0000950103-01-501490.txt : 20011101
0000950103-01-501490.hdr.sgml : 20011101
ACCESSION NUMBER: 0000950103-01-501490
CONFORMED SUBMISSION TYPE: SC 13D/A
PUBLIC DOCUMENT COUNT: 5
FILED AS OF DATE: 20011031
SUBJECT COMPANY:
COMPANY DATA:
COMPANY CONFORMED NAME: CABLEVISION SYSTEMS CORP /NY
CENTRAL INDEX KEY: 0001053112
STANDARD INDUSTRIAL CLASSIFICATION: CABLE & OTHER PAY TELEVISION SERVICES [4841]
IRS NUMBER: 112776686
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: SC 13D/A
SEC ACT: 1934 Act
SEC FILE NUMBER: 005-53757
FILM NUMBER: 1771618
BUSINESS ADDRESS:
STREET 1: 1111 STEWART AVENUE
CITY: BETHPAGE
STATE: NY
ZIP: 11714
BUSINESS PHONE: 5163806230
MAIL ADDRESS:
STREET 1: 1111 STEWART AVENUE
CITY: BETHPAGE
STATE: NY
ZIP: 11714
FILED BY:
COMPANY DATA:
COMPANY CONFORMED NAME: AT&T CORP
CENTRAL INDEX KEY: 0000005907
STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813]
IRS NUMBER: 134924710
STATE OF INCORPORATION: NY
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: SC 13D/A
BUSINESS ADDRESS:
STREET 1: 32 AVENUE OF AMERICAS
CITY: NEW YORK
STATE: NY
ZIP: 10013-2412
BUSINESS PHONE: 9082214268
MAIL ADDRESS:
STREET 1: 32 AVENUE OF AMERICAS
CITY: NEW YORK
STATE: NY
ZIP: 10012-2412
FORMER COMPANY:
FORMER CONFORMED NAME: AMERICAN TELEPHONE & TELEGRAPH CO
DATE OF NAME CHANGE: 19920703
SC 13D/A
1
oct3001_13da.txt
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D/A
(Amendment No. 5)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
CABLEVISION SYSTEMS CORPORATION
-----------------------------------------------------------------------------
(Name of Issuer)
CABLEVISION NY GROUP CLASS A COMMON STOCK, PAR VALUE $0.01 PER SHARE
RAINBOW MEDIA GROUP CLASS A COMMON STOCK, PAR VALUE $0.01 PER SHARE
-----------------------------------------------------------------------------
(Title of Class of Securities)
12686C 10 9
12686C 844
-----------------------------------------------------------------------------
(CUSIP Number)
MARILYN J. WASSER, ESQ.
VICE PRESIDENT -- LAW AND SECRETARY
AT&T CORP.
295 NORTH MAPLE AVENUE
BASKING RIDGE, NJ 07920
(908) 221-2000
-----------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
October 23, 2001
-----------------------------------------------------------------------------
(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check
the following box: [ ].
================================================================================
-------------- -----------------------------------------------------------------
1 NAME OF REPORTING PERSON
-----------------------------------------------------------------
I.R.S. IDENTIFICATION NUMBER NOS. OF ABOVE PERSON
AT&T CORP.
I.R.S. IDENTIFICATION NO. 13-4924710
-------------- -------------------------------------------------- --------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
-------------- -------------------------------------------------- --------------
3 SEC USE ONLY [ ]
-------------- -------------------------------------------------- --------------
4 SOURCE OF FUNDS
Not Applicable
-------------- -----------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
-------------- -----------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
NEW YORK
-------------- -----------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES CABLEVISION NY GROUP CLASS A
COMMON STOCK: 29,790,887*
BENEFICIALLY RAINBOW MEDIA GROUP CLASS A
COMMON STOCK: 24,471,086*
OWNED BY
EACH 8 SHARED VOTING POWER
REPORTING CABLEVISION NY GROUP CLASS A
COMMON STOCK: 0
PERSON WITH: RAINBOW MEDIA GROUP CLASS A
COMMON STOCK: 0
9 SOLE DISPOSITIVE POWER
CABLEVISION NY GROUP CLASS A
COMMON STOCK: 29,790,887*
RAINBOW MEDIA GROUP CLASS A
COMMON STOCK: 24,471,086*
---------------------------- ---------------------------------------------------
10 SHARED DISPOSITIVE POWER
CABLEVISION NY GROUP CLASS A
COMMON STOCK: 0
RAINBOW MEDIA GROUP CLASS A
COMMON STOCK: 0
---------------------------- ---------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
CABLEVISION NY GROUP CLASS A
COMMON STOCK: 29,790,887
RAINBOW MEDIA GROUP CLASS A
COMMON STOCK: 24,471,086
-------------- -----------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
-------------- -----------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
CABLEVISION NY GROUP CLASS A COMMON STOCK: 22.4%**
RAINBOW MEDIA GROUP CLASS A COMMON STOCK: 33.9%**
-------------- -----------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
-------------- -----------------------------------------------------------------
* Subject to the Stockholders Agreement (See Item 6).
** Each share of the Issuer's Cablevision NY Group Class B Common Stock ("Class
B Stock") is entitled to 10 votes per share, each share of Rainbow Media Group
Class B Common Stock is entitled to 5 votes per share, each share of
Cablevision NY Group Class A Common Stock ("Class A Stock") is entitled to one
vote per share, and each share of Rainbow Media Group Class A Common Stock is
entitled to 1/2 of a vote per share. Holders of Class B Stock, Rainbow Media
Group Class B Common Stock, Class A Stock and Rainbow Media Group Class A
Common Stock vote together as a single class, except for the election of
directors. With respect to the election of directors and subject to certain
conditions, holders of Class A Stock and Rainbow Media Group Class A Common
Stock vote together as a separate class and are entitled to elect 25% of the
total number of directors constituting the whole board. For all other issues,
when the classes of stock are aggregated, the Reporting Person may be deemed to
beneficially own voting equity securities of the Issuer representing
approximately 6% of the voting power of the Issuer (See Items 1 and 5).
This Amendment No. 5 filed by AT&T Corp. ("AT&T") amends the Schedule
13D filed on March 19, 1999, as amended by Amendment No. 1 filed on December
15, 2000, Amendment No. 2 filed on April 9, 2001, Amendment No. 3 filed on June
13, 2001, and Amendment No 4 dated August 8, 2001 relating to AT&T's ownership
of the stock of Cablevision Systems Corporation, a Delaware corporation.
Capitalized terms used but not defined herein have the meanings ascribed to
them in the Schedule 13D as previously amended.
Item 4. Purpose of Transaction.
Item 4 of the Schedule 13D is hereby amended by adding the following
at the end thereof:
On October 17, 2001, AT&T and two wholly-owned subsidiaries entered
into an underwriting agreement (the "Underwriting Agreement") for the sale, in
an underwritten public offering, of 19,151,285 Class A Stock at $36.05 per
share, less underwriting discount, fees and expenses. A Registration Statement
on Form S-3 was filed with the Securities and Exchange Commission and, as
subsequently amended, was declared effective on October 17, 2001. The sale was
consummated on October 23, 2001.
Also on October 17, 2001, in connection with an underwritten offering
of certain exchange securities issued by a trust not affiliated with AT&T (the
"Exchange Trust"), AT&T and two wholly-owned subsidiaries entered into an
underwriting agreement (the "Trust Underwriting Agreement") relating to the
offering of exchange securities by the Trust.
Pursuant to the Underwriting Agreement and the Trust Underwriting
Agreement, AT&T has agreed not to offer, sell, contract to sell or otherwise
dispose of, directly or indirectly, any Class A Stock for a period of 180 days
following the consummation of the offering.
On October 23, 2001, in connection with the offering of exchange
securities by the Trust, two wholly-owned subsidiaries of AT&T (the "AT&T
Subs") each entered into a contract with the Trust (the "Contracts") relating
to the disposition, in the aggregate, of not fewer than 22,064,844 nor more
than 26,918,195 Class A Stock (the "Shares") or the cash value of such number
Shares held by the AT&T Subs. The Contracts require the AT&T Subs to deliver to
the Exchange Trust on November 15, 2004 (subject to their right to extend such
date, under certain circumstances, to February 15, 2005) (the "Exchange Date"),
a number of Class A Stock equal to the maximum amount of Shares multiplied by
the Exchange Rate, or the cash equivalent value of that number of shares of
Class A Stock at that time. The Exchange Rate is equal to (i) if the Exchange
Price (as defined in the Contracts) of the Class A Stock is equal to or greater
than $43.981 per share (the "Threshold Appreciation Price"), 0.8197, (ii) if
the Exchange Price is less than the Threshold Appreciation Price but equal to
or greater than $36.05 per share (the "Initial Price"), an amount equal to the
Initial Price divided by the Exchange Price and (iii) if the Exchange Price is
less than the Initial Price, 1.0, subject in each case to certain antidilution
adjustments.
The offering of the exchange securities by the Trust was consummated
on October 23, 2001 and at that time the AT&T received $756,985,269.68 under
the Contracts, representing the purchase price before expenses.
Also on October 23, 2001, the AT&T Subs entered into two Collateral
Agreements (the "Collateral Agreements") with the Trust and the Bank of New
York, as Collateral Agent, to secure their obligations under the Contracts. The
Collateral Agreements require the AT&T Subs to pledge, in the aggregate, the
maximum amount of Shares, subject to the right to substitute collateral
consisting of U.S. Government Securities or Cash Equivalents with an equal or
greater value.
Prior to the delivery of the Shares on the Exchange Date AT&T, through
the AT&T Subs, retains the right to vote the Shares and receive dividends and
other distributions on the Shares. The occurrence of certain defaults under the
Contracts would cause the acceleration of the Contracts and require delivery of
the Shares (or other eligible collateral), cash or a combination thereof, prior
to the Exchange Date. Under the Contracts, AT&T retains an interest in
appreciation, if any, in the market price of the Class A Stock above (but will
not realize a decline, in any, in the market price of the Class A Stock below)
the Initial Price.
The foregoing descriptions of the Underwriting Agreement, the Trust
Underwriting Agreement, the Forward Contracts and the Collateral Agreements are
qualified in their entirety by reference to copies of the full agreements,
which are included herewith as Exhibits 1 through 4 and are specifically
incorporated by reference herein.
Item 5.
The third sentence of paragraph (a) of Item 5 is hereby deleted in its
entirety and replaced with the following.
See Items 11 and 13 of the cover pages for the aggregate number and
percentage of Cablevision NY Group Class A Common Stock and Rainbow Media Group
Class A Common Stock owned by AT&T. Such figures include all the Cablevision NY
Group Class A Common Stock subject to the Contracts described in Item 4.
Item 7. Material To Be Filed As Exhibits.
1. Underwriting Agreement, dated October 17, 2001.
2. Trust Underwriting Agreement, dated October 17, 2001.
3. Forward Contract Agreement between AT&T Broadband CSC Holdings, Inc.
and Equity Securities Trust I dated October 23, 2001; Forward
Contract Agreement between AT&T Broadband CSC II, Inc. and Equity
Securities Trust I dated October 23, 2001.
4. Collateral Agreement among AT&T Broadband CSC Holdings, Inc., Bank of
New York and Equity Securities Trust I dated October 23, 2001;
Collateral Agreement among AT&T Broadband CSC II, Inc., Bank of New
York and Equity Securities Trust I dated October 23, 2001.
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: October 30, 2001
AT&T CORP.
By: /s/ Robert S. Feit
----------------------
Name: Robert S. Feit
Title: Authorized Signatory
INDEX OF EXHIBITS
1. Underwriting Agreement, dated October 17, 2001.
2. Trust Underwriting Agreement, dated October 17, 2001.
3. Forward Contract Agreement between AT&T Broadband CSC Holdings, Inc.
and Equity Securities Trust I dated October 23, 2001; Forward
Contract Agreement between AT&T Broadband CSC II, Inc. and Equity
Securities Trust I dated October 23, 2001.
4. Collateral Agreement among AT&T Broadband CSC Holdings, Inc., Bank of
New York and Equity Securities Trust I dated October 23, 2001;
Collateral Agreement among AT&T Broadband CSC II, Inc., Bank of New
York and Equity Securities Trust I dated October 23, 2001.
EX-1
3
ex1.txt
EXHIBIT 1
CABLEVISION SYSTEMS CORPORATION
(a Delaware corporation)
19,151,285 Shares of Cablevision NY Group Class A Common Stock
UNDERWRITING AGREEMENT
Dated: October 17, 2001
CABLEVISION SYSTEMS CORPORATION
(a Delaware corporation)
19,151,285 Shares of
Cablevision NY Group Class A Common Stock
(Par Value $.01 per Share)
UNDERWRITING AGREEMENT
October 17, 2001
BEAR, STEARNS & CO. INC.
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
SALOMON SMITH BARNEY INC.
as Representatives of the several Underwriters
c/o Bear, Stearns & Co. Inc.
245 Park Avenue
New York, NY 10167
Ladies and Gentlemen:
Cablevision Systems Corporation, a Delaware corporation (the "Company"),
AT&T Broadband CSC II, Inc., a Delaware corporation ("AT&T CSC II"), AT&T
Broadband CSC Holdings, Inc., a Delaware corporation ("AT&T CSC Holdings" and,
together with AT&T CSC II, the "Selling Stockholders"), and AT&T Corp., a New
York corporation ("AT&T"), confirm their respective agreements with Bear,
Stearns & Co. Inc. ("Bear Stearns"), Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("Merrill Lynch") and Salomon Smith Barney
Inc. ("Salomon Smith Barney") and each of the other Underwriters named in
Schedule I hereto (collectively, the "Underwriters," which term shall also
include any underwriter substituted as hereinafter provided in Section 10
hereof), for whom Bear Stearns, Merrill Lynch and Salomon Smith Barney are
acting as representatives (in such capacity, the "Representatives") with
respect to the sale by the Selling Stockholders, acting severally and not
jointly, and the purchase by the Underwriters, acting severally and not
jointly, of 19,151,285 shares of Cablevision NY Group Class A Common Stock of
the Company, par value $.01 per share (the "Cablevision NY Group Class A Common
Stock"), and with respect to the grant by the Selling Stockholders to the
Underwriters, acting severally and not jointly, of the option described in
Section 2(d) hereof to purchase all or any part of 2,872,692 additional shares
of Cablevision NY Group Class A Common Stock solely to cover over-allotments,
if any. The aforesaid 19,151,285 shares of Cablevision NY Group Class A Common
Stock (the "Firm Shares") to be purchased by the Underwriters and all or any
part of the 2,872,692 shares of Cablevision NY Group Class A Common Stock
subject to the option described in Section 2(d) hereof (the "Additional
Shares") are hereinafter called the "Shares".
The Company and the Selling Stockholders understand that the Underwriters
propose to make a public offering of the Shares as soon as the Representatives
deem advisable after this Agreement has been executed and delivered.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on From S-3 (No. 333-61942) covering the
registration of certain of its securities, including the Shares, under the
Securities Act of 1933, as amended (the "1933 Act"), including the related
preliminary prospectus or prospectuses. Promptly after execution and delivery
of this Agreement, the Company will prepare and file a prospectus in accordance
with the provisions of Rule 430A ("Rule 430A") of the rules and regulations of
the Commission under the 1933 Act (the "1933 Act Regulations") and paragraph
(b) of Rule 424 ("Rule 424(b)") of the 1933 Act Regulations. The information
included in such prospectus that was omitted from such registration statement
at the time it became effective but that is deemed to be part of such
registration statement at the time it became effective pursuant to paragraph
(b) of Rule 430A is referred to as "Rule 430A Information". Each prospectus
used before such registration statement became effective, and any prospectus
that omitted the Rule 430A Information that was used after such effectiveness
and prior to the execution and delivery of this Agreement, is herein called a
"preliminary prospectus". Such registration statement, including the exhibits
thereto and the documents incorporated by reference therein pursuant to Item 12
of Form S-3 under the 1933 Act, at the time it became effective and including
the Rule 430A Information is herein called the "Registration Statement". Any
registration statement filed pursuant to Rule 462(b) of the 1933 Act
Regulations is herein referred to as the "Rule 462(b) Registration Statement,"
and after such filing the term "Registration Statement" shall include the Rule
462(b) Registration Statement. The final prospectus, including the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 under the
1933 Act, in the form first furnished to the Underwriters for use in connection
with the offering of the Shares, is herein called the "Prospectus".
Section 1. Representations and Warranties. (a) The Company represents and
warrants to and agrees with each of the Underwriters that:
(i) The Company meets the requirements for use of Form S-3 under the
1933 Act. The Registration Statement and any Rule 462(b) Registration
Statement has become effective under the 1933 Act. At the respective times
the Registration Statement, any Rule 462(b) Registration Statement and any
post-effective amendments thereto become effective, at the Closing Time
(and, if any Additional Shares are purchased, at the Additional Closing
Time), (A) the Registration Statement and any amendments and supplements
thereto, comply and will comply in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations, (B) neither the
Registration Statement nor any amendment or supplement thereto includes or
will include an untrue statement of a material fact or omits or will omit
to state any material fact required to be stated therein or necessary to
make the statements therein not misleading and (C) neither the Prospectus
nor any amendment or supplement thereto includes or will include an untrue
statement of a material fact or omits or will omit to state a material
fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided,
however, that this representation and warranty does not apply to
statements or omissions made in reliance upon and in conformity with
2
information furnished to the Company in writing by (i) any Underwriter
through the Representatives expressly for use in the Registration
Statement or the Prospectus or (ii) by or on behalf of the Selling
Stockholders or AT&T expressly for use in the Registration Statement or
the Prospectus.
(ii) The documents incorporated or deemed to be incorporated by
reference in the Prospectus pursuant to Item 12 of Form S-3 under the 1933
Act, at the time they were or hereafter are filed with the Commission,
complied and will comply in all material respects with the requirements of
the 1934 Act, and the rules and regulations of the Commission thereunder
(the "1934 Act Regulations"), and, when read together and with the other
information in the Prospectus, at the time the Registration Statement
became effective and at all times subsequent thereto up to each Closing
Time, did not and will not include an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(iii) KPMG LLP, who are reporting upon the audited financial
statements and schedules included or incorporated by reference in the
Registration Statement, are independent accountants as required by the
1933 Act and the 1933 Act Regulations.
(iv) This Agreement has been duly authorized, executed and delivered
by the Company.
(v) The consolidated historical financial statements of the Company
and its subsidiaries included or incorporated by reference in the
Registration Statement and the Prospectus present fairly the consolidated
financial position of the Company and its subsidiaries as of the dates
indicated and the consolidated results of operations and changes in
financial position of the Company and its subsidiaries for the periods
specified. Such financial statements have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved. The financial statement schedules, if
any, included in the Registration Statement present fairly the information
required to be stated therein. The selected financial data included in the
Prospectus present fairly the information shown therein and have been
compiled on a basis consistent with that of the audited consolidated
financial statements included or incorporated by reference in the
Registration Statement.
(vi) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware with power
and authority (corporate and other) under such laws to own, lease and
operate its properties and conduct its business as described in the
Prospectus; and the Company is duly qualified to transact business as a
foreign corporation and is in good standing in each other jurisdiction in
which it owns or leases property of a nature, or transacts business of a
type, that would make such qualification necessary, except to the extent
that the failure to so qualify or be in good standing would not have a
material adverse effect on the Company and its subsidiaries, considered as
one enterprise.
3
(vii) The subsidiaries of the Company set forth on Schedule III are,
as of the date hereof, all of the "Restricted Subsidiaries", as such term
is defined in the indenture dated March 22, 2001, between CSC Holdings,
Inc. (a wholly-owned subsidiary of the Company) and the Bank of New York,
Trustee. The subsidiaries of the Company set forth on Schedule IV are
"Unrestricted Subsidiaries", as such term is defined in such indenture
(the restricted subsidiaries and the unrestricted subsidiaries are
hereinafter referred to collectively as the "Subsidiaries"). The
Subsidiaries on Schedules III and IV with an asterisk by their names,
together with CSC Holdings, Inc., are the only subsidiaries of the Company
which had at December 31, 2000 assets in excess of 10% of the consolidated
assets of the Company and its subsidiaries as at that date or had, in the
aggregate, for the fiscal year then ended revenues or operating cash flow
in excess of 10% of consolidated revenues or consolidated operating cash
flow of the Company and its subsidiaries for such period (such
Subsidiaries are referred to herein as the "Material Subsidiaries"). In
making this determination, any subsidiary acquired after December 31, 2000
shall be deemed to have been acquired as of such date.
(viii) Each Material Subsidiary that is a corporation is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation with power and authority (corporate and
other) under such laws to own, lease and operate its properties and
conduct its business; and each such Material Subsidiary is duly qualified
to transact business as a foreign corporation and is in good standing in
each other jurisdiction in which it owns or leases property of a nature,
or transacts business of a type, that would make such qualification
necessary, except to the extent that the failure to be so qualified or in
good standing would not have a material adverse effect on the Company and
its subsidiaries, considered as one enterprise. All of the outstanding
shares of capital stock of each Material Subsidiary that is a corporation
have been duly authorized and validly issued and are fully paid and
nonassessable and, except as disclosed on Schedule III or IV to this
Agreement or as disclosed or contemplated by the Registration Statement,
are owned by the Company, directly or through one or more subsidiaries,
free and clear of any pledge, lien, security interest, mortgage, charge,
claim, equity or encumbrance of any kind.
(ix) Each of the Material Subsidiaries in which the Company or a
subsidiary of the Company is a limited or general partner (hereinafter
called the "Partnerships") has been duly formed and is validly existing as
a limited or general partnership, as the case may be, under the laws of
its jurisdiction of organization, with full power and authority to own,
lease and operate properties and conduct its business; all necessary
filings with respect to the formation of the Partnerships as limited or
general partnerships (as the case may be) have been made under such laws;
and each of the Partnerships is duly qualified to transact business and is
in good standing in each other jurisdiction in which it owns or leases
property of a nature, or transacts business of a type, that would make
such qualification necessary, except to the extent that the failure to be
so qualified or in good standing would not have a material adverse effect
on the Company and its subsidiaries, considered as one enterprise.
(x) The Company had, at June 30, 2001, a duly authorized and
outstanding capitalization as set forth in the Prospectus under the
caption "Capitalization"; the
4
Cablevision NY Group Class A Common Stock conforms in all material
respects to the description thereof contained in the Prospectus and such
description conforms in all material respects to the rights set forth in
the instruments defining the same.
(xi) All of the outstanding shares of capital stock of the Company,
including the Shares, have been duly authorized and validly issued and are
fully paid and non-assessable; and none of the outstanding shares of
capital stock of the Company, including the Shares, was issued in
violation of the preemptive rights of any stockholder of the Company.
(xii) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise stated
therein or contemplated thereby, there has not been (A) any material loss
or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree and there has not been
any change in the capital stock or long-term debt of the Company or any of
its Subsidiaries or any change which the Company has reasonable cause to
believe will involve any material adverse change, or any development
involving a prospective material adverse change, in or affecting the
financial position, stockholders' equity or results of operations of the
Company and its subsidiaries, considered as one enterprise, or (B) any
transaction entered into by the Company or any subsidiary, other than in
the ordinary course of business, that is material to the Company and its
subsidiaries, considered as one enterprise, or (C) any dividend or
distribution of any kind declared, paid or made by the Company on its
capital stock.
(xiii) Neither the Company nor any Subsidiary is in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan agreement,
note, lease or other agreement or instrument to which it is a party or by
which it may be bound or to which any of its properties may be subject,
except for such defaults that would not have a material adverse effect on
the financial position, stockholders' equity or results of operations of
the Company and its subsidiaries, considered as one enterprise. The
execution and delivery of this Agreement and the compliance by the Company
with its obligations hereunder at each Closing Time shall have been duly
authorized by all necessary corporate action on the part of the Company
and do not and will not result in any violation of the charter or by-laws
of the Company or any Subsidiary, and do not and will not conflict with,
or result in a breach of any of the terms or provisions of, or constitute
a default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any
Subsidiary under:
(A) any contract, indenture, mortgage, loan agreement, note,
lease or other agreement or instrument to which the Company or any
Subsidiary is a party or by which it may be bound or to which any of
its properties may be subject (except for such conflicts, breaches or
defaults or liens, charges or encumbrances that would not have a
material adverse effect on the financial position, stockholders'
equity or results of operations of the Company and its subsidiaries,
considered as one enterprise) or
5
(B) any existing applicable law, rule, regulation, judgment,
order or decree of any government, governmental instrumentality or
court, domestic or foreign, having jurisdiction over the Company or
any Subsidiary or any of its properties (except for such conflicts,
breaches or defaults or liens, charges or encumbrances that would not
have a material adverse effect on the financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, considered as one enterprise) or
(C) any material agreement or other material instrument
(including any franchise agreement, license, permit or other
governmental authorization granted by the Federal Communications
Commission (hereinafter called the "FCC"), The New York State Public
Service Commission on Cable Television or any other governing body
having jurisdiction over the Company's cable television operations)
binding upon the Company or any of its Subsidiaries (except for such
conflicts, breaches or defaults or liens, charges or encumbrances
that would not have a material adverse effect on the financial
position, stockholders' equity or results of operations of the
Company and its subsidiaries, considered as one enterprise).
(xiv) The statements in the Prospectus under "Risk Factors" and
"Description of Capital Stock," and the statements in the Company's annual
report on Form 10-K, as supplemented and amended by the Company's Form
10-K/As, for the year ended December 31, 2000 (the "2000 Form 10-K"),
which is incorporated by reference in the Prospectus, under "Business--
Competition-- Cable Television" and "Business-- Regulation-- Cable
Television", and in the Registration Statement in Item 15, and the
statements cross-referenced therein, insofar as such statements constitute
a summary of the legal matters, documents or proceedings referred to
therein, with respect to such legal matters, documents and proceedings, do
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make
the statements therein not misleading.
(xv) Except as disclosed in the Prospectus, no authorization,
approval, consent or license of any government, governmental
instrumentality or court, domestic or foreign (other than under the 1933
Act and the securities or the blue sky laws of the various states), is
required for the execution, delivery or performance of this Agreement by
the Company, except for any consent, approval, authorization, order or
registration the failure of which to obtain or make or the absence of
which would result in no material adverse effect on the Company and its
subsidiaries, considered as one enterprise.
(xvi) Except as disclosed in the Prospectus, there is no action, suit
or proceeding before or by any government, governmental instrumentality or
court, domestic or foreign, now pending or, to the best of the Company's
knowledge, threatened against or affecting the Company or any Subsidiary
that the Company has reasonable cause to believe will result in any
material adverse change in the consolidated financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, considered as one enterprise, or that will materially and
adversely affect the properties or assets of the Company and its
subsidiaries, considered as one enterprise, or that the Company has
6
reasonable cause to believe will materially adversely affect the
consummation of the transactions contemplated in this Agreement.
(xvii) There are no contracts or documents of a character required to
be described in the Registration Statement, the Prospectus or the
documents incorporated by reference therein or to be filed as exhibits to
the Registration Statement that are not described and filed as required.
(xviii) The Company and the Subsidiaries each has good and marketable
title to all material properties and assets described in the Prospectus as
owned by it, free and clear of all liens, charges, encumbrances or
restrictions, except such as (A) are described in the Prospectus or (B)
are neither material in amount nor materially significant in relation to
the business of the Company and its subsidiaries, considered as one
enterprise; and any material real property and buildings under lease by
the Company and the Subsidiaries are held by them under valid, subsisting
and enforceable leases with such exceptions as do not interfere, to an
extent material to the Company and its subsidiaries, considered as one
enterprise, with the use made and proposed to be made of such property and
buildings by the Company and the Subsidiaries.
(xix) Except as disclosed in the Prospectus, the Company and the
Subsidiaries each owns, possesses or has obtained all material agreements,
governmental licenses, permits, certificates, consents, orders, approvals
and other material authorizations (including, without limitation, all
material governmental authorizations and agreements with public utilities
and microwave transmission companies and pole access and rental
agreements) necessary to own or lease, as the case may be, and to operate
its properties and to carry on its business as presently conducted; and
neither the Company nor any Subsidiary has received any notice of
proceedings relating to revocation or modification of any such licenses,
permits, certificates, consents, orders, approvals or authorizations.
(xx) To the best knowledge of the Company and except as disclosed in
the Prospectus, no labor problem exists with its employees or with
employees of the Subsidiaries that could reasonably be expected to
materially and adversely affect the financial position, stockholders'
equity or results of operations of the Company and its subsidiaries,
considered as one enterprise.
(b) Each of the Selling Stockholders and AT&T represents and warrants to
and agrees with the Company and each Underwriter, as follows:
(i) At the respective times the Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments thereto
become effective, at the Closing Time (and, if any Additional Shares are
purchased, at the Additional Closing Time), (A) neither the Registration
Statement nor any amendment or supplement thereto includes or will include
an untrue statement of a material fact or omits or will omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading and (B) neither the Prospectus nor any
amendment or supplement thereto includes or will include an untrue
statement of a material fact or omits or will omit to state a material
fact necessary in order to make the statements therein, in the light
7
of the circumstances under which they were made, not misleading; provided,
however, that this representation and warranty applies only to statements
or omissions relating to such Selling Stockholder or to AT&T furnished to
the Company in writing by or on behalf of such Selling Stockholder or AT&T
expressly for use in the Registration Statement or Prospectus.
(ii) Such Selling Stockholder has the full right, power and authority
to enter into this Agreement and to sell, transfer and deliver the Shares
to be sold by such Selling Stockholder. The execution and delivery of this
Agreement and the sale and delivery of the Shares to be sold by such
Selling Stockholder and the consummation of the transactions contemplated
herein and compliance by such Selling Stockholder with its obligations
hereunder have been duly authorized by such Selling Stockholder and do not
and will not, whether with or without the giving of notice or passage of
time or both, conflict with or constitute a breach of, or default under,
any contract, indenture, mortgage, deed of trust, loan or credit
agreement, note or other agreement or instrument to which such Selling
Stockholder is a party or by which it may be bound, nor will such action
result in any violation of the provisions of the certificate of
incorporation or by-laws of such Selling Stockholder or any law, order,
rule or regulation applicable to such Selling Stockholder of any court,
federal or state regulatory body, administrative agency or other
governmental body having jurisdiction over such Selling Stockholder or its
properties. AT&T has the full right, power and authority to enter into
this Agreement and the execution and delivery of this Agreement have been
duly authorized by AT&T and do not and will not, whether with or without
the giving of notice or passage of time or both, conflict with or
constitute a breach of, or default under, any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note or other agreement
or instrument to which AT&T is a party or by which it may be bound, nor
will such action result in any violation of the provisions of the
certificate of incorporation or by-laws of AT&T or any law, order, rule or
regulation applicable to AT&T of any court, federal or state regulatory
body, administrative agency or other governmental body having jurisdiction
over AT&T or its properties.
(iii) Such Selling Stockholder has and will at the Closing Time and,
if any shares of Cablevision NY Group Class A Common Stock subject to the
option described in Section 2(d) are purchased, at any Additional Closing
Time, have good and marketable title to the Shares to be sold by such
Selling Stockholder, free and clear of any security interest, mortgage,
pledge, lien, charge, claim, equity or encumbrance of any kind, other than
pursuant to this Agreement and the Stockholders' Agreement dated March 4,
1998, as amended by the Letter Agreements dated August 8, 2001, September
10, 2001 and October 5, 2001 (as so amended, the "Stockholders
Agreement"); and upon delivery of such Shares and payment of the purchase
price therefor as herein contemplated, assuming each such Underwriter has
no notice of any adverse claim, each of the Underwriters will receive good
and marketable title to the Shares purchased by it from such Selling
Stockholder, free and clear of any security interest, mortgage, pledge,
lien, charge, claim, equity or encumbrance of any kind.
(iv) Neither such Selling Stockholder nor AT&T has taken, or will
take, directly or indirectly, any action which is designed to or which has
constituted or which
8
might reasonably be expected to cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate the
sale or resale of the Shares.
(v) Except as disclosed in the Prospectus, no authorization,
approval, consent or license of any government, governmental
instrumentality or court, domestic or foreign, (other than under the 1933
Act and the securities or the blue sky laws of the various states) is
required for the performance by such Selling Stockholder or AT&T of its
obligations hereunder, or in connection with the sale and delivery of the
Shares to be sold by such Selling Stockholder hereunder or the
consummation of the transactions contemplated by this Agreement.
(vi) Each of such Selling Stockholder and AT&T and its other
subsidiaries will comply with the last paragraph of Section 2 of the
Stockholders Agreement, as in effect on the date hereof. The foregoing
sentence shall not apply to the Shares to be sold hereunder.
(vii) The sale of the Shares pursuant to this agreement is not
prompted by any material, non-public information in such Selling
Stockholder's or AT&T's possession concerning the Company that would cause
such sale to constitute a violation by such Selling Stockholder or AT&T of
Rule 10b-5 promulgated under the Exchange Act.
(c) Any certificate signed by any officer of the Company or any Subsidiary
delivered to the Representatives or to counsel for the Underwriters in
connection with the offering of the Shares shall be deemed a representation and
warranty by the Company to each Underwriter as to the matters covered thereby;
and any certificate signed by or on behalf of a Selling Stockholder as such and
delivered to the Representatives or to counsel for the Underwriters pursuant to
the terms of this Agreement shall be deemed a representation and warranty by
such Selling Stockholder to the Underwriters as to the matters covered thereby.
Section 2. Sale and Delivery to the Underwriters; Closing. (a) On the
basis of the representations and warranties herein contained, and subject to
the terms and conditions herein set forth, each of the Selling Stockholders,
acting severally and not jointly, agrees to sell to each Underwriter, and each
Underwriter agrees, severally and not jointly, to purchase from such Selling
Stockholder, at a purchase price equal to $34.6981 per share that proportion of
the number of Firm Shares set forth in Schedule II opposite the name of such
Selling Stockholder which the number of Firm Shares set forth in Schedule I
opposite the name of such Underwriter, plus any additional number of Firm
Shares which such Underwriter may become obligated to purchase pursuant to the
provisions of Section 10 hereof, bears to the total number of Firm Shares.
(b) Payment of the purchase price for, and delivery of, the Firm Shares
shall be made at the offices of Shearman & Sterling, 599 Lexington Avenue, New
York, New York 10022, or at such other place in the City of New York, at 10:00
A.M. on October 23, 2001, or at such other time not more than ten full Business
Days thereafter as shall be agreed upon by the Company, the Selling
Stockholders and the Representatives, or as shall otherwise be provided in
Section 10 (such date and time of payment and delivery being herein called the
"Initial Closing Time"). In addition, in the event that any or all of the
Additional Shares are purchased by the
9
Underwriters, payment of the purchase price for, and delivery of certificates
for, such Additional Shares shall be made at the above-mentioned offices, or at
such other place as shall be agreed upon by the Representatives, the Company
and the Selling Stockholders on each Additional Closing Time, as hereinafter
defined, as specified in the notice from the Representatives to the Company and
the Selling Stockholders.
(c) Payment shall be made to the Selling Stockholders by wire transfer of
immediately available funds to a bank account designated by the Selling
Stockholders, against delivery to the Representatives for the respective
accounts of the Underwriters of the certificates evidencing the Firm Shares to
be purchased by them. Certificates evidencing the Firm Shares shall be in
definitive form and shall be registered in such names and in such denominations
as the Representatives may specify at least two business days prior to the
Closing Time by written notice to the Selling Stockholders.
(d) In addition, the Selling Stockholders, acting severally and not
jointly, hereby grant to the Underwriters, severally and not jointly, the
option to purchase up to an additional 2,872,692 Shares, in the respective
amounts set forth in Schedule II as to each Selling Stockholder, at the same
purchase price per Share to be paid by the Underwriters to the Selling
Stockholders for the Firm Shares as set forth in Section 2(a) hereof, less an
amount equal to any dividends or distributions declared by the Company and
payable on the Additional Shares to the Selling Stockholders after the date
hereof, for the sole purpose of covering over-allotments in the sale of the
Firm Shares by the Underwriters. This option may be exercised at any time, in
whole or in part (but not more than once), on or before the 30th day following
the date of the Prospectus, by written notice by the Representatives to the
Company and the Selling Stockholders. Such notice shall set forth the aggregate
number of Additional Shares as to which the option is being exercised and the
date and time, as reasonably determined by the Representatives, when the
Additional Shares are to be delivered (such date and time of delivery is herein
sometimes referred to as the "Additional Closing Time", the Initial Closing
Time and the Additional Closing Time are each hereafter referred to as a
"Closing Time"); provided, however, that the Additional Closing Time shall not
be earlier than the Initial Closing Time in respect of the Firm Shares or
earlier than the third full business day (or one full business day if the
Additional Closing Time will occur simultaneously with the Initial Closing
Time) after the date on which the option shall have been exercised nor later
than the seventh full business day after the date on which the option shall
have been exercised (unless such time and date are postponed in accordance with
the provisions of Section 10 hereof). The Additional Shares shall be registered
in such names and in such denominations as the Representatives may request in
writing at least two full business days prior to the Additional Closing Time.
The number of Additional Shares to be sold to each Underwriter shall be
the number which bears the same ratio to the aggregate number of Additional
Shares being purchased as the number of Firm Shares set forth opposite the name
of such Underwriter in Schedule I hereto (or such number increased as set forth
in Section 10 hereof) bears to 19,151,285 subject, however, to such adjustments
to eliminate any fractional shares as the Representatives in their sole
discretion shall make.
10
Payment for the Additional Shares shall be made to the Selling
Stockholders in the manner specified in Section 2(c) against delivery to the
Representatives of the certificates evidencing the Additional Shares, for the
respective accounts of the Underwriters.
Section 3. Certain Covenants of the Company. The Company covenants with
each Underwriter as follows:
(a) The Company will comply with the requirements of Rule 430A and will
promptly effect the filing necessary pursuant to Rule 424(b). The Company has
furnished or will furnish to the Underwriters as many copies of any preliminary
prospectus and the Prospectus as the Representatives reasonably request.
(b) During the period when the Prospectus is required by the 1933 Act to
be delivered in connection with sales of the Shares, the Company will, subject
to Section 3(c), file promptly all documents required to be filed with the
Commission pursuant to Section 13 or 14 of the 1934 Act subsequent to the time
the Registration Statement becomes effective.
(c) During the period when the Prospectus is required by the 1933 Act to
be delivered in connection with sales of the Shares, the Company will inform
the Representatives of its intention to file any amendment to the Registration
Statement, any supplement to the Prospectus or any document that would as a
result thereof be incorporated by reference in the Prospectus; will furnish the
Representatives with copies of any such amendment, supplement or other document
a reasonable time in advance of filing; and will not file any such amendment,
supplement or other document in a form to which the Representatives shall
reasonably object.
(d) During the period when the Prospectus is required by the 1933 Act to
be delivered in connection with sales of the Shares, the Company will notify
the Representatives immediately, and confirm the notice in writing (with
respect to clause (i), upon request), (i) of the effectiveness of any amendment
to the Registration Statement, (ii) of the receipt of any comments from the
Commission with respect to the Registration Statement or the Prospectus, (iii)
of any request by the Commission to amend the Registration Statement or any
supplement to the Prospectus or for additional information relating thereto and
(iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement, of the suspension of the
qualification of the Shares for offering or sale in any jurisdiction, or of the
institution or to the Company's knowledge, the threatening of any proceedings
for any of such purposes. The Company will use every reasonable effort to
prevent the issuance of any such stop order or of any order preventing or
suspending such use and, if any such order is issued, to obtain the lifting
thereof at the earliest possible moment.
(e) The Company has furnished or will furnish to the Representatives one
copy of the originally executed Registration Statement (as originally filed)
and of each amendment thereto (including exhibits filed therewith or
incorporated by reference therein and documents incorporated or deemed to be
incorporated by reference therein) and a copy of all originally executed
consents and certificates of experts, and has furnished or will furnish to each
of the Representatives as many conformed copies of the Registration Statement
as originally filed and of each amendment thereto (including documents
incorporated or deemed to be
11
incorporated by reference into the Prospectus but without exhibits) as the
Representatives may reasonably request.
(f) The Company will use its reasonable best efforts, in cooperation with
the Underwriters, to qualify the Shares for offering and sale under the
applicable securities laws of such states and other jurisdictions as the
Representatives may designate and to maintain such qualifications in effect for
a period of not less than one year from the date hereof; provided, however,
that the Company shall not be obligated to file any general consent to service
of process or to qualify as a foreign corporation or as a dealer in securities
in any jurisdiction in which it is not so qualified or to subject itself to
taxation in respect of doing business in any jurisdiction in which it is not
otherwise so subject. The Company will file such statements and reports as may
be required by the laws of each jurisdiction in which the Shares have been
qualified as above provided.
(g) The Company will make generally available to its security holders as
soon as practicable, but not later than 45 days after the close of the period
covered thereby (90 calendar days in the case the period corresponds to the
fiscal year of the Company), an earnings statement of the Company (in form
complying with the provisions of Rule 158 of the 1933 Act Regulations),
covering a period of 12 months beginning after the effective date of the
Registration Statement and covering a period of 12 months beginning after the
effective date of any post-effective amendment to the Registration Statement
but not later than the first day of the Company's fiscal quarter next following
such effective date.
(h) The Company will use its reasonable best efforts to comply with the
1933 Act and the 1933 Act Regulations, the 1934 Act and the 1934 Act
Regulations. If at any time when the Prospectus is required by the 1933 Act to
be delivered in connection with sales of the Shares any event shall occur or
condition exist as a result of which it is necessary to amend the Registration
Statement or amend or supplement the Prospectus in order that the Prospectus
will not include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein not misleading
in the light of the circumstances existing at the time it is delivered to a
purchaser, or if it shall be necessary at any such time to amend the
Registration Statement or amend or supplement the Prospectus in order to comply
with the requirements of the 1933 Act or the 1933 Act Regulations, the Company
will promptly prepare and file with the Commission, subject to Section 3(d),
such amendment or supplement as may be necessary to correct such untrue
statement or omission or to make the Registration Statement or the Prospectus
comply with such requirements.
(i) For a period of three years after the Initial Closing Time, the
Company will furnish to the Representatives copies of all annual reports,
quarterly reports and current reports filed with the Commission on Forms 10-K,
10-Q and 8-K, or such other similar forms as may be designated by the
Commission, and such other documents, reports and information as shall be
furnished by the Company to its stockholders generally.
(j) The Company will not be or become, at any time prior to the expiration
of three years after the Initial Closing Time, an open-end investment trust,
unit investment trust or face-amount certificate company that is or is required
to be registered under Section 8 of the Investment Company Act of 1940, as
amended.
12
(k) The Company will not, without the prior written consent of the
Representatives offer, sell, contract to sell or otherwise dispose of any
Cablevision NY Group Class A Common Stock (except for shares issuable upon
conversion of securities or exercise of warrants and options outstanding as of
the date of the Prospectus or pursuant to employee benefit plans), warrants,
rights or options convertible into or exercisable or exchangeable for
Cablevision NY Group Class A Common Stock (except for rights or options
pursuant to employee benefit plans existing on the date of the Prospectus) at
any time for a period of 90 days after the date of the Prospectus.
Section 4. Payment of Expenses. The Company and the Selling Stockholders
will pay and bear all costs and expenses incident to the performance of their
respective obligations under this Agreement, including (a) the preparation,
printing and filing of the Registration Statement (including financial
statements and exhibits), as originally filed and as amended, any preliminary
prospectus and the Prospectus and any amendments or supplements thereto, and
the cost of furnishing copies thereof to the Underwriters, (b) the preparation,
printing and distribution of this Agreement, the Shares and any Blue Sky
Survey, (c) the delivery of the Shares to the Underwriters, (d) the fees and
disbursements of the Company's counsel and accountants, (e) the qualification
of the Shares under the applicable securities laws in accordance with Section
3(f) and any filing for review of the offering with the National Association of
Securities Dealers, Inc., including filing fees and fees and disbursements of
counsel for the Underwriters in connection therewith, and in connection with
any Blue Sky Survey, and (f) the fees and expenses of any transfer agent and
registrar for the Shares.
If this Agreement is terminated by the Representatives in accordance with
the provisions of Section 5 or 9(a)(i), the Selling Stockholders shall
reimburse the Underwriters for their reasonable out-of-pocket expenses,
including the reasonable fees and disbursements of counsel for the
Underwriters.
The provisions of this Section shall not affect any agreement that the
Company, on the one hand, and the Selling Stockholders, AT&T or AT&T Broadband
LLC, on the other hand, may make for the sharing of such costs and expenses.
Section 5. Conditions of Underwriters' Obligations. The obligations of the
several Underwriters to purchase and pay for the Firm Shares and the Additional
Shares, if any, at each Closing Time, that they have respectively agreed to
purchase hereunder are subject to the accuracy, as of such Closing Time, of the
representations and warranties of the Company and the Selling Stockholders
contained herein or in certificates of any officer of the Company or any
Subsidiary or on behalf of any Selling Stockholder delivered pursuant to the
provisions hereof, to the performance by the Company and the Selling
Stockholders of their respective obligations hereunder, and to the following
further conditions:
(a) The Registration Statement, including any Rule 462(b) Registration
Statement, has become effective and at such Closing Time, no stop order
suspending the effectiveness of the Registration Statement shall have been
issued under the 1933 Act and no proceedings for that purpose shall have been
instituted or shall be pending or, to the knowledge of the Company, shall be
contemplated by the Commission, and any request on the part of the Commission
for additional information shall have been complied with to the reasonable
13
satisfaction of counsel for the Underwriters. A prospectus containing the Rule
430A information shall have been filed with the Commission in accordance with
Rule 424(b) (or a post-effective amendment providing such information shall
have been filed and declared effective in accordance with the requirements of
Rule 430A).
(b) At such Closing Time, the Representatives shall have received a signed
opinion of Sullivan & Cromwell, counsel for the Company, dated as of such
Closing Time, in form and substance satisfactory to counsel for the
Underwriters, to the effect that:
(i) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware.
(ii) The Shares sold by the Selling Stockholders pursuant to the
provisions of this Agreement on such Closing Time have been duly
authorized and validly issued and are fully paid and non-assessable.
(iii) The execution and delivery of this Agreement by the Company,
and the compliance by the Company with the terms of this Agreement do not
and will not result in any violation of the Certificate of Incorporation
or By-laws of the Company, in each case as in effect as of such Closing
Time.
(iv) This Agreement has been duly authorized, executed and delivered
by the Company.
Such counsel shall also furnish the Representatives with a letter to the
effect that as counsel to the Company, they reviewed the Registration Statement
and the Prospectus, participated in discussions with representatives of the
Representatives and those of the Company and its accountants and advised the
Company as to the requirements of the 1933 Act and the applicable rules and
regulations thereunder; between the date of the Prospectus and such Closing
Time, such counsel participated in further discussions with representatives of
the Representatives and those of the Company and its accountants in which the
contents of certain portions of the Prospectus and related matters were
discussed and reviewed, reviewed certain documents filed by the Company with
the Commission, certificates of certain officers of the Company and the Selling
Stockholders, an opinion addressed to the Underwriters from Robert S. Lemle,
Esq., Vice Chairman, General Counsel and Secretary for the Company, and a
letter from the Company's independent accountants; on the basis of the
information that such counsel gained in the course of the performance of the
services referred to above, considered in the light of such counsel's
understanding of the applicable law (including the requirements of Form S-3 and
the character of the prospectus contemplated thereby) and the experience such
counsel have gained through their practice under the 1933 Act, they confirm to
the Representatives that, in such counsel's opinion, the Registration
Statement, as of its effective date, and the Prospectus, as of the date of the
Prospectus (and any amendment to the Registration Statement or supplement to
the Prospectus, as of its respective effective or issue date), appeared on
their face to be appropriately responsive in all material respects to the
requirements of the 1933 Act and the applicable rules and regulations of the
Commission thereunder; further, nothing that came to such counsel's attention
in the course of such review has caused such counsel to believe that the
Registration Statement, as of its effective date, contained any untrue
statement of a material fact or omitted to state any
14
material fact required to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus, as of the date of the
Prospectus, contained any untrue statement of a material fact or omitted to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
also, nothing that came to the attention of such counsel in the course of the
procedures described in the second clause of this paragraph has caused such
counsel to believe that the Prospectus, as of such Closing Time, contained any
untrue statement of a material fact or omitted to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; such counsel shall
state that the limitations inherent in the independent verification of factual
matters and the character of determinations involved in the registration
process are such that such counsel does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus except for those made under the
captions "Description of Cablevision NY Group Class A Common Stock" and
"Underwriting" in the Prospectus insofar as they relate to provisions of
documents therein described; also, such counsel need express no opinion or
belief as to the financial statements or other financial data contained in the
Registration Statement or the Prospectus or as to the description of statutes,
regulations, proceedings or matters referred to in Section 5(d) hereof.
In rendering such opinion, such counsel may state that they express no
opinion as to the laws of any jurisdiction other than the federal laws of the
United States, the laws of the State of New York and the General Corporation
Law of the State of Delaware, and no opinion as to federal or state laws
relating to communications and telecommunications, including laws which
regulate individuals, companies or businesses because such entities provide
communications or telecommunications services, including the provision of cable
television services or telephone services. Such counsel may also state that
they have relied as to certain matters on information obtained from public
officials, officers of the Company and other sources believed by them to be
responsible.
(c) At such Closing Time, the Representatives shall have received a signed
opinion of Robert S. Lemle, Esq., Vice Chairman, General Counsel and Secretary
for the Company, in form and substance satisfactory to counsel to the
Underwriters, to the effect that:
(i) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware with corporate
power and authority under such laws to own, lease and operate its
properties and conduct its business as described in the Prospectus.
(ii) The Company is duly qualified to transact business as a foreign
corporation and is in good standing in each other jurisdiction in which it
owns or leases property of a nature, or transacts business of a type, that
would make such qualification necessary, except where the failure to be so
qualified would not have a material adverse effect on the Company and its
subsidiaries, considered as one enterprise.
(iii) Each Material Subsidiary that is a corporation is duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, with corporate power and authority
under such laws to own, lease and operate its properties
15
and conduct its business. Each Material Subsidiary that is a partnership
is duly organized under the laws of the jurisdiction of its organization.
(iv) The number of authorized shares of capital stock of the Company
is as set forth in the Prospectus under the heading "Capitalization".
(v) All of the outstanding shares of capital stock of each Material
Subsidiary that is a corporation have been duly authorized and validly
issued and are fully paid and nonassessable; except as set forth on
Schedules III and IV to this Agreement or as disclosed in or as
contemplated by the Prospectus, all of such shares are owned by the
Company, directly or through one or more subsidiaries, free and clear of
any material pledge, lien, security interest, charge, claim, equity or
encumbrance of any kind; no holder thereof is subject to personal
liability under the certificate of incorporation or by-laws of the
respective Material Subsidiary or the corporation law of the jurisdiction
in which such Material Subsidiary is organized by reason of being such a
holder and none of such shares was issued in violation of the preemptive
rights of any stockholder of such Material Subsidiary under the
certificate of incorporation or by-laws of such Material Subsidiary or the
corporation law of the jurisdiction in which such Material Subsidiary is
organized.
(vi) To such counsel's knowledge, there are no legal or governmental
proceedings pending or threatened to which the Company or any of its
subsidiaries is or may be a party, or of which any of their properties are
or may be the subject, of a character which are required to be disclosed
in the Registration Statement, the Prospectus, the 2000 Form 10-K or any
Form 10-Q of the Company, other than those disclosed therein or in any
amendments thereto.
(vii) The documents incorporated by reference in the Prospectus or
any further amendment or supplement thereto made by the Company prior to
such Closing Time (other than the financial statements and related
schedules therein and any untrue statement or omission of a material fact
contained therein which was corrected in the Prospectus, as to which such
counsel need express no opinion), when they became effective or were filed
with the Commission, as the case may be, complied as to form in all
material respects with the requirements of the 1934 Act and the rules and
regulations of the Commission thereunder; and he has no reason to believe
that such documents, considered together, as of the date of the Prospectus
or as of such Closing Time, contained or contain an untrue statement of a
material fact or omitted or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(viii) Such counsel does not know of any contracts or documents of a
character required to be described or referred to in the Registration
Statement or the Prospectus or to be filed as exhibits to the Registration
Statement that are not described, referred to or filed as required.
(ix) To the knowledge of such counsel, no default exists in the
performance or observance of any material obligation, agreement, covenant
or condition contained in any
16
contract, indenture, loan agreement, note, lease or other agreement or
instrument that is described or referred to in the Registration Statement
or the Prospectus or filed as an exhibit to the Registration Statement or
any subsequent Form 10-Q of the Company, which default would have a
material adverse effect on the financial position, stockholders' equity or
results of operations of the Company and its subsidiaries, considered as
one enterprise.
(x) The execution and delivery by the Company of this Agreement and
the compliance by the Company with its obligations under this Agreement,
will not conflict with the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument (including any franchise agreement, license,
permit or other governmental authorization granted by the FCC, The New
York State Public Service Commission on Cable Television or any other
federal or New York State governing body having jurisdiction over the
Company's cable television operations) known to such counsel to which the
Company or any Subsidiary is a party or by which the Company or any
Subsidiary is bound or to which any of the property or assets of the
Company or any Subsidiary is subject, which conflict, breach, violation or
default would have a material adverse effect on the financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, taken as a whole, nor will such action result in any
violation of the provisions of the Certificate of Incorporation or By-laws
of the Company or any federal, New York or Delaware General Corporation
Law statute or any order, rule or regulation known to such counsel of any
federal, New York or Delaware court or governmental agency or body having
jurisdiction over the Company or any Subsidiary or any of their
properties, which violation in each case would have a material adverse
effect on the financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, taken as a whole; and no
consent, approval, authorization, order, registration or qualification of
or with any such court or governmental agency or body is required for the
consummation by the Company of the transactions contemplated by this
Agreement, except with respect to such consents, approvals,
authorizations, registrations or qualifications as may be required under
state or foreign securities laws in connection with the purchase and
distribution of the Shares by the Underwriters.
(xi) All of the outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
non-assessable; and none of the outstanding shares of capital stock of the
Company was issued in violation of the preemptive rights of any
stockholder of the Company under the Company's Certificate of
Incorporation or By-Laws or the Delaware General Corporation Law.
