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Exhibit 3.7
EXECUTION COPY
SHAREHOLDER GOVERNANCE AGREEMENT
Among
VIVENDI S.A.,
SOFIEE S.A.
AND
THE SHAREHOLDERS PARTY HERETO
Dated As Of June 19, 2000
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TABLE OF CONTENTS
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ARTICLE I
Definitions
SECTION 1.01. Certain Defined Terms..................................... 2
SECTION 1.02. Other Definitional Provisions............................. 8
SECTION 1.03. Methodology for Calculations.............................. 9
ARTICLE II
Corporate Governance
SECTION 2.01. Designees to the Board.................................... 10
SECTION 2.02. Committees................................................ 12
SECTION 2.03. Miscellaneous............................................. 14
ARTICLE III
Transfer of Voting Shares
SECTION 3.01. Restrictions on Transfer.................................. 15
SECTION 3.02. Right of First Offer...................................... 17
SECTION 3.03. Permitted Transferees..................................... 19
SECTION 3.04. Notice of Transfer........................................ 20
SECTION 3.05. Compliance with Transfer Provisions....................... 20
ARTICLE IV
Standstill
SECTION 4.01. No Acquisitions........................................... 20
SECTION 4.02. Other Restrictions........................................ 21
ARTICLE V
Incidental Registrations
SECTION 5.01. Right To Include Registrable Securities................... 24
SECTION 5.02. Company's Ability To Postpone............................. 25
SECTION 5.03. Expenses.................................................. 25
SECTION 5.04. Priority in Incidental Registrations...................... 25
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ARTICLE VI
Registration on Request
SECTION 6.01. Request by Holders........................................ 27
SECTION 6.02. Expenses.................................................. 27
SECTION 6.03. Effective Registration Statement.......................... 27
SECTION 6.04. Selection of Underwriters................................. 28
SECTION 6.05. Priority in Requested Registrations....................... 28
SECTION 6.06. Company's Ability to Postpone............................. 29
SECTION 6.07. Holdback Agreements....................................... 29
ARTICLE VII
Registration Procedures
SECTION 7.01. Registration Procedures................................... 30
SECTION 7.02. Information............................................... 33
SECTION 7.03. Discontinuance of Disposition............................. 33
ARTICLE VIII
Indemnification
SECTION 8.01. Indemnification by the Company............................ 35
SECTION 8.02. Indemnification by the Sellers............................ 36
SECTION 8.03. Notices of Claims, Etc.................................... 37
SECTION 8.04. Contribution.............................................. 38
SECTION 8.05. Other Indemnification..................................... 39
SECTION 8.06. Nonexclusivity............................................ 39
ARTICLE IX
Term and Termination
SECTION 9.01. Term...................................................... 39
ARTICLE X
General Provisions
SECTION 10.01. Notices.................................................. 41
SECTION 10.02. Counterparts............................................. 42
SECTION 10.03. Entire Agreement; No Third Party Beneficiaries........... 42
SECTION 10.04. Governing Law............................................ 42
SECTION 10.05. Severability............................................. 43
SECTION 10.06. Assignment............................................... 43
SECTION 10.07. Enforcement.............................................. 44
SECTION 10.08. Titles and Subtitles..................................... 44
SECTION 10.09. Submission to Jurisdiction; Waivers...................... 44
SECTION 10.10. Form of Securities....................................... 46
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SECTION 10.11. Actions of Shareholders.................................. 47
SECTION 10.12. Prohibited Transfers..................................... 48
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SHAREHOLDER GOVERNANCE AGREEMENT, dated as
of June 19, 2000 (this "Agreement"), among VIVENDI
S.A., a corporation organized under the laws of
France ("Vivendi"), SOFIEE S.A., a corporation
organized under the laws of France ("Sofiee"), and
each of the shareholders party hereto and the
trustees party hereto acting for the benefit of
trusts that are shareholders (collectively, the
"Shareholders").
WHEREAS, Vivendi has agreed to merge with and into Sofiee (the
"Vivendi Merger") and effect the other Vivendi/Canal Transactions (as defined in
the Merger Agreement referred to below), effective as of the Closing (as defined
below);
WHEREAS following the effectiveness of the Plan of Arrangement
(the "Arrangement") contemplated by the Merger Agreement dated as of the date
hereof (the "Merger Agreement"), among Vivendi, Sofiee, The Seagram Company
Ltd., a corporation organized under the laws of Canada ("Seagram"), and the
other parties thereto, upon the terms and subject to the conditions set forth
therein, the surviving entity of the Vivendi Merger (such surviving entity being
referred to herein as, the "Company") will own 100% of the common shares of
Seagram;
WHEREAS the Shareholders beneficially own in the aggregate a
significant percentage of the issued and outstanding shares of Seagram, and upon
completion of the Arrangement, will acquire Voting Shares (as defined below) of
the Company;
WHEREAS the Shareholders have entered into a Voting Agreement
dated as of the date hereof with Vivendi and Canal Plus S.A., pursuant to which
each Shareholder will take the actions specified therein; and
WHEREAS each of the parties desire to enter into this
Agreement in order to establish rights and obligations of the Shareholders as
holders of Voting Shares, effective as of the time the Arrangement becomes
effective (the "Closing").
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NOW, THEREFORE, in consideration of the foregoing and the
respective covenants and agreements set forth herein, and intending to be
legally bound hereby, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Certain Defined Terms. As used in this
Agreement:
"Affiliate" means, with respect to any 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. In all instances where a provision of this Agreement by its terms
requires a Person to "cause" one of its Affiliates to take or refrain from
taking a specified action, in the case of (x) Affiliates that are natural
persons and (y) Affiliates that are not Controlled by such Person, such
requirement shall be deemed satisfied if such Person uses its reasonable best
efforts to cause such action to be taken or not taken by such Affiliate (as
applicable).
"Agreement" means this Shareholder Governance Agreement, as it
may be amended, supplemented, restated or modified from time to time.
"Beneficial Owner" or "Beneficially Own" has the meaning
assigned to such term in Rule 13d-3 under the Exchange Act and a Person's
beneficial ownership of Voting Shares shall be calculated in accordance with the
provisions of such Rule.
"Board" means the Board of Directors of the Company.
"Business Day" means any day that is not a Saturday, a Sunday
or other day on which banks are required or authorized by law to be closed in
France or The City of New York.
"Control" (including the terms "Controlled By" and "Under
Common Control With"), with respect to the relation ship between or among two or
more Persons, means the possession, directly or indirectly, of the power to
direct or cause the direction of the affairs or management of a
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Person, whether through the ownership of voting securities, as trustee or
executor, by contract or otherwise.
"Current Market Value" means, with respect to any security,
the average of the daily closing prices on the principal exchange or market on
which such security may be listed or may trade for such security for the 20
consecutive trading days commencing on the 22nd trading day prior to the date
with respect to which the Current Market Value is being determined. The closing
price for each day shall be the closing price, if reported, or, if the closing
price is not reported, the average of the closing bid and asked prices as
reported by such principal exchange or market. In the event such closing prices
or bid and asked prices, as applicable, are unavailable, the Current Market
Value shall be the Fair Market Value of such security established by a
Determination of the Directors.
"Designee" means a Family Designee or a Non-Family Designee,
as the context requires.
"Determination of the Directors" means, with respect to any
matter, a determination made on an informed basis and in good faith, on the
basis of such relevant factors as the Directors consider, in their judgment,
appropriate, by the vote of a majority of the Directors present at a meeting of
the Board if a quorum of the Directors is present at such meeting or without a
meeting if a majority of all Directors consent thereto in writing.
"Director" means any member of the Board.
"Encumbrance" means any claim, lien (statutory or other),
pledge, hypothecation, option, charge, security interest, encumbrance, mortgage
or other rights of third parties of any nature whatsoever.
"Exchange Act" means the U.S. Securities Exchange
Act of 1934, as amended.
"Exchangeable Shares" means the Exchangeable Shares of Vivendi
Exchangeco Limited, a wholly owned Canadian subsidiary of the Company, issued as
part of or created by the Arrangement and, for purposes of this Agreement,
includes the Vivendi Voting Rights (as defined in the Arrangement) related
thereto.
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"Fair Market Value" means, as to any securities or other
property, the cash price at which a willing seller would sell and a willing
buyer would buy such securities or property in an arm's-length negotiated
transaction without time constraints.
"Family Designees" means those three of the Initial Designees
who are Shareholders, and any replacement designees of such Persons or of any
such replacement designee, in each case who is so designated pursuant to Section
2.01(d).
"Group" has the meaning assigned to such term in Section
13(d)(3) of the Exchange Act.
"Holder" means (i) any Shareholder or any Permitted Transferee
of a Shareholder that is the record holder of Registrable Securities or (ii) any
transferee of a Shareholder or Permitted Transferee that is a Significant
Transferee at the time of the applicable Transfer to the extent that such
transferee was specifically assigned registration rights pursuant to Section
10.06(b).
"Incidental Transfer" means any Underwritten Offering, Market
Transfer or Private Placement, together with any related or contemporaneous
transactions, of Voting Shares representing less than 0.33% of the Company's
issued and outstanding Voting Shares.
"Initial Period" means the initial four-year term of the
Designees on the Board.
"Initial Designees" means five members of the Seagram Board of
Directors who shall be designated by Seagram in writing to Vivendi, provided
that (i) three of such designees shall be Shareholders and (ii) two of such
designees shall be selected by the Board of Directors of Seagram from and among
the existing members of such Board of Directors as of the date of the Merger
Agreement and shall not be Shareholders or their Affiliates.
"Initial Voting Shares" means the number of Voting Shares
Beneficially Owned by the Shareholders as of the Closing.
"Market Transfer" means a sale or other transfer which is
effected in accordance with the provisions of Rule 144 under the Securities Act
or any successor rule
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thereto, or a market sale or similar transaction (including a block trade that
is not designed to effect a broad distribution) which is effected outside of the
United States.
"Non-Family Designees" means those two of the Initial
Designees who are not Shareholders, and any replacement designees of such
Persons or of any such replacement designee, in each case who is so designated
pursuant to Section 2.01(d).
"Ordinary Shares" means the ordinary shares of the Company,
including, without duplication, American Depositary Shares representing such
ordinary shares, and any securities issued in substitution therefor, in
connection with any stock split, dividend or combination, or any
reclassification, recapitalization, merger, consolidation, exchange or other
similar reorganization.
"Permitted Family Transfers" means Transfers of Voting Shares
having a Current Market Value (determined for any Transfer on the applicable
transfer date) of no more than $100,000,000 in the aggregate, less the Current
Market Value (determined for any Transfer on the applicable transfer date) of
Transfers (other than pursuant to the Arrangement) of shares of Seagram made in
accordance with Section 2 of the Voting Agreement.
