REGISTRATION RIGHTS AGREEMENT
by and between
MOSCOW CABLECOM CORP.
and
COLUMBUS NOVA INVESTMENTS VIII LTD.
Dated [ ]
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS..........................................................1
ARTICLE II REGISTRATION........................................................3
SECTION 2.1 Requested Registration..........................................3
SECTION 2.2 Incidental Registrations........................................5
SECTION 2.3 Expenses........................................................5
SECTION 2.4 Effective Registration Statement................................5
SECTION 2.5 Jurisdictional Limitations......................................6
SECTION 2.6 Conversion of Other Securities..................................6
SECTION 2.7 Adjustments Affecting Registrable Securities....................6
ARTICLE III REGISTRATION PROCEDURES............................................6
SECTION 3.1 Company Obligations.............................................6
SECTION 3.2 Holder Obligations..............................................8
ARTICLE IV UNDERWRITTEN OFFERINGS..............................................9
SECTION 4.1 Underwritten Offerings..........................................9
SECTION 4.2 Holdback Agreements............................................12
ARTICLE V INDEMNIFICATION AND CONTRIBUTION....................................12
SECTION 5.1 Indemnification................................................12
SECTION 5.2 Contribution...................................................14
ARTICLE VI COMPANY COVENANTS..................................................15
SECTION 6.1 Covenants Relating to Rule 144; Reports Under Exchange Act.....15
SECTION 6.2 Other Registration Rights......................................15
ARTICLE VII MISCELLANEOUS.....................................................15
SECTION 7.1 Amendments and Waivers.........................................15
SECTION 7.2 Successors and Assigns.........................................16
SECTION 7.3 Entire Agreement...............................................16
SECTION 7.4 Notices........................................................16
SECTION 7.5 Governing......................................................16
SECTION 7.6 Arbitration....................................................17
SECTION 7.7 Equitable Remedies.............................................17
SECTION 7.8 Parties in Interest............................................17
SECTION 7.9 Severability...................................................17
SECTION 7.10 No Inconsistent Agreements....................................17
SECTION 7.11 Headings......................................................17
SECTION 7.12 Construction; Adequate Counsel................................18
SECTION 7.13 Counterparts..................................................18
SECTION 7.14 Interpretation................................................18
ii
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and entered
into as of [ ], by and between Moscow CableCom Corp., a Delaware corporation
(the "Company"), and Columbus Nova Investments VIII Ltd., a Bahamas company
("CNI").
WHEREAS, the parties hereto have entered into a Series B Convertible
Preferred Stock Subscription Agreement dated August 26, 2004 (the "Subscription
Agreement") and a Series B Convertible Preferred Stock Warrant Agreement dated
as of the date hereof (the "Warrant Agreement");
WHEREAS, pursuant to the Subscription Agreement, CNI has acquired
4,500,000 shares of Series B Convertible Preferred Stock, par value $.01 per
share of the Company ("Series B Preferred Stock"), which are currently
convertible into 4,500,000 shares of Common Stock (as defined herein) of the
Company; and
WHEREAS, pursuant to the Warrant Agreement, CNI has acquired warrants that
are currently exercisable for 8,283,000 shares of Series B Preferred Stock of
the Company (the "Warrants");
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein, and intending to be legally bound hereby, the
parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
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The following terms shall have the meanings set forth in this Article I:
"Agreement" has the meaning specified in the preface.
"Commission" means the United States Securities and Exchange Commission or any
successor governmental agency that administers the Securities Act and the
Exchange Act.
"Commission Registration Form" means a registration statement complying with the
rules and regulations of the Commission.
"Common Stock" means the Common Stock, par value $.01 per share of the Company,
as constituted on the date hereof, any shares of the Company's capital stock
into which such Common Stock shall be changed, and any shares of the Company's
capital stock resulting from any reclassification of such Common Stock or any
recapitalization of the Company.
"Company" has the meaning specified in the preface.
"CNI" has the meaning specified in the preface.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or any
successor statute thereto, and the rules and regulations of the Commission
promulgated from time to time thereunder, all as the same shall be in effect at
the time.
"Holders" means CNI and any other Person who holds or may hold Registrable
Securities in the future under this Agreement or under any other agreement with
the Company granting rights to register Registrable Securities.
"Incidental Registration" has the meaning specified in Section 2.2(a).
"Indemnified Parties" has the meaning specified in Section 5.1(a).
"Indemnifying Party" has the meaning specified in Section 5.1(c).
"Person" means any individual, partnership, corporation, limited liability
company, association, trust, joint venture, unincorporated organization and any
government, governmental department or agency or political subdivision thereof.
"Registrable Securities" means, in each case as adjusted for stock splits,
recapitalizations and other similar events, (i) shares of Common Stock and (ii)
securities issued in replacement or exchange of any shares of Common Stock;
provided, however, that any and all shares described in clauses (i) and (ii)
above shall cease to be Registrable Securities upon any sale pursuant to a
registration statement declared effective under the Securities Act, or any sale
exempt from registration under the Securities Act pursuant to section 4(1) of
the Securities Act or Rule 144 promulgated under the Securities Act.
"Registration Expenses" means all expenses incurred by the Company incident to
the Company's performance of or compliance with this Agreement in connection
with each Registration, regardless of whether such registration statement is
declared effective, including without limitation (i) all registration, filing,
listing and National Association of Securities Dealers, Inc. fees, (ii) all fees
and expenses of complying with securities or blue sky laws, (iii) all word
processing, duplicating and printing expenses, (iv) all messenger and delivery
expenses, (v) any transfer taxes, (vi) the fees and expenses of the Company's
legal counsel and independent public accountants, including the expenses of any
"comfort" letters, (vii) all expenses incurred in connection with making
"roadshow" presentations and holding meetings with potential investors to
facilitate the distribution and sale of Registrable Shares, (viii) the
reasonable fees and disbursements of counsel and accountants retained by CNI,
(ix) any fees and disbursements of underwriters customarily paid by issuers or
sellers of securities, but excluding underwriting discounts and commissions as
described below, and (x) all of the internal expenses incurred by the Company,
including, without limitation, salaries and expenses of officers and employees
performing legal and accounting duties, expenses of conducting the annual audit
of the Company's financial statements by its independent public accountants, and
costs in obtaining liability insurance on behalf of the Company, its officers
and directors; provided, however, that each Holder shall be responsible for the
underwriting discounts and commissions with respect to the Registrable Shares
being sold by such Holder.