In rendering such opinion, such counsel may state that he expresses no
opinion as to any matters governed by any laws of any jurisdiction other than
the federal laws of the United States (other than federal communications laws,
as to which such counsel need express no opinion), the laws of the State of New
York and the General Corporation Law of the State of Delaware. In giving such
opinion, such counsel may rely, as to all matters governed by the laws of any
other jurisdiction, upon opinions of other counsel, who shall be counsel
satisfactory to counsel for the Underwriters, in which case the opinion shall
state that he believes the Representatives and he are entitled to so rely. Such
counsel may also state that, insofar as such
17
opinion involves factual matters, he has relied upon certificates of
officers of the Company and the Subsidiaries and certificates of public
officials.
(d) At such Closing Time, the Representatives shall have received a signed
opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., as special
communications counsel to the Company, in form and substance satisfactory to
counsel to the Underwriters, to the effect that:
(i) The approvals, if any, required to be obtained from the FCC to
consummate the transactions contemplated by this Agreement have been
obtained and are in full force and effect.
(ii) Such counsel does not know of any federal communications and
copyright statutes that are principally directed to the regulation of
cable properties applicable to the Company that are not described in the
Prospectus but would be material and relevant to the business of the
Company, and the descriptions in the Prospectus of such statutes therein
described are accurate and fairly summarize the information shown.
(iii) The information in the Registration Statement and Prospectus
under the captions "Risk Factors-- Our business is subject to extensive
government regulations and changes in current or future laws or
regulations could restrict our ability to operate our business as we
currently do", "Risk Factors-- Recent FCC and Congressional issues may
effect our businesses" and "Risk Factors-- Our financial performance may
be harmed by the significant and credible risk of competition in our cable
television business" and in the 2000 Form 10-K under the captions
"Business-- Competition-- Cable Television" and "Business-- Regulation--
Cable Television", to the extent that such sections describe statutes,
regulations and governmental proceedings or matters involving federal
communications and copyright law and policy and the impact thereof on the
business in which the Company and its subsidiaries are engaged, has been
reviewed by them and fairly represents the communications and copyright
law described therein applicable to the Company and its subsidiaries as
disclosed in the Prospectus and material and relevant to the business of
the Company and its subsidiaries.
In giving such opinion, such counsel may rely, as to all matters governed
by the laws of jurisdictions other than the law of the District of Columbia,
the federal law of the United States and the corporate law of the State of
Delaware, upon opinions of other counsel, who shall be counsel satisfactory to
counsel for the Underwriters, in which case the opinion shall state that they
believe the Representatives and they are entitled to so rely. Such counsel may
also state that, insofar as such opinion involves factual matters, they have
relied, to the extent they deem proper, upon certificates of officers of the
Company and the Subsidiaries and certificates of public officials.
(e) At such Closing Time, the Representatives shall have received the
favorable opinion, dated as of Closing Time, of Davis Polk & Wardwell, counsel
for the Selling Stockholders and AT&T, in form and substance satisfactory to
counsel for the Underwriters, to the effect that:
18
(i) No filing with, or consent, approval, authorization, license,
order, registration, qualification or decree of, any U.S. court or
governmental authority or agency (other than the issuance of the order of
the Commission declaring the Registration Statement effective and such
authorizations, approvals or consents as may be necessary under state
securities laws, as to which such counsel need express no opinion), is
necessary or required to be obtained by the Selling Stockholders or AT&T
for the performance by each of the Selling Stockholders and AT&T of its
respective obligations under the Underwriting Agreement, or in connection
with the offer, sale or delivery of the Shares by each Selling
Stockholder.
(ii) The Underwriting Agreement has been duly authorized, executed
and delivered by or on behalf of each Selling Stockholder and AT&T.
(iii) The execution, delivery and performance of the Underwriting
Agreement and the sale and delivery of the Shares and the consummation of
the transactions contemplated in the Underwriting Agreement and in the
Registration Statement and compliance by the Selling Stockholders and AT&T
with their obligations under the Underwriting Agreement have been duly
authorized by all necessary action on the part of the Selling Stockholders
and AT&T and do not and will not, whether with or without the giving of
notice or passage of time or both, conflict with or constitute a breach
of, or default under or result in the creation or imposition of any tax,
lien, charge or encumbrance upon the Shares pursuant to, the Stockholders
Agreement.
(iv) Upon payment for the Shares as provided in this Agreement, the
delivery of the Shares to Cede & Co. ("Cede") or such other nominee as may
be designated by The Depositary Trust Company ("DTC"), the registration of
the Shares in the name of Cede or such other nominee and the crediting of
the Shares on the records of DTC to security accounts in the name of such
Underwriter (assuming that neither DTC nor such Underwriter has notice of
any adverse claim (as such phrase is defined in Section 8-105 of the
Uniform Commercial Code as in effect in the State of New York (the "UCC"))
to the Shares or any security entitlement in respect thereof), (A) DTC
shall be a "protected purchaser" of the Shares within the meaning of
Section 8-303 of the UCC, (B) under Section 8-501 of the UCC, such
Underwriter will acquire a security entitlement in respect of the Shares
and (C) no action based on any "adverse claim" (as defined in Section
8-102 of the UCC) to such security entitlement may be asserted against
such Underwriter.
(f) At such Closing Time, the Representatives shall have received the
favorable opinion of Shearman & Sterling, counsel for the Underwriters, dated
as of such Closing Time, to the effect that the opinions delivered pursuant to
Sections 5(b), 5(c), 5(d) and 5(e) appear on their face to be appropriately
responsive to the requirements of this Agreement except, specifying the same,
to the extent waived by the Representatives, and with respect to the
incorporation and legal existence of the Company, the Shares sold by the
Selling Stockholders pursuant to this Agreement, the Registration Statement,
the Prospectus, the documents incorporated by reference therein and such other
related matters as the Representatives may require. In rendering such opinion,
such counsel may state that they express no opinion as to the laws of any
jurisdiction other than the federal laws of the United States, the laws of the
State of New York and the General Corporation Law of the State of Delaware, and
no opinion as to
19
federal or state communications laws. Such counsel may also state that, insofar
as such opinion involves factual matters, they have relied, to the extent they
deem proper, upon certificates of officers of the Company and the Subsidiaries
and certificates of public officials.
(g) At such Closing Time, (i) the Registration Statement and the
Prospectus, as they may then be amended or supplemented, shall contain all
statements that are required to be stated therein under the 1933 Act and the
1933 Act Regulations and, in all material respects, shall conform to the
requirements of the 1933 Act and the 1933 Act Regulations and neither the
Registration Statement nor the Prospectus, as they may then be amended or
supplemented, shall contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, (ii) there shall not have been, since the
respective dates as of which information is given in the Registration
Statement, any material adverse change or any development involving a
prospective material adverse change in or affecting the financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, considered as one enterprise, (iii) the Company shall have
complied with all agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to such Closing Time and (iv) the other
representations and warranties of the Company set forth in Section 1(a) shall
be accurate as though expressly made at and as of such Closing Time. At such
Closing Time, the Representatives shall have received a certificate of the
Chief Executive Officer, the President, a Vice Chairman or a Vice President,
and the Treasurer or Controller, of the Company, dated as of such Closing Time,
to such effect.
(h) At such Closing Time, the Representatives shall have received a
certificate from each Selling Stockholder, dated as of such Closing Time, to
the effect that (i) the representations and warranties of such Selling
Stockholder set forth in Section 1(b) shall be accurate as though expressly
made at and as of such Closing Time and (ii) such Selling Stockholder shall
have complied with all agreements and satisfied all conditions on its part to
be performed or satisfied at or prior to such Closing Time.
(i) The Representatives shall have received from KPMG LLP (i) at the time
of execution of this Agreement, a letter dated the date hereof and delivered in
accordance with Statement on Auditing Standards No. 72, as amended, in form and
substance satisfactory to the Representatives and (ii) at each Closing Time, a
letter, dated as of such Closing Time, to the effect that KPMG LLP reaffirms
the statements made in the letter furnished pursuant to Section 5(i)(i) hereof,
except that the specified date referred to shall be a date not more than five
business days prior to such Closing Time.
(j) At such Closing Time, counsel for the Underwriters shall have been
furnished with all such documents, certificates and opinions as they may
reasonably request for the purpose of enabling them to pass upon the sale of
the Shares as herein contemplated and the matters referred to in Section 5(f)
and in order to evidence the accuracy and completeness of any of the
representations, warranties or statements of the Company and the Selling
Stockholders, the performance of any of the covenants of the Company and the
Selling Stockholders, or the fulfillment of any of the conditions herein
contained.
20
(k) At the Closing Time, the Representatives shall have received an
agreement substantially in the form of Exhibit A hereto signed by the persons
listed on Schedule V hereto.
If any of the conditions specified in this Section 5 shall not have been
fulfilled when and as required by this Agreement to be fulfilled, this
Agreement may be terminated by the Representatives on notice to the Company and
the Selling Stockholders at any time at or prior to such Closing Time, and such
termination shall be without liability of any party to any other party, other
than pursuant to Section 4. Notwithstanding any such termination, the
provisions of Sections 6, 7 and 8 shall remain in effect.
Section 6. Indemnification. (a) The Company agrees to indemnify and hold
harmless each Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the 1933 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of an untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), including all documents incorporated
therein by reference, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of an untrue statement or
alleged untrue statement of a material fact included in any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto) or
the omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected with
the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred (including
fees and disbursements of counsel chosen by the Representatives),
reasonably incurred in investigating, preparing or defending against any
litigation, or investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under
subparagraph (i) or (ii) above;
provided, however, that this indemnity agreement does not apply to any loss,
liability, claim, damage or expense to the extent arising out of an untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by (i)
any Underwriter through the Representatives expressly for use in the
Registration Statement (or any amendment thereto), or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto) or (ii)
the Selling Stockholders or AT&T,
21
or on behalf of the Selling Stockholders or AT&T, expressly for use in the
Registration Statement (or any amendment thereto), or any preliminary
prospectus or the prospectus (or any amendment or supplement thereto).
The foregoing indemnity with respect to any untrue statement contained in
or any omission from the preliminary prospectus, shall not inure to the benefit
of any Underwriter (or any person controlling such Underwriter) on account of
any loss, claim, damage, liability or litigation arising from the sale of
Shares to any person by such Underwriter if such Underwriter failed to send or
give a copy of the Prospectus, as the same may be supplemented or amended, to
such person within the time required by the 1933 Act, and the untrue statement
or alleged untrue statement or omission or alleged omission of a material fact
in such preliminary prospectus was corrected in the Prospectus, unless such
failure resulted from noncompliance by the Company with its obligations
hereunder to furnish the Underwriters with copies of the Prospectus.
(b) Each Selling Stockholder agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the 1933 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of an untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), including all documents incorporated
therein by reference, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of an untrue statement or
alleged untrue statement of a material fact included in any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto), or
the omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading, but only with reference to
information relating to such Selling Stockholder or AT&T furnished in
writing by or on behalf of such Selling Stockholder or AT&T expressly for
use therein and such indemnification being limited to the amount of net
proceeds received from the sale of such Selling Stockholder's Shares by
the Underwriters;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission referred to in
(i) above, or any such alleged untrue statement or omission, if any such
settlement is effected with the written consent of such Selling
Stockholder; and
(iii) against any and all expense whatsoever, as incurred (including
fees and disbursements of counsel chosen by the Representatives),
reasonably incurred in investigating, preparing or defending against any
litigation, or investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission referred to in (i) above, to the extent that any such expense is
not paid under subparagraph (i) or (ii) above.
22
The foregoing indemnity with respect to any untrue statement contained in
or any omission from the preliminary prospectus, shall not inure to the benefit
of any Underwriter (or any person controlling such Underwriter) on account of
any loss, claim, damage, liability or litigation arising from the sale of
Shares to any person by such Underwriter if such Underwriter failed to send or
give a copy of the Prospectus, as the same may be supplemented or amended, to
such person within the time required by the 1933 Act, and the untrue statement
or alleged untrue statement or omission or alleged omission of a material fact
in such preliminary prospectus was corrected in the Prospectus.
(c) Each Underwriter severally agrees to indemnify and hold harmless the
Company, each Selling Stockholder, the directors of the Company, officers of
the Company who signed the Registration Statement, and each person, if any, who
controls the Company or the Selling Stockholders within the meaning of Section
15 of the 1933 Act, against any and all loss, liability, claim, damage and
expense described in the indemnity agreement in Section 6(a) or Section 6(b),
as applicable, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto), any preliminary prospectus or in the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such
Underwriter through the Representatives expressly for use in the Registration
Statement (or any amendment thereto), or such preliminary prospectus or the
Prospectus (or any amendment or supplement thereto).
(d) Each indemnified party shall give prompt notice to each indemnifying
party of any action commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve it from any liability which it may have otherwise than on account of
this indemnity agreement. An indemnifying party may participate at its own
expense in the defense of such action; provided, however, that counsel to the
indemnifying party shall not (except with the consent of the indemnified party)
also be counsel to the indemnified party. In no event shall the indemnifying
party or parties be liable for the fees and expenses of more than one counsel
for all indemnified parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances.
(e) The provisions of this Section 6 shall not affect any agreement
between the Company, on the one hand, and the Selling Stockholders, AT&T or
AT&T Broadband LLC, on the other hand, with respect to indemnification.
Section 7. Contribution. In order to provide for just and equitable
contribution in circumstances under which the indemnity provided for in Section
6 is for any reason held to be unenforceable by the indemnified parties
although applicable in accordance with its terms, the Company, the Selling
Stockholders and the Underwriters shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by such
indemnity incurred by the Company, the Selling Stockholders and one or more of
the Underwriters, as incurred, in such proportions that the Underwriters are
responsible for that portion represented by the percentage that the
underwriting discount hereunder with respect to the offering of the Shares
bears to the purchase price of the Shares, and the Company and the Selling
Stockholders are responsible for the balance; provided, however, that no person
guilty of
23
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For purposes of this Section, each person,
if any, who controls an Underwriter within the meaning of Section 15 of the
1933 Act shall have the same rights to contribution as such Underwriter, and
each director or officer of the Company or the Selling Stockholders and each
person, if any, who controls the Company or the Selling Stockholders within the
meaning of Section 15 of the 1933 Act shall have the same rights to
contribution as the Company and the Selling Stockholders, respectively.
The contribution provisions contained in this Section 7 do
not affect any agreement between the Company, on the one hand, and the Selling
Stockholders, AT&T or AT&T Broadband LLC, on the other hand, with respect to
contribution.
Section 8. Agreements to Survive Delivery. The indemnities, agreements and
other statements of the Company, the Selling Stockholders and AT&T or their
respective officers, and of the Underwriters set forth in or made pursuant to
this Agreement will remain operative and in full force and effect regardless of
any investigation made by or on behalf of the Company, the Selling
Stockholders, AT&T or any Underwriter or controlling person within the meaning
of Section 15 of the 1933 Act and will survive delivery of and payment for the
Shares.
Section 9. Termination of Agreement. (a) The Representatives may terminate
this Agreement, by notice to the Company and the Selling Stockholders, at any
time at or prior to the Closing Time (i) if there has been, since the
respective dates as of which information is given in the Prospectus, any
material adverse change or any development involving a prospective material
adverse change in or affecting the financial position, stockholders' equity or
results of operations of the Company and its subsidiaries, considered as one
enterprise, or (ii) if trading in securities of the Company or generally on the
New York Stock Exchange shall have been materially suspended or materially
limited or minimum prices shall have been established on such Exchange (which
shall not include trading suspensions or limitations resulting from the
operation of General Rules 80A and 80B of such Exchange, as amended or
supplemented), or (iii) a banking moratorium shall have been declared by either
federal or New York State authorities, or (iv) the United States shall have
become engaged in hostilities which have resulted in the declaration of a
national emergency or a declaration of war, or there shall have occurred any
other calamity or crisis, the effect of which (in either event) on the
financial markets of the United States is such as to make it, in the reasonable
judgment of the Representatives, impracticable or inadvisable to proceed with
the offering or delivery of the Shares on the terms and in the manner
contemplated in the Prospectus.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party, except
to the extent provided in Section 4. Notwithstanding any such termination, the
provisions of Sections 6, 7 and 8 shall remain in effect.
Section 10. Default by One or More of the Underwriters. If one or more of
the Underwriters shall fail at the Initial Closing Time or at any Additional
Closing Time to purchase the Firm Shares or Additional Shares hereunder that it
or they are obligated to purchase pursuant to this Agreement (the "Defaulted
Shares"), the Representatives shall have the right, within 24
24
hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than
all, of the Defaulted Shares in such amounts as may be agreed upon and upon the
terms set forth in this Agreement; if, however, the Representatives have not
completed such arrangements within such 24-hour period, then:
a) if the aggregate number of Defaulted Shares does not exceed 10% of
the aggregate number of shares of the Firm Shares or Additional Shares, as
the case may be, to be purchased pursuant to this Agreement, the
non-defaulting Underwriters shall be obligated to purchase the full amount
thereof in the respective proportions that the number of Firm Shares or
Additional Shares set forth opposite the names of such non-defaulting
Underwriters in Schedule I bears to the total aggregate number of Firm
Shares or Additional Shares set forth opposite the names of such
non-defaulting Underwriters, or
b) if the aggregate number of Defaulted Shares exceeds 10% of the
aggregate number of the Firm Shares or Additional Shares, this Agreement
shall terminate without liability on the part of any non-defaulting
Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default that does not result in a termination of
this Agreement, the Representatives, the Company or the Selling Stockholders
shall have the right to postpone such Closing Time for a period not exceeding
seven days in order to effect any required changes in the Registration
Statement or Prospectus or in any other documents or arrangements. As used
herein, the term "Underwriter" includes any person substituted for an
Underwriter under this Section 10.
Section 11. Guarantee of AT&T. AT&T agrees to guarantee full payment and
complete performance of any and all obligations of the Selling Stockholders
under this Agreement.
Section 12. Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given if
delivered, mailed or transmitted by any standard form of telecommunication.
Notices to the Representatives shall be directed to Bear, Stearns & Co. Inc.,
245 Park Avenue, New York, New York 10167, attention of Simon J. Wainwright;
Merrill Lynch, Pierce, Fenner & Smith Incorporated, World Financial Center,
North Tower, 250 Vesey Street, New York, New York 10281, attention of Toby
Norris; and Salomon Smith Barney Inc., 388 Greenwich Street, New York, NY
10013, attention of Jeanne Campanelli, notices to the Company shall be directed
to it at Cablevision Systems Corporation, 1111 Stewart Avenue, Bethpage, New
York 11714, attention of Robert S. Lemle, Esq., Vice Chairman, Secretary and
General Counsel, with a copy to Sullivan & Cromwell, 125 Broad Street, New
York, New York 10004, attention of John P. Mead, Esq. and notices to the
Selling Stockholders and AT&T shall be directed to them at AT&T Corp., 295
North Maple Avenue, Basking Ridge, NJ 07920, attention of Edward Dwyer,
Treasurer.
Section 13. Parties. This Agreement is made solely for the benefit of the
several Underwriters, the Company, the Selling Stockholders and, to the extent
expressed, any
25
person controlling the Company or the Selling Stockholders or any of the
Underwriters within the meaning of Section 15 of the 1933 Act, and the
directors and officers of the Company, and their respective executors,
administrators, successors and assigns and, subject to the provisions of
Section 10, no other person shall acquire or have any right under or by virtue
of this Agreement. The term "successors and assigns" shall not include any
purchaser, as such purchaser, from any of the several Underwriters of the
Shares. All of the obligations of the Underwriters hereunder are several and
not joint.
Section 14. Governing Law and Time. This Agreement shall be governed by
the laws of the State of New York. Specified times of the day refer to New York
City time.
Section 15. Captions. The captions included in this Agreement are included
solely for convenience of reference and are not considered to be part of this
Agreement.
Section 16. Counterparts. This Agreement may be executed in one or more
counterparts and when a counterpart has been executed by each party, all such
counterparts taken together shall constitute one and the same agreement.
26
If the foregoing is in accordance with the Representatives' understanding
of our agreement, please sign and return to us a counterpart hereof, whereupon
this instrument will become a binding agreement among the Company, the Selling
Stockholders, AT&T and the Underwriters in accordance with its terms.
Very truly yours,
CABLEVISION SYSTEMS
CORPORATION
By
-----------------------------------
Name and Title:
AT&T BROADBAND CSC II, INC.
By
-----------------------------------
Name and Title:
AT&T BROADBAND CSC HOLDINGS, INC.
By
-----------------------------------
Name and Title:
AT&T CORP.
By
-----------------------------------
Name and Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
BEAR, STEARNS & CO. INC.
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
SALOMON SMITH BARNEY INC.
By
-----------------------------------
By
-----------------------------------
Name and Title:
For themselves and as Representatives of the other Underwriters named is
Schedule I hereto.
SCHEDULE I
UNDERWRITERS
Number of Firm Shares
Underwriter to be Purchased
Bear, Stearns & Co. Inc.......................... 4,787,823
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.............................. 4,787,823
Salomon Smith Barney Inc......................... 4,787,823
Banc of America Securities LLC................... 957,564
Goldman, Sachs & Co.............................. 957,564
Lehman Brothers Inc.............................. 957,564
Credit Lyonnais Securities (USA) Inc............. 478,781
Dain Rauscher Incorporated....................... 478,781
J.P. Morgan Securities Inc....................... 478,781
SG Cowen Securities Corporation.................. 478,781
----------
Total 19,151,285
==========
SCHEDULE II
SELLING STOCKHOLDERS
Selling Stockholder Number of Firm Number of Additional
Shares to be Sold Shares to be Sold
AT&T Broadband CSC II, Inc. 19,151,285 2,872,692
AT&T Broadband CSC Holdings, Inc. 0 0
Total 19,151,285 2,872,692
SCHEDULE III
RESTRICTED SUBSIDIARIES
(* - material subsidiary)
151 Fulton Street Corporation
A-R Cable Services - NY, Inc.
Arsenal MSub 2 Inc.
Cablevision Area 9 Corporation
Cablevision Fairfield Corporation
Cablevision Lightpath, Inc.
Cablevision MFR, Inc.
Cablevision of Brookhaven, Inc.
Cablevision of Brookline, Inc.
Cablevision of Cleveland G.P., Inc.
Cablevision of Cleveland L.P., Inc.
Cablevision of Cleveland, L.P.
Cablevision of Connecticut Corporation
Cablevision of Connecticut Limited Partnership
Cablevision of Hudson County, Inc.
Cablevision of Litchfield, Inc.
Cablevision of Monmouth, Inc.
Cablevision of New Jersey, Inc.
Cablevision of Newark
Cablevision of Oakland, Inc.
Cablevision of Ossining Limited Partnership (f/k/a Cablevision of
Brookline LP)
Cablevision of Paterson, Inc.
Cablevision of Rockland/Ramapo, Inc.
Cablevision of Southern Westchester, Inc.
Cablevision of the Midwest Holding, Inc.
Cablevision of Wappingers Falls, Inc. (f/k/a Cablevision of Boston, Inc.)
Cablevision of Warwick, Inc.
Cablevision Systems Brookline Corporation
Cablevision Systems Dutchess Corporation
Cablevision Systems East Hampton Corporation
Cablevision Systems Great Neck Corporation
Cablevision Systems Huntington Corporation
Cablevision Systems Islip Corporation
Cablevision Systems Long Island Corporation
* Cablevision Systems New York City Corporation (f/k/a NYC LP Corp.)
Cablevision Systems of Southern Connecticut Limited Partnership
Schedule III-1
SCHEDULE III
RESTRICTED SUBSIDIARIES
(* - material subsidiary)
Cablevision Systems Suffolk Corporation
Cablevision Systems Westchester Corporation Communications Development
Corporation
CSC Acquisition - MA, Inc.
CSC Acquisition - NY, Inc.
CSC Acquisition Corporation
CSC Gateway Corporation
CSC TKR, Inc.
CSC TKR I, Inc.
KRC/CCC Investment Partnership
Montague Cable Company, Inc.
Petra Cablevision Corporation
Samson Cablevision Corp.
Suffolk Cable Corporation
Suffolk Cable of Shelter Island, Inc.
Suffolk Cable of Smithtown, Inc.
Telerama, Inc.
Schedule III-2
SCHEDULE IV
UNRESTRICTED SUBSIDIARIES
(* - material subsidiary)
AC Productions West, Inc.
AC Productions, Inc.
ACEP LLC
American Catholic Enterprises At The Movies Productions East LLC
American Catholic Enterprises Chat Productions East LLC
American Catholic Enterprises Hub Productions East LLC
American Catholic Enterprises Masters Productions East LLC
American Catholic Enterprises News Productions East LLC
American Catholic Enterprises Productions East LLC
American Catholic Enterprises Studios Productions East LLC
American Catholic LLC
AMC II Holding Corporation 1
AMC Productions, Inc. 1
American Movie Classics Company 1
American Movie Classics Holding Corporation 1
American Pop, LLC
American Sports Classics, L.L.C.
BirdSight LLC
BirdSight Productions LLC
Bravo Acquisition Company LLC
Bravo Company
Bravo Holding Corporation
Bravo II Holding Corporation
Bravo Programming, Inc.
Cable Networks, Inc.
CSC Sterling Holdings, LLC
Foxwatch Productions, Inc.
Garden Programming, L.L.C.
IFC Entertainment LLC
IFC Films LLC
IFC Productions I L.L.C.
IFC Theatres, LLC
* Madison Square Garden, L.P. 2
Madison Square Garden CT, LLC
Maximum Science LLC
Maximum Science Productions LLC
Metro Channel, L.L.C.
Metro Channel Holdings I, LLC
Metro Channel Holdings II, LLC
Metro Channel Productions, LLC
MSG Aircraft Leasing, LLC
MSG Boxing, LLC
MSG Eden Corporation
Schedule IV - 1
SCHEDULE IV
UNRESTRICTED SUBSIDIARIES
(* - material subsidiary)
MSG Flight Operations, LLC
MSG/TJF Scarlet Productions, LLC
MuchMusic U.S.A. Venture
National Advertising Partners
National PSNA Holdings I, LLC
National PSNA Holdings II, LLC
National Sports Partners
News 12.com, Inc. (f/k/a Neighborhood News Holdings, Inc.)
News 12 Holding Corporation
News 12 II Holding Corporation
News 12 New Jersey L.L.C.
News 12 The Bronx, LLC
News 12 The Bronx Holding Corporation
Next Wave Films, L.L.C.
New England Sea Wolves, L.L.C.
New York Rangers Enterprises Company
New York Metro LLC
Prime SportsChannel Networks Associates
Radio City Networks LLC
Radio City Networks Holdings I, LLC
Radio City Networks Holdings II, LLC
Radio City Productions, L.L.C.
Radio City Trademarks, L.L.C.
Rainbow Advertising Holdings, LLC
Rainbow Advertising Sales Corporation
Rainbow CT Holdings, Inc.
Rainbow DBS Holdings, Inc.
Rainbow Films Holding LLC
Rainbow Garden Corp.
Rainbow Media Group, LLC
* Rainbow Media Holdings, Inc.
Rainbow MM Holdings Corporation
Rainbow MM Holdings II Corporation
Rainbow National Sports Holdings, LLC
Rainbow Network Communications
Rainbow News 12 Company
Rainbow NJ Holdings, Inc.
Rainbow NJ Holdings II, Inc.
* Rainbow Regional Holdings, LLC
Rainbow Regional Sports News Holdings, LLC
Schedule IV - 2
SCHEDULE IV
UNRESTRICTED SUBSIDIARIES
(* - material subsidiary)
Rainbow Travel, Inc.
Rainbow Westchester Holdings, Inc.
RCE Humbug Productions LLC
RCE/4KE Productions LLC
Regional Chicago Holdings, LLC
Regional Cincinnati Holdings I, LLC
Regional Cincinnati Holdings II, LLC
* Regional MSG Holdings, LLC
Regional NE Holdings I,
LLC Regional NE Holdings II, LLC
Regional Ohio Holdings I, LLC
Regional Ohio Holdings II, LLC
Regional Pacific Holdings, LLC
* Regional Programming Partners
RNC Holding Corporation
RNC II Holding Corporation
RRH I, LLC
RRH II, LLC
SC Florida Holding Company, L.L.C.
Soccer/USA Partners, L.P.
SportsChannel America Soccer, Inc.
SportsChannel Associates 2
SportsChannel Chicago Associates
SportsChannel Cincinnati Associates
SportsChannel Florida Associates
SportsChannel Florida Holding Company L.L.C.
SportsChannel New England Limited Partnership
SportsChannel Ohio Associates
SportsChannel Pacific Associates
SportsChannel Ventures, Inc.
Sterling Digital LLC
The 31st Street Company, L.L.C.
The Independent Film Channel LLC
WE: Women's Entertainment LLC (f/k/a Romance Classics, LLC)
WE: Women's Entertainment Productions, Inc. (f/k/a Romance Classics
Productions, Inc.) 1
WSN, LLC
Schedule IV - 3
1015 Tiffany Street Corporation
1070 Jericho Turnpike Corp.
111 New South Road Corporation
1111 Stewart Corporation
1144 Route 109 Corp.
389 Adams Street Corporation
Cablevision Digital Development, LLC
* Cablevision Electronics Investments, Inc.
Cablevision Lightpath - CT, Inc.
Cablevision Lightpath - MA, Inc.
Cablevision Lightpath - MI, Inc.
Cablevision Lightpath - NJ, Inc.
Cablevision Lightpath - NY, Inc.
Cablevision Lightpath - OH, Inc.
Cablevision NYI L.L.C.
Cablevision PCS Investment, Inc.
Cablevision PCS Management, Inc.
Cablevision Real Estate Corporation
Coram Route 112 Corporation
CCG Holdings, Inc.
CCC Cobble Hill Cinema Corp.
CCC Franklin Square Cinema Corp.
CSC @Security Holding, LLC
CSC At Home Holding Corporation
CSC Charter Holdings I, Inc.
CSC Charter Holdings II, Inc.
CSC Charter Holdings III, Inc.
CSC Investments, Inc.
CSC LF Holdings, LLC
CSC Metro Cinema LLC
CSC Nassau, Inc.
CSC Ohio Holdings I, Inc.
CSC Ohio Holdings II, Inc.
CSC Ohio Holdings III, Inc.
CSC Optimum Holdings, LLC
CSC T Holdings, Inc.
CSC T Holdings, I, Inc.
CSC T Holdings, II, Inc.
CSC T Holdings, III, Inc.
CSC T Holdings, IV, Inc.
CSC T Holdings, V, Inc.
Schedule IV - 4
SCHEDULE IV
UNRESTRICTED SUBSIDIARIES
(* - material subsidiary)
CSC T Holdings VI, Inc.
CSC Technology, Inc. (f/k/a CSC Realty, Inc.)
CSC Transport, Inc.
CSC Transport II, Inc.
CSC Transport III, Inc.
CSC Transport IV, Inc.
Frowein Road Corporation
Knollwood Development Corp.
NCC LP Corp.
PVI Holding, LLC
The New York Interconnect L.L.C.
U.S. Cable Television Group, L.P.
-------------------
1 Shares of AMC Productions, Inc., We: Women's Entertainment Productions,
Inc. and partnership interests in American Movie Classics Company held by
AMC II Holding Corporation ("AMC II") and American Movie Classics Holding
Corporation ("AMCHC") are pledged to Toronto Dominion under the terms of a
Stock Pledge Agreement, dated as of April 2, 1997, between American Movie
Classics Holding Company and Toronto Dominion (Texas), Inc., as agent for
the Banks and a Partners Pledge Agreement, dated as of April 2, 1997, by
and between AMC II and AMCHC and Toronto Dominion (Texas), Inc..
2 All of the capital stock, partnership interests or limited liability
company interests are pledged under the Credit Party Pledge Agreement,
dated as of June 6, 1997 to the Madison Square Garden, L.P. Credit
Agreement.
Schedule IV - 5
SCHEDULE V
PERSONS TO EXECUTE AND DELIVER
LOCK-UP AGREEMENT
Charles F. Dolan
James L. Dolan
William J. Bell
Robert S. Lemle
Andrew B. Rosengard
Sheila A. Mahony
Margaret Albergo
Thomas C. Dolan
Charles D. Ferris
Richard H. Hochman
Victor Oristano
Vincent Tese
Patrick F. Dolan
John Tatta
Schedule V
EXHIBIT A
FORM OF LOCK-UP AGREEMENT
The undersigned, being [an executive officer][a director] of Cablevision
Systems Corporation ("Cablevision"), understands that Bear, Stearns & Co. Inc.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated and Salomon Smith Barney
Inc. (the "Representatives") have entered into (i) an underwriting agreement
(the "Common Stock Secondary Underwriting Agreement") among Cablevision, the
selling stockholders named therein, AT&T Corp. and the underwriters named
therein (the "Common Stock Secondary Underwriters") providing for the public
offering of shares of Cablevision NY Group Class A common stock, par value $.01
per share, of Cablevision ("Cablevision NY Group Class A Common Stock") and
(ii) an underwriting agreement (the "Equity Trust Securities Underwriting
Agreement") among Equity Securities Trust I (the "Trust"), Cablevision, the
selling stockholders named therein, AT&T Corp. and the underwriters named
therein (the "Equity Trust Securities Underwriters") providing for the public
offering of shares of beneficial interest in the Trust. Each of Section 5(k) of
the Common Stock Secondary Underwriting Agreement and Section 10(r) of the
Equity Trust Securities Underwriting Agreement provides for the delivery of
this lock-up agreement as a condition to the closing contemplated thereby.
In connection therewith, the undersigned hereby agrees, except as set
forth in the next succeeding paragraph, not to offer, sell, contract to sell or
otherwise dispose of, or transfer, any Cablevision NY Group Class A Common
Stock or warrants, rights, options or other securities convertible into or
exchangeable for Cablevision NY Group Class A Common Stock (collectively,
"Cablevision Securities") until January __, 2002 without first obtaining the
written consent of Cablevision Systems Corporation and one of the
Representatives, on behalf of the Common Stock Secondary Underwriters and the
Equity Trust Securities Underwriters.
Notwithstanding the foregoing, the undersigned may offer, sell, contract
to sell or otherwise dispose of, or transfer Cablevision Securities (i) as a
bona fide gift, (ii) as a bona fide pledge to a third party to secure
borrowings, (iii) to any trust, family limited partnership or similar entity
for the direct or indirect benefit of the undersigned or the family members of
the undersigned, provided that the trust, family limited partnership or similar
entity agrees to be bound by the restrictions set forth herein, or (iv)
following the exercise of options granted pursuant to employee benefit plans
prior to the date hereof, provided that the Cablevision Securities offered,
sold, contracted for sale, transferred or otherwise disposed of pursuant to
this clause (iv) shall be limited to those received upon exercise of such stock
options.
-------------------------------------
Name:
Date: October 23, 2001
Exhibit A
EX-2
4
ex2.txt
EXHIBIT 2
EQUITY SECURITIES TRUST I
23,407,127 Equity Trust Securities*
(Representing Beneficial Interests in a Contract Relating to
Shares of Cablevision NY Group Class A Common Stock, $.01 par value, of
Cablevision Systems Corporation)
Underwriting Agreement
New York, New York
October 17, 2001
BEAR STEARNS & CO. INC.
MERRILL LYNCH & CO.
SALOMON SMITH BARNEY INC.
As Representatives of the several Underwriters,
c/o Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
Equity Securities Trust I, a statutory business trust organized under the
State of Delaware Business Trust Act, 12 Del.C. ss. 3801 et seq. (the "Delaware
Act"), (such trust and the trustees thereof acting in their capacities as such
being referred to herein as the "Trust"), proposes to issue and to sell to the
several underwriters named in Schedule I hereto (the "Underwriters"), for whom
you (the "Representatives") are acting as representatives, an aggregate of
23,407,127 Equity Trust Securities representing shares of beneficial interest
in the Trust (the "Underwritten Equity Trust Securities"). In addition, the
Underwriters will have an option to purchase up to 3,511,068 Equity Trust
Securities (the "Option Equity Trust Securities" and, together with the
Underwritten Equity Trust Securities, the "Equity Trust Securities") to cover
over-allotments, if any. The Option Equity Trust Securities and the
Underwritten Equity Trust Securities, together with the 2 Equity Trust
Securities of the Trust subscribed for by Salomon Smith Barney Inc. ("Salomon
Smith Barney") pursuant to the Subscription Agreement, dated as of October 2,
2001, between Salomon Smith Barney and the Trust (the "Subscription Equity
Trust Securities"), are referred to herein as the "Securities." The Securities
are to be issued under an Amended and Restated Declaration of Trust, dated as
of October 16, 2001 (the "Trust Agreement"), among the initial trustee and
initial sponsor of the Trust, the trustees of the Trust (the "Trustees") and
Salomon Smith Barney, as sponsor.
------------------------
* Plus an option to purchase from the Trust up to 3,511,068 additional Equity
Trust Securities to cover over-allotments.
The Trust has entered into forward purchase contracts (the "Contracts")
with AT&T Broadband CSC II, Inc., a Delaware corporation and AT&T Broadband CSC
Holdings Inc., a Delaware corporation ("Counterparties"), pursuant to which
Counterparties have agreed to sell, and the Trust has agreed to purchase, the
number of shares (the "Shares") of Cablevision NY Group Class A Common Stock,
par value $.01 per share (the "Cablevision NY Group Class A Common Stock"), of
Cablevision Systems Corporation, a Delaware corporation (the "Company"),
specified therein on November 15, 2004 (the "Exchange Date") (subject to
Counterparties' right to extend and accelerate the Exchange Date and to deliver
cash with a value equivalent thereto, or other property, as provided in the
Contracts). Counterparties' obligations under the Contracts will be secured by
a pledge of collateral under collateral agreements (the "Collateral
Agreements"), each among a Counterparty, the Trust and The Bank of New York
("BoNY"), as collateral agent (in such capacity, the "Collateral Agent").
In connection with the foregoing, the Company has filed with the
Commission a registration statement, including a basic prospectus, with respect
to 23,407,127 Shares in respect of the Underwritten Equity Trust Securities,
plus an additional 3,511,068 Shares in respect of the Option Equity Trust
Securities, for delivery by Counterparties pursuant to the Securities, which
registration statement is referred to in Section 2(a) of this Agreement.
To the extent there are no additional Underwriters listed on Schedule I
other than you, the term Representatives as used herein shall mean you, as
Underwriters, and the terms Representatives and Underwriters shall mean either
the singular or plural as the context requires. The use of the neuter in this
Agreement shall include the feminine and masculine wherever appropriate.
Certain terms used herein are defined in Section 23 hereof.
1. Representations and Warranties of the Trust. The Trust represents and
warrants to, and agrees with, each Underwriter as set forth below in this
Section 1.
(a) The Trust meets the requirements for use of Form N-2 under the Act and
has prepared and filed with the Commission (a) a notification on Form N-8A (the
"Notification") of registration of the Trust as an investment company under the
Investment Company Act and (b) a registration statement on Form N-2 (file
numbers 333-34600 and 811-9897), including a related preliminary prospectus,
for the registration of the offering and sale of the Equity Trust Securities
under the Act. The Trust may have filed one or more amendments thereto,
including the related preliminary prospectus, each of which has previously been
furnished to you. The Trust will next file with the Commission one of the
following: either (1) prior to the Trust Effective Date of such registration
statement, a further amendment to such registration statement (including the
form of final prospectus); or (2) after the Trust Effective Date of such
registration statement, a final prospectus in accordance with Rules 430A and
497(h). In the case of clause (2), the Trust has included in such registration
statement, as amended at the Trust Effective Date, all information (other than
Rule 430A Information) required by the Act and the rules thereunder to be
included in such registration statement and the Trust Prospectus. As filed,
such amendment and form of final prospectus, or such final prospectus, shall
contain all Rule 430A Information, together with all other such required
information, and, except to the extent the Representatives shall agree in
writing to a modification, shall be in all substantive respects in the form
furnished to you prior to the Execution Time or, to the extent not completed at
the Execution Time, shall contain only
2
such specific additional information and other changes (beyond that contained
in the latest Preliminary Trust Prospectus) as the Trust has advised you, prior
to the Execution Time, will be included or made therein.
(b) On the Trust Effective Date, the Trust Registration Statement and the
Notification did or will, and when the Trust Prospectus is first filed (if
required) in accordance with Rule 497(h) and on the Closing Date (as defined
herein) and on any date on which Option Equity Trust Securities are purchased,
if such date is not the Closing Date (a "Settlement Date"), the Trust
Prospectus (and any supplements thereto) will comply in all material respects
with the applicable requirements of the Act, the Exchange Act and the
Investment Company Act, and the respective rules thereunder; on the Trust
Effective Date and at the Execution Time, the Trust Registration Statement did
not or will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein not misleading; and, on the Trust Effective Date,
the Trust Prospectus, if not filed pursuant to Rule 497(h), did not or will
not, and on the date of any filing pursuant to Rule 497(h) and on the Closing
Date and any Settlement Date, the Trust Prospectus (together with any
supplement thereto) will not, include any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(c) No stop order suspending the effectiveness of the Trust Registration
Statement is in effect, no order preventing or suspending the use of any
Preliminary Trust Prospectus has been issued by the Commission, no notice or
order under Section 8(e) of the Investment Company Act has been issued, and no
proceedings for any such purpose are pending before or threatened by the
Commission.
(d) The Trust has been duly created, is validly existing as a business
trust under the Delaware Act, has the power and authority to own or lease, as
the case may be, and to operate its properties and conduct its business as
described in the Trust Prospectus and to enter into and perform its obligations
under this Agreement, the Trust Agreement and each of the Fundamental
Agreements (as defined below) and is duly qualified to do business and is in
good standing under the laws of each jurisdiction in which it owns or leases
properties or conducts any business so as to require such qualification other
than where the failure to be so qualified would not have a material adverse
effect on the Trust or its assets. The Trust has no subsidiaries.
(e) The Trust is registered with the Commission as a non-diversified,
closed-end management investment company under the Investment Company Act and
no order of suspension or revocation of such registration has been issued or
proceedings therefor initiated or, to the knowledge of the Trust, threatened by
the Commission. No person is serving or acting as an officer or trustee of the
Trust except in accordance with the provisions of the Investment Company Act.
(f) This Agreement has been duly authorized, executed and delivered by the
Trust.
3
(g) Each of the Contracts, the Collateral Agreements, the Administration
Agreement between BoNY and the Trust (the "Administration Agreement"), the
Custodian Agreement between BoNY and the Trust (the "Custodian Agreement"), the
Paying Agent Agreement between BoNY and the Trust (the "Paying Agent
Agreement") and the Fund Indemnity Agreement between Salomon Smith Barney and
the Trust (the "Fund Indemnity Agreement") (the Contracts, the Collateral
Agreements, the Administration Agreement, the Custodian Agreement, the Paying
Agent Agreement and the Fund Indemnity Agreement are referred to herein,
collectively, as the "Fundamental Agreements") has been duly authorized,
executed and delivered by the Trust and, assuming due authorization, execution
and delivery by the other parties thereto, is a valid and binding agreement of
the Trust, enforceable against the Trust in accordance with its terms except as
such enforceability may be limited by applicable bankruptcy, insolvency and
similar laws affecting creditors' rights generally and by general equitable
principles.
(h) The execution and delivery by the Trust of, and the performance by the
Trust of its obligations under, this Agreement and each Fundamental Agreement
(including the issue and sale by the Trust of the Equity Trust Securities as
contemplated by this Agreement) do not and will not, whether with or without
the giving of notice or passage of time or both, conflict with or constitute a
breach or violation of, or default under, or give the holder of any
indebtedness of the Trust the right to require the repurchase, redemption or
repayment of all or a portion of such indebtedness under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Trust pursuant to, any contract, indenture, mortgage, deed of
trust, loan or credit agreement, note, lease or other agreement or instrument
to which the Trust is a party or by which it may be bound, or to which any of
the property or assets of the Trust is subject, nor will such action result in
any violation of the provisions of the Trust Agreement or any applicable law,
statute, rule, regulation, judgment, order, writ or decree of any government,
government instrumentality or court, domestic or foreign, having jurisdiction
over the Trust or any of its assets or properties; and no consent, approval,
authorization, order of, or qualification or filing with, any governmental body
or agency, self-regulatory organization or court or other tribunal, whether
foreign or domestic, is required for the execution and delivery by the Trust of
this Agreement or the Fundamental Agreements or the performance by the Trust of
its obligations hereunder and thereunder, except for the filing of a
Certificate of Trust and the filing of a Restated Certificate of Trust with the
office of the Secretary of State of the State of Delaware (which filings have
been duly made) and such as have been obtained and as may be required by the
securities or Blue Sky laws of the various states and foreign jurisdictions in
connection with the offer and sale of the Equity Trust Securities by the
Underwriters.
(i) The Equity Trust Securities, the Trust Agreement and the Fundamental
Agreements conform in all material respects to the descriptions thereof
contained in the Trust Prospectus.
(j) The Trust Agreement and the Fundamental Agreements comply with all
applicable provisions of the Act, the Exchange Act and the Investment Company
Act, and all approvals of such documents required under the Investment Company
Act by the holders of the Securities and the Trustees have been obtained and
are in full force and effect.
4
(k) On the Closing Date, the Fundamental Agreements will be in full force
and effect and the Trust will not be in default thereunder and, to the
knowledge of the Trust, no event will have occurred which with the passage of
time or the giving of notice or both would constitute a default thereunder. The
Trust is not currently in breach of, or in default under, the Trust Agreement
or any other written agreement or instrument to which it or its property is
bound or affected.
(l) All of the outstanding Securities have been duly authorized and are
validly issued, fully paid and nonassessable undivided beneficial interests in
the assets of the Trust, and the form of certificate used to evidence the
Securities is in due and proper form and complies with all provisions of
applicable law.
(m) The Equity Trust Securities have been duly authorized by the Trust for
issuance to the Underwriters pursuant to this Agreement and, when issued and
delivered by the Trust in accordance with the terms of this Agreement and the
Trust Agreement against payment of the purchase price therefor as provided
herein, will be validly issued, fully paid and nonassessable undivided
beneficial interests in the assets of the Trust, and the issuance of such
Equity Trust Securities will not be subject to any preemptive or similar
rights. No person has rights to the registration of any securities because of
the filing of the Trust Registration Statement, and no holder of the Securities
will be subject to personal liability by reason of being such a holder.
(n) The Equity Trust Securities have been approved for listing on the New
York Stock Exchange (the "NYSE"), subject to official notice of issuance. The
Trust's Registration Statement on Form 8-A under the Exchange Act is effective.
(o) There has not occurred any material adverse change, or any development
involving a prospective material adverse change, in the condition, financial or
otherwise, of the Trust, or in the investment objectives, investment policies,
liabilities, business, prospects or operations of the Trust from that set forth
in the Trust Prospectus (exclusive of any supplements thereto subsequent to the
date of this Agreement) and there have been no transactions entered into by the
Trust which are material to the Trust other than those in the ordinary course
of its business or as described in the Trust Prospectus (exclusive of any
supplements thereto subsequent to the date of this Agreement).
(p) There are no legal or governmental proceedings pending or, to the
knowledge of the Trust, threatened against or affecting the Trust that are
required to be described in the Trust Registration Statement or the Trust
Prospectus and are not so described or any statutes, regulations, contracts or
other documents that are required to be described in the Trust Registration
Statement or the Trust Prospectus or to be filed as exhibits to the Trust
Registration Statement that are not described or filed as required.
(q) The Trust has all necessary consents, authorizations, approvals,
orders (including exemptive orders), certificates and permits of and from, and
has made all declarations and filings with, all governmental authorities,
self-regulatory organizations and courts and other tribunals, whether foreign
or domestic, to own and use its assets and to conduct its business in
5
the manner described in the Trust Prospectus, except to the extent that the
failure to obtain or file the foregoing would not have a material adverse
effect on the Trust and except such as may be required by the securities or
Blue Sky laws of the various states in connection with the offer and sale of
the Equity Trust Securities.
(r) There are no material restrictions, limitations or regulations with
respect to the ability of the Trust to invest its assets as described in the
Trust Prospectus, other than as described therein.
(s) The Trust has good title to all properties owned by it, in each case,
free and clear of all mortgages, pledges, liens, security interests, claims,
restrictions or encumbrances of any kind except such as (a) are described in
the Trust Prospectus or (b) do not, singly or in the aggregate, materially
affect the value of such property and do not interfere with the use made and
proposed to be made of such property by the Trust.
(t) There are no legal or governmental proceedings pending to which the
Trust is a party or of which any property of the Trust is the subject which, if
determined adversely to the Trust, would individually or in the aggregate have
a material adverse effect on the current or future financial position or
results of operations of the Trust; and, to the best of the Trust's knowledge,
no such proceedings are threatened or contemplated by governmental authorities
or threatened by others.
(u) The statement of assets, liabilities and capital included in the Trust
Registration Statement and the Trust Prospectus, together with the notes
thereto, present fairly the financial position of the Trust at the date
indicated, and such financial statement has been prepared in conformity with
generally accepted accounting principles in the United States of America.
(v) The accountants who certified the financial statements and supporting
schedules included in the Trust Registration Statement are independent public
accountants as required by the Act and the rules and regulations of the
Commission thereunder.
(w) The Trust has not taken and will not take, directly or indirectly, any
action designed to or which has constituted or which might reasonably be
expected to cause or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Equity Trust Securities or the Shares.
2. Representations and Warranties of the Company. The Company represents
and warrants to, and agrees with, each Underwriter as set forth below in this
Section 2:
(a) The Company meets the requirements for use of Form S-3 under the Act.
The Company Registration Statement and any Rule 462(b) Company Registration
Statement has become effective under the Act. At the respective times the
Company Registration Statement, any Rule 462(b) Company Registration Statement
and any post-effective amendments thereto become effective (the "Company
Effective Date") and on each Settlement Date, (A) the Company Registration
Statement and any amendments and supplements thereto, comply and will
6
comply in all material respects with the requirements of the Act, (B) neither
the Company Registration Statement nor any amendment or supplement thereto
includes or will include an untrue statement of a material fact or omits or
will omit to state any material fact required to be stated therein or necessary
to make the statements therein not misleading and (C) neither the Company
Prospectus nor any amendment or supplement thereto includes or will include an
untrue statement of a material fact or omits or will omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that this representation and warranty does not apply to statements or omissions
made in reliance upon and in conformity with information furnished to the
Company in writing (i) by any Underwriter through the Representatives expressly
for use in the Company Registration Statement or the Company Prospectus, (ii)
by or on behalf of the Counterparties or AT&T Corp., a New York corporation
("AT&T") expressly for use in the Company Registration Statement or the Company
Prospectus or (iii) by or on behalf of the Trust expressly for use in the
Company Registration Statement or the Company Prospectus. The Company makes no
representations or warranties as to the Trust Registration Statement or the
Trust Prospectus.
(b) The documents incorporated or deemed to be incorporated by reference
in the Company Prospectus pursuant to Item 12 of Form S-3 under the Act, at the
time they were or hereafter are filed with the Commission, complied and will
comply in all material respects with the requirements of the Exchange Act and,
when read together and with the other information in the Company Prospectus, at
the time the Company Registration Statement became effective and at all times
subsequent thereto up to the Closing Date and any Settlement Date, did not and
will not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(c) KPMG LLP, who are reporting upon the audited financial statements and
schedules included or incorporated by reference in the Company Registration
Statement, are independent accountants as required by the Act.
(d) This Agreement has been duly authorized, executed and delivered by the
Company.
(e) The consolidated historical financial statements of the Company and
its subsidiaries included or incorporated by reference in the Company
Registration Statement and the Company Prospectus present fairly the
consolidated financial position of the Company and its subsidiaries as of the
dates indicated and the consolidated results of operations and changes in
financial position of the Company and its subsidiaries for the periods
specified. Such financial statements have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved. The financial statement schedules, if any,
included in the Company Registration Statement present fairly the information
required to be stated therein. The selected financial data included in the
Company Prospectus present fairly the information shown therein and have been
compiled on a basis consistent with that of the audited consolidated financial
statements included or incorporated by reference in the Company Registration
Statement.
7
(f) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware with power and authority
(corporate and other) under such laws to own, lease and operate its properties
and conduct its business as described in the Company Prospectus; and the
Company is duly qualified to transact business as a foreign corporation and is
in good standing in each other jurisdiction in which it owns or leases property
of a nature, or transacts business of a type, that would make such
qualification necessary, except to the extent that the failure to so qualify or
be in good standing would not have a material adverse effect on the Company and
its subsidiaries, considered as one enterprise.
(g) The subsidiaries of the Company set forth on Schedule II are, as of
the date hereof, all of the "Restricted Subsidiaries", as such term is defined
in the indenture dated March 22, 2001, between CSC Holdings, Inc. (a
wholly-owned subsidiary of the Company) and the Bank of New York, Trustee. The
subsidiaries of the Company set forth on Schedule III are "Unrestricted
Subsidiaries", as such term is defined in such indenture (the restricted
subsidiaries and the unrestricted subsidiaries are hereinafter referred to
collectively as the "Subsidiaries"). The Subsidiaries on Schedules II and III
with an asterisk by their names, together with CSC Holdings, Inc., are the only
subsidiaries of the Company which had at December 31, 2000 assets in excess of
10% of the consolidated assets of the Company and its subsidiaries as at that
date or had, in the aggregate, for the fiscal year then ended revenues or
operating cash flow in excess of 10% of consolidated revenues or consolidated
operating cash flow of the Company and its subsidiaries for such period (such
Subsidiaries are referred to herein as the "Material Subsidiaries"). In making
this determination, any subsidiary acquired after December 31, 2000 shall be
deemed to have been acquired as of such date.
(h) Each Material Subsidiary that is a corporation is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation with power and authority (corporate and other) under such laws to
own, lease and operate its properties and conduct its business; and each such
Material Subsidiary is duly qualified to transact business as a foreign
corporation and is in good standing in each other jurisdiction in which it owns
or leases property of a nature, or transacts business of a type, that would
make such qualification necessary, except to the extent that the failure to be
so qualified or in good standing would not have a material adverse effect on
the Company and its subsidiaries, considered as one enterprise. All of the
outstanding shares of capital stock of each Material Subsidiary that is a
corporation have been duly authorized and validly issued and are fully paid and
nonassessable and, except as disclosed on Schedule II or III to this Agreement
or as disclosed or contemplated by the Company Registration Statement, are
owned by the Company, directly or through one or more subsidiaries, free and
clear of any pledge, lien, security interest, mortgage, charge, claim, equity
or encumbrance of any kind.
