EXHIBIT 10.4
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CROWN MEDIA HOLDINGS, INC.
AND
THE HOLDERS NAMED HEREIN
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CONTINGENT APPRECIATION CERTIFICATE AGREEMENT
Dated as of December 17, 2001
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TABLE OF CONTENTS
PAGE
ARTICLE I. DEFINITIONS............................................1
SECTION 1.01. Definitions of Terms................................1
ARTICLE II. EXERCISE OF CERTIFICATE...............................16
SECTION 2.01. Exercise...........................................16
SECTION 2.02. Manner of Exercise.................................17
SECTION 2.03. Material Transaction Announcement..................20
SECTION 2.04. Payment of Taxes...................................20
SECTION 2.05. Fractional Shares..................................20
SECTION 2.06. Continued Validity.................................21
ARTICLE III. TRANSFER, DIVISION AND COMBINATION....................21
SECTION 3.01. Transfer...........................................21
SECTION 3.02. Division and Combination...........................21
SECTION 3.03. Expenses...........................................22
SECTION 3.04. Maintenance of Books...............................22
ARTICLE IV. ADJUSTMENT OF INDEX PRICE AND INDEX AMOUNT............22
SECTION 4.01. General............................................22
SECTION 4.02. Adjustment for Change in Capital Stock.............22
SECTION 4.03. Adjustment for Rights Issue........................23
SECTION 4.04. Adjustment for Other Distributions.................24
SECTION 4.05. Adjustment for Class A Common Stock Issue..........24
SECTION 4.06. Adjustment for Convertible Securities Issue........26
SECTION 4.07. Consideration Received.............................27
SECTION 4.08. Fair Value.........................................28
SECTION 4.09. When De Minimis Adjustment May Be Deferred.........28
SECTION 4.10. When No Adjustment Required........................28
SECTION 4.11. Notice of Adjustment...............................29
SECTION 4.12. When Issuance or Payment May Be Deferred...........29
SECTION 4.13. Adjustment in Index Amount.........................29
ARTICLE V. NOTICE OF CERTAIN EVENTS..............................30
SECTION 5.01. Notice Events......................................30
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TABLE OF CONTENTS
(CONTINUED)
PAGE
ARTICLE VI. NO IMPAIRMENT................................................31
ARTICLE VII. RESERVATION AND AUTHORIZATION OF CLASS A
COMMON STOCK; REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTHORITY.......................31
ARTICLE VIII. TAKING OF RECORD; STOCK AND CERTIFICATE TRANSFER BOOKS.......32
ARTICLE IX. RESTRICTIONS ON TRANSFERABILITY..............................32
SECTION 9.03. Restrictive Legend......................................33
SECTION 9.04. Permitted Transfers.....................................33
SECTION 9.05. Termination of Restrictions.............................34
ARTICLE X. REGISTRATION RIGHTS..........................................34
SECTION 10.01. Required Registration...................................34
SECTION 10.02. Demand Registration.....................................35
SECTION 10.03. Piggy-back Registration.................................38
SECTION 10.04. Registration Procedures.................................39
SECTION 10.05. Allocation of Expenses..................................41
SECTION 10.06. Indemnification.........................................42
SECTION 10.07. Indemnification with Respect to Underwritten Offering...44
SECTION 10.08. Information by Holder...................................44
ARTICLE XI. SUPPLYING INFORMATION........................................44
SECTION 11.01. Information by Company..................................44
SECTION 11.02. Reports by the Company..................................45
ARTICLE XII. SUBORDINATION................................................45
SECTION 12.01. Agreement to Subordinate................................45
SECTION 12.02. Default on Senior Indebtedness..........................46
SECTION 12.03. Liquidation; Dissolution; Bankruptcy....................46
SECTION 12.04. Subrogation.............................................48
SECTION 12.05. Company to Effectuate Subordination.....................49
SECTION 12.06. Subordination May Not Be Impaired.......................49
ARTICLE XIII. LOSS OR MUTILATION...........................................49
ARTICLE XIV. OFFICE OF THE COMPANY........................................50
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TABLE OF CONTENTS
(continued)
PAGE
ARTICLE XV. LIMITATION OF LIABILITY.................................50
ARTICLE XVI. MISCELLANEOUS...........................................50
SECTION 16.01. Nonwaiver and Expenses.............................50
SECTION 16.02. Notice Generally...................................50
SECTION 16.03. Indemnification....................................51
SECTION 16.04. Remedies...........................................52
SECTION 16.05. Undertaking to Pay Costs...........................52
SECTION 16.06. Successors and Assigns.............................53
SECTION 16.07. Amendment..........................................53
SECTION 16.08. Severability.......................................53
SECTION 16.09. Headings...........................................54
SECTION 16.10. Treatment of Units.................................54
SECTION 16.11. Governing Law......................................54
SECTION 16.12. Certain Securities Owned by Company Disregarded....54
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CONTINGENT APPRECIATION CERTIFICATE AGREEMENT
CONTINGENT APPRECIATION CERTIFICATE AGREEMENT (this
"Agreement"), dated as of December 17, 2001, among Crown Media Holdings, Inc., a
Delaware corporation, and the Holders party hereto:
WHEREAS, the Company (as defined herein) has duly authorized
the execution and delivery of this Agreement to provide for the issuance of the
Certificates (as defined herein) entitling the Holder thereof to either the
right to receive a cash payment in the amount of the Minimum Return Amount (as
defined herein) or the right to purchase shares of Class A Common Stock (as
defined herein) of the Company, in each case on the terms and conditions set
forth in this Agreement;
WHEREAS, the Debentures (as defined herein) are issued under
the Indenture (as defined herein) and evidence loans made to the Company from
the proceeds from the issuance by Crown Media Trust, a Delaware statutory
business trust (the "Trust"), of the Preferred Securities (as defined herein)
and the Common Securities (as defined herein) of the Trust;
WHEREAS, the Certificates are to be issued together with the
Trust Securities of the Trust as units (the "Units"), each Unit being comprised
of one Trust Security and one Certificate (the Units, Trust Securities and
Certificates being referred to herein as the "Unit Securities"); and
WHEREAS, the Trust is subject to the Amended and Restated
Declaration of Trust, dated as of December 17, 2001, among the Company, as
Sponsor, the Trust and the trustees named therein (the "Declaration"), which
Declaration sets forth the terms and conditions of the Trust Securities (as
defined herein);
NOW, THEREFORE, in consideration of the premises and the
purchase of the Certificates by the Investors, it is mutually covenanted and
agreed as follows for the equal and ratable benefit of the holders of the
Certificates:
ARTICLE I.
DEFINITIONS
SECTION 1.01. Definitions of Terms.
The terms defined in this Section (except as in this Agreement
otherwise expressly provided or unless the context otherwise requires) for all
purposes of this Agreement shall have the respective meanings specified in this
Section and shall include the plural as well as the singular. Any reference to a
party hereto shall include the successors and permitted assigns of such party.
"Administrative Agent" means JPMorgan Chase Bank, and any
successor, as administrative agent under the Credit, Security, Guaranty, and
Pledge Agreement,
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dated as of August 31, 2001, by and among, the Company, certain of its
Subsidiaries, the lenders referred to therein, JPMorgan Chase Bank (formerly
known as The Chase Manhattan Bank), as Arranger and Sole Bookrunner, Bank of
America, N.A., as Arranger and Syndication Agent, Citicorp USA, Inc. and
Deutsche Bank AG
New York Branch, as Co-Arrangers and Documentation Agents,
together with the related documents thereto (including the term loans and
revolving loans thereunder, any guarantees and security documents), as amended.
"Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act or any successor rule thereunder.
"Affiliation Agreement" means an agreement or series of
related agreements entered into by the Company or any of its subsidiaries in the
ordinary course of its business with a pay television or satellite television
provider in connection with the licensing and/or distribution of pay television
or satellite television programming.
"Agreement" has the meaning set forth in the recitals to this
Agreement.
"Applicable Securities" means, in relation to a Registration
Statement, the Certificate Shares identified in the related Demand Notice or
Piggy-back Notice.
"Bankruptcy Event" means (a) Hallmark Cards or the Company
pursuant to or within the meaning of any Bankruptcy Law (i) commences a
voluntary case, (ii) consents to the entry of an order for relief against it in
an involuntary case, (iii) consents to the appointment of a Custodian of it or
for all or substantially all of its property or (iv) makes a general assignment
for the benefit of its creditors; (b) a court of competent jurisdiction enters
an order under any Bankruptcy Law that (i) is for relief against Hallmark Cards
or the Company in an involuntary case, (ii) appoints a Custodian of Hallmark
Cards or the Company or for all or substantially all of their respective
property, or (iii) orders the liquidation of Hallmark Cards or the Company, and
the order or decree remains unstayed and in effect for 90 days; or (c) Hallmark
Cards or the Company shall have, voluntarily or involuntarily, liquidated,
dissolved, wound-up its business or otherwise terminated its existence other
than in connection with a merger, consolidation or other business combination in
which the surviving entity continues to conduct the business of Hallmark Cards
or the Company, as the case may be.
"Bankruptcy Law" means Title 11, U.S. Code, or any successor
or similar federal or state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the
Company or any duly authorized committee thereof acting within the scope of such
authorization.
"Business Day" means any day other than a day on which Federal
and State banking institutions in The Borough of Manhattan, the City of
New York
are authorized or obligated by law, executive order or regulation to close.
"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of, or interests in
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(however designated), equity of such Person, including any Preferred Stock but
excluding debt securities convertible into such equity.
"Cash Exercise" has the meaning set forth in Section 2.01(a)
hereof.
"Cashless Exercise" has the meaning set forth in Section
2.01(b) hereof.
"Certificate Amount" means the number of Certificates held by
each Investor as set forth on the signature pages hereof.
"Certificate Shares" means the shares of Class A Common Stock
purchased by the holders of the Certificates upon a Shares Exercise.
"Certificate Shares Price" means an amount equal to (i) the
number of shares of Class A Common Stock being purchased upon exercise of
Certificates, pursuant to Section 2.01 hereof, multiplied by (ii) the Index
Price.
"Certificates" means the Certificates issued pursuant to this
Agreement in the form attached as Exhibit A hereto, and all Certificates issued
upon transfer, division or combination of, or in substitution for, any thereof.
All Certificates shall at all times be identical as to terms and conditions and
date. All references to "Certificates represented by this Agreement" and similar
phrases in connection with Holders shall mean Certificates held of record by
such Holders.
"Change of Control" means the occurrence of any of the
following:
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(i) the Permitted Holders cease to be the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act, except that for purposes of this clause (i) the Permitted
Holders shall be deemed to have "beneficial ownership" of (A)
all shares that any such Permitted Holder has the right to
acquire, whether such right is exercisable immediately or only
after the passage of time and (B) any Voting Stock of the
Company held by any other Person (the "parent entity") so long
as the Permitted Holders beneficially own (as so defined),
directly or indirectly, in the aggregate a majority of the
voting power of the Voting Stock of the parent entity),
directly or indirectly, of a majority in the aggregate of the
total voting power of the Voting Stock of the Company, whether
as a result of issuance of securities of the Company,
conversion of shares of Class B Common Stock of the Company,
any merger, consolidation, liquidation or dissolution of the
Company, or any direct or indirect transfer of securities by
the Company or otherwise; provided however, that any shares
underlying any option or other agreement to reacquire economic
or voting control of shares of Capital Stock of the Company
entered into by a Permitted Holder in connection with the
sale, transfer or other disposition by such Permitted Holder
shall not constitute shares beneficially owned by such
Permitted Holder;
(ii) any Person or group other than a Permitted
Holder becomes the "beneficial owner" (as defined in Rules
13d-3 and 13d-5 under the Exchange Act, except that for
purposes of this clause (ii) such Person or group shall be
deemed to have "beneficial ownership" of (A) all shares that
any such Person or group has the right to acquire, whether
such right is exercisable immediately or only after the
passage of time and (B) any Voting Stock of the Company held
by any parent entity so long as the Person or group
beneficially owns (as so defined), directly or indirectly, in
the aggregate a majority of the voting power of the Voting
Stock of the parent entity), directly or indirectly, in the
aggregate of a majority of the total voting power of the
Voting Stock of the Company, whether as a result of issuance
of securities of the Company, conversion of shares of Class B
Common Stock of the Company, any merger, consolidation,
liquidation or dissolution of the Company, or any direct or
indirect transfer of securities by the Company or otherwise;
provided however, that any shares underlying any option or
other agreement to reacquire economic or voting control of
shares of Capital Stock of the Company entered into by such
Person in connection with the sale, transfer or other
disposition by such Person shall not constitute shares
beneficially owned by such Person;
(iii) individuals who on the Issue Date constituted
the Board of Directors (together with any new directors whose
election by such Board of Directors or whose nomination for
election by the stockholders of the Company was approved by a
vote of at least 66-2/3% of the Board of Directors then still
in office who were either directors on the Issue Date or whose
election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the
Board of Directors then in office;
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(iv) the consummation by the Company of any
transaction that would constitute a "Rule 13e-3 transaction"
as defined in the Exchange Act; or
(v) the sale of all or substantially all the assets
of the Company (determined on a consolidated basis) to another
Person, other than a transaction following which the
transferee Person becomes a Subsidiary of the transferor of
such assets and such Subsidiary fully and unconditionally
guarantees the Company's obligations under the Debentures and
the Certificates.
"Change of Control Offer" means an offer by the Company to
purchase any and all Debentures following the occurrence of a Change of Control,
as provided in Section 3.02(b) of the Indenture.
"Change of Control Redemption" means a redemption by the
Company of the Debentures following the occurrence of a Change of Control, as
provided in Section 3.02(a) of the Indenture.
"Class A Common Stock" means (except where the context
otherwise indicates) the Class A Common Stock, par value $0.01 per share, of the
Company issued and outstanding on the Issue Date, and any capital stock into
which such Class A Common Stock may thereafter be changed, and shall also
include (i) capital stock of the Company of any other class (regardless of how
denominated) issued to the holders of shares of Class A Common Stock upon any
reclassification thereof which is also not preferred as to dividends or assets
over any other class of stock of the Company and which is not subject to
redemption and (ii) shares of Class A Common Stock of any successor or acquiring
corporation received by or distributed to the holders of Class A Common Stock of
the Company in the circumstances contemplated by Article V hereof.
"Class B Common Stock" means Class B Common Stock of the
Company, per value $0.01 per share, and any Capital Stock of the Company into
which such Class B Common Stock may thereafter be changed.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the U.S. Securities and Exchange Commission
or, in the absence of the U.S. Securities and Exchange Commission, such other
federal agency then administering the Securities Act and other federal
securities laws.
"Common Securities" means that class of common securities
representing undivided beneficial interests in the assets of the Trust having
such terms as are set forth in the Declaration.
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"Company" means Crown Media Holdings, Inc., a corporation duly
organized and existing under the laws of the State of Delaware and its
successors and assigns.
"Company Common Stock" means the Class A Common Stock and
Class B Common Stock.
"Company Notice" has the meaning set forth in Section 2.01(c)
hereof.
"controlling person" has the meaning set forth in Section
10.06 hereof.
"Current Market Price" means, in respect of the Class A Common
Stock on the date of determination, the weighted average, based on volume of
trading, of the daily market prices on each Trading Day during the period
specified. The daily market price for each such Trading Day shall be the average
of the high and low sales prices on such day on the principal stock exchange or
NASDAQ on which such Class A Common Stock is then listed or admitted to trading.
"Debentures" means the 6.75% Subordinated Debentures due 2007
of the Company issued pursuant to the Indenture.
"Declaration" has the meaning set forth in the recitals to
this Agreement.
"Demand" has the meaning set forth in Section 10.02(a) hereof.
"Demand Notice" has the meaning set forth in Section 10.02(a)
hereof.
"Demanding Holder" has the meaning set forth in Section
10.02(a).
"Disinterested Director" means, in connection with any
issuance of securities that gives rise to a determination of the Fair Value
thereof, each member of the Board of Directors who is not an officer, employee,
director or other Affiliate of the party to whom the Company is proposing to
issue the securities giving rise to such determination.
"Disqualified Stock" means, with respect to any Person, any
Capital Stock which by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable at the option of the holder) or
upon the happening of any event:
(i) matures or is mandatorily redeemable pursuant to a
sinking fund obligation or otherwise;
(ii) is convertible or exchangeable at the option of the
holder for Indebtedness or Disqualified Stock; or
(iii) is mandatorily redeemable or must be purchased upon
the occurrence of certain events or otherwise, in
whole or in part;
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in each case on or prior to the first anniversary of the maturity of the
Debentures; provided, however, that any Capital Stock that would not constitute
Disqualified Stock but for provisions thereof giving holders thereof the right
to require such Person to purchase or redeem such Capital Stock upon the
occurrence of an "asset sale" or "change of control" occurring prior to the
first anniversary of the maturity of the Debentures shall not constitute
Disqualified Stock if:
(i) the "change of control" provisions applicable to such
Capital Stock are not more favorable to the holders of such Capital Stock than
the terms applicable to the Debentures under this Indenture or otherwise; and
(ii) any such requirement only becomes operative after
compliance in full with such terms applicable to the Certificates, including the
purchase of any Certificates tendered pursuant thereto.
"Effective Time" means the date on which the Commission
declares a Registration Statement effective or on which a Registration Statement
otherwise becomes effective.
"Effectiveness Period" means as to a Registration Statement
the period during which such Registration Statement is effective.
"Election" means, with respect to a Registration, that the
Holder has delivered a completed and signed Notice and Questionnaire to the
Company in accordance with the provisions hereof and provided such other
information with respect to such Holder and its Applicable Securities as may be
required by the Company to enable such Holder to use the related Prospectus in
connection with sales of such Applicable Securities.
"Election Deadline" means December 15, 2007.
"Election Notice" has the meaning set forth in Section 2.02(a)
hereof.
"Event of Default" means any event specified in Section 6.01
of the Indenture, continued for the period of time, if any, therein designated.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.
"Exercise Notice" has the meaning set forth in Section 2.02(a)
hereof.
"Exercise Period" has the meaning set forth in Section 2.02(a)
hereof.
"Expiration Date" means March 15, 2008.
"Fair Value" has the meaning set forth in Section 4.8 hereof.
