EXHIBIT 4.5(a)
EQUITY PROTECTION AGREEMENT
THIS EQUITY PROTECTION AGREEMENT (this "Agreement") is made as of
April 25, 1997, by an among UC Television Network Corp., a Delaware corporation
(the "Company"), and U-C Holdings, L.L.C., a Delaware limited liability company
("Holdings" and including any permitted transferees or assigns of any rights
under this Agreement, the "Holder"). As used herein the term "this Agreement"
shall mean and include this Agreement and any agreement or agreements hereafter
entered into as a consequence of the exercise or transfer in whole or in part of
any of the Purchase Rights (as hereinafter defined) granted pursuant to this
Agreement.
WHEREAS, the Company and Holdings are parties to that certain Purchase
Agreement, dated as of the date hereof, pursuant to which Holdings purchased
shares of the Company's Common Stock and a Class C Warrant of the Company; and
WHEREAS, the Company and Holdings desire to enter into this Agreement
in order to protect Holdings from the dilution of its equity position in the
Company upon the exercise of any outstanding warrants or options to purchase
Common Stock of the Company.
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as follows:
1. The following terms shall have the following meanings:
(A) the term "Number of Shares" shall mean, as of any particular date,
the number of shares of Common Stock issuable upon exercise of the Purchase
Rights (the "Shares") equal to the sum of (i) the product of (a) two and (b) the
aggregate number of shares of Common Stock which have been issued by the Company
upon the exercise of any of the Existing Warrants (as hereinafter defined) and
any of the Existing Options (as hereinafter defined) and (c) the Applicable
Percentage, minus (ii) the product of (a) the aggregate number of shares of
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Common Stock issued as of such particular date in connection with any prior
exercises of the Purchase Rights and (b) the Applicable Percentage;
(B) the term "Existing Warrants" shall mean, collectively, all
warrants to purchase shares of Common Stock of the Company outstanding as of the
date hereof and any warrant or warrants issued as a consequence of the exercise
or transfer of such warrants in whole or part, including, without limitation,
any of the Company's Class A Redeemable Warrants, Class B Redeemable Warrants,
any of the warrants issued pursuant to the private placement of securities of
the Company on April 26, 1996 and May 28, 1996.
(C) the term "Existing Options" shall mean, collectively, all options
and other rights to purchase shares of Common Stock of the Company (other than
the Existing Warrants) outstanding as of the date hereof and any option or
options issued as a consequence of the exercise or transfer of such options in
whole or part, including, without limitation, any options granted pursuant to
the Company's 1990 Performance Equity Plan, 1996 Stock Incentive Plan, Outside
Directors 1996 Stock Option Plan and the nonqualified option for 337,500 shares
of Common Stock granted to Xxxxx Xxxxx (as such nonqualified option has been or
shall be amended, modified or increased);
(D) the term "Barington Option" shall mean the unit purchase option
issued to Barington Capital Group, L.P. ("Barington") dated April 26, 1996 and
any warrants subsequently issued to Barington or its transferees pursuant to the
exercise of such unit purchase option.
(D) the term "Applicable Percentage" shall mean, (i) initially, 100%
and (ii) after any partial transfer of the Purchase Rights, the percentage of
the total Number of Shares represented by this Agreement (for example, if the
right to purchase 30% of the Number of Shares is transferred, the Applicable
Percentage for this Agreement shall be 70% of the Applicable Percentage then in
effect with respect to this Agreement and the Applicable Percentage for any new
equity protection agreement issued upon such transfer shall be 30% of the
Applicable Percentage then in effect with respect to this Agreement);
(E) the term "Common Stock" shall mean the Company's common stock, par
value $.001 per share, and any capital stock of any class of the Company
hereafter authorized which is not limited to a fixed sum or percentage of par or
stated value in respect to the rights of the holders thereof to participate in
dividends or in the distribution of assets upon any liquidation, dissolution or
winding up of the Company;
(F) the term "Sale of the Company" shall mean the sale of the Company
to an Independent Third Party or group of Independent Third Parties pursuant to
which such party or parties acquire (i) capital stock of the Company possessing
the voting power under normal circumstances to elect a majority of the Company's
board of directors (whether by merger, consolidation, recapitalization, sale or
transfer of the Company's capital stock or otherwise) or (ii) all or
substantially all of the Company's assets determined on a consolidated basis;
(G) the term "Independent Third Party" shall mean any person or entity
who, immediately prior to the contemplated transaction, does not own in excess
of 5% of the Company's Common Stock on a fully-diluted basis (a "5% Owner"), who
is not controlling, controlled by or under common control with any such 5% Owner
and who is not the spouse or descendent (by birth or adoption) of any such 5%
Owner or a trust for the benefit of such 5% Owner and/or such other persons or
entities;
(H) the term "New Warrants" shall mean the Class C Warrant issued
pursuant to the Purchase Agreement and any warrants issued upon the exercise or
transfer in whole or part of such warrant; and
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(I) the term "Purchase Rights" shall mean the right to purchase Shares
granted pursuant to this Agreement.