"Registration" means any of a Requested Registration or an Incidental
Registration.
"Registration Request" has the meaning set forth in Section 2.1(a).
"Requested Registration" has the meaning specified in Section 2.1(a).
"Securities Act" means the Securities Act of 1933, as amended, or any successor
statute thereto, and the rules and regulations of the Commission promulgated
from time to time thereunder, all as the same shall be in effect at the time.
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"Underwriter's Maximum Number" means a specified maximum number of securities
that could be successfully included in a Registration pursuant to an
underwritten offering within a price range acceptable to Holders and the Company
as determined in writing by the representative of the underwriters.
ARTICLE II
REGISTRATION
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SECTION 2.1 Requested Registration.
(a) Request for Registration. Subject to Section 2.1(b), if at any time
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following the first anniversary of this Agreement the Company shall receive a
written request from CNI (a "Registration Request") that the Company effect a
registration under the Securities Act of all or any part of the Registrable
Securities held by CNI (a "Requested Registration") in accordance with the terms
of this Section 2.1, then the Company shall use its best efforts to effect the
registration under the Securities Act (and any related qualification under blue
sky laws or other compliance) of the offering and sale of such Registrable
Securities within 90 days after receipt of the Registration Request. The Company
may also include in any Requested Registration other securities of the Company
offered for the account of the Company or any other Person, including
Registrable Securities held by other Holders entitled to include such securities
in such Requested Registration pursuant to Section 2.2. A Requested Registration
may be accomplished on Form S-3 under the Securities Act, if available, at the
option of the Company; provided, however, that if, in connection with any
Requested Registration that is proposed by the Company to be on Form S-3 or any
similar short form registration statement that is a successor to Form S-3, the
managing underwriters, if any, shall advise the Company in writing that in their
opinion the use of another permitted form is of material importance to the
success of the offering, then such registration shall be on such other permitted
form. CNI shall have the right to terminate or withdraw any Requested
Registration requested by it under this Section 2.1 prior to the effectiveness
of such registration, whether or not the Company or any Holder has elected to
include Registrable Securities in such Requested Registration. The Registration
Expenses of such terminated or withdrawn registration shall be borne by the
Company in accordance with Section 2.3 if CNI shall have terminated or withdrawn
such registration (i) following a breach by the Company of any of its covenants
or obligations under this Agreement or (ii) as a result of disagreement between
CNI and the Company on the offering price per share and underwriting discounts,
if applicable, in connection with such registration; provided, however, that if
CNI terminates or withdraws such registration other than pursuant to (i) or (ii)
above, the Registration Expenses of such terminated or withdrawn registration
shall be borne by CNI.
(b) Limitation on Requested Registrations.
(i) Share Limitation. The Company shall not be obligated to effect
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a Requested Registration unless such registration involves the
greater of (i) an aggregate offering price of $1,000,000 or
(ii) one percent of the Common Stock issued or outstanding as
of the date of such Registration Request.
(ii) Limitation on the Number of Requested Registrations. The
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Company shall only be obligated to effect one Requested
Registration hereunder in any six month (calendar) period.
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(iii) Prior Registration Limitation. If a registration statement
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related to another Registration has been declared effective
under the Securities Act within the preceding six calendar
months and the participating Holders have not sold all
Registrable Securities included in such registration
statement, then the Company shall have the right to defer a
Requested Registration for a period of not more than 90 days.
(iv) Delay Limitation. If the Company shall furnish to CNI a
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certificate signed by the chief executive officer or chairman
of the board of directors of the Company stating that, in the
good faith judgment of the board of directors, the effecting
of the Requested Registration at the time requested would be
detrimental to the Company or its stockholders, then the
Company shall have the right to defer such Requested
Registration for a period of not more than 180 days; provided,
however, that the Company may only assert such delay once
during any 12-month period.
(v) Simultaneous Company Registration Limitation. From the date of
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filing of any registration statement under the Securities Act
by the Company until the date 180 days following the effective
date of such registration statement, the Company shall not be
obligated to effect a Requested Registration without the
consent of the representative of the underwriters of the
offering as to which such registration statement is filed, so
long as the Company is actively employing in good faith all
reasonable efforts to cause such registration statement to
become or remain effective.
(vi) Termination. The right to request a Requested Registration
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shall terminate on the tenth anniversary of this Agreement.
(vii) Allocation. The inclusion of Registrable Securities in a
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Requested Registration, in addition to the Registrable
Securities to be included by CNI, shall be made on a pro rata
basis among all other Holders. In the event that any Holder
withdraws his Registrable Securities from a Requested
Registration, then the Company shall promptly notify other
Holders of such withdrawal. In such event, other Holders shall
be entitled to increase the number of Registrable Securities
to be included in such Requested Registration on a pro rata
basis based on the number of Registrable Securities that each
such Holder desires to include in such Requested Registration.
(viii) Price Determination. If CNI requests the Registration, it
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shall have the sole right to determine the offering price per
share and underwriting discounts, if applicable, in connection
with any resales of Registrable Securities pursuant to this
Section 2.1, after consultation with the Company and with due
regard for the Company's views relating thereto.
