1
EXHIBIT 10.2
EXECUTION COPY
===========================================================
PREFERRED STOCK REGISTRATION RIGHTS AGREEMENT
Dated as of October 30, 1997
by and among
SOURCE MEDIA, INC.
and
NATWEST CAPITAL MARKETS LIMITED
and
PRUDENTIAL SECURITIES INCORPORATED
as the Initial Purchasers
===========================================================
13.5% SENIOR PIK PREFERRED STOCK
2
TABLE OF CONTENTS
Page
----
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Exchange Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3. Shelf Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4. Additional Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5. Registration Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6. Registration Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8. Rules 144 and 144A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9. Underwritten Registrations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(a) No Inconsistent Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(b) Adjustments Affecting Transfer Restricted Preferred Stock . . . . . . . . . . . . . . . . . . . . . 26
(c) Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(d) Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(e) Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(f) Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(g) Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(h) Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(i) Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(j) Preferred Stock Held by the Company or Their Affiliates . . . . . . . . . . . . . . . . . . . . . . 29
(k) Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(i)
3
PREFERRED STOCK REGISTRATION RIGHTS AGREEMENT
This Preferred Stock Registration Rights Agreement (the
"Agreement") is dated as of October 30, 1997, by and among Source Media, Inc.,
a Delaware corporation (the "Company"), NatWest Capital Markets Limited and
Prudential Securities Incorporated (each an "Initial Purchaser" and
collectively the "Initial Purchasers").
This Agreement is entered into in connection with the Purchase
Agreement, dated October 23, 1997, among the Company and the Initial Purchasers
(the "Purchase Agreement"), which provides for the sale by the Company to the
Initial Purchasers of 800 units (the "Units") consisting of 1,000 shares of
13.5% Senior PIK Preferred Stock (the "Preferred Stock") with warrants to
purchase an aggregate of 447,000 shares of common stock of the Company. In
order to induce the Initial Purchasers to enter into the Purchase Agreement,
the Company has agreed to provide the registration rights set forth in this
Agreement for the benefit of the Initial Purchasers and their direct and
indirect transferees. The execution and delivery of this Agreement is a
condition to the obligation of the Initial Purchasers to purchase the Preferred
Stock under the Purchase Agreement.
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the
following meanings:
Additional Dividends: Has the meaning provided in Section
4(a) hereof.
Advice: Has the meaning provided in the last paragraph of
Section 5 hereof.
Agreement: Has the meaning provided in the first introductory
paragraph hereto.
Applicable Period: Has the meaning provided in Section 2(b)
hereof.
Certificate of Designation: means the certificate of
designation governing the Preferred Stock and the Exchange Preferred Stock.
4
Closing Date: Has the meaning provided in the Purchase
Agreement.
Company: Has the meaning provided in the first introductory
paragraph hereto.
Effectiveness Date: The 120th day after the Issue Date.
Effectiveness Period: Has the meaning provided in Section
3(a) hereof.
Event Date: Has the meaning provided in Section 4(b) hereof.
Exchange Act: The Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.
Exchange Offer: Has the meaning provided in Section 2(a)
hereof.
Exchange Preferred Stock: The shares of 13.5% Senior PIK
Preferred Stock of the Company that are identical to the Preferred Stock in all
material respects, except that the provisions regarding restrictions on
transfer shall be modified, as provided in the Certificate of Designation, and
the issuance thereof pursuant to the Exchange Offer shall have been registered
pursuant to an effective Registration Statement in compliance with the
Securities Act.
Exchange Registration Statement: Has the meaning provided in
Section 2(a) hereof.
Filing Date: The 45th day after the Issue Date.
Holder: Any holder of Transfer Restricted Preferred Stock.
Indemnified Person: Has the meaning provided in Section 7(c)
hereof.
Indemnifying Person: Has the meaning provided in Section 7(c)
hereof.
Initial Purchasers: Has the meaning provided in the first
introductory paragraph hereto.
Inspectors: Has the meaning provided in Section 5(o) hereof.
Issue Date: The date on which the original Preferred Stock
was sold to the Initial Purchasers pursuant to the Purchase Agreement.
-2-
5
NASD: Has the meaning provided in Section 5(s) hereof.
Participant: Has the meaning provided in Section 7(a) hereof.
Participating Broker-Dealer: Has the meaning provided in
Section 2(b) hereof.
Paying Agent: ChaseMellon as Paying Agent for the Preferred
Stock.
Persons: An individual, trustee, corporation, partnership,
limited liability company, joint stock company, trust, unincorporated
association, union, business association, firm or other legal entity.
Preferred Stock: Has the meaning provided in the second
introductory paragraph hereto.
Private Exchange: Has the meaning provided in Section 2(b)
hereof.
Private Exchange Preferred Stock: Has the meaning provided in
Section 2(b) hereof.
Prospectus: The prospectus included in any Registration
Statement (including, without limitation, any prospectus subject to completion
and a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance
upon Rule 430A promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement, and all other amendments and
supplements to the Prospectus, with respect to the terms of the offering of any
portion of the Transfer Restricted Preferred Stock covered by such Registration
Statement including post-effective amendments, and all material incorporated by
reference or deemed to be incorporated by reference in such Prospectus.
Purchase Agreement: Has the meaning provided in the second
introductory paragraph hereto.
Records: Has the meaning provided in Section 5(o) hereof.
Registration Statement: Any registration statement of the
Company, including, but not limited to, the Exchange Registration Statement,
that covers any of the Transfer Restricted Preferred Stock pursuant to the
provisions of this Agreement, including the Prospectus, amendments and
supplements to such registration statement,
-3-
6
including post-effective amendments, all exhibits, and all material
incorporated by reference or deemed to be incorporated by reference in such
registration statement.
Rule 144(k): Rule 144(k) promulgated under the Securities
Act, as such Rule may be amended from time to time, or any similar rule (other
than Rule 144A) or regulation hereafter adopted by the SEC as a replacement
thereto having substantially the same effect as such Rule.
Rule 144A: Rule 144A promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule (other than
Rule 144) or regulation hereafter adopted by the SEC.
Rule 415: Rule 415 promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.
Shelf Notice: Has the meaning provided in Section 2(c)
hereof.
Shelf Registration: Has the meaning provided in Section 3(a)
hereof.
Shelf Registration Statement: shall mean a "shelf"
registration statement of the Company and the Guarantors which covers all of
the Transfer Restricted Preferred Stock on an appropriate form under Rule 415
under the 1933 Act, or any similar rule that may be adopted by the SEC, and all
amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
TIA: The Trust Indenture Act of 1939, as amended.
Transfer Restricted Preferred Stock: Each share of Preferred
Stock upon original issuance of the Preferred Stock and at all times subsequent
thereto, each share of Exchange Preferred Stock as to which Section 2(c)(v)
hereof is applicable upon original issuance and at all times subsequent thereto
and each Private Exchange Preferred Stock upon original issuance thereof and at
all times subsequent thereto, until in the case of any such Preferred Stock,
Exchange Preferred Stock or Private Exchange
-4-
7
Preferred Stock, as the case may be, the earliest to occur of (i) a
Registration Statement (other than, with respect to any Exchange Preferred
Stock as to which Section 2(c)(v) hereof is applicable, the Exchange
Registration Statement) covering such Preferred Stock, Exchange Preferred Stock
or Private Exchange Preferred Stock, as the case may be, has been declared
effective by the SEC and such Preferred Stock, Exchange Preferred Stock or
Private Exchange Preferred Stock, as the case may be, has been disposed of in
accordance with such effective Registration Statement, (ii) such Preferred
Stock, Exchange Preferred Stock or Private Exchange Preferred Stock, as the
case may be, is, or may be, sold in compliance with Rule 144(k), or (iii) such
Preferred Stock, Exchange Preferred Stock or Private Exchange Preferred Stock,
as the case may be, ceases to be outstanding for purposes of the Certificate of
Designation.