(i) Each of the Material Subsidiaries in which the Company or a subsidiary
of the Company is a limited or general partner (hereinafter called the
"Partnerships") has been duly formed and is validly existing as a limited or
general partnership, as the case may be, under the laws of its jurisdiction of
organization, with full power and authority to own, lease and operate
properties and conduct its business; all necessary filings with respect to the
formation of the Partnerships as limited or general partnerships (as the case
may be) have been made under such laws; and each of the Partnerships is duly
qualified to transact business and is in good standing in
8
each other jurisdiction in which it owns or leases property of a nature, or
transacts business of a type, that would make such qualification necessary,
except to the extent that the failure to be so qualified or in good standing
would not have a material adverse effect on the Company and its subsidiaries,
considered as one enterprise.
(j) The Company had, at June 30, 2001, a duly authorized and outstanding
capitalization as set forth in the Company Prospectus under the caption
"Capitalization"; the Shares conform in all material respects to the
description thereof contained in the Company Prospectus and such description
conforms in all material respects to the rights set forth in the instruments
defining the same.
(k) All of the outstanding shares of capital stock of the Company,
including the Shares, have been duly authorized and validly issued and are
fully paid and non-assessable; and none of the outstanding shares of capital
stock of the Company, including the Shares, was issued in violation of the
preemptive rights of any stockholder of the Company.
(l) Since the respective dates as of which information is given in the
Company Registration Statement and the Company Prospectus, except as otherwise
stated therein or contemplated thereby, there has not been (A) any material
loss or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree and there has not been any change
in the capital stock or long-term debt of the Company or any of its
Subsidiaries or any change which the Company has reasonable cause to believe
will involve any material adverse change, or any development involving a
prospective material adverse change, in or affecting the financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, considered as one enterprise, or (B) any transaction entered into
by the Company or any Subsidiary, other than in the ordinary course of
business, that is material to the Company and its subsidiaries, considered as
one enterprise, or (C) any dividend or distribution of any kind declared, paid
or made by the Company on its capital stock.
(m) Neither the Company nor any Subsidiary is in default in the
performance or observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement, note, lease or
other agreement or instrument to which it is a party or by which it may be
bound or to which any of its properties may be subject, except for such
defaults that would not have a material adverse effect on the financial
position, stockholders' equity or results of operations of the Company and its
subsidiaries, considered as one enterprise. The execution and delivery of this
Agreement and the compliance by the Company with its obligations hereunder at
the Closing Date and any Settlement Date shall have been duly authorized by all
necessary corporate action on the part of the Company and do not and will not
result in any violation of the charter or by-laws of the Company or any
Subsidiary, and do not and will not conflict with, or result in a breach of any
of the terms or provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any Subsidiary under:
(i) any contract, indenture, mortgage, loan agreement, note, lease or
other agreement or instrument to which the Company or any Subsidiary is a
party or by which it may be
9
bound or to which any of its properties may be subject (except for such
conflicts, breaches or defaults or liens, charges or encumbrances that
would not have a material adverse effect on the financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, considered as one enterprise); or
(ii) any existing applicable law, rule, regulation, judgment, order
or decree of any government, governmental instrumentality or court,
domestic or foreign, having jurisdiction over the Company or any
Subsidiary or any of its properties (except for such conflicts, breaches
or defaults or liens, charges or encumbrances that would not have a
material adverse effect on the financial position, stockholders' equity or
results of operations of the Company and its subsidiaries, considered as
one enterprise); or
(iii) any material agreement or other material instrument (including
any franchise agreement, license, permit or other governmental
authorization granted by the Federal Communications Commission
(hereinafter called the "FCC"), The New York State Public Service
Commission on Cable Television or any other governing body having
jurisdiction over the Company's cable television operations) binding upon
the Company or any of its Subsidiaries (except for such conflicts,
breaches or defaults or liens, charges or encumbrances that would not have
a material adverse effect on the financial position, stockholders' equity
or results of operations of the Company and its subsidiaries, considered
as one enterprise).
(n) The statements in the Company Prospectus under "Risk Factors" and
"Description of Capital Stock," and the statements in the Company's annual
report on Form 10-K, as supplemented and amended by the Company's Form 10-K/As,
for the year ended December 31, 2000 (the "2000 Form 10-K"), which is
incorporated by reference in the Company Prospectus, under "Business --
Competition -- Cable Television" and "Business -- Regulation -- Cable
Television", and in the Company Registration Statement in Item 15, and the
statements cross-referenced therein, insofar as such statements constitute a
summary of the legal matters, documents or proceedings referred to therein,
with respect to such legal matters, documents and proceedings, do not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading.
(o) Except as disclosed in the Company Prospectus, no authorization,
approval, consent or license of any government, governmental instrumentality or
court, domestic or foreign (other than under the Act and the securities or the
blue sky laws of the various states) is required for the execution, delivery or
performance of this Agreement by the Company, except for any consent, approval,
authorization, order or registration the failure of which to obtain or make or
the absence of which would result in no material adverse effect on the Company
and its subsidiaries, considered as one enterprise.
(p) Except as disclosed in the Company Prospectus, there is no action,
suit or proceeding before or by any government, governmental instrumentality or
court, domestic or foreign, now pending or, to the best of the Company's
knowledge, threatened against or affecting the Company or any Subsidiary that
the Company has reasonable cause to believe will result in any material adverse
change in the consolidated financial position, stockholders' equity or results
10
of operations of the Company and its subsidiaries, considered as one
enterprise, or that will materially and adversely affect the properties or
assets of the Company and its subsidiaries, considered as one enterprise, or
that the Company has reasonable cause to believe will materially adversely
affect the consummation of the transactions contemplated in this Agreement.
(q) There are no contracts or documents of a character required to be
described in the Company Registration Statement, the Company Prospectus or the
documents incorporated by reference therein or to be filed as exhibits to the
Company Registration Statement that are not described and filed as required.
(r) The Company and the Subsidiaries each has good and marketable title to
all material properties and assets described in the Company Prospectus as owned
by it, free and clear of all liens, charges, encumbrances or restrictions,
except such as (A) are described in the Company Prospectus or (B) are neither
material in amount nor materially significant in relation to the business of
the Company and its subsidiaries, considered as one enterprise; and any
material real property and buildings under lease by the Company and the
Subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as do not interfere, to an extent material to the Company
and its subsidiaries, considered as one enterprise, with the use made and
proposed to be made of such property and buildings by the Company and the
Subsidiaries.
(s) Except as disclosed in the Company Prospectus, the Company and the
Subsidiaries each owns, possesses or has obtained all material agreements,
governmental licenses, permits, certificates, consents, orders, approvals and
other material authorizations (including, without limitation, all material
governmental authorizations and agreements with public utilities and microwave
transmission companies and pole access and rental agreements) necessary to own
or lease, as the case may be, and to operate its properties and to carry on its
business as presently conducted; and neither the Company nor any Subsidiary has
received any notice of proceedings relating to revocation or modification of
any such licenses, permits, certificates, consents, orders, approvals or
authorizations.
(t) To the best knowledge of the Company and except as disclosed in the
Company Prospectus, no labor problem exists with its employees or with
employees of the Subsidiaries that could reasonably be expected to materially
and adversely affect the financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, considered as one enterprise.
3. Representations and Warranties of Counterparties. Each Counterparty
(with respect to itself and AT&T) and AT&T (with respect to each Counterparty
and itself) represents and warrants to, and agrees with, each Underwriter, the
Company and the Trust that:
(a) Such Counterparty has been duly organized, is validly existing as
a corporation in good standing under the laws of the jurisdiction in which
it is chartered or organized, with full power and authority to own its
property.
11
(b) Such Counterparty has full legal right, capacity, power and
authority to enter into and perform its obligations under this Agreement,
the Contract and Collateral Agreement to which it is a party and the
letter agreement between Counterparties and Salomon Smith Barney relating
to expenses of the Trust (the "Reimbursement Agreement").
(c) This Agreement has been duly authorized, executed and delivered
by such Counterparty. The Contract and the Collateral Agreement to which
it is a party and the Reimbursement Agreement have been duly authorized,
executed and delivered by such Counterparty and, assuming due
authorization, execution and delivery by the other parties thereto, are
valid and binding agreements of such Counterparty, enforceable against it
in accordance with their terms except as such enforceability may be
limited by applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally and by general equitable principles.
(d) The execution and delivery by such Counterparty and AT&T of this
Agreement, the execution and delivery by such Counterparty of the Contract
and Collateral Agreement to which it is a party and the Reimbursement
Agreement, the performance by such Counterparty of its obligations
hereunder and thereunder and the consummation of the transactions herein
and therein contemplated (including, without limitation, (i) the pledge by
such Counterparty to the Trust of a security interest in the Shares
pursuant to its respective Collateral Agreement, (ii) following an
Acceleration Event (as defined in the Contracts), any action by the
Collateral Agent to foreclose on the Shares and deliver the Shares to the
Trust, and any action by the Trust to distribute the Shares to the holders
of the Equity Trust Securities pursuant to the terms of the Trust
Agreement and the Collateral Agreements, and (iii) if the Counterparties
do not elect the Cash Delivery Option or elect the Cash Delivery Option
but fail thereafter to deliver cash as required by the Contracts, any
action by the Collateral Agent to deliver the Shares to the Trust or by
the Trust to distribute the Shares to the holders of the Equity Trust
Securities pursuant to the terms of the Trust Agreement and the Collateral
Agreements) do not and will not, whether with or without the giving of
notice or passage of time or both, conflict with, result in a breach or
violation of, or default under, any contract, indenture, mortgage, deed of
trust, loan or credit agreement, note or other agreement or instrument to
which such Counterparty or AT&T is a party or by which it may be bound
(including, without limitation the Stockholders Agreement dated March 4,
1998, as amended by the Letter Agreements dated August 8, 2001, September
10, 2001 and October 5, 2001 (as so amended, the "Stockholders
Agreement")), nor will such actions result in any violation of the
provisionsof the certificate of incorporation or by-laws of such
Counterparty or AT&T or any law, order, rule or regulation applicable to
such Counterparty or AT&T of any court, federal or state regulatory body,
administrative agency or other governmental body having jurisdiction over
such Counterparty or AT&T or its properties. Upon the occurrence of any of
the events listed in clauses (ii) and (iii) in the preceding sentence, the
Shares referred to in such clauses will be free and clear of any
restriction imposed on the Shares by the Stockholders Agreement. Amounts
received by such Counterparty under the Contract to which it is a party at
the Closing Date and, if any Option Equity Trust Securities are purchased,
at the time of delivery thereof pursuant to
12
Section 4(b), will not be used by such Counterparty for the purpose,
whether immediate, incidental or ultimate, of buying or carrying a margin
stock, as such terms are defined in Regulation U promulgated by the Board
of Governors of the Federal Reserve System.
(e) Such Counterparty is not and, after giving effect to the
transactions contemplated in the Contract and the Collateral Agreement to
which it is a party and the offering and sale of the Equity Trust
Securities contemplated by this Agreement, will not be an "investment
company" or an entity "controlled" by an "investment company" as such
terms are defined in the Investment Company Act.
(f) Such Counterparty and AT&T is now and on the Exchange Date will
be the beneficial owner of the Shares to be sold under the Contract to
which it is a party free and clear of all liens, encumbrances, equities
and claims, except for those created pursuant to the Collateral Agreement
to which it is a party, and, assuming that the Trust acquires its interest
in such Shares in exchange for the Firm Purchase Price and the Additional
Purchase Price (as defined in the Collateral Agreements) in accordance
with the terms of the Contract to which it is a party without notice of
any adverse claim (within the meaning of Section 8-105 of the New York
Uniform Commercial Code ("UCC")), on the Exchange Date the Trust will have
acquired either the Shares free of any adverse claim (within the meaning
of Section 8-102(a)(1) of the UCC) or a security entitlement (within the
meaning of Section 8-102(a)(17) of the UCC) to such Shares, in accordance
with the terms of the Contract to which such Counterparty is a party. Such
Counterparty has the full right, power and authority, and all
authorization and approvals required by law, to pledge and assign the
Shares to be pledged and assigned by such Counterparty pursuant to the
Collateral Agreement to which it is a party. The sale, transfer and
delivery of any Shares to be delivered by such Counterparty pursuant to
the Contract to which it is a party is not, and at the time of delivery of
such Shares will not be, subject to any right of first refusal or similar
rights of any person pursuant to any contract to which such Counterparty
or any shareholder of such Counterparty is a party or by which any of them
is bound.
(g) At the respective times the Company Registration Statement, any
Company Rule 462(b) Registration Statement become effective, at the
Closing Time (and, if any are purchased on a date other than the Closing
Date, at Settlement Date, (A) neither the Company Registration Statement
nor any amendment or supplement thereto includes or will include an untrue
statement of a material fact or omits or will omit to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading and (B) neither the Company Prospectus nor any
amendment or supplement thereto includes or will include an untrue
statement of a material fact or omits or will omit to state a material
fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided,
however, that this representation and warranty applies only to statements
or omissions relating to such Counterparty or AT&T furnished to the
Company in writing by or on behalf of such Counterparty or AT&T expressly
for use in the Company Registration Statement or Company Prospectus.
13
(h) Such Counterparty hereby repeats and confirms as if set forth in
full herein each of the representations, warranties, guarantees and
agreements made by it in the Contract and the Collateral Agreement to
which it is a party and agrees that the representations, warranties,
guarantees and agreements therein and herein are made hereby for the
benefit of, and may be relied upon by, (i) the Underwriters, Shearman &
Sterling and Cleary, Gottlieb, Steen & Hamilton, counsel to the
Underwriters and (ii) the Company and Sullivan & Cromwell, counsel to the
Company.
(i) Neither such Counterparty nor AT&T has taken or will take,
directly or indirectly, any action which is designed to or which has
constituted or which might reasonably be expected to cause or result,
under the Exchange Act or otherwise, in stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale
of the Shares or the Equity Trust Securities.
(j) No consent, approval, license, authorization, order or validation
of, and no filing, recording, or registration with, any court or
governmental authority, agency or body is required for the compliance by
such Counterparty with all of the provisions of this Agreement, the
Contract and the Collateral Agreement to which it is a party and the
Reimbursement Agreement, except such as have been obtained under the Act
and such as may be required under the blue sky laws in connection with the
purchase and distribution of the Equity Trust Securities by the
Underwriters and the distribution of the Shares pursuant to the terms of
the Equity Trust Securities in the manner contemplated herein and in the
Trust Prospectus and the Company Prospectus.
(k) Such Counterparty is an indirectly, wholly-owned subsidiary of
AT&T.
Any certificate signed by such Counterparty or any director or officer
thereof, as the case may be, and delivered to the Representatives or counsel
for the Underwriters in connection with the offering of the Equity Trust
Securities shall be deemed a representation and warranty by such Counterparty
(and not of such officer in his individual capacity), as to matters covered
thereby, to each Underwriter.
4. Purchase and Sale.
(a) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Trust agrees to sell to
each Underwriter, and each Underwriter agrees, severally and not jointly, to
purchase from the Trust, at a purchase price of $36.05 per Equity Trust
Security, the amount of the Underwritten Equity Trust Securities set forth
opposite such Underwriter's name in Schedule I hereto.
(b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Trust hereby grants an
option to the several Underwriters to purchase, severally and not jointly, up
to 3,511,068 Option Equity Trust Securities at the same purchase price per
Equity Trust Security as the Underwriters shall pay for the Underwritten Equity
Trust Securities. The option may be exercised only to cover over-allotments in
the sale of the Underwritten Equity Trust Securities by the Underwriters. The
option may be exercised in
14
whole or in part at any time (but not more than once) on or before the 30th day
after the date of the Trust Prospectus upon written or facsimile notice by the
Representatives to the Trust setting forth the number of Option Equity Trust
Securities as to which the several Underwriters are exercising the option and
the Settlement Date. Delivery of certificates for the Option Equity Trust
Securities by the Trust, and payment therefor to the Trust, shall be made as
provided in Section 5 hereof. The number of shares of the Option Equity Trust
Securities to be purchased by each Underwriter shall be the same percentage of
the total number of Option Equity Trust Securities to be purchased by the
several Underwriters as such Underwriter is purchasing of the Underwritten
Equity Trust Securities, subject to such adjustments as you in your absolute
discretion shall make to eliminate any fractional Equity Trust Securities.
(c) As compensation to the Underwriters for their commitment hereunder,
and in view of the fact that the proceeds of the sale of the Equity Trust
Securities will be used by the Trust as specified in the Contracts, the
Counterparties agree to pay to Salomon Smith Barney, at the time of each
delivery of Equity Trust Securities pursuant to Section 5, an amount equal to
$1.08 per Equity Trust Security being delivered at such time, plus $1.08 per
Equity Trust Security for each Subscription Equity Trust Securities owned by
Salomon Smith Barney after giving effect to the subdivision of the Subscription
Equity Trust Securities provided for in the Subscription Agreement.
5. Delivery and Payment. Delivery of and payment for the Underwritten
Equity Trust Securities and the Option Equity Trust Securities (if the option
provided for in Section 4(b) hereof shall have been exercised on or before the
first Business Day prior to the Closing Date) shall be made at 10:00 A.M., New
York City time, on October 23, 2001, or at such time on such later date not
later than five Business Days after the foregoing date as the Representatives
shall designate, which date and time may be postponed by agreement among the
Representatives, the Trust and Counterparties or as provided in Section 13
hereof (such date and time of delivery and payment for the Equity Trust
Securities herein called the "Closing Date"). Delivery of the Equity Trust
Securities shall be made to the Representatives for the respective accounts of
the several Underwriters against payment by the several Underwriters through
the Representatives of the purchase price thereof to or upon the order of the
Trust by wire transfer payable in immediately available same-day funds to an
account specified by the Trust in writing at least two Business Days in advance
of the Closing Date. Delivery of the Equity Trust Securities shall be made
through the facilities of the Depository Trust Company unless the
Representatives shall otherwise instruct.
The Trust agrees to have the Equity Trust Securities available for
inspection and checking by the Representatives in New York, New York, not later
than 1:00 P.M. on the Business Day prior to the Closing Date.
If the option provided for in Section 4(b) hereof is exercised after the
first Business Day prior to the Closing Date, the Trust will deliver the Option
Equity Trust Securities (at the expense of the Trust) to the Representatives on
the date specified by the Representatives (which shall be within three Business
Days after exercise of said option) for the respective accounts of the several
Underwriters, against payment by the several Underwriters through the
Representatives of the purchase price thereof to or upon the order of the Trust
by wire transfer
15
payable in immediately available same-day funds to an account specified by the
Trust in writing at least two Business Days in advance of such Settlement Date.
If settlement for the Option Equity Trust Securities occurs after the Closing
Date, the Trust, the Company and Counterparties will deliver to the
Representatives on the Settlement Date for the Option Equity Trust Securities,
and the obligation of the Underwriters to purchase the Option Equity Trust
Securities shall be conditioned upon receipt of, supplemental opinions,
certificates and letters confirming as of such date the opinions, certificates
and letters delivered on the Closing Date pursuant to Section 10 hereof.
6. Offering by the Underwriters. It is understood that the several
Underwriters propose to offer the Equity Trust Securities for sale to the
public as set forth in the Trust Prospectus.
7. Agreements of the Trust. The Trust agrees with the several Underwriters
that:
(a) The Trust will use its best efforts to cause the Trust
Registration Statement, if not effective at the Execution Time, and any
amendment thereof, to become effective. Prior to the termination of the
offering of the Equity Trust Securities, the Trust will not file any
amendment of the Trust Registration Statement or supplement to the Trust
Prospectus or any Rule 462(b) Trust Registration Statement unless the
Trust has furnished you a copy for your review prior to filing and will
not file any such proposed amendment or supplement to which you object.
Subject to the foregoing sentence, if the Trust Registration Statement has
become or becomes effective pursuant to Rule 430A, or filing of the Trust
Prospectus is otherwise required under Rule 424(b), the Trust will cause
the Trust Prospectus, properly completed, and any supplement thereto to be
filed with the Commission pursuant to the applicable paragraph of Rule
424(b) within the time period prescribed and will provide evidence
satisfactory to the Representatives of such timely filing. The Trust will
promptly advise the Representatives (1) when the Trust Registration
Statement, if not effective at the Execution Time, shall have become
effective, (2) when the Trust Prospectus, and any supplement thereto,
shall have been filed (if required) with the Commission pursuant to Rule
424(b) or when any Rule 462(b) Trust Registration Statement shall have
been filed with the Commission, (3) when, prior to termination of the
offering of the Equity Trust Securities, any amendment to the Trust
Registration Statement or any Rule 462(b) Trust Registration Statement,
shall have been filed or become effective, (4) of any request by the
Commission or its staff for any amendment of the Trust Registration
Statement, or any Rule 462(b) Trust Registration Statement, or for any
supplement to the Trust Prospectus or for any additional information, (5)
of the issuance by the Commission of any stop order suspending the
effectiveness of the Trust Registration Statement or the institution or
threatening of any proceeding for that purpose and (6) of the receipt by
the Trust of any notification with respect to the suspension of the
qualification of the Equity Trust Securities for sale in any jurisdiction
or the institution or threatening of any proceeding for such purpose. The
Trust will use its best efforts to prevent the issuance of any such stop
order or the suspension of any such qualification and, if issued, to
obtain as soon as possible the withdrawal thereof.
16
(b) If, at any time when a prospectus relating to the Equity Trust
Securities is required to be delivered under the Act, any event occurs as
a result of which the Trust Prospectus as then supplemented would include
any 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
under which they were made not misleading, or if it shall be necessary to
amend the Trust Registration Statement or supplement the Trust Prospectus
to comply with the Act or the Exchange Act or the respective rules
thereunder, the Trust promptly will (1) notify the Representatives of any
such event, (2) prepare and file with the Commission, subject to the
second sentence of paragraph (a) of this Section 7, an amendment or
supplement which will correct such statement or omission or effect such
compliance and (3) supply any supplemental Trust Prospectus to you in such
quantities as you may reasonably request.
(c) The Trust will furnish to the Representatives and counsel for the
Underwriters, without charge, signed copies of the Trust Registration
Statement (including exhibits thereto) and to each other Underwriter a
copy of the Trust Registration Statement (without exhibits thereto). The
Trust will furnish to the Representatives and counsel for the
Underwriters, without charge, copies of the Trust Registration Statement
(including exhibits thereto). The Trust will furnish to the Underwriters
not later than (i) 12:00 P.M., New York City time, on the Business Day
immediately following the date of determination of the public offering
price of the Equity Trust Securities, if such determination occurred at or
prior to 12:00 noon, New York City time, on such date or (ii) 9:00 A.M.,
New York City time, on the second Business Day immediately following the
date on which the public offering price was determined, if such
determination occurred after 12:00 noon, New York City time, on such date,
as many copies of each Preliminary Trust Prospectus, the Trust Prospectus
and any supplement thereto as the Representatives may reasonably request;
further, so long as delivery of a prospectus by an Underwriter or any
dealer may be required by the Act, as many copies of each Preliminary
Trust Prospectus and the Trust Prospectus and any supplement thereto as
the Representatives may reasonably request.
(d) The Trust will arrange, if necessary, for the qualification of
the Equity Trust Securities and the Shares for sale under the laws of such
jurisdictions as the Representatives may designate, will maintain such
qualifications in effect so long as required for the distribution of the
Equity Trust Securities and will pay any fee of the National Association
of Securities Dealers, Inc. (the "NASD"), in connection with its review,
if any, of the Trust Registration Statement and the offering of the Equity
Trust Securities.
8. Agreements of the Company. The Company agrees with the several
Underwriters that:
(a) The Company will use its best efforts to cause the Company
Registration Statement, if not effective at the Execution Time, and any
amendment thereof, to become effective. Subject to Section 8(c), if filing
of the Company Prospectus is required under Rule 424(b), the Company will
cause the Company Prospectus, properly completed, and
17
any supplement thereto to be filed with the Commission pursuant to the
applicable paragraph of Rule 424(b) within the time period prescribed. The
Company will promptly advise the Representatives when the Company
Registration Statement, if not effective at the Execution Time, shall have
become effective. The Company has furnished or will furnish to the
Underwriters as many copies of any preliminary prospectus and the Company
Prospectus as the Representatives reasonably request.
(b) During the period when the Company Prospectus is required by the
Act to be delivered in connection with sales of the Equity Trust
Securities, the Company will, subject to Section 8(c), file promptly all
documents required to be filed with the Commission pursuant to Section 13
or 14 of the Exchange Act subsequent to the time the Company Registration
Statement becomes effective.
(c) During the period when the Company Prospectus is required by the
Act to be delivered in connection with sales of the Equity Trust
Securities, the Company will inform the Representatives of its intention
to file any amendment to the Company Registration Statement, any
supplement to the Company Prospectus or any document that would as a
result thereof be incorporated by reference in the Company Prospectus;
will furnish the Representatives with copies of any such amendment,
supplement or other document a reasonable time in advance of filing; and
will not file any such amendment, supplement or other document in a form
to which the Representatives shall reasonably object.
(d) During the period when the Company Prospectus is required by the
Act to be delivered in connection with sales of the Equity Trust
Securities, the Company will notify the Representatives immediately, and
confirm the notice in writing (with respect to clause (i), upon request),
(i) of the effectiveness of any amendment to the Company Registration
Statement, (ii) of the receipt of any comments from the Commission with
respect to the Company Registration Statement or the Company Prospectus,
(iii) of any request by the Commission to amend the Company Registration
Statement or any supplement to the Company Prospectus or for additional
information relating thereto and (iv) of the issuance by the Commission of
any stop order suspending the effectiveness of the Company Registration
Statement, of the suspension of the qualification of the Shares for
offering or sale in any jurisdiction, or of the institution or to the
Company's knowledge, the threatening of any proceedings for any of such
purposes. The Company will use every reasonable effort to prevent the
issuance of any such stop order or of any order preventing or suspending
such use and, if any such order is issued, to obtain the lifting thereof
at the earliest possible moment.
(e) The Company has furnished or will furnish to the Representatives
one copy of the originally executed Company Registration Statement (as
originally filed) and of each amendment thereto (including exhibits filed
therewith or incorporated by reference therein and documents incorporated
or deemed to be incorporated by reference therein) and a copy of all
originally executed consents and certificates of experts, and has
furnished or will furnish to each of the Representatives as many conformed
copies of the Company Registration Statement as originally filed and of
each amendment thereto
18
(including documents incorporated or deemed to be incorporated by
reference into the Company Prospectus but without exhibits) as the
Representatives may reasonably request.
(f) The Company will use its reasonable best efforts, in cooperation
with the Trust and the Underwriters, to qualify the Shares for offering
and sale under the applicable securities laws of such states and other
jurisdictions as the Representatives may designate and to maintain such
qualifications in effect for a period of not less than one year from the
date hereof; provided, however, that the Company shall not be obligated to
file any general consent to service of process or to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject. The
Company will file such statements and reports as may be required by the
laws of each jurisdiction in which the Shares have been qualified as above
provided.
(g) The Company will make generally available to its security holders
as soon as practicable, but not later than 45 days after the close of the
period covered thereby (90 calendar days in the case the period
corresponds to the fiscal year of the Company), an earnings statement of
the Company (in form complying with the provisions of Rule 158 under the
Act), covering a period of 12 months beginning after the effective date of
the Registration Statement and covering a period of 12 months beginning
after the effective date of any post-effective amendment to the Company
Registration Statement but not later than the first day of the Company's
fiscal quarter next following such effective date.
(h) The Company will use its reasonable best efforts to comply with
the Act and the Exchange Act. If at any time when the Company Prospectus
is required by the Act to be delivered in connection with sales of the
Equity Trust Securities any event shall occur or condition exist as a
result of which it is necessary to amend the Company Registration
Statement or amend or supplement the Company Prospectus in order that the
Company Prospectus will not include an untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
therein not misleading in the light of the circumstances existing at the
time it is delivered to a purchaser, or if it shall be necessary at any
such time to amend the Company Registration Statement or amend or
supplement the Company Prospectus in order to comply with the requirements
of the Act, the Company will promptly prepare and file with the
Commission, subject to Section 8(d), such amendment or supplement as may
be necessary to correct such untrue statement or omission or to make the
Company Registration Statement or the Prospectus comply with such
requirements.
(i) For a period of three years after the Closing Date, the Company
will furnish to the Representatives copies of all annual reports,
quarterly reports and current reports filed with the Commission on Forms
10-K, 10-Q and 8-K, or such other similar forms as may be designated by
the Commission, and such other documents, reports and information as shall
be furnished by the Company to its stockholders generally.
19
(j) The Company will not be or become, at any time prior to the
expiration of three years after the Closing Date, an open-end investment
trust, unit investment trust or face-amount certificate company that is or
is required to be registered under Section 8 of the Investment Company Act
of 1940, as amended.
(k) The Company will not, without the prior written consent of the
Representatives, offer, sell, contract to sell or otherwise dispose of any
Shares (except for shares issuable upon conversion of securities or
exercise of warrants and options outstanding as of the date of the Company
Prospectus or pursuant to employee benefit plans) or warrants, rights or
options convertible into or exercisable or exchangeable for Shares (except
for the rights or options pursuant to employee benefits plans existing on
the date of the Company Prospectus) at any time for a period of 90 days
after the date of the Company Prospectus.
9. Agreements of Counterparties. Each Counterparty agrees with each of the
Underwriters that:
(a) Each of such Counterparty and AT&T and its other subsidiaries,
will comply with the last paragraph of Section 2 of the Stockholders
Agreement, as in effect on the date hereof. The foregoing sentence shall
not apply to the Shares to be sold hereunder.
(b) Such Counterparty will not take any action designed to or which
has constituted or which might reasonably be expected to cause or result,
under the Exchange Act or otherwise, in stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale
of the Equity Trust Securities or the Shares.
(c) Such Counterparty will advise you promptly, and if requested by
you, will confirm such advice in writing, so long as delivery of a
prospectus relating to the Shares (including with respect to the offering
and sale of the Equity Trust Securities) by an Underwriter or dealer may
be required under the Act, of any change in the information furnished to
the Company in writing by or on behalf of such Counterparty or AT&T in the
Company Registration Statement or the Company Prospectus relating to such
Counterparty or AT&T.
10. Conditions to the Obligations of the Underwriters. The obligations of
the Underwriters to purchase the Underwritten Equity Trust Securities and the
Option Equity Trust Securities, as the case may be, shall be subject to the
accuracy of the representations and warranties on the part of the Trust, the
Company and Counterparty contained herein as of the Execution Time, the Closing
Date and any Settlement Date pursuant to Section 4(b) hereof, to the accuracy
of the statements of the Trust, the Company and Counterparty made in any
certificates pursuant to the provisions hereof, to the performance by each of
the Trust, the Company and Counterparty of their respective obligations
hereunder and to the following additional conditions:
(a) If the Trust Registration Statement or the Company Registration
Statement has not become effective prior to the Execution Time, unless the
Representatives agree in writing to a later time, such Trust Registration
Statement or Company Registration
20
Statement will become effective not later than (i) 6:00 P.M. New York City
time on the date of determination of the public offering price of the
Equity Trust Securities, if such determination occurred at or prior to
3:00 P.M. New York City time on such date or (ii) 9:30 A.M. New York City
time on the Business Day following the day on which the public offering
price of the Equity Trust Securities was determined, if such determination
occurred after 3:00 P.M. New York City time on such date; if filing of the
Trust Prospectus or the Company Prospectus, or any supplement thereto, is
required pursuant to Rule 497(h) or Rule 424(b), such Trust Prospectus or
Company Prospectus, and any such supplement, will be filed in the manner
and within the time period required by such Rule; and no stop order
suspending the effectiveness of the Trust Registration Statement or the
Company Registration Statement shall have been issued and no proceedings
for that purpose shall have been instituted or threatened.
(b) The Representatives shall have received the opinion of Richards,
Layton & Finger, special Delaware counsel for the Trust, dated the Closing
Date and addressed to the Representatives, with respect to such matters as
the Representatives may reasonably request.
(c) The Company Registration Statement, including any Rule 462(b)
Company Registration Statement, has become effective and at the Closing
Date, no stop order suspending the effectiveness of the Company
Registration Statement shall have been issued under the Act and no
proceedings for that purpose shall have been instituted or shall be
pending or, to the knowledge of the Company, shall be contemplated by the
Commission, and any request on the part of the Commission for additional
information shall have been complied with to the reasonable satisfaction
of counsel for the Underwriters.
(d) The Representatives shall have received a signed opinion of
Sullivan & Cromwell, counsel for the Company, dated as of the Closing
Date, in form and substance satisfactory to counsel for the Underwriters,
to the effect that:
(i) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware.
(ii) The Shares have been duly authorized and validly issued and
are fully paid and non-assessable.
(iii) The execution and delivery of this Agreement by the
Company, and the compliance by the Company with the terms of this
Agreement do not and will not result in any violation of the
Certificate of Incorporation or By-laws of the Company, in each case
as in effect as of such Closing Date.
(iv) This Agreement has been duly authorized, executed and
delivered by the Company.
21
Such counsel shall also furnish the Representatives with a letter to the effect
that as counsel to the Company, they reviewed the Company Registration
Statement and the Company Prospectus, participated in discussions with
representatives of the Representatives and those of the Company and its
accountants and advised the Company as to the requirements of the Act and the
applicable rules and regulations thereunder; between the date of the Company
Prospectus and the Closing Date, such counsel participated in further
discussions with representatives of the Representatives and those of the
Company and its accountants in which the contents of certain portions of the
Company Prospectus and related matters were discussed and reviewed, reviewed
certain documents filed by the Company with the Commission, certificates of
certain officers of the Company and the Counterparties, an opinion addressed to
the Underwriters from Robert S. Lemle, Esq., Vice Chairman, General Counsel and
Secretary for the Company, and a letter from the Company's independent
accountants; on the basis of the information that such counsel gained in the
course of the performance of the services referred to above, considered in the
light of such counsel's understanding of the applicable law (including the
requirements of Form S-3 and the character of the prospectus contemplated
thereby) and the experience such counsel have gained through their practice
under the Act, they confirm to the Representatives that, in such counsel's
opinion, the Company Registration Statement, as of its effective date, and the
Company Prospectus, as of the date of the Company Prospectus (and any amendment
to the Company Registration Statement or supplement to the Company Prospectus,
as of its respective effective or issue date), appeared on their face to be
appropriately responsive in all material respects to the requirements of the
Act and the applicable rules and regulations of the Commission thereunder;
further, nothing that came to such counsel's attention in the course of such
review has caused such counsel to believe that the Company Registration
Statement, as of its effective date, contained any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading or that the
Company Prospectus, as of the date of the Company Prospectus, contained any
untrue statement of a material fact or omitted to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; also, nothing that
came to the attention of such counsel in the course of the procedures described
in the second clause of this paragraph has caused such counsel to believe that
the Company Prospectus, as of the Closing Date, contained any untrue statement
of a material fact or omitted to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; such counsel shall state that the limitations
inherent in the independent verification of factual matters and the character
of determinations involved in the registration process are such that such
counsel does not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Company Registration Statement or
the Company Prospectus except for those made under the captions "Description of
Cablevision NY Group Class A Common Stock" and "Plan of Distribution" in the
Company Prospectus insofar as they relate to provisions of documents therein
described; also, such counsel need express no opinion or belief as to the
financial statements or other financial data contained in the Company
Registration Statement or the Company Prospectus or as to the description of
statutes, regulations, proceedings or matters referred to in Section 10(f)
hereof.
In rendering such opinion, such counsel may state that they express no opinion
as to the laws of any jurisdiction other than the federal laws of the United
States, the laws of the State of New
22
York and the General Corporation Law of the State of Delaware, and no opinion
as to federal or state laws relating to communications and telecommunications,
including laws which regulate individuals, companies or businesses because such
entities provide communications or telecommunications services, including the
provision of cable television services or telephone services. Such counsel may
also state that they have relied as to certain matters on information obtained
from public officials, officers of the Company and other sources believed by
them to be responsible.
(e) The Representatives shall have received a signed opinion of Robert S.
Lemle, Esq., Vice Chairman, General Counsel and Secretary for the Company,
dated as of the Closing Date, in form and substance satisfactory to counsel to
the Underwriters, to the effect that:
(i) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware with corporate
power and authority under such laws to own, lease and operate its
properties and conduct its business as described in the Company
Prospectus.
(ii) The Company is duly qualified to transact business as a foreign
corporation and is in good standing in each other jurisdiction in which it
owns or leases property of a nature, or transacts business of a type, that
would make such qualification necessary, except where the failure to be so
qualified would not have a material adverse effect on the Company and its
subsidiaries, considered as one enterprise.
(iii) Each Material Subsidiary that is a corporation is duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, with corporate power and authority
under such laws to own, lease and operate its properties and conduct its
business. Each Material Subsidiary that is a partnership is duly organized
under the laws of the jurisdiction of its organization.
(iv) The number of authorized shares of capital stock of the Company
is as set forth in the Company Prospectus under the heading
"Capitalization".
(v) All of the outstanding shares of capital stock of each Material
Subsidiary that is a corporation have been duly authorized and validly
issued and are fully paid and nonassessable; except as set forth on
Schedules II and III to this Agreement or as disclosed in or as
contemplated by the Company Prospectus, all of such shares are owned by
the Company, directly or through one or more subsidiaries, free and clear
of any material pledge, lien, security interest, charge, claim, equity or
encumbrance of any kind; no holder thereof is subject to personal
liability under the certificate of incorporation or by-laws of the
respective Material Subsidiary or the corporation law of the jurisdiction
in which such Material Subsidiary is organized by reason of being such a
holder and none of such shares was issued in violation of the preemptive
rights of any stockholder of such
23
Material Subsidiary under the certificate of incorporation or by-laws of
such Material Subsidiary or the corporation law of the jurisdiction in
which such Material Subsidiary is organized.
(vi) To such counsel's knowledge, there are no legal or governmental
proceedings pending or threatened to which the Company or any of its
subsidiaries is or may be a party, or of which any of their properties are
or may be the subject, of a character which are required to be disclosed
in the Company Registration Statement, the Company Prospectus, the 2000
Form 10-K or any Form 10-Q of the Company, other than those disclosed
therein or in any amendments thereto.
(vii) The documents incorporated by reference in the Company
Prospectus or any further amendment or supplement thereto made by the
Company prior to the Closing Date (other than the financial statements and
related schedules therein and any untrue statement or omission of a
material fact contained therein which was corrected in the Company
Prospectus, as to which such counsel need express no opinion), when they
became effective or were filed with the Commission, as the case may be,
complied as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations of the Commission thereunder;
and he has no reason to believe that such documents, considered together,
as of the date of the Company Prospectus or as of the Closing Date,
contained or contain an untrue statement of a material fact or omitted or
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(viii) Such counsel does not know of any contracts or documents of a
character required to be described or referred to in the Company
Registration Statement or the Company Prospectus or to be filed as
exhibits to the Company Registration Statement that are not described,
referred to or filed as required.
(ix) To the knowledge of such counsel, no default exists in the
performance or observance of any material obligation, agreement, covenant
or condition contained in any contract, indenture, loan agreement, note,
lease or other agreement or instrument that is described or referred to in
the Company Registration Statement or the Company Prospectus or filed as
an exhibit to the Company Registration Statement or any subsequent Form
10-Q of the Company, which default would have a material adverse effect on
the financial position, stockholders' equity or results of operations of
the Company and its subsidiaries, considered as one enterprise.
(x) The execution and delivery by the Company of this Agreement and
the compliance by the Company with its obligations under this Agreement,
will not conflict with the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument (including any franchise agreement, license,
permit or other
24
governmental authorization granted by the FCC, The New York State Public
Service Commission on Cable Television or any other federal or New York
State governing body having jurisdiction over the Company's cable
television operations) known to such counsel to which the Company or any
Subsidiary is a party or by which the Company or any Subsidiary is bound
or to which any of the property or assets of the Company or any Subsidiary
is subject, which conflict, breach, violation or default would have a
material adverse effect on the financial position, stockholders' equity or
results of operations of the Company and its subsidiaries, taken as a
whole, nor will such action result in any violation of the provisions of
the Certificate of Incorporation or By-laws of the Company or any federal,
New York or Delaware General Corporation Law statute or any order, rule or
regulation known to such counsel of any federal, New York or Delaware
court or governmental agency or body having jurisdiction over the Company
or any Subsidiary or any of their properties, which violation in each case
would have a material adverse effect on the financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, taken as a whole; and no consent, approval, authorization,
order, registration or qualification of or with any such court or
governmental agency or body is required for the consummation by the
Company of the transactions contemplated by this Agreement, except with
respect to such consents, approvals, authorizations, registrations or
qualifications as may be required under state or foreign securities laws
in connection with the purchase and distribution of the Equity Trust
Securities by the Underwriters or the distribution of Shares pursuant to
the terms of the Equity Trust Securities.
(xi) All of the outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
non-assessable; and none of the outstanding shares of capital stock of the
Company was issued in violation of the preemptive rights of any
stockholder of the Company under the Company's Certificate of
Incorporation or By-laws or the Delaware General Corporation Law.
In rendering such opinion, such counsel may state that he expresses no opinion
as to any matters governed by any laws of any jurisdiction other than the
federal laws of the United States (other than federal communications laws, as
to which such counsel need express no opinion), the laws of the State of New
York and the General Corporation Law of the State of Delaware. In giving such
opinion, such counsel may rely, as to all matters governed by the laws of any
other jurisdiction, upon opinions of other counsel, who shall be counsel
satisfactory to counsel for the Underwriters, in which case the opinion shall
state that he believes the Representatives and he are entitled to so rely. Such
counsel may also state that, insofar as such opinion involves factual matters,
he has relied upon certificates of officers of the Company and the Subsidiaries
and certificates of public officials.
(f) The Representatives shall have received a signed opinion of Mintz,
Levin, Cohn, Ferris, Glovsky and Popeo, P.C., as special communications counsel
to the Company, dated as of the Closing Date, in form and substance
satisfactory to counsel to the Underwriters, to the effect that:
25
(i) The approvals, if any, required to be obtained from the FCC to
consummate the transactions contemplated by this Agreement have been
obtained and are in full force and effect.
(ii) Such counsel does not know of any federal communications and
copyright statutes that are principally directed to the regulation of
cable properties applicable to the Company that are not described in the
Company Prospectus but would be material and relevant to the business of
the Company, and the descriptions in the Company Prospectus of such
statutes therein described are accurate and fairly summarize the
information shown.
(iii) The information in the Company Registration Statement and
Company Prospectus under the captions "Risk Factors-- Our business is
subject to extensive government regulations and changes in current or
future laws or regulations could restrict our ability to operate our
business as we currently do", "Risk Factors-- Recent FCC and Congressional
issues may effect our businesses" and "Risk Factors-- Our financial
performance may be harmed by the significant and credible risk of
competition in our cable television business" and in the 2000 Form 10-K
under the captions "Business-- Competition-- Cable Television" and
"Business-- Regulation-- Cable Television", to the extent that such
sections describe statutes, regulations and governmental proceedings or
matters involving federal communications and copyright law and policy and
the impact thereof on the business in which the Company and its
subsidiaries are engaged, has been reviewed by them and fairly represents
the communications and copyright law described therein applicable to the
Company and its subsidiaries as disclosed in the Company Prospectus and
material and relevant to the business of the Company and its subsidiaries.
In giving such opinion, such counsel may rely, as to all matters governed
by the laws of jurisdictions other than the law of the District of Columbia,
the federal law of the United States and the corporate law of the State of
Delaware, upon opinions of other counsel, who shall be counsel satisfactory to
counsel for the Underwriters, in which case the opinion shall state that they
believe the Representatives and they are entitled to so rely. Such counsel may
also state that, insofar as such opinion involves factual matters, they have
relied, to the extent they deem proper, upon certificates of officers of the
Company and the Subsidiaries and certificates of public officials.
(g) Counterparties shall have caused Davis Polk & Wardwell, counsel for
Counterparties and AT&T, to have furnished to the Representatives its opinion
dated the Closing Date and addressed to the Representatives, to the effect
that:
(i) Each of the Counterparties and AT&T is duly incorporated and is
validly existing as a corporation in good standing under the laws of the
jurisdiction in which it is chartered or organized, with full power to own
its property;
26
(ii) This Agreement has been duly authorized, executed and delivered
by each Counterparty and AT&T; the Contracts, the Collateral Agreements
and the Reimbursement Agreement have been duly authorized, executed and
delivered by Counterparties and assuming due authorization, execution and
delivery by the other parties thereto, constitute valid and legally
binding agreements of Counterparties; each Counterparty has corporate
power and authority to sell, transfer and deliver Shares in connection
with the offering of the Equity Trust Securities in the manner provided in
this Agreement and the Contracts;
(iii) Each Counterparty is not, and after giving effect to the
distribution of the Shares in connection with the offering of the Equity
Trust Securities and the application of the proceeds thereof, will not be,
an "investment company" as defined in the Investment Company Act;
(iv) Each Collateral Agreement creates a valid security interest in
favor of the Collateral Agent (as defined therein) for the benefit of the
Trust in the Shares pledged thereunder as security for the performance by
the applicable Counterparty of its obligations under its respective
Contract and to secure the observance and performance of the covenants and
agreements of such Counterparty contained in its respective Contract and
Collateral Agreement;
(v) Each of (i) the execution and delivery by the Counterparties and
AT&T of this Agreement, their respective Contracts and Collateral
Agreements and the Reimbursement Agreement, the performance by the
Counterparties of their respective obligations thereunder and the
consummation of the transactions therein contemplated, including the
pledge by the Counterparties to the Trust of a security interest in the
Shares pursuant to the Collateral Agreement, (ii) following an
Acceleration Event (as defined in the Contracts), any action by the
Collateral Agent to foreclose on the Shares and deliver the Shares to the
Trust, and any action by the Trust to distribute the Shares to the holders
of the Equity Trust Securities pursuant to the terms of the Trust
Agreement, and (iii) if the Counterparties do not elect the Cash Delivery
Option or elect the Cash Delivery Option but fail thereafter to deliver
cash as required by the Contracts, any action by the Collateral Agent to
deliver the Shares to the Trust or by the Trust to distribute the Shares
to the holders of the Equity Trust Securities pursuant to the terms of the
Trust Agreement and the Collateral Agreements, does not and will not,
whether with or without the giving of notice or passage of time or both,
conflict with, result in a breach or violation of the Stockholders
Agreement and upon the occurrence of the any of the events listed in
clauses (ii) and (iii) above, the Shares referred to in such clauses will
be free and clear of any restriction imposed on the Shares by the
Stockholders Agreement; and
(vi) no consent, approval, authorization, filing with or order of any
court or governmental agency or body is required for the consummation by
Counterparty of the transactions contemplated herein, except such as may
have been obtained under the Act and such as may be required under the
blue sky laws
27
of any jurisdiction in connection with the purchase and distribution of
the Equity Trust Securities by the Underwriters and the distribution of
the Shares pursuant to the terms of the Equity Trust Securities in the
manner contemplated in this Agreement and in the Trust Prospectus and the
Company Prospectus;
(h) The Representatives shall have received (i) from Cleary, Gottlieb,
Steen & Hamilton, counsel for the Underwriters and the Trust, such opinion or
opinions, dated the Closing Date and addressed to the Representatives, with
respect to the issuance and sale of the Equity Trust Securities, the Trust
Registration Statement, the Trust Prospectus (together with any supplement
thereto), the Fundamental Agreements and other related matters as the
Representatives may reasonably require, and (ii) from Shearman & Sterling,
counsel for the Underwriters, a negative assurance letter dated the Closing
Date and addressed to the Representatives, with respect to the Company
Registration Statement, the Company Prospectus (together with any supplement
thereto) and other related matters as the Representatives may reasonably
require, and the Company shall have furnished to such counsel such documents as
they reasonably request for the purpose of enabling them to pass upon such
matters.
(i) The Trust shall have furnished to the Representatives a certificate of
the Trust, signed by the Managing Trustee and dated the Closing Date, to the
effect that:
(i) the representations and warranties of the Trust in this Agreement
are true and correct in all material respects on and as of the Closing
Date with the same effect as if made on the Closing Date and the Trust has
complied in all material respects with all of the agreements and satisfied
all the conditions on its part to be performed or satisfied at or prior to
the Closing Date (such certificate to set forth all known failures to
comply with such agreements or satisfy such conditions whether such known
failures are material or immaterial); and
(ii) no stop order suspending the effectiveness of the Trust
Registration Statement or the use of the Trust Prospectus has been issued
and to the Trust's knowledge after due inquiry, no proceedings for that
purpose have been instituted or, to the Trust's knowledge, threatened.
(j) At the Closing Time, (i) the Company Registration Statement and the
Company Prospectus, as they may then be amended or supplemented, shall contain
all statements that are required to be stated therein under the Act and, in all
material respects, shall conform to the requirements of the Act and neither the
Company Registration Statement nor the Company Prospectus, as they may then be
amended or supplemented, shall contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, (ii) there shall not have been,
since the respective dates as of which information is given in the Company
Registration Statement, any material adverse change or any development
involving a prospective material adverse change in or affecting the financial
position, stockholders' equity or results of operations of the Company and its
subsidiaries, considered as one enterprise, (iii) the Company shall have
complied with all agreements
28
and satisfied all conditions on its part to be performed or satisfied at or
prior to the Closing Time and (iv) the other representations and warranties of
the Company set forth in Section 2 shall be accurate as though expressly made
at and as of the Closing Time. At the Closing Time, the Representatives shall
have received a certificate of the Chief Executive Officer, the President, a
Vice Chairman or a Vice President, and the Treasurer or Controller, of the
Company, dated as of the Closing Time, to such effect.
(k) Each Counterparty shall have furnished to the Representatives a
certificate, dated the Closing Date, to the effect that the representations and
warranties of such Counterparty in this Agreement are true and correct in all
material respects on and as of the Closing Date to the same effect as if made
on the Closing Date and such Counterparty has complied in all material respect
with all the agreements and satisfied in all material respect all the
conditions on its part to be performed or satisfied at or prior to the Closing
Date (such certificate to set forth all known failures to comply with such
agreements or satisfy such conditions whether such known failures are material
or immaterial).
(l) The Representatives shall have received from KPMG LLP (i) at the time
of execution of this Agreement, a letter dated the date hereof and delivered in
accordance with Statement on Auditing Standards No. 72, as amended, in form and
substance satisfactory to the Representatives and (ii) at the Closing Date, a
letter, dated as of the Closing Date, to the effect that KPMG LLP reaffirms the
statements made in the letter furnished pursuant to Section 10(l)(i) hereof,
except that the specified date referred to shall be a date not more than five
business days prior to the Closing Date.
(m) The Equity Trust Securities shall have been approved for listing on
the NYSE, subject only to official notice of issuance.
(n) Subsequent to the Execution Time or, if earlier, the dates as of which
information is given in the Company Registration Statement (exclusive of any
amendment thereof) and the Company Prospectus (exclusive of any supplement
thereto), there shall not have been any change, or any development involving a
prospective change, in or affecting the condition (financial or otherwise),
earnings, business or properties of the Company and the Subsidiaries taken as a
whole, whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Company Prospectus
(exclusive of any supplement thereto) the effect of which is, in the judgment
of the Representatives, so material and adverse as to make it impractical or
inadvisable to proceed with the offering or delivery of the Equity Trust
Securities as contemplated by the Trust Registration Statement and the Company
Registration Statement (in either case, exclusive of any amendment thereof) and
the Trust Prospectus and the Company Prospectus (in either case, exclusive of
any supplement thereto).
(o) The NASD shall not have raised any objection with respect to the
fairness and reasonableness of the underwriting terms and arrangements.
(p) Each Fundamental Agreement shall have been executed and delivered by
all parties thereto, and Counterparties shall have delivered to the Collateral
Agent the
29
number of Shares required by the Collateral Agreement to be initially pledged
and assigned by each Counterparty in accordance with the requirements of its
Collateral Agreement.
(q) Prior to the Closing Date, the Representatives shall have received an
agreement substantially in the form of Exhibit A hereto signed by the persons
listed on Schedule IV hereto.
(r) Prior to the Closing Date, counsel for the Underwriters shall have
been furnished with all such documents, certificates and opinions as they may
reasonably request for the purpose of enabling them to pass upon the sale of
the Shares as herein contemplated and the matters referred to in Section 10(h)
and in order to evidence the accuracy and completeness of any of the
representations, warranties or statements of the Company, the Trust, AT&T, and
the Counterparties, the performance of any of the covenants of the Company, the
Trust, AT&T, and the Counterparties, or the fulfillment of any of the
conditions herein contained.
If any of the conditions specified in this Section 10 shall not have been
fulfilled in all material respects when and as provided in this Agreement, or
if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Representatives and counsel for the Underwriters, this
Agreement and all obligations of the Underwriters hereunder may be canceled at,
or at any time prior to, the Closing Date by the Representatives. Notice of
such cancellation shall be given to the Trust, the Company and Counterparty in
writing or by telephone or facsimile confirmed in writing.
The documents required to be delivered by this Section 10 shall be
delivered to Shearman & Sterling, 599 Lexington Avenue, New York, New York
10022, attention of Jonathan Jewett, Esq., on the Closing Date.
11. Expenses. (a) Counterparties will pay all expenses incident to the
performance by the Trust and their obligations under this Agreement and the
Contracts and Collateral Agreements, including (i) the preparation, printing
and filing of the Notification and the Trust Registration Statement (including
financial statements and exhibits) as originally filed and of each amendment
thereto, (ii) the preparation, printing and delivery of this Agreement, the
Trust Agreement, each of the Fundamental Agreements and such other documents as
may be required in connection with the offering, purchase, sale, issuance or
delivery of the Equity Trust Securities, (iii) the preparation, issuance and
delivery of the certificates for the Equity Trust Securities to the
Representatives, (iv) the fees and disbursements of the Trust's counsel,
accountants and other advisors, (v) the fees and disbursements of
Counterparties' counsel and other advisors, (vi) the qualification of the
Equity Trust Securities under state securities laws in accordance with the
provisions of Section 7(d) hereof, including filing fees and the reasonable
fees and disbursements of the counsel for the Underwriters in connection
therewith and in connection with the preparation of the related blue sky survey
and any supplement thereto, (vii) the printing and delivery to the
Representatives of copies of each Preliminary Trust Prospectus, the Trust
Prospectus and any amendments or supplements thereto, (viii) the fees and
expenses of
30
any transfer agent or registrar for the Equity Trust Securities, (ix) the
filing fees incident to, and the reasonable fees and disbursements of counsel
to the Underwriters in connection with, securing any required review by the
NASD of the Trust Registration Statement and the offering of the Equity Trust
Securities in accordance with the provisions of Section 7(d) hereof, (x) the
fees and expenses incurred in connection with the listing of the Equity Trust
Securities on the NYSE and (xi) the fees and expenses incurred in connection
with the preparation and filing of a registration statement under the Exchange
Act relating to the Equity Trust Securities. Counterparties will reimburse the
Underwriters through Salomon Smith Barney on the Closing Date in immediately
available funds for the Up-Front Fee Amount and the Up-Front Expense Amount
(each as defined in the Fund Expense Agreement dated as of the Closing Date
between Salomon Smith Barney and BoNY) and for the up-front fees of the
trustees of the Trust paid by Salomon Smith Barney.
