STOCK PURCHASE AGREEMENT
BETWEEN
KEY3MEDIA GROUP, INC.
AND
INVEMED CATALYST FUND, L.P.
DATED: NOVEMBER 13, 2001
TABLE OF CONTENTS
Page(s)
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ARTICLE I DEFINITIONS................................................................................... 1
1.1 Definitions......................................................................... 1
1.2 Other Definitions................................................................... 4
ARTICLE II SALE AND PURCHASE............................................................................ 4
2.1 Purchase and Sale of Series A Preferred Stock....................................... 4
2.2 Closing............................................................................. 5
2.3 Certificates of Designations........................................................ 5
2.4 Use of Proceeds..................................................................... 5
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................................... 5
3.1 Corporate Existence and Power....................................................... 5
3.2 Authorization; No Contravention..................................................... 6
3.3 Governmental Authorization; Third Party Consents.................................... 6
3.4 Binding Effect...................................................................... 6
3.5 Capitalization...................................................................... 7
3.6 Reports; Financial Statements....................................................... 8
3.7 Litigation.......................................................................... 9
3.8 Liabilities......................................................................... 9
3.9 No Default or Breach; Contractual Obligations....................................... 9
3.10 Employee Benefit Plans.............................................................. 9
3.11 Title to Properties; Liens.......................................................... 10
3.12 Licenses; Permits, Etc.............................................................. 10
3.13 Intellectual Property Rights........................................................ 10
3.14 Compliance with Applicable Law...................................................... 10
3.15 No Registration..................................................................... 11
3.16 Absence of Certain Changes. ....................................................... 11
3.17 Broker's, Finder's or Similar Fees.................................................. 11
3.18 Required Stockholders Quorum and Vote............................................... 11
3.19 Accuracy of Information in Proxy Statement.......................................... 11
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.............................................. 12
4.1 Organization and Qualification...................................................... 12
4.2 Authority........................................................................... 12
4.3 No Conflict; Required Filings and Consents.......................................... 12
4.4 Acquisition of Preferred Shares for Investment..................................... 13
4.5 No Broker........................................................................... 13
ARTICLE V COVENANTS .................................................................................... 14
5.1 Notification of Certain Matters..................................................... 14
5.2 Access to Information............................................................... 14
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5.3 Additional Directors................................................................ 14
5.4 Stockholders Approval............................................................... 14
5.5 NYSE Listing........................................................................ 15
ARTICLE VI CONDITIONS OF THE PURCHASER TO CLOSING....................................................... 15
6.1 Representations and Warranties...................................................... 15
6.2 Covenants........................................................................... 15
6.3 Compliance with this Agreement...................................................... 15
6.4 Officer's Certificate............................................................... 16
6.5 Filing of Certificate of Designations............................................... 16
6.6 Secretary's Certificate............................................................. 16
6.7 Credit Agreement.................................................................... 16
6.8 Registration Rights Agreement....................................................... 16
6.9 Voting Agreements................................................................... 16
6.10 Completion of Equity Offering....................................................... 16
6.11 Opinion of Outstide Counsel......................................................... 16
6.12 Opinion of In-House Counsel......................................................... 17
6.13 No Injunction....................................................................... 17
6.14 No Change of Control................................................................ 17
6.15 Consents and Approvals.............................................................. 17
6.16 Purchased Preferred Shares.......................................................... 17
ARTICLE VII CONDITIONS OF THE COMPANY TO CLOSING........................................................ 17
7.1 Representations and Warranties...................................................... 17
7.2 Covenants........................................................................... 18
7.3 Compliance with this Agreement...................................................... 18
7.4 Officer's Certificate............................................................... 18
7.5 No Injunction....................................................................... 18
7.6 Consents and Approvals.............................................................. 18
7.7 Payment of Purchase Price........................................................... 18
7.8 Registration Rights Agreement....................................................... 18
7.9 Voting Agreements................................................................... 18
ARTICLE VIII INDEMNIFICATION............................................................................ 18
8.1 Indemnification..................................................................... 18
8.2 Notification........................................................................ 19
8.3 Contribution........................................................................ 20
ARTICLE IX TERMINATION OF AGREEMENT..................................................................... 20
9.1 Termination......................................................................... 20
9.2 Survival............................................................................ 21
ARTICLE X MISCELLANEOUS................................................................................. 21
10.1 Survival of Representations and Warranties.......................................... 21
10.2 Amendments and Waivers.............................................................. 21
10.3 Notices............................................................................. 21
10.4 Successors and Assigns.............................................................. 22
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10.5 No Third Party Beneficiaries........................................................ 23
10.6 Counterparts........................................................................ 23
10.7 Descriptive Headings, Etc........................................................... 23
10.8 Severability........................................................................ 23
10.9 Governing Law....................................................................... 23
10.10 Remedies; Specific Performance...................................................... 23
10.11 Entire Agreement.................................................................... 24
10.12 Fees................................................................................ 24
10.13 Consent to Jurisdiction; Waiver of Jury............................................. 24
10.14 Further Assurances.................................................................. 24
10.15 No Inconsistent Agreements.......................................................... 25
10.16 Construction........................................................................ 25
Schedule A........ Preferred Shares/ Purchase Price
Exhibit A......... Form of Certificate of Designations
Exhibit B......... Form of Registration Rights Agreement
Exhibit C-1....... Form of Voting Agreement with SOFTBANK
Exhibit C-2....... Form of Voting Agreement with the parties named therein
Exhibit D-1....... Form of Opinion by Xxxxxxxx & Xxxxxxxx
Exhibit D-2....... Form of Opinion by General Counsel of the Company
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, dated November 13, 2001, by and
between Key3Media Group, Inc., a Delaware corporation (the "Company") and
Invemed Catalyst Fund, L.P., a Delaware limited partnership (the "Purchaser").
WITNESSETH THAT:
WHEREAS, the Company wishes to issue and sell to the Purchaser
and the Purchaser wishes to purchase from the Company, shares of the Company's
Series A 5.5% Convertible Redeemable Preferred Stock, par value $.01 per share
("Series A Preferred Stock"); and
WHEREAS, the shares of Series A Preferred Stock are
convertible (subject to adjustment) into shares of common stock of the Company
(the "Common Stock").
NOW, THEREFORE, in consideration of the agreements and
obligations contained in this Agreement, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:
"Affiliate" shall mean any Person who is an "affiliate" as
defined in Rule 12b-2 of the General Rules and Regulations under the Exchange
Act.
"Agreement" means this Agreement as the same may be amended,
supplemented or modified in accordance with the terms hereof.
"Amendment No.2" means Amendment No.2, dated November 9, 2001,
to the Credit Agreement entered into among the Company, Xxxxxx Xxxxxxx Senior
Funding, Inc., Xxxxxx Xxxxxxx & Co. Incorporated, The Bank of New York, UBS
Warburg LLC and the other parties named therein.
"Board of Directors" means the Board of Directors of the
Company.
"Business Day" means any day other than a Saturday, Sunday or
other day on which commercial banks in the State of New York are authorized or
required by law or executive order to close.
"Bylaws" means the bylaws of the Company in effect on the
Closing Date, as the same may be amended from time to time.
"Certificate of Designations" means the Certificate of
Designations of the Series A 5.5% Convertible Preferred Stock of Key3Media
Group, Inc. with respect to the Preferred Stock adopted by the Board of
Directors and duly filed with the Secretary of State of the State of Delaware on
or before the Closing Date substantially in the form attached hereto as Exhibit
A.
"Certificate of Incorporation" means the amended and restated
certificate of incorporation of the Company in effect on the Closing Date, as
the same may be amended and/ or restated from time to time.
"Code" means the Internal Revenue Code of 1986, as amended, or
any successor statute thereto.
"Commission" means the United States Securities and Exchange
Commission or any similar agency then having jurisdiction to enforce the
Securities Act.
"Credit Agreement" means the Amended and Restated Credit
Agreement, dated June 26, 2001, entered into among the Company, Xxxxxx Xxxxxxx
Senior Funding, Inc., Xxxxxx Xxxxxxx & Co. Incorporated, The Bank of New York,
UBS Warburg LLC and the other parties named therein, as amended by Amendment
No.2.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder.
"GAAP" means United States generally accepted accounting
principles in effect from time to time.
"Governmental Authority" means the government of any nation,
state, city, locality or other political subdivision thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any corporation or other entity
owned or controlled, through stock or capital ownership or otherwise, by any of
the foregoing.
"Governmental Order" means any order, writ, rule, judgment,
injunction, decree, stipulation, determination, award, citation or notice of
violation entered by or with any Governmental Authority.
"Lien" means any mortgage, deed of trust, pledge,
hypothecation, assignment, encumbrance, lien (statutory or other) or other
security interest or preferential arrangement of any kind or nature whatsoever
(excluding preferred stock and equity related preferences).
"NYSE" means the New York Stock Exchange, Inc.
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"Person" means any individual, firm, corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, limited liability company, Governmental Authority or other entity of
any kind, and shall include any successor (by merger or otherwise) of such
entity.
"Registration Rights Agreement" means the Registration Rights
Agreement substantially in the form attached hereto as Exhibit B.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder.
"Series B Preferred Stock" means the 5.5% Series B Convertible
Redeemable Preferred Stock, par value $0.01 per share, of the Company.
"Subsidiaries" means, as of the relevant date of
determination, with respect to any Person, a corporation or other Person of
which 50% or more of the voting power of the outstanding voting equity
securities or 50% or more of the outstanding economic equity interest is held,
directly or indirectly, by such Person. Unless otherwise qualified, or the
context otherwise requires, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of
the Company.
"Taxes" means any federal, state, provincial, county, local,
foreign and other taxes (including, without limitation, income, profits,
windfall profits, alternative, minimum, accumulated earnings, personal holding
company, capital stock, premium, estimated, excise, sales, use, occupancy, gross
receipts, franchise, ad valorem, severance, capital levy, production, transfer,
withholding, employment, unemployment compensation, payroll and property taxes,
import duties and other governmental charges and assessments), whether or not
measured in whole or in part by net income, and including deficiencies,
interest, additions to tax or interest, and penalties with respect thereto, and
including expenses associated with contesting any proposed adjustments related
to any of the foregoing.
"Transaction Documents" means, collectively, this Agreement,
the Registration Rights Agreement and the Voting Agreement.
"Voting Agreements" means (a) the Voting Agreement to be
entered into among the Company, the Purchaser and SOFTBANK Corp. substantially
in the form attached hereto as Exhibit C-1 and (b) the Voting Agreement to be
entered into among the Company, the Purchaser and the other parties thereto
substantially in the form attached hereto as Exhibit C-2.
"Voting Power" means, with respect to any Person, the number
of votes that such Person is entitled to cast generally to elect nominees to the
Board of Directors at a meeting of the Stockholders of the Company.
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1.2 Other Definitions. The meanings of the following terms can
be found in the Sections of this Agreement indicated below:
Term Section
---- -------
Claim................................................... Section 3.7
Closing................................................. Section 2.1
Closing Date............................................ Section 2.2
Common Stock............................................ Recitals
Company................................................. Preamble
Company Material Adverse Effect......................... Section 3.1
Company SEC Reports..................................... Section 3.6
Contracts............................................... Section 3.9
Disclosure Letter....................................... Article III
Intellectual Property Right............................. Section 3.14
Liabilities............................................. Section 3.8
Offering Memorandum..................................... Article III
Orders.................................................. Section 3.2
Plan.................................................... Section 3.11
Preferred Shares........................................ Section 2.1
Proxy Statement......................................... Section 5.5
Purchase Price.......................................... Section 2.1
Purchaser............................................... Preamble
Stockholders Approval................................... Section 3.2
Series A Preferred Stock................................ Recitals
ARTICLE II
SALE AND PURCHASE
2.1 Purchase and Sale of Series A Preferred Stock. At the
closing of the transactions contemplated by Section 2.2 of this Agreement (the
"Closing"), the Company shall issue and sell to the Purchaser, and the Purchaser
shall purchase from the Company, the number of shares of Series A Preferred
Stock (the "Preferred Shares") set forth opposite on Schedule A hereto, for an
aggregate price in immediately available United States funds (the "Purchase
Price") set forth on Schedule A hereto. At the Closing (a) the Company shall
deliver to the Purchaser a certificate or certificates representing the
Preferred Shares being purchased by the Purchaser, and (b) the Purchaser will
deliver to the Company the aggregate purchase price therefor by wire transfer of
immediately available funds. The Purchaser agrees, so long as required by law,
that the certificates representing the Preferred Shares and shares of Common
Stock issuable upon conversion of the Purchaser's Preferred Shares shall bear a
legend in substantially the following form:
"The shares represented by this certificate are "restricted
securities" as that term is defined in Rule 144 promulgated under
the Securities Act of 1933, as amended (the
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"Securities Act"), and may not be offered, sold or otherwise
transferred, pledged or hypothecated except in a transaction
registered under the Securities Act or in a transaction exempt
from such registration."
2.2 Closing. Unless this Agreement shall have terminated
pursuant to Article IX, and subject to the satisfaction or waiver of the
conditions set forth in Articles VI and VII, the Closing shall take place at the
offices of Xxxxxxxx & Xxxxxxxx, at 10:00 a.m., local time (or as soon thereafter
as practicable), on the next Business Day following the date upon which the
conditions set forth in Articles VI and VII (other than any such conditions that
by their nature are to be satisfied at the Closing, but subject to such
satisfaction or waiver) shall be satisfied or waived in accordance with this
Agreement, or at such other time, place and date that the Company and the
Purchaser may agree in writing. (the "Closing Date").
2.3 Certificates of Designations. On or prior to the Closing
Date, the Company shall duly file the Certificate of Designations with the
Secretary of State of the State of Delaware in accordance with the General
Corporation Law of the State of Delaware. The Preferred Shares shall have the
preferences and rights set forth in the Certificate of Designations.
2.4 Use of Proceeds. The Company shall use the proceeds from
the sale of the Preferred Shares to the Purchaser to repay borrowings under the
Credit Agreement as required by it and/ or to fund the Company's working
capital.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as otherwise disclosed in the Company SEC Reports (as
defined below) or in the Offering Memorandum dated the date hereof and prepared
by the Company for the benefit of the Purchaser (the "Offering Memorandum"),
delivered by the Company to the Purchaser prior to the execution of this
Agreement the Company represents and warrants to the Purchaser as follows:
3.1 Corporate Existence and Power. Each of the Company and its
significant subsidiaries (as defined in Rule 1-02(w) of Regulation S-X) is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation. Each of the Company and its
Subsidiaries (a) has all requisite power and authority to own and operate its
property, to lease the property it operates as lessee and to conduct the
business in which it is currently, or is proposed to be, engaged, and (b) is
duly qualified as a foreign corporation, licensed and in good standing under the
laws of each jurisdiction in which its ownership, lease or operation of property
or the conduct of its business requires such qualification, except where the
failure to be so qualified or in good standing could not reasonably be expected
to have a material adverse effect on the assets, business, properties, results
of operations or financial condition of the Company and its Subsidiaries taken
as a whole (a "Company Material Adverse Effect").
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The Company has all necessary corporate power and authority to execute, deliver
and perform its obligations under the Transaction Documents.
3.2 Authorization; No Contravention. Except for the approval
of the issuance of the Common Stock upon conversion of the Preferred Shares by
the holders of a majority of the shares of Common Stock present in person or
proxy at a stockholders meeting of the Company called for such purpose and at
which a quorum was present and acting throughout, as required by Section 312 of
the NYSE Listed Company Manual (the "Stockholders Approval"), the execution,
delivery by the Company of the Transaction Documents, the performance by the
Company of its obligations hereunder and thereunder and the consummation by the
Company of the transactions contemplated hereby and thereby, including without
limitation the issuance of the Preferred Shares to the Purchaser, (a) have been
duly authorized by all necessary corporate action of the Company, (b) do not
contravene the terms of the Certificate of Incorporation or the Bylaws (c) do
not violate, conflict with or result in any breach, default or contravention of
(or with due notice or lapse of time or both would result in any breach, default
or contravention of), or the creation of any Lien under, any contractual
obligation of the Company or its Subsidiaries or any requirements of law
applicable to the Company or its Subsidiaries other than any such matter with
respect to a contractual obligation that, individually or in the aggregate,
could not reasonably be expected to have a Company Material Adverse Effect, and
(d) do not violate any Governmental Order against, or binding upon, the Company.
3.3 Governmental Authorization; Third Party Consents. Except
for the Stockholders Approval and those that have been obtained or made, no
material approval, consent, compliance, exemption, authorization or other action
by, or notice to, or filing with, any Governmental Authority or any other
Person, and no lapse of a waiting period under a requirement of law, is
necessary or required to be obtained or made by the Company in connection with
the execution, delivery or performance (including, without limitation, the sale,
issuance and delivery of the Preferred Shares) by, or enforceability against,
the Company of the Transaction Documents or the transactions contemplated hereby
and thereby.
3.4 Binding Effect. This Agreement has been and, as of the
Closing Date, the Registration Rights Agreement and the Voting Agreement will be
duly executed and delivered by the Company, and (assuming due authorization,
execution and delivery by the Purchaser) this Agreement constitutes, and, as of
the Closing Date, the Registration Rights Agreement and the Voting Agreements
will constitute the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity relating to enforceability (regardless of whether
considered in a proceeding at law or in equity).
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3.5 Capitalization.
(a) As of the date hereof the authorized capital stock of
the Company consists of (x) 200,000,000 shares of Common Stock of which (i)
68,099,575 shares are issued and outstanding, (ii) 24,743,901 shares are
reserved for issuance upon exercise of stock options granted to directors,
officers and other employees of, and consultants to the Company pursuant to
equity incentive plans approved by the Board of Directors, and (iii) 6,277,000
shares are reserved for issuance upon exercise of warrants held by Princess Gate
Investors III, L.P., certain affiliates of Xxxxxx Xxxxxxx Xxxx Xxxxxx & Co. and
certain Persons whose investment manager is PG Investors III, Inc.; (y)
200,000,000 shares of non-voting common stock, par value $0.01 per share (the
"Non-Voting Common Stock"), of the Company, none of which is outstanding; and
(z) 200,000,000 shares of preferred stock, none of which is outstanding.
(b) On the Closing Date, after giving effect to the
transactions contemplated by this Agreement, the authorized capital stock of the
Company shall consist of (x) 200,000,000 shares of Common Stock of which (i)
68,099,575 shares shall be issued and outstanding (but excluding from the
outstanding amounts any shares of Common Stock issued upon exercise of options
and warrants outstanding as of the date of this Agreement), (ii) 24,743,901
shares shall be reserved for issuance upon exercise of stock options granted to
directors, officers and other employees of, and consultants to the Company
pursuant to equity incentive plans approved by the Board of Directors, (iii)
6,277,000 shares shall be reserved for issuance upon exercise of warrants held
by Princess Gate Investors III, L.P., certain affiliates of Xxxxxx Xxxxxxx Xxxx
Xxxxxx & Co. and certain Persons whose investment manager is PG Investors III,
Inc., (iv) 1,000,000 shares shall be reserved for issuance upon conversion of
the Series A Preferred Stock, and (v) (A) the number of shares of Common Stock
sold in the equity offering of the Company referred to in Section 6.10 hereof
shall be issued and outstanding, or (B) the number of shares to be issued upon
conversion of the Series B Preferred Stock sold in the equity offering of the
Company referred to in Section 6.10 shall be reserved for issuance upon such
conversion; (y) 200,000,000 shares of Non-Voting Common Stock, none of which is
outstanding; and (z) 200,000,000 shares of preferred stock of which (i)
1,000,000 shares shall be designated as Series A Preferred Stock, all of which
shall be issued and outstanding, and (ii) if Series B Preferred Stock have been
sold in the equity offering referred to in Section 6.10 hereof, the number of
shares of Series B Preferred Stock sold in such equity offering shall be
designated as shares of Series B Preferred Stock and shall be issued and
outstanding.
(c) The Preferred Shares have been duly authorized by all
necessary corporate action, and when issued and sold to the Purchaser after
payment therefor as provided for herein, will (i) be validly issued, fully paid
and non-assessable, (ii) be issued in compliance with the registration and
qualification requirements of all applicable federal, state and foreign
securities laws, (iii) not be subject to any preemptive rights or similar rights
that have not been satisfied and (iv) be free and clear of all other Liens. The
shares of Common Stock issuable upon conversion of the Preferred Shares have
been duly authorized by all necessary corporate actions, reserved for issuance
and, when issued in compliance with the provisions of the Certificate of
Designations, will (i)
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be validly issued, fully paid and non-assessable, (ii) be issued in compliance
with the registration and qualification requirements of all applicable federal,
state and foreign securities laws and (iii) not subject to any preemptive rights
or similar rights that have not been satisfied and (iv) be free and clear of all
other Liens. All outstanding shares of the Company's capital stock are (and upon
consummation of the Closing contemplated hereby) will be been duly authorized,
validly issued, fully paid and non-assessable, were issued in compliance with
the registration and qualification requirements of all applicable federal, state
and foreign securities laws and none of the shares of capital stock of the
Company will have been issued in violation of any preemptive rights.
(d) Except as described above, there are no (and upon
consummation of the Closing as contemplated hereby there will not be any)
options, warrants, subscriptions, calls, convertible securities or other rights
or arrangements obligating the Company to sell any shares of capital stock of,
or any other equity interest in, the Company. There are no (and upon
consummation of the Closing as contemplated thereby, there will not be any)
outstanding contractual obligations to repurchase, redeem or otherwise acquire
any shares of capital stock of the Company.
3.6 Reports; Financial Statements.
(a) As of the respective dates of their filing with the
Commission, all reports, registration statements and other filings, together
with any amendments thereto, filed by the Company with the Commission since
August 10, 2000 (the "Company SEC Reports"), complied, and all such reports,
registration statements and other filings to be filed by the Company with the
Commission prior to the Closing Date will comply, in all material respects with
the applicable requirements of the Securities Act, the Exchange Act, and the
rules and regulations of the Commission promulgated thereunder. The Company SEC
reports did not at the time they were filed with the Commission, or will not at
the time they are filed with the Commission, and the Offering Memorandum does
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, in the light of the circumstances under which they are made, not
misleading.