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SECTION 2.2 Incidental Registrations.
(a) Incidental Registration. If the Company, for itself or any of its
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security holders other than pursuant to a Requested Registration, at any time
after the date hereof and through the tenth anniversary hereof, undertakes to
effect a registration under the Securities Act of the offering and sale of any
shares of its capital stock or other securities (other than (i) the registration
of an offer, sale or other disposition of securities solely to employees of, or
other Persons providing services to, the Company or any subsidiary of the
Company pursuant to an employee or similar benefit plan or (ii) in connection
with a merger, acquisition or other transaction of the type described in Rule
145 under the Securities Act or a comparable or successor rule, registered on
Form S-4 or similar or successor forms promulgated by the Commission), then on
each such occasion the Company shall notify Holders of such undertaking at least
30 days prior to the filing of a registration statement relating thereto. In
such event, upon the written request of any Holder within 20 days after the
receipt of such notice, subject to Section 4.1(d), the Company shall use its
best efforts as soon as practicable thereafter to cause any Registrable
Securities specified by such Holder to be included in such registration
statement (an "Incidental Registration"). If a Holder desires to include less
than all Registrable Securities held by it in any Incidental Registration, then
such Holder shall nevertheless continue to have the right to include any
remaining Registrable Securities in any subsequent Incidental Registration upon
the terms and conditions set forth herein. The Company shall have the right to
terminate or withdraw any Incidental Registration initiated by it under this
Section 2.2 prior to the effectiveness of such registration, whether or not any
Holder has elected to include Registrable Securities in such Incidental
Registration. The Registration Expenses of such terminated or withdrawn
registration shall be borne by the Company in accordance with Section 2.3.
(b) Price Determination. The Company shall have the sole right to
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determine the offering price per share and underwriting discounts in connection
with any resale by Holders of Registrable Shares pursuant to an underwriting
offering in connection with an Incidental Registration, after consultation with
the Holders and due regard for Holders' views relating thereto. If CNI disagrees
with the Company's determination of the offering price per share, CNI shall have
the right to withdraw its Registrable Securities from the Incidental
Registration.
(c) Effect of Incidental Registration. No Incidental Registration effected
---------------------------------
by the Company shall relieve the Company from its obligations to effect any
Requested Registration.
SECTION 2.3 Expenses. The Company shall pay all Registration Expenses incurred
in connection with any Registration, including if a Registration is not deemed
to have been effected pursuant to Section 2.4 hereof.
SECTION 2.4 Effective Registration Statement. No Registration shall be deemed to
have been effected unless the registration statement filed with respect thereto
in accordance with the Securities Act has been declared effective by the
Commission with respect to the disposition of all Registrable Securities covered
by such Registration and remains effective in accordance with Section 3.1.
Notwithstanding the foregoing, no Registration shall be deemed to have been
effected if (a) after the related registration statement has been declared
effective by the Commission, such Registration is made subject to any stop
order, injunction or other order or requirement of the Commission or other
governmental agency or any court proceeding for any reason, other than solely by
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reason of a misrepresentation or omission by CNI, or (b) the conditions to
closing specified in the underwriting agreement entered into in connection with
such Registration are not satisfied, other than solely by reason of an act or
omission by CNI.
SECTION 2.5 Jurisdictional Limitations. Notwithstanding anything in this
Agreement to the contrary, the Company shall not be obligated to take any action
to effect registration, qualification or compliance with respect to Registrable
Securities: (a) in any particular jurisdiction in which the Company would be
required to execute a general consent to service of process, unless the Company
is already subject to service in such jurisdiction and except as required by the
Securities Act; (b) that would require it to qualify generally to do business in
any jurisdiction in which it is not already so qualified or obligated to
qualify; or (c) that would subject it to taxation in a jurisdiction in which it
is not already subject generally to taxation.
SECTION 2.6 Conversion of Other Securities. If CNI holds any options, rights,
warrants or other securities that are directly or indirectly convertible into or
exercisable or exchangeable for any Registrable Shares, the Registrable Shares
underlying such options, rights, warrants or other securities shall be eligible
for registration pursuant to this Article II. This includes, without limitation,
the Series B Preferred Stock and the Warrants.
SECTION 2.7 Adjustments Affecting Registrable Securities. The Company will not
effect or permit to occur any combination or subdivision of securities that
would adversely affect the ability of Holders to include any Registrable
Securities in any registration of the Company's securities contemplated by this
Article II or the marketability of such Registrable Securities under any such
Registration.