2. The Company hereby grants to the Holder the right to subscribe
for and purchase from Company, upon the terms and conditions set forth herein,
at any time or from time to time before 5:00 P.M. on April 25, 2004, New York
time (the "Exercise Period"), the Number of Shares at a price per share equal to
$.55 (as the same may be adjusted from time to time in accordance with the terms
of this Agreement, the "Exercise Price").
3. The Purchase Rights may be exercised during the Exercise Period,
as to the whole or any lesser number of whole Shares, by the surrender of this
Agreement for notation as to the Number of Shares so purchased (with the
"Election to Exercise" attached hereto, duly executed) to the Company at its
office at 000 Xxxxx Xxxxxx, Xxxx Xxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such
other place as is designated in writing by the Company. In connection with any
exercise of the Purchase Rights, the Holder shall deliver to the Company either
(a) cash (by wire transfer of immediately available funds to the Company's
account) or a certified or bank cashier's check payable to the order of the
Company in an amount equal to the product of the Exercise Price multiplied by
the number of Shares being purchased upon such exercise (the "Aggregate Exercise
Price"), (b) the surrender to the Company of debt or equity securities of the
Company having a Current Market Price (as defined in Section 7(e)) equal to the
Aggregate Exercise Price of the Common Stock being purchased upon such exercise
(provided that for purposes of this subparagraph, the Current Market Price of
any note or other debt security or any preferred stock shall be deemed to be
equal to the aggregate outstanding principal amount or liquidation value thereof
plus all accrued and unpaid interest thereon or accrued or declared and unpaid
dividends thereon) or (c) a written notice to the Company that the Holder is
exercising the Purchase Rights (or a portion thereof) by authorizing the Company
to withhold from issuance a number of shares of Common Stock issuable upon such
exercise of the Purchase Rights which when multiplied by the Current Market
Price of the Common Stock is equal to the Aggregate Exercise Price (and such
withheld shares shall no longer be issuable under this Agreement). All Purchase
Rights which are not exercised prior to 5:00 p.m. on April 25, 2004 New York
time shall become null and void and all such Purchase Rights shall cease as of
such time. At least 30 days prior to the end of the Exercise Period, the
Company shall give the Holder written notice of (i) the expiration of the
Exercise Period, (ii) the Number of Shares issuable upon exercise of the
Purchase Rights as of the date of such notice and (iii) the Exercise Price in
effect as of such date.
4. Upon receipt by the Company of this Agreement, the "Election to
Exercise," and the Aggregate Exercise Price for the Shares, the Holder shall be
deemed to be the holder of record of the Shares issuable upon such exercise;
provided, however, that if the date of such receipt is a date upon which the
transfer books of the Company are closed, the Holder shall be deemed to be the
record holder on the next succeeding business day on which such books are open.
The Company shall not close its books against the transfer of the Purchase
Rights or of any Shares issued or issuable upon the exercise of the Purchase
Rights in any manner which interferes with the timely exercise of the Purchase
Rights. As soon as practicable after each such exercise of the Purchase Rights,
the Company shall issue and cause to be delivered to the Holder a certificate or
certificates for the Shares issuable upon such exercise, registered in the name
of the Holder or its designee.
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Unless this Agreement shall have expired, the Company shall, upon surrender of
this Agreement in connection with any exercise of the Purchase Rights, return
this Agreement to the Holder after notation of the Number of Shares issued upon
such exercise.
5. (a) Any Purchase Rights which are assigned or otherwise
transferred shall be recorded by the Company on a purchase rights register as
such Purchase Rights are assigned or transferred. Such Purchase Rights shall
only be assigned in accordance with the provisions of Section 16. The Company
shall be entitled to treat the registered holder of any Purchase Rights on such
register as the owner in fact thereof for all purposes and shall not be bound to
recognize any equitable or other claim to or interest in such Purchase Rights on
the part of any other person, and shall not be liable for any registration or
transfer of such Purchase Rights which are registered or to be registered in the
name of a fiduciary or the nominee of a fiduciary unless made with the actual
knowledge that a fiduciary or nominee is committing a breach of trust in
requesting such registration or transfer, or with the knowledge of such facts
that its participation therein amounts to bad faith. The Purchase Rights shall
be transferable only on the books of the Company upon delivery hereof duly
endorsed by the Holder or by his duly authorized attorney or representative, or
accompanied by proper evidence of succession, assignment, or authority to
transfer. In all cases of transfer by an attorney, executor, administrator,
guardian, or other legal representative, duly authenticated evidence of his or
its authority shall be produced. Upon any registration of transfer, the Company
shall cause to be delivered a new agreement or agreements substantially
identical to this Agreement to the person entitled thereto. This Agreement may
be exchanged, at the option of the Holder hereof, for another agreement, or
other agreements of different denominations, of like tenor and representing in
the aggregate the right to purchase the Applicable Percentage of the Number of
Shares represented by such agreement or agreements, upon surrender to the
Company or its duly authorized agent. Notwithstanding the foregoing, the Company
shall have no obligation to cause the Purchase Rights to be transferred on its
books to any person if, in the opinion of counsel to the Company, such transfer
does not comply with the provisions of the Securities Act of 1933, as amended
(the "Act"), and the rules and regulations thereunder.
