<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
______________
SCHEDULE 13D
(Rule 13d-101)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO.________)/1/
UC TELEVISION NETWORK CORP.
---------------------------
(Name of Issuer)
----------------
Common Stock
------------
(Title of Class of Securities)
------------------------------
902639103
-----------------
(CUSIP Number)
--------------
Rosemarie Thurston, Esq., Morris, Manning & Martin, L.L.P.
3343 Peachtree Road, N.E., 1600 Atlanta Financial Center
Atlanta, Georgia 30326 (404) 233-7000
-------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
April 25, 1997
--------------
(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject to this Schedule 13D, and is filing
this schedule because of Rule 13D-1 (b)(3) or (4), check the following box. [ ]
Note. Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1 (a) for other parties to whom copies
are to be sent.
(Continued on following pages)
(Page 1 of _____ Pages)
- ----------
/1/ The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures in a prior cover page.
The Information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 or otherwise to the liabilities of that section of the Act but shall be
subject to all other provisions of the Act (however, see the Notes).
<PAGE>
1. NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS:
U-C Holdings, L.L.C.
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*: (a) [ ]
(b) [ ]
3. SEC USE ONLY:
4. SOURCE OF FUNDS*: WC
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e): [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION: Delaware Limited Liability Company
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7. SOLE VOTING POWER:
8. SHARED VOTING POWER: 29,090,909
9. SOLE DISPOSITIVE POWER:
10. SHARED DISPOSITIVE POWER: 29,090,909
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON: 29,090,909
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*: [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11: 72.6%
14. TYPE OF REPORTING PERSON*: OO (limited liability company)
<PAGE>
1. NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS:
John R. Willis ###-##-####
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*: (a) [ ]
(b) [ ]
3. SEC USE ONLY:
4. SOURCE OF FUNDS*: AF
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e): [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION: U.S. Citizen
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7. SOLE VOTING POWER:
8. SHARED VOTING POWER: 29,090,909
9. SOLE DISPOSITIVE POWER:
10. SHARED DISPOSITIVE POWER: 29,090,909
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON: 29,090,909
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*: [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11: 72.6%
14. TYPE OF REPORTING PERSON*: IN
<PAGE>
1. NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS:
Avy H. Stein ###-##-####
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*: (a) [ ]
(b) [ ]
3. SEC USE ONLY:
4. SOURCE OF FUNDS*: AF
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e): [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION: U.S. Citizen
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7. SOLE VOTING POWER:
8. SHARED VOTING POWER: 29,090,909
9. SOLE DISPOSITIVE POWER:
10. SHARED DISPOSITIVE POWER: 29,090,909
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON: 29,090,909
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*: [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11: 72.6%
14. TYPE OF REPORTING PERSON*: IN
<PAGE>
1. NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS:
Beth F. Johnston ###-##-####
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*: (a) [ ]
(b) [ ]
3. SEC USE ONLY:
4. SOURCE OF FUNDS*: AF
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e): [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION: U.S. Citizen
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7. SOLE VOTING POWER:
8. SHARED VOTING POWER: 29,090,909
9. SOLE DISPOSITIVE POWER:
10. SHARED DISPOSITIVE POWER: 29,090,909
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON: 29,090,909
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*: [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11: 72.6%
14. TYPE OF REPORTING PERSON*: IN
<PAGE>
1. NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS:
Daniel M. Gill ###-##-####
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*: (a) [ ]
(b) [ ]
3. SEC USE ONLY:
4. SOURCE OF FUNDS*: AF
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e): [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION: U.S. Citizen
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7. SOLE VOTING POWER:
8. SHARED VOTING POWER: 29,090,909
9. SOLE DISPOSITIVE POWER:
10. SHARED DISPOSITIVE POWER: 29,090,909
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON: 29,090,909
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*: [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11: 72.6%
14. TYPE OF REPORTING PERSON*: IN
<PAGE>
1. NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS:
Daniel H. Blumenthal ###-##-####
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*: (a) [ ]
(b) [ ]
3. SEC USE ONLY:
4. SOURCE OF FUNDS*: AF
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e): [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION: U.S. Citizen
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7. SOLE VOTING POWER:
8. SHARED VOTING POWER: 29,090,909
9. SOLE DISPOSITIVE POWER:
10. SHARED DISPOSITIVE POWER: 29,090,909
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON: 29,090,909
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*: [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11: 72.6%
14. TYPE OF REPORTING PERSON*: IN
<PAGE>
Item 1. Security and Issuer.
- ------- -------------------
This Statement on Schedule 13D relates to the shares of Common Stock,
$.001 par value, of UC Television Network Corp. (the "Company"). The address of
the principal executive office of the Company is UC Television Network Corp.,
645 Fifth Avenue, East Wing, New York, New York 10022.
Item 2. Identity and Background
- ------- -----------------------
This Statement is filed by the following persons:
(a) U-C Holdings, L.L.C. ("Holdings"), a limited liability company
organized under the laws of the State of Delaware with its principal business
address at 227 West Monroe Street, Suite 4300, Chicago, Illinois 60606.
Holdings' principal business is investing in the securities of the Company.
(b) John R. Willis, an individual whose business address is 227 West Monroe
Street, Suite 4300, Chicago, Illinois 60606. Mr. Willis' principal occupation
is serving as a Manager and Founding Member of Willis Stein & Partners, L.L.C.,
the general partner of Willis Stein & Partners, L.P., a private equity
investment limited partnership. Mr. Willis is a citizen of the United States of
America.
(c) Avy H. Stein, an individual whose business address is 227 West Monroe
Street, Suite 4300, Chicago, Illinois 60606. Mr. Stein's principal occupation
is serving as a Manager and Founding Member of Willis Stein & Partners, L.L.C.,
the general partner of Willis Stein & Partners, L.P., a private equity
investment limited partnership. Mr. Stein is a citizen of the United States of
America.
(d) Beth F. Johnston, an individual whose business address is 227 West
Monroe Street, Suite 4300, Chicago, Illinois 60606. Ms. Johnston's principal
occupation is serving as a Founding Member of Willis Stein & Partners, L.L.C.,
the general partner of Willis Stein & Partners, L.P., a private equity
investment limited partnership. Ms. Johnston is a citizen of the United States
of America.
(e) Daniel H. Blumenthal, an individual whose business address is 227 West
Monroe Street, Suite 4300, Chicago, Illinois 60606. Mr. Blumenthal's principal
occupation is serving as a Founding Member of Willis Stein & Partners, L.L.C.,
the general partner of Willis Stein & Partners, L.P., a private equity
investment limited partnership. Mr. Blumenthal is a citizen of the United
States of America.
(f) Daniel M. Gill, an individual whose business address is 227 West Monroe
Street, Suite 4300, Chicago, Illinois 60606. Mr. Gill's principal occupation is
serving as a Founding Member of Willis Stein & Partners, L.L.C., the general
partner of Willis Stein & Partners, L.P., a private equity investment limited
partnership. Mr. Gill is a citizen of the United States of America.
In addition, information relating to the following entities and persons is
provided pursuant to General Instruction C to Schedule 13D:
(g) Willis Stein & Partners, L.P., a limited partnership organized under
the laws of the State of Delaware with its principal business address at 227
West Monroe Street, Suite 4300, Chicago, Illinois 60606. The principal business
of Willis Stein & Partners, L.P. is investing in equity securities. Willis
Stein & Partners, L.P. serves as the Managing Member of Holdings.
(h) Willis Stein & Partners, L.L.C., a limited liability company organized
under the laws of the State of Delaware with its principal business address at
227 West Monroe Street, Suite 4300,
<PAGE>
Chicago, Illinois 60606. The principal business of Willis Stein & Partners,
L.L.C. is serving as the General Partner of Willis Stein & Partners, L.P., a
private equity investment limited partnership.
During the past five years, none of the entities or persons listed above
has been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) or has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws, or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration
- ------- -------------------------------------------------
The funds used to acquire the Common Stock of the Company described in Item
5 below were taken from the equity contributions to capital of Holdings made by
its members. The purchase price of the securities reported herein, including
the Common Stock, Class C Warrant and rights pursuant to the Equity Protection
Agreements (hereinafter described) (collectively, the "Purchased Securities")
was an aggregate of $16,200,000. Holdings paid the purchase price by the
payment of $29,090.91 in cash and the delivery of a promissory note payable to
the Company in the amount of $16,170,909.09 (the "Note"). The Note provides that
it will be immediately due and payable upon the release of the Purchased
Securities from escrow pursuant to the Escrow Agreement described in Item 4
below.
Item 4. Purpose of Transaction
- ------- ----------------------
Holdings acquired the Purchased Securities for investment purposes on April
25, 1997 (the "Closing Date"). On April 24, 1997, two of the Company's
directors, Edward McLaughlin and Edward Weinberger, resigned. On the Closing
Date, the remaining two directors appointed four new directors designated by
Holdings and elected three new executive officers to be effective approximately
May 12, 1997. The change in the membership of the Board of Directors and the
election of new executive officers of the Company was described in an
Information Statement (the "14F-1 Information Statement") filed with the
Securities and Exchange Commission (the "Comission") on May 1, 1997 pursuant to
Section 14(f) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and Rule 14(f) thereunder. As disclosed in the 14F-1 Information
Statement, Holdings acquired, pursuant to a Purchase Agreement between the
Company and Holdings dated April 25, 1997 (the "Purchase Agreement"), 29,090,909
shares of Common Stock and a Class C Warrant to purchase an additional 3,863,662
shares of Common Stock and entered into certain Equity Protection Agreements
with the Company. The Equity Protection Agreements provide that Holdings shall
have the right to acquire additional shares of the Company's Common Stock at
such time as outstanding warrants and options to acquire Common Stock are
exercised by third parties in order to protect Holdings' percentage ownership
interest in the Company's Common Stock from dilution. On the Closing Date, the
Company, Holdings and LaSalle National Bank, as escrow agent, entered into an
Escrow Agreement pursuant to which the Company placed into escrow the purchase
price paid by Holdings for the Purchased Securities, and Holdings placed into
escrow the Purchased Securities. The Purchased Securities are to be released to
Holdings and the purchase price is to be released to the Company following
satisfaction of certain conditions set forth in the Escrow Agreement, as further
described in the 14F-1 Information Statement. If the conditions specified in
the Escrow Agreement to the release from escrow are not timely satisfied and
Holdings delivers instructions to the Escrow Agent, the Escrow Agent will
release the cash and the Note to Holdings and the Purchased Securities to the
Company, and all transactions contemplated by the Purchase Agreement will be
rescinded (including the appointment of new directors and officers) and the
Purchased Securities will no longer be outstanding.
<PAGE>
Pursuant to the Purchase Agreement, the Company intends to amend its
Certificate of Incorporation to increase the number of authorized shares of
Common Stock of the Company from 50,000,000 to 100,000,000 shares, effective as
of 20 days after the filing with the Commission and mailing to the stockholders
of the Company of an Information Statement on Schedule 14C pursuant to Section
14(c) of the Exchange Act and Regulation 14C thereunder.
Holdings may elect to acquire additional shares of Common Stock of the
Company or to sell shares. Any such determination may be based on a number of
factors, including the continued attractiveness of investment in the Company
shares at then prevailing market prices or the prices specified in Holdings'
Class C Warrant or the Equity Protection Agreements, as applicable, the number
of shares that are available for purchase, the price or prices thereof, general
market conditions and other similar factors. The persons identified in response
to Item 2 of this Statement will make the determination as to when or whether to
exercise Holdings' warrant to acquire additional shares of the Company's Common
Stock and when or whether to exercise Holdings' rights pursuant to the Equity
Protection Agreements based on these factors.
While they reserve the right to develop plans or proposals in the future
regarding the following items, at the present time none of the persons
identified in response to Item 2 of this Statement have any plans or proposals
which relate to or would result in any of the following:
(a) except as described above, the acquisition of additional securities of
the Company, or the disposition of securities of the Company;
(b) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Company or any of its subsidiaries;
(c) sale or transfer of a material amount of assets of the Company or any
of its subsidiaries;
(d) except as described above, any change in the present board of directors
or management of the Company, including any plans or proposals to change the
number or term of directors or to fill any existing vacancies on the board;
(e) any material change in the present capitalization or dividend policy of
the Company, other than the change in the number of authorized shares of Common
Stock described above;
(f) any other material change in the Company's business or corporate
structure;
(g) except as described above with respect to the proposed amendment to the
Company's Certificate of Incorporation, any changes in the Company's charter,
bylaws or instruments corresponding thereto or other actions which may impede
the acquisition of control of the Company by any person;
(h) causing a class of securities of the Company to be delisted from a
national securities exchange or cease to be authorized to be quoted in an inter-
dealer quotation system of a registered national security association;
(i) a class of equity securities of the Company becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Exchange Act; or
(j) any action similar to those enumerated above.
<PAGE>
Item 5. Interest in Securities of the Issuer.
- ------- -------------------------------------
(a) As of April 25, 1997, there were 40,075,766 shares of the Company's
Common Stock outstanding. Holdings directly owns 29,090,909 shares of the
Company's Common Stock, or 72.6%. Holdings also acquired on April 25, 1997 a
Class C Warrant entitling Holdings to acquire an additional 3,863,662 shares of
the Company's Common Stock, exercisable after two years from the date of
issuance, subject to certain acceleration provisions, at an exercise price of
$.55 per share, until seven years after the date of issuance. The Company and
Holdings also entered into certain Equity Protection Agreements pursuant to
which Holdings has the right to acquire additional shares of the Company's
Common Stock at such time as outstanding warrants and options to acquire the
Company's Common Stock are exercised by third parties in order to protect
Holdings' percentage ownership interest in the Company's Common Stock from
dilution. John R. Willis and Avy H. Stein (collectively, the "Managers"), as
the Managers of, and John R. Willis, Avy H. Stein, Beth F. Johnston, Daniel M.
Gill and Daniel H. Blumenthal (collectively, the "Founding Members"), as the
Founding Members of, Willis Stein & Partners, L.L.C., the general partner of
Willis Stein & Partners, L.P., which is the Managing Member of Holdings, may be
deemed to share the power to direct the voting and disposition of the shares of
Common Stock held by Holdings and may be deemed to beneficially own such shares.
(b) 29,090,909 shares of Common Stock are directly owned by Holdings. None
of the Founding Members directly owns any shares of the Company's Common Stock,
but the Founding Members may be deemed to share the power to vote or to direct
the vote as well as the power to dispose of or to direct the disposition of all
of the shares of Common Stock held by Holdings, by virtue of such persons'
status as Managers and/or Founding Members of Willis, Stein & Partners, L.L.C.,
the general partner of Willis, Stein & Partners, L.P., which is the Managing
Member of Holdings.
(c) Other than the securities acquired pursuant to the Purchase Agreement
described herein, there were no transactions in the class of securities reported
on that were effected during the past sixty (60) days or since the most recent
filing of Schedule 13D by the persons named in response to Paragraph (a).
(d) Pursuant to the Limited Liability Company Agreement of U-C Holdings,
L.L.C., dated April 25, 1997 (the "Operating Agreement"), the following persons
are members of Holdings and, as such, have the right to receive distributions
from Holdings: Jason Elkin, Joseph D. Gersh, John T. Dobson III and Willis
Stein & Partners, L.P. The sole investment of Holdings is its interest in
securities of the Company; therefore, any dividends paid by the Company to
Holdings will be distributed to the members of Holdings in accordance with the
distribution provisions of the Operating Agreement. As a result, the members of
Holdings have the right to receive dividends from, as well as the proceeds from
the sale of, securities of the Company held by Holdings.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
- ------ ---------------------------------------------------------------------
to Securities of the Issuer.
---------------------------
The Operating Agreement (described in Item 5(d) above and filed as an
exhibit hereto) provides that Willis, Stein & Partners, L.P., as the Managing
Member of Holdings, shall have the sole authority with respect to the transfer
and voting of the securities owned by Holdings. The Operating Agreement contains
provisions regarding the transfer and voting of the securities of the Company
held by Holdings.
<PAGE>
The Operating Agreement was entered into among the members of Holdings named in
response to Item 5(d) above.
Item 7. Material to be Filed as Exhibits.
- ------ --------------------------------
The following documents are filed as exhibits hereto:
(a) Joint Filing Agreement, dated May 5, 1997, among U-C Holdings, L.L.C.,
John R. Willis, Avy H. Stein, Beth F. Johnston, Daniel M. Gill and Daniel H.
Blumenthal.
(b) Purchase Agreement, dated April 25, 1997, between U-C Holdings, L.L.C.
and UC Television Network Corp.
(c) Limited Liability Company Agreement of U-C Holdings, L.L.C. dated April
25, 1997.
(d) Class C Warrant No. C-1 issued by UC Television Network Corp. to U-C
Holdings, L.L.C. dated April 25, 1997.
(e) Four separate Equity Protection Agreements, each dated as of April 25,
1997, between UC Television Network Corp. and U-C Holdings, L.L.C.
(f) Registration Rights Agreement, dated April 25, 1997, between UC
Television Network Corp. and U-C Holdings, L.L.C.
<PAGE>
SIGNATURES
After reasonable inquiry, and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct as of this 5th day of May, 1997.
U-C HOLDINGS, L.L.C.
By: Willis Stein & Partners, L.P.
Its Managing Member
By: Willis Stein & Partners, L.L.C.
Its General Partner
By: /s/ Avy H. Stein
----------------------------
Avy H. Stein
Its Manager
/s/ John R Willis
-------------------------------------------
John R. Willis
/s/ Avy H. Stein
-------------------------------------------
Avy H. Stein
/s/ Beth F. Johnston
-------------------------------------------
Beth F. Johnston
/s/ Daniel M. Gill
-------------------------------------------
Daniel M. Gill
/s/ Daniel H. Blumenthal
-------------------------------------------
Daniel H. Blumenthal
<PAGE>
EXHIBIT 4.1
JOINT FILING AGREEMENT
----------------------
The undersigned hereby agree that the Statement on Schedule 13D to which
this Agreement is attached, relating to shares of Common Stock, par value $.001
per share, of UC Television Network Corp., and any amendments to such Statement,
will be filed on behalf of each of the undersigned.
Agreed this 5th day of May, 1997.
U-C HOLDINGS, L.L.C.
By: Willis Stein & Partners, L.P.
Its Managing Member
By: Willis Stein & Partners, L.L.C.
Its General Partner
By: /s/ Avy H. Stein
----------------------------------------
Avy H. Stein
Its Manager
/s/ John r. Willis
----------------------------------------
John R. Willis
/s/ Avy H. Stein
----------------------------------------
Avy H. Stein
/s/ Beth F. Johnston
----------------------------------------
Beth F. Johnston
/s/ Daniel M. Gill
----------------------------------------
Daniel M. Gill
/s/ Daniel H. Blumenthal
----------------------------------------
Daniel H. Blumenthal
<PAGE>
EXHIBIT 4.2
================================================================================
PURCHASE AGREEMENT
DATED AS OF
APRIL 25, 1997
BY AND BETWEEN
UC TELEVISION NETWORK CORP.
AND
U-C HOLDINGS, L.L.C.
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
<C> <S> <C>
I. DEFINITIONS.............................................. 1
II. THE PURCHASE OF PURCHASED SECURITIES..................... 8
2.1 Authorization of Issue................................... 8
2.2 Purchase of Purchased Securities......................... 8
2.3 Closing.................................................. 8
2.4 Escrow................................................... 9
III. PURCHASER'S REPRESENTATIONS.............................. 9
3.1 Investment Intention..................................... 9
3.2 Accredited Investor...................................... 9
3.3 Corporate Existence...................................... 9
3.4 Corporate Power: Authorization: Enforceable Obligations.. 9
3.5 Information in Purchaser Proposal........................ 10
3.6 Use of Proceeds.......................................... 10
3.7 Declaration of Dividends................................. 10
IV. COMPANY'S REPRESENTATIONS AND WARRANTIES................. 10
4.1 Authorized and Outstanding Shares of Capital Stock....... 10
4.2 Authorization and Issuance of Purchased Securities....... 12
4.4 Corporate Existence: Compliance with Law................. 12
4.5 Subsidiaries............................................. 13
4.6 Corporate Power: Authorization: Enforceable Obligations.. 13
4.7 Financial Statements..................................... 14
4.8 Ownership of Property.................................... 14
4.9 Material Contracts: Indebtedness......................... 15
4.10 Environmental Protection................................. 15
4.11 Labor Matters............................................ 16
4.12 Other Ventures........................................... 16
4.13 Taxes.................................................... 16
4.14 No Litigation............................................ 17
4.15 Brokers.................................................. 18
4.16 Employment and Labor Agreements.......................... 18
4.17 Patents. Trademarks, Copyrights and Licenses............. 18
4.18 No Material Adverse Effect............................... 18
4.19 ERISA.................................................... 18
4.20 Registration Rights...................................... 20
4.21 Ordinary Course of Business.............................. 21
4.22 Full Disclosure.......................................... 21
</TABLE>
i
<PAGE>
<TABLE>
<C> <S> <C>
V. COVENANTS................................................ 21
5.1 Director and Officer Liability Insurance................. 21
5.2 Indemnification of Officer and Directors................. 21
5.3 Amendment to Certificate of Incorporation................ 21
5.4 Schedule 14F-1 Information Statement..................... 21
VI. CONDITIONS PRECEDENT..................................... 21
6.1 Conditions Precedent..................................... 21
VII. SECURITIES LAW MATTERS................................... 23
7.1 Legends.................................................. 23
7.2 Transfer of Restricted Securities........................ 24
VIII. EXPENSES................................................. 25
IX. LIMITATION ON CLAIMS OF PURCHASER........................ 25
9.1 Limitation............................................... 25
X. MISCELLANEOUS............................................ 26
10.1 Notices.................................................. 26
10.2 Binding Effect: Benefits................................. 27
10.3 Amendment................................................ 27
10.4 Successors and Assigns: Assignability.................... 27
10.5 Remedies................................................. 27
10.6 Section and Other Headings............................... 28
10.7 Severability............................................. 28
10.8 Entire Agreement......................................... 28
10.9 Counterparts............................................. 28
10.10 Publicity................................................ 28
10.11 Governing Law............................................ 28
10.12 Expenses................................................. 28
10.13 Negotiations............................................. 29
</TABLE>
ii
<PAGE>
Schedules
---------
Schedule 1.0 Annual Report
Schedule 1.1 Copies of Form Warrants
Schedule 4.1 Stock, Preferred Stock, Options and Warrants
Schedule 4.7 Financial Statements; Other Obligations
Schedule 4.8 Ownership of Property
Schedule 4.9 Material Contracts
Schedule 4.10 Environmental Matters
Schedule 4.14 Litigation
Schedule 4.16 Employment Contracts
Schedule 4.17 Patents, Trademarks, Etc.
Schedule 4.18 Material Adverse Effect
Schedule 4.19 ERISA
Schedule 4.20 Registration Rights
Exhibit A Form of Class C Warrant
Exhibit B-1 Equity Protection Agreement
Exhibit B-2 Equity Protection Agreement
Exhibit B-3 Equity Protection Agreement
Exhibit B-4 Equity Protection Agreement
Exhibit C Escrow Agreement
Exhibit D Registration Rights Agreement
Exhibit E Opinion of Company Counsel
Exhibit F Kauff Employment Agreement
Exhibit G Elkin Employment Agreement
Exhibit H Gersh Employment Agreement
Exhibit I Dobson Employment Agreement
iii
<PAGE>
PURCHASE AGREEMENT
------------------
THIS PURCHASE AGREEMENT, dated as of April 25, 1997, by and among UC
Television Network Corp., a Delaware corporation having an office at 645 Fifth
Avenue, East Wing, New York, New York 10022 ("Company"), and U-C Holdings,
L.L.C., a Delaware limited liability company ("Purchaser").
W I T N E S S E T H
-------------------
WHEREAS, Company has agreed to issue and sell to Purchaser, and Purchaser
has agreed to purchase from Company, upon the terms and conditions hereinafter
provided, 29,090,909 shares of Company's Common Stock, $0.001 par value per
share, a Class C Warrant to purchase 3,863,662 shares of Common Stock and the
Equity Protection Agreements (as defined below) (collectively, the "Purchased
Securities");
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, it is agreed as follows:
I. DEFINITIONS
"Affiliate" shall mean, with respect to any Person, (i) each Person that,
directly or indirectly, owns or controls, whether beneficially, or as a trustee,
guardian or other fiduciary, 5% or more of the Stock having ordinary voting
power in the election of directors of such Person, (ii) each Person that
controls, is controlled by or is under common control with such Person or any
Affiliate of such Person, (iii) each of such Person's officers, directors, joint
venturers and partners, (iv) any trust or beneficiary of a trust of which such
Person is the sole trustee or (v) any lineal descendants, ancestors, spouse or
former spouses (as part of a marital dissolution) of such Person (or any trust
for the benefit of such Person). For the purpose of this definition, "control"
of a Person shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of its management or policies, whether through the
ownership of voting securities, by contract or otherwise.
"Affiliated Group" means an affiliated group as defined in Section 1504 of
the Code (or any analogous combined, consolidated or unitary group defined under
state, local or foreign income tax law) of which Company is or has been a
member.
"Annual Report" shall mean the Annual Report of the Company on Form 10-KSB
for the fiscal year ended October 31, 1996, which has been filed with the SEC, a
copy of which is attached hereto as Schedule 1.0.
"Business Day" shall mean any day that is not a Saturday, a Sunday or a day
on which banks are required or permitted to be closed in the State of New York.
<PAGE>
"Charges" shall mean (A) all federal, state, county, city, municipal,
local, foreign or other governmental (including, without limitation, PBGC) taxes
at the time due and payable, levies, assessments, charges, liens, claims or
encumbrances upon or relating to (i) Company's employees, payroll, income or
gross receipts, (ii) Company's ownership or use of any of its assets, or (iii)
any other aspect of Company's business; or (B) any liability of Company for the
payment of any amounts of the type described in clause (A) arising as a result
of being (or ceasing to be) a member of any Affiliated Group (or being included
(or required to be included) in any tax return relating thereto).
"Class C Warrant" shall mean the Class C Warrant to be issued to Purchaser
to purchase 3,863,662 shares of Common Stock, subject to adjustment, in the form
of Exhibit "A" attached hereto.
"Closing" shall have the meaning set forth in Section 2.3 hereof.
"Closing Date" shall have the meaning set forth in Section 2.3 hereof.
"COBRA" shall have the meaning set forth in Section 4.19(m) hereof.
"Common Stock" shall mean the common stock, $0.001 par value per share, of
Company.
"Company Certificate of Incorporation" shall mean the Certificate of
Incorporation of Company, as amended.
"Environmental Laws" shall mean all federal, state and local laws,
statutes, ordinances and regulations, now or hereafter in effect, and in each
case as amended or supplemented from time to time, and any judicial or
administrative interpretation thereof, including, without limitation, any
applicable judicial or administrative order, consent decree or judgment,
relative to the applicable Real Estate, relating to the regulation and
protection of human health, safety, the environment and natural resources
(including, without limitation, ambient air, surface water, groundwater,
wetlands, land surface or subsurface strata, wildlife, aquatic species and
vegetation). Environmental Laws include but are not limited to the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended (42
U.S.C. (S) 9601 et seq.) ("CERCLA"); the Hazardous Material Transportation Act,
as amended (49 U.S.C. (S) 1801 et seq.); the Federal Insecticide, Fungicide, and
Rodenticide Act, as amended (7 U.S.C. (S) 136 et seq. ); the Resource
Conservation and Recovery Act, as amended (42 U.S.C. (S) 6901 et seq.) ("RCRA");
the Toxic Substance Control Act, as amended (15 U.S.C. (S) 2601 et seq.); the
Clean Air Act, as amended (42 U.S.C. (S) 740 et seq.); the Federal Water
Pollution Control Act, as amended (33 U.S.C. (S) 1251 et seq.); the Occupational
---
Safety and Health Act, as amended (29 U.S.C. (S) 651 et sec.) ("OSHA"); and the
-- ---
Safe Drinking Water Act, as amended (42 U.S.C. (S) 300f et seq.), and any and
all regulations promulgated thereunder, and all analogous state and local
counterparts or equivalents and any transfer of ownership notification or
approval statutes.
2
<PAGE>
"Environmental Liabilities and Costs" shall mean all liabilities,
obligations, responsibilities, remedial actions, losses, damages, punitive
damages, consequential damages, treble damages, costs and expenses (including,
without limitation, all fees, disbursements and expenses of counsel, experts and
consultants and costs of investigation and feasibility studies), fines,
penalties, sanctions and interest incurred as a result of any claim, suit,
action or demand by any Person, whether based in contract, tort, implied or
express warranty, strict liability, criminal or civil statute or common law
(including, without limitation, any thereof arising under any Environmental Law,
permit, order or agreement with any Governmental Authority) and which relate to
any health or safety condition regulated under any Environmental Law or in
connection with any other environmental matter or Spill or the presence of a
hazardous substance or threatened Spill of any Hazardous Substance.
"Equity Protection Agreements" shall mean the Equity Protection Agreements
of even date between Company and Purchaser, in the form of Exhibits "B-1", "B-
2", "B-3" and "B-4" attached hereto.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974 (or
any successor legislation thereto), as amended from time to time and any
regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to Company, any trade or
business (whether or not incorporated) under common control with Company and
which, together with Company, are treated as a single employer within the
meaning of Section 414(b), (c), (m) or (o) of the IRC, excluding Purchaser and
each other person which would not be an ERISA Affiliate if Purchaser did not own
any issued and outstanding shares of Stock of Company.
"Escrow Agreement" shall mean the Escrow Agreement dated April 25, 1997
between Purchaser, Company and LaSalle National Bank, escrow agent, in the form
of Exhibit "C" attached hereto.
"Escrow Release Date" shall be the date the Purchased Securities are
released from escrow to Purchaser in accordance with the Escrow Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and all rules and regulations promulgated thereunder.
"Financials" shall mean the financial statements referred to in Section 4.7
hereof.
"Fiscal Year" shall mean the twelve month period ending October 31.
Subsequent changes of the fiscal year of Company shall not change the term
"Fiscal Year," unless the Purchaser shall consent in writing to such change.
3
<PAGE>
"GAAP" shall mean generally accepted accounting principles in the United
States of America as in effect from time to time.
"Governmental Authority" shall mean any nation or government, any state or
other political subdivision thereof, and any agency, department or other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guaranteed Indebtedness" shall mean, as to any Person, any obligation of
such Person guaranteeing any Indebtedness, lease, dividend, or other obligation
("primary obligations") of any other Person (the "primary obligor'') in any
manner including, without limitation, any obligation or arrangement of such
Person (a) to purchase or repurchase any such primary obligation, (b) to advance
or supply funds (i) for the purchase or payment of any such primary obligation
or (ii) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency or any balance sheet condition
of the primary obligor, (c) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation, or (d) to indemnify the owner of such primary obligation against
loss in respect thereof.
"Guaranty" shall mean the guaranty of the obligations of the Purchaser
under the Note, executed by Willis Stein & Partners, L.P., Jason Elkin, Joseph
D. Gersh and John T. Dobson III on the date hereof.
"Hazardous Substances" shall have the meaning set forth in Section 4.10
hereof.
"Indebtedness" of any Person shall mean (i) all indebtedness of such Person
for borrowed money or for the deferred purchase price of property or services
(including, without limitation, reimbursement and all other obligations with
respect to surety bonds, letters of credit and bankers acceptances, whether or
not matured, but not including obligations to trade creditors incurred in the
ordinary course of business), (ii) all obligations evidenced by notes, bonds,
debentures or similar instruments, (iii) all indebtedness created or arising
under any conditional sale or other title retention agreements with respect to
property acquired by such Person (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), (iv) all capital lease obligations
required to be capitalized in accordance with GAAP, (v) all Guaranteed
Indebtedness, (vi) all Indebtedness referred to in clause (i), (ii), (iii), (iv)
or (v) above secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien upon or in
property (including, without limitation, accounts and contract rights) owned by
such Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness and (vii) all liabilities under Title IV of ERISA.
"IRC" shall mean the Internal Revenue Code of 1986, as amended, and any
successor thereto.
4
<PAGE>
"IRS" shall mean the Internal Revenue Service, or any successor thereto.
"Lien" shall mean any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, security interest,
easement or encumbrance, or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement perfecting a security interest
as to assets owned by the relevant Person under the Uniform Commercial Code or
comparable law of any jurisdiction).
"Material Adverse Effect" shall mean material adverse effect on the
business, assets, operations, prospects or financial or other condition of
Company.
"Material Contracts" means (i) all of Company's contracts, agreements,
leases or other instruments to which Company is a party or by which Company or
its properties are bound, which in Company's good faith judgment are required to
be disclosed as exhibits to the Company's annual report on Form 10-KSB, (ii) all
of Company's loan agreements, bank lines of credit agreements, indentures,
mortgages, deeds of trust, pledge and security agreements, factoring agreements,
conditional sales contracts, letters of credit or other debt instruments, (iii)
all material operating or capital leases for equipment to which Company is a
party, (iv) all non-competition and similar agreements other than as contained
in employment agreements to which Company is a party, (v) all contracts for the
employment of any officer or employee, (vi) all consulting agreements, (vii) any
guarantees by the Company, (viii) all distributor and sales agency agreements,
(ix) all other material contracts not made in the ordinary course of business,
and (x) all material contracts relating to the operation of Company or, the
production of or programming for Company or related to the technology utilized
by Company.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA, and to which Company or any ERISA Affiliate is
making, is obligated to make, has made or been obligated to make, contributions
on behalf of participants who are or were employed by any of them.
"Note" shall have the meaning set forth in Section 2.4 hereof.
"Options" shall mean the options granted pursuant to Company's 1990
Performance Equity Plan, 1996 Stock Incentive Plan; Outside Directors Stock
Option Plan and the nonqualified options for 1,350,000 shares granted to Peter
Kauff.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any successor
thereto.
"Pension Plan" shall have the meaning set forth in Section 4.19 hereof.
5
<PAGE>
"Permitted Indebtedness" means, with respect to Company, (i) taxes or
assessments or other governmental charges or levies, either not yet due and
payable or to the extent that nonpayment thereof is permitted by the terms of
this Agreement; (ii) obligations under workmen's compensation, unemployment
insurance, social security or public liability laws or similar legislation;
(iii) bids, tenders, contracts (other than contracts for the payment of money)
or leases to which Company is a party as lessee made in the ordinary course of
business; (iv) public or statutory obligations of Company; (v) all deferred
taxes and (vi) all unfunded pension fund and other employee benefit plan
obligations and liabilities but only to the extent permitted to remain unfunded
under applicable law.
"Person" shall mean any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, entity or
government (whether federal, state, county, city, municipal or otherwise,
including, without limitation, any instrumentality, division, agency, body or
department thereof).
"Plan" shall have the meaning set forth in Section 4.19 hereof.
"Purchased Securities" shall have the meaning set forth in the first
"Whereas" clause hereof.
"Preferred Stock" shall mean the preferred stock, $0.001 par value per
share of the Company.
"Registration Rights Agreement" shall mean the Registration Rights
Agreement between Company and Purchaser, substantially in the form attached
hereto as Exhibit "D," as such agreement may be amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof.
"Restricted Securities" means (i) the Purchased Securities issued
hereunder, and (ii) any securities issued and exchanged with respect to the
securities referred to in clause (i) by way of a stock dividend or stock split
or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization. As to any particular Restricted
Securities, such securities shall cease to be Restricted Securities when they
have been (a) effectively registered under the Securities Act and disposed of in
accordance with the registration statement covering them, (b) been distributed
to the public through a broker, dealer or market maker pursuant to Rule 144 (or
any similar provision then in force) under the Securities Act or become eligible
for sale pursuant to Rule 144(k) (or any similar provision then in force) under
the Securities Act or (c) been otherwise transferred and new certificates for
them not bearing the Securities Act legend set forth in Section 7.1 have been
delivered by Company in accordance with Section 7.2. Whenever any particular
securities cease to be Restricted Securities, the holder thereof shall be
entitled to receive from Company, without expense, new securities of like tenor
nor bearing a Securities Act legend of the character set forth in Section 7.1.