ARTICLE III
REGISTRATION PROCEDURES
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SECTION 3.1 Company Obligations. If and whenever the Company is required to
use its efforts to effect a Registration as provided in Article II, then as
expeditiously as possible and subject to the terms and conditions of Article II,
the Company shall:
(a) Prepare and file with the Commission the appropriate registration
statement to effect such Registration and use its best efforts to cause such
registration statement to become and remain effective for the period set forth
in Section 3.1(c);
(b) Permit any Holder that, in the reasonable judgment of the Company's
counsel, might be deemed to be an underwriter or a controlling person of the
Company, to participate in the preparation of such registration statement
(including by making available for inspection by any such Person and any
attorney, accountant or other agent retained by such Person, all financial and
other records, pertinent corporate documents and all other information
reasonably requested in connection therewith), furnish to all Holders, the
underwriters, if any, and their respective counsel and accountants advance draft
copies of such registration statement and each prospectus included therein or
filed with the Commission at least five business days prior to the filing
thereof with the Commission, and any amendments and supplements thereto promptly
as they become available, and provide each such Person such access to the books
and records of the Company and such opportunities to discuss the business of the
Company with its officers and the independent public accountants that have
certified the financial statements of the Company as is necessary, in the
opinion of such Person, to conduct a reasonable investigation within the
meaning of the Securities Act;
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(c) Promptly prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
to comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement, until the
earlier of such time as all of such securities have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof set forth in such registration statement or the expiration of 180 days
after such registration statement becomes effective (such period of 180 days to
be extended one day for each day or portion thereof during such period that such
registration statement is subject to any stop order suspending the effectiveness
of the registration statement, any order suspending or preventing the use of any
related prospectus or any order suspending the qualification of any Registrable
Securities included in such registration statement for sale in any
jurisdiction);
(d) Promptly furnish to CNI, in the case of a Requested Registration or
an Incidental Registration in which it participates, copies of drafts and a
final conformed version of such registration statement as proposed to be filed
and a copy of any amendment or supplement to such registration statement or
prospectus (after initial filing of the registration statement), prior to the
filing of any such registration statement, amendment, supplement or prospectus,
and make the Company's representatives available for discussion of such
document and in good faith consider such changes in such document prior to the
filing thereof as CNI or its counsel may reasonably request;
(e) If requested by the underwriter or underwriters or CNI in connection
with an underwritten offering of Registrable Shares, immediately incorporate in
a prospectus supplement or post-effective amendment such information as the
underwriters and CNI agree should be included therein relating to the plan of
distribution with respect to such Registrable Shares, including, without
limitation, information with respect to the principal amount of Registrable
Shares being sold to such underwriters, the purchase price being paid therefor
by such underwriters and with respect to any other terms of such underwritten
offering of Registrable Shares, and the Company shall make all required filings
of the prospectus supplement or post-effective amendment promptly upon being
notified of the matters to be incorporated in such prospectus supplement or
post-effective amendment;
(f) Immediately notify when or if any registration statement, amendment,
supplement or prospectus has been filed and furnish to Holders that participate
in such Registration, without charge to such Holders, such number of conformed
copies of such registration statement and each such amendment and supplement
thereto (in each case including all exhibits), such number of copies of the
prospectus contained in such registration statement (including each preliminary
prospectus and any summary prospectus) and any other prospectus filed under Rule
424 under the Securities Act, in conformity with the requirements of the
Securities Act, and such other documents as the purchaser or any such Holder may
reasonably request;
(g) Use its best efforts to register or qualify all Registrable
Securities covered by such registration statement under the United States state
securities or blue sky laws of such jurisdictions as any Holder that
participates in such Registration reasonably requests, keep such registration
or qualification in effect for the time period set forth in Section 3.1(c) and
take such other action as may be reasonably necessary or advisable to enable
such Holders to sell the Registrable Securities covered by such Registration
in such jurisdictions;
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(h) Use its commercially reasonable efforts to cause all Registrable
Securities covered by such registration statement to be registered with or
approved by such other United States state governmental agencies or authorities
as may be necessary to enable any Holder that participates in such Registration
to sell the Registrable Securities covered by such Registration as intended by
such registration statement;
(i) Use its best efforts to obtain the withdrawal of any stop order
suspending the effectiveness of such registration statement, or of any order
suspending or preventing the use of any related prospectus or suspending the
qualification of any Registrable Securities included in such registration
statement for sale in any jurisdiction;
(j) Immediately notify Holders that participate in such Registration, at
any time during which a prospectus relating to such registration statement is
required to be delivered under the Securities Act, if the Company becomes aware
of any event as a result of which such prospectus, as then in effect, would
include an untrue statement of material fact or would omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances under which they were made, and
at the request of such Holders promptly prepare and furnish to such Holders a
reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus would not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading in
the light of the circumstances under which they were made;
(k) Otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission and make available to its security holders, as
soon as reasonably practicable, an earnings statement covering the period of at
least 12 months but not more than 18 months, beginning with the first full
calendar month after the effective date of such registration statement, which
earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder;
(l) Provide a transfer agent and registrar for all Registrable Securities
covered by such registration statement not later than the effective date of such
registration statement; and
(m) Use its best efforts to list all Registrable Securities covered by
such registration statement on any securities exchange on which the same class
of securities issued by the Company are then listed or to secure designation
and quotation of all Registrable Securities covered by such Registration on the
Nasdaq National Market System and, without limiting the generality of the
foregoing, to arrange for at least two market makers to register with the
National Association of Securities Dealers, Inc. as such with respect to such
Registrable Securities and pay all fees and expenses in connection with the
satisfaction of the obligations set forth in this Section 3.1(m).
SECTION 3.2 Holder Obligations.
(a) Each Holder that participates in a Registration shall furnish to the
Company, upon its written request, such information as it may reasonably request
in writing (i) regarding the proposed distribution by such Holder of the
Registrable Securities held by such Holder and (ii) as required in connection
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with any registration (including an amendment to a registration statement or
prospectus), qualification or compliance referred to in this Article III.
(b) Upon receipt of any notice from the Company, or upon a Holder's
otherwise becoming aware, of the happening of any event of the kind described
in Section 3.1(j), such Holder shall discontinue its disposition of Registrable
Securities pursuant to the registration statement relating to the offering and
sale of such Registrable Securities until the receipt by such Holder of the
supplemented or amended prospectus contemplated by Section 3.1(j). If so
directed by the Company, such Holder shall deliver to the Company all copies
other than permanent file copies then in possession of such Holder of the
prospectus relating to the offering and sale of such Registrable Securities
current at the time of receipt of such notice. In addition, each Holder shall
immediately notify the Company, at any time during which a prospectus relating
to the registration of such Registrable Securities is required to be delivered
under the Securities Act, of the happening of any event as a result of which
information previously furnished in writing by such Holder to the Company
specifically for inclusion in such prospectus contains an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of the
circumstances under which they were made. In the event that the Company or any
such Holder shall give any such notice, the period referred to in Section 3.1(c)
shall be extended by a number of days equal to the number of days during the
period from and including the giving of notice pursuant to Section 3.1(c) to and
including the date on which such Holder receives copies of the supplemented or
amended prospectus contemplated by Section 3.1(c).
