SECURITYHOLDERS AGREEMENT
dated May 11, 1999
among
INSIGHT COMMUNICATIONS COMPANY, INC.,
VESTAR CAPITAL PARTNERS III, L.P.,
XXXXXX X. XXXXXX,
XXXXXXX X. XXXXXXX,
XXX X. XXXXX,
SANDLER CAPITAL PARTNERS IV, L.P.,
SANDLER CAPITAL PARTNERS IV FTE, L.P.,
AND THE OTHER PARTIES HERETO
TABLE OF CONTENTS
Page
ARTICLE 1
FORMATION OF THE COMPANY/REPRESENTATIONS AND WARRANTIES
OF THE PARTIES...........................................................................................1
1.1 Formation of the Company........................................................................1
1.2 Representations and Warranties of the Company...................................................2
1.3 Representations and Warranties of the Securityholders...........................................3
1.4 Company and Management Securityholder Representations...........................................3
ARTICLE 2
VOTING AGREEMENTS........................................................................................3
2.1 Election of Directors...........................................................................3
ARTICLE 3
TRANSFERS OF SECURITIES..................................................................................4
3.1 Restrictions on Transfer of Securities..........................................................4
(a) Class B Stock Transfers................................................................4
(b) Tag-Along Rights.......................................................................4
(c) Excluded Transfers.....................................................................6
(d) Excluded Securities....................................................................6
3.2 Certain Transferees Bound by Agreement..........................................................7
3.3 Ownership of Class B Stock......................................................................7
3.4 Transfers in Violation of Agreement.............................................................7
ARTICLE 4
REGISTRATION RIGHTS......................................................................................7
4.1 Demand Registrations............................................................................7
(a) Requests for Registration..............................................................7
(b) Long-Form Registrations................................................................8
(c) Priority on Demand Registrations.......................................................8
(d) Restrictions on Demand Registrations...................................................8
(e) Selection of Underwriters..............................................................9
4.2 Piggyback Registrations.........................................................................9
(a) Right to Piggyback.....................................................................9
(b) Piggyback Expenses.....................................................................9
(c) Priority on Primary Registrations......................................................9
(d) Priority on Secondary Registrations....................................................9
(e) Other Registrations....................................................................9
4.3 Holdback Agreements............................................................................10
4.4 Registration Procedures........................................................................10
4.5 Shelf Registration.............................................................................12
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Page
(a) Filing of Registration Statement......................................................12
(b) Holdback Agreement....................................................................13
(c) Limitations on Additional Securities..................................................13
4.6 Registration Expenses..........................................................................13
4.7 Indemnification................................................................................14
4.8 Participation in Underwritten Registrations....................................................15
4.9 No Inconsistent Agreements.....................................................................15
4.10 Short-Form Registrations.......................................................................15
ARTICLE 5
AMENDMENT AND TERMINATION...............................................................................15
5.1 Amendment and Waiver...........................................................................15
5.2 Termination of Agreement.......................................................................15
5.3 Termination as to a Party......................................................................16
ARTICLE 6
MISCELLANEOUS...........................................................................................16
6.1 Certain Defined Terms..........................................................................16
6.2 Legends........................................................................................21
(a) Securityholders Agreement.............................................................21
(b) Registrable Securities................................................................21
(c) Removal of Legends....................................................................22
6.3 Severability...................................................................................22
6.4 Entire Agreement...............................................................................22
6.5 Successors and Assigns.........................................................................22
6.6 Counterparts...................................................................................22
6.7 Remedies.......................................................................................22
6.8 Notices........................................................................................23
6.9 Governing Law..................................................................................23
6.10 Descriptive Headings...........................................................................23
6.11 Effective Date.................................................................................23
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SECURITYHOLDERS AGREEMENT
This Securityholders Agreement (this "Agreement") is entered
into as of May 11, 1999, by and among Insight Communications Company, Inc., a
Delaware corporation (the "Company"), Vestar Capital Partners III, L.P., a
Delaware limited partnership ("Vestar"), Sandler Capital Partners IV, L.P., a
Delaware limited partnership ("Sandler IV"), Sandler Capital Partners IV FTE,
L.P., a Delaware limited partnership ("Sandler FTE"; and together with Sandler
IV, "Sandler"; and, together with Vestar, the "New Partners"), Xxxxxx X.
Xxxxxx ("Xxxxxx", and, together with the persons or entities listed on Exhibit
A hereto as "Xxxxxx Entities," the "Xxxxxx Holders"), Xxxxxxx X. Xxxxxxx
("Xxxxxxx"), Xxx X. Xxxxx ("Xxxxx"), and the Persons listed on Exhibit A
hereto as Senior Management Securityholders (the "Senior Management
Securityholders") (the Xxxxxx Holders, Xxxxxxx, Xxxxx, and the Senior
Management Securityholders are sometimes referred to herein collectively as
"Management Securityholders" and individually as a "Management
Securityholder"). The Company, Vestar, Sandler, Knafel, Xxxxxxx and Xxxxx and
each other Person that is or may become a party to this Agreement as a
Securityholder as contemplated hereby are sometimes referred to herein
collectively as the "Securityholders" and individually as a "Securityholder".
Certain capitalized terms used herein are defined in Section 6.1 hereof.
RECITALS
WHEREAS, the parties hereto desire to provide in advance for
the (i) the establishment of the composition of the Company's Board of
Directors (the "Board"), (ii) continuity in the management, ownership and
control of the Company, (iii) certain restrictions on the ability of the
Securityholders to transfer their Securities and (iv) certain rights with
respect to the registration of the Company's Securities;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
FORMATION OF THE COMPANY/REPRESENTATIONS AND WARRANTIES
OF THE PARTIES
1.1 Formation of the Company. Each party hereto will take
all necessary action within such Person's control (whether in his or its
capacity as a stockholder, director, member of a board committee or officer of
the Company or otherwise and, including, without limitation, attendance at
meetings in person or by proxy for purposes of obtaining a quorum and
execution of consents in lieu of meetings) to cause the Company:
(a) to execute and deliver a counterpart of the Agreement
and to take all necessary actions so that this Agreement shall have been duly
and validly executed and delivered by the Company, constituting a legal and
binding obligation of the Company, enforceable against the Company in
accordance with its terms; and
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(b) to ensure that the execution, delivery and performance
by the Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby will not, with or without the giving of
notice or lapse of time, or both (i) violate any provision of law, statute,
rule or regulation to which the Company is subject, (ii) violate any order,
judgment or decree applicable to the Company, or (iii) conflict with, or
result in a breach or default under, any term or condition of the Company's
Certificate of Incorporation or Bylaws or any agreement or instrument to which
the Company is a party or by which it is bound.
1.2 Representations and Warranties of the Company. The
Company hereby represents and warrants to the Securityholders that:
(a) as of the date of this Agreement, it is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, it has full corporate power and authority to execute,
deliver and perform this Agreement and to consummate the transactions
contemplated hereby, and the execution, delivery and performance by it of this
Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action;
(b) as of the date of this Agreement, this Agreement has
been duly and validly executed and delivered by the Company and constitutes a
legal and binding obligation of the Company, enforceable against the Company
in accordance with its terms;
(c) as of the date of this Agreement, the execution,
delivery and performance by the Company of this Agreement and the consummation
by the Company of the transactions contemplated hereby will not, with or
without the giving of notice or lapse of time, or both (i) violate any
provision of law, statute, rule or regulation to which the Company is subject,
(ii) violate any order, judgment or decree applicable to the Company, or (iii)
conflict with, or result in a breach or default under, any term or condition
of the Company's Certificate of Incorporation or Bylaws or any agreement or
instrument to which the Company is a party or by which it is bound; and
(d) at all times after the closing of the IPO, each share of
Class A Stock and Class B Stock are and will be identical in all economic and
legal respects except that each share of Class B Stock may have up to 10 votes
per share, and each share of Class A Stock shall have one vote per share, and
the Class B Stock shall be the only equity security of the Company with
extraordinary voting power, other than pursuant to a Permitted Option Plan, no
additional shares of Class B Stock will be issued (excluding distributions of
Class B Stock on account of stock splits or stock dividends applicable to a
share of Class A Stock), provided, however, that, in connection with the
issuance of equity securities to a third party which either (i) provides
financing to the Company, (ii) is the seller of a business to the Company or
its subsidiaries, or (iii) enters into a joint venture or similar strategic
partnership with the Company, the Company may grant such third party the right
to elect members of the board of directors so long as the Management
Securityholders (A) retain the right to elect a majority of the board of
directors and (B) such designees increase the size of the board of directors.
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1.3 Representations and Warranties of the Securityholders.