6
<PAGE>
"Retiree Welfare Plan" shall refer to any Welfare Plan providing for
continuing coverage or benefits for any participant or any beneficiary of a
participant after such participant's termination of employment, other than
continuation coverage provided pursuant to Section 4980B of the IRC and at the
sole expense of the participant or the beneficiary of the participant.
"SEC" shall mean the U.S. Securities and Exchange Commission, or any
successor thereto.
"Securities Act" shall mean the Securities Act of 1933, as amended, and all
rules and regulations promulgated thereunder.
"Spill" shall have the meaning set forth in Section 4.10.
"Stock" shall mean all shares, options, warrants, general or limited
partnership interests, limited liability company membership interest,
participations or other equivalents (regardless of how designated) of or in a
corporation, partnership, limited liability company or equivalent entity whether
voting or nonvoting, including, without limitation, common stock, preferred
stock, or any other equity security (as such term is defined in Rule 3a11-1 of
the General Rules and Regulations promulgated by the SEC under the Exchange
Act).
"Subsidiary" shall mean, with respect to any Person, (a) any corporation of
which an aggregate of more than 50% of the outstanding Stock having ordinary
voting power to elect a majority of the board of directors of such corporation
(irrespective of whether, at the time, Stock of any other class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time, directly or indirectly, owned
legally or beneficially by such Person and/or one or more Subsidiaries of such
Person, and (b) any partnership or other entity in which such Person and/or one
or more Subsidiaries of such Person shall have an interest (whether in the form
of voting or participation in profits or capital contribution) of more than 50%.
"Transaction Documents" shall mean this Agreement, the Registration Rights
Agreement, the Class C Warrant, the Equity Protection Agreements, the Escrow
Agreement, the Employment Agreements, the Guaranty, the Note and all
certificates and other documents related to the transactions contemplated by
this Agreement.
"Unit Purchase Option" shall mean the option, dated April 26/May 28, 1996,
issued to Barington Capital Group, L.P. for the purchase of the aggregate of
3.44 units at an exercise price of $100,000 per unit, each unit consisting of
142,857 shares of Common Stock and one warrant to purchase 142,857 shares of
Common Stock at an exercise price of $1.29.
"Warrants" shall mean Company's Class A Redeemable Warrants; Class B
Redeemable Warrants; and, to the extent presently unexercised, Units consisting
of two (2) shares of Common Stock, one (1) Class A Redeemable Warrant and one
(1) Class B Redeemable Warrant; and Private Placement Warrants, copies of which
forms are attached hereto as Schedule 1.1.
7
<PAGE>
"Welfare Plan" shall mean any welfare plan, as defined in Section 3(1) of
ERISA, which is maintained or contributed to by Company or any ERISA Affiliate.
References to this "Agreement" shall mean this Purchase Agreement,
including all amendments, modifications and supplements and any exhibits or
scheduler to any of the foregoing, and shall refer to the Agreement as the same
may be in effect at the time such reference becomes operative.
Any accounting term used in this Agreement shall have, unless otherwise
specifically provided herein, the meaning customarily given such term in
accordance with GAAP, and all financial computations hereunder shall be
computed, unless otherwise specifically provided herein, in accordance with GAAP
consistently applied. That certain terms or computations are explicitly modified
by the phrase "in accordance with GAAP" shall in no way be construed to limit
the foregoing. The words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement, as a whole, including the Exhibits and
Schedules hereto, as the same may from time to time be amended, modified or
supplemented, and not to any particular section, subsection or clause contained
in this Agreement. Wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular and the
plural, and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, the feminine and the neuter.
II. THE PURCHASE OF PURCHASED SECURITIES
2.1 Authorization of Issue. Prior to the Closing, Company shall have duly
----------------------
authorized the issuance and sale of the Purchased Securities.
2.2 Purchase of Purchased Securities. Subject to the terms and conditions
--------------------------------
set forth in this Agreement, Purchaser does hereby subscribe for and purchase
from Company, and Company agrees to issue and sell to Purchaser, on the Closing
Date an aggregate of 29,090,909 shares of Common Stock, the Class C Warrant and
the purchase rights granted pursuant to the Equity Protection Agreements.
The aggregate purchase price for the Common Stock subscribed for by
Purchaser is $16,000,000, payable in full on the Closing Date as follows:
$29,090.91 in cash at Closing and $15,970,909.09 pursuant to the Note; and the
aggregate purchase price for the Class C Warrant and the purchase rights granted
pursuant to the Equity Protection Agreements shall be $200,000 payable on the
Closing Date pursuant to the Note. The aggregate principal amount of the Note
shall be $16,170,909.09.
2.3 Closing. The closing of the purchase and sale of the Purchased
-------
Securities (the "Closing") shall take place simultaneously with the execution of
this Agreement (the "Closing Date") at the offices of Kirkland & Ellis, 153 East
53rd Street, New York, New York, or such other place as shall be mutually agreed
to by the parties hereto.
8
<PAGE>
On the Closing Date, Company will deliver to the Purchaser a certificate
representing the Common Stock, the Class C Warrant and the executed Equity
Protection Agreements representing the Purchased Securities to be purchased by
the Purchaser registered in the name of Purchaser against delivery by Purchaser
of the purchase price therefor by payment of cash and delivery of the Note to
Company in accordance with Section 2.2 hereof.
2.4 Escrow. On the date hereof, Purchaser shall place in escrow pursuant
------
to the terms of the Escrow Agreement the Purchased Securities and Company shall
place in escrow pursuant to the terms of the Escrow Agreement the cash and
Promissory Note payable to Company from Purchaser as partial payment of the
Purchase Price (the "Note") for the Purchased Securities and the rights and
benefits pursuant to the Equity Protection Agreements. The Purchased Securities
shall be released from escrow in accordance with the terms and provisions of the
Escrow Agreement. Purchaser shall also place into escrow resignations of the
officers and directors appointed pursuant to Section 6.1(i) hereof to be
effective if the purchase and sale is rescinded in accordance with the terms of
the Escrow Agreement.
III PURCHASER'S REPRESENTATIONS
Purchaser makes the following representations and warranties to Company,
each and all of which shall survive the execution and delivery of this Agreement
and the Closing hereunder:
3.1 Investment Intention. Purchaser is purchasing the Purchased
--------------------
Securities for its own account, for investment purposes and not with a view to
the distribution thereof. Purchaser will not, directly or indirectly, offer,
transfer, sell, assign, pledge, hypothecate or otherwise dispose of any of the
Purchased Securities (or solicit any offers to buy, purchase, or otherwise
acquire any of the Purchased Securities), except in compliance with the
Securities Act.
3.2 Accredited Investor. Purchaser is an "accredited investor" (as that
-------------------
term is defined in Rule 501 of Regulation D under the Securities Act) and by
reason of its business and financial experience, it has such knowledge,
sophistication and experience in business and financial matters as to be capable
of evaluating the merits and risks of the prospective investment, is able to
bear the economic risk of such investment and it is able to afford a complete
loss of such investment.
3.3 Corporate Existence. Purchaser is a limited liability company duly
-------------------
organized, validly existing and in good standing under the laws of its
jurisdiction of formation.
3.4 Corporate Power: Authorization: Enforceable Obligations. The
-------------------------------------------------------
execution, delivery and performance by Purchaser of the Transaction Documents to
be executed by it: (i) are within Purchaser's power, as applicable; (ii) have
been duly authorized by all necessary action, as applicable; (iii) are not in
contravention of any provision of Purchaser's governing documents, as
applicable; and (iv) will not violate any law or regulation, or any order or
decree of any court or governmental instrumentality binding on Purchaser.
Purchaser has full power and authority to
9
<PAGE>
perform its obligations under the Transaction Documents. The Transaction
Documents to which Purchaser is a party have each been duly executed and
delivered by Purchaser and constitute the legal, valid and binding obligations
of Purchaser, enforceable against it in accordance with their respective terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity).
3.5 Information in Purchaser Proposal. The factual information pertaining
---------------------------------
to Willis Stein & Partners, L.P., Jason Elkin and Joseph Gersh and their
respective affiliates contained in the brochure prepared by Willis Stein &
Partners, L.P., dated March 20, 1997, is correct in all material respects.
3.6 Use of Proceeds. As of the Closing Date, the Purchaser intends to
---------------
cause Company to use the proceeds of the investment contemplated hereunder for
building and installing equipment at additional campus locations as and when
contracted; additional personnel; program development; and working capital
needs.
3.7 Declaration of Dividends. As of the Closing Date, the Purchaser has
------------------------
no present intention of causing Company to pay dividends or distribute funds to
it.
IV. COMPANY'S REPRESENTATIONS AND WARRANTIES
Company makes the following representations and warranties to each
Purchaser, each and all of which shall survive the execution and delivery of
this Agreement and the Closing hereunder:
4.1 Authorized and Outstanding Shares of Capital Stock. After giving
--------------------------------------------------
effect to the Closing, the authorized capital stock of Company consists of
50,000,000 shares of Common Stock, $0.001 par value per share, of which
40,075,766 shares will be issued and outstanding on the Closing Date, including
the Purchased Securities, of which 376,945 shares are reserved for issuance upon
exercise of the Class A Warrants; 2,951,027 shares are reserved for issuance
upon exercise of the Class B Warrants; 4,914,283 shares are reserved for
issuance upon the exercise of the Private Placement Warrants; 2,076,591 shares
are reserved for issuance upon exercise of the Options and 982,856 shares are
reserved for issuance upon the exercise of the Unit Purchase Options. No shares
will be reserved for the Class C Warrant on the Closing Date. The following
table sets forth the capital structure as it relates to outstanding Warrants and
Options of the Company after giving effect to the issuance of the Purchased
Securities on April 25, 1997.
10
<PAGE>
<TABLE>
<CAPTION>
NUMBER STOCK STOCK EXERCISABLE EXERCISE PRICE EXERCISE PRICE
OUTSTANDING EXERCISABLE INTO INTO AFTER CLOSING PRIOR TO CLOSING AFTER CLOSING
PRIOR TO CLOSING
<S> <C> <C> <C> <C><C> <C><C>
Class A Warrants 144,979 376,945 376,945 $ 11.5161/1/ $ 11.5161/1/
Class B Warrants 2,270,021 2,951,027 2,951,027 $ 6.9096 $ 6.9096
IPO Unit Purchase 133,929/2/ 790,181 790,181/1/ $ 25.4817/1/ $ 25.4817/1/
Options
Private Placement 4,914,293 4,914,293 4,914,293 $ 1.2900 $ 1.2900
Warrants
Unit Purchase 3.44 982,856 1,001,482 $ 284,285.4300 $ 280,661.9974/1/
Options -
Barington
Options prior 1,064,091
after 2,076,591
</TABLE>
* For all of Stock, not per share.
1. Represents amount payable to exercise unit and underlying warrants.
2. Originally 105,000 and adjusted to 133,929 as a result of interim anti-
dilution adjustments (Expires 6/10/97). Each Unit Purchase Option represents
two Common Shares and one Class A and one Class B Warrant.
Before giving effect to this transaction, each Class A Warrant is
exercisable into 1.3 shares of Common Stock and 1 Class B Warrant. Each Class B
Warrant is exercisable into 1.3 shares of Common Stock. Each Private Placement
Warrant is exercisable for 1.0 shares of Common Stock. Each Unit Purchase Option
is exercisable for 142,857 shares of Common Stock and one (1) Warrant to
purchase 142,857 shares of Common Stock for each unit and there are 3.44 units
outstanding.
There are also 2,000,000 shares of Preferred Stock, $0.001 par value per
share authorized, of which 3,333 shares will be issued and outstanding on the
Closing Date. All of such issued and outstanding Stock of the Company,
including, without limitation, the 29,090,909 shares of Common Stock included as
part of the Purchased Securities, is validly issued, fully paid and non-
assessable. Schedule 4.1 hereto or the Annual Report contains a complete and
correct list of all stockholders of Company owning, to the knowledge of Company,
more than 5% of the outstanding Stock of Company and the number of shares or
warrants owned by each. All Options and the holders of each of the Options and
certain other information pertaining to the Options are listed on Schedule 4.1.
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<PAGE>
Except as set forth on Schedule 4.1 or the Annual Report or the outstanding
Warrants or the Unit Purchase Options referenced above or the Equity Protection
Agreements, (i) there is no existing option, warrant, call, commitment or other
agreement to which Company is a party requiring, and there are no convertible
securities of Company outstanding which upon conversion would require, the
issuance of any additional shares of Stock of Company or other securities
convertible into shares of equity securities of Company, (ii) there are no
agreements or obligations (contingent or otherwise) requiring Company to
repurchase or otherwise acquire or retire any shares of its capital stock or any
warrants, options or other rights to acquire its capital stock, and (iii) there
are no agreements to which Company is a party or, to the knowledge of Company,
to which any stockholder or warrant holder of Company is a party, with respect
to the voting or transfer of the Stock of Company. Except as set forth on
Schedule 4.1 or the Annual Report, there are no stockholders' preemptive rights
or rights of first refusal or other similar rights with respect to the issuance
of the Purchased Securities by Company. True and correct copies of the
certificate of incorporation and by-laws of Company have been delivered to
Purchaser.
4.2 Authorization and Issuance of Purchased Securities. The issuance of
--------------------------------------------------
the Purchased Securities has been duly authorized by all necessary corporate
action on the part of Company and, upon delivery to Purchaser of certificates
therefor against payment in accordance with the terms hereof, the Purchased
Securities and the purchase rights granted pursuant to the Equity Protection
Agreements will have been validly issued and fully paid and non-assessable, free
and clear of all pledges, liens, encumbrances and preemptive rights. Subject to
the amendment of the Certificate of Incorporation of the Company increasing the
number of authorized shares of Common Stock, the issuance of shares upon
exercise of the Class C Warrant and the purchase rights granted pursuant to the
Equity Protection Agreements has been duly authorized by all necessary corporate
action on the part of Company and, when issued upon exercise of the Class C
Warrant and the purchase rights granted pursuant to the Equity Protection
Agreements and payment of the exercise price, such Common Stock will have been
validly issued and fully paid and non-assessable. Subject to increase in
authorized Common Stock, the Company has duly reserved 3,863,662 shares of
Common Stock for issuance pursuant to the terms of the Class C Warrant.
4.3 Securities Laws. In reliance on the representations of Purchaser
---------------
contained in Section 3.1 and 3.2, the offer, issuance, sale and delivery of the
Purchased Securities, as provided in this Agreement, are exempt from the
registration requirements of the Securities Act and all applicable state
securities laws, and are otherwise in compliance with such laws. Neither Company
nor any Person acting on its behalf has taken or will take any action
(including, without limitation, any offering of any securities of Company under
circumstances which would require the integration of such offering with the
offering of the Purchased Securities under the Securities Act and the rules and
regulations of the SEC thereunder) which might subject the offering, issuance or
sale of the Purchased Securities including, but not limited to, the purchase
rights granted pursuant to the Equity Protection Agreements to the registration
requirements of Section 5 of the Securities Act. No information contained in
the documents filed with the SEC contains any untrue statement of a material
fact, or omits to state a material fact necessary to make the statements
contained therein not misleading in light of the circumstances under which made.
4.4 Corporate Existence: Compliance with Law. Company (i) is a
----------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware (ii) except as indicated on Schedule 4.4 is duly
qualified as a foreign corporation and in good standing under the laws of
Massachusetts and New York and each jurisdiction where its ownership or lease of
property or the conduct of its business requires such qualification (except for
jurisdictions in which such failure to so qualify or to be in good standing
would not have a Material Adverse Effect); (iii) has the requisite corporate
power and authority and the legal right to own, pledge, mortgage or otherwise
encumber and operate its properties, to lease the property it operates under
lease, and to
12
<PAGE>
conduct its business as now being conducted in all material respects; (iv) has,
or has applied for, all material licenses, permits, consents or approvals from
or by, and has made all material filings with, and has given all material
notices to, all Governmental Authorities having jurisdiction, to the extent
required for such ownership, operation and conduct; (v) is in compliance with
its certificate of incorporation and by-laws in all material respects; and (vi)
is in compliance with all applicable provisions of applicable laws, including,
but not limited to, the Securities Act and the Exchange Act, except for such
non-compliance which would not have a Material Adverse Effect. The Company has
timely filed all reports with the SEC as is required by the Securities Act and
Exchange Act; and the Rule 144 exemption is available to qualified holders of
Stock of the Company.
4.5 Subsidiaries. There currently exist no Subsidiaries of Company and
------------
Company has no equity interest in any other Person.
4.6 Corporate Power: Authorization: Enforceable Obligations. The
-------------------------------------------------------
execution, delivery and performance by Company of this Agreement, the other
Transaction Documents to which it is a party and all instruments and documents
to be delivered by Company, the issuance and sale of the Purchased Securities
and the consummation of the other transactions contemplated by any of the
foregoing: (i) are within Company's corporate power and authority; (ii) have
been duly authorized by all necessary or proper corporate action; (iii) are not
in contravention of any provision of Company's Certificate of Incorporation or
by-laws; (iv) will not violate any law or regulation, or any order or decree of
any court or governmental instrumentality; (v) subject to the terms of that
certain Agreement with Barington Capital Group, L.P., dated April 26, 1996, and
the obligation of Company to reserve Common Stock for the exercise of the
Warrants and Options, will not conflict with or result in the breach or
termination of, constitute a default under or accelerate any performance
required by, any indenture, mortgage, deed of trust, lease, agreement or other
instrument to which Company is a party or by which Company or any of their
property is bound; (vi) will not result in the creation or imposition of any
Lien upon the capital stock or any of the property of Company; and (vii) do not
require the consent or approval of, or any filing with, any Governmental
Authority or any other Person (except to the extent previously obtained or
made). The execution, delivery and performance of this Agreement and the
transactions contemplated herein do not require approval or consent of the
shareholders or other holders of Stock of Company or the approval or
authorization of any Governmental Authority, NASDAQ, other securities exchange
or any other Person. At or prior to the Closing Date, each of this Agreement
and the other Transaction Documents shall have been duly executed and delivered
by Company and each shall then constitute a legal, valid and binding obligation
of Company, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).
4.7 Financial Statements.
--------------------
13
<PAGE>
(a) The audited financial statements of the Company dated as of
October 31, 1996 (the "Financials") have been prepared in accordance with the
books and records of the Company, present fairly the financial condition of
Company as of the respective dates indicated and the results of operations for
the respective periods indicated, and have been prepared in accordance with GAAP
applied on a consistent basis.
(b) Company has delivered to Purchaser copies of the Annual Report.
In addition, Company has delivered to Purchaser a copy of its Annual Report to
Shareholders with respect to the fiscal year ended October 31, 1996, proxy
statements relating to the 1997 annual meeting of shareholders and copies of its
quarterly reports filed with the SEC of Form 10-QSB for the periods ended
January 31, 1997, July 31, 1996, April 30, 1996 and January 31, 1996; and the
Annual Report on Form 10-KSB as filed with the SEC for the fiscal years ended
October 31, 1996 and October 31, 1995 and the related annual report to
shareholders with respect to said fiscal year ended and the proxy statement
related to the 1996 annual meeting of stockholders.
(c) Except as set forth on Schedule 4.7 or the Annual Report, Company
has no material obligations, contingent or otherwise, including, without
limitation, liabilities for Charges, long-term leases or long-term commitments
which are not reflected in the Financials, other than those incurred since
October 31, 1996, in the ordinary course of business (none of which is a
liability resulting from breach of contract, breach of warranty, tort,
infringement, or any claim or lawsuit).
(d) No dividends or other distributions have been declared, paid or
made upon any Stock of Company, nor has any Stock of Company been redeemed,
retired, purchased or otherwise acquired for value by Company since October 31,
1996.
4.8 Ownership of Property.
---------------------
(a) The Company does not own any real estate. Except as set forth on
Schedule 4.8, Company owns, has a valid leasehold interest in, or has a valid
license to use, all material assets, properties and rights, whether tangible or
intangible, necessary for the conduct of its business as presently conducted and
as presently proposed to be conducted.
(b) All real property leased by Company is set forth on Schedule 4.8
or the Annual Report. Each of such leases is valid and enforceable in accordance
with its terms (subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity)) and is in full force and effect. Company has
delivered to Purchaser true and complete copies of each of such leases set forth
on Schedule 4.8(b) or the Annual Report and all documents affecting the rights
or obligations of Company, including, without limitation, any non-disturbance
and recognition
14
<PAGE>
agreements, subordination agreements, attornment agreements and agreements
regarding the term or rental of any of the leases. Except as set forth on
Schedule 4.8 or the Annual Report, the Company is not in default of its
obligations under any material lease or has it delivered or received any notice
of default under any such lease, nor to the knowledge of the Company has any
event occurred which, with the giving of notice, the passage of time or both,
would constitute a default under any such lease.
(c) Except as disclosed on Schedule 4.8 or the Annual Report, Company
is not obligated under or a party to, any option, right of first refusal or any
other contractual right to purchase, acquire, sell, assign or dispose of any
real property leased by Company.
4.9 Material Contracts: Indebtedness. Schedule 4.9 or the Annual Report
--------------------------------
contains a true, correct and complete list and description of all Material
Contracts. Each Material Contract is a valid and binding agreement of Company
enforceable against Company in accordance with its terms (subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and subject, as
to enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity)), and Company has no
knowledge that any Material Contract is not a valid and binding agreement
against the other parties thereto. Except as set forth in Schedule 4.9 or the
Annual Report, Company is not in material default or breach (whether with or
without the passage of time, the giving of notice or both) or in receipt of any
claims of default or breach, nor to Company's knowledge is any third party in
default or breach, under or with respect to any Material Contract. Except as set
forth on Schedule 4.9 or the Annual Report, Company has no Indebtedness, except
Permitted Indebtedness.
4.10 Environmental Protection.
------------------------
(a) To Company's actual knowledge (for purposes of this Section 4.10
the actual knowledge of the Company shall mean the actual knowledge of Peter
Kauff or Alan Pearl after due inquiry), all real property owned, leased or
otherwise operated by Company (a "Facility") is free of contamination from any
substance, waste or material (i) currently identified to be toxic or hazardous
pursuant to, or which may result in liability under, any Environmental Law or
(ii) within the definition of a substance which is toxic or hazardous under any
Environmental Law, including, without limitation, any asbestos, PCB, radioactive
substance, methane, volatile hydrocarbons, industrial solvents, oil or petroleum
or chemical liquids or solids, liquid or gaseous products, or any other material
or substance which has in the past or could at any time in the future cause or
constitute a health, safety, or environmental hazard to any Person or property
or result in any Environmental Liabilities and Costs ("Hazardous Substance") of
more than $10,000 or which, in either case, could have a Material Adverse
Effect. Neither Company has caused or suffered to occur any release, Spill,
migration, leakage, discharge, spillage, uncontrolled loss, seepage, or
filtration of Hazard Substances at or from the Facility (a "Spill") which could
result in Environmental Liabilities and Costs in excess of $10,000.
15
<PAGE>
(b) Company and each Subsidiary has generated, treated, stored and
disposed of any Hazardous Substances in full compliance with applicable
Environmental Laws, except for such non-compliances which would not have a
Material Adverse Effect.
(c) Company and each Subsidiary has obtained, or has applied for, and
is in full compliance with and in good standing under all permit required under
Environmental Laws (except for such failures which would not have a Material
Adverse Effect) and neither Company has any knowledge of any proceedings to
substantially modify or to revoke any such permit.
(d) There are no investigations, proceedings or litigation pending or,
to Company's knowledge, threatened, affecting or against Company or the
Facilities relating to Environmental Laws or Hazardous Substances.
(e) Since January 1, 1996, the Company has not received any
communication or notice (including, without limitation, requests for
information) indicating the potential of Environmental Liabilities and Costs
against Company.
4.11 Labor Matters.
-------------
(a) There are no strikes or other labor disputes against Company
pending or, to Company's knowledge, threatened. Hours worked by and payment made
to employees of Company have not been in violation of the Fair Labor Standards
Act or any other applicable law dealing with such matters. All payments due from
Company on account of employee health and welfare insurance have been paid or
accrued as a liability on the books of Company. There is no organizing activity
involving Company pending or, to Company's knowledge, threatened by any labor
union or group of employees. There are no representation proceedings pending or,
to Company's knowledge, threatened with the National Labor Relations Board, and
no labor organization or group of employees of Company has made a pending demand
for recognition. There are no complaints or charges against Company pending or,
to Company's knowledge, threatened to be filed with any federal, state, local or
foreign court, governmental agency or arbitrator based on, arising out of, in
connection with, or otherwise relating to the employment or termination of
employment by Company of any individual.
(b) The Company is not, and during the five years preceding the date
hereof was not, a party to any labor or collective bargaining agreement and
there are no labor or collective bargaining agreements which pertain to
employees of Company.
4.12 Other Ventures. The Company is not engaged in any joint venture or
--------------
partnership with any other Person.
4.13 Taxes. All federal, state, local and foreign tax returns, reports
-----
and statements required to be filed by Company and each Affiliated Group have
been timely filed with the
16
<PAGE>
appropriate Governmental Authority except where the failure to file such report
or statement would not have a Material Adverse Effect and all such returns,
reports and statements are true, correct and complete in all material respects.
All Charges and other impositions due and payable for the periods covered by
such returns, reports and statements have been paid prior to the date on which
any fine, penalty, interest or late charge may be added thereto for nonpayment
thereof, or any such fine, penalty, interest or late charge has been paid.
Proper and accurate amounts have been withheld by Company from its employees,
independent contractors, or other third parties for all periods in full and
complete compliance with the tax, social security and unemployment withholding
provisions of applicable federal, state, local and foreign law and such
withholdings have been timely paid to the respective governmental agencies.
Company is not a member of an Affiliated Group. Company has not executed or
filed with the IRS or any other Governmental Authority any agreement or other
document extending, or having the effect of extending, the period for assessment
or collection of any Charges. No tax audits or other administrative or judicial
proceedings are pending or threatened with regard to any Charges for which
Company may be liable and no assessment of Charges is proposed against the
Company. Company has not filed a consent pursuant to IRC Section 341(f) or
agreed to have IRC Section 341(f)(2) apply to any dispositions of subsection (f)
assets (as such term is defined in IRC Section 341(f)(4)). None of the property
owned by Company is property which such company is required to treat as being
owned by any other Person pursuant to the provisions of Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended, and in effect immediately prior to
the enactment of the Tax Reform Act of 1986 or is "tax-exempt" use property,
within the meaning of IRC Section 168(h). Company has not agreed or has been
requested to make any adjustment under IRC Section 481(a) by reason of a change
in accounting method or otherwise. Company has no obligation under any written
tax sharing agreement. Company is not a party to or bound by any tax allocation
or tax sharing agreement and has no current or potential contractual obligation
to indemnify any other person with respect to any Charges. Company has not made
any payments, and is not and will not become obligated (under any contract
entered into on or before the Closing Date) to make any payments, that will be
non-deductible under Section 280G of the IRC (or any corresponding provision of
state, local or foreign income tax law). Company will not be required (A) as a
result of a change in method of accounting for a taxable period ending on or
prior to the Closing Date, to include any adjustment in taxable income for any
taxable period (or portion thereof) ending after the Closing Date or (B) as a
result of any deferred intercompany gain described in Treasury Regulation
Sections 1.1502-13 of former Treasury Regulations Section 1.1502-14 or any
excess loss account described in Treasury Regulation Section 1.1502-19 (or any
corresponding or similar provision or administrative rule of federal, state,
local or foreign income tax law), to include any item of income in taxable
income for any taxable period (or portion thereof) ending after the Closing
Date. Company has not been a member of an Affiliated Group other than one of
which Company was the common parent, or filed or been included in a combined,
consolidated or unitary income tax return, other than one filed by Company.
4.14 No Litigation. Except as set forth on Schedule 4.14, no action,
-------------
claim or proceeding is now pending or, to the knowledge of Company, threatened
against Company (or to Company's knowledge, pending or threatened against or
affecting any of the officers, directors or employees
17
<PAGE>
of Company with respect to its business or proposed business activities), or
pending or threatened by Company against any third party, at law, in equity or
otherwise, before any court, board, commission, agency or instrumentality of any
federal, state, or local government or of any agency or subdivision thereof, or
before any arbitrator or panel of arbitrators.
4.15 Brokers. No broker or finder acting on behalf of Company brought
-------
about the consummation of the transactions contemplated pursuant to this
Agreement and Company has no obligation to any Person in respect of any finder's
or brokerage fees (or any similar obligation) in connection with the
transactions contemplated by this Agreement. Company is solely responsible for
the payment of all such finder's or brokerage fees.
4.16 Employment and Labor Agreements. Except as set forth on Schedule
-------------------------------
4.16 or the Annual Report, there are no employment, consulting or management
agreements covering management of Company.
4.17 Patents. Trademarks, Copyrights and Licenses. Company owns all
--------------------------------------------
licenses, patents, patent applications, copyrights, service marks, trademarks
and registrations and applications for registration thereof, and trade names
necessary to continue to conduct its business as heretofore conducted by it and
now being conducted by it, each of which is listed, together with Patent and
Trademark Office or Copyright Office application or registration numbers, where
applicable, on Schedule 4.17 hereto or the Annual Report. To Company's
knowledge, Company conducts its businesses without infringement or claim of
infringement of any license, patent, copyright, service mark, trademark, trade
name, trade secret or other intellectual property right of others and Company
has received no notices claiming any such infringement. To Company's knowledge,
there is no infringement by others of any license, patent, copyright, service
mark, trademark, trade name, trade secret or other intellectual property right
of Company.
4.18 No Material Adverse Effect. To the Company's knowledge, no event has
--------------------------
occurred since October 31, 1996 which has had or could be reasonably expected to
have a Material Adverse Effect; provided, however, Purchaser acknowledges that
it has been advised that the Company has operated at a loss and has had negative
cash flow since October 31, 1996.
4.19 ERISA.
-----
(a) Schedule 4.19 sets forth: (i) all "employee benefit plans", as
defined in Section 3(3) of ERISA, and any other employee benefit arrangements or
payroll practices, including, without limitation, severance pay, sick leave,
vacation pay, salary continuation for disability, consulting or other
compensation agreements, retirement, deferred compensation, bonus, stock
purchase, hospitalization, medical insurance, life insurance and scholarship
programs (the "Plans") maintained by Company or to which Company contributed,
contributes or is obligated to contribute thereunder, and (ii) all "employee
pension plans ", as defined in Section 3(2) of ERISA (the
18
<PAGE>
"Pension Plans"), maintained by Company or any of its ERISA Affiliates to which
Company or any of its ERISA Affiliates contributed, contributes or is obligated
to contribute thereunder.
(b) Purchaser will not have (i) any obligation to make any
contribution to any Multiemployer Plan or (ii) any withdrawal liability from any
such Multiemployer Plan under Section 4201 of ERISA which it would not have had
it not purchased the Purchased Securities from Company at the Closing in
accordance with the terms of this Agreement.
(c) The Pension Plans and the trusts maintained pursuant thereto are
exempt from federal income taxation under Section 501 of the IRC, and nothing
has occurred with respect to the operation of the Pension Plans which could
cause the loss of such qualification or exemption or the imposition of any
liability, penalty, or tax under ERISA or the IRC.
(d) All contributions required by law or pursuant to the terms of the
Plans (without regard to any waivers granted under Section 412 of the IRC) to
any funds or trusts established thereunder or in connection therewith have been
made by the due date thereof (including any valid extension) and no accumulated
funding deficiencies exist in any of the Pension Plans subject to Section 412 of
the IRC.
(e) There is no "amount of unfunded benefit liabilities" as defined in
Section 4001(a) (18) of ERISA in any of the respective Pension Plans, which are
subject to Title IV of ERISA. Each of the respective Pension Plans are fully
funded in accordance with the actuarial assumptions used by the PBGC to
determine the level of funding required in the event of the termination of the
Pension Plan and all benefit liabilities do not exceed the assets of such
Pension Plans.
(f) There have been no "reportable events" as that term is defined in
Section 4043 of ERISA and the regulations thereunder with respect to the Pension
Plans subject to Title IV of ERISA which would require the giving of notice, or
any event requiring disclosure under Sections 4041(c)(3)(C), 4063(a) or 4068(f)
of ERISA.
(g) There is no material violation of ERISA with respect to the filing
of applicable reports, documents, and notice. regarding the Plans with the
Secretary of Labor and the Secretary of the Treasury or the furnishing of such
documents to the participants or beneficiaries of the Plans.
(h) True, correct and complete copies of the following documents, with
respect to each of the Plans, have been made available or delivered to Purchaser
by Company: (A) any plans and related trust documents, and amendments thereto,
(B) the most recent Forms 5500, (C) the last IRS determination letter, (D)
summary plan descriptions, (E) written communications to employees relating to
the Plans and (F) written descriptions of all non-written agreements relating to
the Plans.
19
<PAGE>
(i) There are no pending actions, claims or lawsuits which have been
asserted or instituted against the Plans, the assets of any of the trusts under
such Plans or the plan sponsor or the plan administrator, or against any
fiduciary of the Plans with respect to the operation of such Plans (other than
routine benefit claims), nor does Company have knowledge of facts which could
form the basis for any such claim or lawsuit.
(j) All amendments and actions required to bring the Plans into
conformity in all material respects with all of the applicable provisions of
ERISA and other applicable laws have been made or taken except to the extent
that such amendments or actions are not required by law to be made or taken
until a date after the Closing Date.
(k) The Plans have been maintained, in all material respects, in
accordance with their terms and with all provisions of ERISA (including rules
and regulations thereunder) and other applicable Federal and state law, and
Company or "party in interest" or "disqualified person" with respect to the
Plans has engaged in a "prohibited transaction" within the meaning of Section
4975 of the IRC or Section 406 of ERISA.
(l) Neither Company nor any ERISA Affiliate has terminated any Pension
Plan subject to Title IV, or incurred any outstanding liability under Section
4062 of ERISA to the PBGC, or to a trustee appointed under Section 4042 of
ERISA.
(m) Neither Company nor any ERISA Affiliate maintains retiree life and
retiree health insurance plans which are Welfare Plans and which provide for
continuing benefits or coverage for any participant or any beneficiary of a
participant except as may be required under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA") and at the expense of the
participant or the participant's beneficiary. Company and each ERISA Affiliate
which maintains a Welfare Plan has complied with the notice and continuation
requirements of COBRA and the regulations thereunder.
(n) Neither Company nor any ERISA Affiliate has contributed or been
obligated to contribute to a Multiemployer Plan as of the Closing.
(o) Neither Company nor any ERISA Affiliate has withdrawn in a
complete or partial withdrawal from any Multiemployer Plan prior to the Closing
Date, nor has any of them incurred any liability due to the termination or
reorganization of a Multiemployer Plan.
(p) Neither Company, any ERISA Affiliate or any organization to which
Company is a successor or parent corporation, within the meaning of Section
4069(b) of ERISA, has engaged in any transaction, within the meaning of Section
4069 of ERISA.
20
<PAGE>
4.20 Registration Rights. Except as set forth on Schedule 4.20, pursuant
-------------------
to the Registration Rights Agreement or as set forth in the Annual Report,
Company is not under obligation to register any of its securities pursuant to
the Securities Act.
4.21 Ordinary Course of Business. Since October 31, 1996, Company has
---------------------------
conducted its operations only in the ordinary course of business consistent with
past practice.
4.22 Full Disclosure. No information contained in this Agreement, any
---------------
other Transaction Document, the Financial Statements or any written statement
furnished by or on behalf of Company pursuant to the terms of this Agreement
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained herein or therein not misleading
in light of the circumstances under which made.
