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EXHIBIT 10(b)
[EXECUTION COPY]
AMENDED AND RESTATED
STOCKHOLDERS' AGREEMENT
AMONG
UNIVERSAL STUDIOS HOLDING I CORP.,
MEI HOLDING INC.
THE SEAGRAM COMPANY LTD.
AND
SEAGRAM DEVELOPMENTS, INC.
DATED AS OF DECEMBER 9, 1998
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS.......................................................................................................2
SECTION 1.1 Certain Defined Terms................................................................................2
ARTICLE II
CORPORATE GOVERNANCE..............................................................................................7
SECTION 2.1 Composition of the Board.............................................................................7
SECTION 2.2 Board Procedures.....................................................................................8
SECTION 2.3 Limitation on Charter or By-law Amendments...........................................................9
ARTICLE III
TRANSFER OF SHARES................................................................................................9
SECTION 3.1 General Restriction..................................................................................9
SECTION 3.2 Legends..............................................................................................9
SECTION 3.3 Certain Restrictions on Transfer....................................................................10
SECTION 3.4 Rights of First Refusal.............................................................................11
SECTION 3.5 Right to Participate in Certain Dispositions........................................................14
SECTION 3.6 Right to Compel Participation in Certain Sales......................................................17
SECTION 3.7 Transferees to Execute Agreement....................................................................19
SECTION 3.8 Certain Information.................................................................................20
SECTION 3.9 Improper Sale or Encumbrance........................................................................20
SECTION 3.10 Determination of Share Consideration...............................................................20
ARTICLE IV
REGISTRATION RIGHTS..............................................................................................21
SECTION 4.1 Incidental Registration.............................................................................21
SECTION 4.2 Registration on Request.............................................................................22
SECTION 4.3 Registration Procedures.............................................................................23
SECTION 4.4 Preparation: Reasonable Investigation...............................................................27
SECTION 4.5 Indemnification.....................................................................................27
SECTION 4.6 Contribution........................................................................................29
ARTICLE V
ADDITIONAL AGREEMENTS............................................................................................31
SECTION 5.1 Right to Purchase USHI New Securities...............................................................31
SECTION 5.2 Issuance of Other Securities to Affiliates..........................................................34
SECTION 5.3 Transactions With Affiliates........................................................................35
SECTION 5.4 Restrictions on Certain Fees........................................................................35
SECTION 5.5 Non-Pro Rata Recapitalizations; Stock Repurchases;
Dividends and Distributions................................................................35
SECTION 5.6 Non-Ordinary Course Transactions....................................................................36
SECTION 5.7 Business Opportunities..............................................................................36
SECTION 5.8 Access to Information; Invitation to Certain Meetings and Events....................................36
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SECTION 5.9 Preferred Vendor/Supplier Status....................................................................37
SECTION 5.10 Technology Matters; Cross Promotion................................................................38
SECTION 5.11 Representations and Warranties of the Parties......................................................39
ARTICLE VI
MISCELLANEOUS....................................................................................................39
SECTION 6.1 Expenses............................................................................................39
SECTION 6.2 Notices.............................................................................................39
SECTION 6.3 Public Announcements................................................................................42
SECTION 6.4 Headings............................................................................................43
SECTION 6.5 Severability........................................................................................43
SECTION 6.6 Entire Agreement....................................................................................43
SECTION 6.7 Assignment..........................................................................................43
SECTION 6.8 No Third Party Beneficiaries........................................................................43
SECTION 6.9 Amendment...........................................................................................43
SECTION 6.10 Governing Law......................................................................................44
SECTION 6.11 Counterparts.......................................................................................44
SECTION 6.12 Specific Performance...............................................................................44
SECTION 6.13 Termination........................................................................................45
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AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT (this "Agreement") dated
as of December 9, 1998, among Universal Studios Holding I Corp., a corporation
organized under the laws of Delaware (the "Company"), MEI Holding Inc., a
corporation organized under the laws of Delaware ("Holding"), The Seagram
Company Ltd., a corporation organized under the laws of Canada ("Seagram") and
Seagram Developments, Inc., a corporation organized under the laws of Delaware
("Developments").
WHEREAS, the Company, Seagram, Holding and Matsushita Electric
Industrial Co., Ltd., a corporation organized under the laws of Japan (the
"Parent") are parties to an Amended and Restated Stock Purchase Agreement dated
as of April 9, 1995 (as amended, the "Purchase Agreement"), pursuant to which
(i) Seagram subscribed for and purchased from the Company, and the Company
issued and sold to Seagram, 3,100 shares of Class A Common Stock, par value
$0.01 per share, of the Company (the "Class A Common Stock", collectively with
the Class B Common Stock, par value $0.01 per share, of the Company, the "Common
Stock"), and (ii) Seagram purchased from Holding, and Holding sold to Seagram,
2,604 shares of Class A Common Stock;
WHEREAS, in connection with the purchase of the Subscription
Shares (as defined in the Purchase Agreement), the Company, Seagram and Holding
entered into a Stockholders' Agreement, dated as of June 5, 1995 (the "Existing
Agreement");
WHEREAS, Seagram and Koninklijke Philips Electronics, N.V.
("Philips") have entered into an Offer Agreement, dated as of June 21, 1998 (the
"Offer Agreement"), whereby Seagram has agreed to purchase all shares of the
common stock of PolyGram N.V.
("PolyGram");
WHEREAS, concurrently with the execution and delivery of this
Agreement, Seagram, Centenary Holding N.V., a corporation organized under the
laws of The Netherlands ("Bidco"), the Company, Holding and MHI Investment
Corporation, a corporation organized under the laws of Delaware ("MHI Sub") are
entering into a Subscription and Redemption Agreement (the "Subscription and
Redemption Agreement") pursuant to which, among other matters, the Company will
redeem 380.2951 shares of its common stock held by Holding for US$460,172,460,
Holding will contribute that amount to the capital of MHI Sub and MHI Sub will
in turn contribute that amount, together with all of its assets and liabilities,
in exchange for 16,119 shares of common stock of Bidco, such that MHI Sub's
Applicable Percentage in Bidco will be equal to Holding's Applicable Percentage
(as defined in the Universal Stockholders' Agreement) in the Company after
giving effect to the redemption and subscription;
WHEREAS, concurrently with the execution and delivery of this
Agreement, Bidco, MHI Sub and Seagram International B.V., a corporation
organized under the laws of The Netherlands ("SIBV") are entering into a
Stockholders' Agreement (the "Bidco Stockholders' Agreement"); and
WHEREAS, it is a condition to Seagram's, MHI Sub's and
Holding's willingness to enter into and approve the above-described transactions
that the parties hereto amend and restate the Existing Agreement as provided for
herein;
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NOW, THEREFORE, in consideration of the premises and the
mutual agreements and covenants hereinafter set forth, the parties hereto hereby
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Certain Defined Terms. As used in this Agreement,
the following terms have the following meanings:
"Affiliate" means, with respect to any specified Person, any
other Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person. For purposes of this definition, from and after the date hereof, Holding
and any Person who directly or indirectly controls Holding shall not be
considered an Affiliate of the Company.
"Applicable Percentage" means, at any time, the ratio of (i)
the then outstanding Voting Interests of the Company beneficially owned by
Holding and its Permitted Transferees to (ii) the total then outstanding Voting
Interests of the Company, expressed as a percentage. For purposes of calculating
Holding's Applicable Percentage under Sections 5.8, 5.9 and 5.10 of this
Agreement, Voting Interests of the Company issued to any third party (other than
Seagram or its Affiliates or any third party that is a direct competitor of
Parent and Parent's Subsidiaries) shall be disregarded in calculating the total
then outstanding Voting Interests of the Company.
"Applicable Provisions" means, with respect to any Prospective
Transferee of any Stockholder, (a) if such Prospective Transferee is a Permitted
Transferee of such Stockholder, all of the terms and provisions of this
Agreement, (b) if such Prospective Transferee (i) is a Third Party transferee of
Seagram or any Permitted Transferee of Seagram and (ii) has agreed to vote,
subsequent to such transfer, for (or to not vote against) the election of one or
more designees of Seagram or such Permitted Transferee of Seagram to the Board,
Article II of this Agreement, and (c) if such Prospective Transferee is a Third
Party Transferee of Holding or any Permitted Transferee of Holding, (i) if such
Prospective Transferee is a Prospective Transferee of more than 50% of the
Shares held by Holding on the date hereof, as adjusted for any
Recapitalizations, all of the terms and provisions of this Agreement other than
Sections 2.1 and 2.2, (ii) except as provided in clause (i), if such Prospective
Transferee is a Prospective Transferee of more than 10% of the Shares held by
Holding on the date hereof, as adjusted for any Recapitalizations, Section 2.3,
Article III, Article IV (other than Section 4.2) and Article V (other than
Sections 5.1, 5.8, 5.9 and 5.10) and (iii) if such Prospective Transferee is a
Prospective Transferee of 10% or less of the Shares held by Holding on the date
hereof, as adjusted for any Recapitalizations, Section 2.3, Section 3.6, Article
IV (other than Section 4.2) and Article V (other than Sections 5.1, 5.8, 5.9,
and 5.10).
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"Beneficial Owner" or "Beneficially Own" has the meaning given
such term in Rule 13d-3 under the Exchange Act, provided that beneficial
ownership under Rule 13d(a) 3(1)(i) shall be determined based on whether a
Person has a right to acquire beneficial ownership within 60 days or thereafter.
"Board" means the Board of Directors of the Company.
"Capital Stock" means, with respect to any Person at any time,
any and all shares, interests, participations or other equivalents (however
designated, whether voting or non-voting) of capital stock, partnership
interests (whether general or limited) or equivalent ownership interests in or
issued by such Person.
"Cash Equivalents" means (a) marketable direct obligations
issued or unconditionally guaranteed by the United States government or issued
by any agency thereof and backed by the full faith and credit of the United
States, in each case maturing within one year from the date of acquisition
thereof, (b) marketable direct obligations issued by any state of the United
States or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having the highest rating obtainable
from any of Standard & Poor's Corporation, Xxxxx'x Investors Service, Inc. or
Duff & Xxxxxx Credit Rating Co. or (c) commercial paper maturing not more than
one year from the date of issuance thereof and, at the time of acquisition,
having the highest rating obtainable from either Standard & Poor's Corporation
or Xxxxx'x Investors Service, Inc.
"Commission" means the Securities and Exchange Commission, and
any successor commission or agency having similar powers.
"Control" (including the terms "controlled by" and "under
common control with"), with respect to the relationship between or among two or
more Persons, means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the affairs or
management of a Person, whether through the ownership of voting securities, as
trustee or executor, by contract or otherwise.
"Encumbrance" means any security interest, pledge, mortgage,
lien, charge, adverse claim of ownership or use, or other encumbrance of any
kind.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Fully Diluted Shares" means the aggregate of (i) the number
of Shares issued and outstanding (other than Shares held in the treasury of the
Company or held by any Subsidiary) and (ii) the number of Shares issuable upon
(x) the exercise of any then exercisable in-the-money outstanding options,
warrants or similar instruments (other than such instruments held by the Company
or any Subsidiary) and (y) the exercise of any then exercisable conversion or
exchange
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rights with respect to any outstanding securities or instruments (other than
such securities or instruments held by the Company or any Subsidiary).
"Marketable Securities" means securities that are (a) (i)
securities of or other interests in any Person that are traded on a national
securities exchange or reported on by the National Association of Securities
Dealers Automated Quotation System or (ii) debt securities on market terms of an
issuer that has debt or equity securities that are so traded or so reported on
and in which Marketable Securities a nationally recognized securities firm has
agreed to make a market, and (b) not subject to restrictions on transfer as a
result of any applicable contractual provisions or the provisions of the
Securities Act or, if subject to such restrictions under the Securities Act,
also subject to registration rights reasonably acceptable to the Person
receiving such securities.
"Non-Qualifying Securities" means (i) preferred stock which
(A) is entitled to a dividend that is determined based upon, in whole or in
part, the financial performance of, or other dividends by, the Company or any of
its Subsidiaries or their respective businesses or assets, (B) is a Voting
Interest or has any consent or other similar rights (except in the case of
dividend arrearages) or (C) is convertible into or exchangeable or exercisable
for (x) any Non-Qualifying Security or (y) any other property of the Company or
its Subsidiaries, (ii) debt securities that are Voting Interests or are
convertible into or exchangeable or exercisable for (x) any Non-Qualifying
Security or (y) any other property of the Company or its Subsidiaries, (iii) any
common stock other than the Common Stock, except for equity securities of any
Subsidiary issued to any subsidiary of Seagram (other than the Company or any
Subsidiary) to the extent necessary to achieve or maintain consolidation of the
Company and its Subsidiaries with Seagram for U.S. Federal income tax purposes,
in connection with the issuance of any securities, or the issuance of options,
warrants or similar rights to acquire equity securities, of any Subsidiary to
employees, consultants, officers or directors of any Subsidiary pursuant to any
employee stock option, stock purchase, stock bonus plan or other similar stock
agreement or arrangement, (iv) any partnership interests (whether general or
limited) or equivalent ownership interests and (v) rights, options or warrants
to purchase, and securities of any type whatsoever that are, or may become,
convertible into, or exchangeable or exercisable for, any securities or other
interests described in clauses (i) through (iv).
"Permitted Transferee" means (a) the Company or any
Subsidiary, (b) the Parent, (c) Seagram or (d) any subsidiary of the Parent or
Seagram, a majority of the voting and economic interests of which are owned,
directly or indirectly, by the Parent or Seagram, as applicable, including,
without limitation, Bidco.
"Person" means any individual, partnership, firm, corporation,
association, trust, unincorporated organization, joint venture or other entity,
as well as any syndicate or group that would be deemed to be a person under
Section 13(d)(3) of the Exchange Act.
"Prospective Transferee" has the meaning specified in Section
3.7(a).
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"Public Company" has the meaning specified in Section 3.8(b).
"Public Offering" means (a) an underwritten public offering of
equity securities of the Company pursuant to a registration statement which has
been declared effective by the Commission under the Securities Act and after
which there is an active trading market for the Common Stock and (b) any
issuance of any Shares as a dividend or other distribution to the public holders
of the common stock of Seagram.
