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