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"Fully Diluted Outstanding" means, when used with reference to
Capital Stock, at any date as of which the number of shares thereof is to be
determined, all shares of Capital Stock Outstanding at such date and shares of
Capital Stock underlying other options, warrants or Certificates to purchase, or
securities convertible into, shares of such Capital Stock outstanding on such
date which would be deemed outstanding in accordance with GAAP for purposes of
determining book value or diluted net income per share.
"GAAP" means generally accepted accounting principles, as in
effect in the United States on the Issue Date.
"Hallmark Cards" means Hallmark Cards, Incorporated, a
Missouri corporation, and its successors and assigns.
"herein", "hereof" and "hereunder", and other words of similar
import, refer to this Agreement as a whole and not to any particular Article,
Section or other subdivision.
"Holder" means a Person in whose name or names the Certificate
or any Certificate Shares, as applicable, shall be registered on the books of
the Company kept for that purpose in accordance with the terms of this
Agreement.
"Indebtedness" means, with respect to any Person on any date
of determination (without duplication):
(a) indebtedness of such Person for borrowed money (whether by
loan or the issuance and sale of debt securities) or for the deferred purchase
price of property or services purchased (other than amounts constituting trade
payables (payable within 90 days) arising in the ordinary course of business);
(b) obligations of such Person in respect of letters of
credit, acceptance facilities, or drafts or similar instruments issued or
accepted by banks and other financial institutions for the account of such
Person;
(c) obligations of such Person under any obligation that is
required to be classified and accounted for as a capital lease for financial
reporting purposes in accordance with GAAP, and the amount of Indebtedness
represented by such obligation shall be the capitalized amount of such
obligation determined in accordance with GAAP; and the stated maturity thereof
shall be the date of the last payment of rent or any other amount due under such
lease prior to the first date upon which such lease may be terminated by the
lessee without payment of a penalty;
(d) deferred payment obligations of such Person resulting from
the adjudication or settlement of any litigation;
(e) obligations of such Person under synthetic leases or
financing leases (but not operating leases);
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(f) obligations of such Person with respect to the redemption,
repayment or other repurchase of any Disqualified Stock of such Person, or with
respect to any preferred stock of any Subsidiary of such Person, the principal
amount of such preferred stock to be determined in accordance with this
Agreement (but excluding, in each case, any accrued dividends);
(g) to the extent not otherwise included in this definition,
hedging obligations of such Person pursuant to any interest rate swap agreement,
interest rate cap agreement or other financial agreement or arrangement designed
to protect such Person against fluctuations in interest rates or foreign
exchange contract, or any currency swap agreement or other similar agreement
designed to protect such Person against fluctuations in currency values, in each
case entered into in the ordinary course of business for bona fide hedging
purposes and not for the purpose of speculation;
(h) obligations under the Debentures and Certificates; and
(i) indebtedness of others of the type described in clauses
(a) through (h) above which such Person has (i) directly or indirectly assumed
or guaranteed in connection with a guarantee or (ii) secured by a lien on the
assets of such Person, whether or not such Person has assumed such indebtedness
(provided, that if such Person has not assumed such indebtedness of another
Person then the amount of indebtedness of such Person pursuant to this clause
(i) for purposes of this Agreement shall be equal to the lesser of the amount of
the indebtedness of the other Person and the fair market value of the assets of
such Person which secure such other indebtedness).
Notwithstanding the foregoing, in connection with the purchase by the Company or
any Subsidiary of any business, the term "Indebtedness" shall exclude
post-closing payment adjustments to which the seller may become entitled to the
extent such payment is determined by a final closing balance sheet or such
payment depends on the performance of such business after the closing; provided,
however, that, at the time of closing, the amount of any such payment is not
determinable and, to the extent such payment thereafter becomes fixed and
determined, the amount is paid within 30 days thereafter.
The amount of Indebtedness of any Person at any date shall be
the outstanding balance at such date of all unconditional obligations as
described above and the maximum liability, upon the occurrence of the
contingency giving rise to the obligation, of any contingent obligations at such
date.
"Indemnified Party" has the meaning set forth in Section 10.06
hereof.
"Indemnifying Party" has the meaning set forth in Section
10.06 hereof.
"Indenture" means that certain Indenture, dated as of the
Issue Date, among the Company and JPMorgan Chase Bank, as Indenture Trustee, as
such instrument may from time to time be supplemented or amended.
"Indenture Trustee" means JPMorgan Chase Bank and, subject to
the provisions of Article VII of the Indenture, shall also include its
successors and assigns,
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and, if at any time there is more than one Person acting in such capacity
hereunder, "Indenture Trustee" shall mean each such Person.
"Index Amount" means the number of Certificate Shares issuable
upon exercise of a Certificate, which shall initially be 38.261 shares per
Certificate, subject to adjustment as provided herein, as set forth on the face
of any Certificate.
"Index Price" means that price per Certificate Share initially
equal to $13.07 (120% of the weighted average, based on volume of trading, of
the average of the daily high and low market prices on each Trading Day for the
thirty Trading Days ending November 30, 2001), subject to adjustment as provided
herein.
"Intended Offering Notice" has the meaning set forth in
Section 10.03(a) hereof.
"Investment Company Act" means the Investment Company Act of
1940, as amended.
"Investment Company Event" means that the Regular Trustees
under the Declaration shall have received an opinion of a nationally recognized
independent counsel experienced in practice under the Investment Company Act
that, as a result of the occurrence of a change in law or regulation or a
written change in interpretation or application of law or regulation by any
legislative body, court, governmental agency or regulatory authority (a "Change
in 1940 Act Law"), there is more than an insubstantial risk that the Trust is or
will be considered an Investment Company which is required to be registered
under the Investment Company Act, which Change in 1940 Act Law becomes effective
on or after the Issue Date.
"Issue Date" means December 17, 2001.
"Liquidation Event" means any voluntary or involuntary
liquidation, dissolution, winding-up or termination of the Trust in connection
with which the Preferred Securities are redeemed or purchased in accordance with
the terms of the Declaration (or the Debentures are accelerated in accordance
with the Indenture).
"Majority Holders" means the Holders of Certificates
exercisable for more than 50% of the aggregate number of shares of Class A
Common Stock then purchasable upon exercise of all Certificates, whether or not
then exercisable.
"Mandatory Redemption" means redemption, in whole but not in
part, by the Trust of any and all of the Securities Outstanding on the Maturity
Date or as a result of acceleration of the Debentures upon the occurrence of an
Event of Default pursuant to Section 6.01 of the Indenture (or the maturity, by
acceleration or otherwise, of the Debentures following distribution thereof to
the Holders).
"Material Transaction Agreement" means an agreement relating
to a transaction or series of related transactions contemplating the acquisition
of a business or asset that is material to the Company and its subsidiaries,
taken as a whole, by the
10
Company or any of its subsidiaries, the merger of the Company or its successor
into another Person or any other transaction the consummation of which would
constitute a Change of Control.
"Maturity Date" means the date on which the Debentures mature
and on which the principal of such Debentures shall be due and payable together
with all accrued and unpaid interest thereon.
"Maximum Return Amount" means an amount equal to the fair
value of the Index Amount (determined as of the date of issuance of Certificate
Shares being issued upon a Shares Exercise) in excess of the aggregate Index
Price of such Certificate Shares, which together with all cash payments and
distributions that have been actually paid pursuant to the terms of the
corresponding Trust Security (or principal and interest paid on the
corresponding Debenture following a distribution of Debentures to the Holders)
comprising part of a Unit held by a Holder (but excluding any premium paid in
connection with a Change of Control Redemption, Change of Control Offer or
Optional Redemption pursuant to clause (ii) of the definition of Minimum Return
Amount or paragraph 4(d) of Exhibit A of the Declaration), provides an internal
rate of return with respect to the Unit equal to 25% (determined as of the date
of issuance of such Certificate Shares). For purposes of this definition, the
"fair value" of the Index Amount as of a specified date shall equal the product
of (i) the Current Market Price of the Class A Common Stock for the 20
consecutive Trading Days immediately preceding such date and (ii) the Index
Amount, subject to adjustment as provided herein. The Maximum Return Amount
shall be calculated in good faith by the Company, based on this definition or,
if contested in writing by Holders of more than 25% of the Certificates being
exercised, a nationally recognized investment banking, appraisal or valuation
firm, provided that the fees of such firm shall be borne, on the one hand by the
Company in proportion to the percentage of the amount in dispute determined by
such firm as owing to the Holders and on the other hand by the Holders in
proportion to the percentage of the amount in dispute determined by such firm as
not owing to the Holders.
"Minimum Return Amount" means (i) the amount (determined on
the date such amount is actually paid) which, when added to all cash payments
and distributions that have been actually paid pursuant to the terms of the
corresponding Trust Security (or principal and interest paid on the Debenture
following a distribution of Debentures to the Holders) comprising part of a Unit
held by a Holder (but excluding any premium paid in connection with a Change of
Control Redemption, Change of Control Offer or Optional Redemption pursuant to
clause (ii) below or paragraph 4(d) of Exhibit A to the Declaration), yields an
internal rate of return with respect to the Unit of the following, depending
upon the date of the Purchase Event or Liquidation Event, as applicable:
Prior to December 15, 2004 14.0%
December 15, 2004 to December 14, 2005 15.0%
December 15, 2005 to December 14, 2006 16.5%
December 15, 2006 to Election Deadline 18.0%; plus
11
(ii) in the event that (a) the Holder exercises the
Certificate in connection with a Change of Control Redemption, Change of Control
Offer or Optional Redemption or a Mandatory Redemption, (or is deemed to have
exercised under Section 2.02(a)) and (b) the Holder makes a Cash Exercise, an
amount for each Certificate exercised for cash as follows, depending on the
period during which such exercise and election are made:
December 15, 2003 to December 14, 2004 $100
December 15, 2004 to December 14, 2005 $ 75
December 15, 2005 to December 14, 2006 $ 50
December 15, 2006 to Election Deadline $ 0
(iii) The Minimum Return Amount shall be calculated in good
faith by the Company, based on this definition or, if contested in writing by
Holders of more than 25% of the Certificates being exercised, a national
recognized investment banking, appraisal or valuation firm, provided that the
fees of such firm shall be borne, on the one hand by the Company in proportion
to the percentage of the amount in dispute determined by such firm as owing to
the Holders and on the other hand by the Holders in proportion to the percentage
of the amount in dispute determined by such firm as not owing to the Holders.
Any amounts owed but not previously paid under the terms of the Trust Security
or the Debenture, as applicable, shall, notwithstanding their inclusion in the
calculation of the Minimum Return Amount, only be paid under, to the extent
permitted under, the Declaration or Indenture, as applicable, and all such
obligations shall be deemed paid and fully satisfied under and in respect of
such Trust Security or Debenture, as applicable, at such time as such amounts
are paid under the Declaration or Indenture, as applicable.
"NASD" means the National Association of Securities Dealers,
Inc., or any successor corporation thereto.
"NASDAQ" means the NASDAQ Stock Market.
"Non-Affiliate Sale" has the meaning set forth in Section
4.08(a) hereof
"Notice and Questionnaire" means a Notice of Registration
Statement and Selling Securityholder Questionnaire substantially in the form of
Exhibit E hereto.
"Notice Event" has the meaning set forth in Section 5.01
hereof.
"Optional Redemption" means a redemption by the Company of the
Debentures, at the Company's option, as provided in Section 3.01(a) of the
Indenture.
"Other Registering Stockholders" has the meaning set forth in
Section 10.03(b) hereof.
"Outstanding" means, when used with reference to Capital
Stock, at any date as of which the number of shares thereof is to be determined,
all issued shares of such Capital Stock, except shares then owned or held by, or
for the account of, the
12
Company or any subsidiary or Affiliate thereof, and shall include all shares
issuable in respect of outstanding scrip or any certificates representing
fractional interests in shares of such Capital Stock.
"Participating Holder" has the meaning set forth in Section
10.03(a) hereof.
"Permitted Holders" means Hallmark Cards and its Affiliates.
"Person" means any individual, sole proprietorship,
partnership, limited liability company, joint venture, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
entity or government (whether federal, state, county, city, municipal or
otherwise, including, without limitation, any instrumentality, division, agency,
body or department thereof).
"Piggy-back Notice" has the meaning set forth in Section
10.03(a) hereof.
"Preferred Securities" means that class of preferred
securities representing undivided preferred beneficial interests in the assets
of Trust having such terms as are set forth in the Declaration.
"Preferred Securities Guarantee" means the guarantee
agreement, dated as of December 17, 2001, between the Company and JPMorgan Chase
Bank, as the initial Preferred Securities Guarantee Trustee thereunder in
respect of the Preferred Securities.
"Preferred Stock," as applied to the Capital Stock of any
Person, means Capital Stock of any class or classes (however designated) which
is preferred as to the payment of dividends or distributions, or as to the
distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such Person, over shares of Capital Stock of any other class of
such Person.
"Prospectus" means the prospectus (including, without
limitation, any preliminary prospectus, any final prospectus and any prospectus
that discloses information previously omitted from a prospectus filed as part of
an effective Registration Statement in reliance upon Rule 430A under the
Securities Act or any successor rule thereto) included in a Registration
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any portion of the Applicable Securities covered
by a Registration Statement and by all other amendments and supplements to such
prospectus, including all material incorporated by reference in such prospectus
and all documents filed after the date of such prospectus by the Company under
the Exchange Act and incorporated by reference therein.
"Purchase Event" means any of a Change of Control Redemption,
a Change of Control Offer, an Optional Redemption, a Special Event Redemption or
a Mandatory Redemption.
"Registrable Securities" means (a) the shares of Class A
Common Stock acquired or received by the Holder pursuant to this Agreement and
the Certificates or
13
otherwise, and (b) any securities of the Company issued or issuable with respect
to any shares of Class A Common Stock referred to in subdivision (a) or (b) upon
conversion of such shares or by way of stock dividend or stock split or in
connection with a combination or conversion of shares, recapitalization, merger,
consolidation or other reorganization or otherwise.
"Registration" means a registration under the Securities Act
effected pursuant to Section 10.01, Section 10.02 or Section 10.03 hereof.
"Registration Expenses" has the meaning set forth in Section
10.05 hereof.
"Registration Statement" means a registration statement filed
by the Company with the Commission for a public offering and sale of securities
of the Company under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended
from time to time, or any successor statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect from time to time.
"Securities Purchase Agreement" means the Securities Purchase
Agreement, dated as of December 17, 2001, by and among the Company, the Trust
and the Investors named therein.
"Senior Indebtedness" means (i) Indebtedness of the Company,
whether outstanding on the Issue Date or thereafter incurred and (ii) accrued
and unpaid interest (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company whether or
not post-filing interest is allowed in such proceeding), fees, expenses,
reimbursement obligations under letters of credit and any other "Obligations"
(as defined in the Credit Agreement) under the Credit Agreement, in each case of
clauses (i) and (ii) in respect of (A) Indebtedness of the Company for money
borrowed and (B) Indebtedness evidenced by debentures, bonds or other similar
instruments for the payment of which such Person is responsible or liable,
unless, in the case of clauses (i) and (ii), in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is provided
that such obligations are not superior in right of payment to the Debentures and
the Certificates; provided, however, that Senior Indebtedness shall not include:
(a) any obligation of the Company to any Subsidiary of the Company; (b) any
liability for federal, state, local or other taxes owed or owing by the Company
or any Subsidiary of the Company (including payments pursuant to any tax sharing
agreement between the Company and any of its Subsidiaries, on the one hand, and
Hallmark Cards and any of its Subsidiaries, on the other hand); (c) any accounts
payable or other liability to trade creditors arising in the ordinary course of
business (including guarantees thereof or instruments evidencing such
liabilities); (d) any Indebtedness of the Company (and any accrued and unpaid
interest in respect thereof) which is subordinate or junior in any respect to
any other Indebtedness or other obligation of the Company; (e) that portion of
any Indebtedness which at the time of incurrence is incurred in violation of the
Indenture or this Agreement; or (f) obligations in respect of performance, bid
and surety bonds and completion guarantees provided by the Company or any
Subsidiary.
14
"Shares Exercise" has the meaning set forth in Section 2.01(a)
hereof.
"Special Event" means a Tax Event or an Investment Company
Event.
"Special Event Redemption" means the redemption by the Company
of any and all of the Outstanding Debentures, in whole but not in part, in the
event of a Special Event, at any time on or prior to December 14, 2003, as
provided in Section 3.01(b) of the Indenture.
"Subordination and Support Agreement" means the Subordination
and Support Agreement, dated as of December 17, 2001, by and among the Company,
the Trust, Hallmark Cards, the Indenture Trustee, the Property Trustee and the
Holders named therein.
"Subsidiary" means, with respect to any Person, (i) any
corporation at least a majority of whose outstanding Voting Stock shall at the
time be owned, directly or indirectly, by such Person or by one or more of its
Subsidiaries or by such Person and one or more of its Subsidiaries, (ii) any
general partnership, joint venture or similar entity, at least a majority of
whose outstanding partnership or similar interests shall at the time be owned by
such Person, or by one or more of its Subsidiaries, or by such Person and one or
more of its Subsidiaries and (iii) any limited partnership of which such Person
or any of its Subsidiaries is a general partner.
"Tax Event" means that the Regular Trustees under the
Declaration shall have received an opinion of a nationally recognized
independent tax counsel experienced in such matters to the effect that on or
after the Issue Date, as a result of (a) any amendment to, or change (including
any announced prospective change) in, the laws (or any regulations thereunder)
of the United States or any political subdivision or taxing authority therefore
or therein, or (b) any amendment to, or change in, an interpretation or
application of any such laws or regulations by any legislative body, court,
governmental agency or regulatory authority, which amendment or change is
enacted, promulgated, issued or announced or which interpretation or
pronouncement is issued or announced or which action is taken, in each case on
or after the Issue Date, there is more than an insubstantial risk that (i) the
Trust is or will be within 90 days of the date thereof, subject to United States
federal income tax with respect to interest accrued or received on the
Debentures, (ii) the Trust is, or will be within 90 days of the date thereof,
subject to more than a de minimis amount of taxes, duties or other governmental
charges, or (iii) interest payable by the Company to the Trust on the Debentures
is not, or within 90 days of the date thereof will not be, deductible, in whole
or in part, by the Company for United States federal income tax purposes.
