EXHIBIT 2.3
CONFORMED COPY
PARENT AGREEMENT AND GUARANTY
PARENT AGREEMENT AND GUARANTY, dated as of July 15, 1999, among TCI Music,
Inc., a Delaware corporation ("TCI Music"), MTVN Networks ("MTVN"), a division
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of Viacom International Inc., a Delaware corporation ("Viacom"), Liberty Media
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Corporation, a Delaware corporation ("Liberty"), SonicNet, Inc., a Delaware
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corporation ("SonicNet"), The Box Worldwide Inc., a Florida corporation ("Box")
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and MTVN Online L.P., a Delaware limited partnership (the "Partnership").
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Contemporaneously herewith, MTVN Online Partner I LLC, a Delaware limited
liability company ("VLLC"), Imagine Radio, Inc., a Delaware corporation
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("Imagine"), SonicNet, and Box are entering into an Agreement of Limited
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Partnership dated as of the date hereof (as such Agreement of Limited
Partnership may from time to time be amended, modified or supplemented in
accordance with its terms, the "Partnership Agreement") pursuant to which VLLC,
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Imagine, SonicNet and Box will form the Partnership (as such limited partnership
may exist in such form or in a reorganized, corporate or other form, "Newco").
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As of the Closing, VLLC, Imagine, SonicNet and Box will collectively own
100% of the partnership interests in the Partnership.
Viacom and its wholly-owned Subsidiaries are the sole members of and own
all of the equity securities of VLLC, and Viacom owns a controlling interest in
Imagine and has the right to acquire all of the equity interests of Imagine
which it does not currently own (VLLC and Imagine, collectively with their
Permitted Transferees, the "MTVN Partners"). TCI Music owns all of the equity
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securities of SonicNet and Box (SonicNet and Box, collectively with their
Permitted Transferees, the "Tune Partners").
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MTVN and TCI Music are willing to permit VLLC and Imagine and SonicNet and
Box, respectively, to enter into the Partnership Agreement only on the condition
that the parties hereto enter into this Agreement.
Each of VLLC and Imagine and SonicNet and Box is willing to enter into the
Partnership Agreement only if certain obligations therein and under certain
other agreements are guaranteed as set forth below.
Capitalized terms used and not otherwise defined herein shall have the
meanings assigned to such terms in the Partnership Agreement.
In consideration of the premises and other covenants and conditions
contained herein, the parties hereto agree as follows:
ARTICLE I
REORGANIZATION OF PARTNERSHIP TO CORPORATE FORM;
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INITIAL PUBLIC OFFERING
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Section 1.1. Reorganization in Corporate Form.
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(a) The parties hereto agree to take such steps as may be reasonably
necessary to cause the Partnership to be reorganized as, or to cause its assets
and liabilities to be contributed to, a Delaware corporation (which will be
wholly-owned by the Partnership or the Partners prior to the IPO, as defined
below), in connection with the IPO or, if the Chief Executive Officer of the
Partnership determines in good faith that it is appropriate, in advance of the
IPO in order to avoid adverse tax consequences to the Partners (the
"Reorganization"). The Partners acknowledge that the Partnership will not be
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the entity to go public in the IPO unless agreed by all Partners. For any
period during which Newco is not a wholly-owned subsidiary of the Partnership,
the parties shall enter into or cause their respective Controlled Affiliates to
enter into a stockholders agreement (the "Newco Stockholders Agreement"), which
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shall provide that the parties and their respective Controlled Affiliates, as
applicable, shall continue to be bound by, and entitled to the benefits of, the
following provisions of the Partnership Agreement, mutatis mutandis, subject to
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the terms and conditions and applicable time periods contained therein (except
to the extent otherwise provided herein): provisions relating to capital
contributions (Section 3.03); provisions relating to management and governance
(Article VI (including Sections 6.10 and 6.11)); restrictions on transfer
(Section 8.01); rights of first offer (Section 8.04); "tag along/drag along"
rights (Section 8.05); provisions relating to Tune's audit rights with respect
to Related Party Transactions (Article XI); preemptive rights (Section 12.02);
put and call rights (Section 12.03); and restrictions on competition (Article
XIV); provided, however, that the provisions relating to capital contributions
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and to management and governance shall cease to apply upon the consummation of
the IPO; and provided further that the provisions with respect to the right of
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first offer shall be modified as follows: (x) in the event that Newco has
consummated an IPO and the Shares (as defined below) are publicly traded, (i)
the two 30-day periods shall be reduced to one period of five Business Days, to
run concurrently (i.e., a Tune Partner must notify MTVN of its intention to sell
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five days before selling, and MTVN has through the fifth day to make an offer),
(ii) any offer to be made by MTVNS or its designee must be made at the then-
current market price (i.e. at the opening of business on the date such offer is
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made) or higher, (iii) the 180-day period shall be reduced to five Business Days
and (iv) the price at and terms on which the Shares may be sold during such five
Business Day period shall be the market price and market terms (including terms
relating to block sales) at the time of sale; (y) such right of first offer
shall not apply to any sale by a Tune Partner or a Permitted Transferee of a
Tune Partner pursuant to any exercise of its registration rights granted
pursuant to this Agreement (including any such public sale occurring following
the exercise of such registration rights where Newco determines such
registration rights are not available (and therefore refuses to register such
Shares) because of the type of sale contemplated (for example, because such
Shares can be sold pursuant to Rule 144) or where Newco elects not to register
such Shares because of events related to Newco (for example, where Newco
suspends its obligation to register such
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shares pursuant to Article III of this Agreement); and (z) in the event of a
sale to MTVNS or its designee pursuant to the right of first offer where a Tune
Partner had initially proposed a public market sale, the 180-day period for
which the closing may be suspended will be reduced to a 20 day period, and the
90 day period within which a designated substitute purchaser is required to
close a sale shall be reduced to 60 days). The parties hereto agree to cause
Newco, promptly, upon its organization, to agree to be bound by this Agreement
as if it were a party hereto. The certificate of incorporation and bylaws of
Newco and the Newco Stockholders Agreement are referred to as the "Newco
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Organizational Documents".
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(b) The parties hereto further agree that, upon the effectiveness of
the Reorganization and provided that (i) neither TCI Music nor any of its
Controlled Affiliates is then in material default under this Agreement, the
Partnership Agreement or the Additional Agreements, (ii) the Tune Partners
beneficially own at least 5% of the outstanding Shares (as defined below)
(excluding any Shares issued or granted in any transaction or transactions with
respect to which TCI Music had no preemptive rights pursuant to any provision
comparable to Section 12.02 of the Partnership Agreement (or where the
Partnership Interests in respect of which such Shares were issued or granted
were originally issued or granted in a transaction with respect to which the
Tune Partners did not have preemptive rights pursuant to Section 12.02 of the
Partnership Agreement)), and (iii) none of the Tune Partners has Disposed of any
Partnership Interests or Shares to any Person that is not a Permitted
Transferee, each party shall take such steps as are reasonably necessary
(including causing such party's director designees to take such actions as are
necessary) to nominate for election and to vote all Shares of Newco beneficially
owned by such party in favor of the election of one designee of TCI Music as a
member of the Board of Directors of Newco.
Section 1.2. The Initial Public Offering.
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(a) The parties hereto intend that Newco conduct an initial
registered public offering of the common stock of Newco (the "Shares") no later
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than the Offering Expiration Date which results in the Shares being publicly
traded and listed on the Nasdaq Stock Market or a national securities exchange
(the "IPO"). As used herein the term "Shares" includes all shares of common
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stock of Newco and any other shares of capital stock of Newco issued in respect
of such shares as a result of stock splits, stock dividends, reclassification,
recapitalizations, mergers, consolidations or similar events. References in this
Agreement to amounts or percentages of Shares as of or on any particular date
shall be deemed to refer to amounts or percentages after giving effect to any
applicable events contemplated by the preceding sentence. References herein to
Shares acquired in a transaction with respect to which TCI Music did not have
preemptive rights pursuant to the provisions of the Newco Stockholders Agreement
comparable to Section 12.02 of the Partnership Agreement shall include Shares
issued in respect of Partnership Interests which were acquired by the applicable
Person in a transaction with respect to which the Tune Partners did not have
preemptive rights under Section 12.02 of the Partnership Agreement.
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(b) If the IPO is consummated while Newco is owned by the
Partnership, the Partnership shall be liquidated immediately following or
contemporaneously with the IPO, and, provided that neither TCI Music nor any of
its Controlled Affiliates is in material default of its obligations under this
Agreement, the Partnership Agreement or the Additional Agreements, the number of
Shares distributed to the Tune Partners in respect of their interests in the
Partnership shall be increased, if necessary (without the payment of any
additional consideration other than the payment of the par value for any newly-
issued Shares), above the number that would otherwise be so distributed so that
the number of Shares so distributed shall have an aggregate value (with each
such Share valued for this purpose at the price to the public listed on the
cover page of the final prospectus delivered in connection with such IPO) equal
to at least the Target Value (as reduced proportionally to reflect any
Disposition by any Tune Partner of any portion of the Tune Partnership Interest
prior to the IPO other than to a Permitted Transferee); provided, however, that
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the number of Shares distributed to the Tune Partners shall not exceed 15% (or
such lesser percentage which equals 150% of the Percentage Interest of the Tune
Partners immediately prior to the IPO other than to a Permitted Transferee) of
the total number of Shares outstanding immediately prior to the IPO.