(b) Counterparties will pay all expenses incident to the performance by
the Company of its obligations under this Agreement, including (i) the
preparation, printing and filing of the Company Registration Statement
(including financial statements and exhibits) as originally filed and of each
amendment thereto, (ii) the preparation, issuance and delivery of the
certificates for the Shares to the Trust, (iii) the fees and disbursements of
the Company's counsel, accountants and other advisors, (iv) the qualification
of the Shares under state securities laws in accordance with the provisions of
Section 8(e) hereof, including filing fees and the reasonable fees and
disbursements of counsel for the Underwriters in connection therewith and in
connection with the preparation of any related blue sky survey and any
supplement thereto, (v) the printing and delivery to the Representatives of
copies of each Preliminary Company Prospectus, the Company Prospectus and any
amendments or supplements thereto, (vi) the fees and expenses of any transfer
agent or registrar for the Shares, (vii) the filing fees incident to, and the
reasonable fees and disbursements of counsel to the Underwriters in connection
with, securing any required review by the NASD of the Company Registration
Statement and the offering of the Shares in accordance with the provisions of
Section 8(e) hereof and (viii) the fees and expenses incurred in connection
with the approval of the Shares for trading on the New York Stock Exchange.
(c) If the sale of the Equity Trust Securities provided for herein is not
consummated because any condition to the obligations of the Underwriters set
forth in Section 10 hereof is not satisfied, because of any refusal, inability
or failure on the part of the Company or Counterparties to perform any
agreement herein or comply with any provision hereof other than by reason of a
default by the Underwriters, Counterparties will reimburse the Underwriters
through Salomon Smith Barney upon demand for all out-of-pocket expenses
(including reasonable fees and disbursements of counsel) that shall have been
incurred by the Underwriters in connection with the proposed purchase and sale
of the Equity Trust Securities.
(d) The provisions of this Section 11 shall not supersede or otherwise
affect any agreement that the Company, on the one hand, and Counterparties or
AT&T Broadband LLC, on the other hand, may otherwise have for the allocation of
such expenses among themselves.
31
12. Indemnification. (a) The Company agrees to indemnify and hold harmless
the Trust, each of the Trustees, each Underwriter and each person, if any, who
controls the Trust or any Underwriter within the meaning of Section 15 of the
Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of an untrue statement or alleged
untrue statement of a material fact contained in the Company Registration
Statement (or any amendment thereto), including all documents incorporated
therein by reference, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of an untrue statement or
alleged untrue statement of a material fact included in any Preliminary
Company Prospectus or the Company Prospectus (or any amendment or
supplement thereto) or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected with
the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred (including
fees and disbursements of counsel chosen by the Representatives),
reasonably incurred in investigating, preparing or defending against any
litigation, or investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under
subparagraph (i) or (ii) above;
provided, however, that this indemnity agreement does not apply to any loss,
liability, claim, damage or expense to the extent arising out of an untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by (i)
any Underwriter through the Representatives expressly for use in the Company
Registration Statement (or any amendment thereto), or any Preliminary Company
Prospectus or the Company Prospectus (or any amendment or supplement thereto),
(ii) the Counterparties or AT&T, or on behalf of the Counterparties or AT&T,
expressly for use in the Company Registration Statement (or any amendment
thereto), or any Preliminary Company Prospectus or the Company Prospectus (or
any amendment or supplement thereto) or (iii) the Trust, or on behalf of the
Trust, expressly for use in the Company Registration Statement (or any
amendment thereto), or any Preliminary Company Prospectus or the Company
Prospectus (or any amendment or supplement thereto).
32
The foregoing indemnity with respect to any untrue statement contained in
or any omission from any Preliminary Company Prospectus, shall not inure to the
benefit of any Underwriter (or any person controlling such Underwriter) on
account of any loss, claim, damage, liability or litigation arising from the
sale of Equity Trust Securities to any person by such Underwriter if such
Underwriter failed to send or give a copy of the Preliminary Company
Prospectus, as the same may be supplemented or amended, to such person within
the time required by the Act, and the untrue statement or alleged untrue
statement or omission or alleged omission of a material fact in such
preliminary prospectus was corrected in the Company Prospectus, unless such
failure resulted from noncompliance by the Company with its obligations
hereunder to furnish the Underwriters with copies of the Company Prospectus.
(b) The Counterparties severally agree to indemnify and hold harmless the
Trust, each of the Trustees, the Company, each Underwriter and each person, if
any, who controls the Trust or any Underwriter within the meaning of Section 15
of the Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of (A) an untrue statement or alleged
untrue statement of a material fact contained in the Trust Registration
Statement (or any amendment thereto), including all documents incorporated
therein by reference, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the
statements therein not misleading; (B) an untrue statement or alleged
untrue statement of a material fact included in any Preliminary Trust
Prospectus or the Trust Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading and (C) an untrue
statement or alleged untrue statement of material fact contained in any
information furnished to the Company by or on behalf of the Trust, the
Counterparties or AT&T in the Company Registration Statement or the
Company Prospectus relating to the Trust, the Counterparties or AT&T or
the offering of the Equity Trust Securities, or the omission or alleged
omission therefrom of a material fact required to be stated in such
information or necessary to make the statements in such information (with
respect to the Company Prospectus, in light of the circumstances under
which they were made) not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if any such settlement is effected
with the written consent of the Counterparties; and
(iii) against any and all expense whatsoever, as incurred (including
fees and disbursements of counsel chosen by the Representatives),
reasonably incurred in investigating, preparing or defending against any
litigation, or investigation or
33
proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission, to the extent that any such
expense is not paid under subparagraph (i) or (ii) above;
The foregoing indemnity with respect to any untrue statement contained in
or any omission from Preliminary Trust Prospectus, shall not inure to the
benefit of any Underwriter (or any person controlling such Underwriter) on
account of any loss, claim, damage, liability or litigation arising from the
sale of Equity Trust Securities to any person by such Underwriter if such
Underwriter failed to send or give a copy of such Preliminary Trust Prospectus,
as the same may be supplemented or amended, to such person within the time
required by the Act, and the untrue statement or alleged untrue statement or
omission or alleged omission of a material fact in such preliminary prospectus
was corrected in the Trust Prospectus, unless such failure resulted from
noncompliance by the Trust with its obligations hereunder to furnish the
Underwriters with copies of the Trust Prospectus.
(c) Each Underwriter severally and not jointly agrees to indemnify and
hold harmless the Company, each Counterparty, the directors of the Company,
officers of the Company who signed the Company Registration Statement, and each
person, if any, who controls the Company or the Counterparties within the
meaning of Section 15 of the Act, against any and all loss, liability, claim,
damage and expense described in the indemnity agreement in Section 12(a), as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Company Registration Statement (or
any amendment thereto), any Preliminary Company Prospectus or in the Company
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such
Underwriter through the Representatives expressly for use in the Company
Registration Statement (or any amendment thereto), or such Preliminary Company
Prospectus or the Company Prospectus (or any amendment or supplement thereto).
(d) Each Underwriter severally and not jointly agrees to indemnify and
hold harmless the Counterparties, the directors, officers, employees and agents
of the Counterparties, and each person, if any, who controls the Counterparties
within the meaning of Section 15 of the Act, against any and all loss,
liability, claim, damage and expense described in the indemnity agreement in
Section 12(b), as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Trust
Registration Statement (or any amendment thereto), any Preliminary Trust
Prospectus or in the Trust Prospectus (or any amendment or supplement thereto)
in reliance upon and in conformity with written information furnished to the
Counterparties by such Underwriter through the Representatives expressly for
use in the Trust Registration Statement (or any amendment thereto), or such
Preliminary Trust Prospectus or the Trust Prospectus (or any amendment or
supplement thereto).
(e) Each indemnified party shall give prompt notice to each indemnifying
party of any action commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve it from any liability which it may have otherwise than on account of
this indemnity agreement. An indemnifying party may participate at its own
expense in the defense of such action; provided, however, that counsel to the
34
indemnifying party shall not (except with the consent of the indemnified party)
also be counsel to the indemnified party. In no event shall the indemnifying
party or parties be liable for the fees and expenses of more than one counsel
for all indemnified parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances.
(f) The provisions of this Section 12 shall not affect any agreement
between the Company, on the one hand, and the Counterparties, AT&T or AT&T
Broadband LLC, on the other hand, with respect to indemnification.
13. Contribution.
(a) In order to provide for just and equitable contribution in
circumstances under which the indemnity provided for in paragraph (a) or (c) of
Section 12 is for any reason held to be unenforceable by the indemnified
parties although applicable in accordance with its terms, the Company, the
Counterparties and the Underwriters shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by such
indemnity incurred by the Company and one or more of the Underwriters, as
incurred, in such proportions that the Underwriters are responsible for that
portion represented by the percentage that the sales load hereunder with
respect to the offering of the Equity Trust Securities bears to the purchase
price of the Equity Trust Securities, and the Company, AT&T and the
Counterparties are responsible for the balance on a pro rata basis; provided,
however, that no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
(b) In order to provide for just and equitable contribution in
circumstances under which the indemnity provided for in paragraph (b) or (d) of
Section 12 is for any reason held to be unenforceable by the indemnified
parties although applicable in accordance with its terms, Counterparties and
the Underwriters shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by such indemnity incurred by
the Counterparties and one or more of the Underwriters, as incurred, in such
proportions that the Underwriters are responsible for that portion represented
by the percentage that the sales load hereunder with respect to the offering of
the Equity Trust Securities bears to the purchase price of the Equity Trust
Securities, and the Counterparties are responsible for the balance on a pro
rata basis; provided, however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
(c) The contribution provisions contained in this Section 13 shall not
affect any agreement between the Company, on the one hand, and the
Counterparties, AT&T or AT&T Broadband LLC on the other hand, with respect to
contribution.
(d) For purposes of this Section, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the Act shall have the same
rights to contribution as such Underwriter, and each director or officer of the
Company or the Selling Stockholders and each person, if any, who controls the
Company or the Counterparties within the
35
meaning of Section 15 of the Act shall have the same rights to contribution as
the Company and the Counterparties, respectively.
14. Default by an Underwriter. If any one or more Underwriters shall fail
to purchase and pay for any of the Equity Trust Securities agreed to be
purchased by such Underwriter or Underwriters hereunder and such failure to
purchase shall constitute a default in the performance of its or their
obligations under this Agreement, the remaining Underwriters shall be obligated
severally to take up and pay for (in the respective proportions which the
amount of Equity Trust Securities set forth opposite their names in Schedule I
hereto bears to the aggregate amount of Equity Trust Securities set forth
opposite the names of all the remaining Underwriters) the Equity Trust
Securities which the defaulting Underwriter or Underwriters agreed but failed
to purchase; provided, however, that in the event that the aggregate amount of
Equity Trust Securities which the defaulting Underwriter or Underwriters agreed
but failed to purchase shall exceed 10% of the aggregate amount of Equity Trust
Securities set forth in Schedule I hereto, the remaining Underwriters shall
have the right to purchase all, but shall not be under any obligation to
purchase any, of the Equity Trust Securities, and if such nondefaulting
Underwriters do not purchase all the Equity Trust Securities, then the Company
shall have 36 hours within which it may, but it is not obligated, to find one
or more substitute underwriters satisfactory to the Representatives to purchase
such Securities upon the terms set forth in this Agreement and if the Company
is unable to find one or more such underwriters that are satisfactory to the
Representatives, this Agreement will terminate without liability to any
nondefaulting Underwriter, the Company, or Counterparty. In the event of a
default by any Underwriter as set forth in this Section 14, the Closing Date
shall be postponed for such period, not exceeding five Business Days, as the
Representatives shall determine in order that the required changes in the
Company Registration Statement, the Company Prospectus, the Trust Registration
Statement and the Trust Prospectus or in any other documents or arrangements
may be effected. Nothing contained in this Agreement shall relieve any
defaulting Underwriter of its liability, if any, to the Company, Counterparties
and any nondefaulting Underwriter for damages occasioned by its default
hereunder.
15. Termination. The Representatives may terminate this Agreement, by
notice to the Company and the Counterparties, at any time at or prior to the
Closing Time (i) if trading in securities of the Company or generally on the
New York Stock Exchange shall have been materially suspended or materially
limited or minimum prices shall have been established on such Exchange (which
shall not include trading suspensions or limitations resulting from the
operation of General Rules 80A and 80B of such Exchange, as amended or
supplemented), or (ii) a banking moratorium shall have been declared by either
federal or New York State authorities, or (iii) the United States shall have
become engaged in hostilities which have resulted in the declaration of war, or
there shall have occurred any other calamity or crisis, the effect of which (in
either event) on the financial markets of the United States is such as to make
it, in the reasonable judgment of the Representatives, impracticable or
inadvisable to proceed with the offering or delivery of the Equity Trust
Securities on the terms and in the manner contemplated in the Trust Prospectus.
16. Representations and Indemnities to Survive. The respective agreements,
representations, warranties, indemnities and other statements of the Trust, the
Company,
36
Counterparties or their respective officers, if applicable, and of the
Underwriters set forth in or made pursuant to this Agreement will remain in
full force and effect, regardless of any investigation made by or on behalf of
any Underwriter, the Trust, the Company, AT&T, the Counterparties or any of the
officers, directors or controlling persons referred to in Section 12 hereof,
and will survive delivery of and payment for the Equity Trust Securities. The
provisions of Sections 11, 12, 13 and 18 hereof shall survive the termination
or cancellation of this Agreement.
17. Guarantee of AT&T.
AT&T agrees to guarantee full payment and complete performance of any and
all obligations of the Counterparties under this Agreement.
18. Notices. All communications hereunder will be in writing and effective
only on receipt, and, if sent to the Representatives, will be mailed, delivered
or telefaxed to Salomon Smith Barney Inc., General Counsel (fax no.: (212)
3695) and confirmed to the General Counsel, care of Salomon Smith Barney Inc.,
at 388 Greenwich Street, New York, New York 10013, attention: Jeanne
Campanelli; if sent to the Trust, will be mailed, delivered, or telefaxed and
confirmed to it c/o Puglisi & Associates, 850 Library Avenue, Suite 204,
Newark, Delaware 19711, Attention: Donald J. Puglisi; if sent to the Company,
will be mailed, delivered or telefaxed and confirmed to it at Cablevision
Systems Corporation, 111 Stewart Avenue, Bethpage, New York 11714, attention of
Robert S. Lemle, Esq., Vice Chairman, Secretary and General Counsel, with a
copy to Sullivan & Cromwell, 125 Broad Street, New York, New York 10004,
attention of John P. Mead, Esq.; or if sent to Counterparties or AT&T shall be
directed to AT&T Corp.,295 North Maple Avenue, Basking Ridge, NJ 07920,
attention of Edward Dwyer.
19. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and the officers and
directors and controlling persons referred to in Section 12 hereof, and no
other person will have any right or obligation hereunder.
20. Applicable Law. This agreement will be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed within the State of New York.
21. Counterparts This Agreement may be executed by any one or more of the
parties in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
agreement.
22. Headings. The section headings used herein are for convenience only
and shall not affect the construction hereof.
23. Definitions. The terms which follow, when used in this Agreement,
shall have the meanings indicated.
"Act" shall mean the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.
37
"Business Day" shall mean any day other than a Saturday, a Sunday or a legal
holiday or a day on which banking institutions or trust companies are
authorized or obligated by law to close in New York City.
"Commission" shall mean the Securities and Exchange Commission.
"Company Prospectus" shall mean the prospectus relating to the Shares that is
used in connection with the offering and sale of the Equity Trust Securities
and that is first filed pursuant to Rule 424(b) after the Execution Time or, if
no filing pursuant to Rule 424(b) is required, shall mean the form of final
prospectus relating to the Shares that is used in connection with such offering
and sale and that is included in the Company Registration Statement at the
Company Effective Date.
"Company Registration Statement" shall mean the registration statement referred
to in Section 2(a) above including incorporated documents, exhibits and
financial statements, as amended at the Execution Time (or, if not effective at
the Execution Time, in the form in which it shall become effective) and, in the
event any post-effective amendment thereto or any Rule 462(b) Company
Registration Statement becomes effective prior to the Closing Date, shall also
mean such registration statement as so amended or such Rule 462(b) Company
Registration Statement, as the case may be.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Execution Time" shall mean the date and time that this Agreement is executed
and delivered by the parties hereto.
"Investment Company Act" shall mean the Investment Company Act of 1940, as
amended, and the rules and regulations of the Commission promulgated
thereunder.
"Organizational Documents" shall mean, in respect of any company, corporation,
trust, partnership, limited liability company, governmental agency or other
enterprise, as applicable, its founding act, charter, articles of incorporation
and by-laws, deed of trust, memorandum and articles of association, statute,
certificate of partnership, partnership agreement, limited liability company
agreement, or similar instrument.
"Preliminary Company Prospectus" shall mean any preliminary prospectus relating
to the Shares referred to in Section 2(a) and any preliminary prospectus
included in the Company Registration Statement at the Company Effective Date
that omits Rule 430A Information.
"Preliminary Trust Prospectus" shall mean any preliminary prospectus referred
to in Section 1(a) above and any preliminary prospectus included in the Trust
Registration Statement at the Trust Effective Date that omits Rule 430A
Information.
"Rule 415," "Rule 424," "Rule 430A," "Rule 462," "Rule 497(h)," "Regulation
S-K" and "Regulation S-X" refer to such rules and regulations under the Act.
38
"Rule 430A Information" shall mean information with respect to the Equity Trust
Securities, the Shares and the offering thereof permitted to be omitted from
the Trust Registration Statement (or, as used in Section 2 above, the Company
Registration Statement) when it becomes effective pursuant to Rule 430A.
"Rule 462(b) Company Registration Statement" shall mean a registration
statement and any amendments thereto filed pursuant to Rule 462(b) relating to
the offering covered by the initial registration statement referred to in
Section 2(a) above.
"Rule 462(b) Trust Registration Statement" shall mean a registration statement
and any amendments thereto filed pursuant to Rule 462(b) relating to the
offering covered by the initial registration statement referred to in Section
1(a) above.
"Trust Effective Date" shall mean each date and time that the Trust
Registration Statement, any post-effective amendment or amendments thereto and
any Rule 462(b) Trust Registration Statement became or become effective.
"Trust Prospectus" shall mean the prospectus relating to the Equity Trust
Securities that is first filed pursuant to Rule 497(h) after the Execution Time
or, if no filing pursuant to Rule 497(h) is required, shall mean the form of
final prospectus relating to the Equity Trust Securities included in the Trust
Registration Statement at the Trust Effective Date.
"Trust Registration Statement" shall mean the registration statement referred
to in paragraph 1(a) above, including exhibits and financial statements, as
amended at the Execution Time (or, if not effective at the Execution Time, in
the form in which it shall become effective) and, in the event any
post-effective amendment thereto or any Rule 462(b) Trust Registration
Statement becomes effective prior to the Closing Date, shall also mean such
registration statement as so amended or such Rule 462(b) Trust Registration
Statement, as the case may be. Such term shall include any Rule 430A
Information deemed to be included therein at the Trust Effective Date as
provided by Rule 430A.
As used herein, the terms "Trust Registration Statement," "Preliminary Trust
Prospectus" and "Trust Prospectus" shall not include the Company Prospectus
attached thereto.
As used herein, the terms "Company Registration Statement", "Preliminary
Company Prospectus", and "Company Prospectus" shall not include the Trust
Registration Statement, Preliminary Trust Prospectus or Trust Prospectus.
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicate hereof, whereupon this
letter and your acceptance shall
39
represent a binding agreement among the Trust, the Company, Counterparties and
the several Underwriters.
Very truly yours,
EQUITY SECURITIES TRUST I
By:
---------------------------
Name:
Title:
CABLEVISION SYSTEMS
CORPORATION
By:
----------------------------
Name:
Title:
AT&T BROADBAND CSC II, INC.
By:
----------------------------
Name:
Title:
AT&T BROADBAND CSC
HOLDINGS, INC.
By:
----------------------------
Name:
Title:
AT&T CORP.
By:
----------------------------
Name:
Title:
40
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
BEAR, STEARNS & CO. INC.
MERRILL LYNCH & CO.
SALOMON SMITH BARNEY
By Salomon Smith Barney Inc.
By:
----------------------------
Name:
Title:
For themselves and the other several Underwriters named in Schedule I to the
foregoing Agreement
41
SCHEDULE I
Number of Underwritten
Equity Trust Securities to be
Underwriters Purchased
Bear, Stearns & Co. Inc. 5,851,781
Merrill Lynch, Pierce, Fenner & Smith Incorporated 5,851,781
Salomon Smith Barney Inc. 5,851,781
Banc of America Securities LLC 1,170,356
Goldman, Sachs & Co. 1,170,356
Lehman Brothers Inc. 1,170,356
Credit Lyonnais Securities (USA) Inc. 585,179
Dain Rauscher Incorporated 585,179
J.P. Morgan Securities Inc. 585,179
SG Cowen Securities Corporation 585,179
Total 23,407,127
----------
42
SCHEDULE II
RESTRICTED SUBSIDIARIES
(* - material subsidiary)
AC Productions West, Inc.
AC Productions, Inc.
ACEP LLC
American Catholic Enterprises At The Movies Productions East LLC
American Catholic Enterprises Chat Productions East LLC
American Catholic Enterprises Hub Productions East LLC
American Catholic Enterprises Masters Productions East LLC
American Catholic Enterprises News Productions East LLC
American Catholic Enterprises Productions East LLC
American Catholic Enterprises Studios Productions East LLC
American Catholic LLC
AMC II Holding Corporation 1
AMC Productions, Inc. 1
American Movie Classics Company 1
American Movie Classics Holding Corporation 1
American Pop, LLC
American Sports Classics, L.L.C.
BirdSight LLC
BirdSight Productions LLC
Bravo Acquisition Company LLC
Bravo Company
Bravo Holding Corporation
Bravo II Holding Corporation
Bravo Programming, Inc.
Cable Networks, Inc.
CSC Sterling Holdings, LLC
Foxwatch Productions, Inc.
Garden Programming, L.L.C.
IFC Entertainment LLC
IFC Films LLC
IFC Productions I L.L.C.
IFC Theatres, LLC
* Madison Square Garden, L.P. 2
Madison Square Garden CT, LLC
Maximum Science LLC
Maximum Science Productions LLC
Metro Channel, L.L.C.
Metro Channel Holdings I, LLC
Metro Channel Holdings II, LLC
1
Metro Channel Productions, LLC
MSG Aircraft Leasing, LLC
MSG Boxing, LLC
MSG Eden Corporation
MSG Flight Operations, LLC
MSG/TJF Scarlet Productions, LLC
MuchMusic U.S.A. Venture
National Advertising Partners
National PSNA Holdings I, LLC
National PSNA Holdings II, LLC
National Sports Partners
News 12.com, Inc. (f/k/a Neighborhood News Holdings, Inc.)
News 12 Holding Corporation
News 12 II Holding Corporation
News 12 New Jersey L.L.C.
News 12 The Bronx, LLC
News 12 The Bronx Holding Corporation
Next Wave Films, L.L.C.
New England Sea Wolves, L.L.C.
New York Rangers Enterprises Company
New York Metro LLC
Prime SportsChannel Networks Associates
Radio City Networks LLC
Radio City Networks Holdings I, LLC
Radio City Networks Holdings II, LLC
Radio City Productions, L.L.C.
Radio City Trademarks, L.L.C.
Rainbow Advertising Holdings, LLC
Rainbow Advertising Sales Corporation
Rainbow CT Holdings, Inc.
Rainbow DBS Holdings, Inc.
Rainbow Films Holding LLC
Rainbow Garden Corp.
Rainbow Media Group, LLC
* Rainbow Media Holdings, Inc.
Rainbow MM Holdings Corporation
Rainbow MM Holdings II Corporation
Rainbow National Sports Holdings, LLC
Rainbow Network Communications
Rainbow News 12 Company
Rainbow NJ Holdings, Inc.
Rainbow NJ Holdings II, Inc.
* Rainbow Regional Holdings, LLC
Rainbow Regional Sports News Holdings, LLC
2
Rainbow Travel, Inc.
Rainbow Westchester Holdings, Inc.
RCE Humbug Productions LLC
RCE/4KE Productions LLC
Regional Chicago Holdings, LLC
Regional Cincinnati Holdings I, LLC
Regional Cincinnati Holdings II, LLC
* Regional MSG Holdings, LLC
Regional NE Holdings I, LLC
Regional NE Holdings II, LLC
Regional Ohio Holdings I, LLC
Regional Ohio Holdings II, LLC
Regional Pacific Holdings, LLC
* Regional Programming Partners
RNC Holding Corporation
RNC II Holding Corporation
RRH I, LLC
RRH II, LLC
SC Florida Holding Company, L.L.C.
Soccer/USA Partners, L.P.
SportsChannel America Soccer, Inc.
SportsChannel Associates 2
SportsChannel Chicago Associates
SportsChannel Cincinnati Associates
SportsChannel Florida Associates
SportsChannel Florida Holding Company L.L.C.
SportsChannel New England Limited Partnership
SportsChannel Ohio Associates
SportsChannel Pacific Associates
SportsChannel Ventures, Inc.
Sterling Digital LLC
The 31st Street Company, L.L.C.
The Independent Film Channel LLC
WE: Women's Entertainment LLC (f/k/a Romance Classics, LLC)
WE: Women's Entertainment Productions, Inc. (f/k/a Romance Classics
Productions, Inc.)
WSN, LLC
3
SCHEDULE III
UNRESTRICTED SUBSIDIARIES
(* - material subsidiary)
1015 Tiffany Street Corporation
1070 Jericho Turnpike Corp.
111 New South Road Corporation
1111 Stewart Corporation
1144 Route 109 Corp.
389 Adams Street Corporation
Cablevision Digital Development, LLC
* Cablevision Electronics Investments, Inc.
Cablevision Lightpath - CT, Inc.
Cablevision Lightpath - MA, Inc.
Cablevision Lightpath - MI, Inc.
Cablevision Lightpath - NJ, Inc.
Cablevision Lightpath - NY, Inc.
Cablevision Lightpath - OH, Inc.
Cablevision NYI L.L.C.
Cablevision PCS Investment, Inc.
Cablevision PCS Management, Inc.
Cablevision Real Estate Corporation
Coram Route 112 Corporation
CCG Holdings, Inc.
CCC Cobble Hill Cinema Corp.
CCC Franklin Square Cinema Corp.
CSC @Security Holding, LLC
CSC At Home Holding Corporation
CSC Charter Holdings I, Inc.
CSC Charter Holdings II, Inc.
CSC Charter Holdings III, Inc.
CSC Investments, Inc.
CSC LF Holdings, LLC
CSC Metro Cinema LLC
CSC Nassau, Inc.
CSC Ohio Holdings I, Inc.
CSC Ohio Holdings II, Inc.
CSC Ohio Holdings III, Inc.
CSC Optimum Holdings, LLC
CSC T Holdings, Inc.
CSC T Holdings, I, Inc.
CSC T Holdings, II, Inc.
CSC T Holdings, III, Inc.
CSC T Holdings, IV, Inc.
CSC T Holdings, V, Inc.
1
CSC T Holdings VI, Inc.
CSC Technology, Inc. (f/k/a CSC Realty, Inc.)
CSC Transport, Inc.
CSC Transport II, Inc.
CSC Transport III, Inc.
CSC Transport IV, Inc.
Frowein Road Corporation
Knollwood Development Corp.
NCC LP Corp.
PVI Holding, LLC
The New York Interconnect L.L.C.
U.S. Cable Television Group, L.P.
-------------------
1 Shares of AMC Productions, Inc., We: Women's Entertainment Productions,
Inc. and partnership interests in American Movie Classics Company held by
AMC II Holding Corporation ("AMC II") and American Movie Classics Holding
Corporation ("AMCHC") are pledged to Toronto Dominion under the terms of a
Stock Pledge Agreement, dated as of April 2, 1997, between American Movie
Classics Holding Company and Toronto Dominion (Texas), Inc., as agent for
the Banks and a Partners Pledge Agreement, dated as of April 2, 1997, by
and between AMC II and AMCHC and Toronto Dominion (Texas), Inc..
2 All of the capital stock, partnership interests or limited liability
company interests are pledged under the Credit Party Pledge Agreement,
dated as of June 6, 1997 to the Madison Square Garden, L.P. Credit
Agreement.
2
SCHEDULE IV
PERSONS AND ENTITIES SUBJECT TO THE
LOCK-UP AGREEMENT
Charles F. Dolan
James L. Dolan
William J. Bell
Robert S. Lemle
Andrew B. Rosengard
Sheila A. Mahony
Margaret Albergo
Thomas C. Dolan
Charles D. Ferris
Richard H. Hochman
Victor Oristano
Vincent Tese
Patrick F. Dolan
John Tatta
3
EXHIBIT A
[LOCK-UP AGREEMENT]
EX-3
5
ex3.txt
EXHIBIT 3
FORWARD CONTRACT AGREEMENT
Between
AT&T BROADBAND CSC HOLDINGS, INC.
As Counterparty,
and
EQUITY SECURITIES TRUST I
Dated as of
October 23, 2001
FORWARD CONTRACT AGREEMENT
THIS AGREEMENT is made as of this October 23, 2001 among AT&T Broadband
CSC Holdings, Inc., a corporation organized under the laws of the State of
Delaware ("Counterparty") and Equity Securities Trust I, a business trust
organized under the laws of the State of Delaware under and by virtue of an
amended and restated declaration of trust, dated as of October 16, 2001 (the
"Declaration of Trust") (such trust and the trustees thereof acting in their
capacity as such being referred to herein as the "Trust").
WHEREAS, Counterparty owns shares of Cablevision NY Group Class A common
stock, $.01 par value (the "Common Stock") of Cablevision Systems Corporation,
a Delaware corporation (including its successors) (the "Company");
WHEREAS, Trust has filed with the Securities and Exchange Commission a
registration statement contemplating the offering of up to 26,918,195 Equity
Trust Securities (the "Equity Trust Securities"), the terms of which
contemplate delivery by the Trust to the holders thereof of a number of shares
of Common Stock (or, if the Counterparty exercises its cash settlement option,
cash in lieu thereof), on, or shortly after, November 15, 2004 (as further
defined herein, the "Exchange Date");
WHEREAS, in exchange for certain consideration to be paid by the Trust
hereunder, the Trust and Counterparty desire to provide for the future
acquisition and delivery of all or a portion of the aggregate number of shares
of Common Stock, or the cash value thereof, contemplated to be delivered by the
Trust in respect of the Equity Trust Securities on the Exchange Date, at a
price to be established under this Agreement and such other agreements;
WHEREAS, Counterparty has agreed to enter into a Collateral Agreement (the
"Collateral Agreement") dated as of the date hereof, among the Trust,
Counterparty and The Bank of New York, as collateral agent (the "Collateral
Agent"), to grant the Trust a security interest in the shares of Common Stock
specified therein and in certain other circumstances certain other collateral
to secure the obligations of Counterparty hereunder;
WHEREAS, the Trust has agreed, pursuant to an underwriting agreement,
dated October 17, 2001 (the "Underwriting Agreement"), among the Trust,
Counterparty, the Company, Salomon Smith Barney Inc., Bear, Stearns & Co. Inc.
and Merrill Lynch, Pierce, Fenner & Smith Incorporated (each an "Underwriter",
and collectively, the "Underwriters"), to issue and sell to the Underwriters an
aggregate of 23,407,127 Equity Trust Securities (together with the 2 Equity
Trust Securities purchased by Salomon Smith Barney Inc. in connection with the
organization of the Trust, the "Initial Equity Trust Securities") and, at the
Underwriters' option, up to 3,551,068 additional Equity Trust Securities (the
"Additional Equity Trust Securities") to cover over-allotments, if any.
NOW, THEREFORE, in consideration of their mutual covenants herein
contained, the parties hereto, intending to be legally bound, hereby mutually
covenant and agree as follows:
DEFINITIONS
As used herein, the following words and phrases shall have the following
meanings:
"Acceleration Date" has the meaning provided in Article VII.
"Acceleration Value" has the meaning provided in Article VII.
"Act" means the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.
"Additional Equity Trust Securities" has the meaning provided in the
recitals of this Agreement.
"Additional Contract Price" has the meaning provided in Section 1.2(b).
"Additional Shares" has the meaning provided in Section 1.1(b).
"Additional STRIPS" means the U.S. Treasury obligations purchased by the
Trust for settlement on the Option Closing Date.
"Adjustment Event" has the meaning provided in Section 6.2.
"Administrator" means The Bank of New York, administrator for the Trust
under the Administration Agreement dated as of October 23, 2001, or any
successor thereto.
"Affiliate" means, as to any Person, any other Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person or is a partner in, or a trustee, settlor, beneficiary, member, manager,
director or officer of, such Person and, with respect to any Person that is a
natural person, further includes such Person's immediate family members,
including his father, mother, spouse and children, the spouses of his children,
his siblings and their spouses and children. For purposes of this definition,
"control" (including the terms "controlled by" or "under common control with")
means, as to any Person, the possession, direct or indirect, of the power to
vote ten percent or more of the corporate or beneficial interests of such
Person (or of the securities having ordinary voting power for the election of
directors of such Person), or the power to direct or cause the direction of the
management and policies of such Person, whether through ownership of voting
securities or by contract or otherwise.
"Bankruptcy Code" has the meaning provided in Section 8.7.
"Business Day" means any day that is not a Saturday, a Sunday or a day on
which the NYSE or banking institutions or trust companies in The City of New
York are authorized or obligated by law or executive order to close.
"Calculation Period" means any period of Trading Days for which an average
security price must be determined pursuant to this Agreement.
3
"Cash Delivery Option" has the meaning provided in Section 1.3(d).
"Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof (provided that the full faith and credit
of the United States is pledged in support thereof) having maturities of not
more than six months from the date of acquisition, (iii) certificates of
deposit with maturities of six months or less from the date of the acquisition,
bankers' acceptances with maturities not exceeding six months and overnight
bank deposits, in each case with any domestic commercial bank having capital
and surplus in excess of $500 million and a Thompson Bank Watch Rating of "B"
or better, (iv) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clause (ii) above entered
into with any financial institution meeting the qualifications specified in
clause (iii) above, (v) commercial paper having the highest rating obtainable
from Moody's Investors Service, Inc. or Standard & Poor's Ratings Group and in
each case maturing within six months after the date of acquisition and (vi)
money market funds at least 95% of the assets of which constitute Cash
equivalents of the kinds described in clauses (i)-(v) of this definition.
"Closing Price" means, for any security on any date of determination, (i)
the closing sale price (or, if no closing price is reported, the last reported
sale price) of such security (regular way) on the NYSE on such date, (ii) if
such security is not listed for trading on the NYSE on any such date, as
reported in the composite transactions for the principal United States
securities exchange on which such security is so listed, (iii) if such security
is not so listed on a United States national or regional securities exchange,
as reported by The NASDAQ Stock Market, (iv) if such security is not so
reported, the last quoted bid price for such security in the over-the-counter
market as reported by the National Quotation Bureau or similar organization, or
(v) if such security is not so quoted, the average of the mid-point of the last
bid and ask prices for such security from at least three nationally recognized
investment banking firms that the Administrator selects for such purpose. The
Closing Price as determined pursuant to the foregoing shall be subject to
adjustment in certain circumstances as provided in Section 6.1(c).
"Collateral" has the meaning provided in the Collateral Agreement.
"Collateral Agent" has the meaning provided in the recitals of this
Agreement.
"Collateral Agreement" has the meaning provided in the recitals of this
Agreement.
"Commission" means the Securities and Exchange Commission.
"Common Stock" has the meaning provided in the recitals of this Agreement.
"Company" has the meaning provided in the recitals of this Agreement.
"Counterparty" has the meaning provided in the introductory paragraph of
this Agreement.
"Custodian" means The Bank of New York, custodian for the Trust under the
Custodian Agreement dated as of October 2, 2001, or any successor thereto.
4
"Declaration of Trust" has the meaning provided in the introductory
paragraph of this Agreement.
"Dilution Adjustment" means any fraction or number by which the Exchange
Rate shall be multiplied pursuant to Section 6.1(a) or (b) or by which Closing
Prices may be divided pursuant to Section 6.1(c).
"Equity Trust Securities" has the meaning provided in the recitals of this
Agreement.
"Event of Default" has the meaning provided in Article VII.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Exchange Date" means November 15, 2004, subject to (i) extension by
Counterparty pursuant to Section 1.3(f) and (ii) subsequent acceleration by
Counterparty pursuant to Section 1.3(g).
"Exchange Price" means the average Closing Price per share of Common Stock
on the 20 Trading Days immediately prior to (but not including) the Exchange
Date; provided, however, that if there are not 20 Trading Days for the Common
Stock occurring later than the 60th calendar day immediately prior to, but not
including, the Exchange Date, Exchange Price shall mean the market value per
share of the Common Stock as of the Exchange Date as determined by a nationally
recognized independent investment banking firm retained for this purpose by the
Administrator; provided, further, that for purposes of determining the payment
required upon cash settlement of this Agreement in connection with a Rollover
Offering, "Exchange Price" means the Closing Price per share of Common Stock on
the Trading Day immediately preceding the date that the Rollover Offering is
priced (the "Pricing Date") or, if the Rollover Offering is priced after 4:00
p.m., New York City time, on the Pricing Date, the Closing Price per share of
Common Stock on the Pricing Date. The Exchange Price as determined pursuant to
the foregoing shall be subject to adjustment in certain circumstances as
provided in Section 6.1(c).
"Exchange Rate" has the meaning provided in Section 1.1(c).
"Extension Amount" means the product of (i) $0.5858 multiplied by (ii) the
sum of the number of Initial Equity Trust Securities plus the number of
Additional Equity Trust Securities multiplied by (iii) a fraction, the
numerator of which is the sum of the Firm Share Base Amount and the denominator
of which is the number of Initial Equity Trust Securities and Additional Equity
Trust Securities.
"Firm Payment Date" has the meaning provided in Section 1.3(a).
"Firm Contract Price" has the meaning provided in Section 1.2(a).
"Firm Share Base Amount" has the meaning provided in Section 1.1(a).
5
"Firm Shares" has the meaning provided in Section 1.1(a).
"Forward Contract Characterization" has the meaning provided in Section
5.2(a).
"Independent Dealers" has the meaning provided in Article VII.
"Initial Equity Trust Securities" has the meaning provided in the recitals
of this Agreement.
"Initial Price" has the meaning provided in Section 1.1(c).
"Lien" has the meaning provided in the Collateral Agreement.
"Market Price" means, as of any date of determination, the average Closing
Price per share of Common Stock on the 20 Trading Days immediately prior to
(but not including) the date of determination; provided, however, that if there
are not 20 Trading Days for the Common Stock occurring later than the 60th
calendar day immediately prior to, but not including, such date, the Market
Price shall mean the market value per share of Common Stock as of such date as
determined by a nationally recognized investment banking firm retained for such
purpose by the Administrator.
"NYSE" means the New York Stock Exchange, Inc.
"Officer" shall mean the manager, trustee, president, any vice president,
the chief financial officer, the treasurer or the secretary of a Person.
"Officer's Certificate" means a certificate signed by an Officer of a
Person.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trust.
"Option Closing Date" means the settlement dates for the Additional Equity
Trust Securities under Section 5 of the Underwriting Agreement.
"Ordinary Cash Dividend" means, with respect to any consecutive 365-day
period, any dividend with respect to Common Stock paid in cash to the extent
that the amount of such dividend, together with the aggregate amount of all
other dividends on the Common Stock paid in cash during such 365-day period,
does not exceed on a per share basis 10% of the average of the Closing Prices
of the Common Stock over such 365-day period; provided that, for purposes of
the foregoing definition, the amount of cash dividends paid on a per share
basis shall be appropriately adjusted to reflect the occurrence during such
period of any event described in Article VI.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association,
limited liability company, joint venture or other entity, or a government or
any political subdivision or agency thereof.
6
"Reimbursement Agreement" means the reimbursement agreement, to be dated
as of October 23, 2001 among Salomon Smith Barney Inc., AT&T Broadband CSC
Holdings, Inc. and AT&T Broadband CSC II, Inc.
"Reported Securities" has the meaning provided in Section 6.2.
"Rollover Offering" means a reoffering or refinancing of the Equity Trust
Securities effected by the Counterparty not earlier than November 8, 2004 by
means of a completed public offering or offerings or another similar offering
(which may include one or more exchange offers), by or on behalf of such
Counterparty.
"Rollover Offering Election" means a written election made in accordance
with Section 1.3(e).
"Share Components" means the numbers of shares of Common Stock per Equity
Trust Security specified in clauses (i), (ii) and (iii) of Section 1.1(c).
"Threshold Appreciation Price" has the meaning provided in Section 1.1(c).
"Trading Day" means, with respect to any security the Closing Price of
which is being determined, a day on which such security (A) is not suspended
from trading on any national or regional securities exchange or association or
over-the-counter market at the close of business and (B) has traded at least
once on the national or regional securities exchange or association or
over-the-counter market that is the primary market for the trading of such
security.
"Transaction Value" has the meaning provided in Section 6.2.
"Trust" has the meaning provided in the introductory paragraph of this
Agreement.
"Underwriter" and "Underwriters" have the meaning provided in the recitals
of this Agreement.
"Underwriting Agreement" has the meaning provided in the recitals of this
Agreement.
ARTICLE I
PAYMENT AND DELIVERY
1.1 Payment and Delivery.
(a) Firm Shares. Upon the terms and subject to the conditions of this
Agreement, the Trust agrees to pay Counterparty the Firm Contract Price (as
defined in Section 1.2(a)) on the Firm Payment Date (as defined in Section
1.3(a)), in exchange the Counterparty agrees to deliver to the Trust on the
Exchange Date the number of shares of Common Stock (the
7
"Firm Shares") equal to the product of (x) 20,991,124 (the "Firm Share Base
Amount") multiplied by (y) the Exchange Rate (as defined in Section 1.1(b)).
(b) Exchange Rate. The "Exchange Rate" shall be determined in accordance
with the following formula, subject to adjustment as a result of certain events
as provided in Article VI: (i) if the Exchange Price is greater than $43.981
(the "Threshold Appreciation Price"), 0.8197, (ii) if the Exchange Price is
less than or equal to the Threshold Appreciation Price but greater than $36.05
(the "Initial Price"), a fraction (rounded upward or downward to the nearest
1/10,000th or, if there is not a nearest 1/10,000th, to the next higher
1/10,000th) equal to the Initial Price divided by the Exchange Price and (iii)
if the Exchange Price is less than or equal to the Initial Price, 1.
1.2 Contract Price.
(a) Firm Contract Price. The price for the Firm Shares (the "Firm Contract
Price") shall be $28.1198 in cash per share of Common Stock multiplied by the
Firm Share Base Amount.
1.3 Payment for and Delivery of Firm Shares.
(a) Firm Payment Date. Upon the terms and subject to the conditions of
this Agreement, the Trust shall deliver to Counterparty the Firm Contract Price
on October 23, 2001 (the "Firm Payment Date") at the offices of Shearman &
Sterling, 599 Lexington Avenue, New York, New York 10022, or at such other
place as shall be agreed upon by the Trust and Counterparty, paid by wire
transfer of Federal (immediately available same-day) funds to an account
designated by Counterparty, against delivery by Counterparty to the Collateral
Agent of the number of shares of Common Stock and/or cash, securities and other
property necessary to comply with Counterparty's obligations under the
Collateral Agreement.
(b) Delivery of Firm Shares.
(i) Except as otherwise provided in this Agreement, Counterparty
agrees to deliver the Firm Shares to the Trust on the Exchange Date.
Counterparty shall be deemed to have instructed the Collateral Agent to
deliver to the Custodian, for the account of the Trust, shares of Common
Stock then held by the Collateral Agent as collateral under the Collateral
Agreement, in an amount equal to the number of Firm Shares, rounded down
to the nearest whole number. Instead of any fractional shares of Common
Stock that would otherwise be deliverable (prior to rounding) to the Trust
at the Exchange Date, Counterparty agrees to make a cash payment in
respect of such fractional shares of Common Stock in an amount equal to
the value thereof at the Exchange Price. Notwithstanding the foregoing, if
an Adjustment Event shall have occurred prior to the Exchange Date then,
in lieu of the foregoing, Counterparty shall be deemed to have instructed:
(A) in the case of any cash required to be delivered on the Exchange Date
as provided in Section 6.2, the Collateral Agent to deliver such cash by
wire transfer Federal (immediately available same-day) funds to an account
designated by the Trust; and (B) in the case of any Reported Securities
required to be delivered by Counterparty in lieu of cash as provided in
Section 6.2, the Collateral Agent to deliver to the Custodian, for the
8
account of the Trust, a specified number of Reported Securities then held
as collateral under the Collateral Agreement, as provided in Section 6(g)
of the Collateral Agreement.
(ii) In the event that by the Exchange Date any substitute collateral
delivered to the Collateral Agent pursuant to Section 6(b) of the
Collateral Agreement has not been replaced by shares of Common Stock
(and/or, after an Adjustment Event, cash or Reported Securities)
sufficient to meet Counterparty's obligations hereunder, delivery shall be
effected by delivery by the Collateral Agent to the Custodian, for the
account of the Trust, of the market value of the shares of Common Stock
required to be delivered hereunder, in the form of any shares of Common
Stock then pledged by Counterparty plus cash generated from the
liquidation of U.S. Government obligations then pledged by Counterparty
(and/or, after an Adjustment Event, the market value of the alternative
consideration required to be delivered hereunder, in the form of any
Reported Securities then pledged, plus any cash then pledged, plus cash
generated from the liquidation of U.S. Government obligations then
pledged). In such event, Counterparty shall be deemed to have instructed
the Collateral Agent to liquidate and turn into cash the U.S. Government
obligations then pledged by Counterparty to the extent necessary to
satisfy Counterparty's obligations hereunder.
(iii) Certificates representing Common Stock (or Reported Securities)
in registered form that are part of the Firm Shares shall be registered in
the Trust's name or in the name of a depositary or a nominee of a
depositary as requested by the Trust, unless such Common Stock (and/or
Reported Securities) is represented by one or more global certificates
registered in the name of a depositary or a nominee of a depositary or are
book entry securities, in which event the Trust's interest in such
securities shall be noted in a manner satisfactory to the Trust and its
counsel.
(iv) Counterparty's right to deliver (or cause to be delivered) to
the Trust hereunder Common Stock and Reported Securities shall be
conditioned upon such Common Stock and Reported Securities to be so
delivered being transferable (i) by Counterparty to the Trust in
accordance with the provisions hereof and in accordance with the terms of
any agreement among shareholders applicable to such Common Stock or
Reported Securities, and (ii) by the Trust, following receipt from
Counterparty, without any restrictions not generally applicable to all
holders of such Common Stock or Reported Securities, as the case may be.
If the conditions set forth in the preceding sentence shall not be
satisfied with respect to any Common Stock or Reported Securities to be
delivered by Counterparty, then, notwithstanding the provisions hereof,
Counterparty shall exercise the Cash Delivery Option.
(d) Cash Delivery Option. At its option, Counterparty may deliver to the
Trust on the Exchange Date (even if the Exchange Date is not extended pursuant
to Section 1.3(f)), in lieu of the Firm Shares, an amount in cash equal to,
subject to adjustment as provided in Section 6.2, the Exchange Price of the
Firm Shares (the "Cash Delivery Option"), paid by wire transfer to an account
designated by the Trust, in Federal (immediately available same-day) funds;
provided that in connection with a Rollover Offering which is consummated and
as to which Counterparty has duly elected the Cash Delivery Option and has duly
made a Rollover Offering Election, such cash payment shall be made no later
than the fifth Business Day after the
9
Exchange Date. Counterparty may elect the Cash Delivery Option in respect of
all, but not less than all, of the Firm Shares and may do so by notice to the
Trust, the Collateral Agent and the Custodian not less than 30 Business Days
prior to the Exchange Date. If Counterparty elects the Cash Delivery Option and
so notifies the Trust, the Trust shall promptly notify The Depository Trust
Company and publish a notice in a daily newspaper of national circulation
stating whether the holders of Equity Trust Securities will receive shares of
Common Stock or cash (and specifying whether any such cash settlement is being
made in connection with a Rollover Offering).
(e) Rollover Offering Election. The provisions of Sections 1.3(f) and (g)
shall be applicable if Counterparty has made a Rollover Offering Election by
written notice given to the Trust not earlier than August 16, 2004 and not
later than October 15, 2004. Any Rollover Offering Election made by
Counterparty] (i) shall be irrevocable once made, and (ii) may be made only if
Counterparty] has also elected, or simultaneously elects, the Cash Delivery
Option.
(f) Extension of Exchange Date. At its option, Counterparty may, by notice
given to the Trust not earlier than August 16, 2004 and not later than October
15, 2004 elect to extend the Exchange Date to February 15, 2005. Any such
extension shall be effective (i) only in connection with a Rollover Offering as
to which Counterparty shall have duly made a Rollover Offering Election and
(ii) only if Counterparty shall have delivered to the Collateral Agent, in
pledge under the Collateral Agreement, (A) direct obligations of the United
States of America which through the scheduled payment of principal and interest
in accordance with their terms will provide, not later than one Business Day
before February 15, 2005, cash in an amount equal to not less than the
Extension Amount (the "Additional Government Securities") or (B) an equivalent
amount of Cash Equivalents. Unless Counterparty has duly elected, in connection
with a Rollover Offering, to accelerate the Exchange Date in accordance with
Section 1.3(g) hereof, Counterparty shall on such extended Exchange Date pay to
the Trust by wire transfer of Federal (immediately available same-day) funds an
amount equal to the Extension Amount.
In addition, Counterparty hereby covenants and agrees to take all other
actions necessary to cause the Trust to be a protected purchaser of such
Additional Government Securities, within the meaning of Article 8 of the New
York Uniform Commercial Code, as amended.
If Counterparty elects to extend the Exchange Date and so notifies the
Trust, the Trust shall promptly notify the Depository Trust Company and publish
a notice in a daily newspaper of national circulation stating that the
Counterparty has elected to extend the Exchange Date.
(g) Acceleration of Exchange Date. At any time after the Exchange Date has
been extended pursuant to Section 1.3(f) hereof, Counterparty may, at its
option but only in connection with the consummation of a Rollover Offering,
accelerate the Exchange Date to any date on or after November 15, 2004, by
notice to the Trust not later than 10:00 a.m. on the date to which the Exchange
Date is accelerated; provided that such acceleration shall be effective only if
at or prior to 10:00 a.m. on such accelerated Exchange Date, Counterparty has
paid to the Trust, by wire transfer to an account designated by the Trust, in
Federal (immediately available same-day) funds, an amount not less than (i) the
Extension Amount multiplied by (ii) the number
10
of days in the period from (and including) November 15, 2004 to (but excluding)
the Exchange Date as accelerated, calculated on the basis of a 360 day year
consisting of twelve 30-day months divided by (iii) 90.
If Counterparty elects to accelerate the Exchange Date and so notifies the
Trust, the Trust shall provide notice of such election to the holders of the
Equity Trust Securities not later than the accelerated Exchange Date.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COUNTERPARTY
Counterparty represents and warrants to the Trust that each representation
and warranty made by Counterparty in Section 3 of the Underwriting Agreement is
true and correct on the date hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE TRUST
The Trust represents and warrants to Counterparty that:
(a) each representation and warranty made by the Trust in Section 1 of the
Underwriting Agreement is true and correct on the date hereof; and
(b) it acknowledges that the Common Stock delivered pursuant to this
Agreement and the Collateral Agreement may contain one or more of the type of
legends referred to in Section 3(e) of the Collateral Agreement (which legend
(i) will not be applicable to the delivery of any such Common Stock to the
Trust pursuant to this Agreement and the Collateral Agreement or to the
delivery of any such Common Stock by the Trust to the holders of Equity Trust
Securities pursuant to the Equity Trust Securities and (ii) will be removed at
the request of the Collateral Agent to the depository for the Common Stock
prior to any such delivery to holders of Equity Trust Securities).
ARTICLE IV
CONDITIONS TO THE TRUST'S OBLIGATIONS
(a) The obligation of the Trust to deliver the Firm Contract Price on the
Firm Payment Date is subject to the satisfaction of the following conditions:
(i) the purchase by the Underwriters of the Equity Trust Securities
pursuant to the Underwriting Agreement shall have been consummated as
contemplated under the Underwriting Agreement;
Date;
11
(ii) the representations and warranties of the Counterparty contained
in Article II hereof shall be true and correct as of the Firm Payment
(iii) the Collateral Agreement shall have been executed by the
Counterparty and the delivery of the Collateral thereunder shall have been
made; and
(iv) the Reimbursement Agreement shall have been executed by the
Counterparty.
(b) The obligation of the Trust to deliver the Additional Contract Price
on the Option Closing Date is subject to the satisfaction of the following
conditions:
(i) the purchase by the Underwriters of the Additional Equity Trust
Securities pursuant to the Underwriting Agreement shall have been
consummated as contemplated under the Underwriting Agreement;
(ii) the representations and warranties of the Counterparty contained
in Article II hereof shall be true and correct as of the Option Closing
Date (except to the extent that they refer to an earlier date, in which
case they shall be true and correct as of such earlier date); and
(iii) the delivery of any additional Collateral under the Collateral
Agreement shall have been made.
ARTICLE V
COVENANTS
5.1 Taxes. Counterparty shall pay any and all documentary, stamp, transfer
or similar taxes and charges that may be payable in respect of the entry into
this Agreement and the transfer and delivery of the Firm Shares, cash or
Reported Securities pursuant hereto.