(b) The Holder acknowledges that such Holder has been advised by the
Company that neither the Purchase Rights nor the Shares have been registered
under the Act, that the Purchase Rights are being or have been granted and the
Shares may be issued on the basis of the statutory exemption provided by Section
4(2) of the Act or Regulation D promulgated thereunder, or both, relating to
transactions by an issuer not involving any public offering, and that the
Company's reliance thereon is based in part upon the representations made by the
original Holder in the Purchase Agreement. The Holder acknowledges that such
Holder is familiar with the nature of the limitations imposed by the Act and the
rules and regulations thereunder on the transfer of securities. In particular,
the Holder agrees that no sale, assignment or transfer of the Purchase Rights or
the Shares issuable upon exercise thereof shall be valid or effective, and the
Company shall not be required to give any effect to any such sale, assignment or
transfer, unless (i) the sale, assignment or transfer of the Purchase Rights or
such Shares is registered under the Act, it being understood that neither the
Purchase Rights nor such Shares are currently registered for sale and that the
Company has no obligation or intention to so register the Purchase Rights or
such Shares except as specifically provided in the registration rights agreement
referred to in Section 11, or (ii) the Purchase Rights or such Shares are sold,
assigned or transferred in accordance with all the
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requirements and limitations of Rule 144 under the Act, it being understood that
Rule 144 is not available as of the date hereof for the sale of the Purchase
Rights or such Shares and that there can be no assurance that Rule 144 sales
will be available at any subsequent time, or (iii) such sale, assignment, or
transfer is otherwise exempt from registration under the Act. Notwithstanding
any other provision hereof, if an exercise of the Purchase Rights or any portion
thereof is to be made in connection with a registered public offering or the
sale of the Company, the exercise of the Purchase Rights or any portion thereof
may, at the election of the Holder, be conditioned upon the consummation of the
public offering or sale of the Company in which case such exercise shall not be
deemed to be effective until the consummation of such transaction. The Company
shall assist and cooperate with any Holder required to make any governmental
filings or obtain any governmental approvals prior to or in connection with any
exercise of the Purchase Rights (including, without limitation, making any
filings required to be made by the Company).
6. The Company covenants that the Shares, upon receipt by the
Company of the Aggregate Exercise Price therefor, shall be validly issued, fully
paid, nonassessable, and free of preemptive rights, liens, taxes and charges
with respect to the issuance thereof. The Company shall take all such actions
as may be necessary to assure that all such shares of Common Stock may be so
issued without violation of any applicable law or governmental regulation or any
requirements of any domestic securities exchange upon which shares of Common
Stock may be listed (except for official notice of issuance which shall be
immediately delivered by the Company upon each such issuance). The Company
shall from time to time take all such action as may be necessary to assure that
the par value per share of the unissued Common Stock acquirable upon exercise of
the Purchase Rights is at all times equal to or less than the Exercise Price
then in effect. The Company covenants and agrees that promptly after the date
hereof, the Company shall amend its certificate of incorporation to increase the
authorized and unissued shares of Common Stock of the Company to a number
sufficient to allow for the exercise of all of the Purchase Rights, the Existing
Warrants, the Barington Option and the Existing Options. The Company shall at
all times thereafter reserve and keep available out of its authorized and
unissued Common Stock, solely for the purpose of providing for the exercise of
the Purchase Rights, such number of shares of Common Stock as shall, from time
to time, be sufficient therefor and the Company shall not thereafter take any
action which would cause the number of authorized but unissued shares of Common
Stock to be less than the number of such shares required to be reserved
hereunder for issuance upon exercise of the Purchase Rights.
7. (a) In case the Company shall at any time after the date this
Agreement is first made (i) declare a dividend on any class of the outstanding
capital stock of the Company (the "Capital Stock") payable in shares of its
Capital Stock, (ii) subdivide any class of the outstanding Capital Stock, or
(iii) combine any class of the outstanding Capital Stock into a smaller number
of shares, then, in each case, the Exercise Price in effect at the time of the
record date for such dividend or of the effective date of such subdivision, or
combination, shall be proportionately adjusted. In addition, to the extent any
shares of Common Stock have been issued upon exercise of any of the Existing
Warrants or the Existing Options, the Number of Shares issuable upon exercise of
the Purchase Rights shall be proportionately adjusted to reflect such dividend,
subdivision, or combination of the Common Stock issued upon such exercise of any
of the Existing Warrants or the
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Existing Options. Such adjustment shall be made successively whenever any event
listed above shall occur.