(c) If (i) Newco consummates an IPO (except under the circumstances
described in Section 1.2(b) above) and (ii) the aggregate value of the Shares
held by the Tune Partners (with each Share valued for such purpose at the price
to the public listed on the cover page of the final prospectus delivered in
connection with such IPO) at the time of such IPO is less than the Target Value
(as reduced proportionally to reflect any Disposition by any Tune Partner of any
portion of the Tune Partnership Interest or of any Shares prior to the IPO other
than to a Permitted Transferee) and provided that neither TCI Music nor any of
its Controlled Affiliates is in material default of their obligations under this
Agreement, the Partnership Agreement or the Additional Agreements, then the
parties hereto shall cause Newco to promptly issue to the Tune Partners (without
the payment of additional consideration, other than the payment of the par value
for the Shares) such additional number of Shares as is required to cause the
aggregate value of Shares (valued as provided above) held by the Tune Partners
to equal the Target Value (as reduced proportionally to reflect any Disposition
by any Tune Partner of any portion of the Tune Partnership Interest or of any
Shares prior to the IPO other than to a Permitted Transferee); provided,
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however, that the number of Shares to be held by the Tune Partners after such
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issuance shall in no event exceed 15% (or such lesser percentage which equals
150% of the percentage of outstanding Shares held by the Tune Partners
immediately prior to the IPO) of the total Shares outstanding immediately prior
to the IPO (but after the issuance of such additional Shares).
Section 1.3. No Public Offering.
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(a) In the event that Newco has been formed but has not consummated
the IPO on or before the Offering Expiration Date and the Tune Partners then
hold Shares rather than Partnership Interests, TCI Music shall be entitled to
request that the Private Share Valuation (as defined below) as of the Offering
Expiration Date of the Shares held by the Tune Partners be determined. Such
election shall be made by written notice to MTVN and Newco delivered
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within six months after the Offering Expiration Date. If the Private Share
Valuation as of the Offering Expiration Date of the Shares held by the Tune
Partners is determined to be less than the Target Value and provided that
neither TCI Music nor any of its Controlled Affiliates is in material default of
their obligations under this Agreement, the Partnership Agreement or the
Additional Agreements, then Newco shall promptly issue to the Tune Partners
(without the payment of additional consideration, other than the payment of the
par value for the Shares) such additional number of Shares as is required to
cause the aggregate Private Share Valuation of the Shares held by the Tune
Partners as of the Offering Expiration Date to equal the Target Value; provided,
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however, that the number of Shares to be held by the Tune Partners after such
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issuance shall in no event exceed 15% (or such lesser percentage which equals
150% of the percentage of outstanding Shares held by the Tune Partners on the
Offering Expiration Date) of the then outstanding Shares; and provided, further,
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however, that the Tune Partners may elect to defer receipt of such additional
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Shares (in such number as determined above) until the first to occur of the (x)
the IPO, (y) such date as the Tune Partners shall request such receipt or (z)
the first anniversary of the Offering Expiration Date.
(b) For purposes hereof, "Private Share Valuation" shall mean the
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amount determined pursuant to the following procedure, which determination shall
be final and binding on the parties hereto. Upon receipt by MTVN of the written
notice from TCI Music to MTVN and Newco provided for in Section 1.3(a) above,
MTVN and TCI Music shall attempt to mutually agree on the Fair Market Value as
of the Offering Expiration Date of the Shares held by the Tune Partners. If the
parties are unable to reach agreement within 60 days after such notice is
received by MTVN, each party shall, within 30 days thereafter, retain an
investment bank to determine the Fair Market Value as of the Offering Expiration
Date of the Shares held by the Tune Partners. If any party fails to retain an
investment bank within such 30-day period, the investment bank retained shall be
the sole investment bank to make such determination. Each investment bank (or in
the event either party fails to retain an investment bank, the sole investment
bank) shall submit its estimation of such Fair Market Value within 45 days from
the date of its selection. If the determinations of Fair Market Value as of the
Offering Expiration Date of the Shares held by the Tune Partners by the
investment banks differ by less than 10% of the average of the two
determinations, such Fair Market Value shall be the average of the two
determinations. If such determinations vary by more than 10% of the average of
such two determinations, the two investment banks shall promptly designate a
third investment bank which shall be unaffiliated with any of the first two
investment banks and shall not have had any significant affiliation with, or
engagement for, any of the parties hereto or any Affiliate of any of the parties
during the two years prior to its selection. The third investment bank shall
select one of the two determinations as the Fair Market Value as of the Offering
Expiration Date of the Shares held by the Tune Partners within 30 days from the
date of its selection. In determining the Private Share Valuation, the
investment bank or banks shall be instructed to assume the continuation of the
Promotion Agreement in accordance with its terms.
Section 1.4. Going Private. In the event that, following the IPO, MTVN
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(or a Controlled Affiliate of Viacom Inc.) engages or causes Newco to engage in
a "Rule 13e-3 transaction" (as such term is defined in Rule 13e-3 under the
Securities Exchange Act of 1934, as
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amended (the "1934 Act")) with respect to Newco, MTVN (or such Controlled
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Affiliate of Viacom Inc.) shall offer TCI Music and its Controlled Affiliates an
opportunity to continue their existing proportionate equity interest in Newco
vis-a-vis MTVN (or Viacom Inc. or a Controlled Affiliate of Viacom Inc.) by
participation in such Rule 13e-3 transaction with Viacom Inc. and its Controlled
Affiliates after such transaction on the same basis as Viacom Inc. and its
Controlled Affiliates.
ARTICLE II
GUARANTIES; COVENANTS
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Section 2.1. Guaranties.
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(a) Each Guarantor (as defined below) hereby unconditionally and
irrevocably guarantees (this "Guaranty") to an Other Partner (as defined below),
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and its successors and assigns permitted under the Partnership Agreement (as
primary obligor and not merely as surety), (i) the due and punctual payment of
all monetary obligations now or hereafter payable by a Related Partner (as
defined below) under each of the Partnership Agreement and the Contribution
Agreements, (ii) the full and complete performance of all obligations, duties
and covenants to be performed by a Related Partner under the Partnership
Agreement and the Contribution Agreements, (iii) the accuracy of the
representations and warranties made by a Related Partner in the Partnership
Agreement and the Contribution Agreements and (iv) in the case of TCI Music, as
Guarantor, the full and complete performance of all of the obligations, duties
and covenants to be performed by VJN LPTV Corp. under the Local Marketing
Arrangement (the "LMA") dated as of the date hereof between VJN LPTV Corp. and
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Box LLC as and when the same shall become due and the full and complete
performance by Box of all of the obligations, duties and covenants to be
performed by Box under the License Agreement dated as of the date hereof between
The Box Worldwide LLC and Box and the Box Holland Promissory Note dated as of
the date hereof from The Box Worldwide-Europe, B.V. to the Partnership (the
obligations under such License Agreement and such Promissory Note being referred
to as the "Box Obligations") (collectively, the "Guaranteed Obligations"), in
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the case of the obligations described in clauses (i) and (ii) when and as the
same shall become due under the Partnership Agreement and the Contribution
Agreements, as the case may be.
As used in this Section 2.1, (i) the term "Guarantor" shall mean each of
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MTVN and TCI Music, (ii) the term "Related Partner" shall mean each of VLLC and
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Imagine, with respect to MTVN as Guarantor, and each of SonicNet and Box, with
respect to TCI Music as Guarantor, and (iii) the term "Other Partner" shall
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mean, with respect to MTVN, each of SonicNet and Box, and with respect to TCI
Music, each of VLLC and Imagine, and/or, in each case, any immediate or
subsequent successor to or transferee of the Partnership Interest (as such term
is defined in the Partnership Agreement) originally held by such person.
Notwithstanding anything to the contrary in this Guaranty, (i) the terms
"Related Partner" and "Other Partner," respectively, shall not mean (x) any
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transferee of the Partnership Interest of a Related Partner or Other Partner
(except to the extent that obligations of a Related Partner
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under the Partnership Agreement expressly survive a transfer by the Other
Partner to a transferee other than a Permitted Transferee), as the case may be,
other than a Permitted Transferee or (y) any immediate or subsequent successor
to or transferee of the Partnership Interest of a transferee referred to in
clause (x), and (ii) a Guarantor shall not be deemed to have guaranteed hereby
any obligation (monetary or otherwise) of any such transferee or successor other
than a Permitted Transferee, and a Guaranty shall not inure to the benefit of
any such transferee or successor other than a Permitted Transferee.
(b) Each Guarantor shall not cause or suffer a Related Partner
voluntarily to institute any proceeding seeking to adjudicate a Related Partner
a bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief or composition of the Partner or its
debts under any law relating to bankruptcy, insolvency or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee or other similar official for it or for any part of its property, in
each case unless in connection with the institution by Guarantor itself of any
such proceeding; provided, however, that, without limitation of the other
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provisions of this Guaranty, nothing in this Section 2.1(b) shall require a
Guarantor to provide any funds to a Related Partner for the payment or discharge
of the Partner's obligations.
(c) Each Guarantor waives any and all notices of the creation,
renewal, extension or accrual of any of the Guaranteed Obligations and notice or
proof of reliance by an Other Partner on this Guaranty or acceptance of this
Guaranty. The Guaranteed Obligations shall conclusively be deemed to have been
created, contracted or incurred in reliance on this Guaranty, and all dealings
between an Other Partner and/or its Affiliates, on the one hand, and a Related
Partner and/or its Affiliates, on the other hand, in connection with the
Partnership Agreement and the Contribution Agreements shall likewise
conclusively be presumed to have been had or consummated in reliance on this
Guaranty, and the LMA and the Box Obligations shall also conclusively be
presumed to have been entered into in reliance on this Guaranty. The Guarantor
also waives diligence, presentment, demand for payment, protest and notice of
nonpayment or dishonor and all other notices and demands whatsoever relating to
the Guaranteed Obligations or the requirement that the Partnership or an Other
Partner proceed first against a Related Partner or any other guarantor of the
Guaranteed Obligations or otherwise exhaust any right, power or remedy under the
Partnership Agreement or the Contribution Agreements, as the case may be, giving
rise to such Guaranteed Obligations before proceeding hereunder. The Guarantor
covenants that this Guaranty shall not be discharged except by complete payment
and performance of the Guaranteed Obligations.