"Trading Day" means any day on which the principal stock
exchange or the NASDAQ on which the Class A Common Stock is then listed or
admitted to trading is open for normal trading.
15
"Transaction Documents" means this Agreement, the Securities
Purchase Agreement, the Certificates, the Indenture, the Debentures, the
Preferred Securities Guarantee, the Declaration, the certificates representing
the Trust Securities and the Subordination and Support Agreement.
"Transfer" means any transfer, hypothecation, assignment or
other disposition of any Certificate or Certificate Shares or of any interest in
either thereof, which would constitute a sale thereof within the meaning of the
Securities Act.
"Trust" has the meaning set forth in the recitals to this
Agreement.
"Trust Securities" means the Preferred Securities and the
Common Securities issued by the Trust.
"Underwriter" has the meaning set forth in Section 10.06
hereof.
"Unit" has the meaning set forth in the recitals to this
Agreement.
"Voting Stock" of a Person means all classes of Capital Stock
or other interests (including partnership interests) of such Person then
outstanding and normally entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof.
ARTICLE II.
EXERCISE OF CERTIFICATE
SECTION 2.01. Exercise.
(a) Subject to the terms and conditions hereof, each Holder
may elect the manner of exercise of one or more Certificates represented by this
Agreement for, at the Holder's election, either (i) a cash payment in the amount
of the Minimum Return Amount (the "Cash Exercise") determined on the date the
Trust redeems or purchases the Trust Securities (or the Company redeems or
purchases the Debentures or such Debentures mature or are accelerated, in each
case following a distribution of Debentures to the Holders) pursuant to a
Purchase Event or Liquidation Event, multiplied by the number of Certificates so
exercised, or (ii) the right to purchase the Index Amount of Certificate Shares
purchasable hereunder at the Index Price multiplied by the number of
Certificates so exercised (the "Shares Exercise"), which right to purchase may
be exercised on any Business Day on or after the date the Trust redeems or
purchases the corresponding Trust Securities (or the Company redeems or
purchases the corresponding Debentures or such Debentures mature or are
accelerated, in each case following a distribution of Debentures to the Holders)
pursuant to such Purchase Event or Liquidation Event until, but no later than,
the Expiration Date; provided, however, that in the case of clause (ii), the
Trust or the Company, as applicable, shall have paid all cash payments and
distributions required to be paid pursuant to the terms of the corresponding
Trust Security (or principal and interest paid on the corresponding Debenture
following a distribution of
16
Debentures to Holders). Holders may exercise one or more Certificates
represented by this Agreement in any combination of a Cash Exercise and a Shares
Exercise.
(b) In the case of a Shares Exercise, the Holder may elect to
exercise one or more Certificates represented by this Agreement, on a net basis,
such that without the exchange of any funds, the Holder receives (i) that number
of Certificate Shares otherwise issuable upon exercise of a Certificate less
(ii) that number of Certificate Shares having a fair market value equal to the
Certificate Shares Price that would otherwise have been paid by the Holder for
the Certificate Shares that otherwise would have been issued (the "Cashless
Exercise"), which Certificate Shares referred to in this clause (ii) shall
thereafter be cancelled. For purposes of the foregoing sentence, "fair market
value" of each Certificate Share shall be the Current Market Price of the Class
A Common Stock for the twenty consecutive Trading Days immediately preceding the
date which is the later of (i) the date on which the Exercise Notice is received
by the Company or (ii) the date of exercise set forth in the Exercise Notice
(which date shall be during the Exercise Period).
(c) The Company shall give the Holder an irrevocable notice
(the "Company Notice") not less than 45 nor more than 60 days prior to the date
on which the Trust expects to redeem or purchase the Trust Securities (or the
Company redeems or purchases the Debentures or such Debentures mature or are
accelerated, in each case following a distribution of Debentures to the Holders)
in connection with a Purchase Event or a Liquidation Event, which Company Notice
shall (i) specify the anticipated date of such redemption or purchase and the
date by which an Election Notice must be delivered pursuant to Section 2.02(a)
and (ii) set forth the calculation of the Minimum Return Amount and the number
of Certificate Shares for which each Certificate is exercisable, upon receipt by
the Company of the Certificate Shares Price, provided that, the number of
Certificate Shares need not be presented in the case of a Cashless Exercise.
SECTION 2.02. Manner of Exercise.
(a) In order to exercise Certificates represented by this
Agreement, a Holder shall deliver to the Company at its principal office at 6430
S. Xxxxxxxx Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000, or at
the office or agency designated by the Company pursuant to Article XIV, within
30 days following receipt of the Company Notice, a notice of election (the
"Election Notice"), substantially in the form attached hereto as Exhibit B,
specifying the number of Certificates being elected for Cash Exercise and the
number of Certificates being elected for Shares Exercise. If the Company fails
to receive an Election Notice from any Holder within 30 days of receipt of the
Company Notice such Holder shall be deemed to have made a Cash Exercise with
respect to that number of Certificates held of record by such Holder exercisable
for that number of Certificate Shares equal to the number of Units corresponding
to the liquidation amount of the Preferred Securities (or the principal amount
of Debentures following distribution of the Debentures to the Holders) redeemed
or purchased. If the Company fails to receive a revocation of an Election Notice
prior to the redemption or purchase date giving rise to the Company Notice, the
election made in the Election Notice previously received by the Company shall be
deemed to have been irrevocably
17
made. In the event of a Cash Exercise, the Company shall pay all amounts due
pursuant to Sections 2.01(a) and 2.02(b) hereof. In the event of a Shares
Exercise, the Holder may exercise the Certificates with respect to which a
Shares Exercise has been elected, by providing a notice of exercise (the
"Exercise Notice") substantially in the form attached hereto as Exhibit C, to
exercise their Certificates at anytime on or after a Purchase Event or
Liquidation Event but not later than 5:00 P.M.,
New York time on the Expiration
Date (the "Exercise Period"), together with delivery of such Certificates to the
Company, which notice shall specify the number of shares of Class A Common Stock
to be purchased thereby and whether the Holder is electing the Cashless Exercise
or the payment of the Certificate Shares Price. Each Election Notice and
Exercise Notice shall be duly executed by each Holder or its agent or attorney.
Each Holder agrees to execute such amendments contemplated by Section 2.02(d)
hereof and/or receipts requested by the Company. In the event of a Shares
Exercise, (a) if the Company fails to receive an Exercise Notice from any Holder
on or before the Expiration Date, then such Holder shall be deemed to have made
a Cashless Exercise on the Expiration Date with respect to that number of
Certificates held of record by such Holder and (b) if the Company fails to
receive a revocation of an Exercise Notice prior to the Expiration Date, then
the election made in such Exercise Notice shall be deemed to have been
irrevocably made.
(b) The Company shall (i) in the event of a Cash Exercise,
deliver or cause to be delivered by wire transfer in immediately available
funds, an amount equal to the Minimum Return Amount, to the account specified by
the Holder in the Election Notice on the date the Trust redeems or purchases the
corresponding Trust Securities (or the Company redeems or purchases the
Debentures or such Debentures mature or are accelerated, in each case following
a distribution of Debentures to the Holders), or (ii) in the event of a Shares
Exercise, execute or cause to be executed and deliver or cause to be delivered
to Holder a certificate or certificates representing the aggregate number of
full shares of Class A Common Stock issuable upon such exercise, together with
cash in lieu of any fraction of a share, as hereinafter provided as promptly as
reasonably practicable following the delivery of an Exercise Notice, but in no
event earlier than the date on which the Trust redeems or purchases the
corresponding Trust Securities (or the Company redeems or purchases the
Debentures or such Debentures mature or are accelerated, in each case following
a distribution of Debentures to the Holders). Any stock certificate or
certificates so delivered shall be, to the extent possible, in such denomination
or denominations as such Holder shall request in the Exercise Notice and shall
be registered in the name of Holder or, subject to Article IX, such other name
as shall be designated in the Exercise Notice. In the case of a Cash Exercise,
the Certificates represented by this Agreement shall be deemed to have been
exercised on date of the earlier of the applicable Purchase Event or Liquidation
Event. In the case of a Shares Exercise, the Certificates represented by this
Agreement shall be deemed to have been exercised and such Certificate Shares
shall be deemed to have been issued, and Holder or any other Person so
designated to be named therein shall be deemed to have become a holder of record
of such Certificate Shares for all purposes, as of the date which is the later
of (i) the date on which the Exercise Notice is received by the Company or (ii)
the date of exercise set forth in the Exercise Notice (which date shall be
during the Exercise Period). All taxes required to be paid by Holder, if any,
pursuant to Section 2.04 prior to the issuance of such Certificate Shares shall
have been paid.
18
(c) If, in connection with a Purchase Event or Liquidation
Event, a Holder elects a Shares Exercise with respect to any Certificates held
by it pursuant to Section 2.01, the Holder and any future Holder thereof shall
permanently forego its right to receive the Minimum Return Amount with respect
to any such Certificates and shall instead retain solely the rights of Shares
Exercise under this Agreement with respect thereto, the obligations of which
shall thereafter be satisfied upon the Holder's exercise of such Certificates
solely by delivery to the Holder of Certificate Shares. Subsequent to a Purchase
Event in connection with which the Holder elects the Shares Exercise pursuant to
Section 2.01 or Section 2.02, the Holder shall have the right to exercise such
Holder's Certificates as provided in the foregoing sentence at any time during
the Exercise Period.
(d) If Certificates represented by this Agreement shall have
been exercised in part, the Company shall, as promptly as reasonably practicable
following the time of delivery of the certificate or certificates relating to
Certificate Shares deliver to Holder a new Certificate representing the
unpurchased shares of Class A Common Stock underlying the unexercised
Certificates. Notwithstanding any provision herein to the contrary, the Company
shall not be required to register shares in the name of any Person who acquired
Certificates or any Certificate Shares otherwise than in accordance with this
Agreement.
(e) In the case of a Shares Exercise, payment of the
Certificate Shares Price shall be made at the option of the Holder by (i)
certified or official bank check, (ii) by the surrender of shares of Class A
Common Stock of the Company with a Current Market Price for the twenty
consecutive Trading Days immediately preceding the date of such surrender equal
to the Certificate Shares Price for all shares then being purchased, (iii) the
Company's withholding of Certificate Shares (or the right to receive such number
of shares) pursuant to a Cashless Exercise, or (iv) any combination thereof,
duly endorsed by or accompanied by appropriate instruments of transfer duly
executed by Holder or by Holder's attorney duly authorized in writing.
(f) Upon the occurrence of a Bankruptcy Event, the Minimum
Return Amount shall be immediately due and payable without any further action by
the Holder; provided, that, if holders of the majority in aggregate principal
amount of the Debentures rescind and annul such declaration and its
consequences, pursuant to the provisions of the Indenture, the Minimum Return
Amount shall correspondingly cease to be immediately due and payable and shall
continue to be payable pursuant to the other provisions of this Agreement.
(g) In the event that the principal of and any accrued and
unpaid interest, if any, on Debentures becomes immediately due and payable in
accordance with the provisions of the Indenture, thereupon the Minimum Return
Amount shall also become immediately due and payable to the Holder without any
further action by the Holders; provided, that, if holders of the majority in
aggregate principal amount of the Debentures rescind and annul such declaration
and its consequences, pursuant to the provisions of the Indenture, the Minimum
Return Amount shall correspondingly cease to be immediately due and payable and
shall continue to be payable pursuant to the other provisions of this Agreement.
19
SECTION 2.03. Material Transaction Announcement.
If (a) within three months of an Optional Redemption in which
a Holder elects the Cash Exercise, the Company shall publicly announce the
actual or expected execution of a Material Transaction Agreement, and (b) the
Current Market Price for the 20 consecutive Trading Days immediately following
the date of such announcement shall exceed the Current Market Price for the 20
consecutive Trading Days immediately preceding the date of such announcement by
more than 15%, then the Company shall, within 30 days of such announcement, pay
any such Holder an amount, if any, by which (A) the product of (x) the Index
Amount of Certificate Shares that such Holder would have received if such Holder
had elected the Cashless Exercise in connection with such Optional Redemption
(in lieu of the Cash Exercise elected by such Holder) and (y) the Current Market
Price for the 20 consecutive Trading Days immediately following the date of such
announcement exceeds (B) the sum of the aggregate Minimum Return Amount with
respect to such Cash Exercise plus interest on such aggregate Minimum Return
Amount from the date such Holder elected the Cash Exercise to the 20th Trading
Day following the announcement of the Material Transaction Agreement at an
annual interest rate equal to 10%.
SECTION 2.04. Payment of Taxes.
All shares of Class A Common Stock issuable upon the exercise
of Certificates pursuant to the terms hereof shall be validly issued, fully paid
and nonassessable. The Company shall pay all reasonable expenses in connection
with, and all taxes and other governmental charges that may be imposed with
respect to, the issue or delivery thereof, unless such tax or charge is imposed
by law upon Holder, in which case such taxes or charges shall be paid by Holder.
The Company shall not be required, however, to pay any tax or other charge
imposed in connection with any transfer involved in the issue of any certificate
for shares of Class A Common Stock issuable upon exercise of Certificates in any
name other than that of Holder, and in such case the Company shall not be
required to issue or deliver any stock certificate until such tax or other
charge has been paid or it has been established to the satisfaction of the
Company that no such tax or other charge is due.
SECTION 2.05. Fractional Shares.
The Company shall not be required to issue a fractional share
of Class A Common Stock upon exercise of any Certificate. As to any fraction of
a share which the Holder of one or more Certificates, the rights under which are
exercised in the same transaction, would otherwise be entitled to purchase upon
such exercise, the Company shall combine all fractions into whole numbers and
pay a cash adjustment in respect of such final fraction in an amount equal to
the same fraction of the Current Market Price for the twenty consecutive Trading
Days immediately preceding the date of exercise.
20
SECTION 2.06. Continued Validity.
A holder of shares of Class A Common Stock issued upon the
exercise of Certificates represented by this Agreement, in whole or in part
(other than a holder who acquires such shares after the same have been publicly
sold pursuant to a Registration Statement under the Securities Act or sold
pursuant to Rule 144 thereunder), shall continue to be entitled, in its capacity
as a former Holder, with respect to such shares to all rights to which it would
have been entitled as a Holder under Articles X, XI and XV of this Agreement.
The Company shall, at the time of each exercise of Certificates represented by
this Agreement, in whole or in part, upon the request of the holder of the
shares of Class A Common Stock issued upon such exercise, acknowledge in
writing, in form reasonably satisfactory to such holder, its continuing
obligation to afford to such holder all such rights; provided, however, that if
such holder fails to make any such request, such failure shall not affect the
continuing obligation of the Company to afford to such holder all such rights.
ARTICLE III.
TRANSFER, DIVISION AND COMBINATION
SECTION 3.01. Transfer.
Subject to compliance with Article IX, transfer of
Certificates represented by this Agreement and all rights hereunder, in whole or
in part, may be made and shall be registered on the books of the Company to be
maintained for such purpose, upon surrender of Certificates represented by this
Agreement at the principal office of the Company referred to in Section 2.02(a)
or the office or agency designated by the Company pursuant to Article XIV,
together with a written assignment of such Certificates substantially in the
form of Exhibit D hereto duly executed by Holder or its agent or attorney and
funds sufficient to pay any transfer taxes payable upon the making of such
transfer. Upon such surrender and, if required, such payment, the Company shall,
subject to Article IX, execute and deliver a new Certificate or Certificates in
the name of the assignee or assignees and in the denomination specified in such
instrument of assignment, and shall issue to the assignor a new Certificate
evidencing the portion of any Certificate not so assigned, and this Certificate
shall promptly be cancelled. A Certificate, if properly assigned in compliance
with Article IX, may be exercised by a new Holder for the purchase of shares of
Class A Common Stock.
SECTION 3.02. Division and Combination.
Subject to Article IX, the Certificates represented by this
Agreement may be divided or combined with other Certificates upon presentation
hereof at the aforesaid office or agency of the Company, together with a written
notice specifying the names and denominations in which new Certificates are to
be issued, signed by Holder or its agent or attorney. Subject to compliance with
Section 3.01 and with Article IX, as to any transfer which may be involved in
such division or combination, the Company shall execute and deliver a
Certificate or Certificates to be divided or combined in accordance with such
notice.
21
SECTION 3.03. Expenses.
The Company shall prepare, issue and deliver at its own
expense (other than transfer taxes) the new Certificates under this Article III.
SECTION 3.04. Maintenance of Books.
The Company agrees to maintain, at its aforesaid office or
agency, books for the registration and the registration of transfer of the
Certificates.
ARTICLE IV.
ADJUSTMENT OF INDEX PRICE AND INDEX AMOUNT
SECTION 4.01. General.
The Index Price and Index Amount shall be adjusted, to the
extent necessary, from time to time (i) in connection with a Shares Exercise
such that the Index Price shall be increased so that the internal rate of return
with respect to the Unit corresponding to each Certificate being exercised will
be no more than the Maximum Return Amount with respect to such Certificate
Shares and (ii) upon the occurrence of the events enumerated in this Article IV.
For purposes of this Article IV and Article V only, "Class A Common Stock"
includes shares now or hereafter authorized of any class of common stock of the
Company (including the Class B Common Stock of the Company) and any other stock
of the Company, however designated, that has the right (subject to any prior
rights of any class or series of preferred stock) to participate in any
distribution of the assets or earnings of the Company without limit as to per
share amount. The Index Price will in no event be less than the par value of the
Class A Common Stock; provided, however, the foregoing minimum Index Price shall
not be applicable for purposes of determining adjustments to the number of
shares issuable upon exercise of a Certificate pursuant to Section 4.13.
SECTION 4.02. Adjustment for Change in Capital Stock.
(a) If the Company (i) pays a dividend in shares of Class A
Common Stock or makes a distribution on its Class A Common Stock in shares of
its Class A Common Stock, (ii) subdivides its outstanding shares of Class A
Common Stock into a greater number of shares, (iii) combines its outstanding
shares of Class A Common Stock into a smaller number of shares, (iv) makes a
distribution on its Class A Common Stock in shares of its capital stock other
than Class A Common Stock or (v) issues by reclassification of its Class A
Common Stock any shares of its capital stock, then the Index Price in effect
immediately prior to such action shall be proportionately adjusted so that the
holder of any Certificate thereafter exercised may receive the aggregate number
and kind of shares of capital stock of the Company which such holder would have
owned immediately following such action if such Certificate had been exercised
immediately prior to such action.
