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EXHIBIT 10.6
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of September 9, 1999 (this
"Agreement"), among Liberty Digital, Inc., a Delaware corporation (the
"Company"), and Liberty Media Corporation, a Delaware corporation ("Liberty ").
WITNESSETH
WHEREAS, pursuant to the terms of the Contribution Agreement, dated as
of April 23, 1999, as amended (the "Contribution Agreement"), among the Company,
Liberty, and certain direct and indirect subsidiaries of Liberty, the Company
has issued to Liberty DMX, Inc., a wholly owned subsidiary of Liberty, an
aggregate of (i) 109,450,167 shares of the Company's Series B Common Stock, par
value $.01 per share (the "Series B Common Stock"), and (ii) 150,000 shares of
the Company's Series B Convertible Preferred Stock, par value $.01 per share
(the "Series B Preferred Stock");
WHEREAS, each share of Series B Preferred Stock is initially
convertible at the option of the holder into 171.674 shares of Series B Common
Stock (subject to adjustment);
WHEREAS, each share of Series B Common Stock is convertible into one
share of the Company's Series A Common Stock, par value $.01 per share (the
"Series A Common Stock" and together with the shares of Series B Common Stock,
the "Common Stock");
WHEREAS, in addition to the shares being issued to it pursuant to the
Contribution Agreement, as of the date hereof Liberty is also the beneficial
owner of shares of Series A Common Stock and shares of Series B Common Stock;
and
WHEREAS, in accordance with the Contribution Agreement, the Company and
Liberty desire to enter into this Agreement to provide Liberty and the members
of the Liberty Group (as defined below) with certain registration rights with
respect to its shares of Common Stock (including any shares of Common Stock
issuable upon conversion of shares of Series B Preferred Stock).
NOW THEREFORE, in consideration of the premises and of the mutual
agreements and covenants hereinafter set forth and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
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1. Certain Definitions.
Agreement: As defined in the Preamble.
Business Day: Any day other than a Saturday, Sunday or other day on
which commercial banking institutions in New York, New York are required or
authorized by law to be closed.
Commission: The Securities and Exchange Commission, or any other
federal agency at the time administering the Securities Act or the Exchange Act.
Company: As defined in the Preamble.
Company Indemnified Parties: As defined in Section 6(b).
Company Notice: As defined in Section 2(b)(i).
Control: means, with respect to any Person, the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether by the ownership of voting securities, by
contract or otherwise.
Controlled Affiliate means, with respect to any Person, any other
Person Controlled by such first Person.
Demand Notice: As defined in Section 2(a).
Demand Registration: As defined Section 2(a).
Disadvantageous Condition: As defined in Section 2(e).
Exchange Act: The Securities and Exchange Act of 1934, as amended, or
any successor federal statute, and the rules and regulations of the Commission
promulgated thereunder, as they each may, from time to time, be in effect.
Incidental Registration: As defined in Section 3(a).
Indemnified Party: As defined in Section 6(c).
Indemnifying Party: As defined in Section 6(c).
Liberty Group: Liberty and its direct and indirect Controlled
Affiliates (other than the Company and the Company's Controlled Affiliates).
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Losses: As defined in Section 6(a).
Market Value: As defined in Section 2(b)(ii).
Other Stockholders: As defined in Section 2(b)(i).
Person: means a human being or a corporation, general or limited
partnership, limited or unlimited liability company, trust, association,
unincorporated organization, governmental authority or other entity.
Prospectus: The prospectus included in a Registration Statement as of
the date it becomes effective under the Securities Act and, in the case of
references to the Prospectus as of a date subsequent to the effective date of
the Registration Statement, as amended or supplemented as of such date,
including all documents incorporated by reference therein, each as amended, and
each applicable prospectus supplement relating to the offering and sale of any
of the Registrable Shares pursuant to such Registration Statement.
Registrable Shares: Shares of Series A Common Stock and Series B Common
Stock, and any other shares of capital stock of the Company issued in respect of
(or that become issuable upon conversion of shares of Series B Preferred Stock
or Series B Common Stock) shares of Series A Common Stock or Series B Common
Stock as a result of stock splits, stock dividends or other distributions,
reclassifications, recapitalizations, mergers, consolidations, reorganizations
or similar events. References in this Agreement to amounts or percentages of
Registrable Shares as of or on any particular date shall be deemed to refer to
amounts or percentages after giving effect to any applicable events contemplated
by the preceding sentence. Any Registrable Share will cease to be a Registrable
Share when (i) a registration statement covering such Registrable Share has been
declared effective by the Commission and such Registrable Share has been
disposed of pursuant to such effective registration statement; (ii) such
Registrable Share is sold by a Stockholder in a transaction in which
registration under the Securities Act is not required and such Stockholders'
rights hereunder with respect to such Registrable Share are not assigned to the
transferee thereof in accordance with the terms and provisions hereof; or (iii)
two years after the date of a transfer of Registrable Shares to any person other
than (x) a member of the Liberty Group or (y) a Person who immediately after
such transfer Controls the Company.
Registrable Shares then outstanding: The sum of, without duplication,
(i) the number of shares of Common Stock (or other securities of the Company)
outstanding that are Registrable Shares and (ii) the number of shares of Common
Stock (or other securities of the Company) that would be Registrable Shares upon
the exercise or conversion of other outstanding securities of the Company for or
into shares of such Common Stock (or other securities of the Company),
including, without limitation, upon conversion of shares of Series B Preferred
Stock.