(b) The consolidated financial statements (including, in
each case, any related schedules or notes thereto) contained in or incorporated
by reference in the Company SEC Reports, the Offering Memorandum and any such
reports, registration statements and other filings to be filed by the Company
with the Commission prior to the Closing Date (i) have been or will be prepared
in accordance with the published rules and regulations of the Commission and
generally accepted accounting principles consistently applied during the periods
involved (except as may be indicated in the notes thereto) and (ii) fairly
present or will fairly present in all material respects the consolidated
financial position of the Company and its subsidiaries as of the respective
dates thereof and the consolidated results of operations, statements of
stockholders' equity and cash flows for the periods indicated, except that any
unaudited interim financial statements were or will be subject to normal and
recurring year-end adjustments and may omit footnote disclosure as permitted by
regulations of the Commission.
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3.7 Litigation. There are no losses actions, suits,
proceedings, claims, complaints, disputes, arbitrations or investigations
(collectively, "Claims") pending or, to the knowledge of the Company,
threatened, at law, in equity, in arbitration or before any Governmental
Authority against the Company or its Subsidiaries that could reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect. No Governmental Order has been issued by any court or other Governmental
Authority against the Company purporting to enjoin or restrain the execution,
delivery or performance by it of the Transaction Documents.
3.8 Liabilities. The Company and its Subsidiaries have no
direct or indirect liabilities or obligations of any nature, including any
liability for Taxes, whether absolute, accrued, contingent or otherwise
("Liabilities"), which are not fully reflected or reserved against in the
consolidated financial statements contained in or incorporated by reference in
the Company SEC Reports and the Offering Memorandum, except for liabilities
that, individually or in the aggregate, could not reasonably be expected to have
a Company Material Adverse Effect.
3.9 No Default or Breach; Contractual Obligations. All of the
Company's material contracts, agreements, understandings and arrangements,
whether written or oral (collectively, the "Contracts") are adequately described
in the Company SEC Reports and the Offering Memorandum. Except as described in
the Company SEC Reports and the Offering Memorandum, all such Contracts are
valid, subsisting, in full force and effect and binding upon the Company and the
other parties thereto, and the Company has paid in full or accrued all amounts
due thereunder and has satisfied in full or provided for all of its Liabilities
and obligations thereunder, except, in each case, as could not be reasonably
expected to have a Company Material Adverse Effect. To the knowledge of the
Company, no other party to any such Contract is in default thereunder, nor does
any condition exist that with notice or lapse of time or both would constitute a
default by such other party thereunder, except as could not be reasonably
expected to have a Company Material Adverse Effect.
3.10 Employee Benefit Plans.
(a) The Company SEC Reports and the Offering Memorandum
describes all material employee benefit plans (including any "multiple employer
plan" within the meaning of the Code or ERISA), arrangements, policies,
programs, agreements or commitments maintained by the Company (collectively, the
"Plans"). Except as could not reasonably be expected to have, individually or in
the aggregate, a Company Material Adverse Effect, each Plan (and related trust,
insurance contract or fund) has been established and administered in accordance
with its terms, and complies in form and in operation with the applicable
requirements of ERISA and the Code and other applicable law and regulation.
(b) Except as could not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, no claim
with respect to the administration or the investment of the assets of any Plan
(other than routine claims for benefits) is pending and all contributions
(including all employer
9
contributions and employee salary reduction contributions) which are due have
been paid to each Plan.
(c) Except as could not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, each Plan
that is intended to be qualified under Section 401(a) of the Code is so
qualified and has been so qualified during the period since its adoption; each
trust created under any such Plan is exempt from tax under Section 501(a) of the
Code and has been so exempt since its creation.
(d) Except as could not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, there are
no unfunded obligations under any Plan which are not fully reflected on the
Financial Statements.
3.11 Title to Properties; Liens. Except as could not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect, the Company and its Subsidiaries have good and
marketable title to all real properties (if any) and all other properties and
assets owned by them, in each case free from Liens, that would affect the value
thereof or interfere with the use made or to be made thereof by them, and the
Company and its Subsidiaries hold any leased real or personal property under
valid and enforceable leases with no exceptions that would interfere with the
use made or to be made thereof by them.
3.12 Licenses; Permits, Etc. Except as could not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect, the Company and its Subsidiaries possess adequate certificates,
authorities or permits issued by appropriate governmental agencies or bodies
necessary to conduct the business now operated by them and have not received any
notice of proceedings relating to the revocation or modification of any such
certificate, authority or permit.
3.13 Intellectual Property Rights. Except for any such matters
which, individually or in the aggregate, could not reasonably be expected to
have a Company Material Adverse Effect, the Company and its Subsidiaries own or
possess, or believe that they can acquire or license on reasonable terms,
adequate patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks,
trade names, or other intellectual property (collectively, "Intellectual
Property Rights") necessary to carry on the business now operated by the Company
and its Subsidiaries, and neither the Company nor any of its Subsidiaries has
received any notice or is otherwise aware of any infringement of or conflict
with asserted rights of others with respect to any Intellectual Property Rights
or of any facts or circumstances which would render any Intellectual Property
Rights invalid or inadequate to protect the interest of the Company and its
Subsidiaries therein.
3.14 Compliance with Applicable Law. The business of the
Company and its Subsidiaries are in compliance in all material respects with all
applicable federal,
10
state, NYSE, local and foreign governments' laws and regulations (including all
applicable environmental laws and regulations), except where any failures to be
so in compliance, either individually or in the aggregate, could not reasonably
be expected to have a Company Material Adverse Effect.
3.15 No Registration. Assuming the representations and
warranties of the Purchaser set forth in Article IV hereof are true and correct
in all respects, the subscription and sale of the Preferred Shares (and the
Common Stock issuable upon conversion of the Preferred Shares) pursuant to this
Agreement will be exempt from the registration requirements of the Securities
Act. The Company has not made and will not prior to the Closing Date make,
directly or indirectly, any offer or sale of the Preferred Shares or of
securities of the same or similar class as the Preferred Shares if, as a result,
the offer and sale contemplated hereby would fail to be entitled to exemption
from the registration requirements of the Securities Act. As used herein, the
terms "offer" and "sale" have the meanings specified in Section 2(3) of the
Securities Act.
3.16 Absence of Certain Changes. Since January 1, 2001, the
Company and its Subsidiaries have conducted their respective businesses in the
ordinary and usual course and, since such date, there has not been any
condition, event or occurrence which had or could reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect.
3.17 Broker's, Finder's or Similar Fees. There are no
brokerage commissions, finder's fees or similar fees or commissions payable by
the Company in connection with the transactions contemplated hereby based on any
agreement, arrangement or understanding with the Company or any action taken by
any such Person.
3.18 Required Stockholders Quorum and Vote.
(a) The holders of a majority of the issued and outstanding
shares of Common Stock as of the record date set forth in the Proxy Statement,
present in person or represented by proxy and entitled to vote, will constitute
a quorum (a "Quorum") for the transaction of business at the meeting called to
obtain the Stockholders Approval. Abstentions and broker non-votes will be
included in determining if a quorum is present at such meeting. The stockholders
of the Company that are party to the Voting Agreement constitute a majority of
the Company's outstanding Voting Power.
(b) The affirmative vote of a majority of the Quorum is
required to obtain the Stockholders Approval. Only votes cast "for" a matter
shall constitute affirmative votes. Votes "withheld" or abstentions from voting
shall have the same effect as vote or votes "against" that matter.
3.19 Accuracy of Information in Proxy Statement. The Proxy
Statement prepared in connection with the Stockholders Approval, on the date
filed with the Commission, 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
11
statements therein, in light of the circumstances under which they are made, not
misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company
that:
4.1 Organization and Qualification. The Purchaser is a limited
partnership, duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all the requisite power and authority to
own, lease and operate its properties and to carry on its business as it is now
being conducted and the Purchaser is duly qualified to do business and in good
standing in each jurisdiction in which the nature of the business conducted by
it or the ownership or leasing of its properties makes such qualification and
being in good standing necessary, other than where the failure to be so
qualified and in good standing would not have a material adverse effect on the
Purchaser and its subsidiaries taken as a whole, their business, financial
condition or results of operations.
4.2 Authority. The Purchaser has all requisite partnership
power and authority to execute and deliver the Transaction Documents, to perform
its obligations hereunder and thereunder, and to consummate the transactions
contemplated hereby to be consummated by the Purchaser. The execution, delivery
and performance of the Transaction Documents by the Purchaser and the
consummation by the Purchaser of the transactions contemplated hereby and
thereby have been duly authorized by all necessary limited partnership,
corporate, limited liability company or trust, as the case may be, action and no
other limited partnership proceedings on the part of the Purchaser are necessary
to authorize the Transaction Documents or to consummate the transactions
contemplated hereby. The Transaction Documents have been duly executed and
delivered by the Purchaser and (assuming the due authorization, execution and
delivery hereof by the Company), constitute the legal, valid and binding
obligations of the Purchaser enforceable against the Purchaser in accordance
with their terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer,
moratorium or similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity (regardless of whether considered
in a proceeding at law or in equity).
4.3 No Conflict; Required Filings and Consents.
(a) The execution and delivery of the Transaction Documents
by the Purchaser does not, and the performance by the Purchaser of its
obligations hereunder and thereunder and the consummation by the Purchaser of
the transactions contemplated hereby and thereby will not, (i) conflict with,
breach or violate the terms of the Purchaser's organizational documents, (ii)
conflict with or violate any laws in effect as of the date of this Agreement
applicable to the Purchaser or any of its subsidiaries or by which any of their
respective properties or assets is bound or (iii) result in any breach
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of, constitute a default (or an event that with notice or lapse of time or both
would become a default) under, give to any other entity any right of
termination, amendment, acceleration or cancellation of, require payment under,
or result in the creation of a lien or encumbrance on any of the properties or
assets of the Purchaser pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise, or other instrument or
obligation to which the Purchaser is a party or by which the Purchaser or any of
its respective properties or assets is bound.
(b) No material approval, consent, compliance, exemption,
authorization or other action by, or notice to, or filing with, any Governmental
Authority or any other Person, and no lapse of a waiting period under a
requirement of law, is necessary or required to be obtained or made in
connection with the execution, delivery or performance by, or enforceability
against, the Purchaser of the Transaction Documents or the transactions
contemplated hereby and thereby.
4.4 Acquisition of Preferred Shares for Investment. The
Purchaser has such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of its purchase of the
Preferred Shares hereunder. The Purchaser is an "accredited investor" within the
meaning of Rule 501 promulgated under the Securities Act. The Purchaser is
acquiring the Preferred Shares for investment and not with a view toward or for
sale in connection with any distribution thereof in violation of any federal or
state securities or "blue sky" laws, or with the present intention of
distributing or selling such Preferred Shares in violation of any federal or
state securities or "blue sky" law. The Purchaser understands and agrees that
the Preferred Shares may not be sold, transferred, offered for sale, pledged,
hypothecated or otherwise disposed of without registration under the Securities
Act or pursuant to an exemption therefrom provided that, if the Purchaser relies
on an exemption from the Securities Act other than the exemptions provided by
Rule 144 and Rule 144A, the Purchaser shall deliver a customary opinion of
counsel reasonably satisfactory to the Company, to the effect that such transfer
is in compliance with the Securities Act. The Purchaser understands and agrees
that the Preferred Shares may not be sold, transferred, offered for sale,
pledged, hypothecated or otherwise disposed of without compliance with state,
local and foreign securities laws (in each case to the extent applicable). The
Purchaser understands and agrees that the Preferred Shares are "restricted
securities" within the meaning of Rule 144 promulgated under the Securities Act
and that, except as set forth in the Registration Rights Agreement, the Company
has no obligation or intention to register any of the Preferred Shares.
4.5 No Broker. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission from the Company
in connection with the purchase of Preferred Shares by the Purchaser provided
for in this Agreement based upon arrangements made by or on behalf of the
Purchaser.
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ARTICLE V
COVENANTS
The Company hereby, covenants and agrees with the Purchaser as
follows:
5.1 Notification of Certain Matters. The Company shall
promptly provide the Purchaser with copies of all filings made by the Company
with the Commission, any other governmental authority or stock exchange in
connection with the Transaction Documents and the transactions contemplated
hereby.
5.2 Access to Information. Subject to any applicable
confidentiality restrictions, between the date hereof and the Closing Date, the
Company will give the Purchaser and its authorized representatives reasonable
access to all senior employees, offices, warehouses and other facilities and to
all books and records of the Company and its subsidiaries, will permit the
Purchaser and its authorized representatives to make such inspections as the
Purchaser may reasonably request and will cause the Company's and its
subsidiaries' officers to furnish the Purchaser or its representatives with such
financial and operating data and other information with respect to the business
and properties of the Company and its subsidiaries as the Purchaser may from
time to time reasonably request, provided that the Purchaser or any of its
authorized representatives (as applicable) agrees to keep confidential the
Company's non-public information it receives hereunder.
5.3 Additional Directors. If any class of equity holders other
than the Common Stock is entitled to vote as a separate class of stockholders to
elect one or more members of the Board of Directors, the Company shall use
commercially reasonable efforts to cause the Board of Directors, as promptly as
practicable, to increase the size of the Board of Directors, elect to the Board
of Directors or, if any such election requires a vote of the stockholders of the
Company, nominate, recommend and solicit proxies for election to the Board of
Directors one or more Persons designated by the Purchaser voting as a separate
class, such that the aggregate number of directors of the Company designated by
the Purchaser shall be the number of directors of the Company elected by the
class of equity holders referred to above times the ratio of the aggregate
Voting Power held by the Purchaser over the aggregate Voting Power held by such
class of equity holders, rounded up to the next unit. The Company will reimburse
such director(s) for his or her reasonable travel and accommodation costs
incurred in connection with attending meetings of the Board of Directors.
5.4 Stockholders Approval.
(a) The Company shall take all action required by the
NYSE's rules and regulations to obtain the Stockholders Approval. Subject to its
fiduciary duties under applicable law, the Board of Directors shall recommend
that the Company's stockholders approve the issuance of Common Stock upon
conversion of the Preferred Shares.
14
(b) Promptly following the date hereof, the Company will
prepare and file with the Commission a proxy statement or information statement
to be distributed to the Company's stockholders in connection with the issuance
and sale of the Preferred Shares hereunder, including any amendments or
supplements thereto (the "Proxy Statement"). The Company will use all reasonable
best efforts to have or cause the Proxy Statement to be declared effective as
promptly as practicable. The Company agrees to provide the Purchaser and their
respective counsel with any written comments the Company or its counsel may
receive from the Commission with respect to the Proxy Statement promptly after
the receipt of such comments. The form and substance of the Proxy Statement
shall be determined by the Company, in its reasonable discretion. The Company
will use all reasonable best efforts to cause the Proxy Statement (i) not to
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, in light of the circumstances under which they are made, not misleading
and (ii) to comply as to form in all material respects with the applicable
provisions of the Exchange Act and the rules and regulations thereunder.
5.5 NYSE Listing. As promptly as practicable following the
date hereof, the Company will apply to the NYSE to list the shares of Common
Stock into which the Preferred Shares may be converted, and the Company will use
its best efforts to cause such shares to be listed on the NYSE as promptly
thereafter as practicable.
ARTICLE VI
CONDITIONS OF THE PURCHASER TO CLOSING
The obligation of the Purchaser to purchase the Preferred
Shares, to pay the purchase price therefor at the Closing and to perform any
obligations hereunder shall be subject to the satisfaction as determined by, or
waiver by, the Purchaser of the following conditions on or before the Closing
Date.
6.1 Representations and Warranties. The representations and
warranties of the Company contained in this Agreement shall be true and correct
in all material respects (except for any such representations and warranties
which are qualified by their terms by a reference to materiality or material
adverse effect, which representation as so qualified shall be true and correct
in all respects) at and on the Closing Date as if made at and on such date.
6.2 Covenants. The Company shall have performed in all
material respects all obligations and complied with all agreements,
undertakings, covenants and conditions required by it to be performed at or
prior to the Closing.
6.3 Compliance with this Agreement. The Company shall have
performed and complied in all material respects with all of its agreements set
forth herein that are required to be performed by the Company on or before the
Closing Date.
15
6.4 Officer's Certificate. The Purchaser shall have received a
certificate from the Company, in form and substance satisfactory to it, dated
the Closing Date, and signed by an executive officer of the Company, certifying
as to the matters set forth in Sections 6.1, 6.2 and 6.3.
6.5 Filing of Certificate of Designations. The Certificate of
Designations shall have been duly filed by the Company with the Secretary of
State of the State of Delaware in accordance with the General Corporation Law of
the State of Delaware, and the Purchaser shall have received satisfactory
evidence of such filing.
6.6 Secretary's Certificate. The Purchaser shall have received
a certificate from the Company, in form and substance satisfactory to it, dated
the Closing Date and signed by the Secretary or an Assistant Secretary of the
Company, certifying (a) that the Company is in good standing with the Secretary
of State of the State of Delaware, (b) that the attached copies of the
Certificate of Incorporation, the Bylaws, and resolutions of the Board of
Directors of the Company approving the Transaction Documents and the
transactions contemplated hereby and thereby, are all true, complete and correct
and remain unamended and in full force and effect and (c) as to the incumbency
and specimen signature of each officer of the Company executing the Transaction
Documents and any other document delivered in connection herewith on behalf of
the Company.
6.7 Credit Agreement. Amendment No.2 shall be in full force
and effect, all the conditions precedent to the effectiveness of Amendment No.2
set forth in Section 2 of Amendment No.2 shall have been satisfied or waived
(except Section 2(d) which shall be satisfied with the consummation of the
transactions contemplated by this Agreement) and there shall have been no
further amendment to the Credit Agreement.
6.8 Registration Rights Agreement. The Company shall have duly
executed and delivered the Registration Rights Agreement.
6.9 Voting Agreements. The Company shall have duly executed
and delivered, and shall have caused SOFTBANK Corp. and the parties thereto
other than the Purchaser to duly execute and deliver, each of the Voting
Agreements.
6.10 Completion of Equity Offering. The Company shall have
sold (a) shares of the Series B Preferred Stock the terms of which (including
without limitation, each of the dividend rate, liquidation preference,
conversion price, anti-dilution adjustments, voting rights and Board of
Directors representation of such class of capital stock) are, in the reasonable
judgment of the Purchaser, no more favorable to the holders thereof than the
terms of the Preferred Shares are to the Purchaser or (b) shares of Common Stock
at a purchase price equal to or greater than the conversion price of the Series
A Preferred Stock, for gross proceeds (before deducting underwriting discounts
and other expenses) of at least $25 million.
6.11 Opinion of Outstide Counsel. The Purchaser shall have
received an opinion of Xxxxxxxx & Xxxxxxxx, dated the Closing Date, relating to
the transactions
16
contemplated by or referred to herein, substantially in the form attached hereto
as Exhibit D-1.
6.12 Opinion of In-House Counsel. The Purchaser shall have
received an opinion of the General Counsel of the Company, dated the Closing
Date, relating to the transactions contemplated by or referred to herein,
substantially in the form attached hereto as Exhibit D-2.
6.13 No Injunction. No law or Governmental Order (whether
temporary, preliminary or permanent) shall be in effect that restrains, enjoins
or otherwise prohibits consummation of the transactions contemplated in the
Transaction Documents or that, individually or in the aggregate with all other
such laws or Governmental Order, could reasonably be expected to result in a
Company Material Adverse Effect and no Governmental Authority or other person
shall have instituted any proceeding seeking any such law or Governmental Order.
6.14 No Change of Control. There shall not have occurred, on
or prior to such Closing, a Sale Transaction (as defined in the Certificate of
Designations).
6.15 Consents and Approvals. All consents, approvals,
exemptions, authorizations, or other actions by, or notice to, or filings with,
Governmental Authorities and other Persons which are necessary or required in
connection with the execution, delivery or performance by, or enforceability
against, the Company of the Transaction Documents shall have been obtained and
be in full force and effect, and the Purchaser shall have been furnished with
appropriate evidence thereof and all applicable waiting periods shall have
expired without any action being taken or threatened which would have a Company
Material Adverse Effect.
6.16 Purchased Preferred Shares. The Company shall be prepared
to deliver to the Purchaser certificates in definitive form representing the
number of Preferred Shares set forth on Schedule A hereto, registered in the
name of the Purchaser.
ARTICLE VII
CONDITIONS OF THE COMPANY TO CLOSING
The obligation of the Company to issue and sell the Preferred
Shares and the obligation of the Company to perform its other obligations
hereunder shall be subject to the satisfaction as determined by, or waiver by,
the Company of the following conditions on or before the Closing Date:
7.1 Representations and Warranties. The representations and
warranties of the Purchaser contained in this Agreement shall be true and
correct in all material respects (except for any such representations and
warranties which are qualified by their terms by a reference to materiality or
material adverse effect, which representation as so qualified shall be true and
correct in all respects) at and on the Closing Date as if made at and on such
date.
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7.2 Covenants. The Purchaser shall have performed in all
material respects all obligations and complied with all agreements,
undertakings, covenants and conditions required by it to be performed at or
prior to the Closing.
7.3 Compliance with this Agreement. The Purchaser shall have
performed and complied in all material respects with all of its agreements set
forth herein that are required to be performed by the Purchaser on or before the
Closing Date.
7.4 Officer's Certificate. The Company shall have received
from the Purchaser, a certificate, signed by the Purchaser to the effect that
the conditions set forth in the foregoing Sections 7.1, 7.2 and 7.3 have been
satisfied with respect to the Purchaser.
7.5 No Injunction. No law or Governmental Order (whether
temporary, preliminary or permanent) shall be in effect that restrains, enjoins
or otherwise prohibits consummation of the transactions contemplated in the
Transaction Documents or that, individually or in the aggregate with all other
such laws or Governmental Order, could reasonably be expected to result in a
Company Material Adverse Effect and no Governmental Authority or other person
shall have instituted any proceeding seeking any such law or Governmental
Orders.
7.6 Consents and Approvals. All consents, approvals,
exemptions, authorizations, or other actions by, or notice to, or filings with,
Governmental Authorities and other Persons and all corporate actions which are
necessary or required in connection with the execution, delivery or performance
by, or enforceability against, the Purchaser of the Transaction Documents shall
have been obtained and be in full force and effect, and the Company shall have
been furnished with appropriate evidence thereof and all applicable waiting
periods shall have expired without any action being taken or threatened which
would have a Company Material Adverse Effect.
7.7 Payment of Purchase Price. The Purchaser shall be prepared
to pay the aggregate purchase price for the Preferred Shares to be purchased by
the Purchaser.
7.8 Registration Rights Agreement. The Purchaser shall have
duly executed and delivered the Registration Rights Agreement.