22
(b) The adjustment shall become effective immediately after
the record date in the case of a dividend or distribution and immediately after
the effective date in the case of a subdivision, combination or
reclassification. If, after an adjustment, a holder of a Certificate upon
exercise of that Certificate may receive shares of two or more classes of
capital stock of the Company, the Company shall determine, in good faith, the
allocation of the adjusted Index Price between the classes of capital stock.
After such allocation, the exercise privilege and the Index Price of each class
of capital stock shall thereafter be subject to adjustment on terms comparable
to those applicable to Class A Common Stock in this Article IV. Such adjustment
shall be made successively whenever any event listed above shall occur.
SECTION 4.03. Adjustment for Rights Issue.
(a) If the Company distributes or sells any rights, options or
warrants to all existing holders of Class A Common Stock (other than to
officers, employees, consultants or directors of the Company and its
subsidiaries) entitling such holders to purchase shares of Class A Common Stock
at a price per share less than the Fair Value (as defined herein) per share on
that record date, the Index Price shall be adjusted in accordance with the
formula:
O + N x P
-------
M
E' = E x -----------
O + N
where:
E' = the adjusted Index Price.
E = the current Index Price.
O = the number of shares of Class A Common Stock
outstanding on the record date.
N = the number of additional shares of Class A
Common Stock issuable pursuant to such
rights, options or warrants.
P = the price per share of the additional
shares (combining the issue price, if
any, of such rights, options or warrants
plus the exercise price thereof).
M = the Fair Value per share of Class A
Common Stock on the record date.
23
(b) The adjustment shall be made successively whenever shares
of Class A Common Stock are issued upon exercise of any such rights, options or
warrants are issued and shall become effective immediately after the date such
additional shares are issued.
SECTION 4.04. Adjustment for Other Distributions.
(a) If the Company distributes to all existing holders of its
Class A Common Stock any of its assets (including ordinary cash dividends) or
debt securities or any rights or warrants to purchase debt securities of the
Company, the Index Price shall be adjusted in accordance with the formula:
M - F
E' = E x ---------
M
where:
E' = the adjusted Index Price.
E = the current Index Price.
M = the Fair Value per share of Class A
Common Stock on the record date mentioned
below.
F = the fair market value on the record
date of the assets, securities, rights or
warrants to be distributed in respect of
one share of Class A Common Stock as
determined in good faith by the Board of
Directors.
(b) The adjustment shall be made successively whenever any
such distribution is made and shall become effective immediately after the
record date for the determination of stockholders entitled to receive the
distribution.
(c) This Section 4.04 does not apply to rights, options or
warrants referred to in Section 4.03 hereof.
SECTION 4.05. Adjustment for Class A Common Stock Issue.
(a) If the Company issues shares of Class A Common Stock for a
consideration per share less than the Fair Value per share on the date the
Company receives the consideration for such additional shares (other than to
officers, employees, consultants or directors of the Company and its
subsidiaries), the Index Price shall be adjusted in accordance with the formula:
24
P
---
O + M
E' = E x --------
A
where
E' = the adjusted Index Price.
E = the then current Index Price.
O = the number of shares outstanding immediately
prior to the issuance of such additional shares.
P = the aggregate consideration received for the
issuance of such additional shares.
M = the Fair Value per share on the date of issuance
of such additional shares.
A = the number of shares outstanding immediately
after the issuance of such additional shares.
(b) The adjustment shall be made successively whenever any
such issuance is made, and shall become effective immediately after such
issuance.
(c) This Section 4.05 does not apply to:
25
(i) any of the transactions described in Sections
4.02, 4.03 and 4.04,
(ii) the exercise of Certificates, or the conversion
or exchange of other securities convertible into or
exchangeable for shares of Class A Common Stock, the issuance
of which caused an adjustment to be made under Section 4.06,
(iii) Class A Common Stock upon the exercise of
rights, options or warrants issued to the holders of Class A
Common Stock for which an adjustment has been made pursuant to
Section 4.03, or
(iv) Class A Common Stock issued to shareholders of
any Person which merges into the Company, or with a subsidiary
of the Company, in proportion to the stock holdings of such
Person immediately prior to such merger, upon such merger.
SECTION 4.06. Adjustment for Convertible Securities Issue.
(a) If the Company issues any securities convertible into or
exchangeable for shares of Class A Common Stock (other than securities for which
adjustments are made pursuant to Sections 4.03 and 4.04) for a consideration per
share of Class A Common Stock initially deliverable upon conversion or exchange
of such securities less than the Fair Value per share on the date of issuance of
such securities, the Index Price shall be adjusted in accordance with this
formula:
P
---
O + M
E' = E x ---------
O + D
where:
E' = the adjusted Index Price.
E = the then current Index Price.
O = the number of shares outstanding immediately
prior to the issuance of such securities.
P = the aggregate consideration received for the
issuance of such securities.
M = the Fair Value per share on the date of issuance
of such securities.
D = the maximum number of shares
deliverable upon conversion or in
exchange for such securities at the
initial conversion or exchange rate.
26
(b) The adjustment shall be made successively whenever any
such issuance is made, and shall become effective immediately after such
conversion or exchange.
(c) If all of the Class A Common Stock deliverable upon
conversion or exchange of such securities have not been issued when such
securities are no longer outstanding, then the Index Price shall be readjusted
upon such conversion or exchange to the Index Price which would then be in
effect had the adjustment upon the issuance of such securities been made on the
basis of the actual number of shares of Class A Common Stock issued upon
conversion or exchange of such securities.
(d) This Section 4.06 does not apply to convertible securities
issued in lieu of Class A Common Stock to shareholders of any Person which
merges into the Company, or with a subsidiary of the Company, in proportion to
their stock holdings of such Person immediately prior to such merger, upon such
merger.
SECTION 4.07. Consideration Received.
For purposes of any computation respecting consideration
received pursuant to Sections 4.05 and 4.06, the following shall apply:
(a) in the case of the issuance of shares of Class A Common
Stock for cash, the consideration shall be the amount of such cash, provided
that in no case shall any deduction be made for any commissions, discounts or
other expenses incurred by the Company for any underwriting or placement of the
issue or otherwise in connection therewith;
(b) in the case of the issuance of shares of Class A Common
Stock for a consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the fair market value thereof as
determined in good faith by the Board of Directors including a majority of the
Disinterested Directors (irrespective of the accounting treatment thereof),
whose determination shall be conclusive, and described in a Board resolution
which shall be furnished to the Holders;
(c) in the case of the issuance of securities convertible into
or exchangeable for shares of Class A Common Stock, the aggregate consideration
received therefor shall be deemed to be the consideration received by the
Company for the issuance of such securities plus the additional minimum
consideration, if any, to be received by the Company upon the conversion or
exchange thereof (the consideration in each case to be determined in the same
manner as provided in clauses (a) and (b) of this Section 4.07); and
(d) in the case of the issuance of shares of Class A Common
Stock pursuant to rights, options or warrants which rights, options or warrants
were originally issued together with one or more other securities as part of a
unit at a price per unit, the consideration shall be deemed to be the fair value
of such rights, options or warrants at
27
the time of issuance thereof as determined in good faith by the Board of
Directors, including a majority of the Disinterested Directors, whose
determination shall be conclusive and described in a Board resolution plus the
additional minimum consideration, if any, to be received by the Company upon the
exercise, conversion or exchange thereof (as determined in the same manner as
provided in clauses (a) and (b) of this Section 4.07).
SECTION 4.08. Fair Value.
The "Fair Value" per security at any date of determination
shall be (i) in connection with a sale by the Company to a party that is not an
Affiliate of the Company in an arm's-length transaction (a "Non-Affiliate
Sale"), the price per security at which such security is sold and (ii) in
connection with any sale by the Company to an Affiliate of the Company, (A) the
Current Market Price of the Class A Common Stock for the twenty consecutive
Trading Days immediately preceding the date on which the Company entered into an
agreement to sell such security to such Affiliate, or (B) if the Class A Common
Stock is not listed on a nationally recognized stock exchange or quoted on any
inter-dealer system or, if it is otherwise not possible to calculate such
Current Market Price, the fair market value of such security determined (1) in
good faith by a majority of the Board of Directors, including a majority of the
Disinterested Directors, and approved in a Board resolution or (2) by a
nationally recognized investment banking, appraisal or valuation firm, in each
case, taking into account, among all other factors deemed relevant by the Board
of Directors or such investment banking, appraisal or valuation firm, the
trading price and volume of such security on any national securities exchange or
automated quotation system on which such security is traded.
SECTION 4.09. When De Minimis Adjustment May Be Deferred.
No adjustment in the Index Price need be made unless the
adjustment would require an increase or decrease of at least 1% in the Index
Price. Any adjustments that are not made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Article IV
shall be made to the nearest cent or to the nearest 1/100th of a share, as the
case may be.
SECTION 4.10. When No Adjustment Required.
With respect to the Certificates of any Holder, no adjustment
need be made for a transaction referred to in Section 4.02, 4.03, 4.04, 4.05,
4.06 or 4.07 hereof, if such Holder is to participate (without being required to
exercise its Certificates) in the transaction on the same basis and with notice
that the Board of Directors, determines to be fair and appropriate in light of
the basis and notice on which holders of Class A Common Stock participate in the
transaction. No adjustment need be made for (a) rights to purchase Class A
Common Stock pursuant to a Company plan for reinvestment of dividends or
interest or (b) a change in the par value or no par value of the Class A Common
Stock. To the extent the Certificates became convertible into cash, no
adjustment need be made thereafter as to the cash. Interest will not accrue on
the cash. Without limiting any other exception contained in this Article IV, and
in addition thereto,
28
no adjustment will be made for: (i) exercises or conversions of any rights,
warrants, options, or convertible securities outstanding on the date hereof;
(ii) Class A Common Stock issued to the Company's directors, employees or
consultants (or directors, employees or consultants of its subsidiaries) under
bona fide employee benefit plans adopted by the Board of Directors and approved
by the holders of Class A Common Stock when required by law, if such Class A
Common Stock would otherwise be covered by this Article IV (but only to the
extent that the aggregate number of shares excluded by this Article IV and
issued after the date of this Agreement shall not exceed 10% of the Class A
Common Stock outstanding at the time of the adoption of each such plan,
exclusive of anti-dilution adjustments thereunder); or (iii) Class A Common
Stock issued in a bona fide private placement through a placement agent which is
a member firm of the National Association of Securities Dealers, Inc. (except to
the extent that any discount from the current market price attributable to
restrictions on transferability of the Class A Common Stock, as determined in
good faith by the Board of Directors and described in a Board resolution, shall
exceed 10%), (iv) issuances of rights, warrants, options or convertible
securities as compensation in lieu of cash in connection with any financing
transaction including commercial bank facilities, bridge financing commitments
or arrangements or other issuances of primary debt obligations or securities or
(v) shares of Class A Common Stock issued pursuant to the most-favored-nation or
similar clause in any Affiliation Agreement.
SECTION 4.11. Notice of Adjustment.
Whenever the Index Price is adjusted, the Company shall
provide the notices required by Section 5.01 hereof.
SECTION 4.12. When Issuance or Payment May Be Deferred.
In any case in which this Article IV shall require that an
adjustment in the Index Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event (i) issuing to the Holder of any Certificate exercised after such record
date the Certificate Shares and other capital stock of the Company, if any,
issuable upon such exercise over and above the Certificate Shares and other
capital stock of the Company, if any, issuable upon such exercise on the basis
of the Index Price and (ii) paying to such Holder any amount in cash in lieu of
a fractional share pursuant to Section 2.06 hereof; provided, however, that the
Company shall deliver to such Holder a due xxxx or other appropriate instrument
evidencing such Holder's right to receive such additional Certificate Shares,
other capital stock and cash upon the occurrence of the event requiring such
adjustment.
SECTION 4.13. Adjustment in Index Amount.
Upon each adjustment of the Index Price pursuant to this
Article IV, each Certificate outstanding prior to the making of the adjustment
in the Index Price shall thereafter evidence the right to receive upon payment
of the adjusted Index Price that Index Amount (calculated to the nearest
hundredth) obtained from the following formula:
29
E
N' = N x -----
E'
where
N' = the adjusted Index Amount.
N = the Index Amount prior to adjustment.
E' = the adjusted Index Price.
E = the Index Price prior to adjustment.
ARTICLE V.
NOTICE OF CERTAIN EVENTS
SECTION 5.01. Notice Events. In the event (a "notice event")
that:
(a) the Company (i) pays a dividend in shares of Class A
common stock or makes a distribution on its Class A common stock in shares of
its Class A common stock, (ii) subdivides its outstanding shares of Class A
common stock into a greater number of shares, (iii) combines its outstanding
shares of Class A common stock into a smaller number of shares, (iv) makes a
distribution on its Class A common stock in shares of its capital stock other
than Class A common stock or (v) issues by reclassification of its Class A
common stock any shares of its capital stock,
(b) the Company distributes or sells any rights, options or
warrants to all existing holders of Class A Common Stock (other than to
officers, employees, consultants or directors of the Company and its
Subsidiaries) entitling such holders to purchase shares of Class A common stock
at a price per share less than the Fair Value per share on that record date,
(c) the Company distributes to all existing holders of its
Class A common stock any of its assets (including ordinary cash dividends), debt
securities or any rights or warrants to purchase debt securities of the Company,
(d) the Company issues shares of Class A common stock for a
consideration per share less than the Fair Value per share on the date the
Company receives the consideration for such additional shares (other than to
officers, employees, consultants or directors of the Company and its
subsidiaries),
(e) the Company issues any securities convertible into or
exchangeable for shares of Class A common stock (other than securities issued in
transactions described in clauses (b) and (c) above) for a consideration per
share of Class A common stock initially deliverable upon conversion or exchange
of such securities less than the Fair Value per share on the date of issuance of
such securities,
30
(f) of any liquidation or merger to which the Company is a
party and for which approval of any of the Company's stockholders is required,
other than a consolidation or merger in which the Company is a continuing
corporation and that does not result in any reclassification or change of the
shares of Class A Common Stock issuable upon the exercise of this Agreement,
(g) of the conveyance or transfer of the Company's properties
and assets, substantially as an entirety, or
(h) of the Company's voluntary or involuntary dissolution,
liquidation or winding-up,
then, in any such case, the Company shall cause to be mailed by certified mail
to the Holder, at least 20 days prior to the applicable record or effective date
hereinafter specified, other than with respect to Sections 5.01(d) and (e)
above, a notice stating the dates as of which (i) the holders of capital stock
of record to be entitled to receive any such rights, certificates or
distributions or to be entitled to vote on such Notice Event are to be
determined, (ii) such Notice Event is expected to become effective, and (iii),
if applicable, it is expected that Holders of record of Certificates shall be
entitled to exercise their Certificates in connection with such Notice Event.
ARTICLE VI.
NO IMPAIRMENT
The Company will (a) not increase the par value of any shares
of Class A Common Stock receivable upon the exercise of Certificates represented
by this Agreement above the amount payable therefor upon such exercise
immediately prior to such increase in par value, (b) take all such action as may
be necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable shares of Class A Common Stock upon the
exercise of Certificates represented by this Agreement, and (c) use its
reasonable best efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction thereof as may be
necessary to enable the Company to perform its obligations under this Agreement.
ARTICLE VII.
RESERVATION AND AUTHORIZATION OF CLASS A COMMON STOCK; REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTHORITY
From and after the Issue Date, the Company shall at all times
reserve and keep available for issue upon the exercise of Certificates such
number of its authorized but unissued shares of Class A Common Stock as will be
sufficient to permit the exercise in full of all outstanding Certificates. All
shares of Class A Common Stock which shall be so issuable, when issued upon
exercise of any Certificate and payment therefor in
31
accordance with the terms of such Certificate, shall be duly and validly issued
and fully paid and nonassessable, and not subject to preemptive rights.
Subject to the last sentence of Section 4.01 hereof, before
taking any action which would result in an adjustment in the number of shares of
Class A Common Stock for which Certificates represented by this Agreement are
exercisable or in the Index Price, the Company shall obtain all such
authorizations or exemptions thereof, or consents thereto, as may be necessary
from any public regulatory body or bodies having jurisdiction thereof.
ARTICLE VIII.
TAKING OF RECORD; STOCK AND CERTIFICATE TRANSFER BOOKS
In the case of all dividends or other distributions by the
Company to the holders of its Class A Common Stock with respect to which any
provision of Article IV refers to the taking of a record of such holders, the
Company will in each such case take such a record and will take such record as
of the close of business on a Business Day. The Company will not at any time,
except upon dissolution, liquidation or winding up of the Company, close its
stock transfer books or Certificate transfer books so as to result in preventing
or delaying the exercise or transfer of any Certificate.
ARTICLE IX.
RESTRICTIONS ON TRANSFERABILITY
SECTION 9.01. No Separate Transfer
The Certificates comprising part of a Unit shall not be
Transferred separately from the Trust Security (or the Debenture following a
distribution of Debentures to the Holders) comprising part of such Unit on or
prior to the earlier of (a) the Expiration Date and (b) the date the Trust
redeems or purchases in full the corresponding Trust Securities (or the Company
redeems or purchases in full the corresponding Debentures or such Debentures are
paid at maturity upon acceleration or otherwise, in each case following a
distribution of Debentures to the Holders) pursuant to a Purchase Event or
Liquidation Event.
Each Holder, by its acceptance of the Certificates, shall be
deemed to have acknowledged, represented to and agreed with the Company that
such Holder understands and acknowledges that (1) the Certificates and
securities issuable pursuant thereto have not been registered under the
Securities Act or any other applicable securities laws and are not freely
transferable without registration under or an exemption from the Securities Act,
(2) the Certificates are being purchased for the account of the Holder without a
view to distribute, or for offer or sale in connection with any distribution of,
the Certificates in violation of the Securities Act or any other applicable
securities laws and (3) in the absence of registration, the Certificates can
only be transferred pursuant to an exemption under the Securities Act and upon
delivery of such
32
certifications and an opinion of counsel reasonably acceptable to the Company to
such effect and in accordance with any other applicable securities laws and that
such Holder will notify the transferee of such resale restrictions.