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Registration Expenses: As defined in Section 5(a).
Registration Statement: A registration statement of the Company under
the Securities Act on any form for which the Company then qualifies and which
permits the sale thereunder of the number and type of Registrable Shares (and
any other securities of the Company) to be included therein in accordance with
this Agreement by the applicable sellers in the manner described therein. The
term "Registration Statement" shall also include all exhibits and financial
statements and schedules and documents incorporated by reference in such
Registration Statement when it becomes effective under the Securities Act, and
in the case of the references to the Registration Statement as of a date
subsequent to the effective date, as amended or supplemented as of such date.
Requesting Stockholder: As defined in Section 2(a).
Securities Act: The Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the Commission
promulgated thereunder, as they each may, from time to time, be in effect.
Selling Stockholder: Any Stockholder whose Registrable Shares are
included at the request of such Stockholder in any Registration Statement
pursuant to Section 2 or Section 3.
Series A Common Stock: As defined in the Preamble.
Series B Common Stock: As defined in the Preamble.
Series B Preferred Stock: As defined in the Preamble.
Stockholder: Liberty, any member of the Liberty Group owning
Registrable Shares, any transferee to which Registrable Shares have been
transferred in a transaction in which rights hereunder have been assigned
(provided that such transferee has executed an instrument, in form and substance
reasonably acceptable to the Company, assuming the obligations of a Stockholder
hereunder), and any other Person (x) to which Registrable Shares have been
pledged or (y) which has a security or other interest in Registrable Shares, in
each case, in connection with or as a result of any financing or hedging
transaction.
Stockholder Indemnified Parties: As defined in Section 6(a).
2. Demand Registration.
(a) Subject to Section 2(b)(ii) each Stockholder shall at any time
have the right to request (a "Demand Registration") that the Company
register under the Securities Act any and all of its Registrable Shares
upon the terms and subject to the conditions set forth in this
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Agreement. One or more Stockholders (each, a "Requesting Stockholder")
holding Registrable Shares may elect to exercise the right to request a
Demand Registration pursuant to this Section 2 by furnishing the
Company with notice of such request, (a "Demand Notice") which sets
forth the type (Series A Common Stock or Series B Common Stock) and
number of Registrable Shares requested to be so registered and such
Stockholder(s) preferred method of distribution of such Registrable
Shares, and upon receipt of such Demand Notice, the Company shall as
soon as practicable after the date on which the Company Notice is given
(and in any event within 45 days thereafter), file with the Commission
and use its commercially reasonable efforts to cause to become
effective as promptly as practicable, a Registration Statement which
shall cover the Registrable Shares requested to be registered in the
manner set forth above. If the Requesting Stockholder is a member of
the Liberty Group, such Requesting Stockholder's Demand Notice may
specify shares of Series B Common Stock as the Registrable Shares for
which it is requesting registration, and the Company's obligations in
respect thereof shall include its obligation to use its commercially
reasonable efforts to cause such shares of Series B Common Stock to be
registered under the Securities Act in accordance with the Agreement
and to cause the shares of Series B Common Stock to be listed for
trading on the same national securities exchange or interdealer
quotation system or other market as the shares of Series A Common Stock
are then listed or quoted. In the event that a Requesting Holder which
is not a member of the Liberty Group requests registration of
Registrable Shares which are shares of Series B Common Stock, the
Company shall, unless otherwise notified by Liberty, require that any
such shares of Series B Common Stock be converted into shares of Series
A Common Stock in connection with the registration and sale hereunder.
(b) (i) Upon receipt by the Company of a Demand Notice, the
Company shall promptly notify each other Stockholder (the "Other
Stockholders") of such request for registration and the Requesting
Stockholder(s)' preferred method of distribution. Upon receipt of such
notice from the Company (the "Company Notice"), each such Other
Stockholder may deliver to the Company a request to register any or all
of such Other Stockholder's Registrable Shares in the registration
described in the Company Notice; provided, that such notice is given
within ten (10) Business Days after the date on which the Company
Notice is given (with such request stating (i) the amount of
Registrable Shares to be so included, (ii) such Other Stockholder's
preferred method of distribution of such Registrable Shares, and (iii)
any other information that the Company Notice reasonably requests be
included in such notice from such Other Stockholder).
(ii) Notwithstanding the provisions of Section 2(a) hereof,
the Company shall not be required to effect any registration pursuant
to this Section 2 if (A) the request or requests for registration cover
an aggregate number of Registrable Shares having a Market Value of less
than $25,000,000 as of the date of the last of such requests (unless
such Demand Registration is in respect of all remaining Registrable
Shares owned by the Stockholders, in which case
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such dollar threshold shall not apply), (B) the Company has previously
filed six (6) registration statements under the Securities Act pursuant
to Section 2(a) of this Agreement, and such Registration Statements
were declared effective by the Commission and remained effective for
the period set forth in Section 4(a) hereof, (C) each Selling
Stockholder requesting registration could sell, in a single
transaction, under Rule 144 promulgated under the Securities Act or any
similar successor rule, the number of Registrable Shares such Selling
stockholder proposes to have registered pursuant to this Agreement, (D)
such request for registration is made prior to the earlier of the date
that is three (3) months after the effective date of the Company's most
recent Registration Statement pursuant to which Registrable Shares were
to be or were sold pursuant to this Section 2 or the date that is 45
days after the effective date of the Company's most recent registration
statement pursuant to which any Stockholders were entitled to request
that Registrable Shares be sold pursuant to Section 3, or (E) the
Company, in order to comply with such request, would be required to (1)
undergo a special interim audit or (2) prepare and file with the
Commission, sooner than would otherwise be required, pro forma or other
financial statements relating to any proposed or probable transaction.