(b) In case the Company shall issue or fix a record date for the
issuance to all holders of any class of Capital Stock of rights, options, or
warrants to subscribe for or purchase Common Stock (or securities convertible
into or exchangeable for Common Stock) at a price per share (or having a
conversion or exchange price per share, if a security convertible into or
exchangeable for Common Stock) less than the Current Market Price per share of
Common Stock on such record date, then, in each case, the Exercise Price shall
be adjusted by multiplying the Exercise Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding on such record date plus the number of shares
of such class of Common Stock which the aggregate offering price of the total
number of shares of such class of Common Stock so to be offered (or the
aggregate initial conversion or exchange price of the convertible or
exchangeable securities so to be offered) would purchase at such Current Market
Price and the denominator of which shall be the number of shares of Common Stock
outstanding on such record date plus the number of additional shares of Common
Stock to be offered for subscription or purchase (or into which the convertible
or exchangeable securities so to be offered are initially convertible or
exchangeable); provided, however, that no such adjustment shall be made which
results in an increase in the Exercise Price. Such adjustment shall become
effective at the close of business on such record date; provided, however, that,
to the extent the shares of Common Stock (or securities convertible into or
exchangeable for shares of Common Stock) are not delivered, the Exercise Price
shall be readjusted after the expiration of such rights, options, or warrants
(but only with respect to the Purchase Rights exercised after such expiration),
to the Exercise Price which would then be in effect had the adjustments made
upon the issuance of such rights, options, or warrants been made upon the basis
of delivery of only the number of shares of Common Stock (or securities
convertible into or exchangeable for shares of Common Stock) actually issued.
In case any subscription price may be paid in a consideration, part or all of
which shall be in a form other than cash, the value of such consideration shall
be as determined in good faith by the board of directors of the Company, whose
determination shall be conclusive absent manifest error. Shares of Common Stock
owned by or held for the account of the Company or any majority-owned subsidiary
shall not be deemed outstanding for the purpose of any such computation.
(c) In case the Company shall distribute to all holders of any class
of Common Stock (including any such distribution made to the stockholders of the
Company in connection with a consolidation or merger in which the Company is the
continuing corporation) evidences of its indebtedness, cash (other than any cash
dividend which, together with any cash dividends paid within the 12 months prior
to the record date for such distribution, does not exceed 5% of the Current
Market Price at the record date for such distribution) or assets (other than
distributions and dividends payable in shares of Common Stock), or rights,
options, or warrants to subscribe for or purchase Common Stock, or securities
convertible into or changeable for shares of Common Stock (excluding those with
respect to the issuance of which an adjustment of the Exercise Price is provided
pursuant to Section 7(b) hereof), then, in each case, the Exercise Price shall
be adjusted by multiplying the Exercise Price in effect immediately prior to the
record date for the determination of stockholders entitled to receive such
distribution by a fraction, the numerator of
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which shall be the Current Market Price per share of such class of Common Stock
on such record date, less the fair market value (as determined in good faith by
the board of directors of the Company, whose determination shall be conclusive
absent manifest error) of the portion of the evidences of indebtedness or assets
so to be distributed, or of such rights, options, or warrants or convertible or
exchangeable securities, or the amount of such cash, applicable to one share,
and the denominator of which shall be such Current Market Price per share of
such class of Common Stock. Such adjustment shall become effective at the close
of business on such record date.