V. COVENANTS
5.1 Director and Officer Liability Insurance. After the Closing Date and
----------------------------------------
until December 31, 2000, Purchaser shall use commercially reasonable best
efforts to cause the Company to keep in full force and effect the Company's
director and officer liability insurance policy in effect on the date hereof or
such other policy which provides as good or better coverage for the Company's
current and past directors.
5.2 Indemnification of Officer and Directors. After the Closing,
----------------------------------------
Purchaser shall take no action, and shall use its best efforts to prevent the
board of directors of Company from taking any action to amend the corporate
charter or by-laws in such a way as to impair the rights to indemnification that
such officers and directors of the Company have on the date hereof except as
otherwise required by law. Purchaser consents to the amendment of Article XIX
of the Company's By-laws effected April 8, 1997 by the Board of Directors, with
respect to advancement of legal fees and expenses.
5.3 Amendment to Certificate of Incorporation. After the Closing, Company
-----------------------------------------
shall use its commercially reasonable best efforts to amend its Certificate of
Incorporation within fifty (50) days after the Closing Date so as to increase
the authorized Common Stock of Company to 100,000,000 shares, $0.001 par value
per share.
5.4 Schedule 14F-1 Information Statement. Within seven days after the
------------------------------------
Closing, Company shall mail the Schedule 14F-1 Information Statement to all
shareholders of Company and file the Information Statement with the SEC and
NASDAQ to reflect the change in directors of the Company pursuant to Section
6.1(i) hereof.
VI. CONDITIONS PRECEDENT
21
<PAGE>
6.1 Conditions Precedent. The obligation of Purchaser to purchase the
--------------------
Purchased Securities pursuant to Section 2.2 hereof, is subject to the condition
that Purchaser shall have received and the following shall be delivered to
Purchaser on the Closing Date, each dated the Closing Date unless otherwise
indicated, in form and substance satisfactory to Purchaser, and the following
actions shall occur on or before the Closing Date, unless waived by Purchaser:
(a) A favorable opinion of Kramer, Levin, Naftalis & Frankel, counsel
to Company, substantially in the form attached hereto as Exhibit E, it being
understood that to the extent that such opinion of counsel to Company shall rely
upon any other opinion of counsel, each such other opinion shall be in form and
substance reasonably satisfactory to the Purchaser and shall provide that
Purchaser may rely thereon.
(b) Resolutions of the board of directors of Company, certified by the
Secretary or Assistant Secretary of Company, as of the Closing Date, to be duly
adopted and in full force and effect on such date, authorizing, in the case of
the board of directors, (i) the consummation of each of the transactions
contemplated by this Agreement and (ii) officers to execute and deliver this
Agreement and each other Transaction Document to which it is a party.
(c) A copy of governmental certificate, dated the most recent
practicable date prior to the Closing Date, with telegram updates where
available, showing that Company is organized and in good standing in the State
of Delaware and is qualified as a foreign corporation and in good standing in
all other jurisdictions in which it is qualified to transact business.
(d) A copy of the organizational charter and all amendments thereto of
Company, certified as of a recent date by the Secretary of State of the State of
Delaware, and copies of Company's by-laws, certified by the Secretary or
Assistant Secretary of Company as true and correct as of the Closing Date.
(e) Certificates of the Secretary or an Assistant Secretary of
Company, dated the Closing Date, as to the incumbency and signatures of the
officers of Company executing this Agreement, the Purchased Securities, each
other Transaction Document to which it is a party and any other certificate or
other document to be delivered pursuant hereto or thereto, together with
evidence of the incumbency of such Secretary or Assistant Secretary.
(f) A copy of all third party consents and approvals, if any, that are
necessary for the consummation of the transactions contemplated hereby or that
are required in order to prevent a breach of or default under, a termination or
modification of, or acceleration of the terms of, any contract, agreement or
document required to be listed on the attached Schedule 4.9 or the Annual
Report, in each case on terms and conditions reasonably satisfactory to
Purchaser, except for additional reservation of Common Stock for issuance of the
Warrants and Options.
22
<PAGE>
(g) A copy of all governmental and regulatory consents and approvals
that are necessary for the consummation of the transactions contemplated hereby,
in each case on terms and conditions satisfactory to Purchaser.
(h) No suit, action or other proceeding shall be pending before any
court or governmental regulatory body or authority in which it is sought to
restrain or prohibit the transactions contemplated hereby, or that could have a
Material Adverse Effect, and no injunction, judgment, order, decree or ruling
with respect thereto shall be in effect.
(i) Company shall have taken such action so that (a) Jason Elkin,
Joseph Gersh, Avy H. Stein, John T. Dobson III and Beth F. Johnston shall have
been appointed to the Board of Directors of the Company and (b) Jason Elkin
shall be appointed Chairman and CEO, Joseph Gersh shall be appointed Vice-
Chairman, Peter Kauff shall be appointed COO and John Dobson shall be appointed
President, such appointments to be effective ten (10) days after Company mails
the Schedule 14F-1 Information Statement to the shareholders of Company and
files such Information Statement with the SEC and NASDAQ (or such later date as
may be required by the SEC); all in accordance with the Certificate of
Incorporation and by-laws of the Company and in compliance with all applicable
laws, including, but not limited to, the Securities Act and the Exchange Act.
(j) Edward McLaughlin and Edward Weinberger shall have resigned as
directors of the Company effective as of the Closing Date.
(k) Company shall have delivered to Purchaser a copy of the fairness
opinion relating to the transaction contemplated herein from MJ Whitman, Inc. to
Purchaser, which fairness opinion shall indicate that the price for the Common
Stock including the Class C Warrant and Equity Protection Agreements, is fair to
Company and which report shall set forth the value of the Common Stock, and of
the Class C Warrant and Equity Protection Agreements.
(l) The Purchased Securities shall be delivered to Purchaser.
(m) Peter Kauff shall have entered into a new Employment Agreement in
the form of Exhibit "F" attached hereto; terminating his existing employment
agreement with the Company and waiving any termination or change in control
payment thereunder on the terms stated therein and Jason Elkin, Joseph Gersh and
John T. Dobson III shall have entered into Employment Agreements in the form of
Exhibits "G," "H" and "I," respectively (collectively, the "Employment
Agreements").
(n) The execution and delivery of the Escrow Agreement.
(o) A copy of the Director's and Officer's Insurance of Company in
effect on the Closing Date.
23
<PAGE>
VII SECURITIES LAW MATTERS
7.1 Legends.
-------
(a) Each certificate representing the Purchased Securities shall bear
a legend substantially in the following form:
"THE STOCK REPRESENTED BY THIS CERTIFICATE HAS BEEN ACQUIRED BY THE
HOLDER FOR ITS OWN ACCOUNT, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW
TO THE DISTRIBUTION OF SUCH STOCK. THE SHARES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR AN EXEMPTION THEREFROM."
(b) The Class C Warrant shall bear a legend substantially in the
following form:
THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE SHARES ISSUABLE
UPON EXERCISE HEREOF 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
STATEMENTS WITH RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY
APPLICABLE STATE SECURITIES LAWS, OR (2) THE COMPANY RECEIVES AN
OPINION OF COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH COUNSEL AND
OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH
SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN
THE MANNER CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENTS
UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS.
7.2 Transfer of Restricted Securities.
---------------------------------
(a) Restricted Securities are transferable only pursuant to (i) public
offerings registered under the Securities Act, (ii) Rule 144 or Rule 144A of the
Securities and Exchange Commission (or any similar rule or rules then in force)
if such rule is available and (iii) subject to the conditions specified in
subparagraph (b) below, any other legally available means to transfer.
24
<PAGE>
(b) In connection with the transfer of any Restricted Securities
(other than a transfer described in clause (i) or (ii) of subparagraph (a)
above), the holder thereof shall deliver written notice to Company describing in
reasonable detail the transfer or proposed transfer, together with an opinion of
counsel which (to Company's reasonable satisfaction) is knowledgeable in
securities law matters to the effect that such transfer of Restricted Securities
may be effected without registration of such Restricted Securities under the
Securities Act. In addition, if the holder of the Restricted Securities
delivers to Company an opinion of counsel that no subsequent transfer of such
Restricted Securities shall require registration under the Securities Act,
Company shall promptly upon such contemplated transfer deliver new certificates
or instruments, as the case may be, for such Restricted Securities which do not
bear the Securities Act legend set forth in Section 7.1 above. If Company is
not required to deliver new certificate or instruments, as the case may be, for
such Restricted Securities not bearing such legend, the holder thereof shall not
transfer the same until the prospective transferee has confirmed to Company in
writing its agreement to be bound by the conditioned contained in this Section
7.2.
(c) Upon the request of a holder of Restricted Securities, Company
shall promptly supply to such holder or such holder's prospective transferees
all information regarding Company required to be delivered in connection with a
transfer pursuant to Rule 144 or 144A of the Securities and Exchange Commission.
(d) If any Restricted Securities become eligible for sale pursuant to
Rule 144(k), Company shall, upon the request of the holder of such Restricted
Securities, remove the legend set forth in Section 7.1 from the certificates or
instruments, as the case may be, representing such Restricted Securities.
VIII EXPENSES
If and only if the purchase and sale of securities pursuant to this
Agreement is not rescinded pursuant to the Escrow Agreement, Company shall pay
all reasonable out-of-pocket expenses of (i) Purchaser in connection with the
preparation of the Transaction Documents and the transactions contemplated
thereby including all due diligence, legal and accounting expenses, (ii) stamp
and other taxes which may be payable in respect of the execution and delivery of
this Agreement, the issuance and delivery of the Purchased Securities, and the
issuance and delivery of any Common Stock upon the exercise of the Class C
Warrant and the rights granted pursuant to the Equity Protection Agreements, and
(iii) the Purchaser in connection with (A) any amendment, modification or
waiver, or consent with respect to, any of the Transaction Documents, and (B)
any attempt to enforce any rights of Purchaser against Company or any other
Person, that may be obligated to any Purchaser by virtue of any of the
Transaction Document (including the reasonable fees and expenses of all of its
counsel and consultants retained in connection with the Transaction Documents
and the transactions contemplated thereby).
IX. LIMITATION ON CLAIMS OF PURCHASER
25
<PAGE>
9.1 Limitation.
----------
(a) Purchaser shall not bring any action or claim against the Company
for damages for a breach of any representation, warranty or covenant contained
herein by the Company until such damages exceed $100,000 at which time Purchaser
may bring an action for all claims.
(b) Company shall not bring any action or claims against Purchaser for
damages for a breach of any representation, warranty or covenant contained
herein by Purchaser until such damages exceed $100,000, at which time Company
may bring an action for all claims.
X. MISCELLANEOUS
10.1 Notices. Whenever it is provided herein that any notice, demand,
-------
request, consent, approval, declaration or other communication shall or may be
given to or served upon any of the parties by another, or whenever any of the
parties desires to give or serve upon another any such communication with
respect to this Agreement, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and either shall be
delivered in person with receipt acknowledged or by registered or certified
mail, return receipt requested, postage prepaid, or by telecopy and confirmed by
telecopy answerback addressed as follows:
If to Purchaser:
U-C Holdings, L.L.C.
227 W. Monroe Street, Suite 4300
Chicago, Illinois 60606
Attn: Avy H. Stein
Telecopy No.: (312) 422-2424
with a copy to:
Morris, Manning & Martin, L.L.P.
3343 Peachtree Rod, N.E.
1600 Atlanta Financial Center
Atlanta, Georgia 30326
Attn: Neil H. Dickson, Esq.
Telecopy No.: (404) 365-9532
Kirkland & Ellis
200 E. Randolph Street
Chicago, Illinois 60601
Attn: Margaret A. Gibson, Esq.
Telecopy No.: (312) 861-2200
If to Company:
26
<PAGE>
UC Television Network Corp.
645 Fifth Avenue, East Wing
New York, New York 10022
Attn: Peter Kauff
Telecopy No.: (212) 755-5992
with copies to:
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, New York 10022
Attention: Richard Marlin
Telecopy No.: (212) 715-8000
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration or other communication hereunder shall be deemed
to have been duly given or served on the date on which personally delivered,
with receipt acknowledged, telecopied and confirmed by telecopy answerback, or
three (3) Business Days after the same shall have been deposited with the United
States mail.
10.2 Binding Effect: Benefits. Except as otherwise provided herein, this
------------------------
Agreement shall be binding upon and inure to the benefit of the parties to this
Agreement and their respective successors and permitted assigns. Nothing in this
Agreement, express or implied, is intended or shall be construed to give any
person other than the parties to this Agreement or their respective successors
or assigns any legal or equitable right, remedy or claim under or in respect of
any agreement or any provision contained herein.
10.3 Amendment. No amendment or waiver of any provision of this Agreement or
---------
any other Transaction Document nor consent to any departure by Company
therefrom, shall in any event be effective unless the same shall be in writing
and signed by Company and the Purchaser, and then such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given. No action taken pursuant to this Agreement, including, without
limitation, any investigation by or on behalf of any party, shall be deemed to
constitute a waiver by the party taking such action, of compliance with any
representations, warranties, covenants or agreements contained herein. The
waiver by any party hereto of a breach of any provision of this Agreement shall
not operate or be construed as a waiver of any preceding or succeeding breach
and no failure by either party to exercise any right or privilege hereunder
shall be deemed a waiver of such party's rights or privileges hereunder or shall
be deemed a waiver of such party's rights to exercise the same at any subsequent
time or times hereunder.
10.4 Successors and Assigns: Assignability. Neither this Agreement nor any
-------------------------------------
right, remedy, obligation or liability arising hereunder or by reason hereof
shall be assignable by Company without
27
<PAGE>
the prior written consent of the Purchaser. All covenants contained herein shall
bind and inure to the benefit of the parties hereto and their respective
successors and assigns (including any subsequent holder of any of the Purchased
Securities or any Common Stock issuable upon exercise of the Purchased
Securities).
10.5 Remedies. Purchaser, in addition to being entitled to exercise all
--------
rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. Company agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach of the provisions of this Agreement and hereby agrees to
waive the defense in any action for specific performance that a remedy at law
would be adequate. In any action or proceeding brought to enforce any provision
of this Agreement or where any provision hereof is validly asserted as a
defense, the successful party shall be entitled to recover reasonable attorneys'
fees in addition to any other available remedy.
10.6 Section and Other Headings. The section and other headings contained in
--------------------------
this Agreement are for reference purposes only and shall not affect the meaning
or interpretation of this Agreement.
10.7 Severability. In the event that any one or more of the provisions
------------
contained in this Agreement shall be determined to be invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision or provisions in every other respect and
the remaining provisions of this Agreement shall not be in any way impaired.
10.8 Entire Agreement. This Agreement and the agreements and documents
----------------
referred to herein contain the entire agreement and understanding between the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, whether written or oral, relating to such subject
matter in any way.
10.9 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
10.10 Publicity. Neither Purchaser nor Company shall issue any press release
---------
or make any public disclosure regarding the transactions contemplated hereby
unless such press release or public disclosure is approved by the other party in
advance. Notwithstanding the foregoing, each of the parties hereto may, in
documents required to be filed by it with the SEC or other regulatory bodies,
make such statements with respect to the transactions contemplated hereby as
each may be advised by counsel is legally necessary or advisable, and may make
such disclosure as it is advised by its counsel is required by law.
10.11 Governing Law. This Agreement shall be governed by, construed and
-------------
enforced in accordance with, the laws of the Delaware without regard to the
principles thereof relating to
28
<PAGE>
conflict of laws. Service of process on the parties in any action arising out of
or relating to this Agreement shall be effective if mailed to the parties in
accordance with Section 10.1 hereof. The parties hereto waive all right to trial
by jury in any action or proceeding to enforce or defend any rights under this
Agreement.
10.12 Expenses. If this transaction is rescinded pursuant to the Escrow
--------
Agreement, because Barington Capital Group, L.P. exercises its right of first
refusal, Company agrees to pay to Purchaser the amount of Purchaser's expenses
incurred in connection with this transaction, including, but not limited to,
legal and accounting fees and third party expenses and fees incurred in due
diligence, up to $250,000. If the transaction is rescinded pursuant to the
Escrow Agreement for any other reason, the Company and the Purchaser shall each
pay their own expenses. Nothing herein shall limit Company's obligations
pursuant to Article VIII hereof in the event the transactions contemplated
hereby are not rescinded pursuant to the Escrow Agreement. Upon presentation by
Purchaser of documentation for such expenses, reimbursement shall be payable by
wire transfer of immediately available funds within ten (10) Business Days.
10.13 Negotiations. The parties hereto do hereby acknowledge that the
------------
Agreement and the Transaction Documents have been negotiated extensively by the
parties and neither party shall be deemed to be the party which prepared or
drafted this Agreement.
29
<PAGE>
IN WITNESS WHEREOF, Company and each Purchaser has executed this Agreement as
of the day and year first above written.
COMPANY:
UC TELEVISION NETWORK CORP.
By:
-----------------------------------------
Peter Kauff,
Chairman of the Board and Chief Executive
Officer
Attest:
-------------------------------------
By: Alan Pearl
-----------------------------------------
Alan Pearl
Secretary
[Corporate Seal]
PURCHASER:
U-C HOLDINGS, L.L.C.
By: WILLIS STEIN & PARTNERS, L.P.
-----------------------------------------
Its: Managing Member
By: Willis Stein & Partners, L.L.C.
-----------------------------------------
Its: General Partner
By: /s/ Avy H. Stein
--------------------------------------
Avy H. Stein
Its: Manager
30
<PAGE>
EXHIBIT 4.3
================================================================================
________________________________________
U-C HOLDINGS, L.L.C.
A Delaware Limited Liability Company
________________________________________
LIMITED LIABILITY COMPANY AGREEMENT
Dated as of April 25, 1997
THE MEMBERSHIP INTERESTS REPRESENTED BY THIS LIMITED LIABILITY COMPANY AGREEMENT
HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED, OR UNDER ANY OTHER APPLICABLE SECURITIES LAWS. SUCH INTERESTS MAY NOT
BE SOLD, ASSIGNED, PLEDGED OR OTHERWISE DISPOSED OF AT ANY TIME WITHOUT
EFFECTIVE REGISTRATION UNDER SUCH ACT AND LAWS OR EXEMPTION THEREFROM, AND
COMPLIANCE WITH THE OTHER RESTRICTIONS ON TRANSFERABILITY SET FORTH HEREIN.
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
DEFINITIONS..................................................................................... 1
1.1 Certain Definitions........................................................................ 1
1.2 Other Definitions.......................................................................... 5
1.3 Construction............................................................................... 5
ARTICLE II
ORGANIZATION.................................................................................... 6
2.1 Formation.................................................................................. 6
2.2 Name....................................................................................... 6
2.3 Registered Office; Registered Agent; Principal Office; Other Offices....................... 6
2.4 Purposes................................................................................... 6
2.5 Term....................................................................................... 6
2.6 No State-Law Partnership................................................................... 6
ARTICLE III
MEMBERSHIP; MEMBER UNITS........................................................................ 7
3.1 Members.................................................................................... 7
3.2 Liability of Members....................................................................... 7
3.3 No Authority to Bind Company............................................................... 7
3.4 Member Units............................................................................... 7
3.5 Issuance of Additional Units and Interests; Admission of New Members; Additional
Capital Contributions...................................................................... 8
3.6 Representations, Warranties and Agreements of the Members.................................. 9
3.7 Initial Capital Contributions.............................................................. 10
3.8 Defaulting Members......................................................................... 10
3.9 Outstanding Units.......................................................................... 11
ARTICLE IV
CAPITAL ACCOUNTS................................................................................ 11
4.1 Establishment and Determination of Capital Accounts........................................ 11
4.2 Computation of Amounts..................................................................... 11
4.3 Interest; Withdrawal....................................................................... 12
ARTICLE V
DISTRIBUTIONS; ALLOCATIONS OF PROFITS AND LOSSES................................................ 12
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
5.1 Generally.................................................................................. 12
5.2 Distributions.............................................................................. 12
5.3 Allocation of Profits and Losses........................................................... 13
5.4 Initial Capital Contributions.............................................................. 13
5.5 Tax Allocations; Code Section 704(c)....................................................... 14
ARTICLE VI
MANAGEMENT OF THE COMPANY....................................................................... 14
6.1 Managing Member............................................................................ 14
6.2 Delegation by Managing Member.............................................................. 15
6.3 Resignation; Vacancy; Removal.............................................................. 15
6.4 Compensation............................................................................... 15
6.5 Board Membership of Subsidiaries........................................................... 15
ARTICLE VII
MEMBERS......................................................................................... 16
7.1 Membership Status; Resignation............................................................. 16
7.2 No Participation in Management............................................................. 16
7.3 Voting Rights Generally; Voting of Units................................................... 16
7.4 Conflicts of Interest...................................................................... 17
7.5 Outside Activities......................................................................... 17
7.6 Confidentiality............................................................................ 17
ARTICLE VIII
EXCULPATION AND INDEMNIFICATION................................................................. 17
8.1 Exculpation................................................................................ 17
8.2 Right to Indemnification................................................................... 18
8.3 Advance Payment............................................................................ 18
8.4 Indemnification of Employees and Agents.................................................... 18
8.5 Appearance as a Witness.................................................................... 18
8.6 Nonexclusivity of Rights................................................................... 19
8.7 Savings Clause............................................................................. 19
ARTICLE IX
TAXES........................................................................................... 19
9.1 Tax Returns................................................................................ 19
9.2 Tax Matters Partner........................................................................ 19
ARTICLE X
BOOKS, REPORTS.................................................................................. 19
10.1 Maintenance of Books...................................................................... 19
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
10.2 Member Tax Information................................................................... 19
ARTICLE XI
TRANSFERS....................................................................................... 20
11.1 Assignment by Members.................................................................... 20
11.2 Void Transfers........................................................................... 20
11.3 Substituted Member....................................................................... 20
11.4 Effect of Assignment..................................................................... 21
11.5 Permitted Transfers...................................................................... 21
11.6 Deliveries for Transfer.................................................................. 21
11.7 Prospective Transferees.................................................................. 22
11.8 Legend................................................................................... 22
11.9 Effective Date........................................................................... 22
ARTICLE XII
DISSOLUTION, LIQUIDATION AND TERMINATION........................................................ 22
12.1 Dissolution.............................................................................. 22
12.2 Liquidation and Termination.............................................................. 23
12.3 Management Holder Give Back.............................................................. 23
12.4 Cancellation of Certificate.............................................................. 24
ARTICLE XIII
GENERAL PROVISIONS.............................................................................. 24
13.1 Notices.................................................................................. 24
13.2 Entire Agreement......................................................................... 25
13.3 Effect of Waiver or Consent.............................................................. 25
13.4 Amendment, Modification or Waiver........................................................ 25
13.5 Binding Effect........................................................................... 25
13.6 Governing Law; Severability.............................................................. 25
13.7 Further Assurances....................................................................... 25
13.8 Waiver of Certain Rights................................................................. 26
13.9 Indemnification and Reimbursement for Payments on Behalf of a Member..................... 26
13.10 Notice to Members of Provisions.......................................................... 26
13.11 Counterparts............................................................................. 26
13.12 Consent to Jurisdiction.................................................................. 26
13.13 Headings................................................................................. 27
13.14 Remedies................................................................................. 27
13.15 Parties in Interest...................................................................... 27
</TABLE>
-iii-
<PAGE>
LIMITED LIABILITY COMPANY AGREEMENT
OF U-C HOLDINGS, L.L.C.
A DELAWARE LIMITED LIABILITY COMPANY
THIS OPERATING AGREEMENT OF U-C HOLDINGS, L.L.C. (this "Agreement"),
---------
dated as of April 25, 1997, is adopted by, and executed and agreed to, for good
and valuable consideration, by Willis Stein & Partners, L.P., a Delaware limited
partnership ("Willis Stein"), and the other Persons listed on Schedule A hereto
------------ ----------
and each other Person who becomes a Member in accordance with the terms of this
Agreement.
ARTICLE I
DEFINITIONS
-----------
1.1 Certain Definitions. As used in this Agreement, the following
-------------------
terms have the following meanings:
"Act" means the Delaware Limited Liability Company Act, Title 6,
---
Sections 18-106 to 18-1107 and any successor statute, as amended from time to
time.
"Affiliate" means, with respect to a Person, another Person that
---------
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Person, where "control"
-------
means the possession, directly or indirectly, of the power to direct the
management and policies of a Person whether through the ownership of voting
securities, contract or otherwise.
"Aggregate Management Percentage" means, on any date of determination,
-------------------------------
the lesser of (i) 25% or (ii) the sum of (A) the Applicable Class A Percentage
and (B) the Applicable Class B Percentage.
"Applicable Class A Catch-up Percentage" means, on any date of
--------------------------------------
determination, the quotient obtained by dividing (i) the Applicable Class A
Percentage by (ii) the Aggregate Management Percentage.
"Applicable Class A Percentage" means, on any date of determination,
-----------------------------
the lesser of (i) 20% or (ii) 20% of the quotient obtained by dividing (A) the
number of outstanding Class A Management Units on such date by (B) 2,000.
"Applicable Class B Catch-up Percentage" means, on any date of
--------------------------------------
determination, the quotient obtained by dividing (i) the Applicable Class B
Percentage by (ii) the Aggregate Management Percentage.
<PAGE>
"Applicable Class B Percentage" means, on any date of determination,
-----------------------------
the lesser of (i) 5% or (ii) 5% of the quotient obtained by dividing (A) the
number of outstanding Class B Management Units on such date by (B) 500.
"Book Value" means, with respect to any Company property, the
----------
Company's adjusted basis for federal income tax purposes, adjusted from time to
time to reflect the adjustments required or permitted by Treasury Regulation
Sections 1.704-l(b)(2)(iv)(d)-(g).
"Business Day" means any day other than a Saturday, a Sunday or a
------------
holiday on which national banking associations in the State of Illinois are
closed.
"Capital Contribution" means the aggregate contributions made by a
--------------------
Member to the capital of the Company. The initial Capital Contribution of each
Member is shown opposite such Member's name on Schedule A, as the same may be
----------
amended from time to time.
"Cash Inflows" means, with respect to the Investors, all payments or
------------
distributions of cash received by such Investors directly from the Company with
respect to the Investor Units issued to the Investors pursuant to this
Agreement.
"Cash Outflows" means, with respect to the Investors, all Capital
-------------
Contributions made by such Investors with respect to Investor Units issued to
the Investors pursuant to this Agreement.
"Class A Management Units"means (i) the Class A Management Units
------------------------
originally issued to Jason Elkin, Joseph D. Gersh and John T. Dobson III
pursuant to this Agreement and designated as Class A Management Units on
Schedule A and (ii) any Class A Management Units issued with respect to such
- ----------
Class A Management Units by way of dividend or Unit split or in connection with
a combination of Units, recapitalization, merger or other reorganization. A
Class A Management Unit will continue to be a Class A Management Unit in the
hands of any Person to which such Unit is transferred.
"Class B Management Units"means (i) the Class B Management Units
------------------------
originally issued pursuant to this Agreement and designated as Class B
Management Units on Schedule A and (ii) any Class B Management Units issued with
----------
respect to such Class B Management Units by way of dividend or Unit split or in
connection with a combination of Units, recapitalization, merger or other
reorganization. A Class B Management Unit will continue to be a Class B
Management Unit in the hands of any Person to which such Unit is transferred.
"Code" means the Internal Revenue Code of 1986, as amended, and any
----
successor statute. Such term shall be deemed to include any future amendments
to the Code or any successor statute to the extent the Managing Member
determines that any such amendments do not adversely affect the relative
economic interests of the Members hereunder.
"Company" means U-C Holdings, L.L.C., a Delaware limited liability
-------
company.
"Entity" means any general partnership, limited partnership,
------
corporation, association, cooperative, joint stock company, trust, limited
liability company, business trust, joint venture, unincorpo-
-2-
<PAGE>
rated organization, governmental entity (or any department, agency or political
subdivision thereof) or other entity.
"Equity Protection Agreements" means those certain Equity Protection
----------------------------
Agreements of even date herewith by and between the Company and UCTV.
"Escrow Agreement" means that certain Escrow Agreement of even date
----------------
herewith by and among UCTV, U-C Holdings, L.L.C. and LaSalle National Bank.
"Family Group" means a Unitholder's spouse and descendants (whether
------------
natural or adopted) and any trust solely for the benefit of such Unitholder
and/or such Unitholder's spouse and/or descendants.
"Fiscal Year" of the Company means the Company's annual accounting
-----------
period ending on December 31.
"Investor" means any holder of Investor Units.
--------
"Investor Units" means (i) any Investor Units originally issued to the
--------------
Investors pursuant to this Agreement and designated as Investor Units on
Schedule A, (ii) any Investor Units otherwise acquired by a Person holding
- ----------
Investor Units and (iii) any Investor Units issued with respect to the Investor
Units referred to in clauses (i) or (ii) by way of dividend or Unit split or in
connection with a combination of Units, recapitalization, merger or other
reorganization. An Investor Unit will continue to be an Investor Unit in the
hands of any Person to which such Unit is transferred.
"IRR" means the annual interest rate (compounded annually) which, when
---
used to calculate the net present value as of April 25, 1997, of all (i) Cash
Inflows received by the Investors through the date of determination and (ii)
Cash Outflows made by the Investors through the date of determination, causes
such entire amount to equal zero. The IRR shall be determined by the Company's
regular outside accounting firm. For purposes of the net present value
calculation, each Cash Inflow and each Cash Outflow specified above shall be
deemed to have been received or made on the first day of the month nearest to
the actual date of such payment.
"IRR Target" means that the Investors have achieved an IRR of 30%.
----------
"Losses" for any period means all items of Company loss, deduction and
------
expense for such period determined in accordance with Section 4.2.
-----------
"Management Holder" means any holder of Management Units.
-----------------
"Management Units" means, collectively, the Class A Management Units
----------------
and the Class B Management Units.
"Member" means any Person executing this Agreement as of the date of
------
this Agreement as a Member or hereafter admitted to the Company as a Member in
accordance with this Agreement and the Act, but does not include any Person who
has ceased to be a member of the Company or no longer
-3-
<PAGE>
owns Units. The Members shall constitute the "members" (as that term is defined
in the Act) of the Company.
"Person" means any individual or Entity, and the heirs, executors,
------
administrators, legal representatives, successors and assigns of such Person
where the context so permits.
"Permitted Transferee" means (i) with respect to any Unitholder who is
--------------------
a natural person, a member of such Unitholder's Family Group and any Transferee
pursuant to applicable laws of descent and distribution and (ii) with respect to
any Unitholder which is an Entity, any of such Unitholder's Affiliates.
"Preferred Units" means (i) any Preferred Units originally issued to
---------------
Willis Stein pursuant to this Agreement and designated as Preferred Units on
Schedule A, and (ii) any Preferred Units issued with respect to the Preferred
- ----------
Units referred to in clause (i) by way of dividend or Unit split or in
connection with a combination of Units, recapitalization, merger or other
reorganization. A Preferred Unit will continue to be an Preferred Unit in the
hands of any Person to which such Unit is transferred.
"Preferred Yield" means at any time an amount calculated on a daily
---------------
basis (without daily compounding) at the rate of 12.5% per annum, compounded
annually, on the Unreturned Preferred Capital.
"Profits" for any period means all items of Company income and gain
-------
for such period determined in accordance with Section 4.2.
-----------
"Required Interests" means each of (i) the Members holding at least a
------------------
majority of the Investor Units and (ii) the Members holding at least a majority
of the Management Units.
"Restricted Securities" means (i) the securities issued hereunder, and
---------------------
(ii) any securities issued with respect to the securities referred to in clause
(i) above in connection with a conversion, combination of shares,
recapitalization, merger, consolidation or other reorganization.
"Securities Act" means the U.S. Securities Act of 1933, as amended.
--------------
"Taxable Year" means the Company's taxable year ending December 31 (or
------------
part thereof, in the case of the Company's last taxable year), or such other
year as is (i) required by Section 706 of the Code or (ii) determined by the
Managing Manager.
"Transfer" means any sale, transfer, assignment, pledge, mortgage,
--------
exchange, hypothecation, grant of a security interest or other direct or
indirect disposition or encumbrance of an interest (including, without
limitation, by operation of law) or the acts thereof. The terms "Transferee,"
----------
"Transferred," and other forms of the word "Transfer" shall have correlative
- ------------
meanings.
"Treasury Regulations" means the income tax regulations promulgated
--------------------
under the Code and effective as of the date hereof. Such term shall be deemed
to include any future amendments to such regulations and any corresponding
provisions of succeeding regulations to the extent the Managing Member
determines that any such amendments and succeeding regulations do not adversely
affect the relative economic interests of the Members hereunder.
-4-
<PAGE>
"UCTV" means UC Television Network Corp., a Delaware corporation.
----
"Unitholder" means any holder of a Unit.
----------
"Unpaid Preferred Yield" means at any time an amount equal to the
----------------------
excess, if any, of (a) the aggregate Preferred Yield accrued through such date,
over (b) all prior distributions made by the Company to the holders of Investor
Units pursuant to Section 5.2(a).
--------------
"Unreturned Preferred Capital" means at any time the aggregate Capital
----------------------------
Contributions with respect to the Investor Units reduced by all prior
distributions made to the holders of Investor Units by the Company pursuant to
Section 5.2(b).
- --------------
"Warrants" means those certain Class C Warrants to purchase common
--------
stock of UCTV of even date herewith issued to the Company by UCTV.
1.2 Other Definitions. Each of the following defined terms has the
-----------------
meaning given such term in the Section set forth opposite such defined term:
<TABLE>
<CAPTION>
Defined Term Section
------------ -------
<S> <C>
"Agreement" Preamble
"Capital Account" 4.1
"Certificate" 2.1
"Certificated Units" 11.8
"Indemnifying Member" 13.11
"Initial Capital Account" 3.1
"Management Notes" 5.4
"Managing Member" 6.1
"Note" 2.4
"Proceeding" 8.2
"Remaining Assets" 12.2(d)
"Tax Matters Member" 9.2
"Unit" 3.4
</TABLE>
1.3 Construction. Whenever the context requires, the gender of all
------------
words used in this Agreement includes the masculine, feminine and neuter. All
references to Articles and Sections refer to articles and sections of this
Agreement, and all references to Schedules are to schedules attached hereto,
each of which is made a part hereof for all purposes.
-5-
<PAGE>
ARTICLE II
ORGANIZATION
------------
2.1 Formation. The Company has been organized as a Delaware limited
---------
liability company by the filing of a Certificate of Formation (the
"Certificate") under and pursuant to the Act. The rights and liabilities of the
-----------
Members shall be determined pursuant to the Act and this Agreement. To the
extent that the rights or obligations of any Member are different by reason of
any provision of this Agreement than they would be in the absence of such
provision, this Agreement, to the extent permitted by the Act, shall control.
2.2 Name. The name of the Company is "U-C Holdings, L.L.C." and all
----
Company business shall be conducted in that name or such other names that comply
with applicable law as the Managing Member may select from time to time.
2.3 Registered Office; Registered Agent; Principal Office; Other
------------------------------------------------------------
Offices. The registered office of the Company required by the Act to be
- -------
maintained in the State of Delaware shall be the office of the initial
registered agent named in the Certificate or such other office (which need not
be a place of business of the Company) as the Managing Member may designate from
time to time in the manner provided by law. The principal office of the Company
shall be at such place as the Managing Member may designate, from time to time,
which need not be in the State of Delaware, and the Company shall maintain
records there.