"Market Value" as used in this Agreement shall mean, as to each
Registrable Share at any date, the average of the daily closing prices
for the Series A Common Stock for the twenty (20) consecutive trading
days before the day in question. The closing price for shares of Series
A Common Stock for each day shall be the last reported sale price or,
in case no such reported sale takes place on such day, the average of
the reported closing bid and asked prices, in either case on the
composite tape, or if such shares are not quoted on the composite tape,
on the principal United States securities exchange registered under the
Exchange Act, on which such shares are listed or admitted to trading,
or if they are not listed or admitted to trading on any such exchange,
the closing sale price (or the average of the quoted closing bid and
asked prices if no sale is reported) as reported by The Nasdaq Stock
Market, or any comparable system, or if such shares are not quoted on
The Nasdaq Stock Market, or any comparable system, the average of the
closing bid and asked prices as furnished by any market maker in the
securities of such class who is a member of the National Association of
Securities Dealers, Inc.
(c) If so requested by Stockholders requesting participation in a
public offering or distribution of Registrable Shares (each a "Selling
Stockholder") who own a majority of the Registrable Shares for which
registration is being requested, the public offering or distribution of
Registrable Shares under this Agreement shall be pursuant to a firm
commitment underwriting, the managing underwriter of which shall be an
investment banking firm selected and engaged by the Selling
Stockholders and approved by the Company, which approval shall not be
unreasonably withheld. The Company shall enter into the same
underwriting agreement as shall the Selling Stockholders, containing
representations, warranties, indemnities and agreements reasonably
satisfactory to the Company and not substantially different from those
customarily made by an issuer in underwriting agreements with respect
to secondary distributions. The Company, as a
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condition to fulfilling its obligations under this Agreement, may
require the underwriters to enter into an agreement in customary form
indemnifying the Company against any Losses that arise out of or are
based upon an untrue statement or an alleged untrue statement or
omission or alleged omission in the Registration Statement or the
Prospectus made in reliance upon and in conformity with written
information furnished to the Company by the underwriters specifically
for use in the preparation thereof.
(d) If the lead managing underwriter of any underwritten public
offering in connection with a Demand Registration determines in good
faith that the aggregate number of Registrable Shares to be offered
exceeds the number of shares that could be sold without having an
adverse effect on such offering (including the price at which the
Registrable Shares may be sold), then the number of Registrable Shares
to be offered for the accounts of the Selling Stockholders in such
offering shall be reduced or limited on such basis as the Selling
Stockholders shall agree or, absent such an agreement, on a pro rata
basis in proportion to the respective numbers of Registrable Shares
requested to be included in such offering by such Selling Stockholders,
to the extent necessary to reduce the total number of shares to be
included in such offering to the amount recommended by such lead
managing underwriter; provided, that if in connection with such Demand
Registration securities other than Registrable Shares are being offered
(whether for the account of the Company or for any stockholder of the
Company not exercising rights under this Section 2), such reduction
shall be made (i) first, from such securities of the Company other than
Registrable Shares and (ii) second, from the number of Registrable
Shares requested to be included in such offering by the applicable
Selling Stockholders, on such basis as such Stockholders shall agree,
or absent such an agreement, on a pro rata basis.
(e) The Company shall be entitled to postpone, for a reasonable
period of time, but in no event in excess of 90 days (subject to
reduction as provided below) after its receipt of a Demand Notice, the
filing of any Registration Statement, if at any time prior to the
filing of such Registration Statement the Board of Directors of the
Company determines, in its reasonable business judgment, that such
registration and offering would materially interfere with or otherwise
adversely affect in any material respect any financing, acquisition,
corporate reorganization, or other material transaction or development
involving the Company or its Controlled Affiliates or would require
disclosure of information that the Board of Directors determined in its
reasonable business judgment should not be disclosed (a
"Disadvantageous Condition") and gives the Selling Stockholders notice
of such determination; provided, that the Company may postpone its
obligations under this Agreement (including in reliance on Section
4(b)) by reason of the existence of one or more Disadvantageous
Conditions only twice during any twelve month period. In the event of
such postponement, the Company shall file such Registration Statement
as soon as practicable after the Board of Directors of the Company
shall determine, in its reasonable business judgment, that such
registration and offering would not result in such
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Disadvantageous Condition (but in no event later than ninety (90) days
after the date of the applicable Demand Notice; provided, that the
aggregate period during which the Company's obligations shall be so
suspended as a result of all determinations of Disadvantageous
Conditions and pursuant to Section 4(b) in any twelve month period
shall not exceed 180 days). If the Company shall postpone the filing of
any Registration Statement, Selling Stockholders holding in the
aggregate 50% or more of the Registrable Shares requested to be
included in such Registration Statement shall have the right to
withdraw the Selling Stockholders' request for such Demand Registration
by giving notice to the Company at any time following said notice by
the Company. Such withdrawal request shall be deemed to apply to all
Selling Stockholders that had requested to participate in such
registration.
