Exhibit 10
June 22, 1997
Telesat Cablevision, Inc.
00000 X.X. Xxxxxxx Xxx
Xxxxx 000
X. Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Re: Series C Preferred Stock
Gentlemen:
In connection with that certain Stock Purchase Agreement
between and among Adelphia Communications Corporation ("Adelphia"),
Telesat Cablevision, Inc. ("Telesat") and Highland Holdings (the
"Private Company") of even date herewith (the "Stock Purchase
Agreement"), it is our understanding that Telesat and the Private
Company, in their capacities as holders of the shares of the Series C
Cumulative Convertible Preferred Stock of Adelphia (the "Series C
Preferred Stock") issued pursuant to the Stock Purchase Agreement
(the "Shares"), have agreed to the following terms and conditions
related to their interests in the Shares.
1. Series C Directors. With respect to the right
of a majority of holders of the outstanding shares of the Series C
Preferred Stock to elect two directors (the "Series C Directors") to
fill the Adelphia Board of Directors seats that would be created upon
the occurrence of certain Voting Rights Trigger Events as such are
described in Section 6(b) of Adelphia's Series C Preferred Stock
Certificate of Designations (the "Certificate of Designations"),
Telesat and the Private Company agree that for as long as Telesat has
not sold, transferred, assigned (other than a sale, transfer or
assignment to an Affiliate of Telesat) or converted more than 50% of
the Shares it is purchasing pursuant to the Stock Purchase Agreement
(the "Telesat Shares"): (a) the Private Company agrees to vote its
Shares in favor of at least one Telesat Series C Director nominee for
as long as Telesat and the Private Company together own a majority of
the outstanding Shares and (b) Telesat and the Private Company will
not vote to fill the second Series C Director seat; provided,
however, that if the Private Company sells, transfers or assigns, to
one or more third parties that are not part of the Rigas Family (as
defined below) more than 62.5% of the Shares which were initially
issued to the Private Company (the "Company Shares"), the agreement
contained in clause (b) shall have no further force or effect.
2. Right of Co-sale; Control Transfer.
(a) At least 30 days prior to the Private Company making any
Control Transfer, the Private Company (the "Transferring
Shareholder") shall deliver a written notice (a "Sale Notice") to
Telesat, which shall disclose in reasonable detail the proposed
number of Company Shares to be transferred (the "Offered Shares"),
the proposed terms and conditions of the Control Transfer and the
identity of the prospective transferee(s) (if known) subject to any
confidentiality terms agreed upon by the Transferring Shareholder and
the prospective transferee(s). Telesat may elect to participate in
the proposed Control Transfer by delivering written notice (the "Co-
Sale Election") to the Transferring Shareholder(s) within 15 days
after delivery of the Sale Notice.
(b) If Telesat elects to participate in such
Control Transfer, then Telesat will be entitled to sell in such
proposed Control Transfer, at the per Share price stated in the Sale
Notice, up to that number of Shares equal to (i) the Offered Shares,
multiplied by (ii) a fraction, the numerator of which shall be the
number of Shares then owned by Telesat, and the denominator of which
shall be the number of Shares then owned by Telesat plus the number
of Shares owned by the Transferring Shareholder; provided, that to
the extent the Transferring Shareholder is required in accordance
with the terms of the proposed Control Transfer to convert the
Company Shares being sold into Class A Common Stock of Adelphia, par
value $.01 per share ("Company Converted Class A Common Shares"),
prior to the transfer, then Telesat shall also be required to
convert prior to such transfer in order to participate in the Control
Transfer; provided, further, that the formula previously set forth in
this Section 2(b) shall be used to calculate the number of Shares to
be converted (shares resulting from a conversion of Shares by Telesat
to be referred to as "Telesat Converted Class A Common Shares") and
that Telesat will be entitled to sell in the proposed Control
Transfer. Except as expressly set forth in Sections 2(b) and 3(b)
hereof, Telesat shall not have any co-sale rights pursuant to this
Letter Agreement with respect to any Class A Common Stock that it
holds as a result of the conversion of the Shares or otherwise.