Underwritten registration or underwritten offering: A
registration in which securities of the Company are sold to an underwriter for
reoffering to the public.
2. Exchange Offer
(a) The Company agrees to file with the SEC no later than the
Filing Date an offer to exchange (the "Exchange Offer") any and all shares of
Preferred Stock (other than the Private Exchange Preferred Stock, if any) for a
like number of shares of Exchange Preferred Stock. The Exchange Offer shall be
registered under the Securities Act on the appropriate form (the "Exchange
Registration Statement") and shall comply with all applicable tender offer
rules and regulations under the Exchange Act and state securities or Blue Sky
Laws. The Company agrees to use its best efforts to (x) cause the Exchange
Registration Statement to be declared effective under the Securities Act no
later than the 120th day after the Issue Date; (y) keep the Exchange Offer open
for at least 30 business days (or longer if required by applicable law) after
the date that notice of the Exchange Offer is mailed to the Holders; and (z)
consummate the Exchange Offer on or prior to the 180th day following the Issue
Date. If after such Exchange Registration Statement is declared effective by
the SEC, the Exchange Offer or the issuance of the Exchange Preferred Stock
thereunder is interfered with by any stop order, injunction or other order or
requirement of the SEC or any other governmental agency or court, such Exchange
Registration Statement shall be deemed not to have become effective for
purposes of this Agreement until each stop order, injunction or other order or
requirement is no longer in effect. Each Holder who participates in the
Exchange Offer will be required to represent that any Exchange Preferred Stock
received by it will be acquired in the ordinary course of its business, that at
the time of the consummation of the Exchange Offer such Holder will have no
arrangement or understanding with any Person to participate in the distribution
of the Exchange Preferred Stock in violation of the provisions of the
Securities Act, and that such Holder in not an "affiliate" of the Company
within the meaning of the Securities Act.
-5-
8
Upon consummation of the Exchange Offer in accordance with this Section 2, the
Company shall have no further obligation to register Transfer Restricted
Preferred Stock (other than Private Exchange Preferred Stock and other than in
respect of any Exchange Preferred Stock as to which clause 2(c)(v) hereof
applies) pursuant to Section 3 hereof. No securities other than the Exchange
Preferred Stock shall be included in the Exchange Registration Statement.
(b) The Company shall include within the Prospectus contained
in the Exchange Registration Statement a section entitled "Plan of
Distribution," reasonably acceptable to the Initial Purchasers, which shall
contain a summary statement of the positions taken or policies made by the
Staff of the SEC with respect to the potential "underwriter" status of any
broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act) of Exchange Preferred Stock received by such broker-dealer in the
Exchange Offer (a "Participating Broker-Dealer"), whether such positions or
policies have been publicly disseminated by the Staff of the SEC or such
positions or policies, in the judgment of the Initial Purchasers, represent the
prevailing views of the Staff of the SEC. Such "Plan of Distribution" section
shall also expressly permit the use of the Prospectus by all Persons subject to
the prospectus delivery requirements of the Securities Act, including all
Participating Broker-Dealers, and include a statement describing the means by
which Participating Broker-Dealers may resell the Exchange Preferred Stock.
The Company shall use its best efforts to keep the Exchange
Registration Statement effective and to amend and supplement the Prospectus
contained therein, in order to permit such Prospectus to be lawfully delivered
by any Participating Broker-Dealer subject to the prospectus delivery
requirements of the Securities Act for such period of time as is necessary to
comply with applicable law in connection with any resale of the Exchange
Preferred Stock; provided, however, that such period shall not exceed 180 days
after the consummation of the Exchange Offer (or such longer period if extended
pursuant to the last paragraph of Section 5 hereof) (the "Applicable Period").
If, prior to consummation of the Exchange Offer, either of the
Initial Purchasers holds any Preferred Stock acquired by it and having the
status of an unsold allotment in the initial distribution, the Company shall,
upon the request of the Initial Purchasers, simultaneously with the delivery of
the Exchange Preferred Stock in the Exchange Offer issue and deliver to the
Initial Purchasers in exchange (the "Private Exchange") for such Preferred
Stock held by the Initial Purchasers a like number of shares of Preferred Stock
of the Company, that is identical in all material respects to the Exchange
Preferred Stock (the "Private Exchange Preferred Stock") (and which is issued
pursuant to the same Certificate of Designation as the Exchange Preferred
Stock)
-6-
9
except for the placement of a restrictive legend on such Private Exchange
Preferred Stock. The Private Exchange Preferred Stock shall if permissible
bear the same CUSIP number as the Exchange Preferred Stock.
Dividends on the Exchange Preferred Stock and the Private
Exchange Preferred Stock will accumulate from the last dividend payment date on
which dividends were paid on the Preferred Stock surrendered in exchange
therefor or, if no dividends have been paid on the Preferred Stock, from the
Issue Date.
In connection with the Exchange Offer, the Company shall:
(1) mail to each Holder a copy of the Prospectus forming
part of the Exchange Registration Statement, together with an
appropriate letter of transmittal and related documents;
(2) utilize the services of a depositary for the Exchange
Offer with an address in the Borough of Manhattan, The City of New
York;
(3) permit Holders to withdraw tendered Preferred Stock
at any time prior to the close of business, New York time, on the last
business day on which the Exchange Offer shall remain open; and
(4) otherwise comply in all material respects with all
applicable laws, rules and regulations.
As soon as practicable after the close of the Exchange Offer
or the Private Exchange, as the case may be, the Company shall:
(1) accept for exchange all Preferred Stock tendered and
not validly withdrawn pursuant to the Exchange Offer or the Private
Exchange;
(2) deliver to the Trustee for cancellation all Preferred
Stock so accepted for exchange; and
(3) cause the Trustee to authenticate and deliver
promptly to each Holder of Preferred Stock, Exchange Preferred Stock
or Private Exchange Preferred Stock, as the case may be, the number of
shares of the Preferred Stock of such Holder so accepted for exchange.
The Exchange Preferred Stock and the Private Exchange
Preferred Stock are to be issued under (i) the Certificate of Designation or
(ii) a Certificate of
-7-
10
Designation identical in all material respects to the Certificate of
Designation, which in either event shall provide that (1) the Exchange
Preferred Stock shall not be subject to the transfer restrictions set forth in
the Certificate of Designation and (2) the Private Exchange Preferred Stock
shall be subject to the transfer restrictions set forth in the Certificate of
Designation. The Certificate of Designation shall provide that the Exchange
Preferred Stock, the Private Exchange Preferred Stock and the Preferred Stock
shall vote and consent together on all matters as to which they have the right
to vote or consent as one class and that none of the Exchange Preferred Stock,
the Private Exchange Preferred Stock or the Preferred Stock will have the right
to vote or consent as a separate class on any matter.
(c) If, (i) because of any change in law or in currently
prevailing interpretations of the Staff of the SEC, the Company is not
permitted to effect an Exchange Offer, (ii) the Exchange Offer is not
consummated within 180 days after the Issue Date, (iii) any holder of Private
Exchange Preferred Stock so requests at any time after the consummation of the
Private Exchange, or (iv) any Holder (other than the Initial Purchaser) is not
eligible to participate in the Exchange Offer, then the Company shall promptly
deliver written notice thereof (the "Shelf Notice") to the Trustee and, in the
case of clauses (i) and (ii) above, all Holders, in the case of clause (iii)
above, the Holders of the Private Exchange Preferred Stock and, in the case of
clause (iv) above, the affected Holder, and shall file a Shelf Registration
pursuant to Section 3 hereof, provided, however, that in the case of clause
(iii) above such Holders shall pay all reasonable registration expenses of the
Company as described in Section 6 hereof in connection with such Shelf
Registration.