"Permitted Transferee" means, in respect of any Shareholder or
Permitted Transferee, the other Shareholders, lineal descendants of any
Shareholder or Permitted Transferee, spouses of any of the foregoing, legal
representatives or estates of any of the foregoing, trusts maintained for the
benefit of any of the foregoing and/or for charitable foundations or
organizations, and corporations, private charitable foundations or other
entities Controlled by such Persons or charitable foundations or organizations
of which one or more of the foregoing is a director, in each case to the extent
such parties agree to be bound by the terms of this Agreement in accordance with
Section 3.03. In addition, any Shareholder shall be a Permitted Transferee of
the Permitted Transferees of itself and of the other Shareholders.
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"Person" means any individual, corporation, limited liability
company, limited or general partnership, joint venture, association, joint-stock
company, trust, unincorporated organization, government or any agency or
political subdivisions thereof or any Group comprised of two or more of the
foregoing.
"Private Placement" means one or a series of related
privately-negotiated Transfers to any Person or Transfers to any Person pursuant
to Rule 144A or Regulation S under the Securities Act or any similar provisions
under U.S., Canadian or other foreign law.
"Registrable Securities" means any Voting Shares held by a
Holder and, in the case of Holders that are not Shareholders of Permitted
Transferees, issued as part of the Arrangement. As to any particular Registrable
Securities, such securities shall cease to be Registrable Securities when (i) a
registration statement with respect to the sale of such securities shall have
become effective under the Securities Act and such Registrable Securities shall
have been disposed of in accordance with such registration statement, (ii) such
securities shall have ceased to be outstanding or (iii) such securities shall
have been sold or otherwise Transferred to any Person who is not a Permitted
Transferee or a Significant Transferee.
"Registration Expenses" means any and all expenses incident to
the Company's performance of its obligations under Articles V, VI and VII of
this Agreement, including (a) all SEC, provincial securities commissions and
stock exchange or National Association of Securities Dealers, Inc. registration
and filing fees, (b) all fees and expenses of complying with securities or blue
sky laws (including reasonable fees and disbursements of counsel for the
underwriters in connection with blue sky qualifications of the Registrable
Securities), (c) all printing, messenger and delivery expenses, (d) all fees and
expenses incurred in connection with the listing of the Registrable Securities
on any securities exchange pursuant to Article VII, (e) the out-of-pocket fees
and disbursements of counsel for the Company and of its independent public
accountants, including the expenses of any special audits and/or "cold comfort"
letters required by or incident to such performance, (f) the reasonable fees and
disbursements of one counsel selected by Holders holding a majority of the
shares being registered in such offering in connection with each such
registration or prospectus and (g) any fees and disbursements of
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underwriters customarily paid by the issuers or sellers of securities, including
liability insurance if the Company so desires or if the underwriters so require,
and the fees and expenses of any special experts retained by the Company in
connection with the requested registration or prospectus, but excluding
underwriting discounts, fees or commissions, fees and expenses of counsel for
the underwriters (except as otherwise set forth in clause (b) above) and
transfer taxes, if any.
"Right of First Offer Transfer" means any Transfer other than
(a) any Transfer by a Shareholder so long as, immediately after giving effect to
such Transfer, the aggregate amount of Transfers pursuant to this clause (a)
does not exceed the number of Voting Shares equal to 2.5% of the issued and
outstanding Voting Shares as of the Closing, (b) after the date that Transfers
pursuant to clause (a) above have reached the number of Voting Shares equal to
2.5% of the issued and outstanding Voting Shares as of the Closing, any
Incidental Transfer or (c) any Transfer pursuant to Section 3.01(a), Section
3.01(b), clause (i) of Section 3.01(d), Section 3.01(e) (other than a Transfer
relating to a Foreclosure Event) or Section 3.01(f); provided, however, that any
Transfer described in clause (c) of this sentence shall not be deemed to be a
Transfer for purposes of calculating the percentages contained in clause (a) and
(b) of this sentence. Notwithstanding the foregoing, any foreclosure by a
transferee of a Transfer pursuant to Section 3.01(e) or a Tax Related Transfer
or any Transfer pursuant to clause (ii) of Section 3.01(d) shall be deemed a
Right of First Offer Transfer.
"SEC" means the United States Securities and Exchange
Commission or any other federal agency at the time administering the Securities
Act or the Exchange Act.
"Securities Act" means the U.S. Securities Act of 1933, as
amended.
"Significant Transferee" means any Person to which any
Transfer has been made that, after giving effect to such Transfer, owns more
than 1% of the outstanding Voting Shares.
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"Subsidiary" means, with respect to any Person, any
corporation, partnership, joint venture, limited liability company or other
entity controlled by such Person directly or indirectly through one or more
intermediaries; provided that for purposes of Article IV, a Person shall be
deemed to be "controlled" by another Person if such other Person possesses,
directly or indirectly, the power to prohibit the taking of the action in
question by such controlled Person, whether through the ownership of voting
securities, as trustee or executor, by contract or otherwise.
"Tax Related Transfer" has the meaning assigned to such term
in Section 3.01(g).
"Transfer" means, directly or indirectly, to sell, transfer,
assign, pledge, encumber, hypothecate or similarly dispose of, either
voluntarily or involuntarily, or to enter into any contract, option or other
arrangement or under standing that is designed to, or could be expected to,
result in the disposition (whether by actual disposition or effective economic
disposition due to cash settlement or otherwise) of, any Voting Shares or any
interest in any Voting Shares.
"Underwritten Offering" means the sale of Voting Shares for
cash in an underwritten public offering or block trade, which, in any case, is
designed to effect a broad distribution of such Voting Shares.
"Voting Share Equivalents" means any warrants, options, rights
or securities convertible into, or exchangeable or exercisable for, Voting
Shares.
"Voting Shares" means any securities the holders of which are
generally entitled to vote for members of the Board, including the Ordinary
Shares and the Exchangeable Shares, and any securities issued in substitution
therefor, in connection with any stock split, dividend or combination, or any
reclassification, recapitalization, merger, demerger, exchange or other similar
reorganization.
SECTION 1.02. Other Definitional Provisions. (a) The words
"hereof", "herein" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement, and Article and Section references are to this
Agreement unless otherwise specified.
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The words "include", "includes" and "including" shall be deemed to be followed
by the phrase "without limitation".
(b) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
SECTION 1.03. Methodology for Calculations. For purposes of
this Agreement, (x) the Transfer of a Voting Share Equivalent shall be treated
as the Transfer of the Voting Shares into which such Voting Share Equivalent can
be converted, exchanged or exercised and (y) the conversion, exchange or
exercise of a Voting Share Equivalent into Voting Shares and the exchange of
Exchangeable Shares into American Depositary Shares or Ordinary Shares shall be
deemed to not be a Transfer. For purposes of calculating the amount of
outstanding Voting Shares as of any date and the amount of Voting Shares
Beneficially Owned by any Person as of any date, the amount of any Voting Shares
shall be equal to the number of votes such Voting Shares shall then entitle the
holder thereof to cast in an election for members of the Board (assuming that
all Voting Shares were voted in such election) and disregarding (x) any Voting
Shares held by the Company or its Affiliates and (y) any limitation on the
voting rights of the holders of Voting Shares that is dependent on the number of
Voting Shares voted). For all purposes hereunder, the Shareholders shall be
entitled to rely on the most recent publicly available information regarding the
number of outstanding Voting Shares as of any date of determination (unless the
Company shall have in fact provided the Shareholders with more updated
information). Shareholders who hold Exchangeable Shares shall not be obligated
to first exercise the exchange right pertaining thereto in connection with a
Right of First Offer Transfer or a request for registration of Registrable
Securities hereunder; provided, however, that "Current Market Value", "Offer
Price" or "Specified Price", as applicable, for purposes of Section 3.02 shall
nonetheless be determined with reference to the Ordinary Shares underlying such
Exchangeable Shares if such Ordinary Shares are the securities proposed to be
transferred.
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ARTICLE II
Corporate Governance
SECTION 2.01. Designees to the Board. (a) The Company will use
its best efforts to cause the election by the shareholders of the Company of
each of the Initial Designees to the Board, effective as of the Closing , and
their continuation on the Board for the Initial Period (subject to the other
provisions of this Article II). Effective as of the Closing and for so long as
the Company shall have the obligation to cause the nomination of any Family
Designees to the Board, the Company's bylaws shall provide that the Board shall
be comprised of no more than 20 members (the "Board Limit"); provided, that the
Board Limit shall be reduced to (i) 19 on the first anniversary of the Closing
and (ii) 18 on the second anniversary of the Closing; provided, further that,
notwithstanding the foregoing, the Board Limit shall be reduced to the extent
required by French law or rule on the date on which any French law or rule
requiring such a reduction becomes effective (and such bylaw provision shall not
be amended without the prior written consent of the Shareholders pursuant to
Section 10.06(c)).
(b) Following the completion of the Initial Period, the number
of Family Designees shall not exceed the corresponding number set forth in the
table below. The number of Family Designees may not increase after a reduction
of the number of Family Designees pursuant to the following table and Section
2.01(e).
Percentage of the Initial
Number of Voting Shares Beneficially
Family Designees Owned by Shareholders and
---------------- Permitted Transferees
---------------------
3 > 75%
2 > 50% but less than or equal to 75%
1 > 25% but less than or equal to 50%
(c) Following the completion of the Initial Period, (i) the
Company shall use its best efforts to cause the continuation on the Board of
each of the Family Designees (including by causing the nomination of such
individuals for election to the Board, and by using its best efforts to cause
the election of such individuals by the
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shareholders of the Company), subject to the limitations contained in Section
2.01(b) and (ii) the renomination of the Non-Family Designees shall be at the
discretion of the Board.