"Recapitalization" means any stock split, dividend or
combination, or any recapitalization, merger, consolidation, exchange or other
similar reorganization.
"Registrable Securities" means all Shares held by
Stockholders, and any Common Stock which may be issued or distributed in respect
thereof by way of any Recapitalization.
"Registration Expenses" means all out-of-pocket expenses
incident to the Company's performance of or compliance with Article IV,
including, without limitation, all registration and filing fees (including
filing fees with respect to the National Association of Securities Dealers,
Inc.), all fees and expenses of complying with state securities or "blue sky"
laws (including reasonable fees and disbursements of underwriters' counsel in
connection with the preparation of any "blue sky" memorandum or survey), all
printing expenses, all listing fees, all registrars' and transfer agents' fees,
the fees and disbursements of counsel for the Company and of its independent
public accountants, including, without limitation, the expenses of any special
audits and/or "cold comfort" letters required by or incident to such performance
and compliance, and the reasonable fees and disbursements of one outside counsel
retained by the holders of Registrable Securities being registered (which
counsel shall be satisfactory to the holders of a majority of the Registrable
Securities being registered), but excluding underwriting discounts and
commissions and applicable transfer taxes, if any, which shall be borne by the
sellers of the Registrable Securities being registered in all cases.
"Restricted Shares" means all Shares other than (a) Shares
that have been registered under a registration statement pursuant to the
Securities Act, (b) Shares with respect to which a Sale has been made in
reliance on and in accordance with Rule 144 or (c) Shares with respect to which
the holder thereof shall have delivered to the Company either (i) an opinion, in
form and substance reasonably satisfactory to the Company, of counsel, who shall
be reasonably satisfactory to the Company, or (ii) a "no action" letter from the
staff of the Commission, to the effect that subsequent transfers of such Shares
may be effected without registration under the Securities Act or compliance with
Rule 144.
"Rule 144" means Rule 144 (or any successor provision) under
the Securities Act.
"Rule 144 Transaction" means any Sale of Shares made in
reliance upon Rule 144 (as in effect on the date hereof) which complies with
paragraphs (d), (f) and (g) thereof (as in effect on the date hereof),
regardless of whether at the time of such Sale the seller is entitled to rely
upon paragraph (k) of Rule 144 in connection with the Sale of such Shares.
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"Sale" means any sale, assignment, transfer, distribution or
other disposition of Shares or of a participation therein, whether voluntarily
or by operation of law.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Share" means any share of Common Stock of the Company and any
securities issued by the Company in respect thereof, or in substitution
therefor, in connection with any Recapitalization.
"Stockholder" means each Person (other than the Company) who
shall be a party to this Agreement, whether in connection with the execution and
delivery hereof as of the date hereof, pursuant to Section 3.7 or otherwise, so
long as such Person shall beneficially own any Shares or any options, warrants
or similar rights to acquire Shares.
"Subsidiary" means any and all corporations, partnerships,
joint ventures, associations and other entities controlled by the Company
directly or indirectly through one or more intermediaries.
"Third Party" means, with respect to any Stockholder, any
other Person (other than a Permitted Transferee of such Stockholder).
"USHI New Securities" means any Capital Stock of the Company,
whether now authorized or not, and rights, options or warrants to purchase such
Capital Stock, and securities of any type whatsoever that are, or may become,
convertible into or exchangeable or exercisable for Capital Stock of the
Company; provided that the term "USHI New Securities" does not include (i)
securities of the Company issued to employees, consultants, officers or
directors of the Company, or which have been reserved for issuance, pursuant to
any employee stock option, stock purchase, stock bonus plan, or other similar
stock agreement or arrangement approved by the Board; (ii) securities of the
Company issued in connection with any stock split, stock dividend or
recapitalization of the Company, (iii) securities of the Company issued in a
Public Offering, (iv) securities of the Company issued upon the conversion or
exchange of convertible or exchangeable securities of the Company that are
outstanding as of the date of this Agreement or have been issued in compliance
with the provisions of Section 5.1, and (v) any right, option or warrant to
acquire any security convertible into or exchangeable or exercisable for the
securities excluded from the definition of USHI New Securities pursuant to
subsection (i) above if issued pursuant to any employee stock option, stock
purchase, stock bonus plan or other similar stock agreement or arrangement
approved by the Board.
"Voting Interests" of any Person (except an individual) means
the Capital Stock issued by such Person, the holders of which are ordinarily, in
the absence of contingencies, entitled to vote for directors (or Persons
performing similar functions), or to direct the management and policies, of such
Person, even though the right to vote has been suspended by the occurrence of a
contingency.
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ARTICLE II
CORPORATE GOVERNANCE
SECTION 2.1 Composition of the Board. (a) Subject to Section
2.1(b), Holding shall be entitled to designate such number of persons for
election to the Board and the board of directors of each Subsidiary
(collectively, the "Applicable Boards") and each committee if any of each
Applicable Board equal, in each case, to the Applicable Percentage of the total
number of members thereof (rounded to the nearest whole number, but in no case
less than one; provided, however, that such number of directors shall be rounded
down (but in no case to a number less than one) at any time that Seagram wishes
to include or maintain the Company or Bidco as part of a consolidated group for
U.S. Federal income tax purposes) (the "Holding Directors"), and Seagram, each
Affiliate of Seagram and each other Stockholder agrees to vote (and cause such
Affiliate to vote if applicable) any Shares, and other Capital Stock of the
Company, owned by it to cause the election of such designee to each Applicable
Board, and the Company agrees to take all necessary action, and to cause each of
its Subsidiaries to take all necessary action, to cause the election of each
such designee to each Applicable Board. In the event that a vacancy is created
at any time by the death, disability, retirement, resignation or removal (with
or without cause) of any Holding Director, Holding shall have the right to
designate a replacement Holding Director to fill such vacancy and Seagram, each
Affiliate of Seagram and each other Stockholder agrees to vote (and cause such
Affiliate to vote if applicable) any Shares, and other Capital Stock of the
Company, owned by it to cause the election of each such designee to the Board,
and the Company agrees to take all necessary action, and to cause each of its
Subsidiaries to take all necessary action, to cause the election of each such
designee to each Applicable Board. Upon the written request of Holding to remove
a specified Holding Director from office, Seagram, each Affiliate of Seagram and
each other Stockholder shall take or cause to be taken all actions necessary to
remove such Holding Director, and any replacement Holding Director shall be
designated and elected as provided in the first sentence of this Section 2.1(a).
Except as so requested, neither Seagram nor any Affiliate of Seagram shall take
any action to cause the removal of any Holding Director without cause. The
Holding Director(s) designated pursuant to this Section 2.1(a) shall be the same
person(s) designated as directors of Bidco by MHI Sub pursuant to the Bidco
Stockholders' Agreement.
(b) Holding shall be entitled to designate Holding Directors
as set forth in Section 2.1(a), and Seagram, each other Stockholder, the Company
and each Subsidiary shall take the actions specified in Section 2.1(a), in each
case so long as (i) Holding and its Permitted Transferees hold Shares or other
securities of the Company constituting, in the aggregate, at least 10% of the
then outstanding Voting Interests of the Company or (ii) (A) Holding and its
Permitted Transferees hold Shares or other securities of the Company
constituting, in the aggregate, no less than 5% of the then outstanding Voting
Interests of the Company and have not effected Sales to Third Parties of Shares
constituting, in the aggregate, more than 50% of the Shares beneficially owned
by Holding on the date hereof, as adjusted subsequent hereto for any
Recapitalizations, and (B) the Company is not a Public Company.
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SECTION 2.2 Board Procedures. Each Applicable Board shall
follow the following procedures:
(a) Meetings. Each Applicable Board shall hold regularly
scheduled meetings at such times as may from time to time be fixed by
resolution of such Applicable Board, and no notice (other than the
resolution) need be given of a regularly scheduled meeting. Special
meetings of each Applicable Board may be called in the manner
designated in the by-laws of the applicable corporation as in effect
from time to time and may be held at any time upon oral, telephonic,
telegraphic or facsimile notice duly given or sent at least 24 hours,
or by written notice sent by express mail at least one day, before the
meeting to each director, provided that all such notices to directors
located outside the United States shall be given or sent orally or by
telephone, telegraph or facsimile transmission (receipt of which has
been duly confirmed). Reasonable efforts shall be made to ensure that
each director actually receives timely notice of any such special
meeting.
(b) Agenda. Each Applicable Board shall use reasonable efforts
to supply a reasonably detailed agenda to each director reasonably in
advance of each meeting, including each special meeting, of an
Applicable Board to adequately inform directors regarding matters to
come before such Applicable Board. Any director wishing to place a
matter on the agenda for any meeting of such Applicable Board may do so
by communicating with the Chairman of such Applicable Board
sufficiently in advance of the meeting of such Applicable Board so as
to permit timely dissemination to all directors of information with
respect to the agenda items.
(c) Powers of the Board. Except with the consent of the
Holding Directors, at least one Applicable Board shall reserve to
itself the power to approve transactions for all business conducted by
the Company and its Subsidiaries that are of a type customarily subject
to board approval as a matter of good corporate practice for Delaware
corporations, and shall not delegate to any officers of the Company or
to any other Persons the authority to conduct business in any manner
that would circumvent, or deprive Holding or any other Person of the
rights or protection accorded to it under, this Agreement.
SECTION 2.3 Limitation on Charter or By-law Amendments.
Without the consent of Holding, the Company shall not, and Seagram shall not
cause, or (so long as Seagram or its Affiliates holds Shares or other securities
of the Company constituting, in the aggregate, more than 50% of the then
outstanding Voting Interests of the Company) permit, the Company to, amend its
certificate of incorporation or by-laws in any manner that would be adverse to
Holding and the other Stockholders (other than any amendment creating any class
or series of stock, or increasing the number of authorized shares of any class
or series of such stock, in connection with any issuance of stock otherwise
permitted by this Agreement).
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ARTICLE III
TRANSFER OF SHARES
SECTION 3.1 General Restriction. No Stockholder shall,
directly or indirectly, make or solicit any Sale of, or create, incur, solicit
or assume any Encumbrance with respect to, any Share, except in compliance with
the Securities Act and this Agreement.
SECTION 3.2 Legends. (a) The Company shall affix to each
certificate evidencing Shares issued to Stockholders a legend in substantially
the following form:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO
REGISTRATION OF TRANSFER OF SUCH SECURITIES WILL BE MADE ON
THE BOOKS OF THE ISSUER UNLESS SUCH TRANSFER IS MADE IN
CONNECTION WITH AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT OR PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT OR SUCH ACT DOES NOT APPLY.
THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER AS SET FORTH IN AN AMENDED
AND RESTATED STOCKHOLDERS' AGREEMENT DATED AS OF DECEMBER 9,
1998, AS IT MAY BE AMENDED FROM TIME TO TIME, A COPY OF WHICH
IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF THE ISSUER.
NO REGISTRATION OF TRANSFER OF SUCH SECURITIES WILL BE MADE ON
THE BOOKS OF THE ISSUER UNLESS AND UNTIL SUCH RESTRICTIONS
SHALL HAVE BEEN COMPLIED WITH."
(b) In the event that any Shares shall cease to be Restricted
Shares, the Company shall, upon the written request of the holder thereof, issue
to such holder a new certificate evidencing such Shares without the first
paragraph of the legend required by Section 3.2(a) endorsed thereon. In the
event that the Shares shall cease to be subject to the restrictions on transfer
set forth in this Agreement, the Company shall, upon the written request of the
holder thereof, issue to such holder a new certificate evidencing such Shares
without the legend required by the second paragraph of Section 3.2(a).
SECTION 3.3 Certain Restrictions on Transfer. (a) Each
Stockholder agrees that it will not, directly or indirectly, make or solicit any
Sale of, or create, incur or assume any Encumbrance (other than a pledge or
hypothecation of Shares to one or more bona fide financial institutions and any
foreclosure thereof, in each case subject to such terms hereof applicable to a
Third Party transferee of such Stockholder) with respect to, any Share
beneficially owned by such Stockholder other than (i) any Sale to a Permitted
Transferee, or any Sale to the Company
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or any Subsidiary in accordance with Section 5.5(b), (ii) any Sale that is made
in compliance with the procedures, and subject to the limitations, set forth in
Section 3.4, and any Sale made to any Third Party after the termination of
Section 3.4 pursuant to subparagraph (g) thereof, (iii) any Sale that is made in
compliance with the procedures, and subject to the limitations, set forth in
Section 3.5 or 3.6, (iv) any Sale pursuant to a Public Offering or (v) any sale
pursuant to a Rule 144 Transaction. Notwithstanding the foregoing, except as
otherwise expressly provided in this Agreement, all Sales permitted by the
foregoing clauses (i) through (v) shall be subject to, and shall not be made
other than in compliance with, the provisions of Sections 3.1, 3.3(b) and 3.7.
For so long as the Company is not a Public Company, the provisions of Section
3.6 remain in effect and Seagram continues to believe it is appropriate that
Holding's Applicable Percentage in the Company be equal to MHI Sub's Applicable
Percentage (as defined in the Bidco Stockholders' Agreement) in Bidco, Holding
further agrees that it will not transfer any of its Shares pursuant to this
Section 3.3 (other than to Permitted Transferees, to the Company or a Subsidiary
of the Company in accordance with Section 5.5(b), in a Public Offering or
pursuant to Section 3.5 or 3.6) unless MHI Sub transfers a corresponding number
of its shares in Bidco such that Holding's Applicable Percentage in the Company
is equal at all times to MHI Sub's Applicable Percentage (as defined in the
Bidco Stockholders' Agreement) in Bidco.