SECTION 9.02. Compliance
The Holder shall effect any Transfer of Certificates (or
Debentures following a distribution of Debentures to the Holders) represented
hereby, either as part of a Unit or separately (as provided in Section 9.01) in
accordance with the conditions specified in this Article IX, which conditions
are intended to ensure compliance with the provisions of the Securities Act with
respect to the Transfer of any Certificate or any Certificate Shares. Holder
agrees to be bound by the provisions of this Article IX.
SECTION 9.03. Restrictive Legend.
Prior to any Purchase Event or Liquidation Event and the
registration of the Certificate Shares underlying Certificates represented by
this Agreement in accordance with Article X, Certificates shall be stamped or
otherwise imprinted with a legend in substantially the following form:
"EACH HOLDER OF THE CERTIFICATES, BY ITS ACCEPTANCE HEREOF, WILL BE DEEMED TO
HAVE ACKNOWLEDGED, REPRESENTED TO AND AGREED WITH THE COMPANY THAT SUCH HOLDER
UNDERSTANDS AND ACKNOWLEDGES THAT (1) THE CERTIFICATES AND SECURITIES ISSUABLE
PURSUANT THERETO HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR ANY OTHER
APPLICABLE SECURITIES LAWS AND ARE NOT FREELY TRANSFERABLE WITHOUT REGISTRATION
UNDER OR AN EXEMPTION FROM THE SECURITIES ACT, (2) THE CERTIFICATES ARE BEING
PURCHASED FOR THE ACCOUNT OF THE HOLDER WITHOUT A VIEW TO DISTRIBUTE, OR FOR
OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION OF, THE CERTIFICATES IN
VIOLATION OF THE SECURITIES ACT OR ANY OTHER APPLICABLE SECURITIES LAWS AND (3)
IN THE ABSENCE OF REGISTRATION, THE CERTIFICATES CAN ONLY BE TRANSFERRED
PURSUANT TO AN EXEMPTION UNDER THE SECURITIES ACT AND UPON DELIVERY OF SUCH
CERTIFICATIONS AND AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY TO
SUCH EFFECT AND IN ACCORDANCE WITH ANY OTHER APPLICABLE SECURITIES LAWS AND THAT
SUCH HOLDER WILL NOTIFY THE TRANSFEREE OF SUCH RESALE RESTRICTIONS."
SECTION 9.04. Permitted Transfers.
Subject to Section 9.01, and notwithstanding any other
provision to the contrary contained herein, at any time, Holder may transfer a
Certificate represented by this Agreement or all or a portion of the Certificate
Shares upon the exercise of Certificates to any Affiliate of the Holder that
agrees to be bound by the terms hereof.
33
SECTION 9.05. Termination of Restrictions.
Notwithstanding the foregoing provisions of Article IX (except
Section 9.01), the restrictions imposed by this Section upon the transferability
of the Certificates represented by this Agreement and the Certificate Shares and
the legend requirements of Section 9.01 shall terminate as to the Agreement, any
particular Certificate or share of Certificate Shares (i) when and so long as
such security shall have been effectively registered under the Securities Act
and disposed of pursuant thereto or (ii) when the Company shall have received an
opinion of counsel reasonably satisfactory to it that such security may be
transferred without registration thereof under the Securities Act. Whenever the
restrictions imposed by Article IX (other than Section 9.01) shall terminate as
to this Agreement, as hereinabove provided, the Holder hereof shall be entitled
to receive from the Company, at the expense of the Company, an amendment to this
Agreement bearing the following legend in place of the restrictive legend set
forth hereon:
"THE RESTRICTIONS ON TRANSFERABILITY OF THE WITHIN
AGREEMENT CONTAINED IN ARTICLE IX HEREOF (OTHER THAN SECTION
9.01) TERMINATED ON ________, 200_, AND ARE OF NO FURTHER
FORCE AND EFFECT."
All Certificates issued upon registration of transfer, division or combination
of, or in substitution for, any Certificate or Certificates entitled to bear
such legend shall have a similar legend endorsed thereon.
ARTICLE X.
REGISTRATION RIGHTS
SECTION 10.01. Required Registration.
The Company shall (i) file with the Commission a Registration
Statement for the offering and resale of any and all Certificate Shares subject
to acquisition by the Holder upon exercise of the Certificates represented by
this Agreement in accordance herewith, and (ii) use its best efforts to cause
such Registration Statement to be declared effective, if the Certificates become
exercisable in connection with an Optional Redemption, on or prior to the first
day on which the Certificates are exercisable, and if the Certificates otherwise
become exercisable, no later than 90 days following the day on which the
Certificates become exercisable (the "Declaration Date") and, in either case,
keep such Registration Effective for a period of no less than 12 months,
provided, that if the Company postpones (or, if necessary or advisable,
withdraws) the filing, or delays the effectiveness, of a Registration Statement,
or fails to keep such Registration Statement continuously effective for any
period of time or does not amend or supplement the Registration Statement or
included Prospectus, then such period shall be added to such 12 month period;
provided further, that, the right of the Company pursuant to Section
34
10.02(b) shall not be available to the Company and shall not apply, during the
60 consecutive days immediately following the applicable Declaration Date.
SECTION 10.02. Demand Registration.
(a) In addition to Section 10.01, the Majority Holders as a
group, shall have the right (though such right need not be jointly exercised by
the Holders of the Certificates), on not more than one occasion in the aggregate
(except as provided in clause (d) below) (it being understood and agreed that
two or more Holders of Certificates may make a joint Demand hereunder or any
Holder of Certificates may join in a Demand made by any other Holder of
Certificates, and any such joint Demand or joining in of a Demand shall be
deemed to be a single Demand for all purposes hereof), and no more than once
during any six-month period, to require the Company to register for offer and
sale under the Securities Act (a "Demand") all or a portion of the Certificate
Shares held, or represented by Certificates held by such Holders, subject to the
restrictions set forth herein; provided that no Holders of Certificates shall be
entitled to make a Demand hereunder unless the aggregate offering price of the
securities to be offered in such Demand (net of underwriting discounts and
commissions) exceeds the amounts set forth below depending on the time such
Demand is exercised, as follows:
Minimum Aggregate
Date of Demand Offering Price
-------------- -----------------
Prior to December 15, 2004 $ 50 million
December 15, 2004 to December 14, 2005 $ 67 million
December 15, 2005 to December 14, 2006 $ 84 million
December 15, 2006 and thereafter $100 million
As promptly as practicable after the Company receives from a
Holder of Certificates (together with any other Holder who elects to participate
in the registration requested under the Demand, the "Demanding Holder") a notice
pursuant to this Section 10.02(a) (a "Demand Notice"), a copy of which shall
have also been delivered to each of the other Holders of Certificates at the
same time as to the Company, demanding that the Company register for offer and
sale under the Securities Act Certificate Shares, subject to Section 10.02(b),
the Company shall (i) use all reasonable efforts to file as promptly as
reasonably practicable with the Commission a Registration Statement relating to
the offer and sale of the Applicable Securities on such form as the Company may
reasonably deem appropriate (provided that the Company shall not, unless the
Company otherwise determines, be obligated to register any securities on a
"shelf" Registration Statement or otherwise to register securities for offer or
sale on a continuous or delayed basis and the Company actually maintains such
"shelf" Registration Statement effective) and, thereafter, (ii) after the filing
of an initial version of the Registration Statement, use reasonable efforts to
cause such Registration Statement to be declared effective under the Securities
Act as promptly as practicable after the date of filing of such Registration
Statement; provided, however, that no Demanding Holder shall be entitled to be
named as a selling securityholder in the Registration Statement or to use the
Prospectus forming a
35
part thereof for resales of Certificate Shares unless such Demanding Holder has
made an Election. Subject to Section 10.02(b), the Company shall use reasonable
efforts to keep each Registration Statement continuously effective in order to
permit the Prospectus forming a part thereof to be usable by such Demanding
Holder or Holders for resales of Certificate Shares for an Effectiveness Period
ending on the earlier of (i) 30 days from the Effective Time of such
Registration Statement and (ii) such time as all of such Certificate Shares have
been disposed of by the selling Holders.
(b) The Company shall have the right to postpone (or, if
necessary or advisable, withdraw) the filing, or delay the effectiveness, of a
Registration Statement, or fail to keep such Registration Statement continuously
effective or not amend or supplement the Registration Statement or included
Prospectus, if the Company determines based upon the advice of counsel that it
would be advisable to not disclose in the Registration Statement a planned or
proposed financing, acquisition or other corporate transaction or other material
information, and the Company shall have determined in good faith that such
disclosure is not in the best interests of the Company and its stockholders;
provided that no one such postponement shall exceed 90 days in any six-month
period and all such postponements shall not exceed 180 days in the aggregate.
The Company shall advise each of the Demanding Holders in writing of any such
determination as promptly as practicable after such determination.
(c) In connection with an underwritten offering, if the
managing underwriter or underwriters advise the Company that in its or their
opinion the number of Applicable Securities subject to a Demand exceeds the
number which can be sold in such offering, the Company shall include in such
Registration the number of Applicable Securities that, in the opinion of such
managing underwriter or underwriters, can be sold in such offering (provided
that, in the event of a joint Demand, the Applicable Securities included shall
be allocated pro rata among the Demanding Holders on the basis of the relative
number of Applicable Securities each such Demanding Holder has requested to be
included in such Registration).
(d) The Company may include in any Registration requested
pursuant to Section 10.02(a) hereof other securities for sale for its own
account or for the account of another Person, subject to the provisions of the
following sentence. In connection with an underwritten offering, if the managing
underwriter or underwriters advise the Company that in its or their opinion the
number of Applicable Securities requested by the Demanding Holders, together
with other securities for sale for the account of the Company or any other
Person, to be registered exceeds the number which can be sold in such offering,
the Company shall include in such Registration the number of Applicable
Securities and other securities that, in the opinion of such managing
underwriter or underwriters, can be sold in such offering as follows: (i) first,
shares requested to be included in such underwritten offering by any
securityholder of the Company other than the Holder (each an "Other Registering
Stockholder") possessing contractual rights to have its shares included in such
offering prior to the Applicable Securities, on the date hereof, (ii) second,
the Applicable Securities requested to be registered by the Demanding Holder and
(iii) third, any other securities requested to be included in such Registration.
In the event that 20% or more of the Certificate Shares requested by the Holders
to be
36
included in such Demand initiated by the Holders are excluded therefrom and
securities held by other security holders (other than the Holders) are included
in such Demand, the Holders shall be entitled to exercise an additional Demand
in accordance with this Section 10.02.
(e) A Demanding Holder shall have the right to withdraw any
Demand (i) prior to the time the Registration Statement in respect of such
Demand has been declared effective, (ii) upon the issuance by the Commission or
any other governmental agency of a stop order, injunction or other order which
interferes with such Registration, (iii) upon the Company's availing itself of
Section 10.02(b), or (iv) if such Demanding Holder is prevented pursuant to
Section 10.02(c) or (d) from selling all of the Applicable Securities it
requested to be registered. Notwithstanding such request to withdraw the Demand,
the Registration requested by such Demanding Holder shall nonetheless be deemed
to have been effected (and, therefore, requested) for purposes of Section
10.02(a) hereof if such Demanding Holder withdraws any Demand (A) pursuant to
clause (i) of the preceding sentence after the Commission filing fee is paid
with respect thereto or (B) pursuant to clause (iv) of the preceding sentence in
circumstances where at least 50% of the Applicable Securities requested to be
included in such Registration by such Demanding Holder could have been included,
and in each case, (x) the Company has not availed itself of Section 10.02(b)
with respect to such Registration request or (y) the Company has availed itself
of Section 10.02(b) and the withdrawal request is not made within 10 days after
the termination of the suspension period occasioned by the Company's exercise of
its rights under Section 10.02(b). If a Demanding Holder withdraws a Demand but
the Company nevertheless determines to complete, within 30 days after such
withdrawal, the Registration so requested as to securities other than the
Applicable Securities, such Demanding Holder shall be entitled to participate in
such Registration pursuant to Section 10.03, but in such case the Intended
Offering Notice shall be required to be given to such Demanding Holder at least
five (5) consecutive Business Days immediately prior to the anticipated filing
date of the Registration Statement, or if such Registration Statement has
already been filed, within 10 consecutive Business Days immediately following
after receipt of the request to withdraw Demand from such Demanding Holder and
such Demanding Holder shall be required to give the Piggy-back Notice no later
than three (3) consecutive Business Days immediately after the Company's
delivery of such Intended Offering Notice.
(f) In the event that any Registration pursuant to this
Section 10.02 shall involve, in whole or in part, an underwritten offering, one
co-lead managing underwriter shall be selected by the Company and shall be
reasonably acceptable to the Demanding Holder, and the other co-lead underwriter
shall be selected by such Demanding Holder and shall be reasonably acceptable to
the Company, provided that, in the event of a joint Demand, the other co-lead
underwriter shall be selected by a majority in interest (by reference to the
number of Applicable Securities requested to be included in the Registration) of
the Demanding Holders, and shall be reasonably acceptable to the Company. Any
additional co-managing underwriters shall be selected by the Company.
37
SECTION 10.03. Piggy-back Registration.
(a) If at any time the Company intends to file on its behalf
or on behalf of any of its securityholders a Registration Statement under the
Securities Act in connection with a public underwritten offering of any
securities of the Company on a form and in a manner that would permit the
Registration for offer and sale under the Securities Act of Registrable
Securities, other than a Registration Statement on Form S-8 or Form S-4, then
the Company shall give written notice (an "Intended Offering Notice") of such
intention to each Holder then holding Certificates or Certificate Shares at
least 20 consecutive Business Days immediately prior to the anticipated filing
date of such Registration Statement. Such Intended Offering Notice shall offer
to include in such Registration Statement for offer to the public (or, in the
event such Registration Statement is filed in connection with the sale of
securities on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act, to include in a public underwritten offering under such
Registration Statement) such number of Certificate Shares as each Holder may
request, subject to the conditions set forth herein, and shall specify, to the
extent then known, the number and class of securities proposed to be registered,
the proposed date of filing of such Registration Statement, any proposed means
of distribution of such securities, the proposed managing underwriter or
underwriters of such securities and a good faith estimate by the Company of the
proposed maximum offering price of such securities, as such price is proposed to
appear on the facing page of such Registration Statement. Each Holder shall
advise the Company in writing (such written notice being a "Piggy-back Notice")
not later than 10 Business Days immediately after the Company's delivery to such
Holder of the Intended Offering Notice, if such Holder desires to participate in
such offering. The Piggy-back Notice shall set forth the number of Certificate
Shares such Holder desires to have included in the Registration Statement and
offered to the public. Upon the request of the Company, each Holder electing to
include Certificate Shares in the Registration Statement (a "Participating
Holder") shall enter into such underwriting, custody and other agreements as are
customary in connection with registered secondary offerings or necessary or
appropriate in connection with the offering. No Participating Stockholder shall
be entitled to be named as a selling securityholder in the Registration
Statement or to use the Prospectus forming a part thereof for sales of
Certificate Shares unless such Participating Stockholder has made an Election.
(b) In connection with any such underwritten offering, if the
managing underwriter or underwriters advise the Company in writing that in its
or their opinion the number of securities proposed to be registered exceeds the
number that can be sold in such offering, the Company shall include in such
Registration the number of securities that, in the opinion of such managing
underwriter or underwriters, can be sold as follows: (i) first, the securities
that the Company proposes to sell or, if the Registration is in response to a
demand by any Other Registering Stockholder, any securities requested to be
included in such underwritten offering by such Other Registering Stockholder (in
the event of a joint demand, pro rata in proportion to the number of Applicable
Securities requested to be included by each of the Other Registering
Stockholders), (ii) second, securities requested to be included in such
Registration by any Other Registering Stockholders possessing contractual rights
to have its shares included in such offering
38
prior to the Applicable Securities on the date hereof, (iii) third, any
Applicable Securities requested to be included in such Registration by the
Holders and (iv) fourth, other securities requested to be included in such
Registration.
(c) The rights of each Holder pursuant to Sections 10.01 and
10.02 hereof and this Section 10.03 are cumulative, and the exercise of rights
under one such Section shall not exclude the subsequent exercise of rights under
the other such Section (except to the extent expressly provided otherwise
herein). Notwithstanding anything herein to the contrary, the Company may
abandon and/or withdraw any Registration as to which any right under this
Section 10.03 may exist at any time and for any reason without liability
hereunder. In such event, the Company shall notify each Holder to the extent
that it has delivered a Piggy-back Notice to such Holder to participate therein.
SECTION 10.04. Registration Procedures.