Each Securityholder (as to himself or itself only) represents and warrants to
the Company and the other Securityholders that, as of the time such
Securityholder becomes a party to this Agreement:
(a) this Agreement (or the separate joinder agreement
executed by such Securityholder) has been duly and validly executed and
delivered by such Securityholder, and this Agreement constitutes a legal and
binding obligation of such Securityholder, enforceable against such
Securityholder in accordance with its terms; and
(b) the execution, delivery and performance by such
Securityholder of this Agreement (or any joinder to this Agreement) and the
consummation by such Securityholder of the transactions contemplated hereby
(and thereby) will not, with or without the giving of notice or lapse of time,
or both (i) violate any provision of law, statute, rule or regulation to which
such Securityholder is subject, (ii) violate any order, judgment or decree
applicable to such Securityholder, or (iii) conflict with, or result in a
breach or default under, any term or condition of any agreement or other
instrument to which such Securityholder is a party or by which such
Securityholder is bound.
1.4 Company and Management Securityholder Representations.
The Company and each Management Securityholder represent and warrant to the
New Partner Majority Holder (a) that Exhibit A attached hereto, modified
immediately prior to the closing of the IPO, sets forth an accurate list of
the legal and beneficial owners (as defined in Rule 13D under the Securities
Exchange Act of 1934, as amended) of all the Class B Stock and other
Management Securities, and the number of shares of each type of Common Stock
which each owns, (b) that each such Person is either a Management
Securityholder or a Permitted Holder, and (c) each Senior Management
Securityholder is a member of the senior management of the Company as of the
closing date of the IPO.
ARTICLE 2
VOTING AGREEMENTS
2.1 Election of Directors.
(a) Each of the Management Securityholders hereby agrees
that such Management Securityholder will vote, or cause to be voted, all
voting securities of the Company over which such Person has the power to vote
or direct the voting, and will take all other necessary or reasonable action
within such Person's control (whether in his or its capacity as a stockholder,
director, member of a board committee or officer of the Company or otherwise
and including without limitation attendance at meetings in person or by proxy
for purposes of obtaining a quorum and execution of consents in lieu of
meetings), and the Company will take all necessary and desirable actions
within its control (including without limitation calling special board and
stockholder meetings) to elect or cause to be elected to the board of
directors of the Company and cause to be continued in office the Required
Vestar Directors (the "Vestar Directors").
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(b) If at any time Vestar shall notify the other parties to
this Agreement of their desire to remove, with or without cause, any Vestar
Director from a Company directorship, all such parties so notified will vote,
or cause to be voted, all voting securities of the Company over which they
have the power to vote or direct the voting, and shall take all such other
reasonable actions promptly as shall be necessary or desirable within the
control of such Person to cause the removal of such director.
(c) If at any time any Vestar Director ceases to serve on
the board of directors of the Company (whether due to resignation, removal or
otherwise), Vestar shall be entitled to designate a successor director to fill
the vacancy created thereby on the terms and subject to the conditions of
paragraph (a) above. Each Person that is a party hereto agrees to vote, or
cause to be voted, all voting securities of the Company over which such Person
has the power to vote or direct the voting, and shall take all such other
reasonable actions as shall be necessary or desirable within the control of
such Person to cause the designated successor to be elected to fill such
vacancy.
(d) Nothing in this Agreement shall be construed to impair
any rights that the stockholders of the Company who execute this Agreement may
have to remove any director for cause pursuant to Section 141(k) of the
General Corporation Law of the State of Delaware (or any successor provision).
No such removal of an individual designated pursuant to this Section 2.1 for
cause shall affect any of Vestar's rights to designate a different individual
pursuant to this Section 2.1 to fill the directorship from which such
individual was removed.
ARTICLE 3
TRANSFERS OF SECURITIES
3.1 Restrictions on Transfer of Securities.
(a) Class B Stock Transfers. The Xxxxxx Holders may not
Transfer any Class B Stock except in a Class B Exempt Transfer. Any Transfer
of interests or beneficial ownership, directly or indirectly, in an entity
which is a Permitted Holder shall be deemed a Transfer of the Class B Stock
owned directly or indirectly by such Permitted Holder.
(b) Tag-Along Rights. Prior to making any Tag-Along Transfer
of Management Securities (other than a Transfer described in Section 3.1(c)
hereof), any holder of Management Securities proposing to make such a Transfer
(for purposes of this Section 3.1, a "Selling Holder") shall give at least
thirty (30) days' prior written notice to each holder of New Partner
Securities (for purposes of this Section 3.1, an "Other Holder") and the
Company, which notice (for purposes of this Section 3.1, the "Sale Notice")
shall identify the type and amount of Management Securities to be sold (for
purposes of this Section 3.1, the "Offered Securities"), describe the terms
and conditions of such proposed Transfer, and identify each prospective
transferee. Any of the Other Holders may, within fifteen (15) days of the
receipt of the Sale Notice, give written notice (each, a "Tag-Along Notice")
to the Selling Holder that such Other Holder wishes to participate in such
proposed Transfer upon the terms and conditions set forth in the Sale Notice,
which Tag-Along Notice shall specify the New Partner Securities such Other
Holder desires to include in such proposed Transfer; provided, however, that
(1) each Other Holder shall be required, as a condition to being permitted to
sell New
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Partner Securities pursuant to this Section 3.1(b) in connection with a
Transfer of Offered Securities, to elect to sell New Partner Securities in the
same relative proportions (which proportions shall be determined on a share
for share basis with respect to Common Stock) as the Securities which comprise
the Offered Securities; and (2) to exercise its tag-along rights hereunder,
each Other Holder must agree to make to the transferee the same
representations, warranties, covenants, indemnities and agreements as the
Selling Holder agrees to make in connection with the Transfer of the Offered
Securities (except that in the case of representations and warranties
pertaining specifically to, or covenants made specifically by, the Selling
Holder, the Other Holders shall make comparable representations and warranties
pertaining specifically to (and, as applicable, covenants by themselves), and
must agree to bear his or its ratable share (which shall be several and not
joint but shall be based on the value of Securities that are Transferred) of
all liabilities to the transferees arising out of representations, warranties
and covenants (other than those representations, warranties and covenants that
pertain specifically to a given Securityholder, who shall bear all of the
liability related thereto), indemnities or other agreements made in connection
with the Transfer, provided that no Other Holder shall be liable under such
indemnity for an amount exceeding 100% of the fair market value of
consideration received with respect to such shares. Each Securityholder will
bear (x) its or his own costs of any sale of Securities pursuant to this
Section 3.1(b) and (y) its or his pro rata share (based upon the relative
amount of Securities sold) of the reasonable costs of any sale of Securities
pursuant to this Section 3.1(b) (excluding all amounts paid to any
Securityholder or his or its Affiliates as a transaction fee, broker's fee,
finder's fee, advisory fee, success fee, or other similar fee or charge
related to the consummation of such sale) to the extent such costs are
incurred for the benefit of all Securityholders and are not otherwise paid by
the acquiring party.
If none of the Other Holders gives the Selling Holder a
timely Tag-Along Notice with respect to the Transfer proposed in the Sale
Notice, then the Selling Holder may Transfer such Offered Securities on the
terms and conditions set forth, and to or among any of the transferees
identified (or Affiliates of transferees identified), in the Sale Notice at
any time within 90 days after expiration of the 15-day period for giving
Tag-Along Notices with respect to such Transfer. Any such Offered Securities
not Transferred by the Selling Holder during such 90-day period (or such
longer period as may be needed to obtain the consent of any governmental or
regulatory authority for such Transfer) will again be subject to the
provisions of this Section 3.1(b) upon subsequent Transfer. If one or more
Other Holders give the Selling Holder a timely Tag-Along Notice, then the
Selling Holder shall use all reasonable efforts to obtain the agreement of the
prospective transferee(s) to the participation of the Other Holders in any
contemplated Transfer, on the same terms and conditions as are applicable to
the Offered Securities, and no Selling Holder shall transfer any of its shares
to any prospective transferee if such prospective transferee(s) declines to
allow the participation of the Other Holders. If the prospective transferee(s)
is unwilling or unable to acquire all of the Offered Securities and all of the
New Partner Securities specified in a timely Tag-Along Notice upon such terms,
then the Selling Holder may elect either to cancel such proposed Transfer or
to allocate the maximum number of each class of Securities that the
prospective transferees are willing to purchase (the "Allocable Shares") among
the Selling Holder and the Other Holders giving timely Tag-Along Notices as
follows (it being understood that the prospective transferees shall be
required to purchase Securities of the same class on the same terms and
conditions taking into account the provisions of clause (1) of the first
paragraph of this Section 3.1(b), and to consummate such Transfer on those
terms and conditions):
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(i) each participating Securityholder (including
the Selling Holder) shall be entitled to sell a number of shares of
each class of Securities (taking into account the provisions of
clause (1) of the first paragraph of this Section 3.1(b)) (not to
exceed, for any Other Holder, the number of shares of such class of
Securities identified in such Other Holder's Tag-Along Notice) equal
to the product of (A) the number of Allocable Shares of such class of
Securities and (B) a fraction, the numerator of which is the number
of shares of such class of Securities owned by such Securityholder
and the denominator of which is the number of shares owned by all
participating Securityholders of such class of Securities; and
(ii) if after allocating the Allocable Shares of
any class of Securities to such Securityholders in accordance with
Section 3.1(b)(i) above, there are any Allocable Shares of such class
that remain unallocated, then they shall be allocated (in one or more
successive allocations on the basis of the allocation method
specified in Section 3.1(b)(i) above) among the Selling Holder and
each such Other Holder that has elected in its Tag-Along Notice to
sell a greater number of shares of such class of Securities than
previously has been allocated to it pursuant to Section 3.1(b)(i)
above and this Section 3.1(b)(ii) (all of whom (but no others) shall,
for purposes of Section 3.1(b)(i) above, be deemed to be the
participating Securityholders) until all such Allocable Shares have
been allocated in accordance with this Section 3.1(b)(ii).