(b) Each Stockholder agrees that it will not sell or transfer
any Shares to a Permitted Transferee if a purpose or effect of such sale or
transfer shall be to circumvent the provisions of this Section 3.3, Section 3.4,
Section 3.5 or Section 3.6 (it being understood that the Sale of Shares to a
Permitted Transferee that is not a wholly owned direct or indirect subsidiary of
Seagram and does not have any material assets other than Shares and other debt
or equity securities of the Company and its Subsidiaries will be deemed in
circumvention of such provisions). Each Stockholder shall remain responsible for
the performance of this Agreement by each Permitted Transferee of such
Stockholder to which Shares are transferred. If any Permitted Transferee to
which Shares are transferred pursuant to clause (i) of Section 3.3(a) ceases to
be a Permitted Transferee of the Stockholder from which or whom it acquired such
Shares pursuant to such provision, such Person shall reconvey such Shares to
such transferring Stockholder immediately before such Person ceases to be a
Permitted Transferee of such transferring Stockholder.
SECTION 3.4 Rights of First Refusal. (a) If at any time any
Stockholder other than Seagram or any Permitted Transferee of Seagram receives
from or otherwise negotiates with a Third Party a bona fide offer (for purposes
of this Section 3.4, an "Offer") to purchase for cash, Cash Equivalents or
Marketable Securities or other securities reasonably subject to valuation in the
manner set forth in Section 3.4(b)(ii) below (the "Offer Consideration") any of
the Shares owned or held by such Stockholder, and such Stockholder intends to
sell such Shares to such Third Party, such Stockholder (for purposes of this
Section 3.4, the "Prospective Seller") shall provide the Company and each of the
other Stockholders (for purposes of this Section 3.4, the "Other Stockholders")
written notice of such Offer (for purposes of this Section 3.4, an "Offer
Notice"). The Offer Notice shall identify the Third Party making the Offer, the
number of Shares with respect to which the Prospective Seller has such an offer
(for purposes of this Section 3.4, the "Offered Shares"), the price per Share at
which a sale is proposed to be made (for purposes of
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this Section 3.4, the "Offer Price"), and all other material terms and
conditions of the Offer, including, without limitation, a description of any
non-cash Offer Consideration sufficiently detailed to permit valuation thereof,
as well as a copy of the Offer, if available and permitted pursuant the terms
thereof. At such time as the Company becomes a Public Company, adjustments to
the provisions of this Section 3.4 shall be made such that the timing hereunder
in respect of any tender or exchange offer is consistent with the corresponding
provision in the stockholders' agreement between Seagram & X.X. XxXxxx de
Nemours dated as of March 26, 1986.
(b) (i) The receipt of an Offer Notice by each Other
Stockholder and the Company from a Prospective Seller shall constitute an offer
by such Prospective Seller to sell to each Other Stockholder and the Company all
(but not less than all) of the Offered Shares at the Offer Price per Share in
cash or, if the Offer Price includes any non-cash Offer Consideration, the
portion of the Offer Price payable in non-cash Offer Consideration shall be
payable in any combination of cash, Cash Equivalents or Marketable Securities
(subject to the valuation procedures set forth in Section 3.4(b)(ii) below).
Such offer shall be irrevocable for 30 days after receipt of such Offer Notice
by each Other Stockholder and the Company. During such 30-day period, each Other
Stockholder and the Company shall, subject to the priorities set forth in
Section 3.4(b)(iii), have the right to accept such offer as to any or all of the
Offered Shares by giving a written notice of acceptance (for purposes of this
Section 3.4, the "Notice of Acceptance") to the Prospective Seller prior to the
expiration of such 30-day period (for the purposes of this Section 3.4, any
Other Stockholder or the Company so accepting such offer, an "Accepting Party").
In the event that within five Business Days prior to the expiration of such
30-day period the Prospective Seller shall not have received Notices of
Acceptance for all of the Offered Shares, the Prospective Seller shall notify
each Other Stockholder of such fact and shall provide each Other Stockholder an
opportunity to submit an additional Notice of Acceptance for any such Offered
Shares prior to the expiration of such 30-day period.
(ii) If the purchase price specified in the Offer Notice
includes any securities, such purchase price shall be deemed to be the amount of
any cash included in the purchase price plus the value (as jointly determined by
a nationally recognized investment banking firm selected by each of the Company
and the Prospective Seller or, in the event such firms are unable to agree, a
third nationally recognized investment banking firm to be selected by such
investment banking firms) of such securities included in such price. For this
purpose:
(A) The parties shall use their best efforts to cause any
determination of the value of any such securities included in the
purchase price to be made within three business days after the date of
delivery of the Offer Notice. If the firms selected by the Company and
the Prospective Seller are unable to agree upon the value of any such
securities within such three-day period, such firms shall promptly
select a third firm whose determination with respect to those
securities having a disputed value shall be conclusive; and
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(B) The date by which the Company and the Other Stockholders
must exercise their rights of first refusal under this Section 3.4
shall be extended until three business days after the determination of
the value of such securities included in the purchase price.
(iii) Each Other Stockholder and the Company shall be entitled
to accept such offer from the Prospective Seller in the following order of
priority: first, the Company shall be entitled to accept such offer for any or
all of the Offered Shares; second, if the Company shall not have accepted such
offer for all the Offered Shares, each Other Stockholder shall be entitled to
accept such offer for not more than the portion of the remaining Offered Shares
determined on a pro rata basis based on the ratio of the number of Shares owned
by such Other Stockholder to the number of Shares then owned by all Other
Stockholders (other than the Shares constituting Offered Shares); and third, if
one or more Other Stockholders and the Company have not accepted such offer for
all the Offered Shares, each Other Stockholder shall then be entitled to accept
such offer for not more than the portion of the remaining Offered Shares
determined on a pro rata basis based on the ratio of the number of Offered
Shares specified in such Other Stockholder's Notice of Acceptance in respect of
which such Other Stockholder shall not be entitled to accept the Prospective
Seller's offer as a result of the application of clause second above to the
number of Offered Shares specified in all such Other Stockholders' Notices of
Acceptance in respect of which such Other Stockholders shall not be entitled to
accept the Prospective Seller's offer as a result of the application of clause
second above (it being understood that each such Other Stockholder shall be
entitled to indicate its interest in accepting more than its pro rata share of
the remaining Offered Shares and to accept the Prospective Seller's offer with
respect to (A) such additional Offered Shares if all the Offered Shares are not
otherwise accepted pursuant to clauses first, second and third or (B) such
Offered Shares that remain unsold as described in Section 3.4(d)(ii) below). If
the Company or any Other Stockholder so accepts the Prospective Seller's offer,
such Person will purchase from the Prospective Seller, and the Prospective
Seller will sell to such Accepting Party, such number of Offered Shares as to
which such Accepting Party shall have accepted the Prospective Seller's offer
(which must total, as to all Accepting Parties, all of the Offered Shares). The
price per Share to be paid by such Accepting Party shall be the Offer Price
specified in the Offer Notice, payable in accordance with the terms of the Offer
by the Prospective Seller specified in Section 3.4(b)(i). The Notice of
Acceptance shall specify (i) such Accepting Party's acceptance of the
Prospective Seller's offer and (ii) the number of Offered Shares to be purchased
by such Accepting Party.
(c) The consummation of any such purchase by and sale to any
Accepting Party shall take place on such date, not later than 30 days after
receipt of the latest Notice of Acceptance received by the Prospective Seller
(which shall not be later than the 30 day period provided therefor), as such
Accepting Party and the Prospective Seller shall select. Upon the consummation
of such purchase and sale, the Prospective Seller shall, against delivery by the
relevant Accepting Party of the Offer Price multiplied by the number of Shares
being purchased by such Accepting Party, (i) deliver to the Accepting Party the
certificate or certificates evidencing the Offered Shares purchased and sold
duly endorsed in blank or accompanied by written instruments of transfer in form
satisfactory to such Accepting Party duly executed by the
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Prospective Seller, and (ii) shall assign all its rights under this Agreement
with respect to the Offered Shares purchased and sold pursuant to an instrument
of assignment reasonably satisfactory to such Accepting Party.
(d) In the event that (i) each Other Stockholder and the
Company shall have received an Offer Notice from a Prospective Seller but the
Prospective Seller shall not have received from the Company and one or more
Other Stockholders Notices of Acceptance as to all the Offered Shares prior to
the expiration of the 30-day period following receipt of such Offer Notice or
(ii) an Accepting Party shall have given a Notice of Acceptance to the
Prospective Seller but shall have failed to consummate, other than as a result
of the fault of the Prospective Seller, a purchase of the Offered Shares with
respect to which such Notice of Acceptance was given within 30 days after
receipt of the Notice of Acceptance by the Prospective Seller and one or more
Other Stockholders shall not have indicated an interest upon any such failure to
buy such Shares as provided in clause (B) of the parenthetical phrase following
clause third of Section 3.4(b)(iii) and shall not have been prepared to purchase
such Shares within five business days of their receipt of a notice of such
failure from the Prospective Seller, and the Company shall not have indicated an
interest in purchasing such Shares as have not been purchased pursuant to the
immediately preceding clause and shall not have been prepared to purchase such
Shares at the Offer Price originally specified in the Offer Notice relating to
such Shares within five business days of its receipt of a notice from the
Prospective Seller that such Shares have not been purchased pursuant to the
immediately preceding clause, such Prospective Seller shall have the right to
reject any or all Notices of Acceptance theretofore received, and nothing in
this Section 3.4 shall limit the right of the Prospective Seller to make
thereafter a sale of the Offered Shares so long as all the Offered Shares that
are sold or otherwise disposed of by the Prospective Seller (which number of
Offered Shares shall be not less than the number of Offered Shares specified in
such Offer Notice) are sold for cash or the Offer Consideration (A) within 180
days after the date of receipt of such Offer Notice by each Other Stockholder
and the Company, (B) at an amount not less than the Offer Price included in such
Offer Notice and (C) to the Third Party making the Offer.
(e) In the event that each Other Stockholder and the Company
shall have received an Offer Notice from a Prospective Seller but the
Prospective Seller shall not have received Notices of Acceptance for all the
Offered Shares prior to the expiration of the 30-day period following receipt of
such Offer Notice by each Other Stockholder and the Company and such Prospective
Seller shall not have sold the remaining Offered Shares before the expiration of
the 180-day period in accordance with paragraph (d) above, then such Prospective
Seller shall not give another Offer Notice for a period of 180 days from the
last day of such 180-day period.
(f) Anything in this Section 3.4 or in Section 3.3 to the
contrary notwithstanding, the provisions of this Section 3.4 will not be
applicable to Sales of Shares (i) pursuant to a Public Offering or a Rule 144
Transaction, (ii) referred to in, or made pursuant to and in compliance with,
Section 3.5 or Section 3.6 or (iii) any Sale or Encumbrance described in clauses
(i), (iii), (iv) or (v) of Section 3.3(a).
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(g) The provisions of this Section 3.4 shall terminate and be
of no further force and effect on and after, (i) if the Company is not then a
Public Company, the date on which Seagram and its Permitted Transferees
collectively beneficially own less than the largest number of Fully Diluted
Shares then outstanding beneficially owned by any other Person or group (within
the meaning of such term under Section 13(d) of the Exchange Act and the rules
and regulations of the Commission thereunder) and (ii) if the Company is a
Public Company, the date on which Seagram and its Permitted Transferees
collectively own 30% or less of the then outstanding Fully Diluted Shares.
(h) For so long as the Company is not a Public Company, the
provisions of Section 3.4 remain in effect and Seagram continues to believe it
is appropriate that Holding's Applicable Percentage in the Company be equal to
MHI Sub's Applicable Percentage (as defined in the Bidco Stockholders'
Agreement) in Bidco, Holding shall not offer to sell or consummate the sale of
any of its Shares pursuant to this Section 3.4 unless MHI Sub offers to sell
and/or sells, respectively, a corresponding number of shares in Bidco such that
Holding's Applicable Percentage in the Company is equal at all times to MHI
Sub's Applicable Percentage (as defined in the Bidco Stockholders' Agreement) in
Bidco.
SECTION 3.5 Right to Participate in Certain Dispositions. (a)
(i) So long as (A) Seagram and any Permitted Transferees of Seagram shall own,
in the aggregate, Shares representing more than 30% of the then outstanding
Fully Diluted Shares or (B) the Company is not then a Public Company and Seagram
and its Permitted Transferees collectively beneficially own more Fully Diluted
Shares then outstanding than Holding and its Permitted Transferees (either of
clause (A) or (B) being a "Tag-Along Condition"), neither Seagram nor any of its
Permitted Transferees shall in any transaction or series of related transactions
(other than a Public Offering), directly or indirectly, make any Sale of Shares
beneficially owned by Seagram or any such Permitted Transferee to any Third
Party or Parties, unless the terms and conditions of such sale or other
disposition shall include an offer to include, at the option of each of the
other Stockholders (other than Seagram or any Permitted Transferee of Seagram)
(for purposes of this Section 3.5, the "Other Stockholders"), in such sale or
other disposition to the Third Party or Third Parties, the Pro Rata Portion (as
defined in Section 3.5(a)(vi) below) of the Fully Diluted Shares then owned by
each such Other Stockholder, provided that no such offer to the Other
Stockholders shall be required in connection with any Sale by Seagram or any
Permitted Transferee of Seagram if, immediately following consummation of such
Sale and any related Sales, Seagram and its Permitted Transferees will own
beneficially and of record 70% or more of the then outstanding Fully Diluted
Shares.
(ii) If, at any time when a Tag-Along Condition is met,
Seagram or any Permitted Transferee of Seagram receives from a Third Party or
Parties a bona fide offer or offers to purchase or otherwise acquire (for
purposes of this Section 3.5, an "Offer") Shares beneficially owned by Seagram
or such Permitted Transferee (for purposes of this Section 3.5, the "Offered
Shares") and the proviso in subparagraph (a)(i) above is not applicable, and
Seagram or such Permitted Transferee intends to sell such Offered Shares to such
Third Party or Parties, Seagram or such Permitted Transferee (for purposes of
this Section 3.5, the "Prospective Seller") shall
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provide written notice (for purposes of this Section 3.5, the "Offer Notice") of
such Offer to each of the Other Stockholders not later than the thirtieth day
prior to the consummation of the sale or other disposition contemplated by the
Offer. The Offer Notice shall identify the Offered Shares, the price offered for
such Offered Shares, all other material terms and conditions of the Offer and,
in the case of an Offer in which the consideration payable for Offered Shares
consists in whole or in part of consideration other than cash, information
relating to such other consideration sufficiently detailed to permit the
valuation thereof, as well as a copy of the offer, if available and permitted
pursuant to the terms thereof. Each of the Other Stockholders shall have the
right and option, for a period of 25 days after the date the Offer Notice is
given to such Other Stockholders (for purposes of this Section 3.5, the "Notice
Period"), to notify the Prospective Seller of such Other Stockholder's interest
in selling or otherwise disposing of up to the Pro Rata Portion (as defined in
clause (vi) below) of such Other Stockholder's Shares pursuant to the Offer.