7.9 Voting Agreements. The Purchaser shall have duly executed
and delivered the Voting Agreements.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification. Except as otherwise provided in this
Article VIII, the Company (the "Indemnifying Party") agrees to indemnify, defend
and hold harmless the Purchaser and its affiliates and their respective
officers, directors, agents, employees, subsidiaries, partners, members and
controlling persons (each, an "Indemnified Party") to
18
the fullest extent permitted by law from and against any and all losses,
damages, expenses (including reasonable fees, disbursements and other charges of
counsel incurred by the Indemnified Party in any action between the Indemnifying
Party and the Indemnified Party or between the Indemnified Party and any third
party or otherwise) or other liabilities (collectively, "Losses") resulting from
or arising out of any breach of any representation or warranty, covenant or
agreement by the Company in the Transaction Documents, including as a result of
any Claim by the Indemnified Party or a third party with respect to any such
breach. For purposes of the foregoing, any diminution in value of the Preferred
Shares or the Common Stock issuable upon conversion of the Preferred Shares,
shall be deemed a Loss.
8.2 Notification. Each Indemnified Party under this Article
VIII shall, promptly after the receipt of notice of the commencement of any
Claim by a third party against such Indemnified Party in respect of which
indemnity may be sought from the Indemnifying Party under this Article VIII,
notify the Indemnifying Party in writing of the commencement thereof. The
omission of any Indemnified Party to so notify the Indemnifying Party of any
such action shall not relieve the Indemnifying Party from any liability which it
may have to such Indemnified Party (a) other than pursuant to this Article VIII
or (b) under this Article VIII unless, and only to the extent that, such
omission results in the Indemnifying Party's forfeiture of substantive rights or
defenses. In case any such Claim shall be brought against any Indemnified Party,
and it shall notify the Indemnifying Party of the commencement thereof, the
Indemnifying Party shall be entitled to assume the defense thereof at its own
expense, with counsel satisfactory to such Indemnified Party in its reasonable
judgment (Xxxxxxxx & Xxxxxxxx and Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx being
deemed satisfactory to the parties hereof); provided, however, that any
Indemnified Party may, at its own expense, retain separate counsel to
participate in such defense at its own expense. Notwithstanding the foregoing,
in any Claim in which both the Indemnifying Party, on the one hand, and an
Indemnified Party, on the other hand, are, or are reasonably likely to become, a
party, such Indemnified Party shall have the right to employ separate counsel
and to control its own defense of such Claim if, in the reasonable opinion of
counsel to such Indemnified Party, either (x) one or more defenses are available
to the Indemnified Party that are not available to the Indemnifying Party or (y)
a conflict or potential conflict exists between the Indemnifying Party, on the
one hand, and such Indemnified Party, on the other hand, that would make such
separate representation advisable; provided, however, that the Indemnifying
Party shall not be liable for the fees and expenses of more than one counsel to
all Indemnified Parties. The Indemnifying Party agrees that it will not, without
the prior written consent of the Purchaser, settle, compromise or consent to the
entry of any judgment in any pending or threatened Claim relating to the matters
contemplated hereby (if any Indemnified Party is a party thereto or has been
actually threatened to be made a party thereto) unless such settlement,
compromise or consent includes an unconditional release of each Indemnified
Party from all liability arising or that may arise out of such Claim. The
Indemnifying Party shall not be liable for any settlement of any Claim effected
against an Indemnified Party without its written consent. The rights accorded to
an Indemnified Party hereunder shall be in addition to any rights that any
Indemnified Party may have at common law, by separate agreement or otherwise;
provided, however, that notwithstanding the foregoing or anything to the
contrary contained in this
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Agreement, nothing in this Article VIII shall restrict or limit any rights that
any Indemnified Party may have to seek equitable relief.
8.3 Contribution. If the indemnification provided for in this
Article VIII from the Indemnifying Party is unavailable to an Indemnified Party
hereunder in respect of any Losses referred to herein (other than by reason of a
breach of, or default under, the provisions of Section 8.2 hereof by such
Indemnified Party), then the Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions which resulted in such Losses,
as well as any other relevant equitable considerations. The relative faults of
such Indemnifying Party and Indemnified Party shall be determined by reference
to, among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied by,
such Indemnifying Party or Indemnified Party, and the parties relative intent,
knowledge, access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of the Losses referred
to above shall be deemed to include, subject to the limitations set forth in
Sections 8.1 and 8.2, any legal or other fees, charges or expenses reasonably
incurred by such party in connection with any investigation or proceeding.
ARTICLE IX
TERMINATION OF AGREEMENT
9.1 Termination. This Agreement may be terminated prior to the
Closing as follows:
(a) at any time on or prior to the Closing Date, by mutual
written consent of the Company and the Purchaser;
(b) at the election of the Company or the Purchaser, by
written notice to the other parties hereto after 5:00 p.m., New York time, on
December 31, 2001 if the Closing shall not have occurred, unless such date is
extended by the mutual written consent of the Company and the Purchaser;
provided, however, that the right to terminate this Agreement under this Section
9.1(b) shall not be available (i) to any party whose breach of any
representation, warranty, covenant or agreement under this Agreement has been
the proximate cause of the failure of the Closing to occur on or before such
date or (ii) if the Closing has not occurred solely because any party hereto has
not yet obtained a necessary approval from any Governmental Authority;
(c) at the election of the Company, if there has been a
material breach of any representation, warranty, covenant or agreement on the
part of any of the Purchaser contained in this Agreement, which breach has not
been cured within fifteen (15) Business Days of notice to the Purchaser of such
breach; or
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(d) at the election of the Purchaser, if there has been a
material breach of any representation, warranty, covenant or agreement on the
part of the Company contained in this Agreement, which breach has not been cured
within fifteen (15) Business Days notice to the Company of such breach.
If this Agreement so terminates, it shall become null and void
and have no further force or effect, except as provided in Section 9.2.
9.2 Survival. Notwithstanding Section 9.1, if this Agreement
is terminated and the transactions contemplated hereby are not consummated as
described above, this Agreement shall become void and of no further force and
effect, except for the provisions of Article I and this Section 9.2; provided,
however, that (a) none of the parties hereto shall have any liability in respect
of a termination of this Agreement pursuant to Section 9.1(a) or Section 9.1(b)
and (b) nothing shall relieve any of the parties from liability for actual
damages resulting from a termination of this Agreement pursuant to Section
9.1(c) or 9.1(d); and provided, further, that none of the parties hereto shall
have any liability for speculative, indirect, unforeseeable or consequential
damages or lost profits resulting from any legal action relating to any
termination of this Agreement.
ARTICLE X
MISCELLANEOUS
10.1 Survival of Representations and Warranties. All of the
representations, warranties and indemnities made herein shall survive the
execution and delivery of this Agreement until the date that is ninety (90) days
after the receipt by the Purchaser of audited financial statements of the
Company for the fiscal year ending December 31, 2002 (or, if such fiscal year
changes and no such audited consolidated financial statements are available,
then the successor fiscal year), except to the extent any Claim under Section
Article VIII is pending, in which case the representations, warranties and
indemnities related to such Claim shall survive until such Claim is resolved in
accordance with Article VIII.
10.2 Amendments and Waivers. The provisions of this Agreement
may not be amended, modified, supplemented or terminated, and waivers or
consents to departures from the provisions hereof may not be given, without the
written consent of the Company and the Purchaser.
10.3 Notices. All notices and other communications provided
for or permitted hereunder shall be made in writing by hand delivery,
telecopier, any courier guaranteeing overnight delivery or first class
registered or certified mail, return receipt requested, postage prepaid,
addressed to the applicable party at the address set forth below or such other
address as may hereafter be designated in writing by such party to the other
parties in accordance with the provisions of this Section:
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If to the Company, to:
Key3Media Group, Inc.
0000 Xxxxxxxx Xxxx., Xxxxx 000
Xxx Xxxxxxx, XX 00000
Telecopy: 000-000-0000
Attention: Xxx X. Xxxxxxxxx, Esq.
With a copy to:
Xxxxxxxx and Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: 000-000-0000
Attention: Xxxxxx X. XxXxxxxxx, Esq.
If to the Purchaser, to:
Invemed Catalyst Fund, L.P.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy: 000-000-0000
Attention: Xxxxxxx Present
With a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
1285 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000-0000
Telecopy: 000-000-0000
Attention: Xxxxxxx X. Xxxx, Esq.
All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; when
receipt is acknowledged, if telecopied; on the next business day, if timely
delivered to a courier guaranteeing overnight delivery; and five days after
being deposited in the mail, if sent first class or certified mail, return
receipt requested, postage prepaid.
10.4 Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and assigns of each party; provided however that neither the Company,
on the one hand, nor the Purchaser on behalf of the Purchaser, on the other
hand, shall assign or delegate any of the rights or obligations created under
this Agreement without the prior written consent of the other party; provided
further that, the Purchaser may assign any of its rights under this Agreement,
but not any of its obligations hereunder, to any Affiliate of the Purchaser
without the Company's consent.
22
10.5 No Third Party Beneficiaries. This Agreement shall be
binding upon and inure solely to the benefit of the parties hereto and their
permitted assigns, and nothing herein, express or implied, is intended to or
shall confer upon any other Person any legal or equitable right, benefit or
remedy of any nature whatsoever or by reason of this Agreement.
10.6 Counterparts. This Agreement may be executed in two or
more counterparts, each of which, when so executed and delivered, shall be
deemed to be an original, but all of which counterparts, taken together, shall
constitute one and the same instrument.
10.7 Descriptive Headings, Etc. The headings in this Agreement
are for convenience of reference only and shall not limit or otherwise affect
the meaning of terms contained herein. Unless the context of this Agreement
otherwise requires: (1) words of any gender shall be deemed to include each
other gender; (2) words using the singular or plural number shall also include
the plural or singular number, respectively; (3) the words "hereof", "herein"
and "hereunder" and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement, and Section and paragraph references are to the Sections and
paragraphs of this Agreement unless otherwise specified; (4) the word
"including" and words of similar import when used in this Agreement shall mean
"including, without limitation," unless otherwise specified; (5) "or" is not
exclusive; and (6) provisions apply to successive events and transactions.
10.8 Severability. In the event that any one or more of the
provisions, paragraphs, words, clauses, phrases or sentences contained herein,
or the application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision, paragraph, word, clause, phrase or
sentence in every other respect and of the other remaining provisions,
paragraphs, words, clauses, phrases or sentences hereof shall not be in any way
impaired, it being intended that all rights, powers and privileges of the
parties hereto shall be enforceable to the fullest extent permitted by law.
10.9 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York (without giving
effect to the conflict of law principles thereof).
10.10 Remedies; Specific Performance. The parties hereto
acknowledge that money damages would not be an adequate remedy at law if any
party fails to perform in any material respect any of its obligations hereunder,
and accordingly agree that each party, in addition to any other remedy to which
it may be entitled at law or in equity, shall be entitled to seek to compel
specific performance of the obligations of any other party under this Agreement,
without the posting of any bond, in accordance with the terms and conditions of
this Agreement in any court of the United States or any State thereof having
jurisdiction, and if any action should be brought in equity to enforce any of
the provisions of this Agreement, none of the parties hereto shall raise the
defense that there is an adequate remedy at law. Except as otherwise provided by
law, a delay or omission by a
23
party hereto in exercising any right or remedy accruing upon any such breach
shall not impair the right or remedy or constitute a waiver of or acquiescence
in any such breach. No remedy shall be exclusive of any other remedy. All
available remedies shall be cumulative.
10.11 Entire Agreement. The Transaction Documents are intended
by the parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There are no
restrictions, promises, representations, warranties, covenants or undertakings
relating to such subject matter, other than those set forth or referred to
herein or in the other Transaction Documents. The Transaction Documents
supersede all prior agreements and understandings between the parties to this
Agreement with respect to such subject matter.
10.12 Fees. Upon the Closing, the Company shall reimburse the
Purchaser for all of its reasonable fees, disbursements and other charges of
counsel reasonably incurred in connection with the transactions contemplated by
this Agreement up to an aggregate amount of $50,000 if the Closing takes place.
10.13 Consent to Jurisdiction; Waiver of Jury. Each party to
this Agreement hereby irrevocably and unconditionally agrees that any legal
action, suit or proceeding arising out of or relating to this Agreement or any
agreements or transactions contemplated hereby may be brought in any federal
court of the Southern District of New York or any state court located in New
York County, State of New York, and hereby irrevocably and unconditionally
expressly submits to the personal jurisdiction and venue of such courts for the
purposes thereof and hereby irrevocably and unconditionally waives any claim (by
way of motion, as a defense or otherwise) of improper venue, that it is not
subject personally to the jurisdiction of such court, that such courts are an
inconvenient forum or that this Agreement or the subject matter may not be
enforced in or by such court. Each party hereby irrevocably and unconditionally
consents to the service of process of any of the aforementioned courts in any
such action, suit or proceeding by the mailing of copies thereof by registered
or certified mail, postage prepaid, to the address set forth or provided for in
Section 10.3 of this Agreement, such service to become effective 10 days after
such mailing. Nothing herein contained shall be deemed to affect the right of
any party to serve process in any manner permitted by law or commence legal
proceedings or otherwise proceed against any other party in any other
jurisdiction to enforce judgments obtained in any action, suit or proceeding
brought pursuant to this Section. Each of the parties hereby irrevocably waives
trial by jury in any action, suit or proceeding, whether at law or equity,
brought by any of them in connection with this Agreement or the transactions
contemplated hereby.
10.14 Further Assurances. Each party hereto shall do and
perform or cause to be done and performed all such further acts and things and
shall execute and deliver all such other agreements, certificates, instruments
and documents as any other party hereto reasonably may request in order to carry
out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
24
10.15 No Inconsistent Agreements. The Company will not
hereafter enter into any agreement which is inconsistent with the rights granted
to the Purchaser in this Agreement.
10.16 Construction. The parties acknowledge that each of them
has had the benefit of legal counsel of its own choice and has been afforded an
opportunity to review this Agreement with its, his or her legal counsel and that
this Agreement shall be construed as if jointly drafted by the Company and the
Purchaser.
[Remainder of page intentionally left blank.]
25
IN WITNESS WHEREOF, the parties have executed this Stock
Purchase Agreement as of the date first above written.
KEY3MEDIA GROUP, INC.
By:
--------------------------------------
Name:
Title:
INVEMED CATALYST FUND, L.P.
By: Invemed Catalyst GenPar, LLC,
its general partner
By: Gladwyne Catalyst GenPar, LLC,
its managing member
--------------------------------------
Name: Xxxxxxx Present
Title: Member
26
Schedule A
NAME NUMBER OF PREFERRED SHARES PURCHASE PRICE
-------------------------------------- ----------------------------- -----------------
Invemed Catalyst Fund, L.P. 1,000,000 $25,000,000
Exhibit A
CERTIFICATE OF DESIGNATIONS
OF
SERIES A 5.5% CONVERTIBLE REDEEMABLE PREFERRED STOCK
OF
KEY3MEDIA GROUP, INC.
KEY3MEDIA GROUP, INC., a Delaware corporation (the
"Corporation"), DOES HEREBY CERTIFY:
That the following resolution was duly adopted by the Board of
Directors of the Corporation (the "Board of Directors") at a meeting duly
convened and held on November 13, 2001 pursuant to authority conferred upon the
Board of Directors by the provisions of the Certificate of Incorporation of the
Corporation authorizing the Corporation to issue up to 200 million shares of its
preferred stock, par value $0.01 per share (the "Preferred Stock"):
"BE IT RESOLVED, that the issuance of a series of preferred
stock, par value $0.01 per share (the "Preferred Stock"), of Key3Media Group,
Inc. (the "Corporation") is hereby authorized, and the designation, voting
powers, preferences and relative, participating, optional and other special
rights, and qualifications, limitations and restrictions thereof, of the shares
of such series, in addition to those set forth in the certificate of
incorporation of the Corporation, are hereby fixed as follows:
SECTION 1. DESIGNATION. The distinctive serial designation of
such series is "Series A 5.5% Convertible Redeemable Preferred Stock" ("Series
A"). Each share of Series A shall be identical in all respects to every other
share of Series A.
SECTION 2. NUMBER OF SHARES. The number of shares of Series A
shall be one million. Subject to the approval required by Section 9(b), such
number may from time to time be increased (but not in excess of the total number
of authorized shares of Preferred Stock) or decreased (but not below the number
of shares of Series A then outstanding) by the Board of Directors. Shares of
Series A that are redeemed, purchased or otherwise acquired by the Corporation
or converted into Common Stock shall be cancelled and shall revert to authorized
but unissued shares of Preferred Stock undesignated as to series.
SECTION 3. DEFINITIONS. As used herein with respect to Series
A:
(a) "Business Day" means each Monday, Tuesday, Wednesday,
Thursday or Friday on which banking institutions in The City of New York are not
authorized or obligated by law, regulation or executive order to close.
(b) "Common Shares" means the Common Stock and the non-voting
common stock, par value $0.01 per share, of the Corporation.
(c) "Common Stock" means the common stock, par value $0.01 per
share, of the Corporation.
(d) "Junior Stock" means the Common Shares and any other
classes or series of capital stock of the Corporation hereafter authorized that
are not, by their express terms, Parity Stock or Senior Stock and over which
Series A has preference or priority in the payment of dividends or in the
distribution of assets on any liquidation, dissolution or winding up of the
Corporation.
(e) "Parity Stock" means the Series B 5.5% Convertible
Redeemable Preferred Stock of the Corporation (the "Series B") and any other
class or series of capital stock of the Corporation that by its express terms
ranks on a parity with Series A in the payment of dividends or in the
distribution of assets on any liquidation, dissolution or winding up of the
Corporation.
(f) "Senior Stock" means any class or series of capital stock
of the Corporation that by its express terms ranks senior to the Series A in the
payment of dividends or in the distribution of assets on any liquidation,
dissolution or winding up of the Corporation. .
(f) "Person" means any individual, corporation, partnership,
joint venture, trust, unincorporated organization, government or any agency or
political subdivision thereof or any other entity or organization.
SECTION 4. DIVIDENDS.
(A) RATE. The holders of the Series A shall be entitled to
receive, when, as and if declared by the Board of Directors, but only out of
funds legally available therefor, cash dividends ("Quarterly Dividends") at the
annual rate of 5.5% of the Applicable Liquidation Preference (as defined below)
per share, and no more, which shall accrue and be payable quarterly on the __
day of February, May, August and November in each year, respectively, beginning
on February __, 2002 (or, if any such date is not a Business Day, on the next
succeeding Business Day)(each, a "Dividend Payment Date") with respect to the
period from and including (i) if the respective Dividend Payment Date is the
first Dividend Payment Date, November __, 2001 (the "Issue Date") and (ii) in
all other cases, the Dividend Payment Date immediately preceding the respective
Dividend Payment Date to but excluding the respective Dividend Payment Date
(each such period, a "Quarterly Dividend Period"), to the holders of record on
the date, not more than 60 nor less than 10 days preceding the respective
Dividend Payment Date, fixed for that purpose by the Board of Directors in
advance of payment of each particular dividend. The Quarterly Dividends payable
per share of Series A for each Quarterly Dividend Period shall be computed by
multiplying the Applicable Liquidation Preference for such Quarterly Dividend
Period by 1.375%. The accrued Quarterly Dividends for any period less than a
full Quarterly Dividend Period during which shares of Series A are outstanding
shall be computed on the basis of a 360-day year of twelve 30-day months and the
actual number of days elapsed in the period. To the extent that any Quarterly
Dividends payable on the Series A on any Dividend Payment Date (whether or not
declared) are not paid in cash or declared and set aside in cash for payment
prior to 5:00 p.m., New York City time, on such Dividend Payment Date (such time
and date, the "Payment Deadline" and such unpaid Quarterly Dividends, the
"Unpaid Quarterly
2
Dividends"), then such Unpaid Quarterly Dividends shall be deemed paid, shall
not cumulate and shall cease to accrue and be payable as of the Payment Deadline
as long as such Unpaid Quarterly Dividends are added to the Liquidation
Preference as required by Section 5(a) below. No interest, or sum of money in
lieu of interest, shall be payable in respect of any Unpaid Quarterly Dividends.
The "Applicable Liquidation Preference" means, with respect to
any Quarterly Dividend Period, the Liquidation Preference determined as of 5:01
p.m., New York City Time, on the first day of such Quarterly Dividend Period
(after giving effect to the accretion of all Unpaid Quarterly Dividends for all
prior Quarterly Dividend Periods as required by Section 5(a) below) .
(b) PRIORITY OF QUARTERLY DIVIDENDS. So long as any share of
Series A remains outstanding, no dividend whatever shall be paid or declared and
no distribution shall be made on any Junior Stock, other than a dividend payable
solely in Junior Stock or a Participating Dividend (as hereinafter defined), and
no shares of Junior Stock shall be purchased, redeemed or otherwise acquired for
consideration by the Corporation, directly or indirectly (other than as a result
of a reclassification of Junior Stock for or into Junior Stock, or the exchange
or conversion of one share of Junior Stock for or into another share of Junior
Stock, and other than through the use of the proceeds of a substantially
contemporaneous sale of other shares of Junior Stock), unless (i) the full
Quarterly Dividends thereon for the then current Quarterly Dividend Period has
been paid or declared and set aside for payment and (ii) all prior redemption
requirements with respect to Series A have been complied with. When the
Quarterly Dividends for any Quarterly Dividend Period are not paid in full upon
the shares of Series A and any Parity Stock, all such dividends declared upon
shares of Series A and all Parity Stock shall be declared pro rata so that the
respective amounts of such dividends shall bear the same ratio to each other as
the accrued but unpaid dividends per share on the shares of Series A and all
such Parity Stock for such Quarterly Dividend Period bear to each other. Subject
to the foregoing and paragraph (c) below, and not otherwise, such dividends
(payable in cash, stock or otherwise) as may be determined by the Board of
Directors may be declared and paid on any Junior Stock from time to time out of
any funds legally available therefor, and the shares of Series A shall not be
entitled to participate in any such dividend.
(c) PARTICIPATING DIVIDENDS. In addition to the Quarterly
Dividends provided above, if the Board of Directors declares or pays any
dividend, or makes any other distribution, on the Common Shares, then
concurrently therewith the Board of Directors shall declare or pay (as
applicable) a dividend or make a distribution on the Series A in an amount per
share equal to the product of (i) the dividend or distribution per Common Share
and (ii) the number of shares of Common Stock into which one share of Series A
is then convertible (collectively, ("Participating Dividends"). No dividend
whatever shall be declared or paid, and no other distribution shall be made, on
the Common Shares unless the corresponding Participating Dividend is paid on the
shares of Series A in accordance with the preceding sentence.
