Execution Copy
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT (this "Agreement") is entered into as of
March 4, 1998, by and among Cablevision Systems Corporation, a Delaware
corporation (including any successor pursuant to this Agreement, the "Parent"),
TeleCommunications, Inc., a Delaware corporation (including any successor
pursuant to this Agreement, the "Company"), and the Class B Entities (as defined
below).
WHEREAS, Parent, TCI Communications, Inc. and the Company have entered
into an Amended and Restated Contribution and Merger Agreement dated as of June
6, 1997 (the "Merger Agreement") providing for, among other things, the
Contribution and the Merger;
WHEREAS, the respective boards of directors of each of Parent and the
Company have approved this Agreement;
WHEREAS, upon consummation of the Transactions pursuant to the Merger
Agreement, the Company and the Class B Entities will Beneficially Own (as
defined below) Shares (as defined below) and the Class B Entities will
Beneficially Own in the aggregate Shares constituting a majority of the Total
Voting Power (as defined below);
WHEREAS, the execution and delivery of this Agreement by the parties
hereto is a condition to the consummation of the Contribution Closing; and
WHEREAS, the parties hereto desire to make certain representations,
warranties, covenants and agreements as provided in this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
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1. Certain Definitions. (a) Capitalized terms that are used but not
otherwise defined herein shall have the meanings given to them in the Merger
Agreement.
(b) For the purposes of this Agreement, the following terms shall have
the following meanings:
"Affiliate" and "Associate" when used with reference to any Person
shall have the meanings assigned to such terms in Rule 12b-2 of the Exchange Act
as in effect of the date hereof; provided, that Parent and its Subsidiaries and
the officers and directors of Parent and its Subsidiaries who are not Investor
Directors and who are not directors or officers of the Company or any of its
Subsidiaries shall not, solely as a result of holding such office of Parent or
any of its Subsidiaries, be deemed Affiliates or Associates of any Investor for
purposes of this Agreement.
"Acquisition Transaction" shall mean (i) any merger or other business
combination or reorganization transaction involving Parent or any of its
Subsidiaries or (ii) any transaction involving the acquisition of capital stock
or assets or assumption of liabilities of any Person by Parent or any of its
Subsidiaries the fair market value of which exceeds $5 million in the aggregate
and which is not made in the ordinary course of business.
"Annualized Operating Cash Flow" shall mean, as of any date, an amount
equal to Operating Cash Flow for the period of three complete consecutive
calendar months ending on or most recently prior to such date, multiplied by
four.
A Person shall be deemed the "Beneficial Owner", and to have
"Beneficial Ownership" of, and to "Beneficially Own," any securities as to which
such Person is or may be deemed to be the beneficial owner pursuant to Rule
13d-3 and 13d-5 under the Exchange Act, as such rules are in effect on the date
of this Agreement, as well as any securities as to which such Person has the
right to become Beneficial Owner (whether such right is exercisable immediately
or only after the passage of time or the occurrence of conditions)
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pursuant to any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group members with respect
to a bona fide public offering of securities), or upon the exercise of
conversion rights, exchange rights, rights, warrants or options, or otherwise;
provided, however, that no Person shall be deemed the "Beneficial Owner" or to
have "Beneficial Ownership" of, or to "Beneficially Own," any Shares solely by
virtue of the rights set forth in Sections 7, 8, 9 and 10; provided, further,
that a Person shall not be deemed the "Beneficial Owner", or to have "Beneficial
Ownership" of, or to "Beneficially Own", any Shares (i) solely because such
Shares have been tendered pursuant to a tender or exchange offer made by such
Person, or any of such Person's Affiliates or Associates, until such tendered
Shares are accepted for payment or exchange or (ii) solely because such Person,
or any of such Person's Affiliates or Associates, has or shares the power to
vote or direct the voting of such Shares pursuant to a revocable proxy given in
response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations under the Exchange Act,
except if such power (or the arrangements relating thereto) is then reportable
under Item 6 of Schedule 13D under the Exchange Act (or any similar provision of
a comparable or successor report). For purposes of this Agreement, in
determining the percentage of the outstanding Shares with respect to which a
Person is the Beneficial Owner, all Shares as to which such Person is deemed the
Beneficial Owner shall be deemed outstanding.
"Board" shall mean the Board of Directors of Parent.
"Cash Flow Ratio" shall mean, as of any date, the ratio of (A) the sum
of (i) the aggregate principal amount of all Indebtedness of Parent and its
Indenture Restricted Subsidiaries plus (ii) the aggregate Redemption Amounts on
such date in respect of all outstanding preferred stock of Parent and any of its
Indenture Restricted Subsidiaries, to (B) Annualized Operating Cash Flow
determined as of the last day of the calendar month which precedes such date by
at least 10 business days.
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"Cash Flow Ratio Threshold" shall mean 8.0 to 1.0 until and through
December 31, 1998; 7.75 to 1.0 from January 1, 1999 until and through December
31, 1999; and 7.5 to 1.0 after December 31, 1999.
"Change of Control" shall mean, with respect to the Investor or any
Class B Entity (other than any Class B Entity that is a natural person), any
transaction or series of transactions occurring after the date that such Person
becomes subject to this Agreement pursuant to which any Person becomes the
Beneficial Owner of Voting Securities of the Investor or such Class B Entity
that have the power to cast at least 50% of the votes entitled to be cast in
elections of directors (or similar officials) of the Investor or such Class B
Entity, as the case may be; provided, that if the Investor or Class B Entity is
a trust, this definition shall apply when any Person becomes the Beneficial
Owner of interests in such trust constituting at least 50% of the beneficial
interest.
"Class B Entities" shall mean Xxxxxxx X. Xxxxx, Xxxxxxx X. Xxxxx 1997
Grantor Retained Annuity Trust, Xxxxx Descendants Trust, Xxxxx Progeny Trust,
Xxxxx Grandchildren Trust, Xxxxx Spouse Trust, DC Xxxxxxxx Trust, DC Xxxxxxx
Trust, DC Xxxxxxxx Trust, DC Patrick Trust, XX Xxxxxx Trust, DC James Trust, CFD
Trust Xx. 0, XXX Xxxxx Xx. 0, XXX Trust Xx. 0, XXX Xxxxx Xx. 0, XXX Trust No. 5,
CFD Trust No. 6 and CFD Trust No. 10.
"Closing Date" shall mean the date of the Contribution Closing.
"Competitor" shall mean a competitor of Parent or any of its
Subsidiaries in one or more of Parent's or any of its Subsidiaries' significant
lines of business.
"Controlled Subsidiary" shall mean, with respect to any Person, a
Subsidiary at least a majority of the Voting Securities and other equity
interests of which are owned, directly or indirectly, by such Person.
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"Family Members" shall mean, with respect to any natural person, such
person's spouse, siblings, descendants and any spouse of such siblings and
descendants and descendants of such siblings, including for this purpose persons
in a step or adoptive relationship.
"Group" shall have the meaning assigned to such term in Rule 13d-5
under the Exchange Act as in effect on the date hereof.
"Holding Company Merger" shall mean any merger or other business
combination or reorganization transaction where the stockholders of Parent
immediately prior to such transaction will Beneficially Own in the aggregate
100% of the surviving corporation's Voting Securities and other equity interests
immediately following such transaction in the same proportion as immediately
prior to such transaction subject only to any disproportionality resulting
solely from any issuance of Shares in the Partnership Contribution.
"Indebtedness" shall have the meaning set forth in the Indenture.
"Indenture" shall mean the Indenture dated as of November 1, 1995,
between CSC and The Bank of New York, as Trustee, as in effect on the date of
the Merger Agreement and without regard to whether such Indenture shall be in
effect or amended in any respect.
"Indenture Restricted Subsidiary" shall mean "Restricted Subsidiary" as
defined in the Indenture as applied to Parent as opposed to CSC.
"Investor" shall mean the Company or any Permitted Transferee that may
from time to time become a party as the Investor to a counterpart of this
Agreement.
"Minority Shares" shall mean the Voting Securities of Parent that are
Beneficially Owned by Minority Stockholders.
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"Minority Stockholders" shall mean the Beneficial Owners of Voting
Securities of Parent who (i) are not the Investor or a Class B Entity, or
Affiliates or Associates of the Investor or a Class B Entity, and (ii) are not
members of a Group of which the Investor or a Class B Entity, or Affiliates or
Associates of the Investor or a Class B Entity, are members with respect to
Voting Securities of Parent.
"Operating Cash Flow" shall mean, for any period, "Operating Cash Flow"
as defined in the Indenture as applied to Parent and its Indenture Restricted
Subsidiaries on a consolidated basis.
"Outstanding Share Capital" shall mean, from time to time, the issued
and outstanding Shares, excluding any treasury Shares.
"Parent Share Issuance Commitments" shall mean those commitments to
issue Shares set forth in Schedule 1.
"Permitted Transferee" shall mean a permitted transferee under Section
6(a) or Section 6(h).
"Qualified Parties" shall mean, with respect to any Person, any (i)
trust described in Section 664 of the Code or other trust of which the Person or
Family Members or Qualified Parties of the Person are greater than 50% income
beneficiaries, (ii) charitable organization described in Section 501(c)(3) of
the Code, (iii) with respect to any Class B Entity that is a natural person,
estate of such natural person and (iv) Family Members of any Person that is a
natural person.
"Redemption Amounts" shall mean the sum of all amounts payable (whether
or not then due) by Parent or any of its Indenture Restricted Subsidiaries (or
principal amount of indebtedness issuable by Parent or any of its Indenture
Restricted Subsidiaries) in respect of any preferred stock of Parent or any of
its Indenture Restricted Subsidiaries which is by its terms at any time required
to be redeemed, purchased or otherwise retired or extinguished
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(other than by delivery of common stock or of preferred stock of Parent or its
Indenture Restricted Subsidiaries), or which by its terms is convertible into
any Indebtedness of Parent or any Indenture Restricted Subsidiary at a fixed or
determinable date, at the option of any Person other than Parent or such
Indenture Restricted Subsidiary or upon the occurrence of a condition not solely
within the control of Parent or such Indenture Restricted Subsidiary, or which
by its terms is convertible into preferred stock of Parent or any of its
Indenture Restricted Subsidiaries that can be so redeemed, retired, extinguished
or converted.