(d) In case the Company shall have issued at any time after April 26,
1996 or shall issue shares of Common Stock or rights, options, or warrants to
subscribe for or purchase Common Stock, or securities convertible into or
exchangeable for Common Stock (excluding shares, rights, options, warrants, or
convertible or exchangeable securities issued or issuable (i) in any of the
transactions with respect to which an adjustment of the Exercise Price is
provided pursuant to Sections 7(a), 7(b), or 7(c) above, (ii) upon any issuance
of securities pursuant to the Purchase Agreement, (iii) upon exercise of the New
Warrants, (iv) upon exercise of any of the Existing Warrants, (v) upon exercise
of any Existing Options or (vi) upon exercise of the Barington Option), at a
price per share (determined, in the case of such rights, options, warrants, or
convertible or exchangeable securities, by dividing (x) the total amount
received or receivable by the Company in consideration of the sale and issuance
of such rights, options, warrants, or convertible or exchangeable securities,
plus the minimum aggregate consideration payable to the Company upon exercise,
conversion, or exchange thereof, by (y) the maximum number of shares covered by
such rights, options, warrants, or convertible or exchangeable securities) lower
than the Current Market Price per share of shares of such class of Common Stock
so issued in effect immediately prior to such issuance, then the Exercise Price
shall be reduced on the date of such issuance to a price (calculated to the
nearest cent) determined by multiplying the Exercise Price in effect immediately
prior to such issuance by a fraction, (1) the numerator of which shall be an
amount equal to the sum of (A) the number of shares of Common Stock outstanding
immediately prior to such issuance plus (B) the quotient obtained by dividing
the consideration received by the Company upon such issuance by such Current
Market Price, and (2) the denominator of which shall be the total number of
shares of Common Stock outstanding immediately after such issuance; provided,
however, that no such adjustment shall be made which results in an increase in
the Exercise Price. For the purposes of such adjustments, the maximum number of
shares which the holders of any such rights, options, warrants, or convertible
or exchangeable securities shall be entitled to initially subscribe for or
purchase or convert or exchange such securities into shall be deemed to be
issued and outstanding as of the date of such issuance, and the consideration
received by the Company therefor shall be deemed to be the consideration
received by the Company for such rights, options, warrants, or convertible or
exchangeable securities, plus the minimum aggregate consideration or premiums
stated in such rights, options, warrants, or convertible or exchangeable
securities to be paid for the shares covered thereby. No further adjustment of
the Exercise Price shall be made as a result of the actual issuance of shares of
Common Stock on exercise of such rights, options, or warrants or on conversion
or exchange of such convertible or exchangeable securities. On the expiration
or the termination of such rights, options, or warrants, or the termination of
such right to convert or exchange, the Exercise Price shall be readjusted (but
only with respect to Warrants exercised after such expiration or termination) to
such Exercise Price as would have obtained had the adjustments made upon the
issuance of such rights, options, warrants, or convertible or exchangeable
securities
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been made upon the basis of the delivery of only the number of shares of Common
Stock actually delivered upon the exercise of such rights, options, or warrants
or upon the conversion or exchange of any such securities; and on any change of
the number of shares of Common Stock deliverable upon the exercise of any such
rights, options, or warrants or conversion or exchange of such convertible or
exchangeable securities or any change in the consideration to be received by the
Company upon such exercise, conversion, or exchange, including, without
limitation, a change resulting from the antidilution provisions thereof. In case
the Company shall issue shares of Common Stock or any such rights, options,
warrants, or convertible or exchangeable securities for a consideration
consisting, in whole or in part, of property other than cash or its equivalent,
then the "price per share" and the "consideration received by the Company" for
purposes of the first sentence of this Section 7(d) shall be as determined in
good faith by the board of directors of the Company, whose determination shall
be conclusive absent manifest error. Shares of Common Stock owned by or held for
the account of the Company or any majority-owned subsidiary shall not be deemed
outstanding for the purpose of any such computation.
(e) For the purpose of any computation under this Section 7, the
Current Market Price per share of any class of Capital Stock on any date shall
be deemed to be the average of the daily closing prices for shares of such class
for the 30 consecutive trading days immediately preceding the date in question.
The closing price for each day shall be the last reported sales price regular
way, or in case no such reported sales takes place on such date, the closing bid
price regular way on the principal national securities exchange (including, for
purposes hereof, the NASDAQ National Market System or the NASDAQ SmallCap
Market) on which shares of such class of Common Stock are listed or admitted to
trading or, if such class of Common Stock is not listed or admitted to trading
on any national securities exchange, the highest reported bid price for such
class of Common Stock as furnished by the National Association of Securities
Dealers, Inc. through NASDAQ or a similar organization if NASDAQ is no longer
reporting such information. If on any such date such class of Common Stock is
not listed or admitted to trading on any national securities exchange and is not
quoted by NASDAQ or any similar organization, the fair value of a share of such
class of Common Stock on such date, as determined in good faith by the board of
directors of the Company, whose determination shall be conclusive absent
manifest error, shall be used.
(f) All calculations under this Section 7 shall be made to the nearest
cent or to the nearest one-thousandth of a share, as the case may be.
(g) Whenever there shall be an adjustment as provided in this Section
7, the Company shall promptly cause written notice thereof to be sent by
certified mail, postage prepaid, to the Holder, at its address as it shall
appear in the purchase rights register, which notice shall be accompanied by an
officer's certificate setting forth the Number of Shares purchasable upon the
exercise of the Purchase Rights and the Exercise Price after such adjustment and
setting forth a brief statement of the facts requiring such adjustment and the
computation thereof, which officer's certificate shall be conclusive evidence of
the correctness of any such adjustment absent manifest error.
(h) The Company shall not be required to issue fractions of shares of
Common Stock of the Company upon the exercise of the Purchase Rights. If any
fraction of a share
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would be issuable on the exercise of the Purchase Rights (or specified portions
thereof), the Company shall purchase such fraction for an amount in cash equal
to the same fraction of the Current Market Price of such share of Common Stock
on the date of exercise of the Purchase Rights.