For purposes of this Section 3.1(b), Class A Stock and Class
B Stock shall be deemed the same class of stock.
(c) Excluded Transfers. The rights and restrictions
contained in Section 3.1(b) shall not apply with respect to any of the
following Transfers of Securities:
(i) any Transfer of Management Securities in a
Public Sale;
(ii) any Transfer of Management Securities to
another Management Securityholder;
(iii) any Transfer of Management Securities
incidental to the exercise, conversion or exchange of such securities
in accordance with their terms or any combination of shares
(including any reverse stock split); and
(iv) any Transfer constituting an Exempt Transfer.
(d) Excluded Securities. No Securities that have been
transferred by the Selling Holder or an Other Holder in a Transfer pursuant to
the provisions of Section 3.1(b) hereof ("Excluded Securities") shall be
subject again to the restrictions set forth in Section 3.1(b) hereof, or any
other provision of this Agreement, nor shall any Securityholder holding
Excluded Securities be entitled to exercise any rights as an Other Holder
under Section 3.1(b) hereof with respect to such Excluded Securities, and no
Excluded Securities held by a Selling Holder or any Other Holder shall
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be counted in determining the respective participation rights of such Holders
in a Transfer subject to Section 3.1(b) hereof.
3.2 Certain Transferees Bound by Agreement. Subject to
compliance with the other provisions of this Article 3 applicable to such
Management Securityholder, any Management Securityholder may Transfer any
Securities held by such Securityholder in accordance with applicable law;
provided, however, that if the Transfer is an Exempt Transfer, then the
transferor of such Security shall first deliver to the Company a written
agreement of the proposed transferee to become a Securityholder and to be
bound by the terms of this Agreement applicable to the Securityholder who
Transferred the Securities. All Management Securities will continue to be
Management Securities in the hands of any transferee who is required to become
a party hereto under this Section 3.2.
3.3 Ownership of Class B Stock. The Company and each holder
of Management Securities covenants that it, he or she will take all actions
within their control to assure that the Management Securities owned by such
holder which are Class B Stock will be owned legally and beneficially only by
such holder, his or her Permitted Holders, and Permitted Option Holders until
such Management Securities are converted into Class A Stock. The Company
further covenants to cause each holder of Management Securities, including
those Persons holding Management Securities as of the closing of the IPO, to
execute this Agreement as a Management Securityholder.
3.4 Transfers in Violation of Agreement. Any Transfer or
attempted Transfer of any Securities in violation of any provision of this
Agreement shall be void, and the Company shall not record such Transfer on its
books or treat any purported transferee of such Securities as the owner of
such Securities for any purpose.
ARTICLE 4
REGISTRATION RIGHTS
4.1 Demand Registrations.
(a) Requests for Registration. At any time after the 180th
day following the closing of the IPO or such earlier date on which the
holdback period imposed with respect to an IPO has terminated (the "Lockup
Termination Date"), the New Partner Majority Holders may request the
registration under the Securities Act of all or any portion of their
Registrable Securities on Form S-1 or any similar long-form registration
("Long-Form Registrations") or on Form S-2 or S-3 or any similar short-form
registration ("Short-Form Registrations") if available. All registrations
requested pursuant to this paragraph 4.1(a) are referred to herein as "Demand
Registrations". Each request for a Demand Registration shall specify the
approximate number of Registrable Securities requested to be registered and
the anticipated per share price range for such offering. Within ten days after
receipt of any such request, the Company shall give written notice of such
requested registration to all other holders of Registrable Securities and
shall include in such registration all Registrable Securities with respect to
which the Company has received written requests for inclusion therein within
15 days after the receipt of the Company's notice.
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(b) Long-Form Registrations. The New Partner Majority
Holders shall be entitled to request two Long-Form Registrations and an
unlimited number of Short-Form Registrations ("Company-paid Registrations"),
provided that, in each case, the proceeds from the sale of securities pursuant
to such registrations shall be at least Five Million Dollars ($5,000,000). The
New Partner Majority Holders may demand that any Long-Form Registration shall
be a Shelf Registration (as defined herein) under Rule 415 under the
Securities Act. A registration shall not count as one of the Long-Form Demand
Registrations until it has become effective and unless the Person requesting
such registration is able to register and, provided such Person exercises
commercially reasonable efforts to sell such securities at the price
originally contemplated at the time of the Demand Registration, sell at least
80% of the Registrable Securities requested to be included in such
registration; provided that in any event the Company shall pay all
Registration Expenses in connection with any registration initiated as a
Demand Registration whether or not it has become effective and whether or not
such registration has counted as one of the permitted Company-paid
Registrations.
(c) Priority on Demand Registrations. (i) If the Demand
Registration (A) occurs within the Exclusivity Period or (B) is the last
Long-Form Registration available to the New Partners, the Company shall not
include in such registration any securities which are not New Partner
Securities, or (ii) if clause (i) above does not apply and a Demand
Registration is an underwritten offering and the underwriter advises the
Company that in its opinion the number of Registrable Securities and other
securities requested to be included in such offering exceeds the number of
Registrable Securities and other securities, if any, which can be sold in an
orderly manner in such offering within a price range acceptable to the New
Partner Majority Holders initially requesting such registration, then the
Company shall include in such registration prior to the inclusion or any
securities which are not Registrable Securities the number of Registrable
Securities requested to be included which, in the opinion of such
underwriters, can be sold in an orderly manner within the price range of such
offering without adversely affecting the marketability of the offering, pro
rata among the respective holders thereof on the basis of the amount of
Registrable Securities owned by each such holder.
(d) Restrictions on Demand Registrations. The Company shall
not be obligated to effect any Demand Registration within 180 days after the
effective date of a previous Demand Registration, provided, however, that,
during the Exclusivity Period, such Demand Registration may occur as early as
90 days after such prior effective date. The Company may postpone for up to 90
days the filing or the effectiveness of a registration statement for a Demand
Registration if the Board determines in its reasonable good faith judgment
that such Demand Registration would reasonably be expected to have a material
adverse effect on any proposal or plan by the Company or any of its
Subsidiaries to engage in any acquisition of assets (other than in the
ordinary course of business) or any merger, consolidation, tender offer,
reorganization or similar transaction; provided that in such event, the
holders of Registrable Securities initially requesting such Demand
Registration shall be entitled to withdraw such request and, if such request
is withdrawn, such Demand Registration shall not count as one of the permitted
Demand Registrations hereunder and the Company shall pay all Registration
Expenses in connection with such registration.
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(e) Selection of Underwriters. The holders of a majority of
the Registrable Securities initially requesting registration hereunder shall
have the right to select the investment banker(s) and manager(s) to administer
the offering, subject to the Company's approval which shall not be
unreasonably withheld.
4.2 Piggyback Registrations.
(a) Right to Piggyback. Whenever the Company proposes to
register any of its securities under the Securities Act (other than pursuant
to an employee benefit plan or to the extent issued as consideration for an
acquisition of the assets or stock of another entity) and the registration
form to be used may be used for the registration of Registrable Securities (a
"Piggyback Registration"), the Company shall give prompt written notice (in
any event within three business days after its receipt of notice of any
exercise of demand registration rights other than under this Agreement) to all
holders of Registrable Securities of its intention to effect such a
registration and shall include in such registration all Registrable Securities
with respect to which the Company has received written requests for inclusion
therein within 20 days after the receipt of the Company's notice.
(b) Piggyback Expenses. The Registration Expenses of the
holders of Registrable Securities shall be paid by the Company in all
Piggyback Registrations.