(d) In the event that a vacancy in the Board is created at any
time by the death, disability, retirement, resignation or removal (with or
without cause) of a Family Designee or a Non-Family Designee (during the Initial
Period only, solely in the case of Non-Family Designees), the Shareholders (in
the case of a Family Designee) and the remaining Non-Family Designee (or, in the
event that there is no remaining Non-Family Designee on the Board, the
Shareholders (provided that such replacement Non-Family Designee shall not be a
Shareholder or an Affiliate of a Shareholder)) (in the case of a Non-Family
Designee) shall have the right to designate any Person as a replacement Family
Designee or a Non-Family Designee (during the Initial Period only, solely in the
case of Non-Family Designees), as the case may be, to fill such vacancy and the
Company agrees to use its best efforts to cause such vacancy to be filled as
promptly as possible with the replacement Designee. The Company shall not take
any action to cause the removal of a Family Designee or a Non-Family Designee
(during the Initial Period only, solely in the case of Non-Family Designees)
without cause, except pursuant to Section 2.01(e)(ii). Unless the Company
otherwise agrees, the Shareholders (in their capacity as shareholders of the
Company) shall not, and shall use their best efforts to cause each Family
Designee not to, take any action to cause the removal of any Director (other
than the Family Designees) with or without cause. The Board will use its best
efforts to cause, including by making the necessary proposals to the
shareholders of the Company, the Designees to be entitled to directors fees to
the same extent as other independent directors of the Company. The Designees
will be entitled to be reimbursed by the Company for all reasonable travel and
out-of-pocket expenses incurred by the Designees as a result of attending
meetings of the Board to the same extent as other independent directors of the
Company. For purposes of this paragraph, "cause" shall mean the wilful and
continuous failure of a Director to substantially perform such Director's duties
to the Company or the wilful engaging by a Director in gross misconduct
materially and demonstrably injurious to the Company. Notwithstanding anything
to the contrary contained herein, in the event that a Family Designee or a
Non-Family Designee (during the Initial Period only, solely in the case of
Non-Family Designees) is removed
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from the Board with or without cause, the Shareholders (in the case of a Family
Designee) and the remaining Non-Family Designee (or, in the event that there is
no remaining Non-Family Designee on the Board, the Shareholders (provided that
such replacement Non-Family Designee shall not be a Shareholder or an Affiliate
of a Shareholder)) (in the case of a Non-Family Designee) shall have the right
to designate any Person as a replacement Family Designee or a Non-Family
Designee (during the Initial Period only, solely in the case of Non-Family
Designees), as the case may be.
(e) If, at any time, the number of Family Designees exceeds
the number of Family Designees to which the Shareholders are entitled pursuant
to Section 2.01(b), then:
(i) the Shareholders shall use their best efforts to cause a
Family Designee or Family Designees, as the case may be, to resign from
the Board as promptly as practicable in order to ensure compliance with
Section 2.01(b);
(ii) if a Family Designee or Family Designees, as the case may
be, shall not have resigned within three days of the event requiring
such resignation, the Company may take or cause to be taken all actions
necessary to remove a Family Designee or Family Designees, as the case
may be, from the Board and the Shareholders shall vote (and cause each
of its Affiliates to vote, if applicable), all Voting Shares
Beneficially Owned by it and otherwise take or cause to be taken all
actions necessary to remove such Family Designee or Family Designees,
as the case may be.
SECTION 2.02. Committees. (a) For so long as the Shareholders
are entitled to at least two Family Designees pursuant to Section 2.01(b) or the
Shareholders and their Permitted Transferees are collectively the largest holder
of Voting Shares (other than the Company and its Affiliates), the Shareholders
shall have the right to designate the Chairman of the Compensation Committee of
the Board, and the Company agrees to cause such designee to be appointed to and
maintained in such position.
(b) The Company agrees (i) to cause the Chairman of the
Compensation Committee of the Company designated by the Shareholders pursuant to
Section 2.02(a) to be appointed and maintained as a member of the Nominating
Committee of
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the Board and (ii) that, during the period the Shareholders have the right to
designate the Chairman of the Compensation Committee of the Board, the
Nominating Committee of the Board will be responsible for proposing to the Board
the nomination of all Directors, other than the Family Designees.
(c) For so long as the Shareholders have the right to
designate the Chairman of the Compensation Committee of the Board pursuant to
Section 2.02(a), the Shareholders shall also have the right to designate one
member of the Audit Committee of the Board, and the Company agrees to cause such
designee to be appointed to and maintained in such position.
(d) In the event that the Board shall form an executive
committee or any other similar committee such that the failure of the
Shareholders to participate in such committee would be inconsistent with the
purposes of the Board and committee participation rights of the Shareholders
provided for under this Agreement, the Shareholders shall also have the right to
designate one member of each such committee of the Board, and the Company agrees
to cause such designee to be appointed to and maintained in each such position
(for so long as the Shareholders have the right to designate the Chairman of the
Compensation Committee of the Board pursuant to Section 2.02(a)).
(e) In the event that a vacancy in one of the foregoing
committee positions is created at any time by the death, disability, retirement,
resignation or removal (with or without cause) of a designee of the Shareholders
to the committees of the Board pursuant to Section 2.02 (a "Committee
Designee"), the Shareholders shall have the right to designate a replacement
designee to fill such vacancy and the Company agrees to use its best efforts to
cause such vacancy to be filled as promptly as possible with the replacement
designee. The Company shall not take any action to cause the removal of a
Committee Designee without cause, except pursuant to Section 2.02(f)(ii). Unless
the Company otherwise agrees, the Shareholders (in their capacity as
shareholders of the Company) shall not, and shall use their best efforts to
cause the Committee Designees not to, take any action to cause the removal of
any committee member (other than the Committee Designees) with or without cause.
The Committee Designees will be entitled to committee member fees to the same
extent as other independent committee members of the Company. The Committee
Designees
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will be entitled to be reimbursed by the Company for all reasonable travel and
out-of-pocket expenses incurred by the Committee Designees as a result of
attending meetings of the applicable committee to the same extent as other
independent committee members of the Company. For purposes of this paragraph,
"cause" shall mean the wilful and continuous failure of a committee member to
substantially perform such member's duties to the Company or the wilful engaging
by a committee member in gross misconduct materially and demonstrably injurious
to the Company. Notwithstanding anything to the contrary contained herein, in
the event that a Committee Designee is removed from the applicable committee
with or without cause, the Shareholders shall have the right to designate any
Person as a replacement Committee Designee.
(f) If, at any time, the Shareholders are not entitled to
designate the Chairman of the Compensation Committee of the Board pursuant to
Section 2.02(a), then:
(i) the Shareholders shall use their best efforts to cause
each Committee Designee to resign from the applicable committee of the
Board as promptly as practicable;
(ii) if the Committee Designees shall not have resigned within
three days of the event requiring such resignation, the Company may
take or cause to be taken all actions necessary to remove the Committee
Designees from the committees of the Board upon which the Committee
Designees may be serving and the Shareholders shall vote (and cause
each of its Affiliates to vote, if applicable) all Voting Shares
Beneficially Owned by them and otherwise take or cause to be taken all
actions necessary to remove the Committee Designees.
SECTION 2.03. Miscellaneous. (a) The Company agrees that the
number of meetings of the Board and the committees of the Board shall be
consistent with the past practice of Vivendi.
(b) The Company agrees that one-third of Board meetings and,
to the extent practicable, committee meetings each year shall take place in the
United States and that all Board meetings and committee meetings will be
conducted in English.
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(c) The Company agrees that (i) all Directors will receive
notice of meetings and delivery of materials at substantially the same time and
(ii) documents delivered to American and Canadian Directors shall be in English.
(d) The Company agrees that it will not amend its constituent
documents or enter into any agreement or arrangement in any manner that (i)
would result in the Company being unable to fulfill its obligations hereunder or
(ii) could reasonably be expected to discriminate against any Shareholder or
Permitted Transferee by virtue of the size of its holdings of Voting Shares, or
its citizenship, residence or other similar criteria.
ARTICLE III
Transfer of Voting Shares
SECTION 3.01. Restrictions on Transfer. Without the consent of
the Company, each Shareholder agrees not to Transfer any Voting Shares
Beneficially Owned by such Shareholder (x) prior to the date that is 90 days
after the Closing (other than Permitted Family Transfers or pursuant to Section
3.01(b) or Section 3.01(e)) and (y) thereafter, not to make any such Transfer
except:
(a) to the Company, any of its Affiliates or any assignee of
the Company's rights under Section 3.02;
(b) to any Permitted Transferee, so long as such Permitted
Transferee agrees to be bound by the terms of this Agreement in
accordance with Section 3.03 (if not already bound hereby);
(c) pursuant to an Underwritten Offering, Market Transfer or a
Private Placement, in each case so long as the ultimate purchaser would
not (to the transferor's knowledge after reasonable due inquiry)
Beneficially Own more than 5% of the then outstanding Voting Shares,
after giving effect to such transfer;
(d) pursuant to a bona fide third party tender offer or
exchange offer which was not induced directly or indirectly by any
Shareholder or any Affiliate of any Shareholder and (i) which is
approved by the Board or (ii) in circumstances in which it is
reasonably likely the Shareholders would be, as a
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result of not tendering or exchanging, relegated to different
consideration than would be available to those shareholders who did
tender or exchange, taking into account any provisions thereof
(including with respect to proration and any proposed second step or
back end transaction (or the absence of such provisions)); provided
that, in the case of clause (ii), all conditions to such tender or
exchange offer (other than the minimum tender or exchange condition)
are reasonably likely to be satisfied or waived at the scheduled
expiration date and the minimum tender or exchange condition is
reasonably likely to be satisfied or waived at the scheduled expiration
date for such offer even if the Shareholders do not tender or exchange;
and provided, further, notwithstanding the foregoing, prior to
completing a Transfer pursuant to clause (ii) of this Section 3.01(d),
the applicable Voting Shares shall have been offered to the Company
pursuant to the right of first offer specified in Section 3.02 and no
such Transfer shall be permitted if the Company commits to purchase
such Voting Shares pursuant to Section 3.02(d) (any such offer, a
"Permitted Tender Offer");
(e) any Encumbrance on the Voting Shares in connection with
bona fide financings with a financial institution, so long as the
foreclosure by such financial institution (and any transferee thereof)
is subject to the right of first offer specified in Section 3.02 and
such financial institution (and any transferee thereof) acknowledges in
writing for the benefit of the Company such right of first offer;
(f) any Transfer arising as a result of a merger
or similar transaction involving the Company; or
(g) any Transfer to the extent necessary to satisfy the
estimated Canadian federal and provincial tax obligations upon the
ultimate Transfer of the Exchangeable Shares during the final year that
the Exchangeable Shares remain outstanding (or in any prior year during
which the Exchangeable Shares are redeemed or otherwise exchanged for
Ordinary Shares (or within the first four months of the following
year), other than as a result of a Shareholder retracting against the
Company or other redemption caused by the voluntary action of the
Shareholders pursuant to the terms of the Exchangeable Shares), so long
as such transfer (i) is
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subject to the right of first offer specified in Section 3.02 and (ii)
is not made pursuant to a tender offer or exchange offer (other than a
Permitted Tender Offer).
A Shareholder shall provide notice to the Company (including
the aggregate Current Market Value of all such Transfers) upon the making of any
Permitted Family Transfer.