5.2 Forward Contract. Each of the Trust and Counterparty hereby agrees
that:
(a) it will treat this Agreement in its entirety as a forward contract for
the delivery of the Firm Shares on the Exchange Date (including as a result of
acceleration or otherwise) (the "Forward Contract Characterization"), under the
terms of which contract (i) at the time of issuance of the Equity Trust
Securities, the Trust is required to pay the Counterparty a fixed amount of
cash equal to the Firm Contract Price of the Equity Trust Securities, in
consideration for the Counterparty's obligation to deliver Common Stock (or
cash in lieu of Common Stock) to the Trust at maturity, and (ii) at maturity,
the Counterparty will deliver to the Trust the number of shares of Common Stock
that the Trust is entitled to receive at that time pursuant to the terms of the
Equity Trust Securities (subject to the right of the Counterparty to deliver
cash in lieu of the Common Stock);
(b) it will treat the delivery of the Firm Shares, if any, as occurring on
the Exchange Date;
12
(c) it will not treat this Agreement, any portion of this Agreement or any
obligation hereunder as giving rise to any interest income or other inclusions
of ordinary income (in the case of the Trust) or as giving rise to any interest
expense or other deductions of ordinary expense (in the case of Counterparty);
(d) it will not treat the delivery of any portion of the Firm Shares, cash
or Reported Securities to be delivered pursuant to this Agreement as the
payment of interest or ordinary income; and
(e) it will not take any action (including filing any tax return or form
or taking any position in any tax proceeding) that is inconsistent with the
obligations contained in clauses (a) through (d), unless such action or
position is required by an applicable taxing authority or unless such action or
position is required by a change in statutory law or regulation or by a
judicial or other authoritative interpretation of the law enacted, promulgated
or published after the date of this Agreement.
5.3 Limitations on Trading During Certain Days. Counterparty hereby agrees
that it will not, and will cause each of its Affiliates that is under its
control not to, buy shares of Common Stock of the Company or Reported
Securities for its own account during the ten days prior to the Exchange Date.
5.4 Notices. Counterparty will cause to be delivered to the Trust:
(a) immediately upon the occurrence of any Event of Default hereunder
or under the Collateral Agreement; and
(b) promptly after Counterparty receives notice, or otherwise obtains
knowledge, at any time prior to the Exchange Date that any event requiring
that an adjustment be effected pursuant to Article VI hereof shall have
occurred or be pending;
a notice identifying such event and stating, if known to Counterparty, the date
on which such event is to occur and, if applicable, the record date relating to
such event. Counterparty shall cause further notices to be delivered to the
Trust if Counterparty shall subsequently receive notice, or shall otherwise
obtain knowledge, of any further or revised information regarding the terms or
timing of such event or any record date relating thereto.
5.5 Affirmative Covenants. During the term of this Agreement, Counterparty
covenants and agrees that it will:
(a) Comply in all material respects with all applicable laws, rules,
regulations and orders to the extent noncompliance would have a material
adverse effect on the ability of Counterparty to perform its obligations
hereunder or under the Collateral Agreement, such compliance to include,
without limitation, paying before the same become delinquent all taxes,
assessments and governmental charges imposed upon Counterparty or upon
Counterparty's property, including the collateral pledged under the Collateral
Agreement, except to the extent contested in good faith.
13
(b) Furnish to the Trust as soon as possible and in any event within
twenty calendar days after Counterparty shall become aware of the occurrence of
any failure by Counterparty to comply with or perform any agreement or
obligation contained in this Agreement or the Collateral Agreement, a statement
of Counterparty describing such failure and setting forth details of such
failure and the action which Counterparty has taken and proposes to take with
respect thereto.
5.6 Further Assurances. From time to time on and after the date hereof
through the Exchange Date (or, if later, the date on which this Agreement has
been fully performed), each of the parties hereto shall use its best efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper and advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement in
accordance with the terms and conditions hereof, including (i) using reasonable
best efforts to remove any legal impediment to the consummation of such
transactions and (ii) the execution and delivery of all such deeds, agreements,
assignments and further instruments of transfer and conveyance necessary,
proper or advisable to consummate and make effective the transactions
contemplated by the Agreement in accordance with the terms and conditions
hereof.
ARTICLE VI
ADJUSTMENT OF EXCHANGE RATE, EXCHANGE PRICE AND CLOSING PRICE
6.1 Dilution Adjustments. The Exchange Rate, Exchange Price and Closing
Price shall be subject to adjustment successively from time to time as follows:
(a) Stock Dividends, Splits, Reclassifications, Etc. If the Company shall,
after the date hereof,
(i) pay a stock dividend or make a distribution, in either case, with
respect to Common Stock in shares of such stock;
(ii) subdivide or split its outstanding shares of Common Stock into a
greater number of shares;
(iii) combine its outstanding shares of Common Stock into a smaller
number of shares; or
(iv) issue by reclassification (other than a reclassification
pursuant to clause (b), (c), (d) or (e) of the definition of Adjustment
Event) of its shares of Common Stock any other equity securities of the
Company;
then, the Exchange Rate shall be multiplied by a Dilution Adjustment equal to
the number of shares of Common Stock (or the fraction thereof) that a holder
who held one share of Common Stock immediately prior to such event would be
entitled solely by reason of such event to hold immediately after such event.
14
In the case of the reclassification of any shares of Common Stock into any
other equity securities of the Company other than the Common Stock, such other
equity securities shall be deemed shares of Common Stock for all purposes
hereunder. The Exchange Price and Closing Price shall also be adjusted in the
manner described in paragraph (c) of this Section 6.1.
(b) Right or Warrant Issuances. If the Company shall, after the date
hereof, issue, or declare a record date in respect of an issuance of, rights or
warrants (other than rights to purchase Common Stock pursuant to a plan for the
reinvestment of dividends or interest) to all holders of Common Stock entitling
them to subscribe for or purchase shares of Common Stock at a price per share
less than the Market Price of the Common Stock on the Business Day next
following the record date for the determination of holders of Common Stock
entitled to receive such rights or warrants, then, in each such case, the
Exchange Rate shall be multiplied by the following Dilution Adjustment: a
fraction, of which the numerator shall be (A) the number of shares of Common
Stock outstanding on the record date for the issuance of such rights or
warrants plus (B) the number of additional shares of Common Stock offered for
subscription or purchase pursuant to such rights or warrants, and of which the
denominator shall be (x) the number of shares of Common Stock outstanding on
the record date for the issuance of such rights or warrants plus (y) the number
specified in clause (B) above multiplied by the quotient of the exercise price
of such rights or warrants divided by the Market Price of the Common Stock on
the Business Day next following the record date for the determination of
holders of Common Stock entitled to receive such rights or warrants; provided
that the Exchange Rate shall not be adjusted to more than one share of Common
Stock per Equity Trust Security. To the extent that such rights or warrants
expire prior to the Exchange Date and shares of Common Stock are delivered with
respect to less than all of such rights or warrants prior to such expiration,
the Exchange Rate shall be readjusted to the Exchange Rate which would then be
in effect had such adjustments for the issuance of such rights or warrants been
made upon the basis of delivery of only the number of shares of Common Stock
actually delivered pursuant to such rights or warrants. For purposes of this
Section 6.1(b), dividends will be deemed to be paid as of the record date for
such dividend. The Exchange Price and Closing Price shall also be adjusted in
the manner described in paragraph (c) of this Section 6.1.
(c) Corresponding Adjustments to Exchange Price; Adjustment of Closing
Price in Certain Circumstances.
(i) If any adjustment is made to the Exchange Rate pursuant to
paragraph (a) or (b) of this Section 6.1, an adjustment shall also be made
to the Exchange Price as such term is used throughout the definition of
Exchange Rate. The required adjustment to the Exchange Price shall be made
at the Exchange Date by multiplying the Exchange Price by the cumulative
Dilution Adjustment.
(ii) If, during any Calculation Period used in calculating the
Exchange Price, the Market Price or the Transaction Value, there shall
occur any event requiring an adjustment to be effected pursuant to this
Section 6.1, then the Closing Price for each Trading Day in the
Calculation Period occurring prior to the day on which such adjustment is
effected shall be adjusted by being multiplied by the relevant Dilution
Adjustment.
15
(d) Timing of Dilution Adjustments. Each Dilution Adjustment shall be
effected:
(i) in the case of any dividend, distribution, or issuance of rights
or warrants, at the opening of business on the Business Day next following
the record date for determination of holders of Common Stock entitled to
receive such dividend, distribution or issuance or, if the announcement of
any such dividend, distribution or issuance is after such record date, at
the time such dividend, distribution or issuance shall be announced by the
Company; and
(ii) in the case of any subdivision, split, combination or
reclassification, on the effective date of such transaction.
(e) General; Failure of Dilution Event to Occur. All Dilution Adjustments
shall be rounded upward or downward to the nearest 1/10,000th (or if there is
not a nearest 1/10,000th to the next higher 1/10,000th). No adjustment in the
Exchange Rate shall be required unless such adjustment would require an
increase or decrease of at least one percent therein; provided, however, that
any adjustments which by reason of this sentence are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
If any announcement or declaration of a record date in respect of a dividend,
distribution or issuance requiring an adjustment pursuant to this Section 6.1
shall subsequently be canceled by the Company, or such dividend, distribution
or issuance shall fail to receive requisite approvals or shall fail to occur
for any other reason, then, upon such cancellation, failure of approval or
failure to occur, the Exchange Rate shall be readjusted to the Exchange Rate
which would then have been in effect had adjustment for such event not been
made. If an Adjustment Event shall occur after the occurrence of one or more
events requiring an adjustment pursuant to this Section 6.1, the Dilution
Adjustments previously applied to the Exchange Rate in respect of such events
shall not be rescinded but shall be applied to the new Exchange Rate provided
for under Section 6.2.
6.2 Adjustment for Consolidation, Merger or Other Adjustment Event. In the
event of (a) any dividend or distribution by the Company to all holders of
Common Stock of evidences of its indebtedness or other assets (excluding any
dividends or distributions referred to in Section 6.1(a)(i), any other equity
securities issued pursuant to a reclassification referred to in Section
6.1(a)(iv) and any Ordinary Cash Dividends) or any issuance by the Company to
all holders of Common Stock of rights or warrants to subscribe for or purchase
any of its securities (other than rights or warrants referred to in Section
6.1(b)), (b) any consolidation or merger of the Company, or any surviving
entity or subsequent surviving entity of the company (any such entity, a
"Company Successor") with or into another entity (other than a merger or
consolidation in which the Company is the continuing corporation and in which
the Common Stock outstanding immediately prior to the merger or consolidation
is not exchanged for cash, securities or other property of the Company or
another corporation), (c) any sale, transfer, lease or conveyance to another
corporation of the property of the Company as an entirety or substantially as
an entirety, (d) any statutory exchange of securities of the Company or any
Company Successor with another corporation (other than in connection with a
merger or acquisition) or (e) any liquidation, dissolution or winding up of the
Company (any such event described in clause (a), (b), (c), (d) or (e), an
"Adjustment Event"), the Exchange Rate shall be
16
adjusted so that on the Exchange Date Counterparty shall deliver to the Trust,
in lieu of or (in the case of an Adjustment Event described in clause (a)
above) in addition to, the Firm Shares, cash in an amount equal to:
(A) if the Exchange Price is greater than the Threshold Appreciation
Price, 0.8197 multiplied by the Transaction Value (as defined below);
(B) if the Exchange Price is less than or equal to the Threshold
Appreciation Price but greater than the Initial Price, the product of
(x) the Initial Price divided by the Exchange Price multiplied by (y)
the Transaction Value; and
(C) if the Exchange Price is less than or equal to the Initial Price, the
Transaction Value;
provided, however, that if the consideration received by all holders of
Common Stock in such Adjustment Event does not and may not at the option of
such holders include Reported Securities, then (except in the case of an
Adjustment Event solely of the type described in clause (a) above) (i)
Counterparty's delivery obligations hereunder will be accelerated and promptly
upon consummation of the Adjustment Event Counterparty will be required to
deliver to the Trust cash in an amount equal to (x) if the Transaction Value is
greater than the Threshold Appreciation Price, 0.8197 multiplied by the
Transaction Value, (y) if the Transaction Value is less than or equal to the
Threshold Appreciation Price but greater than Initial Price, the Initial Price,
and (z) if the Transaction Value is less than or equal to the Initial Price,
the Transaction Value.
If the consideration received by holders of Common Stock in an Adjustment
Event includes Reported Securities, and, to any extent, consideration other
than Reported Securities, and in the case of an Adjustment Event described in
(b), (c) or (d) of the definition of that term , the Transaction Value of the
consideration other than Reported Securities comprises 25% or more of the
aggregate Transaction Value for such Adjustment Event, then (a) Counterparty's
delivery obligations hereunder will be accelerated to the extent that the value
of the consideration received in such Adjustment Event does not derive from
Reported Securities and promptly upon consummation of the Adjustment Event
Counterparty will be required to deliver to the Trust cash in an amount equal
to (x) if the Transaction Value is greater than the Threshold Appreciation
Price, 0.8197 multiplied by (i) the Transaction Value and (ii) the percentage
of the value of the consideration received in connection with the Adjustment
Event that does not derive from Reported Securities, (y) if the Transaction
Value is less than or equal to the Threshold Appreciation Price but greater
than the Initial Price, the Initial Price multiplied by the percentage of the
value of the consideration received in connection with the Adjustment Event
that does not derive from Reported Securities, and (z) if the Transaction Value
is less than or equal to the Initial Price, the Transaction Value multiplied by
the percentage of the value of the consideration received in connection with
the Adjustment Event that does not derive from Reported Securities.
Following the occurrence of an Adjustment Event, the Exchange Price, as
such term is used throughout the definition of Exchange Rate, shall be deemed
to equal (A) if shares
17
of Common Stock are outstanding at the Exchange Date, the Exchange Price of the
Common Stock, as adjusted pursuant to Section 6.1(c), otherwise zero, plus (B)
the Transaction Value.
Notwithstanding the foregoing, with respect to any Reported Securities (as
defined below) received by holders of Common Stock in an Adjustment Event,
Counterparty shall, in lieu of delivering cash in respect of such Reported
Securities as described above, deliver a number of such Reported Securities
with a value, as determined in accordance with clause (ii) of the definition of
Transaction Value, equal to all cash amounts that would otherwise be
deliverable in respect of Reported Securities received in such Adjustment
Event, except to the extent Counterparty has made an election to exercise the
Cash Delivery Option or such Reported Securities have not yet been delivered to
the holders entitled thereto following such Adjustment Event or any record date
with respect thereto. If, following any Adjustment Event, any Reported Security
ceases to qualify as a Reported Security, then (x) Counterparty shall not
deliver such Reported Security but instead shall deliver an equivalent amount
of cash and (y) notwithstanding clause (ii) of the definition of Transaction
Value, the Transaction Value of such Reported Security shall mean the fair
market value of such Reported Security on the date such security ceases to
qualify as a Reported Security, as determined by a nationally recognized
investment banking firm retained for this purpose by the Administrator.
"Transaction Value" means (i) for any cash received in any Adjustment
Event, the amount of cash received per share of Common Stock, (ii) for any
Reported Securities received in any Adjustment Event, an amount equal to (x)
the average Closing Price per security of such Reported Securities on the 20
Trading Days immediately prior to (but not including) the Exchange Date (except
in the case of a Rollover Offering, in which case the Closing Price on the
Trading Day immediately preceding the Pricing Date or, if the Rollover Offering
is priced after 4:00 p.m. New York City time on the Pricing Date, the Closing
Price on the Pricing Date shall be used for purposes of this clause) multiplied
by (y) the number of such Reported Securities (as adjusted pursuant to the
definition thereof) received per share of Common Stock and (iii) for any
property received in any Adjustment Event other than cash or Reported
Securities, an amount equal to the fair market value of the property received
per share of Common Stock on the date such property is received, as determined
by a nationally recognized investment banking firm retained for this purpose by
the Administrator; provided, however, that in the case of clause (ii), (x) with
respect to securities that are Reported Securities by virtue of only clause
(iv) of the definition of Reported Securities, Transaction Value with respect
to any such Reported Security means the average of the mid-point of the last
bid and ask prices for such Reported Security as of the Exchange Date from each
of at least three nationally recognized investment banking firms retained for
such purpose by the Administrator multiplied by the number of such Reported
Securities (as adjusted pursuant to the definition thereof) received per share
of Common Stock and (y) with respect to all Reported Securities other than
securities that are Reported Securities by virtue of only clause (iv) of the
definition of Reported Securities, if there are not 20 Trading Days for any
particular Reported Security occurring after the 60th calendar day immediately
prior to, but not including, the Exchange Date, Transaction Value with respect
to such Reported Security means the fair market value per security of such
Reported Security as of the Exchange Date as determined by a nationally
recognized investment banking firm retained for such purpose by the
Administrator multiplied by the number of such Reported Securities (as adjusted
pursuant to the definition thereof) received per share of Common Stock. For
purposes of calculating the Transaction Value, any cash, Reported Securities or
other property receivable in
18
an Adjustment Event shall be deemed to have been received immediately prior to
the close of business on the record date for such Adjustment Event or, if there
is no record date for such Adjustment Event, immediately prior to the close of
business on the effective date of such Adjustment Event.
"Reported Securities" means any securities received in an Adjustment Event
that (A) are (i) listed on a United States national securities exchange, (ii)
reported on a United States national securities system subject to last sale
reporting, (iii) traded in the over-the-counter market and reported on the
National Quotation Bureau or similar organization or (iv) for which bid and ask
prices are available from at least three nationally recognized investment
banking firms; and (B) are either (x) perpetual equity securities or (y)
non-perpetual equity or debt securities with a stated maturity after the
Exchange Date. The number of shares of any Reported Securities included in the
calculation of Transaction Value pursuant to clause (ii) of the definition
thereof shall be subject to adjustment if any event that would, had it occurred
with respect to the Common Stock or the Company, have required an adjustment
pursuant to Section 6.1 or 6.2, shall occur with respect to such Reported
Securities or the issuer thereof subsequent to the date the Adjustment Event is
consummated. Adjustment for such subsequent events shall be as nearly
equivalent as practicable to the adjustments provided for in Section 6.1 or
6.2, as applicable.
ARTICLE VII
ACCELERATION
If one or more of the following events (each an "Event of Default") shall
occur:
(a) Counterparty or AT&T Corp., a New York corporation ("AT&T"), shall
commence a voluntary case or other proceeding seeking a liquidation,
reorganization or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, or shall
consent to any such relief or to the appointment of or taking possession by any
such official in an involuntary case or other proceeding commenced against it,
or shall take any action to authorize any of the foregoing;
(b) an involuntary case or other proceeding shall be commenced against
Counterparty or AT&T seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other similar
law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property; or an order for relief shall be entered
against Counterparty or AT&T under any bankruptcy, insolvency or other similar
law as now or hereafter in effect; or
(c) a Collateral Event of Default within the meaning of the Collateral
Agreement;
19
then an "Acceleration Date" shall occur, Counterparty's rights under Section
1.3(d), (e) (f) and (g) shall terminate immediately and (i) in the case of
clause (c), Counterparty shall become obligated to the extent permitted by law
to deliver to the Trust (and shall be deemed to instruct the Collateral Agent
to deliver to the Custodian, for the account of the Trust, and to liquidate and
turn into cash the U.S. Government obligations and Cash Equivalents then
pledged by Counterparty to the extent necessary to satisfy such obligation) the
Firm Share Base Amount plus the Additional Share Base Amount, if any, in the
form of the shares of Common Stock then pledged by Counterparty, or cash
generated from the liquidation of U.S. Government obligations and Cash
Equivalents then pledged by Counterparty, or a combination thereof (or, after
an Adjustment Event, the alternate consideration to be delivered, in the form
of Reported Securities then pledged, cash then pledged, cash generated from the
liquidation of U.S. Government obligations and Cash Equivalents then pledged,
or a combination thereof); or (ii) in the case of clauses (a) or (b),
Counterparty shall become obligated to the extent permitted by law to deliver
to the Trust (and shall be deemed to instruct the Collateral Agent to deliver
to the Custodian, for the account of the Trust, and to liquidate and turn into
cash the U.S. Government obligations and Cash Equivalents then pledged by
Counterparty to the extent necessary to satisfy such obligation) a number of
shares of Common Stock, in the form of the shares of Common Stock then pledged
by Counterparty, or cash generated from the liquidation of U.S. Government
obligations and Cash Equivalents then pledged by Counterparty, or a combination
thereof (or, after an Adjustment Event, the alternate consideration to be
delivered, in the form of Reported Securities then pledged, cash then pledged,
cash generated from the liquidation of U.S. Government obligations and Cash
Equivalents then pledged, or a combination thereof), with an aggregate value
(based on the Closing Price on the Acceleration Date) equal to the Acceleration
Value (as defined below).
"Acceleration Value" means an amount determined by the Administrator on
the basis of quotations from Independent Dealers (as defined below). Each
quotation will be for an amount that would be paid to the relevant Independent
Dealer in consideration of an agreement between the Trust and such Independent
Dealer that would have the effect of preserving for the Trust the economic
equivalent of the payments and deliveries that the Trust would, but for the
occurrence of the Acceleration Date, have been entitled to receive after the
Acceleration Date hereunder (taking into account any adjustments to the
Exchange Rate that may have been effected on or prior to the Acceleration
Date). On or as soon as reasonably practicable following the Acceleration Date,
the Administrator will request each Independent Dealer to provide its quotation
as soon as reasonably practicable, but in any event within two Business Days.
The Administrator shall compute the Acceleration Value upon receipt of each
Independent Dealer's quotation, provided that if, at the close of business on
the fourth Business Day following the Acceleration Date, the Administrator
shall have received quotations from fewer than four of the Independent Dealers,
the Administrator shall compute the Acceleration Value using the quotations, if
any, it shall have received at or prior to such time. If four quotations are
provided, the Acceleration Value will be the arithmetic mean of the two
quotations remaining after disregarding the highest and lowest quotations. (For
this purpose, if more than one quotation has the same highest or lowest value,
then one of such quotations shall be disregarded.) If two or three quotations
are provided, the Acceleration Value will be the arithmetic mean of such
quotations. If one quotation is provided, the Acceleration Value will be equal
to such quotation. If no quotations are provided, the Acceleration Value will
be the aggregate value (based on the Closing Price on the Acceleration Date) of
the number of shares of Common Stock (or, after an
20
Adjustment Event, Reported Securities, cash or a combination thereof) that
would be required to be delivered hereunder on the Acceleration Date if the
Exchange Date were redefined to be the Acceleration Date.
"Independent Dealers" means four nationally recognized independent
investment banking firms selected in good faith by the Administrator.
As promptly as reasonably practicable after receipt of the quotations on
which the Acceleration Value is based (or, as the case may be, after failure to
receive any such quotations within the time period prescribed above), the Trust
shall deliver to Counterparty and the Collateral Agent a notice specifying the
number of shares of Common Stock (or, after an Adjustment Event, the alternate
consideration) required to be delivered by Counterparty. the Trust and
Counterparty agree that the obligations contained in clauses (i) and (ii) above
are a reasonable pre-estimate of loss and not a penalty. Such amount is payable
for the loss of bargain and the Trust will not be entitled to recover
additional damage as a consequence of loss resulting from an Event of Default.
ARTICLE VIII
MISCELLANEOUS
8.1 Adjustments; Selection of Independent Investment Banking Firm. The
Trust shall be responsible for the effectuation and calculation of any
adjustment pursuant to Article VI hereof and shall furnish Counterparty notice
of any such adjustment and shall provide Counterparty reasonable opportunity to
review the calculations pertaining to any such adjustment. If, pursuant to the
terms and conditions hereof, the Administrator shall be required to retain a
nationally recognized independent investment banking firm for any purpose
provided herein, such nationally recognized independent investment banking firm
shall be selected and retained by the Administrator only after consultation
with Counterparty; provided, however, that Counterparty shall be deemed to have
waived its right to consult if Counterparty fails to consult within five
Business Days of notice being sent by the Administrator to Counterparty seeking
consultation. the Trust may delegate the effectuation and calculation of any
such adjustments to its Administrator.
8.2 Notices. Notices to the Trust shall be directed to it in care of the
Administrator for the Trust, The Bank of New York, 5 Penn Plaza, 13th floor,
New York, New York 10001, Telephone: (212) 896-7126, Telecopier: (212)
896-7295; notices to Counterparty shall be directed to care of AT&T Broadband
CSC Holdings, Inc., 3763 Howard Hughes Parkway, #120, Las Vegas, Nevada 89109
(fax no.: (702) 866-0427), Attention: President. Notwithstanding the foregoing,
notices to a party shall be directed to such other address for such party as
shall be specified by such party in a like notice given pursuant to this
Section 8.2. All notices and other communications hereunder shall be in writing
and shall be deemed to have been duly given if either (i) personally delivered
(including delivery by courier service or by Federal Express or any other
nationally recognized overnight delivery service for next day delivery) to the
offices specified in the preceding sentence, in which case they shall be deemed
received on the first Business Day by which delivery shall have been made to
said offices; or (ii) sent by certified mail, return receipt requested, in
accordance with the preceding sentence, in
21
which case they shall be deemed received when receipted for unless
acknowledgment is refused (in which case delivery shall be deemed to have been
received on the first Business Day on which such acknowledgment is refused).
Any notice, demand or other communication to be provided by or on behalf of the
Trust pursuant to this Agreement shall be sent to the address of Counterparty,
provided in this Section 8.2. Any failure by Counterparty or any guardian,
conservator, executor, administrator or other similarly appointed person to
receive any such notice, demand or communication shall in no way abrogate,
invalidate or otherwise affect the validity or enforceability of the notice,
demand or communication or the matters set forth therein.
8.3 Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
8.4 Entire Agreement. Except as expressly set forth herein, this Agreement
constitutes the entire agreement among the parties with respect to the subject
matter hereof and supersedes all prior agreements, understandings and
negotiations, both written and oral, among the parties with respect to the
subject matter of this Agreement.
8.5 Amendments; Waivers. Any provision of this Agreement may be amended or
waived if, and only if, such amendment or waiver is in writing and signed, in
the case of an amendment, by the Trust and Counterparty, or, in the case of a
waiver, by the party or parties against whom the waiver is to be effective. No
failure or delay by either party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by
law.
8.6 No Third Party Rights; Successors and Assigns. Except as otherwise
agreed in writing, this Agreement is not intended and shall not be construed to
create any rights in any person other than Counterparty and the Trust and their
respective successors and assigns and no person shall assert any rights as
third party beneficiary hereunder. Whenever any of the parties hereto is
referred to, such reference shall be deemed to include the successors and
permitted assigns of such party.
8.7 Application of Bankruptcy Code. The parties hereto acknowledge and
agree that the Collateral Agent is a "financial institution" within the meaning
of Section 101(22) of Title 11 of the United States Code (the "Bankruptcy
Code") and is acting as agent and custodian for the Trust in connection with
this Agreement and that the Trust is a "customer" of the Collateral Agent
within the meaning of said Section 101(22). The parties hereto further
acknowledge and agree that this Agreement is a "securities contract", as such
term is defined in Section 741(7) of the Bankruptcy Code, entitled to the
protection of Section 555 of the Bankruptcy Code.
8.8 Governing Law; Jurisdiction; Severability; Waiver of Jury Trial. This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York. For the purpose of any suit, action or proceeding arising
out of or relating to this Agreement, the parties hereto hereby expressly and
irrevocably consent and submit to the non-
22
exclusive jurisdiction of any United States Federal or New York State court
sitting in the Borough of Manhattan, City and State of New York, and expressly
and irrevocably waive, to the extent permitted under applicable law, any
immunity from the jurisdiction thereof and any claim or defense in such suit,
action or proceeding based on a claim of improper venue, forum non conveniens
or any similar basis to which it might otherwise be entitled. To the extent
permitted by law, the unenforceability or invalidity of any provision or
provisions of this Agreement shall not render any other provision or provisions
herein contained unenforceable or invalid. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THE PARTIES HERETO HEREBY WAIVE AND COVENANT THAT THEY WILL NOT
ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY
JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER
HEREOF, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING OR WHETHER IN
CONTRACT OR TORT OR OTHERWISE. EACH PARTY HERETO ACKNOWLEDGES THAT IT OR HE HAS
BEEN INFORMED BY THE OTHER PARTY HERETO THAT THE PROVISIONS OF THIS SECTION
CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH SUCH OTHER PARTY HERETO HAS RELIED,
IS RELYING AND WILL RELY IN ENTERING INTO THIS AGREEMENT AND ANY DOCUMENT
RELATED THERETO. EACH PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OF THIS
SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE OTHER PARTY
HERETO TO THE WAIVER OF ITS OR HIS RIGHTS TO TRIAL BY JURY.
23
IN WITNESS WHEREOF, the parties have signed this Agreement as of the date
and year first above written.
TRUST: COUNTERPARTY:
EQUITY SECURITIES TRUST I: AT&T BROADBAND CSC HOLDINGS, INC.
By: By:
--------------------------------- -------------------------------
Name: Name:
Title: Title:
EXECUTION VERSION
FORWARD CONTRACT AGREEMENT
Between
AT&T BROADBAND CSC II, INC.
As Counterparty,
and
EQUITY SECURITIES TRUST I
Dated as of
October 23, 2001
FORWARD CONTRACT AGREEMENT
THIS AGREEMENT is made as of this October 23, 2001 among AT&T Broadband
CSC II, Inc., a corporation organized under the laws of the State of Delaware
("Counterparty") and Equity Securities Trust I, a business trust organized
under the laws of the State of Delaware under and by virtue of an amended and
restated declaration of trust, dated as of October 16, 2001 (the "Declaration
of Trust") (such trust and the trustees thereof acting in their capacity as
such being referred to herein as the "Trust").
WHEREAS, Counterparty owns shares of Cablevision NY Group Class A common
stock, $.01 par value (the "Common Stock") of Cablevision Systems Corporation,
a Delaware corporation (including its successors) (the "Company");
WHEREAS, Trust has filed with the Securities and Exchange Commission a
registration statement contemplating the offering of up to 26,918,195 Equity
Trust Securities (the "Equity Trust Securities"), the terms of which
contemplate delivery by the Trust to the holders thereof of a number of shares
of Common Stock (or, if the Counterparty exercises its cash settlement option,
cash in lieu thereof), on, or shortly after, November 15, 2004 (as further
defined herein, the "Exchange Date");
WHEREAS, in exchange for certain consideration to be paid by the Trust
hereunder, the Trust and Counterparty desire to provide for the future
acquisition and delivery of all or a portion of the aggregate number of shares
of Common Stock, or the cash value thereof, contemplated to be delivered by the
Trust in respect of the Equity Trust Securities on the Exchange Date, at a
price to be established under this Agreement and such other agreements;
WHEREAS, Counterparty has agreed to enter into a Collateral Agreement (the
"Collateral Agreement") dated as of the date hereof, among the Trust,
Counterparty and The Bank of New York, as collateral agent (the "Collateral
Agent"), to grant the Trust a security interest in the shares of Common Stock
specified therein and in certain other circumstances certain other collateral
to secure the obligations of Counterparty hereunder;
WHEREAS, the Trust has agreed, pursuant to an underwriting agreement,
dated October 17, 2001 (the "Underwriting Agreement"), among the Trust,
Counterparty, the Company, Salomon Smith Barney Inc., Bear, Stearns & Co. Inc.
and Merrill Lynch, Pierce, Fenner & Smith Incorporated (each an "Underwriter",
and collectively, the "Underwriters"), to issue and sell to the Underwriters an
aggregate of 23,407,127 Equity Trust Securities (together with the 2 Equity
Trust Securities purchased by Salomon Smith Barney Inc. in connection with the
organization of the Trust, the "Initial Equity Trust Securities") and, at the
Underwriters' option, up to 3,551,068 additional Equity Trust Securities (the
"Additional Equity Trust Securities") to cover over-allotments, if any.
NOW, THEREFORE, in consideration of their mutual covenants herein
contained, the parties hereto, intending to be legally bound, hereby mutually
covenant and agree as follows:
DEFINITIONS
As used herein, the following words and phrases shall have the following
meanings:
"Acceleration Date" has the meaning provided in Article VII.
"Acceleration Value" has the meaning provided in Article VII.
"Act" means the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.
"Additional Equity Trust Securities" has the meaning provided in the
recitals of this Agreement.
"Additional Contract Price" has the meaning provided in Section 1.2(b).
"Additional Share Base Amount" means a number equal to the number of
Additional Equity Trust Securities that the Underwriters elect to purchase
under the Underwriting Agreement.
"Additional Shares" has the meaning provided in Section 1.1(b).
"Additional STRIPS" means the U.S. Treasury obligations purchased by the
Trust for settlement on the Option Closing Date.
"Adjustment Event" has the meaning provided in Section 6.2.
"Administrator" means The Bank of New York, administrator for the Trust
under the Administration Agreement dated as of October 23, 2001, or any
successor thereto.
"Affiliate" means, as to any Person, any other Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person or is a partner in, or a trustee, settlor, beneficiary, member, manager,
director or officer of, such Person and, with respect to any Person that is a
natural person, further includes such Person's immediate family members,
including his father, mother, spouse and children, the spouses of his children,
his siblings and their spouses and children. For purposes of this definition,
"control" (including the terms "controlled by" or "under common control with")
means, as to any Person, the possession, direct or indirect, of the power to
vote ten percent or more of the corporate or beneficial interests of such
Person (or of the securities having ordinary voting power for the election of
directors of such Person), or the power to direct or cause the direction of the
management and policies of such Person, whether through ownership of voting
securities or by contract or otherwise.
"Bankruptcy Code" has the meaning provided in Section 8.7.
"Business Day" means any day that is not a Saturday, a Sunday or a day on
which the NYSE or banking institutions or trust companies in The City of New
York are authorized or obligated by law or executive order to close.
3
"Calculation Period" means any period of Trading Days for which an average
security price must be determined pursuant to this Agreement.
"Cash Delivery Option" has the meaning provided in Section 1.3(d).
"Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof (provided that the full faith and credit
of the United States is pledged in support thereof) having maturities of not
more than six months from the date of acquisition, (iii) certificates of
deposit with maturities of six months or less from the date of the acquisition,
bankers' acceptances with maturities not exceeding six months and overnight
bank deposits, in each case with any domestic commercial bank having capital
and surplus in excess of $500 million and a Thompson Bank Watch Rating of "B"
or better, (iv) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clause (ii) above entered
into with any financial institution meeting the qualifications specified in
clause (iii) above, (v) commercial paper having the highest rating obtainable
from Moody's Investors Service, Inc. or Standard & Poor's Ratings Group and in
each case maturing within six months after the date of acquisition and (vi)
money market funds at least 95% of the assets of which constitute Cash
equivalents of the kinds described in clauses (i)-(v) of this definition.
"Closing Price" means, for any security on any date of determination, (i)
the closing sale price (or, if no closing price is reported, the last reported
sale price) of such security (regular way) on the NYSE on such date, (ii) if
such security is not listed for trading on the NYSE on any such date, as
reported in the composite transactions for the principal United States
securities exchange on which such security is so listed, (iii) if such security
is not so listed on a United States national or regional securities exchange,
as reported by The NASDAQ Stock Market, (iv) if such security is not so
reported, the last quoted bid price for such security in the over-the-counter
market as reported by the National Quotation Bureau or similar organization, or
(v) if such security is not so quoted, the average of the mid-point of the last
bid and ask prices for such security from at least three nationally recognized
investment banking firms that the Administrator selects for such purpose. The
Closing Price as determined pursuant to the foregoing shall be subject to
adjustment in certain circumstances as provided in Section 6.1(c).
"Collateral" has the meaning provided in the Collateral Agreement.
"Collateral Agent" has the meaning provided in the recitals of this
Agreement.
"Collateral Agreement" has the meaning provided in the recitals of this
Agreement.
"Commission" means the Securities and Exchange Commission.
"Common Stock" has the meaning provided in the recitals of this Agreement.
"Company" has the meaning provided in the recitals of this Agreement.
"Contract Shares" has the meaning provided in Section 1.1.
4
"Counterparty" has the meaning provided in the introductory paragraph of
this Agreement.
"Custodian" means The Bank of New York, custodian for the Trust under the
Custodian Agreement dated as of October 2, 2001, or any successor thereto.
"Declaration of Trust" has the meaning provided in the introductory
paragraph of this Agreement.
"Dilution Adjustment" means any fraction or number by which the Exchange
Rate shall be multiplied pursuant to Section 6.1(a) or (b) or by which Closing
Prices may be divided pursuant to Section 6.1(c).
"Equity Trust Securities" has the meaning provided in the recitals of this
Agreement.
"Event of Default" has the meaning provided in Article VII.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Exchange Date" means November 15, 2004, subject to (i) extension by AT&T
Broadband CSC Holdings, Inc. pursuant to Section 1.3(f) of the Holdings Forward
Contract (as defined below) and (ii) subsequent acceleration by AT&T Broadband
CSC Holdings, Inc. pursuant to Section 1.3(g) of the Holdings Forward Contract.
"Exchange Price" means the average Closing Price per share of Common Stock
on the 20 Trading Days immediately prior to (but not including) the Exchange
Date; provided, however, that if there are not 20 Trading Days for the Common
Stock occurring later than the 60th calendar day immediately prior to, but not
including, the Exchange Date, Exchange Price shall mean the market value per
share of the Common Stock as of the Exchange Date as determined by a nationally
recognized independent investment banking firm retained for this purpose by the
Administrator; provided, further, that for purposes of determining the payment
required upon cash settlement of this Agreement in connection with a Rollover
Offering, "Exchange Price" means the Closing Price per share of Common Stock on
the Trading Day immediately preceding the date that the Rollover Offering is
priced (the "Pricing Date") or, if the Rollover Offering is priced after 4:00
p.m., New York City time, on the Pricing Date, the Closing Price per share of
Common Stock on the Pricing Date. The Exchange Price as determined pursuant to
the foregoing shall be subject to adjustment in certain circumstances as
provided in Section 6.1(c).
"Exchange Rate" has the meaning provided in Section 1.1(c).
"Extension Amount" means the product of (i) $0.5858 multiplied by (ii) the
sum of the number of Initial Equity Trust Securities plus the number of
Additional Equity Trust Securities multiplied by (iii) a fraction, the
numerator of which is the sum of the Firm Share Base Amount and the Additional
Share Base Amount and the denominator of which is the number of Initial Equity
Trust Securities and Additional Equity Trust Securities.
5
"Firm Payment Date" has the meaning provided in Section 1.3(a).
"Firm Contract Price" has the meaning provided in Section 1.2(a).
"Firm Share Base Amount" has the meaning provided in Section 1.1(a).
"Firm Shares" has the meaning provided in Section 1.1(a).
"Forward Contract Characterization" has the meaning provided in Section
5.2(a).
"Independent Dealers" has the meaning provided in Article VII.
"Initial Equity Trust Securities" has the meaning provided in the recitals
of this Agreement.
"Initial Price" has the meaning provided in Section 1.1(c).
"Lien" has the meaning provided in the Collateral Agreement.
"Market Price" means, as of any date of determination, the average Closing
Price per share of Common Stock on the 20 Trading Days immediately prior to
(but not including) the date of determination; provided, however, that if there
are not 20 Trading Days for the Common Stock occurring later than the 60th
calendar day immediately prior to, but not including, such date, the Market
Price shall mean the market value per share of Common Stock as of such date as
determined by a nationally recognized investment banking firm retained for such
purpose by the Administrator.
"NYSE" means the New York Stock Exchange, Inc.
"Officer" shall mean the manager, trustee, president, any vice president,
the chief financial officer, the treasurer or the secretary of a Person.
"Officer's Certificate" means a certificate signed by an Officer of a
Person.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trust.
"Option Closing Date" means the settlement dates for the Additional Equity
Trust Securities under Section 5 of the Underwriting Agreement.
"Ordinary Cash Dividend" means, with respect to any consecutive 365-day
period, any dividend with respect to Common Stock paid in cash to the extent
that the amount of such dividend, together with the aggregate amount of all
other dividends on the Common Stock paid in cash during such 365-day period,
does not exceed on a per share basis 10% of the average of the Closing Prices
of the Common Stock over such 365-day period; provided that, for purposes of
the foregoing definition, the amount of cash dividends paid on a per share
basis shall be appropriately adjusted to reflect the occurrence during such
period of any event described in Article VI.
6
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association,
limited liability company, joint venture or other entity, or a government or
any political subdivision or agency thereof.
"Reimbursement Agreement" means the reimbursement agreement, to be dated
as of October 23, 2001 among Salomon Smith Barney Inc., AT&T Broadband CSC
Holdings, Inc. and AT&T Broadband CSC II, Inc.
"Reported Securities" has the meaning provided in Section 6.2.
"Rollover Offering" means a reoffering or refinancing of the Equity Trust
Securities effected by the Counterparty not earlier than November 8, 2004 by
means of a completed public offering or offerings or another similar offering
(which may include one or more exchange offers), by or on behalf of such
Counterparty.
"Rollover Offering Election" means a written election made in accordance
with Section 1.3(e).
"Share Components" means the numbers of shares of Common Stock per Equity
Trust Security specified in clauses (i), (ii) and (iii) of Section 1.1(c).
"Threshold Appreciation Price" has the meaning provided in Section 1.1(c).
"Trading Day" means, with respect to any security the Closing Price of
which is being determined, a day on which such security (A) is not suspended
from trading on any national or regional securities exchange or association or
over-the-counter market at the close of business and (B) has traded at least
once on the national or regional securities exchange or association or
over-the-counter market that is the primary market for the trading of such
security.
"Transaction Value" has the meaning provided in Section 6.2.
"Trust" has the meaning provided in the introductory paragraph of this
Agreement.
"Underwriter" and "Underwriters" have the meaning provided in the recitals
of this Agreement.
"Underwriting Agreement" has the meaning provided in the recitals of this
Agreement.
7
ARTICLE I
PAYMENT AND DELIVERY
1.1 Payment and Delivery.
(a) Firm Shares. Upon the terms and subject to the conditions of this
Agreement, the Trust agrees to pay Counterparty the Firm Contract Price (as
defined in Section 1.2(a)) on the Firm Payment Date (as defined in Section
1.3(a)), in exchange the Counterparty agrees to deliver to the Trust on the
Exchange Date the number of shares of Common Stock (the "Firm Shares") equal to
the product of (x) 2,416,003 (the "Firm Share Base Amount") multiplied by (y)
the Exchange Rate (as defined in Section 1.1(c)).
(b) Additional Shares. Upon the terms and subject to the conditions of
this Agreement, the Trust agrees to pay Counterparty the Additional Contract
Price on the Option Closing Date (as defined in Section 1.3(b)), and in
exchange, the Counterparty agrees to deliver to the Trust on the Exchange Date
a number of additional shares of Common Stock (the "Additional Shares") equal
to the product of (x) the Additional Share Base Amount multiplied by (y) the
Exchange Rate. In addition to the other conditions set forth herein, such
payment and delivery shall be conditioned on the Underwriters' purchase of the
Additional Equity Trust Securities pursuant to the Underwriting Agreement on
the Option Closing Date. Promptly after receipt by the Trust of notice that the
Underwriters are exercising their option to purchase Additional Equity Trust
Securities, the Trust will provide Counterparty with written notice of such
exercise by the Underwriters, stating the related Additional Share Base Amount
and the date on which the Trust shall deliver the contract price for the
Additional Shares, which shall be the Option Closing Date for the Additional
Equity Trust Securities. The Firm Shares and the Additional Shares (if any) are
collectively referred to herein as the "Contract Shares".
(c) Exchange Rate. The "Exchange Rate" shall be determined in accordance
with the following formula, subject to adjustment as a result of certain events
as provided in Article VI: (i) if the Exchange Price is greater than $43.981
(the "Threshold Appreciation Price"), 0.8197, (ii) if the Exchange Price is
less than or equal to the Threshold Appreciation Price but greater than $36.05
(the "Initial Price"), a fraction (rounded upward or downward to the nearest
1/10,000th or, if there is not a nearest 1/10,000th, to the next higher
1/10,000th) equal to the Initial Price divided by the Exchange Price and (iii)
if the Exchange Price is less than or equal to the Initial Price, 1.
1.2 Contract Price.
(a) Firm Contract Price. The price for the Firm Shares (the "Firm Contract
Price") shall be $28.1198 in cash per share of Common Stock multiplied by the
Firm Share Base Amount.
(b) Additional Contract Price. The price for the Additional Shares (the
"Additional Contract Price") shall be an amount equal to the difference between
(1) the aggregate proceeds to the Trust from the sale of the Additional Equity
Trust Securities and (2) the aggregate cost to the Trust, as notified by the
Trust to Counterparty on the Option Closing Date for the Additional Equity
Trust Securities, of the Additional STRIPS.
8
1.3 Payment for and Delivery of Contract Shares.
(a) Firm Payment Date. Upon the terms and subject to the conditions of
this Agreement, the Trust shall deliver to Counterparty the Firm Contract Price
on October 23, 2001 (the "Firm Payment Date") at the offices of Shearman &
Sterling, 599 Lexington Avenue, New York, New York 10022, or at such other
place as shall be agreed upon by the Trust and Counterparty, paid by wire
transfer of Federal (immediately available same-day) funds to an account
designated by Counterparty, against delivery by Counterparty to the Collateral
Agent of the number of shares of Common Stock and/or cash, securities and other
property necessary to comply with Counterparty's obligations under the
Collateral Agreement.
(b) Option Closing Date. Upon the terms and subject to the conditions of
this Agreement, the Trust shall deliver to Counterparty the Additional Contract
Price on the Option Closing Date at the offices of Shearman & Sterling, 599
Lexington Avenue, New York, New York 10022, or at such other place as shall be
agreed upon by the Trust and Counterparty, paid by wire transfer of Federal
(immediately available same-day) funds to an account designated by
Counterparty, against delivery by Counterparty to the Collateral Agent of the
additional number of shares of Common Stock and/or cash, securities and other
property necessary to comply with Counterparty's obligations under the
Collateral Agreement.
(c) Delivery of Contract Shares.
(i) Except as otherwise provided in this Agreement, Counterparty
agrees to deliver the Contract Shares to the Trust on the Exchange Date.
Counterparty shall be deemed to have instructed the Collateral Agent to
deliver to the Custodian, for the account of the Trust, shares of Common
Stock then held by the Collateral Agent as collateral under the Collateral
Agreement, in an amount equal to the number of Contract Shares, rounded
down to the nearest whole number. Instead of any fractional shares of
Common Stock that would otherwise be deliverable (prior to rounding) to
the Trust at the Exchange Date, Counterparty agrees to make a cash payment
in respect of such fractional shares of Common Stock in an amount equal to
the value thereof at the Exchange Price. Notwithstanding the foregoing, if
an Adjustment Event shall have occurred prior to the Exchange Date then,
in lieu of the foregoing, Counterparty shall be deemed to have instructed:
(A) in the case of any cash required to be delivered on the Exchange Date
as provided in Section 6.2, the Collateral Agent to deliver such cash by
wire transfer Federal (immediately available same-day) funds to an account
designated by the Trust; and (B) in the case of any Reported Securities
required to be delivered by Counterparty in lieu of cash as provided in
Section 6.2, the Collateral Agent to deliver to the Custodian, for the
account of the Trust, a specified number of Reported Securities then held
as collateral under the Collateral Agreement, as provided in Section 6(g)
of the Collateral Agreement.
(ii) In the event that by the Exchange Date any substitute collateral
delivered to the Collateral Agent pursuant to Section 6(b) of the
Collateral Agreement has not been replaced by shares of Common Stock
(and/or, after an Adjustment Event, cash or Reported Securities)
sufficient to meet Counterparty's obligations hereunder, delivery shall be
effected by delivery by the Collateral Agent to the Custodian, for the
account of the Trust, of the market value of the shares of Common Stock
required to be delivered
9
hereunder, in the form of any shares of Common Stock then pledged by
Counterparty plus cash generated from the liquidation of U.S. Government
obligations then pledged by Counterparty (and/or, after an Adjustment
Event, the market value of the alternative consideration required to be
delivered hereunder, in the form of any Reported Securities then pledged,
plus any cash then pledged, plus cash generated from the liquidation of
U.S. Government obligations then pledged). In such event, Counterparty
shall be deemed to have instructed the Collateral Agent to liquidate and
turn into cash the U.S. Government obligations then pledged by
Counterparty to the extent necessary to satisfy Counterparty's obligations
hereunder.
(iii) Certificates representing Common Stock (or Reported Securities)
in registered form that are part of the Contract Shares shall be
registered in the Trust's name or in the name of a depositary or a nominee
of a depositary as requested by the Trust, unless such Common Stock
(and/or Reported Securities) is represented by one or more global
certificates registered in the name of a depositary or a nominee of a
depositary or are book entry securities, in which event the Trust's
interest in such securities shall be noted in a manner satisfactory to the
Trust and its counsel.
(iv) Counterparty's right to deliver (or cause to be delivered) to
the Trust hereunder Common Stock and Reported Securities shall be
conditioned upon such Common Stock and Reported Securities to be so
delivered being transferable (i) by Counterparty to the Trust in
accordance with the provisions hereof and in accordance with the terms of
any agreement among shareholders applicable to such Common Stock or
Reported Securities, and (ii) by the Trust, following receipt from
Counterparty, without any restrictions not generally applicable to all
holders of such Common Stock or Reported Securities, as the case may be.
If the conditions set forth in the preceding sentence shall not be
satisfied with respect to any Common Stock or Reported Securities to be
delivered by Counterparty, then, notwithstanding the provisions hereof,
Counterparty shall exercise the Cash Delivery Option.
(d) Cash Delivery Option. At its option, Counterparty may deliver to the
Trust on the Exchange Date (even if the Exchange Date is not extended pursuant
to Section 1.3(f)), in lieu of the Contract Shares, an amount in cash equal to,
subject to adjustment as provided in Section 6.2, the Exchange Price of the
Contract Shares (the "Cash Delivery Option"), paid by wire transfer to an
account designated by the Trust, in Federal (immediately available same-day)
funds; provided, however, that Counterparty hereby waives its right to exercise
the Cash Delivery Option and agrees to be bound by the decision AT&T Broadband
CSC Holdings, Inc. ("Holdings") makes with respect to the Cash Delivery Option
under the Forward Contract Agreement, dated as of the date hereof by and
between the Trust and Holdings (the "Holdings Forward Contract"); provided,
further, that in connection with a Rollover Offering which is consummated and
as to which Counterparty has duly elected the Cash Delivery Option and has duly
made a Rollover Offering Election, such cash payment shall be made no later
than the fifth Business Day after the Exchange Date. If Holdings elects the
Cash Delivery Option and so notifies the Trust, the Trust shall promptly notify
The Depository Trust Company and publish a notice in a daily newspaper of
national circulation stating whether the holders of Equity Trust Securities
will receive shares of Common Stock or cash (and specifying whether any such
cash settlement is being made in connection with a Rollover Offering).
10
(e) Rollover Offering Election. The provisions of Sections 1.3(f) and (g)
shall be applicable if Holdings has made a Rollover Offering Election by
written notice given to the Trust not earlier than August 16, 2004 and not
later than October 15, 2004. Any Rollover Offering Election made by Holdings
(i) shall be irrevocable once made, and (ii) may be made only if Holdings has
also elected, or simultaneously elects, the Cash Delivery Option.
(f) Extension of Exchange Date. At its option, Counterparty may, by notice
given to the Trust not earlier than August 16, 2004 and not later than October
15, 2004 elect to extend the Exchange Date to February 15, 2005; provided,
however, that Counterparty hereby waives its right to extend the Exchange Date
hereunder and agrees to be bound by the decision Holdings makes with respect to
extension of the Exchange Date pursuant to Section 1.3(f) of the Holdings
Forward Contract. Any such extension shall be effective (i) only in connection
with a Rollover Offering as to which Holdings shall have duly made a Rollover
Offering Election and (ii) only if Counterparty shall have delivered to the
Collateral Agent, in pledge under the Collateral Agreement, (A) direct
obligations of the United States of America which through the scheduled payment
of principal and interest in accordance with their terms will provide, not
later than one Business Day before February 15, 2005, cash in an amount equal
to not less than the Extension Amount (the "Additional Government Securities")
or an equivalent amount of Cash Equivalents. Unless Holdings has duly elected,
in connection with a Rollover Offering, to accelerate the Exchange Date in
accordance with Section 1.3(g) hereof, Counterparty shall on such extended
Exchange Date pay to the Trust by wire transfer of Federal (immediately
available same-day) funds an amount equal to the Extension Amount.
In addition, Counterparty hereby covenants and agrees to take all other
actions necessary to cause the Trust to be a protected purchaser of such
Additional Government Securities, within the meaning of Article 8 of the New
York Uniform Commercial Code, as amended.
If Counterparty elects to extend the Exchange Date and so notifies the
Trust, the Trust shall promptly notify the Depository Trust Company and publish
a notice in a daily newspaper of national circulation stating that the
Counterparty has elected to extend the Exchange Date.
(g) Acceleration of Exchange Date. At any time after the Exchange Date has
been extended pursuant to Section 1.3(f) hereof, Counterparty may, at its
option but only in connection with the consummation of a Rollover Offering,
accelerate the Exchange Date to any date on or after November 15, 2004, by
notice to the Trust not later than 10:00 a.m. on the date to which the Exchange
Date is accelerated; provided, however, that Counterparty hereby waives its
right to accelerate the Exchange Date hereunder and agrees to be bound by the
decision Holdings makes with respect to acceleration of the Exchange Date
pursuant to Section 1.3(g) of the Holdings Forward Contract; provided, further,
that such acceleration shall be effective only if at or prior to 10:00 a.m. on
such accelerated Exchange Date, Counterparty has paid to the Trust, by wire
transfer to an account designated by the Trust, in Federal (immediately
available same-day) funds, an amount not less than (i) the Extension Amount
multiplied by (ii) the number of days in the period from (and including)
November 15, 2004 to (but excluding) the Exchange Date as accelerated,
calculated on the basis of a 360 day year consisting of twelve 30-day months
divided by (iii) 90.
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If Holdings elects to accelerate the Exchange Date and so notifies the
Trust, the Trust shall provide notice of such election to the holders of the
Equity Trust Securities not later than the accelerated Exchange Date.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COUNTERPARTY
Counterparty represents and warrants to the Trust that each representation
and warranty made by Counterparty in Section 3 of the Underwriting Agreement is
true and correct on the date hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE TRUST
The Trust represents and warrants to Counterparty that:
(a) each representation and warranty made by the Trust in Section 1 of the
Underwriting Agreement is true and correct on the date hereof; and
(b) it acknowledges that the Common Stock delivered pursuant to this
Agreement and the Collateral Agreement may contain one or more of the type of
legends referred to in Section 3(e) of the Collateral Agreement (which legend
(i) will not be applicable to the delivery of any such Common Stock to the
Trust pursuant to this Agreement and the Collateral Agreement or to the
delivery of any such Common Stock by the Trust to the holders of Equity Trust
Securities pursuant to the Equity Trust Securities and (ii) will be removed at
the request of the Collateral Agent to the depository for the Common Stock
prior to any such delivery to holders of Equity Trust Securities).