(d) The obligations of each Guarantor hereunder shall constitute a
present and continuing guarantee of payment and not of collectability only,
shall be absolute and unconditional, shall not be subject to any counterclaim,
setoff, deduction or defense the Guarantor may have against an Other Partner, a
Related Partner, the Partnership or any other person (other than counterclaims,
setoffs, deductions or defenses available to the Related Partner under or in
respect of the Partnership Agreement, the Contribution Agreements, the LMA and
the Box Obligations, as the case may be), and shall remain in full force and
effect until all
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Guaranteed Obligations have been satisfied and performed in full, without regard
to any event whatsoever (whether or not the Guarantor shall have any knowledge
or notice thereof or shall have consented thereto), including, without
limitation:
(i) any amendment or modification of or supplement to the
Partnership Agreement, the Contribution Agreements, the LMA, the Box
Obligations or this Guaranty, any assignment or transfer of any of the
rights, obligations, duties or covenants of any party to the Partnership
Agreement, the Contribution Agreements, the LMA, the Box Obligations or
this Guaranty, any renewal or extension of time for the performance of any
of the Guaranteed Obligations, or any furnishing or acceptance of security
so furnished or accepted for any of the Guaranteed Obligations;
(ii) any waiver, consent, extension, forbearance, release or
substitution of security or other action or inaction under or in respect of
the Partnership Agreement, the Contribution Agreements, the LMA, the Box
Obligations or this Guaranty, or any excise of, or failure to exercise, any
right, remedy or power in respect hereof or thereof;
(iii) any bankruptcy, insolvency, marshaling of assets and
liabilities, arrangements, readjustment, composition, receivership,
assignment for the benefit of creditors, liquidation or similar proceedings
with respect to a Related Partner or Guarantor;
(iv) the dissolution, sale or other disposition of all or
substantially all of the assets of a Related Partner, a Guarantor, an Other
Partner or the Partnership; or
(v) any default by a Related Partner or Guarantor under, or any
invalidity or any unenforceability of, or any misrepresentation by a
Related Partner or Guarantor in, or any irregularity or other defect in,
the Partnership Agreement, the Contribution Agreements, the LMA, the Box
Obligations or this Guaranty or any other instrument or agreement.
Any term of this Guaranty to the contrary notwithstanding, if at any time
any amount (constituting a Guaranteed Obligation) paid or payable by a Related
Partner is rescinded or must otherwise be restored or returned, whether upon or
as a result of the appointment of a custodian, receiver or trustee or similar
officer for a Related Partner or any substantial part of its assets, or the
insolvency, bankruptcy or reorganization of a Related Partner or otherwise, the
Guarantor's obligations hereunder with respect to such payment shall be
reinstated as though such payment had been due but not made at such time.
(e) Each Guarantor will not exercise any rights which it may have
acquired against a Related Partner by way of subrogation, by any payment made
hereunder or otherwise, or accept any payment on account of such subrogation
rights, unless and until all of the Guaranteed Obligations of the Related
Partner for which performance is then due have been fully satisfied.
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(f) Each Guarantor may at any time elect to pay or otherwise perform
any Guaranteed Obligation, which shall operate (subject to the last sentence of
clause (d) of this Section 2.1) as a discharge and release of a Related Partner
from such Guaranteed Obligation to an Other Partner or the Partnership (but not
to the Guarantor as subrogee); provided, however, that no such election shall
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release a Related Partner from any of its other Guaranteed Obligations.
(g) The obligations of each Guarantor hereunder with respect to
Guaranteed Obligations shall apply, in addition and not in limitation of the
obligations of the Guarantor with respect to a Related Partner, to each
immediate or subsequent successor to or transferee of the Partnership Interest
of the Partner who is a Permitted Transferee with the same force and effect as
would be the case if such successor or transferee had originally be named as a
"Related Partner" hereunder.
(h) Neither Guarantor may assign its rights or delegate its duties
hereunder, except to any entity into which it may be merged or with which it may
be consolidated or to which it may transfer all or substantially all of its
assets, without the prior written consent of each Other Partner.
(i) The Guaranty by each Guarantor is intended solely for the benefit
of, and shall inure to the benefit of and may be enforced solely by, each Other
Partner and its successors and permitted assigns under the Partnership Agreement
(including without limitation any successor of each Other Partner), and may not
be relied on, nor is it enforceable by, any other Person.
Section 2.2. Guaranties Relating to Newco. Substantially contemporaneous
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with the Reorganization, for any period during which Newco is not wholly owned
by the Partnership, the Guarantors shall enter into guaranties of the
obligations of the stockholders of Newco which may be Affiliates of the
respective Guarantors under the Newco Stockholders Agreement which are
comparable, mutatis mutandis, to the Guaranties set forth in Section 2.1.
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Section 2.3. Restrictions on Transfers of Stock of Partners.
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(a) TCI Music represents and acknowledges that it owns, directly or
indirectly, all of the equity securities of each of the Tune Partners and of
each Person holding an equity interest in the Tune Partners and it covenants and
agrees that it will not cease to own, either directly or indirectly through an
unbroken chain of wholly owned Subsidiaries, all of the outstanding equity
interests in each Tune Partner; provided, however, that TCI Music will be
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entitled to Dispose of its interest in any such Person or Partner by complying
with the obligations such Person or Partner would have with respect to any
Disposition of the Partnership Interest or Shares held by such Person or Partner
as if obligations comparable thereto, mutatis mutandis, applied to TCI Music and
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its holdings of the equity securities of such Person or Partner so long as (i)
the ultimate parent of the Person acquiring such interest or (ii) if any parent
of such Person is a public corporation, the highest such public parent in such
Person's ownership structure becomes a party to this Agreement and is bound by
Article II hereof to the same extent that TCI Music is so bound, in which case
TCI Music's obligations under Section 2.1 will terminate in
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accordance with the third paragraph of Section 2.1(a) as if TCI Music's Related
Partner had disposed of a proportionate amount of its Partnership Interest or
Shares.
(b) Viacom represents and acknowledges that it owns, directly or
indirectly, all of the equity securities of each of the MTVN Partners and of
each Person holding an equity interest in the MTVN Partners (except for a
minority interest in Imagine, which it has a right to acquire) and it covenants
and agrees that it will not cease to own, either directly or indirectly through
an unbroken chain of wholly owned subsidiaries, all of the outstanding equity
interests in each MTVN Partner, free and clear of all Liens, pledges and
security interests; provided, however, that Viacom will be entitled to Dispose
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of its interest in any such Person or Partner by complying with the obligations
such Person or Partner would have with respect to any Disposition of the
Partnership Interest or Shares held by such Person or Partner as if obligations
comparable thereto, mutatis mutandis, applied to Viacom and its holdings of the
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equity securities of such Person or Partner so long as the ultimate parent of
the Person acquiring such interest becomes a party to this Agreement and is
bound by Article II hereof to the same extent that Viacom is so bound, in which
case MTVN's obligations under Section 2.1 will terminate in accordance with the
third paragraph of Section 2.1(a) as if MTVN's Related Partner had disposed of a
proportionate amount of its Partnership Interest or Shares.
ARTICLE III
REGISTRATION RIGHTS
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Section 3.1. Demand Rights.
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(a) The Tune Partners shall have the right, at any time after the
consummation of the IPO, upon written notice and subject to the provisions of
this Article III, to require Newco to prepare and file as soon as practicable
after receipt of such notice and use its reasonable best efforts to cause to
become effective as soon as practicable thereafter a registration statement (a
"Registration Statement") under the Securities Act of 1933, as amended (the
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"Securities Act"), with respect to the resale of all Shares requested by the
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Tune Partners to be so registered (a "Demand Registration"); provided, however,
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that Newco shall not be required to violate the terms of any "lock-up" or
"standstill" provisions relating to any securities offering by it by which it
may be bound.
(b) Notwithstanding anything to the contrary contained herein, Newco
shall have no obligation to prepare, file and cause to become effective the
Registration Statement (i) unless the Shares to be registered pursuant to the
Registration Statement constitute at least 25% of the Shares beneficially owned
by the Tune Partners as of the date of the notice requesting such registration
or (ii) if Newco delivers to TCI Music an opinion of counsel to the effect that
all such Shares for which registration was requested may be sold in a single
transaction without registration under the Securities Act. Furthermore, Newco
shall not be obligated to prepare, file and cause to become effective
Registration Statements for more than two such registrations pursuant to this
Section 3.1.
10
(c) If the selling Tune Partner so elects, it may cause the public
offering or distribution of the Shares pursuant to a Demand Registration to be
pursuant to a firm commitment underwriting, the managing underwriter of which
shall be a nationally recognized investment banking firm selected by the selling
Tune Partner and approved by Newco (which approval shall not be unreasonably
withheld). Newco shall enter into the same underwriting agreement as shall the
selling Tune Partner, containing representations, warranties, indemnities, and
agreements reasonably acceptable to Newco and not substantially different from
those customarily made by an issuer in underwriting agreements with respect to
secondary distributions. If (i) a Demand Registration is for a firm commitment
underwritten public offering and the managing underwriter thereof determines in
good faith that the aggregate number of Shares to be offered thereby exceeds the
total number of Shares that may be successfully offered at an estimated initial
price per share to the public that is at least equal to the minimum initial
price per Share (which shall not be higher than the market price at the time of
designation) to the public that has been designated in writing at the time of
the notice referred to in Section 3.1(a) by the selling Tune Partner, and/or
(ii) a Demand Registration is delayed more than 30 days pursuant to Section
3.3(b) prior to being declared effective, and in either case no Shares are sold
pursuant to such Demand Registration, then the selling Tune Partner shall have
the right to reduce or withdraw its request for such registration by giving
written notice to the Company to such effect, in which event, in the case of a
withdrawal, such registration shall not be deemed to have occurred for purposes
of the last sentence of Section 3.1(b).
(d) The selling Tune Partners may elect to withdraw their Shares from
inclusion in a Demand Registration; provided that, except for a withdrawal
pursuant to the last sentence of Section 3.1(c), notwithstanding such
withdrawal, such registration shall be deemed to have occurred for the purposes
of the last sentence of Section 3.1(b), unless the selling Tune Partners pay
(pro rata, in proportion to the number of Shares requested by them to be
included in such registration) within 30 days after any such withdrawal, all of
the out-of-pocket expenses of Newco incurred in connection with such
registration. Neither Newco nor any Person that is not a Tune Partner shall
participate in any Demand Registration unless the selling Tune Partners
otherwise agree.