"Restricted Subsidiary" shall mean any Significant Subsidiary of Parent
other than Madison Square Garden L.P.
"Shares" shall mean the Parent Class A Shares and Parent Class B Shares
and any other shares of common stock of Parent.
"Special Committee" shall mean the committee of directors of the Board
formed pursuant to Article II, Section 9 of the By-laws of Parent.
"Special Directors" shall mean those directors of the Board who are
members of the Special Committee.
"Subsidiary" shall mean, with respect to any Person, any entity at
least 50% of the Voting Securities of which are owned directly or indirectly by
such Person.
"Total Voting Power" shall mean the aggregate votes that are entitled
to be cast by all Shares, calculated with respect to any Person in accordance
with Rule 13d-3(d)(1)(i) under the Exchange Act.
"Transfer" shall mean (i) any direct or indirect sale, transfer,
assignment, pledge, hypothecation, mortgage, or other disposition or
encumbrance, including those by operation or succession of law, merger or
otherwise, and (ii) with respect to any Shares that are Beneficially Owned by
the Investor, any Change of
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Control of such Investor where, at the time immediately following such Change of
Control, the fair market value of such Shares represents more than 20% of the
fair market value of all assets of such Investor and (iii) with respect to any
Shares that are Beneficially Owned by any Class B Entity, any Change of Control
of such Class B Entity.
"Ultimate Parent Entity" shall mean, with respect to any Person that is
a Subsidiary of a Person, the Person that, directly or indirectly, Beneficially
Owns at least 50% of the Voting Securities of such Subsidiary and is not a
Subsidiary of any Person who is not a natural person.
"Voting Securities" shall mean any securities entitled to vote in the
ordinary course in the election of directors or of Persons serving in a similar
governing capacity of any partnership, limited liability company or other
entity, including the voting rights attached to such securities.
(c) For the purposes of this Agreement, the following terms shall have
the meanings assigned to them in the corresponding Sections of this Agreement
(whether or not such Sections have been terminated):
Term Section
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Agreement......................................................Recitals
Company........................................................Recitals
Demand Registration............................................Annex A
Drag-Along Transaction.........................................8(b)
Investor Directors.............................................11(a)
Investor Proposal Notice.......................................9(a)
Merger Agreement...............................................Recitals
Parent.........................................................Recitals
Piggy-back Registration........................................Annex A
Proposal Notice................................................7(a)
Tag-Along Transaction..........................................8(a)
Transfer Transaction...........................................7(a)
2. Representations of the Company. As of the date hereof, the Company
represents and warrants to Parent and to each of the Class B Entities that:
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(a) other than those Voting Securities of CSC or Shares issued in
exchange thereof in the Merger disclosed to Parent prior to the Contribution
Closing, the Company does not Beneficially Own any Shares other than those
Shares issued in connection with the Contribution at the Contribution Closing;
(b) the Company has all requisite corporate power and authority and has
taken all corporate action necessary in order to execute and deliver this
Agreement;
(c) this Agreement has been duly executed and delivered by the Company
and is a valid and binding agreement of the Company enforceable against the
Company in accordance with its terms, subject to the Bankruptcy and Equity
Exception;
(d) no notices, reports or other filings are required to be made by the
Company with, nor are any consents, registrations, approvals, permits or author-
izations required to be obtained by the Company from, any Governmental Entity,
in connection with the execution and delivery of this Agreement by the Company,
except those that have been made or obtained or that the failure to make or
obtain are not, individually or in the aggregate, reasonably likely to prevent,
materially delay or materially impair the ability of the Company to consummate
the transactions contemplated by this Agreement; and
(e) the execution, delivery and performance of this Agreement by the
Company do not, and the consummation by the Company of the transactions
contemplated hereby will not, constitute or result in (i) a breach or violation
of, or a default under, the certificate of incorporation or by-laws of the
Company, (ii) a breach of or violation of or a default under, or the
acceleration of any obligations of or the creation of a Lien on the assets of
the Company (with or without notice, lapse of time or both) pursuant to, any
Contracts binding upon the Company or any Law or governmental or
non-governmental permit or license to which the Company is subject or (iii) any
change in the rights or
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obligations of any party under any of such Contracts to which the Company is a
party, except, in the case of clause (ii) or (iii) above, for any breach,
violation, default, acceleration, creation or change that, individually or in
the aggregate, is not reasonably likely to prevent, materially delay or
materially impair the ability of the Company to consummate the transactions
contemplated by this Agreement.
3. Representations of the Class B Entities. As of the date hereof, the
Class B Entities each severally represents and warrants to the Company and to
Parent that:
(a) such Class B Entity Beneficially Owns such Shares as set forth
opposite its name in Schedule 3 hereto;
(b) such Class B Entity has all requisite power and authority
(corporate or otherwise) and has taken all action (corporate or otherwise)
necessary in order to execute and deliver this Agreement;
(c) this Agreement has been duly executed and delivered by such Class B
Entity and is a valid and binding agreement of such Class B Entity enforceable
against it in accordance with its terms, subject to the Bankruptcy and Equity
Exception;
(d) no notices, reports or other filings are required to be made by
such Class B Entity with, nor are any consents, registrations, approvals,
permits or authorizations required to be obtained by such Class B Entity from,
any Governmental Entity, in connection with the execution and delivery of this
Agreement by such Class B Entity, except those that have been made or obtained
or that the failure to make or obtain are not, individually or in the aggregate,
reasonably likely to prevent, materially delay or materially impair the ability
of such Class B Entity to consummate the transactions contemplated by this
Agreement; and
(e) the execution, delivery and performance of this Agreement by such
Class B Entity does not, and the
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consummation by such Class B Entity of the transactions contemplated hereby will
not, constitute or result in (i) a breach or violation of, or a default under,
the certificate of incorporation or by-laws of such Class B Entity or any of its
comparable governing instruments, (ii) a breach of or violation of or a default
under, or the acceleration of any obligations of or the creation of a Lien on
the assets of such Class B Entity (with or without notice, lapse of time or
both) pursuant to, any Contracts binding upon such Class B Entity or any Law or
governmental or non-governmental permit or license to which such Class B Entity
is subject or (iii) any change in the rights or obligations of any party under
any of such Contracts to which such Class B Entity is a party, except, in the
case of clause (ii) or (iii) above, for (x) Contracts, Laws, permits and
licenses also binding upon CSC or to which CSC or its business also is subject
and (y) any breach, violation, default, acceleration, creation or change that,
individually or in the aggregate, is not reasonably likely to prevent,
materially delay or materially impair the ability of such Class B Entity to
consummate the transactions contemplated by this Agreement.
4. Representations of Parent. As of the date hereof, Parent represents
and warrants to the Company and the Class B Entities that:
(a) Parent has all requisite corporate power and authority and has
taken all corporate action necessary in order to execute and deliver this
Agreement;
(b) this Agreement has been duly executed and delivered by Parent and
is a valid and binding agreement of Parent enforceable against Parent in
accordance with its terms, subject to the Bankruptcy and Equity Exception;
(c) no notices, reports or other filings are required to be made by
Parent with, nor are any consents, registrations, approvals, permits or
authorizations required to be obtained by Parent from, any Governmental Entity,
in connection with the execution and delivery of this Agreement by Parent,
except those that have been made or obtained or that the failure to make or
obtain are not, individually or
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in the aggregate, reasonably likely to prevent, materially delay or materially
impair the ability of Parent to consummate the transactions contemplated by this
Agreement; and
(d) the execution, delivery and performance of this Agreement by Parent
do not, and the consummation by Parent of the transactions contemplated hereby
will not, constitute or result in (i) a breach or violation of, or a default
under, the certificate of incorporation or by-laws of Parent, (ii) a breach of
or violation of or a default under, or the acceleration of any obligations of or
the creation of a Lien on the assets of Parent (with or without notice, lapse of
time or both) pursuant to, any Contracts binding upon Parent or any Law or
governmental or non-governmental permit or license to which Parent is subject or
(iii) any change in the rights or obligations of any party under any of such
Contracts to which Parent is a party, except, in the case of clause (ii) or
(iii) above, for any breach, violation, default, acceleration, creation or
change that, individually or in the aggregate, is not reasonably likely to
prevent, materially delay or materially impair the ability of Parent to
consummate the transactions contem plated by this Agreement.