2.4 Purposes. The nature of the business or purposes to be conducted
--------
or promoted by the Company is to engage in any lawful act or activity for which
limited liability companies may be organized under the Act. The Company may
engage in any and all activities necessary, desirable or incidental to the
accomplishment of the foregoing. Notwithstanding anything herein to the
contrary, nothing set forth herein shall be construed as authorizing the Company
to possess any purpose or power, or to do any act or thing, forbidden by law to
a limited liability company organized under the laws of the State of Delaware.
The Company shall not (i) create, incur, assume or suffer to exist any
indebtedness for borrowed money or issue evidences of indebtedness or guaranty
indebtedness, or secure the same by a mortgage, pledge or other lien on the
assets of the Company, except for the issuance of the promissory note of the
Company pursuant to that certain Purchase Agreement, dated as of the date
hereof, by and between the Company and UCTV (the "Note"), or (ii) enter into or
----
engage in any transaction which is reasonably likely to cause Willis Stein or
any of its limited partners which are exempt from income taxation under Code (S)
501(a) and, if applicable, any pension plan that any such trust may be a part
of, to recognize unrelated business taxable income as defined in Code (S)(S) 512
and 514.
2.5 Term. The term of the Company commenced on the date the
----
Certificate was filed with the office of the Secretary of State of Delaware and
shall continue in existence until December 31, 2007 or termination and
dissolution of the Company as determined under Section 12.1 of this Agreement.
------------
2.6 No State-Law Partnership. The Members intend that the Company
------------------------
shall not be a partnership (including, without limitation, a limited
partnership) or joint venture, and that no Member or the Company shall be a
partner or joint venturer of any other Member or the Company, for any purposes
other than federal and, if applicable, state tax purposes, and this Agreement
shall not be construed to the
-6-
<PAGE>
contrary. The Members intend that the Company shall be treated as a partnership
for federal and, if applicable, state income tax purposes, and each Member and
the Company shall file all tax returns and shall otherwise take all tax and
financial reporting positions in a manner consistent with such treatment.
ARTICLE III
MEMBERSHIP; MEMBER UNITS
------------------------
3.1 Members. The name and address of each Member, the number of
-------
Units of each class owned by such Member at any time, the percentage of each
class of Units owned by such Member, and the initial Capital Contribution and
initial Capital Account (the "Initial Capital Account") of such Member with
-----------------------
respect to such Units (as determined in accordance with Section 4.1) shall be
-----------
set forth next to each Member's name on Schedule A hereto, as amended from time
----------
to time in accordance with this Agreement. Each Person listed on Schedule A,
----------
upon (i) his or its execution of this Agreement or counterpart thereof and (ii)
receipt (or deemed receipt) of such Person's initial Capital Contribution as set
forth on Schedule A, is hereby admitted to the Company as a Member of the
----------
Company. No Member shall be required to make any additional Capital Contribution
except as required by applicable law or by Section 3.5.
-----------
3.2 Liability of Members. Except as otherwise required by applicable
--------------------
law and as expressly set forth in this Agreement, no Member shall have any
personal liability whatsoever in his capacity as a Member, whether to the
Company, to any of the other Members, to the creditors of the Company or to any
other third party, for the debts, liabilities, commitments or any other
obligations of the Company or for any losses of the Company, and therefore, a
Member shall be liable only to make the payments provided herein. In accordance
with the Act and the laws of the State of Delaware, a member of a limited
liability company may, under certain circumstances, be required to return
amounts previously distributed to such member. It is the intent of the Members
that no distribution to any Member pursuant to Article V hereof shall be deemed
---------
a return of money or other property paid or distributed in violation of the Act.
3.3 No Authority to Bind Company. No Member (in such Member's
----------------------------
capacity as a Member) shall have the authority or power to represent or act for
or on behalf of the Company, to do any act that would be binding on the Company
or to make any expenditures or incur any obligations on behalf of the Company
other than the Managing Member. Each Member hereby consents to the exercise by
the Managing Member of the powers conferred on such Managing Member by law and
this Agreement.
3.4 Member Units. Each Member's interest in the Company, including
------------
such Member's interest, if any, in the capital, income, gains, losses,
deductions and expenses of the Company and the right to vote, if any, on certain
Company matters as provided in this Agreement, shall be represented by "Units"
(each, individually, a "Unit," and any number of Units, including fractions
----
thereof, "Units"). Initially, the Units shall be comprised of "Investor Units,"
----- --------------
"Preferred Units," "Class A Management Units" and "Class B Management Units."
--------------- ------------------------ ------------------------
The ownership by a Member of "Investor Units," "Preferred Units," "Class A
-------------- --------------- -------
Management Units" and "Class B Management Units" shall entitle such Member to
- ---------------- ------------------------
allocations of Profits and Losses and other items and distributions of cash and
other property with respect to such Units as set forth in Article V hereof.
---------
Ownership of a Unit by a Member shall entitle such Member to one
-7-
<PAGE>
vote on any matter voted on by all Members as provided in this Agreement and/or
as required by applicable law. The Managing Member may cause the Company to
issue to a Member certificates representing the Units held by such Member.
3.5 Issuance of Additional Units and Interests; Admission of New
------------------------------------------------------------
Members; Additional Capital Contributions.
- -----------------------------------------
(a) Subject to obtaining the consent of the Required Interests and as
otherwise provided in this Agreement, the Managing Member shall have the right
to cause the Company to issue (i) additional Units or other interests in the
Company (including other classes or series thereof having different rights),
(ii) obligations, evidences of indebtedness or other securities or interests
convertible or exchangeable into Units or other interests in the Company and
(iii) warrants, options or other rights to purchase or otherwise acquire Units
or other interests in the Company; provided, however, that at any time following
-------- -------
the date hereof, the Company shall not issue Units to any Person unless such
Person shall have executed a joinder agreement in form satisfactory to the
Managing Member pursuant to which such Person agrees to be bound by the
provisions of this Agreement; and provided further that no consent of the
-------- -------
Required Interests shall be required in connection with the issuance of the
Note. The Managing Member shall determine the terms and conditions governing
the issuance of such additional interests, including the number and designation
of such additional interests, the preference (with respect to distributions, in
liquidation or otherwise) over any other Units and any required contributions in
connection therewith. A Person to which the Company issues Units or other
interests in the Company shall be admitted as a Member of the Company only with
the prior written consent of the Managing Member and if such Person has executed
and delivered a counterpart of this Agreement. Notwithstanding the foregoing,
the Managing Member shall have the right, without obtaining the consent of the
Required Interests or any Member, to cause the Company to issue additional
Investor Units in connection with the repurchase by the Company of any Units
held by any Member pursuant to an agreement with such Member. At least 10 days
prior to the issuance and sale of any additional Investor Units in connection
with any such repurchase, the Company shall give written notice of such issuance
to the Investors (other than any Investor whose Units are being repurchased)
and, to the extent permitted under applicable securities laws without material
expenditure by the Company, each such Investor shall be entitled to purchase in
connection with such issuance a number of additional Investor Units equal to
such Investor's pro rata share (based upon the number of Investor Units held by
such Investor and the number of Investor Units held by all Investors other than
any Investor whose Units are being repurchased) of such additional Investor
Units. Any Investor Units which remain unpurchased after such offer to such
Investors, shall be reoffered to such Investors on a pro rata basis until all of
such Investor Units shall have been purchased. Each such Investor may elect to
purchase additional Investor Units by delivering written notice of such election
to the Company together with the purchase price therefor (in the form specified
in the Company's notice) within 10 days after receipt of the Company notice.
Each purchasing Investor shall be entitled to purchase such additional Investor
Units at the same price and on the same terms as such Investor Units are offered
by the Company to the other Investors.
(b) Notwithstanding anything herein to the contrary, John T. Dobson
III ("Dobson") shall have the right, without obtaining the consent of the
------
Required Interests or any Member, to cause the Company to issue Class B
Management Units to employees of any Subsidiary of the Company (including,
without limitation, employees of UCTV) in an amount not to exceed 500 Class B
Management Units; provided, however, that prior to any such issuance, Dobson
-------- -------
shall require such employees to enter into agreements providing for the
repurchase of such Units upon termination of employment and shall obtain
-8-
<PAGE>
the consent of the Managing Member solely with respect to adequacy of any
repurchase rights in favor of the Company regarding such Class B Management
Units; and provided further that the Company shall not issue Class B Management
-------- -------
Units to any Person unless such Person shall have executed a joinder agreement
in form satisfactory to the Managing Member pursuant to which such Person agrees
to be bound by the provisions of this Agreement. In the event Dobson ceases to
be an employee of any Subsidiary of the Company (including, without limitation,
UCTV) or ceases to be a Member, the Managing Member shall have the right to
issue any additional Class B Management Units.
(c) Notwithstanding anything to the contrary in Section 3.5(a) above,
--------------
each Investor shall be required to make additional Capital Contributions to the
Company from time to time with respect to the Investor Units held by such
Investor when and as called by the Managing Member upon ten days prior written
notice solely to fund the exercise by the Company of the Warrants or the
exercise by the Company of the purchase rights granted pursuant to the Equity
Protection Agreements. The amount of any such additional Capital Contribution by
such Investor shall be limited to such Investor's pro rata share (based upon the
number of outstanding Investor Units held by such Investor and the number of
outstanding Investor Units held by all Investors) of the aggregate Capital
Contribution being made by all Investors pursuant to such capital call by the
Managing Member. No additional Investor Units will be issued in connection with
any such additional Capital Contribution.
3.6 Representations, Warranties and Agreements of the Members. Each
---------------------------------------------------------
Member hereby represents and warrants (severally as to itself only) that:
(a) The Units have been purchased by such Member and not by any other
Person, with the Member's own funds and not with the funds of any other Person,
and for the account of such Member, not as a nominee or agent and not for the
account of any other Person. Such Member has purchased the Units for investment
for an indefinite period, not with a view to the sale or distribution of any
part of all thereof by public or private sale or other disposition.
(b) Such Member has been advised that the Units have not been
registered under the Securities Act or registered or qualified under any other
securities law, on the ground, among others, that no distribution or public
offering of the Units is to be effected and the Units will be issued by the
Company in connection with a transaction that does not involve any public
offering within the meaning of Section 4(2) of the Securities Act, or the rules
and regulations of the Securities and Exchange Commission and under comparable
exemptive provisions of the securities laws, rules and regulations of other
jurisdictions. Such Member understands that the Company is relying in part on
the Member's representations as set forth herein for purposes of claiming such
exemptions and that the basis for such exemptions may not be present if,
notwithstanding such Member's representations, such Member has in mind merely
acquiring Units for resale on the occurrence or non-occurrence of some
predetermined event. Such Member has no such intention.
(c) Such Member has such knowledge and experience in financial and
business matters that such Member is capable of evaluating the merits and risks
of an investment in Units and has the capacity to protect such Member's own
interests in connection with such Member's proposed investment in Units.
-9-
<PAGE>
(d) Such Member acknowledges that such Member has been furnished with
such financial and other information concerning the Company as such Member
considers necessary in connection with such Member's investment in Units. Such
Member has carefully reviewed such information and is thoroughly familiar with
the proposed business, operations, properties and financial condition of the
Company and has discussed with representatives of the Company any questions the
Purchase may have had with respect thereto. Such Member understands: (i) the
risks involved in this offering, including the speculative nature of the
investment; (ii) the financial hazards involved in this offering, including the
risk of losing such Member's entire investment; (iii) the lack of liquidity and
restrictions on transfers of Units; and (iv) the tax consequences of this
investment. Such Member has consulted with such Member's own legal, accounting,
tax, investment and other advisers with respect to the tax treatment of an
investment by such Member in Units and the merits and risks of an investment in
Units. Such Member is an "accredited investor" as defined under the Securities
Act or has provided written notice to the Company that such Member is not an
"accredited investor" prior to purchasing any Units or other interest in the
Company.
(e) The execution, delivery and performance by such Member of this
Agreement have been duly authorized by such Member. This Agreement constitutes a
valid and binding obligation of such Member, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding in equity or
at law).
(f) Such Member understands that the Units will be "restricted
securities" as that term is defined in Rule 144 under the Securities Act and,
accordingly, that the Units must be held indefinitely unless they are
subsequently registered under the Securities Act and qualified under any other
applicable securities law or exemptions from such registration and qualification
are available. Such Member understands that the Company is under no obligation
to register or qualify Units under the Securities Act, or any other securities
law.
(g) Such Member is a resident of the jurisdiction set forth in such
Member's address on Schedule A.
----------
3.7 Initial Capital Contributions. Each Member shall make an initial
-----------------------------
Capital Contribution to the Company in cash or assets in the amount set forth
opposite such Member's name on Schedule A hereto. Upon receipt of the initial
----------
Capital Contribution set forth opposite such Member's name on Schedule A, each
----------
Member shall be deemed to own the number of Investor Units and Management Units
set forth opposite such Member's name on Schedule A.
----------
3.8 Defaulting Members. If any Member (a "Defaulting Member") fails
------------------ -----------------
to make full payment of any portion of any additional Capital Contribution
called by the Managing Member pursuant to Section 3.5(c), the Managing Member
--------------
may undertake any one or more of the following steps:
(a) The Managing Member may pursue and enforce all rights and
remedies the Company may have against such Defaulting Member, including a
lawsuit to collect the overdue amount, with interest calculated thereon
at a rate equal to 12%.
-10-
<PAGE>
(b) Notwithstanding anything herein to the contrary, from and after
any date on which a Defaulting Member's fails to make any additional
Capital Contribution pursuant to Section 3.5(c), if such Defaulting
--------------
Member continues to hold Units, (i) such Defaulting Member shall have no
right to receive any distributions from the Company until such time as the
amount of distributions that would have been made to the Defaulting Member
shall have been reduced by an amount equal to the sum of (A) an amount
equal to 18% per annum, compounded annually, of the unpaid additional
Capital Contribution and (B) an amount equal to the unpaid Capital
Contribution, and such reduced amount shall have been distributed to the
Investors other than the Defaulting Member pursuant to Section 5.2(b), (ii)
--------------
such Defaulting Member's Capital Account shall not be credited with such
Defaulting Member's share of items of income and gain allocated to such
Defaulting Member pursuant to Article V, and (iii) such Defaulting Member's
---------
Capital Account shall continue to be debited for such Defaulting Member's
share of items of loss, deduction and expense allocated to such Defaulting
Member pursuant to Article V.
---------
3.9 Outstanding Units. Any Units issued pursuant to this Agreement
-----------------
which are subsequently held by the Company as a result of any repurchase of such
Units by the Company or otherwise, shall not be considered outstanding Units for
any purpose hereunder.
ARTICLE IV
CAPITAL ACCOUNTS
----------------
4.1 Establishment and Determination of Capital Accounts. A capital
---------------------------------------------------
account ("Capital Account") shall be established for each Member in accordance
---------------
with the Treasury Regulations under Section 704(b) of the Code. In accordance
with such Treasury Regulations, the Capital Account of each Member shall consist
of such Member's initial Capital Contribution and shall be (i) increased by any
additional Capital Contributions made by such Member pursuant to the terms of
this Agreement and such Member's share of items of income and gain allocated to
such Member pursuant to Article V and (ii) decreased by such Member's share of
---------
items of loss, deduction and expense allocated to such Member pursuant to
Article V and any distributions to such Member of cash or the fair market value
- ---------
of any other property (net of liabilities assumed by such Member and liabilities
to which such property is subject) distributed to such Member. Any references
in this Agreement to the Capital Account of a Member shall be deemed to refer to
such Capital Account as the same may be increased or decreased from time to time
as set forth above. The Capital Account maintenance rules set forth in this
Section 4.1 are intended to be consistent with the capital account maintenance
- -----------
rules of Treasury Regulation Section 1.704-1(b)(2)(iv).
4.2 Computation of Amounts. For purposes of computing the amount of
----------------------
any item of income, gain, loss, deduction or expense to be reflected in Capital
Accounts, the determination, recognition and classification of each such item
shall be the same as its determination, recognition and classification for
federal income tax purposes; provided that (a) any income that is exempt from
-------------
federal income tax shall be added to such taxable income or losses; (b) any
expenditures of the Company described in Section 705(a)(2)(B) of the Code or
treated as Code Section 705(a)(2)(B) expenditures pursuant to Treasury
Regulation Section 1.704-1(b)(2)(iv)(i), shall be subtracted from such taxable
income or losses; (c) if the Book Value of any Company property is adjusted
pursuant to Treasury Regulation
-11-
<PAGE>
Section 1.704-1(b)(2)(iv)(e) (in connection with a distribution of such
property) or (f) (in connection with a revaluation of Capital Accounts), the
amount of such adjustment shall be taken into account as gain or loss from the
disposition of such property; (d) if property that is reflected on the books of
the Company has a Book Value that differs from the adjusted tax basis of such
property, depreciation, amortization and gain or loss with respect to such
property shall be determined by reference to such Book Value; and (e) the
computation of all items of income, gain, loss, deduction and expense shall be
made without regard to any election pursuant to Section 754 of the Code that may
be made by the Company, unless the adjustment to basis of Company property
pursuant to such election is reflected in Capital Accounts pursuant to Treasury
Regulation Section 1.704-1(b)(2)(iv)(m).
4.3 Interest; Withdrawal. No Member shall be paid interest on any
--------------------
Capital Contributions to the Company or on the balance of such Member's Capital
Account. No Member shall have any right (a) to demand the return of such
Member's Capital Contributions or any other distribution from the Company
(whether upon resignation, withdrawal or otherwise), except upon dissolution of
the Company pursuant to Article XII hereof, or (b) to cause a partition of the
-----------
Company's assets.
ARTICLE V
DISTRIBUTIONS; ALLOCATIONS OF PROFITS AND LOSSES
------------------------------------------------
5.1 Generally. Subject to the provisions of Section 18-607 of the
---------
Act, the Managing Member shall have sole discretion regarding the amounts and
timing of distributions to Members, in each case subject to the retention and
establishment of reasonable reserves of, or payment to third parties of, such
funds as the Managing Member deems necessary with respect to the reasonable
business needs of the Company which shall include the payment or the making of
provision for the payment when due of the Company's obligations, including the
payment of any management or administrative fees and expenses or any other
obligations.
5.2 Distributions. Except as provided in Section 5.4, distributions
------------- -----------
to be made at any time shall be made in the following order and priority:
(a) First, to the holders of Investor Units pro rata according to
-----
their ownership of outstanding Investor Units until the aggregate distributions
with respect to the Investor Units made pursuant to this Section 5.2(a) reduces
--------------
the aggregate Unpaid Preferred Yield to zero; and
(b) Second, to the holders of Investor Units pro rata according to
------
their ownership of outstanding Investor Units until the aggregate distributions
with respect to the Investor Units made pursuant to this Section 5.2(b) reduces
--------------
the aggregate Unreturned Preferred Capital to zero; and
(c) Third, to the holders of the Management Units pro rata according
-----
to their ownership of the outstanding Class A Management Units until the
aggregate distributions with respect to the Class A Management Units made
pursuant to this Section 5.2(c) equals the Applicable Class A Percentage of all
-------------
distributions made pursuant to Section 5.2(a) and this Section 5.2(c); and
-------------- --------------
(d) Fourth, until such time as the IRR Target has been achieved, the
------
Applicable Class A Percentage to the holders of Class A Management Units pro
rata according to their ownership of
-12-
<PAGE>
outstanding Class A Management Units and the remainder to the holders of
Investor Units pro rata according to their ownership of outstanding Investor
Units; and
(e) Fifth, after such time as the IRR Target has been achieved, the
-----
Applicable Class A Catch-up Percentage to the holders of Class A Management
Units pro rata according to their ownership of outstanding Class A Management
Units and the Applicable Class B Catch-up Percentage to the holders of Class B
Management Units pro rata according to their ownership of outstanding Class B
Management Units until the aggregate distributions with respect to the
Management Units made pursuant to Sections 5.2(c), (d) and this Section 5.2(e)
--------------- --- --------------
is equal to the Aggregate Management Percentage of the aggregate distributions
made pursuant to Sections 5.2(a), (c), (d) and this Section 5.2(e) with respect
--------------- --- --- --------------
to the Investor Units and Management Units; and
(f) Sixth, the Applicable Class A Percentage to the holders of Class
-----
A Management Units pro rata according to their ownership of outstanding Class A
Management Units, the Applicable Class B Percentage to the holders of the Class
B Management Units pro rata according to their ownership of outstanding Class B
Management Units and the remainder to the holders of Investor Units pro rata
according to their ownership of outstanding Investor Units.
(g) Notwithstanding Sections 5.2(d), (e) and (f), if subsequent to
----------------------------
the making of any distribution pursuant to Section 5.2(e) or (f), a Cash Outflow
---------------------
occurs (a "Post-Distribution Cash Outflow"), then in such case the amount that
------------------------------
would otherwise be distributed to Management Holders pursuant to Sections
--------
5.2(d), (e) and (f) shall be reduced (and such amount shall be distributed to
- -------------------
holders of Investor Units, pro rata according to their ownership of Investor
Units) by an amount equal to the excess of (i) the aggregate amount of all
distributions previously made to the Management Holders pursuant to Section
-------
5.2(e) and (f) over (ii) the aggregate amount of the distributions that would
- --------------
have been made to the Management Holders pursuant to Section 5.2(e) and (f) if
----------------------
all Post-Distribution Cash Outflows had been taken into account for purposes of
determining whether the IRR Target was met on the date of such distributions.
5.3 Allocation of Profits and Losses. For each Fiscal Year of the
--------------------------------
Company, all Profits and Losses shall be allocated to the Members' Capital
Accounts in a manner such that, as of the end of such Fiscal Year, the Capital
Account of each Member (which may be either a positive or negative balance)
shall be equal to (a) the amount which would be distributed to such Member,
determined as if the Company were to liquidate all of its assets for the Book
Value thereof and distribute the proceeds thereof pursuant to Section 12.2
------------
hereof, minus (b) the sum of (i) such Member's share of partnership minimum gain
-----
(as determined according to Treasury Regulation Sections 1.704-2(d) and (g)(3))
and partner minimum gain (as determined according to Treasury Regulation Section
1.704-2(i)) and (ii) the amount, if any, which such Member is obligated to
contribute to the capital of the Company as of the last day of such Fiscal Year.
5.4 Initial Capital Contributions. Notwithstanding anything to the
-----------------------------
contrary contained in Section 5.2, the Members acknowledge that (i) Willis Stein
made an initial Capital Contribution to the Company in the amount of $29,090.91,
and that in the event this amount is returned to the Company pursuant to the
Escrow Agreement, such amount or other amounts payable to the Company by UCTV
shall be distributed solely to Willis Stein as a return of capital and (ii) the
Management Holders paid their initial Capital Contributions by the delivery of
promissory notes to the Company (the "Management Notes") and
----------------
-13-
<PAGE>
that all principal and accrued interest with respect to the Management Notes
which is paid by such Management Holders shall be distributed solely to the
holders of Preferred Units as a return of capital. Each of the Management
Holders acknowledges and agrees that until such time as all principal and
accrued interest with respect to the Management Note of such Management Holder
is paid in full, such Management Holder shall have no right to receive any
distributions from the Company and all distributions which would have been paid
by the Company to such Management Holder shall be retained by the Company as
payment with respect to the Management Note of such Management Holder and
distributed in accordance with the immediately preceding sentence until such
Management Note is paid in full. Any distributions to the holders of Preferred
Units upon any payment with respect to a Management Note shall be deemed a
return of capital to the holders of Preferred Units.
5.5 Tax Allocations; Code Section 704(c).
------------------------------------
(a) The income, gains, losses, deductions and expenses of the Company
shall be allocated, for federal, state and local income tax purposes, among the
Members in accordance with the allocation of such income, gains, losses,
deductions and expenses among the Members for computing their Capital Accounts,
except that if any such allocation is not permitted by the Code or other
- -----------
applicable law, the Company's subsequent income, gains, losses, deductions and
expenses shall be allocated among the Members so as to reflect as nearly as
possible the allocation set forth herein in computing their Capital Accounts.
(b) In accordance with Code Section 704(c) and the Treasury
Regulations thereunder, income, gain, loss, deduction and expense with respect
to any property contributed to the capital of the Company shall, solely for tax
purposes, be allocated among the Members so as to take account of any variation
between the adjusted basis of such property to the Company for federal income
tax purposes and its fair market value at the time of contribution.
(c) If the Book Value of any Company asset is adjusted pursuant to
Section 4.2, subsequent allocations of items of taxable income, gain, loss,
- -----------
deduction and expense with respect to such asset shall take account of any
variation between the adjusted basis of such asset for federal income tax
purposes and its Book Value in the same manner as under Code Section 704(c).
(d) Any elections or other decisions relating to such allocations
shall be made by the Members in any manner that reasonably reflects the purpose
and intent of this Agreement. Allocations pursuant to this Section 5.5 are
-----------
solely for purposes of federal, state and local taxes and shall not affect, or
in any way be taken into account in computing, any Member's Capital Account or
share of profits, losses, other items or distributions pursuant to any
provisions of this Agreement.
ARTICLE VI
MANAGEMENT OF THE COMPANY
-------------------------
6.1 Managing Member. Except as otherwise required by the Act, the
---------------
business and affairs of the Company shall be managed by or under the direction
of a "manager"(as that term is defined in the Act) who shall be a Member (the
"Managing Member"). The initial Managing Member shall be
---------------
-14-
<PAGE>
Willis Stein. Except as otherwise expressly provided for in this Agreement, the
Members hereby consent to the exercise by the Managing Member of all such powers
and rights conferred on them by the Act with respect to the management and
control of the Company. The Managing Member shall have the power on behalf and
in the name of the Company to carry out any and all of the objectives and
purposes of the Company and to perform all acts and enter into and perform all
contracts and other undertakings which the Managing Member, in its sole
discretion, deems necessary or advisable or incidental thereto, including the
power to dispose of or vote any security held by the Company (including any
securities of UCTV) or exercise any right to acquire securities held by the
Company (including the Warrants and the Equity Protection Agreements).
Notwithstanding the foregoing and except as explicitly set forth in this
Agreement, if a vote, consent or approval of the Members is required by the Act
or other applicable law with respect to any act to be taken by the Company or
matter considered by the Managing Member, the Members agree that they shall be
deemed to have consented to or approved such act or voted on such matter in
accordance with the determination of the Managing Member on such act or matter.
No Member, in his or its capacity as a Member, shall have any power to act for,
sign for or do any act that would bind the Company. The Managing Member shall
devote such time and effort to the affairs of the Company as he or it may deem
appropriate for the oversight of the management and affairs of the Company.
6.2 Delegation by Managing Member. The Managing Member shall have the
-----------------------------
power and authority to delegate to one or more other Persons the Managing
Member's rights and powers to manage and control the business and affairs of the
Company, including to delegate to agents and employees of a Member or the
Company, and to delegate by a written agreement with, or otherwise to, other
Persons. The Managing Member may authorize any Person (including, without
limitation, any Member) to enter into and perform under any document on behalf
of the Company.
6.3 Resignation; Vacancy; Removal. The Managing Member may resign by
-----------------------------
delivering his or its written resignation to the Company. Such resignation
shall be effective fourteen (14) business days following receipt of such
resignation by the Company unless some later time is specified in such
resignation. If a vacancy in the position of Managing Member should for any
reason occur, a replacement Managing Member shall be appointed by Willis Stein.
Any subsequent Managing Member may be removed only by Willis Stein. The initial
Managing Member may not be removed for any reason. Any subsequent Managing
Member may be removed only by Willis Stein.
6.4 Compensation. The Managing Member shall not be entitled to
------------
compensation from the Company in connection with its activities as Managing
Member; provided that the foregoing shall not prevent the Managing Member from
--------
receiving reimbursement for out-of-pocket expenses incurred by the Managing
Member on behalf of the Company, receiving distributions as a Member pursuant to
this Agreement or otherwise receiving compensation from the Company for actions
unrelated to its activities as Managing Member.
6.5 Board Membership of Subsidiaries.
--------------------------------
(a) The Managing Member and each other Member shall cause the Company
to vote all voting securities of UCTV over which the Company has voting
control and shall take all other necessary or desirable actions within its
control (including in its capacity as a member of the Board, as defined
below) so that the following individuals shall be elected to the board of
directors
-15-
<PAGE>
of UCTV (the "Board") and shall remain directors of the Board until removed
in accordance with Sections 6.5(b) and 6.5(c):
--------------------------
(i) two representatives designated by the holders of a
majority of the Investor Units (the "Investor Directors"), which
------------------
Investor Directors shall initially be Avy H. Stein and Beth F.
Johnston;
(ii) Jason Elkin, Joseph D. Gersh and John T. Dobson III (the
"Management Directors"), so long as each such Management Director is
--------------------
employed by UCTV; and
(iii) up to six additional representatives designated by the
holders of a majority of the Investor Units, who shall initially include
Thomas McMillian (the "Other Directors").
---------------
(b) The removal from the Board (with or without cause) of any
Investor Director or any Other Director shall only be upon written request
of the Managing Member and under no other circumstances.
(c) Each Management Director shall be removed from the Board
automatically if such Management Director ceases to be employed by UCTV
for any reason.
(d) In the event that any representative designated hereunder ceases
to serve as a member of the Board during his term of office for any reason,
the resulting vacancy on the Board shall be filled by a representative
designated by the same group or Person that designated such prior
representative.
ARTICLE VII
MEMBERS
-------
7.1 Membership Status; Resignation. A Transfer by a Member of all of
such Member's Units shall be deemed to be a resignation by such Member effective
upon consummation of such Transfer and such Member shall not be entitled to any
distributions or payments of any kind from the Company. Transfers may only be
made pursuant to Article XI hereof. To the fullest extent permitted by law, a
----------
Member may not resign or withdraw as a Member of the Company without the consent
of the Managing Member, which consent may be withheld in its sole discretion.
7.2 No Participation in Management. The management of the business
------------------------------
and affairs of the Company shall be vested in whole in the Managing Member in
accordance with Article VI of this Agreement. Except with respect to the
----------
execution and filing of the Certificate, as otherwise specifically provided by
this Agreement or required by the Act, no Member, acting solely in the capacity
of Member, shall participate in the management of or be an agent of the Company
or have any authority to act for or bind the Company.
7.3 Voting Rights Generally; Voting of Units. Except as expressly
----------------------------------------
provided in this Agreement or as may be required by the Act, Members shall have
no voting, approval or consent rights. Each Member shall be entitled to one (1)
vote for each Unit held by such Member upon
-16-
<PAGE>
any matter upon which Members are entitled to vote submitted to a vote at a
meeting of the Members called by the Managing Member. Any action required to, or
which may be, taken by Members may be taken without a meeting if consented
thereto in a writing setting forth the action so taken and signed by all the
Members entitled to vote with respect to the subject matter thereof.
7.4 Conflicts of Interest. The Company may transact business with
---------------------
any Member, its Affiliates and each of their respective stockholders, directors,
officers, controlling persons, members, partners and employees; provided, the
terms of those transactions are no less favorable than those the Company could
obtain from unrelated third parties or are approved by a majority of the Members
who have no direct or indirect interest in that transaction.
7.5 Outside Activities. Each Member of the Company, in its capacity
------------------
as such, its Affiliates and each of their respective stockholders, directors,
officers, controlling persons, members, partners and employees may at any time
and from time to time may engage in and own interests in other business ventures
of any and every type and description, independently or with others (including
ones in competition with the Company) with no obligation to offer to the Company
or any other Member or officer the right to participate therein. Neither the
Company nor any Member of the Company shall have any rights by virtue of this
Agreement or the limited liability company relationship created hereby in any
such business interests or activities of any such Person.
7.6 Confidentiality. Each Member agrees to maintain the
---------------
confidentiality of all proprietary, nonpublic information, documents and
materials relating to the business of the Company or any of its Subsidiaries
which the Member now or in the future may possess, except to the extent
disclosure of any such information is required by law or authorized by the
Company or reasonably occurs in connection with disputes over the terms of this
Agreement.
ARTICLE VIII
EXCULPATION AND INDEMNIFICATION
-------------------------------
8.1 Exculpation. No Member (including the Managing Member) shall
-----------
have any duty to the Company or to any Member of the Company except as expressly
set forth herein. No Member (including the Managing Member) shall be liable to
any other Member or the Company for any loss or damage suffered by the Company
or any Member unless such loss or damage is caused by such Member's gross
negligence, willful misconduct, intentional violation of law or material breach
of this Agreement. No Member (including the Managing Member) shall be liable for
errors in judgment or for any acts or omissions that do not constitute gross
negligence, willful misconduct, intentional violation of law or material breach
of this Agreement. Any Member (including the Managing Member) may consult with
counsel and accountants in respect of Company affairs, and provided such Member
acts in good faith reliance upon the advice or opinion of such counsel or
accountants, such Member shall not be liable for any loss or damage suffered by
the Company or any Member in reliance thereon. The preceding sentence shall in
no way limit any Person's right to rely on information to the extent provided in
Section 18-406 of the Act.
-17-
<PAGE>
8.2 Right to Indemnification. Subject to the limitations and
------------------------
conditions as provided in this Article VIII, each Person who was or is made a
------------
party or is threatened to be made a party to or is involved in any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative, arbitrative (hereinafter a "Proceeding"), or any appeal in such
----------
a Proceeding or any inquiry or investigation that could lead to such a
Proceeding, by reason of the fact that such Person, or a Person of whom such
Person is the legal representative, is or was a Member of the Company or while a
Member of the Company is or was serving at the request of the Company as a
manager, director, officer, partner, venturer, proprietor, trustee, employee,
agent or similar functionary of another foreign or domestic limited liability
company, corporation, partnership, joint venture, sole proprietorship, trust,
employee benefit plan or other enterprise shall be indemnified by the Company to
the fullest extent permitted under applicable law, as the same exist or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Company to provide broader indemnification
rights than said law permitted the Company to provide prior to such amendment)
against judgments, penalties (including excise and similar taxes and punitive
damages), fines, settlements and reasonable expenses (including, without
limitation, attorneys' fees) actually incurred by such Person in connection with
such Proceeding; provided that (a) such Person's course of conduct was pursued
-------------
in good faith and believed by such Person to be in the best interests of the
Company and (b) such course of conduct did not constitute gross negligence or
willful misconduct on the part of such Person and otherwise was in accordance
with the terms of this Agreement. Indemnification under this Article VIII shall
------------
continue as to a Person who has ceased to serve in the capacity which initially
entitled such Person to indemnity hereunder. The rights granted pursuant to
this Article VIII shall be deemed contractual rights, and no amendment,
------------
modification or repeal of this Article VIII shall have the effect of limiting or
------------
denying any such rights with respect to actions taken or Proceedings arising
prior to any amendment, modification or repeal. It is expressly acknowledged
that the indemnification provided in this Article VIII could involve
------------
indemnification for negligence or under theories of strict liability.
8.3 Advance Payment. The right to indemnification conferred in this
---------------
Article VIII shall include the right to be paid or reimbursed by the Company the
- ------------
reasonable expenses incurred by a Person of the type entitled to be indemnified
under Section 8.2 who was, is or is threatened to be made a named defendant or
-----------
respondent in a Proceeding in advance of the final disposition of the Proceeding
and without any determination as to the Person's ultimate entitlement to
indemnification; provided, however, that the payment of such expenses incurred
by any such Person in advance of the final disposition of a Proceeding shall be
made only upon delivery to the Company of a written affirmation by such Person
of his or her good faith belief that he has met the standard of conduct
necessary for indemnification under Article VIII and a written undertaking, by
------------
or on behalf of such Person, to repay all amounts so advanced if it shall
ultimately be determined that such indemnified Person is not entitled to be
indemnified under this Article VIII or otherwise.
------------
8.4 Indemnification of Employees and Agents. The Company shall
---------------------------------------
indemnify and advance expenses to any officer, director, partner, employee or
agent of the Managing Member or the Company to the same extent and subject to
the same conditions that it may indemnify and advance expenses to the Managing
Member under this Article VIII.