3. Shelf Registration
If a Shelf Notice is delivered as contemplated by Section 2(c)
hereof, then:
(a) Shelf Registration. The Company shall as promptly as
reasonably practicable file with the SEC a Registration Statement for an
offering to be made on a continuous basis pursuant to Rule 415 covering all of
the Transfer Restricted Preferred Stock (the "Shelf Registration"). If the
Company shall not have yet filed an Exchange Registration Statement, the
Company shall use its best efforts to file with the SEC the Shelf Registration
on or prior to the Filing Date. The Shelf Registration shall be on Form S-3 or
another appropriate form permitting registration of such Transfer Restricted
Preferred Stock for resale by Holders in the manner or manners designated by
them (including, without limitation, one or more underwritten offerings). The
Company shall not permit any securities other than the Transfer Restricted
Preferred Stock to be included in the Shelf Registration, except to the extent
that the Company
-8-
11
is unable to obtain waivers of registration rights from the persons listed on
Schedule A, which the Company shall use its best efforts to obtain.
The Company shall use its best efforts to cause the Shelf
Registration to be declared effective under the Securities Act by the 120th day
after the Preferred Stock Shelf Request and to keep the Shelf Registration
continuously effective under the Securities Act until the date which is two
years from the Issue Date, subject to extension pursuant to the last paragraph
of Section 5 hereof, or such shorter period ending when all shares of Transfer
Restricted Preferred Stock covered by the Shelf Registration have been sold in
the manner set forth and as contemplated in the Shelf Registration or such
Transfer Restricted Preferred Stock becomes eligible for resale without volume
restrictions pursuant to Rule 144 and or the Securities Act.
(b) Withdrawal of Stop Orders. If the Shelf Registration
ceases to be effective for any reason at any time during the Effectiveness
Period (other than because of the sale of all of the securities registered
thereunder), the Company shall use its best efforts to obtain the prompt
withdrawal of any order suspending the effectiveness thereof.
(c) Supplements and Amendments. The Company shall
promptly supplement and amend the Shelf Registration if required by the rules,
regulations or instructions applicable to the registration form used for such
Shelf Registration, if required by the Securities Act, or if reasonably
requested for such purpose by the Holders of a majority of the shares of the
Transfer Restricted Preferred Stock covered by such Registration Statement or
by any underwriter of such Transfer Restricted Preferred Stock.
4. Additional Dividends
(a) The Company and the Initial Purchaser agree that the
Holders of Transfer Restricted Preferred Stock will suffer damages if the
Company fails to fulfill its obligations under Section 2 or Section 3 hereof
and that it would not be feasible to ascertain the extent of such damages with
precision. Accordingly, the Company agrees to pay, as liquidated damages and
as the sole and exclusive remedy therefor, additional dividends on the
Preferred Stock ("Additional Dividends") under the circumstances and to the
extent set forth below:
(i) if the Preferred Stock Exchange Offer Registration
Statement or Preferred Stock Shelf Registration Statement is not filed
within, in the case of the Preferred Stock Exchange Offer Registration
Statement, 45 days following the Preferred Stock Issue Date or, in the
case of the Preferred Stock Shelf
-9-
12
Registration Statement, within 45 days following a Preferred Stock
Shelf Request, Preferred Stock Additional Dividends shall accrue on
the Preferred Stock over and above the stated rate of 0.50% per annum
for the first 30 days commencing on the 46th day after the Preferred
Stock Issue Date or such Preferred Stock Shelf Request, respectively,
such Additional Dividends increasing by an additional 0.50% per annum
at the beginning of each subsequent 30-day period;
(ii) if the Preferred Stock Exchange Offer Registration
Statement or Preferred Stock Shelf Registration Statement is not
declared effective within, in the case of the Preferred Stock Exchange
Offer Registration Statement, 120 days following the Preferred Stock
Issue Date or, in the case of Preferred Stock Shelf Registration
Statement, 120 days following a Preferred Stock Shelf Request,
Additional Dividends shall accrue on the Preferred Stock over and
above the stated Additional Dividends at a rate of 0.50% per annum for
the first 30 days commencing on the 121st day after the Preferred
Stock Issue Date or such Preferred Stock Shelf Request, respectively,
such Additional Dividends increasing by an additional 0.50% per annum
at the beginning of each subsequent 30-day period; or
(iii) if (A) the Company has not exchanged all Preferred
Stock validly tendered in accordance with the terms of the Preferred
Stock Exchange Offer on or prior to 180 days after the Preferred Stock
Issue Date or (B) the Preferred Stock Exchange Offer Registration
Statement ceases to be effective at any time prior to the time that
the Preferred Stock Exchange Offer is consummated or (C) if
applicable, the Preferred Stock Shelf Registration Statement has been
declared effective and such Preferred Stock Shelf Registration
Statement ceases to be effective at any time prior to the second
anniversary of the Preferred Stock Issue Date (unless all the
Preferred Stock has been sold thereunder), then Additional Dividends
shall accrue on the Preferred Stock over and above the stated
Additional Dividends at a rate of 0.50% per annum for the first 30
days commencing on (x) the 181st day after the Preferred Stock Issue
Date with respect to the Preferred Stock validly tendered and not
exchanged by the Company, in the case of (A) above, or (y) the day the
Preferred Stock Exchange Offer Registration Statement ceases to be
effective or usable for its intended purpose in the case of (B) above,
or (z) the day such Preferred Stock Shelf Registration Statement
ceases to be effective in the case of (C) above, such Additional
Dividends increasing by an additional 0.50% per annum at the beginning
of each subsequent 30- day period.
-10-
13
provided, however, that the Additional Dividends on the Preferred Stock may not
exceed in the aggregate 2.0% per annum; and provided, further, that (1) upon
the filing of the Preferred Stock Exchange Offer Registration Statement or
Preferred Stock Shelf Registration Statement (in the case of clause (i) above),
(2) upon the effectiveness of the Preferred Stock Exchange Offer Registration
Statement or Preferred Stock Shelf Registration Statement (in the case of (ii)
above), or (3) upon the exchange of Exchange Preferred Stock for all Preferred
Stock tendered (in the case of clause (iii)(A) above), or upon the
effectiveness of the Preferred Stock Exchange Offer Registration Statement
which had ceased to remain effective (in the case of clause (iii)(B) above), or
upon the effectiveness of the Preferred Stock Shelf Registration Statement
which had ceased to remain effective (in the case of clause (iii)(C) above),
Additional Dividends on the Preferred Stock as a result of such clause (or the
relevant subclause thereof), as the case may be, shall cease to accrue.
(b) The Company shall notify the Paying Agent within one
business day after each and every date on which an event occurs in respect of
which Additional Dividends are required to be paid (an "Event Date"). The
Company shall pay the Additional Dividends due on the Transfer Restricted
Preferred Stock by depositing with the Paying Agent (which shall not be the
Company for these purposes) for the Transfer Restricted Preferred Stock, in
trust, for the benefit of the holders thereof, prior to 11:00 A.M. on the next
dividend payment date specified by the Certificate of Designation (or such
other certificate of designation), sums or shares of the Preferred Stock, as
the case may be, sufficient to pay the Additional Dividends then due. Any
amounts of Additional Dividends due pursuant to clauses (a)(i), (a)(ii) or
(a)(iii) of this Section 4 will be payable to the Holders of affected Preferred
Stock in cash or shares of the Preferred Stock, as the case may be, quarterly
on each dividend payment date specified by the Certificate of Designation (or
such other certificate of designation) to the record holders entitled to
receive the dividend payment to be made on such date, commencing with the first
such date occurring after any such Additional Dividends commence to accrue.