Each Other Stockholder desiring to exercise such option shall, prior to the
expiration of the Notice Period, provide the Prospective Seller with a written
notice specifying the number of Shares which such Other Stockholder has an
interest in selling or otherwise disposing of pursuant to the Offer (for
purposes of this Section 3.5, a "Notice of Interest"), and shall deliver to the
Prospective Seller (A) the certificate or certificates evidencing the Shares to
be sold or otherwise disposed of pursuant to such Offer by such Other
Stockholder duly endorsed in blank or accompanied by written instruments of
transfer in form satisfactory to the Prospective Seller executed by such Other
Stockholder and (B) an instrument of assignment reasonably satisfactory to the
Prospective Seller assigning, as of the consummation of the sale and transfer or
other disposition to the Third Party or Parties, all such Other Stockholder's
rights under this Agreement with respect to the Shares to be sold or otherwise
disposed of and delivery of such certificate or certificates evidencing the
Shares to be sold, and the instrument of assignment shall constitute an
irrevocable election by such Other Stockholder to authorize and permit the
Prospective Seller to sell such Shares, on behalf of such Other Stockholder,
pursuant to the Offer.
(iii) As promptly as practicable after the consummation of the
sale or other disposition of the Shares of the Prospective Seller and the Shares
of the Other Stockholders to the Third Party or Parties pursuant to the Offer,
the Prospective Seller shall remit to each of the Other Stockholders the total
sales price of the Shares of such Other Stockholders sold or otherwise disposed
of pursuant thereto less a pro rata portion of the out-of-pocket expenses
payable to any Third Party other than the Prospective Seller and its Affiliates
(including, without limitation, legal expenses) incurred by the Prospective
Seller in connection with such sale or disposition. If the consideration payable
to the Other Stockholders consists in whole or in part of consideration other
than cash, Cash Equivalents and Marketable Securities, and if Seagram or its
Affiliates have any right to participate in sale transactions of other Persons,
a right to put the consideration received to another Person, registration
rights, investor protection rights (such as those provided for in Section 2.3 or
Article V hereof), board of directors representation rights or any other similar
rights, then the Other Stockholders shall receive as part of such transaction
each such right obtained by Seagram or its Affiliates; provided that no
transferee of Holding, other than Permitted Transferees, is entitled to board
representation and Holding shall only be entitled to board representation that
is proportionate to the ownership interest of Holding and its Affiliates in the
relevant entity, but not fewer than one board seat for as long as the ownership
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interest of Holding and its Affiliates in the relevant entity is equal to or
greater than 5% of the combined ownership interest of Holding, Seagram and their
respective Affiliates.
(iv) If at the end of the Notice Period any Other Stockholder
shall not have given a Notice of Interest (and delivered all other required
documents) with respect to some or all of the Pro Rata Portion of such Other
Stockholder's Shares, such Other Stockholder will be deemed to have waived all
its rights under this Section 3.5 with respect to the sale or other disposition
pursuant to the Offer of the Pro Rata Portion of the Shares owned by such Other
Stockholder with respect to which a Notice of Interest shall not have been
given. If, at any time the Prospective Seller abandons the proposed sale
pursuant to the offer or at the end of the 180-day period following the giving
of the Offer Notice, the Prospective Seller has not completed the sale of all
the Offered Shares and the Shares with respect to which Other Stockholders shall
have given Notices of Interest pursuant to this Section 3.5, no assignment of
the Shares shall be recorded by the Company in its records and the provisions of
this Section 3.5 shall apply to any subsequent Sale by the Prospective Seller of
any of the Shares initially proposed to be sold in the Offer.
(v) Except as expressly provided in this Section 3.5, no
Prospective Seller shall have any obligation to any Other Stockholder with
respect to the sale or other disposition of any Shares owned by such Other
Stockholder in connection with this Section 3.5. Anything herein to the contrary
notwithstanding and irrespective of whether any Notice of Interest shall have
been given, no Prospective Seller shall have any obligation to any Other
Stockholder to sell or otherwise dispose of any Offered Shares pursuant to this
Section 3.5 as a result of any decision by such Prospective Seller not to accept
or consummate any Offer or sale or other disposition with respect to the Offered
Shares (it being understood that any and all such decisions shall be made by
such Prospective Seller in its sole discretion). No Other Stockholder shall be
entitled to sell or otherwise dispose of Shares directly to any Third Party or
Parties pursuant to an Offer (it being understood that all such sales and other
dispositions shall be made only on the terms and pursuant to the procedures set
forth in this Section 3.5).
(vi) For purposes of this Section 3.5, "Pro Rata Portion"
means, with respect to each Other Stockholder, a number equal to the product of
(a) the total number of Fully Diluted Shares then owned by such Other
Stockholder and (b) a fraction, the numerator of which shall be the total number
of Fully Diluted Shares proposed to be sold by the Prospective Seller, and the
denominator of which shall be the total number of Fully Diluted Shares then
owned by the Prospective Seller.
(b) Anything in this Section 3.5 or in Section 3.3 to the
contrary notwithstanding, (i) the provisions of this Section 3.5 will not be
applicable to any Sale of Shares pursuant to a Public Offering, or to any
transfer described in clause (i), (ii), (iv) or (v) of Section 3.3(a) and (ii)
in the event that Seagram shall exercise the option referred to in Section 3.6
to require each of the Other Stockholders to participate in the sale of Shares
referred to therein, the Other Stockholders (as defined in and for the purposes
of Section 3.6) shall thereafter have no right pursuant to this
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Section 3.5 to participate in any such sale. Nothing in this Section 3.5 shall
affect any of the rights or obligations of any of the Stockholders under any
other provision of this Agreement.
(c) For so long as the Company is not a Public Company, the
provisions of Section 3.6 remain in effect and Seagram continues to believe it
is appropriate that Holding's Applicable Percentage in the Company be equal to
MHI Sub's Applicable Percentage (as defined in the Bidco Stockholders'
Agreement) in Bidco, Holding shall not exercise its rights under this Section
3.5 unless, and to the extent applicable, MHI Sub exercises its rights to sell
or otherwise dispose of a corresponding number of shares in Bidco pursuant to
Section 3.5 of the Bidco Stockholders Agreement such that Holding's Applicable
Percentage in the Company is equal at all times to MHI Sub's Applicable
Percentage (as defined in the Bidco Stockholders Agreement) in Bidco.
SECTION 3.6 Right to Compel Participation in Certain Sales.
(a) If Seagram and its Permitted Transferees shall, in any transaction or series
of related transactions, directly or indirectly, propose to sell all (but not
less than all) Shares held by them (for purposes of this Section 3.6, the
"Controlling Shares") to a Third Party or Parties (for purposes of this Section
3.6, an "Offer"), Seagram may, at its option, require each of the other
Stockholders (for purposes of this Section 3.6, the "Other Stockholders") to
sell all Shares owned or held by such Other Stockholders to the Third Party or
Parties for the same consideration per Share, and otherwise on the same terms
and conditions upon which Seagram and its Permitted Transferees sell their
Shares, provided that if the purchase price for Seagram and its Affiliates'
Shares includes any property other than cash, Cash Equivalents and/or Marketable
Securities (the "Non-Liquid Consideration"), the Other Stockholders shall have
the option to receive the portion of such purchase price consisting of
Non-Liquid Consideration solely in cash, Cash Equivalents and/or Marketable
Securities and such purchase price shall be deemed to be an amount of any cash
included in the purchase price specified in the relevant Offer Notice (as
defined in subparagraph (b)(i) below) plus the value (as determined in
accordance with the provisions of Section 3.4(b)(ii), which provisions shall
apply mutatis mutandis to Seagram and the Other Stockholders in lieu of the
Company and the Prospective Seller) of such other property included in such
price. The value of any Cash Equivalents and/or Marketable Securities to be
received by the Other Stockholders pursuant to the proviso in the immediately
preceding sentence will be determined pursuant to the same valuation procedures
set forth in Section 3.4(b)(ii), which provisions shall apply mutatis mutandis
to Seagram and the Other Stockholders in lieu of the Company and the Prospective
Seller, as are applicable to valuations of property other than cash included in
the purchase price.
(b) (i) Seagram shall provide a written notice (for purposes
of this Section 3.6, the "Offer Notice") of such Offer to each of the Other
Stockholders not later than the twentieth business day prior to the consummation
of the sale contemplated by the Offer. The Offer Notice shall contain written
notice of the exercise of Seagram's rights pursuant to Section 3.6(a), setting
forth the consideration per Share to be paid by the Third Party or Parties and
the other material terms and conditions of the Offer, as well as a copy of the
Offer, if available and permitted pursuant to the terms thereof. Within 20
business days following the date the Offer Notice is
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given, each of the Other Stockholders shall deliver to Seagram the certificate
or certificates evidencing all the Shares owned or held by such Other
Stockholder duly endorsed in blank or accompanied by written instruments of
transfer in form satisfactory to Seagram executed by such Other Stockholder.
(ii) As promptly as practicable after the consummation of the
sale of Shares held by Seagram and the Other Stockholders to the Third Party or
Parties pursuant to the Offer, Seagram shall remit to each of the Other
Stockholders the total sales price of the Shares of such Other Stockholders sold
pursuant thereto less a pro rata portion of the out-of-pocket expenses payable
to any Third Party other than Seagram and its Affiliates (including, without
limitation, legal expenses) incurred by Seagram in connection with such sale.
(iii) Neither Seagram nor any of its Permitted Transferees
will effect the Sale of any Controlling Shares pursuant to the Offer unless all
the Controlling Shares and all of the Shares transferred to Seagram pursuant to
Section 3.6(b)(i) are simultaneously transferred. If, at any time the
Prospective Seller abandons the proposed Sale pursuant to the offer or at the
end of the 180 day period following the giving of the Offer Notice, Seagram and
its Permitted Transferees shall not have completed the sale of all the
Controlling Shares and the Shares transferred to Seagram pursuant to Section
3.6(b)(i), Seagram shall return to each of the Other Stockholders all
certificates evidencing Shares that such Other Stockholder delivered for sale
pursuant to this Section 3.6.
(iv) Except as expressly provided in this Section 3.6, no
Prospective Seller shall have any obligation to any Other Stockholder with
respect to the sale or other disposition of any Shares owned by such Other
Stockholder in connection with this Section 3.6. Anything herein to the contrary
notwithstanding, Seagram shall have no obligation to any Other Stockholder to
sell or otherwise dispose of any Controlling Shares pursuant to this Section 3.6
or as a result of any decision by Seagram not to accept or consummate any Offer
or sale with respect to the Controlling Shares (it being understood that any and
all such decisions shall be made by Seagram in its sole discretion). No Other
Stockholder shall be entitled to make any Sale of Shares directly to any Third
Party pursuant to an Offer (it being understood that all such Sales shall be
made only on the terms and pursuant to the procedures set forth in this Section
3.6). Nothing in this Section 3.6 shall affect any of the obligations of any of
the Stockholders under any other provision of this Agreement.
(c) Anything in this Section 3.6 or in Section 3.3 to the
contrary notwithstanding, the provisions of this Section 3.6 shall not be
applicable to any Sale of Shares pursuant to a Public Offering or to any
transfer described in clause (i) or (v) of Section 3.3.
(d) The provisions of this Section 3.6 shall terminate and be
of no further force and effect on and after, (i) if the Company is not then a
Public Company, the date on which Seagram and its Permitted Transferees
collectively beneficially own less than the largest number of Fully Diluted
Shares then outstanding and beneficially owned by any other Person or group
(within the meaning of such term under Section 13(d) of the Exchange Act and the
rules and
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regulations of the Commission thereunder) and (ii) if the Company is a Public
Company, the date on which Seagram and its Permitted Transferees collectively
own 30% or less of the then outstanding Fully Diluted Shares.
(e) As long as Holding shall own any Shares and the provisions
of this Section 3.6 shall not have terminated, the Parent shall own, directly or
indirectly, a majority of the outstanding voting and economic interests in
Holding.
SECTION 3.7 Transferees to Execute Agreement. (a) Each
Stockholder agrees that it will not, directly or indirectly, make any Sale of,
or create, incur or assume any Encumbrance with respect to, any Shares
beneficially owned by such Stockholder unless prior to the consummation of any
such Sale or the creation, incurrence or assumption of such Encumbrance, the
Person to whom such Sale is proposed to be made or the Person in whose favor
such Encumbrance is proposed to be created, incurred or assumed (a "Prospective
Transferee") (i) executes and delivers to the Company and each Stockholder an
agreement, in form and substance reasonably satisfactory to the Company, whereby
such Prospective Transferee confirms that, with respect to the Shares that are
the subject of such Sale or Encumbrance, it shall be deemed to be a
"Stockholder" for purposes of all Applicable Provisions of this Agreement and
agrees to be bound by all the terms of all Applicable Provisions of this
Agreement and (ii) unless such Prospective Transferee is a recognized
institutional investor, delivers to the Company and Holding an opinion of
counsel, satisfactory in form and substance to the Company and Holding, to the
effect that the agreement referred to above that is delivered by such
Prospective Transferee is a legal, valid and binding obligation of such
Prospective Transferee enforceable against such Prospective Transferee in
accordance with its terms, subject to the effect of any applicable bankruptcy,
reorganization, insolvency, moratorium or similar laws affecting creditor's
rights generally and subject, as to enforceability, to the effect of general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law). Upon the execution and delivery by such
Prospective Transferee of the agreement referred to in clause (i) of the
preceding sentence and, if required, the delivery of the opinion of counsel
referred to in clause (ii) of the preceding sentence, such Prospective
Transferee shall be deemed a "Stockholder" for purposes of all Applicable
Provisions of this Agreement and shall have the rights and be subject to the
obligations of a Stockholder under the Applicable Provisions of this Agreement,
in each case with respect to the Shares beneficially owned by such Prospective
Transferee or in respect of which such Encumbrance shall have been created,
incurred or assumed.