3
SECTION 5. LIQUIDATION RIGHTS.
(a) LIQUIDATION. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Corporation, the
holders of Series A shall be entitled, before any distribution or payment out of
the assets of the Corporation may be made to or set aside for the holders of any
Junior Stock, to receive in full an amount equal to the Liquidation Preference
(as hereinafter defined) determined as of the payment date, together with an
amount equal to the Accrued Dividends with respect to the payment date. For
purposes of this Section 5 the merger or consolidation of the Corporation with
any other Person shall not constitute a liquidation, dissolution or winding up
of the Corporation.
"Accrued Dividends" means, with respect to any payment,
redemption or conversion date, the accrued and unpaid Quarterly Dividends per
share of Series A from and including the first day of the Quarterly Dividend
Period in which such payment, redemption or conversion date occurs to but
excluding the date of such payment, redemption or conversion, whether or not
earned or declared.
"Liquidation Preference" shall initially be $25.00 per share
of Series A but shall increase on the Payment Deadline on each Dividend Payment
Date if there are any Unpaid Quarterly Dividends with respect to the Quarterly
Dividend Period ending on the day prior to such Dividend Payment Date by the
amount of such Unpaid Quarterly Dividends per share of Series A.
(b) PARTIAL PAYMENT. If the assets of the Corporation are not
sufficient to pay in full the Liquidation Preference determined as of the
payment date and all Accrued Dividends with respect to the payment date to all
holders of Series A and all holders of any Parity Stock, the amounts paid to the
holders of Series A and to the holders of all Parity Stock shall be pro rata in
accordance with the respective aggregate liquidation preferences of Series A and
all such Parity Stock.
(c) RESIDUAL DISTRIBUTIONS. If the Liquidation Preference
determined as of the payment date and all Accrued Dividends with respect to the
payment date have been paid in full to all holders of Series A and the
respective liquidation preferences and any accrued dividends payable in
connection with such liquidation, dissolution or winding up have been paid in
full to all holders of any Parity Stock, the holders of Junior Stock shall be
entitled to receive all remaining assets of the Corporation according to their
respective rights and preferences.
SECTION 6. REDEMPTION.
(a) OPTIONAL REDEMPTION. The Corporation, at the option of the
Board of Directors, may redeem in whole or in part the shares of Series A at the
time outstanding, at any time or from time to time, upon notice given as
provided in Subsection (b) below, for cash at the redemption price in effect at
the redemption date as provided in this Section 6; provided, however, that no
shares of Series A may be redeemed before November __, 2004. The redemption
price per share of Series A shall be equal to the sum of (i) the Liquidation
Preference determined as of the redemption date, (ii) the Accrued Dividends with
respect to the redemption
4
date, and (iii) the premium per share of Series A, if any, specified in the
following table determined by reference to the redemption date:
REDEMPTION DATE PREMIUM
--------------- -------
November ___, 2004 to November ___, 2005 $0.87500
November ___, 2005 to November ___, 2006 $0.66250
November ___, 2006 to November ___, 2007 $0.43750
November ___, 2007 to November ___, 2008 $0.21875
On or after November ___, 2008 $0.00
(b) NOTICE OF REDEMPTION. Notice of every redemption of shares
of Series A shall be mailed by first class mail, postage prepaid, addressed to
the holders of record of the shares to be redeemed at their respective last
addresses appearing on the books of the Corporation. Such mailing shall be at
least 30 days and not more than 60 days before the date fixed for redemption.
Any notice mailed as provided in this Subsection shall be conclusively presumed
to have been duly given when mailed, whether or not the holder receives such
notice, and the failure duly to give such notice by mail, or any defect in such
notice or in the mailing thereof, to any holder of shares of Series A designated
for redemption shall not affect the validity of the proceedings for the
redemption of any other shares of Series A.
(c) PARTIAL REDEMPTION. In case of any redemption of only part
of the shares of Series A at the time outstanding, the shares to be redeemed
shall be selected either pro rata or by lot or in such other manner as the Board
of Directors may determine to be fair and equitable. Subject to the provisions
hereof, the Board of Directors shall have full power and authority to prescribe
the terms and conditions upon which shares of Series A shall be redeemed from
time to time.
(d) EFFECTIVENESS OF REDEMPTION. If notice of redemption has
been duly given, and if on or before the redemption date specified in the notice
all funds necessary for the redemption have been set aside by the Corporation,
separate and apart from its other funds, in trust for the pro rata benefit of
the holders of the shares called for redemption, so as to be and continue to be
available therefor, then, notwithstanding that any certificate for any share so
called for redemption has not been surrendered for cancellation, on and after
the redemption date all shares so called for redemption shall cease to be
outstanding and all rights with respect to such shares shall forthwith on such
redemption date cease and terminate, except only the right of the holders
thereof to receive the amount payable on such redemption without interest. Any
funds unclaimed at the end of three years from the redemption date shall, to the
extent permitted by law, be released to the Corporation, after which time the
holders of the shares so called for redemption shall look only to the
Corporation for payment of the redemption price of such
5
shares. Any funds so set aside by the Corporation that are not required for such
redemption because of the subsequent exercise of any right of conversion shall
be released or repaid to the Corporation forthwith.
SECTION 7. CONVERSION.
(a) AUTOMATIC AND MANDATORY CONVERSIONS. (i) As of 5:00 pm,
New York City time, on November __, 2011 (the "Automatic Conversion Date"), all
(but not less than all) of the outstanding shares of Series A will automatically
be converted into fully paid, validly issued and non-assessable shares of Common
Stock, at the rate of that number of shares of Common Stock for each full share
of Series A (calculated as to each conversion to the nearest 1/100 of a share of
Common Stock) that is equal to the Adjusted Liquidation Preference (as
hereinafter defined) divided by the lower of (i) the Conversion Price (as
hereinafter defined) or (ii) the Closing Price (as hereinafter defined) for the
Common Stock, in each case determined as of the Automatic Conversion Date, or
into such additional or other securities, cash or property and at such other
rates as required in accordance with the provisions set forth below (the
"Automatic Conversion").
(ii) At any time after the volume-weighted average of the
Closing Price (as hereinafter defined) of the Common Stock for any 60
consecutive Trading Days (as hereinafter defined) equals or exceeds 150% of the
then current Conversion Price, then by written notice given as provided below
the Corporation may cause all (but not less than all) of the outstanding shares
of Series A to be converted into fully paid, validly issued and non-assessable
shares of Common Stock, at the rate of that number of shares of Common Stock for
each full share of Series A (calculated as to each conversion to the nearest
1/100 of a share of Common Stock) that is equal to the Adjusted Liquidation
Preference divided by the Conversion Price, in each case determined as of 5:00
pm, New York City time, on the Mandatory Conversion Date (as hereinafter
defined), or into such additional or other securities, cash or property and at
such other rates as required in accordance with the provisions set forth below
(the "Mandatory Conversion").
(iii) The Corporation shall mail written notice of any
Automatic Conversion or Mandatory Conversion by first class mail, postage
prepaid, addressed to the holders of record of the outstanding shares of Series
A at their respective last addresses appearing on the books of the Corporation.
In the case of the Mandatory Conversion, such written notice shall specify the
date of the mandatory conversion (the "Mandatory Conversion Date") which shall
not be earlier than the date on which the notice is given. Any notice mailed as
provided in this subsection shall be conclusively presumed to have been duly
given when so mailed, whether or not the holder receives such notice, and the
failure duly to give such notice by mail, or any defect in such notice or in the
mailing thereof, to any holder of shares of Series A shall not affect the
validity of the Automatic Conversion or Mandatory Conversion, as applicable, of
any other shares of Series A. The Automatic Conversion and the Mandatory
Conversion shall be deemed to have occurred at the close of business in The City
of New York on Automatic Conversion Date and the Mandatory Conversion Date,
respectively, and from and after such time the shares of Series A shall no
longer be deemed outstanding, the certificates therefore shall represent only
the right to
6
receive the Common Stock or other consideration deliverable upon the conversion
of the Series A and the person or persons entitled to receive such Common Stock
shall be treated for all purposes as the record holder or holders of such Common
Stock at such time; provided, however, that in order to receive certificates
representing such Common Stock or other consideration the holders of shares of
Series A must surrender the certificate or certificates representing their
shares of Series A at the office of the transfer agent for the Series A or at
such other office or offices, if any, as the Board of Directors may designate
for the purpose (which certificate or certificates for the Series A, if the
Corporation shall so require, shall be duly endorsed to the Corporation or in
blank, or be accompanied by proper instruments of transfer to the Corporation or
in blank), accompanied by an irrevocable written notice specifying the name or
names (with address or addresses) in which a certificate or certificates
evidencing the shares of Common Stock to be issued upon such conversion are to
be issued or to whom any other consideration deliverable upon such conversion is
to be delivered. The Corporation shall, as soon as practicable after such
surrender and compliance, deliver at such office, to the person or persons
entitled thereto (as specified in the written notice), a certificate or
certificates evidencing the Common Stock to which such person or persons shall
be entitled as aforesaid, together with a cash adjustment in respect of any
fraction of a share of Common Stock as hereinafter provided and/or any other
consideration deliverable upon such conversion.
(b) RIGHT OF CONVERSION. Each share of Series A shall be
convertible at the option of the holder thereof, at any time prior to the close
of business on the fourth Trading Day (as hereinafter defined) prior to the date
fixed for redemption of such share as provided in Section 6(a) (and thereafter
if the Corporation defaults in payment of the redemption price), into fully
paid, validly issued and nonassessable shares of Common Stock, at the rate of
that number of shares of Common Stock for each full share of Series A
(calculated as to each conversion to the nearest 1/100 of a share of Common
Stock) that is equal to the Adjusted Liquidation Preference divided by the
Conversion Price, in each case determined as of the date on which such
conversion becomes effective, or into such additional or other securities, cash
or property and at such other rates as required in accordance with the
provisions set forth herein. Notwithstanding anything herein to the contrary, if
a Sale Transaction occurs, then for a period beginning simultaneously with the
consummation of such Sale Transaction and ending five years thereafter the
holders of the Series A shall have the right to convert the Series A at the rate
of that number of shares of Common Stock for each full share of Series A
(calculated as to each conversion to the nearest 1/100 of a share of Common
Stock) that is equal to the Adjusted Liquidation Preference (determined as of
the date on which such conversion becomes effective) divided by the lower of (i)
the Conversion Price (determined as of the date on which such conversion becomes
effective) and (ii) 95% of the Current Market Price as of the Business Day prior
to such the date on which the Sale Transaction was consummated, or into such
additional or other securities, cash or property and at such other rates as
required in accordance with the provisions set forth herein.
(c) CONVERSION PROCEDURES. Any holder of shares of Series A
desiring to convert such shares into Common Stock shall surrender the
certificate or certificates evidencing such shares of Series A at the office of
the transfer agent for the Series A or at such other office or offices, if any,
as the Board of Directors may designate for the purpose (which certificate or
7
certificates, if the Corporation shall so require, shall be duly endorsed to the
Corporation or in blank, or be accompanied by proper instruments of transfer to
the Corporation or in blank), accompanied by irrevocable written notice to the
Corporation to the effect that the holder elects so to convert such shares of
Series A (which notice shall specify the name or names (with address or
addresses) in which a certificate or certificates evidencing the shares of
Common Stock to be issued upon such conversion are to be issued or to whom any
other consideration deliverable upon such conversion is to be delivered).
Except as otherwise expressly set forth herein, no payment or
adjustment shall be made upon any conversion of shares of Series A on account of
any dividends accrued on such shares or on account of any dividends accrued on
the shares of Common Stock issued upon such conversion.
The Corporation shall, as soon as practicable after the
surrender of certificates evidencing shares of Series A being converted at the
office referred to above and compliance with the other conditions herein
contained, deliver at such office, to the person or persons entitled thereto (as
specified in the applicable written notice of conversion), a certificate or
certificates evidencing the number of full shares of Common Stock to which such
person or persons shall be entitled as aforesaid, together with a cash
adjustment in respect of any fraction of a share of Common Stock as hereinafter
provided and/or any other consideration deliverable upon such conversion. Such
conversion shall be deemed to have been made as of the date of such surrender of
certificates evidencing shares of Series A to be converted (or, if later, the
date of compliance with such other conditions), and the person or persons
entitled to receive the Common Stock deliverable upon conversion of such Series
A shall be treated for all purposes as the record holder or holders of such
Common Stock on such date.
(d) NO FRACTIONAL SHARES. No fractional shares of Common Stock
shall be issued upon conversion of Series A. If a number of shares of Series A
(evidenced by one or more certificates) shall be surrendered for conversion at
one time by the same holder, the number of full shares issuable upon conversion
thereof shall be computed on the basis of the aggregate number of shares of
Series A being converted at such time by such holder. Instead of any fractional
share of Common Stock that would otherwise be issuable to a holder upon
conversion of any shares of Series A, the Corporation shall pay a cash
adjustment in respect of such fractional share in an amount equal to the same
fraction of the Closing Price of the Common Stock on the day of conversion.
(e) RESERVATION OF SHARES; ETC. The Corporation shall at all
times reserve and keep available, free from preemptive or similar rights out of
its authorized but unissued Common Stock, solely for the purpose of effecting
the conversion of shares of Series A, the full number of shares of Common Stock
that would then be deliverable upon the conversion of all shares of Series A
then outstanding. If any shares of Common Stock required to be reserved for
purposes of conversion of the Series A hereunder require registration with or
approval of any governmental authority under any Federal or State law before
such shares may be issued or freely transferred upon conversion, the Corporation
will use its reasonable best efforts to cause such shares to be duly registered
or approved, as the case may be, as expeditiously as possible.
8
If the Common Stock is quoted on the New York Stock Exchange or any other U.S.
national securities exchange, the Corporation will, if permitted by the rules of
such exchange, list and keep listed on such exchange, upon official notice of
issuance, all shares of Common Stock issuable upon conversion of the Series A.
Notwithstanding the foregoing, the reference to free transferability in the
second sentence of this paragraph and the reference to listing in the third
sentence of this paragraph shall apply only when the Series A shall have become
freely transferable under the federal securities laws.
(f) PRIOR NOTICE OF CERTAIN EVENTS. In case:
(i) the Corporation shall authorize any transaction that would
require an adjustment to the Conversion Price (other than a transaction referred
to in paragraph (g)(i), (iii) or (vii) of this Section 7); or
(ii) the Corporation shall authorize any merger or
consolidation to which paragraph (i) of this Section 7 applies; or
(iii) of the voluntary or involuntary dissolution, liquidation
or winding up of the Corporation;
then the Corporation shall cause to be filed with the transfer agent for the
Series A, and shall cause to be mailed to the holders of record of the Series A,
at their last addresses as they shall appear upon the stock transfer books of
the Corporation, at least 20 days (or, in the case of a transaction referred to
in paragraph (g)(ii), (iv) or (v) below, 10 days) prior to the applicable
record, expiration or consummation date hereinafter specified, a notice stating
(x) the record date fixed for the determination of holders of Common Stock
entitled to the applicable issuance, dividend or distribution, (y) the date of
expiration of the applicable tender or exchange offer or (z) the date on which
any merger or consolidation to which paragraph (i) of this Section 7 applies is
expected to be consummated, as the case may be (but no failure to mail such
notice or any defect therein or in the mailing thereof shall affect the validity
of the corporate action required to be specified in such notice).
(g) ADJUSTMENT OF CONVERSION PRICE.
(i) In case the Corporation shall pay or make a dividend or
other distribution on any class of capital stock of the Corporation payable in
Common Stock, the Conversion Price in effect at the opening of business on the
day following the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution shall be reduced by multiplying such
Conversion Price by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding at the close of business on the date fixed
for such determination and the denominator shall be the sum of such number of
shares and the total number of shares constituting such dividend or other
distribution, such reduction to become effective immediately after the opening
of business on the day following the date fixed for such determination. (For the
purposes of determining adjustments to the Conversion Price as set forth herein,
shares of Common Stock held in the treasury of the Corporation, and
distributions or issuances in respect thereof, shall be disregarded.)
9
(ii) In case the Corporation shall issue rights or warrants to
all holders of either or both classes of its Common Shares, entitling them, for
a period of not more than 45 days, to subscribe for or purchase the applicable
Common Shares at a price per share less than the Current Market Price (as
hereinafter defined) of such shares on the date fixed for the determination of
stockholders entitled to receive such rights or warrants, the Conversion Price
in effect at the opening of business on the day following the date fixed for
such determination shall be reduced by multiplying such Conversion Price by a
fraction of which the numerator shall be the number of Common Shares outstanding
at the close of business on the date fixed for such determination plus the
number of Common Shares of each class which the aggregate of the offering price
of the total number of Common Shares of such class so offered for subscription
or purchase would purchase at such Current Market Price for the shares of such
class and the denominator shall be the number of Common Shares outstanding at
the close of business on the date fixed for such determination plus the number
of Common Shares of each class so offered for subscription or purchase, such
reduction to become effective immediately after the opening of business on the
day following the date fixed for such determination. In case any rights or
warrants referred to in this paragraph in respect of which an adjustment shall
have been made shall expire unexercised, the Conversion Price shall be
readjusted at the time of such expiration to the Conversion Price that would
have been in effect if no adjustment had been made on account of the
distribution or issuance of such expired and unexercised rights or warrants.
(iii) In case outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the Conversion Price
in effect at the opening of business on the day following the day upon which
such subdivision becomes effective shall be proportionately reduced, and
conversely, in case outstanding shares of Common Stock shall each be combined
into a smaller number of shares of Common Stock, the Conversion Price in effect
at the opening of business on the day following the day upon which such
combination becomes effective shall be proportionately increased, such reduction
or increase, as the case may be, to become effective immediately after the
opening of business on the day following the day upon which such subdivision or
combination becomes effective.
(iv) In case the Corporation shall, by dividend or otherwise,
distribute to all holders of either or both classes of its Common Shares
evidences of indebtedness, shares of capital stock of any class or series, other
securities, cash or assets (other than Stapled Securities (as hereinafter
defined), Common Stock or rights or warrants referred to in paragraph (g)(ii)
and other than pursuant to a merger or consolidation to which paragraph (i)
applies or a dividend or distribution payable exclusively in cash), the
Conversion Price in effect immediately prior to the close of business on the
date fixed for the determination of holders entitled to receive such
distribution shall be reduced by multiplying such Conversion Price by a fraction
of which the numerator shall be the Current Market Price on the date fixed for
such determination minus the quotient obtained by dividing (x) an amount equal
to the then aggregate fair market value (as determined in good faith by the
Board of Directors, whose good faith determination shall be conclusive and
described in a resolution of the Board of Directors) of such evidences of
indebtedness, shares of capital stock, other securities, cash and assets so
distributed by (y) the number of Common Shares outstanding at the close of
business on the date fixed for such determination and the denominator shall be
such Current Market Price, such reduction to become
10
effective immediately prior to the opening of business on the day following the
date fixed for such determination. If the Board of Directors determines the fair
market value of any distribution for purposes of this paragraph by reference to
the actual or when-issued trading market for any securities comprising such
distribution, it must in doing so consider the prices in such market over the
same period used in computing the Current Market Price for such purposes.
(v) In case the Corporation shall, by dividend or otherwise,
make a distribution to all holders of either or both classes of its Common
Shares payable exclusively in cash (other than pursuant to a merger or
consolidation to which paragraph (i) applies) in an aggregate amount that, when
combined with (x) the aggregate amount paid in respect of all other
distributions to all holders of either or both classes of its Common Shares paid
exclusively in cash within the 12 months preceding the date fixed for the
determination of holders entitled to receive such distribution to the extent
such amount has not already been applied in a prior adjustment pursuant to this
paragraph and (y) the aggregate Premium Amount (as hereinafter defined) paid in
respect of all tender or exchange offers by the Corporation or any subsidiary of
the Corporation for any Common Shares that expired within the 12 months
preceding the date fixed for such determination to the extent such Premium
Amount has not already been applied in a prior adjustment pursuant to the next
succeeding paragraph, exceeds 10% of the sum of the following product for each
class of Common Shares (A) the Current Market Price of such class on the date
fixed for such determination and (B) the number of Common Shares of such class
outstanding on the date fixed for such determination, the Conversion Price in
effect immediately prior to the close of business on the date fixed for such
determination shall be reduced by multiplying such Conversion Price by a
fraction of which the numerator shall be the Current Market Price of the Common
Stock on the date fixed for such determination less the Per Share Distribution
Amount (as hereinafter defined) paid in such distribution and the denominator
shall be such Current Market Price, such reduction to become effective
immediately prior to the opening of business on the day following the date fixed
for such determination.
(vi) In case the Corporation or any subsidiary of the
Corporation shall consummate a tender or exchange offer for any Common Shares
and pay a Premium Amount in respect thereof in an amount that, when combined
with (x) the aggregate amount paid in respect of all distributions to all
holders of either or both classes of its Common Shares paid exclusively in cash
within the 12 months preceding the date of expiration of such tender or exchange
offer to the extent such amount has not already been applied in a prior
adjustment pursuant to the immediately preceding paragraph and (y) the aggregate
Premium Amount paid in respect of all other tender or exchange offers by the
Corporation or any subsidiary of the Corporation any Common Shares that expired
within the 12 months preceding such date of expiration to the extent such
Premium Amount has not already been applied in a prior adjustment pursuant to
this paragraph, exceeds 10% of the sum of the following product for each class
of Common Shares (A) the Current Market Price of such class on such date of
expiration and (B) the Post-Tender Offer Number of Common Shares of such class,
the Conversion Price in effect immediately prior to the close of business on the
date of expiration of such tender or exchange offer shall be reduced by
multiplying such Conversion Price by a fraction of which the numerator shall be
the Current Market Price of the Common Stock on such date of expiration minus
the Per Share Premium Amount (as hereinafter defined) paid in such tender or
exchange offer and the
11
denominator shall be such Current Market Price, such reduction to become
effective immediately prior to the opening of business on the day following such
date of expiration.