In connection with any Registration required pursuant to this
Article X, the Company shall:
(a) prepare and file with the Commission a Registration
Statement with respect to such Certificate Shares and cause that Registration
Statement to become and remain effective for the period of the distribution
contemplated thereby (determined as hereinafter provided);
(b) prepare and file with the Commission any amendments and
supplements to the Registration Statement and the prospectus in connection
therewith as may be necessary to keep the Registration Statement effective until
the earliest of (i) one year from the effective date, and (ii) the sale of all
Certificate Shares covered thereby;
(c) furnish to the Holder such reasonable number of copies of
the prospectus, including each preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as the Holder may
reasonably request in order to facilitate the public sale or other disposition
of the Certificate Shares;
(d) use reasonable efforts to register or qualify the shares
of Class A Common Stock covered by the Registration Statement under the
securities or Blue Sky laws of such states as the Holder shall reasonably
request, and do any and all other reasonable acts that may be necessary or
desirable to enable the Holder to consummate the public sale or other
disposition in such states of the shares of Class A Common Stock; provided,
however, that the Company shall not be required in connection with this clause
(d) to (i) qualify as a foreign corporation or as a dealer in securities or (ii)
execute a general consent to service of process or subject itself to tax in any
jurisdiction;
(e) notify the Holder at any time when a prospectus relating
to the shares of Class A Common Stock is required to be delivered under the
Securities Act of the happening of any event of which the Company has knowledge
as a result of which the prospectus included in such Registration Statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein
39
or necessary to make the statements therein not misleading in the light of the
circumstances then existing. The Holder agrees upon receipt of such notice
forthwith to cease making offers and sales of shares of Class A Common Stock
pursuant to such Registration Statement or deliveries of the prospectus
contained therein for any purpose until the Company has prepared and furnished
such amendment or supplement to the prospectus as may be necessary so that, as
thereafter delivered to purchasers of such shares of Class A Common Stock, such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing;
(f) if the offering is underwritten and at the request of the
Holder, use reasonable efforts to furnish on the date that shares of Class A
Common Stock are delivered to the underwriters for sale pursuant to such
Registration: (i) an opinion dated such date of counsel representing the Company
for the purposes of such Registration, addressed to the underwriters and to such
Holder, stating that such Registration Statement has become effective under the
Securities Act and that (A) to the best knowledge of such counsel, no stop order
suspending the effectiveness thereof has been issued and no proceedings for that
purpose have been instituted or are pending or contemplated under the Securities
Act, (B) the Registration Statement, the related prospectus and each amendment
or supplement thereof comply as to form in all material respects with the
requirements of the Securities Act (except that such counsel need not express
any opinion as to financial statements and the notes thereto and the schedules
and other financial and statistical data contained therein) and (C) to such
other effect as reasonably may be requested by counsel for the underwriters and
(ii) a letter dated such date from the independent certified public accountants
retained by the Company, addressed to the underwriters and to the Holder,
stating that they are independent certified public accountants within the
meaning of the Securities Act and that, in the opinion of such accountants, the
financial statements of the Company included in the Registration Statement or
the prospectus, or any amendment or supplement thereof, comply as to form in all
material respects with the applicable accounting requirements of the Securities
Act, and such letter shall additionally cover such other financial matters
customarily covered by comfort letters (including information as to the period
ending no more than five (5) consecutive Business Days immediately prior to the
date of such letter) with respect to such Registration as such underwriters
reasonably may request;
(g) cause all shares of Class A Common Stock covered by such
Registration Statement to be listed on each securities exchange on which the
Class A Common Stock is then listed or quoted on the over-the-counter market
reported by the Nasdaq National Market or any comparable system on which the
Class A Common Stock is then quoted;
(h) in connection with an underwritten offering, if
applicable, use reasonable efforts cause its directors, officers and affiliates
to enter into customary lock up agreements;
40
(i) make available for inspection upon reasonable notice
during the Company's regular business hours by the Holder, any underwriter
participating in any distribution pursuant to such Registration Statement, and
any attorney, accountant or other agent retained by the Holder or underwriter,
all financial and other records, pertinent corporate documents and properties of
the Company, and cause the Company's officers, directors and employees to supply
all information reasonably requested by and the Holder, underwriter, attorney,
accountant or agent in connection with such Registration Statement; and
(j) provide a CUSIP number for all shares of Class A Common
Stock covered by such Registration Statement not later than the effective date
of such Registration Statement and, if applicable, provide the Company's
transfer agent with printed certificates for such Certificate Shares which are
in a form eligible for deposit with DTC.
In connection with each Registration hereunder, any Holder
wishing to participate in such Registration or, if applicable, an underwritten
offering, shall (a) provide such information and execute such documents as may
reasonably be required in connection with such Registration, (b) agree to sell
shares of Class A Common Stock on the basis provided in any underwriting
arrangements, (c) complete and execute all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents required under the
terms of such underwriting arrangements, which arrangements shall not be
inconsistent herewith, and (d) keep confidential any notice of the Company
pursuant to Section 10.04(e) and the confidential information provided pursuant
to such notice by the Company in connection with any Registration pursuant to
this Article X, provided that such notice and confidential information shall be
kept confidential for a period of 15 days following receipt thereof; provided
that upon the expiration of such 15-day period, the Company shall be required to
publicly disclose the information in such notice.
In connection with each Registration covering an underwritten
public offering, the Company and the Holder agree to enter into a written
agreement with the managing underwriter selected in the manner herein provided
in such form and containing such provisions as are customary in the securities
business of such an arrangement between such underwriter and companies of the
Company's size and investment stature.
SECTION 10.05. Allocation of Expenses.
The Company shall bear the Registration Expenses (as defined
herein) in connection with the performance of its obligations under Section
10.01, 10.02 and 10.03. For purposes of this Section 10.03, the term
"Registration Expenses" shall mean all expenses incident to the Company's
performance of or compliance with any registration of Certificate Shares
pursuant to this Agreement, including without limitation, NASD fees, all fees
and expenses of complying with securities or blue sky laws, all word processing,
duplicating and printing expenses, messenger and delivery expenses, the fees and
disbursements of counsel for the Company and of its independent public
accountants,
41
including the expenses of any special audits or "comfort" letters required by or
incident to such performance and compliance, premiums and other costs of
policies of insurance obtained by the Company against liabilities arising out of
the offering of Certificate Shares being registered, and the reasonable fees and
disbursements of counsel selected by the Holder (such legal fees and expenses
for all Holders as a group not to exceed an aggregate amount of $25,000 in
connection with any single registration), but excluding premiums and other costs
of policies of insurance obtained by any Holder or its agents or Underwriter
against liabilities arising out of the offering of the Certificate Shares being
registered, any fees and disbursements of Underwriters customarily paid by
sellers of securities who are not the issuers of such securities, all
underwriting discounts and commissions and transfer taxes, if any, and
registration and filing fees relating to the Certificate Shares being
registered. Each Holder shall bear all other expenses relating to any
registration or sale of Certificate Shares pro rata with the other Holders
participating therein, including any applicable underwriting discounts or
commissions and registration or filing fees with respect to the Certificate
Shares.
SECTION 10.06. Indemnification.
(a) In the event of Registration of any of the shares of Class
A Common Stock under the Securities Act pursuant to this Agreement, the Company
will indemnify and hold harmless the Holder, each of its directors, officers,
members or partners, each underwriter (if any) within the meaning of the
Exchange Act (an "Underwriter") of such shares of Class A Common Stock and each
other person, if any, who controls the Holder or Underwriter within the meaning
of the Securities Act or the Exchange Act (a "controlling person") against any
losses, claims, damages or liabilities, joint or several, to which the Holder or
Underwriter or controlling person may become subject under the Securities Act,
the Exchange Act, Blue Sky laws or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon (i) any untrue statement or alleged untrue statement of any material fact
contained in any Registration Statement under which such shares of Class A
Common Stock were registered under the Securities Act, any preliminary
prospectus or final prospectus contained in the Registration Statement, or any
amendment or supplement to such Registration Statement, or (ii) the omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading, or (iii) any violation or alleged violation by
the Company of the Securities Act, the Exchange Act, any federal securities or
state Blue Sky law or any rule or regulation promulgated under the Securities
Act, the Exchange Act or any federal securities or Blue Sky law in connection
with the offering covered by such Registration Statement; and the Company will
reimburse the Holder or Underwriter and each such controlling person for any
legal or any other expenses reasonably incurred by the Holder or Underwriter or
controlling person in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Company will not
be liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any untrue statement or omission made
in such Registration Statement, preliminary prospectus or prospectus, or any
such amendment or supplement, in reliance upon and in conformity with
information furnished to the Company, in writing, by or on behalf of
42
such Holder, underwriter or controlling person specifically for use in the
preparation thereof or if such misstatement or omission was corrected in any
amendment or supplement provided to the Holder pursuant to Sections 10.04(b) and
(c) and the selling Holder failed to deliver such amendment or supplement.
(b) In the event of any Registration of any of the shares of
Class A Common Stock under the Securities Act pursuant to this Agreement, the
Holder will indemnify and hold harmless the Company, each of its directors and
officers, each Underwriter (if any) and each controlling person, if any, of the
Company or Underwriter against any losses, claims, damages or liabilities, joint
or several, to which the Company, such directors and officers, any Underwriter
or controlling persons may become subject under the Securities Act, Exchange
Act, Blue Sky laws or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of a material fact contained in
any Registration Statement under which such shares of Class A Common Stock were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained in the Registration Statement, or any amendment or
supplement to the Registration Statement, (ii) any omission or alleged omission
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading, or (iii) any violation or alleged violation by the Holder of the
Securities Act, the Exchange Act, any federal securities or Blue Sky law or any
rule or regulation promulgated under the Securities Act, the Exchange Act or any
federal securities or Blue Sky law in connection with the offering covered by
such Registration Statement, if, in each such case enumerated in clauses (i),
(ii) and (iii), the statement, omission or violation was made or occurred in
reliance upon and in conformity with information furnished in writing to the
Company by or on behalf of the Holder, specifically for use in connection with
the preparation of such Registration Statement, prospectus, amendment or
supplement or if such misstatement or omission was corrected in any amendment or
supplement provided to the Holder pursuant to Section 10.04 and the Holder
failed to deliver such amendment or supplement, and the Holder will reimburse
the Company and each such director, officer or underwriter and each such
controlling person for any legal or any other expenses reasonably incurred by
the Company, such director, officer or underwriter or such controlling person in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the aggregate obligations of the
Holder hereunder shall be limited to an amount equal to the net proceeds to the
Holder of shares of Class A Common Stock sold as contemplated herein, minus any
amounts already paid to third parties in connection therewith.
(c) Each party entitled to indemnification under this Section
10.06 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom; provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld); provided, further, that after notice from the
Indemnifying
43
Party to the Indemnified Party of its election to assume the defense of such
claim or litigation, the Indemnified Party shall be liable to the Indemnified
Party under this Section 10.06 for any legal expenses of only the joint counsel
selected by any such Indemnified Party or any other expenses subsequently
incurred by the Indemnified Party in connection with the defense thereof; and,
provided, further, that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its obligations
under this Section 10.06. The Indemnified Party may participate in such defense
at such party's expense; provided, however, that the Indemnifying Party shall
pay such expense if representation of such Indemnified Party by the counsel
retained by the Indemnifying Party would be inappropriate due to actual or
potential differing interests between the Indemnified Party and any other party
represented by such counsel in such proceeding. No Indemnifying Party, in the
defense of any such claim or litigation shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from all liability
in respect of such claim or litigation, and no further obligation to indemnify
an Indemnified Party shall exist in connection with either of the following
without the prior written consent of the Indemnifying Party, which consent shall
not be unreasonably withheld: (i) judgment entered with the consent of the
Indemnified Person; or (ii) settlement of such claim or litigation.
SECTION 10.07. Indemnification with Respect to Underwritten
Offering.
In the event that shares of Class A Common Stock are sold
pursuant to a Registration Statement in an underwritten offering, the Company
will enter into an underwriting agreement containing customary representations
and warranties with respect to the business and operations of an issuer of the
securities being registered and customary covenants and agreements to be
performed by such issuer, including without limitation customary provisions with
respect to indemnification by the Company of the underwriters of such offering
and their controlling persons.
SECTION 10.08. Information by Holder.
Upon its inclusion in any Registration, the Holder shall
furnish to the Company such information regarding the Holder and the
distribution proposed by the Holder as the Company may reasonably request in
writing and as shall be required in connection with any registration,
qualification or compliance.
ARTICLE XI.
SUPPLYING INFORMATION
SECTION 11.01. Information by Company.
The Company shall cooperate with each Holder of a Certificate
and each holder of restricted Class A Common Stock in supplying such information
as may be reasonably necessary for such holder to complete and file any
information reporting
44
forms presently or hereafter required by the Commission as a condition to the
availability of an exemption from the Securities Act for the sale of any
Certificate or any Class A Common Stock transferred pursuant to Section 9.02.
SECTION 11.02. Reports by the Company.
At any time during which there shall be no Debentures
Outstanding and any Certificates Outstanding but not exercised, the Company
covenants and agrees that it will transmit by mail, first class postage prepaid
or reputable over-night delivery service that provides for evidence of receipt,
to the Holders, as their names and addresses appear upon the books and records
of the Company, within 15 days after the Company is required to file the same
with the Commission, copies of the annual reports and of the information,
documents and other reports (or copies of such portions of any of the foregoing
as the Commission may from time to time by rules and regulations prescribe) that
the Company files with the Commission pursuant to Section 13 or Section 15(d) of
the Exchange Act; or, if the Company is not required to file information,
documents or reports pursuant to either of such sections, then transmit by mail,
first class postage prepaid or reputable over-night delivery service that
provides for evidence of receipt, to the Holders, as their names and addresses
appear upon the books and records of the Company, such of the supplementary and
periodic information, documents and reports that may be required pursuant to
Section 13 of the Exchange Act, in respect of a security listed and registered
on a national securities exchange as may be prescribed from time to time in such
rules and regulations.
ARTICLE XII.
SUBORDINATION
SECTION 12.01. Agreement to Subordinate.
The Company covenants and agrees, and each Holder of
Certificates by such Holder' s acceptance thereof likewise covenants and agrees,
that all Certificates shall be issued subject to the provisions of this Article
XII; and each Holder of a Certificate, whether upon original issue or upon
transfer or assignment thereof, accepts and agrees to be bound by such
provisions.
The payment by the Company of any and all amounts required
hereunder, including fees and expenses (other than fees and expenses under
Sections 10.05, 16.01 and 16.05 hereof), on all Certificates exercised shall, to
the extent and in the manner hereinafter set forth, be subordinated and junior
in right of payment to the prior payment in full of all Senior Indebtedness of
the Company, whether outstanding at the Issue Date or thereafter incurred.
No provision of this Article XII shall prevent the occurrence
of any Default or Event of Default hereunder, nor the rights of any Holder to
exercise such rights and remedies afforded to it under this Agreement with
respect to any provision of this Agreement.
45
SECTION 12.02. Default on Senior Indebtedness.
(a) In the event that (i) any payment of principal, interest
or any other payment due on any Senior Indebtedness is not paid by the Company
when due, any applicable grace period with respect to any such payment default
has ended and such default has not been cured, waived or ceased to exist, (ii)
any other default occurs and is continuing with respect to Senior Indebtedness
that permits holders of the Senior Indebtedness as to which such default relates
to accelerate its maturity and the Holders receive notice of such default (a
"Payment Blockage Notice") from the Company or any other Person permitted to
give such notice (including without limitation, any representative of any holder
of Senior Indebtedness); or (iii) in the event that the maturity of any Senior
Indebtedness of the Company has been accelerated because of a default, then, in
any such case, no payment may be made in respect of a Cash Exercise. Such
payments may resume: (A) in the case of a payment default on any Senior
Indebtedness, upon the date on which such default is cured or waived; and (B) in
case of a nonpayment default, the earlier of the date on which that default is
cured or waived or 179 days after the date on which the applicable Payment
Blockage Notice is received. A new Payment Blockage Notice may be delivered if
180 days have elapsed since the delivery of the immediately prior Payment
Blockage Notice so long as such Payment Blockage Notice relates to a default
under Senior Indebtedness that has not been the subject of any prior Payment
Blockage Notice.
(b) In the event that, notwithstanding the foregoing, any
payment shall be received by any Holder when such payment is prohibited by the
preceding paragraph of this Section 12.02, such payment shall be deemed to be
held in trust for the benefit of, and shall be paid over or delivered to, the
holders of Senior Indebtedness or their respective representatives, or to the
trustee or trustees under any indenture pursuant to which any of such Senior
Indebtedness may have been issued, as their respective interests may appear, but
only to the extent that the holders of the Senior Indebtedness (or their
representative or representatives or a trustee) notify the Company and the
Holders in a written notice within 90 days of the date on which such payments
are disbursed by the Company of the amounts outstanding under the Senior
Indebtedness, plus accrued interest thereon, and only the amounts specified in
such notice to the Company and the Holders shall be paid to the holders of
Senior Indebtedness.
SECTION 12.03. Liquidation; Dissolution; Bankruptcy.
(a) Upon any payment by the Company or distribution of assets
of the Company of any kind or character, whether in cash, property or
securities, to creditors upon any dissolution or winding-up or liquidation or
reorganization of the Company, whether voluntary or involuntary or in
bankruptcy, insolvency, receivership or other proceedings, all amounts due or to
become due on all Senior Indebtedness of the Company, shall first be paid in
full, or payment thereof provided for in cash in accordance with its terms,
before any payment is made by the Company in respect of the Certificates; and
upon any such dissolution or winding-up or liquidation or reorganization, any
payment by the Company or distribution of assets of the Company of any kind or
character pursuant to a Cash Exercise, whether in cash, property or securities,
46
to which the Holders of the Certificates would be entitled to receive from the
Company, except for the provisions of this Article XII, shall be paid by the
Company, or by any receiver, trustee in bankruptcy, liquidating trustee, agent
or other Person making such payment or distribution, or by the Holders of the
Certificates under this Agreement if received by them or it, directly to the
holders of Senior Indebtedness of the Company (pro rata to such holders on the
basis of the respective amounts of Senior Indebtedness held by such holders, as
calculated by the Company) or their representative or representatives, or to the
trustee or trustees under any indenture pursuant to which any instruments
evidencing such Senior Indebtedness may have been issued, as their respective
interests may appear, to the extent necessary to pay such Senior Indebtedness in
full, in cash, after giving effect to any concurrent payment or distribution to
or for the holders of such Senior Indebtedness, before any such payment or
distribution is made to or retained by the Holders of Certificates.
(b) In the event that, notwithstanding the foregoing, any
payment or distribution of assets of the Company of any kind or character
pursuant to a Cash Exercise, whether in cash, property or securities, prohibited
by the foregoing, shall be received by the Holders of the Certificates before
all Senior Indebtedness of the Company is paid in full, or provision is made for
such payment in cash in accordance with its terms, such payment or distribution
shall be held in trust for the benefit of and shall be paid over or delivered to
the holders such Senior Indebtedness or their representative or representatives,
or to the trustee or trustees under any indenture pursuant to which any
instruments evidencing such Senior Indebtedness may have been issued, and their
respective interests may appear, as calculated by the Company, for application
to the payment of all Senior Indebtedness of the Company, remaining unpaid to
the extent necessary to pay such Senior Indebtedness in full in cash in
accordance with its terms, after giving effect to any concurrent payment or
distribution to or for the holders of such Senior Indebtedness.