5. Standstill Provisions. The Investor shall not, and shall not suffer
or permit any Subsidiaries of the Investor to or, to the extent the Investor
possesses the power to prevent, permit any Affiliates or Associates of the
Investor to (and shall use all reasonable best efforts to cause such Affiliates
and Associates not to), whether acting alone or in concert with others:
(a) form, join or participate in, or encourage the formation of, a
Group with respect to any Shares, other than a Group consisting solely of the
Investor, or Affiliates or Associates of the Investor, of Class B Entities or of
Qualified Parties of Class B Entities or the Investor;
(b) deposit any Shares into a voting trust or (except as provided in
this Agreement) subject any such
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Shares to any arrangement or agreement with respect to the voting or Transfer
thereof, other than any such trust, arrangement or agreement (i) the only
parties to, or beneficiaries of which, are the Investor or any Controlled
Subsidiaries of the Investor, any of the Class B Entities, Parent or any
Qualified Parties of the Investor or any of the Class B Entities and (ii) the
terms of which prohibit any party thereto from acting in a manner inconsistent
with this Agreement; provided, that all of the Shares deposited into any such
trust or subjected to any such arrangement or agreement shall be deemed to be
Beneficially Owned by the Investor or Affiliates or Associates of the Investor
for all purposes of this Agreement;
(c) (i) except for Shares acquired in the Contribution or upon exercise
of the Investor's rights set forth in Section 7 or 10, purchase or otherwise
acquire Beneficial Ownership of or otherwise Beneficially Own any Voting
Securities of Parent such that the Investor, together with the Affiliates of the
Investor, will Beneficially Own 10% or more of the Parent Class A Shares (it
being understood and agreed that any Shares acquired and from time to time
Beneficially Owned by the Investor and its Affiliates as a result of the
ownership of the Voting Securities of CSC and the exchange thereof in the Merger
as disclosed to Parent pursuant to Section 2(a) shall be included and count
toward such 10% threshold), or (ii) at any time purchase or otherwise acquire
any Shares in violation of Regulation M under the Exchange Act (or any successor
provision) and the policies of the SEC promulgated thereunder;
(d) effect or agree to effect any reduction in its equity interest in
Parent for up to 180 days following delivery by Parent of a written notice that
Parent is proposing to consummate a business combination to be accounted for as
a pooling of interests; provided, that this restriction shall terminate if
Parent has not consummated such business combination within 90 days of the date
of such written notice and provided, further, that this restriction shall be
inapplicable to the extent any reduction would not
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adversely affect the accounting treatment of such business combination as a
pooling of interests; or
(e) advise, assist (including by knowingly providing or arranging
financing for that purpose) or knowingly encourage, induce or attempt to
encourage or induce any other Person to take any actions referred to in the
foregoing paragraphs (a) through (d).
6. Share Transfers. The Investor shall not Transfer, in any single
transaction or group of related transactions, any Shares that are Beneficially
Owned by the Investor, except for a Transfer in connection with a Holding
Company Merger or pursuant to Section 8 or for a Transfer that complies with any
of the following subsections:
(a) a Transfer (i) of all (but not less than all) of such Shares to any
Controlled Subsidiary of the Company or (ii) of all or any of such Shares to a
Subsidiary all of the Voting Securities and all of the equity securities (other
than preferred stock held by institutional or public investors) of which are
Beneficially Owned, directly or indirectly, by the Company; provided, that
contemporaneously with any such Transfer such Controlled Subsidiary or wholly
owned Subsidiary, as the case may be, becomes a party to a counterpart of this
Agreement and the Investor and the Company guarantee the performance of all
obligations of such Controlled Subsidiary or wholly owned Subsidiary, as the
case may be, under this Agreement; provided, further, that such Controlled
Subsidiary or wholly owned Subsidiary, as the case may be, and the Company shall
prior to such Transfer covenant and agree with Parent and the Class B Entities
that, for so long as the Controlled Subsidiary or wholly owned Subsidiary, as
the case may be, Beneficially Owns such Shares, it shall continue to be a
Controlled Subsidiary or wholly owned Subsidiary, as the case may be, of the
Company;
(b) a Transfer of all or any of such Shares to any Person such that
such Person, together with the Affiliates and Associates of such Person, will
not Beneficially Own, after giving effect to such Transfer,
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Voting Securities of Parent constituting 10% or more of the outstanding Parent
Class A Shares or Shares constituting 5% or more of the Outstanding Share
Capital; provided, that the Investor shall not, and shall not suffer or permit
any Subsidiaries of the Investor to or, to the extent the Investor has the power
to prevent, permit any Affiliates or Associates of the Investor to (and shall
use all reasonable best efforts to cause such Affiliates and Associates not to),
in any case, form, join or participate in or encourage the formation of a Group
with such Person or any Affiliates or Associates of such Person;
(c) a sale of all or any of such Shares to any Person that is conducted
publicly through one or more registered broker-dealers over the AMEX or such
other stock exchange or interdealer quotation service where Parent Class A
Shares may be listed or quoted pursuant to which the sale of such Shares will be
in a manner to effect a broad distribution, with such distribution certified to
Parent by the lead broker-dealer in any such sale;
(d) a Transfer of all or any of such Shares to underwriters in
connection with an underwritten public offering of such Shares on a firm
commitment basis registered under the Securities Act pursuant to which the sale
of such Shares will be in a manner to effect a broad distribution, with such
distribution certified to Parent by the lead or managing underwriter or
underwriters in any such offering;
(e) a Transfer of all or any of such Shares to Parent or any Controlled
Subsidiary of Parent;
(f) for so long as the Parent Class B Shares are entitled in accordance
with their terms to elect 75% of the Board, a Transfer of all or any of such
Shares to any Class B Entity;
(g) a Transfer of all or any of such Shares in a bona fide pledge of
such Shares to a financial institution to secure borrowings as permitted by
applicable Law; provided, that contemporaneously with such pledge such
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financial institution agrees with Parent that upon any foreclosure on such
pledge it shall be bound by the obligations of the Company and the Investor
under this Agreement (but shall not have any of the rights of the Company and
the Investor under this Agreement except as provided in this Section and in
Sections 11, 14(c), 15 and 16 pursuant to an assignment effected in accordance
with the terms hereof); or
(h) a Transfer of all (but not less than all) of such Shares to any
Person after complying with all of the provisions set forth in Section 9;
provided, that contemporaneously with such Transfer (i) such Person becomes a
party to a counterpart of this Agreement as the Investor (whereupon, subject to
Section 16(f), any reference to the Investor herein shall be deemed to be a
reference to such Person), (ii) if such Person is a Subsidiary of any other
Person that is not a natural person, the Ultimate Parent Entity of such Person
shall also become a party to a counterpart of this Agreement and assume all
obligations of the Company hereunder (whereupon, subject to Section 16(f), any
reference to the Company herein shall be deemed to be a reference to such
Ultimate Parent Entity) and (iii) such Person causes to be delivered to Parent a
legal opinion of counsel of national standing, in form and substance reasonably
acceptable to Parent, to the effect set forth in Sections 2(b) and 2(c).
7. The Company's Right of Consultation with Parent and the Class B
Entities. The Company, Parent and the Class B Entities hereby agree with each
other that, until the date that the Investor ceases to be entitled to nominate
two Investor Directors pursuant to Section 11(a) or, if earlier and at such time
the Investor does not Beneficially Own at least 33% of the Outstanding Share
Capital or such lesser percentage that results solely from any dilution for
issuances for which no preemptive rights under Section 10 are given to the
Investor or results solely from dilution for issuances for which no
anti-dilution adjustment was required to be made under the Merger Agreement, ten
years from the date hereof, the Company, Parent and the Class B Entities shall
be entitled to the respective rights and be
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subject to the respective obligations set forth in this Section:
(a) Notice. Prior to (i) the Class B Entities effecting a Transfer
(other than in a bona fide pledge or grant of security interest to a financial
institution to secure borrowings) of Shares to any Person (other than any Class
B Entity or any Qualified Parties or Controlled Subsidiaries of any Class B
Entities) in any transaction or series of transactions pursuant to which there
is a Transfer of Shares that would constitute at least 10% of the Total Voting
Power, (ii) Parent or its Subsidiaries effecting a Transfer (other than in a
bona fide pledge or grant of security interest to a financial institution to
secure borrowings) of Beneficial Ownership of capital stock or other equity
interests in any Restricted Subsidiary other than to Parent or to a Controlled
Subsidiary or stockholders of Parent or (iii) Parent or its Subsidiaries
effecting a Transfer (other than in a bona fide pledge or grant of security
interest to a financial institution to secure borrowings) of a substantial
portion of the assets of Parent or any Restricted Subsidiary other than to
Parent or to a Controlled Subsidiary of Parent (collectively, a "Transfer
Transaction"), Parent or the Class B Entity desiring to make such a Transfer
shall first notify the Company in writing (a "Proposal Notice") of the
possibility of such a transaction and the number of and a description of the
interests contemplated to be Transferred.
(b) Consultation. Following the Company's receipt of the Proposal
Notice, Parent or the Class B Entity sending the notice shall discuss with the
Company the possibility of effecting a Transfer Transaction with the Company. If
the Company wishes to pursue such a transaction and is capable of completing a
Transfer Transaction, then, for a period of 30 days after the Company's receipt
of the Proposal Notice (or such shorter period if the Company responds in
writing that it is not interested in pursuing such a transaction), Parent or the
Class B Entity shall negotiate in good faith and exclusively with the Company to
determine whether it is possible to agree to a Transfer Transaction with the
Company but shall not be obligated to
-17-
enter into any agreement with the Company to do so. Parent or the Class B Entity
shall be free to negotiate and to initiate and hold discussions with other
potential purchasers at any time before the Proposal Notice or after the
expiration of such 30-day or shorter period and may agree to enter into a
Transfer Transaction at any time after the expiration of such 30-day or shorter
period even if such Transfer Transaction has a lower value to Parent or the
Class B Entity than any transaction proposed by the Company. The Company agrees
to keep confidential the fact that Parent or a Class B Entity is considering
effecting a Transfer Transaction, the possible terms thereof and any
confidential information obtained by the Company in pursuing negotiations
contemplated by this Section or otherwise obtained from Parent or any of the
Class B Entities or their respective representatives.