(f) A Demand Registration shall not be deemed to have been
effected until the applicable Registration Statement shall have become
effective under the Securities Act (and not subject to any stop order,
injunction or other order or requirement of the Commission or other
governmental agency or court for any reason) for the period specified
in Section 4(a)(i). Each Selling Stockholder may, before any
Registration Statement becomes effective, withdraw its Registrable
Shares from inclusion therein, should the terms of the proposed
distribution not be satisfactory to such Selling Stockholder. If
Selling Stockholders holding in the aggregate 50% or more of the
Registrable Shares requested to be included in such Demand Registration
elect to withdraw such Registration Statement, such Registration
Statement shall be withdrawn (if necessary) and such registration shall
not be deemed to have been a Demand Registration for purposes of the
limitations on the number of Demand Registrations hereunder contained
in this Section 2; provided, that the Selling Stockholders shall
reimburse the Company for their pro rata portion of the Registration
Expenses incurred by the Company in connection with such Demand
Registration with 30 days after such withdrawal (unless at the time of
such withdrawal, the Selling Stockholder's have learned of a material
adverse change in the operating results, financial condition or
business of the Company of which such Selling Stockholders were not
aware as of the time of the Demand Notice and have withdrawn such
request promptly following the disclosure by the Company of such
material adverse change, in which case, the Selling Stockholders shall
not be obligated to reimburse the Company for such Registration
Expenses in order to preserve their respective rights under this
Section 2).
3. Incidental Registration.
(a) Each time the Company proposes to register under the
Securities Act any shares of Series A Common Stock or other equity
securities of the Company (whether in an underwritten public offering
or otherwise and whether or not for the account of the Company or for
any selling stockholder) (other than (x) in a transaction to which Rule
145 or any other similar rule of the Commission under the Securities
Act is applicable or (y) a registration statement on Form S-4 or Form
S-8 or any successor or comparable forms) in a manner
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which would permit the registration under the Securities Act of
Registrable Shares for sale to the public, the Company shall give
notice to each Stockholder of its intention to do so not later than
twenty (20) days prior to the anticipated filing date of the applicable
Registration Statement. Upon receipt of any such notice, each
Stockholder may elect to participate in such registration by giving the
Company notice requesting it to register any or all of such
Stockholder's Registrable Shares in connection with the registration
described in such notice from the Company within ten (10) days after
such notice has been given by the Company (with such request stating
(i) the type and amount of Registrable Shares to be included in such
registration by such Stockholder and the intended method of
distribution and (ii) any other information that the Company reasonably
requests be included in such registration statement) (such
registration, an "Incidental Registration"). Upon receipt of such
request, the Company will use its commercially reasonable efforts to
cause all such Registrable Shares requested to be included in such
Incidental Registration to be so included (in accordance with the
intended methods of disposition set forth in such Selling Stockholder's
notice) and to file the applicable Registration Statement with the
Commission promptly and cause such Registration Statement to be
declared effective under the Securities Act as promptly as practicable.
(b) If the proposed method of distribution in connection with such
an Incidental Registration is an underwritten public offering and the
lead managing underwriter thereof determines reasonably and in good
faith that the number of such Registrable Shares to be included in such
offering would materially adversely affect such offering, the number of
Registrable Shares to be offered for the account of the Selling
Stockholders shall be reduced or limited in proportion to the number of
Registrable Shares to be so offered by such Selling Stockholders to the
extent necessary to reduce the total number of shares to be included in
such offering to the amount recommended by such managing underwriter;
provided, that if securities are being offered for the account of other
persons or entities (other than, or in addition to, the Company), such
reduction shall be made pro rata from the securities intended to be
offered by such other persons or entities and the Selling Stockholders,
but no such reduction shall be made from the securities to be offered
for the account of the Company.
(c) The Company may, without the consent of any Stockholder,
delay, suspend, abandon or withdraw any Incidental Registration and any
related proposed offering or other distribution in which any
Stockholder has requested inclusion of such Stockholder's Registrable
Shares pursuant to this Section 3; provided, that the applicable
Selling Stockholders shall be entitled to continue such registration as
a Demand Registration pursuant to Section 2 following any such
withdrawal by the Company to the extent that such registration by the
Selling Stockholders making such election would otherwise satisfy the
requirements of Section 2.
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(d) Any Selling Stockholder may elect to withdraw its respective
Registrable Shares from inclusion in an Incidental Registration at any
time prior to five (5) Business Days prior to the then anticipated
effective date of the applicable Registration Statement; provided,
however, that the withdrawing Selling Stockholders shall reimburse the
Company for the portion of the Commission fees payable with respect to
the Registrable Shares so withdrawn.
(e) In connection with any Incidental Registration involving an
underwritten public offering of securities of the Company for the
account of the Company, each Selling Stockholder electing to
participate in such underwritten public offering shall, as a condition
to the Company's obligation hereunder with respect to such Selling
Stockholder's Registrable Shares, enter into and perform its
obligations under an underwriting agreement or other similar
arrangement in customary form with the managing underwriter of such
offering.