SECTION 3.02. Right of First Offer. (a) Any Right of First
Offer Transfer by any Shareholder or any Permitted Transferee of the
Shareholders (the proposed transferor, the "Transferring Party") will be subject
to the right of first offer provisions of this Section 3.02.
(b) Prior to effecting any Right of First Offer Transfer, the
Transferring Party shall deliver a written notice (the "Offer Notice") to the
Company, which Offer Notice shall specify (i) the number or amount and
description of the Voting Shares intended to be Transferred, (ii) the applicable
exception under Section 3.01 pursuant to which such Transfer is being made and
(iii) if applicable, the Specified Price (as defined below). The Offer Notice
shall constitute an irrevocable offer to the Company or its designee, for the
period of time described below, to purchase all (but not less than all) of such
Voting Shares at (i) the Offer Price (as defined in Section 3.02(c) below), in
the case of a Permitted Tender Offer, (ii) the price set by the Transferring
Party in the Offer Notice (the "Specified Price"), in the case of a Private
Placement, or (iii) the Current Market Value as of the date of the Offer Notice,
in all other cases.
(c) For purposes hereof, the "Offer Price" shall mean with
respect to any Permitted Tender Offer, the final tender offer or exchange offer
price offered per Voting Share in such offer, or any other offer announced prior
to the scheduled expiration date of the initial offer, if higher, taking into
account any provisions thereof with respect to proration and any proposed second
step or "back-end" transaction. To the extent the Offer Price consists of
consideration other than cash or a publicly traded security for which a closing
market price is published for each Business Day (in which case such non-cash
portion of the consideration shall be equal to the Current Market Value
determined as of the Business Day prior to the announcement of the Permitted
Tender Offer), such consideration shall be valued by a determination of a
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internationally recognized investment bank (selected by the Company and
reasonably satisfactory to the Transferring Party) of the Fair Market Value
thereof of the consideration being offered per Voting Share, giving effect to
any tax benefit that the Transferring Party would have realized by reason of
receiving such non-cash consideration. Notwithstanding anything to the contrary
contained in this Section 3.02, the time periods applicable to an election by
the Company to purchase the offered securities set forth in Section 3.02(d)
shall not be deemed to commence until the determination of the investment bank
under this Section 3.02(c) has been made; provided that, in no event shall any
such election be permitted later than 48 hours prior to the latest time by which
Voting Shares shall be tendered in order to be accepted pursuant to such offer
or to qualify for any proration applicable to such offer if all conditions to
such offer (other than the number of shares tendered) are reasonably likely to
be satisfied or waived. The Company agrees to use its reasonable best efforts to
cause the determination of the investment bank under this Section 3.02(c) to be
made as promptly as practicable.
(d) If the Company elects to purchase all of the offered
Voting Shares at the price described in Section 3.02(b), it shall give
irrevocable notice to the Transferring Party within 24 hours of its receipt of
the Offer Notice (or in the case of a Permitted Tender Offer, not later than
five Business Days prior to the expiration date of such offer or such later time
as permitted by Section 3.02(c)). If the Company shall deliver such a notice, it
shall constitute a binding obligation, subject to obtaining any governmental and
other similar required approvals and, in the case of a Permitted Tender Offer,
all of the conditions to such Permitted Tender Offer being satisfied or waived,
to purchase the offered Voting Shares, which notice shall include the date set
for the closing of such purchase, which date shall be no later than 15 days
following the delivery of such election notice (the "Determination Date"),
subject to extension to the extent necessary to obtain required governmental
approvals and other required approvals, which the Transferring Party and the
Company shall use their respective reasonable best efforts to obtain as promptly
as practicable. Notwithstanding the foregoing, such time periods shall not be
deemed to commence with respect to any purported notice that does not comply in
all material respects with the requirements of this Section 3.02(d). The Company
may assign its rights to purchase under this Section 3.02 to any
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Person. To the extent that the closing of any such purchase has not occurred by
the Determination Date (whether to the Company or an assignee), the Transferring
Party may terminate the relevant agreement to sell the Voting Shares to the
Company and sell the Voting Shares in accordance with the provisions of Section
3.01.
(e) If the Company does not respond to the Offer Notice within
the required response time period or elects not to purchase the offered Voting
Shares, the Transferring Party shall be free to Transfer the offered Voting
Shares in any manner permitted by Section 3.01; provided that (x) such Transfer
is closed within 120 days (in the case of a registered Underwritten Offering),
60 days (in the case of a Private Placement) or 30 days (in the case of any
other Transfer) after the latest of (A) the expiration of the foregoing required
response time periods, or (B) the receipt by the Transferring Party of the
foregoing election notice, and (y) the price at which the Voting Shares are
Transferred must be equal to or higher than (i) the Offer Price, in the case of
a Transfer pursuant to a Permitted Tender Offer (with any non-cash consideration
being valued at the same value used to determine the Offer Price), (ii) the
Specified Price, in the case of a Private Placement (with any non-cash
consideration being valued using the methodology described in the second
sentence of Section 3.02(c) (provided that the investment bank shall be selected
by the Transferring Shareholder and shall be reasonably acceptable to the
Company), and giving effect to any tax benefit that the Transferring Party would
have realized by reason of receiving such non-cash consideration), or (iii) the
Fair Market Value of such Voting Shares pursuant to a transaction of the type
being effected at the time of such Transfer (taking into account any applicable
market discounts for such a transaction), in all other cases.
SECTION 3.03. Permitted Transferees. Any Permitted Transferee
shall be subject to the terms and conditions of this Agreement as if such
Permitted Transferee were a Shareholder. Prior to the initial acquisition of
Beneficial Ownership of any Voting Shares by any Permitted Transferee, and as a
condition thereto, each Shareholder agrees (a) to cause such Permitted
Transferees to agree in writing with the Company to be bound by the terms and
conditions of this Agreement to the extent described in the preceding sentence
and (b) that it shall remain directly liable for the performance by the
Permitted Transferees of all obligations of such Permitted Transferees under
this
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Agreement. To the extent a Permitted Transferee Beneficially Owns Voting Shares
and is not an individual, a trust or an estate, and a third party (which is not
a Shareholder or a Permitted Transferee) acquires Control of such Permitted
Transferee, such acquisition of Control shall be deemed to be a Transfer of the
Voting Shares held by such Permitted Transferee subject to the transfer
restrictions of Section 3.01 and the right of first offer provisions of Section
3.02, in each case to the extent applicable to a Transfer of Voting Shares.
SECTION 3.04. Notice of Transfer. To the extent any
Shareholder or any Permitted Transferee shall Transfer any Voting Shares, such
Shareholder or Permitted Transferee shall, within three Business Days following
consummation of such Transfer, deliver notice thereof to the Company.
SECTION 3.05. Compliance with Transfer Provisions. Any
Transfer or attempted Transfer of Voting Shares in violation of any provision of
this Agreement shall be void, and the Company shall not record such Transfer on
its books or treat any purported transferee of such Voting Shares as the owner
of such Voting Shares for any purpose.
ARTICLE IV
Standstill
SECTION 4.01. No Acquisitions. (a) Each Shareholder covenants
and agrees with the Company that such Shareholder shall not, and shall cause
each of its Affiliates not to, directly or indirectly, acquire, or agree to
acquire, by purchase or otherwise, Beneficial Ownership of any Voting Shares or
Voting Share Equivalents (except by way of stock dividends, stock
reclassifications or other distributions or offerings made available to holders
of Voting Shares generally including capital increases) if following any such
acquisition the Shareholders and Persons acting in concert with the Shareholders
would collectively Beneficially Own more than 10% of the outstanding Voting
Shares.
(b) Each Shareholder represents and warrants that neither it
nor, to its knowledge, any of its Affiliates, Beneficially Own any Voting Shares
or Voting Share Equivalents as of the date of this Agreement and agrees that, as
of the Closing, except for Ordinary Shares and Exchangeable Shares issued to it
pursuant to the Arrangement
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or Ordinary Shares underlying employee stock options, such Shareholder shall not
Beneficially Own any Voting Shares or Voting Share Equivalents.
SECTION 4.02. Other Restrictions. Except as expressly set
forth in Article II, each Shareholder covenants and agrees with the Company that
such Shareholder shall not, and it will cause its Affiliates not to, directly or
indirectly, alone or in concert with others, unless specifically requested in
writing by the Chief Executive Officer of the Company or by a resolution of a
majority of the Directors of the Company, take any of the actions set forth
below (or take any action that would require the Company to make an announcement
regarding any of the following):
(a) effect, seek, offer, engage in, propose (whether
publicly or otherwise) or cause or participate in, or assist any other
Person to effect, seek, engage in, offer or propose (whether publicly
or otherwise) or participate in (other than through the making of any
Transfer permitted by the terms of this Agreement):
(i) any acquisition of Beneficial Ownership
of Voting Shares which would result in a breach of
Section 4.01 of this Agreement;
(ii) any tender or exchange offer, merger,
consolidation, share exchange, business combination,
recapitalization, restructuring, liquidation,
dissolution or other extraordinary transaction
involving the Company or any material portion of its
business or any purchase of all or any substantial
part of the assets of the Company or any material
portion of its business; or
(iii) any "solicitation" of "proxies" (as
such terms are used in the proxy rules of the SEC but
without regard to the exclusion set forth in Section
14a-1(1)(2)(iv) from the definition of
"solicitation") with respect to the Company or any of
its Affiliates or any action resulting in any
Shareholder, any Affiliates of any Shareholder, or
such other Person becoming a "participant" in any
"election contest" (as such terms are used in
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the proxy rules of the SEC) with respect to the
Company or any of its Subsidiaries;
(b) propose any matter for submission to a vote of
shareholders of the Company or any of its Affiliates;
(c) seek election to, seek to place a representative (other
than the Family Designees) on, or seek the removal of, any Director,
except pursuant to Section 2.01;
(d) grant any proxy with respect to any Voting Shares (other
than to a Shareholder, its Affiliates or the Chief Executive Officer of
the Company);
(e) except as contemplated by this Agreement, execute any
written consent with respect to any Voting Shares;
(f) form, join or participate in a Group with respect to any
Voting Shares or deposit any Voting Shares in a voting trust or subject
any Voting Shares to any arrangement or agreement with respect to the
voting of such Voting Shares or other agreement having similar effect
(in each case except among Shareholders, Permitted Transferees and
their respective Affiliates);
(g) take any other action to seek to affect the control of the
management or Board of the Company or any of its Affiliates, including
publicly suggesting or announcing its willingness to engage in or have
another Person engage in a transaction that could reasonably be
expected to result in a business combination or to increase the
ownership percentage of the Shareholders; provided that nothing in this
Section 4.02(g) shall restrict the manner in which (A) a Shareholder, a
Permitted Transferee or any of their respective Affiliates may vote its
shares or (B) a Family Designee, Shareholder or Affiliate thereof, may
(i) vote on any matter submitted to the Board or (ii) participate in
deliberations or discussions of the Board or take any other action in
his or her capacity as a Director or officer of the Company (so long as
such actions do not otherwise violate any other provision of Section
4.01 or Section 4.02);
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(h) enter into any discussions, negotiations, arrangements or
understandings with any Person with respect to any of the foregoing, or
advise, assist, encourage or seek to persuade others to take any action
with respect to any of the foregoing (in each case except among
Shareholders, Permitted Transferees and their respective Affiliates);
(i) disclose to any Person (other than a Shareholder, Permitted
Transferee or their respective Affiliates), or otherwise induce,
encourage, discuss or facilitate, any intention, plan or arrangement
inconsistent with the foregoing or with the restrictions on transfer set
forth in Article III or form any such intention which would result in
the Company or any of its Affiliates or any Shareholder or any
Affiliates of any Shareholder being required to make any such disclosure
in any filing with a Governmental Entity (as defined in the Merger
Agreement) or being required to make a public announcement with respect
thereto; or
(j) request the Company or any of its Affiliates, directors,
officers, employees, representatives, advisors or agents, directly or
indirectly, to amend or waive this Agreement (including this Section
4.02) or the statutes or by-laws (or similar constituent documents) of
the Company or any of its Affiliates.