8. The Investor's Tag-Along Rights; the Class B Entities' Drag-Along
Rights. The Company and the Class B Entities hereby agree with each other that,
for so long as the Parent Class B Shares are entitled in accordance with their
terms to elect 75% of the Board or until this Section 8 terminates as provided
in Section 16(f), the Company and the Class B Entities shall be entitled to the
respective rights and subject to the respective obligations set forth in this
Section:
(a) Tag-Along. If any Class B Entity proposes to Transfer any Shares
Beneficially Owned by it to any Person (other than any Class B Entity or any
Qualified Parties or Controlled Subsidiaries of any Class B Entities) in a
transaction or series of transactions pursuant to which such Person, together
with Affiliates and Associates of such Person (excluding from such Affiliates or
Associates any Class B Entity or any Qualified Parties or Controlled
Subsidiaries of any Class B Entities) (a "Tag-Along Transaction"), would become
the Beneficial Owner of Voting Securities of Parent that have the power to cast
at least 50% of the votes entitled to be cast in elections of directors of
Parent, the Investor shall be given the opportunity and shall have the right to
Transfer such number (but no less or more than such number) of the Shares then
-18-
Beneficially Owned by the Investor that is the same in proportion to the total
number of Shares that are Beneficially Owned by the Investor as the proportion
of the number of Shares being or to be Transferred by the Class B Entities
concurrently to such Person in the transaction or series of transactions
constituting the Tag-Along Transaction to the total number of Shares that are
Beneficially Owned by all of the Class B Entities on terms (including the form
and amount of, and the time of receipt of, consideration therefor) and
conditions identical in all material respects to those applicable to such Class
B Entity in connection with such Transfer. Any such Class B Entity shall give
written notice to the Investor setting forth in detail the material terms and
conditions of the applicable proposed Transfer, and the Investor shall have at
least ten business days after such notice is given within which to exercise its
rights contained in this Section by written notice thereof given to such Class B
Entity (it being understood and agreed that, if no such notice is received by
such Class B Entity within such period, the Investor shall be deemed to have
elected not to have exercised its rights under this Section). Any such notice
shall constitute an irrevocable offer by the Investor to sell to such Person
such Shares on the terms and conditions received by any such Class B Entity in
connection with such Transfer.
(b) Drag-Along. If the Investor does not exercise the rights set forth
in the foregoing paragraph (a), then any Class B Entity that is Transferring
Shares to a Person (other than any Class B Entity or any Qualified Parties or
Controlled Subsidiaries of a Class B Entity or any Person that before entering
into the definitive documentation relating to such Transfer was an Associate or
Affiliate of any Class B Entity or of a Qualified Party of a Class B Entity) in
a transaction or series of transactions pursuant to which such Person, together
with Affiliates and Associates of such Person (excluding from such Affiliates or
Associates any Class B Entity or any Qualified Parties or Controlled
Subsidiaries of any Class B Entities) (a "Drag-Along Transaction"), would become
the Beneficial Owner of Voting Securities of Parent that have the power to cast
at least 50% of the votes entitled to be cast in elections of
-19-
directors of Parent may give written notice to the Investor during the period
expiring on the close of business on the tenth business day following the
expiration of the five business day period set forth in the foregoing paragraph
(a) requiring the Investor to Transfer such number (but no less or more than
such number) of the Shares then Beneficially Owned by the Investor that is the
same in proportion to the total number of Shares that are Beneficially Owned by
the Investor as the proportion of the number of Shares being or to be
Transferred by the Class B Entities concurrently to such Person in the
transaction or series of transactions constituting the Drag-Along Transaction to
the number of Shares that are Beneficially Owned by the Class B Entities on
terms (including the form and amount of, and the time of receipt of,
consideration therefor) and conditions no less favorable in all material
respects to those applicable to such Class B Entity (and its Affiliates and
Associates) in connection with such Transfer.
(c) Parity; Closing. The terms on which the applicable Class B Entity
actually Transfers its Shares shall not be materially more favorable to the
Class B Entity (and its Affiliates, Associates and Qualified Parties), and
include no more cash, than the terms set forth in the notice given by it
pursuant to the foregoing paragraph (a). The Investor shall give the same
representations, warranties, covenants and agreements as are given by the Class
B Entity in connection with any Transfer pursuant to this Section, but only
insofar as they relate to the Investor's ownership of Shares or are
representations and warranties to the effect set forth in Section 2, and shall
take all such actions as may be necessary to permit such Transfer to lawfully
occur. The closing of the purchase and sale of the Investor's Shares by any
Person pursuant to this Section shall, to the extent legally practicable, take
place at the same time and place as the closing of the Transfer by any such
Class B Entity giving rise to the tag-along rights and drag-along rights set
forth in this Section. At such closing, (i) the Investor shall deliver to such
Person certificates representing the Shares being sold, free and clear of any
Lien (and the Investor hereby represents and warrants to the Class B Entities
and shall represent and
-20-
warrant to such Person that such Shares shall, immediately prior to such sale,
be so free and clear), (ii) such Person shall deliver to the Investor the
consideration to be paid for such Shares in accordance with the terms of the
purchase and sale of such Shares and (iii) the Investor shall execute such other
documents and take such other action as shall be reasonably necessary to
consummate the purchase and sale of such Shares; provided, that if the Investor
is required to Transfer Shares pursuant to a Class B Entity's exercise of its
drag-along rights, the Investor shall not be required to enter into any
noncompete or other agreement that in any material respect restricts or has an
adverse effect on the business or operations of the Investor or any of its
Affiliates.
9. Parent's Right of Consultation with the Investor. The Company and
Parent hereby agree with each other that the Company and Parent shall be
entitled to the respective rights and subject to the respective obligations set
forth in this Section:
(a) Notice. If at any time the Investor desires to Transfer in a
transaction or series of transactions any Shares to any other Person pursuant to
Section 6(h), the Investor shall first notify Parent in writing (an "Investor
Proposal Notice") of the possibility of such a transaction, the number of Shares
proposed to be Transferred and the aggregate number of and a description of the
Shares that are Beneficially Owned by the Investor.
(b) Consultation. Following Parent's receipt of an Investor Proposal
Notice the Investor shall discuss with Parent the possibility of effecting such
a transaction with Parent. If Parent wishes to pursue such a transaction and is
capable of completing such a transaction, then, for a period of 30 days after
Parent's receipt of the Investor Proposal Notice (or such shorter period if
Parent responds in writing that it is not interested in pursuing such a
transaction), the Investor shall negotiate in good faith and exclusively with
Parent to determine whether it is possible to agree to such a transaction with
Parent but shall not be obligated to enter into any agreement with Parent to do
so.
-21-
The Investor shall be free to negotiate and to initiate and hold discussions
with other potential purchasers at any time before the Investor Proposal Notice
or after the expiration of such 30-day or shorter period and may agree to enter
into such a transaction at any time after the expiration of such 30-day or
shorter period even if such transaction has a lower value to the Investor than
any transaction proposed by Parent. Parent agrees to keep confidential the fact
that the Investor is considering effecting such a transaction, the possible
terms thereof and any confidential information obtained by Parent in pursuing
negotiations contemplated by this Section.
10. The Investor's Preemptive Rights. The Company and Parent hereby
agree with each other that the Investor and Parent shall be entitled to the
respective rights and subject to the respective obligations set forth in this
Section:
(a) Notice; Exercise; Closing. If Parent proposes to issue, grant or
sell Shares, Parent shall give to the Investor a written notice setting forth in
reasonable detail the per share consideration (including, in the case of any
convertible or derivative security, the issue consideration pro rated per Share
for such security) and other terms on which such Shares are proposed to be
issued, granted or sold and the amount thereof proposed to be issued, granted or
sold. The Investor shall thereafter have the preemptive right, exercisable by
notice to Parent no later than 15 days after Parent's notice is given, to
purchase up to such number of Parent Class A Shares so that, after giving effect
to such issuance, grant or sale and the preemptive subscription by the Investor,
the Investor, together with its Affiliates and Associates, will Beneficially Own
in the aggregate the same proportion of the Outstanding Share Capital as
Beneficially Owned as of the date of Parent's notice, for the consideration in
cash and on the other terms set forth in Parent's notice. Any written notice by
the Investor exercising the right to purchase Shares pursuant to this Section
shall constitute an irrevocable commitment to purchase from Parent the Shares
specified in such notice, subject to the maximum set forth
-22-
in the preceding sentence. The closing of the purchase of Shares by the Investor
shall, to the extent legally practicable, take place at the same time and place
as the closing of such issuance, grant or sale to the Persons giving rise to the
preemptive rights set forth in this Section and if not at the same time shall
take place as soon thereafter as is practicable; provided that such closing
shall, to the extent applicable, be conditioned upon the expiration or
termination of any waiting period under the HSR Act and the making of any
necessary filings with and obtaining of any approvals from any Governmental
Entities except those that the failure to make or obtain are not, individually
or in the aggregate, reasonably likely to have a Parent Material Adverse Effect
or a material adverse effect on the financial condition, properties, business or
results of operations of the Company and its Subsidiaries taken as a whole. At
such closing, (i) Parent shall deliver to the Investor certificates representing
the Shares being subscribed, and such Shares will be validly issued, fully paid
and nonassessable, (ii) the Investor shall deliver to Parent the consideration
to be paid for such Shares and (iii) the Investor and Parent shall execute such
other documents and take such other action as shall be reasonably necessary to
consummate the subscription of such Shares.
(b) Non-Exercise. From the expiration of the 15-day period first
referred to in the foregoing paragraph (a) and for a period of 90 days
thereafter, Parent may offer, issue, grant and sell to any Person up to the
amount of Shares set forth in Parent's notice relating to such Shares for a
price and other terms no less favorable to Parent, and including no less cash,
than those set forth in such notice (without deduction for reasonable
underwriting, sales agency and similar fees payable in connection therewith);
provided, however, that Parent may not issue, grant or sell Shares in an amount
greater than the amount set forth in such notice minus the amount purchased or
committed to be purchased by the Investor upon exercise of its preemptive rights
without granting the Investor the preemptive rights in this Section with respect
to such greater amount of Shares.
-23-
(c) Exemptions. The provisions of this Section shall not apply to (i)
any issuance and sale of Shares by Parent in a Demand Registration (as defined
in Annex A) or in a Piggy-back Registration (as defined in Annex A) in which the
Investor is participating; (ii) the grant or exercise of employee, management or
director stock options to purchase Shares pursuant to, or the issuance of Shares
otherwise under or pursuant to, the Parent Share Issuance Commitments; (iii) any
grant or exercise of employee, management or director stock options not included
in the Parent Share Issuance Commitments the grant of which, when aggregated
with options or Shares included in or issued under the Parent Share Issuance
Commitments, was or is consistent with CSC's and Parent's past practices; (iv)
any sale, grant or issuance of Shares that, together with any previous sales,
grants or issuances made in reliance on this clause (iv), represents less than
1% of the Outstanding Share Capital as of the date of such sale, grant or
issuance; and (v) any other sale, grant or issuance of Shares that has been
approved in writing by the Investor.