8. (a) In case of any consolidation with or merger of the Company
with or into another corporation (other than a merger or consolidation in which
the Company is the surviving or continuing corporation), or in case of any sale,
lease, or conveyance to another corporation of the property and assets of any
nature of the Company as an entirety or substantially as an entirety, such
successor, leasing, or purchasing corporation, as the case may be, shall (i)
execute with the Holder an agreement providing that the Holder shall have the
right thereafter to receive upon exercise of the Purchase Rights solely the kind
and amount of shares of stock and other securities, property, cash, or any
combination thereof receivable upon such consolidation, merger, sale, lease, or
conveyance by a holder of the number of shares of Common Stock for which the
Purchase Rights might have been exercised immediately prior to such
consolidation, merger, sale, lease, or conveyance, and (ii) make effective
provision in its certificate of incorporation or otherwise, if necessary, to
effect such agreement. Such agreement shall provide for adjustments which shall
be as nearly equivalent as practicable to the adjustments in Section 7.
(b) In case of any reclassification or change of the shares of Common
Stock issuable upon exercise of the Purchase Rights (other than a change in par
value or from no par value to a specified par value, or as a result of a
subdivision or combination, but including any change in the shares into two or
more classes or series of shares), or in case of any consolidation or merger of
another corporation into the Company in which the Company is the continuing
corporation and in which there is a reclassification or change (including a
change to the right to receive cash or other property) of the shares of Common
Stock (other than a change in par value, or from no par value to a specified par
value, or as a result of a subdivision or combination, but including any change
in the shares into two or more classes or series of shares), the Holder shall
have the right thereafter to receive upon exercise of the Purchase Rights solely
the kind and amount of shares of stock and other securities, property, cash, or
any combination thereof receivable upon such reclassification, change,
consolidation, or merger by a holder of the Number of Shares for which the
Purchase Rights might have been exercised immediately prior to such
reclassification, change, consolidation, or merger. Thereafter, appropriate
provision shall be made for adjustments which shall be as nearly equivalent as
practicable to the adjustments in Section 7.
(c) The above provisions of this Section 8 shall similarly apply to
successive reclassifications and changes of shares of Common Stock and to
successive consolidations, mergers, sales, leases, or conveyances.
(d) If any event occurs of the type contemplated by the provisions of
this Section 8 but not expressly provided for by such provisions, then the
Company's board of directors shall make an appropriate adjustment in the
Exercise Price and the Number of Shares obtainable upon exercise of the Purchase
Rights so as to protect the rights of the Company and the holders of the
Purchase Rights; provided that no such adjustment shall increase the Exercise
Price or decrease the Number of Shares obtainable as otherwise determined
pursuant to this Agreement without the
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prior written consent of the holders of a majority of the Shares issued or
issuable upon exercise of the Purchase Rights (which consent will not be
unreasonably withheld).
9. (a) In case at any time the Company shall issue any shares of
Common Stock upon the exercise of any of the Existing Warrants, the Barington
Option or Existing Options, then the Company shall give written notice thereof,
(i) by telecopy to the Holder at the telecopy number of such Holder as it shall
appear on the Company's books and records, such notice to be sent as of the date
of such issuance and (ii) by certified mail, postage prepaid, to the Holder at
the Holder's address as it shall appear in the purchase rights register, such
notice to be mailed no later than one day after such issuance. Each such notice
shall state (A) the name of the party or parties exercising any such Existing
Warrants, the Barington Option or Existing Options, (B) the number of shares of
Common Stock issued upon such exercise, (C) the purchase price per share of
Common Stock issued upon such exercise, (D) the number of Shares exercisable
under this Agreement after giving effect to such issuance, (E) the Exercise
Price then in effect under this Agreement after giving effect to such issuance
and (F) the remaining Number of Shares as of the date of such notice.
(b) In case at any time the Company shall propose to:
(i) pay any dividend or make any distribution on shares of
Common Stock in shares of Common Stock or make any other distribution
(other than regularly scheduled cash dividends which are not in a
greater amount per share than the most recent such cash dividend) to
all holders of Common Stock; or
(ii) issue any rights, warrants, or other securities to all
holders of Common Stock entitling them to purchase any additional
shares of Common Stock or any other rights, warrants, or other
securities; or
(iii) effect any reclassification or change of outstanding
shares of Capital Stock, or any consolidation, merger, sale, lease, or
conveyance of property, described in Section 8 hereof; or
(iv) effect any liquidation, dissolution, or winding-up of
the Company; or
(v) take any other action which would cause an adjustment
to the Exercise Price;
then, and in any one or more of such cases, the Company shall give written
notice thereof, by certified mail, postage prepaid, to the Holder at the
Holder's address as it shall appear in the purchase rights register, mailed at
least 15 days prior to (A) the date as of which the holders of record of shares
of Common Stock to be entitled to receive any such dividend, distribution,
rights, warrants, or other securities are to be determined, (B) the date on
which any such reclassification, change of outstanding shares of Common Stock,
consolidation, merger, sale, lease, conveyance of property, liquidation,
dissolution, or winding-up is expected to become effective, and the date as of
which it is expected that holders of record of shares of Common Stock shall be
entitled to exchange
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their shares for securities or other property, if any, deliverable upon such
reclassification, change of outstanding shares, consolidation, merger, sale,
lease, conveyance of property, liquidation, dissolution, or winding-up, or (C)
the date of such action which would require an adjustment to the Exercise Price.