ARTICLE IV
CONDITIONS TO THE TRUST'S OBLIGATIONS
(a) The obligation of the Trust to deliver the Firm Contract Price on the
Firm Payment Date is subject to the satisfaction of the following conditions:
(i) the purchase by the Underwriters of the Equity Trust Securities
pursuant to the Underwriting Agreement shall have been consummated as
contemplated under the Underwriting Agreement;
(ii) the representations and warranties of the Counterparty contained
in Article II hereof shall be true and correct as of the Firm Payment
Date;
(iii) the Collateral Agreement shall have been executed by the
Counterparty and the delivery of the Collateral thereunder shall have been
made; and
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(iv) the Reimbursement Agreement shall have been executed by the
Counterparty.
(b) The obligation of the Trust to deliver the Additional Contract Price
on the Option Closing Date is subject to the satisfaction of the following
conditions:
(i) the purchase by the Underwriters of the Additional Equity Trust
Securities pursuant to the Underwriting Agreement shall have been
consummated as contemplated under the Underwriting Agreement;
(ii) the representations and warranties of the Counterparty contained
in Article II hereof shall be true and correct as of the Option Closing
Date (except to the extent that they refer to an earlier date, in which
case they shall be true and correct as of such earlier date); and
(iii) the delivery of any additional Collateral under the Collateral
Agreement shall have been made.
ARTICLE V
COVENANTS
5.1 Taxes. Counterparty shall pay any and all documentary, stamp, transfer
or similar taxes and charges that may be payable in respect of the entry into
this Agreement and the transfer and delivery of the Contract Shares, cash or
Reported Securities pursuant hereto.
5.2 Forward Contract. Each of the Trust and Counterparty hereby agrees
that:
(a) it will treat this Agreement in its entirety as a forward contract for
the delivery of the Contract Shares on the Exchange Date (including as a result
of acceleration or otherwise) (the "Forward Contract Characterization"), under
the terms of which contract (i) at the time of issuance of the Equity Trust
Securities, the Trust is required to pay the Counterparty a fixed amount of
cash equal to the Firm Contract Price of the Equity Trust Securities, in
consideration for the Counterparty's obligation to deliver Common Stock (or
cash in lieu of Common Stock) to the Trust at maturity, and (ii) at maturity,
the Counterparty will deliver to the Trust the number of shares of Common Stock
that the Trust is entitled to receive at that time pursuant to the terms of the
Equity Trust Securities (subject to the right of the Counterparty to deliver
cash in lieu of the Common Stock);
(b) it will treat the delivery of the Contract Shares, if any, as
occurring on the Exchange Date;
(c) it will not treat this Agreement, any portion of this Agreement or any
obligation hereunder as giving rise to any interest income or other inclusions
of ordinary income (in the case of the Trust) or as giving rise to any interest
expense or other deductions of ordinary expense (in the case of Counterparty);
13
(d) it will not treat the delivery of any portion of the Contract Shares,
cash or Reported Securities to be delivered pursuant to this Agreement as the
payment of interest or ordinary income; and
(e) it will not take any action (including filing any tax return or form
or taking any position in any tax proceeding) that is inconsistent with the
obligations contained in clauses (a) through (d), unless such action or
position is required by an applicable taxing authority or unless such action or
position is required by a change in statutory law or regulation or by a
judicial or other authoritative interpretation of the law enacted, promulgated
or published after the date of this Agreement.
5.3 Limitations on Trading During Certain Days. Counterparty hereby agrees
that it will not, and will cause each of its Affiliates that is under its
control not to, buy shares of Common Stock of the Company or Reported
Securities for its own account during the ten days prior to the Exchange Date.
5.4 Notices. Counterparty will cause to be delivered to the Trust:
(a) immediately upon the occurrence of any Event of Default hereunder
or under the Collateral Agreement; and
(b) promptly after Counterparty receives notice, or otherwise obtains
knowledge, at any time prior to the Exchange Date that any event requiring
that an adjustment be effected pursuant to Article VI hereof shall have
occurred or be pending;
a notice identifying such event and stating, if known to Counterparty, the date
on which such event is to occur and, if applicable, the record date relating to
such event. Counterparty shall cause further notices to be delivered to the
Trust if Counterparty shall subsequently receive notice, or shall otherwise
obtain knowledge, of any further or revised information regarding the terms or
timing of such event or any record date relating thereto.
5.5 Affirmative Covenants. During the term of this Agreement, Counterparty
covenants and agrees that it will:
(a) Comply in all material respects with all applicable laws, rules,
regulations and orders to the extent noncompliance would have a material
adverse effect on the ability of Counterparty to perform its obligations
hereunder or under the Collateral Agreement, such compliance to include,
without limitation, paying before the same become delinquent all taxes,
assessments and governmental charges imposed upon Counterparty or upon
Counterparty's property, including the collateral pledged under the Collateral
Agreement, except to the extent contested in good faith.
(b) Furnish to the Trust as soon as possible and in any event within
twenty calendar days after Counterparty shall become aware of the occurrence of
any failure by Counterparty to comply with or perform any agreement or
obligation contained in this Agreement or the Collateral Agreement, a statement
of Counterparty describing such failure and setting forth details of such
failure and the action which Counterparty has taken and proposes to take with
respect thereto.
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5.6 Further Assurances. From time to time on and after the date hereof
through the Exchange Date (or, if later, the date on which this Agreement has
been fully performed), each of the parties hereto shall use its best efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper and advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement in
accordance with the terms and conditions hereof, including (i) using reasonable
best efforts to remove any legal impediment to the consummation of such
transactions and (ii) the execution and delivery of all such deeds, agreements,
assignments and further instruments of transfer and conveyance necessary,
proper or advisable to consummate and make effective the transactions
contemplated by the Agreement in accordance with the terms and conditions
hereof.
ARTICLE VI
ADJUSTMENT OF EXCHANGE RATE, EXCHANGE PRICE AND CLOSING PRICE
6.1 Dilution Adjustments. The Exchange Rate, Exchange Price and Closing
Price shall be subject to adjustment successively from time to time as follows:
(a) Stock Dividends, Splits, Reclassifications, Etc. If the Company shall,
after the date hereof,
(i) pay a stock dividend or make a distribution, in either case, with
respect to Common Stock in shares of such stock;
(ii) subdivide or split its outstanding shares of Common Stock into a
greater number of shares;
(iii) combine its outstanding shares of Common Stock into a smaller
number of shares; or
(iv) issue by reclassification (other than a reclassification
pursuant to clause (b), (c), (d) or (e) of the definition of Adjustment
Event) of its shares of Common Stock any other equity securities of the
Company;
then, the Exchange Rate shall be multiplied by a Dilution Adjustment equal to
the number of shares of Common Stock (or the fraction thereof) that a holder
who held one share of Common Stock immediately prior to such event would be
entitled solely by reason of such event to hold immediately after such event.
In the case of the reclassification of any shares of Common Stock into any
other equity securities of the Company other than the Common Stock, such other
equity securities shall be deemed shares of Common Stock for all purposes
hereunder. The Exchange Price and Closing Price shall also be adjusted in the
manner described in paragraph (c) of this Section 6.1.
(b) Right or Warrant Issuances. If the Company shall, after the date
hereof, issue, or declare a record date in respect of an issuance of, rights or
warrants (other than rights to purchase Common Stock pursuant to a plan for the
reinvestment of dividends or interest) to all
15
holders of Common Stock entitling them to subscribe for or purchase shares of
Common Stock at a price per share less than the Market Price of the Common
Stock on the Business Day next following the record date for the determination
of holders of Common Stock entitled to receive such rights or warrants, then,
in each such case, the Exchange Rate shall be multiplied by the following
Dilution Adjustment: a fraction, of which the numerator shall be (A) the number
of shares of Common Stock outstanding on the record date for the issuance of
such rights or warrants plus (B) the number of additional shares of Common
Stock offered for subscription or purchase pursuant to such rights or warrants,
and of which the denominator shall be (x) the number of shares of Common Stock
outstanding on the record date for the issuance of such rights or warrants plus
(y) the number specified in clause (B) above multiplied by the quotient of the
exercise price of such rights or warrants divided by the Market Price of the
Common Stock on the Business Day next following the record date for the
determination of holders of Common Stock entitled to receive such rights or
warrants; provided that the Exchange Rate shall not be adjusted to more than
one share of Common Stock per Equity Trust Security. To the extent that such
rights or warrants expire prior to the Exchange Date and shares of Common Stock
are delivered with respect to less than all of such rights or warrants prior to
such expiration, the Exchange Rate shall be readjusted to the Exchange Rate
which would then be in effect had such adjustments for the issuance of such
rights or warrants been made upon the basis of delivery of only the number of
shares of Common Stock actually delivered pursuant to such rights or warrants.
For purposes of this Section 6.1(b), dividends will be deemed to be paid as of
the record date for such dividend. The Exchange Price and Closing Price shall
also be adjusted in the manner described in paragraph (c) of this Section 6.1.
(c) Corresponding Adjustments to Exchange Price; Adjustment of Closing
Price in Certain Circumstances.
(i) If any adjustment is made to the Exchange Rate pursuant to
paragraph (a) or (b) of this Section 6.1, an adjustment shall also be made
to the Exchange Price as such term is used throughout the definition of
Exchange Rate. The required adjustment to the Exchange Price shall be made
at the Exchange Date by multiplying the Exchange Price by the cumulative
Dilution Adjustment.
(ii) If, during any Calculation Period used in calculating the
Exchange Price, the Market Price or the Transaction Value, there shall
occur any event requiring an adjustment to be effected pursuant to this
Section 6.1, then the Closing Price for each Trading Day in the
Calculation Period occurring prior to the day on which such adjustment is
effected shall be adjusted by being multiplied by the relevant Dilution
Adjustment.
(d) Timing of Dilution Adjustments. Each Dilution Adjustment shall be
effected:
(i) in the case of any dividend, distribution, or issuance of rights
or warrants, at the opening of business on the Business Day next following
the record date for determination of holders of Common Stock entitled to
receive such dividend, distribution or issuance or, if the announcement of
any such dividend, distribution or issuance is after
16
such record date, at the time such dividend, distribution or issuance
shall be announced by the Company; and
(ii) in the case of any subdivision, split, combination or
reclassification, on the effective date of such transaction.
(e) General; Failure of Dilution Event to Occur. All Dilution Adjustments
shall be rounded upward or downward to the nearest 1/10,000th (or if there is
not a nearest 1/10,000th to the next higher 1/10,000th). No adjustment in the
Exchange Rate shall be required unless such adjustment would require an
increase or decrease of at least one percent therein; provided, however, that
any adjustments which by reason of this sentence are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
If any announcement or declaration of a record date in respect of a dividend,
distribution or issuance requiring an adjustment pursuant to this Section 6.1
shall subsequently be canceled by the Company, or such dividend, distribution
or issuance shall fail to receive requisite approvals or shall fail to occur
for any other reason, then, upon such cancellation, failure of approval or
failure to occur, the Exchange Rate shall be readjusted to the Exchange Rate
which would then have been in effect had adjustment for such event not been
made. If an Adjustment Event shall occur after the occurrence of one or more
events requiring an adjustment pursuant to this Section 6.1, the Dilution
Adjustments previously applied to the Exchange Rate in respect of such events
shall not be rescinded but shall be applied to the new Exchange Rate provided
for under Section 6.2.
6.2 Adjustment for Consolidation, Merger or Other Adjustment Event. In the
event of (a) any dividend or distribution by the Company to all holders of
Common Stock of evidences of its indebtedness or other assets (excluding any
dividends or distributions referred to in Section 6.1(a)(i), any other equity
securities issued pursuant to a reclassification referred to in Section
6.1(a)(iv) and any Ordinary Cash Dividends) or any issuance by the Company to
all holders of Common Stock of rights or warrants to subscribe for or purchase
any of its securities (other than rights or warrants referred to in Section
6.1(b)), (b) any consolidation or merger of the Company, or any surviving
entity or subsequent surviving entity of the company (any such entity, a
"Company Successor"), with or into another entity (other than a merger or
consolidation in which the Company is the continuing corporation and in which
the Common Stock outstanding immediately prior to the merger or consolidation
is not exchanged for cash, securities or other property of the Company or
another corporation), (c) any sale, transfer, lease or conveyance to another
corporation of the property of the Company as an entirety or substantially as
an entirety, (d) any statutory exchange of securities of the Company or any
Company Successor with another corporation (other than in connection with a
merger or acquisition) or (e) any liquidation, dissolution or winding up of the
Company (any such event described in clause (a), (b), (c), (d) or (e), an
"Adjustment Event"), the Exchange Rate shall be adjusted so that on the
Exchange Date Counterparty shall deliver to the Trust, in lieu of or (in the
case of an Adjustment Event described in clause (a) above) in addition to, the
Contract Shares, cash in an amount equal to:
(A) if the Exchange Price is greater than the Threshold Appreciation
Price, 0.8197 multiplied by the Transaction Value (as defined below);
17
(B) if the Exchange Price is less than or equal to the Threshold
Appreciation Price but greater than the Initial Price, the product of
(x) the Initial Price divided by the Exchange Price multiplied by (y)
the Transaction Value; and
(C) if the Exchange Price is less than or equal to the Initial Price, the
Transaction Value;
provided, however, that if the consideration received by all holders of
Common Stock in such Adjustment Event does not and may not at the option of
such holders include Reported Securities, then (except in the case of an
Adjustment Event solely of the type described in clause (a) above) (i)
Counterparty's delivery obligations hereunder will be accelerated and promptly
upon consummation of the Adjustment Event Counterparty will be required to
deliver to the Trust cash in an amount equal to (x) if the Transaction Value is
greater than the Threshold Appreciation Price, 0.8197 multiplied by the
Transaction Value, (y) if the Transaction Value is less than or equal to the
Threshold Appreciation Price but greater than Initial Price, the Initial Price,
and (z) if the Transaction Value is less than or equal to the Initial Price,
the Transaction Value.
If the consideration received by holders of Common Stock in an Adjustment
Event includes Reported Securities, and, to any extent, consideration other
than Reported Securities, and in the case of an Adjustment Event described in
(b), (c) or (d) of the definition of that term , the Transaction Value of the
consideration other than Reported Securities comprises 25% or more of the
aggregate Transaction Value for such Adjustment Event, then (a) Counterparty's
delivery obligations hereunder will be accelerated to the extent that the value
of the consideration received in such Adjustment Event does not derive from
Reported Securities and promptly upon consummation of the Adjustment Event
Counterparty will be required to deliver to the Trust cash in an amount equal
to (x) if the Transaction Value is greater than the Threshold Appreciation
Price, 0.8197 multiplied by (i) the Transaction Value and (ii) the percentage
of the value of the consideration received in connection with the Adjustment
Event that does not derive from Reported Securities, (y) if the Transaction
Value is less than or equal to the Threshold Appreciation Price but greater
than the Initial Price, the Initial Price multiplied by the percentage of the
value of the consideration received in connection with the Adjustment Event
that does not derive from Reported Securities, and (z) if the Transaction Value
is less than or equal to the Initial Price, the Transaction Value multiplied by
the percentage of the value of the consideration received in connection with
the Adjustment Event that does not derive from Reported Securities.
Following the occurrence of an Adjustment Event, the Exchange Price, as
such term is used throughout the definition of Exchange Rate, shall be deemed
to equal (A) if shares of Common Stock are outstanding at the Exchange Date,
the Exchange Price of the Common Stock, as adjusted pursuant to Section 6.1(c),
otherwise zero, plus (B) the Transaction Value.
Notwithstanding the foregoing, with respect to any Reported Securities (as
defined below) received by holders of Common Stock in an Adjustment Event,
Counterparty shall, in lieu of delivering cash in respect of such Reported
Securities as described above, deliver a number of such Reported Securities
with a value, as determined in accordance with clause (ii) of the definition of
Transaction Value, equal to all cash amounts that would otherwise be
18
deliverable in respect of Reported Securities received in such Adjustment
Event, except to the extent Counterparty has made an election to exercise the
Cash Delivery Option or such Reported Securities have not yet been delivered to
the holders entitled thereto following such Adjustment Event or any record date
with respect thereto. If, following any Adjustment Event, any Reported Security
ceases to qualify as a Reported Security, then (x) Counterparty shall not
deliver such Reported Security but instead shall deliver an equivalent amount
of cash and (y) notwithstanding clause (ii) of the definition of Transaction
Value, the Transaction Value of such Reported Security shall mean the fair
market value of such Reported Security on the date such security ceases to
qualify as a Reported Security, as determined by a nationally recognized
investment banking firm retained for this purpose by the Administrator.
"Transaction Value" means (i) for any cash received in any Adjustment
Event, the amount of cash received per share of Common Stock, (ii) for any
Reported Securities received in any Adjustment Event, an amount equal to (x)
the average Closing Price per security of such Reported Securities on the 20
Trading Days immediately prior to (but not including) the Exchange Date (except
in the case of a Rollover Offering, in which case the Closing Price on the
Trading Day immediately preceding the Pricing Date or, if the Rollover Offering
is priced after 4:00 p.m. New York City time on the Pricing Date, the Closing
Price on the Pricing Date shall be used for purposes of this clause) multiplied
by (y) the number of such Reported Securities (as adjusted pursuant to the
definition thereof) received per share of Common Stock and (iii) for any
property received in any Adjustment Event other than cash or Reported
Securities, an amount equal to the fair market value of the property received
per share of Common Stock on the date such property is received, as determined
by a nationally recognized investment banking firm retained for this purpose by
the Administrator; provided, however, that in the case of clause (ii), (x) with
respect to securities that are Reported Securities by virtue of only clause
(iv) of the definition of Reported Securities, Transaction Value with respect
to any such Reported Security means the average of the mid-point of the last
bid and ask prices for such Reported Security as of the Exchange Date from each
of at least three nationally recognized investment banking firms retained for
such purpose by the Administrator multiplied by the number of such Reported
Securities (as adjusted pursuant to the definition thereof) received per share
of Common Stock and (y) with respect to all Reported Securities other than
securities that are Reported Securities by virtue of only clause (iv) of the
definition of Reported Securities, if there are not 20 Trading Days for any
particular Reported Security occurring after the 60th calendar day immediately
prior to, but not including, the Exchange Date, Transaction Value with respect
to such Reported Security means the fair market value per security of such
Reported Security as of the Exchange Date as determined by a nationally
recognized investment banking firm retained for such purpose by the
Administrator multiplied by the number of such Reported Securities (as adjusted
pursuant to the definition thereof) received per share of Common Stock. For
purposes of calculating the Transaction Value, any cash, Reported Securities or
other property receivable in an Adjustment Event shall be deemed to have been
received immediately prior to the close of business on the record date for such
Adjustment Event or, if there is no record date for such Adjustment Event,
immediately prior to the close of business on the effective date of such
Adjustment Event.
"Reported Securities" means any securities received in an Adjustment Event
that (A) are (i) listed on a United States national securities exchange, (ii)
reported on a United States national securities system subject to last sale
reporting, (iii) traded in the over-the-counter market
19
and reported on the National Quotation Bureau or similar organization or (iv)
for which bid and ask prices are available from at least three nationally
recognized investment banking firms; and (B) are either (x) perpetual equity
securities or (y) non-perpetual equity or debt securities with a stated
maturity after the Exchange Date. The number of shares of any Reported
Securities included in the calculation of Transaction Value pursuant to clause
(ii) of the definition thereof shall be subject to adjustment if any event that
would, had it occurred with respect to the Common Stock or the Company, have
required an adjustment pursuant to Section 6.1 or 6.2, shall occur with respect
to such Reported Securities or the issuer thereof subsequent to the date the
Adjustment Event is consummated. Adjustment for such subsequent events shall be
as nearly equivalent as practicable to the adjustments provided for in Section
6.1 or 6.2, as applicable.
ARTICLE VII
ACCELERATION
If one or more of the following events (each an "Event of Default") shall
occur:
(a) Counterparty or AT&T Corp., a New York corporation ("AT&T"), shall
commence a voluntary case or other proceeding seeking a liquidation,
reorganization or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, or shall
consent to any such relief or to the appointment of or taking possession by any
such official in an involuntary case or other proceeding commenced against it,
or shall take any action to authorize any of the foregoing;
(b) an involuntary case or other proceeding shall be commenced against
Counterparty or AT&T seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other similar
law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property; or an order for relief shall be entered
against Counterparty or AT&T under any bankruptcy, insolvency or other similar
law as now or hereafter in effect; or
(c) a Collateral Event of Default within the meaning of the Collateral
Agreement;
then an "Acceleration Date" shall occur, Counterparty's rights under Section
1.3(d), (e) (f) and (g) shall terminate immediately and (i) in the case of
clause (c), Counterparty shall become obligated to the extent permitted by law
to deliver to the Trust (and shall be deemed to instruct the Collateral Agent
to deliver to the Custodian, for the account of the Trust, and to liquidate and
turn into cash the U.S. Government obligations and Cash Equivalents then
pledged by Counterparty to the extent necessary to satisfy such obligation) the
Firm Share Base Amount plus the Additional Share Base Amount, if any, in the
form of the shares of Common Stock then pledged by Counterparty, or cash
generated from the liquidation of U.S. Government obligations and Cash
Equivalents then pledged by Counterparty, or a combination thereof (or, after
an
20
Adjustment Event, the alternate consideration to be delivered, in the form of
Reported Securities then pledged, cash then pledged, cash generated from the
liquidation of U.S. Government obligations and Cash Equivalents then pledged,
or a combination thereof); or (ii) in the case of clauses (a) or (b),
Counterparty shall become obligated to the extent permitted by law to deliver
to the Trust (and shall be deemed to instruct the Collateral Agent to deliver
to the Custodian, for the account of the Trust, and to liquidate and turn into
cash the U.S. Government obligations and Cash Equivalents then pledged by
Counterparty to the extent necessary to satisfy such obligation) a number of
shares of Common Stock, in the form of the shares of Common Stock then pledged
by Counterparty, or cash generated from the liquidation of U.S. Government
obligations and Cash Equivalents then pledged by Counterparty, or a combination
thereof (or, after an Adjustment Event, the alternate consideration to be
delivered, in the form of Reported Securities then pledged, cash then pledged,
cash generated from the liquidation of U.S. Government obligations and Cash
Equivalents then pledged, or a combination thereof), with an aggregate value
(based on the Closing Price on the Acceleration Date) equal to the Acceleration
Value (as defined below).
"Acceleration Value" means an amount determined by the Administrator on
the basis of quotations from Independent Dealers (as defined below). Each
quotation will be for an amount that would be paid to the relevant Independent
Dealer in consideration of an agreement between the Trust and such Independent
Dealer that would have the effect of preserving for the Trust the economic
equivalent of the payments and deliveries that the Trust would, but for the
occurrence of the Acceleration Date, have been entitled to receive after the
Acceleration Date hereunder (taking into account any adjustments to the
Exchange Rate that may have been effected on or prior to the Acceleration
Date). On or as soon as reasonably practicable following the Acceleration Date,
the Administrator will request each Independent Dealer to provide its quotation
as soon as reasonably practicable, but in any event within two Business Days.
The Administrator shall compute the Acceleration Value upon receipt of each
Independent Dealer's quotation, provided that if, at the close of business on
the fourth Business Day following the Acceleration Date, the Administrator
shall have received quotations from fewer than four of the Independent Dealers,
the Administrator shall compute the Acceleration Value using the quotations, if
any, it shall have received at or prior to such time. If four quotations are
provided, the Acceleration Value will be the arithmetic mean of the two
quotations remaining after disregarding the highest and lowest quotations. (For
this purpose, if more than one quotation has the same highest or lowest value,
then one of such quotations shall be disregarded.) If two or three quotations
are provided, the Acceleration Value will be the arithmetic mean of such
quotations. If one quotation is provided, the Acceleration Value will be equal
to such quotation. If no quotations are provided, the Acceleration Value will
be the aggregate value (based on the Closing Price on the Acceleration Date) of
the number of shares of Common Stock (or, after an Adjustment Event, Reported
Securities, cash or a combination thereof) that would be required to be
delivered hereunder on the Acceleration Date if the Exchange Date were
redefined to be the Acceleration Date.
"Independent Dealers" means four nationally recognized independent
investment banking firms selected in good faith by the Administrator.
As promptly as reasonably practicable after receipt of the quotations on
which the Acceleration Value is based (or, as the case may be, after failure to
receive any such quotations
21
within the time period prescribed above), the Trust shall deliver to
Counterparty and the Collateral Agent a notice specifying the number of shares
of Common Stock (or, after an Adjustment Event, the alternate consideration)
required to be delivered by Counterparty. the Trust and Counterparty agree that
the obligations contained in clauses (i) and (ii) above are a reasonable
pre-estimate of loss and not a penalty. Such amount is payable for the loss of
bargain and the Trust will not be entitled to recover additional damage as a
consequence of loss resulting from an Event of Default.
ARTICLE VIII
MISCELLANEOUS
8.1 Adjustments; Selection of Independent Investment Banking Firm. The
Trust shall be responsible for the effectuation and calculation of any
adjustment pursuant to Article VI hereof and shall furnish Counterparty notice
of any such adjustment and shall provide Counterparty reasonable opportunity to
review the calculations pertaining to any such adjustment. If, pursuant to the
terms and conditions hereof, the Administrator shall be required to retain a
nationally recognized independent investment banking firm for any purpose
provided herein, such nationally recognized independent investment banking firm
shall be selected and retained by the Administrator only after consultation
with Counterparty; provided, however, that Counterparty shall be deemed to have
waived its right to consult if Counterparty fails to consult within five
Business Days of notice being sent by the Administrator to Counterparty seeking
consultation. the Trust may delegate the effectuation and calculation of any
such adjustments to its Administrator.
8.2 Notices. Notices to the Trust shall be directed to it in care of the
Administrator for the Trust, The Bank of New York, 5 Penn Plaza, 13th floor,
New York, New York 10001, Telephone: (212) 896-7126, Telecopier: (212)
896-7295; notices to Counterparty shall be directed to care of AT&T Broadband
CSC II, Inc., 3763 Howard Hughes Parkway, #120, Las Vegas, Nevada 89109 (fax
no.: (702) 866-0427), Attention: President. Notwithstanding the foregoing,
notices to a party shall be directed to such other address for such party as
shall be specified by such party in a like notice given pursuant to this
Section 8.2. All notices and other communications hereunder shall be in writing
and shall be deemed to have been duly given if either (i) personally delivered
(including delivery by courier service or by Federal Express or any other
nationally recognized overnight delivery service for next day delivery) to the
offices specified in the preceding sentence, in which case they shall be deemed
received on the first Business Day by which delivery shall have been made to
said offices; or (ii) sent by certified mail, return receipt requested, in
accordance with the preceding sentence, in which case they shall be deemed
received when receipted for unless acknowledgment is refused (in which case
delivery shall be deemed to have been received on the first Business Day on
which such acknowledgment is refused). Any notice, demand or other
communication to be provided by or on behalf of the Trust pursuant to this
Agreement shall be sent to the address of Counterparty, provided in this
Section 8.2. Any failure by Counterparty or any guardian, conservator,
executor, administrator or other similarly appointed person to receive any such
notice, demand or communication shall in no way abrogate, invalidate or
otherwise affect the validity or enforceability of the notice, demand or
communication or the matters set forth therein.
22
8.3 Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
8.4 Entire Agreement. Except as expressly set forth herein, this Agreement
constitutes the entire agreement among the parties with respect to the subject
matter hereof and supersedes all prior agreements, understandings and
negotiations, both written and oral, among the parties with respect to the
subject matter of this Agreement.
8.5 Amendments; Waivers. Any provision of this Agreement may be amended or
waived if, and only if, such amendment or waiver is in writing and signed, in
the case of an amendment, by the Trust and Counterparty, or, in the case of a
waiver, by the party or parties against whom the waiver is to be effective. No
failure or delay by either party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by
law.
8.6 No Third Party Rights; Successors and Assigns. Except as otherwise
agreed in writing, this Agreement is not intended and shall not be construed to
create any rights in any person other than Counterparty and the Trust and their
respective successors and assigns and no person shall assert any rights as
third party beneficiary hereunder. Whenever any of the parties hereto is
referred to, such reference shall be deemed to include the successors and
permitted assigns of such party.
8.7 Application of Bankruptcy Code. The parties hereto acknowledge and
agree that the Collateral Agent is a "financial institution" within the meaning
of Section 101(22) of Title 11 of the United States Code (the "Bankruptcy
Code") and is acting as agent and custodian for the Trust in connection with
this Agreement and that the Trust is a "customer" of the Collateral Agent
within the meaning of said Section 101(22). The parties hereto further
acknowledge and agree that this Agreement is a "securities contract", as such
term is defined in Section 741(7) of the Bankruptcy Code, entitled to the
protection of Section 555 of the Bankruptcy Code.
8.8 Governing Law; Jurisdiction; Severability; Waiver of Jury Trial. This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York. For the purpose of any suit, action or proceeding arising
out of or relating to this Agreement, the parties hereto hereby expressly and
irrevocably consent and submit to the non-exclusive jurisdiction of any United
States Federal or New York State court sitting in the Borough of Manhattan,
City and State of New York, and expressly and irrevocably waive, to the extent
permitted under applicable law, any immunity from the jurisdiction thereof and
any claim or defense in such suit, action or proceeding based on a claim of
improper venue, forum non conveniens or any similar basis to which it might
otherwise be entitled. To the extent permitted by law, the unenforceability or
invalidity of any provision or provisions of this Agreement shall not render
any other provision or provisions herein contained unenforceable or invalid. TO
THE EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES HERETO HEREBY WAIVE AND
COVENANT THAT THEY WILL NOT ASSERT (WHETHER AS PLAINTIFF,
23
DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF
ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING OUT OF OR BASED
UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF, IN EACH CASE WHETHER NOW
EXISTING OR HEREAFTER ARISING OR WHETHER IN CONTRACT OR TORT OR OTHERWISE. EACH
PARTY HERETO ACKNOWLEDGES THAT IT OR HE HAS BEEN INFORMED BY THE OTHER PARTY
HERETO THAT THE PROVISIONS OF THIS SECTION CONSTITUTE A MATERIAL INDUCEMENT
UPON WHICH SUCH OTHER PARTY HERETO HAS RELIED, IS RELYING AND WILL RELY IN
ENTERING INTO THIS AGREEMENT AND ANY DOCUMENT RELATED THERETO. EACH PARTY
HERETO MAY FILE AN ORIGINAL COUNTERPART OF THIS SECTION WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE OTHER PARTY HERETO TO THE WAIVER OF ITS
OR HIS RIGHTS TO TRIAL BY JURY.
24
IN WITNESS WHEREOF, the parties have signed this Agreement as of the date
and year first above written.
TRUST: COUNTERPARTY:
EQUITY SECURITIES TRUST I: AT&T BROADBAND CSC II, INC.
By: By:
-------------------------------- -------------------------------
Name: Name:
Title: Title:
EX-4
6
ex4.txt
EXHIBIT 4
COLLATERAL AGREEMENT
Among
AT&T BROADBAND CSC HOLDINGS, INC.
As Pledgor,
THE BANK OF NEW YORK, As Collateral Agent
and
EQUITY SECURITIES TRUST I
Dated as of
October 23, 2001
The following Table of Contents has been inserted for convenience of
reference only and does not constitute a part of the Collateral Agreement.
TABLE OF CONTENTS
SECTION
1. The Security Interests................................................1
2. Definitions...........................................................2
3. Representations and Warranties of the Pledgor.........................6
4. Representations and Warranties of the Collateral Agent................7
5. Certain Covenants of the Pledgor......................................8
6. Administration of the Collateral and Valuation of the Securities......9
7. Income and Voting Rights on Collateral...............................14
8. Remedies upon Events of Default......................................15
9. The Collateral Agent.................................................17
10. Miscellaneous........................................................20
11. Termination of Collateral Agreement..................................21
12. No Personal Liability of Trustees....................................21
Exhibit A - Certificate for Substituted Collateral
Exhibit B - Certificate for Additional Government Securities
Exhibit C - Certificate for Additional Collateral
COLLATERAL AGREEMENT
THIS COLLATERAL AGREEMENT (the "Agreement"), dated as of October 23, 2001,
among AT&T Broadband CSC Holdings, Inc., a corporation organized under the laws
of the State of Delaware, (the "Pledgor"), The Bank of New York, a New York
banking corporation, as collateral agent (the "Collateral Agent") hereunder for
the benefit of Equity Securities Trust I, a statutory business trust organized
under the Business Trust Act of the State of Delaware (such trust and the
trustees thereof acting in their capacity as such being referred to herein as
the "Trust"), and the Trust;
W I T N E S S E T H:
WHEREAS, pursuant to the Forward Contract Agreement (the "Forward
Contract"), dated as of the date hereof, between Pledgor and the Trust, the
Pledgor has agreed to deliver and the Trust has agreed to acquire Cablevision
NY Group Class A common stock, or the cash value thereof, $.01 par value, of
Cablevision Systems Corporation, a Delaware corporation (the "Company"),
subject to the terms and conditions of the Forward Contract; and
NOW, THEREFORE, to secure the performance by the Pledgor of its
obligations under the Forward Contract and to secure the observance and
performance of the covenants and agreements contained herein and in the Forward
Contract, the parties hereto agree as follows:
1. The Security Interests.
In order to secure the observance and performance of the covenants,
agreements and obligations contained herein and in the Forward Contract:
(a) Security Interests. The Pledgor hereby grants and pledges unto the
Collateral Agent, as agent of and for the benefit of the Trust, a security
interest in and to, and a lien upon and right of set-off against, all of
Pledgor's right, title and interest in and to (i) the Pledged Items described
in paragraphs (b) and (c); (ii) all additions to and substitutions for such
Pledged Items; (iii) (subject to the remittance of certain payments upon
satisfaction of the conditions specified in Section 7(a) hereof) all income,
proceeds and collections received or to be received, or derived or to be
derived, now or any time hereafter from or in connection with the Pledged Items
(whether such proceeds arise before or after the commencement of any proceeding
under any applicable bankruptcy, insolvency or other similar law, by or against
the Pledgor with respect to the Pledgor); and (iv) all powers and rights now
owned or hereafter acquired under or with respect to the Pledged Items (such
Pledged Items, additions, substitutions, income, proceeds, collections, powers
and rights being herein collectively called the "Collateral"). The Collateral
Agent shall have all of the rights, remedies and recourses with respect to the
Collateral afforded a secured party by the New York Uniform Commercial Code, in
addition to, and not in limitation of, the other rights, remedies and recourses
afforded to the Collateral Agent by this Agreement.
(b) Firm Payment Date. At the Firm Payment Date, the Pledgor shall deliver
to the Collateral Agent in pledge hereunder one or more certificates in
registered form representing in the aggregate 20,991,124 shares of Common
Stock, indorsed in blank or in the
name of the Collateral Agent for the benefit of the Trust (together with all
signature guarantees and other documents necessary to permit the Collateral
Agent to effect the re-registration of such Common Stock without further action
by the Pledgor) or, if such Common Stock is not issuable in certificated form
but is held in book entry form by The Depository Trust Company, the Pledgor
shall transfer such number of shares of Common Stock to an account of the
Collateral Agent or to an account (other than an account of the Pledgor)
designated by the Collateral Agent with The Depository Trust Company.
(c) Extension of Exchange Date. Prior to, or simultaneously with Pledgor's
election to extend the Exchange Date pursuant to Section 1.3(f) of the Forward
Contract, the Pledgor shall deliver to the Collateral Agent in pledge hereunder
Additional Government Securities meeting the requirements of Section 1.3(f) of
the Forward Contract.
2. Definitions.
Capitalized terms used and not otherwise defined herein shall have the
meanings ascribed to them in the Forward Contract. Capitalized terms used
herein shall have the meanings as follows:
"Additional Government Securities" means collateral that must be pledged
to the Collateral Agent in connection with the Pledgor's election to extend the
Exchange Date and, consisting of U.S. Government Securities which through the
scheduled payment of principal and interest in accordance with their terms will
provide, not later than one Business Day before the extended Exchange Date,
money in an amount not less than the Extension Amount.
"Authorized Representative" of the Pledgor means any trustee, officer or
other representative as to whom Pledgor shall have delivered notice to the
Collateral Agent that such trustee or other representative is authorized to act
hereunder on behalf of Pledgor.
"Business Day" means any day except a Saturday, Sunday or other day on
which banking institutions in New York City are authorized or obligated by law
or regulation to close or a day on which the New York Stock Exchange, Inc. is
closed.
"Cash Delivery Obligations" means, at any time (A) if no Adjustment Event
shall have occurred prior to such time, zero, and (B) from and after the
occurrence of any Adjustment Event, (i) the Firm Share Base Amount plus the
Additional Share Base Amount (if any) multiplied by (ii) the Transaction Value
of any property other than Reported Securities received by the Pledgor in such
Adjustment Event, multiplied successively by each number by which the Exchange
Rate shall have been multiplied on or prior to the Adjustment Event pursuant to
the adjustments provided for under Section 6.1 of the Forward Contract;
provided, however, that upon the occurrence of an Adjustment Event in
connection with which holders of Common Stock receive consideration other than
Reported Securities with a Transaction Value of 25% or more of the Aggregate
Transaction Value for such Adjustment Event, then the Cash Delivery Obligations
shall be zero.
"Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof (provided that the full faith and credit
of the United States is pledged in
2
support thereof) having maturities of not more than six months from the date of
acquisition, (iii) certificates of deposit with maturities of six months or
less from the date of the acquisition, bankers' acceptances with maturities not
exceeding six months and overnight bank deposits, in each case with any
domestic commercial bank having capital and surplus in excess of $500 million
and a Thompson Bank Watch Rating of "B" or better, (iv) repurchase obligations
with a term of not more than seven days for underlying securities of the types
described in clause (ii) above entered into with any financial institution
meeting the qualifications specified in clause (iii) above, (v) commercial
paper having the highest rating obtainable from Moody's Investors Service, Inc.
or Standard & Poor's Ratings Group and in each case maturing within six months
after the date of acquisition and (vi) money market funds at least 95% of the
assets of which constitute Cash equivalents of the kinds described in clauses
(i)-(v) of this definition.
"Collateral" has the meaning specified in Section 1(a).
"Collateral Agent" means the financial institution identified as such in
the preliminary paragraph hereof, or any successor appointed in accordance with
Section 9.
"Collateral Agreement" means this Collateral Agreement and any exhibits
hereto.
"Collateral Event of Default" has the meaning specified in Section 6(e).
"Collateral Requirement" means, as of any date and with respect to: (i)
any Common Stock, 100%; (ii) any Reported Securities, 100%; (iii) any U.S.
Government Securities or Cash Equivalents pledged in respect of Cash Delivery
Obligations, 105%; (iv) any other U.S. Government Securities or Cash
Equivalents (other than Additional Government Securities), 150%, provided that
upon and after any failure to cure an Insufficiency Determination by 4:00 p.m.
New York City time on the Business Day following telephonic notice of such
Insufficiency Determination as described in Section 6(e), which insufficiency
shall be continuing on such Business Day, the Collateral Requirement relating
to any U.S. Government Securities or Cash Equivalents (other than (i)
Additional Government Securities and (ii) U.S. Government Securities or Cash
Equivalents pledged in respect of Cash Delivery Obligations) shall be 200%; and
(v) any Additional Government Securities, 100%. The portion of any pledged U.S.
Government Securities or Cash Equivalents that shall be deemed at any time to
be in respect of Cash Delivery Obligations shall be as provided in Section
6(e).
"Common Stock" means the Cablevision NY Group Class A common stock of
Cablevision Systems Corporation, par value $.01 per share.
"Delivery Date" has the meaning specified in Section 8(a).
"Eligible Collateral" means (i) Common Stock, (ii) U.S. Government
Securities, (iii) Cash Equivalents, (iv) from and after Pledgor's election to
extend the Exchange Date pursuant to Section 1.3(f) of the Forward Contract,
Additional Government Securities, and (v) from and after any Adjustment Event,
Reported Securities, provided, in each case, that (A) the Pledgor has good and
marketable title thereto, free of all Liens (other than the Liens created by
this Collateral Agreement) and Transfer Restrictions except as contemplated by
Section 3(e) and (B) the Collateral Agent has a valid, first priority perfected
security interest therein and first lien thereon, and provided further that to
the extent the number of shares of Common Stock or
3
Reported Securities pledged hereunder exceeds at any time the Maximum
Deliverable Number thereof, such excess shares shall not be Eligible
Collateral.
"Event of Default" means the occurrence of: (i) an event described in
clause (a) or (b) of Article VII of the Forward Contract, (ii) a Collateral
Event of Default, (iii) a failure by Pledgor to have caused the Collateral to
meet the requirements described in Section 5(d), (iv) if an Adjustment Event
shall have occurred prior to the Exchange Date, failure by Pledgor to cause to
be delivered to the Trust on the Exchange Date the consideration then required
to be delivered pursuant to Section 6.2 of the Forward Contract or (v) if
Pledgor shall have exercised its Cash Delivery Option, a failure by the Pledgor
to deliver cash on the Exchange Date in the amount required under Section
1.3(d) of the Forward Contract.
"Ineligible Collateral" means Collateral that does not constitute
"Eligible Collateral".
"Insufficiency Determination" has the meaning specified in Section 6(e).
"Lien" means any lien, mortgage, security interest, pledge, charge or
encumbrance of any kind.
"Market Value" means, as of any date: (a) with respect to any Common Stock
(except as otherwise provided in Section 6(e)(2)), the Closing Price of the
Common Stock on such date; (b) with respect to any U.S. Government Security,
(x)(i) the average unit bid price for such security on the Trading Day prior to
such date as published in the New York edition of The Wall Street Journal or
The New York Times or, if not so published, (ii) the lower bid price quoted
(which quotation shall be evidenced in writing) on such date (or if such date
is not a Trading Day, on the preceding Trading Day) by either of two nationally
recognized dealers making a market in such security which are members of the
National Association of Securities Dealers, Inc. multiplied by (y) the number
of such units comprised in the outstanding principal amount of such U.S.
Government Security; (c) with respect to any unit of Reported Securities, the
Closing Price thereof on such date; provided that the "Market Value" of any
Ineligible Collateral shall be zero; and (d) with respect to any Cash
Equivalent, the face value of such instrument.
"Maximum Deliverable Number" means, on any date, with respect to the
Common Stock, the product of the Firm Share Base Amount plus the Additional
Share Base Amount (if any), multiplied successively by each number by which the
Exchange Rate shall have been multiplied on or prior to such date pursuant to
the adjustments provided for under Article VI of the Forward Contract. The
Maximum Deliverable Number of Reported Securities means, on any date, (i) the
Firm Share Base Amount plus the Additional Share Base Amount (if any)
multiplied by (ii) the number of Reported Securities received by the Pledgor in
the Adjustment Event for each share of Common Stock, multiplied successively by
each number by which the Exchange Rate shall have been multiplied on or prior
to such date and after the date of such Adjustment Event pursuant to the
adjustments provided for under Article VI of the Forward Contract.
4
"Person" means an individual, a corporation, a partnership, an
association, a limited liability company, a trust or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"Pledge Value" means, as of any date and with respect to any particular
type of Collateral, an amount equal to the aggregate Market Value of such
Collateral divided by the Collateral Requirement for such Collateral.
"Pledge Value Requirement" means, as of any date, (a) the aggregate Market
Value on such date of the Maximum Deliverable Number of shares of Common Stock
or, from and after an Adjustment Event, Reported Securities, on such date plus
(b) from and after an Adjustment Event, the Cash Delivery Obligations plus (c)
from and after the Pledgor's extension of the Exchange Date pursuant to Section
1.3(f) of the Forward Contract, the aggregate Market Value on such date of the
Additional Government Securities.
"Pledged Items" means, as of any date, any and all securities and
instruments delivered by the Pledgor to be held by the Collateral Agent under
this Collateral Agreement as Collateral, whether Eligible Collateral or
Ineligible Collateral.
"Prior Collateral" has the meaning specified in Section 6(b)(1).
"Responsible Officer" means, when used with respect to the Collateral
Agent, any vice president, assistant vice president, assistant treasurer or
assistant secretary located in the division or department of the Collateral
Agent responsible for performing the obligations of the Collateral Agent under
this Collateral Agreement, or in any other division or department of the
Collateral Agent performing operations substantially equivalent to those
performed by such division or department pursuant hereto, or any other officer
of the Collateral Agent or any successor Collateral Agent customarily
performing functions similar to those performed by any of the aforesaid
officers, and also means, with respect to any matter relating to this
Collateral Agreement or the Collateral, any other officer to whom such matter
is referred because of his knowledge of and familiarity with the particular
subject.
"Transfer Restriction" means, with respect to any item of Collateral, any
condition to or restriction on the ability of the holder thereof to sell,
assign or otherwise transfer such item of Collateral to the Trust or to enforce
the provisions thereof or of any document related thereto whether set forth in
such item of Collateral itself or in any document related thereto, including,
without limitation, (i) any requirement that any sale, assignment or other
transfer or enforcement of such item of Collateral be consented to or approved
by any Person, including, without limitation, the issuer thereof or any other
obligor thereon, (ii) any limitations on the type or status, financial or
otherwise, of any purchaser, pledgee, assignee or transferee of such item of
Collateral, (iii) any requirement of the delivery of any certificate, consent,
agreement, opinion of counsel, notice or any other document of any Person to
the issuer of, any other obligor on or any registrar or transfer agent for,
such item of Collateral, prior to the sale, pledge, assignment or other
transfer or enforcement of such item of Collateral and (iv) any registration or
qualification requirement for such item of Collateral pursuant to any federal
or state securities law; provided that the required delivery of any assignment
from the seller,
5
pledgor, assignor or transferor of such item of Collateral, together with any
evidence of the corporate or other authority of such Person, shall not
constitute a "Transfer Restriction."
"Trustee" or "Trustees" means any trustee or trustees of the Trust
identified on the signature pages hereto, or any successor as such trustee or
trustees.
"UCC" means the Uniform Commercial Code as in effect in the State of New
York.
"U.S. Government Securities" means direct obligations of the United States
of America that mature on a date that is one year or less from the date such
obligations are pledged hereunder, but in any event prior to the Exchange Date
(or the extended Exchange Date in the case of Additional Government Securities
pledged in connection with an extension of the Exchange Date pursuant to
Section 1.3(f) of the Forward Contract).
3. Representations and Warranties of the Pledgor.
The Pledgor hereby represents and warrants to the Collateral Agent and the
Trust that:
(a) Power. The Pledgor has full power and authority to execute and
deliver this Collateral Agreement and to perform and observe the
provisions hereof;
(b) Non-Contravention. The execution, delivery and performance by the
Pledgor of this Collateral Agreement do not and will not violate,
contravene or constitute a default under any provision of applicable law
or regulation or of any material agreement, judgment, injunction, order,
decree or other instrument binding upon the Pledgor. The Pledgor is not in
default under any material agreement by which the Collateral may be bound
and no litigation, arbitration or administrative proceedings are current
or pending, which default, litigation, arbitration or administrative
proceedings are material to the Collateral in the context of this
Collateral Agreement.
(c) Binding Effect. This Collateral Agreement constitutes a valid and
binding agreement of the Pledgor enforceable against the Pledgor in
accordance with its terms except as such enforceability may be limited by
applicable bankruptcy, insolvency and similar laws affecting creditors'
rights generally and by general equitable principles.
(d) Solvency. The Pledgor is presently solvent and able to pay, and
paying its debts as they become due, and anticipates that it will continue
to be able to pay its debts as they become due for the foreseeable future.
(e) No Transfer Restrictions. Except for (i) any legend with respect
to restrictions pursuant to applicable federal and state securities laws
on transfer of the Common Stock pledged by the Pledgor hereunder which
appears on the certificates representing such Common Stock (and which (A)
will not be applicable to the delivery of any such Common Stock to the
Trust pursuant to the Forward Contract and this Agreement or to the
delivery of any such Common Stock by the Trust to the holders of Equity
Trust Securities pursuant to the Equity Trust Securities and (B) will be
removed at
6
the request of the Collateral Agent to the transfer agent for the Common
Stock prior to any such delivery to the holders of Equity Trust
Securities) and (ii) any restrictions on the Common Stock pursuant to the
Stockholders Agreement, dated as of March 4, 1998, as amended by the
Letter Agreements dated August 8, 2001, September 10, 2001 and October 5,
2001 (which such Agreement, as amended, shall not have any effect on the
Common Stock pledged hereunder for so long as the Common Stock remains
pledged pursuant to the terms of this Agreement and when such Common Stock
is delivered by the Collateral Agent to the Trust on the Exchange Date or
in connection with the occurrence of an Event of Default), no Transfer
Restrictions exist with respect to or otherwise apply to the assignment
of, or transfer by the Pledgor of possession of, any items of Collateral
to the Collateral Agent hereunder, or the subsequent sale or transfer of
such items of Collateral by the Collateral Agent pursuant to the terms
hereof.
(f) Title to Collateral; Perfected Security Interest. The Pledgor has
good and marketable title to the Pledged Items, free of all Liens (other
than the Lien created by this Collateral Agreement) and Transfer
Restrictions (except for any restrictions as contemplated in Section 3(e)
hereof). Upon delivery or transfer of the Pledged Items as described in
paragraph (b) and (c) of Section 1 to the Collateral Agent hereunder, the
Collateral Agent will obtain a valid and, to the extent that perfection
can be obtained under the UCC, first priority perfected security interest
in such Pledged Items subject to no other Lien. None of the Collateral is
or shall be pledged by the Pledgor as collateral for any other purpose.
4. Representations and Warranties of the Collateral Agent.
The Collateral Agent represents and warrants to the Pledgor and the Trust
that:
(a) Corporate Existence and Power. The Collateral Agent is a banking
corporation, duly incorporated, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, and has all
corporate powers and all material governmental licenses, authorizations,
consents and approvals required to enter into, and perform its obligations
under, this Collateral Agreement.
(b) Authorization and Non-Contravention. The execution, delivery and
performance by the Collateral Agent of this Collateral Agreement have been
duly authorized by all necessary corporate action on the part of the
Collateral Agent (no action by the shareholders of the Collateral Agent
being required) and do not and will not violate, contravene or constitute
a default under any provision of applicable law or regulation or of the
charter or by-laws of the Collateral Agent or of any material agreement,
judgment, injunction, order, decree or other instrument binding upon the
Collateral Agent.
(c) Binding Effect. This Collateral Agreement constitutes a valid and
binding agreement of the Collateral Agent enforceable against the
Collateral Agent in accordance with its terms.
5. Certain Covenants of the Pledgor.
7
The Pledgor agrees that, so long as any of its obligations under the
Forward Contract remain outstanding:
(a) Title to Collateral. The Pledgor shall, subject to the terms of
this Agreement, at all times hereafter have good title to the Collateral
pledged hereunder, free of all Liens (other than the Liens created by this
Collateral Agreement) and Transfer Restrictions (except for those
permitted by Section 3(e) hereof), and, subject to the terms of this
Collateral Agreement, will at all times hereafter have good, right and
lawful authority to assign, transfer and pledge such Collateral and all
such additions thereto and substitutions therefor under this Collateral
Agreement.
(b) Pledge Value Requirement. The Pledgor shall cause the aggregate
Pledge Value of the Collateral to be equal to or greater than the Pledge
Value Requirement at all times, and shall pledge additional Collateral in
the manner described in Section 6(d) as necessary to cause such
requirement to be met.
(c) Pledge upon Adjustment Event. Upon the occurrence of an
Adjustment Event, the Pledgor shall immediately cause to be delivered to
the Collateral Agent, in the manner provided in Section 6(d): (i) U.S.
Government Securities or Cash Equivalents (other than cash) having an
aggregate Market Value at least equal to 105% of the Cash Delivery
Obligations, if any, or at Pledgor's election, U.S. dollars in an amount
equal to at least 100% of the Cash Delivery Obligations, if any; and (ii)
Reported Securities in an amount at least equal to the Maximum Deliverable
Number thereof (if any), or, at Pledgor's election, U.S. Government
Securities or Cash Equivalents having an aggregate Market Value at least
equal to 150% of such Maximum Deliverable Number of Reported Securities;
in each case to be held as substitute or additional Collateral hereunder.
(d) Composition of Pledged Items. Notwithstanding Pledgor's right to
substitute Collateral pursuant to Section 6(b), the Pledgor shall cause
the Collateral to include, on the Exchange Date, unless Pledgor shall have
exercised its Cash Delivery Option, a number of shares of Common Stock
(and/or, if an Adjustment Event shall have occurred, Reported Securities)
at least equal to the number of shares of Common Stock (and/or, if an
Adjustment Event shall have occurred, Reported Securities) required to be
delivered under the Forward Contract on the Exchange Date. If the Pledgor
shall have extended the Exchange Date pursuant to Section 1.3(f) of the
Forward Contract, the Pledgor shall cause Collateral for Pledgor's
obligations to deliver the Extension Amount to consist entirely of
Additional Government Securities.
(e) Further Assurances. The Pledgor shall, at its expense and in such
manner and form as the Trust or the Collateral Agent may reasonably
require, give, execute, deliver, file and record any financing statement,
notice, instrument, document, agreement or other papers that may be
necessary in order to create, preserve, perfect, substantiate or validate
any security interest granted pursuant hereto or to enable the Collateral
Agent to exercise and enforce its rights and the rights of the Trust
hereunder with respect to such security interest. To the extent permitted
by applicable law, the Pledgor hereby authorizes the Collateral Agent to
execute and file, in the name of the
8
Pledgor or otherwise, Uniform Commercial Code financing or continuation
statements (which may be carbon, photographic, photostatic or other
reproductions of this Agreement or of a financing statement relating to
this Agreement) which the Collateral Agent may reasonably deem necessary
or appropriate to further perfect, or maintain the perfection of the
security interests granted hereby.
(f) The Pledgor shall not consolidate with or merge with or into, or
transfer all or substantially of its assets to, any other Person unless:
(i) either (x) the Pledgor shall be the resulting or surviving
entity or (y) such other Person is an entity organized and existing
under the laws of the United States, a State thereof or the District
of Columbia, such other Person expressly assumes by supplemental
agreement executed and delivered to the Trust, in form satisfactory
to counsel to the Trust, all the obligations of the Pledgor under the
Underwriting Agreement, Collateral Agreement, the Reimbursement
Agreement, and this Agreement (in which case all such obligations of
the Pledgor shall terminate); and
(ii) the Pledgor shall deliver to the Trust prior to the
proposed transaction an Officer's Certificate and an Opinion of
Counsel, each of which shall state that such consolidation, merger or
transfer and such supplemental agreement comply with this Section
5(f) and that all conditions precedent herein provided for relating
to such transaction have been complied with.