(d) Non-Cash Valuation. In the event that any offer, issue, grant or
sale includes or is proposed to include any non-cash consideration, Parent and
the Investor shall in good faith seek to agree upon the value of such non-cash
consideration. If Parent and the Investor fail to agree on such value during the
15-day period contemplated by paragraph (a) of this Section, then Parent shall
refer the items in dispute to a nationally recognized investment banking firm
that is selected by the Board and that shall make a final and binding
determination within 10 days. The value of any securities shall be the fair
market value of such securities and the value of any property other than
securities shall be the fair market value of such property. If a determination
under this paragraph (d) is required, any deadline for acceptance provided for
in this Section shall be postponed until the fifth business day after the date
of such determination. Whichever of the Investor or Parent whose last estimate
differed the most from that finally decided by the investment banking firm shall
be responsible for and pay all of the expenses of such investment banking firm.
All determinations made pursuant to this
-24-
paragraph (d) shall be final and binding on the Investor and Parent.
(e) HSR Condition. If in the reasonable judgment of the Investor, the
Investor's acquisition of Shares upon exercise of its rights under this Section
10 would require a filing under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended (the "HSR Act"), Parent and the Investor each will take such
actions as may be required promptly to comply with the requirements of the HSR
Act relating to the filing and furnishing of information (an "HSR Report") to
the Federal Trade Commission ("FTC") and the Antitrust Division of the
Department of Justice ("DOJ"), such actions to include (i) preparing and
cooperating with each other in preparing the HSR Report to be filed by or on
behalf of each of them so as to avoid errors or inconsistencies between their
HSR Reports in the description of the reported transaction and to permit the
filing of their HSR Reports in a timely fashion, (ii) complying with any request
for additional documents or information made by the FTC, the DOJ or any other
Governmental Entity or by any court and assisting the other in so complying and
(iii) causing all Persons which are part of the same "person" (as defined for
purposes of the HSR Act) as such party to cooperate and assist in such
compliance. Parent and the Investor each will pay any costs that it incurs in
complying with the obligations set forth in this paragraph. It will be a
condition precedent to the acquisition of Shares by the Investor that either (i)
no filing under the HSR Act by the Investor is required in connection with such
acquisition or (ii) any applicable waiting period under the HSR Act has expired
or been terminated. If the applicable waiting period under the HSR Act has not
expired or been terminated within 180 days after filing of the HSR Report or if
the Investor and Parent agree to withdraw the HSR Report, then Parent will use
its reasonable best efforts to afford to the Investor the benefits intended to
be provided by this Section 10 by granting to the Investor the right to acquire,
on the same terms as the securities originally to be acquired, other securities
of Parent having substantially the same rights, privileges and preferences as
the securities originally to be acquired, except that such other
-25-
securities will not possess voting rights and will be convertible into the
Shares that the Investor was to acquire pursuant to this Section.
11. Board Representation.
(a) Investor Directors. For so long as, and only for so long as, the
Investor Beneficially Owns Parent Class A Shares that in the aggregate comprise
at least 20% of the Outstanding Share Capital, the Investor shall be entitled to
nominate two and no more than two directors (the "Investor Directors") to the
Board, each of whom shall be a person that is reasonably acceptable to Parent
(it being agreed for this purpose that, subject to applicable legal
requirements, any executive officer or member of the board of directors of the
Company shall be acceptable to Parent); provided, that in the event that the
Investor shall at any time cease to Beneficially Own Parent Class A Shares that
in the aggregate comprise at least 20% of the Outstanding Share Capital but
shall continue to Beneficially Own Parent Class A Shares that in the aggregate
comprise at least 10% of the Outstanding Share Capital, the Investor shall
thenceforth be entitled to nominate one and no more than one Investor Director
under this Section 11 and Parent or any of the Class B Entities may request that
one of the Investor Directors then on the Board resign as a director of Parent
and, upon such request, one of the Investor Directors shall, and the Investor
shall use best efforts to cause one of the Investor Directors to, resign
immediately and relinquish all rights and privileges as a member of the Board;
provided, further, that each of the Investor Directors shall in all cases be a
director elected to the Board by the Parent Class B Shares. In the event that
the Investor shall at any time cease to Beneficially Own Parent Class A Shares
that in the aggregate comprise at least 10% of the Outstanding Share Capital,
the Investor shall thenceforth not be entitled to nominate any Investor
Directors under this Section 11 and Parent or any of the Class B Entities may
request that any Investor Directors then on the Board resign as directors of
Parent and, upon such request, the Investor Directors shall, and the Investor
shall use its reasonable best efforts to, cause such Investor Directors to,
resign immediately and
-26-
relinquish all rights and privileges as a member of the Board.
Prior to the election of directors to the Board, the Investor may give
reasonable advance written notice to Parent prior to the mailing of the proxy
statement relating to such matters requesting that Parent include, and Parent
and the Class B Entities (in their capacity as stockholders of Parent) agree
that Parent shall include, the Investor Directors as nominees for the slate of
directors to be elected to the Board.
Notwithstanding the foregoing, in the event that the holders of the
Class B Shares cease at any time to be entitled to elect 75% of the Board in
accordance with the terms of the Parent Class B Shares, the Investor shall
thenceforth no longer be entitled to any rights under this Section and the
Investor agrees that, following such event, Parent may request that all or any
of the Investor Directors then on the Board resign as Investor Directors, and
upon such request by Parent, the Investor Directors shall, and the Investor
shall use reasonable best efforts to cause such Investor Directors to, resign as
Investor Directors and relinquish all rights and privileges as a member of the
Board at the next meeting of stockholders of Parent called for the purpose of
electing directors to the Board; provided, that such Investor Directors may in
any case be nominees as directors to the Board at any meetings called for
election of directors in accordance with this Agreement and with the By-laws of
Parent. Notwithstanding anything to the contrary in this Agreement, no more than
25% of the directors on the Board (rounded up to the nearest whole director)
shall be nominees of the Investor or any Affiliate or Associate of the Investor.
(b) Special Committee. For so long as, and only for so long as, the
Investor is entitled to nominate two Investor Directors pursuant to Section
11(a) (without giving effect to any reduction in the number of Investor
Directors resulting from the last sentence of Section 11(a)), (i) two (or one,
if the number of Investor Directors is reduced as a result of Section 11(a)) of
the Special Directors shall be
-27-
the Investor Directors and (ii) Section 9 of Article II of Parent's By-laws may
not be amended without the prior written consent of the Investor. If only one of
the Special Directors is an Investor Director as a result of any reduction
resulting from the last sentence of Section 11(a), then any matter requiring the
approval of the Special Directors shall not be approved without the approval of
the Investor Director. The Investor, Parent and the Class B Entities agree that
the Investor Directors shall not be entitled to vote on the transactions
contemplated by the Partnership Contribution or on the approval or adoption of
the Partnership Contribution Agreement notwithstanding the fact that such
transaction and such agreement may be referred to the Special Committee.
(c) Efforts to Nominate and Elect Directors. Parent shall nominate and
Parent and the Class B Entities shall use their respective best efforts to take
and cause to be taken all necessary action (corporate and other), which efforts
shall include the voting of or granting consents with respect to all Voting
Securities of Parent Beneficially Owned by them, to elect to the Board the
Investor Directors required to be nominated for election as directors in
accordance with the terms of this Section.
12. Investor Voting. For so long as the Class B Shares are entitled in
accordance with their terms to elect 75% of the Board, with respect to the
election of directors to or removal of directors from the Board and any increase
of authorized Shares, the Investor shall vote or grant consent with respect to,
and shall cause to be voted or to be granted any consents with respect to, all
Voting Securities that are Beneficially Owned by the Investor on all matters
submitted to the holders of Voting Securities in direct proportion to the votes
or consents of the Minority Shares on any such matter. The Investor and the
Class B Entities shall cause all Shares owned by the Investor and the Class B
Entities, as the case may be, and shall use reasonable best efforts to cause all
of their respective Affiliates and Associates to be represented, in person or by
proxy, at all meetings of holders of Shares of which the Investor or the Class B
Entities, as the case may be, have
-28-
actual notice, so that all of such Shares may be counted for the purpose of
determining the presence of a quorum at such meetings.
13. Acquisition Transactions. For so long as, and only for so long as,
the Investor is entitled to nominate two Investor Directors pursuant to Section
11(a), Parent shall not, without the prior written consent of the Company,
consummate an Acquisition Transaction if, after giving effect to such
transaction, the Cash Flow Ratio will exceed the Cash Flow Ratio Threshold.
Before consummation of an Acquisition Transaction that is reasonably likely to
result in the Cash Flow Ratio Threshold being exceeded, Parent shall provide
written notice and a reasonable description of such transaction, including pro
forma calculations of the Cash Flow Ratio giving effect to such transaction as
of the beginning of the most recent three-month period for which Annualized
Operating Cash Flow can be calculated, together with reasonable documentary
supporting information for such calculation. To the extent reasonably
practicable under the circumstances of such transaction, such notice shall be
given 30 days prior to such consummation, but in no event shall such notice be
given less than 10 days prior to such consummation.
14. Additional Agreements.
(a) Exchange Act Reporting. For so long as, and only for so long as,
any of the Shares Beneficially Owned by the Investor are "restricted securities"
within the meaning of Rule 144(a)(3) under the Securities Act, unless Parent is
then subject to and in compliance with Section 13 or 15(d) of the Exchange Act
as contemplated by Rule 144(c)(1) under the Securities Act, Parent shall make
publicly available any information concerning Parent that is contemplated by
Rule 144(c)(2) under the Securities Act.