(c) Priority on Primary Registrations. If a Piggyback
Registration is an underwritten primary registration on behalf of the Company
or a Successor, and the managing underwriters advise the Company in writing
that in their opinion the number of securities requested to be included in
such registration exceeds the number which can be sold in such offering
without adversely affecting the marketability of the offering, the Company
shall include in such registration (i) first, the securities the Company
proposes to sell, (ii) second, if such registration occurs during the
Exclusivity Period, the New Partner Securities requested to be included in
such registration, pro rata among the holders of such New Partner Securities
on the basis of the number of shares owned by each such holder, and (iii)
third, the other Registrable Securities requested to be included in such
registration pro rata among the holders of such securities.
(d) Priority on Secondary Registrations. Subject to Section
4.1(c) hereof, if a Piggyback Registration is an underwritten secondary
registration on behalf of holders of the Company's securities, and the
managing underwriters advise the Company in writing that in their opinion the
number of securities requested to be included in such registration exceeds the
number which can be sold in such offering without adversely affecting the
marketability of the offering, the Company shall include in such registration
(i) first, the securities requested to be included therein by the holders
requesting such registration and the Registrable Securities requested to be
included in such registration, pro rata among such holders on the basis of the
number of shares owned by each such holder and (ii) second, other securities
requested to be included in such registration.
(e) Other Registrations. If the Company has previously filed
a registration statement with respect to New Partner Securities pursuant to
Section 4.1 hereof or pursuant to this Section 4.2, and if such previous
registration has not been withdrawn or abandoned, the Company
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shall not file or cause to be effected any other registration of any of its
equity securities or securities convertible or exchangeable into or
exercisable for its equity securities under the Securities Act (except on Form
S-8 or any successor form), whether on its own behalf or at the request of any
holder or holders of such securities, until a period of at least 180 days has
elapsed from the effective date of such previous registration, except as
provided in Section 4.1(d). During the Exclusivity Period, without the consent
of the New Partner Majority Holders, the Company shall not file a registration
statement in respect of a secondary offering of Company common stock except as
needed to effect a Demand Registration.
4.3 Holdback Agreements.
(a) The Xxxxxx Holders shall not effect any Public Sale of
equity securities of the Company, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven days prior
to and the 90-day period beginning on the effective date of any underwritten
Demand Registration in which Registrable Securities are included (except as
part of such underwritten registration), unless the underwriters managing the
registered public offering otherwise agree.
(b) The Company shall not effect any Public Sale of its
equity securities, or any securities convertible into or exchangeable or
exercisable for such securities, during the seven days prior to and during the
90-day period beginning on the effective date of any underwritten Demand
Registration or any underwritten Piggyback Registration (except as part of
such underwritten registration or pursuant to registrations on Form S-8 or any
successor form), unless the underwriters managing the registered public
offering (i.e., the Demand or Piggyback Registration) otherwise agree.
(c) No Xxxxxx Holder shall sell any Management Securities
pursuant to a Public Sale during the Exclusivity Period.
4.4 Registration Procedures. Whenever the holders of
Registrable Securities have requested that any Registrable Securities be
registered pursuant to this Article 4, the Company and the Management
Securityholders shall use their commercially reasonable best efforts to effect
the registration and the sale of such Registrable Securities in accordance
with the intended method of disposition thereof, and pursuant thereto the
Company shall as expeditiously as possible:
(a) prepare and file with the Securities and
Exchange Commission a registration statement with respect to such
Registrable Securities and use its commercially reasonable best
efforts to cause such registration statement to become effective
(provided that before filing a registration statement or prospectus
or any amendments or supplements thereto, the Company shall furnish
to the counsel selected by the holders of a majority of the
Registrable Securities covered by such registration statement copies
of all such documents proposed to be filed, which documents shall be
subject to the review and comment of such counsel);
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(b) notify each holder of Registrable Securities of
the effectiveness of each registration statement filed hereunder and
prepare and file with the Securities and Exchange 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 for a period of not less than
180 days and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such
registration statement during such period in accordance with the
intended methods of disposition by the sellers thereof set forth in
such registration statement;
(c) furnish to each seller of Registrable
Securities such number of copies of such registration statement, each
amendment and supplement thereto, the prospectus included in such
registration statement (including each preliminary prospectus) and
such other documents as such seller may reasonably request in order
to facilitate the disposition of the Registrable Securities owned by
such seller;
(d) use its commercially reasonable best efforts to
register or qualify such Registrable Securities under such other
securities or blue sky laws of such jurisdictions as any seller
reasonably requests and do any and all other acts and things which
may be reasonably necessary or advisable to enable such seller to
consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller (provided that the Company shall not
be required to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but
for this subparagraph, (ii) subject itself to taxation in any such
jurisdiction or (iii) consent to general service of process in any
such jurisdiction);
(e) notify each seller of such Registrable
Securities, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the happening
of any event as a result of which the prospectus included in such
registration statement contains an untrue statement of a material
fact or omits any fact necessary to make the statements therein not
misleading, and, at the request of any such seller, the Company shall
prepare a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable
Securities, such prospectus shall not contain an untrue statement of
a material fact or omit to state any fact necessary to make the
statements therein not misleading;
(f) cause all such Registrable Securities to be
listed on each securities exchange on which similar securities issued
by the Company are then listed and, if not so listed, to be listed on
the NASD automated quotation system and, if listed on the NASD
automated quotation system, use its commercially reasonable best
efforts to secure designation of all such Registrable Securities
covered by such registration statement as a NASDAQ "national market
system security" within the meaning of Rule 11Aa2-1 of the Securities
and Exchange Commission or, failing that, to secure NASDAQ
authorization for such Registrable Securities and, without limiting
the generality of the foregoing, to arrange for at least two market
makers to register as such with respect to such Registrable
Securities with the NASD;
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(g) provide a transfer agent and registrar for all
such Registrable Securities not later than the effective date of such
registration statement;
(h) enter into such customary agreements (including
underwriting agreements in customary form) and take all such other
actions as the holders of a majority of the Registrable Securities
being sold or the underwriters, if any, reasonably request in order
to expedite or facilitate the disposition of such Registrable
Securities (including effecting a stock split or a combination of
shares);
(i) make available for inspection by any seller of
Registrable Securities, any underwriter participating in any
disposition pursuant to such registration statement and any attorney,
accountant or other agent retained by any such seller or underwriter,
all financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company's officers,
directors, employees and independent accountants to supply all
information reasonably requested by any such seller, underwriter,
attorney, accountant or agent in connection with such registration
statement;
(j) otherwise use its best efforts to comply with
all applicable rules and regulations of the Securities and Exchange
Commission, and make available to its security holders, as soon as
reasonably practicable, an earnings statement covering the period of
at least twelve months beginning with the first day of the Company's
first full calendar quarter after the effective date of the
registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158
thereunder;
(k) permit any holder of Registrable Securities
which holder, in its sole and exclusive judgment, might be deemed to
be an underwriter or a controlling person of the Company, to
participate in the preparation of such registration or comparable
statement and to require the insertion therein of material, furnished
to the Company in writing, which in the reasonable judgment of such
holder and its counsel should be included; and
(l) in the event of the issuance of any stop order
suspending the effectiveness of a registration statement, or of any
order suspending or preventing the use of any related prospectus or
suspending the qualification of any common stock included in such
registration statement for sale in any jurisdiction, the Company
shall use its best efforts promptly to obtain the withdrawal of such
order.
4.5 Shelf Registration.
(a) Filing of Registration Statement. If a Demand
Registration is to be a Shelf Registration (as defined below), the Company
shall, as expeditiously as possible, file with the SEC a registration
statement under the Securities Act on the applicable registration pursuant to
Rule 415 under the Securities Act (the "Shelf Registration"). The Company and
the Management Securityholders shall use their commercially reasonable best
efforts to cause the Shelf Registration to be declared effective under the
Securities Act as soon as practical after filing, and once effective, the
Company shall cause such Shelf Registration to remain effective for a period
ending on the first
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anniversary of the effective date of such Shelf Registration. During the
Exclusivity Period the Company shall not effect a shelf registration of its
equity securities (or of securities convertible into such equity securities)
except pursuant to this Section 4.5(a).
(b) Holdback Agreement. If any holder or holders of
Registrable Securities notify the Company in writing that they intend to
effect the sale of Registrable Securities pursuant to the Shelf Registration
which has been filed under Section 4.5(a) above which constitute at least 10%
of the New Partner Securities as of the closing of the IPO (a "Sale"), the
Company shall not effect any public sale or distribution of its equity
securities, or any securities convertible into, or exchangeable or exercisable
for, its equity securities during the 90-day period beginning on the date such
notice of a Sale is received.