The amount of Additional Dividends will be determined by multiplying the
applicable Additional Dividends rate by the liquidation preference of the
affected Transfer Restricted Preferred Stock of such Holders, multiplied by a
fraction, the numerator of which is the number of days such Additional
Dividends rate was applicable during such period (determined on the basis of a
360-day year comprised of twelve 30-day months and, in the case of a partial
month, the actual number of days elapsed), and the denominator of which is 360.
5. Registration Procedures
In connection with the filing of any Registration Statement
pursuant to Sections 2 or 3 hereof, the Company shall effect such
registration(s) to permit the sale
-11-
14
of the securities covered thereby in accordance with the intended method or
methods of disposition thereof, and pursuant thereto and in connection with any
Registration Statement filed by the Company hereunder, the Company shall:
(a) Prepare and file with the SEC prior to the Filing
Date a Registration Statement or Registration Statements as prescribed
by Sections 2 or 3 hereof, and use its best efforts to cause each such
Registration Statement to become effective and remain effective as
provided herein; provided, however, that, if (1) such filing is
pursuant to Section 3 hereof, or (2) a Prospectus contained in an
Exchange Registration Statement filed pursuant to Section 2 hereof is
required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Preferred Stock during the
Applicable Period, before filing any Registration Statement or
Prospectus or any amendments or supplements thereto, the Company
shall, if requested in writing, furnish to and afford the Holders of
the Transfer Restricted Preferred Stock covered by such Registration
Statement or each such Participating Broker-Dealer, as the case may
be, their counsel and the managing underwriters, if any, a reasonable
opportunity to review copies of all such documents (including copies
of any documents to be incorporated by reference therein and all
exhibits thereto) proposed to be filed (in each case at least three
business days prior to such filing). The Company shall not file any
Registration Statement or Prospectus or any amendments or supplements
thereto in respect of which the Holders must be afforded an
opportunity to review prior to the filing of such document under the
immediately preceding sentence, if the Holders of a majority in
aggregate principal amount of the Transfer Restricted Preferred Stock
covered by such Registration Statement, or any such Participating
Broker-Dealer, as the case may be, their counsel, or the managing
underwriters, if any, shall object directly to the Company in writing,
which writing shall set forth a reasonable basis for such objection.
(b) Prepare and file with the SEC such amendments and
post-effective amendments to each Shelf Registration or Exchange
Registration Statement, as the case may be, as may be necessary to
keep such Registration Statement continuously effective for the
Effectiveness Period or the Applicable Period or until consummation of
the Exchange Offer, as the case may be; cause the related Prospectus
to be supplemented by any Prospectus supplement required by applicable
law, and as so supplemented to be filed pursuant to Rule 424 (or any
similar provisions then in force) promulgated under the Securities
Act; and comply with the provisions of the Securities Act and the
Exchange Act applicable to it with respect to the disposition of all
securities covered by such Registration Statement as so amended or in
such Prospectus as so supplemented and with
-12-
15
respect to the subsequent resale of any securities being sold by a
Participating Broker-Dealer covered by any such Prospectus; the
Company shall be deemed not to have used its best efforts to keep a
Registration Statement effective during the Applicable Period if it
voluntarily takes any action that would result in selling Holders of
the Transfer Restricted Preferred Stock covered thereby or
Participating Broker-Dealers seeking to sell Exchange Preferred Stock
not being able to sell such Transfer Restricted Preferred Stock or
such Exchange Preferred Stock during that period unless such action is
required by applicable law or unless the Company complies with this
Agreement, including, without limitation, the provisions of paragraph
5(k) hereof and the last paragraph of this Section 5.
(c) If (1) a Shelf Registration is filed pursuant to
Section 3 hereof, or (2) a Prospectus contained in an Exchange
Registration Statement filed pursuant to Section 2 hereof is required
to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Preferred Stock during the
Applicable Period, notify the selling Holders of Transfer Restricted
Preferred Stock, or each such Participating Broker-Dealer, as the case
may be, their counsel and the managing underwriters, if any, promptly
(but in any event within two business days), and confirm such notice
in writing, (i) when a Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to a
Registration Statement or any post-effective amendment, when the same
has become effective under the Securities Act (including in such
notice a written statement that any Holder may, upon request, obtain,
at the sole expense of the Company, one conformed copy of such
Registration Statement or post-effective amendment including financial
statements and schedules, documents incorporated or deemed to be
incorporated by reference and exhibits), (ii) of the issuance by the
SEC of any stop order suspending the effectiveness of a Registration
Statement or of any order preventing or suspending the use of any
preliminary prospectus or the initiation of any proceedings for that
purpose, (iii) if at any time when a Prospectus is required by the
Securities Act to be delivered in connection with sales of the
Transfer Restricted Preferred Stock or resales of Exchange Preferred
Stock by Participating Broker-Dealers the representations and
warranties of the Company contained in any agreement (including any
underwriting agreement), contemplated by Section 5(n) hereof cease to
be true and correct, (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification or
exemption from qualification of a Registration Statement or any of the
Transfer Restricted Preferred Stock or the Exchange Preferred Stock to
be sold by any Participating Broker-Dealer for offer or sale in any
jurisdiction, or the initiation or threatening of any proceeding for
such purpose, (v) of the
-13-
16
happening of any event, the existence of any condition or any
information becoming known that makes any statement made in such
Registration Statement or related Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue
in any material respect or that requires the making of any changes in
or amendments or supplements to such Registration Statement,
Prospectus or documents so that, in the case of the Registration
Statement, it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and that in
the case of the Prospectus, it will not contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, and
(vi) of the determination by the Company that a post-effective
amendment to a Registration Statement would be appropriate.
(d) Use its best efforts to prevent the issuance of any
order suspending the effectiveness of a Registration Statement or of
any order preventing or suspending the use of a Prospectus or
suspending the qualification (or exemption from qualification) of any
of the Transfer Restricted Preferred Stock or the Exchange Preferred
Stock for sale in any jurisdiction, and, if any such order is issued,
to use its best efforts to obtain the withdrawal of any such order at
the earliest possible moment.
(e) If a Shelf Registration is filed pursuant to Section
3 hereof and if requested by the managing underwriter or underwriters
(if any), or the Holders of a majority in aggregate principal amount
of the Transfer Restricted Preferred Stock being sold in connection
with an underwritten offering, (i) promptly incorporate in a
prospectus supplement or post-effective amendment such information as
the managing underwriter or underwriters (if any), such Holders, or
counsel for any of them reasonably request to be included therein,
(ii) make all required filings of such prospectus supplement or such
post-effective amendment as soon as practicable after the Company has
received notification of the matters to be incorporated in such
prospectus supplement or post-effective amendment, and (iii)
supplement or make amendments to such Registration Statement.
(f) If (1) a Shelf Registration is filed pursuant to
Section 3 hereof, or (2) a Prospectus contained in an Exchange
Registration Statement filed pursuant to Section 2 hereof is required
to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Preferred Stock during the
Applicable Period, furnish to each selling Holder of Transfer
-14-
17
Restricted Preferred Stock and to each such Participating
Broker-Dealer who so requests and to counsel and each managing
underwriter, if any, at the sole expense of the Company, one conformed
copy of the Registration Statement or Registration Statements and each
post-effective amendment thereto, including financial statements and
schedules, and, if requested, all documents incorporated or deemed to
be incorporated therein by reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to
Section 3 hereof, or (2) a Prospectus contained in an Exchange
Registration Statement filed pursuant to Section 2 hereof is required
to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Preferred Stock during the
Applicable Period, deliver to each selling Holder of Transfer
Restricted Preferred Stock, or each such Participating Broker-Dealer,
as the case may be, their respective counsel, and the underwriters, if
any, at the sole expense of the Company, as many copies of the
Prospectus or Prospectuses (including each form of preliminary
prospectus) and each amendment or supplement thereto and any documents
incorporated by reference therein as such Persons may reasonably
request; and, subject to the last paragraph of this Section 5, Company
hereby consents to the use of such Prospectus and each amendment or
supplement thereto by each of the selling Holders of Transfer
Restricted Preferred Stock or each such Participating Broker-Dealer,
as the case-may be, and the underwriters or agents, if any, and
dealers (if any), in connection with the offering and sale of the
Transfer Restricted Preferred Stock covered by, or the sale by
Participating Broker-Dealers of the Exchange Preferred Stock pursuant
to, such Prospectus and any amendment or supplement thereto.