(b) Maintenance of Ultimate Parent Entity as a Party. In the
event that the Company shall at any time become or be a Subsidiary of any Person
that is not a natural person, the Company covenants and agrees that the Ultimate
Parent Entity of such Person shall forthwith
-29-
execute a counterpart of this Agreement and shall assume all obligations of the
Company hereunder and all references herein to the Company shall be deemed a
reference to such Ultimate Parent Entity. This paragraph shall similarly apply
to any subsequent Ultimate Parent Entities.
(c) Registration Rights. The Investor shall have the registration
rights set forth in Annex A hereto.
(d) Volume Discounts. The Company shall use its reasonable best efforts
to make available to Parent and its Subsidiaries the benefits of its agreements
with vendors on terms no less favorable than those generally available to the
Company or Affiliates of the Company.
15. Legends. (a) Each of the Investor and the Class B Entities agrees
that all certificates representing the Shares that are from time to time subject
to this Agreement shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO A STOCKHOLDERS AGREEMENT DATED MARCH 4, 1998(A COPY OF WHICH
IS ON FILE WITH THE SECRETARY OF THE CORPORATION) WHICH PROVIDES,
AMONG OTHER THINGS, FOR CERTAIN RESTRICTIONS ON THE TRANSFER AND
VOTING THEREOF. THE SECURITIES REPRESENTED BY THIS CERTIFICATE
MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE
WITH SAID AGREEMENT. ANY SALE OR OTHER TRANSFER NOT IN COMPLIANCE
WITH SAID AGREEMENT SHALL BE VOID."
Upon termination with respect to the Investor or the Class B Entities of this
Agreement in accordance with its terms or upon any Shares ceasing to be subject
to this Agreement and upon the written request by the Investor or any of the
Class B Entities, as the case may be, Parent shall issue new certificates with
the foregoing legend removed.
(b) The Investor agrees that all certificates representing the Shares
that were issued in the Contribution and that are Transferred pursuant to this
Agreement (unless
-30-
a registration statement with respect to such Shares is then effective) shall
bear the following legend until such time as the Investor or any transferee
thereof delivers an opinion of counsel reasonably acceptable to Parent to the
effect that such legend is no longer required under the Securities Act:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE SOLD
WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933 AND MAY
BE OFFERED OR SOLD ONLY IF REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR IF AN EXEMPTION FROM REGISTRATION IS
AVAILABLE."
16. Miscellaneous.
(a) GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH AND SUBJECT
TO THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO CONFLICTS OF LAWS
PRINCIPLES.
(b) Venue; WAIVER OF JURY TRIAL. The parties hereby irrevocably submit
to the jurisdiction of the courts of the State of Delaware and the Federal court
of the United States of America located in the State of Delaware solely in
respect of the interpretation and enforcement of the provisions of this
Agreement and of the documents referred to in this Agreement, and in respect of
the transactions contemplated hereby, and hereby waive, and agree not to assert,
as a defense in any action, suit or proceeding for the interpretation or
enforcement hereof or of any such document, that it is not subject thereto or
that such action, suit or proceeding may not be brought or is not maintainable
in said courts or that the venue thereof may not be appropriate or that this
Agreement or any such document may not be enforced in or by such courts, and the
parties hereto irrevocably agree that all claims with respect to such action or
proceeding shall be heard and determined in such a Delaware State or Federal
court. The parties hereby consent to and grant any such court jurisdiction over
the person of such parties and over the
-31-
subject matter of such dispute and agree that mailing of process or other papers
in connection with any such action or proceeding in the manner provided in
paragraph (c) of this Section or in such other manner as may be permitted by law
shall be valid and sufficient service thereof.
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND
THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY
MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS PARAGRAPH (b).
(c) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed given (i) on
the first business day following the date received, if delivered personally or
by telecopy (with telephonic confirmation of receipt by the addressee), (ii) on
the business day following timely deposit with an overnight courier service, if
sent by overnight courier specifying next day delivery and (iii) on the first
business day that is at least five days following deposit in the mails, if sent
by first class mail, to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
If to the Company or the Investor, to:
0000 XXX Xxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000-0000
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Facsimile: (000) 000-0000/(000) 000-0000
Attention: President/Legal Department
with a copy to:
Xxxxxxx & Xxxxxx L.L.C.
Suite 3000
000 Xxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
If to Parent, to:
Xxx Xxxxx Xxxxxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: General Counsel
with a copy to:
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
If to any of the Class B Entities, to:
Xxxxxxx X. Xxxxx
One Media Crossways
Xxxxxxxx, Xxx Xxxx 00000
-33-
Facsimile: (000) 000-0000
and
Xxxxxxx X. Xxxxxx, Xx.
Xxx Xxxxx Xxxxxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
with a copy to:
Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxx, Esq.
(d) Severability. The provisions of this Agree ment shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (i) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (ii) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
(e) Counterparts. For the convenience of the parties hereto, this
Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an
-34-
original and all of which shall together constitute the same agreement.
(f) Termination; Survival. Immediately upon the Investor, together with
all of the Affiliates of the Investor, ceasing to Beneficially Own in the
aggregate at least 20% of the Outstanding Share Capital, Sections 7 and 9 shall
terminate automatically without any action by any party and such terminated
provision shall not survive such termination. Immediately upon the Investor,
together with all of the Affiliates of the Investor, ceasing to Beneficially Own
in the aggregate at least 10% of the Outstanding Share Capital, this Agreement
(other than Sections 1, 2, 3, 4, 5, 14(c), 15 and 16) shall terminate
automatically without any action by any party and such terminated provisions of
this Agreement shall not survive such termination. On the day that is two years
after the date of such termination, Section 5 shall terminate automatically
without any action by any party and shall not survive such termination.
Immediately upon a Transfer to a Permitted Transferee pursuant to Section 6(h),
Sections 7, 9, 11(b) and 13 shall terminate automatically without any action by
any party and such terminated provisions of this Agreement shall not survive
such termination; provided, that if such Permitted Transferee is a Competitor,
all of Section 11 shall terminate automatically without any action by any party
and such terminated provision shall not survive such termination; provided,
further, that on the day that is five years following a Transfer to any such
Permitted Transferee, Section 10 shall terminate automatically without any
action by any party and such terminated provision shall not survive such
termination. This Section 16 and Sections 1, 2, 3, 4, 14(c) and 15 shall survive
any termination of all or any part of this Agreement indefinitely.
(g) Headings; Recitals. All Section headings and the recitals herein
are for convenience of reference only and are not part of this Agreement, and no
construction or reference shall be derived therefrom.
-35-
(h) Specific Performance. Each party hereto acknowledges that it will
be impossible to measure in money the damage to the other party if a party
hereto fails to comply with any of the obligations imposed by this Agreement,
that every such obligation is material and that, in the event of any such
failure, the other party will not have an adequate remedy at law or damages.
Accordingly, each party hereto agrees that injunctive relief or other equitable
remedy, in addition to remedies at law or damages, is the appropriate remedy for
any such failure and will not oppose the granting of such relief on the basis
that the other party has an adequate remedy at law. Each party hereto agrees
that it shall not seek, and agrees to waive any requirement for, the securing or
posting of a bond in connection with any other party's seeking or obtaining such
equitable relief.
(i) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns and shall not be assignable except to the extent expressly
permitted hereby and any purported assignment in violation of this Agreement
shall be void. Any Class B Entity may assign this Agreement in connection with a
Transfer of any Shares to a Class B Entity or any Qualified Parties or
Controlled Subsidiaries of any Class B Entities; provided, that such transferee
shall become a party to a counterpart of this Agreement and become bound as a
Class B Entity hereunder. In the case of a merger or other business combination
or reorganization transaction involving Parent where securities other than those
of Parent are issued to the holders of Shares, this Agreement shall be assigned
to and shall inure to the benefit of and be binding upon the Person issuing
securities in such transaction and any reference herein to Parent shall be
deemed to be a reference to such Person. The rights and obligations under this
Agreement (excluding Sections 7, 9, 11(b) and 13) shall be assigned by the
Investor and the Company to a Permitted Transferee in connection with the
Transfer to such Permitted Transferee pursuant to Section 6(h); provided, that
if such Permitted Transferee is a Competitor, Section 11 shall also
-36-
be excluded from such assignment, which assignment shall not terminate any
portion of this Agreement except in accordance with Section 16(f). The Investor
may assign its rights and obligations (w) under this Agreement to a Permitted
Transferee pursuant to Section 6(a)(i), (x) under this Agreement to a Permitted
Transferee pursuant to Section 6(a)(ii), (y) under Sections 14(c), 15 and 16 to
a transferee pursuant to Section 6(b) and (z) under Sections 6, 11, 14(c), 15
and 16 to a transferee pursuant to Section 6(g), which assignment shall not
terminate any obligations of the Investor hereunder; provided, that in the event
of an assignment described in (x), (y) or (z) above, the Investor agrees with
Parent that the transferee(s) and the Investor shall, with respect to Parent,
act as one Investor under such assigned Sections.
(j) Entire Agreement; Amendment; Waiver. This Agreement (including any
annexes and schedules hereto) and the Merger Agreement (including any exhibits
and schedules thereto) supersede all prior agreements, written or oral, among
the parties hereto with respect to the subject matter hereof and contains the
entire agreement among the parties with respect to the subject matter hereof.
This Agreement may not be amended, supplemented or modified, and no provisions
hereof may be modified or waived, except by an instrument in writing signed by
the party or parties affected or to be affected thereby. No waiver of any
provisions hereof by any party shall be deemed a waiver of any other provisions
hereof by any such party, nor shall any such waiver be deemed a continuing
waiver of any provision hereof by such party.