(c) Limitations on Additional Securities. In no event shall
the Company include any securities under the Shelf Registration which are not
New Partner Securities without the prior written consent of the holders of a
majority of New Partner Securities, and any such securities permitted to be
sold under the Shelf Registration shall only be sold in connection with a
Sale. If, in connection with any Sale, the Managing Underwriter (as defined
below) advises the Company that, in its opinion, the number of New Partner
Securities and other securities (if any) requested to be included in such Sale
exceeds the number of New Partner Securities and other securities which can be
sold in such offering without adversely affecting the marketability of the
offering, the Company shall include in such Sale the New Partner Securities
requested to be included in such Sale, pro rata among the holders of such New
Partner Securities on the basis of the number of New Partner Securities owned
by each such holder.
4.6 Registration Expenses.
(a) All expenses incident to the Company's performance of or
compliance with this Agreement, including without limitation all registration
and filing fees, fees and expenses of compliance with securities or blue sky
laws, printing expenses, messenger and delivery expenses, fees and
disbursements of custodians, and fees and disbursements of counsel for the
Company and all independent certified public accountants, underwriters
(excluding discounts and commissions) and other Persons retained by the
Company (all such expenses being herein called "Registration Expenses"), shall
be borne as provided in this Agreement, except that the Company shall, in any
event, pay its internal expenses (including, without limitation, all salaries
and expenses of its officers and employees performing legal or accounting
duties), the expense of any annual audit or quarterly review, the expense of
any liability insurance and the expenses and fees for listing the securities
to be registered on each securities exchange on which similar securities
issued by the Company are then listed or on the NASD automated quotation
system.
(b) To the extent Registration Expenses are not required to
be paid by the Company, each holder of securities included in any registration
hereunder shall pay those Registration Expenses allocable to the registration
of such holder's securities so included, and any Registration Expenses not so
allocable shall be borne by all sellers of securities included in such
registration in proportion to the aggregate selling price of the securities to
be so registered.
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4.7 Indemnification.
(a) The Company agrees to indemnify, to the extent permitted
by law, each holder of Registrable Securities, its officers and directors and
each Person who controls such holder (within the meaning of the Securities
Act) against all losses, claims, damages, liabilities and expenses caused by
any untrue or alleged untrue statement of material fact contained in any
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or any omission or alleged omission of a
material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as the same are caused by or
contained in any information furnished in writing to the Company by such
holder expressly for use therein or by such holder's failure to deliver a copy
of the registration statement or prospectus or any amendments or supplements
thereto after the Company has furnished such holder with a sufficient number
of copies of the same. In connection with an underwritten offering, the
Company shall indemnify such underwriters, their officers and directors and
each Person who controls such underwriters (within the meaning of the
Securities Act) to the same extent as provided above with respect to the
indemnification of the holders of Registrable Securities.
(b) In connection with any registration statement in which a
holder of Registrable Securities is participating, each such holder shall
furnish to the Company in writing such information and affidavits as the
Company reasonably requests for use in connection with any such registration
statement or prospectus and, to the extent permitted by law, shall indemnify
the Company, its directors and officers and each Person who controls the
Company (within the meaning of the Securities Act) against any losses, claims,
damages, liabilities and expenses resulting from any untrue or alleged untrue
statement of material fact contained in the registration statement, prospectus
or preliminary prospectus or any amendment thereof or supplement thereto or
any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading, but only
to the extent that such untrue statement or omission is contained in any
information or affidavit so furnished in writing by such holder; provided that
the obligation to indemnify shall be individual, not joint and several, for
each holder and shall be limited to the net amount of proceeds received by
such holder from the sale of Registrable Securities pursuant to such
registration statement.
(c) Any Person entitled to indemnification hereunder shall
(i) give prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification (provided that the failure to give
prompt notice shall not impair any Person's right to indemnification hereunder
to the extent such failure has not prejudiced the indemnifying party) and (ii)
unless in such indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties may exist with respect to
such claim, permit such indemnifying party to assume the defense of such claim
with counsel reasonably satisfactory to the indemnified party. If such defense
is assumed, the indemnifying party shall not be subject to any liability for
any settlement made by the indemnified party without its consent (but such
consent shall not be unreasonably withheld). An indemnifying party who is not
entitled to, or elects not to, assume the defense of a claim shall not be
obligated to pay the fees and expenses of more than one counsel for all
parties indemnified by such indemnifying party with respect to such claim,
unless in the reasonable
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judgment of any indemnified party a conflict of interest may exist between
such indemnified party and any other of such indemnified parties with respect
to such claim.
(d) The indemnification provided for under this Article 4
shall remain in full force and effect regardless of any investigation made by
or on behalf of the indemnified party or any officer, director or controlling
Person of such indemnified party and shall survive the transfer of securities.
The Company also agrees to make such provisions, as are reasonably requested
by any indemnified party, for contribution to such party in the event the
Company's indemnification is unavailable for any reason.
4.8 Participation in Underwritten Registrations. No Person
may participate in any registration hereunder which is underwritten unless
such Person (i) agrees to sell such Person's securities on the basis provided
in any underwriting arrangements approved by the Person or Persons entitled
hereunder to approve such arrangements and (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements.
4.9 No Inconsistent Agreements. The Company shall not
hereafter enter into any other registration agreement with respect to its
securities or any agreement which is inconsistent with or violates the rights
granted to the holders of Registrable Securities in this Article.
4.10 Short-Form Registrations.. The Company shall take all
steps necessary to permit the use of a Short-form Registration under Form S-3
(or successor form for similar registrations) in order to effect the sale of
New Partner Securities.
ARTICLE 5
AMENDMENT AND TERMINATION
5.1 Amendment and Waiver. Except as otherwise provided
herein, no modification, amendment or waiver of any provision of this
Agreement shall be effective against the Company or the Securityholders unless
such modification, amendment or waiver is approved in writing by each of the
Company, the New Partner Majority Securityholders and the Management Majority
Holders. The failure of any party to enforce any of the provisions of this
Agreement shall in no way be construed as a waiver of such provisions and
shall not affect the right of such party thereafter to enforce each and every
provision of this Agreement in accordance with its terms.
5.2 Termination of Agreement. This Agreement and the Letter
Agreement will terminate in respect of all Securityholders (a) with the
written consent of the Company, the New Partner Majority Holders and the
Management Majority Holders (b) upon the dissolution, liquidation or
winding-up of the Company (other than by way of merger), (c) upon the
consummation of a Sale of the Company (except with respect to the rights under
Sections 4.1 and 4.2 hereof, which shall survive), and (d) when the New
Partner Securities held by Vestar represent less than 10% of the New Partner
Securities held by Vestar as of the closing of the IPO. The termination of
this Agreement will not affect any indemnification or contribution obligations
under Section 4.7 hereof, which shall survive such termination.
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5.3 Termination as to a Party. Any Person who ceases to hold
any Securities shall cease to be a Securityholder and shall have no further
rights or obligations under this Agreement or the Letter Agreement (except
with respect to any indemnification and contribution obligations under Section
4.7 hereof and for any breaches of this Agreement by such Person occurring
while such Person was a Securityholder, which shall survive), provided,
however, that, for purposes of this Section 5.3, Vestar Capital Partners III,
L.P. shall be deemed to own any securities owned by Persons included in the
definition of "Vestar."
ARTICLE 6
MISCELLANEOUS
6.1 Certain Defined Terms. As used in this Agreement, the
following terms shall have the meanings set forth or as referenced below:
"Affiliate" of any particular Person means any other Person
Controlling, Controlled by or under common Control with such particular Person
or, in the case of a natural Person, any other member of such Person's Family
Group.
"Agreement" has the meaning set forth in the preamble hereof.
"Allocable Shares" has the meaning set forth in Section 3.1(b)
hereof.
"Board" has the meaning set forth in the recitals hereof.
"Class B Exempt Transfer" means a Conversion Transfer or a
Transfer to a Permitted Holder.
"Class A Stock" means the Class A Common Stock, par value
$.01, of the Company and any capital stock of the Company into which such
stock may be converted as a result of a recapitalization of the Company which
has no extraordinary voting power.
"Class B Stock" means Class B common stock, par value $.01,
of the Company.
"Common Stock" means, collectively, the common stock, par
value $.01 per share, including Class A and Class B Stock of the Company and
any other class or series of authorized capital stock of the Company which is
not limited to a fixed sum or percentage of par or stated value in respect to
the rights of the holders thereof to participate in dividends or in the
distribution of assets upon any liquidation, dissolution or winding up of the
Company.