(h) Prior to any public offering of Transfer Restricted
Preferred Stock or any delivery of a Prospectus contained in the
Exchange Registration Statement by any Participating Broker-Dealer who
seeks to sell Exchange Preferred Stock during the Applicable Period,
to use its best efforts to register or qualify such Transfer
Restricted Preferred Stock (and to cooperate with selling Holders of
Transfer Restricted Preferred Stock or each such Participating
Broker-Dealer, as the case may be, the managing underwriter or
underwriters, if any, and their respective counsel in connection with
the registration or qualification (or exemption from such registration
or qualification) of such Transfer Restricted Preferred Stock) for
offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as any selling Holder,
Participating Broker-Dealer, or the managing underwriter or
underwriters reasonably request in writing; provided, however, that
where Exchange Preferred Stock held by Participating Broker-Dealers or
Transfer Restricted Preferred
-15-
18
Stock are offered other than through an underwritten offering, the
Company agrees to cause their counsel to perform Blue Sky
investigations and file registrations and qualifications required to
be filed pursuant to this Section 5(h); keep each such registration or
qualification (or exemption therefrom) effective during the period
such Registration Statement is required to be kept effective and do
any and all other acts or things reasonably necessary or advisable to
enable the disposition in such jurisdictions of the Exchange Preferred
Stock held by Participating Broker-Dealers or the Transfer Restricted
Preferred Stock covered by the applicable Registration Statement;
provided, however, that the Company shall not be required to (A)
qualify generally to do business in any jurisdiction where it is not
then so qualified, (B) take any action that would subject it to
general service of process in any such jurisdiction where it is not
then so subject or (C) subject itself to taxation in excess of a
nominal dollar amount in any such jurisdiction where it is not then so
subject.
(i) If a Shelf Registration is filed pursuant to Section
3 hereof, cooperate with the selling Holders of Transfer Restricted
Preferred Stock and the managing underwriter or underwriters, if any,
to facilitate the timely preparation and delivery of certificates
representing Transfer Restricted Preferred Stock to be sold, which
certificates shall not bear any restrictive legends and shall be in a
form eligible for deposit with The Depository Trust Company; and
enable such Transfer Restricted Preferred Stock to be in such
denominations and registered in such names as the managing underwriter
or underwriters, if any, or Holders may reasonably request.
(j) Use its best efforts to cause the Transfer Restricted
Preferred Stock covered by the Registration Statement to be registered
with or approved by such other governmental agencies or authorities as
may be necessary to enable the Holders thereof or the underwriter or
underwriters, if any, to dispose of such Transfer Restricted Preferred
Stock, except as may be required solely as a consequence of the nature
of a selling Holder's business, in which case the Company will
cooperate in all reasonable respects with the filing of such
Registration Statement and the granting of such approvals.
(k) If (1) a Shelf Registration is filed pursuant to
Section 3 hereof, or (2) a Prospectus contained in an Exchange
Registration Statement filed pursuant to Section 2 hereof is required
to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Preferred Stock during the
Applicable Period, upon the occurrence of any event contemplated by
paragraph 5(c)(v) or 5(c)(vi) hereof, as promptly as practicable
prepare and (subject to Section 5(a) hereof) file with the SEC, at the
sole expense of the
-16-
19
Company, a supplement or post-effective amendment to the Registration
Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, or
file any other required document so that, as thereafter delivered to
the purchasers of the Transfer Restricted Preferred Stock being sold
thereunder or to the purchasers of the Exchange Preferred Stock to
whom such Prospectus will be delivered by a Participating
Broker-Dealer, any such Prospectus will not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading;
provided, that this Section 5(k) shall not be deemed to require the
Company to disclose any information that, in the good faith opinion of
the management of the Company, is not yet required to be disclosed and
would not be in the best interests of the Company to disclose, so long
as the Company complies with all applicable laws and government
regulations and the last paragraph of this Section 5.
(l) Prior to the effective date of the first Registration
Statement relating to the Transfer Restricted Preferred Stock, provide
a CUSIP number for the Transfer Restricted Preferred Stock or Exchange
Preferred Stock, as the case may be.
(m) In connection with any underwritten offering
initiated by the Company of Transfer Restricted Preferred Stock
pursuant to a Shelf Registration, enter into an underwriting agreement
as is customary in underwritten offerings of securities similar to the
Preferred Stock and take all such other actions as are reasonably
requested by the managing underwriter or underwriters in order to
facilitate the registration or the disposition of such Transfer
Restricted Preferred Stock and, in such connection, (i) make such
representations and warranties to, and covenants with, the
underwriters with respect to the business of the Company and its
respective subsidiaries and the Registration Statement, Prospectus and
documents, if any, incorporated or deemed to be incorporated by
reference therein, in each case, as are customarily made by Company to
underwriters in underwritten offerings of securities similar to the
Preferred Stock, and confirm the same in writing if and when
requested; (ii) obtain the written opinion of counsel to the Company
and written updates thereof in form, scope and substance reasonably
satisfactory to the managing underwriter or underwriters, addressed to
the underwriters covering the matters customarily covered in opinions
requested in underwritten offerings of securities similar to the
Preferred Stock and such other matters as may be reasonably requested
by the managing underwriter or underwriters; (iii) obtain "cold
comfort" letters and updates thereof in form, scope and substance
reasonably
-17-
20
satisfactory to the managing underwriter or underwriters from the
independent certified public accountants of the Company (and, if
necessary, any other independent certified public accountants of any
subsidiary of any of the Company or of any business acquired by any of
the Company for which financial statements and financial data are, or
are required to be, included or incorporated by reference in the
Registration Statement), addressed to each of the underwriters, such
letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with
underwritten offerings of securities similar to the Preferred Stock
and such other matters as reasonably requested by the managing
underwriter or underwriters; and (iv) if an underwriting agreement is
entered into, the same shall contain indemnification provisions and
procedures no less favorable than those set forth in Section 7 hereof
(or such other provisions and procedures acceptable to Holders of a
majority in aggregate principal amount of Transfer Restricted
Preferred Stock covered by such Registration Statement and the
managing underwriter or underwriters or agents) with respect to all
parties to be indemnified pursuant to said Section. The above shall
be done at each closing under such underwriting agreement, or as and
to the extent required thereunder.
(n) If (1) a Shelf Registration is filed pursuant to
Section 3 hereof, or (2) a Prospectus contained in an Exchange
Registration Statement filed pursuant to Section 2 hereof is required
to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Preferred Stock during the
Applicable Period, make available for inspection by any selling Holder
of such Transfer Restricted Preferred Stock being sold, or each such
Participating Broker-Dealer, as the case may be, any underwriter
participating in any such disposition of Transfer Restricted Preferred
Stock, if any, and any attorney, accountant or other agent retained by
any such selling Holder or each such Participating Broker-Dealer, as
the case may be, or underwriter (collectively, the "Inspectors"), at
the offices where normally kept, during reasonable business hours, all
financial and other records, pertinent corporate documents and
instruments of the Company and its subsidiaries (collectively, the
"Records") as shall be reasonably necessary to enable them to exercise
any applicable due diligence responsibilities, and cause the officers,
directors and employees of the Company and its respective subsidiaries
to make available for inspection all information reasonably requested
by any such Inspector in connection with such Registration Statement.