ARTICLE IV
UNDERWRITTEN OFFERINGS
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SECTION 4.1 Underwritten Offerings.
(a) In connection with any (i) Requested Registration with respect to
which CNI proposes to dispose of the Registrable Shares in an underwritten
offering or (ii) Incidental Registration the Company undertakes to effect as an
underwritten offering, the Company shall enter into an underwriting agreement
(and any other customary agreements) with the underwriters for such offering,
such agreement to be in form and substance reasonably satisfactory to such
underwriters in their reasonable judgment and to contain such representations
and warranties by the Company and such other terms as are customarily contained
in agreements of that type, including without limitation indemnities to the
effect and to the extent provided in Section 5.1.
(b) In connection with any underwritten offering in which CNI
participates, the Company shall furnish CNI with (i) an opinion (and updates
thereto) of the Company's counsel to the effect that the registration statement
complies as to form with the Securities Act and any other securities or blue sky
laws and that such counsel has no knowledge or reason to know of any material
misstatement or omission in the registration statement and (ii) a "comfort"
letter (and updates thereof) signed by the independent public accountants that
have certified the Company's financial statements included or incorporated by
reference in such registration statement covering substantially the same matters
with respect to such registration statement (and the prospectus included
therein) and with respect to events subsequent to the date of such financial
statements, as are customarily covered in accountants' letters delivered to
underwriters in underwritten public offerings of securities.
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(c) Each Holder that participates in the Registration shall be a party to
such underwriting agreement and may, at such Holder's option, require that any
or all representations and warranties by, and the other agreements on the part
of, the Company to and for the benefit of such underwriters be made to and for
the benefit of such Holder and that any or all conditions precedent to the
obligations of such underwriters under such underwriting agreement be conditions
precedent to the obligations of such Holder. No such Holder participating in any
such underwritten offering shall be required by the provisions hereof to make
any representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements regarding such
Holder and its intended method of distribution and any other representation
required by law.
(d) Participation in Underwritten Offerings.
(i) If a Requested Registration is an underwritten offering, and
the representative of the underwriters gives written advice to
the Holder(s) requesting the Registration and the Company
that, in its opinion, market conditions dictate that no more
than an Underwriter's Maximum Number could successfully be
included in such Requested Registration, then the Company
shall be required by this Section 4.1(d)(i) to include in such
Requested Registration only such number of securities as
equals the Underwriter's Maximum Number. In such event, the
Holder(s) requesting the Registration, the Company and any
other Person participating in such Requested Registration
shall participate in such Requested Registration as follows:
(1) First, there shall be included in such Requested
Registration that number of securities that the
Holder(s) requesting the Registration requested to be
included in such registration to the full extent of the
Underwriter's Maximum Number;
(2) Second, if the Underwriter's Maximum Number has not yet
been reached, there shall be included in such Requested
Registration that number of Registrable Securities that
the Company proposes to offer and sell for its own
account in such registration to the full extent of the
Underwriter's Maximum Number; and
(3) Third, if the Underwriter's Maximum Number has not yet
been reached, there shall be included in the Requested
Registration that number of Registrable Securities that
any Holders other than the Holder(s) requesting the
Registration and the Company have requested to be
included in the Requested Registration to the full
extent of the remaining portion of the Underwriter's
Maximum Number, allocated pro rata among such other
Holders based on the number of Registrable Securities
that each such Holder desires to offer.
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(ii) If an Incidental Registration is an underwritten offering, and
the representative of the underwriters gives written advice to
the Holders participating in the Incidental Registration and
the Company that, in its opinion, market conditions dictate
that no more than an Underwriter's Maximum Number could
successfully be included in such Incidental Registration, then
the Company shall be required by this Section 4.1(d)(ii) to
include in such Incidental Registration only such number of
securities as equals the Underwriter's Maximum Number. In such
event, the Holders, the Company and any other Person
participating in such Incidental Registration shall
participate in such Incidental Registration as follows:
(1) First, there shall be included in such Incidental
Registration that number of securities that the Company
proposes to offer and sell for its own account in such
registration to the full extent of the Underwriter's
Maximum Number;
(2) Second, if the Underwriter's Maximum Number has not yet
been reached, there shall be included in such Incidental
Registration that number of Registrable Securities that
Holders have requested to be included in such Incidental
Registration to the full extent of the remaining portion
of the Underwriter's Maximum Number, allocated pro rata
among such Holders based on the number of Registrable
Securities that each such Holder desires to offer; and
(3) Third, if the Underwriter's Maximum Number has not yet
been reached, there shall be included in the Incidental
Registration that number of Registrable Securities that
any Persons other than Holders and the Company have
requested to be included in the Incidental Registration
to the full extent of the remaining portion of the
Underwriter's Maximum Number, allocated pro rata among
such other Persons based on the number of Registrable
Securities that each such Person desires to offer.
(e) The Company shall promptly notify each Holder if any of its
Registrable Securities will not be included in a Registration pursuant to
Section 4.1(d). If any securities are withdrawn from a Registration and if the
number of Registrable Securities to be included in such Registration was
previously reduced pursuant to Section 4.1(d), then the Company shall then offer
to all Holders the right to include additional Registrable Securities in such
Registration equal to the number of securities so withdrawn, with such
Registrable Securities to be allocated among the Holders requesting additional
inclusion on a pro rata basis.
(f) Selection of Underwriters. In a Requested Registration, the Holder(s)
-------------------------
requesting the Registration shall notify the Company that it proposes to dispose
of the Registrable Shares in an underwritten offering and the Company and such
11
Holder(s) shall agree, with each party acting in good faith, to jointly select
the representative of the underwriters from underwriting firms of national
reputation in the United States. In an Incidental Registration, the Company
shall select the representative of the underwriters from underwriting firms of
national reputation in the United States that are reasonably acceptable to
Holders participating in the Incidental Registration.