------------
8.5 Appearance as a Witness. Notwithstanding any other provision of
-----------------------
this Article VIII, the Company may pay or reimburse reasonable out-of-pocket
------------
expenses incurred by a Managing Member or such Managing Member's officers,
directors, employees, partners and agents in connection with such
-18-
<PAGE>
Person's appearance as a witness or other participation in a Proceeding related
to or arising out of the business of the Company at a time when such Person is
not a named defendant or respondent in the Proceeding.
8.6 Nonexclusivity of Rights. The right to indemnification and the
------------------------
advancement and payment of expenses conferred in this Article VIII shall not be
------------
exclusive of any other right which a Person indemnified pursuant to Section 8.4
-----------
may have or hereafter acquire under any law (common or statutory), provision of
the Certificate or this Agreement, agreement, vote of Members or otherwise.
8.7 Savings Clause. If this Article VIII or any portion hereof shall
-------------- ------------
be invalidated on any ground by any court of competent jurisdiction, then the
Company shall nevertheless indemnify and hold harmless each Person indemnified
pursuant to this Article VIII as to costs, charges and expenses (including
------------
attorneys' fees), judgments, fines and amounts paid in settlement with respect
to any action, suit or proceeding, whether civil, criminal, administrative or
investigative to the full extent permitted by any applicable portion of this
Article VIII that shall not have been invalidated and to the fullest extent
- ------------
permitted by applicable law.
ARTICLE IX
TAXES
-----
9.1 Tax Returns. The Company shall cause to be prepared and filed
-----------
all necessary federal and state income tax returns for the Company, including
making any elections the Managing Member may deem appropriate and in the best
interests of the Members. Each Member shall furnish to the Managing Member all
pertinent information in its possession relating to Company operations that is
necessary to enable the Company's income tax returns to be prepared and filed.
9.2 Tax Matters Partner. The Managing Member shall be the "tax
-------------------
matters partner" of the Company pursuant to Section 6231(a)(7) of the Code (the
"Tax Matters Member"). The Tax Matters Member is authorized to represent the
------------------
Company before the Internal Revenue Service and any other governmental agency
with jurisdiction, and to sign such consents and to enter into settlements and
other agreements with such agencies as the Managing Member deems necessary or
advisable.
ARTICLE X
BOOKS, REPORTS
--------------
10.1 Maintenance of Books. The Company shall keep appropriate books
--------------------
and records of accounts and shall keep appropriate minutes of the proceedings of
its Members and any committees. The Fiscal Year of the Company shall be the
calendar year.
10.2 Member Tax Information. Within ninety (90) days after the end of
----------------------
each Taxable Year, the Company will cause to be delivered to each Person who was
a Member at any time during such
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<PAGE>
Taxable Year a Form K-1 and such other information, if any, with respect to the
Company as may be necessary for the preparation of such Member's federal, state
and local income tax returns.
ARTICLE XI
TRANSFERS
---------
11.1 Assignment by Members. No holder of Units shall Transfer any
---------------------
Units or other interests in the Company prior to the first anniversary of the
Escrow Release Date (as defined in the Escrow Agreement). No Management Holder
shall transfer any Units or other interests of the Company, or offer to Transfer
all or any part of such Management Holder's Units or other interest in the
Company (whether voluntarily or involuntarily) without the consent of the
Managing Member, which consent may be withheld in the Managing Member's sole
discretion. Each transferee of Units or other interest in the Company shall as a
condition prior to such Transfer execute a joinder agreement in a form
satisfactory to the Managing Member pursuant to which such transferee shall
agree to be bound by the provisions of this Agreement (it being understood that
any such Transfer shall have the effect of Transferring an economic interest in
such Units and shall not have the effect of Transferring any other rights of a
Member unless such Transferee is admitted as a substitute Member pursuant to
Section 11.3). Any Transfer by a Member of any part of Units to a Person who is
- ------------
not a Member shall not relieve such Member of any of its obligations with
respect to such Units.
11.2 Void Transfers. Any Transfer by any Member of any Units or other
--------------
interest in the Company (a) in contravention of this Agreement (including,
without limitation, the failure of the transferee to execute a counterpart in
accordance with Section 11.1), (b) prior to the first anniversary of the Escrow
------------
Release Date or (c) which would cause the Company to not be treated as a
partnership for U.S. federal income tax purposes, shall be void and ineffectual
and shall not bind or be recognized by the Company or any other party. No
purported assignee shall have any right to any profits, losses or distributions
of the Company.
11.3 Substituted Member.
------------------
(a) An assignee of any Units or other interest in the Company held by
a Member, or any portion thereof, shall become a substituted Member entitled to
all the rights of a Member if and only if the assignor gives the assignee such
right, and prior written consent to such assignment and substitution has been
obtained from the Managing Member, which consent may be withheld in such
Managing Member's sole discretion.
(b) The Company and the Members shall be entitled to treat the record
owner of any Units or other interest in the Company as the absolute owner
thereof and shall incur no liability for distributions of cash or other property
made in good faith to such owner until such time as a written assignment of such
Units or other interest in the Company, which assignment is permitted pursuant
to the terms and conditions of Section 11.1 and Section 11.3 hereof, has been
------------ ------------
received and accepted by the Managing Member and recorded on the books of the
Company.
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<PAGE>
(c) Upon the admission of a substituted Member, Schedule A attached
----------
hereto shall be amended to reflect the name, address and Units of such
substituted Member and to eliminate the name and address of and other
information relating to the assigning Member with regard to the assigned Units.
11.4 Effect of Assignment.
--------------------
(a) Any Member who shall make a permitted assignment under this
Agreement of any Units or other interest in the Company shall cease to be a
Member of the Company with respect to such Units or other interest and shall no
longer have any rights or privileges of a Member with respect to such Units or
other interest, except that unless and until the assignee of such Member is
admitted as a substituted Member in accordance with the provisions of this
Article XI, such assigning Member shall retain the statutory rights and
- ----------
obligations of an assignor member under applicable law.
(b) Any Person who acquires in any manner whatsoever any Units or
other interest in the Company, irrespective of whether such Person has accepted
and adopted in writing the terms and provisions of this Agreement, shall be
deemed by the acceptance of the benefits of the acquisition thereof to have
agreed to be subject to and bound by of all the terms and conditions of this
Agreement that any predecessor in such Units or other interest in the Company of
such Person was subject to or by which such predecessor was bound.
(c) Following an assignment of any Units or other interest that is
permitted under this Agreement, the transferee of such Units or interest shall
be treated as having made all of the Capital Contributions in respect of, and
received all of the distributions received in respect of, such Units or
interest, shall succeed to the Capital Account associated with such Units or
interest and shall receive allocations and distributions under Articles V and
--------------
XII in respect of such Units or interest as if such transferee were a Member.
- ---
11.5 Permitted Transfers. Subject in all events to the general
-------------------
restrictions on Transfers contained in Sections 11.1, 11.2 and 11.3, the
----------------------------
restrictions contained in the first sentence of Section 11.1 shall not apply to
------------
any Transfer of Units by any Unitholder among such Unitholder's Permitted
Transferees so long as such Permitted Transferee shall agree in writing to be
bound by the provisions of this Agreement prior to any such Transfer.
11.6 Deliveries for Transfer.
-----------------------
(a) In connection with the Transfer of any Restricted Securities, the
holder thereof will deliver written notice to the Company describing in
reasonable detail the Transfer or proposed Transfer. In addition, in the case
of any Certificated Units (as defined below), if the holder of such Restricted
Securities delivers to the Company an opinion of such counsel that no subsequent
Transfer of such Restricted Securities will require registration under the
Securities Act, the Company will promptly upon such contemplated Transfer
deliver new certificates or instruments, as the case may be, for such Restricted
Securities which do not bear the restrictive legend relating to the Securities
Act as set forth below. If the Company is not required to deliver new
certificates or instruments, as the case may be, for such Restricted Securities
not bearing such legend, the holder thereof will not Transfer the same until the
prospective transferee has confirmed to the Company in writing its agreement to
be bound by the conditions contained in this Section 11.6.
------------
-21-
<PAGE>
(b) Notwithstanding any other provisions of this Article XI, no
----------
Transfer of Units or any other interest in the Company may be made unless in the
opinion of counsel (who may be counsel for the Company), satisfactory in form
and substance to the Managing Member and counsel for the Company (which opinion
may be waived, in whole or in part, at the discretion of the Managing Member),
such Transfer would not violate any federal securities laws or any state or
provincial securities or "blue sky" laws (including any investor suitability
standards) applicable to the Company or the interest to be transferred, or cause
the Company to be required to register as an Investment Company under the
Investment Company Act of 1940, as amended. Such opinion of counsel shall be
delivered in writing to the Company prior to the date of the Transfer.
11.7 Prospective Transferees. Subject to the terms of this Agreement,
-----------------------
the Company agrees to cooperate, as may reasonably be requested, in order to
provide any information and access to any information to any prospective
transferee in connection with a proposed Transfer.
11.8 Legend. In the event that certificates representing the Units are
------
issued ("Certificated Units"), such certificates will bear a legend stating that
------------------
the Transfer of the Units is subject to the conditions specified in this
Agreement.
11.9 Effective Date. Any Transfer and any related admission of a
--------------
Person as a Member in compliance with this Article XI shall be deemed effective
----------
on such date that the transferee or successor in interest complies with
the requirements of this Agreement.
ARTICLE XII
DISSOLUTION, LIQUIDATION AND TERMINATION
----------------------------------------
12.1 Dissolution. The Company shall be dissolved and its affairs
-----------
shall be wound up on the first to occur of the following:
(a) the expiration of its term pursuant to Section 2.5;
-----------
(b) prior to April 25, 2002, the written consent of the Required
Interests to dissolve the Company;
(c) after April 25, 2002, the written determination of the Managing
Member (in its self-discretion) to dissolve the Company;
(d) upon the determination of the Managing Member in the event of a
sale of all or substantially all the Company's assets or in the event the
Company no longer owns any securities of UCTN; and
(e) the entry of a decree of judicial dissolution of the Company
under Section 18-802 of the Act.
-22-
<PAGE>
The death, retirement, resignation, expulsion, incapacity, bankruptcy or
dissolution of a Member, or the occurrence of any other event that terminates
the continued membership of a Member in the Company, shall not cause a
dissolution of the Company, and the Company shall continue in existence subject
to the terms and conditions of this Agreement.
12.2 Liquidation and Termination. On dissolution of the Company, the
---------------------------
Managing Member shall act as liquidator or may appoint one or more Members as
liquidator. The liquidator(s) shall proceed diligently to wind up the affairs
of the Company and make final distributions as provided herein and in the Act.
The costs of liquidation shall be borne as a Company expense. Until final
distribution, the liquidator(s) shall continue to operate the Company properties
with all of the power and authority of the Managing Member and the Members. The
steps to be accomplished by the liquidators are as follows:
(a) as promptly as possible after dissolution and again after final
liquidation, the liquidator(s) shall cause a proper accounting to be made by a
recognized firm of certified public accountants of the Company's assets,
liabilities and operations through the last day of the calendar month in which
the dissolution occurs or the final liquidation is completed, as applicable;
(b) the liquidator(s) shall cause the notice described in the Act to
be mailed to each known creditor of and claimant against the Company in the
manner described thereunder;
(c) the liquidator(s) shall pay, satisfy or discharge from Company
funds all of the debts, liabilities and obligations of the Company (including,
without limitation, all expenses incurred in liquidation) or otherwise make
adequate provision for payment and discharge thereof (including, without
limitation, the establishment of a cash fund for contingent liabilities in such
amount and for such term as the liquidator(s) may reasonably determine); and
(d) the remaining assets of the Company (the "Remaining Assets")
----------------
shall be distributed to the Members in accordance with Sections 5.2 and 5.4
--------------------
hereof. The Remaining Assets shall be distributed by the end of the taxable year
of the Company during which the liquidation of the Company occurs (or, if later,
90 days after the date of the liquidation).
All distributions in kind to the Members shall be made subject to the liability
of each distributee for costs, expenses and liabilities theretofore incurred or
for which the Company has committed prior to the date of termination, and those
costs, expenses and liabilities shall be allocated to the distributees pursuant
to this Section 12.2. The distribution of cash and/or property to a Member in
------------
accordance with the provisions of this Section 12.2 constitutes a complete
------------
return to the Member of its Capital Contributions and a complete distribution to
the Member of its interest in the Company and all the Company's property and
constitutes a compromise to which all Members have consented within the meaning
of the Act. To the extent that a Member returns funds to the Company, it has no
claim against any other Member for those funds. Any Company assets distributed
in kind will first be written up or down to their fair market value, thus
creating Profits or Losses (if any), which shall be allocated in accordance with
Sections 5.3 and 5.4.
- ------------ ---
12.3 Management Holder Give Back. After the final distribution of the
---------------------------
assets of the Company among the Members as provided in Section 12.2 and Article
------------ -------
V, the Management Holders shall contribute to the Company (pro rata according to
- -
their ownership of Management Units) an amount equal to the sum of the
---
following:
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<PAGE>
(a) first, in the event that the Investors did not receive
-----
distributions in the aggregate pursuant to Sections 5.2(a) and (b) equal to
-----------------------
their aggregate Capital Contributions plus the aggregate Yield accrued through
such date, the Management Holders shall make a Capital Contribution (pro rata
according to their ownership of Management Units) to the Company equal to such
deficit and such amount will be distributed to the holders of Investor Units,
pro rata according to their ownership of Investor Units; and
(b) second, in the event that distributions to Management Holders
------
were not reduced by the entire excess amount described in Section 5.2(g), the
---------------
Management Holders shall make a Capital Contribution (pro rata according to
their ownership of Management Units) to the Company equal to the amount by which
distributions to Management Holders were not reduced by the entire excess amount
described in Section 5.2(g) and such amount will be distributed to the holders
--------------
of Investor Units, pro rata according to their ownership of Investor Units;
provided that such Management Holders Capital Contribution shall not exceed
- --------
100% of the net amount distributed to the Management Holders during the life of
the Company pursuant to Section 5.2. Except as otherwise provided in this
-----------
Section 12.3, and notwithstanding any custom or rule of law to the contrary, to
- ------------
the extent that any Member has a deficit Capital Account balance, upon
dissolution of the Company such deficit shall not be an asset of the Company and
such Members shall not be obligated to contribute such amount to the Company to
bring the balance of such Member's capital account to zero.
12.4 Cancellation of Certificate. On completion of the distribution of
---------------------------
Company assets as provided herein, the Company is terminated, and the Managing
Member (or such other Person or Persons as the Act may require or permit) shall
file a certificate of cancellation with the Secretary of State of Delaware,
cancel any other filings made pursuant to Section 2.5 and take such other
-----------
actions as may be necessary to terminate the Company.
ARTICLE XIII
GENERAL PROVISIONS
------------------
13.1 Notices. Except as expressly set forth to the contrary in this
-------
Agreement, all notices, requests or consents provided for or permitted to be
given under this Agreement must be in writing and shall be deemed delivered:
(a) upon delivery if delivered in person; (b) three (3) business days after
deposit in the United States mail, addressed to the recipient, postage paid, and
registered or certified with return receipt requested; (c) upon transmission if
sent via telecopier, with a confirmation copy sent via overnight mail, provided
--------
that confirmation of such overnight delivery is received; or (d) one (1)
- ----
business day after deposit with a national overnight courier provided that
-------------
confirmation of such overnight delivery is received. All notices, requests and
consents to be sent to a Member must be sent to or made at the address given for
that Member on Schedule A, or such other address as that Member may specify by
----------
notice to the other Members. Any notice, request, or consent to the Company or
the Managing Member must be given to the Managing Member at the address for the
Managing Member set forth on Schedule A. Whenever any notice is required to be
----------
given by law, the Certificate or this Agreement, a written waiver thereof,
signed by the Person entitled to notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.
-24-
<PAGE>
13.2 Entire Agreement. This Agreement constitutes the entire agreement
----------------
of the Members and their Affiliates relating to the Company and supersedes all
prior contracts or agreements with respect to the Company, whether oral or
written.
13.3 Effect of Waiver or Consent. A waiver or consent, express or
---------------------------
implied, to or of any breach or default by any Person in the performance by that
Person of its obligations with respect to the Company is not a consent or waiver
to or of any other breach or default in the performance by that Person of the
same or any other obligations of that Person with respect to the Company.
Failure on the part of a Person to complain of any act of any Person or to
declare any Person in default with respect to the Company, irrespective of how
long that failure continues, does not constitute a waiver by that Person of its
rights with respect to that default until the applicable statute-of-limitations
period has run.
13.3 Amendment, Modification or Waiver. Except as otherwise expressly
---------------------------------
provided herein, this Agreement may be amended, modified or waived from time to
time only by a written instrument adopted by the Managing Member; provided,
however, that (a) except as otherwise expressly provided herein, an amendment or
modification reducing disproportionately a Member's Units or other interest in
profits or losses or in distributions or increasing a Member's Capital
Contribution shall be effective only with that Member's consent, (b) an
amendment, modification or waiver to this Agreement which affects the
liabilities, obligations or rights of a particular class of Units in a manner
which is more adverse than such amendment, modification or waiver affects the
rights of all classes of Units shall be effective only with the consent of the
holders of a majority of the outstanding Units of such class, and (c) an
amendment, modification or waiver reducing the Required Interests for any
consent or vote in this Agreement shall be effective only with the consent or
vote of Members having the interest theretofore required, and provided further
that the Managing Member may amend and modify the provisions of this Agreement
and Schedule A hereto to the extent necessary to reflect the issuance of new
----------
Units or other interests in the Company as contemplated by Section 3.5 as
-----------
determined in good faith by the Managing Member.
13.5 Binding Effect. Subject to the restrictions on Transfers set
--------------
forth in this Agreement, this Agreement is binding on and shall inure to the
benefit of the Members and their respective heirs, legal representatives,
successors and assigns.
13.6 Governing Law; Severability. THIS AGREEMENT IS GOVERNED BY AND
---------------------------
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE,
EXCLUDING ANY CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE
OR THE CONSTRUCTION OF THIS AGREEMENT TO THE LAW OF ANOTHER JURISDICTION. In the
event of a direct conflict between the provisions of this Agreement and any
provision of the Certificate or any mandatory provision of the Act, the
applicable provision of the Certificate or the Act shall control. If any
provision of this Agreement or the application thereof to any Person or
circumstance is held invalid or unenforceable to any extent, the remainder of
this Agreement and the application of that provision to other Persons or
circumstances is not affected thereby and that provision shall be enforced to
the greatest extent permitted by law.
13.7 Further Assurances. In connection with this Agreement and the
------------------
transactions contemplated hereby, each Member shall execute and deliver any
additional documents and instruments
-25-
<PAGE>
and perform any additional acts that may be necessary or appropriate to
effectuate and perform the provisions of this Agreement and those transactions.
13.8 Waiver of Certain Rights. Each Member irrevocably waives any
------------------------
right it may have to demand any distributions or withdrawal of property from the
Company or to maintain any action for dissolution of the Company or for
partition of the property of the Company.
13.9 Indemnification and Reimbursement for Payments on Behalf of a
-------------------------------------------------------------
Member. If the Company is obligated to pay any amount to a governmental agency
- ------
(or otherwise makes a payment) because of a Member's status or otherwise
specifically attributable to a Member (including, without limitation, federal,
state or local withholding taxes, state personal property taxes, state
unincorporated business taxes, state personal property replacement taxes, etc.),
then such Member (the "Indemnifying Member") shall indemnify the Company in full
-------------------
for the entire amount paid (including, without limitation, any interest,
penalties and expenses associated with such payments). The amount to be
indemnified shall be charged against the Capital Account of the Indemnifying
Member, and, at the option of the Members, either:
------
(a) promptly upon notification of an obligation to indemnify the
Company, the Indemnifying Member shall make a cash payment to the Company equal
to the full amount to be indemnified (and the amount paid shall be added to the
Indemnifying Member's Capital Account but shall not be treated as a Capital
Contribution), or
--
(b) the Company shall reduce distributions which would otherwise be
made to the Indemnifying Member, until the Company has recovered the amount to
be indemnified (and, notwithstanding Section 4.1, the amount withheld shall not
be treated as a Capital Contribution).
The provisions of this Section 13.9 shall survive a liquidation, dissolution or
------------
termination of the Company.
13.10 Notice to Members of Provisions. By executing this Agreement,
-------------------------------
each Member acknowledges that it has actual notice of (i) all of the provisions
hereof (including, without limitation, the restrictions on the transfer set
forth in Article XI) and (ii) all of the provisions of the Certificate.
----------
13.11 Counterparts. This Agreement may be executed in multiple
------------
counterparts with the same effect as if all signing parties had signed the same
document. All counterparts shall be construed together and constitute the same
instrument.
13.12 Consent to Jurisdiction. Each Member irrevocably submits to the
-----------------------
non-exclusive jurisdiction of the United States District Court for the Northern
District of Illinois and the state courts of the State of Illinois, sitting in
Chicago, for the purposes of any suit, action or other proceeding arising out of
this Agreement or any transaction contemplated hereby. Each Member further
agrees that service of any process, summons, notice or document by U.S.
certified or registered mail to such Member's respective address set forth above
shall be effective service of process in any action, suit or proceeding in
Illinois with respect to any matters to which it has submitted to jurisdiction
as set forth above in the immediately preceding sentence. Each Member
irrevocably and unconditionally waives any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement or the transactions
contemplated hereby in the United States District Court for the Northern
District of Illinois or the state
-26-
<PAGE>
courts of the State of Illinois, sitting in Chicago, and hereby irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in such court has been brought in an
inconvenient forum.
13.13 Headings. The headings used in this Agreement are for the
--------
purpose of reference only and will not otherwise affect the meaning or
interpretation of any provision of this Agreement.
13.14 Remedies. The Company and the Members shall be entitled to
--------
enforce their rights under this Agreement specifically, to recover damages by
reason of any breach of any provision of this Agreement (including costs of
enforcement) and to exercise any and all other rights existing in their favor.
The parties hereto agree and acknowledge that money damages may not be an
adequate remedy for any breach of the provisions of this Agreement and that the
Company or any Member may in its or his sole discretion apply to any court of
law or equity of competent jurisdiction for specific performance or injunctive
relief (without posting a bond or other security) in order to enforce or prevent
any violation or threatened violation of the provisions of this Agreement.
13.15 Parties in Interest. Except as expressly provided in the Act,
-------------------
nothing in this Agreement shall confer any rights or remedies under or by reason
of this Agreement on any Persons other than the Members and their respective
successors and assigns nor shall anything in this Agreement relieve or discharge
the obligation or liability of any other Person to any party to this Agreement,
nor shall any provision give any other Person any right of subrogation or action
over or against any party to this Agreement.
* * * * * *
-27-
<PAGE>
IN WITNESS WHEREOF, the Members have executed this Agreement as of the
date first set forth above.
MEMBERS:
WILLIS STEIN & PARTNERS, L.P.
By: Willis Stein & Partners, L.L.C.
Its General Partner
By: /s/ Avy H. Stein
----------------------------
Avy H. Stein
Its Manager
/s/ Jason Elkin
---------------------------------
Jason Elkin
/s/ Joseph D. Gersh
---------------------------------
Joseph D. Gersh
/s/ John T. Dobson, III
---------------------------------
John T. Dobson III
-28-
<PAGE>
<TABLE>
<CAPTION>
Initial
Capital
Initial Account
Capital with
Account with Number of respect Percentage Number of
Number of respect to Percentage Class A to Class A of Class A Class B
Name and Address of Investor Investor of Investor Management Management Management Management
Members Units Units Units Units Units Units Units(1)
------- ----- ----- ----- ----- ----- ----- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Willis Stein & Partners, 15,200,000 $15,200,000.00 93.8272% 0 $0.00 0.0000% 0
L.P. 227 West Monroe Street
Suite 4300
Chicago, Il 60606
Telecopy: (312) 422-2424
(312) 422-2400
Attention: Avy H. Stein
Beth F. Johnston
Jason Elkin 333,334 $333,333.40 2.0576% 800 $800.00 40.0000% 0
5784 Lake Forrest Drive
Suite 275
Atlanta, GA 30328
Joseph D. Gersh 333,333 $333,333.30 2.0576% 800 $800.00 40.0000% 0
5784 Lake Forrest Drive
Suite 275
Atlanta, GA 30328
John T. Dobson III 333,333 $333,333.30 2.0576% 400 $400.00 20.0000% 0
2660 Peachtree Road, N.W.
No. 17-G
Atlanta, GA 30305
TOTALS 16,200,000 $16,200,000.00 100.0000% 2,000 $2,000.00 100.0000% 0
====== ========== ============== ======== ===== ========= ======== =
<CAPTION>
Initial Initial
Capital Capital
Account Account
with with
respect Percentage Number respect Percentage
to Class B of Class B of to of
Name and Address of Management Management Preferred Preferred Preferred
Members Units Units Units Clients Units
------- ----- ----- ----- ------- -----
<S> <C> <C> <C> <C> <C>
Willis Stein & Partners, $0.00 0.0000% 1,000,000 $1,000,000 100%
L.P. 227 West Monroe Street
Suite 4300
Chicago, Il 60606
Telecopy: (312) 422-2424
(312) 422-2400
Attention: Avy H. Stein
Beth F. Johnston
Jason Elkin 0.00 0.0000%
5784 Lake Forrest Drive
Suite 275
Atlanta, GA 30328
Joseph D. Gersh 0.00 0.0000%
5784 Lake Forrest Drive
Suite 275
Atlanta, GA 30328
John T. Dobson III 0.00 0.0000%
2660 Peachtree Road, N.W.
No. 17-G
Atlanta, GA 30305
TOTALS 0.00 0.0000% 100%
====== ===== ====== ===
</TABLE>
(1) Class B Management Units not to exceed 500 Class B Management Units to be
distributed at a later date at the discretion of John T. Dobson III.
<PAGE>
EXHIBIT 4.4
CLASS C WARRANT
THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE SHARES ISSUABLE UPON
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SECURITIES
NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE
TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS
EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) THE
COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH
COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH
SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER
CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR
APPLICABLE STATE SECURITIES LAWS.
THE TRANSFER OF THIS WARRANT IS
RESTRICTED AS DESCRIBED HEREIN.
UC TELEVISION NETWORK CORP.
Warrant for the Purchase of Shares of Common Stock,
par value $0.001 per share
THIS WARRANT EXPIRES ON APRIL 25, 2004
No. C-1 3,863,662 Shares
THIS CERTIFIES that, for value received, U-C Holdings, L.L.C., a
Delaware limited liability company, with an address at 227 West Monroe Street,
Suite 4300, Chicago, IL 60606, c/o Willis Stein & Partners (including any
transferee, the "Holder"), is entitled to subscribe for and purchase from UC
Television Network Corp., a Delaware corporation (the "Company"), upon the terms
and conditions set forth herein, at any time or from time to time after the
Commencement Date (as defined below) and before 5:00 P.M. on April 25, 2004, New
York time (the "Exercise Period"), 3,863,662 shares of the Company's Common
Stock (as hereinafter defined) 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 Warrant,
the "Exercise Price"). This Warrant is the Class C Warrant (collectively,
including any warrants issued upon the exercise or transfer of this Warrant in
whole or in part, the "Warrants") issued pursuant to that certain Purchase
Agreement, dated as of the date hereof, by and between the Company and the
original Holder of this Warrant (the "Purchase Agreement"). As used herein the
term "this Warrant" shall mean and include this Warrant and any Warrant or
Warrants hereafter issued as a consequence of the exercise or transfer of this
Warrant in whole or in part.
<PAGE>
For purposes of this Warrant, the following terms shall have the
meanings set forth below:
(A) 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;
(B) the term "Commencement Date" means the earlier of (i) April 25,
1999, (ii) the date of the consummation of any Sale of the Company and (iii) the
date of any Public Offering;
(C) 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;
(D) 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;
(E) the term "Public Offering" shall mean the sale in an underwritten
public offering registered under the Securities Act of shares of the Company's
Common Stock;
(F) 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, the unit purchase option issued
to Barington Capital Group, L.P. ("Barington") on April 26, 1996 and any
warrants subsequently issued to Barington or its transferees pursuant to the
exercise of such unit purchase option;
(G) 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
-2-
<PAGE>
Directors 1996 Stock Option Plan and the nonqualified option for 337,500 shares
of Common Stock granted to Peter Kauff (as such nonqualified option shall be
amended or modified);
(H) the term "Purchase Rights" shall mean the right to purchase shares
of the Company's Common Stock granted pursuant to those certain Equity
Protection Agreements, dated as of the date hereof, between the Company and the
original Holder; and
(I) the term "Warrant Shares" shall mean the shares of Common Stock
issuable upon exercise of the Warrants.
1. This Warrant may be exercised during the Exercise Period, as to
the whole or any lesser number of whole Warrant Shares, by the surrender of this
Warrant (with the "Election to Exercise" attached hereto, duly executed) to the
Company at its office at 645 Fifth Avenue, East Wing, New York, New York 10022,
or at such other place as is designated in writing by the Company. In
connection with any exercise of this Warrant, 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 Warrant 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 5(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 this Warrant (or a portion thereof) by
authorizing the Company to withhold from issuance a number of shares of Common
Stock issuable upon such exercise of this Warrant 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 Warrant).
Each Warrant not exercised prior to 5:00 p.m. on April 25, 2004 New York time
shall become null and void and all rights thereunder 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 Warrant Shares issuable upon exercise of this Warrant
as of the date of such notice and (iii) the Exercise Price in effect as of such
date.
2. Upon receipt by the Company of this Warrant, the "Election to
Exercise," and the Aggregate Exercise Price for the Warrant Shares, the Holder
shall be deemed to be the holder of record of the Warrant 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
this Warrant or of any Warrant Shares issued or issuable upon the exercise of
this Warrant in any manner which interferes with the timely exercise of this
Warrant. As soon as practicable after each such exercise of this Warrant, the
Company shall issue and cause to be delivered to the Holder a certificate or
certificates for the Warrant Shares issuable upon such exercise, registered in
the name of the Holder or its designee.
-3-
<PAGE>
If this Warrant should be exercised in part only, the Company shall, upon
surrender of this Warrant for cancellation, execute and deliver a new Warrant
evidencing the right of the Holder to purchase the remaining unexercised balance
of the Warrant Shares (or portions thereof) subject to purchase hereunder.
3. (a) Any Warrants issued upon the transfer or exercise in part of
this Warrant shall be numbered and shall be registered in a Warrant Register as
they are issued. The Company shall be entitled to treat the registered holder
of any Warrant on the Warrant 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 Warrant on the part of any other person, and shall not be
liable for any registration or transfer of Warrants 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.
This Warrant 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. This Warrant shall be
transferable only on the books of the Company upon delivery thereof 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 Warrant or Warrants to the person entitled
thereto. This Warrant may be exchanged, at the option of the Holder thereof,
for another Warrant, or other Warrants of different denominations, of like tenor
and representing in the aggregate the right to purchase a like number of Warrant
Shares (or portions thereof), upon surrender to the Company or its duly
authorized agent. Notwithstanding the foregoing, the Company shall have no
obligation to cause Warrants 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 this Warrant nor the Warrant Shares have been registered
under the Act, that this Warrant is being or has been issued and the Warrant
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
-4-
<PAGE>
or transfer of this Warrant or the Warrant Shares issuable upon exercise hereof
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 this Warrant or such Warrant Shares is registered under the Act,
it being understood that neither this Warrant nor such Warrant Shares are
currently registered for sale and that the Company has no obligation or
intention to so register this Warrant or such Warrant Shares except as
specifically provided in the registration rights agreement referred to in
Section 9, or (ii) this Warrant or such Warrant Shares are sold, assigned or
transferred in accordance with all the requirements and limitations of Rule 144
under the Act, it being understood that Rule 144 is not available at the time of
the original issuance of this Warrant for the sale of this Warrant or such
Warrant 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 this Warrant or any portion hereof is to be
made in connection with a registered public offering or the sale of the Company,
the exercise of this Warrant or any portion hereof 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 this
Warrant (including, without limitation, making any filings required to be made
by the Company).
4. The Company covenants that the Warrant 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
this Warrant 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 the Warrants, the Existing Warrants, the
Existing Options and the Purchase Rights. 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 Warrants,
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 Warrants.
5. (a) In case the Company shall at any time after the date this
Warrant is first issued (i) declare a dividend on any class of the outstanding
capital stock of the Company (the "Capital Stock") payable in shares of its
Capital Stock, (ii) subdivide any class of the outstanding Capital Stock, or
(iii) combine any class of the outstanding Capital Stock into a smaller number
of shares, then, in each case, the Exercise Price, and the number of Warrant
Shares issuable upon exercise of this Warrant, in effect at the time of the
record date for such dividend or of the effective date of such subdivision, or
combination, shall be proportionately adjusted so that the Holder after
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such time shall be entitled to receive the aggregate number and kind of shares
for such consideration which, if such Warrant had been exercised immediately
prior to such time at the then current exercise price, he would have owned upon
such exercise and been entitled to receive by virtue of such dividend,
subdivision, or combination. Such adjustment shall be made successively whenever
any event listed above shall occur.
(b) In case the Company shall issue or fix a record date for the
issuance to all holders of any class of Capital Stock of rights, options, or
warrants to subscribe for or purchase Common Stock (or securities convertible
into or exchangeable for Common Stock) at a price per share (or having a
conversion or exchange price per share, if a security convertible into or
exchangeable for Common Stock) less than the Current Market Price per share of
Common Stock on such record date, then, in each case, the Exercise Price shall
be adjusted by multiplying the Exercise Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding on such record date plus the number of shares
of such class of Common Stock which the aggregate offering price of the total
number of shares of such class of Common Stock so to be offered (or the
aggregate initial conversion or exchange price of the convertible or
exchangeable securities so to be offered) would purchase at such Current Market
Price and the denominator of which shall be the number of shares of Common Stock
outstanding on such record date plus the number of additional shares of Common
Stock to be offered for subscription or purchase (or into which the convertible
or exchangeable securities so to be offered are initially convertible or
exchangeable); provided, however, that no such adjustment shall be made which
results in an increase in the Exercise Price. Such adjustment shall become
effective at the close of business on such record date; provided, however, that,
to the extent the shares of Common Stock (or securities convertible into or
exchangeable for shares of Common Stock) are not delivered, the Exercise Price
shall be readjusted after the expiration of such rights, options, or warrants
(but only with respect to Warrants exercised after such expiration), to the
Exercise Price which would then be in effect had the adjustments made upon the
issuance of such rights, options, or warrants been made upon the basis of
delivery of only the number of shares of Common Stock (or securities convertible
into or exchangeable for shares of Common Stock) actually issued. In case any
subscription price may be paid in a consideration, part or all of which shall be
in a form other than cash, the value of such consideration shall be as
determined in good faith by the board of directors of the Company, whose
determination shall be conclusive absent manifest error. Shares of Common Stock
owned by or held for the account of the Company or any majority-owned subsidiary
shall not be deemed outstanding for the purpose of any such computation.
(c) In case the Company shall distribute to all holders of any class
of Common Stock (including any such distribution made to the stockholders of the
Company in connection with a consolidation or merger in which the Company is the
continuing corporation) evidences of its indebtedness, cash (other than any cash
dividend which, together with any cash dividends paid within the 12 months prior
to the record date for such distribution, does not exceed 5% of the Current
Market Price at the record date for such distribution) or assets (other than
distributions and dividends payable in shares of Common Stock), or rights,
options, or warrants to subscribe for or purchase Common Stock, or securities
convertible into or changeable for shares of Common Stock (excluding those with
respect to the issuance of which an adjustment of the Exercise
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Price is provided pursuant to section 5(b) hereof), then, in each case, the
Exercise Price shall be adjusted by multiplying the Exercise Price in effect
immediately prior to the record date for the determination of stockholders
entitled to receive such distribution by a fraction, the numerator of which
shall be the Current Market Price per share of such class of Common Stock on
such record date, less the fair market value (as determined in good faith by the
board of directors of the Company, whose determination shall be conclusive
absent manifest error) of the portion of the evidences of indebtedness or assets
so to be distributed, or of such rights, options, or warrants or convertible or
exchangeable securities, or the amount of such cash, applicable to one share,
and the denominator of which shall be such Current Market Price per share of
such class of Common Stock. Such adjustment shall become effective at the close
of business on such record date.