(vii) In case the Corporation shall issue any Common Shares or
any Common Share Equivalent (as hereinafter defined) in a transaction other than
an Exempt Transaction (as hereinafter defined) at a price per share of the
relevant class of Common Shares that is below 95% of the most recent Closing
Price for such class of Common Shares available at the time at which the
Corporation agreed to make such issuance (the "Market Price"), the Conversion
Price in effect at the opening of business on the day following the date on
which the Company agreed to such issuance (the "Pricing Date") shall be reduced
by multiplying such Conversion Price by a fraction of which the numerator shall
be the number of Common Shares that would have been outstanding on a fully
diluted basis at the close of business on the Pricing Date if such issuance had
not occurred plus the number of Common Shares which the aggregate purchase price
paid in such sale would have purchased at the Market Price and the denominator
shall be the number of Common Shares outstanding at the close of business on the
Pricing Date on a fully diluted basis after giving effect to such issuance, such
reduction to become effective immediately after the opening of business on the
day following the Pricing Date. For purposes of the foregoing, the purchase
price per Common Share for any Common Share Equivalent shall be deemed to be the
quotient obtained by dividing (i) the sum of the purchase price paid for such
Common Share Equivalent plus any additional consideration that the holder
thereof must pay in order to convert, exchange or exercise such Common Share
Equivalent for the relevant class of Common Shares and (ii) the number of Common
Shares issuable upon such conversion, exchange or exercise, in each case without
regard to antidilution adjustments. In case any Common Share Equivalent in
respect of which an adjustment shall have been made under this paragraph shall
have expired or been terminated or redeemed without having been converted,
exchanged or exercised for Common Shares, then the Conversion Price shall be
readjusted at the time of such expiration, termination or redemption to the
Conversion Price that would have been in effect if no adjustment had been made
on account of the issuance of such Common Share Equivalent.
(viii) The Corporation may make such reductions in the
Conversion Price, in addition to those required by the foregoing paragraphs, as
it considers to be advisable to avoid or diminish any income tax to holders of
Common Shares or rights to purchase Common Shares resulting from any dividend or
distribution of stock (or rights to acquire stock) or from any event treated as
such for income tax purposes. In addition, the Corporation from time to time may
reduce the Conversion Price by any amount for any period of time if the period
is at least twenty days, the reduction is irrevocable during the period, and the
Board of Directors of the Corporation shall have made a determination that such
reduction would be in the best interest of the Corporation, which determination
shall be conclusive. Whenever the Conversion Price is reduced pursuant to the
preceding sentence, the Corporation shall mail to holders of record of the
Series A a notice of the reduction at least fifteen days prior to the date the
reduced Conversion Price takes effect, and such notice shall state the reduced
Conversion Price and the period it will be in effect.
(ix) The Corporation may not engage in any transaction if, as
a result thereof, the Conversion Price would be reduced to below the par value
per share of the Common Stock.
12
(x) No adjustment in the Conversion Price shall be required
unless such adjustment would require an increase or decrease of at least 1% in
the Conversion Price; provided, however, that any adjustments which by reason of
this paragraph are not required to be made shall be carried forward and taken
into account in any subsequent adjustment.
(xi) Whenever the Conversion Price is adjusted as herein
provided:
(1) the Corporation shall compute the adjusted
Conversion Price and shall prepare a certificate signed by the
Treasurer of the Corporation setting forth the adjusted
Conversion Price and showing in reasonable detail the facts
upon which such adjustment is based, and such certificate
shall forthwith be filed with the transfer agent for the
Series A; and
(2) a notice stating that the Conversion Price has been
adjusted and setting forth the adjusted Conversion Price shall
forthwith be required, and as soon as practicable after it is
required such notice shall be mailed by the Corporation to all
holders of record of shares of Series A, at their last
addresses as they shall appear upon the stock transfer books
of the Corporation.
(h) STAPLED SECURITIES.
(i) Prior to a Separation Event (as hereinafter defined) with
respect to any Stapled Securities, such Stapled Securities will be deemed, for
purposes of the adjustments contemplated hereby, to comprise part of the Common
Shares to which such Stapled Securities appertain, and as a result,
distributions in respect of such Stapled Securities will be deemed, for such
purposes, to be distributions in respect of such shares.
(ii) Each holder of Series A who converts any shares of Series
A after a Separation Event with respect to any Stapled Securities shall be
entitled to receive upon such conversion, in addition to the shares of Common
Stock issuable upon such conversion, the same rights to which such holder would
have been entitled under the Stapled Securities that would have appertained to
such shares of Common Stock if such holder had converted such shares of Series A
before such Separation Event.
(i) CONSOLIDATIONS, MERGERS OR SALES OF ASSETS. In the event
of any consolidation of the Corporation with, or merger of the Corporation into,
any other Person or any merger of another Person into the Corporation (other
than a merger or consolidation does not result in any reclassification,
conversion, exchange or cancellation of the outstanding shares of the Common
Stock or which is a Sale Transaction), each holder of shares of Series A shall
have the right thereafter to convert each share of Series A only into the kind
and amount of securities, cash and other property receivable upon such merger or
consolidation by a holder of the number of shares of Common Stock into which one
share of Series A could have been converted immediately prior to such merger or
consolidation, assuming such holder (i) is not the Person with which the
Corporation consolidated or into which the Corporation merged or which merged
into the Corporation, as the case may be, (a "Constituent Person") or an
affiliate of a Constituent Person and (ii) failed to exercise his or her rights
of election, if any, as to the kind or amount of
13
securities, cash and other property receivable upon such consolidation or
merger; provided, however, that if the kind or amount of securities, cash and
other property receivable upon such consolidation or merger is not the same for
each share of Common Stock held immediately prior to such consolidation or
merger by persons other than a Constituent Person or an affiliate thereof and in
respect of which such rights of election shall not have been exercised (each, a
"Non-Electing Share"), then for purposes of this paragraph the kind and amount
of securities, cash and other property receivable upon such consolidation or
merger by each Non-Electing Share shall be deemed to be the kind and amount so
receivable per share by a plurality of the Non-Electing Shares. If the
Corporation is not the surviving Person of such merger or consolidation, then it
shall cause such surviving Person to enter into a written agreement giving the
holders of Series A the right to effect such conversion, and such written
agreement shall provide for adjustments which, for events subsequent to the
effective date of such agreement, shall be as nearly equivalent as may be
practicable to the adjustments provided for herein in respect of the Series A.
The provisions of this paragraph shall similarly apply to successive
consolidations or mergers.
(j) CERTAIN DEFINITIONS. The following definitions shall apply
to terms used in this Section 7:
"Adjusted Liquidation Preference" means, with respect to any
conversion of the Series A, the sum of (i) the Liquidation Preference determined
as of the conversion date plus (ii) (A) the Accrued Dividends with respect to
such conversion date multiplied by (B) a fraction the numerator of which is the
Conversion Price determined as of such conversion date and the denominator of
which is the last Closing Price for the Common Stock on the last Trading Day
before the conversion date; provided, however, that in the case of any Mandatory
Conversion on or prior to November __, 2002, for purposes of the foregoing the
Liquidation Preference shall be deemed to be $26.40 per share and there shall be
deemed to be no Accrued Dividends.
"Closing Price" means, with respect to the shares of any class
of any common stock on any day, the last reported per share sale price, regular
way, of the shares of such class of common stock on such day, or, in case no
such sale takes place on such day, the average of the reported closing per share
bid and asked prices, regular way, of the shares of such class of common stock
on such day, in each case on the New York Stock Exchange or, if such class of
common stock is not listed or admitted to trading on the New York Stock
Exchange, on the principal national securities exchange or quotation system on
which such class of common stock is listed or admitted to trading or quoted, or,
if such class of common stock is not listed or admitted to trading or quoted on
any national securities exchange or quotation system, the average of the closing
per share bid and asked prices of such class of common stock on such day in the
over-the-counter market as reported by a generally accepted national quotation
service or, if not so available in such manner, as furnished by any New York
Stock Exchange member firm selected from time to time by the Board of Directors
of the Corporation for that purpose or, if not so available in such manner, as
otherwise determined in good faith by the Board of Directors (whose good faith
determination shall be conclusive and described in a resolution of the Board of
Directors).
14
"Common Share Equivalent" means any security, option, warrant
or other right or obligation which by its terms is convertible into, or
exchangeable or exercisable for, either class of Common Shares or another Common
Share Equivalent.
"Continuing Directors" means any member of the Board of
Directors who (i) was such a member as of the Issue Date or (ii) became such a
member thereafter and whose election to the Board of Directors was recommended
or approved, or who was elected or appointed by, a majority of the directors
described in clause (i) or who were so recommended, approved, elected or
appointed.
"Conversion Price" initially means $5.75, subject to
adjustment from time to time as set forth herein.
"Current Market Price" on any date in question means, with
respect to any class of Common Shares and any adjustment in conversion rights as
set forth herein, the average of the daily Closing Prices for the shares such
class of Common Shares for the five consecutive Trading Days ending on the
earlier of the date in question and the day before the Ex Date with respect to
the transaction requiring such adjustment; provided, however, that (i) if any
other transaction occurs requiring a prior adjustment to the Conversion Price
and the Ex Date for such other transaction falls after the first of such five
consecutive Trading Days, the Closing Price for each such Trading Day falling
prior to the Ex Date for such other transaction shall be adjusted by multiplying
such Closing Price by the same fraction by which the Conversion Price is so
required to be adjusted as a result of such other transaction and (ii) if any
other transaction occurs requiring a subsequent adjustment to the Conversion
Price and the Ex Date for such other transaction falls on or before the last of
such five consecutive Trading Days, the Closing Price for each such Trading Day
falling on or after the Ex Date for such other transaction shall be adjusted by
dividing such Closing Price by the same fraction by which the Conversion Price
is so required to be adjusted as a result of such other transaction.
"Ex Date" means (i) when used with respect to any dividend,
distribution or issuance with respect to any class of Common Shares, the first
date on which the shares of such class trades regular way on the relevant
exchange or in the relevant market from which the Closing Price is obtained
without the right to receive such dividend, distribution or issuance, (ii) when
used with respect to any subdivision or combination of shares of Common Stock,
the first date on which the Common Stock trades regular way on such exchange or
in such market after the time at which such subdivision or combination becomes
effective, (iii) when used with respect to any tender or exchange offer for any
class of Common Shares, the first date on which the shares of such class trades
regular way on such exchange or in such market after such tender or exchange
offer expires and (iv) when used with respect to any other transaction, the date
of consummation of such transaction.
"Exempt Transaction" means any of the following: (i) any
issuance of Common Shares or Common Share Equivalents which is covered by any of
the other adjustment provisions in this Section 7, (ii) any bona fide public
offering of Common Shares or Common Share Equivalents registered under the
Securities Act of 1933, (iii) any issuance by the
15
Corporation of Common Shares or Common Share Equivalents to the directors or
employees of, or consultants to, the Corporation or any of its subsidiaries that
was approved by the Board of Directors, (iv) any issuance of Common Shares or
Common Share Equivalents in connection with acquisitions, joint ventures or
other commercial transactions the primary purpose of which is not to raise
equity capital approved by the Board of Directors, (v) any issuance of Common
Shares or Common Share Equivalents to lenders or lessors in connection with
extensions of credit to the Corporation or any of its subsidiaries, (vi) any
issuance of Common Shares upon conversion of any shares of Series A or Series B
or upon exercise of any warrants or other securities outstanding on the Issue
Date or (vii) any issuance of Common Shares or Common Share Equivalents upon
conversion, exchange or exercise of any Common Share Equivalent, whether
outstanding on the Issue Date or issued thereafter.
"Per Share Distribution Amount" means, with respect to any
distribution, (i) the cash paid in such distribution divided by (ii) the number
of Common Shares outstanding on the date fixed for the determination of the
holders of entitled to receive such distribution, in each case without regard to
which class or classes of the Common Shares are entitled to receive such
distribution.
"Per Share Premium Amount" means, with respect to any tender
or exchange offer, (i) the Premium Amount paid as part of such tender or
exchange offer divided by (ii) the Post-Tender Offer Number of Common Shares.
"Post-Tender Offer Number of Common Shares" means, with
respect to any tender or exchange offer, the number of Common Shares outstanding
at the close of business on the date of expiration of such tender or exchange
offer (before giving effect to the acquisition of Common Shares pursuant
thereto) minus the number of Common Shares acquired pursuant thereto, in each
case determined without regard to the class or classes which are the subject of
the tender or exchange offer.
"Premium Amount" means, with respect to any tender or exchange
offer, the sum of the following differences for each class of Common Shares
which are the subject of such tender or exchange offer (i) the Tender
Consideration paid in such tender or exchange offer for the shares of such class
minus (ii) the product of the Current Market Price of the shares of such class
on the date of expiration of such tender or exchange offer and the number of
shares of such class acquired pursuant to such tender or exchange offer.
"Sale Transaction" means any of the following: (i) any sale by
the Corporation of all or substantially all of its assets, (ii) any merger,
consolidation, tender offer or other business combination or sale transaction if
the holders of the Corporation's Voting Securities immediately prior to such
transaction do not own collectively immediately after such transaction Voting
Securities of the Corporation or, if not the Corporation, the surviving Person
of such transaction (in either case, the "Surviving Person") entitled to cast at
least a majority of the total votes entitled to be cast by all of the
outstanding Voting Securities of the Surviving Person generally in the election
of the directors of the Surviving Person (or the individuals who perform a
similar function with respect to the Surviving Person); provided that no sale of
Voting Securities solely
16
involving a transfer among SOFTBANK Corp. and/or any of its majority-owned
affiliates (as defined in Rule 12b-2 under the Securities Exchange Act of 1934,
as amended) shall be deemed a Sale Transaction) or (iii) the Continuing
Directors of the Corporation cease to constitute a majority of the Board of
Directors after and as a result of any proxy contest.
"Separation Event" has the meaning set forth in the definition
of the term "Stapled Securities" below.
"Stapled Securities" means securities issued under any plan or
agreement providing in substance that, until such securities are redeemed or the
rights thereunder are otherwise terminated or a specified event occurs (a
"Separation Event"), (i) a specified number of such securities will appertain to
each share of Common Stock then issued or to be issued in the future (including
shares issued upon conversion of shares of Series A) and (ii) each such security
will be evidenced or represented by the certificate representing the share of
Common Stock to which it appertains and will automatically trade with such
share.
"Tender Consideration" means, with respect to any tender or
exchange offer, the aggregate of the cash plus the fair market value (as
determined in good faith by the Board of Directors, whose good faith
determination shall be conclusive and described in a resolution of the Board of
Directors) of all non-cash consideration paid in respect of such tender or
exchange offer.
"Trading Day" means a day on which securities are traded on
the national securities exchange or quotation system or in the over-the-counter
market used to determine Closing Prices for the relevant class of Common Shares.
"Voting Securities" means, with respect to any Person, any
capital stock of, or other equity interest in, such Person that are generally
entitled to cast votes in the election of the directors of such Person (or the
individuals who perform a comparable function for with respect to such Person).
(k) SHAREHOLDER APPROVAL. Notwithstanding anything in this
Section 7 to the contrary, no holder of shares of Series A shall have the right
to convert such shares unless and until the holders of Common Stock have
approved such conversion as required by Rule 312.00 of the Listed Company Manual
of the New York Stock Exchange, Inc.
SECTION 8. TRANSFER AND OTHER TAXES. The Corporation shall pay
any and all stock transfer, documentary stamp and other taxes that may be
payable in respect of any issuance or delivery of shares of Series A or shares
of Common Stock or other securities issued or delivered on conversion of Series
A. The Corporation shall not, however, be required to pay any such tax which may
be payable in respect of any transfer involved in the issuance or delivery of
shares of Series A or Common Stock or other securities in a name other than that
in which the shares of Series A with respect to which such shares or other
securities are issued or delivered were registered, and shall not be required to
make any such issuance or delivery unless and until the person otherwise
entitled to such issuance or delivery has paid to the Corporation the amount
17
of any such tax or has established, to the satisfaction of the Corporation, that
such tax has been paid or is not payable.
SECTION 9. VOTING RIGHTS.
(a) GENERAL. Except as hereinafter provided, the holders of
Series A shall be entitled to the number of votes per share of Series A equal to
the number of whole shares of Common Stock into which one share of Series A is
then convertible pursuant to Section 7(b) and shall vote together with the
holders of Common Stock (and of any other class or series that may similarly be
entitled to vote with the holders of Common Stock) as a single class on all
matters on which holders of Common Stock are entitled to vote.
(b) OTHER VOTING RIGHTS. So long as any shares of Series A are
outstanding, in addition to any other vote or consent of stockholders required
by law or by the certificate of incorporation, the vote or consent of the
holders of at least 50% of the shares of Series A at the time outstanding,
voting separately as a single class on the basis of one vote per share, given in
person or by proxy, either in writing without a meeting or by vote at any
meeting called for the purpose, shall be necessary for effecting or validating:
(i) AMENDMENT OF CERTIFICATE OF INCORPORATION. Any
amendment, alteration or repeal of any provision of the
certificate of incorporation or by-laws of the Corporation
that would alter or change the voting powers, preferences or
special rights of the Series A so as to affect them adversely;
provided, however, that the amendment of the certificate of
incorporation so as to authorize or create, or to increase the
authorized amount of, any Junior Stock shall not be deemed to
affect adversely the voting powers, preferences or special
rights of the Series A;
(ii) AUTHORIZATION OF SENIOR OR PARITY STOCK. Any
amendment or alteration of the certificate of incorporation to
authorize or create (by reclassification or otherwise), or
increase the authorized amount of, any Parity Stock or any
Senior Stock; or
(iii) CHANGES IN AUTHORIZED PREFERRED STOCK. Any
amendment or alteration of the certificate of incorporation to
increase or decrease (but not below the number of shares
thereof then outstanding) the authorized number of shares of
Series A or Series B;
provided, however, that no such vote or consent of the holders of Series A shall
be required if provision is made for the redemption of all shares of Series A at
the time outstanding at or before the time when such amendment, alteration or
repeal is to take effect or when such authorization, creation, increase or
decrease in the authorized amount is to take effect, as the case may be; and
provided, further, that if any such action would affect adversely the voting
powers, preferences or special rights of the Series A and any other series of
the Preferred Stock similarly entitled to vote upon the matters specified herein
in substantially the same manner, it shall be sufficient if the holders of
Series A and all such other series so adversely affected vote thereon together
as a single class, regardless of series, on the basis of one vote per share.
Without limiting the foregoing, any filing of a certificate of designation with
respect to any preferred stock shall be deemed to be an amendment or alteration
of the certificate of incorporation.
18
SECTION 10. OTHER RIGHTS. The shares of Series A shall not
have any voting powers, preferences or relative, participating, optional or
other special rights, or qualifications, limitations or restrictions thereof,
other than as set forth herein or in the certificate of incorporation of the
Corporation or as required by Delaware law (after giving effect to any
limitations included herein or in the certificate of incorporation that are
permitted by such law) .
SECTION 11. RESTATEMENT OF CERTIFICATE. Upon any restatement
of the certificate of incorporation of the Corporation, Sections 1 through 10 of
this certificate of designations shall be included in Article FOURTH of the
certificate of incorporation under the heading "Series A 5.5% Convertible
Redeemable Preferred Stock" and this Section 11 may be omitted. If the Board of
Directors so determines, the numbering of Sections 1 through 10 may be changed
for convenience of reference or for any other proper purpose."
IN WITNESS WHEREOF, _________ KEY3MEDIA GROUP, INC, has caused
this certificate to be signed by __________, its [President], this ___ day of
November, 2001.
KEY3MEDIA GROUP, INC,
BY_________________________
19
Exhibit B
EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
BETWEEN
KEY3MEDIA GROUP, INC.
AND
INVEMED CATALYST FUND, L.P.
------------------------------
DATED: NOVEMBER __, 2001
------------------------------
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS.............................................. 1
1.1 Definitions...................................... 1
1.2 Other Definitions................................ 4
ARTICLE II REGISTRATION UNDER THE SECURITIES ACT................... 5
2.1 Shelf Registration Statement..................... 5
2.2 Demand Registration.............................. 6
2.3 Incidental Registration.......................... 9
2.4 Expenses......................................... 11
2.5 Underwritten Offerings........................... 11
2.6 Blackout Periods................................. 12
ARTICLE III RESTRICTIONS ON SALE................................... 13
3.1 Restrictions on Sale by the Company and Others... 13
ARTICLE IV REGISTRATION PROCEDURES................................. 14
4.1 Obligations of the Company....................... 14
4.2 Seller Information............................... 18
4.3 Notice to Discontinue............................ 19
ARTICLE V INDEMNIFICATION; CONTRIBUTION............................ 19
5.1 Indemnification by the Company................... 19
5.2 Indemnification by Holders ...................... 20
5.3 Conduct of Indemnification Proceedings........... 21
5.4 Contribution..................................... 22
5.5 Indemnification Payments......................... 22
ARTICLE VI GENERAL................................................. 22
6.1 Registration Rights to Others.................... 22
6.2 Availability of Information...................... 23
6.3 Amendments and Waivers........................... 23
6.4 Notices.......................................... 23
6.5 Successors and Assigns........................... 24
6.6 Counterparts..................................... 25
6.7 Descriptive Headings, Etc........................ 25
6.8 Severability..................................... 25
6.9 Governing Law.................................... 25
6.10 Remedies; Specific Performance................... 25
6.11 Entire Agreement................................. 26
6.12 Nominees for Beneficial Owners................... 26
6.13 Consent to Jurisdiction; Waiver of Jury.......... 26
6.14 Further Assurances............................... 27
6.15 No Inconsistent Agreements....................... 27
6.16 Construction..................................... 27
REGISTRATION RIGHTS AGREEMENT dated November __, 2001 by and
between Key3Media Group, Inc. (the "Company") and Invemed Catalyst Fund, L.P., a
Delaware limited partnership ("ICF").
W I T N E S S E T H :
WHEREAS, the Company and ICF have entered into a Stock
Purchase Agreement, dated November 13, 2001 (such Stock Purchase Agreement, as
amended or otherwise modified from time to time, the "Stock Purchase
Agreement"), pursuant to which the Company will issue and sell, and ICF will
purchase 1,000,000 shares of 5.5% Convertible Series A Preferred Stock, par
value $0.01 per share, of the Company (the "Preferred Shares"), convertible into
shares of Common Stock, par value $0.01 per share, of the Company (the "Common
Stock").
WHEREAS, in order to induce ICF to enter into the Stock
Purchase Agreement, the board of directors of the Company has authorized and
approved the grant by the Company of certain registration rights in respect of
the Registrable Securities (as defined below) on the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements contained herein, and for other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following
terms shall have the following meanings:
"Affiliate" means with respect to any Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such Person, which shall be deemed to include (i) with
respect to ICF, any general or limited partner or member of ICF, and (ii) with
respect to any individual, shall also mean the spouse, sibling, child,
stepchild, grandchild, niece, nephew or parent of such Person, or the spouse
thereof.
"Agreement" means this Agreement as the same may be amended,
supplemented or modified in accordance with the terms hereof.