Records which the Company determine, in good faith, to be confidential
and any Records which it notifies the Inspectors are confidential
shall not be disclosed by the Inspectors unless (i) the disclosure of
such Records is necessary to avoid or correct a misstatement or
omission in such Registration Statement, (ii) the release of such
Records is ordered pursuant
-18-
21
to a subpoena or other order from a court of competent jurisdiction,
(iii) disclosure of such information is, in the opinion of counsel (a
copy of which shall be delivered to the Company) for any Inspector,
necessary or advisable in connection with any action, claim, suit or
proceeding, directly or indirectly, involving or potentially involving
such Inspector and arising out of, based upon, relating to, or
involving this Agreement, or any transactions contemplated hereby or
arising hereunder, or (iv) the information in such Records has been
made generally available to the public. Each selling Holder of such
Registrable Securities and each such Participating Broker-Dealer will
be required to agree that information obtained by it as a result of
such inspections shall be deemed confidential and shall not be used by
it as the basis for any market transactions in the securities of the
Company unless and until such information is generally available to
the public. Each selling Holder of such Transfer Restricted Preferred
Stock and each such Participating Broker-Dealer will be required to
further agree that it will, upon learning that disclosure of such
Records is sought in a court of competent jurisdiction, give notice to
the Company and allow the Company to undertake appropriate action to
prevent disclosure of the Records deemed confidential at the Company's
sole expense.
(o) Comply with all applicable rules and regulations of
the SEC and make generally available to its securityholders earnings
statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder (or any similar rule
promulgated under the Securities Act) no later than 45 days after the
end of any 12-month period (or 90 days after the end of any 12-month
period if such period is a fiscal year) (i) commencing at the end of
any fiscal quarter in which Transfer Restricted Preferred Stock are
sold to underwriters in a firm commitment or best efforts underwritten
offering and (ii) if not sold to underwriters in such an offering,
commencing on the first day of the first fiscal quarter of the Company
after the effective date of a Registration Statement, which statements
shall cover said 12-month periods.
(p) If an Exchange Offer or a Private Exchange is to be
consummated, upon delivery of the Transfer Restricted Preferred Stock
by Holders to the Company (or to such other Person as directed by the
Company) in exchange for the Exchange Preferred Stock or the Private
Exchange Preferred Stock, as the case may be, the Company shall xxxx,
or cause to be marked, on such Transfer Restricted Preferred Stock
that such Transfer Restricted Preferred Stock is being cancelled in
exchange for the Exchange Preferred Stock or the Private Exchange
Preferred Stock, as the case may be; in no event shall such Transfer
Restricted Preferred Stock be marked as paid or otherwise satisfied.
-19-
22
(q) Cooperate with each seller of Transfer Restricted
Preferred Stock covered by any Registration Statement and each
underwriter, if any, participating in the disposition of such Transfer
Restricted Preferred Stock and their respective counsel in connection
with any filings required to be made with the National Association of
Securities Dealers, Inc. (the "NASD").
(r) Use its best efforts to take all other steps
necessary or advisable to effect the registration of the Transfer
Restricted Preferred Stock covered by a Registration Statement
contemplated hereby.
The Company may require each seller of Transfer Restricted
Preferred Stock as to which any Registration Statement is being effected to
furnish to the Company such information regarding such seller and the
distribution of such Transfer Restricted Preferred Stock as the Company may,
from time to time, reasonably request. The Company may exclude from such
Registration Statement the Transfer Restricted Preferred Stock of any seller
who unreasonably fails to furnish such information within a reasonable time
after receiving such request. Each seller as to which any Shelf Registration
is being effected agrees to furnish promptly to the Company all information
required to be disclosed in order to make the information previously furnished
to the Company by such seller not materially misleading.
Each Holder of Transfer Restricted Preferred Stock and each
Participating Broker-Dealer agrees by acquisition of such Transfer Restricted
Preferred Stock or Exchange Preferred Stock to be sold by such Participating
Broker-Dealer, as the case may be, that, upon actual receipt of any notice from
the Company of the happening of any event of the kind described in Section
5(c)(ii), 5(c)(iv), 5(c)(v), or 5(c)(vi) hereof, such Holder will forthwith
discontinue disposition of such Transfer Restricted Preferred Stock or Exchange
Preferred Stock, as the case may be, covered by such Registration Statement or
Prospectus to be sold by such Holder or Participating Broker-Dealer, as the
case may be, until such Holder's or Participating Broker-Dealer's receipt of
the copies of the supplemented or amended Prospectus contemplated by Section
5(k) hereof, or until it is advised in writing (the "Advice") by the Company
that the use of the applicable Prospectus may be resumed, and has received
copies of any amendments or supplements thereto. In the event the Company shall
give any such notice, each of the Effectiveness Period and the Applicable
Period shall be extended by the number of days during such periods from and
including the date of the giving of such notice to and including the date when
each seller of Transfer Restricted Preferred Stock covered by such Registration
Statement or Exchange Preferred Stock to be sold by such Participating
Broker-Dealer, as the case may be, shall have received (x) the copies of the
supplemented or amended Prospectus contemplated by Section 5(k) hereof or (y)
the Advice. In the event the Company does not give any such notice within five
business days, each
-20-
23
Holder shall return such Registration Statement or Prospectus to the Company or
destroy all copies of such Registration Statement or Prospectus; and if so
requested by the Company, shall certify that all copies of the Registration
Statement or Prospectus were destroyed.
6. Registration Expenses
(a) All fees and expenses incident to the performance of
or compliance with this Agreement by the Company shall be borne by the Company
whether or not the Exchange Offer or a Shelf Registration is filed or becomes
effective, including, without limitation, (i) all registration and filing fees
(including, without limitation, (A) fees with respect to filings with the SEC,
(B) fees with respect to filings required to be made with the NASD in
connection with an underwritten offering and (C) fees and expenses of
compliance with state securities or Blue Sky laws (including, without
limitation, reasonable fees and disbursements of the Company's counsel in
connection with Blue Sky qualifications of the Transfer Restricted Preferred
Stock or Exchange Preferred Stock and determination of the eligibility of the
Transfer Restricted Preferred Stock or Exchange Preferred Stock for investment
under the laws of such jurisdictions (x) where the holders of Transfer
Restricted Preferred Stock are located, in the case of the Exchange Preferred
Stock, or (y) as provided in Section 5(h) hereof, in the case of Transfer
Restricted Preferred Stock or Exchange Preferred Stock to be sold by a
Participating Broker-Dealer during the Applicable Period)), (ii) printing
expenses, including, without limitation, expenses of printing certificates for
Transfer Restricted Preferred Stock or Exchange Preferred Stock in a form
eligible for deposit with The Depository Trust Company and of printing
Prospectuses if the printing of Prospectuses is requested by the managing
underwriter or underwriters, if any, by the Holders of a majority in aggregate
principal amount of the Transfer Restricted Preferred Stock included in any
Registration Statement or sold by any Participating Broker-Dealer, as the case
may be, (iii) messenger, telephone and delivery expenses, (iv) fees and
disbursements of counsel for the Company, (v) fees and disbursements of all
independent certified public accountants referred to in Section 5(n)(iii)
hereof (including, without limitation, the expenses of any special audit and
"cold comfort" letters required by or incident to such performance by or
incident to such performance), (vi) rating agency fees, if any, and any fees
associated with making the Transfer Restricted Preferred Stock or Exchange
Preferred Stock eligible for trading through The Depository Trust Company,
(vii) Securities Act liability insurance, if the Company desires such
insurance, (viii) fees and expenses of all other Persons retained by the
Company, (ix) internal expenses of the Company (including, without limitation,
all salaries and expenses of officers and employees of the Company performing
legal or accounting duties), (x) the expense of any annual audit, (ix) the fees
and expenses incurred in connection with the listing of the securities to be
registered on any securities
-21-
24
exchange or any inter-dealer quotation system, if applicable, and (xii) the
expenses relating to printing, word processing and distributing all
Registration Statements, underwriting agreements, securities sales agreements,
indentures and any other documents necessary in order to comply with this
Agreement.