4. Obligations with Respect to Registration.
(a) Whenever the Company is obligated by the provisions of this
Agreement to effect the registration of any Registrable Shares under
the Securities Act, the Company shall:
(i) subject to Section 4(b), use its commercially reasonable
efforts to cause the applicable Registration Statement to remain
effective, and to prepare and file with the Commission any
amendments and supplements to the Registration Statement and to
the Prospectus used in connection therewith as may be necessary to
keep the Registration Statement and the Prospectus current and in
compliance with the provisions of the Securities Act, until the
sooner to occur of (A) the sale of all of the Registrable Shares
covered by such Registration Statement in accordance with the
intended methods of distribution thereof or (B) the one hundred
twentieth (120th) day following the effective date of such
Registration Statement;
(ii) promptly notify each Selling Stockholder of Registrable
Shares covered by such Registration Statement of the effectiveness
thereof and of any stop order issued or threatened by the
Commission and take all reasonable actions required to prevent the
entry of such stop order or to remove it if entered and promptly
notify such Selling Stockholder of such lifting or withdrawal of
such order;
(iii) promptly notify each Selling Stockholder holding
Registrable Shares covered by the applicable Registration
Statement at any time when a Prospectus relating thereto is
required to be delivered under the Securities Act, of the
occurrence of an event requiring the preparation of a supplement
or amendment to such Prospectus so that, as thereafter delivered
to the purchasers of such Registrable Shares, such Prospectus will
not contain an untrue statement of a material fact or
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omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading and
promptly make available to each such Selling Stockholder any such
supplement or amendment, and the Company will promptly prepare and
furnish to each such Selling Stockholder a supplement to or an
amendment of such Prospectus so that, as thereafter delivered to
the purchasers of such Registrable Shares, such Prospectus will
not contain any untrue statement of material fact or omit to state
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;
(iv) in the case of an underwritten public offering, enter
into customary agreements (including an underwriting agreement in
customary form) and perform its obligations under any such
agreement(s) and shall take such other actions as are reasonably
required in order to expedite or facilitate the disposition of
such Registrable Shares;
(v) in the case of an underwritten public offering, make
available for inspection by any Selling Stockholder covered by
such Registration Statement, any underwriter participating in any
disposition pursuant to such Registration Statement and any
attorney, accountant or other professional retained by any such
Selling Stockholder or underwriter, all financial and other
records, pertinent corporate documents and properties of the
Company as shall be reasonably necessary to enable them to
exercise their due diligence responsibility in connection
therewith, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any of
such persons in connection with such Registration Statement.
Information which the Company determines, in good faith, to be
confidential and which it notifies such persons is confidential
shall not be disclosed to such persons unless such persons agree
to enter into a mutually acceptable confidentiality agreement
having customary terms (which shall permit the disclosure of such
information in the Registration Statement to the extent such
information is necessary to avoid or correct a misstatement or
omission in such Registration Statement or the release of such
information is ordered pursuant to a subpoena or other order from
a court of competent jurisdiction). Each such Selling Stockholder
agrees that information obtained by it as a result of such
inspections shall be deemed confidential and shall not be used by
it as the basis for any market transactions in the securities of
the Company unless and until such information is made generally
available to the public;
(vi) in the case of an underwritten public offering, use
commercially reasonable efforts to furnish to each Selling
Stockholder and to each underwriter a signed counterpart of (A) an
opinion or opinions of counsel to the Company
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addressed to such Selling Stockholder and underwriter (on which
opinion both such Selling Stockholder and such underwriter are
entitled to rely) and (B) a comfort letter or comfort letters from
the Company's independent public accountants, each in customary
form and covering such matters of the type customarily covered by
opinions or comfort letters, as the case may be, as the holders of
a majority of the Registrable Shares included in such Registration
Statement or the managing underwriter therefor reasonably
requests;
(vii) prepare and file with the Commission promptly upon the
request of any Selling Stockholder, any amendments or supplements
to such Registration Statement or the applicable Prospectus which,
in the reasonable opinion of counsel for such Selling
Stockholders, is required under the Securities Act or the rules
and regulations thereunder in connection with the distribution of
the Registrable Shares by such Selling Stockholders;
(viii) use commercially reasonable efforts to register or
qualify the Registrable Shares covered by a Registration Statement
under the securities or blue sky laws of such jurisdictions in the
United States as the Selling Stockholders shall reasonably
request, and do any and all other acts and things which may be
necessary to enable each Selling Stockholder to consummate the
disposition in such jurisdictions of such Registrable Shares in
accordance with a method of distribution described in such
Registration Statement; provided, however, that the Company shall
in no event be required to qualify to do business as a foreign
corporation or as a dealer in any jurisdiction where it is not
otherwise required to be so qualified, to conform its
capitalization or the composition of its assets at the time to the
securities or blue sky laws of such jurisdiction, to execute or
file any general consent to service of process under the laws of
any jurisdiction, to take any action that would subject it to
service of process in suits other than those arising out of the
offer and sale of the Registrable Shares covered by such
Registration Statement, or to subject itself to taxation in any
jurisdiction where it has not theretofore done so;
(ix) use commercially reasonable efforts to cause such
Registrable Shares covered by a Registration Statement to be
listed on the principal exchange or exchanges or qualified for
trading on the principal over the counter market on which the
Series A Common Stock is then listed or traded upon the sale of
such Registrable Shares pursuant to such Registration Statement;
and
(x) make and keep information publicly available relating to
the Company so as to satisfy the corresponding requirements of
Rule 144 under the Securities Act (or any successor or
corresponding rule) and to file with the Commission all reports
and
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other documents required of the Company under the Securities Act
and the Exchange Act in a timely manner.