"Demand Registration" means a registration required to be
effected by the Company pursuant to Section 2.2.
"Demand Registration Statement" means a registration statement
of the Company which covers the Registrable Securities requested to be included
therein pursuant to the provisions of Section 2.2 and all amendments and
supplements to such
2
registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference (or deemed to be incorporated by reference)
therein.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and the rules and regulations thereunder, or any
successor statute.
"Holders" means the Initial Holder for so long as it owns
Registrable Securities and their respective successors and permitted assigns who
acquire or are otherwise transferees of Registrable Securities, directly or
indirectly, from the Initial Holder (or any subsequent Holders), for so long as
such successors and permitted assigns own Registrable Securities.
"Holders' Counsel" means one firm of legal counsel (per
registration) representing the Holders of Registrable Securities participating
in such registration, which counsel shall be selected (i) in the case of a
Demand Registration, by the Initiating Holders holding a majority of the
Registrable Securities for which registration was requested in the Request, and
(ii) in all other cases, by the Majority Holders of the Registration.
"Incidental Registration Statement" means a registration
statement of the Company which covers the Registrable Securities requested to be
included therein pursuant to the provisions of Section 2.3 and all amendments
and supplements to such registration statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference (or deemed to be
incorporated by reference) therein.
"Initial Holder" means the ICF.
"Initiating Holders" means, with respect to a particular
registration, the Holders who initiated the Request for such registration.
"Majority Holders" means one or more Holders of Registrable
Securities who would hold a majority of the Registrable Securities then
outstanding.
"Majority Holders of the Registration" means, with respect to
a particular registration, one or more Holders of Registrable Securities who
would hold a majority of the Registrable Securities to be included in such
registration.
"NASD" means the National Association of Securities Dealers,
Inc.
"Person" means any individual, firm, partnership, corporation,
trust, joint venture, association, joint stock company, limited liability
company, unincorporated organization or any other entity or organization,
including a government or agency or political subdivision thereof, and shall
include any successor (by merger or otherwise) of such entity.
3
"Prospectus" means the prospectus included in a Registration
statement (including, without limitation, any preliminary prospectus and any
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), and any such Prospectus as amended or
supplemented by any prospectus supplement, and all other amendments and
supplements to such Prospectus, including post-effective amendments, and in each
case including all material incorporated by reference (or deemed to be
incorporated by reference) therein.
"Registrable Securities" means (i) the shares of Common Stock
issuable upon conversion of the Preferred Shares, (ii) any other securities of
the Company (or any successor or assign of the Company, whether by merger,
consolidation, sale of assets or otherwise) which may be issued or issuable with
respect to, in exchange for, or in substitution of, the Registrable Securities
referenced in clause (i) above by reason of any dividend or stock split,
combination of shares, merger, consolidation, recapitalization,
reclassification, reorganization, sale of assets or similar transaction and
(iii) any other shares of Common Stock now owned by a Holder that is an
Affiliate of the Company. As to any particular Registrable Securities, such
securities shall cease to be Registrable Securities when (A) a Registration
Statement with respect to the sale of such securities shall have been declared
effective under the Securities Act and such securities shall have been disposed
of in accordance with such Registration Statement, (B) such securities have been
otherwise transferred, a new certificate or other evidence of ownership for them
not bearing the legend restricting further transfer shall have been delivered by
the Company and subsequent public distribution of them shall not require
registration under the Securities Act, (C) such securities shall have ceased to
be outstanding, or (D) such securities become eligible for sale under Rule
144(k) without any volume, manner of sale or other restrictions.
"Registration Expenses" means any and all expenses incident to
performance of or compliance with this Agreement by the Company and its
subsidiaries, including, without limitation, (i) registration and filing fees,
(ii) fees and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of a qualified independent underwriter, if
any, counsel in connection therewith and the reasonable fees and disbursements
of counsel in connection with blue sky qualifications of the Registrable
Securities), (iii) printing expenses, (iv) internal expenses of the Company
(including, without limitation, all salaries and expenses of officers and
employees performing legal or accounting duties), (v) fees and disbursements of
counsel for the Company and of Holders' Counsel, (vi) customary fees and
expenses for independent certified public accountants retained by the Company
(including the expenses of any comfort letters or costs associated with the
delivery by independent certified public accountants of a comfort letter or
comfort letters), (vii) fees and expenses of any special experts retained by the
Company in connection with such registration, (viii) fees and expenses of
listing the Registrable Securities on a securities exchange or on the NASDAQ
National Market System, (ix) rating agency fees, and (x) out-of-pocket expenses
of the Company.
4
"Registration Statement" means any registration statement of
the Company which covers any Registrable Securities and all amendments and
supplements to any such Registration Statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference (or deemed to be
incorporated by reference) therein.
"SEC" means the Securities and Exchange Commission, or any
successor agency having jurisdiction to enforce the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended
from time to time, and the rules and regulations promulgated thereunder, or any
successor statute.
"Shelf Registration" means a shelf registration pursuant to
Rule 415 under the Securities Act.
"Underwriters" means the underwriters, if any, of the offering
being registered under the Securities Act.
"Underwritten Offering" means a sale of securities of the
Company to an Underwriter or Underwriters for reoffering to the public.
1.2 Other Definitions. The meanings of the following terms can
be found in the Sections of this Agreement indicated below:
Term Section
---- -------
Affiliate Blackout Notice............................... Section 2.6(a)
Affiliate Blackout Period............................... Section 2.6(a)
Agents.................................................. Section 5.1
Claims.................................................. Section 5.1
Common Stock............................................ Recitals
Company................................................. Preamble
Compliance Program...................................... Section 2.6
General Blackout Notice................................. Section 2.6(b)
General Blackout Period................................. Section 2.6(b)
ICF..................................................... Preamble
Incidental Registration................................. Section 2.3(a)
Inspectors.............................................. Section 4.1(g)
Permitted Trading Period................................ Section 2.6
Preferred Shares........................................ Recitals
Records................................................. Section 4.1(g)
5
Term Section
---- -------
Request................................................. Section 2.2(a)
Shelf Registration Period............................... Section 2.1(b)
Shelf Registration Statement............................ Section 2.1(a)
Stock Purchase Agreement................................ Recitals
Withdrawn Demand Registration........................... Section 2.2(a)
Withdrawn Request....................................... Section 2.2(a)
ARTICLE II
REGISTRATION UNDER THE SECURITIES ACT
2.1 Shelf Registration Statement.
(a) The Company: (A) shall cause to be filed with the SEC, on
or before December 31, 2001, a shelf registration statement (the "Shelf
Registration Statement") on an appropriate form under the Securities Act,
relating solely to the offer and sale of all the Registrable Securities by the
Holders thereof from time to time in accordance with the methods of distribution
specified by the Initial Holder as set forth in the Registration Statement and
Rule 415 under the Securities Act; and (B) shall use its best efforts to have
such Shelf Registration declared effective by the SEC as soon as practicable
thereafter, but in no event later than June 30, 2002; provided, however, that no
Holder (other than the Initial Holder) shall be entitled to have the Registrable
Securities held by it covered by such Registration Statement unless such Holder
agrees in writing to be bound by all the provisions of this Agreement applicable
to such Holder.
(b) The Company shall use its best efforts to keep the Shelf
Registration Statement continuously effective, supplemented and amended in order
to permit the Prospectus included therein to be lawfully delivered by the
Holders of the Registrable Securities during each Permitted Trading Period (as
defined below) for the Holders subject to Section 2.6(a), or at all times
(except during a General Blackout Period) for all other Holders, beginning on
the effective date of the Shelf Registration Statement and ending on the earlier
of (i) the date on which all of the Registrable Securities covered by such Shelf
Registration may be sold pursuant to Rule 144(k) under the Securities Act (or
any successor provision
6
having similar effect) without any volume, manner of sale or other restrictions,
or (ii) the date on which no Holder owns any Registrable Securities (in any such
case, such period being called the "Shelf Registration Period"); provided,
however, that prior to the termination of such Shelf Registration pursuant to
clause (i), the Company shall first furnish to each Holder of Registrable
Securities participating in such Shelf Registration (A) an opinion, in form and
substance satisfactory to the Majority Holders of the Registration, of counsel
for the Company satisfactory to the Majority Holders stating that such
Registrable Securities are freely saleable pursuant to Rule 144(k) under the
Securities Act (or any successor provision having similar effect) without any
volume, manner of sale or other restrictions or (B) a "No-Action Letter" from
the staff of the SEC stating that the SEC would not recommend enforcement action
if the Registrable Securities included in such Shelf Registration were sold in a
public sale other than pursuant to an effective registration statement. The
Company shall be deemed not to have used its best efforts to keep the
Registration Statement effective during the Shelf Registration Period if it
voluntarily takes any action that would result in Holders of the Registrable
Securities covered thereby not being able to offer and sell such Registrable
Securities during the Shelf Registration Period, unless such action is required
by applicable law or the SEC.
(c) If at any time the Majority Holders request in writing
that all or any part of the Registrable Securities covered by the Shelf
Registration Statement be offered by means of a firm commitment Underwritten
Offering, the Company shall cause to be filed with the SEC as soon as
practicable any necessary or appropriate supplement to the Shelf Registration
Statement in order to effect such Underwritten Offering. In such case, the sole
or managing Underwriters and any additional investment bankers and managers to
be used in connection with such registration shall be selected by the Company,
subject to the approval of such Majority Holders (such approval not to be
unreasonably withheld).
2.2 Demand Registration.
(a) Right to Demand Registration. Commencing June 30, 2002, at
any time or from time to time when the Shelf Registration Statement provided for
in Section 2.1 has not become or is not effective under the Securities Act
(including, but not limited to, if the Company is not eligible to effect a
continuous offering using a Form S-3 registration statement in reliance upon
Rule 415 under the Securities Act or any comparable successor form, Rule or
statute), the Majority Holders shall have the right to request in writing that
the Company register all or part of such Holders' Registrable Securities (a
"Request") (which Request shall specify the amount of Registrable Securities
intended to be disposed of by such Holders and the intended method or methods of
disposition thereof) by filing with the SEC a Demand Registration Statement. As
promptly as practicable, but no later than 10 days after receipt of a Request,
the Company shall give written notice of such requested registration to all
Holders of Registrable Securities. Subject to Section 2.2(b), the Company shall
include in a Demand Registration (i) the Registrable Securities intended to be
disposed of by the Initiating Holders and (ii) the Registrable Securities
intended to be disposed of by any other Holder and shares of Common Stock of any
Person that has analogous incidental or "piggyback" registration rights which in
either case shall have made a written request (which request shall specify the
amount of Registrable Securities or shares of Common Stock to be registered) to
the Company for inclusion thereof in such registration within 20 days after the
receipt of such written notice from the Company. The Company shall, as
expeditiously as possible following a Request, use its reasonable best efforts
to cause to be filed with the SEC a Demand Registration Statement providing for
the registration under the Securities Act of the Registrable Securities which
the Company has been so requested to register by all such Holders, to the extent
necessary to permit the disposition of such Registrable Securities so to be
registered in accordance with the intended method
7
of disposition thereof specified in such Request. The Company shall use its best
efforts to have such Demand Registration Statement declared effective by the SEC
as soon as practicable thereafter and to keep such Demand Registration Statement
continuously effective for the period specified in Section 4.1(b). A Request may
be withdrawn prior to the filing of the Demand Registration Statement by the
Majority Holders of the Registration (a "Withdrawn Request") and a Demand
Registration Statement may be withdrawn prior to the effectiveness thereof by
the Majority Holders of the Registration (a "Withdrawn Demand Registration"),
and such withdrawals shall be treated as a Demand Registration which shall have
been effected pursuant to this Section 2.2, unless the Holders of Registrable
Securities to be included in such Registration Statement reimburse the Company
for its reasonable out-of-pocket Registration Expenses relating to the
preparation and filing of such Demand Registration Statement (to the extent
actually incurred); provided, however, that if a Withdrawn Request or Withdrawn
Demand Registration is made (A) because of a material adverse change in the
business, financial condition or prospects of the Company determined, in the
case of an Underwritten Offering, by the sole or lead managing Underwriter in
its reasonable discretion, or (B) because the sole or lead managing Underwriter
advises that the amount of Registrable Securities to be sold in such offering be
reduced pursuant to Section 2.2(b) by more than 33% of the Registrable
Securities to be included in such Registration Statement, or (C) because of a
postponement of such registration pursuant to Section 2.6, then such withdrawal
shall not be treated as a Demand Registration effected pursuant to this Section
2.2 (and shall not be counted toward the number of Demand Registrations), and
the Company shall pay all Registration Expenses in connection therewith. Any
Holder requesting inclusion in a Demand Registration may, at any time prior to
the effective date of the Demand Registration Statement (and for any reason)
revoke such request by delivering written notice to the Company revoking such
requested inclusion.
No more than three Requests may be made by all Holders in the aggregate
pursuant to this Section 2.2; provided that the Company shall not be obligated
to effect any Demand Registration within six months of the effectiveness of any
other Demand Registration Statement. The registration rights granted pursuant to
the provisions of this Section 2.2 shall be in addition to the registration
rights granted pursuant to the other provisions of Article II hereof.
(b) Priority in Demand Registrations. If a Demand Registration
involves an Underwritten Offering, and the sole or lead managing Underwriter, as
the case may be, of such Underwritten Offering shall advise the Company in
writing (with a copy to each Holder requesting registration) on or before the
date five days prior to the date then scheduled for such offering that, in its
opinion, the amount of Registrable Securities requested to be included in
8
such Demand Registration exceeds the number which can be sold in such offering
within a price range acceptable to the Majority Holders of the Registration
(such writing to state the basis of such opinion and the approximate number of
Registrable Securities which may be included in such offering), the Company
shall include in such Demand Registration, to the extent of the number which the
Company is so advised may be included in such offering, the Registrable
Securities requested to be included in the Demand Registration by the Holders
allocated pro rata in proportion to the number of Registrable Securities
requested to be included in such Demand Registration by each of them. In the
event the Company shall not, by virtue of this Section 2.2(b), include in any
Demand Registration all of the Registrable Securities of any Holder requesting
to be included in such Demand Registration, such Holder may, upon written notice
to the Company given within five days of the time such Holder first is notified
of such matter, reduce the amount of Registrable Securities it desires to have
included in such Demand Registration, whereupon only the Registrable Securities,
if any, it desires to have included will be so included and the Holders not so
reducing shall be entitled to a corresponding increase in the amount of
Registrable Securities to be included in such Demand Registration.
(c) Underwriting; Selection of Underwriters. Notwithstanding
anything to the contrary contained in Section 2.2(a), if the Initiating Holders
holding a majority of the Registrable Securities for which registration was
requested in the Request so elect, the offering of such Registrable Securities
pursuant to such Demand Registration shall be in the form of a firm commitment
Underwritten Offering and such Initiating Holders may require that all Persons
(including other Holders) participating in such registration sell their
Registrable Securities to the Underwriters at the same price and on the same
terms of underwriting applicable to the Initiating Holders. If any Demand
Registration involves an Underwritten Offering, the sole or managing
Underwriters and any additional investment bankers and managers to be used in
connection with such registration shall be selected by the Company, subject to
the approval of the Initiating Holders holding a majority of the Registrable
Securities for which registration was requested in the Request (such approval
not to be unreasonably withheld).
(d) Registration of Other Securities. Whenever the Company
shall effect a Demand Registration, no securities other than the Registrable
Securities shall be covered by such registration unless the Majority Holders
shall have consented in writing to the inclusion of such other securities.
(e) Effective Registration Statement; Suspension. A Demand
Registration Statement shall not be deemed to have become effective (and the
related registration will not be deemed to have been effected) (i) unless it has
been declared effective by the SEC and remains effective in compliance with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by such Demand Registration Statement for the
time period specified in Section 4.1(b), (ii) if the offering of any Registrable
Securities pursuant to such Demand Registration Statement is interfered with by
any stop order, injunction or other order or requirement of the SEC or any other
governmental agency or court, or (iii) if, in the case of an Underwritten
Offering, the conditions to closing specified in an underwriting agreement to
which the Company is a party are not satisfied other than by the sole reason of
any breach or failure by the Holders of Registrable Securities or are not
otherwise waived.
(f) Other Registrations. During the period (i) beginning on
the date of a Request, and (ii) ending on the date that is 90 days after the
date that a Demand Registration Statement filed pursuant to such Request has
been declared effective by the SEC or, if the Holders shall withdraw such
Request or such Demand Registration Statement, on the date of such Withdrawn
Request or such Withdrawn Demand
9
Registration, the Company shall not, without the consent of the Majority
Holders, file a registration statement (other than a registration statement on
Form S-4 or S-8 or any successor form to such forms) pertaining to any
securities of the Company that are substantially similar to the Registrable
Securities.
(g) Registration Statement Form. Registrations under this
Section 2.2 shall be on such appropriate registration form of the SEC (i) as
shall be selected by the Initiating Holders holding a majority of the
Registrable Securities for which registration was requested in the Request and
as shall be reasonably acceptable to the Company, and (ii) which shall be
available for the sale of Registrable Securities in accordance with the intended
method of disposition specified in the requests for registration; provided,
however, that if the Company is then a registrant entitled to use Form S-3 or
any successor form thereto to register such securities, such registration shall
be effected on such form. The Company agrees to include in any such Registration
Statement all information which any selling Holder, upon advice of counsel,
shall reasonably request.
2.3 Incidental Registration.
(a) Right to Include Registrable Securities. Commencing on the
date of this Agreement, if the Company, at any time or from time to time,
proposes to register any of its equity securities under the Securities Act
(other than in a registration on Form S-4 or S-8 or any successor form to such
forms and other than pursuant to Sections 2.1 or 2.2) whether or not pursuant to
registration rights granted to other holders of its securities and whether or
not for sale for its own account, the Company shall deliver prompt written
notice (which notice shall be given at least 30 days prior to such proposed
registration) to all Holders of Registrable Securities of its intention to
undertake such registration, describing in reasonable detail the proposed
registration and distribution (including the anticipated range of the proposed
offering price, the class and number of securities proposed to be registered and
the distribution arrangements) and of such Holders' right to participate in such
registration under this Section 2.3 as hereinafter provided. Subject to the
other provisions of this paragraph (a) and Section 2.3(b), upon the written
request of any Holder made within 20 days after the receipt of such written
notice (which request shall specify the amount of Registrable Securities to be
registered), the Company shall effect the registration under the Securities Act
of all Registrable Securities requested by Holders to be so registered (an
"Incidental Registration"), to the extent required to permit the disposition of
the Registrable Securities so to be registered, by inclusion of such Registrable
Securities in the Registration Statement which covers the securities which the
Company proposes to register and shall cause such Registration Statement to
become and remain effective with respect to such Registrable Securities in
accordance with the registration procedures set forth in Article IV. If an
Incidental Registration involves an Underwritten Offering, immediately upon
notification to the Company from the Underwriter of the price at which such
securities are to be sold, the Company shall so advise each participating
Holder. The Holders requesting inclusion in an Incidental Registration may, at
any time prior to the effective date of the Incidental Registration Statement
(and for any reason), revoke such request by delivering written notice to the
Company revoking such requested inclusion.
10
If at any time after giving written notice of its intention to register
any securities and prior to the effective date of the Incidental Registration
Statement filed in connection with such registration, the Company shall
determine for any reason not to register or to delay registration of such
securities, the Company may, at its election, give written notice of such
determination to each Holder of Registrable Securities and, thereupon, (A) in
the case of a determination not to register, the Company shall be relieved of
its obligation to register any Registrable Securities in connection with such
registration (but not from its obligation to pay the Registration Expenses
incurred in connection therewith), without prejudice, however, to the rights of
Holders to cause such registration to be effected as a registration under
Sections 2.1 or 2.2, and (B) in the case of a determination to delay such
registration, the Company shall be permitted to delay the registration of such
Registrable Securities for the same period as the delay in registering such
other securities; provided, however, that if such delay shall extend beyond 120
days from the date the Company received a request to include Registrable
Securities in such Incidental Registration, then the Company shall again give
all Holders the opportunity to participate therein and shall follow the
notification procedures set forth in the preceding paragraph. There is no
limitation on the number of such Incidental Registrations pursuant to this
Section 2.3 which the Company is obligated to effect.
The registration rights granted pursuant to the provisions of this
Section 2.3 shall be in addition to the registration rights granted pursuant to
the other provisions of Article II hereof.
(b) Priority in Incidental Registration. If an Incidental
Registration involves an Underwritten Offering (on a firm commitment basis), and
the sole or the lead managing Underwriter, as the case may be, of such
Underwritten Offering shall advise the Company in writing (with a copy to each
Holder requesting registration) on or before the date five days prior to the
date then scheduled for such offering that, in its opinion, the amount of
securities (including Registrable Securities) requested to be included in such
registration exceeds the amount which can be sold in such offering without
materially adversely affecting the price at which the securities being offered
can be sold and/or their ability to successfully market and sell the securities
being offered (such writing to state the basis of such opinion and the
approximate number of such securities which may be included in such offering
without such effect), the Company shall include in such registration, to the
extent of the number which the Company is so advised may be included in such
offering without such effect, (i) in the case of a registration initiated by the
Company, (A) first, the securities that the Company proposes to register for its
own account, (B) second, the
11
Registrable Securities requested to be included in such registration by the
Holders and any other stockholders having contractual rights to participate in
such registration, allocated pro rata in proportion to the number of Registrable
Securities requested to be included in such registration by each of them, and
(C) third, other securities of the Company to be registered on behalf of any
other Person, and (ii) in the case of a registration initiated by a Person other
than the Company, (A) first, the securities requested to be included in such
registration by any Persons initiating such registration, allocated pro rata in
proportion to the number of securities requested to be included in such
registration by each of them, (B) second, the Registrable Securities requested
to be included in such registration by the Holders and any other stockholders
having contractual rights to participate in such registration, allocated pro
rata in proportion to the number of Registrable Securities requested to be
included in such registration by each of them, (C) third, the securities that
the Company proposes to register for its own account, and (D) fourth, other
securities of the Company to be registered on behalf of any other Person;
provided, however, that in the event the Company will not, by virtue of this
Section 2.3(b), include in any such registration all of the Registrable
Securities of any Holder requested to be included in such registration, such
Holder may, upon written notice to the Company given within three days of the
time such Holder first is notified of such matter, reduce the amount of
Registrable Securities it desires to have included in such registration,
whereupon only the Registrable Securities, if any, it desires to have included
will be so included and the Holders not so reducing shall be entitled to a
corresponding increase in the amount of Registrable Securities to be included in
such registration.