SECTION 4.2 Holdback Agreements.
(a) In connection with any underwritten public offering of Registrable
Securities by the Company under the Securities Act, no Holder shall effect
directly or indirectly (except as part of such underwritten Registration in
accordance with the provisions hereof or pursuant to a transaction exempt from
registration other than pursuant to Rule 144 or Rule 145 of the Securities Act)
any sale, distribution, short sale, loan, grant of options for the purchase of
or other disposition of any Registrable Securities for such period as the
representative of the underwriters requests, which period shall in no event
commence earlier than seven days prior to, or end more than 180 days after, the
date on which the registration statement related to such offering is declared
effective. The Company shall be entitled to instruct its transfer agent to place
stop transfer notations in its records to enforce this Section 4.2(a).
(b) The Company agrees (i) not to effect any public sale or distribution
of any Common Stock (other than pursuant to a registration statement on Form S-8
or any successor form), during the seven days prior to, and during the 180 days
after, the date on which the registration statement related to a Registration is
declared effective (except as part of such registration statement); and (ii)
that any agreement entered into after the date of this Agreement pursuant to
which the Company issues or agrees to issue any privately placed securities
shall contain a provision under which the holders of such securities agree not
to effect any public sale or distribution of any such securities during the
periods described in (i) above, in each case including a sale pursuant to Rule
144; provided, however, that the provisions of this paragraph 4.2(b) shall not
prevent the conversion or exchange of any securities pursuant to their terms
into or for other securities.
ARTICLE V
INDEMNIFICATION AND CONTRIBUTION
--------------------------------
SECTION 5.1 Indemnification.
(a) Indemnification by the Company. In connection with any Registration,
------------------------------
to the extent permitted by law, the Company shall and hereby does indemnify and
hold harmless each Holder that participates in such Registration, each such
Holder's legal counsel and independent accountants, each other Person who
participates as an underwriter in the offering or sale of securities (if so
required by such underwriter as a condition to including the Registrable
Securities of such Holders in such registration) and each other Person, if any,
who controls any such Holder or any such underwriter within the meaning of the
Securities Act (collectively, the "Indemnified Parties"), against any losses,
claims, damages, liabilities (or actions or proceedings, whether commenced or
threatened, in respect thereof) or expenses, joint or several, to which such
Holder, underwriter or other Person may become subject under the Securities Act
or otherwise, insofar as such losses, claims, damages, liabilities (or actions
or proceedings, whether commenced or threatened, in respect thereof) or expenses
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any registration statement under which the
12
offering and sale of such securities were registered under the Securities Act,
any registration statement or prospectus, or any document incorporated therein
by reference, or any amendment or supplement thereto, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein in light of the circumstances in which
they were made not misleading, or arise out of any violation by the Company of
any rule or regulation promulgated under the Securities Act or state securities
law applicable to the Company and relating to action or inaction required of the
Company in connection with any such registration. The Company shall reimburse
the Indemnified Parties for any legal or any other expenses reasonably incurred
by them in connection with investigating or defending any such losses, claims,
damages or liabilities (or actions or proceedings, whether commenced or
threatened, in respect thereof); provided, however, that the indemnity agreement
contained in this Section 5.1(a) shall not apply to amounts paid in settlement
of any such loss, claim, damage, liability (or action or proceeding, whether
commenced or threatened, in respect thereof) or expense if such settlement is
effected without the consent of the Company (which consent shall not be
unreasonably withheld); and provided, further, that the Company shall not be
liable to any Indemnified Party in any such case to the extent that any such
loss, claim, damage, liability (or action or proceeding in respect thereof) or
expense arises solely out of or is based upon any untrue statement or alleged
untrue statement or omission or alleged omission made in such registration
statement, prospectus, or any document incorporated therein by reference, or any
such amendment or supplement thereto, in reliance upon and in conformity with
information furnished to the Company in writing by any Indemnified Party
specifically for use therein.
(b) Indemnification by Holders. As a condition to including any
--------------------------
Registrable Securities in any Registration, to the extent permitted by law, each
Holder shall and does hereby indemnify and hold harmless (in the same manner and
to the same extent as set forth in Section 5.1(a)) the Company, each director of
the Company, each officer of the Company and each other Person, if any, who
controls the Company within the meaning of the Securities Act, with respect to
any statement or alleged statement in or omission or alleged omission from any
registration statement under which the offering and sale of such securities were
registered under the Securities Act, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, if and only if and to the extent that such statement or
alleged statement or omission or alleged omission was made in reliance upon and
in conformity with information furnished in writing to the Company directly by
such Person for use in connection with the registration statement, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto; provided, however, that the
obligation of any such Holder under this Section 5.1(b) shall be limited to an
amount equal to the gross proceeds received by such Holder upon the sale of
Registrable Securities sold in such Registration, unless such liability arises
out of or is based upon such Holder's willful misconduct.
(c) Notices of Claims, etc. Promptly after receipt by an Indemnified Party
----------------------
of notice of the commencement of any action, proceeding, claim, investigation or
other similar event involving a claim referred to in this Section 5.1, if a
claim in respect thereof is to be made against a party required to provide
indemnification (an "Indemnifying Party"), the Indemnified Party shall give
written notice to the latter of the commencement of such action; provided,
however, that the failure of any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its obligation under this
Section 5.1, except to the extent that the Indemnifying Party is actually
prejudiced by such failure to give notice. In case any such action is brought
13
against an Indemnified Party, unless in the reasonable judgment of such
Indemnified Party a conflict of interest between such Indemnified Party and the
Indemnifying Party may exist in respect of such claim, then each Indemnifying
Party shall be entitled to participate in and to assume the defense thereof,
jointly with any other Indemnifying Party similarly notified to the extent that
it may wish, with counsel reasonably satisfactory to such Indemnified Party.