(e) A Demand Registration shall not be deemed to have been effected
until such registration has been effective (and not subject to any stop order,
injunction or other order or requirement of the Securities and Exchange
Commission (the "SEC") or other Governmental Entity for any reason) for a period
of 150 days following the date on which such registration was declared
effective, or, if earlier, the date on which all Shares requested to be
registered thereunder have been sold.
(f) Newco shall not grant to any other Person the right to include
any other Shares in any Registration Statement filed pursuant to this Section
3.1.
11
Section 3.2. Piggy-Back Rights.
-----------------
(a) For so long as the Tune Partners beneficially own at least 1% of
the Shares outstanding, each time that Newco intends to proceed with the actual
preparation and filing of a registration statement under the Securities Act for
its own account or the account of any member of the MTVN Stockholder Group in
connection with the proposed offer and sale (including in connection with the
IPO) for money of any securities of Newco (other than a registration statement
on Form S-4 or Form S-8 or any successor to either such form), Newco will give
at least 20 days written notice of its election to TCI Music. Upon the written
request of TCI Music to Newco given within 10 days after receipt of any such
notice from Newco, Newco will, except as herein provided, use its reasonable
best efforts to cause all Shares for which TCI Music has requested registration
to be included in such registration statement, all to the extent requisite to
permit the sale or other disposition by the Tune Partners of the Shares to be so
registered, with TCI Music paying any direct incremental expenses attributable
to the registration of such Shares; provided, however, that (i) nothing herein
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shall prevent Newco from, at any time, abandoning or delaying any such
registration initiated by it; (ii) if Newco determines not to proceed with a
registration after the registration statement has been filed with the SEC, Newco
shall complete the registration for the benefit of the Tune Partners if TCI
Music wishes to proceed with a public offering of such Shares and agrees, along
with any other selling shareholder also electing to proceed, to bear its pro
rata share of expenses reasonably incurred by Newco as the result of such
registration of such Shares after Newco has decided not to proceed; (iii) for
purposes of this sentence, the use by Newco of reasonable best efforts shall not
require Newco to materially reduce the amount or sale price of the securities it
proposes to distribute for its own account; and (iv) Newco shall not be required
to violate the terms of any "lock-up" or "standstill" provisions relating to any
securities offering by which it may be bound. If any registration pursuant to
this Section 3.2 shall be underwritten in whole or in part, (A) Newco may
require that the Shares requested for inclusion pursuant to this Section 3.2 be
included in the underwriting on the same terms and conditions as the Shares
otherwise being sold through the underwriters and (B) the selling Tune Partners
may elect, in writing not less than three Business Days prior to the effective
date of the registration statement filed in connection with such registration,
not to register their Shares in connection with such registration. No
registration effected under this Section 3.2 shall relieve Newco of its
obligation to effect Demand Registrations in accordance with Section 3.1.
(b) In connection with a registration under this Section 3.2, Newco
may enter into an underwriting agreement in such customary form as shall have
been negotiated and agreed to by Newco with the underwriter or underwriters
selected for such underwriting by Newco. Notwithstanding any other provision of
this Section 3.2, if in the opinion of the managing underwriter the inclusion of
Shares owned by the Tune Partners in a registration statement would materially
reduce the amount or sale price of the other securities to be included in such
registration, Newco may reduce, to as low as zero, the number of Shares to be
included by the Tune Partners in the registration and underwriting under this
Section 3.2, to the extent necessary to cause inclusion of such Shares not to be
materially detrimental to the registration filed pursuant to this Section 3.2.
12
Section 3.3. General Provisions.
------------------
(a) If and whenever Newco is required by the provisions of this
Article III to effect the registration of Shares owned by the Tune Partners
under the Securities Act, Newco will:
(i) subject to the terms and conditions of this Article III,
as expeditiously as possible, prepare and file with the SEC a registration
statement with respect to such Shares, and use its reasonable best efforts
to cause such registration statement to become and remain effective for
such period as may be reasonably necessary to effect the sale of such
Shares, but in no event longer than 150 days;
(ii) prepare and file with the SEC such amendments to such
registration statement and supplements to the prospectus contained therein
as may be necessary to keep such registration statement effective for such
period as may be reasonably necessary to effect the sale of such Shares,
but in no event longer than 150 days;
(iii) furnish to TCI Music such reasonable number of copies of
the registration statement, preliminary prospectus, final prospectus and
such other documents as TCI Music may reasonably request in order to
facilitate the public offering of such Shares;
(iv) prepare and promptly file with the SEC and promptly notify
TCI Music of the filing of such amendment or supplement to such
registration statement or prospectus as may be necessary to correct any
statements or omission if, at the time when a prospectus relating to such
Shares is required to be delivered under the Securities Act, any event
shall have occurred as the result of which any such prospectus or any other
prospectus as then in effect would include an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances in which they were
made, not misleading and promptly provide to TCI Music sufficient copies of
such amended or supplemented prospectus so that it can be delivered to the
purchasers of the Shares as required by the Securities Act and the
regulations thereunder; and
(v) advise TCI Music, promptly after it shall receive notice
or obtain knowledge thereof, of the issuance of any stop order by the SEC
suspending the effectiveness of such registration statement or the
initiation or threatening of any proceeding for that purpose, promptly use
its reasonable best efforts to prevent the issuance of any stop order or to
obtain its withdrawal if such stop order should be issued and promptly
notify Tune of the forbearance, lifting or withdrawal of such stop order or
proceeding.
(vi) notify TCI Music, (A) when a registration statement
becomes effective, (B) when the filing of a post-effective amendment to a
registration statement or
13
supplement to a prospectus is required, when the same is filed, and in the
case of a post-effective amendment, when the same becomes effective, and
(C) of any request by the SEC for any amendment of or supplement to a
Registration Statement or any prospectus relating thereto or for additional
information;
(vii) register or qualify the Shares covered by a Registration
Statement under the securities or blue sky laws of such jurisdictions in
the United States as the selling Tune Partners shall reasonably request,
and do any and all other acts and things which may be necessary to enable
each Tune Partner whose Shares are covered by such Registration Statement
to consummate the disposition in such jurisdictions of such Shares;
provided, however, that Newco shall in no event be required to qualify to
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do business as a foreign corporation or a dealer in any jurisdiction where
it is not so qualified, to conform its capitalization or the composition of
its assets at the time to the securities or blue sky laws of such
jurisdiction, to execute or file any general consent to service of process
under the laws of any jurisdiction, to take any action that would subject
it to service of process in suits other than those arising out of the offer
and sale of the Shares covered by such Registration Statement, or to
subject itself to taxation in any jurisdiction where it has not theretofore
done so; and
(viii) cause the Shares covered by a Registration Statement to
be listed on the principal exchange or exchanges or qualified for trading
on the principal over the counter market on which the common stock of Newco
is then listed or traded upon the sale of such Shares pursuant to such
Registration Statement.
(ix) at least three Business Days prior to filing a
registration statement or any amendment or supplement thereto, furnish to
TCI Music and each underwriter, if any, of the Shares covered by such
registration statement copies of such registration statement, amendment or
supplement as proposed to be filed (excluding documents to be incorporated
by reference therein) which registration statement, amendment or supplement
will be subject to reasonable review and comments by TCI Music and such
underwriter insofar as such documents relate to TCI Music or its Controlled
Affiliates or such underwriter (and their respective attorneys) during such
three-Business Day period, and Newco will not file any registration
statement, any prospectus or any amendment or supplement thereto containing
any statements with respect to TCI Music or its Controlled Affiliates to
which TCI Music shall reasonably object in writing.
(x) furnish to TCI Music and the underwriter, if any, such
number of copies of such registration statement, each amendment and
supplement thereto (in each case including all exhibits thereto and
documents incorporated by reference therein), the prospectus included in
such registration statement (including each preliminary prospectus) and
such other documents as TCI Music or such underwriter may reasonably
request in order to facilitate the disposition of the Shares.
14
(xi) make available for inspection by TCI Music, any
underwriter participating in any disposition pursuant to such registration
statement and any attorney, accountant or other professional retained by
TCI Music or such underwriter (collectively, the "Inspectors"), all
----------
financial and other records, pertinent corporate documents and properties
of Newco (collectively, the "Records") as shall be reasonably necessary to
-------
enable them to exercise their due diligence responsibility, so long as such
Inspectors execute a confidentiality agreement with respect thereto in form
and substance reasonably satisfactory to Newco, and cause Newco's officers,
directors and employees to supply all information reasonably requested by
any Inspectors in connection with such registration statement.
(xii) furnish to TCI Music and to each underwriter, if any, a
signed counterpart of (i) an opinion or opinions of counsel to Newco
addressed to TCI Music and such underwriter on which opinion both TCI Music
and such underwriter are entitled to rely and (ii) a comfort letter or
comfort letters from Newco's independent public accountants, each in
customary form and covering such matters of the type customarily covered by
opinions or comfort letters, as the case may be, as TCI Music or the
managing underwriter therefor reasonably requests.
(xiii) make available to its security holders, as soon as
reasonably practicable, an earnings statement covering a period of 12
months, beginning within three months after the effective date of the
registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act.
TCI Music, upon receipt of any notice from Newco of the happening of any event
of the kind described in paragraph (iv) or (v) above, will forthwith
discontinue, and cause its Affiliates to discontinue, disposition of the Shares
until TCI Music's receipt of the copies of the supplemented or amended
prospectus contemplated by paragraph (iv) above or until it is advised in
writing by Newco that the use of the prospectus may be resumed and has received
copies of any additional or supplemental filings which are incorporated by
reference in the prospectus. If so directed by Newco, TCI Music will deliver to
Newco or destroy all copies, other than permanent file copies then in the
possession of TCI Music or its Affiliates, of the prospectus required to be
supplemented or amended.