(k) No Request for Amendment or Waiver. The Company shall not, and
shall cause its Affiliates not to and use reasonable best efforts to cause its
Associates not to, request publicly that Parent or any of the Class B Entities
or any of their respective agents or representatives, directly or indirectly,
amend or waive any provision of this Agreement or make any such request
privately if it could reasonably be expected to require Parent to make a public
announcement regarding such request.
-37-
(l) No Relief of Liabilities. No Transfer by the Investor or any Class
B Entity of Beneficial Ownership of any Shares shall relieve the Investor or
such Class B Entity of any liabilities or obligations to Parent or to a Class B
Entity (in the case of a Transfer by the Investor) or to the Investor (in the
case of a Transfer by a Class B Entity) that arose or accrued prior to the date
of such Transfer.
(m) Securities Subject to Agreement; Ineffective Transfers. All Shares
that are Beneficially Owned by the Investor (including any Shares disclosed
pursuant to Section 2(a) for as long as such Shares are Beneficially Owned by
the Investor or its Affiliates), and the Class B Entities and, to the extent
provided herein, the Affiliates and Associates of the Investor and the Class B
Entities, shall be subject to this Agreement. No Transfer or acquisition of any
Shares in violation of any provision of this Agreement shall be effective to
pass any title to, or create any interest in favor of, any Person, but the
Investor or Class B Entities, as the case may be, in attempting to effect or in
permitting or suffering such Transfer or acquisition, shall be deemed to have
committed a material breach hereof.
(n) Further Assurances. The parties hereto shall execute and deliver
such additional instruments and other documents and shall take such further
actions as may be necessary or appropriate to effectuate, carry out and comply
with all of the terms of this Agreement and the transactions contemplated
hereby.
(o) THIRD PARTY BENEFICIARIES. NOTHING IN THIS AGREEMENT, EXPRESS OR
IMPLIED, IS INTENDED TO CONFER UPON ANY THIRD PARTY ANY RIGHTS OR REMEDIES OF
ANY NATURE WHATSOEVER UNDER OR BY REASON OF THIS AGREEMENT.
-38-
IN WITNESS WHEREOF, Parent, each Class B Entity and the
Company have executed and delivered this Agreement, or a counterpart hereof, as
of the date first written above or, where applicable, across from a party's
signature on such counterpart.
PARENT:
CABLEVISION SYSTEMS CORPORATION
By: /s/Xxxxxxx X. Xxxx
-----------------------------------
Name: Xxxxxxx X. Xxxx
Title: Vice Chairman
THE COMPANY:
TELE-COMMUNICATIONS, INC.
By: /s/Xxxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Executive Vice President
The Company hereby irrevocably and unconditionally guarantees the
performance of all obligations under this Agreement of each of the Investors on
the signature page attached hereto and hereby covenants and agrees with Parent
and each of the Class B Entities that each such Investor, for so long as such
Investor Beneficially Owns Shares, shall continue to be a Controlled Subsidiary
or wholly owned Subsidiary of the Company.
THE COMPANY:
TELE-COMMUNICATIONS, INC.
By: /s/Xxxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Executive Vice President
-39-
THE INVESTORS:
COUNTRY CABLE III, INC.
CCC SUB, INC.
TCI CSC II, Inc.
TCI CSC III, Inc.
TCI CSC IV, Inc.
TCI CSC V, Inc.
TCI CSC VI, Inc.
TCI CSC VII, Inc.
TCI CSC VIII, Inc.
TCI CSC IX, Inc.
TCI CSC X, Inc.
TCI CSC XI, Inc.
By: /s/Xxxxxxx X. Xxxxxxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxxxxxx, Vice President
-40-
XXXXXXX X. XXXXX
By: /s/Xxxxxxx X. Xxxxx
-------------------------------------
XXXXXXX X. XXXXX 1997 GRANTOR
RETAINED ANNUITY TRUST
By: /s/Xxxxx Xxxxx
-------------------------------------
Name: Xxxxx Xxxxx
Title: Trustee
XXXXX DESCENDANTS TRUST
/s/Xxxxxxxx X. Xxxxx
By: /s/Xxxx X. Xxxxx
-------------------------------------
Name: Xxxxxxxx X. Xxxxx,
Xxxx X. Xxxxx
Title: Trustees
XXXXX PROGENY TRUST
/s/Xxxxxxx Xxxxx Xxxxxxx
/s/Xxxxxxx X. Xxxxx
By: /s/Xxxx X. Xxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxx,
Xxxx X. Xxxxx,
Xxxxxxx Xxxxx Xxxxxxx
Title: Trustees
-41-
XXXXX GRANDCHILDREN TRUST
/s/Xxxx X. Xxxxx
/s/Xxxxxx X. Xxxxx
By: /s/Xxxxxxxx Xxxxx Xxxxx
-------------------------------------
Name: Xxxx X. Xxxxx,
Xxxxxx X. Xxxxx,
Xxxxxxxx Xxxxx Xxxxx
Title: Trustees
XXXXX SPOUSE TRUST
/s/Xxxx X. Xxxxx
/s/Xxxxxx X. Xxxxx
By: /s/Xxxxxxxx Xxxxx Xxxxx
-------------------------------------
Name: Xxxx X. Xxxxx,
Xxxxxx X. Xxxxx,
Xxxxxxxx Xxxxx Xxxxx
Title: Trustees
DC XXXXXXXX TRUST
/s/Xxxxxxxx X. Xxxxx
By: /s/Xxxx X. Xxxxx
-------------------------------------
Name: Xxxxxxxx X. Xxxxx,
Xxxx X. Xxxxx
Title: Trustees
DC XXXXXXX TRUST
/s/Xxxx X. Xxxxx
By: /s/Xxxxxxx Xxxxx Xxxxxxx
-------------------------------------
Name: Xxxx X. Xxxxx,
Xxxxxxx Xxxxx Xxxxxxx
Title: Trustees
-42-
DC XXXXXXXX TRUST
/s/Xxxxxxxx Xxxxx Xxxxx
By: /s/Xxxxxxx Xxxxx
-------------------------------------
Name: Xxxxxxx Xxxxx,
Xxxxxxxx Xxxxx Xxxxx
Title: Trustees
DC PATRICK TRUST
/s/Xxxxxxx X. Xxxxx
By: /s/Xxxx X. Xxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxx,
Xxxx X. Xxxxx
Title: Trustees
XX XXXXXX TRUST
/s/Xxxxxx X. Xxxxx
By: /s/Xxxxxxx Xxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxx,
Xxxxxxx Xxxxx
Title: Trustees
DC JAMES TRUST
By: /s/Xxxx X. Xxxxx
-------------------------------------
Name: Xxxx X. Xxxxx
Title: Trustee
CFD TRUST NO. 1
By: /s/Xxxx XxxXxxxxxx
-------------------------------------
Name: Xxxx XxxXxxxxxx
Title: Trustee
-43-
CFD TRUST NO. 2
By: /s/Xxxx XxxXxxxxxx
-------------------------------------
Name: Xxxx XxxXxxxxxx
Title: Trustee
CFD TRUST NO. 3
By: /s/Xxxx XxxXxxxxxx
-------------------------------------
Name: Xxxx XxxXxxxxxx
Title: Trustee
CFD TRUST NO. 4
By: /s/Xxxx XxxXxxxxxx
-------------------------------------
Name: Xxxx XxxXxxxxxx
Title: Trustee
CFD TRUST NO. 5
By: /s/Xxxx XxxXxxxxxx
-------------------------------------
Name: Xxxx XxxXxxxxxx
Title: Trustee
CFD TRUST NO. 6
By: /s/Xxxx XxxXxxxxxx
-------------------------------------
Name: Xxxx XxxXxxxxxx
Title: Trustee
-44-
CFD TRUST NO. 10
By: /s/Xxxx XxxXxxxxxx
-------------------------------------
Name: Xxxx XxxXxxxxxx
Title: Trustee
-45-
Schedule 1
(Parent Share Issuance Commitments)
9. CSC Stock Plans.
10. Any Parent Class A Shares issuable upon conversion of any Parent Class
B Shares.
11. Any Shares issuable upon conversion of the Series C Cumulative Preferred
Stock, par value $.01 per share, of Parent outstanding as of the date of
the Merger Agreement.
-1-
Schedule 3
(Parent Class B Shares of the Class B Entities)*
Entity Class B Shares
------ --------------
Xxxxxxx X. Xxxxx 4,859,281
Xxxxxxx X. Xxxxx 1997
Grantor Retained Annuity Trust 1,240,000
Xxxxx Descendants Trust 413,625
Xxxxx Progeny Trust 513,625
Xxxxx Grandchildren Trust 307,625
Xxxxx Spouse Trust 52,945
DC Xxxxxxxx Trust 303,116
DC Xxxxxxx Trust 303,116
DC Xxxxxxxx Trust 294,285
DC Patrick Trust 294,285
XX Xxxxxx Trust 303,116
DC James Trust 303,116
CFD Trust No. 1 302,880
CFD Trust No. 2 302,880
CFD Trust No. 3 294,049
CFD Trust No. 4 294,049
CFD Trust No. 5 302,880
CFD Trust No. 6 302,880
CFD Trust No. 10 93,456
--------
* To be updated as of Contribution Closing.
-1-
ANNEX A
REGISTRATION RIGHTS
-------------------
The Parent Class A Shares that are Beneficially Owned by the Investor from
time to time are hereinafter referred to as the "Registrable Securities" and
shall have the benefit of the following registration rights.
Demand
Registration: After the date that is six months
following the Contribution Closing, the
Investor may request, by written notice
to Parent, that Parent file a
registration statement registering for
offering and sale Registrable Securities
in an amount equal to or in excess of
2,000,000 Shares or, if less, the Shares
then Beneficially Owned by the Investor
and any transferees with rights
hereunder in an underwritten public
offering (a "Demand Registration").