(b) Notwithstanding anything to the contrary contained herein, if
at any time after the filing of a Registration Statement or after it is
declared effective by the Commission the Company determines, in its
reasonable business judgment, that such registration and offering would
result in a Disadvantageous Condition, then the Company may require the
suspension by each Selling Stockholder of the distribution of any of
the Registrable Shares by giving notice to such effect to each Selling
Stockholder. In the event that such notice is given, then until the
Board of Directors of the Company has determined, in its reasonable
business judgment, that such registration and offering no longer would
result in a Disadvantageous Condition, the Company's obligations under
Section 2(a), if the Registration Statement has not become effective,
or under Section 4(a)(i), if the Registration Statement has become
effective, will be suspended. In the event of a suspension pursuant to
this Section 4(b) after a Registration Statement has been declared
effective, the one hundred twenty (120)-day period of effectiveness of
such Registration Statement referred to in Section 4(a)(i) will be
extended by a number of days equal to the total number of days for
which the distribution of Registrable Shares included in such
Registration Statement by the Selling Stockholder was suspended under
this Section 4(b); provided that if during the period of any suspension
pursuant to this Section 4(b) there occurs a suspension under Section
4(c)(ii), the number of days of suspension pursuant to Section 4(c)(ii)
shall be included within the suspension period under this Section 4(b)
for purposes of calculating the extension of the Company's obligation
under Section 4(a)(i). Notwithstanding anything to the contrary set
forth herein, the total period of time during which the Company's
registration obligation or sales of Registrable Securities may be
suspended during any twelve month period pursuant to Section 2(d) and
this Section 4(b) shall not exceed 180 days in the aggregate.
(c) The Company's obligations under this Agreement to a Selling
Stockholder shall be conditioned upon such Selling Stockholder's
compliance with the following:
(i) such Selling Stockholder shall cooperate with the Company
in connection with the preparation of the Registration Statement,
and for so long as the Company is obligated to keep the
Registration Statement effective, such Selling Stockholder will
provide to the Company for use in the Registration Statement, all
information regarding such Selling Stockholder, its intended
method of disposition of the applicable Registrable Shares, and
such other information as the Company may reasonably request to
prepare the Registration Statement and Prospectus covering the
Registrable Shares and to maintain the currency and effectiveness
thereof;
(ii) each Selling Stockholder agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind
described in Section 4(a)(iii),
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such Selling Stockholder will forthwith discontinue disposition of
Registrable Shares pursuant to the applicable Registration
Statement until such Selling Stockholder's receipt of the copies
of the supplemented or amended Prospectus contemplated by Section
4(a)(iii), and, if so directed by the Company, such Stockholder
will deliver to the Company all copies in its possession of the
most recent Prospectus covering such Registrable Shares at the
time of receipt of such notice. In the event the Company gives
such notice, the Company shall extend the period during which the
effectiveness of such registration statement shall be maintained
pursuant to Section 4(a)(i) hereof by the number of days during
the period from and including the date of the giving of notice
pursuant to Section 4(a)(iii) to the date when the Company shall
make available to such Stockholder a Prospectus supplemented or
amended to conform with the requirements of Section 4(a)(iii);
provided that if during the period of any suspension pursuant to
this Section 4(c)(ii) there occurs a suspension under Section
4(b), the number of days of suspension pursuant to Section 4(b)
shall be included within the suspension period under this Section
4(c)(ii) for purposes of calculating the extension of the
Company's obligation under Section 4(a)(i); and
(iii) during such time as such Selling Stockholder may be
engaged in a distribution of the Registrable Shares, such Selling
Stockholder shall comply with all applicable laws relating to such
distribution, including Regulation M promulgated under the
Exchange Act and pursuant thereto it shall: (A) not engage in any
stabilization activity in connection with the securities of the
Company in contravention thereof; (B) distribute the Registrable
Shares solely in the manner described in the Registration
Statement; (C) cause to be furnished to each broker through whom
the Registrable Shares may be offered, or to the offeree if an
offer is not made through a broker, such copies of the Prospectus
covering the Registrable Shares and any amendment or supplement
thereto and documents incorporated by reference therein as may be
required by law; and (D) not bid for or purchase any securities of
the Company or attempt to induce any person to purchase any
securities of the Company other than as permitted under the
Exchange Act.
(d) Each holder of Registrable Shares agrees, so long as the
Company and its controlling stockholders and their respective directors
and executive officers agree to be similarly bound, not to effect any
sale or distribution through or into the public markets of any equity
securities of the Company, or any securities convertible into or
exchangeable or exercisable for such securities, including a sale
pursuant to rule 144 under the Securities Act (or any similar provision
then in force), during the 30 day period before the effective date of
any registration statement (except as part of such registration
statement) or during the period after such effective date that such
managing underwriter or the Board, in their reasonable judgement, shall
agree (but not to exceed 180 days). Each Stockholder agrees that, in
connection with any assignment of registration rights hereunder, it
will cause its assignee to
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agree to be bound by the terms of this Section 4(d). The Company agrees
that any agreement entered into after the date of this Agreement
pursuant to which the Company agrees to register or to permit the
participation in the registration of any securities of the Company
shall contain a provision under which holders of any such securities
agree not to effect any public sale or distribution of any such
securities during the periods described in clause (i) above, in each
case including a sale pursuant to Rule 144.