(b) Notwithstanding anything to the contrary in this Agreement, if at
any time after the filing of a registration statement (i) in the case of any
registration statement for a firm commitment underwritten offering of Shares,
before it is declared effective by the SEC, or (ii) in the case of any other
registration statement, before or after it is declared effective by the SEC,
Newco determines, in its reasonable good faith business judgment, that such
registration and the offering of Shares covered by such registration would
interfere with or otherwise adversely affect any financing, acquisition,
corporate reorganization or other material transaction or development involving
Newco or any of its Controlled Affiliates or require Newco to disclose material
matters regarding itself or such Controlled Affiliates that otherwise would not
be required to be disclosed at such time, then Newco may require the suspension
of the distribution of any Shares (a
15
"Blackout Period") by giving notice to TCI Music. Any such notice need not
----------------
specify the reasons for such suspension if Newco determines, in its reasonable
good faith business judgment, that doing so would interfere with or adversely
affect such transaction or development or would result in the disclosure of
material nonpublic information. In the event that such notice is given, then
until Newco has determined, in its reasonable good faith business judgment, that
such registration and distribution would no longer materially interfere with the
matters described in the preceding sentence and has given notice thereof to TCI
Music, Newco's obligations under this Article III will be suspended, provided
that such suspension shall not exceed the first to occur of (x) the filing of
Newco's next SEC filing and (y) 90 days. Newco shall extend the period of time
Newco is required to maintain effective any registration statement required
pursuant to clauses (i) and (ii) of paragraph (a) hereof by a length of time
equal to the aggregate length of the Blackout Periods. In the event of any
suspension of a registration pursuant to this Section 3.3(b), the selling Tune
Partners shall be entitled to withdraw from such registration upon written
notice to Newco.
(c) Newco's obligations to Tune under this Article III will be
conditioned on compliance with the following:
(i) TCI Music and its Affiliates will cooperate with Newco in
connection with the preparation of the applicable registration statement,
and for so long as Newco is obligated to keep such registration statement
effective, TCI Music and its Affiliates will provide to Newco, in writing
in a timely manner, for use in such registration statement (and expressly
identified in writing as such), all information regarding TCI Music and its
Affiliates and such other information as may be required by applicable law
to enable Newco to prepare such registration statement and the related
prospectus covering the applicable Shares owned by the selling Tune
Partners and to maintain the currency and effectiveness thereof, so long as
Newco executes a confidentiality agreement in form and substance reasonably
satisfactory to TCI Music in the event any Confidential Information is
requested by Newco;
(ii) TCI Music and its Affiliates will permit Newco and its
representatives and agents to examine such documents and records and will
supply in a timely manner any information as they may reasonably request in
connection with the offering or other distribution of Shares by the Tune
Partners;
(iii) TCI Music and its Affiliates will enter into such
agreements with Newco and any broker-dealer or similar securities industry
professional containing representations, warranties, indemnities and
agreements as are customarily entered into and made by a seller of
securities and such seller's controlling shareholders with respect to
secondary distributions under similar circumstances;
(iv) during such time as TCI Music and its Affiliates may be
engaged in a distribution of the Shares, TCI Music and its Affiliates will
comply with all applicable laws, including Regulation M promulgated under
the 1934 Act, and, to the
16
extent required by such laws, will, among other things: (A) not engage in
any stabilization activity in connection with the securities of Newco in
contravention of such rules; (B) distribute the Shares acquired by it
solely in the manner described in the applicable registration statement;
(C) if required by applicable law, rules or regulations, cause to be
furnished to each agent or broker-dealer to or through whom such Shares may
be offered, or to the offeree if an offer is made directly by TCI Music and
its Affiliates, such copies of the applicable prospectus (as amended and
supplemented to such date) and documents incorporated by reference therein
as may be required by such agent, broker-dealer or offeree, provided that
Newco shall provide TCI Music with an adequate number of copies thereof;
and (D) not bid for or purchase any securities of Newco; and
(v) on notice from Newco of the happening of any of the events
specified in Section 3.3(a)(iv) or (v), or that, as set forth in Section
3.3(b), requires the suspension by TCI Music and its Affiliates of the
distribution of any of the Shares owned by the Tune Partners, then TCI
Music and its Affiliates will cease offering or distributing the Shares
owned by the Tune Partners until the offering and distribution of the
Shares owned by the Tune Partners may recommence in accordance with the
terms hereof and applicable law.
(d) Except as otherwise provided with respect to registrations
terminated by Newco, Newco shall bear the following fees, costs and expenses in
connection with its obligations under this Article III: all registration, filing
fees, printing expenses, all internal Newco expenses, the premiums and other
costs of policies of insurance against liability arising out of the public
offering, and all legal fees and disbursements and other expenses of complying
with state securities or blue sky laws of any jurisdiction in which Shares to be
offered are to be registered or qualified. Fees and disbursements of counsel
and accountants for TCI Music and its Affiliates, underwriting discounts and
commissions and transfer taxes for TCI Music and its Affiliates and other direct
selling expenses incurred by TCI Music and its Affiliates not expressly included
above shall be borne by TCI Music and its Affiliates.
(e) Newco shall indemnify and hold harmless the selling Tune
Partners, and each Person, if any, who controls the selling Tune Partners within
the meaning of the Securities Act, from and against any and all claims, losses,
damages, liabilities, costs and expenses to which the selling Tune Partners or
any such controlling Person may become subject under the Securities Act or
otherwise, insofar as such claims, losses, damages, liabilities, costs or
expenses arise out of or are based on any untrue statement or alleged untrue
statement of any material fact contained in any registration statement filed by
Newco pursuant to this Article III which relates to Shares owned by the selling
Tune Partners, any prospectus contained therein or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they were made,
not misleading, except insofar as any such claim, loss, damage, liability, costs
or expense arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission so made in conformity with information
furnished by TCI Music or its Affiliates or such controlling Person
17
specifically for inclusion in such registration statement; provided, however,
-----------------
that the foregoing indemnity is subject to the condition that, insofar as it
relates to any untrue statement or alleged untrue statement, omission or alleged
omission made in a preliminary prospectus but eliminated or remedied in a
prospectus, such indemnity agreement shall not inure to the benefit of the
selling Tune Partner or any Person who controls the selling Tune Partner if (A)
Newco complied with all of its notification and delivery obligations as provided
herein, (B) such claim, loss, damage, liability, cost or expense relates to the
matter so eliminated or remedied in the final prospectus and (C) the selling
Tune Partner or its Affiliates failed to deliver a copy of the prospectus at or
prior to the time such action is required by the Securities Act; provided,
--------
further, that the foregoing indemnity is also subject to the condition that,
-------
insofar as it relates to any untrue statement or alleged untrue statement,
omission or alleged omission made in a prospectus attributable solely to facts
or events which occur after the effective date of the registration statement,
which untrue statement or alleged untrue statement, omission or alleged omission
is eliminated or completely remedied in an amendment or supplement to the
prospectus, such indemnity agreement shall not inure to the benefit of the
selling Tune Partner or any Person who control the selling Tune Partner or any
of its Affiliates, if, having previously been furnished by or on behalf of Newco
with copies of the prospectus as so amended or supplemented, in lieu thereof the
selling Tune Partner or its Affiliates delivered the prospectus without such
amendment or supplement.
(f) TCI Music shall indemnify and hold harmless Newco and any
underwriter (as defined in the Securities Act) for Newco, and each Person, if
any, who controls the Newco or such underwriter within the meaning of the
Securities Act from and against any claims, losses, damages, liabilities, costs
or expenses to which Newco or any such underwriter or controlling Person may
become subject under the Securities Act or otherwise, insofar as such claims,
losses, damages, liabilities, costs or expenses are caused by any untrue or
alleged untrue statement of any material fact contained in any registration
statement filed by Newco pursuant to this Article III which relates to Shares
owned by any Tune Partner or any of its Affiliates, any prospectus contained
therein or any amendment or supplement thereto, and arise out of or are based
upon the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was so made in reliance upon
and in strict conformity with written information furnished by TCI Music or its
Affiliates specifically for inclusion in such registration statement, prospectus
or amendment or supplement thereto).
(g) Except to the extent otherwise provided in this Section 3.3(g), a
party obligated to provide indemnification under Section 3.3(e) or (f) shall
reimburse each party entitled to such indemnification the costs of investigating
and defending any claim, loss, damage, liability, cost or expense giving rise to
such indemnification obligation. Promptly after receipt by an indemnified party
pursuant to the provisions of paragraph (e) and (f) of this Section 3.3 of
notice of commencement of any action involving the subject matter of the
foregoing indemnity provisions, such indemnified party will, if a claim thereof
is to be made against the indemnifying party pursuant to the provisions of said
paragraph (e) and (f) promptly notify the indemnifying
18
party of the commencement thereof, but the omission to so notify the
indemnifying party will not relieve it from any liability which it may have to
any indemnified party, except to the extent that the indemnifying party is
materially prejudiced by the failure to give such prompt notice. If such action
is brought against any indemnified party and it notifies the indemnifying party
of the commencement thereof, the indemnifying party shall have the right to
participate therein, and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof so long as
it agrees to accept full responsibility to indemnify and hold harmless the
indemnified party in accordance herewith in respect of such action. 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 pursuant to the provisions of said paragraph (e) and (f) for
any legal or other expense subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation, unless (i) the indemnified party shall have been advised by its
counsel that use of the same counsel to represent both the indemnifying party
and the indemnified party would present a conflict of interest (which shall be
deemed to include any case where there may be a legal defense or claim available
to the indemnified party which is different from or additional to those
available to the indemnifying party) or (ii) the indemnifying party shall fail
vigorously to defend or prosecute such claim or demand within a reasonable time,
in which case the fees of counsel for the indemnified party shall be for the
account of the indemnifying party and the indemnifying party shall not have the
right to direct the defense of such action on behalf of the indemnified party.
The indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent but if settled with such consent, or if
there be a final judgment for the plaintiff, the indemnifying party shall
indemnify and hold harmless such indemnified parties from and against any loss
or liability (to the extent stated above) by reason of such settlement or
judgment. No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened proceeding
in respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party, unless
such settlement includes an unconditional release of such indemnified party from
all liability arising out of such proceeding.