2.4 Expenses. Registration Expenses incurred in connection with any
registration made or requested to be made pursuant to this Article II will be
borne by the Company, whether or not any such Registration Statement becomes
effective, to the extent permitted by applicable law.
2.5 Underwritten Offerings.
(a) Underwritten Offerings. If requested by the sole or lead
managing Underwriter for any Underwritten Offering effected pursuant to a Demand
Registration or the Shelf Registration Statement, the Company shall enter into a
customary underwriting agreement with the Underwriters for such offering, such
agreement to be reasonably satisfactory in substance and form to the Company and
to each Holder of Registrable Securities participating in such offering, and to
contain such representations and warranties by the Company and such other terms
as are customary in agreements of that type, including, without limitation,
indemnification and contribution to the effect and to the extent provided in
Article V.
(b) Holders of Registrable Securities to be Parties to
Underwriting Agreement. The Holders of Registrable Securities to be distributed
by Underwriters in an Underwritten Offering contemplated by Article II shall be
parties to the underwriting agreement between the Company and such Underwriters
and may, at such Holders' option, require that any or all of the representations
and warranties by, and the other agreements on the part of, the Company to and
for the benefit of such Underwriters shall also be made to and for the benefit
of such Holders of Registrable Securities and that any or all of the conditions
precedent to the obligations of such Underwriters under such underwriting
agreement be conditions precedent to the obligations of such Holders of
Registrable Securities; provided, however, that the Company shall not be
required to make any representations or warranties with respect to written
information specifically provided by a selling Holder for inclusion in the
Registration Statement. No Holder shall be required to make any representations
or warranties to, or agreements with, the Company or the Underwriters other than
12
representations, warranties or agreements regarding such Holder and such
Holder's Registrable Securities.
(c) Participation in Underwritten Registration.
Notwithstanding anything herein to the contrary, no Person may participate in
any underwritten registration hereunder unless such Person (i) agrees to sell
its securities on the same terms and conditions provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangement and (ii) accurately completes and executes in a timely manner all
questionnaires, powers of attorney, indemnities, custody agreements,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.
(d) Limitations on Underwritten Offerings. In no event shall
the Company be required to effect more than two (2) Underwritten Offerings
pursuant to this Agreement (whether as a Shelf Registration Statement pursuant
to Section 2.1 or a Demand Registration pursuant to Section 2.2).
2.6 Blackout Periods.
(a) ICF and its Affiliates (other than an Affiliate which is
an Affiliate solely because it is a limited partner in ICF and to whom
Registrable Securities have been distributed), for so long as Xxxxxxx Xxxxxxx
(or another individual who is an employee, partner or Affiliate of ICF) serves
on the board of directors of the Company, agree that offers and sales of their
Registrable Securities pursuant to the Shelf Registration or any Demand
Registration (or while this Section 2.6(a) is applicable to any such Holder, any
other transaction) may only be made during the periods (each, a "Permitted
Trading Period") in which the directors and executive officers of the Company
are permitted to purchase or sell securities of the Company pursuant to the
Company's existing Trading Compliance Program (including any period in which any
such director or executive officer is exempt from the Trading Compliance Program
pursuant to its terms), a copy of which is attached hereto as Schedule A, or any
successor program adopted by the Company's Board of Directors and delivered to
the holders (the "Compliance Program"). The Company shall promptly notify the
Persons referred to in this Section 2.6(a) in writing (an "Affiliate Blackout
Notice") of any decision to restrict trading under the Compliance Program during
any Window Period (as defined therein) and when such trading may be resumed
(each period during which there is such a restriction, an "Affiliate Blackout
Period").
(b) Holders other than the Holders referred to in Section
2.6(a) hereof agree that the Company shall be entitled to postpone the filing or
effectiveness of, or sales under (unless they have already contractually agreed
to make such sales), a Demand Registration and to require them to discontinue
the disposition of their securities covered by a Shelf Registration during any
General Blackout Period (as defined below) (i) if the board of directors of the
Company determines in good faith that effecting such a registration or
continuing such disposition at such time would have an adverse effect upon (A) a
proposed sale of all (or substantially all) of the assets of the Company or a
merger, reorganization, recapitalization or similar current transaction
materially affecting
13
the capital, structure or equity ownership of the Company or (B) any other
material financing, acquisition or extraordinary corporate transaction, or (ii)
if the Company is in possession of material information which the board of
directors of the Company determines in good faith is not in the best interests
of the Company to disclose in a registration statement at such time, provided,
however, that the Company may delay the filing or effectiveness of, or sales
under (unless they have already contractually agreed to make such sales), a
Demand Registration and require the Holders of Registrable Securities referred
to in this Section 2.6(b) to discontinue the disposition of their securities
covered by a Shelf Registration only for a reasonable period of time not to
exceed 30 days (or such earlier time as such transaction is consummated or no
longer proposed or the material information has been made public) (each, a
"General Blackout Period"); provided, further, that the effectiveness period of
any Demand Registration shall be extended by the number of days in any General
Blackout Period to the extent that the Registration Statement already was
effective at the commencement of the General Blackout Period. There shall not be
more than three General Blackout Periods in any 12 month period. The Company
shall promptly notify the Holders referred to in this Section 2.6(b) in writing
(a "General Blackout Notice") of any decision to postpone the filing or
effectiveness of, or sales under (unless they have already contractually agreed
to make such sales), a Demand Registration or to discontinue sales of
Registrable Securities covered by a Shelf Registration pursuant to this Section
2.6 and shall include an undertaking by the Company to promptly notify the
Holders referred to in this Section 2.6(b) as soon as a Demand Registration may
be effected or sales of Registrable Securities covered by a Demand Registration
or Shelf Registration may resume.
(c) In making any such determination to initiate or terminate
an Affiliate Blackout Period or a General Blackout Period, the Company shall not
be required to consult with or obtain the consent of any Holder, and any such
determination shall be the Company's sole responsibility. Each Holder shall
treat all notices received from the Company pursuant to this Section 2.6 in the
strictest confidence and shall not disseminate such information. If the Company
shall impose an Affiliate Blackout Period or a General Blackout Period prior to
the filing of a Demand Registration Statement pursuant to this Section 2.6, the
Majority Holders shall have the right to withdraw the request for registration.
Any such withdrawal shall be made by giving written notice to the Company within
30 days after receipt of the Affiliate Blackout Notice or the General Blackout
Notice. Such withdrawn registration request shall not be treated as a Demand
Registration effected pursuant to Section 2.2 (and shall not be counted towards
the number of Demand Registrations effected), and the Company shall pay all
Registration Expenses in connection therewith.
ARTICLE III
RESTRICTIONS ON SALE
3.1 Restrictions on Sale by the Company and Others. The Company agrees
that (i) if timely requested in writing by the sole or lead managing Underwriter
in an Underwritten Offering of any Registrable Securities, it will not make any
short sale of, loan, grant any option for the purchase of or effect any public
sale or distribution of any of the Company's equity securities that are
substantially similar to the Registrable
14
Securities being offered (or any security convertible into or exchangeable or
exercisable for any of such equity securities) during the nine business days (as
defined in Rule 100 of Regulation M promulgated under the Exchange Act) prior
to, and during the time period reasonably requested by the sole or lead managing
Underwriter not to exceed 90 days, beginning on the effective date of the
applicable Registration Statement (except as part of such underwritten
registration or pursuant to registrations on Forms S-4 or S-8 or any successor
form to such forms), and (ii) it will use its commercially reasonable efforts to
cause each officer and director of the Company and each Affiliate that holds 10%
or more of equity securities (or any security convertible into or exchangeable
or exercisable for any of its equity securities) of the Company purchased from
the Company at any time after the date of this Agreement (other than in a
registered public offering) to so agree.
ARTICLE IV
REGISTRATION PROCEDURES
4.1 Obligations of the Company. Subject to Section 2.6, whenever the
Company is required to effect the registration of Registrable Securities under
the Securities Act pursuant to Article II of this Agreement, the Company shall,
as expeditiously as possible:
(a) prepare and file with the SEC (promptly, and, except as
set forth in Section 2.1, in any event within 60 days after receipt of a request
to register Registrable Securities) the requisite Registration Statement to
effect such registration, which Registration Statement shall comply as to form
in all material respects with the requirements of the applicable form and
include all financial statements required by the SEC to be filed therewith, and
the Company shall use its best efforts to cause such Registration Statement to
become effective (provided, that the Company may discontinue any registration of
its securities that are not Registrable Securities, and, under the circumstances
specified in Section 2.3, its securities that are Registrable Securities);
provided, however, that before filing with the SEC a Registration Statement or
Prospectus or comparable statements under securities or blue sky laws of any
jurisdiction, the Company shall (i) provide Holders' Counsel and any other
Inspector (as defined in Section 4.1(g)) with an adequate and appropriate
opportunity to review, comment and participate in the preparation of such
Registration Statement, Prospectus or other comparable statement and (ii)
refrain from filing with the SEC such Registration Statement, Prospectus or
other comparable statement if Holder's Counsel, any selling Holder or any other
Inspector reasonably objects to such filing on the grounds that it does not
comply in all material respects with the requirements of the Securities Act or
of the rules or regulations thereunder;
(b) prepare and file with the SEC such amendments and
supplements to such Registration Statement and the Prospectus used in connection
therewith as may be necessary (i) to keep such Registration Statement effective,
and (ii) to comply with the provisions of the Securities Act with respect to the
disposition of all Registrable Securities covered by such Registration
Statement, in each case until the earlier of (A) such time as all of such
Registrable Securities have been disposed of in accordance with the intended
methods of disposition set forth in such Registration
15
Statement (but not before the expiration of the 90 day period referred to in
Section 4(3) of the Securities Act and Rule 174 thereunder, if applicable), and
(B) (x) six months after the effective date of any Registration Statement other
than a Shelf Registration Statement; and (y) with respect to any Shelf
Registration, the time period provided in Section 2.1;
(c) furnish, without charge, to each selling Holder of such
Registrable Securities and each Underwriter, if any, of the securities covered
by such Registration Statement, such number of copies of such Registration
Statement, each amendment and supplement thereto (in each case including all
exhibits), and the Prospectus included in such Registration Statement (including
each preliminary Prospectus) in conformity with the requirements of the
Securities Act, and other documents, as such selling Holder and Underwriter may
reasonably request in order to facilitate the public sale or other disposition
of the Registrable Securities owned by such selling Holder (the Company hereby
consenting to the use in accordance with applicable law of each such
Registration Statement (or amendment or post-effective amendment thereto) and
each such Prospectus (or preliminary prospectus or supplement thereto) by each
such selling Holder of Registrable Securities and the Underwriters, if any, in
connection with the offering and sale of the Registrable Securities covered by
such Registration Statement or Prospectus);
(d) prior to any public offering of Registrable Securities,
use its reasonable best efforts to register or qualify all Registrable
Securities and other securities covered by such Registration Statement under
such other securities or blue sky laws of such jurisdictions as any selling
Holder of Registrable Securities covered by such Registration Statement or the
sole or lead managing Underwriter, if any, may reasonably request, and take any
other action as may be reasonably necessary or advisable to enable such selling
Holder to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such selling Holder; provided that the Company shall not be
required to (i) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section 4.1(d), (ii)
subject itself to taxation in any such jurisdiction, or (iii) consent to general
service of process in any such jurisdiction;
(e) use its reasonable best efforts to obtain all other
approvals, consents, exemptions or authorizations from such governmental
agencies or authorities as may be necessary to enable the selling Holders of
such Registrable Securities to consummate the disposition of such Registrable
Securities;
(f) promptly notify Holders' Counsel, each Holder of
Registrable Securities covered by such Registration Statement and the sole or
lead managing Underwriter, if any: (i) when the Registration Statement, any
pre-effective amendment, the Prospectus or any prospectus supplement related
thereto or post- effective amendment to the Registration Statement has been
filed and, with respect to the Registration Statement or any post-effective
amendment, when the same has become effective, (ii) of any request by the SEC or
any state securities or blue sky authority for amendments or supplements to the
Registration Statement or the Prospectus related
16
thereto or for additional information, (iii) of the issuance by the SEC of any
stop order suspending the effectiveness of the Registration Statement or the
initiation or threat of any proceedings for that purpose, (iv) of the receipt by
the Company of any notification with respect to the suspension of the
qualification of any Registrable Securities for sale under the securities or
blue sky laws of any jurisdiction or the initiation of any proceeding for such
purpose, (v) of the existence of any fact of which the Company becomes aware or
the happening of any event which results in (A) the Registration Statement
containing an untrue statement of a material fact or omitting to state a
material fact required to be stated therein or necessary to make any statements
therein not misleading, or (B) the Prospectus included in such Registration
Statement containing an untrue statement of a material fact or omitting to state
a material fact required to be stated therein or necessary to make any
statements therein, in the light of the circumstances under which they were
made, not misleading, (vi) if at any time the representations and warranties
contemplated by Section 2.5(b) cease to be true and correct in all material
respects, and (vii) of the Company's reasonable determination that a
post-effective amendment to a Registration Statement would be appropriate or
that there exists circumstances not yet disclosed to the public which make
further sales under such Registration Statement inadvisable pending such
disclosure and post-effective amendment; and, if the notification relates to an
event described in any of the clauses (ii) through (vii) of this Section 4.1,
the Company shall promptly prepare a supplement or post-effective amendment to
such Registration Statement or related Prospectus or any document incorporated
therein by reference or file any other required document so that (1) such
Registration Statement shall not contain any 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, and (2) as thereafter delivered to
the purchasers of the Registrable Securities being sold thereunder, such
Prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein in the light of the circumstances under which they were made
not misleading (and shall furnish to each such Holder and each Underwriter, if
any, a reasonable number of copies of such Prospectus so supplemented or
amended); and if the notification relates to an event described in clause (iii)
of this Section 4.1(f), the Company shall take all reasonable action required to
prevent the entry of such stop order or to remove it if entered;
(g) make available for inspection by any selling Holder of
Registrable Securities, any sole or lead managing Underwriter participating in
any disposition pursuant to such Registration Statement, Holders' Counsel and
any attorney, accountant or other agent retained by any such seller or any
Underwriter (each, an "Inspector" and, collectively, the "Inspectors"), all
financial and other records, pertinent corporate documents and properties of the
Company and any subsidiaries thereof as may be in existence at such time
(collectively, the "Records") as shall be necessary, in the opinion of such
Holders' and such Underwriters' respective counsel, to enable them to exercise
their due diligence responsibility and to conduct a reasonable investigation
within the meaning of the Securities Act, and cause the Company's and any
subsidiaries' officers, directors and employees, and the independent public
accountants of the Company, to supply all information reasonably requested by
any such Inspectors in connection with such Registration Statement;
17
(h) obtain an opinion from the Company's counsel and a "cold
comfort" letter from the Company's independent public accountants who have
certified the Company's financial statements included or incorporated by
reference in such Registration Statement, in each case dated the effective date
of such Registration Statement (and if such registration involves an
Underwritten Offering, dated the date of the closing under the underwriting
agreement), in customary form and covering such matters as are customarily
covered by such opinions and "cold comfort" letters delivered to underwriters in
underwritten public offerings, which opinion and letter shall be reasonably
satisfactory to the sole or lead managing Underwriter, if any, and to the
Majority Holders, and furnish to each Holder participating in the offering and
to each Underwriter, if any, a copy of such opinion and letter addressed to such
Holder (in the case of the opinion) and Underwriter (in the case of the opinion
and the "cold comfort" letter);
(i) provide and cause to be maintained a transfer agent and
registrar for all such Registrable Securities covered by such Registration
Statement not later than the effectiveness of such Registration Statement;
(j) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC and any other governmental agency or
authority having jurisdiction over the offering, and make available to its
security holders, as soon as reasonably practicable but no later than 90 days
after the end of any 12-month period, an earnings statement (i) commencing at
the end of any month in which Registrable Securities are sold to Underwriters in
an Underwritten Offering and (ii) commencing with the first day of the Company's
calendar month next succeeding each sale of Registrable Securities after the
effective date of a Registration Statement, which statement shall cover such 12-
month periods, in a manner which satisfies the provisions of Section 11(a) of
the Securities Act and Rule 158 thereunder;
(k) if so requested by the Majority Holders of the
Registration, use its best efforts to cause all such Registrable Securities to
be listed (i) on each national securities exchange on which the Company's
securities are then listed or, (ii) if securities of the Company are not at the
time listed on any national securities exchange (or, if the listing of
Registrable Securities is not permitted under the rules of each national
securities exchange on which the Company's securities are then listed), on a
national securities exchange or The Nasdaq Stock Market's National Market, as
designated by the Majority Holders;
(l) keep each selling Holder of Registrable Securities advised
in writing as to the initiation and progress of any registration under Article
II hereunder;
(m) enter into and perform customary agreements (including, if
applicable, an underwriting agreement in customary form) and take such other
actions as are reasonably required in order to expedite or facilitate the
disposition of such Registrable Securities;
18
(n) cooperate with each selling Holder of Registrable
Securities and each Underwriter participating in the disposition of such
Registrable Securities and their respective counsel in connection with any
filings required to be made with the NASD and make reasonably available its
employees and personnel and otherwise provide reasonable assistance to the
Underwriters (taking into account the needs of the Company's businesses and the
requirements of the marketing process) in the marketing of Registrable
Securities in any Underwritten Offering;
(o) furnish to each Holder participating in the offering and
the sole or lead managing Underwriter, if any, without charge, at least one
manually- signed copy of the Registration Statement and any post-effective
amendments thereto, including financial statements and schedules, all documents
incorporated therein by reference and all exhibits (including those deemed to be
incorporated by reference);
(p) cooperate with the selling Holders of Registrable
Securities and the sole or lead managing Underwriter, if any, to facilitate the
timely preparation and delivery of certificates not bearing any restrictive
legends representing the Registrable Securities to be sold, and cause such
Registrable Securities to be issued in such denominations and registered in such
names in accordance with the underwriting agreement prior to any sale of
Registrable Securities to the Underwriters or, if not an Underwritten Offering,
in accordance with the instructions of the selling Holders of Registrable
Securities at least three business days prior to any sale of Registrable
Securities;
(q) if requested by the sole or lead managing Underwriter or
any selling Holder of Registrable Securities, immediately incorporate in a
prospectus supplement or post-effective amendment such information concerning
such Holder of Registrable Securities, or the Underwriters or the intended
method of distribution as the sole or lead managing Underwriter or the selling
Holder of Registrable Securities reasonably requests to be included therein and
as is appropriate in the reasonable judgment of the Company, including, without
limitation, information with respect to the number of shares of the Registrable
Securities being sold to the Underwriters, the purchase price being paid
therefor by such Underwriters and with respect to any other terms of the
Underwritten Offering of the Registrable Securities to be sold in such offering;
make all required filings of such Prospectus supplement or post-effective
amendment as soon as notified of the matters to be incorporated in such
Prospectus supplement or post-effective amendment; and supplement or make
amendments to any Registration Statement if requested by the sole or lead
managing Underwriter of such Registrable Securities; and
(r) use its commercially reasonable efforts to take all other
steps necessary to expedite or facilitate the registration and disposition of
the Registrable Securities contemplated hereby.
4.2 Seller Information. The Company may require each selling Holder of
Registrable Securities as to which any registration is being effected to furnish
to the Company such information regarding such Holder, such Holder's Registrable
Securities
19
and such Holder's intended method of disposition as the Company may from time to
time reasonably request in writing; provided that such information shall be used
only in connection with such registration.
If any Registration Statement or comparable statement under "blue sky"
laws refers to any Holder by name or otherwise as the Holder of any securities
of the Company, then such Holder shall have the right to require (i) the
insertion therein of language, in form and substance satisfactory to such Holder
and the Company, to the effect that the holding by such Holder of such
securities is not to be construed as a recommendation by such Holder of the
investment quality of the Company's securities covered thereby and that such
holding does not imply that such Holder will assist in meeting any future
financial requirements of the Company, and (ii) in the event that such reference
to such Holder by name or otherwise is not in the judgment of the Company, as
advised by counsel, required by the Securities Act or any similar federal
statute or any state "blue sky" or securities law then in force, the deletion of
the reference to such Holder.
4.3 Notice to Discontinue. Each Holder of Registrable Securities agrees
that, upon receipt of any notice from the Company of the happening of any event
of the kind described in Section 4.1(f)(ii) through (vii), such Holder shall
forthwith discontinue disposition of Registrable Securities pursuant to the
Registration Statement covering such Registrable Securities until such Holder's
receipt of the copies of the supplemented or amended prospectus contemplated by
Section 4.1(f) and, if so directed by the Company, such Holder shall deliver to
the Company (at the Company's expense) all copies, other than permanent file
copies, then in such Holder's possession of the Prospectus covering such
Registrable Securities which is current at the time of receipt of such notice.
If the Company shall give any such notice, the Company shall extend the period
during which such Registration Statement shall be maintained effective pursuant
to this Agreement (including, without limitation, the period referred to in
Section 4.1(b)) by the number of days during the period from and including the
date of the giving of such notice pursuant to Section 4.1(f) to and including
the date when the Holder shall have received the copies of the supplemented or
amended prospectus contemplated by and meeting the requirements of Section
4.1(f).
ARTICLE V
INDEMNIFICATION; CONTRIBUTION
5.1 Indemnification by the Company. The Company agrees to indemnify and
hold harmless, to the fullest extent permitted by law, each Holder of
Registrable Securities, its officers, directors, partners, members,
shareholders, employees, Affiliates and agents (collectively, "Agents") and each
Person who controls such Holder (within the meaning of the Securities Act) and
its Agents with respect to each registration which has been effected pursuant to
this Agreement, against any and all losses, claims, damages or liabilities,
joint or several, actions or proceedings (whether commenced or threatened) in
respect thereof, and expenses (as incurred or suffered and including, but not
limited to, any and all expenses incurred in investigating, preparing or
defending any litigation or proceeding, whether commenced or threatened, and the
reasonable fees,
20
disbursements and other charges of legal counsel) in respect thereof
(collectively, "Claims"), insofar as such Claims arise out of or are based upon
any untrue or alleged untrue statement of a material fact contained in any
Registration Statement or Prospectus (including any preliminary, final or
summary prospectus and any amendment or supplement thereto) related to any such
registration or any omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or any violation by the Company of the Securities Act or any rule or
regulation thereunder applicable to the Company and relating to action or
inaction required of the Company in connection with any such registration, or
any qualification or compliance incident thereto; provided, however, that the
Company will not be liable in any such case to the extent that any such Claims
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact or omission or alleged omission of a material fact so made in
reliance upon and in conformity with written information furnished to the
Company in an instrument duly executed by such Holder or any Underwriter
specifically stating that it was expressly for use therein. The Company shall
also indemnify any Underwriters of the Registrable Securities, their Agents and
each Person who controls any such Underwriter (within the meaning of the
Securities Act) to the same extent as provided above with respect to the
indemnification of the Holders of Registrable Securities. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of any Person who may be entitled to indemnification pursuant to this
Article V and shall survive the transfer of securities by such Holder or
Underwriter.