(e) Neither the Company nor any Selling Stockholder may
participate in any underwritten public offering in connection with a
Demand Registration or an Incidental Registration unless such person or
entity (i) agrees to sell its securities on the basis provided in any
underwriting arrangements approved by the party selecting the managing
underwriter for such offering and (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of
such underwriting arrangements and this Agreement.
5. Expenses of Registration.
(a) Except as provided in paragraph (b) below, all Registration
Expenses incurred in connection with any Demand Registration or
Incidental Registration and the distribution of any Registrable Shares
in connection therewith shall be borne by the Company. For purposes of
this Agreement, the term "Registration Expenses" shall mean all (i)
registration, qualification and filing fees, (ii) fees and expenses of
compliance with securities or blue sky laws, (iii) printing expenses
(or comparable duplication expenses) and escrow fees, (iv) fees and
disbursements of counsel for the Company, (v) customary fees and
expenses for independent certified public accountants retained by the
Company (including the expenses of any comfort letters or costs
associated with the delivery by independent certified public
accountants of a comfort letter or comfort letters), (vi) fees and
expenses of any special experts retained by the Company in connection
with such registration, (vii) fees and expenses of listing the
Registrable Shares on a securities exchange, and (viii) in the case of
a Demand Registration only, the reasonable fees and expenses of a
single counsel for the Selling Stockholders acceptable to the Company.
(b) Each Selling Stockholder shall pay all stock transfer fees or
expenses (including the cost of all transfer tax stamps), if any, and
all underwriting or brokerage discounts, commissions and fees relating
to the distribution of the Registrable Shares of such Selling
Stockholder, and in connection with an Incidental Registration only,
its pro rata share of the incremental filing fee under the Securities
Act attributable to the applicable Registrable Shares.
(c) Notwithstanding any other provision of this Agreement, the
Company shall be obligated to bear all internal expenses of the Company
in connection with any Demand
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Registration or Incidental Registration (including, without limitation,
all salaries of its officers and employees performing accounting and
legal functions and related expenses).
6. Indemnification.
(a) The Company agrees to indemnify and hold harmless, to the full
extent permitted by law, each Selling Stockholder, its officers,
directors and agents, and each person (if any) who controls such
Selling Stockholder within the meaning of either the Securities Act or
the Exchange Act (collectively, the "Stockholder Indemnified Parties")
from and against any losses, claims, damages or liabilities, and any
related legal or other fees and expenses (collectively, "Losses"),
joint or several, to which such Stockholder Indemnified Parties may
become subject, insofar as such Losses (or actions in respect thereof)
are based upon any untrue statement or alleged untrue statement of a
material fact contained in the applicable Registration Statement or
Prospectus, 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 under which they were
made, not misleading; provided, that the Company will not indemnify or
hold harmless any Stockholder Indemnified Party from or against any
such Losses if the untrue statement, omission or allegation thereof
upon which such Losses are based (x) was made in reliance upon and in
conformity with the information provided by or on behalf of the
applicable Selling Stockholder specifically for use or inclusion in the
applicable Registration Statement or Prospectus or (y) was made in any
Prospectus used after such time as the Company advised such Selling
Stockholder that the filing of a post-effective amendment or supplement
thereto was required, except the Prospectus as so amended or
supplemented.
(b) Each Selling Stockholder, individually and not jointly, agrees
to indemnify and hold harmless, to the full extent permitted by law,
the Company, its officers, directors and agents, and each person, if
any, who controls the Company within the meaning of either the
Securities Act or the Exchange Act (the "Company Indemnified Parties"),
from and against any Losses, joint or several, to which such Company
Indemnified Parties may become subject, insofar as such Losses (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in
the applicable Registration Statement or the Prospectus, 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 under which they were made, not misleading,
if the statement or omission was made in reliance upon and in
conformity with the information provided by or on behalf of such
Selling Stockholder or any person who controls such Selling Stockholder
specifically for use or inclusion in the applicable Registration
Statement or Prospectus; provided, that such Selling Stockholder will
not indemnify or hold harmless any Company Indemnified Party from or
against any such Losses (i) to the extent the untrue statement,
omission or allegation thereof upon which such Losses are based was
made in any
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Prospectus used after such time as such Selling Stockholder notified
the Company that the filing of a post-effective amendment or supplement
thereto was required, except the Prospectus as so amended or
supplemented, or (ii) in an amount that exceeds the net proceeds
received by such Selling Stockholder from the sale of Registrable
Shares pursuant to such Registration Statement.