(c) Telesat shall state in its Co-Sale Election
the number of Telesat Shares or Telesat Converted Class A Common
Shares, as applicable, it has elected to sell in the proposed Control
Transfer. The Transferring Shareholder shall use its best efforts to
obtain the agreement of the prospective transferee(s) to the
participation of Telesat in any contemplated Control Transfer to the
extent provided in the Co-Sale Election, and the Transferring
Shareholder shall not effect a Control Transfer of any of the
Company's Shares to any prospective transferee(s) if such
transferee(s) will not permit participation by Telesat to the extent
provided by this Section 2.
(d) For purposes of this Agreement, a "Control
Transfer" means any single sale, transfer, assignment or other
disposal or a related series thereof (whether with or without
consideration and whether voluntarily or involuntarily or by
operation of law, but excluding a bona fide pledge to secure
indebtedness) or series of related sales, transfers, assignments or
other disposals to a party that is not a member of the Rigas Family
of at least 50% of the Company Shares initially issued to the Private
Company; provided, however, that if a Sale Notice has been delivered
with respect to a proposed Control Transfer and such Control Transfer
is subsequently consummated, no subsequent transfers shall be deemed
to be a Control Transfer.
3. Right of Co-Sale; Change of Control. (a) At
least 30 days prior to a proposed Change of Control, the Rigas Family
shall deliver a written notice (a "Change of Control Notice") to
Telesat, which shall disclose in reasonable detail the proposed
transaction resulting in the Change of Control; provided that Telesat
agrees to any confidentiality terms agreed upon by affected members
of the Rigas Family and the prospective acquiror. If the Change of
Control involves the sale, transfer or assignment of the Company
Shares or Company Converted Class A Common Shares, Telesat may elect
to participate in the proposed Change of Control by delivering
written notice (the "Participation Election") to the affected members
of the Rigas Family within 15 days after delivery of the Change of
Control Notice.
(b) If Telesat elects to participate in such
Change of Control, Telesat will be required to convert all of its
Shares into Class A Common Stock in order to participate. Telesat
will then be entitled to sell not less than all of the Telesat
Converted Class A Common Shares at the price per share stated in the
Change of Control Notice.
(c) The affected members of the Rigas Family
shall use their best efforts to obtain the agreement of the
prospective acquiror to the participation of Telesat in any
contemplated Change of Control. To the extent it is not possible to
obtain the agreement of the prospective acquiror, the Rigas Family or
any member thereof, at Telesat s election,shall be required to
purchase such Telesat Shares or Telesat Converted Class A Common
Shares at the price stated in the Change of Control Notice (or, if no
price is stated in such Change of Control Notice, at the greater of
(i) Fair Market Value, and (ii) (x) if such purchase is to occur
prior to August 1, 2000, at a price per share equal to the
Liquidation Preference (as defined in the Certificate of
Designations), or (y) if such purchase is to occur on or after August
1, 2000, at a price per share equal to the Applicable Redemption
Price, as defined in the Certificate of Designations) or will not
effect a Change of Control to the extent the Rigas Family or any
member of thereof can control the occurrence such Change of Control.
4. Voting of Shares. The Private Company hereby agrees
that it shall vote the Company Shares which it holds in the manner
directed by Telesat in connection with proposals requiring the
consent of the holders of the Shares pursuant to Sections 6(f), (g)
and (h) of the Certificate of Designations; provided, however, that
the agreement contained in this Section 4 shall be of no further
force or effect (a) upon the consummation of a Change of Control or a
Control Transfer, or (b) in the event that Telesat sells, transfers,
assigns or otherwise disposes of, or converts into Class A Common
Stock, at least 50% of the shares of Series C Preferred Stock
initially issued to Telesat.
5. Definitions. For the purposes of this Letter
Agreement, the following terms shall have the meanings indicated:
(a) "Change of Control" means any occurrence
resulting in (i) a P-person other than a member of the Rigas Family
becoming the beneficial owner of more than 35% of the total voting
power required to elect or designate for election a majority of
Adelphia's Board of Directors and attaching to the then outstanding
voting capital stock of Adelphia and (ii) no member of the Rigas
Family at such time being the beneficial owner of more than 35% of
the total voting power required to elect or designate for election a
majority of Adelphia's Board of Directors and attaching to the then
outstanding voting capital stock of Adelphia; provided, however, that
if a Change of Control Notice has been delivered with respect to a
proposed Change of Control and such Change of Control is subsequently
consummated, no subsequent transfers shall be deemed to be a Control
Transfer.