(c) For purposes of this Article XII, the words "cash,
property or securities" shall not be deemed to include shares of stock of the
Company as reorganized or readjusted, or securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment, the
payment of which is subordinated at least to the extent provided in this Article
XII with respect to the Certificates to the payment of all Senior Indebtedness
of the Company, that may at the time be outstanding, provided that (i) such
Senior Indebtedness is assumed by the new corporation, if any, resulting from
any such reorganization or readjustment, and (ii) the rights of the holders of
such Senior Indebtedness are not, without the consent of such holders, altered
by such reorganization or readjustment. The consolidation, amalgamation or
merger of the Company with or into, another corporation or the liquidation or
dissolution of the Company following the conveyance, transfer, lease or other
disposition of its property as an entirety, or substantially as an entirety, to
another corporation upon the terms and conditions provided for in Article X of
the Indenture shall not be deemed a dissolution, winding-up, liquidation or
reorganization for the purposes of this Section 12.03 if such other corporation
shall, as a part of such consolidation, amalgamation, merger, conveyance,
transfer, lease or other disposition, comply with the conditions stated in
Article X of the Indenture.
47
SECTION 12.04. Subrogation.
(a) Subject to the payment in full of all Senior Indebtedness
of the Company, the rights of the Holders of the Certificates shall be
subrogated to the rights of the holders of such Senior Indebtedness to receive
payments or distributions of cash, property or securities of the Company
pursuant to a Cash Exercise, applicable to such Senior Indebtedness until the
Minimum Return Amount payable with respect to any Certificates shall be paid in
full; and, for the purposes of such subrogation, no payments or distributions to
the holders for such Senior Indebtedness of any cash, property or securities to
which the Holders of the Certificates would be entitled except for the
provisions of this Article XII, and no payment over pursuant to the provisions
of this Article XII, to or for the benefit of the holders of such Senior
Indebtedness by Holders of the Certificates, shall, as between the Company, its
creditors other than holders of Senior Indebtedness of the Company, and the
Holders of the Certificates, be deemed to be a payment by the Company, to or on
account of such Senior Indebtedness. It is understood that the provisions of
this Article XII are and are intended solely for the purposes of defining the
relative rights of the Holders of the Certificates, on the one hand, and the
holders of such Senior Indebtedness on the other hand.
(b) Nothing contained in this Article XII or elsewhere in this
Agreement or in the Certificates is intended to or shall impair, as between the
Company, its creditors other than the holders of Senior Indebtedness of the
Company and the Holders of the Certificates, the obligation of the Company,
which is absolute and unconditional, to pay to the Holders of the Certificates
the Minimum Return Amount in connection with a Cash Exercise as and when the
same shall become due and payable in accordance with the terms of this Agreement
and the Certificates, or is intended to or shall affect the relative rights of
the Holders of the Certificates and creditors of the Company, other than the
holders of Senior Indebtedness of the Company, nor shall anything herein or
therein prevent the Holder of any Certificate from exercising all remedies
otherwise permitted by applicable law upon default under this Agreement, subject
to the rights, if any, under this Article XII of the holders of such Senior
Indebtedness in respect of cash, property or securities of the Company, received
upon the exercise of any such remedy.
(c) Upon any payment or distribution of assets of the Company
referred to in this Article XII, the Holders of the Certificates shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction in which such dissolution, winding-up, liquidation or
reorganization proceedings are pending, or a certificate of the receiver,
trustee in bankruptcy, liquidation trustee, agent or other Person making such
payment or distribution, delivered to the Holders of the Certificates, for the
purposes of ascertaining the Persons entitled to participate in such
distribution, the holders of Senior Indebtedness and other Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article
XII.
48
SECTION 12.05. Company to Effectuate Subordination.
Each Holder of Certificates by such Holder's acceptance
thereof authorizes and directs the Company on such Holder's behalf to take such
action as may be necessary or appropriate to effectuate the subordination
provided in this Article XII.
SECTION 12.06. Subordination May Not Be Impaired.
(a) No right of any present or future holder of any Senior
Indebtedness of the Company to enforce subordination as herein provided shall at
any time in any way be prejudiced or impaired by any act or failure to act on
the part of the Company, or by any act or failure to act, in good faith, by any
such holder, or by any noncompliance by the Company, with the terms, provisions
and covenants of this Agreement, regardless of any knowledge thereof that any
such holder may have or otherwise be charged with.
(b) Without in any way limiting the generality of the
foregoing paragraph, the holders of Senior Indebtedness of the Company may, at
any time and from time to time, without the consent of or notice to the Holders
of the Certificates, without incurring responsibility to the Holders of the
Certificates and without impairing or releasing the subordination provided in
this Article XII or the obligations hereunder of the Holders of the Certificates
to the holders of such Senior Indebtedness, do any one or more of the following:
(i) change the manner, place or terms of payment or extend the time of payment
of, or renew or alter, such Senior Indebtedness, or otherwise amend or
supplement in any manner such Senior Indebtedness or any instrument evidencing
the same or any agreement under which such Senior Indebtedness is outstanding;
(ii) sell, exchange, release or otherwise deal with any property pledged,
mortgaged or otherwise securing such Senior Indebtedness; (iii) release any
Person liable in any manner for the collection of such Senior Indebtedness; and
(iv) exercise or refrain from exercising any rights against the Company and any
other Person.
ARTICLE XIII.
LOSS OR MUTILATION
Upon receipt by the Company from any Holder of evidence
reasonably satisfactory to the Company of the ownership of and the loss, theft,
destruction or mutilation of such Holder's Certificate and indemnity reasonably
satisfactory to the Company, and in case of mutilation upon surrender and
cancellation hereof, the Company will execute and deliver in lieu hereof a new
Certificate of like tenor to such Holder; provided, in the case of mutilation,
no indemnity shall be required if such Certificate in identifiable form is
surrendered to the Company for cancellation.
49
ARTICLE XIV.
OFFICE OF THE COMPANY
As long as any of the Certificates remain outstanding, the
Company shall maintain an office or agency (which may be the principal executive
offices of the Company) where the Certificates may be presented for exercise,
registration of transfer, division or combination as provided in this Agreement.
ARTICLE XV.
LIMITATION OF LIABILITY
No provision hereof, in the absence of affirmative action by
Holder to purchase shares of Class A Common Stock, and no enumeration herein of
the rights or privileges of Holder hereof, shall give rise to any liability of
such Holder for the purchase price of any Class A Common Stock or as a
stockholder of the Company (solely by virtue of holding a Certificate), whether
such liability is asserted by the Company or by creditors of the Company.
ARTICLE XVI.
MISCELLANEOUS
SECTION 16.01. Nonwaiver and Expenses.
No course of dealing or any delay or failure to exercise any
right hereunder on the part of Holder shall operate as a waiver of such right or
otherwise prejudice Holder's rights, powers or remedies. If the Company fails to
make, when due, any payments provided for hereunder, or fails to comply with any
other provision of this Agreement, the Company shall pay to Holder such amounts
as shall be sufficient to cover any costs and expenses including, but not
limited to, reasonable attorneys' fees, including those of appellate
proceedings, incurred by Holder in collecting any amounts due pursuant hereto or
in otherwise evaluating or enforcing any of its rights, powers or remedies
hereunder.
SECTION 16.02. Notice Generally.
Any notice, demand, request, consent, approval, declaration,
delivery or other communication hereunder to be made pursuant to the provisions
of this Agreement shall be sufficiently given or made if in writing and either
delivered in person with receipt acknowledged or by telecopy and confirmed by
telecopy answerback, with an original copy of same to be sent by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
(a) If to any Holder or holder of Certificate Shares, at its
last known address appearing on the books of the Company maintained for such
purpose.
50
(b) If to the Company at
Crown Media Holdings, Inc.
0000 X. Xxxxxxxx Xxxxx Xxxxxx
Xxxxxxxxx Xxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxx, Esq.
Fax: (000) 000-0000
with copies to:
Hallmark Cards, Incorporated
2501 XxXxx, P.O. Box 419126
Mail Drop #339
Xxxxxx Xxxx, XX 00000
Attn: General Counsel
Fax: (000) 000-0000
and:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
or at such other address as may be substituted by notice given as herein
provided, and the Company shall notify the Administrative Agent of such other
address. The Company shall deliver to the Administrative Agent any notice that
the Company delivers pursuant to this Agreement. The giving of any notice
required hereunder may be waived in writing by the party entitled to receive
such notice. Every notice, demand, request, consent, approval, declaration,
delivery or other communication hereunder shall be deemed to have been duly
given or served on the date on which personally delivered, with receipt
acknowledged, telecopied and confirmed by telecopy answerback, or three (3)
consecutive Business Days immediately after the same shall have been deposited
in the United States mail. Failure or delay in delivering copies of any notice,
demand, request, approval, declaration, delivery or other communication to the
person designated above to receive a copy shall in no way adversely affect the
effectiveness of such notice, demand, request, approval, declaration, delivery
or other communication.
SECTION 16.03. Indemnification.
The Company agrees (a) to indemnify and hold harmless the
Holders and their respective directors, officers, employees, trustees, agents
and affiliates (each, an "Indemnified Party") (to the full extent permitted by
Applicable Law) from and against any and all claims, demands, losses, judgments
and liabilities (including liabilities for penalties) of whatsoever nature, and
(b) to pay to the Indemnified Parties an amount equal to the amount of all costs
and expenses, including, but not limited to, the reasonable
51
fees and disbursements of one legal counsel for the Holders as a group, and any
out-of-pocket costs reasonably incurred by any Indemnified Party in appearing as
a witness or in otherwise complying with legal process served upon them, and
with regard to both (a) and (b), growing out of or resulting from (x) any
litigation or other proceedings by a Holder against the Company relating to (1)
the rights and remedies granted to the Holders under this Agreement or (2) the
legality, enforcement or exercise of any provision, right or remedy granted to
the Holders hereunder, or (y) any litigation or other proceedings relating to
any claim alleging that an Indemnified Party is liable in whole or in part in
respect of any action or inaction of the Company and its Subsidiaries or any of
their respective officers, directors, employees, predecessors, successors or
assignees under this Agreement under any theory of secondary liability,
including without limitation as an alleged aider and abettor, co-conspirator,
controlling person or principal, but in the case of (a) and (b) above, excluding
therefrom all claims demands, losses, judgments, liabilities (including
liabilities for penalties), costs and expenses growing out of or resulting from
(i) in the case of any Indemnified Party, the gross negligence or willful
misconduct of such Indemnified Party or (ii) claims, litigation or other
proceedings in which the Company (or, in the case of clause (y) above, the
Indemnified Party (other than fees and expenses under Section 16.03(b)) is the
prevailing party.
All indemnities contained in this Section 16.03 shall survive
the expiration or earlier termination of this Agreement and shall inure to the
benefit of any Person who was a Holder notwithstanding such Person's assignment
of all its obligations as to any actions taken or omitted to be taken by it
while it was a Holder.
SECTION 16.04. Remedies.
Each holder of Certificates and Certificate Shares, in
addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under Article X of this Agreement. The Company agrees that monetary damages
would not be adequate compensation for any loss incurred by reason of a breach
by it of the provisions of Article X of this Agreement and hereby agrees to
waive the defense in any action for specific performance that a remedy at law
would be adequate.
SECTION 16.05. Undertaking to Pay Costs.
In connection with the offering, sale and issuance,
amendments, modifications and revisions of the Certificates initiated by the
Company, the Company shall pay all reasonable costs and expenses of one legal
counsel (together with any requisite local counsel) for all the Holders,
provided that, notwithstanding the foregoing, the Company shall be obligated
only to pay expenses of one lead counsel and any requisite local counsel.
52
SECTION 16.06. Successors and Assigns.
Subject to the provisions of Section 3.01 and Article IX, this
Agreement and the rights evidenced hereby shall inure to the benefit of and be
binding upon the successors of the Company and the successors and assigns of
Holder. The provisions of this Agreement are intended to be for the benefit of
all Holders from time to time of this Agreement and, with respect to Article IX
hereof, holders of Certificate Shares, and shall be enforceable by any such
Holder or holder of Certificate Shares. The Company may not assign nor delegate
its obligations under this Agreement or under the Certificates except (x) as
permitted by Section 4.07 of the Indenture or (y) with respect to the Company's
obligations pursuant to a Cash Exercise, as permitted by Article X of the
Indenture.
SECTION 16.07. Amendment.
Any amendment or supplement to, or waiver of the provisions
of, this Agreement shall require the written consent of the Majority Holders of
the then outstanding Certificates affected by such amendment, supplement or
waiver, provided that the consent of each Holder of any Certificates affected is
required for any amendment pursuant to which the Index Price or the Minimum
Return Amount would be increased or decreased (other than pursuant to
adjustments provided for in the Certificates as provided in Article IV and as
amended by the Majority Holders).
Notwithstanding the foregoing, the Company may from time to
time and at any time amend this Agreement or the Certificates represented
hereby, without the consent of the Holders, for one or more of the following
purposes:
(a) to cure any ambiguity, defect, or inconsistency herein, or
in the Certificates in either case which does not adversely affect the rights of
any Holder;
(b) to comply with any requirement of the Commission in
connection with qualifying, or maintaining the qualification of this Indenture
under the Trust Indenture Act; and
(c) to add to the covenants of the Company for the benefit of
the Holders or to surrender any right or power herein conferred upon the
Company.
SECTION 16.08. Severability.
Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
53
SECTION 16.09. Headings.
The headings used in this Agreement are for the convenience of
reference only and shall not, for any purpose, be deemed a part of this
Agreement.
SECTION 16.10. Treatment of Units.
Each Holder of Units consisting of Preferred Securities and
Certificates hereby agrees to treat, for United States federal income tax
purposes, the Preferred Securities and the related Certificates that comprise
the Units as unitary debt instruments that are subject to the United States
Treasury regulations governing contingent payment debt instruments.
Notwithstanding any other provision in this Agreement and the other applicable
Transactions Documents to the contrary, in the event that on or after the Issue
Date, (a) a Holder determines (and the Company agrees in writing, which
agreement shall not be unreasonably withheld) that there is a change in the laws
of the United States which change occurs on or after the Issue Date and would
require a Holder to characterize, for United States federal income tax purposes,
the Preferred Securities and the related Certificates that comprise the Units as
other than unitary debt instruments that are subject to the United States
Treasury regulations governing contingent payment debt instruments, or (b) there
is a "determination" within the meaning of Section 1313(a)(1) of the Code with
respect to a Holder that requires a Holder to characterize, for United States
federal income tax purposes, the Preferred Securities and the related
Certificates that comprise the Units as other than unitary debt instruments that
are subject to the United States Treasury regulations governing contingent
payment debt instruments, then that Holder shall not be bound pursuant to the
preceding sentence or the documents referred to in this sentence to treat, for
United States federal income tax purposes, the Preferred Securities and the
related Certificates that comprise the Units as unitary debt instruments that
are subject to the United States Treasury regulations governing contingent
payment debt instruments. In the event that the Debentures are distributed by
the Trust to holders of Securities, the above provisions of this Section 16.10
shall apply with respect to the Debentures so distributed in lieu of the
Preferred Securities.
SECTION 16.11. Governing Law.
This Certificate shall be governed by the laws of the State of
New York, without regard to the provisions thereof relating to conflict of laws.
SECTION 16.12. Certain Securities Owned by Company
Disregarded.
In determining whether the Holders of the requisite amount of
the Certificates have concurred in any direction, consent or waiver under this
Agreement, the Certificates that are owned by the Company or by any Affiliate
thereof shall be disregarded and deemed not to be Outstanding for the purpose of
any such determination. The Certificates so owned that have been pledged in good
faith may be regarded as Outstanding for the purposes of this Section 16.12 so
long as the pledgee is not an Affiliate of the Company.
54
IN WITNESS WHEREOF, the Company and each Holder have executed
this
Contingent Appreciation Certificate Agreement as of the day and year first
above written.
CROWN MEDIA HOLDINGS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chief Financial Officer
55
INVESTORS
FARALLON CAPITAL PARTNERS, L.P.
By: FARALLON PARTNERS, L.L.C., its General
Partner
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Managing Member
FARALLON CAPITAL INSTITUTIONAL
PARTNERS, L.P.
By: FARALLON PARTNERS, L.L.C., its General
Partner
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Managing Member
FARALLON CAPITAL INSTITUTIONAL
PARTNERS II, L.P.
By: FARALLON PARTNERS, L.L.C., its General
Partner
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Managing Member
56
FARALLON CAPITAL INSTITUTIONAL
PARTNERS III, L.P.
By: FARALLON PARTNERS, L.L.C., its General
Partner
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Managing Member
RR CAPITAL PARTNERS, L.P.
By: FARALLON PARTNERS, L.L.C., its General
Partner
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Managing Member
57
DLJ INVESTMENT PARTNERS II, L.P.
By: /s/ Xxxxxx Xxx
------------------------------------------
Name: Xxxxxx Xxx
Title: Principal
DLJ INVESTMENT PARTNERS, L.P.
By: /s/ Xxxxxx Xxx
------------------------------------------
Name: Xxxxxx Xxx
Title: Principal
DLJIP II Holdings, L.P.
By: /s/ Xxxxxx Xxx
------------------------------------------
Name: Xxxxxx Xxx
Title: Principal
58
TORONTO DOMINION INVESTMENTS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
59
XXXX XXXXXXX LIFE INSURANCE COMPANY
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Managing Director
XXXX XXXXXXX VARIABLE LIFE INSURANCE COMPANY
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Authorized Signatory
SIGNATURE 5 L.P.
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Managing Director
60
TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA
By: /s/ Xxxxxxx Xxxxxxx
-----------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Director - Private Placement
61
NEW YORK LIFE INSURANCE COMPANY
By: /s/ S. Xxxxxx Xxxxx
------------------------------------------
Name: S. Xxxxxx Xxxxx
Title: Investment Vice President
62
ALLSTATE LIFE INSURANCE COMPANY
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxx
By: /s/ Xxxxxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxxxxx X. Xxxxxx
Authorized Signatories
63
MAGNETITE ASSET INVESTORS III L.L.C.
By: BLACKROCK FINANCIAL
MANAGEMENT, INC.
As Managing Member
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Managing Director
MAGNETITE ASSET INVESTORS L.L.C.
By: BLACKROCK FINANCIAL
MANAGEMENT, INC.
As Managing Member
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Managing Director
00
XXXXXX XXXXXX FUND, L.P.
By: MLIM DivPEP I, LLC, its
general partner
By: MLIM Private Equity, L.P., its member
manager
By: Portfolio Administration &
Management Ltd., its general partner
By: /s/ Piers X. X. Xxxxxx
------------------------------------------
Name: Piers X. X. Xxxxxx
Title: Vice President
XXXXXX STREET PORTFOLIO, L.P.