10. The issuance of any shares or other securities upon the exercise
of the Purchase Rights, and the delivery of certificates or other instruments
representing such shares or other securities, shall be made without charge to
the Holder for any tax or other charge in respect of such issuance or for any
other cost of the Company incurred in connection with such issuance and
delivery. The Company shall not, however, be required to pay any tax which may
be payable in respect of any transfer or delivery of the Purchase Rights to a
person other than, or the issuance and delivery of any certificate in a name
other than that of the registered Holder and the Company shall not be required
to issue or deliver any such certificate unless and until the person or persons
requesting the issue thereof shall have paid to the Company the amount of such
tax or shall have established to the satisfaction of the Company that such tax
has been paid.
11. The Shares shall be entitled to benefit of the provisions of that
certain Registration Rights Agreement, of even date herewith, by and among the
Company and the persons purchasing securities pursuant to the Purchase
Agreement.
12. Subject to the conditions set forth below, the Company agrees to
indemnify and hold harmless each Holder, its officers, directors, partners,
employees, agents, and counsel, and each person, if any, who controls any such
person within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, from and against any and all loss, liability, charge, claim,
damage, and expense whatsoever (which shall include, for all purposes of this
Section 12, without limitation, reasonable attorneys' fees and any and all
expense whatsoever incurred in investigating, preparing, or defending against
any litigation, commenced or threatened, or any claim whatsoever, and any and
all amounts paid in settlement of any claim or litigation), as and when
incurred, arising out of, based upon, or in connection with, any breach of any
representation, warranty, covenant, or agreement of the Company contained in
this Agreement. The foregoing agreement to indemnify shall be in addition to
any liability the Company may otherwise have, including liabilities arising
under the Purchase Rights.
If any action is brought against any Holder or any of its officers,
directors, partners, employees, agents, or counsel, or any controlling persons
of such person (an "indemnified party") in respect of which indemnity may be
sought against the Company pursuant to the foregoing paragraph, such indemnified
party or parties shall promptly notify the Company in writing of the institution
of such action (but the failure so to notify shall not relieve the Company from
any liability under this Section 12 unless the Company shall have been
materially prejudiced by such failure or relieve the Company from any liability
other than pursuant to this Section 12) and the Company shall promptly assume
the defense of such action, including the employment of counsel (reasonably
satisfactory to such indemnified party or parties) and payment of expenses.
Such indemnified party or parties shall have the right to employ its or their
own counsel in any such case, but the fees and expenses of such counsel shall be
at the expense of such indemnified party or parties unless the employment of
such counsel shall have been authorized in writing by the Company in connection
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with the defense of such action or the Company shall not have employed counsel
reasonably satisfactory to such indemnified party or parties to have charge of
the defense of such action or such indemnified party or parties shall have
reasonably concluded that there may be one or more legal defenses available to
it or them or to other indemnified parties which are different from or
additional to those available to the Company, in any of which events such fees
and expenses shall be borne by the Company and the Company shall not have the
right to direct the defense of such action on behalf of the indemnified party or
parties. Anything in this Section 12 to the contrary notwithstanding, the
Company shall not be liable for any settlement of any such claim or action
effected without its written consent, which shall not be unreasonably withheld.
13. Unless registered pursuant to the provisions of the registration
rights agreement referred to in Section 11 hereof, the Shares issued upon
exercise of the Purchase Rights shall be subject to a stop transfer order and
the certificate or certificates evidencing such Shares shall bear the following
legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY
INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE
TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO
IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS,
OR (2) THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF
SUCH SECURITIES, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY
TO THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED,
ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR APPLICABLE STATE
SECURITIES LAWS."
14. Upon receipt of evidence satisfactory to the Company of the loss,
theft, destruction, or mutilation of this Agreement or any similar agreements
issued upon the assignment or transfer of all or any portion of the Purchase
Rights (and upon surrender of any such agreement if mutilated), including an
affidavit of the Holder thereof that this Agreement or any similar agreements
issued upon the assignment or transfer of all or any portion of the Purchase
Rights has been lost, stolen, destroyed or mutilated, together with an indemnity
against any claim that may be made against the Company on account of such lost
stolen, destroyed or mutilated agreement, and upon reimbursement of the
Company's reasonable incidental expenses, the Company shall execute and deliver
to the Holder thereof a new agreement of like date, tenor, and denomination.