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 for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof other than
reasonable costs of investigation. No Indemnifying Party shall consent to entry
of any judgment or enter into any settlement without the consent of the
Indemnified Party if such judgment or settlement does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
(d) Other Indemnification. Indemnification similar to that specified in
---------------------
this Section 5.1 (with appropriate modifications) shall be given by the Company
and each Holder that participates in a Registration to each other and to any
underwriter, as applicable, with respect to any required registration or other
qualification of securities under any United States federal or state law or
regulation, other than the Securities Act, of any United States governmental
authority.
(e) Indemnification Payment. The indemnification required by this Section
-----------------------
5.1 shall be made by periodic payments of the amount thereof during the course
of the investigation or defense, as and when bills are received and as a loss,
claim, damage, liability or expense is incurred.
(f) Survival of Obligations. The obligations of the Company and Holders
-----------------------
under this Section 5.1 and Section 5.2 shall survive the completion of any
offering of Registrable Securities.
SECTION 5.2 Contribution. If the indemnification provided for in Section
5.1 is unavailable or insufficient to hold harmless an Indemnified Party, then
each Indemnifying Party shall contribute to the amount paid or payable to such
Indemnified Party as a result of the losses, claims, damages or liabilities
referred to in Section 5.1 an amount or additional amount, as the case may be,
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party or Indemnifying Parties, on the one hand, and the Indemnified
Party, on the other, in connection with the statements or omissions that
resulted in such losses, claims, demands or liabilities as well as any other
relevant equitable considerations. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Indemnifying Party or Indemnifying
Parties, on the one hand, or the Indemnified Party, on the other, and the
relative intent, knowledge, access to information and opportunity of the parties
to correct or prevent such untrue statement or omission. The Company and CNI
agree that it would not be just and equitable if contribution pursuant to this
Section 5.2 were determined by pro rata allocation or by any other method of
allocation that does not take account of the equitable considerations referred
to in the immediately preceding sentence. The amount paid to an Indemnified
Party pursuant to this Section 5.2 shall be deemed to include any legal or other
expenses reasonably incurred by such Indemnified Party in connection with
investigating or defending any action or claim subject to this Article V. No
Person guilty of fraudulent misrepresentation within the meaning of Section
11(f) of the Securities Act shall be entitled to contribution from any Person
that was not guilty of such fraudulent misrepresentation.
14
ARTICLE VI
COMPANY COVENANTS
-----------------
SECTION 6.1 Covenants Relating to Rule 144; Reports Under Exchange Act. With a
view to (a) making available the benefits of certain rules and regulations of
the Commission that may at any time permit the sale of securities of the
Company to the public without registration after such time as a public market
exists for the Common Stock and (b) causing the Company to be and remain
eligible to use Form S-3 under the Securities Act, the Company shall:
(i) Make and keep public information available in accordance with
Rule 144 under the Securities Act at all times after the
effective date of the first registration under the Securities
Act filed by the Company for an offering of its securities to
the general public;
(ii) Take such action, including the voluntary registration of the
Common Stock under Section 12 of the Exchange Act, as
necessary to enable the Company to utilize Form S-3 for the
sale of Registrable Securities;
(iii) Use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company
under the Securities Act and the Exchange Act; and
(iv) Furnish to each Holder forthwith upon request, so long as such
Holder owns any Registrable Securities, a written statement by
the Company as to its compliance with the reporting
requirements of Rule 144 under the Securities Act, the
Securities Act and the Exchange Act, a copy of the most recent
annual or quarterly report of the Company and such other
reports and documents of the Company as such Holder may
reasonably request in availing itself of any rule or
regulation of the Commission that may allow such Holder to
sell any Registrable Securities without registration.
SECTION 6.2 Other Registration Rights. The Company may from time to time
grant additional registration rights to other holders of Common Stock, provided
that no such registration rights shall be senior to the rights granted under
this Agreement with respect to registration and cutback (but that such rights
may at all times be pari passu).
ARTICLE VII
MISCELLANEOUS
-------------
SECTION 7.1 Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
parties. Either party to this Agreement may (i) extend the time for the
performance of any of the obligations or other acts of the other party, or (ii)
waive compliance with any of the agreements or conditions of the other party
15
contained herein. Any such extension or waiver shall be valid only if set forth
in an instrument in writing signed by the party to be bound thereby. Any waiver
of any term or condition shall not be construed as a waiver of any subsequent
breach or a subsequent waiver of the same term or condition, or a waiver of any
other term or condition, of this Agreement. The failure of any party to assert
any of its rights hereunder shall not constitute a waiver of any of such rights.
SECTION 7.2 Successors and Assigns. All covenants and agreements contained
in this Agreement by or on behalf of either party hereto shall bind and inure to
the benefit of the respective successors and assigns of such party hereto,
whether so expressed or not, including subsequent Holders of Registrable
Securities.
SECTION 7.3 Entire Agreement. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof and
supersede all prior agreements and undertakings, both written and oral, among
the parties with respect to the subject matter hereof.