(d) In case the Company shall issue shares of Common Stock or rights,
options, or warrants to subscribe for or purchase Common Stock, or securities
convertible into or exchangeable for Common Stock (excluding shares, rights,
options, warrants, or convertible or exchangeable securities issued or issuable
(i) in any of the transactions with respect to which an adjustment of the
Exercise Price is provided pursuant to Sections 5(a), 5(b), or 5(c) above, (ii)
upon any issuance of securities pursuant to the Purchase Agreement, (iii) upon
exercise of any of the Existing Warrants, (iv) upon exercise of any of the
Existing Options or (v) upon exercise of any of the Purchase Rights), at a price
per share (determined, in the case of such rights, options, warrants, or
convertible or exchangeable securities, by dividing (x) the total amount
received or receivable by the Company in consideration of the sale and issuance
of such rights, options, warrants, or convertible or exchangeable securities,
plus the minimum aggregate consideration payable to the Company upon exercise,
conversion, or exchange thereof, by (y) the maximum number of shares covered by
such rights, options, warrants, or convertible or exchangeable securities) lower
than the Current Market Price per share of shares of such class of Common Stock
so issued in effect immediately prior to such issuance, then the Exercise Price
shall be reduced on the date of such issuance to a price (calculated to the
nearest cent) determined by multiplying the Exercise Price in effect immediately
prior to such issuance by a fraction, (1) the numerator of which shall be an
amount equal to the sum of (A) the number of shares of Common Stock outstanding
immediately prior to such issuance plus (B) the quotient obtained by dividing
the consideration received by the Company upon such issuance by such Current
Market Price, and (2) the denominator of which shall be the total number of
shares of Common Stock outstanding immediately after such issuance; provided,
however, that no such adjustment shall be made which results in an increase in
the Exercise Price. For the purposes of such adjustments, the maximum number of
shares which the holders of any such rights, options, warrants, or convertible
or exchangeable securities shall be entitled to initially subscribe for or
purchase or convert or exchange such securities into shall be deemed to be
issued and outstanding as of the date of such issuance, and the consideration
received by the Company therefor shall be deemed to be the consideration
received by the Company for such rights, options, warrants, or convertible or
exchangeable securities, plus the minimum aggregate consideration or premiums
stated in such rights, options, warrants, or convertible or exchangeable
securities to be paid for the shares covered thereby. No further adjustment of
the Exercise Price shall be made as a result of the actual issuance of shares of
Common Stock on exercise of such rights, options, or warrants or on conversion
or exchange of such convertible or exchangeable securities. On the expiration or
the termination of such rights, options, or warrants, or the termination of such
right to convert or exchange, the Exercise Price shall be readjusted (but only
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with respect to Warrants exercised after such expiration or termination) to such
Exercise Price as would have obtained had the adjustments made upon the issuance
of such rights, options, warrants, or convertible or exchangeable securities
been made upon the basis of the delivery of only the number of shares of Common
Stock actually delivered upon the exercise of such rights, options, or warrants
or upon the conversion or exchange of any such securities; and on any change of
the number of shares of Common Stock deliverable upon the exercise of any such
rights, options, or warrants or conversion or exchange of such convertible or
exchangeable securities or any change in the consideration to be received by the
Company upon such exercise, conversion, or exchange, including, without
limitation, a change resulting from the antidilution provisions thereof. In
case the Company shall issue shares of Common Stock or any such rights, options,
warrants, or convertible or exchangeable securities for a consideration
consisting, in whole or in part, of property other than cash or its equivalent,
then the "price per share" and the "consideration received by the Company" for
purposes of the first sentence of this Section 5(d) shall be as determined in
good faith by the board of directors of the Company, whose determination shall
be conclusive absent manifest error. Shares of Common Stock owned by or held
for the account of the Company or any majority-owned subsidiary shall not be
deemed outstanding for the purpose of any such computation.
(e) For the purpose of any computation under this Section 5, the
Current Market Price per share of any class of Capital Stock on any date shall
be deemed to be the average of the daily closing prices for shares of such class
for the 30 consecutive trading days immediately preceding the date in question.
The closing price for each day shall be the last reported sales price regular
way, or in case no such reported sales takes place on such date, the closing bid
price regular way on the principal national securities exchange (including, for
purposes hereof, the NASDAQ National Market System or the NASDAQ SmallCap
Market) on which shares of such class of Common Stock are listed or admitted to
trading or, if such class of Common Stock is not listed or admitted to trading
on any national securities exchange, the highest reported bid price for such
class of Common Stock as furnished by the National Association of Securities
Dealers, Inc. through NASDAQ or a similar organization if NASDAQ is no longer
reporting such information. If on any such date such class of Common Stock is
not listed or admitted to trading on any national securities exchange and is not
quoted by NASDAQ or any similar organization, the fair value of a share of such
class of Common Stock on such date, as determined in good faith by the board of
directors of the Company, whose determination shall be conclusive absent
manifest error, shall be used.
(f) All calculations under this Section 5 shall be made to the nearest
cent or to the nearest one-thousandth of a share, as the case may be.
(g) Upon each adjustment of the Exercise Price as a result of the
calculations made in Sections 5(b), 5(c), or 5(d) hereof, this Warrant shall
thereafter evidence the right to purchase, at the adjusted Exercise Price, that
number of shares (calculated to the nearest thousandth) obtained by dividing (A)
the product obtained by multiplying the number of shares purchasable upon
exercise of this Warrant prior to adjustment of the number of shares by the
Exercise Price in effect prior to adjustment of the Exercise Price by (B) the
Exercise Price in effect after such adjustment of the Exercise Price.
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(h) Whenever there shall be an adjustment as provided in this Section
5, the Company shall promptly cause written notice thereof to be sent by
certified mail, postage prepaid, to the Holder, at its address as it shall
appear in the Warrant Register, which notice shall be accompanied by an
officer's certificate setting forth the number of Warrant Shares purchasable
upon the exercise of this Warrant and the Exercise Price after such adjustment
and setting forth a brief statement of the facts requiring such adjustment and
the computation thereof, which officer's certificate shall be conclusive
evidence of the correctness of any such adjustment absent manifest error.
(i) The Company shall not be required to issue fractions of shares of
Common Stock of the Company upon the exercise of this Warrant. If any fraction
of a share would be issuable on the exercise of this Warrant (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 this Warrant.
6. (a) In case of any consolidation with or merger of the Company
with or into another corporation (other than a merger or consolidation in which
the Company is the surviving or continuing corporation), or in case of any sale,
lease, or conveyance to another corporation of the property and assets of any
nature of the Company as an entirety or substantially as an entirety, such
successor, leasing, or purchasing corporation, as the case may be, shall (i)
execute with the Holder an agreement providing that the Holder shall have the
right thereafter to receive upon exercise of this Warrant 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 this
Warrant 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 5.
(b) In case of any reclassification or change of the shares of Common
Stock issuable upon exercise of this Warrant (other than a change in par value
or from no par value to a specified par value, or as a result of a subdivision
or combination, but including any change in the shares into two or more classes
or series of shares), or in case of any consolidation or merger of another
corporation into the Company in which the Company is the continuing corporation
and in which there is a reclassification or change (including a change to the
right to receive cash or other property) of the shares of Common Stock (other
than a change in par value, or from no par value to a specified par value, or as
a result of a subdivision or combination, but including any change in the shares
into two or more classes or series of shares), the Holder shall have the right
thereafter to receive upon exercise of this Warrant 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 of Common Stock for which this Warrant 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 5.
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<PAGE>
(c) The above provisions of this Section 6 shall similarly apply to
successive reclassifications and changes of shares of Common Stock and to
successive consolidations, mergers, sales, leases, or conveyances.
(d) If any event occurs of the type contemplated by the provisions of
this Section 6 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 Warrant Shares obtainable upon exercise of this
Warrant so as to protect the rights of the holders of the Warrants; provided
that no such adjustment shall increase the Exercise Price or decrease the Number
of Warrant Shares obtainable as otherwise determined pursuant to this Warrant
without the prior written consent of the holders of a majority of the Warrant
Shares issued or issuable upon exercise of the Warrants (which consent will not
be unreasonably withheld).
7. In case at any time the Company shall propose to:
(a) 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
(b) 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
(c) effect any reclassification or change of outstanding shares of
Capital Stock, or any consolidation, merger, sale, lease, or conveyance of
property, described in Section 6 hereof; or
(d) effect any liquidation, dissolution, or winding-up of the Company;
or
(e) 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 Warrant Register, mailed at least 15
days prior to (i) 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, (ii) 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 (iii) the date of such action which would require
an adjustment to the Exercise Price.
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8. The issuance of any shares or other securities upon the exercise
of this Warrant, 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 this Warrant 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.
9. The Warrant 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.
10. 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 10, without limitation, reasonable attorneys' fees and any and all
expense whatsoever incurred in investigating, preparing, or defending against
any litigation, commenced or threatened, or any claim whatsoever, and any and
all amounts paid in settlement of any claim or litigation), as and when
incurred, arising out of, based upon, or in connection with, any breach of any
representation, warranty, covenant, or agreement of the Company contained in any
of the Warrants. The foregoing agreement to indemnify shall be in addition to
any liability the Company may otherwise have, including liabilities arising
under any of the Warrants.
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 10 unless the Company shall have been
materially prejudiced by such failure or relieve the Company from any liability
other than pursuant to this Section 10) 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
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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 10 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.
11. Unless registered pursuant to the provisions of the registration
rights agreement referred to in Section 9 hereof, the Warrant Shares issued upon
exercise of the Warrants shall be subject to a stop transfer order and the
certificate or certificates evidencing such Warrant Shares shall bear the
following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY
INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE
TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO
IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS,
OR (2) THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF
SUCH SECURITIES, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY
TO THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED,
ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR APPLICABLE STATE
SECURITIES LAWS."
In addition, any Warrants issued upon transfer or any new Warrants
issued shall bear a similar legend.
12. Upon receipt of evidence satisfactory to the Company of the loss,
theft, destruction, or mutilation of any Warrant (and upon surrender of any
Warrant if mutilated), including an affidavit of the Holder thereof that this
Warrant 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 Warrant, and upon reimbursement of the
Company's reasonable incidental expenses, the Company shall execute and deliver
to the Holder thereof a new Warrant of like date, tenor, and denomination.
13. The Holder of any Warrant 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 Warrant. 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
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such holder for the Exercise Price of Common Stock acquirable by exercise hereof
or as a stockholder of the Company.
14. This Warrant 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.
15. 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 645 Fifth Avenue, East Wing,
New York, New York 10022, Attention: President, (ii) if to the Holder, at its
address set forth on the first 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 15. Notice to the estate of any party shall be
sufficient if addressed to the party as provided in this Section 15. Any notice
or other communication given by certified mail shall be deemed given at the time
of certification thereof, except for a notice changing a party's address which
shall be deemed given at the time of receipt thereof. Any notice given by other
means permitted by this Section 15 shall be deemed given at the time of receipt
thereof.
16. 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 Warrant 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.
17. This Warrant may be amended only by a written instrument executed
by the Company and the Holder hereof. Any amendment shall be endorsed upon this
Warrant, and all future Holders shall be bound thereby.
* * * * *
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Dated: April 25, 1997
UC TELEVISION NETWORK CORP.
By: __________________________________
Its:
_____________________________
Alan Pearl, Secretary
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FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
attached Warrant.)
FOR VALUE RECEIVED, ______________________ hereby sells, assigns, and
transfers unto ___________________ a Warrant 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 Warrant 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 Warrant in every particular, without alteration
or enlargement or any change whatsoever.
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<PAGE>
To: UC TELEVISION NETWORK CORP.
645 Fifth Avenue
East Wing
New York, New York 10022
ELECTION TO EXERCISE
The undersigned hereby exercises his or its rights to purchase _____
Warrant Shares covered by the within Warrant 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, if such number of Warrant Shares shall not be all the Warrant Shares
covered by the within Warrant, that a new Warrant for the balance of the Warrant
Shares covered by the within Warrant 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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EXHIBIT 4.5(a)
EQUITY PROTECTION AGREEMENT
THIS EQUITY PROTECTION AGREEMENT (this "Agreement") is made as of
April 25, 1997, by an among UC Television Network Corp., a Delaware corporation
(the "Company"), and U-C Holdings, L.L.C., a Delaware limited liability company
("Holdings" and including any permitted transferees or assigns of any rights
under this Agreement, the "Holder"). As used herein the term "this Agreement"
shall mean and include this Agreement and any agreement or agreements hereafter
entered into as a consequence of the exercise or transfer in whole or in part of
any of the Purchase Rights (as hereinafter defined) granted pursuant to this
Agreement.
WHEREAS, the Company and Holdings are parties to that certain Purchase
Agreement, dated as of the date hereof, pursuant to which Holdings purchased
shares of the Company's Common Stock and a Class C Warrant of the Company; and
WHEREAS, the Company and Holdings desire to enter into this Agreement
in order to protect Holdings from the dilution of its equity position in the
Company upon the exercise of any outstanding warrants or options to purchase
Common Stock of the Company.
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as follows:
1. The following terms shall have the following meanings:
(A) the term "Number of Shares" shall mean, as of any particular date,
the number of shares of Common Stock issuable upon exercise of the Purchase
Rights (the "Shares") equal to the sum of (i) the product of (a) two and (b) the
aggregate number of shares of Common Stock which have been issued by the Company
upon the exercise of any of the Existing Warrants (as hereinafter defined) and
any of the Existing Options (as hereinafter defined) and (c) the Applicable
Percentage, minus (ii) the product of (a) the aggregate number of shares of
-----
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.
<PAGE>
(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 Peter Kauff (as such nonqualified option has been or
shall be amended, modified or increased);
(D) the term "Barington Option" shall mean the unit purchase option
issued to Barington Capital Group, L.P. ("Barington") dated April 26, 1996 and
any warrants subsequently issued to Barington or its transferees pursuant to the
exercise of such unit purchase option.
(D) the term "Applicable Percentage" shall mean, (i) initially, 100%
and (ii) after any partial transfer of the Purchase Rights, the percentage of
the total Number of Shares represented by this Agreement (for example, if the
right to purchase 30% of the Number of Shares is transferred, the Applicable
Percentage for this Agreement shall be 70% of the Applicable Percentage then in
effect with respect to this Agreement and the Applicable Percentage for any new
equity protection agreement issued upon such transfer shall be 30% of the
Applicable Percentage then in effect with respect to this Agreement);
(E) the term "Common Stock" shall mean the Company's common stock, par
value $.001 per share, and any capital stock of any class of the Company
hereafter authorized which is not limited to a fixed sum or percentage of par or
stated value in respect to the rights of the holders thereof to participate in
dividends or in the distribution of assets upon any liquidation, dissolution or
winding up of the Company;
(F) the term "Sale of the Company" shall mean the sale of the Company
to an Independent Third Party or group of Independent Third Parties pursuant to
which such party or parties acquire (i) capital stock of the Company possessing
the voting power under normal circumstances to elect a majority of the Company's
board of directors (whether by merger, consolidation, recapitalization, sale or
transfer of the Company's capital stock or otherwise) or (ii) all or
substantially all of the Company's assets determined on a consolidated basis;
(G) the term "Independent Third Party" shall mean any person or entity
who, immediately prior to the contemplated transaction, does not own in excess
of 5% of the Company's Common Stock on a fully-diluted basis (a "5% Owner"), who
is not controlling, controlled by or under common control with any such 5% Owner
and who is not the spouse or descendent (by birth or adoption) of any such 5%
Owner or a trust for the benefit of such 5% Owner and/or such other persons or
entities;
(H) the term "New Warrants" shall mean the Class C Warrant issued
pursuant to the Purchase Agreement and any warrants issued upon the exercise or
transfer in whole or part of such warrant; and
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(I) the term "Purchase Rights" shall mean the right to purchase Shares
granted pursuant to this Agreement.
2. The Company hereby grants to the Holder the right to subscribe
for and purchase from Company, upon the terms and conditions set forth herein,
at any time or from time to time before 5:00 P.M. on April 25, 2004, New York
time (the "Exercise Period"), the Number of Shares at a price per share equal to
$.55 (as the same may be adjusted from time to time in accordance with the terms
of this Agreement, the "Exercise Price").
3. The Purchase Rights may be exercised during the Exercise Period,
as to the whole or any lesser number of whole Shares, by the surrender of this
Agreement for notation as to the Number of Shares so purchased (with the
"Election to Exercise" attached hereto, duly executed) to the Company at its
office at 645 Fifth Avenue, East Wing, New York, New York 10022, 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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<PAGE>
requirements and limitations of Rule 144 under the Act, it being understood that
Rule 144 is not available as of the date hereof for the sale of the Purchase
Rights or such Shares and that there can be no assurance that Rule 144 sales
will be available at any subsequent time, or (iii) such sale, assignment, or
transfer is otherwise exempt from registration under the Act. Notwithstanding
any other provision hereof, if an exercise of the Purchase Rights or any portion
thereof is to be made in connection with a registered public offering or the
sale of the Company, the exercise of the Purchase Rights or any portion thereof
may, at the election of the Holder, be conditioned upon the consummation of the
public offering or sale of the Company in which case such exercise shall not be
deemed to be effective until the consummation of such transaction. The Company
shall assist and cooperate with any Holder required to make any governmental
filings or obtain any governmental approvals prior to or in connection with any
exercise of the Purchase Rights (including, without limitation, making any
filings required to be made by the Company).
6. The Company covenants that the Shares, upon receipt by the
Company of the Aggregate Exercise Price therefor, shall be validly issued, fully
paid, nonassessable, and free of preemptive rights, liens, taxes and charges
with respect to the issuance thereof. The Company shall take all such actions
as may be necessary to assure that all such shares of Common Stock may be so
issued without violation of any applicable law or governmental regulation or any
requirements of any domestic securities exchange upon which shares of Common
Stock may be listed (except for official notice of issuance which shall be
immediately delivered by the Company upon each such issuance). The Company
shall from time to time take all such action as may be necessary to assure that
the par value per share of the unissued Common Stock acquirable upon exercise of
the Purchase Rights is at all times equal to or less than the Exercise Price
then in effect. The Company covenants and agrees that promptly after the date
hereof, the Company shall amend its certificate of incorporation to increase the
authorized and unissued shares of Common Stock of the Company to a number
sufficient to allow for the exercise of all of the Purchase Rights, the Existing
Warrants, the Barington Option and the Existing Options. The Company shall at
all times thereafter reserve and keep available out of its authorized and
unissued Common Stock, solely for the purpose of providing for the exercise of
the Purchase Rights, such number of shares of Common Stock as shall, from time
to time, be sufficient therefor and the Company shall not thereafter take any
action which would cause the number of authorized but unissued shares of Common
Stock to be less than the number of such shares required to be reserved
hereunder for issuance upon exercise of the Purchase Rights.
7. (a) In case the Company shall at any time after the date this
Agreement is first made (i) declare a dividend on any class of the outstanding
capital stock of the Company (the "Capital Stock") payable in shares of its
Capital Stock, (ii) subdivide any class of the outstanding Capital Stock, or
(iii) combine any class of the outstanding Capital Stock into a smaller number
of shares, then, in each case, the Exercise Price in effect at the time of the
record date for such dividend or of the effective date of such subdivision, or
combination, shall be proportionately adjusted. In addition, to the extent any
shares of Common Stock have been issued upon exercise of any of the Existing
Warrants or the Existing Options, the Number of Shares issuable upon exercise of
the Purchase Rights shall be proportionately adjusted to reflect such dividend,
subdivision, or combination of the Common Stock issued upon such exercise of any
of the Existing Warrants or the
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<PAGE>
Existing Options. Such adjustment shall be made successively whenever any event
listed above shall occur.
(b) In case the Company shall issue or fix a record date for the
issuance to all holders of any class of Capital Stock of rights, options, or
warrants to subscribe for or purchase Common Stock (or securities convertible
into or exchangeable for Common Stock) at a price per share (or having a
conversion or exchange price per share, if a security convertible into or
exchangeable for Common Stock) less than the Current Market Price per share of
Common Stock on such record date, then, in each case, the Exercise Price shall
be adjusted by multiplying the Exercise Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding on such record date plus the number of shares
of such class of Common Stock which the aggregate offering price of the total
number of shares of such class of Common Stock so to be offered (or the
aggregate initial conversion or exchange price of the convertible or
exchangeable securities so to be offered) would purchase at such Current Market
Price and the denominator of which shall be the number of shares of Common Stock
outstanding on such record date plus the number of additional shares of Common
Stock to be offered for subscription or purchase (or into which the convertible
or exchangeable securities so to be offered are initially convertible or
exchangeable); provided, however, that no such adjustment shall be made which
results in an increase in the Exercise Price. Such adjustment shall become
effective at the close of business on such record date; provided, however, that,
to the extent the shares of Common Stock (or securities convertible into or
exchangeable for shares of Common Stock) are not delivered, the Exercise Price
shall be readjusted after the expiration of such rights, options, or warrants
(but only with respect to the Purchase Rights exercised after such expiration),
to the Exercise Price which would then be in effect had the adjustments made
upon the issuance of such rights, options, or warrants been made upon the basis
of delivery of only the number of shares of Common Stock (or securities
convertible into or exchangeable for shares of Common Stock) actually issued.
In case any subscription price may be paid in a consideration, part or all of
which shall be in a form other than cash, the value of such consideration shall
be as determined in good faith by the board of directors of the Company, whose
determination shall be conclusive absent manifest error. Shares of Common Stock
owned by or held for the account of the Company or any majority-owned subsidiary
shall not be deemed outstanding for the purpose of any such computation.
(c) In case the Company shall distribute to all holders of any class
of Common Stock (including any such distribution made to the stockholders of the
Company in connection with a consolidation or merger in which the Company is the
continuing corporation) evidences of its indebtedness, cash (other than any cash
dividend which, together with any cash dividends paid within the 12 months prior
to the record date for such distribution, does not exceed 5% of the Current
Market Price at the record date for such distribution) or assets (other than
distributions and dividends payable in shares of Common Stock), or rights,
options, or warrants to subscribe for or purchase Common Stock, or securities
convertible into or changeable for shares of Common Stock (excluding those with
respect to the issuance of which an adjustment of the Exercise Price is provided
pursuant to Section 7(b) hereof), then, in each case, the Exercise Price shall
be adjusted by multiplying the Exercise Price in effect immediately prior to the
record date for the determination of stockholders entitled to receive such
distribution by a fraction, the numerator of
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<PAGE>
which shall be the Current Market Price per share of such class of Common Stock
on such record date, less the fair market value (as determined in good faith by
the board of directors of the Company, whose determination shall be conclusive
absent manifest error) of the portion of the evidences of indebtedness or assets
so to be distributed, or of such rights, options, or warrants or convertible or
exchangeable securities, or the amount of such cash, applicable to one share,
and the denominator of which shall be such Current Market Price per share of
such class of Common Stock. Such adjustment shall become effective at the close
of business on such record date.
(d) In case the Company shall have issued at any time after April 26,
1996 or shall issue shares of Common Stock or rights, options, or warrants to
subscribe for or purchase Common Stock, or securities convertible into or
exchangeable for Common Stock (excluding shares, rights, options, warrants, or
convertible or exchangeable securities issued or issuable (i) in any of the
transactions with respect to which an adjustment of the Exercise Price is
provided pursuant to Sections 7(a), 7(b), or 7(c) above, (ii) upon any issuance
of securities pursuant to the Purchase Agreement, (iii) upon exercise of the New
Warrants, (iv) upon exercise of any of the Existing Warrants, (v) upon exercise
of any Existing Options or (vi) upon exercise of the Barington Option), at a
price per share (determined, in the case of such rights, options, warrants, or
convertible or exchangeable securities, by dividing (x) the total amount
received or receivable by the Company in consideration of the sale and issuance
of such rights, options, warrants, or convertible or exchangeable securities,
plus the minimum aggregate consideration payable to the Company upon exercise,
conversion, or exchange thereof, by (y) the maximum number of shares covered by
such rights, options, warrants, or convertible or exchangeable securities) lower
than the Current Market Price per share of shares of such class of Common Stock
so issued in effect immediately prior to such issuance, then the Exercise Price
shall be reduced on the date of such issuance to a price (calculated to the
nearest cent) determined by multiplying the Exercise Price in effect immediately
prior to such issuance by a fraction, (1) the numerator of which shall be an
amount equal to the sum of (A) the number of shares of Common Stock outstanding
immediately prior to such issuance plus (B) the quotient obtained by dividing
the consideration received by the Company upon such issuance by such Current
Market Price, and (2) the denominator of which shall be the total number of
shares of Common Stock outstanding immediately after such issuance; provided,
however, that no such adjustment shall be made which results in an increase in
the Exercise Price. For the purposes of such adjustments, the maximum number of
shares which the holders of any such rights, options, warrants, or convertible
or exchangeable securities shall be entitled to initially subscribe for or
purchase or convert or exchange such securities into shall be deemed to be
issued and outstanding as of the date of such issuance, and the consideration
received by the Company therefor shall be deemed to be the consideration
received by the Company for such rights, options, warrants, or convertible or
exchangeable securities, plus the minimum aggregate consideration or premiums
stated in such rights, options, warrants, or convertible or exchangeable
securities to be paid for the shares covered thereby. No further adjustment of
the Exercise Price shall be made as a result of the actual issuance of shares of
Common Stock on exercise of such rights, options, or warrants or on conversion
or exchange of such convertible or exchangeable securities. On the expiration
or the termination of such rights, options, or warrants, or the termination of
such right to convert or exchange, the Exercise Price shall be readjusted (but
only with respect to Warrants exercised after such expiration or termination) to
such Exercise Price as would have obtained had the adjustments made upon the
issuance of such rights, options, warrants, or convertible or exchangeable
securities
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<PAGE>
been made upon the basis of the delivery of only the number of shares of Common
Stock actually delivered upon the exercise of such rights, options, or warrants
or upon the conversion or exchange of any such securities; and on any change of
the number of shares of Common Stock deliverable upon the exercise of any such
rights, options, or warrants or conversion or exchange of such convertible or
exchangeable securities or any change in the consideration to be received by the
Company upon such exercise, conversion, or exchange, including, without
limitation, a change resulting from the antidilution provisions thereof. In case
the Company shall issue shares of Common Stock or any such rights, options,
warrants, or convertible or exchangeable securities for a consideration
consisting, in whole or in part, of property other than cash or its equivalent,
then the "price per share" and the "consideration received by the Company" for
purposes of the first sentence of this Section 7(d) shall be as determined in
good faith by the board of directors of the Company, whose determination shall
be conclusive absent manifest error. Shares of Common Stock owned by or held for
the account of the Company or any majority-owned subsidiary shall not be deemed
outstanding for the purpose of any such computation.
(e) For the purpose of any computation under this Section 7, the
Current Market Price per share of any class of Capital Stock on any date shall
be deemed to be the average of the daily closing prices for shares of such class
for the 30 consecutive trading days immediately preceding the date in question.
The closing price for each day shall be the last reported sales price regular
way, or in case no such reported sales takes place on such date, the closing bid
price regular way on the principal national securities exchange (including, for
purposes hereof, the NASDAQ National Market System or the NASDAQ SmallCap
Market) on which shares of such class of Common Stock are listed or admitted to
trading or, if such class of Common Stock is not listed or admitted to trading
on any national securities exchange, the highest reported bid price for such
class of Common Stock as furnished by the National Association of Securities
Dealers, Inc. through NASDAQ or a similar organization if NASDAQ is no longer
reporting such information. If on any such date such class of Common Stock is
not listed or admitted to trading on any national securities exchange and is not
quoted by NASDAQ or any similar organization, the fair value of a share of such
class of Common Stock on such date, as determined in good faith by the board of
directors of the Company, whose determination shall be conclusive absent
manifest error, shall be used.
(f) All calculations under this Section 7 shall be made to the nearest
cent or to the nearest one-thousandth of a share, as the case may be.
(g) Whenever there shall be an adjustment as provided in this Section
7, the Company shall promptly cause written notice thereof to be sent by
certified mail, postage prepaid, to the Holder, at its address as it shall
appear in the purchase rights register, which notice shall be accompanied by an
officer's certificate setting forth the Number of Shares purchasable upon the
exercise of the Purchase Rights and the Exercise Price after such adjustment and
setting forth a brief statement of the facts requiring such adjustment and the
computation thereof, which officer's certificate shall be conclusive evidence of
the correctness of any such adjustment absent manifest error.
(h) The Company shall not be required to issue fractions of shares of
Common Stock of the Company upon the exercise of the Purchase Rights. If any
fraction of a share
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would be issuable on the exercise of the Purchase Rights (or specified portions
thereof), the Company shall purchase such fraction for an amount in cash equal
to the same fraction of the Current Market Price of such share of Common Stock
on the date of exercise of the Purchase Rights.
8. (a) In case of any consolidation with or merger of the Company
with or into another corporation (other than a merger or consolidation in which
the Company is the surviving or continuing corporation), or in case of any sale,
lease, or conveyance to another corporation of the property and assets of any
nature of the Company as an entirety or substantially as an entirety, such
successor, leasing, or purchasing corporation, as the case may be, shall (i)
execute with the Holder an agreement providing that the Holder shall have the
right thereafter to receive upon exercise of the Purchase Rights solely the kind
and amount of shares of stock and other securities, property, cash, or any
combination thereof receivable upon such consolidation, merger, sale, lease, or
conveyance by a holder of the number of shares of Common Stock for which the
Purchase Rights might have been exercised immediately prior to such
consolidation, merger, sale, lease, or conveyance, and (ii) make effective
provision in its certificate of incorporation or otherwise, if necessary, to
effect such agreement. Such agreement shall provide for adjustments which shall
be as nearly equivalent as practicable to the adjustments in Section 7.
(b) In case of any reclassification or change of the shares of Common
Stock issuable upon exercise of the Purchase Rights (other than a change in par
value or from no par value to a specified par value, or as a result of a
subdivision or combination, but including any change in the shares into two or
more classes or series of shares), or in case of any consolidation or merger of
another corporation into the Company in which the Company is the continuing
corporation and in which there is a reclassification or change (including a
change to the right to receive cash or other property) of the shares of Common
Stock (other than a change in par value, or from no par value to a specified par
value, or as a result of a subdivision or combination, but including any change
in the shares into two or more classes or series of shares), the Holder shall
have the right thereafter to receive upon exercise of the Purchase Rights solely
the kind and amount of shares of stock and other securities, property, cash, or
any combination thereof receivable upon such reclassification, change,
consolidation, or merger by a holder of the Number of Shares for which the
Purchase Rights might have been exercised immediately prior to such
reclassification, change, consolidation, or merger. Thereafter, appropriate
provision shall be made for adjustments which shall be as nearly equivalent as
practicable to the adjustments in Section 7.
(c) The above provisions of this Section 8 shall similarly apply to
successive reclassifications and changes of shares of Common Stock and to
successive consolidations, mergers, sales, leases, or conveyances.
(d) If any event occurs of the type contemplated by the provisions of
this Section 8 but not expressly provided for by such provisions, then the
Company's board of directors shall make an appropriate adjustment in the
Exercise Price and the Number of Shares obtainable upon exercise of the Purchase
Rights so as to protect the rights of the Company and the holders of the
Purchase Rights; provided that no such adjustment shall increase the Exercise
Price or decrease the Number of Shares obtainable as otherwise determined
pursuant to this Agreement without the
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prior written consent of the holders of a majority of the Shares issued or
issuable upon exercise of the Purchase Rights (which consent will not be
unreasonably withheld).
9. (a) In case at any time the Company shall issue any shares of
Common Stock upon the exercise of any of the Existing Warrants, the Barington
Option or Existing Options, then the Company shall give written notice thereof,
(i) by telecopy to the Holder at the telecopy number of such Holder as it shall
appear on the Company's books and records, such notice to be sent as of the date
of such issuance and (ii) by certified mail, postage prepaid, to the Holder at
the Holder's address as it shall appear in the purchase rights register, such
notice to be mailed no later than one day after such issuance. Each such notice
shall state (A) the name of the party or parties exercising any such Existing
Warrants, the Barington Option or Existing Options, (B) the number of shares of
Common Stock issued upon such exercise, (C) the purchase price per share of
Common Stock issued upon such exercise, (D) the number of Shares exercisable
under this Agreement after giving effect to such issuance, (E) the Exercise
Price then in effect under this Agreement after giving effect to such issuance
and (F) the remaining Number of Shares as of the date of such notice.
(b) In case at any time the Company shall propose to:
(i) pay any dividend or make any distribution on shares of
Common Stock in shares of Common Stock or make any other distribution
(other than regularly scheduled cash dividends which are not in a
greater amount per share than the most recent such cash dividend) to
all holders of Common Stock; or
(ii) issue any rights, warrants, or other securities to all
holders of Common Stock entitling them to purchase any additional
shares of Common Stock or any other rights, warrants, or other
securities; or
(iii) effect any reclassification or change of outstanding
shares of Capital Stock, or any consolidation, merger, sale, lease, or
conveyance of property, described in Section 8 hereof; or
(iv) effect any liquidation, dissolution, or winding-up of
the Company; or
(v) take any other action which would cause an adjustment
to the Exercise Price;
then, and in any one or more of such cases, the Company shall give written
notice thereof, by certified mail, postage prepaid, to the Holder at the
Holder's address as it shall appear in the purchase rights register, mailed at
least 15 days prior to (A) the date as of which the holders of record of shares
of Common Stock to be entitled to receive any such dividend, distribution,
rights, warrants, or other securities are to be determined, (B) the date on
which any such reclassification, change of outstanding shares of Common Stock,
consolidation, merger, sale, lease, conveyance of property, liquidation,
dissolution, or winding-up is expected to become effective, and the date as of
which it is expected that holders of record of shares of Common Stock shall be
entitled to exchange
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their shares for securities or other property, if any, deliverable upon such
reclassification, change of outstanding shares, consolidation, merger, sale,
lease, conveyance of property, liquidation, dissolution, or winding-up, or (C)
the date of such action which would require an adjustment to the Exercise Price.
10. The issuance of any shares or other securities upon the exercise
of the Purchase Rights, and the delivery of certificates or other instruments
representing such shares or other securities, shall be made without charge to
the Holder for any tax or other charge in respect of such issuance or for any
other cost of the Company incurred in connection with such issuance and
delivery. The Company shall not, however, be required to pay any tax which may
be payable in respect of any transfer or delivery of the Purchase Rights to a
person other than, or the issuance and delivery of any certificate in a name
other than that of the registered Holder and the Company shall not be required
to issue or deliver any such certificate unless and until the person or persons
requesting the issue thereof shall have paid to the Company the amount of such
tax or shall have established to the satisfaction of the Company that such tax
has been paid.
11. The Shares shall be entitled to benefit of the provisions of that
certain Registration Rights Agreement, of even date herewith, by and among the
Company and the persons purchasing securities pursuant to the Purchase
Agreement.
12. Subject to the conditions set forth below, the Company agrees to
indemnify and hold harmless each Holder, its officers, directors, partners,
employees, agents, and counsel, and each person, if any, who controls any such
person within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, from and against any and all loss, liability, charge, claim,
damage, and expense whatsoever (which shall include, for all purposes of this
Section 12, without limitation, reasonable attorneys' fees and any and all
expense whatsoever incurred in investigating, preparing, or defending against
any litigation, commenced or threatened, or any claim whatsoever, and any and
all amounts paid in settlement of any claim or litigation), as and when
incurred, arising out of, based upon, or in connection with, any breach of any
representation, warranty, covenant, or agreement of the Company contained in
this Agreement. The foregoing agreement to indemnify shall be in addition to
any liability the Company may otherwise have, including liabilities arising
under the Purchase Rights.