Upon any consolidation or merger, or any transfer of all or
substantially all of the assets of the Pledgor in accordance with this
Section 5(f), the successor entity formed by such consolidation or into
which the Pledgor is merged or to which such transfer is made shall
succeed to, and be substituted for, and may exercise every right and power
of the Pledgor under this Agreement with the same effect as if such
successor entity had been named as the Pledgor herein, and the predecessor
entity, shall be relieved of any further obligation under this Agreement.
6. Administration of the Collateral and Valuation of the Securities.
(a) Valuation of Collateral. The Collateral Agent shall determine on each
Business Day whether the Pledge Value is at least equal to the Pledge Value
Requirement and whether an Insufficiency Determination or Collateral Event of
Default shall have occurred and, from and after any substitution of U.S.
Government Securities or Cash Equivalents for pledged Common Stock or Reported
Securities pursuant to paragraph (b) of this Section 6, shall determine the
Pledge Value on each Business Day and shall provide written notice of the
Pledge Value to the Pledgor.
(b) Substitution of Collateral. The Pledgor may substitute Collateral in
accordance with the following provisions:
(1) Unless an Event of Default or a failure by the Pledgor to meet
any of its obligations under Section 5(b) or (c) hereof has occurred and
is continuing, the Pledgor shall have the right at any time and from time
to time to deposit Eligible
9
Collateral with the Collateral Agent in substitution for Pledged Items
previously deposited hereunder ("Prior Collateral") and to obtain the
release from the Lien hereof of such Prior Collateral.
(2) If the Pledgor wishes to deposit Eligible Collateral with the
Collateral Agent in substitution for Prior Collateral, the Pledgor shall
(i) give written notice to the Collateral Agent identifying the Prior
Collateral to be released from the Lien hereof, and (ii) deliver to the
Collateral Agent concurrently with such Eligible Collateral a certificate
of the Pledgor substantially in the form of Exhibit A hereto and dated the
date of such delivery, (A) identifying the items of Eligible Collateral
being substituted for the Prior Collateral and the Prior Collateral that
is to be transferred to the Pledgor and (B) certifying that the
representations and warranties contained in such Exhibit A hereto are true
and correct on and as of the date thereof. The Pledgor hereby covenants
and agrees to take all actions required under Section 6(d) and any other
actions necessary to create for the benefit of the Collateral Agent a
valid, first priority perfected security interest in, and a first lien
upon, such Eligible Collateral deposited with the Collateral Agent in
substitution for Prior Collateral.
(3) No such substitution shall be made unless and until the
Collateral Agent shall have determined that the aggregate Pledge Value of
all of the Collateral at the time of such proposed substitution, after
giving effect to the proposed substitution, shall at least equal the
Pledge Value Requirement.
(c) Additional Collateral. The Pledgor may pledge additional Collateral
(excluding Additional Government Securities) hereunder at any time and may
pledge Additional Government Securities hereunder at any time prior to or
simultaneously with Pledgor's election to extend the Exchange Date pursuant to
Section 1.3(f) of the Forward Contract. Concurrently with the delivery of any
additional Eligible Collateral, the Pledgor shall deliver in the case of
Eligible Collateral consisting of Additional Government Securities, a
certificate of the Pledgor substantially in the form of Exhibit B hereto, or in
the case of all other Eligible Collateral, a certificate of the Pledgor
substantially in the form of Exhibit C hereto and dated the date of such
delivery, in each case (A) identifying the additional items of Eligible
Collateral being pledged and (B) certifying that with respect to such items of
additional Eligible Collateral the representations and warranties contained in
such Exhibit B or Exhibit C, as the case may be, hereto are true and correct on
and as of the date thereof. The Pledgor hereby covenants and agrees to take all
actions required under Section 6(d) and any other actions necessary to create
for the benefit of the Collateral Agent a valid, first priority perfected
security interest in, and a first lien upon, such additional Eligible
Collateral.
(d) Delivery of Collateral. The Pledgor shall deliver all Collateral to
the Collateral Agent in accordance with the following provisions:
(1) Pledged Common Stock. In the case of Collateral consisting of
Common Stock, by delivery of certificates evidencing such Common Stock,
indorsed in blank (together with all signature guarantees and any other
documents necessary to permit the Collateral Agent to effect the
re-registration thereof without further action by the Pledgor) or
registered in the name of the Collateral Agent or its nominee or, if such
10
Common Stock is held in book entry form by The Depository Trust Company,
by transfer to an account of the Collateral Agent or to an account (other
than an account of the Pledgor) designated by the Collateral Agent with
The Depository Trust Company;
(2) Pledged Government Securities. In the case of Collateral
consisting of U.S. Government Securities or Additional Government
Securities, by transfer thereof through the Book Entry System of the
Federal Reserve System to the account of the Collateral Agent or to an
account (other than an account of the Pledgor) designated by the
Collateral Agent; and
(3) Pledged Cash Equivalents. In the case of Collateral consisting of
Cash Equivalents under (i) of the definition of Cash Equivalents, by wire
transfer in immediately available funds to the account of the Collateral
Agent or to an account (other than an account of the Pledgor) designated
by the Collateral Agent and over which the Collateral Agent has sole
control; in the case of Collateral consisting of Cash Equivalents under
(ii) of the definition of Cash Equivalents, by transfer thereof through
the Book Entry System of the Federal Reserve System to the account of the
Collateral Agent or to an account (other than an account of the Pledgor)
designated by the Collateral Agent or, if such Cash Equivalents are held
in book entry form by The Depository Trust Company, by transfer to an
account of the Collateral Agent or to an account (other than an account of
the Pledgor) designated by the Collateral Agent with The Depository Trust
Company; in the case of Collateral consisting of Cash Equivalents under
(iv) of the definition of Cash Equivalents, by transfer of the underlying
securities to a security account maintained by the Collateral Agent with a
securities intermediary in its name, pursuant to a contract between the
Collateral Agent and a third party; and in each other case of Collateral
consisting of Cash Equivalents under the definition of Cash Equivalents,
by physically delivering certificates evidencing the Cash Equivalents
indorsed in blank (together with all documents necessary to permit the
Collateral Agent to effect the re-registration thereof without further
action by the Pledgor) or registered in the name of the Collateral Agent
issued to or otherwise payable to the Collateral Agent or its nominee or,
if such Cash Equivalents are held in book entry form by a securities
intermediary, by transfer to an account of the Collateral Agent or to an
Account (other than an account of the Pledgor) designated by the
Collateral Agent with such securities intermediary, or by crediting the
Cash Equivalents to a securities account maintained by the Collateral
Agent or to an account designated by the Collateral Agent with a
securities intermediary in its name.
(4) Pledged Reported Securities. In the case of Collateral consisting
of Reported Securities, by delivery of certificates evidencing such
Reported Securities, indorsed in blank (together with all signature
guarantees and other documents necessary to permit the Collateral Agent to
effect the re-registration thereof without further action by the Pledgor)
or registered in the name of the Collateral Agent or its nominee or, if
such Reported Securities are not issuable in certificated form but are
held in book entry form by The Depository Trust Company, by transfer to an
account of the Collateral Agent or to an account (other than an account of
the Pledgor) designated by the Collateral Agent with The Depository Trust
Company.
11
Upon delivery of any Pledged Item under this Collateral Agreement, the
Collateral Agent shall examine such Pledged Item and any certificates delivered
pursuant to Sections 6(b), 6(c), 6(d)(3) or otherwise pursuant to the terms
hereof in connection therewith to determine that they comply as to form with
the requirements for Eligible Collateral. Immediately following an Event of
Default, the Collateral Agent shall cause all Collateral in the form of
certificates indorsed in blank to be re-registered on the books of the
applicable transfer agent into the name of the Collateral Agent or its nominee,
and shall thereafter maintain all such Collateral in such form until the
termination of this Agreement; provided, however, that at any time following
such delivery to the Collateral Agent, the Collateral Agent may cause any such
certificates to be deposited with The Depository Trust Company and thereafter
hold such certificates in book entry form in an account (other than an account
of Pledgor) designated by the Collateral Agent. The Pledgor hereby designates
the Collateral Agent as the person in whose name any Collateral held in book
entry form in the Federal Reserve System shall be recorded.
(e) Insufficiency Determination.
(1) If on any Business Day the Collateral Agent determines that the
aggregate Pledge Value of the Collateral is less than the Pledge Value
Requirement (any such determination, an "Insufficiency Determination"),
the Collateral Agent shall, by telephone call to an Authorized
Representative of the Pledgor followed by a written confirmation of such
call, promptly notify the Pledgor of such determination and of the amount
of the insufficiency.
(2) If, by 4:00 p.m., New York City time on the Business Day
following the day on which telephonic notice shall have been given
pursuant to the preceding paragraph (e)(1), the Pledgor shall have failed
to deliver, in the manner set forth in paragraphs (c) and (d) of this
Section 6, sufficient additional Eligible Collateral so that, after giving
effect to such delivery (and taking into account that Common Stock and
Reported Securities in excess of the Maximum Deliverable Number thereof
shall not constitute Eligible Collateral), the aggregate Pledge Value of
the Collateral, as of such Business Day, is at least equal to the Pledge
Value Requirement, then (x) the Collateral Requirement with respect to any
U.S. Government Securities or Cash Equivalents pledged hereunder (other
than in respect of Cash Delivery Obligations) shall be increased from 150%
to 200%, and (y) unless a Collateral Event of Default shall have occurred
and be continuing, the Collateral Agent shall:
(i) commence sales, in the manner described in paragraph (3)
below, of such portion of the Collateral consisting of U.S.
Government Securities or Cash Equivalents as may be required to be
sold in order to generate proceeds sufficient to purchase Common
Stock and/or, after an Adjustment Event, Reported Securities, as
described in the following clause (ii); and
(ii) commence purchases, in the manner described in paragraph
(3) below, of Common Stock and/or, after an Adjustment Event,
Reported Securities, in an amount sufficient to cause the aggregate
Pledge Value of the Collateral to be at least equal to the Pledge
Value Requirement.
12
Notwithstanding the foregoing, the Collateral Agent shall discontinue
sales and purchases pursuant to the preceding clauses (i) and (ii),
respectively, if at any time a Collateral Event of Default shall have
occurred and be continuing. The Collateral Agent shall determine the
Market Value and the Pledge Value of the Collateral after each purchase of
Common Stock or Reported Securities pursuant to the preceding clause (ii)
in order to determine whether the Pledge Value Requirement is met and
whether a Collateral Event of Default has occurred. Solely for purposes of
such calculation, the Market Value of the Common Stock or Reported
Securities shall be the most recent sales price as reported in the
composite transactions for the principal securities exchange on which the
Common Stock or Reported Securities, as the case may be, are then listed
or, if such securities are not so listed, the last quoted ask price for
such securities in the over-the-counter market as reported by The NASDAQ
National Market or, if not so reported, by the National Quotation Bureau
or a similar organization.
A "Collateral Event of Default" shall mean, at any time, the
occurrence of any of the following: (A) failure of the aggregate Market
Value of the Collateral to equal or exceed the Pledge Value Requirement;
(B) failure of the Market Value of any U.S. Government Securities and Cash
Equivalents pledged at such time (not including any (i) Additional
Government Securities or (ii) U.S. Government Securities and Cash
Equivalents pledged in respect of Cash Delivery Obligations at such time)
to have an aggregate Market Value of at least 105% of the Market Value of
a number of shares of Common Stock (or, from and after any Adjustment
Event, Reported Securities) equal to (x) the Maximum Deliverable Number
thereof minus (y) the number thereof pledged as Collateral hereunder at
such time; or (C) from and after any Adjustment Event, failure of the U.S.
Government Securities and Cash Equivalents (other than cash) pledged in
respect of Cash Delivery Obligations to have an aggregate Market Value at
least equal to 105% of the Cash Delivery Obligations at such time or, in
the case of cash pledged in respect of Cash Delivery Obligations, failure
of such cash to be at least equal to the Cash Delivery Obligations at such
time, if, in the case of a failure described in this clause (C), such
failure shall continue to be in effect at 4:00 p.m., New York City time,
on the Business Day following the day on which telephonic notice in
respect thereof shall have been given pursuant to paragraph (e)(1) above.
For purposes of this Agreement, the portion of any pledged U.S. Government
Securities and Cash Equivalents that shall be deemed to be in respect of
Cash Delivery Obligations at any time shall be a portion having a Market
Value equal to 105% of the Cash Delivery Obligations at such time (or, if
less, the aggregate Market Value of all U.S. Government Securities and
Cash Equivalents pledged at such time). To the extent that any pledged
U.S. Government Securities and Cash Equivalents have a Market Value
exceeding 105%, the U.S. Government Securities shall be applied to satisfy
the 105% requirement in the first instance.
(3) Collateral sold and Common Stock or shares of Reported Securities
purchased by the Collateral Agent pursuant to the preceding paragraphs
(e)(2)(i) and (ii) may be sold and purchased on any securities exchange or
in any over-the-counter market or in any private purchase transaction, and
at such price or prices, in each case as the Collateral Agent may deem
satisfactory. The Pledgor covenants and agrees that it will execute and
deliver such documents and take such other action as the
13
Collateral Agent deems necessary or advisable in order that any such sales
and purchases may be made in compliance with law.
(f) Release of Excess Collateral. If on any Business Day the Collateral
Agent determines that the aggregate Pledge Value of the Pledgor's Eligible
Collateral exceeds the Pledge Value Requirement and no Event of Default or
failure by the Pledgor to meet any of its obligations under Sections 5 or 6
hereof has occurred and is continuing, the Pledgor may obtain the release from
the Lien hereof of any Collateral having an aggregate Pledge Value on such
Business Day less than or equal to such excess, upon delivery to the Collateral
Agent of a written notice from an Authorized Representative of the Pledgor
indicating the items of Collateral to be released. Such Collateral shall be
released only after the Collateral Agent shall have determined that the
aggregate Pledge Value of all of the Collateral remaining after such release as
determined on such Business Day is at least equal to the Pledge Value
Requirement.
(g) Delivery of Forward Contract Consideration. On the Exchange Date,
unless Pledgor shall have exercised its Cash Delivery Option, the Collateral
Agent shall deliver to the Trust Common Stock (or, if an Adjustment Event shall
have occurred, Reported Securities) then held by it hereunder representing the
number of shares of Common Stock (or, if an Adjustment Event shall have
occurred, Reported Securities) then required to be delivered under the Forward
Contract. Upon such delivery, the Trust shall hold such Common Stock or
Reported Securities, as the case may be, absolutely and free from any claim or
right whatsoever.
(h) Investment of Cash Collateral. The Collateral Agent shall invest any
cash received by it pursuant to Section 6.2 of the Forward Contract in direct
obligations of the United States of America maturing on or before the Exchange
Date.
7. Income and Voting Rights on Collateral.
(a) Unless an Event of Default or failure by the Pledgor to meet any of
Pledgor's obligations under Section 5(b) or (c) hereof has occurred and is
continuing, the Pledgor shall be entitled to receive for Pledgor's own account
all dividends, interest and, if any, principal and premium relating to all of
the Collateral, unless the payment thereof to the Pledgor would reduce the
aggregate Pledge Value of the Collateral below the Pledge Value Requirement.
The Collateral Agent agrees to remit to the Pledgor on the Business Day
received or the first Business Day thereafter all such payments received by it.
If an Event of Default or failure by the Pledgor to meet any of its obligations
under Section 5(b) or (c) hereof has occurred and is continuing, all such
payments made or accrued after and during the continuance of such Event of
Default or failure shall be retained by the Collateral Agent, and any such
payments which are received by the Pledgor shall be received in trust for the
benefit of the Trust, shall be segregated from other funds of the Pledgor and
shall forthwith be paid over to the Collateral Agent. Any such payments so
retained by, or paid over to, the Collateral Agent shall be held by the
Collateral Agent as Collateral hereunder. If any such Event of Default or
failure is no longer continuing, then the Collateral Agent shall remit any such
payments that are so retained by, or paid to it, on the first Business Day
after the Collateral Agent shall have received notice from the Trust that such
Event of Default or failure is no longer continuing, unless the payment thereof
to the Pledgor would reduce the aggregate Pledge Value of the Collateral below
the Pledge Value Requirement.
14
(b) Unless an Event of Default has occurred and is continuing, the Pledgor
shall have the right, from time to time, to vote and to give all approvals,
consents, ratifications and waivers with respect to the Collateral (including
all shares of Common Stock), and the Collateral Agent shall promptly deliver to
the Pledgor such proxies, powers of attorney, consents, ratifications and
waivers in respect of any of the Collateral which is registered in the name of
the Collateral Agent or its nominee and shall further deliver such documents
and instruments as shall be specified in a written request by the Pledgor.
If an Event of Default shall have occurred and be continuing, the
Collateral Agent shall have the right to the extent permitted by law, and the
Pledgor shall take all such action as may be necessary or appropriate to give
effect to such right, to vote and to give all approvals, consents,
ratifications and waivers, and take any other action with respect to any or all
of the Collateral with the same force and effect as if the Collateral Agent
were the absolute and sole owner thereof.
8. Remedies upon Events of Default.
(a) If any Event of Default shall have occurred and be continuing, the
Collateral Agent may exercise on behalf of the Trust all the rights of a
secured party under the UCC (whether or not in effect in the jurisdiction where
such rights are exercised) and, in addition, without being required to give any
notice, except as herein provided or as may be required by mandatory provisions
of law, shall: (i) deliver all Collateral consisting of Common Stock or
Reported Securities (but not, in either case, in excess of the number of shares
thereof deliverable under the Forward Contract at such time) to the Trust on
the date of the notice delivered to the Collateral Agent pursuant to the last
paragraph of Article VII of the Forward Contract relating to such Event of
Default (or, in the case of an Event of Default described in clause (iii), (iv)
or (v) of the definition thereof in this Agreement, on the Exchange Date) (in
either case, the "Delivery Date"), whereupon the Trust shall hold such Common
Stock or Reported Securities absolutely free from any claim or right of
whatsoever kind, including any equity or right of redemption of the Pledgor
which may be waived, and the Pledgor, to the extent permitted by law, hereby
specifically waives all rights of redemption, stay or appraisal which Pledgor
has or may have under any law now existing or hereafter adopted; and (ii) if
such delivery shall be insufficient to satisfy in full all of the obligations
of Pledgor under the Forward Contract, sell all of the remaining Collateral, or
such lesser portion thereof as may be necessary to generate proceeds sufficient
to satisfy in full all of the obligations of Pledgor under the Forward
Contract, at public or private sale or at any broker's board or on any
securities exchange, for cash, upon credit or for future delivery, and at such
price or prices as the Collateral Agent may deem satisfactory. The Pledgor
covenants and agrees to execute and deliver such documents and take such other
action as the Collateral Agent deems necessary or advisable in order that any
such sale may be made in compliance with law. Upon any such sale the Collateral
Agent shall have the right to deliver, assign and transfer to the purchaser
thereof the Collateral so sold. Each purchaser at any such sale shall hold the
Collateral so sold absolutely and free from any claim or right of whatsoever
kind, including any equity or right of redemption of the Pledgor which may be
waived, and the Pledgor, to the extent permitted by law, hereby specifically
waives all rights of redemption, stay or appraisal which Pledgor has or may
have under any law now existing or hereafter adopted. The notice (if any) of
such sale required by Article 9 of the UCC shall (1) in case of a public sale,
state the time and place fixed for such sale, (2) in case of
15
sale at a broker's board or on a securities exchange, state the board or
exchange at which such sale is to be made and the day on which the Collateral,
or the portion thereof so being sold, will first be offered for sale at such
board or exchange, and (3) in the case of a private sale, state the day after
which such sale may be consummated. Any such public sale shall be held at such
time or times within ordinary business hours and at such place or places as the
Collateral Agent may fix in the notice of such sale. At any such sale the
Collateral may be sold in one lot as an entirety or in separate parcels, as the
Collateral Agent may determine. The Collateral Agent shall not be obligated to
make any such sale pursuant to any such notice. The Collateral Agent may,
without notice or publication, adjourn any public or private sale or cause the
same to be adjourned from time to time by announcement at the time and place
fixed for the sale, and such sale may be made at any time or place to which the
same may be so adjourned. In case of any sale of all or any part of the
Collateral on credit or for future delivery, the Collateral so sold may be
retained by the Collateral Agent until the selling price is paid by the
purchaser thereof, but the Collateral Agent shall not incur any liability in
case of the failure of such purchaser to take up and pay for the Collateral so
sold and, in case of any such failure, such Collateral may again be sold upon
like notice. The Collateral Agent, instead of exercising the power of sale
herein conferred upon it, may proceed by a suit or suits at law or in equity to
foreclose the security interests and sell the Collateral, or any portion
thereof, under a judgment or decree of a court or courts of competent
jurisdiction.
(b) Power of Attorney. The Collateral Agent is hereby irrevocably
appointed the true and lawful attorney of the Pledgor with full power and
authority, in the name and stead of the Pledgor, to do all of the following:
(i) upon any delivery or sale of all or any part of any Collateral made either
under the power of delivery or sale given hereunder or under judgment or decree
in any judicial proceedings for foreclosure or otherwise for the enforcement of
this Collateral Agreement, to make all necessary deeds, bills of sale and
instruments of assignment, transfer or conveyance of the property thus
delivered or sold; (ii) if an Event of Default shall have occurred and be
continuing, upon the occurrence of an Adjustment Event while any shares of
Common Stock are Pledged Items, to take any necessary actions with respect to
such shares of Common Stock to cause the Pledged Items to conform to the
requirements of this Agreement following the occurrence of the Adjustment
Event, including, without limitation, the tender of shares of Common Stock and
the sale of property (other than Reported Securities) received in respect of
Common Stock. The grant of the foregoing power of attorney shall not be deemed
to be a grant of a power of attorney to vote or grant proxies with respect to
any shares of Common Stock, except as provided in Section 7(b). For such
purposes the Collateral Agent may execute all necessary documents and
instruments. This power of attorney shall be deemed coupled with an interest,
and the Pledgor hereby ratifies and confirms all that its attorneys acting
under such power, or such attorneys' successors or agents, shall lawfully do so
by virtue of this Collateral Agreement. If so requested by the Collateral
Agent, by the Trustees or by any purchaser of the Collateral or a portion
thereof, the Pledgor shall further ratify and confirm any such delivery or sale
by executing and delivering to the Collateral Agent, to the Trustees or to such
purchaser or purchasers at the expense of the Pledgor all proper deeds, bills
of sale, instruments of assignment, conveyance of transfer and releases as may
be designated in any such request. The Pledgor's obligations and authorizations
hereunder shall not be terminated by operation of law or the occurrence of any
event whatsoever, including the death or disability of the Pledgor, or the
occurrence of any other event.
16
(c) Application of Collateral and Proceeds. In the case of an Event of
Default, the Collateral Agent may proceed to realize upon the security interest
in the Collateral against any one or more of the types of Collateral, at any
one time, as the Collateral Agent shall determine in its sole discretion
subject to the foregoing provisions of this Section 8. The proceeds of any sale
of, or other realization upon, or other receipt from, any of the Collateral
remaining after delivery to the Trust pursuant to Section 8(a) shall be applied
by the Collateral Agent in the following order of priorities:
(1) first, to the payment to the Trust of an amount equal to: (A) the
aggregate Market Value of a number of shares of Common Stock equal to (1)
the number of shares of Common Stock required to be delivered under the
Forward Contract on the Delivery Date minus (2) the number of shares of
Common Stock delivered by the Collateral Agent to the Trust on the
Delivery Date as described above; or (B) from and after an Adjustment
Event, the sum of (1) the Cash Delivery Obligations on the Delivery Date
plus (2) the aggregate Market Value on the Delivery Date of a number of
Reported Securities (and, if applicable, shares of Common Stock) equal to
(x) the number thereof required to be delivered on the Delivery Date under
Section 6.2 of the Forward Contract minus (y) the number thereof delivered
by the Collateral Agent to the Trust on the Delivery Date as described
above; and/or (C) if the Pledgor shall have exercised its Cash Delivery
Option, the amount of cash required to be delivered under Section 1.3(d)
of the Forward Contract minus the amount of cash so delivered; and (D) if
the Pledgor shall have extended the Exchange Date pursuant to Section
1.3(f) of the Forward Contract, the amount of cash required to be
delivered under said Section 1.3(f) (or, if the Pledgor shall have
accelerated the Exchange Date pursuant to Section 1.3(g) thereof, the
amount of cash deliverable pursuant to said Section 1.3(g));
(2) second, to the payment to the Collateral Agent of the expenses of
such sale or other realization, including reasonable compensation to the
Collateral Agent and its agents and counsel, and all expenses, liabilities
and advances incurred or made by the Collateral Agent in connection
therewith, including brokerage fees in connection with the sale by the
Collateral Agent of any Pledged Item; and
(3) finally, if all of the obligations of the Pledgor hereunder and
under the Forward Contract have been fully discharged or sufficient funds
have been set aside by the Collateral Agent at the request of the Pledgor
for the discharge thereof, any remaining proceeds shall be released to the
Pledgor.
9. The Collateral Agent.
The Collateral Agent accepts its duties and responsibilities hereunder as
agent for the Trust, on and subject to the following terms and conditions:
(a) Performance of Duties; Force Majeure. The Collateral Agent undertakes
to perform such duties and only such duties as are expressly set forth herein
and, beyond the exercise of reasonable care in the performance of such duties,
no implied covenants or obligations shall be read into this Collateral
Agreement against the Collateral Agent. No
17
provision hereof shall be construed to relieve the Collateral Agent from
liability for its own grossly negligent action, grossly negligent failure to
act or its own willful misconduct, subject to the following:
(1) The Collateral Agent may consult with counsel, and the advice or
opinion of such counsel shall be full and complete authorization and
protection in respect of an action taken or suffered hereunder in good
faith and in accordance with such advice or opinion of counsel.
(2) The Collateral Agent shall not be liable with respect to any
action taken, suffered or omitted by it in good faith (i) reasonably
believed by it to be authorized or within the discretion or rights or
powers conferred on it by this Collateral Agreement or (ii) in accordance
with any direction or request of the Trustees.
(3) The Collateral Agent shall not be liable for any error of
judgment made in good faith by any of its officers, unless the Collateral
Agent was grossly negligent in ascertaining the pertinent facts.
(4) The Collateral Agent shall not be liable for any claims, losses,
liabilities, damages or expenses (including attorneys' fees and expenses)
due to forces beyond the reasonable control of the Collateral Agent,
including without limitation strikes, work stoppages, acts of war or
terrorism, insurrection, revolution, nuclear or natural catastrophes or
acts of God, and interruptions, loss or malfunctions of utilities,
communications or computer (software and hardware) services; provided that
this provision shall not protect the Collateral Agent against any
liability to which it would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and
duties hereunder.
(5) In the absence of bad faith on its part, the Collateral Agent may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon any note, notice, resolution,
consent, certificate, affidavit, letter, telegram, teletype message,
statement, order or other document believed by it to be genuine and
correct and to have been signed or sent by the proper Person or Persons.
(6) No provision of this Collateral Agreement shall require the
Collateral Agent to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder, or
in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
(7) The Collateral Agent may perform any duties hereunder either
directly or by or through agents or attorneys, and the Collateral Agent
shall not be responsible for any willful misconduct or gross negligence on
the part of any agent or attorney appointed with due care by it hereunder.
In furtherance thereof, any subsidiary owned or controlled by the
Collateral Agent, or its successors, as agent for the Collateral
18
Agent, may perform any or all of the duties of the Collateral Agent
relating to the valuation of securities and other instruments constituting
Collateral hereunder.
(8) In no event shall the Collateral Agent be personally liable for
any taxes or other governmental charges imposed upon or in respect of (i)
the collateral or (ii) the income or other distributions thereon.
(9) Unless and until the Collateral Agent shall have received notice
from the Pledgor, or unless and until a Responsible Officer of the
Collateral Agent shall have actual knowledge to the contrary, the
Collateral Agent shall be entitled to deem and treat all Collateral
delivered to it hereunder as Eligible Collateral hereunder, provided that
the Collateral Agent has carried out the duties specified in Section 6
with respect to such Collateral at the time of delivery thereof.
The Collateral Agent shall not be responsible for the correctness of the
recitals and statements herein which are made by the Pledgor or for any
statement or certificate delivered by the Pledgor pursuant hereto. Except as
specifically provided herein, the Collateral Agent shall not be responsible for
the validity, sufficiency, collectibility or marketability of any Collateral
given to or held by it hereunder or for the validity or sufficiency of the
Forward Contract or the Lien on the Collateral purported to be created hereby.
(b) Knowledge. The Collateral Agent shall not be deemed to have knowledge
of any Event of Default (except a Collateral Event of Default), unless and
until a Responsible Officer of the Collateral Agent shall have actual knowledge
thereof or shall have received written notice thereof.
(c) Merger. Any corporation or association into which the Collateral Agent
may be converted or merged, or with which it may be consolidated, or to which
it may sell or transfer its agency business and assets as a whole or
substantially as a whole, or any corporation or association resulting from any
such conversion, sale, merger, consolidation or transfer to which it is a
party, shall, subject to the prior written consent of the Trust, be and become
a successor Collateral Agent hereunder and vested with all of the title to the
Collateral and all of the powers, discretions, immunities, privileges and other
matters as was its predecessor without, except as provided above, the execution
or filing of any instrument or any further act, deed or conveyance on the part
of any of the parties hereto, anything herein to the contrary notwithstanding.
(d) Resignation. The Collateral Agent and any successor Collateral Agent
may at any time resign by giving 30 days' written notice by registered or
certified mail to the Pledgor and notice to the Trust in accordance with the
provisions of Section 10(d) hereof. Such resignation shall take effect upon the
appointment of a successor Collateral Agent by the Trust.
(e) Removal. The Collateral Agent may be removed at any time by an
instrument or concurrent instruments in writing delivered to the Collateral
Agent and to the Pledgor and signed by the Trust.
(f) Appointment of Successor. (1) If the Collateral Agent hereunder shall
resign or be removed, or be dissolved or shall be in the course of dissolution
or liquidation or
19
otherwise become incapable of action hereunder, or if it shall be taken under
the control of any public officer or officers or of a receiver appointed by a
court, a successor may be appointed by the Trust by an instrument or concurrent
instruments in writing signed by the Trust or by its attorneys in fact fully
authorized, a copy of such instrument or concurrent instruments shall be sent
by registered mail to the Pledgor.
(2) Every such temporary or permanent successor Collateral Agent
appointed pursuant to the provisions hereof shall be a trust company or
bank in good standing, having a reported capital and surplus of not less
than $100,000,000 and capable of holding the Collateral in the State of
New York, if there be such an institution willing, qualified and able to
accept the duties of the Collateral Agent hereunder upon customary terms.
(g) Acceptance by Successor. Every temporary or permanent successor
Collateral Agent appointed hereunder shall execute, acknowledge and deliver to
its predecessor and also to the Pledgor an instrument in writing accepting such
appointment hereunder, whereupon such successor, without any further act, deed
or conveyance, shall become fully vested with all the estates, properties,
rights, powers, duties and obligations of its predecessors. Such predecessor
shall, nevertheless, on the written request of its successor or the Pledgor,
execute and deliver an instrument transferring to such successor all the
estates, properties, rights and powers of such predecessor hereunder. Every
predecessor Collateral Agent shall deliver all Collateral held by it as the
Collateral Agent hereunder to its successor. Should any instrument in writing
from the Pledgor be reasonably required by a successor Collateral Agent for
more fully and certainly vesting in such successor the estates, properties,
rights, powers, duties and obligations hereby vested or intended to be vested
in the predecessor, any and all such instruments in writing shall, at the
request of the temporary or permanent successor Collateral Agent, be forthwith
executed, acknowledged and delivered by the Pledgor.
10. Miscellaneous.
(a) Benefit of Agreement; Successors and Assigns. Whenever any of the
parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party. All the covenants and agreements herein
contained by or on behalf of the Pledgor and the Collateral Agent shall bind,
and inure to the benefit of, their respective successors and assigns whether so
expressed or not, and shall be enforceable by and inure to the benefit of the
Trust and its successors and assigns.
(b) Separability. To the extent permitted by law, the unenforceability or
invalidity of any provision or provisions of this Collateral Agreement shall
not render any other provision or provisions herein contained unenforceable or
invalid.
(c) Amendments and Waivers. Any term, covenant, agreement or condition of
this Collateral Agreement may be amended or compliance therewith may be waived
(either generally or in a particular instance and either retrospectively or
prospectively) but only by a writing signed by the Collateral Agent, the
Pledgor and the Trust.
20
(d) Notices.
(1) Any notice provided for herein, unless otherwise specified, shall
be in writing (including transmittals by telex or telecopier) and shall be
given to a party at the address set forth opposite such party's name on
the signature pages hereto or at such other address as may be designated
by notice duly given in accordance with this Section 10(d) to each other
party hereto.
(2) Each such notice given pursuant to paragraph (1) shall be
effective (i) if sent by certified mail (return receipt requested), 72
hours after being deposited in the United States mail, postage prepaid;
(ii) if given by telex or telecopier, when such telex or telecopied notice
is transmitted; or (iii) if given by any other means, when delivered at
the address specified in this Section 10(d).
(e) Governing Law. This Collateral Agreement shall in all respects be
construed in accordance with and governed by the laws of the State of New York;
provided that as to Pledged Items located in any jurisdiction other than the
State of New York, the Collateral Agent on behalf of the Trust shall have all
of the rights to which a secured party is entitled under the laws of such other
jurisdiction.
(f) Counterparts. This Collateral Agreement may be executed, acknowledged
and delivered in any number of counterparts and such counterparts taken
together shall constitute one and the same instrument.
(g) Application of Bankruptcy Code. The parties hereto acknowledge and
agree that the Collateral Agent is a "financial institution" within the meaning
of Section 101(22) of the Bankruptcy Code and is acting as agent and custodian
for the Trust in connection with the Forward Contract and that the Trust is a
"customer" of the Collateral Agent within the meaning of said Section 101(22).
(h) WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE
PARTIES HERETO HEREBY WAIVE AND COVENANT THAT THEY WILL NOT ASSERT (WHETHER AS
PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN
RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING OUT OF
OR BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF, IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING OR WHETHER IN CONTRACT OR TORT OR OTHERWISE.
EACH PARTY HERETO ACKNOWLEDGES THAT IT OR HE HAS BEEN INFORMED BY THE OTHER
PARTY HERETO THAT THE PROVISIONS OF THIS SECTION CONSTITUTE A MATERIAL
INDUCEMENT UPON WHICH SUCH OTHER PARTY HERETO HAS RELIED, IS RELYING AND WILL
RELY IN ENTERING INTO THIS AGREEMENT AND ANY DOCUMENT RELATED THERETO. EACH
PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OF THIS SECTION WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE OTHER PARTY HERETO TO THE WAIVER OF ITS
RIGHTS TO TRIAL BY JURY.
11. Termination of Collateral Agreement.
21
This Collateral Agreement and the rights hereby granted by the Pledgor in
the Collateral shall cease, terminate and be void upon fulfillment of all of
the obligations of the Pledgor under the Forward Contract, and the Pledgor
shall have no further liability hereunder upon such termination. Any Collateral
remaining at the time of such termination shall be fully released and
discharged from the Lien hereof and delivered to the Pledgor by the Collateral
Agent, all at the expense of the Pledgor.
12. No Personal Liability of Trustees.
By executing this Collateral Agreement none of the Trustees assumes any
personal liability hereunder.
22
IN WITNESS WHEREOF, each of the Pledgor, the Collateral Agent and the
Trust has caused this Collateral Agreement to be duly executed on its behalf as
of the date hereof.
PLEDGOR:
AT&T BROADBAND CSC HOLDINGS, INC.
By:
-----------------------------
Name:
Title:
Address for Notices:
COPY TO
Davis Polk and Wardwell
450 Lexington Avenue
New York, New York 10017
Fax. No. (212) 450-6862
Attention: John Brandow
THE TRUST:
EQUITY SECURITIES TRUST I
By:
------------------------------
Donald J. Puglisi,
as Managing Trustee
Address for Notices:
c/o Puglisi & Associates
850 Library Avenue - Suite 204
Newark, DE 19711
Attention: Donald J. Puglisi
COLLATERAL AGENT:
THE BANK OF NEW YORK
as Collateral Agent
By:
------------------------------
Name:
Title:
Address for Notices:
5 Penn Plaza, 13th floor
New York, NY 10001
Attention: Betty Cocozza
2
Exhibit A
to
Collateral Agreement
CERTIFICATE FOR SUBSTITUTED COLLATERAL
The undersigned, _____________ (the "Pledgor"), hereby certifies, pursuant to
Section 6(b) of the Collateral Agreement dated as of October 23, 2001 among the
Pledgor, The Bank of New York, as Collateral Agent, and Equity Securities Trust
I (the "Collateral Agreement"; terms defined in the Collateral Agreement being
used herein as defined therein), that:
1. The Pledgor is delivering the following securities to the Collateral
Agent to be held by the Collateral Agent as substituted Collateral (the
"Substituted Collateral"):
2. The Pledgor requests that the Collateral Agent transfer to the Pledgor
the following Prior Collateral, pursuant to Section 6(b) of the Collateral
Agreement:
3. The Pledgor hereby represents and warrants to the Collateral Agent and
the Trust that:
(a) Consents to Transfer. No Transfer Restrictions exist with respect
to or otherwise apply to the assignment of, or transfer by the Pledgor of
possession of, any items of Substituted Collateral to the Collateral Agent
under the Collateral Agreement, or the subsequent sale or transfer of such
items of Substituted Collateral by the Collateral Agent pursuant to the
terms of the Collateral Agreement.
(b) Title to Collateral; Perfected Security Interest. The Pledgor has
good and marketable title to the Substituted Collateral, free of all Liens
(other than the Lien created by the Collateral Agreement) and Transfer
Restrictions. Upon delivery of the Collateral to the Collateral Agent, the
Collateral Agent will obtain a valid, first priority perfected security
interest in, and a first lien upon, such Substituted Collateral subject to
no other Lien. None of such Substituted Collateral is or shall be pledged
by the Pledgor as collateral for any other purpose.
This Certificate may be relied upon by the Trust as fully and to the same
extent as if this Certificate had been specifically addressed to the Trust.
A-1
IN WITNESS WHEREOF, the undersigned has executed this Certificate this
_____ day of ______, 200_.
---------------------------------
Name:
Title:
A-2
Exhibit B
to
Collateral Agreement
CERTIFICATE FOR ADDITIONAL GOVERNMENT SECURITIES
The undersigned, __________________ (the "Pledgor"), hereby certifies,
pursuant to Section 6(c) of the Collateral Agreement, dated as of October 23,
2001, among the Pledgor, The Bank of New York, as Collateral Agent, and Equity
Securities Trust I (the "Collateral Agreement"; terms defined in the Collateral
Agreement being used herein as defined therein), that:
1. The Pledgor is delivering the following securities to the Collateral
Agent to be held by the Collateral Agent as Collateral deliverable in
connection with Pledgor's option to extend the Exchange Date in accordance with
Section 1.3(f) of the Forward Contract (the "Additional Government
Securities"):
2. The Pledgor hereby represents and warrants to the Collateral Agent
that:
(a) Consents to Transfer. No Transfer Restrictions exist with respect
to or otherwise apply to the assignment of, or transfer by the Pledgor of
possession of, any items of Additional Government Securities to the
Collateral Agent under the Collateral Agreement, or the subsequent sale or
transfer of such items of Additional Government Securities by the
Collateral Agent pursuant to the terms of the Collateral Agreement.
(b) Title to Collateral; Perfected Security Interest. The Pledgor has
good and marketable title to the Additional Government Securities, free of
all Liens (other than the Lien created by the Collateral Agreement) and
Transfer Restrictions. Upon delivery of the Collateral to the Collateral
Agent, the Collateral Agent will obtain a valid, first priority perfected
security interest in, and a first lien upon, such Additional Government
Securities subject to no other Lien. None of such Additional Government
Securities is or shall be pledged by the Pledgor as collateral for any
other purpose.
This Certificate may be relied upon by the Trust as fully and to the same
extent as if this Certificate had been specifically addressed to the Trust.
B-1
IN WITNESS WHEREOF, the undersigned has executed this Certificate this
_____ day of _____, 200_.
---------------------------------
Name:
Title:
Exhibit C
to
Collateral Agreement
CERTIFICATE FOR ADDITIONAL COLLATERAL
The undersigned, __________________ (the "Pledgor"), hereby certifies,
pursuant to Section 6(c) of the Collateral Agreement, dated as of October 23,
2001, among the Pledgor, The Bank of New York, as Collateral Agent, and Equity
Securities Trust I (the "Collateral Agreement"; terms defined in the Collateral
Agreement being used herein as defined therein), that:
1. The Pledgor is delivering the following securities to the Collateral
Agent to be held by the Collateral Agent as additional Collateral (the
"Additional Collateral"):
2. The Pledgor hereby represents and warrants to the Collateral Agent
that:
(a) Consents to Transfer. No Transfer Restrictions exist with respect
to or otherwise apply to the assignment of, or transfer by the Pledgor of
possession of, any items of Additional Collateral to the Collateral Agent
under the Collateral Agreement, or the subsequent sale or transfer of such
items of Additional Collateral by the Collateral Agent pursuant to the
terms of the Collateral Agreement.
(b) Title to Collateral; Perfected Security Interest. The Pledgor has
good and marketable title to the Additional Collateral, free of all Liens
(other than the Lien created by the Collateral Agreement) and Transfer
Restrictions. Upon delivery of the Collateral to the Collateral Agent, the
Collateral Agent will obtain a valid, first priority perfected security
interest in, and a first lien upon, such additional Collateral subject to
no other Lien. None of such Additional Collateral is or shall be pledged
by the Pledgor as collateral for any other purpose.
This Certificate may be relied upon by the Trust as fully and to the same
extent as if this Certificate had been specifically addressed to the Trust.
C-1
IN WITNESS WHEREOF, the undersigned has executed this Certificate this
_____ day of _____, 200_.
---------------------------------
Name:
Title:
C-2
EXECUTION VERSION
COLLATERAL AGREEMENT
Among
AT&T BROADBAND CSC II, INC.
As Pledgor,
THE BANK OF NEW YORK, As Collateral Agent
and
EQUITY SECURITIES TRUST I
Dated as of
October 23, 2001
The following Table of Contents has been inserted for convenience of
reference only and does not constitute a part of the Collateral Agreement.
TABLE OF CONTENTS
SECTION
1. The Security Interests................................................1
2. Definitions...........................................................2
3. Representations and Warranties of the Pledgor.........................6
4. Representations and Warranties of the Collateral Agent................7
5. Certain Covenants of the Pledgor......................................8
6. Administration of the Collateral and Valuation of the Securities......9
7. Income and Voting Rights on Collateral...............................14
8. Remedies upon Events of Default......................................15
9. The Collateral Agent.................................................17
10. Miscellaneous........................................................20
11. Termination of Collateral Agreement..................................21
12. No Personal Liability of Trustees....................................21
Exhibit A - Certificate for Substituted Collateral
Exhibit B - Certificate for Additional Government Securities
Exhibit C - Certificate for Additional Collateral
2
COLLATERAL AGREEMENT
THIS COLLATERAL AGREEMENT (the "Agreement"), dated as of October 23, 2001,
among AT&T Broadband CSC II, Inc., a corporation organized under the laws of
the State of Delaware, (the "Pledgor"), The Bank of New York, a New York
banking corporation, as collateral agent (the "Collateral Agent") hereunder for
the benefit of Equity Securities Trust I, a statutory business trust organized
under the Business Trust Act of the State of Delaware (such trust and the
trustees thereof acting in their capacity as such being referred to herein as
the "Trust"), and the Trust;
W I T N E S S E T H:
WHEREAS, pursuant to the Forward Contract Agreement (the "Forward
Contract"), dated as of the date hereof, between Pledgor and the Trust, the
Pledgor has agreed to deliver and the Trust has agreed to acquire Cablevision
NY Group Class A common stock, or the cash value thereof, $.01 par value, of
Cablevision Systems Corporation, a Delaware corporation (the "Company"),
subject to the terms and conditions of the Forward Contract; and
NOW, THEREFORE, to secure the performance by the Pledgor of its
obligations under the Forward Contract and to secure the observance and
performance of the covenants and agreements contained herein and in the Forward
Contract, the parties hereto agree as follows:
1. The Security Interests.
In order to secure the observance and performance of the covenants,
agreements and obligations contained herein and in the Forward Contract:
(a) Security Interests. The Pledgor hereby grants and pledges unto the
Collateral Agent, as agent of and for the benefit of the Trust, a security
interest in and to, and a lien upon and right of set-off against, all of
Pledgor's right, title and interest in and to (i) the Pledged Items described
in paragraphs (b), (c) and (d); (ii) all additions to and substitutions for
such Pledged Items; (iii) (subject to the remittance of certain payments upon
satisfaction of the conditions specified in Section 7(a) hereof) all income,
proceeds and collections received or to be received, or derived or to be
derived, now or any time hereafter from or in connection with the Pledged Items
(whether such proceeds arise before or after the commencement of any proceeding
under any applicable bankruptcy, insolvency or other similar law, by or against
the Pledgor with respect to the Pledgor); and (iv) all powers and rights now
owned or hereafter acquired under or with respect to the Pledged Items (such
Pledged Items, additions, substitutions, income, proceeds, collections, powers
and rights being herein collectively called the "Collateral"). The Collateral
Agent shall have all of the rights, remedies and recourses with respect to the
Collateral afforded a secured party by the New York Uniform Commercial Code, in
addition to, and not in limitation of, the other rights, remedies and recourses
afforded to the Collateral Agent by this Agreement.
(b) Firm Payment Date. At the Firm Payment Date, the Pledgor shall deliver
to the Collateral Agent in pledge hereunder one or more certificates in
registered form representing in the aggregate 2,416,003 shares of Common Stock,
indorsed in blank or in the
name of the Collateral Agent for the benefit of the Trust (together with all
signature guarantees and other documents necessary to permit the Collateral
Agent to effect the re-registration of such Common Stock without further action
by the Pledgor) or, if such Common Stock is not issuable in certificated form
but is held in book entry form by The Depository Trust Company, the Pledgor
shall transfer such number of shares of Common Stock to an account of the
Collateral Agent or to an account (other than an account of the Pledgor)
designated by the Collateral Agent with The Depository Trust Company.
(c) Option Closing Date. Effective upon and subject to the receipt by the
Pledgor of the Additional Contract Price, at the Option Closing Date, the
Pledgor shall deliver to the Collateral Agent in pledge hereunder one or more
certificates in registered form representing in the aggregate a number of
shares of Common Stock equal to the Additional Share Base Amount, indorsed in
blank or in the name of the Collateral Agent for the benefit of the Trust
(together with all signature guarantees and other documents necessary to permit
the Collateral Agent to effect the re-registration of such Common Stock without
further action by the Pledgor) or, if such Common Stock is not issuable in
certificated form but is held in book entry form by The Depository Trust
Company, the Pledgor shall transfer such number of shares of Common Stock to an
account of the Collateral Agent or to an account (other than an account of the
Pledgor) designated by the Collateral Agent with The Depository Trust Company.
(d) Extension of Exchange Date. If AT&T Broadband CSC Holdings, Inc.
("Holdings") elects to extend the Exchange Date under the Forward Contract,
dated as of the date hereof by and between the Trust and Holdings (the
"Holdings Forward Contract"), the Pledgor shall deliver to the Collateral Agent
in pledge hereunder Additional Government Securities meeting the requirements
of Section 1.3(f) of the Holdings Forward Contract.
2. Definitions.
Capitalized terms used and not otherwise defined herein shall have the
meanings ascribed to them in the Forward Contract. Capitalized terms used
herein shall have the meanings as follows:
"Additional Government Securities" means collateral that must be pledged
to the Collateral Agent in connection with Holdings' election to extend the
Exchange Date under the Holdings Forward Contract and, consisting of U.S.
Government Securities which through the scheduled payment of principal and
interest in accordance with their terms will provide, not later than one
Business Day before the extended Exchange Date, money in an amount not less
than the Extension Amount.
"Authorized Representative" of the Pledgor means any trustee, officer or
other representative as to whom Pledgor shall have delivered notice to the
Collateral Agent that such trustee or other representative is authorized to act
hereunder on behalf of Pledgor.
"Business Day" means any day except a Saturday, Sunday or other day on
which banking institutions in New York City are authorized or obligated by law
or regulation to close or a day on which the New York Stock Exchange, Inc. is
closed.
2
"Cash Delivery Obligations" means, at any time (A) if no Adjustment Event
shall have occurred prior to such time, zero, and (B) from and after the
occurrence of any Adjustment Event, (i) the Firm Share Base Amount plus the
Additional Share Base Amount (if any) multiplied by (ii) the Transaction Value
of any property other than Reported Securities received by the Pledgor in such
Adjustment Event, multiplied successively by each number by which the Exchange
Rate shall have been multiplied on or prior to the Adjustment Event pursuant to
the adjustments provided for under Section 6.1 of the Forward Contract;
provided, however, that upon the occurrence of an Adjustment Event in
connection with which holders of Common Stock receive consideration other than
Reported Securities with a Transaction Value of 25% or more of the Aggregate
Transaction Value for such Adjustment Event, then the Cash Delivery Obligations
shall be zero.
"Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof (provided that the full faith and credit
of the United States is pledged in support thereof) having maturities of not
more than six months from the date of acquisition, (iii) certificates of
deposit with maturities of six months or less from the date of the acquisition,
bankers' acceptances with maturities not exceeding six months and overnight
bank deposits, in each case with any domestic commercial bank having capital
and surplus in excess of $500 million and a Thompson Bank Watch Rating of "B"
or better, (iv) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clause (ii) above entered
into with any financial institution meeting the qualifications specified in
clause (iii) above, (v) commercial paper having the highest rating obtainable
from Moody's Investors Service, Inc. or Standard & Poor's Ratings Group and in
each case maturing within six months after the date of acquisition and (vi)
money market funds at least 95% of the assets of which constitute Cash
equivalents of the kinds described in clauses (i)-(v) of this definition.
"Collateral" has the meaning specified in Section 1(a).
"Collateral Agent" means the financial institution identified as such in
the preliminary paragraph hereof, or any successor appointed in accordance with
Section 9.
"Collateral Agreement" means this Collateral Agreement and any exhibits
hereto.
"Collateral Event of Default" has the meaning specified in Section 6(e).
"Collateral Requirement" means, as of any date and with respect to: (i)
any Common Stock, 100%; (ii) any Reported Securities, 100%; (iii) any U.S.
Government Securities or Cash Equivalents pledged in respect of Cash Delivery
Obligations, 105%; (iv) any other U.S. Government Securities or Cash
Equivalents (other than Additional Government Securities), 150%, provided that
upon and after any failure to cure an Insufficiency Determination by 4:00 p.m.
New York City time on the Business Day following telephonic notice of such
Insufficiency Determination as described in Section 6(e), which insufficiency
shall be continuing on such Business Day, the Collateral Requirement relating
to any U.S. Government Securities or Cash Equivalents (other than (i)
Additional Government Securities and (ii) U.S. Government Securities or Cash
Equivalents pledged in respect of Cash Delivery Obligations) shall be 200%; and
(v) any Additional Government Securities, 100%. The portion of any pledged U.S.
3
Government Securities or Cash Equivalents that shall be deemed at any time to
be in respect of Cash Delivery Obligations shall be as provided in Section
6(e).
"Common Stock" means the Cablevision NY Group Class A common stock of
Cablevision Systems Corporation, par value $.01 per share.
"Delivery Date" has the meaning specified in Section 8(a).
"Eligible Collateral" means (i) Common Stock, (ii) U.S. Government
Securities, (iii) Cash Equivalents, (iv) from and after Holdings' election to
extend the Exchange Date pursuant to Section 1.3(f) of the Holdings Forward
Contract, Additional Government Securities, and (v) from and after any
Adjustment Event, Reported Securities, provided, in each case, that (A) the
Pledgor has good and marketable title thereto, free of all Liens (other than
the Liens created by this Collateral Agreement) and Transfer Restrictions
except as contemplated by Section 3(e) and (B) the Collateral Agent has a
valid, first priority perfected security interest therein and first lien
thereon, and provided further that to the extent the number of shares of Common
Stock or Reported Securities pledged hereunder exceeds at any time the Maximum
Deliverable Number thereof, such excess shares shall not be Eligible
Collateral.
"Event of Default" means the occurrence of: (i) an event described in
clause (a) or (b) of Article VII of the Forward Contract, (ii) a Collateral
Event of Default, (iii) a failure by Pledgor to have caused the Collateral to
meet the requirements described in Section 5(d), (iv) if an Adjustment Event
shall have occurred prior to the Exchange Date, failure by Pledgor to cause to
be delivered to the Trust on the Exchange Date the consideration then required
to be delivered pursuant to Section 6.2 of the Forward Contract or (v) if
Holdings shall have exercised the Cash Delivery Option, a failure by the
Pledgor to deliver cash on the Exchange Date in the amount required under
Section 1.3(d) of the Holdings Forward Contract.
"Ineligible Collateral" means Collateral that does not constitute
"Eligible Collateral".
"Insufficiency Determination" has the meaning specified in Section 6(e).
"Lien" means any lien, mortgage, security interest, pledge, charge or
encumbrance of any kind.
"Market Value" means, as of any date: (a) with respect to any Common Stock
(except as otherwise provided in Section 6(e)(2)), the Closing Price of the
Common Stock on such date; (b) with respect to any U.S. Government Security,
(x)(i) the average unit bid price for such security on the Trading Day prior to
such date as published in the New York edition of The Wall Street Journal or
The New York Times or, if not so published, (ii) the lower bid price quoted
(which quotation shall be evidenced in writing) on such date (or if such date
is not a Trading Day, on the preceding Trading Day) by either of two nationally
recognized dealers making a market in such security which are members of the
National Association of Securities Dealers, Inc. multiplied by (y) the number
of such units comprised in the outstanding principal amount of such U.S.
Government Security; (c) with respect to any unit of Reported Securities, the
Closing Price thereof on such date; provided that the "Market Value" of any
Ineligible
4
Collateral shall be zero; and (d) with respect to any Cash Equivalent, the face
value of such instrument.