(b) Anything in this Section 3.7 or in Section 3.3 to the
contrary notwithstanding, the provisions of this Section 3.7 will not be
applicable to (i) any Sale of Shares pursuant to a Public Offering or (ii) any
Sale of Shares in a Rule 144 Transaction.
SECTION 3.8 Certain Information. (a) In the event that and so
long as the Company shall be a Public Company, it shall file all reports and
other information required to be filed by Section 13 or 15(d) under the Exchange
Act, as the case may be, as shall be necessary in
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order that the conditions to the availability of Rule 144 in connection with any
Sale of Shares by a Stockholder shall be met.
(b) For purposes of this Agreement, the Company shall be
deemed to be a "Public Company" if, as of any date of determination, any number
of Shares shall have been sold in Public Offerings and any Shares are registered
or required to be registered under the Exchange Act.
SECTION 3.9 Improper Sale or Encumbrance. Any attempt not in
compliance with this Agreement to make any Sale of, or create, incur or assume
any Encumbrance with respect to, any Shares shall be null and void and of no
force and effect, the purported transferee shall have no rights or privileges in
or with respect to the Company, and the Company shall not give any effect in the
Company's stock records to such attempted Sale or Encumbrance.
SECTION 3.10 Determination of Share Consideration. When
determining the consideration per Share in respect of any Offer under Section
3.5 and 3.6, (a) the consideration payable for the relevant Shares shall include
any non-compete or other payments made or to be made to Seagram and its
Permitted Transferees in connection with such transaction and (b) the allocation
of the consideration between the Shares being sold by Seagram and its Permitted
Transferees and any other securities or other property being sold by Seagram and
its Permitted Transferees shall be determined based on the fair values of the
Shares and any such other securities or other property being sold.
ARTICLE IV
REGISTRATION RIGHTS
SECTION 4.1 Incidental Registration. (a) If the Company at any
time proposes to register any Shares under the Securities Act for Sale in a
Public Offering, whether or not for its own account, on a form and in a manner
that would permit registration of Registrable Securities under the Securities
Act for Sale in such Public Offering, it will each such time give prompt written
notice to all holders of Registrable Securities of its intention to do so,
specifying the form and manner and the other relevant facts involved in such
proposed registration (including, without limitation, the identity of the
managing underwriter). Upon the written request of any such holder of
Registrable Securities delivered to the Company within 30 days after such notice
shall have been given to such holder (which request shall specify the
Registrable Securities intended to be disposed of by such holder and the
intended method of disposition thereof), the Company will use its best efforts
to effect the registration under the Securities Act, as expeditiously as is
reasonable, of all Registrable Securities that the Company has been so requested
to register by the holders of Registrable Securities, to the extent requisite to
permit the Sale of the Registrable Securities to be so registered in such Public
Offering; provided, however, that:
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(i) if, at any time after giving such written notice of its
intention to register any of such Shares proposed to be registered by
the Company and prior to the effective date of the registration
statement filed in connection with such registration, the Company shall
determine for any reason not to register such Shares, the Company may,
at its election, give written notice of such determination to each
holder of Registrable Securities that has requested to register
Registrable Securities and thereupon the Company shall be relieved of
its obligation to register any Registrable Securities in connection
with such registration (but not from its obligation to pay the
Registration Expenses in connection therewith to the extent provided in
Section 4.1(b));
(ii) if the managing underwriter of such Public Offering shall
advise the Company that, in its judgment, the number of Shares proposed
to be included in such Public Offering should be limited because the
inclusion of Registrable Securities is likely to adversely impact the
purchase price obtained for the Shares proposed to be included in such
Public Offering, then the Company will promptly advise each such holder
of Registrable Securities thereof and may require, by written notice to
each such holder accompanying such advice, that, to the extent
necessary to meet such limitation, all holders of Registrable
Securities proposing to sell Shares in such Public Offering shall share
pro rata in the number of Shares to be excluded from such offering,
such sharing to be based on the respective numbers of Registrable
Securities as to which registration has been requested by such holders
and that the distribution of such Registrable Securities as are so
excluded be deferred (in case of a deferral as to a portion of such
Registrable Securities, such portion to be allocated among such holders
in proportion to the respective numbers of Shares so requested to be
registered by such holders) until the completion of the distribution of
such Shares and any other securities by such underwriters; and
(iii) the Company shall not be obligated to effect any
registration of Registrable Securities under this Section 4.1 that is
incidental to the registration of any of its Shares or other securities
in connection with any merger, acquisition, exchange offer, dividend
reinvestment plan or stock option or other employee benefit plan.
(b) The Company will pay all Registration Expenses in
connection with each registration of Registrable Securities effected by it
pursuant to this Section 4.1.
SECTION 4.2 Registration on Request. (a) If the Company is a
Public Company, upon the written request of Holding or any Permitted Transferee
of Holding, or, if Holding or any Permitted Transferee so permits, any Third
Party transferee of Holding or a Permitted Transferee identified in writing to
the Company, requesting that the Company effect the registration under the
Securities Act of all or part of the Registrable Securities held by such Person
and specifying the intended method of disposition thereof, the Company will
promptly give written notice of such requested registration to all other holders
of Registrable Securities, and thereupon will, as expeditiously as possible, use
its best efforts to effect the registration under the Securities Act of the
Registrable Securities which the Company has been so requested
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to register by such holder, provided that (i) the Company shall be obligated to
register such Registrable Securities pursuant to this Section 4.2(a) on only two
occasions, (ii) the Company shall not be obligated to file a registration
statement relating to any registration request under this Section 4.2(a) within
a period of nine months after the effective date of any other registration
statement relating to any registration request under this Section 4.2(a) which
was not effected on Form S-3 (or any successor or similar short-form
registration statement) or relating to any registration effected under Section
4.1, or if with respect thereto the managing underwriter, the Commission, the
Securities Act or the rules and regulations thereunder, or the form on which the
registration statement is to be filed, would require the conduct of an audit
other than the regular audit conducted by the Company at the end of its fiscal
year, in which case the filing may be delayed until the completion of such
regular audit (unless the holders of the Registrable Securities to be registered
agree to pay the expenses of the Company in connection with such an audit other
than the regular audit) and (iii) if the Company, in its sole discretion,
determines that the filing of a registration statement in the near future
pursuant to this Section 4.2 would interfere with any financing, acquisition,
corporate reorganization or other similar transaction involving the Company or
any Subsidiary or that such registration would require disclosure of non-public
information that the Company deems advisable not to disclose, then the Company's
obligation to file a registration statement shall be deferred for a period not
to exceed 180 days; provided, however, that the Company shall not obtain such a
deferral more than once in any twelve-month period.
(b) If any registration requested pursuant to this Section
which is proposed by the Company to be effected by the filing of a registration
statement on Form S-3 (or any successor or similar short-form registration
statement) shall be in connection with an underwritten public offering, and if
the managing underwriter shall advise the Company in writing that, in its
opinion, the use of another form of registration statement is of material
importance to the success of such proposed offering, then such registration
shall be effected on such other form.
(c) A registration requested pursuant to this Section will not
be deemed to have been effected unless it has become effective, provided that
if, within 180 days after it has become effective, the offering of Registrable
Securities pursuant to such registration is interfered with by any stop order,
injunction or other order or requirement of the Commission or other governmental
agency or court, such registration will be deemed not to have been effected.
(d) If a requested registration pursuant to this Section
involves an underwritten offering, the Company shall have the right to select in
good faith the investment banker or bankers and managers to administer the
offering, provided, however, that such investment banker or bankers and managers
shall be satisfactory to holders of a majority of the Registrable Securities
which are held by holders and which the Company has been requested to register.
(e) If a requested registration pursuant to this Section 4.2
involves an underwritten offering and the managing underwriter advises the
Company that, in its opinion, the number of securities requested to be included
in such registration (including securities of the Company which are not
Registrable Securities) exceeds the number which can be sold in such
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offering, the Company will include in such registration only the Registrable
Securities requested to be included in such registration pursuant to this
Section 4.2. In the event that the number of Registrable Securities requested to
be included in such registration exceeds the number which, in the opinion of
such managing underwriter, can be sold, the number of such Registrable
Securities to be included in such registration shall be allocated pro rata among
the holders requesting registration pursuant to this Section 4.2 on the basis of
the relative number of shares of Registrable Securities then held by each such
holder (provided that any shares thereby allocated to any such holder that
exceed such holder's request shall be reallocated among the remaining requesting
holders in like manner). In the event that the number of Registrable Securities
requested to be included in such registration is less than the number which, in
the opinion of the managing underwriter, can be sold, the Company may include in
such registration the securities the Company proposes to sell up to the number
of securities that, in the opinion of the underwriter, can be sold.
SECTION 4.3 Registration Procedures. (a) If and whenever the
Company is required to use its best efforts to effect the registration of any
Registrable Securities under the Securities Act for Sale in a Public Offering as
provided in Section 4.1 or 4.2, the Company will as expeditiously as is
reasonably practicable:
(i) prepare and file with the Commission on any appropriate
form a registration statement with respect to such Registrable
Securities and use its best efforts to cause such registration
statement to become effective;
(ii) prepare and file with the Commission such amendments
(including post-effective amendments) and supplements to such
registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective and
to comply with the provisions of the Securities Act with respect to the
disposition of all Registrable Securities and other securities covered
by such registration statement until the earlier of (A) such time as
all such Registrable Securities and other securities have been disposed
of in accordance with the intended methods of disposition by the seller
or sellers thereof set forth in such registration statement and (B) the
expiration of 120 days from the date such registration statement first
becomes effective;
(iii) furnish to each seller of such Registrable Securities
such number of conformed copies of such registration statement and of
each such amendment and supplement thereto (in each case including all
exhibits), such number of copies of the prospectus included in such
registration statement (including each preliminary prospectus and any
summary prospectus), in conformity with the requirements of the
Securities Act, such documents incorporated by reference in such
registration statement or prospectus, and such other documents, as such
seller may reasonably request in order to facilitate the sale or
disposition of such Registrable Securities;
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(iv) use its best efforts to register or qualify all
Registrable Securities and other securities covered by such
registration statement under such other securities or "blue sky" laws
of such jurisdictions as each seller shall reasonably request, and do
any and all other acts and things that may be necessary to enable such
seller to consummate the disposition in such jurisdictions of its
Registrable Securities covered by such registration statement, except
that the Company shall not for any such purpose be required to qualify
generally to do business as a foreign corporation in any jurisdiction
wherein it is not so qualified, or to subject itself to taxation in
respect of doing business in any such jurisdiction, or to consent to
general service of process in any such jurisdiction;
(v) enter into such customary agreements (including an
underwriting agreement in customary form), which may include
indemnification provisions in favor of underwriters and other persons
in addition to, or in substitution for the provisions of Section 4.5
hereof, and take such other actions as sellers of a majority of shares
of such Registrable Securities or the underwriters, if any, reasonably
request in order to expedite or facilitate the disposition of such
Registrable Securities;
(vi) furnish to each seller of Registrable Securities (1) a
signed counterpart, addressed to such seller, of any opinion of counsel
for the Company, dated the date of the closing under the underwriting
agreement with respect to such Public Offering, in customary form and
in form and scope reasonably satisfactory to the underwriter and its
counsel, and (2) a signed counterpart, if requested by such seller,
addressed to it, of any "cold comfort" letter signed by the independent
public accountants in customary form and covering matters of the type
customarily covered by "cold comfort" letters as the seller of such
Registrable Securities shall reasonably request (provided that
Registrable Securities constitute at least 25% of the securities
covered by such registration statement, unless such a "cold comfort"
letter or letters are provided to the Company or other selling holders
in connection with such registration);
(vii) immediately notify each seller of Registrable Securities
covered by such registration statement 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, as then in effect, includes an
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing
or if it is necessary to amend or supplement such prospectus to comply
with law, and at the request of any such seller prepare and furnish to
such seller a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such Registrable Securities or other
securities, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in
the light of the circumstances then existing and shall otherwise comply
in all material respects with law and so that such prospectus, as
amended or supplemented, will comply with law;
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(viii) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available
to its security holders, as soon as reasonably practicable, an earnings
statement which shall satisfy the provisions of Section 11(a) of the
Securities Act and the rules and regulations thereunder;
(ix) use its best efforts to list such Shares on each
securities exchange or quotation system on which Shares are then listed
or quoted, if such Shares are not already so listed or quoted and if
such listing is then permitted under the rules of such exchange or
quotation system, and provide a transfer agent and registrar for such
Registrable Securities not later than the effective date of such
registration statement;
(x) cooperate with the holders of Registrable Securities
covered by the registration statement and the managing underwriter or
agent, if any, to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends) representing
securities to be sold under the registration statement, and enable such
securities to be in such denominations and registered in such names as
the managing underwriter or agent, if any, or such holders may request;
(xi) notify counsel for the holders of Registrable Securities
included in such registration statement and the managing underwriter or
agent, immediately, and confirm the notice in writing (i) when the
registration statement, or any post-effective amendment to the
registration statement, shall have become effective, or any supplement
to the prospectus or any amendment to the prospectus shall have been
filed, (ii) of the receipt of any comments from the Commission, (iii)
of any request of the Commission to amend the registration statement or
amend or supplement the prospectus or for additional information, and
(iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the registration statement or of any order preventing
or suspending the use of any preliminary prospectus, or of the
suspension of the qualification of the registration statement for
offering or sale in any jurisdiction, or of the institution or
threatening of any proceedings for any of such purposes;
(xii) make every reasonable effort to prevent the issuance of
any stop order suspending the effectiveness of the registration
statement or of any order preventing or suspending the use of any
preliminary prospectus and, if any such order is issued, to obtain the
withdrawal of any such order at the earliest possible moment;
(xiii) if requested by the managing underwriter or agent or
any holder of Registrable Securities covered by the registration
statement, promptly incorporate in a prospectus supplement or
post-effective amendment such information as the managing underwriter
or agent or such holder reasonably requests to be included therein,
including, without limitation, with respect to the number of
Registrable Securities being sold by such holder to such underwriter or
agent, the purchase price being paid therefor by such underwriter or
agent and with respect to any other terms of the underwritten offering
of the Registrable Securities to be sold in such offering; and make all
required filings of
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such prospectus supplement or post-effective amendment as soon as
practicable after being notified of the matters incorporated in such
prospectus supplement or post-effective amendment;
(xiv) cooperate with each seller of Registrable Securities and
each underwriter or agent participating in the disposition of such
Registrable Securities and their respective counsel in connection with
any filings required to be made with the National Association of
Securities Dealers, Inc.; and
(xv) cooperate with the Stockholders to facilitate the timely
preparation and delivery to any underwriter to which any holder of
Registrable Securities may sell such Registrable Securities in
connection with any such registration (and to any direct or indirect
transferee of any such underwriter) certificates (not bearing any
restrictive legends) to be sold under the Registration Agreement.