-12-
15. The Holder of any Purchase Rights shall not have solely on
account of such status, any rights of a stockholder of the Company, either at
law or in equity, or to any notice of meetings of stockholders or of any other
proceedings of the Company, except as provided in this Agreement. No provision
hereof, in the absence of affirmative action by the Holder to purchase Common
Stock, and no enumeration herein of the rights or privileges of the Holder shall
give rise to any liability of such holder for the Exercise Price of Common Stock
acquirable by exercise hereof or as a stockholder of the Company.
16. The Purchase Rights shall not be transferable without the prior
written consent of the Company except in connection with (i) the transfer of
shares of Common Stock acquired pursuant to the purchase agreement (the
"Purchase Agreement") between the Company and the original Holder, dated April
25, 1997 and in such event, in a percentage equal to the percentage of Common
Stock transferred determined by dividing the number of shares being transferred
by the number of shares purchased under the Purchase Agreement; (ii) any Sale of
the Company; or (iii) a sale of all remaining Common Stock owned by the Holder.
17. This Agreement shall be construed in accordance with the laws of
the State of Delaware applicable to contracts made and performed within such
State, without regard to principles governing conflicts of law.
18. Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be mailed by certified mail,
return receipt requested, or by Federal Express, Express Mail or similar
overnight delivery or courier service or delivered (in person or by telecopy,
telex or similar telecommunications equipment) against receipt to the party to
whom it is to be given, (i) if to the Company, at 000 Xxxxx Xxxxxx, Xxxx Xxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention: President, (ii) if to the Holder, at its
address set forth on the signature page hereof, or (iii) in either case, to such
other address as the party shall have furnished in writing in accordance with
the provisions of this Section 18. Notice to the estate of any party shall be
sufficient if addressed to the party as provided in this Section 18. Any notice
or other communication given by certified mail shall be deemed given at the time
of certification thereof, except for a notice changing a party's address which
shall be deemed given at the time of receipt thereof. Any notice given by other
means permitted by this Section 18 shall be deemed given at the time of receipt
thereof.
19. No course of dealing and no delay or omission on the part of the
Holder in exercising any right or remedy shall operate as a waiver thereof or
otherwise prejudice the Holder's rights, powers or remedies. No right, power or
remedy conferred by this Agreement upon the Holder shall be exclusive of any
other right, power or remedy referred to herein or now or hereafter available at
law, in equity, by statute or otherwise, and all such remedies may be exercised
singly or concurrently.
20. This Agreement may be amended only by a written instrument
executed by the Company and the Holder hereof. Any amendment shall be endorsed
upon this Agreement, and all future Holders shall be bound thereby.
-13-
* * * *
-14-
IN WITNESS WHEREOF, the parties have executed this Equity Protection
Agreement as of the date first written above.
UC TELEVISION NETWORK CORP.
By: _____________________________
Name:
Title:
Address: 000 Xxxxx Xxxxxx, Xxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
U-C HOLDINGS, L.L.C.
By: XXXXXX XXXXX & PARTNERS, L.P.
Its Managing Member
By: Xxxxxx Xxxxx & Partners, L.L.C.
Its General Partner
By: _____________________________
Avy X. Xxxxx
Its Manager
Address: 000 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
-15-
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer any
Purchase Rights granted pursuant to the attached Agreement.)
FOR VALUE RECEIVED, ______________________ hereby sells, assigns, and
transfers unto ___________________ the right to purchase __________ shares of
Common Stock, par value $0.001 per share, of UC Television Network Corp. (the
"Company"), together with all right, title, and interest therein, and does
hereby irrevocably constitute and appoint the secretary of the Company attorney
to transfer such rights on the books of the Company, with full power of
substitution.
Dated: ____________________
Signature
-----------------------------
---------------------------------------
Signature Guarantee
NOTICE
The signature on the foregoing Assignment must correspond to the name
as written upon the face of this Agreement in every particular, without
alteration or enlargement or any change whatsoever.
-16-
To: UC TELEVISION NETWORK CORP.
000 Xxxxx Xxxxxx
Xxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
ELECTION TO EXERCISE
The undersigned hereby exercises his or its rights to purchase _____
Shares covered by the within Agreement and tenders payment herewith of the
Aggregate Exercise Price in accordance with the terms thereof, and requests that
certificates for such securities be issued in the name of, and delivered to:
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
(Print Name, Address and Social Security
or Tax Identification Number)
and that this Agreement containing a notation as to the Number of Shares issued
upon such exercise be registered in the name of, and delivered to, the
undersigned at the address stated below.
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
(Print Name, Address and Social Security
or Tax Identification Number)
-17-
Dated: ____________________
Name:_____________________________
(Print)
__________________________________
(Signature)
__________________________________
(Signature Guarantee)
__________________________________
(Signature Guarantee)
-18-