"Common Stock Equivalents" means (without duplication with
any Common Stock or other Common Stock Equivalents) rights, warrants, options,
convertible securities, or exchangeable securities or indebtedness, or other
rights, exercisable for or convertible or and exchangeable into, directly or
indirectly, Common Stock or securities exercisable for or convertible or
exchangeable into Common Stock, whether at the time of issuance or upon the
passage of time or the occurrence of some future event.
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"Company" has the meaning set forth in the preamble hereof.
"Company-paid Registrations" has the meaning given such term
in Section 4.1(b).
A "Conversion Transfer" means any Transfer if, prior to or
as a result of such Transfer, the shares of Class B Stock being transferred
are converted into shares of Class A Stock.
"Demand Registrations" has the meaning given such term in
Section 4.1(a) hereof.
"Excluded Securities" has the meaning set forth in Section
3.1(d) hereof.
"Exclusivity Period" means the 365-day period immediately
following the Lockup Termination Date, provided such period shall be extended
by the number of days which any Demand Registrations is deferred under Section
4.1(d) hereof and for 90 days for each primary registration of equity
securities by the Company (other than the initial public offering of the
common stock of the Company and primary registrations effected in connection
with a Demand Registration) and, provided further, that, for purposes of
Section 4.2(e) hereof, the period shall end at the expiration of the 24th
month following the Lockup Termination Date (and shall be subject to same
extensions as in the immediately preceding proviso).
"Exempt Transfer" means a Transfer of Management Securities
(a) upon the death of the holder pursuant to the applicable laws of descent
and distribution or to a conservator appointed to manage the estate of such
holder, (b) to or among such Person's Family Group, or (c) to the Company (i)
incidental to the exercise, conversion or exchange of such securities in
accordance with their terms, any combination of shares (including any reverse
stock split) or (ii) incidental to any recapitalization, reorganization or
reclassification of, or any merger or consolidation involving, the Company,
provided that such transferee complies with the provisions of Section 3.2
hereof.
"Family Group" means, with respect to any individual, such
individual's spouse (including pursuant to any divorce decree) and descendants
(whether natural or adopted), siblings, and any legal entity established and
maintained for the benefit of any of the foregoing Persons.
"Fully-Diluted Shares" means, as of any date of
determination, the number of shares of such Common Stock outstanding plus
(without duplication) all shares of such Common Stock issuable, whether at
such time or upon the passage of time or the occurrence of future events, upon
the exercise, conversion or exchange of all then-outstanding Common Stock
Equivalents.
"IPO" means the consummation of the initial public offering of
the Common Stock of the Company.
"Xxxxx" has the meaning set forth in the preamble hereof.
"Xxxxxx" has the meaning set forth in the preamble hereof.
"Xxxxxx Holders" has the meaning set forth in the preamble
hereof.
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"Letter Agreement" has the meaning set forth in Section 6.4
hereof.
"Lockup Termination Date" has the meaning set forth in Section
4.1(a) hereof.
"Long-Form Registrations" has the meaning given such term in
Section 4.1(a) hereof.
"Management Majority Holder" means the Persons who own the
majority of the Management Securities.
"Management Securities" means (i) securities of the Company
owned by the Management Securityholders as of the effective date of this
Agreement or other stock received from the Company in respect of such stock or
subsequently acquired by such Persons and (ii) any Class B Stock of the Company
(including Class B Stock issued pursuant to a Permitted Option Plan).
"Management Securityholder" means any Persons identified in
the preamble of this Agreement as such and any Permitted Holder, so long as such
Person holds Management Securities.
"NASD" means the National Association of Securities Dealers.
"NASDAQ" means the National Association of Securities Dealers
Automated Quotation System.
"New Partners" has the meaning given such term in the preamble
hereof.
"New Partner Majority Holders" means Vestar.
"New Partner Securities" means any capital stock of the
Company initially owned by Vestar or other New Partners as a result of their
ownership of Class B Units of Insight Communications Company, L.P., including
any securities of the Company received from the Company in respect of such New
Partner Securities whether by way of recapitalization, stock split, stock
dividend, or similar transactions.
"Offered Securities" has the meaning given such term in
Section 3.1(a) hereof.
"Other Holder" has the meaning given such term in Section
3.1(a) hereof.
"Permitted Holder" means, with respect to any holder of
Management Securities, a Person to whom or which such holder may Transfer shares
in an Exempt Transfer, provided that no Person other than such Permitted Holder
or the Management Securityholder or Permitted Option Holder who Transferred such
stock to the Permitted Holder has the right to control, by contract or
otherwise, the voting power of Class B Stock owned by such Permitted Holder
hereof and, provided further, that, in the case of a legal entity, such Person
shall be a Permitted Holder only if Permitted Holders who are not legal entities
own 100% of the legal and beneficial ownership of such entity.
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"Permitted Option Holders" means Persons who receive stock
pursuant to a Permitted Option Plan and Persons to whom such holders could
Transfer Management Securities in an Exempt Transfer.
"Permitted Option Plan" means an option plan adopted by the
Company which is described in Section 4 of the Letter Agreement.
"Person" means an individual, a partnership, a joint venture,
a corporation, an association, a joint stock company, a limited liability
company, a trust, an unincorporated organization or a government or any
department or agency or political subdivision thereof.
"Piggyback Registration" has the meaning given such term in
Section 4.2(a) hereof.
"Public Offering" means a sale of Common Stock to the public
in an offering pursuant to an effective registration statement filed with the
SEC pursuant to the Securities Act, as then in effect, provided that a Public
Offering shall not include an offering of company securities as part of the
consideration for a business acquisition or combination or made solely in
connection with an employee benefit plan.
"Public Sale" means a sale of Securities pursuant to a Public
Offering or a Rule 144 Sale.
"Registrable Securities" means (i) the Securities, (ii) any
Common Stock issued or issuable with respect to the securities referred to in
clause (i) by way of a conversion right, stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization. As to any particular Registrable Securities, such
securities will cease to be Registrable Securities when they have been (i)
Transferred in a Public Sale or (ii) otherwise Transferred and new certificates
not bearing the legend set forth in Section 6.2 hereof shall have been delivered
by the Company and subsequent disposition of such securities shall not require
registration or qualification of such securities under the Securities Act or
such state securities or blue sky laws then in force.
"Registration Expenses" has the meaning given such term in
Section 4.6(a).
"Required Vestar Directors" means two individuals designated
by Vestar so long as Vestar continues to own at least 25% of the outstanding
Common Stock of the Company it owned as of the closing of the IPO and one
individual designated by Vestar so long as Vestar owns at least 10% of the
outstanding Common Stock of the Company it owned as of the closing of the IPO.
For this purpose, the amount owned by Vestar as of the closing of the IPO shall
be adjusted to account for any stock split occurring after the IPO.
"Rule 144" means Rule 144 adopted under the Securities Act (or
any successor rule or regulation).
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"Rule 144 Sale" means a sale of Securities to the public
through a broker, dealer or market-maker pursuant to the provisions of Rule 144
adopted under the Securities Act (or any successor rule or regulation).
"Sale" has the meaning given such term in Section 4.5(b)
hereof.
"Sale of the Company" means the consummation of a transaction,
whether in a single transaction or in a series of related transactions that are
consummated contemporaneously (or consummated pursuant to contemporaneous
agreements), with any Person or Persons (other than an affiliate of the Company)
on an arm's-length basis, pursuant to which such party or parties (i) acquire
(whether by merger, stock purchase, recapitalization, reorganization,
redemption, issuance of capital stock or otherwise) more than 50% of the Fully
Diluted Shares or (ii) acquire assets constituting all or substantially all of
the assets of the Company and its Subsidiaries on a consolidated basis.
"Sale Notice" has the meaning given such term in Section
3.1(b) hereof.
"Sandler" has the meaning given such term in the preamble
hereof.
"Sandler IV" has the meaning given such term in the preamble
hereof.
"Sandler FTE" has the meaning given such term in the preamble
hereof.
"SEC" means the Securities and Exchange Commission.
"Securities" means, collectively, the New Partner Securities
and the Management Securities.
"Securityholder" has the meaning given such term in the
preamble hereof.
"Securities Act" means the Securities Act of 1933, as amended
from time to time.
"Selling Holder" has the meaning given such term in Section
3.1(a) hereof.
"Shelf Registration" has the meaning given such term in
Section 4.5(a) hereof.
"Short-Form Registrations" has the meaning given such term in
Section 4.1(a) hereof.
"Subsidiary" means any corporation with respect to which
another specified corporation has the power to vote or direct the voting of
sufficient securities to elect directors having a majority of the voting power
of the board of directors of such corporation.
"Tag-Along Notice" has the meaning given such term in Section
3.1(b) hereof.