(b) The Company shall reimburse the Holders of the Transfer
Restricted Preferred Stock being registered in a Shelf Registration for the
reasonable fees and disbursements of not more than one counsel chosen in
writing by the Holders of a majority in aggregate principal amount of the
Transfer Restricted Preferred Stock to be included in such Registration
Statement. In addition, the Company, shall reimburse the Initial Purchasers
for 50% (but not more than $10,000 or such other amount as may be mutually
agreed to by the Initial Purchasers and the Company) of the reasonable fees and
expenses of one counsel in connection with the Exchange Offer which shall be
White & Case, and shall not be required to pay any other legal expenses of the
Initial Purchaser in connection therewith.
7. Indemnification. (a) The Company agrees to indemnify and
hold harmless each Holder of Transfer Restricted Preferred Stock offered
pursuant to a Shelf Registration Statement and each Participating Broker-Dealer
selling Exchange Preferred Stock during the Applicable Period, the affiliates,
directors, officers, agents, representatives and employees of each such Person
or its affiliates, and each other Person, if any, who controls any such Person
or its affiliates within the meaning of either Section 15 of the Securities Act
or Section 20 of the Exchange Act (each, a "Participant") from and against any
and all losses, claims, damages and liabilities (including, without limitation,
the reasonable legal fees and other expenses actually incurred in connection
with any suit, action or proceeding or any claim asserted) caused by, arising
out of or based upon any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement pursuant to which the
offering of such Transfer Restricted Preferred Stock or Exchange Preferred
Stock, as the case may be, is registered (or any amendment thereto) or related
Prospectus (or any amendments or supplements thereto) or any related
preliminary prospectus, or caused by, arising out of or based upon any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that the Company will not be required to indemnify a Participant if (i) such
losses, claims, damages or liabilities are caused by any untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with information furnished to the Company in writing by or on behalf
of such Participant expressly for use therein or (ii) if such Participant sold
to the person asserting the claim the Transfer Restricted Preferred Stock or
Exchange Preferred Stock which is the subject of such claim and such untrue
statement or omission or alleged untrue statement or omission was contained or
made in any
-22-
25
preliminary prospectus and corrected in the Prospectus or any amendment or
supplement thereto and the Prospectus does not contain any other untrue
statement or omission or alleged untrue statement or omission of a material
fact that was the subject matter of the related proceeding and such Participant
failed to deliver or provide a copy of the Prospectus (as amended or
supplemented) to such Person with or prior to the confirmation of the sale of
such Transfer Restricted Preferred Stock or Exchange Preferred Stock sold to
such Person if required by applicable laws, unless such failure to deliver or
provide a copy of the Prospectus (as amended or supplemented) was a result of
noncompliance by the Company with Section 5 of this Agreement.
(b) Each Participant agrees, severally and not jointly, to
indemnify and hold harmless the Company, its respective directors, officers,
agents, representatives, employees and each Person who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act to the same extent as the foregoing indemnity from the Company to
each Participant, but only (i) with reference to information furnished to the
Company in writing by or on behalf of such Participant expressly for use in any
Registration Statement or Prospectus, any amendment or supplement thereto, or
any preliminary prospectus or (ii) with respect to any untrue statement or
representation made by such Participant in writing to the Company.
(c) If any suit, action, proceeding (including any
governmental or regulatory investigation), claim or demand shall be brought or
asserted against any Person in respect of which indemnity may be sought
pursuant to either of the two preceding paragraphs, such Person (the
"Indemnified Person") shall promptly notify the Person against whom such
indemnity may be sought (the "Indemnifying Person") in writing, and the
Indemnifying Person shall have the right to retain counsel reasonably
satisfactory to the Indemnified Person to represent the Indemnified Person and
any others the Indemnifying Person may reasonably designate in such proceeding
and shall pay the reasonable fees and expenses actually incurred by such
counsel related to such proceeding; provided, however, that the failure to so
notify the Indemnifying Person shall not relieve it of any obligation or
liability which it may have hereunder or otherwise (unless and only to the
extent that such failure results in the loss or compromise of any material
rights or defenses by the Indemnifying Person). In any such proceeding, any
Indemnified Person shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Person
unless (i) the Indemnifying Person and the Indemnified Person shall have
mutually agreed in writing to the contrary, (ii) the Indemnifying Person shall
have failed within a reasonable period of time to retain counsel reasonably
satisfactory to the Indemnified Person or (iii) the named parties in any such
proceeding (including any impleaded parties) include both the Indemnifying
Person and the Indemnified Person and representation of both parties by the
same counsel would be inappropriate due to actual or potential differing
interests
-23-
26
between them. It is understood that, unless there exists a conflict among
Indemnified Persons, the Indemnifying Person shall not, in connection with any
one such proceeding or separate but substantially similar related proceeding in
the same jurisdiction arising out of the same general allegations, be liable
for the reasonable fees and expenses of more than one separate firm (in
addition to any local counsel) for all Indemnified Persons, and that all such
fees and expenses shall be reimbursed promptly as they are incurred. Any such
separate firm for the Participants and such control Persons of Participants
shall be designated in writing by Participants who sold a majority in interest
of Transfer Restricted Preferred Stock and Exchange Preferred Stock sold by all
such Participants and any such separate firm for the Company, its directors,
their officers and such control Persons of the Company shall be designated in
writing by the Company. The Indemnifying Person shall not be liable for any
settlement of any proceeding effected without its prior written consent, but if
settled with such consent or if there be a final non-appealable judgment for
the plaintiff for which the Indemnified Person is entitled to indemnification
pursuant to this Agreement, the Indemnifying Person agrees to indemnify and
hold harmless each Indemnified Person from and against any loss or liability by
reason of such settlement or judgment. No Indemnifying Person shall, without
the prior written consent of the Indemnified Person, effect any settlement or
compromise of any pending or threatened proceeding in respect of which any
Indemnified Person is or could have been a party, and indemnity could have been
sought hereunder by such Indemnified Person, unless such settlement (A)
includes an unconditional written release of such Indemnified Person, in form
and substance reasonably satisfactory to such Indemnified Person, from all
liability on claims that are the subject matter of such proceeding and (B) does
not include any statement as to an admission of fault, culpability or failure
to act by or on behalf of any Indemnified Person.
(d) If the indemnification provided for in Sections 7(a) and
7(b) hereof is for any reason unavailable to, or insufficient to hold harmless,
an Indemnified Person in respect of any losses, claims, damages or liabilities
referred to therein, then each Indemnifying Person under such paragraphs, in
lieu of indemnifying such Indemnified Person thereunder and in order to provide
for just and equitable contribution, shall contribute to the amount paid or
payable by such Indemnified Person as a result of such losses, claims, damages
or liabilities in such proportion as is appropriate to reflect (i) the relative
benefits received by the Indemnifying Person or Persons on the one hand and the
Indemnified Person or Persons on the other from the offering of the Preferred
Stock or (ii) if the allocation provided by the foregoing clause (i) is not
permitted by applicable law, not only such relative benefits but also the
relative fault of the Indemnifying Person or Persons on the one hand and the
Indemnified Person or Persons on the other in connection with the statements or
omissions or alleged statements or omissions that resulted in such losses,
claims, damages or liabilities (or actions in
-24-
27
respect thereof). The relative fault of the parties shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company on the one hand or
such Participant or such other Indemnified Person, as the case may be, on the
other, the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission, and any other
equitable considerations appropriate in the circumstances.