(c) Each Person claiming a right to indemnification under this
Section 6 (the "Indemnified Party") shall give notice to the Person
required to provide indemnification (the "Indemnifying Party") promptly
after such Indemnified Party has actual knowledge of any claim as to
which indemnity may be sought, and the Indemnifying Party may
participate at its own expense in the defense, or if it so elects,
assume the defense of any such claim and any action or proceeding
resulting therefrom, including the employment of counsel and the
payment of all expenses. The failure of any Indemnified Party to give
notice as provided herein shall not relieve the Indemnifying Party from
its obligations to indemnify such Indemnified Party, except to the
extent the Indemnified Party's failure to so notify actually prejudices
the Indemnifying Party's ability to defend against such claim, action
or proceeding. In the event that the Indemnifying Party elects to
assume the defense in any action or proceeding, an Indemnified Party
shall have the right to employ separate counsel in any such action or
proceeding and to participate in the defense thereof, but such
Indemnified Party shall pay the fees and expenses of such separate
counsel unless (i) the Indemnifying Party has agreed to pay such fees
and expenses or (ii) the named parties to any such action or proceeding
(including any impleaded parties) include such Indemnified Party and
the Indemnifying Party, and such Indemnified Party shall have been
advised by counsel that there may be a conflict of interest between
such Indemnified Party and the Indemnifying Party in the conduct of the
defense of such action (in which case, if such Indemnified Party
notifies the Indemnifying Party that it elects to employ separate
counsel at the expense of the Indemnifying Party, the Indemnifying
Party shall not assume the defense of such action or proceeding on such
Indemnified Party's behalf, it being understood, however, that the
Indemnifying Party shall not, in connection with any one such action or
proceeding or separate but substantially similar or related actions or
proceedings arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more
than one separate firm of attorneys at any time for all Indemnified
Parties, which firm shall be designated in writing by the applicable
Indemnified Parties). No Indemnifying Party, in the defense of any such
claim or litigation, shall, except with the consent of the Indemnified
Party, consent to entry of any judgment or enter into any settlement
which 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. No Indemnifying
Party shall settle or compromise any such claim or litigation in which
any relief other than the payment or money damages is sought against
any Indemnified Party unless the Indemnified Party consents in writing
to such settlement or compromise.
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(d) If the indemnification provided for under this Section 6 is
unavailable to or insufficient to hold the Indemnified Party harmless
under subparagraphs (a) or (b) above in respect of any Losses referred
to therein for any reason other than as specified therein, then the
Indemnifying Party shall contribute to the amount paid or payable by
such Indemnified Party as a result of such Losses in such proportion as
is appropriate to reflect the relative fault of the Indemnifying Party,
on the one hand, and such Indemnified Party, on the other, in
connection with the statements or omissions which resulted in such
Losses, 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 (or omitted to be supplied by) the Indemnifying
Parties or Indemnified Parties, the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent
such statement or omission, the relative benefits received by each
party from the sale of the Registrable Shares, and any other equitable
considerations appropriate under the circumstances. The amount paid or
payable by an Indemnified Party as a result of the Losses referred to
above in this subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such Indemnified party in
connection with investigation or defending any such action or claim. 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 who was not guilty of such fraudulent
misrepresentation.
(e) The parties hereto acknowledge and agree that the
indemnification provided herein shall supersede the indemnification
provisions set forth in Section 10 of the Contribution Agreement, and
that the Minimum Amount and Maximum Amount (each as defined in the
Contribution Agreement) shall not be applicable to claims under this
Section 6.
7. Notices. All notices, requests, demands, waivers and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered personally or mailed, certified or registered mail with postage
prepaid, or sent by telex, telegram or telecopier, as follows:
(a) if to the Company:
Liberty Digital, Inc.
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxx Xxxxxxx
Facsimile:
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(b) if to Liberty:
Liberty Media Corporation
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
or to such other person or address as any party shall specify by notice in
writing to the other party. All notices and other communications given to a
party in accordance with the provisions of this Agreement shall be deemed to
have been given (i) three Business Days after the same are sent by certified or
registered mail, postage prepaid, return receipt requested, (ii) when delivered
by hand or transmitted by telecopy (confirmation received) or (iii) one Business
Day after the same are sent by a reliable overnight courier service, with
acknowledgment of receipt requested. Notwithstanding the preceding sentence,
notice of change of address shall be effective only upon actual receipt thereof.
8. Amendment. Any provision of this Agreement may be amended or modified in
whole or in part at any time by an agreement in writing among each of the
parties hereto, executed in the same manner as this Agreement. No consent,
waiver or similar act shall be effective unless in writing.
9. Entire Agreement. This Agreement constitutes the entire agreement among the
parties hereto and supersedes all prior agreements and understandings, oral and
written, among the parties hereto with respect to the subject matter hereof.
10. Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
11. Governing Law. This Agreement shall be governed by and interpreted in
accordance with the internal laws of the State of Delaware, without giving
effect to principles of conflicts of laws.
12. Assignment; Binding Effect; Benefit. Liberty shall be entitled to assign its
rights hereunder to any member of the Liberty Group, and Liberty or any member
of the Liberty Group to which such rights are assigned shall be entitled to
further assign such rights to any person or entity to which Registrable Shares
are transferred, and to any Person acquiring a pledge of, security interest in,
or other rights to any Registrable Shares in connection with any hedging or
financing transaction, in each case without the consent or approval of the
Company or any other Person, and upon such assignment the assignor will be
relieved from its obligations hereunder. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and assigns. Nothing in this Agreement, expressed or implied, is
intended to confer on any Person other than the parties hereto or their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, other than rights conferred
upon Indemnified Parties under Section 6.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
LIBERTY DIGITAL, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
LIBERTY MEDIA CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Senior Vice President
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