ARTICLE V
Incidental Registrations
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SECTION 5.01. Right To Include Registrable Securities. If the
Company at any time after 90 days following the Closing proposes to register
Ordinary Shares under the Securities Act (other than a registration on Form F-4
or F-8, or any successor or other forms promulgated for similar purposes), for
sale for its own account or the account of any other Person, pursuant to a
registration statement on which it is permissible to register Registrable
Securities for sale to the public under the Securities Act, it will each such
time give prompt written notice to each Holder of its intention to do so. Upon
the written request of any Holder made within 15 days after the receipt of any
such notice (which request shall specify the maximum number of Registrable
Securities intended to be disposed of by such Holder), the Company will use its
reasonable best efforts to effect the registration under the Securities Act of
all Registrable Securities which the Company has been so requested to register
by the Holders thereof (with the securities that the Company at the time
proposes to register) to permit the sale or other disposition by such Holders
(in accordance with the intended method of distribution thereof) of the
Registrable Securities to be so registered or qualified for sale; provided that
(a) if, at any time after giving written notice of its intention to register or
sell any Ordinary Shares and prior to the effective date of the registration
statement or prospectus filed in connection with such registration or sale by
way of prospectus, the Company shall determine for any reason not to proceed
with the proposed registration of the Ordinary Shares to be sold by it and/or
the other applicable Persons, the Company may, at its election, give written
notice of such determination to each applicable Holder and, thereupon, shall be
relieved of its obligation to register or qualify for sale pursuant to a
prospectus any Registrable Securities in connection with such registration (but
not from its obligation to pay the Registration Expenses in connection
therewith), and (b) if such registration involves an Underwritten Offering, all
Holders of Registrable Securities requesting to be included in the registration
or sale by way of prospectus must sell their Registrable Securities to the
underwriters selected by the Company on the same terms and conditions as apply
to the Company, with such differences, including any with respect to
indemnification and liability insurance, as may be customary or appropriate in
combined primary and secondary offerings. If a registration requested pursuant
to this Section 5.01 involves an Under written Offering, any Holder of
Registrable Securities requesting to be included in such registration or sale by
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way of prospectus may elect, in writing prior to the effective date of the
registration statement or prospectus filed in connection with such registration
or sale by way of prospectus, not to register such Registrable Securities in
connection with such registration or sell such Registrable Securities pursuant
to such sale by way of prospectus; provided, however, that such withdrawal shall
be irrevocable and, after making such withdrawal, a Holder shall no longer have
any right to include Registrable Securities in the registration or sale by way
of prospectus as to which such withdrawal was made.
SECTION 5.02. Company's Ability To Postpone. The Company shall be
entitled to postpone for a reasonable period of time (but not exceeding a total
of 120 days in any 360-day period) the filing of any registration statement or
suspend the effectiveness of any registration statement otherwise effecting any
registration or permitting any sale by way of prospectus under this Article V,
if, upon a Determination of the Directors, the Company concludes that, a
registration or sale by way of prospectus of Registrable Securities pursuant to
this Article V would materially adversely affect any financing, offering,
acquisition or disposition, corporate reorganization or other material
transaction involving the Company or any of its Affiliates, or would require
premature disclosure thereof. The Company shall promptly give each applicable
Holder notice of such conclusion. If the Company shall so postpone the filing of
a registration statement or prospectus, the Holders of Registrable Securities
requesting registration or sale by way of prospectus thereof pursuant to Section
5.01 shall have the right to withdraw the request for registration or sale by
way of prospectus by giving written notice to the Company within 30 days after
receipt of the notice of postponement (provided that the Company shall remain
responsible for all Registration Expenses incurred in connection therewith).
SECTION 5.03. Expenses. The Company will pay all Registration
Expenses in connection with each registration of Registrable Securities
requested pursuant to this Article V (whether or not consummated).
SECTION 5.04. Priority in Incidental Registrations. If a
registration pursuant to this Article V involves an Underwritten Offering and
the managing underwriter advises the Company that, in its opinion, the number of
Registrable Securities requested to be included in
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such registration or sale by way of prospectus exceeds the number which can be
sold in such offering, so as to be likely to have an adverse effect on the
successful marketing of such offering (including the price at which such
securities can be sold pursuant thereto), then the Company will include in such
registration (a) first, 100% of the securities the Company proposes to sell for
its own account, (b) second, up to 100% of the securities requested to be
registered by any Holder of the Company pursuant to demand registration rights
in any agreement between the Company and such Person, and (c) third, to the
extent of the number of Registrable Securities (and securities held by other
Persons with similar incidental registration rights) requested to be included in
such registration which, in the opinion of such managing underwriter, can be
sold without having the adverse effect referred to above, the number of
Registrable Securities (and such securities) which the Holders (and such other
Persons) have requested to be included in such registration or sale by way of
prospectus, such amount to be allocated pro rata among all requesting Holders
(and such other Persons) on the basis of the relative number of shares of
Registrable Securities then held by each such Holder (or Voting Shares then held
by such other Person) (provided that any shares thereby allocated to any such
Holder (or such other Person) that exceed such Holder's (or such other Person's)
request will be reallocated among the remaining requesting Holders (and such
other Persons) in like manner).
ARTICLE VI
Registration on Request
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SECTION 6.01. Request by Holders. At any time, and from time to
time, after 90 days following the Closing, upon the written request of any
Holder requesting that the Company effect the registration under the Securities
Act of all or part of the Registrable Securities and specifying the intended
method of disposition thereof, the Company shall, as promptly as practicable,
use its reasonable best efforts to effect the registration under the Securities
Act (including by means of a shelf registration (which the Company shall not be
required to keep effective for more than 120 days) pursuant to Rule 415 under
the Securities Act (or any successor rule thereto) if so requested and if the
Company is then eligible to effect a shelf registration for such disposition) of
the Registrable Securities which the Company has been so requested to register
so as to permit the disposition (in accordance with the intended method thereof
as aforesaid) of the Registrable Securities so to be registered; provided that
the Company shall not be obligated to file a registration statement relating to
any request for registration under this Section 6.01 within a period of 180 days
after the effective date of any other registration statement or prospectus which
included Ordinary Shares of the Holder making such request or its Affiliates
under this Section 6.01; provided further that the Company shall not be required
to effect more than eight requested registrations pursuant to this Article VI.
The Holder providing such notice shall also notify the other Holders, each of
which shall be able to request that Voting Shares they Beneficially Own be
included as part of such requested registration; provided that during the period
commencing on the Closing and ending on the first anniversary of the Closing,
the Company shall not be obligated to effect more than one such requested
registration.
SECTION 6.02. Expenses. The Company will pay all Registration
Expenses in connection with the registrations of Registrable Securities pursuant
to this Article VI (whether or not consummated).
SECTION 6.03. Effective Registration Statement. A registration
requested pursuant to this Article VI will not be deemed to have been effected
unless it has become effective; provided that if, within 60 days after it has
become effective, the offering of Registrable Securities pursuant to such
registration or prospectus is interfered with by any stop order, injunction or
other order or requirement of the SEC, any provincial securities commission or
other governmental agency or court, such registration or
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sale by way of prospectus will be deemed not to have been effected.
SECTION 6.04. Selection of Underwriters. If a requested
registration pursuant to this Article VI involves an Underwritten Offering,
Holders holding a majority of the shares being registered in such offering shall
have the right to select the investment banker or bankers and managers to
administer the offering and the method of distribution for the offering, subject
to the consent of the Company, which shall not be unreasonably withheld.
SECTION 6.05. Priority in Requested Registrations. If a requested
registration pursuant to this Article VI 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 or sale by way of
prospectus (including securities of the Company or other Persons which are not
Registrable Securities) exceeds the number which can be sold in such offering,
so as to be likely to have an adverse effect on the successful marketing of such
offering (including the price at which such securities can be sold pursuant
thereto), the Company will include in such registration only the Registrable
Securities requested to be included in such registration. 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 without having the adverse effect referred to above, the number of such
Registrable Securities to be included in such registration shall be allocated
pro rata among all requesting Holders on the basis of the relative number of
shares of Registrable Securities then held by each such Holder and requested to
be included (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 or sale by way of prospectus is
less than the number which, in the opinion of the managing underwriter, can be
sold without having the adverse effect referred to above, the Company may
include in such registration or sale by way of prospectus the securities the
Company (or any other stockholder) proposes to sell up to the number of
securities that, in the opinion of the underwriter, can be sold without having
the adverse effect referred to above.