"Tag-Along Transfer" means any Transfer of Management
Securities (or series of related Transfers) by the Xxxxxx Holders or their
Permitted Transferees agreed to within three years
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of the IPO to a single Person and the Affiliates of such Person which results
in the Transfer of more than fifty percent (50%) of the Management Securities
owned by the Xxxxxx Holders at the time of the IPO.
"Transfer" means (in either the noun or the verb form,
including with respect to the verb form, all conjugations thereof within their
correlative meanings) with respect to any security, the gift, sale, assignment,
transfer, pledge, hypothecation or other disposition (whether for or without
consideration, whether directly or indirectly, and whether voluntary,
involuntary or by operation of law) of such Security or any economic or voting
interest therein.
"Vestar" has the meaning given such term in the preamble
hereof but shall include any limited partner of Vestar or any partner, principal
or Affiliate of the General Partner of Vestar.
"Vestar Directors" has the meaning given such term in Section
2.1(a) hereof.
"Xxxxxxx" has the meaning given such term in the preamble
hereof.
6.2 Legends.
(a) Securityholders Agreement. Each certificate or
instrument evidencing Management Securities and each certificate or instrument
issued in exchange for or upon the Transfer of any such Management Securities
(if such securities remain subject to this Agreement after such Transfer)
shall be stamped or otherwise imprinted with a legend (as appropriately
completed under the circumstances) in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE CONSTITUTE
MANAGEMENT SECURITIES UNDER A CERTAIN SECURITYHOLDERS
AGREEMENT DATED AS OF MAY 11, 1999, AMONG THE ISSUER OF SUCH
SECURITIES (THE "COMPANY") AND CERTAIN OF THE COMPANY'S
SECURITYHOLDERS AND, AS SUCH, ARE SUBJECT TO CERTAIN VOTING
PROVISIONS, PURCHASE RIGHTS AND RESTRICTIONS ON TRANSFER SET
FORTH IN THE SECURITYHOLDERS AGREEMENT. A COPY OF SUCH
SECURITYHOLDERS AGREEMENT WILL BE FURNISHED WITHOUT CHARGE
BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST."
(b) Registrable Securities. Each instrument or certificate
evidencing Securities and each instrument or certificate issued in exchange or
upon the Transfer of any Securities shall be stamped or otherwise imprinted
with a legend substantially in the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND MAY NOT BE OFFERED OR SOLD UNLESS IT
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HAS BEEN REGISTERED UNDER THE SECURITIES ACT OR UNLESS AN
EXEMPTION FROM REGISTRATION IS AVAILABLE (AND, IN SUCH CASE,
AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY
SHALL HAVE BEEN DELIVERED TO THE COMPANY TO THE EFFECT THAT
SUCH OFFER OR SALE IS NOT REQUIRED TO BE REGISTERED UNDER
THE SECURITIES ACT)."
(c) Removal of Legends. Whenever in the opinion of the
Company and counsel reasonably satisfactory to the Company (which opinion
shall be delivered to the Company in writing) the restrictions described in
any legend set forth above cease to be applicable to any Securities, the
holder thereof shall be entitled to receive from the Company, without expense
to the holder, a new instrument or certificate not bearing a legend stating
such restriction.
6.3 Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
6.4 Entire Agreement. Except as otherwise expressly set forth
herein, this document and that certain letter agreement dated May 11, 1999,
among Vestar, the Company and Insight Communications, L.P. (the "Letter
Agreement") embodies the complete agreement and understanding among the parties
hereto with respect to the subject matter hereof and supersedes and preempts any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
6.5 Successors and Assigns. Except as otherwise provided
herein, this Agreement shall bind and inure to the benefit of and be enforceable
by the Company and its successors and assigns and the Securityholders and any
subsequent holders of Securities and the respective successors and assigns of
each of them, so long as they hold Securities.
6.6 Counterparts. This Agreement may be executed in separate
counterparts each of which shall be an original and all of which taken together
shall constitute one and the same agreement.
6.7 Remedies. The Company and the Securityholders shall be
entitled to enforce their rights under this Agreement specifically, to recover
damages by reason of any breach of any provision of this Agreement (including
costs of enforcement) and to exercise all other rights existing in their favor.
The parties hereto agree and acknowledge that money damages may not be an
adequate remedy for any breach of the provisions of this Agreement and that the
Company or any Securityholder may in its or his sole discretion apply to any
court of law or equity of competent
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jurisdiction for specific performance or injunctive relief (without posting a
bond or other security) in order to enforce or prevent any violation of the
provisions of this Agreement.
6.8 Notices. Any notice provided for in this Agreement shall
be in writing and shall be either personally delivered, or mailed first class
mail (postage prepaid) or sent by reputable overnight courier service (charges
prepaid) to the Company at the address set forth below and to any other
recipient at the address indicated on the attached Schedule of Securityholders
and to any subsequent holder of Securities subject to this Agreement at such
address as indicated by the Company's records, or at such address or to the
attention of such other person as the recipient party has specified by prior
written notice to the sending party. Notices will be deemed to have been given
hereunder when sent by facsimile (receipt confirmed) delivered personally, five
days after deposit in the U.S. mail and one day after deposit with a reputable
overnight courier service. The Company's address is:
Insight Communications Company, Inc.
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
A copy of each notice given to the Company shall be given to Vestar (and no
notice to the Company shall be effective until such copy is delivered to
Vestar) at the following address:
Vestar Capital Partners III, L.P.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Managing Director
6.9 Governing Law. The General Corporation Law of the State
of Delaware shall govern all questions arising under this Agreement concerning
the relative rights of the Company and its stockholders. All other questions
concerning the construction, validity and interpretation of this Agreement
shall be governed by and construed in accordance with the domestic laws of the
State of New York, without giving effect to any choice of law 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.
6.10 Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
6.11 Effective Date. This Agreement shall be effective only
upon the consummation of a Qualifying IPO (as that term is defined in the Letter
Agreement).
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IN WITNESS WHEREOF, the parties hereto have executed this
Securityholders Agreement on the day and year first above written.
INSIGHT COMMUNICATIONS COMPANY, INC.
By:
--------------------------------------
Name:
Title:
VESTAR CAPITAL PARTNERS III, L.P.
By: Vestar Associates III, L.P.
Its: General Partner
By: Vestar Associates Corporation III
Its: General Partner
By:
--------------------------------------
Name:
Title:
--------------------------------------
Xxxxxx X. Xxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxxx
--------------------------------------
Xxx X. Xxxxx
XXXXXXX CAPITAL PARTNERS IV, L.P.
By: Sandler Investment Partners, L.P.,
its sole general partner
By: Sandler Capital Management,
its sole general partner
By: MJDM Corp.,
its general partner
By:
--------------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: President
SANDLER CAPITAL PARTNERS IV FTE, L.P.
By: Sandler Investment Partners, L.P.,
its sole general partner
By: Sandler Capital Management,
its sole general partner
By: MJDM Corp.,
its general partner
By:
--------------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: President
May 11, 1999
Insight Communications Company, L.P.
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
Dear Xxxxxxx:
This letter agreement sets forth the agreement of the
signatories hereto related to an initial public offering (the "IPO") of common
stock of Insight Communications Company, Inc. ("Insight"), which will be the
transferee of all of the equity interests of Insight Communications Company,
L.P. (the "Partnership").
In order to effectuate the IPO, the parties hereto agree
that the following transaction will occur at or prior to the closing of the
IPO:
1. Effective immediately prior to the closing of the IPO,
Insight will, directly or indirectly, own all of the assets of the Partnership
and will, directly or indirectly, be responsible for all of the liabilities of
the Partnership.
2. Contemporaneously with the closing of the IPO, the
Partnership will distribute to holders of Class B Units of the Partnership, in
proportion to their ownership of Class B Units, that number of shares of common
stock of Insight (the "Common Stock") with a value (based on the price of stock
in the IPO) equal to the "Adjusted Class B Equity Value" (as illustrated in
Appendix A hereto), in exchange for all of the Class B Units held by such
holders and, after such distribution, the holders of such Class B Units shall
have no further rights or obligations under the Partnership Agreement, except
for any rights or obligations arising from any breach of the Partnership
Agreement (as defined below) occurring prior to the date of distribution. The
other partners of the Partnership will receive solely Common Stock identical to
the stock received by the holders of Class B Units of the Partnership, provided
that Management Securityholders and Permitted Holders (as both terms are defined
in the Securityholders Agreement referred to in paragraph 3 hereto) shall be
entitled to receive Class B Stock of Insight, which is identical in all respect
to Class A Stock except with respect to voting power. For purposes of this
agreement, the capitalized terms listed below have the meanings listed opposite
such term:
Adjusted Class B Equity Value Class B Equity Value divided by .97.
Class B Current Ownership The total Class B Units outstanding
(currently 47,215,859) divided by
the total Class A and Class B Units
outstanding (currently 89,179,344)
immediately
preceding the IPO. (Note: such
ownership percentage is currently
52.9%.)