SECTION 7.4 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed duly given (i) on the date of delivery if
delivered personally, (ii) on the date of confirmation of receipt (or, the first
business day following such receipt if the date is not a business day or the
receipt is after 5 p.m.) of transmission by facsimile, or (iii) on the date of
confirmation of receipt (or, the first business day following such receipt if
the date is not a business day or the receipt is after 5 p.m.) if delivered by
courier. Subject to the foregoing, all notices hereunder shall be delivered as
set forth below, or pursuant to such other instructions as may be designated in
writing by the party to receive such notice:
If to CNI: With a courtesy copy (which shall not
Columbus Nova Investments VIII Ltd. constitute notice to CNI) to:
βββ βββββββ ββββββ Skadden, Arps, Slate, βββββββ & ββββ LLP
38th Floor An der Welle 5
βββ ββββ, ββ βββββ 60322 Frankfurt am Main
United States Germany
Attention: ββββ ββββββ Attention: ββββββ βββββββ
Facsimile: ββ-βββ-βββ-ββββ Facsimile: βββ-ββ-ββββββββ
If to Company: With a courtesy copy (which shall not
Moscow CableCom Corp. constitute notice to the Company) to:
βββ ββββ ββββββ
βββββ ββββ ββββββ β. βββββ, ββ.
βββ ββββ, ββ βββββ ββ ββββββββββ ββββ
Attention: ββββββ βββββ ββββ ββββ, ββ βββββ
Facsimile: ββ-βββ-βββ-ββββ Facsimile: ββ-βββ-βββ-ββββ
Any party may change the address to which notices, requests, demands and other
communications hereunder are to be delivered by giving the other party notice in
the manner herein set forth.
SECTION 7.5 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, without giving
effect to any choice or conflict of law provision or rule (whether of the State
of New York or any other jurisdiction) that would cause the application of the
Laws of any jurisdiction other than the State of New York.
16
SECTION 7.6 Arbitration. Any dispute, controversy or claim between the
parties arising out of or relating to this Agreement or the breach, termination
or validity hereof shall be referred to and finally resolved by arbitration in
New York, New York, to the exclusion of all other procedures, in accordance with
the rules then in force of the American Arbitration Association, which are
deemed to be incorporated by reference into this Section 7.6. In any such
arbitration, three arbitrators shall be appointed in accordance with the such
rules. Where the rules of the American Arbitration Association do not provide
for a particular situation, the arbitrators shall determine the course of action
to be followed. To the maximum extent permitted by applicable law, the parties
agree not to assert any rights to have any court rule on a question of law
affecting the arbitration or to hear any appeal from or entertain any judicial
review of the arbitral award.
SECTION 7.7 Equitable Remedies. The parties agree that irreparable harm
would occur in the event that any of the agreements and provisions of this
Agreement were not performed fully by the parties in accordance with their
specific terms or conditions or were otherwise breached, and that money damages
are an inadequate remedy for breach of this Agreement because of the difficulty
of ascertaining and quantifying the amount of damage that would be suffered by
the parties in the event that this Agreement were not performed in accordance
with its terms or conditions or were otherwise breached. It is accordingly
hereby agreed that the parties shall be entitled to an injunction or injunctions
to restrain, enjoin and prevent breaches of this Agreement by the other party
and to enforce specifically such terms and conditions of this Agreement, such
remedy being in addition to and not in lieu of any other rights and remedies to
which the other party is entitled to at law or in equity.
SECTION 7.8 Parties in Interest. This Agreement is for the benefit of any
Holder irrespective of whether such Holder is a signatory to this Agreement,
subject to (a) the provisions respecting the minimum numbers or percentages of
shares of Registrable Securities required in order to entitle Holders to certain
rights, or take certain actions, contained herein and (b) the limitations set
forth in the agreement with the Company granting rights to register Registrable
Securities to which any such Holder is a party.
SECTION 7.9 Severability. If any provision of this Agreement is invalid,
illegal or incapable of being enforced by any law or public policy, all other
provisions of this Agreement shall nevertheless remain in full force and effect
and the application of such provision to other Persons or circumstances will be
interpreted so as reasonably to effect the intent of the parties hereto so long
as the economic or legal substance of the transactions contemplated hereby is
not affected in any manner materially adverse to any party. Upon such
determination that any provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby are consummated as originally contemplated to the greatest extent
possible.
SECTION 7.10 No Inconsistent Agreements. The Company shall not enter into
any agreement with respect to its securities that is inconsistent with the
rights granted to CNI in this Agreement.
SECTION 7.11 Headings.
The descriptive headings contained in this Agreement are for convenience of
reference only and shall not affect in any way the meaning or interpretation of
this Agreement.
17
SECTION 7.12 Construction; Adequate Counsel.
(a) Construction. The parties have participated jointly in the
------------
negotiation and drafting of this Agreement. In the event that an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties, and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of
any of the provisions of this Agreement.
(b) Adequate Counsel. Each of the Company and CNI hereby represents and
----------------
warrants that it and its legal counsel have adequate information regarding the
terms of this Agreement, the scope and effect of the transactions contemplated
hereby and all other matters encompassed by this Agreement to make an informed
and knowledgeable decision with regard to entering into this Agreement.
SECTION 7.13 Counterparts.
This Agreement may be executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same instrument.
SECTION 7.14 Interpretation.
References in this Agreement to articles, sections, paragraphs, clauses and
exhibits are to articles, sections, paragraphs, clauses and exhibits in or to
this Agreement unless otherwise indicated. Whenever the context may require, any
pronoun includes the corresponding masculine, feminine and neuter forms. Any
term defined by reference to any agreement, instrument or document has the
meaning assigned to it whether or not such agreement, instrument or document is
in effect. Any reference to any federal, state, local or foreign statute or law
shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. The words "include",
"includes" and "including" are deemed to be followed by the phrase "without
limitation". Unless the context otherwise requires, any agreement, instrument or
other document defined or referred to herein refers to such agreement,
instrument or other document as from time to time amended, supplemented or
otherwise modified from time to time. Unless the context otherwise requires,
references herein to any Person include its successors and assigns.
18
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
MOSCOW CABLECOM CORP.
By: _________________________________
Name: _________________________________
Title: _________________________________
COLUMBUS NOVA INVESTMENTS VIII LTD.
By: _________________________________
Name: _________________________________
Title: _________________________________
19