If any action is brought against any Holder or any of its officers,
directors, partners, employees, agents, or counsel, or any controlling persons
of such person (an "indemnified party") in respect of which indemnity may be
sought against the Company pursuant to the foregoing paragraph, such indemnified
party or parties shall promptly notify the Company in writing of the institution
of such action (but the failure so to notify shall not relieve the Company from
any liability under this Section 12 unless the Company shall have been
materially prejudiced by such failure or relieve the Company from any liability
other than pursuant to this Section 12) and the Company shall promptly assume
the defense of such action, including the employment of counsel (reasonably
satisfactory to such indemnified party or parties) and payment of expenses.
Such indemnified party or parties shall have the right to employ its or their
own counsel in any such case, but the fees and expenses of such counsel shall be
at the expense of such indemnified party or parties unless the employment of
such counsel shall have been authorized in writing by the Company in connection
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<PAGE>
with the defense of such action or the Company shall not have employed counsel
reasonably satisfactory to such indemnified party or parties to have charge of
the defense of such action or such indemnified party or parties shall have
reasonably concluded that there may be one or more legal defenses available to
it or them or to other indemnified parties which are different from or
additional to those available to the Company, in any of which events such fees
and expenses shall be borne by the Company and the Company shall not have the
right to direct the defense of such action on behalf of the indemnified party or
parties. Anything in this Section 12 to the contrary notwithstanding, the
Company shall not be liable for any settlement of any such claim or action
effected without its written consent, which shall not be unreasonably withheld.
13. Unless registered pursuant to the provisions of the registration
rights agreement referred to in Section 11 hereof, the Shares issued upon
exercise of the Purchase Rights shall be subject to a stop transfer order and
the certificate or certificates evidencing such Shares shall bear the following
legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY
INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE
TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO
IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS,
OR (2) THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF
SUCH SECURITIES, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY
TO THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED,
ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR APPLICABLE STATE
SECURITIES LAWS."
14. Upon receipt of evidence satisfactory to the Company of the loss,
theft, destruction, or mutilation of this Agreement or any similar agreements
issued upon the assignment or transfer of all or any portion of the Purchase
Rights (and upon surrender of any such agreement if mutilated), including an
affidavit of the Holder thereof that this Agreement or any similar agreements
issued upon the assignment or transfer of all or any portion of the Purchase
Rights has been lost, stolen, destroyed or mutilated, together with an indemnity
against any claim that may be made against the Company on account of such lost
stolen, destroyed or mutilated agreement, and upon reimbursement of the
Company's reasonable incidental expenses, the Company shall execute and deliver
to the Holder thereof a new agreement of like date, tenor, and denomination.
-12-
<PAGE>
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 645 Fifth Avenue, East Wing,
New York, New York 10022, Attention: President, (ii) if to the Holder, at its
address set forth on the signature page hereof, or (iii) in either case, to such
other address as the party shall have furnished in writing in accordance with
the provisions of this Section 18. Notice to the estate of any party shall be
sufficient if addressed to the party as provided in this Section 18. Any notice
or other communication given by certified mail shall be deemed given at the time
of certification thereof, except for a notice changing a party's address which
shall be deemed given at the time of receipt thereof. Any notice given by other
means permitted by this Section 18 shall be deemed given at the time of receipt
thereof.
19. No course of dealing and no delay or omission on the part of the
Holder in exercising any right or remedy shall operate as a waiver thereof or
otherwise prejudice the Holder's rights, powers or remedies. No right, power or
remedy conferred by this Agreement upon the Holder shall be exclusive of any
other right, power or remedy referred to herein or now or hereafter available at
law, in equity, by statute or otherwise, and all such remedies may be exercised
singly or concurrently.
20. This Agreement may be amended only by a written instrument
executed by the Company and the Holder hereof. Any amendment shall be endorsed
upon this Agreement, and all future Holders shall be bound thereby.
-13-
<PAGE>
* * * *
-14-
<PAGE>
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: 645 Fifth Avenue, East Wing
New York, New York 10022
U-C HOLDINGS, L.L.C.
By: WILLIS STEIN & PARTNERS, L.P.
Its Managing Member
By: Willis Stein & Partners, L.L.C.
Its General Partner
By: _____________________________
Avy H. Stein
Its Manager
Address: 227 West Monroe Street
Suite 4300
Chicago, Illinois 60606
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<PAGE>
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer any
Purchase Rights granted pursuant to the attached Agreement.)
FOR VALUE RECEIVED, ______________________ hereby sells, assigns, and
transfers unto ___________________ the right to purchase __________ shares of
Common Stock, par value $0.001 per share, of UC Television Network Corp. (the
"Company"), together with all right, title, and interest therein, and does
hereby irrevocably constitute and appoint the secretary of the Company attorney
to transfer such rights on the books of the Company, with full power of
substitution.
Dated: ____________________
Signature
-----------------------------
---------------------------------------
Signature Guarantee
NOTICE
The signature on the foregoing Assignment must correspond to the name
as written upon the face of this Agreement in every particular, without
alteration or enlargement or any change whatsoever.
-16-
<PAGE>
To: UC TELEVISION NETWORK CORP.
645 Fifth Avenue
East Wing
New York, New York 10022
ELECTION TO EXERCISE
The undersigned hereby exercises his or its rights to purchase _____
Shares covered by the within Agreement and tenders payment herewith of the
Aggregate Exercise Price in accordance with the terms thereof, and requests that
certificates for such securities be issued in the name of, and delivered to:
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
(Print Name, Address and Social Security
or Tax Identification Number)
and that this Agreement containing a notation as to the Number of Shares issued
upon such exercise be registered in the name of, and delivered to, the
undersigned at the address stated below.
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
(Print Name, Address and Social Security
or Tax Identification Number)
-17-
<PAGE>
Dated: ____________________
Name:_____________________________
(Print)
__________________________________
(Signature)
__________________________________
(Signature Guarantee)
__________________________________
(Signature Guarantee)
-18-
<PAGE>
EXHIBIT 4.5(b)
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) one and (b) the
aggregate number of shares of Common Stock which have been issued by the Company
upon the exercise of any of the Existing Warrants (as hereinafter defined) and
any of the Existing Options (as hereinafter defined) and (c) the Applicable
Percentage, minus (ii) the product of (a) the aggregate number of shares of
-----
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.
<PAGE>
(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 Peter Kauff (as such nonqualified option has been or
shall be amended, modified or increased);
(D) the term "Barington Option" shall mean the unit purchase option
issued to Barington Capital Group, L.P. ("Barington") dated April 26, 1996 and
any warrants subsequently issued to Barington or its transferees pursuant to the
exercise of such unit purchase option.
(D) the term "Applicable Percentage" shall mean, (i) initially, 100%
and (ii) after any partial transfer of the Purchase Rights, the percentage of
the total Number of Shares represented by this Agreement (for example, if the
right to purchase 30% of the Number of Shares is transferred, the Applicable
Percentage for this Agreement shall be 70% of the Applicable Percentage then in
effect with respect to this Agreement and the Applicable Percentage for any new
equity protection agreement issued upon such transfer shall be 30% of the
Applicable Percentage then in effect with respect to this Agreement);
(E) the term "Common Stock" shall mean the Company's common stock, par
value $.001 per share, and any capital stock of any class of the Company
hereafter authorized which is not limited to a fixed sum or percentage of par or
stated value in respect to the rights of the holders thereof to participate in
dividends or in the distribution of assets upon any liquidation, dissolution or
winding up of the Company;
(F) the term "Sale of the Company" shall mean the sale of the Company
to an Independent Third Party or group of Independent Third Parties pursuant to
which such party or parties acquire (i) capital stock of the Company possessing
the voting power under normal circumstances to elect a majority of the Company's
board of directors (whether by merger, consolidation, recapitalization, sale or
transfer of the Company's capital stock or otherwise) or (ii) all or
substantially all of the Company's assets determined on a consolidated basis;
(G) the term "Independent Third Party" shall mean any person or entity
who, immediately prior to the contemplated transaction, does not own in excess
of 5% of the Company's Common Stock on a fully-diluted basis (a "5% Owner"), who
is not controlling, controlled by or under common control with any such 5% Owner
and who is not the spouse or descendent (by birth or adoption) of any such 5%
Owner or a trust for the benefit of such 5% Owner and/or such other persons or
entities;
(H) the term "New Warrants" shall mean the Class C Warrant issued
pursuant to the Purchase Agreement and any warrants issued upon the exercise or
transfer in whole or part of such warrant; and
-2-
<PAGE>
(I) the term "Purchase Rights" shall mean the right to purchase Shares
granted pursuant to this Agreement.
2. The Company hereby grants to the Holder the right to subscribe
for and purchase from Company, upon the terms and conditions set forth herein,
at any time or from time to time before 5:00 P.M. on April 25, 2004, New York
time (the "Exercise Period"), the Number of Shares at a price per share equal to
$.70 (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 645 Fifth Avenue, East Wing, New York, New York 10022, 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.
-3-
<PAGE>
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
-4-
<PAGE>
requirements and limitations of Rule 144 under the Act, it being understood that
Rule 144 is not available as of the date hereof for the sale of the Purchase
Rights or such Shares and that there can be no assurance that Rule 144 sales
will be available at any subsequent time, or (iii) such sale, assignment, or
transfer is otherwise exempt from registration under the Act. Notwithstanding
any other provision hereof, if an exercise of the Purchase Rights or any portion
thereof is to be made in connection with a registered public offering or the
sale of the Company, the exercise of the Purchase Rights or any portion thereof
may, at the election of the Holder, be conditioned upon the consummation of the
public offering or sale of the Company in which case such exercise shall not be
deemed to be effective until the consummation of such transaction. The Company
shall assist and cooperate with any Holder required to make any governmental
filings or obtain any governmental approvals prior to or in connection with any
exercise of the Purchase Rights (including, without limitation, making any
filings required to be made by the Company).
6. The Company covenants that the Shares, upon receipt by the
Company of the Aggregate Exercise Price therefor, shall be validly issued, fully
paid, nonassessable, and free of preemptive rights, liens, taxes and charges
with respect to the issuance thereof. The Company shall take all such actions
as may be necessary to assure that all such shares of Common Stock may be so
issued without violation of any applicable law or governmental regulation or any
requirements of any domestic securities exchange upon which shares of Common
Stock may be listed (except for official notice of issuance which shall be
immediately delivered by the Company upon each such issuance). The Company
shall from time to time take all such action as may be necessary to assure that
the par value per share of the unissued Common Stock acquirable upon exercise of
the Purchase Rights is at all times equal to or less than the Exercise Price
then in effect. The Company covenants and agrees that promptly after the date
hereof, the Company shall amend its certificate of incorporation to increase the
authorized and unissued shares of Common Stock of the Company to a number
sufficient to allow for the exercise of all of the Purchase Rights, the Existing
Warrants, the Barington Option and the Existing Options. The Company shall at
all times thereafter reserve and keep available out of its authorized and
unissued Common Stock, solely for the purpose of providing for the exercise of
the Purchase Rights, such number of shares of Common Stock as shall, from time
to time, be sufficient therefor and the Company shall not thereafter take any
action which would cause the number of authorized but unissued shares of Common
Stock to be less than the number of such shares required to be reserved
hereunder for issuance upon exercise of the Purchase Rights.
7. (a) In case the Company shall at any time after the date this
Agreement is first made (i) declare a dividend on any class of the outstanding
capital stock of the Company (the "Capital Stock") payable in shares of its
Capital Stock, (ii) subdivide any class of the outstanding Capital Stock, or
(iii) combine any class of the outstanding Capital Stock into a smaller number
of shares, then, in each case, the Exercise Price in effect at the time of the
record date for such dividend or of the effective date of such subdivision, or
combination, shall be proportionately adjusted. In addition, to the extent any
shares of Common Stock have been issued upon exercise of any of the Existing
Warrants or the Existing Options, the Number of Shares issuable upon exercise of
the Purchase Rights shall be proportionately adjusted to reflect such dividend,
subdivision, or combination of the Common Stock issued upon such exercise of any
of the Existing Warrants or the
-5-
<PAGE>
Existing Options. Such adjustment shall be made successively whenever any event
listed above shall occur.
(b) In case the Company shall issue or fix a record date for the
issuance to all holders of any class of Capital Stock of rights, options, or
warrants to subscribe for or purchase Common Stock (or securities convertible
into or exchangeable for Common Stock) at a price per share (or having a
conversion or exchange price per share, if a security convertible into or
exchangeable for Common Stock) less than the Current Market Price per share of
Common Stock on such record date, then, in each case, the Exercise Price shall
be adjusted by multiplying the Exercise Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding on such record date plus the number of shares
of such class of Common Stock which the aggregate offering price of the total
number of shares of such class of Common Stock so to be offered (or the
aggregate initial conversion or exchange price of the convertible or
exchangeable securities so to be offered) would purchase at such Current Market
Price and the denominator of which shall be the number of shares of Common Stock
outstanding on such record date plus the number of additional shares of Common
Stock to be offered for subscription or purchase (or into which the convertible
or exchangeable securities so to be offered are initially convertible or
exchangeable); provided, however, that no such adjustment shall be made which
results in an increase in the Exercise Price. Such adjustment shall become
effective at the close of business on such record date; provided, however, that,
to the extent the shares of Common Stock (or securities convertible into or
exchangeable for shares of Common Stock) are not delivered, the Exercise Price
shall be readjusted after the expiration of such rights, options, or warrants
(but only with respect to the Purchase Rights exercised after such expiration),
to the Exercise Price which would then be in effect had the adjustments made
upon the issuance of such rights, options, or warrants been made upon the basis
of delivery of only the number of shares of Common Stock (or securities
convertible into or exchangeable for shares of Common Stock) actually issued.
In case any subscription price may be paid in a consideration, part or all of
which shall be in a form other than cash, the value of such consideration shall
be as determined in good faith by the board of directors of the Company, whose
determination shall be conclusive absent manifest error. Shares of Common Stock
owned by or held for the account of the Company or any majority-owned subsidiary
shall not be deemed outstanding for the purpose of any such computation.
(c) In case the Company shall distribute to all holders of any class
of Common Stock (including any such distribution made to the stockholders of the
Company in connection with a consolidation or merger in which the Company is the
continuing corporation) evidences of its indebtedness, cash (other than any cash
dividend which, together with any cash dividends paid within the 12 months prior
to the record date for such distribution, does not exceed 5% of the Current
Market Price at the record date for such distribution) or assets (other than
distributions and dividends payable in shares of Common Stock), or rights,
options, or warrants to subscribe for or purchase Common Stock, or securities
convertible into or changeable for shares of Common Stock (excluding those with
respect to the issuance of which an adjustment of the Exercise Price is provided
pursuant to Section 7(b) hereof), then, in each case, the Exercise Price shall
be adjusted by multiplying the Exercise Price in effect immediately prior to the
record date for the determination of stockholders entitled to receive such
distribution by a fraction, the numerator of
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<PAGE>
which shall be the Current Market Price per share of such class of Common Stock
on such record date, less the fair market value (as determined in good faith by
the board of directors of the Company, whose determination shall be conclusive
absent manifest error) of the portion of the evidences of indebtedness or assets
so to be distributed, or of such rights, options, or warrants or convertible or
exchangeable securities, or the amount of such cash, applicable to one share,
and the denominator of which shall be such Current Market Price per share of
such class of Common Stock. Such adjustment shall become effective at the close
of business on such record date.
(d) In case the Company shall have issued at any time after April 26,
1996 or shall issue shares of Common Stock or rights, options, or warrants to
subscribe for or purchase Common Stock, or securities convertible into or
exchangeable for Common Stock (excluding shares, rights, options, warrants, or
convertible or exchangeable securities issued or issuable (i) in any of the
transactions with respect to which an adjustment of the Exercise Price is
provided pursuant to Sections 7(a), 7(b), or 7(c) above, (ii) upon any issuance
of securities pursuant to the Purchase Agreement, (iii) upon exercise of the New
Warrants, (iv) upon exercise of any of the Existing Warrants, (v) upon exercise
of any Existing Options or (vi) upon exercise of the Barington Option), at a
price per share (determined, in the case of such rights, options, warrants, or
convertible or exchangeable securities, by dividing (x) the total amount
received or receivable by the Company in consideration of the sale and issuance
of such rights, options, warrants, or convertible or exchangeable securities,
plus the minimum aggregate consideration payable to the Company upon exercise,
conversion, or exchange thereof, by (y) the maximum number of shares covered by
such rights, options, warrants, or convertible or exchangeable securities) lower
than the Current Market Price per share of shares of such class of Common Stock
so issued in effect immediately prior to such issuance, then the Exercise Price
shall be reduced on the date of such issuance to a price (calculated to the
nearest cent) determined by multiplying the Exercise Price in effect immediately
prior to such issuance by a fraction, (1) the numerator of which shall be an
amount equal to the sum of (A) the number of shares of Common Stock outstanding
immediately prior to such issuance plus (B) the quotient obtained by dividing
the consideration received by the Company upon such issuance by such Current
Market Price, and (2) the denominator of which shall be the total number of
shares of Common Stock outstanding immediately after such issuance; provided,
however, that no such adjustment shall be made which results in an increase in
the Exercise Price. For the purposes of such adjustments, the maximum number of
shares which the holders of any such rights, options, warrants, or convertible
or exchangeable securities shall be entitled to initially subscribe for or
purchase or convert or exchange such securities into shall be deemed to be
issued and outstanding as of the date of such issuance, and the consideration
received by the Company therefor shall be deemed to be the consideration
received by the Company for such rights, options, warrants, or convertible or
exchangeable securities, plus the minimum aggregate consideration or premiums
stated in such rights, options, warrants, or convertible or exchangeable
securities to be paid for the shares covered thereby. No further adjustment of
the Exercise Price shall be made as a result of the actual issuance of shares of
Common Stock on exercise of such rights, options, or warrants or on conversion
or exchange of such convertible or exchangeable securities. On the expiration
or the termination of such rights, options, or warrants, or the termination of
such right to convert or exchange, the Exercise Price shall be readjusted (but
only with respect to Warrants exercised after such expiration or termination) to
such Exercise Price as would have obtained had the adjustments made upon the
issuance of such rights, options, warrants, or convertible or exchangeable
securities
-7-
<PAGE>
been made upon the basis of the delivery of only the number of shares of Common
Stock actually delivered upon the exercise of such rights, options, or warrants
or upon the conversion or exchange of any such securities; and on any change of
the number of shares of Common Stock deliverable upon the exercise of any such
rights, options, or warrants or conversion or exchange of such convertible or
exchangeable securities or any change in the consideration to be received by the
Company upon such exercise, conversion, or exchange, including, without
limitation, a change resulting from the antidilution provisions thereof. In case
the Company shall issue shares of Common Stock or any such rights, options,
warrants, or convertible or exchangeable securities for a consideration
consisting, in whole or in part, of property other than cash or its equivalent,
then the "price per share" and the "consideration received by the Company" for
purposes of the first sentence of this Section 7(d) shall be as determined in
good faith by the board of directors of the Company, whose determination shall
be conclusive absent manifest error. Shares of Common Stock owned by or held for
the account of the Company or any majority-owned subsidiary shall not be deemed
outstanding for the purpose of any such computation.
(e) For the purpose of any computation under this Section 7, the
Current Market Price per share of any class of Capital Stock on any date shall
be deemed to be the average of the daily closing prices for shares of such class
for the 30 consecutive trading days immediately preceding the date in question.
The closing price for each day shall be the last reported sales price regular
way, or in case no such reported sales takes place on such date, the closing bid
price regular way on the principal national securities exchange (including, for
purposes hereof, the NASDAQ National Market System or the NASDAQ SmallCap
Market) on which shares of such class of Common Stock are listed or admitted to
trading or, if such class of Common Stock is not listed or admitted to trading
on any national securities exchange, the highest reported bid price for such
class of Common Stock as furnished by the National Association of Securities
Dealers, Inc. through NASDAQ or a similar organization if NASDAQ is no longer
reporting such information. If on any such date such class of Common Stock is
not listed or admitted to trading on any national securities exchange and is not
quoted by NASDAQ or any similar organization, the fair value of a share of such
class of Common Stock on such date, as determined in good faith by the board of
directors of the Company, whose determination shall be conclusive absent
manifest error, shall be used.
(f) All calculations under this Section 7 shall be made to the nearest
cent or to the nearest one-thousandth of a share, as the case may be.
(g) Whenever there shall be an adjustment as provided in this Section
7, the Company shall promptly cause written notice thereof to be sent by
certified mail, postage prepaid, to the Holder, at its address as it shall
appear in the purchase rights register, which notice shall be accompanied by an
officer's certificate setting forth the Number of Shares purchasable upon the
exercise of the Purchase Rights and the Exercise Price after such adjustment and
setting forth a brief statement of the facts requiring such adjustment and the
computation thereof, which officer's certificate shall be conclusive evidence of
the correctness of any such adjustment absent manifest error.
(h) The Company shall not be required to issue fractions of shares of
Common Stock of the Company upon the exercise of the Purchase Rights. If any
fraction of a share
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<PAGE>
would be issuable on the exercise of the Purchase Rights (or specified portions
thereof), the Company shall purchase such fraction for an amount in cash equal
to the same fraction of the Current Market Price of such share of Common Stock
on the date of exercise of the Purchase Rights.
8. (a) In case of any consolidation with or merger of the Company
with or into another corporation (other than a merger or consolidation in which
the Company is the surviving or continuing corporation), or in case of any sale,
lease, or conveyance to another corporation of the property and assets of any
nature of the Company as an entirety or substantially as an entirety, such
successor, leasing, or purchasing corporation, as the case may be, shall (i)
execute with the Holder an agreement providing that the Holder shall have the
right thereafter to receive upon exercise of the Purchase Rights solely the kind
and amount of shares of stock and other securities, property, cash, or any
combination thereof receivable upon such consolidation, merger, sale, lease, or
conveyance by a holder of the number of shares of Common Stock for which the
Purchase Rights might have been exercised immediately prior to such
consolidation, merger, sale, lease, or conveyance, and (ii) make effective
provision in its certificate of incorporation or otherwise, if necessary, to
effect such agreement. Such agreement shall provide for adjustments which shall
be as nearly equivalent as practicable to the adjustments in Section 7.
(b) In case of any reclassification or change of the shares of Common
Stock issuable upon exercise of the Purchase Rights (other than a change in par
value or from no par value to a specified par value, or as a result of a
subdivision or combination, but including any change in the shares into two or
more classes or series of shares), or in case of any consolidation or merger of
another corporation into the Company in which the Company is the continuing
corporation and in which there is a reclassification or change (including a
change to the right to receive cash or other property) of the shares of Common
Stock (other than a change in par value, or from no par value to a specified par
value, or as a result of a subdivision or combination, but including any change
in the shares into two or more classes or series of shares), the Holder shall
have the right thereafter to receive upon exercise of the Purchase Rights solely
the kind and amount of shares of stock and other securities, property, cash, or
any combination thereof receivable upon such reclassification, change,
consolidation, or merger by a holder of the Number of Shares for which the
Purchase Rights might have been exercised immediately prior to such
reclassification, change, consolidation, or merger. Thereafter, appropriate
provision shall be made for adjustments which shall be as nearly equivalent as
practicable to the adjustments in Section 7.
(c) The above provisions of this Section 8 shall similarly apply to
successive reclassifications and changes of shares of Common Stock and to
successive consolidations, mergers, sales, leases, or conveyances.
(d) If any event occurs of the type contemplated by the provisions of
this Section 8 but not expressly provided for by such provisions, then the
Company's board of directors shall make an appropriate adjustment in the
Exercise Price and the Number of Shares obtainable upon exercise of the Purchase
Rights so as to protect the rights of the Company and the holders of the
Purchase Rights; provided that no such adjustment shall increase the Exercise
Price or decrease the Number of Shares obtainable as otherwise determined
pursuant to this Agreement without the
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<PAGE>
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
(ii) effect any reclassification or change of outstanding
shares of Capital Stock, or any consolidation, merger, sale, lease, or
conveyance of property, described in Section 8 hereof; or
(iv) effect any liquidation, dissolution, or winding-up of
the Company; or
(v) take any other action which would cause an adjustment
to the Exercise Price;
then, and in any one or more of such cases, the Company shall give written
notice thereof, by certified mail, postage prepaid, to the Holder at the
Holder's address as it shall appear in the purchase rights register, mailed at
least 15 days prior to (A) the date as of which the holders of record of shares
of Common Stock to be entitled to receive any such dividend, distribution,
rights, warrants, or other securities are to be determined, (B) the date on
which any such reclassification, change of outstanding shares of Common Stock,
consolidation, merger, sale, lease, conveyance of property, liquidation,
dissolution, or winding-up is expected to become effective, and the date as of
which it is expected that holders of record of shares of Common Stock shall be
entitled to exchange
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<PAGE>
their shares for securities or other property, if any, deliverable upon such
reclassification, change of outstanding shares, consolidation, merger, sale,
lease, conveyance of property, liquidation, dissolution, or winding-up, or (C)
the date of such action which would require an adjustment to the Exercise Price.
10. The issuance of any shares or other securities upon the exercise
of the Purchase Rights, and the delivery of certificates or other instruments
representing such shares or other securities, shall be made without charge to
the Holder for any tax or other charge in respect of such issuance or for any
other cost of the Company incurred in connection with such issuance and
delivery. The Company shall not, however, be required to pay any tax which may
be payable in respect of any transfer or delivery of the Purchase Rights to a
person other than, or the issuance and delivery of any certificate in a name
other than that of the registered Holder and the Company shall not be required
to issue or deliver any such certificate unless and until the person or persons
requesting the issue thereof shall have paid to the Company the amount of such
tax or shall have established to the satisfaction of the Company that such tax
has been paid.
11. The Shares shall be entitled to benefit of the provisions of that
certain Registration Rights Agreement, of even date herewith, by and among the
Company and the persons purchasing securities pursuant to the Purchase
Agreement.
12. Subject to the conditions set forth below, the Company agrees to
indemnify and hold harmless each Holder, its officers, directors, partners,
employees, agents, and counsel, and each person, if any, who controls any such
person within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, from and against any and all loss, liability, charge, claim,
damage, and expense whatsoever (which shall include, for all purposes of this
Section 12, without limitation, reasonable attorneys' fees and any and all
expense whatsoever incurred in investigating, preparing, or defending against
any litigation, commenced or threatened, or any claim whatsoever, and any and
all amounts paid in settlement of any claim or litigation), as and when
incurred, arising out of, based upon, or in connection with, any breach of any
representation, warranty, covenant, or agreement of the Company contained in
this Agreement. The foregoing agreement to indemnify shall be in addition to
any liability the Company may otherwise have, including liabilities arising
under the Purchase Rights.
If any action is brought against any Holder or any of its officers,
directors, partners, employees, agents, or counsel, or any controlling persons
of such person (an "indemnified party") in respect of which indemnity may be
sought against the Company pursuant to the foregoing paragraph, such indemnified
party or parties shall promptly notify the Company in writing of the institution
of such action (but the failure so to notify shall not relieve the Company from
any liability under this Section 12 unless the Company shall have been
materially prejudiced by such failure or relieve the Company from any liability
other than pursuant to this Section 12) and the Company shall promptly assume
the defense of such action, including the employment of counsel (reasonably
satisfactory to such indemnified party or parties) and payment of expenses.
Such indemnified party or parties shall have the right to employ its or their
own counsel in any such case, but the fees and expenses of such counsel shall be
at the expense of such indemnified party or parties unless the employment of
such counsel shall have been authorized in writing by the Company in connection
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<PAGE>
with the defense of such action or the Company shall not have employed counsel
reasonably satisfactory to such indemnified party or parties to have charge of
the defense of such action or such indemnified party or parties shall have
reasonably concluded that there may be one or more legal defenses available to
it or them or to other indemnified parties which are different from or
additional to those available to the Company, in any of which events such fees
and expenses shall be borne by the Company and the Company shall not have the
right to direct the defense of such action on behalf of the indemnified party or
parties. Anything in this Section 12 to the contrary notwithstanding, the
Company shall not be liable for any settlement of any such claim or action
effected without its written consent, which shall not be unreasonably withheld.
13. Unless registered pursuant to the provisions of the registration
rights agreement referred to in Section 11 hereof, the Shares issued upon
exercise of the Purchase Rights shall be subject to a stop transfer order and
the certificate or certificates evidencing such Shares shall bear the following
legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY
INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE
TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO
IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS,
OR (2) THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF
SUCH SECURITIES, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY
TO THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED,
ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR APPLICABLE STATE
SECURITIES LAWS."
14. Upon receipt of evidence satisfactory to the Company of the loss,
theft, destruction, or mutilation of this Agreement or any similar agreements
issued upon the assignment or transfer of all or any portion of the Purchase
Rights (and upon surrender of any such agreement if mutilated), including an
affidavit of the Holder thereof that this Agreement or any similar agreements
issued upon the assignment or transfer of all or any portion of the Purchase
Rights has been lost, stolen, destroyed or mutilated, together with an indemnity
against any claim that may be made against the Company on account of such lost
stolen, destroyed or mutilated agreement, and upon reimbursement of the
Company's reasonable incidental expenses, the Company shall execute and deliver
to the Holder thereof a new agreement of like date, tenor, and denomination.
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<PAGE>
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 645 Fifth Avenue, East Wing,
New York, New York 10022, Attention: President, (ii) if to the Holder, at its
address set forth on the signature page hereof, or (iii) in either case, to such
other address as the party shall have furnished in writing in accordance with
the provisions of this Section 18. Notice to the estate of any party shall be
sufficient if addressed to the party as provided in this Section 18. Any notice
or other communication given by certified mail shall be deemed given at the time
of certification thereof, except for a notice changing a party's address which
shall be deemed given at the time of receipt thereof. Any notice given by other
means permitted by this Section 18 shall be deemed given at the time of receipt
thereof.
19. No course of dealing and no delay or omission on the part of the
Holder in exercising any right or remedy shall operate as a waiver thereof or
otherwise prejudice the Holder's rights, powers or remedies. No right, power or
remedy conferred by this Agreement upon the Holder shall be exclusive of any
other right, power or remedy referred to herein or now or hereafter available at
law, in equity, by statute or otherwise, and all such remedies may be exercised
singly or concurrently.
20. This Agreement may be amended only by a written instrument
executed by the Company and the Holder hereof. Any amendment shall be endorsed
upon this Agreement, and all future Holders shall be bound thereby.
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<PAGE>
* * * *
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<PAGE>
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: 645 Fifth Avenue, East Wing
New York, New York 10022
U-C HOLDINGS, L.L.C.
By: WILLIS STEIN & PARTNERS, L.P.
Its Managing Member
By: Willis Stein & Partners, L.L.C.
Its General Partner
By:
----------------------------------
Avy H. Stein
Its Manager
Address: 227 West Monroe Street
Suite 4300
Chicago, Illinois 60606
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<PAGE>
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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<PAGE>
To: UC TELEVISION NETWORK CORP.
645 Fifth Avenue
East Wing
New York, New York 10022
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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<PAGE>
Dated: ____________________
Name:
--------------------------------
(Print)
-------------------------------------
(Signature)
-------------------------------------
(Signature Guarantee)
-------------------------------------
(Signature Guarantee)
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<PAGE>
EXHIBIT 4.5(c)
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) one 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
-----
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.
<PAGE>
(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 Peter Kauff (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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<PAGE>
(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 $.70 (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 645 Fifth Avenue, East Wing, New York, New York 10022, 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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<PAGE>
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 requirements and
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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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<PAGE>
(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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<PAGE>
(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. (a) In case of any consolidation with or merger of the Company with
or into another corporation (other than a merger or consolidation in which the
Company is the surviving or continuing corporation), or in case of any sale,
lease, or conveyance to another corporation of the property and assets of any
nature of the Company as an entirety or substantially as an entirety, such
successor, leasing, or purchasing corporation, as the case may be, shall (i)
execute with the Holder an agreement providing that the Holder shall have the
right thereafter to receive upon exercise of the Purchase Rights solely the kind
and amount of shares of stock and other securities, property, cash, or any
combination thereof receivable upon such consolidation, merger, sale, lease, or
conveyance by a holder of the number of shares of Common Stock for which the
Purchase Rights might have been exercised immediately prior to such
consolidation, merger, sale, lease, or conveyance, and (ii) make effective
provision in its certificate of incorporation or otherwise, if necessary, to
effect such agreement. Such agreement shall provide for adjustments which shall
be as nearly equivalent as practicable to the adjustments in Section 7.
(b) In case of any reclassification or change of the shares of Common
Stock issuable upon exercise of the Purchase Rights (other than a change in par
value or from no par value to a specified par value, or as a result of a
subdivision or combination, but including any change in the shares into two or
more classes or series of shares), or in case of any consolidation or merger of
another corporation into the Company in which the Company is the continuing
corporation and in which there is a reclassification or change (including a
change to the right to receive cash or other property) of the shares of Common
Stock (other than a change in par value, or from no par value to
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<PAGE>
a specified par value, or as a result of a subdivision or combination, but
including any change in the shares into two or more classes or series of
shares), the Holder shall have the right thereafter to receive upon exercise of
the Purchase Rights solely the kind and amount of shares of stock and other
securities, property, cash, or any combination thereof receivable upon such
reclassification, change, consolidation, or merger by a holder of the Number of
Shares for which the Purchase Rights might have been exercised immediately prior
to such reclassification, change, consolidation, or merger. Thereafter,
appropriate provision shall be made for adjustments which shall be as nearly
equivalent as practicable to the adjustments in Section 7.
(c) The above provisions of this Section 8 shall similarly apply to
successive reclassifications and changes of shares of Common Stock and to
successive consolidations, mergers, sales, leases, or conveyances.
(e) 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, and any and
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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 645 Fifth Avenue, East Wing, New York,
New York 10022, 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
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<PAGE>
party as provided in this Section 18. Any notice or other communication given by
certified mail shall be deemed given at the time of certification thereof,
except for a notice changing a party's address which shall be deemed given at
the time of receipt thereof. Any notice given by other means permitted by this
Section 18 shall be deemed given at the time of receipt thereof.
19. No course of dealing and no delay or omission on the part of the
Holder in exercising any right or remedy shall operate as a waiver thereof or
otherwise prejudice the Holder's rights, powers or remedies. No right, power or
remedy conferred by this Agreement upon the Holder shall be exclusive of any
other right, power or remedy referred to herein or now or hereafter available at
law, in equity, by statute or otherwise, and all such remedies may be exercised
singly or concurrently.
20. This Agreement may be amended only by a written instrument executed by
the Company and the Holder hereof. Any amendment shall be endorsed upon this
Agreement, and all future Holders shall be bound thereby.
* * * *
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<PAGE>
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: 645 Fifth Avenue, East Wing
New York, New York 10022
U-C HOLDINGS, L.L.C.
By: WILLIS STEIN & PARTNERS, L.P.
Its Managing Member
By: Willis Stein & Partners, L.L.C.
Its General Partner
By:
-------------------------------
Avy H. Stein
Its Manager
Address: 227 West Monroe Street
Suite 4300
Chicago, Illinois 60606
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<PAGE>
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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<PAGE>
To: UC TELEVISION NETWORK CORP.
645 Fifth Avenue
East Wing
New York, New York 10022
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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<PAGE>
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
-----
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.