"Maximum Deliverable Number" means, on any date, with respect to the
Common Stock, the product of the Firm Share Base Amount plus the Additional
Share Base Amount (if any), multiplied successively by each number by which the
Exchange Rate shall have been multiplied on or prior to such date pursuant to
the adjustments provided for under Article VI of the Forward Contract. The
Maximum Deliverable Number of Reported Securities means, on any date, (i) the
Firm Share Base Amount plus the Additional Share Base Amount (if any)
multiplied by (ii) the number of Reported Securities received by the Pledgor in
the Adjustment Event for each share of Common Stock, multiplied successively by
each number by which the Exchange Rate shall have been multiplied on or prior
to such date and after the date of such Adjustment Event pursuant to the
adjustments provided for under Article VI of the Forward Contract.
"Person" means an individual, a corporation, a partnership, an
association, a limited liability company, a trust or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"Pledge Value" means, as of any date and with respect to any particular
type of Collateral, an amount equal to the aggregate Market Value of such
Collateral divided by the Collateral Requirement for such Collateral.
"Pledge Value Requirement" means, as of any date, (a) the aggregate Market
Value on such date of the Maximum Deliverable Number of shares of Common Stock
or, from and after an Adjustment Event, Reported Securities, on such date plus
(b) from and after an Adjustment Event, the Cash Delivery Obligations plus (c)
from and after Holdings' extension of the Exchange Date pursuant to Section
1.3(f) of the Holdings Forward Contract, the aggregate Market Value on such
date of the Additional Government Securities.
"Pledged Items" means, as of any date, any and all securities and
instruments delivered by the Pledgor to be held by the Collateral Agent under
this Collateral Agreement as Collateral, whether Eligible Collateral or
Ineligible Collateral.
"Prior Collateral" has the meaning specified in Section 6(b)(1).
"Responsible Officer" means, when used with respect to the Collateral
Agent, any vice president, assistant vice president, assistant treasurer or
assistant secretary located in the division or department of the Collateral
Agent responsible for performing the obligations of the Collateral Agent under
this Collateral Agreement, or in any other division or department of the
Collateral Agent performing operations substantially equivalent to those
performed by such division or department pursuant hereto, or any other officer
of the Collateral Agent or any successor Collateral Agent customarily
performing functions similar to those performed by any of the aforesaid
officers, and also means, with respect to any matter relating to this
Collateral Agreement or the Collateral, any other officer to whom such matter
is referred because of his knowledge of and familiarity with the particular
subject.
5
"Transfer Restriction" means, with respect to any item of Collateral, any
condition to or restriction on the ability of the holder thereof to sell,
assign or otherwise transfer such item of Collateral to the Trust or to enforce
the provisions thereof or of any document related thereto whether set forth in
such item of Collateral itself or in any document related thereto, including,
without limitation, (i) any requirement that any sale, assignment or other
transfer or enforcement of such item of Collateral be consented to or approved
by any Person, including, without limitation, the issuer thereof or any other
obligor thereon, (ii) any limitations on the type or status, financial or
otherwise, of any purchaser, pledgee, assignee or transferee of such item of
Collateral, (iii) any requirement of the delivery of any certificate, consent,
agreement, opinion of counsel, notice or any other document of any Person to
the issuer of, any other obligor on or any registrar or transfer agent for,
such item of Collateral, prior to the sale, pledge, assignment or other
transfer or enforcement of such item of Collateral and (iv) any registration or
qualification requirement for such item of Collateral pursuant to any federal
or state securities law; provided that the required delivery of any assignment
from the seller, pledgor, assignor or transferor of such item of Collateral,
together with any evidence of the corporate or other authority of such Person,
shall not constitute a "Transfer Restriction."
"Trustee" or "Trustees" means any trustee or trustees of the Trust
identified on the signature pages hereto, or any successor as such trustee or
trustees.
"UCC" means the Uniform Commercial Code as in effect in the State of New
York.
"U.S. Government Securities" means direct obligations of the United States
of America that mature on a date that is one year or less from the date such
obligations are pledged hereunder, but in any event prior to the Exchange Date
(or the extended Exchange Date in the case of Additional Government Securities
pledged in connection with an extension of the Exchange Date pursuant to
Section 1.3(f) of the Holdings Forward Contract).
3. Representations and Warranties of the Pledgor.
The Pledgor hereby represents and warrants to the Collateral Agent and the
Trust that:
(a) Power. The Pledgor has full power and authority to execute and
deliver this Collateral Agreement and to perform and observe the
provisions hereof;
(b) Non-Contravention. The execution, delivery and performance by the
Pledgor of this Collateral Agreement do not and will not violate,
contravene or constitute a default under any provision of applicable law
or regulation or of any material agreement, judgment, injunction, order,
decree or other instrument binding upon the Pledgor. The Pledgor is not in
default under any material agreement by which the Collateral may be bound
and no litigation, arbitration or administrative proceedings are current
or pending, which default, litigation, arbitration or administrative
proceedings are material to the Collateral in the context of this
Collateral Agreement.
(c) Binding Effect. This Collateral Agreement constitutes a valid and
binding agreement of the Pledgor enforceable against the Pledgor in
accordance with its
6
terms except as such enforceability may be limited by applicable
bankruptcy, insolvency and similar laws affecting creditors' rights
generally and by general equitable principles.
(d) Solvency. The Pledgor is presently solvent and able to pay, and
paying its debts as they become due, and anticipates that it will continue
to be able to pay its debts as they become due for the foreseeable future.
(e) No Transfer Restrictions. Except for (i) any legend with respect
to restrictions pursuant to applicable federal and state securities laws
on transfer of the Common Stock pledged by the Pledgor hereunder which
appears on the certificates representing such Common Stock (and which (A)
will not be applicable to the delivery of any such Common Stock to the
Trust pursuant to the Forward Contract and this Agreement or to the
delivery of any such Common Stock by the Trust to the holders of Equity
Trust Securities pursuant to the Equity Trust Securities and (B) will be
removed at the request of the Collateral Agent to the transfer agent for
the Common Stock prior to any such delivery to the holders of Equity Trust
Securities) and (ii) any restrictions on the Common Stock pursuant to the
Stockholders Agreement, dated as of March 4, 1998, as amended by the
Letter Agreements dated August 8, 2001, September 10, 2001 and October 5,
2001 (which such Agreement, as amended, shall not have any effect on the
Common Stock pledged hereunder for so long as the Common Stock remains
pledged pursuant to the terms of this Agreement and when such Common Stock
is delivered by the Collateral Agent to the Trust on the Exchange Date or
in connection with the occurrence of an Event of Default), no Transfer
Restrictions exist with respect to or otherwise apply to the assignment
of, or transfer by the Pledgor of possession of, any items of Collateral
to the Collateral Agent hereunder, or the subsequent sale or transfer of
such items of Collateral by the Collateral Agent pursuant to the terms
hereof.
(f) Title to Collateral; Perfected Security Interest. The Pledgor has
good and marketable title to the Pledged Items, free of all Liens (other
than the Lien created by this Collateral Agreement) and Transfer
Restrictions (except for any restrictions as contemplated in Section 3(e)
hereof). Upon delivery or transfer of the Pledged Items described in
paragraph (b), (c) and (d) of Section 1 to the Collateral Agent hereunder,
the Collateral Agent will obtain a valid and, to the extent perfection can
be obtained under the UCC, first priority perfected security interest in,
and a first lien upon, such Pledged Items subject to no other Lien. None
of the Collateral is or shall be pledged by the Pledgor as collateral for
any other purpose.
4. Representations and Warranties of the Collateral Agent.
The Collateral Agent represents and warrants to the Pledgor and the Trust
that:
(a) Corporate Existence and Power. The Collateral Agent is a banking
corporation, duly incorporated, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, and has all
corporate powers and all material governmental licenses, authorizations,
consents and approvals required to enter into, and perform its obligations
under, this Collateral Agreement.
7
(b) Authorization and Non-Contravention. The execution, delivery and
performance by the Collateral Agent of this Collateral Agreement have been
duly authorized by all necessary corporate action on the part of the
Collateral Agent (no action by the shareholders of the Collateral Agent
being required) and do not and will not violate, contravene or constitute
a default under any provision of applicable law or regulation or of the
charter or by-laws of the Collateral Agent or of any material agreement,
judgment, injunction, order, decree or other instrument binding upon the
Collateral Agent.
(c) Binding Effect. This Collateral Agreement constitutes a valid and
binding agreement of the Collateral Agent enforceable against the
Collateral Agent in accordance with its terms.
5. Certain Covenants of the Pledgor.
The Pledgor agrees that, so long as any of its obligations under the
Forward Contract remain outstanding:
(a) Title to Collateral. The Pledgor shall, subject to the terms of
this Agreement, at all times hereafter have good title to the Collateral
pledged hereunder, free of all Liens (other than the Liens created by this
Collateral Agreement) and Transfer Restrictions (except for those
permitted by Section 3(e) hereof), and, subject to the terms of this
Collateral Agreement, will at all times hereafter have good, right and
lawful authority to assign, transfer and pledge such Collateral and all
such additions thereto and substitutions therefor under this Collateral
Agreement.
(b) Pledge Value Requirement. The Pledgor shall cause the aggregate
Pledge Value of the Collateral to be equal to or greater than the Pledge
Value Requirement at all times, and shall pledge additional Collateral in
the manner described in Section 6(d) as necessary to cause such
requirement to be met.
(c) Pledge upon Adjustment Event. Upon the occurrence of an
Adjustment Event, the Pledgor shall immediately cause to be delivered to
the Collateral Agent, in the manner provided in Section 6(d): (i) U.S.
Government Securities or Cash Equivalents (other than cash) having an
aggregate Market Value at least equal to 105% of the Cash Delivery
Obligations, if any, or at Pledgor's election, U.S. dollars in an amount
equal to at least 100% of the Cash Delivery Obligations, if any; and (ii)
Reported Securities in an amount at least equal to the Maximum Deliverable
Number thereof (if any), or, at Pledgor's election, U.S. Government
Securities or Cash Equivalents having an aggregate Market Value at least
equal to 150% of such Maximum Deliverable Number of Reported Securities;
in each case to be held as substitute or additional Collateral hereunder.
(d) Composition of Pledged Items. Notwithstanding Pledgor's right to
substitute Collateral pursuant to Section 6(b), the Pledgor shall cause
the Collateral to include, on the Exchange Date, unless Pledgor shall have
exercised its Cash Delivery Option, a number of shares of Common Stock
(and/or, if an Adjustment Event shall have occurred, Reported Securities)
at least equal to the number of shares of Common Stock (and/or, if an
Adjustment Event shall have
8
occurred, Reported Securities) required to be delivered under the Forward
Contract on the Exchange Date. If Holdings shall have extended the
Exchange Date pursuant to Section 1.3(f) of the Holdings Forward Contract,
the Pledgor shall cause Collateral for Pledgor's obligations to deliver
the Extension Amount to consist entirely of Additional Government
Securities.
(e) Further Assurances. The Pledgor shall, at its expense and in such
manner and form as the Trust or the Collateral Agent may reasonably
require, give, execute, deliver, file and record any financing statement,
notice, instrument, document, agreement or other papers that may be
necessary in order to create, preserve, perfect, substantiate or validate
any security interest granted pursuant hereto or to enable the Collateral
Agent to exercise and enforce its rights and the rights of the Trust
hereunder with respect to such security interest. To the extent permitted
by applicable law, the Pledgor hereby authorizes the Collateral Agent to
execute and file, in the name of the Pledgor or otherwise, Uniform
Commercial Code financing or continuation statements (which may be carbon,
photographic, photostatic or other reproductions of this Agreement or of a
financing statement relating to this Agreement) which the Collateral Agent
may reasonably deem necessary or appropriate to further perfect, or
maintain the perfection of the security interests granted hereby.
(f) The Pledgor shall not consolidate with or merge with or into, or
transfer all or substantially of its assets to, any other Person unless:
(i) either (x) the Pledgor shall be the resulting or surviving
entity or (y) such other Person is an entity organized and existing
under the laws of the United States, a State thereof or the District
of Columbia, such other Person expressly assumes by supplemental
agreement executed and delivered to the Trust, in form satisfactory
to counsel to the Trust, all the obligations of the Pledgor under the
Underwriting Agreement, Collateral Agreement, the Reimbursement
Agreement, and this Agreement (in which case all such obligations of
the Pledgor shall terminate); and
(ii) the Pledgor shall deliver to the Trust prior to the
proposed transaction an Officer's Certificate and an Opinion of
Counsel, each of which shall state that such consolidation, merger or
transfer and such supplemental agreement comply with this Section
5(f) and that all conditions precedent herein provided for relating
to such transaction have been complied with.
Upon any consolidation or merger, or any transfer of all or
substantially all of the assets of the Pledgor in accordance with
this Section 5(f), the successor entity formed by such consolidation
or into which the Pledgor is merged or to which such transfer is made
shall succeed to, and be substituted for, and may exercise every
right and power of the Pledgor under this Agreement with the same
effect as if such successor entity had been named as the Pledgor
herein, and the predecessor entity, shall be relieved of any further
obligation under this Agreement.
9
6. Administration of the Collateral and Valuation of the Securities.
(a) Valuation of Collateral. The Collateral Agent shall determine on each
Business Day whether the Pledge Value is at least equal to the Pledge Value
Requirement and whether an Insufficiency Determination or Collateral Event of
Default shall have occurred and, from and after any substitution of U.S.
Government Securities or Cash Equivalents for pledged Common Stock or Reported
Securities pursuant to paragraph (b) of this Section 6, shall determine the
Pledge Value on each Business Day and shall provide written notice of the
Pledge Value to the Pledgor.
(b) Substitution of Collateral. The Pledgor may substitute Collateral in
accordance with the following provisions:
(1) Unless an Event of Default or a failure by the Pledgor to meet
any of its obligations under Section 5(b) or (c) hereof has occurred and
is continuing, the Pledgor shall have the right at any time and from time
to time to deposit Eligible Collateral with the Collateral Agent in
substitution for Pledged Items previously deposited hereunder ("Prior
Collateral") and to obtain the release from the Lien hereof of such Prior
Collateral.
(2) If the Pledgor wishes to deposit Eligible Collateral with the
Collateral Agent in substitution for Prior Collateral, the Pledgor shall
(i) give written notice to the Collateral Agent identifying the Prior
Collateral to be released from the Lien hereof, and (ii) deliver to the
Collateral Agent concurrently with such Eligible Collateral a certificate
of the Pledgor substantially in the form of Exhibit A hereto and dated the
date of such delivery, (A) identifying the items of Eligible Collateral
being substituted for the Prior Collateral and the Prior Collateral that
is to be transferred to the Pledgor and (B) certifying that the
representations and warranties contained in such Exhibit A hereto are true
and correct on and as of the date thereof. The Pledgor hereby covenants
and agrees to take all actions required under Section 6(d) and any other
actions necessary to create for the benefit of the Collateral Agent a
valid, first priority perfected security interest in, and a first lien
upon, such Eligible Collateral deposited with the Collateral Agent in
substitution for Prior Collateral.
(3) No such substitution shall be made unless and until the
Collateral Agent shall have determined that the aggregate Pledge Value of
all of the Collateral at the time of such proposed substitution, after
giving effect to the proposed substitution, shall at least equal the
Pledge Value Requirement.
(c) Additional Collateral. The Pledgor may pledge additional Collateral
(excluding Additional Government Securities) hereunder at any time and may
pledge Additional Government Securities hereunder at any time prior to or
simultaneously with Holdings' election to extend the Exchange Date pursuant to
Section 1.3(f) of the Holdings Forward Contract. Concurrently with the delivery
of any additional Eligible Collateral, the Pledgor shall deliver in the case of
Eligible Collateral consisting of Additional Government Securities, a
certificate of the Pledgor substantially in the form of Exhibit B hereto, or in
the case of all other Eligible Collateral, a certificate of the Pledgor
substantially in the form of Exhibit C hereto and dated the
10
date of such delivery, in each case (A) identifying the additional items of
Eligible Collateral being pledged and (B) certifying that with respect to such
items of additional Eligible Collateral the representations and warranties
contained in such Exhibit B or Exhibit C, as the case may be, hereto are true
and correct on and as of the date thereof. The Pledgor hereby covenants and
agrees to take all actions required under Section 6(d) and any other actions
necessary to create for the benefit of the Collateral Agent a valid, first
priority perfected security interest in, and a first lien upon, such additional
Eligible Collateral.
(d) Delivery of Collateral. The Pledgor shall deliver all Collateral to
the Collateral Agent in accordance with the following provisions:
(1) Pledged Common Stock. In the case of Collateral consisting of
Common Stock, by delivery of certificates evidencing such Common Stock,
indorsed in blank (together with all signature guarantees and any other
documents necessary to permit the Collateral Agent to effect the
re-registration thereof without further action by the Pledgor) or
registered in the name of the Collateral Agent or its nominee or, if such
Common Stock is held in book entry form by The Depository Trust Company,
by transfer to an account of the Collateral Agent or to an account (other
than an account of the Pledgor) designated by the Collateral Agent with
The Depository Trust Company;
(2) Pledged Government Securities. In the case of Collateral
consisting of U.S. Government Securities or Additional Government
Securities, by transfer thereof through the Book Entry System of the
Federal Reserve System to the account of the Collateral Agent or to an
account (other than an account of the Pledgor) designated by the
Collateral Agent; and
(3) Pledged Cash Equivalents. In the case of Collateral consisting of
Cash Equivalents under (i) of the definition of Cash Equivalents, by wire
transfer in immediately available funds to the account of the Collateral
Agent or to an account (other than an account of the Pledgor) designated
by the Collateral Agent and over which the Collateral Agent has sole
control; in the case of Collateral consisting of Cash Equivalents under
(ii) of the definition of Cash Equivalents, by transfer thereof through
the Book Entry System of the Federal Reserve System to the account of the
Collateral Agent or to an account (other than an account of the Pledgor)
designated by the Collateral Agent or, if such Cash Equivalents are held
in book entry form by The Depository Trust Company, by transfer to an
account of the Collateral Agent or to an account (other than an account of
the Pledgor) designated by the Collateral Agent with The Depository Trust
Company; in the case of Collateral consisting of Cash Equivalents under
(iv) of the definition of Cash Equivalents, by transfer of the underlying
securities to a security account maintained by the Collateral Agent with a
securities intermediary in its name, pursuant to a contract between the
Collateral Agent and a third party; and in each other case of Collateral
consisting of Cash Equivalents under the definition of Cash Equivalents,
by physically delivering certificates evidencing the Cash Equivalents
indorsed in blank (together with all documents necessary to permit the
Collateral Agent to effect the re-registration thereof without further
action by the Pledgor) or registered in the name of the Collateral Agent
issued to or otherwise payable to the Collateral Agent or its nominee or,
if such Cash Equivalents are held in book entry form by a securities
intermediary, by
11
transfer to an account of the Collateral Agent or to an Account (other
than an account of the Pledgor) designated by the Collateral Agent with
such securities intermediary, or by crediting the Cash Equivalents to a
securities account maintained by the Collateral Agent or to an account
designated by the Collateral Agent with a securities intermediary in its
name.
(4) Pledged Reported Securities. In the case of Collateral consisting
of Reported Securities, by delivery of certificates evidencing such
Reported Securities, indorsed in blank (together with all signature
guarantees and other documents necessary to permit the Collateral Agent to
effect the re-registration thereof without further action by the Pledgor)
or registered in the name of the Collateral Agent or its nominee or, if
such Reported Securities are not issuable in certificated form but are
held in book entry form by The Depository Trust Company, by transfer to an
account of the Collateral Agent or to an account (other than an account of
the Pledgor) designated by the Collateral Agent with The Depository Trust
Company.
Upon delivery of any Pledged Item under this Collateral Agreement, the
Collateral Agent shall examine such Pledged Item and any certificates delivered
pursuant to Sections 6(b), 6(c), 6(d)(3) or otherwise pursuant to the terms
hereof in connection therewith to determine that they comply as to form with
the requirements for Eligible Collateral. Immediately following an Event of
Default, the Collateral Agent shall cause all Collateral in the form of
certificates indorsed in blank to be re-registered on the books of the
applicable transfer agent into the name of the Collateral Agent or its nominee,
and shall thereafter maintain all such Collateral in such form until the
termination of this Agreement;; provided, however, that at any time following
such delivery to the Collateral Agent, the Collateral Agent may cause any such
certificates to be deposited with The Depository Trust Company and thereafter
hold such certificates in book entry form in an account (other than an account
of Pledgor) designated by the Collateral Agent. The Pledgor hereby designates
the Collateral Agent as the person in whose name any Collateral held in book
entry form in the Federal Reserve System shall be recorded.
(e) Insufficiency Determination.
(1) If on any Business Day the Collateral Agent determines that the
aggregate Pledge Value of the Collateral is less than the Pledge Value
Requirement (any such determination, an "Insufficiency Determination"),
the Collateral Agent shall, by telephone call to an Authorized
Representative of the Pledgor followed by a written confirmation of such
call, promptly notify the Pledgor of such determination and of the amount
of the insufficiency.
(2) If, by 4:00 p.m., New York City time on the Business Day
following the day on which telephonic notice shall have been given
pursuant to the preceding paragraph (e)(1), the Pledgor shall have failed
to deliver, in the manner set forth in paragraphs (c) and (d) of this
Section 6, sufficient additional Eligible Collateral so that, after giving
effect to such delivery (and taking into account that Common Stock and
Reported Securities in excess of the Maximum Deliverable Number thereof
shall not constitute Eligible Collateral), the aggregate Pledge Value of
the Collateral, as of such Business Day, is at least equal to the Pledge
Value Requirement, then (x) the Collateral
12
Requirement with respect to any U.S. Government Securities or Cash
Equivalents pledged hereunder (other than in respect of Cash Delivery
Obligations) shall be increased from 150% to 200%, and (y) unless a
Collateral Event of Default shall have occurred and be continuing, the
Collateral Agent shall:
(i) commence sales, in the manner described in paragraph (3)
below, of such portion of the Collateral consisting of U.S.
Government Securities or Cash Equivalents as may be required to be
sold in order to generate proceeds sufficient to purchase Common
Stock and/or, after an Adjustment Event, Reported Securities, as
described in the following clause (ii); and
(ii) commence purchases, in the manner described in paragraph
(3) below, of Common Stock and/or, after an Adjustment Event,
Reported Securities, in an amount sufficient to cause the aggregate
Pledge Value of the Collateral to be at least equal to the Pledge
Value Requirement.
Notwithstanding the foregoing, the Collateral Agent shall discontinue
sales and purchases pursuant to the preceding clauses (i) and (ii),
respectively, if at any time a Collateral Event of Default shall have
occurred and be continuing. The Collateral Agent shall determine the
Market Value and the Pledge Value of the Collateral after each purchase of
Common Stock or Reported Securities pursuant to the preceding clause (ii)
in order to determine whether the Pledge Value Requirement is met and
whether a Collateral Event of Default has occurred. Solely for purposes of
such calculation, the Market Value of the Common Stock or Reported
Securities shall be the most recent sales price as reported in the
composite transactions for the principal securities exchange on which the
Common Stock or Reported Securities, as the case may be, are then listed
or, if such securities are not so listed, the last quoted ask price for
such securities in the over-the-counter market as reported by The NASDAQ
National Market or, if not so reported, by the National Quotation Bureau
or a similar organization.
A "Collateral Event of Default" shall mean, at any time, the
occurrence of any of the following: (A) failure of the aggregate Market
Value of the Collateral to equal or exceed the Pledge Value Requirement;
(B) failure of the Market Value of any U.S. Government Securities and Cash
Equivalents pledged at such time (not including any (i) Additional
Government Securities or (ii) U.S. Government Securities and Cash
Equivalents pledged in respect of Cash Delivery Obligations at such time)
to have an aggregate Market Value of at least 105% of the Market Value of
a number of shares of Common Stock (or, from and after any Adjustment
Event, Reported Securities) equal to (x) the Maximum Deliverable Number
thereof minus (y) the number thereof pledged as Collateral hereunder at
such time; or (C) from and after any Adjustment Event, failure of the U.S.
Government Securities and Cash Equivalents (other than cash) pledged in
respect of Cash Delivery Obligations to have an aggregate Market Value at
least equal to 105% of the Cash Delivery Obligations at such time or, in
the case of cash pledged in respect of Cash Delivery Obligations, failure
of such cash to be at least equal to the Cash Delivery Obligations at such
time, if, in the case of a failure described in this clause (C), such
failure shall continue to be in effect at 4:00 p.m., New York City time,
on the
13
Business Day following the day on which telephonic notice in respect
thereof shall have been given pursuant to paragraph (e)(1) above. For
purposes of this Agreement, the portion of any pledged U.S. Government
Securities and Cash Equivalents that shall be deemed to be in respect of
Cash Delivery Obligations at any time shall be a portion having a Market
Value equal to 105% of the Cash Delivery Obligations at such time (or, if
less, the aggregate Market Value of all U.S. Government Securities and
Cash Equivalents pledged at such time). To the extent that any pledged
U.S. Government Securities and Cash Equivalents have a Market Value
exceeding 105%, the U.S. Government Securities shall be applied to satisfy
the 105% requirement in the first instance.
(3) Collateral sold and Common Stock or shares of Reported Securities
purchased by the Collateral Agent pursuant to the preceding paragraphs
(e)(2)(i) and (ii) may be sold and purchased on any securities exchange or
in any over-the-counter market or in any private purchase transaction, and
at such price or prices, in each case as the Collateral Agent may deem
satisfactory. The Pledgor covenants and agrees that it will execute and
deliver such documents and take such other action as the Collateral Agent
deems necessary or advisable in order that any such sales and purchases
may be made in compliance with law.
(f) Release of Excess Collateral. If on any Business Day the Collateral
Agent determines that the aggregate Pledge Value of the Pledgor's Eligible
Collateral exceeds the Pledge Value Requirement and no Event of Default or
failure by the Pledgor to meet any of its obligations under Sections 5 or 6
hereof has occurred and is continuing, the Pledgor may obtain the release from
the Lien hereof of any Collateral having an aggregate Pledge Value on such
Business Day less than or equal to such excess, upon delivery to the Collateral
Agent of a written notice from an Authorized Representative of the Pledgor
indicating the items of Collateral to be released. Such Collateral shall be
released only after the Collateral Agent shall have determined that the
aggregate Pledge Value of all of the Collateral remaining after such release as
determined on such Business Day is at least equal to the Pledge Value
Requirement.
(g) Delivery of Forward Contract Consideration. On the Exchange Date,
unless Pledgor shall have exercised its Cash Delivery Option, the Collateral
Agent shall deliver to the Trust Common Stock (or, if an Adjustment Event shall
have occurred, Reported Securities) then held by it hereunder representing the
number of shares of Common Stock (or, if an Adjustment Event shall have
occurred, Reported Securities) then required to be delivered under the Forward
Contract. Upon such delivery, the Trust shall hold such Common Stock or
Reported Securities, as the case may be, absolutely and free from any claim or
right whatsoever.
(h) Investment of Cash Collateral. The Collateral Agent shall invest any
cash received by it pursuant to Section 6.2 of the Forward Contract in direct
obligations of the United States of America maturing on or before the Exchange
Date.
7. Income and Voting Rights on Collateral.
(a) Unless an Event of Default or failure by the Pledgor to meet any of
Pledgor's obligations under Section 5(b) or (c) hereof has occurred and is
continuing, the
14
Pledgor shall be entitled to receive for Pledgor's own account all dividends,
interest and, if any, principal and premium relating to all of the Collateral,
unless the payment thereof to the Pledgor would reduce the aggregate Pledge
Value of the Collateral below the Pledge Value Requirement. The Collateral
Agent agrees to remit to the Pledgor on the Business Day received or the first
Business Day thereafter all such payments received by it. If an Event of
Default or failure by the Pledgor to meet any of its obligations under Section
5(b) or (c) hereof has occurred and is continuing, all such payments made or
accrued after and during the continuance of such Event of Default or failure
shall be retained by the Collateral Agent, and any such payments which are
received by the Pledgor shall be received in trust for the benefit of the
Trust, shall be segregated from other funds of the Pledgor and shall forthwith
be paid over to the Collateral Agent. Any such payments so retained by, or paid
over to, the Collateral Agent shall be held by the Collateral Agent as
Collateral hereunder. If any such Event of Default or failure is no longer
continuing, then the Collateral Agent shall remit any such payments that are so
retained by, or paid to it, on the first Business Day after the Collateral
Agent shall have received notice from the Trust that such Event of Default or
failure is no longer continuing, unless the payment thereof to the Pledgor
would reduce the aggregate Pledge Value of the Collateral below the Pledge
Value Requirement.
(b) Unless an Event of Default has occurred and is continuing, the Pledgor
shall have the right, from time to time, to vote and to give all approvals,
consents, ratifications and waivers with respect to the Collateral (including
all shares of Common Stock), and the Collateral Agent shall promptly deliver to
the Pledgor such proxies, powers of attorney, consents, ratifications and
waivers in respect of any of the Collateral which is registered in the name of
the Collateral Agent or its nominee and shall further deliver such documents
and instruments as shall be specified in a written request by the Pledgor.
If an Event of Default shall have occurred and be continuing, the
Collateral Agent shall have the right to the extent permitted by law, and the
Pledgor shall take all such action as may be necessary or appropriate to give
effect to such right, to vote and to give all approvals, consents,
ratifications and waivers, and take any other action with respect to any or all
of the Collateral with the same force and effect as if the Collateral Agent
were the absolute and sole owner thereof.
8. Remedies upon Events of Default.
(a) If any Event of Default shall have occurred and be continuing, the
Collateral Agent may exercise on behalf of the Trust all the rights of a
secured party under the UCC (whether or not in effect in the jurisdiction where
such rights are exercised) and, in addition, without being required to give any
notice, except as herein provided or as may be required by mandatory provisions
of law, shall: (i) deliver all Collateral consisting of Common Stock or
Reported Securities (but not, in either case, in excess of the number of shares
thereof deliverable under the Forward Contract at such time) to the Trust on
the date of the notice delivered to the Collateral Agent pursuant to the last
paragraph of Article VII of the Forward Contract relating to such Event of
Default (or, in the case of an Event of Default described in clause (iii), (iv)
or (v) of the definition thereof in this Agreement, on the Exchange Date) (in
either case, the "Delivery Date"), whereupon the Trust shall hold such Common
Stock or Reported Securities absolutely free from any claim or right of
whatsoever kind, including any
15
equity or right of redemption of the Pledgor which may be waived, and the
Pledgor, to the extent permitted by law, hereby specifically waives all rights
of redemption, stay or appraisal which Pledgor has or may have under any law
now existing or hereafter adopted; and (ii) if such delivery shall be
insufficient to satisfy in full all of the obligations of Pledgor under the
Forward Contract, sell all of the remaining Collateral, or such lesser portion
thereof as may be necessary to generate proceeds sufficient to satisfy in full
all of the obligations of Pledgor under the Forward Contract, at public or
private sale or at any broker's board or on any securities exchange, for cash,
upon credit or for future delivery, and at such price or prices as the
Collateral Agent may deem satisfactory. The Pledgor covenants and agrees to
execute and deliver such documents and take such other action as the Collateral
Agent deems necessary or advisable in order that any such sale may be made in
compliance with law. Upon any such sale the Collateral Agent shall have the
right to deliver, assign and transfer to the purchaser thereof the Collateral
so sold. Each purchaser at any such sale shall hold the Collateral so sold
absolutely and free from any claim or right of whatsoever kind, including any
equity or right of redemption of the Pledgor which may be waived, and the
Pledgor, to the extent permitted by law, hereby specifically waives all rights
of redemption, stay or appraisal which Pledgor has or may have under any law
now existing or hereafter adopted. The notice (if any) of such sale required by
Article 9 of the UCC shall (1) in case of a public sale, state the time and
place fixed for such sale, (2) in case of sale at a broker's board or on a
securities exchange, state the board or exchange at which such sale is to be
made and the day on which the Collateral, or the portion thereof so being sold,
will first be offered for sale at such board or exchange, and (3) in the case
of a private sale, state the day after which such sale may be consummated. Any
such public sale shall be held at such time or times within ordinary business
hours and at such place or places as the Collateral Agent may fix in the notice
of such sale. At any such sale the Collateral may be sold in one lot as an
entirety or in separate parcels, as the Collateral Agent may determine. The
Collateral Agent shall not be obligated to make any such sale pursuant to any
such notice. The Collateral Agent may, without notice or publication, adjourn
any public or private sale or cause the same to be adjourned from time to time
by announcement at the time and place fixed for the sale, and such sale may be
made at any time or place to which the same may be so adjourned. In case of any
sale of all or any part of the Collateral on credit or for future delivery, the
Collateral so sold may be retained by the Collateral Agent until the selling
price is paid by the purchaser thereof, but the Collateral Agent shall not
incur any liability in case of the failure of such purchaser to take up and pay
for the Collateral so sold and, in case of any such failure, such Collateral
may again be sold upon like notice. The Collateral Agent, instead of exercising
the power of sale herein conferred upon it, may proceed by a suit or suits at
law or in equity to foreclose the security interests and sell the Collateral,
or any portion thereof, under a judgment or decree of a court or courts of
competent jurisdiction.
(b) Power of Attorney. The Collateral Agent is hereby irrevocably
appointed the true and lawful attorney of the Pledgor with full power and
authority, in the name and stead of the Pledgor, to do all of the following:
(i) upon any delivery or sale of all or any part of any Collateral made either
under the power of delivery or sale given hereunder or under judgment or decree
in any judicial proceedings for foreclosure or otherwise for the enforcement of
this Collateral Agreement, to make all necessary deeds, bills of sale and
instruments of assignment, transfer or conveyance of the property thus
delivered or sold; (ii) if an Event of Default shall have occurred and be
continuing, upon the occurrence of an Adjustment Event while any shares of
Common Stock are Pledged Items, to take any necessary actions with respect to
such shares of
16
Common Stock to cause the Pledged Items to conform to the requirements of this
Agreement following the occurrence of the Adjustment Event, including, without
limitation, the tender of shares of Common Stock and the sale of property
(other than Reported Securities) received in respect of Common Stock. The grant
of the foregoing power of attorney shall not be deemed to be a grant of a power
of attorney to vote or grant proxies with respect to any shares of Common
Stock, except as provided in Section 7(b). For such purposes the Collateral
Agent may execute all necessary documents and instruments. This power of
attorney shall be deemed coupled with an interest, and the Pledgor hereby
ratifies and confirms all that its attorneys acting under such power, or such
attorneys' successors or agents, shall lawfully do so by virtue of this
Collateral Agreement. If so requested by the Collateral Agent, by the Trustees
or by any purchaser of the Collateral or a portion thereof, the Pledgor shall
further ratify and confirm any such delivery or sale by executing and
delivering to the Collateral Agent, to the Trustees or to such purchaser or
purchasers at the expense of the Pledgor all proper deeds, bills of sale,
instruments of assignment, conveyance of transfer and releases as may be
designated in any such request. The Pledgor's obligations and authorizations
hereunder shall not be terminated by operation of law or the occurrence of any
event whatsoever, including the death or disability of the Pledgor, or the
occurrence of any other event.
(c) Application of Collateral and Proceeds. In the case of an Event of
Default, the Collateral Agent may proceed to realize upon the security interest
in the Collateral against any one or more of the types of Collateral, at any
one time, as the Collateral Agent shall determine in its sole discretion
subject to the foregoing provisions of this Section 8. The proceeds of any sale
of, or other realization upon, or other receipt from, any of the Collateral
remaining after delivery to the Trust pursuant to Section 8(a) shall be applied
by the Collateral Agent in the following order of priorities:
(1) first, to the payment to the Trust of an amount equal to: (A) the
aggregate Market Value of a number of shares of Common Stock equal to
(1) the number of shares of Common Stock required to be delivered
under the Forward Contract on the Delivery Date minus (2) the number
of shares of Common Stock delivered by the Collateral Agent to the
Trust on the Delivery Date as described above; or (B) from and after
an Adjustment Event, the sum of (1) the Cash Delivery Obligations on
the Delivery Date plus (2) the aggregate Market Value on the Delivery
Date of a number of Reported Securities (and, if applicable, shares
of Common Stock) equal to (x) the number thereof required to be
delivered on the Delivery Date under Section 6.2 of the Forward
Contract minus (y) the number thereof delivered by the Collateral
Agent to the Trust on the Delivery Date as described above; and/or
(C) if Holdings shall have exercised the Cash Delivery Option, the
amount of cash required to be delivered under Section 1.3(d) of the
Holdings Forward Contract minus the amount of cash so delivered; and
(D) if Holdings shall have extended the Exchange Date pursuant to
Section 1.3(f) of the Holdings Forward Contract, the amount of cash
required to be delivered under said Section 1.3(f) (or, if Holdings
shall have accelerated the Exchange Date pursuant to Section 1.3(g)
thereof, the amount of cash deliverable pursuant to said Section
1.3(g));
(2) second, to the payment to the Collateral Agent of the expenses of
such sale or other realization, including reasonable compensation to
the Collateral Agent
17
and its agents and counsel, and all expenses, liabilities and
advances incurred or made by the Collateral Agent in connection
therewith, including brokerage fees in connection with the sale by
the Collateral Agent of any Pledged Item; and
(3) finally, if all of the obligations of the Pledgor hereunder and under
the Forward Contract have been fully discharged or sufficient funds
have been set aside by the Collateral Agent at the request of the
Pledgor for the discharge thereof, any remaining proceeds shall be
released to the Pledgor.
9. The Collateral Agent.
The Collateral Agent accepts its duties and responsibilities hereunder as
agent for the Trust, on and subject to the following terms and conditions:
(a) Performance of Duties; Force Majeure. The Collateral Agent undertakes
to perform such duties and only such duties as are expressly set forth herein
and, beyond the exercise of reasonable care in the performance of such duties,
no implied covenants or obligations shall be read into this Collateral
Agreement against the Collateral Agent. No provision hereof shall be construed
to relieve the Collateral Agent from liability for its own grossly negligent
action, grossly negligent failure to act or its own willful misconduct, subject
to the following:
(1) The Collateral Agent may consult with counsel, and the advice or
opinion of such counsel shall be full and complete authorization and
protection in respect of an action taken or suffered hereunder in good
faith and in accordance with such advice or opinion of counsel.
(2) The Collateral Agent shall not be liable with respect to any
action taken, suffered or omitted by it in good faith (i) reasonably
believed by it to be authorized or within the discretion or rights or
powers conferred on it by this Collateral Agreement or (ii) in accordance
with any direction or request of the Trustees.
(3) The Collateral Agent shall not be liable for any error of
judgment made in good faith by any of its officers, unless the Collateral
Agent was grossly negligent in ascertaining the pertinent facts.
(4) The Collateral Agent shall not be liable for any claims, losses,
liabilities, damages or expenses (including attorneys' fees and expenses)
due to forces beyond the reasonable control of the Collateral Agent,
including without limitation strikes, work stoppages, acts of war or
terrorism, insurrection, revolution, nuclear or natural catastrophes or
acts of God, and interruptions, loss or malfunctions of utilities,
communications or computer (software and hardware) services; provided that
this provision shall not protect the Collateral Agent against any
liability to which it would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and
duties hereunder.
18
(5) In the absence of bad faith on its part, the Collateral Agent may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon any note, notice, resolution,
consent, certificate, affidavit, letter, telegram, teletype message,
statement, order or other document believed by it to be genuine and
correct and to have been signed or sent by the proper Person or Persons.
(6) No provision of this Collateral Agreement shall require the
Collateral Agent to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder, or
in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
(7) The Collateral Agent may perform any duties hereunder either
directly or by or through agents or attorneys, and the Collateral Agent
shall not be responsible for any willful misconduct or gross negligence on
the part of any agent or attorney appointed with due care by it hereunder.
In furtherance thereof, any subsidiary owned or controlled by the
Collateral Agent, or its successors, as agent for the Collateral Agent,
may perform any or all of the duties of the Collateral Agent relating to
the valuation of securities and other instruments constituting Collateral
hereunder.
(8) In no event shall the Collateral Agent be personally liable for
any taxes or other governmental charges imposed upon or in respect of (i)
the collateral or (ii) the income or other distributions thereon.
(9) Unless and until the Collateral Agent shall have received notice
from the Pledgor, or unless and until a Responsible Officer of the
Collateral Agent shall have actual knowledge to the contrary, the
Collateral Agent shall be entitled to deem and treat all Collateral
delivered to it hereunder as Eligible Collateral hereunder, provided that
the Collateral Agent has carried out the duties specified in Section 6
with respect to such Collateral at the time of delivery thereof.
The Collateral Agent shall not be responsible for the correctness of the
recitals and statements herein which are made by the Pledgor or for any
statement or certificate delivered by the Pledgor pursuant hereto. Except as
specifically provided herein, the Collateral Agent shall not be responsible for
the validity, sufficiency, collectibility or marketability of any Collateral
given to or held by it hereunder or for the validity or sufficiency of the
Forward Contract or the Lien on the Collateral purported to be created hereby.
(b) Knowledge. The Collateral Agent shall not be deemed to have knowledge
of any Event of Default (except a Collateral Event of Default), unless and
until a Responsible Officer of the Collateral Agent shall have actual knowledge
thereof or shall have received written notice thereof.
(c) Merger. Any corporation or association into which the Collateral Agent
may be converted or merged, or with which it may be consolidated, or to which
it may sell or transfer its agency business and assets as a whole or
substantially as a whole, or any corporation or association resulting from any
such conversion, sale, merger, consolidation or transfer to
19
which it is a party, shall, subject to the prior written consent of the Trust,
be and become a successor Collateral Agent hereunder and vested with all of the
title to the Collateral and all of the powers, discretions, immunities,
privileges and other matters as was its predecessor without, except as provided
above, the execution or filing of any instrument or any further act, deed or
conveyance on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
(d) Resignation. The Collateral Agent and any successor Collateral Agent
may at any time resign by giving 30 days' written notice by registered or
certified mail to the Pledgor and notice to the Trust in accordance with the
provisions of Section 10(d) hereof. Such resignation shall take effect upon the
appointment of a successor Collateral Agent by the Trust.
(e) Removal. The Collateral Agent may be removed at any time by an
instrument or concurrent instruments in writing delivered to the Collateral
Agent and to the Pledgor and signed by the Trust.
(f) Appointment of Successor. (1) If the Collateral Agent hereunder shall
resign or be removed, or be dissolved or shall be in the course of dissolution
or liquidation or otherwise become incapable of action hereunder, or if it
shall be taken under the control of any public officer or officers or of a
receiver appointed by a court, a successor may be appointed by the Trust by an
instrument or concurrent instruments in writing signed by the Trust or by its
attorneys in fact fully authorized, a copy of such instrument or concurrent
instruments shall be sent by registered mail to the Pledgor.
(2) Every such temporary or permanent successor Collateral Agent appointed
pursuant to the provisions hereof shall be a trust company or bank in good
standing, having a reported capital and surplus of not less than $100,000,000
and capable of holding the Collateral in the State of New York, if there be
such an institution willing, qualified and able to accept the duties of the
Collateral Agent hereunder upon customary terms.
(g) Acceptance by Successor. Every temporary or permanent successor
Collateral Agent appointed hereunder shall execute, acknowledge and deliver to
its predecessor and also to the Pledgor an instrument in writing accepting such
appointment hereunder, whereupon such successor, without any further act, deed
or conveyance, shall become fully vested with all the estates, properties,
rights, powers, duties and obligations of its predecessors. Such predecessor
shall, nevertheless, on the written request of its successor or the Pledgor,
execute and deliver an instrument transferring to such successor all the
estates, properties, rights and powers of such predecessor hereunder. Every
predecessor Collateral Agent shall deliver all Collateral held by it as the
Collateral Agent hereunder to its successor. Should any instrument in writing
from the Pledgor be reasonably required by a successor Collateral Agent for
more fully and certainly vesting in such successor the estates, properties,
rights, powers, duties and obligations hereby vested or intended to be vested
in the predecessor, any and all such instruments in writing shall, at the
request of the temporary or permanent successor Collateral Agent, be forthwith
executed, acknowledged and delivered by the Pledgor.
10. Miscellaneous.
20
(a) Benefit of Agreement; Successors and Assigns. Whenever any of the
parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party. All the covenants and agreements herein
contained by or on behalf of the Pledgor and the Collateral Agent shall bind,
and inure to the benefit of, their respective successors and assigns whether so
expressed or not, and shall be enforceable by and inure to the benefit of the
Trust and its successors and assigns.
(b) Separability. To the extent permitted by law, the unenforceability or
invalidity of any provision or provisions of this Collateral Agreement shall
not render any other provision or provisions herein contained unenforceable or
invalid.
(c) Amendments and Waivers. Any term, covenant, agreement or condition of
this Collateral Agreement may be amended or compliance therewith may be waived
(either generally or in a particular instance and either retrospectively or
prospectively) but only by a writing signed by the Collateral Agent, the
Pledgor and the Trust.
(d) Notices.
(1) Any notice provided for herein, unless otherwise specified, shall
be in writing (including transmittals by telex or telecopier) and shall be
given to a party at the address set forth opposite such party's name on
the signature pages hereto or at such other address as may be designated
by notice duly given in accordance with this Section 10(d) to each other
party hereto.
(2) Each such notice given pursuant to paragraph (1) shall be
effective (i) if sent by certified mail (return receipt requested), 72
hours after being deposited in the United States mail, postage prepaid;
(ii) if given by telex or telecopier, when such telex or telecopied notice
is transmitted; or (iii) if given by any other means, when delivered at
the address specified in this Section 10(d).
(e) Governing Law. This Collateral Agreement shall in all respects be
construed in accordance with and governed by the laws of the State of New York;
provided that as to Pledged Items located in any jurisdiction other than the
State of New York, the Collateral Agent on behalf of the Trust shall have all
of the rights to which a secured party is entitled under the laws of such other
jurisdiction.
(f) Counterparts. This Collateral Agreement may be executed, acknowledged
and delivered in any number of counterparts and such counterparts taken
together shall constitute one and the same instrument.
(g) Application of Bankruptcy Code. The parties hereto
acknowledge and agree that the Collateral Agent is a "financial institution"
within the meaning of Section 101(22) of the Bankruptcy Code and is acting as
agent and custodian for the Trust in connection with the Forward Contract and
that the Trust is a "customer" of the Collateral Agent within the meaning of
said Section 101(22).
(h) WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE
PARTIES HERETO HEREBY WAIVE AND COVENANT THAT
21
THEY WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT
TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT
MATTER HEREOF, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING OR
WHETHER IN CONTRACT OR TORT OR OTHERWISE. EACH PARTY HERETO ACKNOWLEDGES THAT
IT OR HE HAS BEEN INFORMED BY THE OTHER PARTY HERETO THAT THE PROVISIONS OF
THIS SECTION CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH SUCH OTHER PARTY
HERETO HAS RELIED, IS RELYING AND WILL RELY IN ENTERING INTO THIS AGREEMENT AND
ANY DOCUMENT RELATED THERETO. EACH PARTY HERETO MAY FILE AN ORIGINAL
COUNTERPART OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT
OF THE OTHER PARTY HERETO TO THE WAIVER OF ITS RIGHTS TO TRIAL BY JURY.
11. Termination of Collateral Agreement.
This Collateral Agreement and the rights hereby granted by the Pledgor in
the Collateral shall cease, terminate and be void upon fulfillment of all of
the obligations of the Pledgor under the Forward Contract, and the Pledgor
shall have no further liability hereunder upon such termination. Any Collateral
remaining at the time of such termination shall be fully released and
discharged from the Lien hereof and delivered to the Pledgor by the Collateral
Agent, all at the expense of the Pledgor.
12. No Personal Liability of Trustees.
By executing this Collateral Agreement none of the Trustees assumes any
personal liability hereunder.
22
IN WITNESS WHEREOF, each of the Pledgor, the Collateral Agent and the
Trust has caused this Collateral Agreement to be duly executed on its behalf as
of the date hereof.
PLEDGOR:
AT&T BROADBAND CSC II, INC.
By:
------------------------------
Name:
Title:
Address for Notices:
COPY TO
Davis Polk and Wardwell
450 Lexington Avenue
New York, New York 10017
Fax. No. (212) 450-6862
Attention: John Brandow
THE TRUST:
EQUITY SECURITIES TRUST I
By:
------------------------------
Donald J. Puglisi,
as Managing Trustee
Address for Notices:
c/o Puglisi & Associates
850 Library Avenue - Suite 204
Newark, DE 19711
Attention: Donald J. Puglisi
COLLATERAL AGENT:
THE BANK OF NEW YORK
as Collateral Agent
By:
------------------------------
Name:
Title:
Address for Notices:
5 Penn Plaza, 13th floor
New York, NY 10001
Attention: Betty Cocozza
2
Exhibit A
to
Collateral Agreement
CERTIFICATE FOR SUBSTITUTED COLLATERAL
The undersigned, _____________ (the "Pledgor"), hereby certifies, pursuant to
Section 6(b) of the Collateral Agreement dated as of October 23, 2001 among the
Pledgor, The Bank of New York, as Collateral Agent, and Equity Securities Trust
I (the "Collateral Agreement"; terms defined in the Collateral Agreement being
used herein as defined therein), that:
1. The Pledgor is delivering the following securities to the Collateral
Agent to be held by the Collateral Agent as substituted Collateral (the
"Substituted Collateral"):
2. The Pledgor requests that the Collateral Agent transfer to the Pledgor
the following Prior Collateral, pursuant to Section 6(b) of the Collateral
Agreement:
3. The Pledgor hereby represents and warrants to the Collateral Agent and
the Trust that:
(a) Consents to Transfer. No Transfer Restrictions exist with respect
to or otherwise apply to the assignment of, or transfer by the Pledgor of
possession of, any items of Substituted Collateral to the Collateral Agent
under the Collateral Agreement, or the subsequent sale or transfer of such
items of Substituted Collateral by the Collateral Agent pursuant to the
terms of the Collateral Agreement.
(b) Title to Collateral; Perfected Security Interest. The Pledgor has
good and marketable title to the Substituted Collateral, free of all Liens
(other than the Lien created by the Collateral Agreement) and Transfer
Restrictions. Upon delivery of the Collateral to the Collateral Agent, the
Collateral Agent will obtain a valid, first priority perfected security
interest in, and a first lien upon, such Substituted Collateral subject to
no other Lien. None of such Substituted Collateral is or shall be pledged
by the Pledgor as collateral for any other purpose.
This Certificate may be relied upon by the Trust as fully and to the same
extent as if this Certificate had been specifically addressed to the Trust.
A-1
IN WITNESS WHEREOF, the undersigned has executed this Certificate this
_____ day of ______, 200_.
---------------------------------
Name:
Title:
A-2
Exhibit B
to
Collateral Agreement
CERTIFICATE FOR ADDITIONAL GOVERNMENT SECURITIES
The undersigned, __________________ (the "Pledgor"), hereby certifies,
pursuant to Section 6(c) of the Collateral Agreement, dated as of October 23,
2001, among the Pledgor, The Bank of New York, as Collateral Agent, and Equity
Securities Trust I (the "Collateral Agreement"; terms defined in the Collateral
Agreement being used herein as defined therein), that:
1. The Pledgor is delivering the following securities to the Collateral
Agent to be held by the Collateral Agent as Collateral deliverable in
connection with Holdings' election to extend the Exchange Date in accordance
with Section 1.3(f) of the Holdings Forward Contract (the "Additional
Government Securities"):
2. The Pledgor hereby represents and warrants to the Collateral Agent
that:
(a) Consents to Transfer. No Transfer Restrictions exist with respect
to or otherwise apply to the assignment of, or transfer by the Pledgor of
possession of, any items of Additional Government Securities to the
Collateral Agent under the Collateral Agreement, or the subsequent sale or
transfer of such items of Additional Government Securities by the
Collateral Agent pursuant to the terms of the Collateral Agreement.
(b) Title to Collateral; Perfected Security Interest. The Pledgor has
good and marketable title to the Additional Government Securities, free of
all Liens (other than the Lien created by the Collateral Agreement) and
Transfer Restrictions. Upon delivery of the Collateral to the Collateral
Agent, the Collateral Agent will obtain a valid, first priority perfected
security interest in, and a first lien upon, such Additional Government
Securities subject to no other Lien. None of such Additional Government
Securities is or shall be pledged by the Pledgor as collateral for any
other purpose.
This Certificate may be relied upon by the Trust as fully and to the same
extent as if this Certificate had been specifically addressed to the Trust.
B-1
IN WITNESS WHEREOF, the undersigned has executed this Certificate this
_____ day of _____, 200_.
---------------------------------
Name:
Title:
B-2
Exhibit C
to
Collateral Agreement
CERTIFICATE FOR ADDITIONAL COLLATERAL
The undersigned, __________________ (the "Pledgor"), hereby certifies,
pursuant to Section 6(c) of the Collateral Agreement, dated as of October 23,
2001, among the Pledgor, The Bank of New York, as Collateral Agent, and Equity
Securities Trust I (the "Collateral Agreement"; terms defined in the Collateral
Agreement being used herein as defined therein), that:
1. The Pledgor is delivering the following securities to the Collateral
Agent to be held by the Collateral Agent as additional Collateral (the
"Additional Collateral"):
2. The Pledgor hereby represents and warrants to the Collateral Agent
that:
(a) Consents to Transfer. No Transfer Restrictions exist with respect
to or otherwise apply to the assignment of, or transfer by the Pledgor of
possession of, any items of Additional Collateral to the Collateral Agent
under the Collateral Agreement, or the subsequent sale or transfer of such
items of Additional Collateral by the Collateral Agent pursuant to the
terms of the Collateral Agreement.
(b) Title to Collateral; Perfected Security Interest. The Pledgor has
good and marketable title to the Additional Collateral, free of all Liens
(other than the Lien created by the Collateral Agreement) and Transfer
Restrictions. Upon delivery of the Collateral to the Collateral Agent, the
Collateral Agent will obtain a valid, first priority perfected security
interest in, and a first lien upon, such additional Collateral subject to
no other Lien. None of such Additional Collateral is or shall be pledged
by the Pledgor as collateral for any other purpose.
This Certificate may be relied upon by the Trust as fully and to the same
extent as if this Certificate had been specifically addressed to the Trust.
C-1
IN WITNESS WHEREOF, the undersigned has executed this Certificate this
_____ day of _____, 200_.
---------------------------------
Name:
Title:
C-2