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SECTION 6.06. Company's Ability to Postpone. The Company shall be
entitled to postpone for a reasonable period of time (but not exceeding a total
of 120 days in any 360-day period) the filing of any registration statement or
suspend the effectiveness of any registration statement or otherwise effecting
any registration or qualifying Registrable Securities for sale by way of
prospectus under this Article VI, if, upon a Determination of the Directors the
Company concludes that, a registration or sale by way of prospectus of
Registrable Securities pursuant to this Article VI would materially adversely
affect any financing, offering, acquisition or disposition, corporate
reorganization or other material transaction involving the Company or any of its
Affiliates, or would require premature disclosure thereof; provided, however,
that in any event the Company shall not be required to effect any registration
or sale by way of prospectus prior to the termination, waiver or reduction of
any reasonable "blackout period" required by the underwriters to be applicable
to the Holders or the Company, if any, in connection with any offering (any
blackout period described in this proviso not to exceed the shorter of (i) the
shortest blackout period applicable to the Company and/or the other holders of
securities of the Company selling in the offering giving rise to such blackout
period and (ii) 90 days). The Company shall promptly give each applicable Holder
notice of such conclusion. If the Company shall so postpone the filing of a
registration statement or prospectus or suspend the effectiveness or use of any
registration statement or prospectus, the Holders of Registrable Securities
requesting registration or sale by way of prospectus thereof pursuant to Section
6.01 shall have the right to withdraw the request for registration by giving
written notice to the Company within 30 days after receipt of the notice of
postponement or suspension and, in the event of such withdrawal, such request
shall not be counted for purposes of the requests for registration or sale by
way of prospectus to which Holders of Registrable Securities are entitled
pursuant to Section 6.01 hereof (provided that the Company shall remain
responsible for all Registration Expenses incurred in connection therewith).
SECTION 6.07. Holdback Agreements. Notwithstanding anything in
this Agreement to the contrary, the Company shall not be required to effect any
requested registration or sale by way of prospectus under Section 6.01 within a
period of (i) 7 days prior to or (ii) such number of days as was required by the
underwriters (or determined in the good faith judgment of the Board, in the case
of a
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previous offering that was not an Underwritten Offering) (in either event not to
exceed 90 days) following the effective date of any other registration statement
or prospectus relating to an Underwritten Offering or any other offering of
Ordinary Shares (a "Recent Offering"), if, in the opinion of the underwriters of
such Recent Offering (or the good faith judgment of the Board, in the case of a
Recent Offering that is not an Underwritten Offering), such requested
registration or sale by way of prospectus could have an adverse effect on such
Recent Offering or the market for the Ordinary Shares.
ARTICLE VII
Registration Procedures
SECTION 7.01. Registration Procedures. If and whenever the
Company is required to use its reasonable best efforts to effect or cause the
registration of any Registrable Securities under the Securities Act as provided
in this Agreement, the Company will, as promptly as practicable:
(a) prepare and, in any event within 60 days after the end of the
period within which a request for registration may be given to the
Company, file with the SEC a registration statement with respect to such
Registrable Securities and use its reasonable best efforts to cause such
registration statement to become effective;
(b) prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement
effective for a period not in excess of 120 days (or such shorter period
during which the distribution of securities thereunder continues) and to
comply with the provisions of the Securities Act with respect to the
sale or other disposition of all securities covered by such registration
statement during such period in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such
registration statement (so long as such intended methods of disposition
are commercially reasonable); provided that before filing a registration
statement or prospectus, or any amendments or supplements thereto, the
Company
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will furnish to one counsel selected by the applicable Holders of
Registrable Securities covered by such registration statement, copies of
all documents proposed to be filed, which documents will be subject to
the reasonable review of such counsel;
(c) furnish to each seller of such Registrable Securities such
number of copies of such registration statement and of each 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 summary
prospectus), in conformity with the requirements of the Securities Act,
and such other documents as such seller may reasonably request in order
to facilitate the disposition of the Registrable Securities by such
seller;
(d) use its reasonable best efforts to register or qualify such
Registrable 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 which may be reasonably necessary or advisable to enable such
seller to consummate the disposition in such jurisdictions of the
Registrable Securities owned by such seller, 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 where, but for the
requirements of this Section 7.01(d), it would not be obligated to be so
qualified, to subject itself to taxation in any such jurisdiction, or to
consent to general service of process in any such jurisdiction;
(e) use its reasonable best efforts to cause such Registrable
Securities covered by such registration statement to be registered with
or approved by such other governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof to consummate the
disposition of such Registrable Securities;
(f) notify each seller of any such Registrable Securities covered
by such registration statement, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act within the
appropriate period mentioned in Section 7.01(b), of the
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Company's becoming aware that the prospectus included in such
registration statement, as then in effect, includes an untrue statement
of a material fact or omits 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 at the
request of any such seller and subject to Section 7.01(b), prepare and
furnish to such seller a reasonable number of copies of an amended or
supplemental prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such Registrable 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;
(g) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the SEC, and make available to its
security holders, as soon as reasonably practicable (but not more than
18 months) after the effective date of the registration statement, an
earnings statement which shall satisfy the provisions of Section 11(a)
of the Securities Act and the rules and regulations promulgated
thereunder;
(h) use its reasonable efforts to list or have admitted for
trading, as applicable, such Registrable Securities on each securities
exchange on which the Ordinary Shares are then listed or traded;
(i) enter into such customary agreements (including an
underwriting agreement in customary form) 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;
(j) use its reasonable efforts to obtain a "cold comfort" letter
or letter from the Company's independent public accountants in customary
form and covering matters of the type customarily covered by "cold
comfort" letters as the applicable Holders shall reasonably request
(provided that Registrable Securities constitute at least 25% of the
securities covered by such registration statement);
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(k) make reasonably available for inspection by representatives
of the sellers of such Registrable Securities covered by such
registration statement, by any underwriter participating in any
disposition to be effected pursuant to such registration statement and
by any attorney, accountant or other agent retained by such sellers or
any such underwriter, all pertinent financial and other records,
pertinent corporate documents and properties of the Company, and cause
all of the Company's officers, directors and employees to supply all
information reasonably requested by any such seller, underwriter,
attorney, accountant or agent in connection with such registration
statement (subject to each party referred to in this Section 7.01(k)
entering into customary confidentiality agreements in a form reasonably
acceptable to the Company and provided that the Company shall not be
required to disclose any information which it is prohibited by law or
any agreement from disclosing, or which could in its judgment result in
a waiver or loss of any attorney-client privilege to which it may be
entitled); and
(l) use its reasonable efforts (taking into account the interests
of the Company) to make available members of the Company's management to
participate in customary "road show" presentations that may be
reasonably requested by the Holders and the managing underwriter in any
Underwritten Offering; provided that the participation of such
individuals shall not interfere in any material respect with the conduct
of their duties to the Company.
SECTION 7.02. Information. 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 pertinent to the
disclosure requirements relating to the registration and the distribution of
such securities as the Company may from time to time reasonably request in
writing.
SECTION 7.03. Discontinuance of Disposition. Each Holder of
Registrable Securities agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 7.01(f), such
Holder will forthwith discontinue disposition of Registrable Securities pursuant
to the registration statement covering such Registrable Securities until such
Holder's receipt of
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the copies of the supplemented or amended prospectus contemplated by Section
7.01(f), and, if so directed by the Company, such Holder will deliver to the
Company (at the Company's expense) all copies of the prospectus covering such
Registrable Securities current at the time of receipt of such notice. In the
event the Company shall give any such notice, the period mentioned in Section
7.01(b) shall be extended by the number of days during the period from and
including the date of the giving of such notice pursuant to Section 7.01(f) and
including the date when each seller of Registrable Securities covered by such
registration statement shall have received the copies of the supplemented or
amended prospectus contemplated by Section 7.01(f).
ARTICLE VIII
Indemnification
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SECTION 8.01. Indemnification by the Company. In the event of
any registration of any securities of the Company under the Securities Act
pursuant to Articles V or VI, the Company will, and it hereby does, indemnify
and hold harmless, the seller of any Registrable Securities covered by such
registration statement and each person who participates as an underwriter in any
offering or sale of the Registrable Securities, their directors and officers or
general and limited partners (and the directors and officers and general and
limited partners thereof), and each other Person, if any, who controls such
seller or underwriter within the meaning of the Securities Act (collectively,
the "Indemnified Parties"), against any and all losses, claims, damages or
liabilities, joint or several, and expenses to which such seller, any such
director or officer or general or limited partner or controlling Person may
become subject under the Securities Act, common law or otherwise, insofar as
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of or are based upon (a) 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, final or summary prospectus contained therein, or any amendment
or supplement thereto, or (b) 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 (in the case of a prospectus or a preliminary
prospectus, in light of the circumstances under which they are made), and the
Company will reimburse each such Indemnified Party for any legal or any other
expenses reasonably incurred by it in connection with investigating or defending
any such loss, claim, liability, action or proceeding; provided that the Company
shall not be liable to any Indemnified Party in any such case to the extent that
any such loss, claim, damage, liability (or action or proceeding in respect
thereof) or expense arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in such
registration statement or amendment or supplement thereto or in any such
preliminary, final or summary prospectus in reliance upon and in conformity with
written information furnished to the Company by or on behalf of such indemnified
parties for use in the preparation thereof; and provided, further, that the
Company will not be liable to any Indemnified Party (including any person
controlling such Indemnified Party), who is obligated to deliver a prospectus in
transactions in a security as to which a registration statement has been filed
pursuant to
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the Securities Act, under the indemnity agreement in this Section 8.01, with
respect to any preliminary prospectus or the final prospectus or the final
prospectus as amended or supplemented, as the case may be, to the extent that
any such loss, claim, damage or liability of such Indemnified Party arises out
of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission contained in any preliminary prospectus and such Registrable
Securities were sold to a person to whom there was not sent or given, at or
prior to the written confirmation of such sale, a copy of the final prospectus
(excluding any documents incorporated by reference therein) or of the final
prospectus as then amended or supplemented (excluding any documents incorporated
by reference therein), whichever is most recent, if the Company has previously
furnished copies thereof to such Indemnified Party and such prospectus corrects
such untrue statement or omission or alleged untrue statement or omission. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such seller or any Indemnified Party and shall survive
the transfer of such securities by such seller and the termination of this
Agreement.
SECTION 8.02. Indemnification by the Sellers. In the event of any
registration of any securities of the Company under the Securities Act pursuant
to Article V or VI, each prospective seller of Registrable Securities shall
indemnify and hold harmless (in the same manner and to the same extent as set
forth in Section 8.01) the Company, all other prospective sellers, and any of
their respective directors, officers or general or limited partners, and other
Persons, if any, who control the Company or such sellers, as the case may be,
within the meaning of the Securities Act, with respect to any statement or
alleged statement in or omission or alleged omission from such registration
statement, any preliminary, final or summary prospectus contained therein, or
any amendment or supplement, if such statement or alleged statement or omission
or alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such seller for use in
the preparation of such registration statement, preliminary, final or summary
prospectus or amendment or supplement, or a document incorporated by reference
into any of the foregoing; provided, however, that in no event shall the
liability of any seller hereunder be greater than the dollar amount of the
proceeds received by such seller upon its sale of the Registrable Securities
giving rise to such indemnification obligation. Such indemnity shall remain in
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full force and effect regardless of any investigation made by or on behalf of
the Company or any of the prospective sellers, or any of their respective
Affiliates, directors, officers or controlling Persons and shall survive the
transfer of such securities by such seller and the termination of this
Agreement.