(h) The registration rights granted to TCI Music and its Controlled
Affiliates pursuant to this Article III are not assignable, except to the extent
any Partnership Interests or Shares are Disposed of to a Permitted Transferee or
other Controlled Affiliate in accordance with the terms of the Partnership
Agreement, the Newco Stockholder Agreement and/or this Agreement. Any
assignment not permitted hereunder shall be null and void ab initio.
(i) If the indemnification provided for under Sections 3.3(e) or (f),
as applicable, is unavailable to or insufficient to hold the indemnified party
harmless under such Section in respect of any claim, loss, damage, liability,
cost or expense referred to therein (a "Liability") for any reason other than as
---------
specified therein, then the indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such claims, losses,
damages, liabilities, costs or expenses (i) in such proportion as is appropriate
to reflect the relative benefits received by the indemnifying party on the one
hand and such indemnified party on the other from the subject offering or
distribution or (ii) if the allocation provided by clause (i)
19
of this sentence is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
of this sentence but also the relative fault of the indemnifying party on the
one hand and such indemnified party on the other in connection with the
statements or omissions which resulted in such Liability as well as any other
relevant equitable considerations. The relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other hand
shall be deemed to be in the same proportion as the net proceeds of the offering
or other distribution (after deducting expenses) received by the indemnifying
party bears to the net proceeds of the offering or other distribution (after
deducting expenses) received by the indemnified party. The relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by (or omitted to be supplied
by) Newco or the selling Tune Partners, the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission, the relative benefits received by each party from the sale of the
Shares and any other equitable considerations appropriate under the
circumstances. The amount paid or payable by an indemnified party as a result of
the Liability referred to above in this Section 3.3(i) shall be deemed to
include 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 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.
(j) Notwithstanding anything herein to the contrary, the parties
agree that the obligations and liability of the selling Tune Partners with
respect to any registration in which any Tune Partner participates pursuant to
Section 3.1 or 3.2 whether from indemnification pursuant to Section 3.3(f),
contribution pursuant to Section 3.3(i), or otherwise shall not in any event
exceed, in the aggregate, the amount of net proceeds received by such selling
Tune Partner from the sale of the Shares sold by such Tune Partner in such
registration.
ARTICLE IV
CONFIDENTIAL INFORMATION; NON-COMPETITION; EXCLUSIVITY
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Section 4.1. Confidential and Proprietary Information. Except as
----------------------------------------
otherwise provided in the Additional Agreements, all Proprietary Information (as
defined below) of any party hereto or its Affiliates shall remain the property
of such party or its Affiliates (other than Newco and its Subsidiaries), and all
Proprietary Information of Newco and its Controlled Affiliates shall remain the
property of Newco and its Controlled Affiliates. Each of the parties hereto and
their respective Affiliates (i) shall use any and all Confidential Information
(as defined below) only for purposes of Newco and shall not use such
Confidential Information for the benefit of or in connection with any other
business or enterprise of such party or any of its Affiliates and (ii) shall,
and shall use its reasonable best efforts to cause its and their respective
officers, directors, employees, attorneys, accountants, and agents
(collectively, "Agents") to, keep secret and retain in strictest confidence any
------
and all Confidential Information, and shall not disclose such Confidential
Information, and shall use its reasonable best efforts to cause its Agents not
to
20
disclose such Confidential Information, to any Person other than such party,
its Affiliates, Newco or their respective Agents, except (i) for such
disclosures as may be required by law or legal process, disclosures to such
party's counsel, or disclosures pursuant to any listing agreement with, or the
rules or regulations of, any securities exchange on which securities of such
party or any such Affiliate are listed or traded (in which event the party
making such disclosure or whose Affiliates or Agents are making such disclosure
shall so notify the other parties hereto as promptly as practicable (and if
possible, prior to making such disclosure) and shall seek confidential treatment
of such information); (ii) as may be necessary to establish or enforce its
rights hereunder; (iii) as part of the normal review or reporting procedure to
its Parent, its auditors and its attorneys; provided, that such party shall be
--------
liable for any breach by such Parent, auditors or attorneys of any provision of
this Section 4.1; (iv) for disclosures to an Affiliate of, or a professional
advisor to, such party in connection with the performance by such party of its
obligations hereunder, under the Additional Agreements or under an agreement
with Newco; provided, that such party shall be liable for any breach by such
--------
Affiliate or professional advisor of any provision of this Section 4.1; (v) for
disclosures to a prospective third party purchaser pursuant to Article VIII of
the Partnership Agreement or a prospective third party purchaser (by merger,
stock acquisition or otherwise) of all or substantially all of the assets of the
Parent of such party so long as such prospective purchaser executes and delivers
to Newco a confidentiality agreement in form and substance reasonably
satisfactory to Newco; provided that such party shall be liable for any breach
--------
by such prospective third party purchaser of any provision of this Section 4.1;
and (vi) with the prior written consent of the nondisclosing parties.
Notwithstanding the foregoing, Viacom Inc. and its Controlled Affiliates shall
be permitted to use Confidential Information of Newco and its Controlled
Affiliates for the benefit of or in connection with their respective businesses,
except that Viacom Inc. and its Controlled Affiliates shall not have the right
to use Confidential Information of Newco and its Controlled Affiliates which
constitutes, is set forth in, or concerns architecture or design of data
processing or communications systems, information or data processing algorithms,
and source code, flow charts and internal technical documentation relating to
the design or operation of computer programs. The obligations under this
Section 4.1 shall survive the termination of this Agreement and any Person
ceasing to be an Affiliate of a party for a period of five years after the
occurrence of such event. For purposes of this Section 4.1:
"Confidential Information" shall mean (i) the terms of this Agreement and
------------------------
the Additional Agreements and (ii) all Proprietary Information; provided,
--------
however, that such Confidential Information shall not include, with respect to
-------
any party, any information that (A) is or has become generally available to the
public other than as a result of a disclosure by such party, its Affiliates or
its Agents, (B) has been independently developed by such party or an Affiliate
or Parent of such party, or (C) is, or becomes available to such party or an
Affiliate or Parent of such party on a non-confidential basis from a third party
having no obligation of confidentiality to a party hereto or Newco or its
Controlled Affiliates known to the receiving party and which has not itself
received such information directly or indirectly in breach of any such
obligation of confidentiality.
21
"Proprietary Information" means any proprietary ideas, plans or
-----------------------
information, including, without limitation, information of a technological or
business nature (including, without limitation, all trade secrets, proposed
trade names, proposed slogans, computer software, technology, data, summaries,
reports, or mailing lists, whether written or oral and if written, however
produced or reproduced) (i) belonging to any party or any of its Affiliates or
(ii) developed by or for Newco or its Controlled Affiliates, that is marked
proprietary or confidential, or bears a marking of like import, or that such
party or Affiliate or Newco or its Controlled Affiliates, as the case may be,
states in writing within 30 days of disclosure thereof is to be considered
proprietary or confidential (except for computer source code internal software
technical documentation, machine readable databases or customer lists, which
shall be deemed proprietary whether or not so marked or designated), in each
case other than any such information that is already known to the party
receiving the same or its Affiliates at the time of receipt from the party
disclosing the same, as evidenced by written records made prior to such receipt,
or is independently developed or formulated by such receiving party or its
Affiliates, or is provided to such receiving party or its Affiliates by a third
party not as a result of any in breach of any obligation of confidentiality to
such disclosing party, or that otherwise becomes publicly available through no
fault of such receiving party or its Affiliates.
Section 4.2. Non-Competition.
---------------
(a) Neither SonicNet, Box, TCI Music nor Liberty, directly or
indirectly through their respective Controlled Affiliates, shall, for a period
ending on the earlier of (x) 3 years from the Closing or (y) such date as the
MTVN Stockholder Group ceases to own the largest percentage of the outstanding
equity of Newco and have the right to designate the greatest number of
representatives or directors to serve on Newco's Management Committee or Board
of Directors, as the case may be (the "MTVN Loss of Control Date"), make an
-------------------------
investment in, or own or otherwise operate the Business other than its
investment in Newco or announce or disclose any intention to do any of the
foregoing.
(b) Neither SonicNet, Box, TCI Music nor Liberty, directly or
indirectly through their respective Controlled Affiliates, shall, for a period
ending on the earlier of (x) five years from the Closing or (y) the MTVN Loss of
Control Date, make an investment in, or own or otherwise operate, any cable or
satellite audio/visual television services, digital or analog, principally or in
large part devoted to music-related or music-themed programming (the "Television
----------
Business"), or announce any intention to do any of the foregoing.