The Company may require each seller of Registrable Securities as to which any
registration is being effected to furnish the Company with such information
regarding such seller and the distribution of such Registrable Securities as the
Company may from time to time reasonably request in writing and as shall be
required by law or by the Commission in connection therewith.
(b) Each holder of Registrable Securities agrees, if so
required by the managing underwriters, not to effect any public sale or
distribution (including any sale pursuant to Rule 144) of Registrable Securities
(other than as part of such Public Offering) within 7 days prior to the
effective date of the registration statement with respect to such underwritten
public offering or 180 days after the effective date of such registration
statement.
(c) The Company agrees, if so required by the managing
underwriters in connection with such Public Offering of Registrable Securities
pursuant to Section 4.1 or Section 4.2, not to effect any public sale or
distribution of any of its equity securities or securities convertible into or
exchangeable or exercisable for any of such equity securities during the 7 days
prior to and the 180 days after the effective date of any registration statement
with respect to such Public Offering, except as part of such Public Offering or
except in connection with a stock option plan, stock purchase plan, savings or
similar plan, or an acquisition, merger or exchange offer.
(d) It is understood that in any Public Offering of
Registrable Securities in addition to the Shares (the "initial Shares") the
underwriters have committed to purchase, the underwriting agreement may grant
the underwriters an option to purchase a number of additional shares (the
"option Shares") equal to up to 15% of the initial Shares (or such other maximum
amount as the National Association of Securities Dealers, Inc. may then permit),
solely to cover over-allotments. Shares proposed to be sold by the Company and
the holders shall be allocated between initial Shares and option Shares as
agreed or, in the absence of agreement, pursuant to Section 4.1(a)(ii) or
Section 4.2(e), as the case may be. The number of initial Shares and option
Shares to be sold by requesting holders shall be allocated pro rata among all
such holders on the
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basis of the relative number of Registrable Securities each such holder has
requested to be included in such registration.
SECTION 4.4 Preparation: Reasonable Investigation. In
connection with the preparation and filing of each registration statement
registering Registrable Securities under the Securities Act, the Company will
give the holders of Registrable Securities on whose behalf such Registrable
Securities are to be so registered and their underwriters, if any, and their
respective counsel, accountants and other agents the opportunity to participate
in the preparation of such registration statement, each prospectus included
therein or filed with the Commission, and each amendment thereof or supplement
thereto, and will give each of them such access to its books and records and
such opportunities to discuss the business of the Company with its officers and
the independent public accountants who have issued a report on its financial
statements as shall be necessary, in the opinion of such holders and such
underwriters or their respective counsel, to conduct a reasonable investigation
within the meaning of the Securities Act.
SECTION 4.5 Indemnification. (a) In the event of any
registration of any equity securities of the Company under the Securities Act,
the Company will, and hereby does, indemnify and hold harmless, in the case of
any registration statement filed pursuant to Section 4.1 or Section 4.2, the
seller of any Registrable Securities covered by such registration statement, its
directors and officers, general and limited partners (and directors and officers
thereof and, if such seller is a portfolio or investment fund, its investment
advisors), each other Person who participates as an underwriter in the Public
Offering of such securities, each officer and director of each such underwriter,
and each other Person, if any, who controls such seller or any such underwriter
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, against any losses, claims, damages, liabilities and expenses,
joint or several, to which such seller or any such director or officer or
participating or controlling Person may become subject under the Securities Act
or otherwise, insofar as such losses, claims, damages, liabilities or expenses
(or actions or proceedings in respect thereof) arise out of or are based upon
(i) any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which such securities were
registered under the Securities Act, any preliminary prospectus, final
prospectus or summary prospectus included therein, or any amendment or
supplement thereto, or any document incorporated by reference therein, or (ii)
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
the Company will reimburse such seller, and each such director, officer,
underwriter and controlling Person for any legal or any other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, liability, action or proceeding; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage, liability (or action or proceeding in respect thereof) or expense
arises out of or is based upon (i) an untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement,
any such preliminary prospectus, final prospectus, summary prospectus, amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company for use in the preparation thereof by such seller or
underwriter, as the case may be, or (ii) an untrue
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statement or alleged untrue statement or omission or alleged omission made in
any preliminary prospectus but notified to such seller and underwriter prior to
any Sale of Registrable Securities and subsequently corrected by the Company in
any final prospectus, amendment or supplement made available to such seller or
underwriter but which final prospectus, amendment or supplement was not used by
such seller or underwriter in the Sale of Registrable Securities that gave rise
to such loss, claim, damage, liability (or action or proceeding in respect
thereof) or expense. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such seller or any such
director, officer, underwriter or controlling Person and shall survive the
transfer of such Shares by such seller.
(b) The Company may require, as a condition to including any
Registrable Securities in any registration statement filed pursuant to Section
4.1 or Section 4.2, that the Company shall have received an undertaking
satisfactory to it from (i) the prospective seller of such Shares, to indemnify
and hold harmless (in the same manner and to the same extent as set forth in
Section 4.5(a), except that any such prospective seller shall not in any event
be liable to the Company pursuant thereto for an amount in excess of the net
proceeds of sale of such prospective seller's Registrable Securities so to be
sold) the Company, each such underwriter of such Shares, each officer and
director of each such underwriter and each other Person, if any, who controls
the Company or any such underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, and (ii) each such underwriter
of such Shares, to indemnify and hold harmless (in the same manner and to the
same extent as set forth in Section 4.5(a)) the Company, each officer and
director of the Company, each prospective seller, each officer and director of
each prospective seller and each other Person, if any, who controls the Company
or any such prospective seller within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, with respect to any statement
in or omission from such registration statement, any preliminary prospectus,
final prospectus or summary prospectus included therein, or any amendment or
supplement thereto, if such statement or omission was made in reliance upon and
in conformity with written information furnished by such prospective seller or
such underwriter, as the case may be, to the Company for use in the preparation
of such registration statement, preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of the
Company or any such director, officer or controlling Person and shall survive
the transfer of such Shares by such seller.
(c) Promptly after receipt by an indemnified party of notice
of the commencement of any action or proceeding (including any governmental
investigation) involving a claim referred to in Section 4.5(a) or (b), such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party, give written notice to the latter of the commencement of
such action; provided, however, that the failure of any indemnified party to
give notice as provided herein shall not relieve the indemnifying party of its
obligations under the preceding provisions of this Section 4.5, except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice. In case any such action is brought against an indemnified party,
unless in such indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties may exist in respect of such
claim (in which
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case, the indemnifying party shall not be liable for the fees and expenses of
more than one counsel for all sellers of Registrable Securities, or more than
one counsel for the underwriters in connection with any one action or separate
but similar or related actions), the indemnifying party will be entitled to
participate in and to assume the defense thereof, jointly with any other
indemnifying party similarly notified, to the extent that it may wish with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party will not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof. No indemnifying party will
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.
SECTION 4.6 Contribution. (a) If the indemnification provided
for in Section 4.5 is unavailable to the indemnified parties in respect of any
losses, claims, damages or liabilities referred to therein, then each
indemnifying party and the Company shall contribute to the amounts paid or
payable by such indemnified parties as a result of such losses, claims, damages
or liabilities (i) as between the Company and the holders of Registrable
Securities covered by a registration statement, on the one hand, and the
underwriters, on the other, in such proportion as is appropriate to reflect the
relative benefits received by the Company and such holders, on the one hand, and
the underwriters, on the other, from the Public Offering of the Registrable
Securities, or if such allocation is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits but also
the relative fault of the Company and such holders, on the one hand, and of the
underwriters, on the other, in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations, and (ii) as between the Company, on the one
hand, and each holder of Registrable Securities covered by a registration
statement, on the other, in such proportion as is appropriate to reflect the
relative fault of the Company and of each such holder in connection with such
statements or omissions, as well as any other relevant equitable considerations.
The relative benefits received by the Company and such holders, on the one hand,
and the underwriters, on the other, shall be deemed to be in the same proportion
as the total proceeds from the Public Offering (net of underwriting discounts
and commissions but before deducting expenses) received by the Company and such
holders bear to the total underwriting discounts and commissions received by the
underwriters. The relative fault of the Company and such holders, on the one
hand, and of the underwriters, on the other, shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company and such holders or by the
underwriters. The relative fault of the Company, on the one hand, and of each
such holder, on the other, shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact
relates to information supplied by such party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
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(b) The Company and the holders of Registrable Securities
agree that it would not be just and equitable if contribution pursuant to this
Section 4.6 were determined by pro rata allocation (even if the underwriters
were treated as one entity for such purpose) or by any other method of
allocation that does not take account of the equitable considerations referred
to in the next preceding paragraph. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities referred to in
the next preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 4.6, no
underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Registrable Securities underwritten by it
and distributed to the public were offered to the public pursuant to such Public
Offering exceeds the amount of any damages that such underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission, and no holder of Registrable Securities shall be
required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities of such holder were offered to the
public pursuant to such Public Offering exceeds the amount of any damages that
such holder has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. 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. Each Stockholder's obligation to
contribute pursuant to this Section 4.5 is several in the proportion that the
proceeds of the Public Offering received by such Stockholder bears to the total
proceeds of the Public Offering received by all the Stockholders and not joint.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1 Right to Purchase USHI New Securities. (a) In the
event the Company proposes to issue USHI New Securities to Seagram or any other
Affiliate of the Company, the Company hereby grants to each Stockholder (other
than Seagram and any Affiliate of the Company) the right to purchase in lieu of
Seagram or such other Affiliate, in accordance with Section 5.1(b), a number of
shares or other amount of any USHI New Securities which the Company issues equal
to the product of (a) the total number of shares or other amount of such USHI
New Securities which the Company issues at such time and (b) a fraction, the
numerator of which shall be the total number of Fully Diluted Shares then
outstanding and beneficially owned by such Stockholder, and the denominator of
which shall be the total number of Fully Diluted Shares then outstanding. If any
such Stockholder does not purchase any or all of its pro rata portion of USHI
New Securities, the remaining Stockholders shall have the right to purchase such
non-purchasing Stockholder's pro rata portion of USHI New Securities, pro rata,
until all of such non-purchasing Stockholder's pro rata portion of USHI New
Securities have been purchased or until no other such Stockholder desires to
purchase any more USHI New Securities. The
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rights of the Stockholders under this Section 5.1 shall terminate if unexercised
within 30 days after receipt of the Notice of Issuance referred to in Section
5.1(b).
(b) In the event that the Company proposes to undertake an
issuance of USHI New Securities to Seagram or any other Affiliate of the
Company, it shall give each Stockholder (other than Seagram and any other
Affiliate of the Company) written notice (a "Notice of Issuance") of its
intention, describing all material terms of the USHI New Securities, the price
and all material terms upon which the Company proposes to issue such USHI New
Securities. Each such Stockholder shall have 30 days from the date of the Notice
of Issuance to agree to purchase all or any portion of such Stockholder's pro
rata share of such USHI New Securities (as determined pursuant to Section
5.1(a)) for the same consideration, if such consideration shall consist solely
of cash, or for cash, Cash Equivalents or Marketable Securities having an
equivalent value to the consideration payable by Seagram or such other Affiliate
of the Company at the time of payment as determined pursuant to the same
valuation procedures set forth in Section 3.4(b)(ii) (mutatis mutandis) and
otherwise upon the terms specified in the Notice of Issuance by giving written
notice to the Company, with a copy to each other such Stockholder, and stating
therein the quantity of USHI New Securities to be purchased by such Stockholder;
provided, however, to the extent a payment of non-cash consideration by Seagram,
or such other Affiliate of the Company, as contemplated by this Section 5.1(b),
consists of any assets, securities or capital stock acquired from a
non-Affiliate substantially contemporaneously with such payment made in
accordance with the provisions of Section 5.1(d)(B) or 5.1(e), then the value of
such assets, securities or capital stock for purposes of this Section 5.1(b)
shall equal the price paid by Seagram or such other Affiliate to the
non-Affiliate; provided, further, that any capital stock issued by Seagram or
such other Affiliate of the Company to acquire assets, securities or capital
stock from a non-Affiliate shall be valued at the same time as it is valued
under the terms of any agreement with such non-Affiliate. For so long as Seagram
continues to believe that it is appropriate that Holding's Applicable Percentage
in the Company be equal to MHI Sub's Applicable Percentage (as defined in the
Bidco Stockholders' Agreement) in Bidco, then Holding shall not exercise its
rights to purchase USHI New Securities hereunder unless MHI Sub also exercises
its corresponding rights to purchase Bidco New Securities (as defined in the
Bidco Stockholders Agreement) such that Holding's Applicable Percentage in the
Company is equal at all times to MHI Sub's Applicable Percentage (as defined in
the Bidco Stockholders' Agreement) in Bidco.