SECTION 8.03. Notices of Claims, Etc. Promptly after receipt by
an indemnified party hereunder of written notice of the commencement of any
action or proceeding with respect to which a claim for indemnification may be
made pursuant to this Article VIII, 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 that the failure of
the indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under Sections 8.01 or 8.02, as the case
may be, 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, 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 other than reasonable costs of investigation, 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 event such indemnified party and any other indemnified party to which such
conflict of interest applies shall be reimbursed for the reasonable expenses
incurred in connection with retaining one separate legal counsel for all such
indemnified parties in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances). No indemnifying party will,
without the prior written consent of the indemnified party (which consent shall
not be unreasonably withheld), consent to entry of any judgment or enter into
any settlement in respect of any such indemnifiable claim, unless any such
judgment or settlement includes as an unconditional term thereof the giving by
the claimant or
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plaintiff to such indemnified party of a release from all liability in respect
to such claim or litigation. No indemnified party will, without the prior
written consent of the indemnifying party (which consent shall not be
unreasonably withheld), consent to entry of any judgment or enter into any
settlement in respect of any such indemnifiable claim which the indemnifying
party is defending in good faith.
SECTION 8.04. Contribution. (a) If for any reason the indemnity
provided for in this Article VIII is unavailable or is insufficient to hold
harmless an indemnified party under this Article VIII, then the indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities in such proportion as is appropriate to reflect
the relative fault of the indemnifying party and of the indemnified party in
connection with the actions, statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations; provided, however, that in no event shall the liability of any
seller hereunder be greater than the dollar amount of the proceeds received by
such seller upon its sale of the Registrable Securities giving rise to such
indemnification obligation. The relative fault of the indemnifying party, on the
one hand, and of the indemnified party, 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.
(b) The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 8.04 were determined by pro
rata allocation or by any other method of allocation that does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities referred to in the immediately 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. No
person guilty of fraudulent misrepresentation (within the
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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.
SECTION 8.05. Other Indemnification. Indemnification similar to
that specified in Sections 8.01 and 8.02 (with appropriate modifications) shall
be given by the Company and each seller of Registrable Securities with respect
to any required registration or other qualification of securities under any
federal, state or provincial law or regulation or governmental authority other
than the Securities Act.
SECTION 8.06. Nonexclusivity. The obligations of the parties
under this Article VIII shall be in addition to any liability which any party
may otherwise have to any other party.
ARTICLE IX
Term and Termination
SECTION 9.01. Term. (a) This Agreement shall become effective
upon the Closing and prior thereto shall be of no force or effect. If the Merger
Agreement shall be terminated in accordance with its terms, this Agreement shall
automatically be deemed to have been terminated and shall thereafter be of no
force or effect.
(b) Subject to paragraph (a) above or paragraph (c) and (d)
below, the rights and obligations of the Shareholders and the Permitted
Transferees of the Shareholders hereunder shall terminate upon the earlier of
(i) the 30th anniversary of the Closing and (ii) the date on which the
Shareholders are no longer entitled to designate any Family Designees to the
Board pursuant to Section 2.01(b); provided that Articles III and IV of this
Agreement shall automatically become effective and reinstated if, within 12
months following the date of termination pursuant to clause (ii) above, the
Shareholders and Permitted Transferees Beneficially Own a number of Voting
Shares that would have entitled the Shareholders to designate at least one
Designee to the Board pursuant to Section 2.01(b) as a result of the acquisition
of Voting Shares by any Shareholder or any Permitted Transferee (and shall
continue only for so long as such level of ownership continues).
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(c) In addition, the rights and obligations of the Shareholders
and their Permitted Transferees under Section 2.03 and Article III and Article
IV of this Agreement shall terminate immediately (x) at the time any Person or
Group becomes the Beneficial Owner of more than 33% of the Voting Shares or (y)
in the event that the Company breaches in any material respect the terms of this
Agreement, which such breach is not cured within 10 days after notice of such
breach by any Shareholder.
(d) Notwithstanding anything else to the contrary, the provisions
contained in Articles V, VI and VII shall continue so long as there are, and
shall terminate when there are no longer, any Registrable Securities. In
addition, the rights and obligations of the Company under Section 2.01, 2.02 and
2.03 and Article V, VI and VII of this Agreement shall terminate as to any
Shareholder in the event that such Shareholder breaches in any material respect
the terms of this Agreement, which such breach is not cured within 10 days after
notice of such breach by the Company.
(e) The provisions of Article VIII shall remain operative and in
full force and effect regardless of any termination or expiration of this
Agreement.
(f) Notwithstanding anything to the contrary contained herein, in
no circumstances shall Section 10.12 terminate until the earlier of (i) the day
after the close of the fifth full taxable year of each Person who entered into a
gain recognition agreement described in Section 10.12 following the close of the
taxable year of the Closing and (ii) the date on which no gain recognition
agreements specified in Section 10.12 are in effect.
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ARTICLE X
General Provisions
SECTION 10.01. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed duly given and received (a) on
the date of delivery if delivered personally, or by facsimile upon confirmation
of transmission by the sender's fax machine if sent on a Business Day (or
otherwise on the next Business Day) or (b) on the first Business Day following
the date of dispatch if delivered by a recognized next-day courier service. All
notices hereunder shall be delivered as set forth below, or pursuant to such
other instructions as may be designated in writing by the party to receive such
notice:
(i) if to Vivendi or Sofiee (prior to the Closing) and the
Company (after the Closing), to:
00, xxxxxx xx Xxxxxxxxx
00000 Xxxxx Cedex 08
France
Fax: 00-0-0000-0000
Attention: Guillaume Hannezo
with a copy to:
Cravath, Swaine & Xxxxx
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxx
Xxxxxx Prat
000 xxx xx Xxxxxxxx
Xxxxx-Xxxxxx
00000 Xxxxx
Fax: 00-0-0000-0000
Attention: Xxxxx Xxxxxx
(ii) if to any Shareholder, to the address of such Shareholder
specified on the signature page hereto
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with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxxx
Xxxxx X. Xxxxxxx
Xxxxxxx Xxxxxxxx & Xxxxxxxx
1501 XxXxxx Xxxxxxx Xxxxxx
00xx Xxxxx
Xxxxxxxx, Xxxxxx
X0X 0X0
Fax: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxx
SECTION 10.02. Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other party, it being
understood that both parties need not sign the same counterpart.
SECTION 10.03. Entire Agreement; No Third Party Beneficiaries.
(a) This Agreement constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof, other than the
Voting Agreement.
(b) This Agreement shall be binding upon and inure solely to the
benefit of each party hereto, and nothing in this Agreement, express or implied,
is intended to or shall confer upon any other Person any right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
(c) The provisions of this Agreement shall be binding upon and
inure to the benefit of the Company upon completion of the Vivendi Merger as the
surviving entity of the Vivendi Merger without any action on the part of any
party.
SECTION 10.04. Governing Law. This Agreement shall be governed
and construed in accordance with the laws
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of the State of New York without giving effect to applicable principles of
conflict of laws, except to the extent the substantive laws of France are
mandatorily applicable under French law.
SECTION 10.05. 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 10.06. Assignment; Amendments. (a) Except as provided in
Section 3.02(d), Section 3.03 and Section 10.06(b) and (c), neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto, in whole or in part (whether by operation
of law or otherwise), without the prior written consent of the other parties,
and any attempt to make any such assignment without such consent shall be null
and void. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of and be enforceable by, the parties and their
respective successors and assigns. If the Company assigns its rights to purchase
under Section 3.02(d), the Company shall guarantee the purchase obligations of
its assignee.
(b) If a Shareholder or a Permitted Transferee transfers Voting
Shares to a Significant Transferee and in connection therewith specifically
assigns, in whole or in part, to such Significant Transferee registration rights
under this Agreement (and such Significant Transferee agrees to be bound to the
applicable registration rights provisions of this Agreement), such Significant
Transferee shall thereafter have the rights and obligations of a "Holder" under
this Agreement with respect to such Voting Shares (and the Shareholders and
their Permitted Transferees shall be entitled to assign such rights hereunder
without the consent of any other party hereto); provided, however, that no
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assignment of any rights under Article VI may be made to any Significant
Transferee unless such Significant Transferee Beneficially Owns, after giving
effect to such Transfer, at least 3% of the outstanding Voting Shares.
(c) No amendment to this Agreement shall be effective unless it
shall be in writing and (i) prior to the Closing, signed by Vivendi, Sofiee and
each of the Shareholders and (ii) after the Closing, signed by the Company and
Shareholders holding a majority of the Voting Shares held by the Shareholders at
such time, except no such amendment shall affect a Shareholder
disproportionately when compared to other Shareholders without the consent of
such Shareholder.
SECTION 10.07. Enforcement. (a) Each of the Company and each
Shareholder acknowledges that the other party would not have an adequate remedy
at law for money damages in the event that any of the covenants or agreements of
the other party in this Agreement were not performed in accordance with its
terms, and it is therefore agreed that each of the Company and each Shareholder,
in addition to and without limiting any other remedy or right it may have, will
have the right to an injunction or other equitable relief in any court of
competent jurisdiction, enjoining any such breach and enforcing specifically the
terms and provisions hereof, and each of the Company and each Shareholder hereby
waives any and all defenses they may have on the ground of lack of jurisdiction
or competence of the court to grant such an injunction or other equitable
relief.
(b) All rights, powers and remedies provided under this Agreement
or otherwise available in respect hereof at law or in equity shall be cumulative
and not alternative, and the exercise or beginning of the exercise of any
thereof by any party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party.