(b) "Immediate Family" means the spouse, child,
grandchild, grandparent, lineal descendant or ancestor, mother,
father, sister, brother, niece or nephew, (whether natural or
adopted) of a specified Person or any spouse of the foregoing.
(c) "Person" means an individual, a partnership,
a corporation, a business trust, a joint stock company, a group
(within the meaning of Section 13(d) under the Securities Exchange
Act of 1934, as amended), a trust, any unincorporated association, a
joint venture, a governmental authority or any other entity of
whatever nature.
(d) "Rigas Family" means Xxxx X. Xxxxx, Xxxxx X.
Xxxxx, Xxxxxxx X. Xxxxx, Xxxxxxx X. Xxxxx, Xxxxx X. Xxxxx, Xxxxx X.
Xxxxx, any of the Immediate Family of any of them, any of the
respective estates or lineal descendants of any such person, any
trust created for the benefit of any such persons (so long as one or
more of the foregoing persons is the controlling trustee) and, while
and to the extent they are serving in such capacity, the executors,
administrators or personal representatives of such persons, and any
corporation, partnership or other person owned or controlled directly
or indirectly by one or more members of the Rigas Family.
(e) "Fair Market Value" means the fair market
value of the securities in question (i) as mutually agreed to by
Telesat and the Private Company, or (ii) if no such agreement is
reached within seven (7) days of Telesat's election as described
above, as determined by an appraisal conducted by two independent
appraisers, one selected by Telesat, and one by the Private Company;
provided, however, that if either the Private Company or Telesat
fails to choose an appraiser prior to fifteen (15) days after
receiving notice of the other party's choice of an independent
appraiser, such other party's choice of independent appraiser shall
be the sole appraiser for purposes of this letter. In the event that
such two appraisers are unable to agree on the Fair Market Value
within thirty (30) days following their selection, they shall jointly
appoint a third independent appraiser whose determination shall be
issued within thirty (30) days thereafter and shall be final and
binding. The Private Company and Telesat shall each bear the cost of
the respective appraiser selected by them, and the cost of the
appraisal conducted by a third appraiser shall be borne equally by
the Private Company and Telesat.
6. Assignment. Except as provided below, this
Letter Agreement may not be assigned in whole or in part and shall
not be binding upon transferees of the Shares, other than transferees
who control, are controlled by or are under common control with
either of the parties hereto ("Affiliates"). Either party may assign
this Agreement to an Affiliate of such party ("Assignee"); provided
however that such assignment shall not be effective until the
Assignee delivers to the non-assigning party an executed assumption
and undertaking pursuant to which the Assignee agrees to be bound by
and perform all of the obligations of the assigning party.
7. Counterparts. This Letter Agreement may be
executed simultaneously in separate counterparts, any one of which
need not contain the signatures of more than one party, but all such
counterparts taken together shall constitute one and the same Letter
Agreement. Delivery of executed signature pages by facsimile
transmission shall constitute effective and binding execution and
delivery of this Letter Agreement.
8. Governing Law. This Letter Agreement shall be
interpreted and construed in accordance with the laws of the
Commonwealth of Pennsylvania, without regard to its choice of law
provisions.
9. Notices. All notices, demands or other
communications to be given or delivered under or by reason of the
provisions of this Letter Agreement shall be in writing and shall be
deemed to have been given when delivered personally to the recipient,
sent to the recipient by facsimile transmission (as evidenced by a
confirmation mechanically produced simultaneously with the completion
of such transmission), reputable express courier service (charges
prepaid) or mailed to the recipient by certified or registered mail,
return receipt requested and postage prepaid. Such notices, demands
and other communications shall be sent to the Telesat and the Private
Company and at the addresses and telecopy numbers set forth in the
Stock Purchase Agreement, or to such other address or to the
attention of such other person as the recipient party has specified
by prior written notice to the sending party. For the purpose of
this notice provision, the Rigas Family shall be treated the same as
the Private Company.
If the foregoing is also your understanding of our
agreement, please sign, date and return a copy to us of this letter.
Very truly yours,
HIGHLAND HOLDINGS
By: /s/ Xxxxxxx X. Xxxxx
Its: Executive Vice President
ACCEPTED and AGREED TO, intending
to be legally bound, as of this
___ day of July, 1997:
TELESAT CABLEVISION, INC.
By: /s/ X. X. Xxxxxx
Its: Vice President