(e) The parties agree that it would not be just and equitable
if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Participants were treated as one entity for such
purposes) or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Person as a result of
the losses, claims, damages and liabilities referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any reasonable legal or other expenses actually incurred by such
Indemnified Person in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 7, in no event
shall a Participant be required to contribute any amount in excess of the
amount by which proceeds received by such Participant from sales of Transfer
Restricted Preferred Stock or Exchange Preferred Stock, as the case may be,
exceeds the amount of any damages that such Participant has otherwise been
required to pay or has paid by reason of such untrue or alleged untrue
statement or omission or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
(f) The indemnity and contribution agreements contained in
this Section 7 will be in addition to any liability which the Indemnifying
Persons may otherwise have to the Indemnified Persons referred to above.
8. Rules 144 and 144A. The Company covenants that it will
file the reports required to be filed by it under the Securities Act and the
Exchange Act and the rules and regulations adopted by the SEC thereunder in a
timely manner in accordance with the requirements of the Securities Act and the
Exchange Act and, if at any time the Company is not required to file such
reports, it will, upon the request of any Holder of Transfer Restricted
Preferred Stock, make publicly available annual reports and such information,
documents and other reports of the type specified in Sections 13 and 15(d) of
the Exchange Act. The Company further covenants for so long as any Transfer
Restricted Preferred Stock remain outstanding, to make available to any Holder
or beneficial owner of Transfer Restricted Preferred Stock in connection with
any sale
-25-
28
thereof and any prospective purchaser of such Transfer Restricted Preferred
Stock from such Holder or beneficial owner the information required by Rule
144(d)(4) under the Securities Act in order to permit resales of such Transfer
Restricted Preferred Stock pursuant to Rule 144A.
9. Underwritten Registrations. If any of the Transfer
Restricted Preferred Stock covered by any Shelf Registration are to be sold in
an underwritten offering, the investment banker or investment bankers and
manager or managers that will manage the offering will be selected by the
Holders of a majority in aggregate principal amount of such Transfer Restricted
Preferred Stock included in such offering and reasonably acceptable to the
Company.
No Holder of Transfer Restricted Preferred Stock may
participate in any underwritten registration hereunder unless such Holder (a)
agrees to sell such Holder's Transfer Restricted Preferred Stock on the basis
provided in any underwriting arrangements approved by the Persons entitled
hereunder to approve such arrangements and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements.
10. Miscellaneous. (a) No Inconsistent Agreements. The
Company has not entered, as of the date hereof, and the Company shall not,
after the date of this Agreement, enter into any agreement with respect to any
of its securities that is inconsistent with the rights granted to the Holders
of Transfer Restricted Preferred Stock in this Agreement or otherwise conflicts
with the provisions hereof. Other than as provided in Schedule A attached
hereto, the Company has not entered and none of the Company will enter into any
agreement with respect to any of its securities which will grant to any Person
piggy-back registration rights with respect to a Registration Statement.
(b) Adjustments Affecting Transfer Restricted Preferred
Stock. The Company shall not, directly or indirectly, take any action with
respect to the Transfer Restricted Preferred Stock as a class that would
adversely affect the ability of the Holders of Transfer Restricted Preferred
Stock to include such Transfer Restricted Preferred Stock in a registration
undertaken pursuant to this Agreement.
(c) Amendments and Waivers. The provisions of this Agreement
may not be amended, modified or supplemented, and waivers or consents to
departures from the provisions hereof may not be given, otherwise than with the
prior written consent of the Holders of not less than a majority in aggregate
principal amount of the then outstanding Transfer Restricted Preferred Stock.
Notwithstanding the foregoing, a
-26-
29
waiver or consent to depart from the provisions hereof with respect to a matter
that relates exclusively to the rights of Holders of Transfer Restricted
Preferred Stock whose securities are being sold pursuant to a Registration
Statement and that does not directly or indirectly affect, impair, limit or
compromise the rights of other Holders of Transfer Restricted Preferred Stock
may be given by Holders of at least a majority in aggregate principal amount of
the Transfer Restricted Preferred Stock being sold by such Holders pursuant to
such Registration Statement; provided, however, that the provisions of this
sentence may not be amended, modified or supplemented except in accordance with
the provisions of the immediately preceding sentence.
(d) Notices. All notices and other communications provided
for or permitted hereunder shall be made in writing by hand-delivery,
registered first-class mail, next-day air courier or facsimile:
1. if to a Holder of the Transfer Restricted
Preferred Stock or any Participating Broker- Dealer, at the
most current address of such Holder or Participating
Broker-Dealer, as the case may be, set forth on the records of
the registrar under the Indenture, with a copy in like manner
to the Initial Purchaser as follows:
NatWest Capital Markets Limited
000 Xxxxxxxxxxx
Xxxxxx, XX0X 0XX
Xxxxxx Xxxxxxx
Attention: Xxxxx Xxxx
with a copy to:
White & Case
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile No: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
2. if to the Initial Purchaser, at the addresses\
specified in Section 10(d)(1);
3. if to the Company, as follows:
Source Media, Inc.
0000 Xxxxxx Xxxx Xxxx
-27-
30
Suite 1000
Xxxxxx, XX 00000
Attention: Xxxxxxx Xxxxx, Esq.
with a copy to:
Xxxxxxxx & Knight, P.C.
0000 Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; one
business day after being timely delivered to a next-day air courier; and when
receipt is acknowledged by the addressee, if sent by facsimile.
(e) Successors and Assigns. This Agreement shall inure
to the benefit of and be binding upon the successors and assigns of each of the
parties hereto; provided, however, that this Agreement shall not inure to the
benefit of or be binding upon a successor or assign of a Holder unless and to
the extent such successor or assign holds Registerable Preferred Stock.
(f) Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning thereof.
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED
TO CONTRACTS MADE AND PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO
SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
-28-
31
(i) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their best efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
(j) Preferred Stock Held by the Company or Their Affiliates.
Whenever the consent or approval of Holders of a specified percentage of
Registerable Preferred Stock is required hereunder, Registerable Preferred
Stock held by the Company or its affiliates (as such term is defined in Rule
405 under the Securities Act) shall not be counted in determining whether such
consent or approval was given by the Holders of such required percentage.
(k) Third Party Beneficiaries. Holders of Registerable
Preferred Stock and Participating Broker-Dealers are intended third party
beneficiaries of this Agreement and this Agreement may be enforced by such
Persons.
-29-
32
IN WITNESS WHEREOF, the parties have executed the Agreement as
of the date first written above.
Company:
SOURCE MEDIA, INC.
By: /s/ XXXXXXX X. XXXX
------------------------------
Name: Xxxxxxx X. Xxxx
Title: Chief Financial Officer
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above
written:
NATWEST CAPITAL MARKETS LIMITED
By: /s/ N. COULBECK
----------------------------
Name: NB Coulbeck
Title: Director
PRUDENTIAL SECURITIES INCORPORATED
By: /s/ XXXXXXXXXXX X. XXXXXX
----------------------------
Name: Xxxxxxxxxxx X. Xxxxxx
Title: Managing Director
-30-
33
SCHEDULE A
Piggy-Back Registration Rights
34
SCHEDULE B
Adjustments Reflecting Transfer Restricted Preferred Stock