(c) The price payable for any Shares to be issued by the
Company prior to the first anniversary hereof shall be based upon a value for
the Company and Bidco as a whole as is mutually determined in good faith by
Seagram and Parent as promptly as practicable following the date hereof (and if
no agreement as to such value is reached, then the value shall be determined as
otherwise set forth herein). Except as contemplated by paragraph (f), with
respect to all other issuances of USHI New Securities to Seagram or any other
Affiliate of the Company, the Company may sell such USHI New Securities only if
such securities do not constitute Non-Qualifying Securities and (i) the Company
shall have received from an investment bank of recognized international
standing, selected by Seagram and reasonably satisfactory to Holding and MHI
Sub, an opinion to the effect that the price proposed to be paid by Seagram or
such
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other Affiliate of the Company for such USHI New Securities is fair, from a
financial point of view, to the Company (or Seagram shall have provided an
alternative means reasonably satisfactory to Holding to substantiate the
fairness of the price to be paid in such transaction) or (ii) if Holding shall
consent in writing to such issuance of USHI New Securities.
(d) Unless otherwise agreed by the parties hereto, for so long
as Seagram continues to believe that it is appropriate that Holding's Applicable
Percentage in the Company following the issuance of USHI New Securities to any
Affiliate of Seagram be equal to MHI Sub's Applicable Percentage (as defined in
the Bidco Stockholders' Agreement) in Bidco, then:
(A) in connection with any proposed issuance of USHI New
Securities by the Company to any Affiliate of Seagram, the following steps would
apply:
(i) Seagram would determine in its good faith
judgment the relative value of each of the Company and Bidco. The relative
values of the Company and Bidco would be expressed as a percentage, with the
aggregate of both equal to 100%;
(ii) Seagram would determine the aggregate amount
(the "Aggregate Contribution") that it desires to be contributed to the Company
and Bidco;
(iii) With respect to any issuance of USHI New
Securities for cash or Cash Equivalents, Seagram would, subject to the
provisions of Sections 5.1(a), 5.1(b), 5.1(c) and 5.1(f), directly or indirectly
contribute to the Company an amount in cash equal to the Aggregate Contribution
times the percentage attributed to the Company pursuant to clause (i); and
(iv) The balance of the Aggregate Contribution would,
subject to the provisions of Sections 5.1(a), 5.1(b), 5.1(c) and 5.1(f), be
directly or indirectly contributed to Bidco in exchange for Bidco New Securities
Bidco may then lend the contributed cash to the Company or the Company may then
lend the contributed cash to Bidco as intercompany debt consistent with past
practice.
(v) Any proposed issuance of USHI New Securities by
the Company and Bidco New Securities by Bidco shall be subject to Sections
5.1(a) and (b) of this Agreement and Sections 5.1(a) and (b), respectively, of
the Bidco Stockholders' Agreement.
(B) In connection with an acquisition by the Company or its
Subsidiaries of capital stock or assets of one or more non-Affiliate third
person(s) in which Seagram or any Affiliate of Seagram (other than the Company
and its Subsidiaries or Bidco and its Subsidiaries) issues shares of its capital
stock (or the capital stock of any such Affiliate) or pays cash to such third
person(s), the following steps would apply:
(i) Seagram would determine in its good faith
judgment the relative value of each of the Company and Bidco. The relative
values of the Company and Bidco would be expressed as a percentage, with the
aggregate of both equal to 100%;
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(ii) Seagram or such Affiliate would, subject to the
provisions of Sections 5.1(a), 5.1(b), 5.1(c) and 5.1(f), contribute the
acquired stock or assets to the Company and Bidco in proportion to their
relative percentages (determined pursuant to clause (i) above); and
(iii) Bidco may then resell such contributed capital
stock or assets to the Company or the Company may then resell such contributed
capital stock or assets to Bidco in consideration for issuance of a promissory
note with a principal amount equal to the aggregate value of the acquired stock
or assets times the proportion being resold (or otherwise structured so that
there would be no gain or loss under applicable tax regulations as a result of
such resale).
(e) To the extent that a capital contribution by Seagram or
its Affiliates is effected by means other than as contemplated by paragraph
5.1(d) above, Seagram may take such action as is reasonably necessary to
maintain an Applicable Percentage of each party in the Company equal to the
Applicable Percentage (as defined in the Bidco Stockholders' Agreement) of such
party in Bidco, provided that such action is not adverse in any material respect
to MHI Sub or Holding.
(f) Following the first anniversary hereof and in connection
with an issuance of USHI New Securities in accordance with paragraphs 5.1(d) and
5.1(e), the Company may sell USHI New Securities to Seagram or another Affiliate
of the Company only if such securities do not constitute Non-Qualifying
Securities and (i) the Company shall have received from an investment bank of
recognized international standing, selected by Seagram and reasonably
satisfactory to Holding and MHI Sub, an opinion to the effect that the prices
proposed to be paid by Seagram or such other Affiliate of the Company for such
USHI New Securities and any Bidco New Securities to be issued at such time as
contemplated by paragraphs (d) and (e) hereof, when taken together, are fair,
from a financial point of view, to Holding and MHI Sub with a view to their
interest in the Company and Bidco taken as a whole (or Seagram shall have
provided an alternative means reasonably satisfactory to Holding and MHI Sub to
substantiate the fairness to Holding and MHI Sub of the prices proposed to be
paid by Seagram or such other Affiliate of the Company for such USHI New
Securities and any Bidco New Securities to be issued at such time as
contemplated by paragraph (d) and (e) hereof (with a view to Holding's and MHI
Sub's interest in the Company and Bidco taken as a whole)) or (ii) if Holding
shall consent in writing to such issuance of Bidco New Securities.
(g) Notwithstanding anything to the contrary contained in this
Agreement, to the extent that Seagram directly or indirectly acquires any asset,
securities or capital stock from a non-Affiliate and, substantially
contemporaneously therewith transfers or contributes such asset, securities or
capital stock to the Company in accordance with the procedures set forth in this
Section 5.1, the provisions of Section 5.6 shall be inapplicable in connection
with the issuance of USHI New Securities by the Company or its Subsidiaries to
Seagram or its Affiliates.
SECTION 5.2 Issuance of Other Securities to Affiliates. (a)
The Company and any of its Subsidiaries may issue Non-Qualifying Securities to
Seagram or any other Affiliates of
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the Company (other than the Company and its Subsidiaries) only with the prior
written consent of Holding. The Company or any of its Subsidiaries may issue any
of its securities other than USHI New Securities or Non-Qualifying Securities to
Seagram or any other Affiliate of the Company if (i) the Company or Subsidiary
shall have received from an investment bank of recognized international standing
selected by Seagram and reasonably acceptable to Holding an opinion to the
effect that the price proposed to be paid by Seagram or such other Affiliate of
the Company for such securities is fair, from a financial point of view, to the
Company (or Seagram shall have provided an alternative means reasonably
acceptable to Holding to substantiate the fairness of the price to be paid in
such transaction) or (ii) Holding shall have consented in writing to such
issuance of securities.
(b) The Company shall not permit any Subsidiary to register
any of its equity securities under the Exchange Act or the Securities Act,
except for any such registration on Form S-8 (or any successor form), unless
such Subsidiary is a subsidiary of Universal Studios, Inc. ("Universal") or
PolyGram and is not the successor to all or substantially all of Universal's or
PolyGram's assets.
SECTION 5.3 Transactions With Affiliates. (a) Except for
transactions subject to Section 5.1, 5.2, 5.3(b), 5.4 or 5.5(b) (which shall be
governed by such Sections and not by this Section 5.3(a)), but subject to
Section 5.6, the Company and its Subsidiaries shall not, and Seagram shall not
permit any of the Company or its Subsidiaries to, directly or indirectly, enter
into any single transaction or series of related transactions with any Affiliate
of the Company (other than the Company or any of its Subsidiaries) unless such
transaction or series of related transactions is on terms that are no less
favorable to the Company or any such Subsidiary, as the case may be, than would
be available in a comparable transaction or transactions with an unrelated third
party.
(b) Seagram or its subsidiaries may provide administrative
services in the ordinary course of the Company's and Subsidiaries' businesses
and may receive compensation therefor and reimbursement for its costs and
expenses in connection therewith on no less favorable terms than such services
are provided to any other business unit of Seagram.
SECTION 5.4 Restrictions on Certain Fees. Neither Seagram nor
any other Affiliate of the Company (other than the Company and its Subsidiaries)
shall accept from the Company or any of its Subsidiaries, and the Company and
its Subsidiaries shall not pay to Seagram or any other Affiliate of the Company
(other than the Company and its Subsidiaries), any management, consulting,
investment banking or similar fee without the prior written consent of Holding.
SECTION 5.5 Non-Pro Rata Recapitalizations; Stock Repurchases;
Dividends and Distributions. (a) Seagram shall not permit the Company to engage
in any Recapitalization, unless in connection therewith, each Stockholder
receives such Stockholder's pro rata share of the same type or types of
consideration or securities as all other Stockholders of the Company receive in
such transaction, provided that, in the case of any recapitalization, merger,
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consolidation, exchange or other similar reorganization, each such Stockholder
shall have the right to receive such consideration in any combination of cash,
Cash Equivalents and Marketable Securities.
(b) Seagram shall not permit the Company to repurchase or
otherwise acquire any Shares from any Affiliate of the Company, unless the
Company or such Subsidiary shall offer to repurchase or otherwise acquire Shares
from all Stockholders pro rata in accordance with the number of Fully Diluted
Shares then beneficially owned by each such Stockholder and such Stockholder
receives any combination of cash, Cash Equivalents or Marketable Securities.
Seagram shall not permit the Company and its Subsidiaries to repurchase or
otherwise acquire any equity securities from any Affiliate of the Company other
than repurchases or other acquisitions of shares in accordance with the
immediately preceding sentence or required pursuant to Section 3.3(b).
(c) The Company shall not, and shall not permit any Subsidiary
to, declare or pay any dividend or distribution, other than (i) dividends and
distributions payable solely in cash, Cash Equivalents and/or Marketable
Securities or (ii) dividends and distributions payable to the Company or a
Subsidiary.
SECTION 5.6 Non-Ordinary Course Transactions. Without the
prior written consent of Holding, the Company shall not, and shall not permit
any Subsidiary to, (i) sell, transfer, lease or otherwise dispose of any assets
or other property to any Affiliate of the Company (other than the Company and
its Subsidiaries and Bidco and its Subsidiaries), (ii) make any loans to (other
than for cash management in the ordinary course of business) or investments in,
or guarantee or otherwise become liable for any debt or other obligations of,
any Affiliate of the Company (other than the Company and its Subsidiaries and
Bidco and its Subsidiaries), (iii) merge or consolidate with or into enter into
any similar business combination with any Affiliate of the Company (other than
the Company and its Subsidiaries and Bidco and its Subsidiaries), or (iv)
purchase, lease or otherwise acquire any assets or any other property from any
Affiliate of the Company (other than the Company and its Subsidiaries and Bidco
and its Subsidiaries), in each case to the extent that such transaction or
series of related transactions involve a value in excess of $25 million,
provided that the foregoing shall not apply to purchases and sales of goods and
services in the ordinary course of the Company's or its Subsidiaries' business
(which shall be subject to Section 5.3). For the avoidance of doubt and
notwithstanding anything to the contrary contained in this Agreement or the
Bidco Stockholders Agreement, Seagram, Developments and SIBV shall have the
right at any time to cause a business combination (whether by merger,
acquisition, consolidation, amalgamation, sale of substantially all of the
assets or otherwise) of the Company or its Subsidiaries and Bidco and its
Subsidiaries. The parties shall cooperate to amend this Agreement and the Bidco
Stockholders' Agreement to reflect any such actions permitted by this Agreement.
SECTION 5.7 Business Opportunities. Except as otherwise
provided in this Section 5.7, Seagram and its Affiliates shall engage in the
businesses conducted by the Company and its Subsidiaries and Bidco and its
Subsidiaries (the "Business") exclusively through the
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Company and its Subsidiaries and Bidco and its Subsidiaries. Any opportunity
presented to Seagram or its Affiliates that involves the Business shall be
corporate opportunities of the Company and Bidco and shall be presented to the
Board and/or the Board of Directors of Bidco to determine whether the Company or
its Subsidiaries or Bidco or its Subsidiaries, as the case may be, will engage
in such corporate opportunity. If such boards, acting in good faith, determine
not to engage in such corporate opportunity, then Seagram or any of Seagram's
Affiliates may engage in such opportunity outside of the Company and its
Subsidiaries and Bidco and its Subsidiaries.
SECTION 5.8 Access to Information; Invitation to Certain
Meetings and Events. (a) From and after the date hereof and for so long as the
Applicable Percentage of Holding is 5% or more, the Company will permit
representatives of Holding and its Affiliates, at their expense, to obtain all
documents and other information in the possession of the Company and its
Subsidiaries as may reasonably be requested in order to enable Holding and its
Permitted Transferees to monitor their investment in the Company and to exercise
their rights under this Agreement, and, to the extent applicable, to provide
such other access and information as may be reasonably required to enable
Holding and its Permitted Transferees to account for the investment in the
Company on the equity method and otherwise comply with applicable requirements
of U.S. and Japanese securities laws, generally accepted accounting principles
and requirements of governmental authorities including, without limitation,
delivering unaudited quarterly and audited year end balance sheets and
statements of income and cash flow prepared in accordance with generally
accepted accounting principles. Without limiting the generality of the
foregoing, from and after the date hereof and for so long as the Applicable
Percentage of Holding is 5% or more, the Company will invite Holding to send
representatives of Holding and its Affiliates, at their expense, to meetings of
the Company's Marketing Council, Communication Council and Technology Council,
(or any other Company group performing functions substantially similar to those
performed by any of such councils), to any inter- divisional management retreat,
the annual "Town Hall" event (or any substantially similar inter- divisional
retreat or event) and to each other meeting or event as to which the Company, in
its good faith discretion, believes it would be appropriate for such
representatives to attend in order that Holding and its Affiliates are informed
of matters of policy relating to the Company and its Subsidiaries, that Holding
and its Affiliates have an opportunity to communicate their views concerning
such matters of policy to appropriate officers and employees of the Company and
its Subsidiaries and that Holding and its Affiliates have an adequate
opportunity to inform those officers and employees about Holding and its
Affiliates and their respective capabilities.