Parent will use its reasonable best
efforts to file a registration statement
on an appropriate form with the SEC
covering the Registrable Securities for
which registration was so requested
within 30 days of Parent's receipt of
such request, subject to Parent's
blackout rights described below, and
shall use its reasonable best efforts to
cause such registration statement to be
declared effective as soon thereafter as
practicable. In addition, Parent shall
amend or supplement such registration
statement so that the Investor may use
such registration statement and the
related prospectus in connection with an
underwritten offering of such
Registrable Securities for 90 days from
the effective date of such registration
A-1
statement, subject to Parent's blackout
rights described below. Parent agrees
to keep the Demand Registration
effective for such 90-day period and,
after the expiration of such 90-day
period, may deregister the Registrable
Securities registered thereon. Parent
shall not be obligated to effect more
than one Demand Registration for the
Investor in each of the years following
the date that is six months following
the Contribution Closing.
Piggy-back
Registration: The Investor shall be entitled to
"piggy-back" registration rights on any
registrations of Shares registering for
offering and sale at least $100 million
of Shares (based upon the market value
thereof on the date of filing), other
than a registration on Form S-8, Form S-
4 or any successors to such forms (a
"Piggy-back Registration"), subject to
the cutback provisions described below.
Registration
Expenses: The Investor will pay a proportional
amount (based upon the number of shares
registered by the Investor) of any and
all fees and expenses in a Piggy-back
Registration; provided, that the
Investor will not be responsible for
counsel expenses of other selling
stockholders. In a Demand Registration,
Parent will pay any and all fees and
expenses; provided that Parent will not
be responsible for the counsel expenses
of the Investor or any underwriting fees
and commissions for the Shares sold by
the Investor.
A-2
Underwriters: In case of any Demand Registration or
Piggy-back Registration, Parent shall
select the underwriter or underwriters
that shall manage or lead such
registration. The Investor shall not be
entitled to participate in any
underwritten offering unless and until
the Investor has entered into an
underwriting or other agreement with
such underwriter or underwriters in such
form as Parent and such underwriter or
underwriters shall determine.
In addition, in connection with any
underwritten offering proposed by the
Investor hereunder, Parent shall enter into
an underwriting or other agreement with the
underwriters thereof containing customary
representations, warranties, covenants,
indemnities and other terms.
Transfer of
Registration
Rights: The Investor may transfer or assign its
registration rights in connection with
any Transfer of Registrable Securities
to a Permitted Transferee or a
transferee under Section 6(b) or 6(g);
provided, that any such transferee shall
agree to be bound by the terms hereof
relating to Shares or securities
convertible or exchangeable for Shares
and, with respect to Parent, all of such
transferees must act as one Investor
hereunder.
Lock-Up Provision: The Investor will not engage in
transactions involving Parent's equity
securities, including by commencing any
public offering of Parent's equity
securities or by causing a Demand
Registration, for a period not to exceed
A-3
180 days after the effective date of any
Parent registration statement that is
equal to the shortest period that such
restriction is made applicable to any
director, officer or Affiliate of
Parent.
Blackout Rights: Upon written notice to the Investor,
Parent may suspend the Investor's right
to sell Registrable Securities under a
registration statement or temporarily
refuse to proceed with a Demand
Registration under the following
circumstances: (a) Parent reasonably
believes that the use of such
registration statement would require
disclosure of a material corporate
development not otherwise required to be
disclosed that Parent has a valid business
purpose for not disclosing, (b) Parent is in
the process of making, or preparing to make,
a registered offering of securities and
Parent reasonably deems it advisable to
temporarily discontinue disposition of
Registrable Securities or (c) Parent
reasonably believes that disposition of
Registrable Securities at such time would
have a material adverse effect on Parent.
Parent shall notify the Investor immediately
upon the conditions in clause (a) or (c)
above ceasing to exist, at which time such
suspension shall terminate. Notwithstanding
the foregoing, (i) the maximum period in
which Parent can suspend the Investor's
rights under clauses (a), (b) and (c) above
is 60 days on any single occasion and 145
consecutive days in any one-year period,
(ii) Parent may not suspend such rights more
than three times in any one-year period
commencing after the date
A-4
that the Demand Registration becomes
effective and (iii) the Investor shall in
any event, taking into account the blackout
rights and lock-up provisions set forth
herein, be entitled to 180 days in any
one-year period (other than the period
prior to the date that is six months
following the Stock Closing) that are not
subject to any blackout or lockup. The
Investor's rights hereunder may not be
suspended unless corresponding rights of
other stockholders are similarly suspended.
Cutback Rights: In the event that the Investor, Parent
and/or any stockholder or Affiliate of
Parent are participating in an
underwritten equity offering and the
managing or lead underwriter or
underwriters thereof shall determine in
its or their reasonable good faith judgment
that it cannot sell, or that it would not be
advisable to sell, all the Shares desired to
be sold, then the number of Shares that each
such Person may have included shall be
reduced according to the following terms
until the managing or lead underwriter or
underwriters shall believe that the
remaining Shares can be sold and it would
not be inadvisable to sell such number of
Shares:
(a) in the event that the
offering in question includes a
primary offering of Shares by
Parent, then the number of Shares
that Parent may have included shall
not be reduced and the number of
Shares which the Investor and any
other Persons may have included
shall be reduced pro rata in
A-5
proportion to the total number of
Shares sought to be included by each
such Person, and
(b) in the event that the
offering in question does not
include a primary offering of Shares
by Parent, then the number of shares
that the Investor and any other
Persons may have included shall be
reduced pro rata in proportion to
the total number of Shares sought to
be included by each such Person.
Indemnification: Parent will indemnify the Investor and
the Investor's officers, directors and
controlling persons against any losses,
claims, damages, expenses or liabilities
incurred by the Investor arising out of,
or based upon, any untrue statement or
alleged untrue statement of a material
fact contained in any registration
statement or prospectus or amendment or
supplement thereto, including any
document incorporated by reference therein,
or the omission or alleged omission
therefrom of a material fact necessary in
order to make the statements therein, in
light of the circumstances under which they
were made, not misleading; provided, that
Parent shall not be liable to the extent
that any loss, claim, damage, expense or
liability arises out of information supplied
in writing by the Investor or any of its
Affiliates or Associates for use in any
registration statement or prospectus or
amendment or supplement thereto, including
any document incorporated by reference
therein. The Investor shall indemnify Parent
and
A-6
Parent's officers, directors and
controlling persons against any losses,
claims, damages, expenses or liabilities
incurred by Parent arising out of, or based
upon, any untrue statement or alleged
untrue statement of a material fact
relating to the Investor contained in any
registration statement or prospectus or
amendment or supplement thereto, including
any document incorporated by reference
therein, which information was supplied in
writing by the Investor or any of its
Affiliates or Associates for use in any
registration statement or prospectus or
amendment or supplement thereto, or the
omission or alleged omission therefrom of a
material fact relating to the Investor
necessary in order to make the statements
therein, in light of the circumstances
under which they were made, not misleading.
Promptly after receipt by an indemnified
party under the preceding paragraph of
notice of the commencement of any action,
such indemnified party shall, if a claim in
respect thereof is to be made against the
indemnifying party under such paragraph,
notify the indemnifying party in writing of
the commencement thereof; but the omission
so to notify the indemnifying party shall
not relieve it from any liability which it
may have to any indemnified party otherwise
than under such subsection. In case any
such action shall be brought against any
indemnified party and it shall notify the
indemnifying party of the commencement
thereof, the indemnifying party shall be
entitled to participate therein and, to the
extent that it shall wish, jointly with any
other
A-7
indemnifying party similarly notified, to
assume the defense thereof, with counsel
satisfactory to such indemnified party (who
shall not, except with the consent of the
indemnified party, be counsel to the
indemnifying party), and, after notice from
the indemnifying party to such indemnified
party of its election so to assume the
defense thereof, the indemnifying party
shall not be liable to such indemnified
party under such subsection for any legal
expenses of other counsel or any other
expenses, in each case subsequently
incurred by such indemnified party, in
connection with the defense thereof other
than reasonable costs of investigation. No
indemnifying party shall, without the
written consent of the indemnified party,
effect the settlement or compromise of, or
consent to the entry of any judgment with
respect to, any pending or threatened
action or claim in respect of which
indemnification or contribution may be
sought hereunder (whether or not the
indemnified party is an actual or potential
party to such action or claim) unless such
settlement, compromise or judgment (i)
includes an unconditional release of the
indemnified party from all liability
arising out of such action or claim and
(ii) does not include a statement as to or
an admission of fault, culpability or a
failure to act by or on behalf of any
indemnified party.
Termination of
Registration
Rights: The Investor's registration rights
hereunder will automatically expire with
A-8
no action by either Parent or the
Investor if and at the time that the
Investor is able to sell all of its
Registrable Securities in any 90-day
period pursuant to Rule 144 or any
successor exemption under the Securities
Act.
Further Actions: In connection with sales of Registrable
Securities by the Investor, Parent shall
take such further actions as are
customarily required of issuers
providing registration rights, including
using its reasonable best efforts to (i)
list the shares on the principal
securities exchanges or markets on which
or in which the outstanding securities
of the same class are listed or traded,
(ii) obtain any required clearance with
state securities regulators, (iii) file
Exchange Act reports on a timely basis,
(iv) make available for inspection
corporate documents at reasonable times,
(v) participate in a reasonable number
of management due diligence sessions at
reasonable times (but Parent's
management shall not be required to
travel outside of the metropolitan area
in which its principal executive offices
are located) and (vi) furnish copies of
required prospectuses, in each case, at
the expense of the Investor.
Savings Clause: The registration rights granted here
under are subject in all respects to the
rights granted to Cablevision Systems
Company and CSC Holdings Company
pursuant to the Registration Rights
Agreements, each dated January 27, 1986,
between CSC and each of such parties as
in effect on the date of the Merger
A-9
Agreement, true and complete copies of which
have been provided to the Company.
A-10