SECTION 10.08. Titles and Subtitles. The titles of the sections
and subsections of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
SECTION 10.09. Submission to Jurisdiction; Waivers. The Company
and each of the Shareholders irrevocably consents to the exclusive jurisdiction
and venue
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in the United States District Court for the Southern District of New York and in
the courts hearing appeals therefrom unless no federal subject matter
jurisdiction exists, in which event, the Company and each of the Shareholders
irrevocably consents to the exclusive jurisdiction and venue in the Supreme
Court of the State of New York, New York County, and in the courts hearing
appeals therefrom, for the resolution of any dispute, action, suit or proceeding
arising out of or relating to this Agreement. The Company and each of the
Shareholders hereby irrevocably waives, and agrees not to assert, by way of
motion, as a defense, counterclaim or otherwise, in any action or proceeding
with respect to this Agreement, the defense of sovereign immunity, any claim
that it is not personally subject to the jurisdiction of the above-named courts
for any reason other than the failure to serve process in accordance with this
Section, that it or its property is exempt or immune from the jurisdiction of
any such court or from any legal process commenced in such courts (whether
through service of notice, attachment prior to judgment, attachment in aid of
execution of judgment, execution of judgment or otherwise), and to the fullest
extent permitted by applicable law, that the suit, action or proceeding in any
such court is brought in an inconvenient forum, that the venue of such suit,
action or proceeding is improper, or that this Agreement, or the subject matter
hereof or thereof, may not be enforced in or by such courts and further
irrevocably waives, to the fullest extent permitted by applicable law, the
benefit of any defense that would hinder, xxxxxx or delay the levy, execution or
collection of any amount to which the party is entitled pursuant to the final
judgment of any court having jurisdiction. The Company and each of the
Shareholders hereby respectively appoints Cravath, Swaine & Xxxxx and Xxxxxxx
Xxxxxxx & Xxxxxxxx at their respective offices in New York, New York (each a
"Process Agent"), as the designees, appointees and agents of the Company and the
Shareholders, respectively, to receive, for and on such parties' behalf, service
of process in such jurisdiction in any legal action or proceeding with respect
to this Agreement and such service shall be deemed complete upon delivery
thereof to the applicable Process Agent; provided, that in the case of any such
service upon a Process Agent, the party effecting such service shall also
deliver a copy thereof to the party who designated such Process Agent in the
manner provided in Section 10.01. Each party shall take all such action as may
be necessary to continue said appointment in full force and effect or to appoint
another agent so that it will at all times have an
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agent for service of process for the above purposes in New York, New York. The
Company and each of the Shareholders further irrevocably consents to the service
of process out of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered airmail, postage
prepaid, to such party at its address set forth in this Agreement, such service
of process to be effective upon acknowledgment of receipt of such registered
mail. Nothing herein shall affect the right of any party to serve process in any
other manner permitted by law. The Company and each of the Shareholders
expressly acknowledges that the foregoing waiver is intended to be irrevocable
under the laws of the State of New York and of the United States of America;
provided, that each such party's consent to jurisdiction and service contained
in this Section is solely for the purpose referred to in this Section and shall
not be deemed to be a general submission to said courts or in the State of New
York other than for such purpose.
SECTION 10.10. Form of Securities. (a) All Voting Shares held by
the Shareholders that are not certificated shall be held in the form of
nominatif pur in accordance with French law. Upon request, the Company will
provide any Shareholder with certificated Voting Shares, in lieu of a
corresponding number of Voting Shares held in the form of nominatif pur, to the
extent such Shareholder makes such a request in connection with a Transfer
permitted by Section 3.01(e).
(b)(i) In the case of Voting Shares that are certificated, upon
original issuance thereof, and until such time as the same is no longer required
hereunder or under the applicable requirements of the Securities Act or
applicable state securities or "blue sky" laws, any certificate issued
representing any Voting Shares held by each Shareholder or any Permitted
Transferee (including all certificates issued in exchange thereof or in
substitution therefor) shall bear the following legends:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO VOTING
AGREEMENTS AND RESTRICTIONS ON TRANSFER SET FORTH IN A CERTAIN
SHAREHOLDER GOVERNANCE AGREEMENT DATED AS OF JUNE 19, 2000 RELATING TO
THE COMPANY ISSUING THE SHARES REPRESENTED BY THIS CERTIFICATE, (THE
"COMPANY"), COPIES OF WHICH AGREEMENT ARE ON FILE AT THE PRINCIPAL
OFFICE OF THE COMPANY."
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"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THESE SHARES MAY NOT
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR IN A TRANSACTION EXEMPT FROM, OR NOT SUBJECT TO, THE
SECURITIES ACT."
(ii) The certificates representing the Voting Shares held by each
Shareholder or any Permitted Transferee (including any certificate issued in
exchange thereof or in substitution therefor) shall also bear any legend
required under any applicable state securities or "blue sky" laws.
(iii) The Company may make a notation on its records or give
instructions to any transfer agents or registrars for the Voting Shares in order
to implement the restrictions on Transfer set forth in Article III.
(iv) In connection with any Transfer of Voting Shares, the
transferor shall provide the Company with such customary certificates, opinions
and other documents as the Company may reasonably request to assure that such
Transfer complies fully with applicable securities and other laws.
(v) The Company shall not incur any liability for any delay in
recognizing any Transfer of Voting Shares if the Company in good faith
reasonably believes that such Transfer may have been or would be in violation in
any material respect of the provisions of the Securities Act, applicable state
securities or "blue sky" laws, or this Agreement.
(vi) After such time as the legend described in this Section
10.10(b) is no longer required on any certificate or certificates representing
the Voting Shares held by any Shareholder, upon the request of such Shareholder,
the Company will cause such certificate or certificates to be exchanged for a
certificate or certificates that do not bear such legend.
SECTION 10.11. Actions of Shareholders. Each Shareholder agrees
and acknowledges, with respect to the arrangements contemplated by this
Agreement and matters related to the Company upon which the Shareholders are
entitled to vote, such Shareholder is acting in concert with the other
Shareholders.
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SECTION 10.12. Prohibited Transfers. If any Person enters into a
gain recognition agreement pursuant to Treasury Regulation Section 1.367(a)-3(b)
with respect to the Seagram shares transferred pursuant to the Merger Agreement
and the Arrangement, neither Vivendi, Sofiee or any Affiliate or subsidiary
thereof nor any transferee thereof (any of the foregoing, a "Vivendi Party")
shall make, directly or indirectly, during the period ending on the earlier of
(i) the day after the close of the fifth full taxable year of such Person
following the close of the taxable year of the Closing and (ii) the date on
which such gain recognition agreement is terminated any "disposition" (or any
"deemed disposition"), within the meaning of Treasury Regulation Section
1.367(a)-8 (the "Regulations"), in whole or in part of any of the stock or
assets of Seagram that would cause such Person to recognize gain, in whole or in
part, under the gain recognition agreement. Notwithstanding the foregoing, this
Section 10.12 shall not apply to any disposition or deemed disposition that is
attributable, in whole or in part, to actions taken, or actions failed to be
taken (including, without limitation, ceasing to be a U.S. citizen or resident,
or failing to notify the Internal Revenue Service of a transaction, or failing
to enter into a new gain recognition agreement), by such Person (or by an
Affiliate, or party related to, such Person); provided, however, that where such
disposition or deemed disposition also involves an action taken by a Vivendi
Party (such as an actual transfer of the Seagram shares), the Vivendi Party
shall timely notify such Person of such action. During the term of any gain
recognition agreement described in this Section 10.12, the Vivendi Parties will
timely provide the information necessary to allow such Person to file the Annual
Certification required by Treasury Regulation Section 1.367(a)-8(b)(5).
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IN WITNESS WHEREOF, Vivendi, Sofiee and each Shareholder have
duly executed this Shareholder Governance Agreement as of the date first written
above.
VIVENDI S.A.
By: /s/ Xxxx-Xxxxx Xxxxxxx
_____________________________________
Name: Xxxx-Xxxxx Xxxxxxx
Title: Chairman & Chief Executive Officer
SOFIEE S.A.
By: /s/ Xxxx-Xxxxx Xxxxxxx
_____________________________________
Name: Xxxx-Xxxxx Xxxxxxx
Title: Authorized Signing Officer
XXXXXXXX ASSOCIATES
By: /s/ Xxxxx X. Xxxxxxxx
_____________________________________
Name: Xxxxx X. Xxxxxxxx
Title: Managing Partner
X. XXXXXXXX FAMILY TRUST
By: /s/ Xxxxx X. Xxxxxxxx
_____________________________________
Name: Xxxxx X. Xxxxxxxx
Title: Trustee
54
PBBT/XXXXX XXXXX XXXXXXXX
FAMILY TRUST
By: /s/ Xxxxx X. Xxxxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Trustee
By: /s/ Xxxx X. Xxxxxxxx
-------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Trustee
By: /s/ Xxxxxx Xxxxxxxx
-------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Trustee
By: /s/ Xxxxxxx Xxxxx
-------------------------------
Name: Xxxxxxx Xxxxx
Title: Trustee
XXXXXXX XXXXXX XXXXXXXX FAMILY TRUST
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Trustee
THE XXXXXXX XXXXXXXX TRUST II
By: /s/ Xxxxxxx Xxxxxxx
-------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Trustee
55
THE CLARIDGE FOUNDATION
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Member and Director
CRB ASSOCIATES,
LIMITED PARTNERSHIP
By: /s/ Xxxxxxx Xxxxxxx
-------------------------
Name: Xxxxxxx Xxxxxxx
Title: Manager of Claridge Israel, LLC,
A General Partner
XXXXXXX X. XXXXXXXX
DISCRETIONARY TRUST
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Trustee
/s/ Xxxxx X. Xxxxxxxx
---------------------------
XXXXX X. XXXXXXXX
/s/ Xxxxxxx X. Xxxxxxxx
----------------------------
XXXXXXX X. XXXXXXXX
/s/ Xxxxxx Xxxxxxxx XX
----------------------------
XXXXXX XXXXXXXX XX
56
/s/ Xxxxx Xxxxxxxx, Xx.
----------------------------
XXXXX XXXXXXXX, XX.
/s/ Xxxxxxx Xxxxxxxx
----------------------------
XXXXXXX XXXXXXXX
/s/ Xxxxx Xxxxxxxx Xxxxxxxx
----------------------------
XXXXX XXXXXXXX XXXXXXXX
57
ADDRESSES FOR SIGNATORIES
For: Xxxxxxxx Associates, PBBT/Xxxxx Xxxxx Xxxxxxxx, Xxxxx X. Xxxxxxxx,
Xxxxxx Xxxxxxxx XX, Xxxxx Xxxxxxxx, Xx. and Xxxxxxx Xxxxxxxx
c/o Xxxxx Xxxxxxxx, Xx.
Xxxxxx X. Xxxxxxx & Sons, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000)000-0000
For: X. Xxxxxxxx Family Trust, Xxxxxxx Xxxxxx Xxxxxxxx Family Trust, The
Xxxxxxx Xxxxxxxx Trust II, The Claridge Foundation, CRB Associates,
Limited Partnership, Xxxxxxx X. Xxxxxxxx Discretionary Trust, Xxxxxxx
X. Xxxxxxxx and Xxxxx Xxxxxxxx Xxxxxxxx
c/o Xxxxxx Xxxxxxxx
President and Chief Executive Officer
Claridge Inc.
0000 Xxxx Xxxxxx
0xx xxxxx
Xxxxxxxx, Xxxxxx
Xxxxxx X0X 0X0
Fax: (000)000-0000