By: MLIM DivPEP I, LLC, its managing
general partner
By: MLIM Private Equity, L.P., its member
manager
By: Portfolio Administration &
Management Ltd., its general partner
By: /s/ Piers X. X. Xxxxxx
------------------------------------------
Name: Piers X. X. Xxxxxx
Title: Vice President
00
XXXXX XXXXXX FUND, L.P.
By: MLIM DivPEP I, LLC, its
general partner
By: MLIM Private Equity, L.P., its member
manager
By: Portfolio Administration &
Management Ltd., its general partner
By: /s/ Piers X. X. Xxxxxx
------------------------------------------
Name: Piers X. X. Xxxxxx
Title: Vice President
XXXXX STREET PORTFOLIO, L.P.
By: MLIM DivPEP I, LLC, its managing
general partner
By: MLIM Private Equity, L.P., its member
manager
By: Portfolio Administration &
Management Ltd., its general partner
By: /s/ Piers X. X. Xxxxxx
------------------------------------------
Name: Piers X. X. Xxxxxx
Title: Vice President
66
PASSAGE PORTFOLIO, L.P.
By: MLIM DivPEP I, LLC, its managing
general partner
By: MLIM Private Equity, L.P., its member
manager
By: Portfolio Administration &
Management Ltd., its general partner
By: /s/ Piers X. X. Xxxxxx
------------------------------------------
Name: Piers X. X. Xxxxxx
Title: Vice President
67
MONY LIFE INSURANCE COMPANY OF
AMERICA
By: /s/ Xxxxxxx Xxxxxxx
------------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Authorized Agent
68
EXHIBIT A
FORM OF CONTINGENT APPRECIATION CERTIFICATE
No. [ ] No. of Certificates: [__]
Contingent Appreciation Certificate
CROWN MEDIA HOLDINGS, INC.
EACH HOLDER OF THE CERTIFICATES, BY ITS ACCEPTANCE HEREOF, WILL BE DEEMED TO
HAVE ACKNOWLEDGED, REPRESENTED TO AND AGREED WITH THE COMPANY THAT SUCH HOLDER
UNDERSTANDS AND ACKNOWLEDGES THAT (1) THE CERTIFICATES AND SECURITIES ISSUABLE
PURSUANT THERETO HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR ANY OTHER
APPLICABLE SECURITIES LAWS AND ARE NOT FREELY TRANSFERABLE WITHOUT REGISTRATION
UNDER OR AN EXEMPTION FROM THE SECURITIES ACT, (2) THE CERTIFICATES ARE BEING
PURCHASED FOR THE ACCOUNT OF THE HOLDER WITHOUT A VIEW TO DISTRIBUTE, OR FOR
OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION OF, THE CERTIFICATES IN
VIOLATION OF THE SECURITIES ACT OR ANY OTHER APPLICABLE SECURITIES LAWS AND (3)
IN THE ABSENCE OF REGISTRATION, THE CERTIFICATES CAN ONLY BE TRANSFERRED
PURSUANT TO AN EXEMPTION UNDER THE SECURITIES ACT AND UPON DELIVERY OF SUCH
CERTIFICATIONS AND AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY TO
SUCH EFFECT AND IN ACCORDANCE WITH ANY OTHER APPLICABLE SECURITIES LAWS AND THAT
SUCH HOLDER WILL NOTIFY THE TRANSFEREE OF SUCH RESALE RESTRICTIONS.
THE FOLLOWING INFORMATION IS PROVIDED PURSUANT TO UNITED STATES TREASURY
REGULATION SECTION 1.1275-3(b). EXCEPT AS OTHERWISE PROVIDED, EACH HOLDER OF A
PREFERRED SECURITY (OR A DEBENTURE FOLLOWING DISTRIBUTION OF THE DEBENTURES TO
THE HOLDERS) AND THIS CONTINGENT APPRECIATION CERTIFICATE AGREES TO TREAT, FOR
UNITED STATES FEDERAL INCOME TAX PURPOSES, THE PREFERRED SECURITIES AND THE
RELATED CONTINGENT APPRECIATION CERTIFICATES THAT COMPRISE THE UNITS AS UNITARY
DEBT INSTRUMENTS THAT ARE SUBJECT TO THE UNITED STATES TREASURY REGULATIONS
GOVERNING CONTINGENT PAYMENT DEBT INSTRUMENTS AND SUCH UNITARY DEBT INSTRUMENTS
WILL BE TREATED AS ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR UNITED STATES FEDERAL
INCOME TAX PURPOSES. THE HOLDER OF THIS CERTIFICATE MAY OBTAIN THE INFORMATION
DESCRIBED IN UNITED STATES TREASURY REGULATION SECTION 1.1275-3(b)(1)(i) FROM
THE COMPANY, AT THE FOLLOWING ADDRESS: x/x XXXXX XXXXX XXXXXXXX,
X-0
INC., 6430 SOUTH XXXXXXXX XXXXX XXXXXX, XXXXX 000, XXXXXXXXX XXXXXXX, XX, 00000,
ATTENTION: VICE PRESIDENT OF FINANCE ADMINISTRATION.
Capitalized terms not otherwise defined have the meaning
assigned thereto in the
Contingent Appreciation Certificate Agreement dated as
of December 17, 2001, between Crown Media Holdings, Inc. (the "Company") and the
Holders party thereto (the "Agreement").
This Contingent Appreciation Certificate (this "Certificate")
certifies that [INVESTOR], or its registered assigns, is the registered holder
of the number of Certificates set forth above.
Subject to the terms and conditions of the
Contingent
Appreciation Certificate Agreement, on the earlier of the date of a Purchase
Event or Liquidation Event, Holder may elect the manner of exercise of the
Certificates represented hereby, for, at the Holder's election, either (i) a
cash payment in the amount of the Minimum Return Amount (the "Cash Exercise")
determined on the date the Trust redeems or purchases the Preferred Securities
pursuant to such Purchase Event or Liquidation Event, multiplied by the number
of Certificates so exercised, or (ii) the right to purchase the Index Amount of
Certificate Shares purchasable hereunder at the Index Price multiplied by the
number of Certificates so exercised (the "Shares Exercise"), in whole or in
part, which right to purchase may be exercised on any Business Day on or after
the date the Trust redeems or purchases the Preferred Securities pursuant to
such Purchase Event or Liquidation Event until, but no later than, the
Expiration Date. Holder may exercise Certificates in any combination of Cash
Exercise and Shares Exercise.
The number of Certificate Shares issuable upon a Shares
Exercise of this Certificate is subject to adjustment upon the occurrence of
certain events set forth in the Agreement. No fractions of a share of Class A
Common Stock will be issued upon the exercise of any Certificate. The
Certificate Shares issuable pursuant to a Shares Exercise hereof are entitled to
the registration rights set forth in the Agreement.
No Certificate may be exercised after 5:00 p.m.,
New York City
time on the Expiration Date, and to the extent not exercised by such time such
Certificate shall become void.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof and such further provisions shall
for all purposes have the same effect as though fully set forth at this place.
By receipt of this Certificate, the Holder hereof agrees to be
bound by the terms of the Agreement and shall be entitled to the benefits
thereunder.
This Certificate is governed by the laws of the State of
New
York, without regard to the provisions thereof relating to conflict of laws.
A-2
The Certificates are subordinated to Senior Indebtedness, as
defined in the Agreement. To the extent provided in the Agreement, Senior
Indebtedness must be paid in full before payments may be made with respect to
the Certificates. The Company agrees, and each Holder by accepting this
Certificate agrees, to the subordination provisions contained in the Agreement
and, further, each Holder authorizes the Company to give such subordination
provisions effect and appoints the Company as attorney-in-fact for such purpose.
A-3
IN WITNESS WHEREOF, the Company has caused this Certificate to
be signed below.
Dated: December 17, 2001
CROWN MEDIA HOLDINGS, INC.
By:
--------------------------------
Name:
Title:
A-4
EXHIBIT B
ELECTION NOTICE
Date:___________
The undersigned, registered holder (the "Holder") of __
Contingent Appreciation Certificates (the "Certificates") of Crown Media
Holdings, Inc. (the "Company") pursuant to that certain
Contingent Appreciation
Certificate Agreement, dated as of December 14, 2001, between the Company, the
Holder and the other parties named therein (the "Agreement"), hereby elects
pursuant to Section 2.02(a) of the Agreement:
[ ] with respect to _____ Certificates (the "Cash
Certificates"), a Cash Exercise and requests that
funds in an amount equal to the Minimum Return Amount
with respect to each Cash Certificate be delivered by
wire transfer in immediately available funds to the
following account:
___________________________________; and/or
[ ] with respect to _____ Certificates, a Shares
Exercise. A separate Exercise Notice shall be sent by
the Holder, to the extent the Holder elects to effect
the Shares Exercise, specifying the manner of
exercise.
All capitalized terms not otherwise defined herein shall have
the meaning ascribed thereto in the Agreement.
-------------------------------------
(Name of Registered Owner)
-------------------------------------
(Signature of Registered Owner)
-------------------------------------
(Street Address)
-------------------------------------
(City) (State) (Zip Code)
NOTICE: The name of the Registered Owner on this subscription must
correspond with the name as written upon the transfer records
of the Company in every particular, without alteration or
enlargement or any change whatsoever.
B-1
EXHIBIT C
EXERCISE NOTICE
Date:___________
The undersigned, registered holder (the "Holder") of __
Contingent Appreciation Certificates (the "Certificates") of Crown Media
Holdings, Inc. (the "Company") pursuant to that certain
Contingent Appreciation
Certificate Agreement, dated as of December 14, 2001, between the Company, the
Holder and the other parties named therein (the "Agreement"), hereby exercises
such Certificates effective as of [the date hereof/_______, 200_] for:
[ ] the purchase of ______ shares of Class A Common Stock
of the Company at the Index Price and herewith makes
payment therefor, or
[ ] the purchase of such number of shares of Class A
Common Stock of the Company issuable to the Holder by
way of Cashless Exercise of the Certificates,
all on the terms and conditions specified in the Agreement,
and requests that certificates for the shares of Class A Common Stock hereby
purchased (and any securities or other property issuable upon such exercise) be
issued in the name of and delivered to _____________ whose address is
_________________ (and, if such shares of Class A Common Stock shall not include
all of the shares of Class A Common Stock issuable as provided in the Agreement,
that an amendment to the Agreement reflecting the balance of the shares of Class
A Common Stock issuable thereunder be delivered to the undersigned).
All capitalized terms not otherwise defined herein shall have
the meaning assigned thereto in the Agreement.
-----------------------------------------
(Name of Registered Owner)
-----------------------------------------
(Signature of Registered Owner)
-----------------------------------------
(Street Address)
-----------------------------------------
(City) (State) (Zip Code)
C-1
NOTICE: The name of the Registered Owner on this subscription must correspond
with the name as written upon the face of the transfer records of the Company in
every particular, without alteration or enlargement or any change whatsoever.
C-2
EXHIBIT D
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of
Contingent Appreciation Certificates (the "Certificates") of Crown Media
Holdings, Inc. (the "Company") pursuant to that certain
Contingent Appreciation
Certificate Agreement (the "Agreement") hereby sells, assigns and transfers unto
the Assignee named below all of the rights of the undersigned under the
Agreement, with respect to the number of shares of Class A Common Stock set
forth below:
Name and Address of Assignee No. of Certificates and
Shares of Class A
Common Stock
SSN/TIN No.:
-------------
and does hereby irrevocably constitute and appoint __________________________
attorney-in-fact to register such transfer on the books of the Company
maintained for the purpose, with full power of substitution in the premises.
Dated: Print Name:
-------------- -------------------------
Signature:
--------------------------
Witness:
----------------------------
NOTICE: The signature on this subscription must correspond with
the name as written upon the transfer records of the
Company in every particular, without alteration or
enlargement or any change whatsoever.
________________, as assignee, does hereby acknowledge receipt of a copy of the
Agreement and agrees to be bound by all of the terms thereof as a Holder of the
Certificates referenced above.
D-1
EXHIBIT E
[NAME OF ISSUER]
Notice of Registration Statement
and
Selling Securityholder Questionnaire
[Date]
Reference is hereby made to the
Contingent Appreciation
Certificate Agreement (the "Agreement") among the investors named therein
(collectively, the "Holders") and Crown Media Holdings, Inc., a Delaware
corporation (the "Company"). Pursuant to the Agreement, the Company [has filed]
with the United States Securities and Exchange Commission (the "Commission") a
registration statement on Form ____ (the "Registration Statement") for the
registration and resale under the Securities Act of 1933, as amended (the
"Securities Act"), of shares of Company Common Stock. All capitalized terms not
otherwise defined herein have the meanings ascribed thereto in the Agreement.
The Holder is entitled to have the Certificate Shares owned by
it included in the Registration Statement. In order to have Certificate Shares
included in the Registration Statement, this Notice of Registration Statement
and Selling Securityholder Questionnaire ("Notice and Questionnaire") must be
completed, executed and delivered to the Company's counsel at the address set
forth herein for receipt ON OR BEFORE [DEADLINE FOR RESPONSE]. If the Holder
does not complete, execute and return this Notice and Questionnaire by such
date, the Holder (i) will not be named as a selling securityholder in the
Registration Statement and (ii) may not use the Prospectus forming a part
thereof for resales of Certificate Shares.
Certain legal consequences arise from being named as a selling
securityholder in the Registration Statement and related Prospectus.
Accordingly, the Holder is advised to consult its own securities law counsel
regarding the consequences of being named or not being named as a selling
securityholder in the Registration Statement and related Prospectus.
E-1
ELECTION
The Holder (the "Selling Holder") hereby elects to include in
the Registration Statement the Certificate Shares beneficially owned by it and
listed below in Item (3). The Selling Holder, by signing and returning this
Notice and Questionnaire, agrees to be bound with respect to such Certificate
Shares by the terms and conditions of this Notice and Questionnaire.
The Selling Holder hereby provides the following information
to the Company and represents and warrants that such information is accurate and
complete in all material respects:
QUESTIONNAIRE
(1) Full Legal Name of Selling Securityholder:
(2) Address for Notices to Selling Securityholder:
Telephone:
Fax:
Contact Person:
(3) Except as set forth below in this Item (3), the undersigned does not
beneficially own any shares of any class of Company Common Stock.
(a) Number of Certificate Shares and shares of each class of
Company Common Stock beneficially owned: ___
(b) Number of Certificate Shares which the undersigned wishes
to be included in the Registration Statement: ___
(4) Beneficial Ownership of Other Securities of the Company:
Except as set forth below in this Item (4), the undersigned
Selling Holder is not the beneficial or registered owner of any shares of any
class of Company Common Stock or any other securities of the Company, other than
the Certificate Shares and shares of Company Common Stock listed above in Item
(3).
State any exceptions here:
(5) Relationships with the Company:
E-2
Except as set forth below, neither the Selling Holder nor any
of its affiliates, officers, directors or principal equity holders (5% or more)
has held any position or office or has had any other material relationship with
the Company (or its predecessors or affiliates) during the past three years.
State any exceptions here:
(6) Plan of Distribution:
Except as set forth below, the undersigned Selling Holder
intends to distribute the Certificate Shares listed above in Item (3) only as
follows (if at all): Such Certificate Shares may be sold from time to time
directly by the undersigned Selling Holder or, alternatively, through
underwriters, broker-dealers or agents. Such Certificate Shares may be sold in
one or more transactions at fixed prices, at prevailing market prices at the
time of sale, at varying prices determined at the time of sale, or at negotiated
prices. Such sales may be effected in transactions (which may involve crosses or
block transactions) (i) on any national securities exchange or quotation service
on which the Registered Securities may be listed or quoted at the time of sale,
(ii) in the over-the-counter market, (iii) in transactions otherwise than on
such exchanges or services or in the over-the-counter market, or (iv) through
the writing of options. In connection with sales of the Certificate Shares or
otherwise, the Selling Holder may enter into hedging transactions with
broker-dealers, which may in turn engage in short sales of the Certificate
Shares in the course of hedging the positions they assume. The Selling Holder
may also sell Certificate Shares short and deliver Certificate Shares to close
out such short positions, or loan or pledge Certificate Shares to broker-dealers
that in turn may sell such Certificate Shares.
State any exceptions here:
By signing below, the Selling Holder acknowledges that it
understands its obligation to comply, and agrees that it will comply, with the
provisions of the Exchange Act and the Rules and regulations, particularly
Regulation M.
By signing below, the Selling Holder consents to the
disclosure of the information contained herein in its answers to Items (1)
through (6) above and the inclusion of such information in the Registration
Statement and related Prospectus. The Selling Holder understands that such
information will be relied upon by the Company in connection with the
preparation of the Registration Statement and related Prospectus.
In accordance with the Selling Holder's obligation under the
Agreement to provide such information as may be required by law for inclusion in
the Registration Statement, the Selling Holder agrees to promptly notify the
Company of any inaccuracies or changes in the information provided herein which
may occur subsequent to the date hereof at any time while the Registration
Statement remains in effect. All notices hereunder and pursuant to the Agreement
shall be made in writing, by hand-delivery or air courier guaranteeing overnight
delivery as follows:
E-3
(i) To the Company:
[Name of Issuer]
[Address]
(ii) With a copy to:
[Company Counsel]
[Address]
E-4
Once this Notice and Questionnaire is executed by the Selling
Holder and received by the Company's counsel, the terms of this Notice and
Questionnaire, and the representations and warranties contained herein, shall be
binding on, shall inure to the benefit of and shall be enforceable by the
respective successors, heirs, personal representatives, and assigns of the
Company and the Selling Holders. This Agreement shall be governed in all
respects by the laws of the State of
New York.
E-5
IN WITNESS WHEREOF, the undersigned, by authority duly given,
has caused this Notice and Questionnaire to be executed and delivered either in
person or by its duly authorized agent.
Dated:
-----------------------------
Selling Holder
By:
------------------------------
Name:
Title:
PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE FOR RECEIPT ON
OR BEFORE [DEADLINE FOR RESPONSE] TO THE COMPANY'S COUNSEL AT:
[Company Counsel]
[Address]
E-6