--------
(c) The restrictions on competition set forth in subsections (a)
and (b) of this Section 4.2 shall not apply to any of the following or the
announcement of any of the following: (i) the operations of DMX Inc. as
currently conducted or the operation of an internet radio business by DMX Inc.
through sites owned or operated by Lycos Inc. and any of its successors and
assigns pursuant to DMX Inc.'s current agreement with Lycos Inc. as it may be
amended (the "Lycos Deal") or the operations of DMX Inc. as a distributor of a
----------
bona fide subscription service consisting exclusively, with de minimis
exceptions, of audio and/or text and/or non-moving pictures content provided
that the foregoing will not include an internet radio business
22
(other than the Lycos Deal) similar to ▇▇▇▇▇▇▇.▇▇▇ or Imagine as currently
conducted; (ii) e-commerce operations which derive less than 50% of their
revenue from music related products; provided that if such e-commerce operation
is a television service which includes visual programming, such programming
shall not contain music related programming for more than (x) 33% of the time
such programming is aired on any given day, (y) four consecutive hours on any
given day, or (z) 120 minutes on a given day during the hours of 6:00 p.m. to
12:00 a.m.; (iii) any business which would fall within the definition of the
Television Business so long as less than 35% of its programming consists of
music related programming; (iv) investments or acquisitions of less than 3% of
the outstanding equity interests in any company, or investments or acquisitions
of less than 25% of the outstanding equity interests in a company involved in
the Television Business and not involved in the Business; (v) the acquisition or
ownership of any interest in a company or assets not principally engaged in the
Business or the Television Business (i.e., the competing business does not
represent in excess of 35% of the fair market value of the assets or revenues of
such acquired or owned company or assets); (vi) any interest in a company
resulting from a spin-off from a company in which SonicNet, Box, TCI Music,
Liberty or any of their Controlled Affiliates holds an interest that does not
violate the provisions of Section 4.2(a) or (b); (vii) any interest in a company
resulting from an exercise of rights to acquire securities or interests in such
company (directly or indirectly) from any person if such rights would be
forfeited if not so exercised or if SonicNet, Box, Liberty, TCI Music or a
Controlled Affiliate would be required to sell or dispose of its interest in
such company (provided, that the acquisition of such rights as they relate to
the Business or the Television Business was ancillary to the transaction in
which such rights were acquired); (viii) any interest in BET Holdings, Inc.;
(ix) any interest in Ticketmaster Group Inc.; (x) the ownership and operation of
any Excluded Tune Assets as existing and operating on the date hereof or as
otherwise necessary to fulfill the obligations under or with respect to the
Excluded Tune Assets (as such term is defined in the Organization Agreement);
provided, that the business of The Box Holland, B.V. may be extended to other
Dutch-speaking operating territories and the technology of The Box Holland, B.V.
may be upgraded for use by The Box Holland, B.V.; (xi) if Newco invests in the
Interactive Music Channel (as defined in the Organization Agreement), an
investment in such Interactive Music Channel; and (xii) in the event that the
approval of the Federal Communications Commission (the "FCC") of the transfer of
---
the low power television station licenses from VJN LPTV Corp. to Box LLC has
not been obtained by the Closing, the LMA will remain in effect until the
applicable FCC approvals are obtained. Notwithstanding the foregoing, the
exceptions to the restrictions on competition set forth in the prior sentence
shall not be available to SonicNet, Box, TCI Music, Liberty or their Controlled
Affiliates if any of such persons structures a transaction to fall within one of
such exceptions with the primary purpose of evading the restrictions on
competition contained herein and subsequently engages in such a transaction.
(d) If SonicNet, Box, TCI Music, Liberty or any of their respective
Controlled Affiliates makes an acquisition of a company which has a competing
business and clause (v) of Section 4.2(c) is the only one of the exceptions to
the restrictions on competition provisions of Section 4.2(a) or (b) pursuant to
which such acquisition is permitted, at such time during the restricted period
set forth in Section 4.2(a) or (b) applicable to such competing business as
23
SonicNet, Box, TCI Music, Liberty or any of their respective Controlled
Affiliates acquires control of such competing business, SonicNet, Box, Liberty
or TCI Music must, or must cause the applicable Controlled Affiliate to, offer
to sell such competing business to Newco at a price not in excess of the fair
market value of the consideration paid, if Newco declines to purchase such
competing business, SonicNet, Box, Liberty or TCI Music must, or must cause the
applicable Controlled Affiliate to, divest it, unless (i) the Board of Directors
of SonicNet, Box, Liberty or TCI Music or such Controlled Affiliate shall have
been advised by outside counsel that the approval by such Board of such sale to
Newco or divestiture (a "Divestiture") is reasonably likely to constitute a
-----------
breach by such directors of their fiduciary duties owed to third parties or
stockholders other than stockholders of TCI Music or its parent entities, (ii)
such Divestiture would violate the provisions of any contract to which SonicNet,
Box, Liberty, TCI Music or such Controlled Affiliate is a party (other than
contracts entered into with a primary purpose referred to in the last sentence
of Section 4.2(c)), or (iii) such Divestiture would trigger any tax liability
for SonicNet, Box, Liberty or TCI Music or such Controlled Affiliate which is
material to SonicNet, Box, Liberty or TCI Music and would otherwise not be
triggered; provided, however, that in the event of the occurrence of any of the
-------- -------
circumstances referred to in clauses (i)-(iii) above, such obligation to make a
Divestiture shall arise at such subsequent time during the restricted period (as
set forth in Section 4.2(a) or (b) as applicable) applicable hereto, if any, as
such potential breach of fiduciary duty or potential breach of contract or such
adverse tax consequence may be reasonably avoided.
Section 4.3. Exclusivity
-----------
(a) For a period of five years from the Closing, if MTVN,
directly or indirectly through a Controlled Affiliate, acquires or makes an
investment in or otherwise operates the Business other than through Newco, MTVN
shall provide TCI Music the right to purchase a pro-rata interest in such
business or assets; provided that this provision shall not apply to (i) any
children's services, including children's music services regardless of the means
of distribution of such services; (ii) the delivery of content purely ancillary
to a business that is not the Business, provided that the ancillary content that
may be delivered relates solely to MTVN and its operations; (iii) investment or
acquisitions of less than 3% (and, after the third anniversary of the Closing
Date, 25%) of the outstanding equity interest in any person or entity; (iv) the
acquisition or operation of any interest in a company or assets not principally
engaged in the Business (i.e., the competing business does not represent in
excess of 35% of the fair market value of the assets or revenues of such
acquired company or assets); or (v) any current or future business conducted by
any of the entities listed on Schedule I hereto to the extent such businesses
were not contributed to the Partnership by an MTVN Partner.
(b) For a period of five years from the Closing, MTVN will not
promote the Business as owned or operated by any Affiliate of MTVN (other than
the Partnership or Newco) on its cable television services except on commercial
terms.
(c) Notwithstanding the foregoing, the covenants set forth in
Section 4.3(a) and (b) shall be of no force or effect in the event that (i)
members of the Tune Stockholder Group
24
own less than 5% of the outstanding Partnership Interests or equity in Newco
(excluding any Partnership Interests or equity issued or granted in any
transaction or transactions with respect to which TCI Music has no preemptive
rights pursuant to Section 12.02 of the Partnership Agreement (or any comparable
provision of the Newco Stockholders Agreement)), (ii) TCI Music or any of its
Affiliates is in material default of this Agreement, the Organization Agreement,
the Partnership Agreement, any of the Related Party Agreements or any other
agreement contemplated hereby or thereby; or (iii) any of the Tune Stockholder
Group has transferred any portion of its Partnership Interest or any equity
interest in Newco to any Person that is not a Permitted Transferee.
Section 4.4. Freedom of Action. Except as otherwise expressly provided
-----------------
herein or in the Partnership Agreement or in any Additional Agreement to which
such party is or will be a party or bound, no party hereto shall have any
obligation to Newco or the Partners not to (i) engage in the same or similar
activities or lines of business as Newco or develop or market any products or
services that compete, directly or indirectly, with those of Newco or (ii)
invest or own any interest publicly or privately in, or develop a business
relationship with, any corporation, partnership or other entity engaged in the
same or similar activities or lines of business as, or otherwise in competition
with, Newco or (iii) do business with any client or customer of Newco or (iv)
employ or otherwise engage any former officer or employee of Newco. Except as
otherwise expressly provided herein or in the Partnership Agreement or in any
Additional Agreement to which such party is or will be a party or bound, no
party hereto shall be obligated to present or offer to Newco any particular
investment or business opportunity, regardless of whether Newco could take
advantage of such opportunity if it were presented to Newco, but may, subject to
the terms of any agreement between the parties hereto other than this Agreement,
avail itself of any such opportunity for its own benefit or direct such
opportunity to another Person. For purposes of this Section 4.4, any reference
to a party shall include its Affiliates, including its Parent, and the
Affiliates of such Parent.
Section 4.5. Rights and Remedies Upon Breach. If a party hereto or any of
-------------------------------
its Affiliates breaches, or threatens to commit a breach of, any of its
obligations under any of the provisions of Sections 2.3, 4.1, 4.2 or 4.3 (a
"Restrictive Covenant"), the other parties hereto shall have the right and
---------------------
remedy to have such obligations or such Restrictive Covenant specifically
enforced by any court having jurisdiction, it being acknowledged and agreed that
any such breach or threatened breach will cause irreparable injury to the other
parties and that money damages will not provide an adequate remedy to the other
parties. Nothing in this Section 4.5 shall be construed to limit the right of
any party hereto to collect money damages in the event of a breach of any such
obligation or Restrictive Covenant. The parties hereto acknowledge that the
restrictions contained in Sections 2.3, 4.1, 4.2 and 4.3 are reasonable and
necessary protections of the immediate interests of the parties hereto and each
party hereto acknowledges that the other parties hereto would not have entered
into this Agreement without receiving the additional consideration offered by
the other parties hereto in binding themselves to these restrictions. If any
portion of the covenants or agreements contained in Sections 2.3, 4.1, 4.2 or
4.3, or the application thereof, is construed to be invalid or unenforceable,
then the other portions of such covenant(s) or agreement(s) or the application
thereof will be given full force and effect without
25
regard to the invalid or unenforceable portions. If any such covenant or
agreement is held to be unenforceable in equity because of the area covered, the
duration thereof, or the scope thereof, then the court making such determination
will have the power to reduce the area and/or duration and/or limit the scope
thereof, and the covenant or agreement will then be enforceable in equity in its
reduced form.
Section 4.6. Release of Liberty. In the event of the transfer of
------------------
substantially all of Liberty's assets and businesses to (i) Liberty Media Group
LLC or (ii) a subsidiary of AT&T the stock of which is then distributed in
redemption of the shares of AT&T Liberty Media Group Common Stock, each as
described in the definition of "Liberty" as set forth in the Organization
Agreement, then upon the execution by Liberty Media Group LLC or such AT&T
subsidiary of an instrument assuming all of Liberty's obligations under Section
4.2 hereof, Liberty will be released and discharged from its obligations under
Section 4.2 effective as of such date.