5.2 Indemnification by Holders. Each Holder, if Registrable Securities
held by it are included in the securities as to which a registration is being
effected, agrees to, severally and not jointly, indemnify and hold harmless, to
the fullest extent permitted by law, the Company, its directors and officers,
each other Person who participates as an Underwriter in the offering or sale of
such securities and its Agents and each Person who controls the Company or any
such Underwriter (within the meaning of the Securities Act) and its Agents
against any and all Claims, insofar as such Claims arise out of or are based
upon any untrue or alleged untrue statement of a material fact contained in any
Registration Statement or Prospectus (including any preliminary, final or
summary prospectus and any amendment or supplement thereto) related to such
registration, or any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to the
Company in an instrument duly executed by such Holder specifically stating that
it was expressly for use therein; provided, however, that the aggregate amount
which any such Holder shall be required to pay pursuant to this Section 5.2
shall be limited to the proportion that the net proceeds from the sale of the
Registrable Securities sold by such Holder under the Registration Statement
bears to the total net proceeds from the sale of all securities sold thereunder,
but in no event be greater than the amount of the net proceeds received by such
Holder upon the sale of the Registrable Securities pursuant to the Registration
Statement giving rise to such Claims less all amounts previously paid by such
Holder with respect to any such Claims. Such indemnity shall remain in full
21
force and effect regardless of any investigation made by or on behalf of such
indemnified party and shall survive the transfer of such securities by such
Holder or Underwriter.
5.3 Conduct of Indemnification Proceedings. Promptly after receipt by
an indemnified party of notice of any Claim or the commencement of any action or
proceeding involving a Claim under this Article V, such indemnified party shall,
if a claim in respect thereof is to be made against the indemnifying party
pursuant to Article V, (i) notify the indemnifying party in writing of the Claim
or the commencement of such action or proceeding; provided, that the failure of
any indemnified party to provide such notice shall not relieve the indemnifying
party of its obligations under this Article V, except to the extent the
indemnifying party is materially and actually prejudiced thereby and shall not
relieve the indemnifying party from any liability which it may have to any
indemnified party otherwise than under this Article V, and (ii) permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party (Xxxxxxxx & Xxxxxxxx and Xxxx, Weiss,
Rifkind, Xxxxxxx & Xxxxxxxx being deemed reasonably satisfactory counsel to the
parties for purposes of this Section 5.3); provided, however, that any
indemnified party shall have the right to employ separate counsel and to
participate in the defense of such claim, but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless (A) the
indemnifying party has agreed in writing to pay such fees and expenses, (B) the
indemnifying party shall have failed to assume the defense of such claim and
employ counsel reasonably satisfactory to such indemnified party within 20 days
after receiving notice from such indemnified party that the indemnified party
believes it has failed to do so, (C) in the reasonable judgment of any such
indemnified party, based upon advice of counsel, a conflict of interest may
exist between such indemnified party and the indemnifying party with respect to
such claims (in which case, if the indemnified party notifies the indemnifying
party in writing that it elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right to assume
the defense of such claim on behalf of such indemnified party) or (D) such
indemnified party is a defendant in an action or proceeding which is also
brought against the indemnifying party and reasonably shall have concluded that
there may be one or more legal defenses available to such indemnified party
which are not available to the indemnifying party. No indemnifying party shall
be liable for the fees and expenses of more than one counsel employed by the
indemnified parties in connection with a proceeding involving a Claim under this
Article V. No indemnifying party shall be liable for any settlement of any such
claim or action effected without its written consent. In addition, without the
consent of the indemnified party (which consent shall not be unreasonably
withheld), no indemnifying party shall be permitted to consent to entry of any
judgment with respect to, or to effect the settlement or compromise of any
pending or threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified party is an
actual or potential party to such action or claim), unless such settlement,
compromise or judgment (i) includes an unconditional release of the indemnified
party from all liability arising out of such action or claim, (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of any indemnified party, and (iii) does not provide for
any action on the part of any Indemnified Party other than the payment of money
damages which is to be paid in full by the indemnifying party.
22
5.4 Contribution. If the indemnification provided for in Section 5.1 or
5.2 from the indemnifying party for any reason is unavailable to (other than by
reason of exceptions provided therein), or is insufficient to hold harmless, an
indemnified party hereunder in respect of any Claim, then the indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such Claim in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party, on the one hand, and the indemnified party, on the other
hand, in connection with the actions which resulted in such Claim, as well as
any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied by,
such indemnifying party or indemnified party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action. If, however, the foregoing allocation is not permitted by applicable
law, then each indemnifying party shall contribute to the amount paid or payable
by such indemnified party in such proportion as is appropriate to reflect not
only such relative faults but also the relative benefits of the indemnifying
party and the indemnified party as well as any other relevant equitable
considerations.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5.4 were determined by pro rata allocation
or by any other method of allocation which does not take into account the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by a party as a result of any Claim referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth in Section 5.3, any legal or other fees, costs or expenses
reasonably incurred by such party in connection with any investigation or
proceeding. Notwithstanding anything in this Section 5.4 to the contrary, no
indemnifying party (other than the Company) shall be required pursuant to this
Section 5.4 to contribute any amount in excess of the net proceeds received by
such indemnifying party from the sale of the Registrable Securities pursuant to
the Registration Statement giving rise to such Claims, less all amounts
previously paid by such indemnifying party with respect to such Claims. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(a) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
5.5 Indemnification Payments. The indemnification and contribution
required by this Article V shall be made by periodic payments of the amount
thereof during the course of any investigation or defense, as and when bills are
received or any expense, loss, damage or liability is incurred.
ARTICLE VI
GENERAL
6.1 Registration Rights to Others. Other than as set forth on Schedule
B, the Company is not party to any agreement with respect to its securities
23
granting any registration rights to any Person. If the Company shall at any time
hereafter provide to any holder of any securities of the Company rights with
respect to the registration of such securities under the Securities Act, (i)
such rights shall not be in conflict with or adversely affect any of the rights
provided in this Agreement to the Holders and (ii) if such rights are provided
on terms or conditions more favorable in the aggregate to such holder than the
terms and conditions provided in this Agreement, the Company shall provide (by
way of amendment to this Agreement or otherwise) such more favorable terms or
conditions to the Holders.
6.2 Availability of Information. The Company covenants that it shall
timely file any reports required to be filed by it under the Securities Act or
the Exchange Act (including, but not limited to, the reports under Sections 13
and 15(d) of the Exchange Act referred to in subparagraph (c) of Rule 144 under
the Securities Act), and that it shall take such further action as any Holder of
Registrable Securities may reasonably request, all to the extent required from
time to time to enable such Holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (i) Rule 144 under the Securities Act, as such rule may be amended
from time to time, or (ii) any other rule or regulation now existing or
hereafter adopted by the SEC. Upon the request of any Holder of Registrable
Securities, the Company shall deliver to such Holder a written statement as to
whether it has complied with such requirements.
6.3 Amendments and Waivers. The provisions of this Agreement may not be
amended, modified, supplemented or terminated, and waivers or consents to
departures from the provisions hereof may not be given, without the written
consent of the Company and the Holders holding more than 50% of the Registrable
Securities then outstanding; provided, however, that no such amendment,
modification, supplement, waiver or consent to departure shall reduce the
aforesaid percentage of Registrable Securities without the written consent of
all of the Holders of Registrable Securities; and provided, further, that
nothing herein shall prohibit any amendment, modification, supplement,
termination, waiver or consent to departure the effect of which is limited only
to those Holders who have agreed to such amendment, modification, supplement,
termination, waiver or consent to departure.
6.4 Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, telecopier, any
courier guaranteeing overnight delivery or first class registered or certified
mail, return receipt requested, postage prepaid, addressed to the applicable
party at the address set forth below or such other address as may hereafter be
designated in writing by such party to the other parties in accordance with the
provisions of this Section:
If to the Company, to:
Key3Media Group, Inc.
0000 Xxxxxxxx Xxxx., Xxxxx 000
Xxx Xxxxxxx, XX 00000
24
Telecopy: 000-000-0000
Attention: Xxx X. Xxxxxxxxx, Esq.
With a copy to:
Xxxxxxxx and Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: 000-000-00-00
Attention: Xxxxxx X. XxXxxxxxx, Esq.
If to the ICF, to:
Invemed Catalyst Fund, L.P.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy: 000-000-0000
Attn: Xxxxxxx Present
With a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
1285 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000-0000
Telecopy: 000-000-0000
Attn: Xxxxxxx X. Xxxx, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; when receipt is
acknowledged, if telecopied; on the next business day, if timely delivered to a
courier guaranteeing overnight delivery; and five days after being deposited in
the mail, if sent first class or certified mail, return receipt requested,
postage prepaid.
6.5 Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective successors and
permitted assigns. Any Holder may assign to any Affiliate or to any other
transferee of at least 50% of the Registrable Securities then owned by such
Holder (other than a transferee that acquires such Registrable Securities in a
registered public offering or pursuant to a sale under Rule 144 of the
Securities Act (or any successor rule)), its rights and obligations under this
Agreement; provided, however, if any such transferee shall take and hold
Registrable Securities, such transferee shall promptly notify the Company and by
taking and holding such Registrable Securities such transferee shall
automatically be entitled to receive the benefits of and be conclusively deemed
to have agreed to be bound by and to perform all of the terms and provisions of
this Agreement as if it were a party hereto (and shall, for all purposes, be
deemed a Holder under this Agreement). If the Company shall so request, any
successor or permitted assign (including any permitted transferee) shall agree
in writing to acquire and hold the Registrable Securities subject to all of the
terms
25
hereof. For purposes of this Agreement, "successor" for any entity other than a
natural person shall mean a successor to such entity as a result of such
entity's merger, consolidation, sale of substantially all of its assets, or
similar transaction. Except as provided above or otherwise permitted by this
Agreement, neither this Agreement nor any right, remedy, obligation or liability
arising hereunder or by reason hereof shall be assignable by any Holder or by
the Company without the consent of the Company and the Majority Holders.
6.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which, when so executed and delivered, shall be deemed to
be an original, but all of which counterparts, taken together, shall constitute
one and the same instrument.
6.7 Descriptive Headings, Etc. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning of terms contained herein. Unless the context of this Agreement
otherwise requires: (1) words of any gender shall be deemed to include each
other gender; (2) words using the singular or plural number shall also include
the plural or singular number, respectively; (3) the words "hereof', "herein"
and "hereunder" and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement, and Section and paragraph references are to the Sections and
paragraphs of this Agreement unless otherwise specified; (4) the word
"including" and words of similar import when used in this Agreement shall mean
"including, without limitation," unless otherwise specified; (5) "or" is not
exclusive; and (6) provisions apply to successive events and transactions.
6.8 Severability. In the event that any one or more of the provisions,
paragraphs, words, clauses, phrases or sentences contained herein, or the
application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision, paragraph, word, clause, phrase or
sentence in every other respect and of the other remaining provisions,
paragraphs, words, clauses, phrases or sentences hereof shall not be in any way
impaired, it being intended that all rights, powers and privileges of the
parties hereto shall be enforceable to the fullest extent permitted by law.
6.9 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York (without giving effect to
the conflict of laws principles thereof).
6.10 Remedies; Specific Performance. The parties hereto acknowledge
that money damages would not be an adequate remedy at law if any party fails to
perform in any material respect any of its obligations hereunder, and
accordingly agree that each party, in addition to any other remedy to which it
may be entitled at law or in equity, shall be entitled to seek to compel
specific performance of the obligations of any other party under this Agreement,
without the posting of any bond, in accordance with the terms and conditions of
this Agreement in any court of the United States or any State thereof having
jurisdiction, and if any action should be brought in equity to enforce any of
the provisions
26
of this Agreement, none of the parties hereto shall raise the defense that there
is an adequate remedy at law. Except as otherwise provided by law, a delay or
omission by a party hereto in exercising any right or remedy accruing upon any
such breach shall not impair the right or remedy or constitute a waiver of or
acquiescence in any such breach. No remedy shall be exclusive of any other
remedy. All available remedies shall be cumulative.
6.11 Entire Agreement. This Agreement and the Stock Purchase Agreement
are intended by the parties as a final expression of their agreement and
intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein. There are no restrictions, promises, representations, warranties,
covenants or undertakings relating to such subject matter, other than those set
forth or referred to herein or in the Stock Purchase Agreement. This Agreement
and the Stock Purchase Agreement supersede all prior agreements and
understandings between the Company and the other parties to this Agreement with
respect to such subject matter.
6.12 Nominees for Beneficial Owners. In the event that any Registrable
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its election in writing delivered to the
Company, be treated as the holder of such Registrable Securities for purposes of
any request or other action by any holder or holders of Registrable Securities
pursuant to this Agreement or any determination of any number or percentage of
shares of Registrable Securities held by any holder or holders of Registrable
Securities contemplated by this Agreement. If the beneficial owner of any
Registrable Securities so elects, the Company may require assurances reasonably
satisfactory to it of such owner's beneficial ownership of such Registrable
Securities.
6.13 Consent to Jurisdiction; Waiver of Jury. Each party to this
Agreement hereby irrevocably and unconditionally agrees that any legal action,
suit or proceeding arising out of or relating to this Agreement or any
agreements or transactions contemplated hereby may be brought in any federal
court of the Southern District of New York or any state court located in New
York County, State of New York, and hereby irrevocably and unconditionally
expressly submits to the personal jurisdiction and venue of such courts for the
purposes thereof and hereby irrevocably and unconditionally waives any claim (by
way of motion, as a defense or otherwise) of improper venue, that it is not
subject personally to the jurisdiction of such court, that such courts are an
inconvenient forum or that this Agreement or the subject matter may not be
enforced in or by such court. Each party hereby irrevocably and unconditionally
consents to the service of process of any of the aforementioned courts in any
such action, suit or proceeding by the mailing of copies thereof by registered
or certified mail, postage prepaid, to the address set forth or provided for in
Section 6.5 of this Agreement, such service to become effective 10 days after
such mailing. Nothing herein contained shall be deemed to affect the right of
any party to serve process in any manner permitted by law or commence legal
proceedings or otherwise proceed against any other party in any other
jurisdiction to enforce judgments obtained in any action, suit or proceeding
brought pursuant to this Section. Each of the parties hereby irrevocably waives
trial by jury in
27
any action, suit or proceeding, whether at law or equity, brought by any of them
in connection with this Agreement or the transactions contemplated hereby.
6.14 Further Assurances. Each party hereto shall do and perform or
cause to be done and performed all such further acts and things and shall
execute and deliver all such other agreements, certificates, instruments and
documents as any other party hereto reasonably may request in order to carry out
the intent and accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.
6.15 No Inconsistent Agreements. The Company will not hereafter enter
into any agreement which is inconsistent with the rights granted to the Holders
in this Agreement.
6.16 Construction. The Company and the Holders acknowledge that each of
them has had the benefit of legal counsel of its own choice and has been
afforded an opportunity to review this Agreement with its legal counsel and that
this Agreement shall be construed as if jointly drafted by the Company and the
Holders.
[Remainder of page intentionally left blank]
28
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first written above.
KEY3MEDIA GROUP, INC.
By:
-----------------------------------
Name:
Title:
INVEMED CATALYST FUND, L.P.
By: Invemed Catalyst GenPar, LLC,
its general partner
By: Gladwyne Catalyst GenPar, LLC,
its managing member
-----------------------------------
Name: Xxxxxxx Present
Title: Member
29
Schedule A
Trading Compliance Program of the Company
Schedule B
Other Registration Rights Granted by the Company
Registration Rights Agreement, dated as of July, 2000, between Key3Media Group,
Inc. and SOFTBANK Corp. and its Subsidiaries (as defined therein)
Registration Rights Agreement, dated as of August 18, 2000, between Key3Media
Group, Inc., Princess Gate Investors III, L.P., certain affiliates of Xxxxxx
Xxxxxxx Xxxx Xxxxxx & Co. and certain Persons whose investment manager is PG
Investors III, Inc. listed therein
EXHIBIT C-1
[SOFTBANK CORP. LETTERHEAD]
November __, 2001
Key3Media Group, Inc.
0000 Xxxxxxxx Xxxx. - Xxxxx 000
Xxx Xxxxxxx, XX 00000
Invemed Catalyst Fund, L.P.,
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Ladies and Gentlemen:
1. In order to induce you to sign the Stock Purchase Agreement, between
Key3Media Group, Inc. (the "Company") and Invemed Catalyst Fund, L.P.
("Invemed"), dated the date hereof, SOFTBANK Corp. hereby agrees, and shall
cause each of its affiliates (as defined in Rule 405 of the Securities Act of
1933, as amended) to agree to (SOFTBANK Corp. and its affiliates being
collectively referred to herein as "SOFTBANK"):
- approve the issuance of shares of the Series A 5.5%
Convertible Redeemable Preferred Stock, par value $0.01 per
share (the "Series A"), of the Company and shares of the
Series B 5.5% Convertible Preferred Stock, par value $0.01 per
share (the "Series B"), of the Company with an aggregate
purchase price of up to $150 million and the issuance of
common stock, par value $0.01 per share (the "Common Stock"),
of the Company upon the conversion of the Series A and Series
B for all purposes of ARTICLE FOURTH of the Amended and
Restated Certificate of Incorporation of the Company;
- cause all the shares of capital stock of the Company
beneficially owned by SOFTBANK to approve the issuance to
Invemed of (i) the shares of the Series A purchased by
Invemed, and (ii) the Common Stock issuable upon conversion of
such shares of Series A in accordance with their terms at any
meeting of the Company's stockholders duly convened to obtain
such approval as required by Section 312.00 of the New York
Stock Exchange Listed Company Manual (the "Meeting");
- waive any and all participation and/or registration rights
that SOFTBANK may have with respect to the registered offering
of the Series B pursuant to Section 2.2 of the Registration
Rights Agreement, dated as of July 2000, between the Company
and SOFTBANK; and
- during the period from the date hereof until the record date
for the first Meeting, refrain from selling, transferring or
otherwise disposing any shares of capital stock of the Company
owned by it as of the date hereof, unless the transferee
agrees in writing to be bound by the terms and conditions of
this letter agreement.
2. Each purchaser of the Series A other than Invemed and the purchasers
of the Series B shall be third party beneficiaries of the undertakings made by
SOFTBANK pursuant to this letter agreement.
3. This letter agreement shall be governed by, and construed in
accordance with, the laws of the State of New York applicable to contracts made
and to be performed in such State without regard to the conflict of law
principles thereof.
4. The parties hereto agree that irreparable damage would occur in the
event any provision of this letter agreement was not performed in accordance
with the terms hereof and the parties shall be entitled to specific performance
in addition to any other remedy at law or in equity. No failure or delay by any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof nor shall a single or partial exercise thereof preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege hereunder.
5. This letter agreement may be executed in any number of counterparts,
each such counterpart being deemed to be an original instrument, and all such
counterparts shall together constitute the same agreement. Delivery may be
effected via facsimile.
2
IN WITNESS WHEREOF, SOFTBANK, the Company and Invemed have executed
this letter agreement as of the __th day of November 2001.
SOFTBANK CORP.
By: _________________________
Name:
Title:
Accepted and agreed:
KEY3MEDIA GROUP, INC.
By: _________________________
Name:
Title:
INVEMED CATALYST FUND, L.P.
By: _________________________
Name:
Title:
3
EXHIBIT C-2
November __, 2001
Key3Media Group, Inc.
0000 Xxxxxxxx Xxxx. - Xxxxx 000
Xxx Xxxxxxx, XX 00000
Invemed Catalyst Fund, L.P.,
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Ladies and Gentlemen:
1. In order to induce you to sign the Stock Purchase Agreement, between
Key3Media Group, Inc. (the "Company") and Invemed Catalyst Fund, L.P.
("Invemed"), dated the date hereof, each of the undersigned individuals hereby
agrees that:
- he will vote, or cause to be voted, all the shares of capital
stock of the Company beneficially owned by such individual to
approve the issuance to Invemed of (i) the shares of the 5.5%
Series A Convertible Redeemable Preferred Stock (the "Series
A") purchased by Invemed, and (ii) the Common Stock issuable
upon conversion of such shares of Series A in accordance with
their terms at any meeting of the Company's stockholders duly
convened to obtain such approval as required by Section 312.00
of the New York Stock Exchange Listed Company Manual (the
"Meeting"); and
- during the period from the date hereof until the record date
for the first Meeting, it will refrain from selling,
transferring or otherwise disposing any shares of capital
stock of the Company owned by it as of the date hereof, unless
the transferee agrees in writing to be bound by the terms and
conditions of this letter agreement.
2. Each purchaser of the Series A other than Invemed and the purchasers
of the 5.5% Series B Convertible Redeemable Preferred Stock shall be third party
beneficiaries of the undertakings made pursuant to this letter agreement.
3. This letter agreement shall be governed by, and construed in
accordance with, the laws of the State of New York applicable to contracts made
and to be performed in such State without regard to the conflict of law
principles thereof.
4. The parties hereto agree that irreparable damage would occur in the
event any provision of this letter agreement was not performed in accordance
with the terms hereof and the parties shall be entitled to specific performance
in addition to any other remedy at law or in equity. No failure or delay by any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof nor shall a single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder.
5. This letter agreement may be executed in any number of counterparts,
each such counterpart being deemed to be an original instrument, and all such
counterparts shall together constitute the same agreement. Delivery may be
effected via facsimile.
2
IN WITNESS WHEREOF, the undersigned, the Company and Invemed have
executed this letter agreement as of the __th day of November 2001.
-------------------------
Xxxxxxx X. Xxxxx
-------------------------
Xxxxx Xxxxxxx
-------------------------
Xxx Xxxxxxxxx
-------------------------
Xxxx Xxxxxxxx
Accepted and agreed:
KEY3MEDIA GROUP, INC.
By: _________________________
Name:
Title:
INVEMED CATALYST FUND, L.P.
By: _________________________
Name:
Title:
3