Class B Equity Value Pre-Option Class B Equity Value less
the General Partner Option Value.
Class B IRR Threshold 25% compounded annually.
Class B IRR Threshold Time Period Three years plus the amount of time
elapsed, if any, from July 28, 1999
until the effective date of the
initial public offering of the
Company's Common Stock.
Class B Minimum Equity Value The product of the Implied IRR
Equity Hurdle (as defined below) and
the Class B Current Ownership.
Class B Residual Equity Value Ownership The product, expressed as a
percentage, of (A) 25 divided by 45
and (B) the Class B Current
Ownership (Note: such ownership
percentage is currently 29.4%).
General Partner Option Value 6.667% of the Pre-Option Class B
Equity Value (as defined below).
Implied IRR Equity Hurdle $50
million divided by the Class B
Current Ownership and multiplied by
1 plus the Class B IRR Threshold
raised to the power of the Class B
IRR Threshold Time Period.
Post-Money Equity Value The IPO offering price per share
multiplied by the pro forma
fully-diluted shares outstanding.
Pre-Option Class B Equity Value The sum of (A) the Class B Minimum
Equity Value and (B) the product of
the Class B Residual Equity Value
Ownership and the Residual Equity
Value.
Residual Equity Value The Residual Equity Value to the
Existing Class A and Class B Holders
less the Implied IRR Equity Hurdle.
-2-
Residual Equity Value to Existing The Post-Money Equity Value less the
Class A and Class B Holders total value of shares sold in the
IPO.
Except as specifically provided herein, all defined terms
shall have the same meaning as in the Securityholders Agreement (as defined
below).
3. Xxxxxx Xxxxxx, Xxx Xxxxx, Xxxxxxx Xxxxxxx, Vestar Capital
Partners III, L.P. ("Vestar"), Insight (and, if they so elect, other holders of
Class B Units), the Xxxxxx Holders and all other Management Securityholders will
execute a securityholders agreement in the form attached hereto as Exhibit B
(the "Securityholders Agreement"). No other partner of the Partnership shall
receive any registration rights from the Company upon the IPO.
4. The certificate of incorporation of Insight shall provide
that Class B Stock shall convert to shares of Class A Stock when such shares are
held by persons other than "Permitted Holders," as that term is defined in the
Securityholders Agreement. Notwithstanding the foregoing, the Company may issue
additional shares of Class B Stock to senior executives of the Company pursuant
to an option plan, provided that (a) the maximum number of Class B shares
issuable and issued pursuant to the exercise of such options shall not exceed
three percent (3%) of the fully-diluted outstanding Common Stock of the Company
on the date that such options are granted, (b) the exercise price for each share
issued pursuant to such option shall be no less than its fair market value on
the date such option is granted and (c) each Person receiving Class B Stock
pursuant to an option must become a party to the Securityholders Agreement as a
Management Securityholder.
5. Insight shall (a) pay all expenses of the holders of Class
B Units incurred in connection with the IPO, including expenses incurred in the
negotiation and preparation of the documents referred to in this letter
agreement, and (b) at all times that directors nominated by Vestar are on the
board of directors of Insight, maintain directors and officers liability
insurance in an amount of at least $10 million, and shall, in good faith,
investigate and consider an amount of coverage of $20 million or more.
6. The parties hereto agree that the IPO shall not be
consummated unless (a) it is consummated prior to January 31, 2000, (b) all of
the documents referred to herein are duly executed by the parties thereto and
all the transactions listed in paragraphs 1-5 above occur on or prior to the
closing of the IPO, and (c) the IPO constitutes a "qualifying IPO." For purposes
of this paragraph, the IPO will be a "qualifying IPO" if (i) the IPO results in
the listing of the Common Stock on NASDAQ or a national securities exchange and
yields gross proceeds to Insight of at least one hundred twenty-five million
dollars ($125,000,000) and (ii) as of the date of the IPO, the value of the
equity of Insight distributed to the holders of Class A Units and Class B Units
of the Partnership and persons who hold interests in the General Partner of the
Partnership, in each case as of the date hereof, based on the price per share of
common stock in the IPO, is at least three hundred million dollars
($300,000,000).
7. Insight will distribute to the holders of Class B Units who
are holders on the date hereof an amount equal to any tax costs, of any kind,
including interest and
-3-
penalties, incurred by them as a result of (a) the transactions contemplated
herein to occur at or immediately prior to the IPO and (b) any taxable income of
the Partnership incurred during the taxable year of the Partnership in which the
IPO occurs. The Partnership and Insight will (i) use all commercially reasonable
efforts to cause any distributions under this paragraph 7 to be excludable from
the gross income of the recipients and, if such distribution is includable in
gross income, it shall be "grossed up" so that the after-tax distribution is
sufficient to pay the tax costs giving rise to the distribution, (ii) consult
with Vestar prior to finalizing any calculation of tax consequences of the
transaction contemplated hereunder or of the taxable income in the year in which
the IPO occurs and (iii) provide the Form K-1 for the year in which the IPO
occurs as promptly as practicable but in no event later than March 31 of the
following year. If any distribution is made hereunder (a "Section 7
Distribution"), each holder of Units, other than holders of Class B Units, and
the General Partner shall be entitled to a distribution from Insight equal to
the "Pro Rata Amount," and there shall be no other distribution (including by
way of any loan, other than a Qualified Loan, from Insight or the Partnership)
to such holders of Units or the General Partner (or persons who own interests in
the General Partner) relating to the taxable income of the Partnership. For
purposes of this letter, the "Pro Rata Amount" means the amount that would be
distributed to each Class A Partner and the General Partner as a Net Tax
Distribution Shortfall under Section 11.2(B) of the agreement of partnership of
the Partnership (the "Partnership Agreement") if the Section 7 Distribution were
the only Tax Distribution received by the holders of Class B Units. For the
purpose of this paragraph 7, defined terms used herein but otherwise undefined
shall have the same meaning as in the Partnership Agreement. All Section 7
Distributions shall be made, to the extent possible, prior to the date that the
related tax payment must be made, but in any event no later than 30 days after
the date that the amount of the Section 7 Distribution is determined. For
purposes of this paragraph 7, "Qualified Loan" shall mean funds loaned to
members of management of Insight as of the time of the IPO (excluding Xxxxxx
Xxxxxx): (A) with terms and borrowers approved by the board of directors of
Insight; (B) which are used to pay income taxes of the borrower directly
resulting from the transfer of partnership interests of the Partnership to
Insight or from the distribution of stock of Insight to such persons at the time
of the IPO; and (C) which, when added to all other loans made for this purpose,
do not exceed, in the aggregate, $5 million.
8. This letter agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective predecessors, successors,
assigns, heirs, executors, administrators and personal representatives, and each
of them, whether so expressed or not. This letter agreement is not assignable by
any party without the prior written consent of the other parties, and any
attempted assignment of this letter agreement without such prior written consent
shall be void.
9. The parties hereto acknowledge and agree that money damages
may not be an adequate remedy for any breach of the provisions of this letter
agreement, and any party shall be entitled to obtain specific performance and/or
injunctive relief (without posting any bond or other security) in order to
enforce or prevent any violation of the provisions of this letter agreement.
-4-
10. This letter agreement will be governed by the laws of the
State of New York, without regard to conflict principles.
11. This letter agreement may be executed in any number of
counterparts, each of which shall be an original, and all of which shall
constitute one and the same instrument.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
[SIGNATURE PAGE FOLLOWS]
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The parties hereto have caused this agreement to be duly
authorized and executed below as evidence of their agreement to be bound by the
terms of this letter agreement.
INSIGHT COMMUNICATIONS COMPANY,
L.P.
By: ICC Associates, L.P.
Its: General Partner
By: Insight Communications, Inc.
Its: General Partner
By:
--------------------------------
Name:
Title:
VESTAR CAPITAL PARTNERS III, L.P.
By: Vestar Associates III, L.P.
Its: General Partner
By: Vestar Associates Corporation III
Its: General Partner
By:
--------------------------------
Name:
Title:
--------------------------------
Xxxxxx X. Xxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxx
--------------------------------
Xxx X. Xxxxx
XXXXXXX CAPITAL PARTNERS IV, L.P.
By: Sandler Investment Partners, L.P.,
its sole general partner
By: Sandler Capital Management,
its sole general partner
By: MJDM Corp.,
its general partner
By:
--------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: President
SANDLER CAPITAL PARTNERS IV FTE,
L.P.
By: Sandler Investment Partners, L.P.,
its sole general partner
By: Sandler Capital Management,
its sole general partner
By: MJDM Corp.,
its general partner
By:
--------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: President