(b) To the extent that Philips is an investor in Seagram or
any of its subsidiaries and Philips or any of its Affiliates has provided
confidential and proprietary information or trade secrets of Philips or any of
its Affiliates to Seagram or any of its subsidiaries, Parent and Holding
understand that access to such information may be restricted by the Company and
that any Holding Director may be required to be excluded from deliberations of
the Board to the extent such confidential information is discussed. To the
extent that Parent or any of its Affiliates has provided confidential and
proprietary information or trade secrets of Parent or any of its Affiliates to
Seagram or any of its subsidiaries, Seagram and the Company understand that
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access to such information may be restricted by Parent and that Seagram and the
Company may be required to cause any designee and any ex officio designee of
Philips on the board of directors of Seagram or any of its subsidiaries to be
excluded from board deliberations to the extent such confidential information is
discussed.
Seagram and Parent recognize that Seagram is expanding its
involvement in the field of entertainment and that Parent has technical
expertise that may be useful to Seagram in that field. Accordingly, Seagram and
Parent envision as a business matter that they will maintain a special
relationship in helping each other to the benefit of both. In furtherance of
this vision, the parties agree as set forth in Sections 5.9 and 5.10 below.
SECTION 5.9 Preferred Vendor/Supplier Status. Each of the
Company and Seagram agree that, for so long as the Applicable Percentage of
Holding is 5% or more, to the extent any Permitted Transferee of Holding
provides any hardware products (which, for the purposes of this Section 5.9,
shall include any software, any components and any services incidental to the
provision of such hardware products or components) or software products of a
type not developed or produced by the Company or any of its Subsidiaries, in
each case, of a type purchased by the Company or any of its Subsidiaries, at
levels of price, quality, quantity and service that are competitive with the
levels obtainable by the Company or any such Subsidiary in an arm's length
transaction with a third party, each such Permitted Transferee of Holding shall
be a preferred supplier of such hardware and software products to the Company
and its Subsidiaries. To the fullest extent permitted by applicable law, the
Company and Seagram agree that so long as the Applicable Percentage of Holding
is 5% or more, with respect to any potential purchase or series of related
purchases of hardware or software products in excess of $500,000 in the
aggregate, (a) the Company will use commercially reasonable efforts to seek bids
from Permitted Transferees and others to provide hardware or software products
that may fall within the terms of the preceding sentence, (b) the bidding
procedures will be structured in a manner that will give such Permitted
Transferees a reasonable chance to compete and (c) if practical, Permitted
Transferees designated by Holding will be given the first opportunity to submit
bids to provide such hardware or software products and, if practical, the
Company will accept each such bid unless it concludes in good faith that such
bid does not represent the best available alternative (taking into account such
factors as the Company may reasonably determine) when compared with a bid
available in an arms' length transaction with a third party. This covenant is
subject to all pre-existing agreements, fiduciary duties and obligations of
Polygram N.V. and its Subsidiaries and the Company and its Subsidiaries and the
Company shall not be required to breach any such agreements, fiduciary duties or
obligations (or fiduciary duties arising hereafter) in order to comply with this
provision.
SECTION 5.10 Technology Matters; Cross Promotion. (a)
Following the date hereof, SIBV, Seagram and the Parent shall negotiate in good
faith and use all commercially reasonable efforts to enter into mutually
acceptable technology cooperation and supply agreements (including, without
limitation, agreements pursuant to which the Company or its Subsidiaries will
provide technology, products and/or services to the Parent, Matsushita Electric
Corporation of America ("MECA") and/or other subsidiaries of Parent (MECA and
such other
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subsidiaries being herein referred to individually as a "Parent's Subsidiary"
and collectively as "Parent's Subsidiaries") and the Parent or Parent's
Subsidiaries will provide technology, products and/or services to the Company
and its Subsidiaries) and shall use commercially reasonable efforts to explore
technology joint ventures, taking into account the relationships existing
between the Company and the Parent and Parent's Subsidiaries prior to the date
hereof. In furtherance of, and subject to, the foregoing, for so long as the
Applicable Percentage of Holding is 5% or more, before the Company or any of its
wholly owned Subsidiaries enters into any material technology cooperation or
supply agreement or technology joint venture with any third party in an area in
which Parent or a Parent's Subsidiary has substantial expertise, the Company
shall, to the extent practical, first consult with Holding about the possibility
that the Company or such Subsidiary would instead enter into such agreement or
joint venture with Parent or such Parent's Subsidiary. For purposes hereof, a
joint venture shall not include a minority equity investment in a company in
which the Company does not have significant influence.
(b) In addition, following the date hereof, Seagram and the
Parent shall negotiate in good faith and use commercially reasonable efforts to
explore appropriate areas of cooperation in promoting products of the Company
and its Subsidiaries and of the Parent and Parent's Subsidiaries generally, such
as, for example, inclusion of products of the Parent and Parent's Subsidiaries
in motion pictures and other entertainment product produced or distributed by
the Company or its Subsidiaries or of references to motion pictures and other
entertainment product produced or distributed by the Company or its Subsidiaries
in advertising or marketing materials used by the Parent and Parent's
Subsidiaries and, upon mutual identification of such areas, to promptly
negotiate mutually acceptable agreements relating thereto.
SECTION 5.11 Representations and Warranties of the Parties.
Each party signatory hereto hereby represents and warrants to the other parties
signatory hereto that (i) such party is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all necessary corporate power and authority to enter into
this Agreement, to carry out its obligations hereunder and to consummate the
transactions contemplated hereby and (ii) this Agreement has been duly executed
and delivered by such party, and (assuming due authorization, execution and
delivery by the other parties signatory hereto) this Agreement constitutes a
legal, valid and binding obligation of such party enforceable against such party
in accordance with its terms.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1 Expenses. Except as otherwise specified in this
Agreement, all costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses.
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SECTION 6.2 Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given or
made (and shall be deemed to have been duly given or made upon receipt) by
delivery in person, by courier service, by telecopy or by registered or
certified mail (postage prepaid, return receipt requested) to the respective
parties at the following addresses (or at such other address for a party as
shall be specified in a notice given in accordance with this Section 6.2):
(a) if to Holding:
MEI Holding Inc.
x/x Xxxxxxxxxx Xxxxxxxx Xxxxxxxxxx Xx., Xxx.
0000, Xxxxxx
Xxxxx, 000, Xxxxx
Telecopy: 000-000-000 1523
Attention: Xx. Xxxxx Xxxxxx
with a copy to:
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 X.X.X.
Telecopy: (000) 000-0000
Attention: Xxxx Xxxxxxxxxx, Esq.
(b) if to the Company:
Universal Studios Holding I Corp.
c/o The Seagram Company Ltd.
0000 Xxxx Xxxxxx
Xxxxxxxx, Xxxxxx
X0X 000 Xxxxxx
Telecopy: (000) 000-0000
with copies to:
Xxxxxx X. Xxxxxxx & Sons, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 X.X.X.
Telecopy: (000) 000-0000
Attention: Vice President - Legal Affairs
General Counsel
and
Xxxxxxx Xxxxxxx & Xxxxxxxx
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000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 X.X.X.
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxx, Esq.
(c) if to Developments:
Seagram Development, Inc.
c/o The Seagram Company Ltd.
0000 Xxxx Xxxxxx
Xxxxxxxx, Xxxxxx
X0X 000 Xxxxxx
Telecopy: (000) 000-0000
with copies to:
Xxxxxx X. Xxxxxxx & Sons, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 X.X.X.
Telecopy: (000) 000-0000
Attention: Vice President - Legal Affairs
General Counsel
and
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Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 X.X.X.
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxx, Esq.
(d) if to Seagram:
The Seagram Company Ltd.
0000 Xxxx Xxxxxx
Xxxxxxxx, Xxxxxx
X0X 159 Canada
Telecopy: (000) 000-0000
Attention: Vice President, Legal and
Environmental Affairs
with copies to:
Xxxxxx X. Xxxxxxx & Sons, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 X.X.X.
Telecopy: (000) 000-0000
Attention: Vice President - Legal Affairs,
General Counsel
and
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 X.X.X.
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxx, Esq.
SECTION 6.3 Public Announcements. No party to this Agreement
shall make, or cause to be made, any press release or public announcement in
respect of this Agreement or the transactions contemplated hereby or otherwise
communicate with any news media without the prior written consent of the other
party, and the parties shall cooperate as to the timing and contents of any such
press release or public announcement; provided, however, that a party may,
without the prior consent of the other party, make such press release or public
announcement as may be required by law or any listing agreement with a
securities exchange if it has used all reasonable efforts to consult with the
other party and to obtain such party's consent but has been unable to do so in a
timely manner.
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SECTION 6.4 Headings. The descriptive headings contained in
this Agreement are for convenience of reference only and shall not affect in any
way the meaning or interpretation of this Agreement.
SECTION 6.5 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
SECTION 6.6 Entire Agreement. This Agreement constitutes the
entire agreement of the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements and undertakings, both written and oral,
between the parties hereto with respect to the subject matter hereof.
SECTION 6.7 Assignment. Except as otherwise provided herein,
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and permitted assigns; provided,
however, that this Agreement shall not inure to the benefit of any Prospective
Transferee unless such Prospective Transferee shall have complied with the terms
of Section 3.7. No Stockholder may assign any of its rights hereunder to any
Person other than a transferee that has complied with the requirements of
Section 3.7 in all respects.
SECTION 6.8 No Third Party Beneficiaries. This Agreement shall
be binding upon and inure solely to the benefit of the parties hereto and their
permitted assigns and nothing herein, express or implied, is intended to or
shall confer upon any other Person any legal or equitable right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 6.9 Amendment. (a) Any term of this Agreement may be
amended and the observance of any such term may be waived (either generally or
in a particular instance and either retroactively or prospectively) only with
the written consent of (a) the Company, (b) Seagram and (c) Stockholders (other
than Seagram and its Permitted Transferees) holding Shares representing at least
a majority of the then outstanding Shares held by all such Stockholders;
provided, however, that no amendment or waiver which affects Holding or its
Permitted Transferees adversely shall be effective without the consent of
Holding or such Permitted Transferees. Except as expressly provided by the
proviso to the immediately preceding sentence, each Stockholder shall be bound
by any amendment or waiver authorized by this Section 6.9, whether or not such
Stockholder shall have consented thereto.
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(b) No failure or delay by any party in exercising any right,
power or privilege under this Agreement shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.
SECTION 6.10 Governing Law. This Agreement (other than the
Dutch Provisions) shall be governed by, and construed in accordance with, the
laws of the State of Delaware, applicable to contracts executed in and to be
performed entirely within that state. All actions and proceedings arising out of
or relating to this Agreement shall be heard and determined in the Chancellory
Court of the State of Delaware or any federal court sitting in the City of New
York, and the parties hereto hereby irrevocably submit to the exclusive
jurisdiction of such courts in any such action or proceeding and irrevocably
waive the defense of an inconvenient forum to the maintenance of any such action
or proceeding. Seagram hereby irrevocably appoints Xxxxxx X. Xxxxxxx & Sons,
Inc. (the "Seagram Process Agent"), with an office on the date hereof at 000
Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Xxxxxx Xxxxxx, Attention: Vice President
- Legal Affairs, General Counsel, as its agent to receive on behalf of Seagram
and its property service of copies of the summons and complaint and any other
process which may be served in any such action or proceeding. Such service may
be made by mailing or delivering a copy of such process to Seagram in care of
the Seagram Process Agent at the Seagram Process Agent's above address, and
Seagram hereby irrevocably authorizes and directs the Seagram Process Agent to
accept such service on behalf of Seagram. As an alternative method of service,
each party hereto also irrevocably consents to the service of any and all
process in any such action or proceeding by the mailing of copies of such
process to such party at its address specified in Section 6.2. The parties
hereto agree that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Section 6.10 shall affect
the right of any party hereto to serve legal process in any other manner
permitted by law. The consents to jurisdiction set forth in this Section 6.10
shall not constitute general consents to service of process in the State of New
York or Delaware and shall have no effect for any purpose except as provided in
this Section 6.10 and shall not be deemed to confer rights on any person other
than the parties hereto.
SECTION 6.11 Counterparts. This Agreement may be executed in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
SECTION 6.12 Specific Performance. The parties hereto agree
that irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties shall
be entitled to specific performance of the terms hereof, in addition to any
other remedy at law or in equity.
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SECTION 6.13 Termination. This Agreement shall terminate on
the tenth anniversary of the date hereof. After the eighth anniversary hereof
the parties hereto shall use their best efforts to extend the terms of this
Agreement for an additional ten-year period.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first written above by their respective
officers hereunto duly authorized.
UNIVERSAL STUDIOS HOLDING I CORP.
By /s/ Xxxxxx X. Xxxxxxxx III
----------------------------------------
Title: Vice President
MEI HOLDING INC.
By
----------------------------------------
Title:
THE SEAGRAM COMPANY LTD.
By /s/ Xxxxxx X. Xxxxxxxx
----------------------------------------
Title: Executive Vice President
SEAGRAM DEVELOPMENTS, INC.
as the Permitted Transferor of
The Seagram Company Ltd.
By /s/ Xxxxxx X. Xxxxxxxx III
----------------------------------------
Title: Vice President
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first written above by their respective
officers hereunto duly authorized.
UNIVERSAL STUDIOS HOLDING I CORP.
By
----------------------------------------
Title: Vice President
MEI HOLDING INC.
By /s/ Xxxxx Xxxxxxxxx
----------------------------------------
Title:
THE SEAGRAM COMPANY LTD.
By
----------------------------------------
Title: Executive Vice President
SEAGRAM DEVELOPMENTS, INC.
as the Permitted Transferor of
The Seagram Company Ltd.
By
----------------------------------------
Title: Vice President