ARTICLE V
MISCELLANEOUS
-------------
Section 5.1. Notices. Except as expressly provided herein, notices and
-------
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed (certified or registered
mail, postage prepaid, return receipt requested) or sent by facsimile copier of
the sending party, as follows:
(a) If to MTVN to:
MTV Networks
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
with a copy to:
Viacom International Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
26
(b) If to TCI Music, Box or SonicNet to:
TCI Music, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇
with a copy to:
Liberty Media Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇
(c) If to Liberty to:
Liberty Media Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇
(d) If to the Partnership to:
MTV Online L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
or to such other address or attention of such other Person as any party shall
advise the other parties in writing. All notices and other communications given
in accordance with the provisions of this Agreement shall be deemed to have been
given (i) three Business Days after the same are sent by certified or registered
mail, postage prepaid, return receipt requested, (ii) when delivered by hand or
transmitted by facsimile (confirmation received) unless delivered on a day which
is not a Business Day in which case such notice shall be deemed to have been
given on the next succeeding Business Day or (iii) one Business Day after the
same are sent by a reliable overnight courier service, with acknowledgment of
receipt.
Section 5.2. Table of Contents; Headings. The table of contents and
---------------------------
headings of the Articles, Sections and other subdivisions of this Agreement are
for convenience of reference only and shall not modify, define or limit any of
the terms or provisions of this Agreement.
27
Section 5.3. Governing Law. This Agreement shall be construed in
-------------
accordance with and governed by the laws of the State of New York, excluding the
choice of law rules thereof.
Section 5.4. Severability. If any provision of this Agreement shall be
------------
held to be illegal, invalid or unenforceable, that provision will be enforced to
the maximum extent permissible so as to effect the intent of the parties and the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby. If necessary to effect the intent of
the parties, the parties will negotiate in good faith to amend this Agreement to
replace the unenforceable language with enforceable language which as closely as
possible reflects such intent.
Section 5.5. Amendments. This Agreement may be modified or amended only
----------
by a written amendment signed by each party hereto.
Section 5.6. 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 shall have been signed by
each party and delivered to the other party.
Section 5.7. Entire Agreement. The provisions of this Agreement set forth
----------------
the entire agreement and understanding among the parties as to the subject
matter hereof and supersede all prior agreements, oral or written, and other
communications between the parties relating to the subject matter hereof,
including the Memorandum of Understanding dated May 19, 1999 among MTVN, TCI
Music and Liberty.
Section 5.8. Parties in Interest; Limitation on Rights of Others. MTVN
---------------------------------------------------
may assign its rights and obligations under this Agreement to one or more
Affiliates of MTVN which is directly or indirectly wholly-owned (and including
for this purpose Imagine) by Viacom, Inc.; provided that, in connection with any
--------
such assignment, the applicable assignee executes and delivers to TCI Music an
instrument, in form and substance reasonably satisfactory to TCI Music, by which
MTVN guarantees the performance of any such assignee's obligations hereunder.
TCI Music may assign any or all of its rights and obligations under this
Agreement to any of wholly-owned subsidiaries; provided that, in connection with
--------
any such assignment, TCI Music executes and delivers to MTVN an instrument, in
form and substance reasonably satisfactory to MTVN, by which TCI Music
guarantees the performance of any such assignee's obligations hereunder. No
party to this Agreement may assign any of its rights or obligations under this
Agreement except as specifically provided in this Section 5.8. The terms of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and, except as provided herein, their respective successors and permitted
assigns. Any assignment of rights hereunder in violation hereof shall be void
ab initio. Nothing in this Agreement, whether express or implied, shall be
-- ------
construed to give any Person (other than the parties hereto, including Newco
following its execution of a counterpart hereof, and their successors and
permitted assigns) any legal or equitable right, remedy or claim under or in
respect of this Agreement or any covenants, conditions or provisions contained
herein.
28
Section 5.9. Waivers; Remedies. The observance of any term of this
-----------------
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively) by the party or parties entitled to enforce such
term, but any such waiver shall be effective only if in a writing signed by the
party or parties against which such waiver is to be asserted and only in the
specific instance and for the specific purpose for which given. Except as
otherwise provided herein, no failure or delay of any party in exercising any
power or right under this Agreement shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such right or power, preclude any other or
further exercise thereof or the exercise of any other right or power.
Section 5.10. No Presumption. This Agreement shall be construed without
--------------
regard to any presumption or rule requiring construction or interpretation
against the party drafting or causing any instrument to be drafted.
Section 5.11. Jurisdiction; Consent to Service of Process.
-------------------------------------------
(a) Each party hereby irrevocably and unconditionally submits,
for itself and its property, to the exclusive jurisdiction of any New York State
court sitting in the County of New York or any federal court of the United
States of America sitting in the Southern District of New York, and any
appellate court from any such court, in any suit, action or proceeding arising
out of or relating to this Agreement, or for recognition or enforcement of any
judgment relating hereto. Each party hereby irrevocably and unconditionally
agrees that any suit, action or proceeding against it by any other party to this
Agreement with respect to this Agreement shall be instituted only in any New
York State court sitting in the County of New York or any federal court sitting
in the Southern District of New York, as the party instituting such suit, action
or proceeding may elect in its sole discretion. Each party also hereby
irrevocably and unconditionally agrees that a final judgment in any such suit,
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
(b) Each party hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in any New York State
court sitting in the County of New York or any federal court sitting in the
Southern District of New York, and any appellate court from any such court. Each
party hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such suit, action or
proceeding in any such court and further waives the right to object, with
respect to such suit, action or proceeding, that such court does not have
jurisdiction over such party. Each party hereby irrevocably waives the right to
a jury trial in any suit, action or proceeding arising out of or related to this
Agreement.
(c) Each party hereby irrevocably and unconditionally consents
to service of process in the manner provided for the giving of notices pursuant
to this Agreement. Nothing in
29
this Agreement shall affect the right of either party to serve process in any
other manner permitted by law.
Section 5.12. Public Announcements. No party shall make or shall permit
--------------------
any of its Affiliates to make any public announcement about Newco and its
formation or activities without the prior written consent of the other parties
hereto, which consent shall not be unreasonably withheld or delayed.
Notwithstanding any other provision contained herein, Newco may make any public
announcements without restriction after consummation of the IPO, and any party
or Affiliate of such party may at any time make announcements which are required
by applicable law or the rules of any national stock exchange or stock
association so long as the party or Affiliate so required to make the
announcement, promptly upon learning of such requirement, notifies the other
parties of such requirement and discusses with the other parties in good faith
the exact wording of any such announcement.
Section 5.13. Binding on Viacom. The parties acknowledge that MTVN is a
-----------------
division of Viacom and that, consequently, Viacom is obligated to perform the
obligations to be paid or performed by MTVN hereunder. The use of the term
"MTVN" in Section 4.3 of this Agreement shall refer only to the operating unit
or units of Viacom that on a day-to-day basis operate the business of MTV:
Music Television or VH1 Music First; provided, however, that Viacom is obligated
-------- -------
to cause MTVN to perform its obligations under Section 4.3.
Section 5.14. TCI Music and Liberty. Each of the obligations under this
---------------------
Agreement of TCI Music and Liberty, including under Section 4.2, are several and
not joint.
Section 5.15. Capitalized Terms: Capitalized terms used and not otherwise
-----------------
defined herein shall have the meanings assigned to such terms in the Partnership
Agreement.
Section 5.16. Provisions Related to the Put and Call Rights.
---------------------------------------------
(a) Following the IPO, the Tune Partnership Interest Value (as
otherwise defined in the Partnership Agreement or in the corresponding provision
of the Newco Stockholders Agreement) shall be the product of the Current Market
Price of one Share and the number of Shares that compromise the Tune Partnership
Interest.
The "Current Market Price" for a security shall be the average of the
reported last sales prices for the 40 consecutive Trading Days before the date
of the applicable Put Notice or Call Notice, as the case may be.
The reported last sales price of a security for each Trading Day shall be:
(i) the reported last sales price, regular way, as reported on the New
York Stock Exchange Composite Tape; or
(ii) if the security is not listed or admitted to trading on the New York
Stock Exchange, on the National Market tier of The Nasdaq Stock
Market; or
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(iii) if the security is not listed or admitted to trading on the National
Market tier of the Nasdaq Stock Market at such time, in the
principal consolidated or composite transaction reporting system on
the principal national securities exchange on which such security is
listed or admitted to trading; or
(iv) if such security is not quoted on such National Market tier or any
national securities exchange, the average of the highest bid and
lowest asked prices on such day as reported on The Nasdaq Stock
Market.
As used herein, the term "Trading Days" means a day on which the New York Stock
Exchange, each national securities exchange on which the security is listed and
The Nasdaq Stock Market are open for business, provided that if no sales of the
security takes place on such day on the relevant exchange or stock market
determined under the immediately preceding sentence, such day shall not be a
Trading Day.
(b) If TCI Music exercises its right to acquire an interest in
any business or assets pursuant to Section 4.3 of this Agreement, then such
interest shall be deemed to be part of the Tune Partnership Interest for all
purposes under Section 12.03 of the Partnership Agreement (and the corresponding
provision of the Newco Organizational Documents). If such interest is not in a
Publicly Traded security, its value shall be determined in the same manner as
provided for the determination of the Tune Partnership Interest Value in the
Partnership Agreement (or the corresponding provision of the Newco
Organizational Documents). If such interest is in a Publicly Traded security,
then its value shall be determined as provided in subsection (a) of this Section
5.16. A security shall be considered to be "Publicly Traded" as of any date if
on such date (i) the security is registered under Section 12(b) or 12(g) of the
1934 Act and (ii) the security is listed for trading on a national securities
exchange registered under the 1934 Act or traded in the over-the-counter market
and quoted on The Nasdaq Stock Market.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
TCI MUSIC, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇
Title: Vice President
VIACOM INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Sr. Vice President and
General Counsel
LIBERTY MEDIA CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇
Title: Sr. Vice President
SONICNET, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇
Title: Vice President
THE BOX WORLDWIDE, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇
Title: Vice President
MTVN ONLINE L.P.
By: MTVN ONLINE PARTNER I LLC, its
General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: Sr. Vice President
General Counsel and Assistant
Secretary