<PAGE>
(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 Peter Kauff (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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<PAGE>
(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 645 Fifth Avenue, East Wing, New York, New York 10022, 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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<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
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;
-8-
<PAGE>
(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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<PAGE>
(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
-10-
<PAGE>
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
-11-
<PAGE>
(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,
-12-
<PAGE>
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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<PAGE>
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 645 Fifth Avenue, East Wing,
New York, New York 10022, 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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<PAGE>
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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<PAGE>
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: 645 Fifth Avenue, East Wing
New York, New York 10022
U-C HOLDINGS, L.L.C.
By: WILLIS STEIN & PARTNERS, L.P.
Its Managing Member
By: Willis Stein & Partners, L.L.C.
Its General Partner
By:
-----------------------------------------
Avy H. Stein
Its Manager
Address: 227 West Monroe Street
Suite 4300
Chicago, Illinois 60606
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<PAGE>
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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<PAGE>
To: UC TELEVISION NETWORK CORP.
645 Fifth Avenue
East Wing
New York, New York 10022
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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<PAGE>
Dated: ____________________
Name: ___________________________________
(Print)
_________________________________________
(Signature)
_________________________________________
(Signature Guarantee)
_________________________________________
(Signature Guarantee)
-19-
<PAGE>
EXHIBIT 4.6
-----------
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, DATED AS OF APRIL 25, 1997, BY AND AMONG UC
TELEVISION NETWORK CORP., A DELAWARE CORPORATION ("COMPANY"), AND U-C HOLDINGS,
L.L.C. (THE "PURCHASER").
W I T N E S S E T H:
-------------------
WHEREAS, Company and Purchaser have entered into that certain Purchase
Agreement, dated as of the date hereof (the "Purchase Agreement"), pursuant to
which Company has agreed to issue and sell to Purchaser, and Purchaser has
agreed to purchase from Company, an aggregate of 29,090,909 shares of Common
Stock, $0.001 par value per share ("Common Stock") and a Class C Warrant for
3,863,662 shares of Common Stock and certain purchase rights pursuant to the
Equity Protection Agreements; and
WHEREAS, in order to induce Purchaser to enter into the Purchase Agreement,
the Transaction Documents and to purchase such shares of Common Stock, the Class
C Warrant and certain purchase rights pursuant to the Equity Protection
Agreements, Company has agreed to provide registration rights with respect
thereto and to the shares of Common Stock of Company held by Purchaser;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, it is agreed as follows:
1. Definitions. Unless otherwise defined herein, terms defined in the
-----------
Purchase Agreement are used herein as therein defined, and the following shall
have (unless otherwise provided elsewhere in this Registration Rights Agreement)
the following respective meanings (such meanings being equally applicable to
both the singular and plural form of the terms defined):
"Agreement" shall mean this Registration Rights Agreement, including all
amendments, modifications and supplements and any exhibits or schedules to any
of the foregoing, and shall refer to the Agreement as the same may be in effect
at the time such reference becomes operative.
"Business Day" shall mean any day that is not a Saturday, a Sunday or a day
on which banks are required or permitted to be closed in the State of New York.
"Commission" shall mean the Securities and Exchange Commission or any other
federal agency then administering the Securities Act and other federal
securities laws.
"Conversion Shares" shall mean shares of Common Stock issued or issuable
upon exercise of the Class C Warrant.
<PAGE>
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
or any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect from time to time.
"Holder" shall mean the holder of Conversion Shares or shares of Common
Stock held by Purchaser or their respective transferees.
"Majority Holders" shall mean Holders holding at the time, shares of
Conversion Shares or Common Stock representing more than 50% of all Registrable
Securities.
"NASD" shall mean the National Association of Securities Dealers, Inc., or
any successor corporation thereto.
"Registrable Securities" shall mean the shares of Common Stock held by
Purchaser or its transferees, or shares of Common Stock from time to time issued
or issuable to the holders of the Class C Warrant upon the exercise thereof or
to the holders of the purchase rights pursuant to the Equity Protection
Agreements, or hereafter acquired by Purchaser or which they hereafter obtain
the right to acquire. As to any particular Registrable Securities, such
securities shall cease to be Registrable Securities when they have been
distributed to the public pursuant to the an offering registered under the
Securities Act or sold to the public through a broker, dealer or market maker in
compliance with Rule 144 under the Securities Act (or similar rule then in
force) or repurchased by the Company or any Subsidiary. For purposes of this
Agreement, a Person shall be deemed to be a holder of Registrable Securities,
and the Registrable Securities shall be deemed to be in existence, whenever such
Person has the right to acquire directly or indirectly such Registrable
Securities (upon conversion or exercise in connection with a transfer of
securities or otherwise, but disregarding any restrictions or limitations upon
the exercise of such right), whether or not such acquisition has actually been
effected, and such Person shall be entitled to exercise the rights of a holder
of Registrable Securities hereunder.
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect from time to time.
2. Required Registration. After receipt of a written request from the
---------------------
Holders of Registrable Securities requesting that Company effect a registration
under the Securities Act covering at least 20% of the Registrable Securities
initially outstanding, and specifying the intended method or methods of
disposition thereof, Company shall promptly notify all Holders in writing of the
receipt of such request and each such Holder, in lieu of exercising its rights
under Section 3 may elect (by written notice sent to Company within 10 Business
Days from the date of such Holder's receipt of the aforementioned Company's
notice) to have Registrable Securities included in such registration thereof
pursuant to this Section 2, provided, however, that no Holder will deliver a
request for a demand registration during the six (6) month period following the
effective date of a Registration Statement filed in respect of a previous demand
registration. Thereupon Company shall, as expeditiously as is possible and at
its expense, use its best efforts to effect the registration under the
Securities Act of all shares of Registrable Securities which Company has been so
requested to register by such Holders for sale, all to the extent required to
permit the disposition (in accordance with the intended method or methods
-2-
<PAGE>
thereof, as aforesaid) of the Registrable Securities so registered; provided,
--------
however, that Company shall not be required to effect more than two (2)
- -------
registrations of any Registrable Securities pursuant to this Section 2 for the
Purchaser, unless Company shall be eligible at any time to file a registration
statement on Form S-3 (or other comparable short form) under the Securities Act,
in which event there shall be no limit on the number of such registrations
pursuant to this Section 2. The rights of the Holders under this Section 2
shall be effective immediately after the date hereof. If the managing
underwriter shall determine that it cannot register all of the Registrable
Securities in any registration of Registrable Securities shall have priority
over any other securities requested to be included in such registration.
3. Incidental Registration. If Company at any time proposes to file on
-----------------------
its behalf and/or on behalf of any of its security holders (the "Demanding
Security Holders") a Registration Statement under the Securities Act on any form
(other than a Registration Statement on Form S-4 or S-8 or any successor form
for securities to be offered in a trans action of the type referred to in Rule
145 under the Securities Act or to employees of Company pursuant to any employee
benefit plan, respectively) for the registration of securities, it will give
written notice to all Holders at least 30 days before the initial filing with
the Commission of such Registration Statement, which notice shall set forth the
intended method of disposition of the securities proposed to be registered by
Company. The notice shall offer to include in such filing the aggregate number
of shares of Registrable Securities as such Holders may request.Each Holder
desiring to have Registrable Securities registered under this Section 3 shall
advise Company in writing within 10 Business Days after the date of receipt of
such offer from Company, setting forth the amount of such Registrable Securities
for which registration is requested. Company shall thereupon include in such
filing the number of shares of Registrable Securities for which registration is
so requested, subject to the next sentence, and shall use its best efforts to
effect registration under the Securities Act of such shares. If the managing
underwriter of a proposed public offering shall advise Company in writing that,
in its opinion, the distribution of the Registrable Securities requested to be
included in the registration concurrently with the securities being registered
by Company, the other security holders of the Company or such Demanding Security
Holder would materially and adversely affect the distribution of such securities
by Company, the other security holders of the Company or such Demanding Security
Holder, then all selling security holders (including the Holder who initially
requested such registration) shall reduce the amount of securities each intended
to distribute through such offering on a pro rata basis. Except as otherwise
provided in Section 5, all expenses of such registration shall be borne by
Company.
4. Registration Procedures. If Company is required by the provisions of
-----------------------
Section 2 or 3 to use its best efforts to effect the registration of any of its
securities under the Securities Act, Company will, as expeditiously as possible:
(a) prepare and file with the Commission a Registration Statement with
respect to such securities and use its best efforts to cause such Registration
Statement to become and remain effective for a period of time required for the
disposition of such securities by the holders thereof, but not to exceed 180
days;
(b) prepare and file with the Commission such amendments and
supplements to such Registration Statement and the prospectus used in connection
therewith as may be
-3-
<PAGE>
necessary to keep such Registration Statement effective and to comply with the
provisions of the Securities Act with respect to the sale or other disposition
of all securities covered by such Registration Statement until the earlier of
such time as all of such securities have been disposed of in a public offering
or the expiration of 180 days;
(c) furnish to such selling security holders such number of copies of
a summary prospectus or other prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other
documents, as such selling security holders may reasonably request;
(d) use its best efforts to register or qualify the securities covered
by such Registration Statement under such other securities or blue sky laws of
such jurisdictions within the United States and Puerto Rico as each holder of
such securities shall request (provided, however, that Company shall not be
-------- -------
obligated to qualify as a foreign corporation to do business under the laws of
any jurisdiction in which it is not then qualified), and do such other
reasonable acts and things as may be required of it to enable such holder to
consummate the disposition in such jurisdiction of the securities covered by
such Registration Statement;
(e) furnish, at the request of any Holder requesting registration of
Registrable Securities pursuant to Section 2, on the date that such shares of
Registrable Securities are delivered to the underwriters for sale pursuant to
such registration or, if such Registrable Securities are not being sold through
underwriters, on the date that the Registration Statement with respect to such
shares of Registrable Securities becomes effective, (1) an opinion, dated such
date, of the independent counsel representing Company for the purposes of such
registration, addressed to the underwriters, if any, and if such Registrable
Securities are not being sold through underwriters, then to the Holders making
such request, in customary form and covering matters of the type customarily
covered in such legal opinions; and (2) a comfort letter dated such date, from
the independent certified public accountants of Company, addressed to the
underwriters, if any, and if such Registrable Securities are not being sold
through underwriters, then to the Holder making such request and, if such
accountants refuse to deliver such letter to such Holder, then to Company, in a
customary form and covering matters of the type customarily covered by such
comfort letters and as the underwriters or such Holder shall reasonably request.
Such opinion of counsel shall additionally cover such other legal matters with
respect to the registration in respect of which such opinion is being given as
such Holders may reasonably request. Such letter from the independent certified
public accountants shall additionally cover such other financial matters
(including information as to the period ending not more than five Business Days
prior to the date of such letter) with respect to the registration in respect of
which such letter is being given as the Holders of a majority of the Registrable
Securities being so registered may reasonably request;
(f) enter into customary agreements (including an underwriting
agreement in customary form) and take such other actions as are reasonably
required in order to expedite or facilitate the disposition of such Registrable
Securities; and
(g) otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission, and make available to its security holders,
as soon as reasonably practicable, but not later than 18 months after the
effective date of the Registration Statement, an
-4-
<PAGE>
earnings statement covering the period of at least 12 months beginning with the
first full month after the effective date of such Registration Statement, which
earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act.
It shall be a condition precedent to the obligation of Company to take any
action pursuant to this Agreement in respect of the securities which are to be
registered at the request of any Holder that such Holder shall furnish to
Company such information regarding the securities held by such Holder and the
intended method of disposition thereof as Company shall reasonably request and
as shall be required in connection with the action taken by Company.
5. Expenses. All reasonable expenses incurred in complying with this
--------
Agreement, including, without limitation, all registration and filing fees
(including all expenses incident to filing with the NASD), printing expenses,
fees and disbursements of counsel for Company, the reasonable fees and expenses
of counsel for the selling security holders (selected by those holding a
majority of the shares being registered), expenses of any special audits
incident to or required by any such registration and expenses of complying with
the securities or blue sky laws of any jurisdiction pursuant to Section 4(d),
shall be paid by Company, except that:
(a) all such expenses in connection with any amendment or supplement
to the Registration Statement or prospectus filed more than 180 days after the
effective date of such Registration Statement because any Holder has not
effected the disposition of the securities requested to be registered shall be
paid by such Holder; and
(b) Company shall not be liable for any fees, discounts or commissions
to any underwriter or any fees or disbursements of counsel for any underwriter
in respect of the securities sold by such Holder.
6. Indemnification and Contribution.
--------------------------------
(a) In the event of any registration of any Registrable Securities
under the Securities Act pursuant to this Agreement, Company shall indemnify and
hold harmless the holder of such Registrable Securities, such holder's directors
and officers, and each other person (including each underwriter) who
participated in the offering of such Registrable Securities and each other
person, if any, who controls such holder or such participating person within the
meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which such holder or any such director or
officer or participating person or controlling person may become subject under
the Securities Act or any other statute or at common law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon (i) any alleged untrue statement of any material fact
contained, on the effective date thereof, in any Registration Statement under
which such securities were registered under the Securities Act, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereto, or (ii) any alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and shall reimburse such holder or such director, officer or participating
person or controlling person for any legal or any other expenses reasonably
incurred by such holder or such director, officer or participating person or
controlling person in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that Company shall not be
-------- -------
liable
-5-
<PAGE>
in any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any actual or alleged untrue statement or actual
or alleged omission made in such Registration Statement, preliminary prospectus,
prospectus or amendment or supplement in reliance upon and in conformity with
written information furnished to Company by such holder specifically for use
therein or (in the case of any registration pursuant to Section 2) so furnished
for such purposes by any underwriter. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of such holder
or such director, officer or participating person or controlling person, and
shall survive the transfer of such securities by such holder.
(b) Each Holder, by acceptance hereof, agrees to indemnify and hold
harmless Company, its directors and officers and each other person, if any, who
controls Company within the meaning of the Securities Act against any losses,
claims, damages or liabilities, joint or several, to which Company or any such
director or officer or any such person may become subject under the Securities
Act or any other statute or at common law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon information in writing provided to Company by such Holder specifically for
use in the following documents and contained, on the effective date thereof, in
any Registration Statement under which securities were registered under the
Securities Act at the request of such Holder, any preliminary prospectus or
final prospectus contained therein, or any amendment or supplement thereto.
Notwithstanding the provisions of this paragraph (b) or paragraph (c) below, no
Holder shall be required to indemnify any person pursuant to this Section 6 or
to contribute pursuant to paragraph (c) below in an amount in excess of the
amount of the aggregate net proceeds received by such Holder in connection with
any such registration under the Securities Act.
(c) If, as a matter of law, the indemnification provided for in this
Section 6 from the indemnifying party is unavailable to an indemnified party
hereunder in respect of any losses, claims, damages, liabilities or expenses
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the indemnifying party and indemnified parties in connection with the actions
which resulted in such losses, claims, damages, liabilities or expenses, as well
as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified parties shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied by,
such indemnifying party or indemnified parties, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such action. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include any legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6(c) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
No Person guilty of fraudulent misrepresentation (within the meaning of
-6-
<PAGE>
Section 11(f) of the Securities Act) shall be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation.
7. Certain Limitations on Registration Rights. Notwithstanding the other
------------------------------------------
provisions of this Agreement:
(a) Company shall have the right to delay the filing or effectiveness
of a registration statement required pursuant to Section 2 hereof during one or
more periods aggregating not more than 60 days in any twelve month period in the
event that (i) Company would, in accordance with the advice of its counsel, be
required to disclose in the prospectus information not otherwise then required
by law to be publicly disclosed and (ii) in the judgment of Company's Board of
Directors, there is a reasonable likelihood that such disclosure, or any other
action to be taken in connection with the prospectus, would materially and
adversely affect any existing or prospective material business or financial
situation, transaction or negotiation, including, but not limited to any
financing, acquisition or corporate reorganization, or otherwise materially and
adversely affect Company.
8. Selection of Managing Underwriters. Subject to the obligations of the
----------------------------------
Company under agreements existing on the date hereof, the managing underwriter
or underwriters for any offering of Registrable Securities to be registered
pursuant to Section 2 shall be selected by the holders of a majority of the
shares being so registered and shall be reasonably acceptable to Company. No
person may participate in any underwritten offering hereunder unless such
person: (i) agrees to sell its Registrable Securities on the basis provided in
any underwriting arrangements approved by the Persons entitled hereunder to
approve such arrangements, and (ii) completes and executes powers of attorney,
indemnities, underwriting agreements and other documents required under the
terms of such underwriting arrangements.
9. Miscellaneous.
-------------
(a) No Inconsistent Agreements. Company will not, without the written
--------------------------
consent of Majority Holders, such consent not to be unreasonably withheld,
hereafter enter into any agreement with respect to its securities which is
inconsistent with the rights granted to the Holders in this Agreement. Except
as set forth in the Purchase Agreement, Company has not previously entered into
any agreement with respect to any of its securities granting any registration
rights to any person.
(b) Remedies. Each Holder, in addition to being entitled to exercise
--------
all rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. Company agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Agreement and hereby agrees
to waive the defense in any action for specific performance that a remedy at law
would be adequate. In any action or proceeding brought to enforce any provision
of this Agreement or where any provision hereof is validly asserted as a
defense, the successful party shall be entitled to recover reasonable attorneys'
fees in addition to any other available remedy.
-7-
<PAGE>
(c) Amendments and Waivers. Except as otherwise provided herein, the
----------------------
provisions of this Agreement may not be amended, modified or supplemented, and
waivers or consents to departure from the provisions hereof may not be given
unless Company has obtained the written consent of the Majority Holders and
Company has been obtained.
(d) Notice Generally. Whenever it is provided herein that any notice,
----------------
demand, request, consent, approval, declaration or other communication shall or
may be given to or served upon any of the parties by another, or whenever any of
the parties desires to give or serve upon another any such communication with
respect to this Agreement, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and either shall be
delivered in person with receipt acknowledged or by registered or certified
mail, return receipt requested, postage prepaid, or by telecopy and confirmed by
telecopy answerback addressed as follows:
(i) If to any Holder, at its last known address appearing on the
books of Company maintained for such purpose.
(ii) If to Company, at
UC Television Network Corp.
c/o Willis Stein & Partners, L.P.
227 W. Monroe Street, Suite 4300
Chicago, Illinois 60606
Attention: Avy H. Stein
Telecopy Number: 312-422-2424
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration or other communication hereunder shall be deemed
to have been duly given or served on the date on which personally delivered,
with receipt acknowledged by overnight courier, with delivery acknowledged,
telecopied and confirmed by telecopy answerback, or three (3) Business Days
after the same shall have been deposited with the United States mail.
(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
including any person to whom Registrable Securities are transferred.
(f) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law; Jurisdiction. This Agreement shall be governed by,
---------------------------
construed and enforced in accordance with the laws of the State of Delaware
without giving effect to the conflict of laws provisions thereof.
-8-
<PAGE>
(h) Severability. Wherever possible, each provision of this Agreement
------------
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
(i) Entire Agreement. This Agreement, together with the Purchase
----------------
Agreement, represents the complete agreement and understanding of the parties
hereto in respect of the subject matter contained herein and therein. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
COMPANY:
Attest: UC TELEVISION NETWORK CORP.
By:______________________________ By:______________________________
Alan Pearl Peter Kauff
Secretary Chief Executive Officer and
Chairman of the Board
[Corporate Seal]
PURCHASER:
U-C HOLDINGS, L.L.C.
By: Willis Stein & Partners, L.P.
Its: Managing Member
By: Willis Stein & Partners, L.L.C.
Its: General Partner
By:_____________________________
Avy H. Stein
Its Manager
-9-
<PAGE>
EXHIBIT 4.7
-----------
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Escrow Agreement") is made as of April
----------------
25, 1997, by and among UC Television Network Corp., a Delaware corporation (the
"Company"), U-C Holdings, L.L.C., a Delaware limited liability company (the
-------
"Purchaser"), and LaSalle National Bank, as escrow agent (the "Escrow Agent").
- ---------- ------------
The Purchaser and the Company are sometimes collectively referred to herein as
the "Parties" and individually as a "Party." Capitalized terms used herein but
------- -----
not defined herein shall have the meanings set forth in the Purchase Agreement
(as defined below).
WHEREAS, the Parties have entered into that certain Purchase
Agreement, dated as of the date hereof (as amended and modified from time to
time in accordance with its terms, the "Purchase Agreement"), providing for,
------------------
among other things, the purchase by the Purchaser of the Purchased Securities.
WHEREAS, the Company issued the Purchased Securities to the Purchaser
and the Purchaser paid the purchase price for the Purchased Securities by
delivering cash and the Note to the Company (the "Purchase Price") upon the
--------------
Closing of the transactions contemplated by the Purchase Agreement.
WHEREAS, pursuant to the terms of the Purchase Agreement and as part
of the transactions contemplated thereby, the Parties agreed that at the
Closing, they would enter into this Escrow Agreement and that the Purchaser
would deposit the Purchased Securities and certain other documents with the
Escrow Agent and that the Company would deposit the Purchase Price with the
Escrow Agent, in each case for the purposes set forth herein.
WHEREAS, the parties hereto desire to more specifically set forth
their rights and obligations with respect to the Purchased Securities, such
other documents and the Purchase Price deposited with the Escrow Agent and the
distribution and release thereof.
WHEREAS, the execution and delivery of this Escrow Agreement is a
condition to the consummation of the transactions contemplated by the Purchase
Agreement.
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. Escrow Deposit. Simultaneously with the execution of this Escrow
--------------
Agreement,
(a) the Company shall deposit (i) $29,090.91 in cash (the "Cash
----
Amount") with the Escrow Agent by check or by wire transfer of immediately
- ------
available funds to the account of the Escrow Agent designated on Schedule I
attached hereto and (ii) the Note with the Escrow Agent by delivery of such Note
to the Escrow Agent by overnight courier immediately following the Closing,
which amount represents the Purchase Price paid by the Purchaser for the
Purchased Securities; and
<PAGE>
(b) the Purchaser shall deposit (i) the Purchased Securities and (ii)
the resignations (the "Resignations") of the New Directors (as defined in
------------
Section 3(b) below) from the board of directors of the Company with the Escrow
Agent by delivery of such Purchased Securities and the Resignations to the
Escrow Agent by overnight courier immediately following the Closing, in each
case in accordance with the Purchase Agreement. The Escrow Agent hereby
acknowledges that a check for the Cash Amount, the Note, the Purchased
Securities and the Resignations (collectively, the "Escrow Deposit") shall be
--------------
delivered to the Escrow Agent by overnight courier immediately following the
Closing. The Escrow Agent agrees to hold the Cash Amount, together with all
products and proceeds thereof (including all interest, dividends, gains and
other income earned with respect thereto) (collectively, the "Escrow Funds"), in
------------
a separate and distinct account (the "Escrow Account"), subject to the terms and
--------------
conditions of this Escrow Agreement. The Escrow Agent shall not distribute or
release the Escrow Deposit except in accordance with the express terms and
conditions of this Escrow Agreement. The Company and the Purchaser each
acknowledge and agree that the Purchased Securities have been issued to and are
owned beneficially and of record by the Purchaser and that the Purchaser shall
be entitled to cast any vote or give any consent or waiver with respect to the
Purchased Securities prior to the Escrow Release Date. The Escrow Agent shall
have no obligation or right to cast any vote or take any similar action with
respect to the Purchase Securities.
2. Permitted Investments. The Escrow Agent shall invest the Escrow
---------------------
Funds in the Rembrandt Government Money Market Fund; provided, however, that in
-------- -------
the event the Escrow Agent shall receive written instructions signed by both the
Representative (as defined below) and the Company directing the Escrow Agent to
invest Escrow Funds in any other investment, the Escrow Agent shall invest such
Escrow Funds in the manner specified in such written instructions (the
"Permitted Investments"). No party hereto shall be liable or responsible in any
- ----------------------
manner for any loss or depreciation resulting from any such investment or any
liquidation thereof, or for any costs in connection therewith, and all of said
losses and costs shall be borne by the Escrow Account. The Escrow Agent shall
have no power or authority to invest or reinvest any Escrow Funds except in the
Permitted Investments.
3. Conditions to Release of Escrow Deposit. The Parties agree that
---------------------------------------
the release of the Escrow Deposit pursuant to Section 5(a) hereof is subject to
------------
the satisfaction on the Escrow Release Date of the following conditions to the
satisfaction of the Purchaser as determined in good faith by the Purchaser in
its sole discretion:
(a) Barington Capital Group, L.P. ("Barington") shall have (i)
---------
released, waived, or failed to exercise its right of first refusal with regard
to the issuance of capital stock of the Company set forth in that certain letter
agreement dated April 26, 1996 (the "Engagement Letter") and (ii) signed a
-----------------
written statement releasing the Company from any and all obligations under and
pursuant to the terms of the Engagement Letter.
(b) Jason Elkin, Joseph D. Gersh III, Avy H. Stein, John T. Dobson and
Beth F. Johnston (collectively, the "New Directors") shall have been appointed,
-------------
effective as of the satisfaction of the condition set forth in Section 3(c), to
------------
the board of directors of the Company in accordance with the Certificate of
Incorporation and bylaws of the Company and in compliance with all applicable
laws, including, but not limited to, the Securities Act and the Exchange Act,
Edward S. McLaughlin and Edward Weinberger shall have resigned as directors of
the Company and the New
-2-
<PAGE>
Directors shall represent a majority of the board of directors of the Company on
the effective date of their appointment.
(c) The Company shall have delivered the information statement
pursuant to Rule 14f-1 under the Securities Exchange Act of 1934, as amended, to
all shareholders of the Company and filed such information statement with all
applicable governmental agencies, NASDAQ and all applicable stock exchanges and
the notice period pursuant to Rule 14f-1 (as the same may be extended as a
result of any action taken by the Securities and Exchange Commission) shall have
expired.
(d) No suit, action or other proceeding shall be pending or threatened
before any court or governmental regulatory body or authority (i) relating to or
seeking to restrain or prohibit the transactions contemplated by the Purchase
Agreement, this Agreement or any other Transaction Document or (ii) that has had
or could have a Material Adverse Effect on the Company or a material adverse
effect on the Purchaser or its members, no injunction, judgment, order, decree
or ruling with respect thereto shall be in effect and the release of the Escrow
Deposit pursuant to Section 5(a) shall not violate any applicable law, rule or
------------
regulation.
(e) The Company shall not have breached in any material respect any of
the covenants contained in the Purchase Agreement or this Agreement.
(f) There shall not have occurred any event or condition since the
Closing Date which has had or could reasonably be expected to have a Material
Adverse Effect.
(g) The Company's representations and warranties set forth in the
Purchase Agreement shall be true and correct in all material respects at and as
of the Escrow Release Date.
(h) The Purchaser shall have received a certificate from the President
of the Company, dated the Escrow Release Date, stating that (i) no resolutions,
written consents or other actions have been taken by the board of directors of
the Company and no meetings of the board of directors of the Company have been
held since the Closing Date, except for actions taken after receipt of a written
consent from the Representative of the Purchaser to such actions, and (ii) the
conditions set forth in Sections 3(d), 3(e), 3(f) and 3(g) have been satisfied.
----------------------------------
Any condition specified in this Section 3 may be waived only if such waiver
---------
is set forth in a writing executed by the Representative of the Purchaser.
4. Covenants of the Company Prior to the Escrow Release Date.
---------------------------------------------------------
(a) From the date hereof, to and through the Escrow Release Date (as
defined in Section 5(c) below), and except to the extent that the Representative
of the Purchaser shall otherwise consent to such action in writing, the Company
shall not enter into any transaction, arrangement or contract material to the
business, operations, financial condition, operating results, earnings, assets,
customer, supplier and employee relations, or business prospects of the Company,
whether or not in the ordinary course of business. Without limiting the
generality of the foregoing, the Company shall not: (i) redeem, purchase or
otherwise acquire directly or indirectly any of its issued and outstanding
capital stock, or any outstanding rights or securities exercisable or
exchangeable for or
-3-
<PAGE>
convertible into its capital stock, or make any distribution or dividend with
respect to its capital stock, (ii) increase any officer's or employee's
compensation, incentive arrangements or other benefits, (iii) amend its
certificate of incorporation or bylaws, (iv) issue (or agree to issue) any
capital stock or any rights to acquire, or securities convertible into or
exchangeable for, any of its capital stock, (v) take any action or fail to take
any action or allow to occur any transaction, event or condition which, if
taken, not taken or occurring prior to the Closing, would have been required to
be disclosed on the disclosure schedules to the Purchase Agreement or would have
constituted a breach of any covenant contained in the Purchase Agreement, (vi)
directly or indirectly engage in any transaction, arrangement or contract with
any officer, director, shareholder or other insider or Affiliate which is not in
the ordinary course of business consistent with past practice and at arm's
length, (vii) buy or sell any assets out of the ordinary course of business
consistent with past practice or merge, consolidate or enter into any similar
business combination or transaction with any Person, (viii) liquidate, dissolve
or effect a recapitalization or reorganization in any form of transaction, (ix)
incur any Indebtedness, other than Permitted Indebtedness or (x) commit to do
any of the foregoing.
(b) From the date hereof to and through the Escrow Release Date, and
except to the extent that the Representative of the Purchaser shall otherwise
consent to such action in writing, the Company shall: (i) operate its business
substantially as presently operated and only in the ordinary course and, to the
extent of and consistent with such operations, use its best efforts to preserve
intact its goodwill, reputation and present business organizations and to
preserve the relationships with persons having business dealings with it; (ii)
maintain all of its properties in customary repair, good order and condition,
reasonable wear and use accepted; (iii) take all steps necessary to maintain its
intangible assets, if any, including without limitation, its patents,
trademarks, trade names, brand names, copyrights, permits and licenses and any
pending applications thereof; and (iv) use its best efforts to take all actions
and do all things necessary, proper or advisable in order to satisfy the
conditions set forth in Section 3.
---------
5. Release of Escrow Funds. The Escrow Deposit shall only be
-----------------------
distributed and released as follows:
(a) Satisfaction of Conditions Precedent. If on the Escrow Release
------------------------------------
Date the Purchaser shall deliver to the Escrow Agent written instructions,
signed by Avy H. Stein as the representative of the Purchaser (the
"Representative"), stating that the conditions set forth in Section 3 hereof are
- --------------- ---------
satisfied, the Escrow Agent shall (i) release the Escrow Funds to an account of
the Company designated by the Representative in such written instructions and
deliver the Note to the Company and (ii) release the Purchased Securities and
the resignations of the New Directors to the Purchaser. The notice delivered by
the Purchaser pursuant to this Section 5(a) shall be conclusive and binding on
------------
the Parties and the Escrow Agent with respect to the satisfaction of the
conditions set forth in Section 3 for purposes of the release of the Escrow
---------
Deposit pursuant to this Section 5(a).
------------
(b) Failure of Conditions Precedent.
-------------------------------
(i) If on the Escrow Release Date the Purchaser shall deliver to the
Escrow Agent written instructions, signed by the Representative of the
Purchaser, stating that the conditions in Section 3 have not been satisfied, the
---------
Escrow Agent shall (A) release the Cash Amount
-4-
<PAGE>
to an account of the Purchaser designated by the Representative in such written
instructions and deliver the Note to the Purchaser and (B) release any interest
or income on the Cash Amount to an account of the Company designated by the
Representative in such written instructions and deliver the Purchased Securities
to the Company. The notice delivered by the Purchaser will be conclusive and
binding on the Parties and theEscrow Agent with respect to the failure of the
conditions set forth in Section 3 for purposes of the release of the Escrow
-------
Deposit pursuant to this Section 5(b).
------------
(ii) The Company hereby (A) acknowledges and agrees that it shall
have no right to dispute the delivery of any notice by the Purchaser pursuant to
Section 5(a) or Section 5(b)(i) and (B) agrees to waive any claim it may have
- ------------ ---------------
against the Purchaser or the Escrow Agent arising out of or in connection with
the delivery of any such notice by the Purchaser pursuant to Section 5(a) or
------------
Section 5(b)(i) or otherwise relating to the release of the Escrow Deposit or
- ---------------
pursuant to this Agreement or the Purchase Agreement, other than any claim in
which it has been finally determined that the Purchaser has breached its
obligations in connection with a release notice pursuant to Section 5(a) or
------------
Section 5(b)(i); provided that the Parties agree that in no event shall the
- ---------------
Purchaser be liable to the Company or to any other person or entity with respect
to any breach of its obligations in connection with a release notice or
otherwise with respect to this Agreement or the Purchase Agreement in an amount
in excess of $2,000,000; and provided further that no such claim by the Company
shall restrict, prohibit or otherwise impair the Escrow Agent from releasing the
Escrow Deposit in accordance with such release instructions.
(iii) In the event of a release of the Escrow Deposit pursuant to
this Section 5(b), the Purchase Agreement shall forthwith be rescinded and
------------
terminated and shall be void and of no further force and effect, except that the
covenants and agreements set forth in Article VIII, Article IX, Sections 10.5,
------------ ---------- --------------
10.7, 10.8, 10.10, 10.11 and 10.12, shall survive such termination indefinitely,
- -----------------------------------
and except that nothing in this Escrow Agreement shall be deemed to release any
Party from any liability for any breach of any representations and warranties of
such Party set forth in the Purchase Agreement. Upon any release of the Escrow
Deposit pursuant to this Section 5(b), all transactions contemplated by the
------------
Purchase Agreement and the other Transaction Documents shall be rescinded and
the Purchaser shall not be considered a shareholder of the Company for any
purpose thereafter.
(c) Escrow Release Date. The term "Escrow Release Date" shall mean
------------------- -------------------
the earlier of (i) the date on which the conditions set forth in both Section
-------
3(a) and Section 3(c) have been satisfied (as determined in good faith by the
- ---- ------------
Purchaser in its sole discretion), (ii) the date on which any of the conditions
in Section 3 shall become incapable of being satisfied (as determined in good
---------
faith by the Purchaser in its sole discretion) and (iii) May 16, 1997.
6. Termination of this Agreement. This Escrow Agreement shall
-----------------------------
terminate when the Escrow Funds have been released and distributed in accordance
with Section 5. Upon such termination this Escrow Agreement shall have no
---------
further force and effect, except that the provisions of Section 5(b)(ii),
----------------
Section 5(b)(iii), this Section 6, Sections 7, 8, 9 and Sections 10 through 22
- ----------------- --------- ---------------- ----------------------
below shall survive such termination.
7. Conditions to Escrow. The Escrow Agent agrees to hold the Escrow
--------------------
Deposit and to perform in accordance with the terms and provisions of this
Escrow Agreement. The Parties agree that the Escrow Agent shall not assume any
responsibility for the failure of the Parties to
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<PAGE>
perform in accordance with the Purchase Agreement or this Escrow Agreement. The
acceptance by the Escrow Agent of its responsibilities hereunder is subject to
the following terms and conditions which the parties hereto agree shall govern
and control with respect to the Escrow Agent's rights, duties and liabilities
hereunder:
(a) Documents. The Escrow Agent shall be protected in acting upon any
---------
written notice, request, waiver, consent, receipt or other paper or document
furnished to it, not only as to its due execution and validity and the
effectiveness of its provisions, but also as to the truth and accuracy of any
information therein contained, which the Escrow Agent in good faith believes to
be genuine and what it purports to be. Should it be necessary for the Escrow
Agent to act upon any instructions, directions, documents or instruments issued
or signed by or on behalf of any corporation, partnership, fiduciary or
individual acting on behalf of another party hereto, it shall not be necessary
for the Escrow Agent to inquire into such corporation's, partnership's,
fiduciary's or individual's authority. The Escrow Agent is also relieved from
the necessity of satisfying itself as to the authority of the persons executing
this Escrow Agreement in a representative capacity on behalf of any of the
Parties.
(b) Liability. The Escrow Agent shall not be liable for anything
---------
which it may do or refrain from doing in connection herewith, except for its own
gross negligence, bad faith or willful misconduct.
(c) Legal Counsel. The Escrow Agent may consult with, obtain advice
-------------
from and be reimbursed for the reasonable fees and expenses of legal counsel in
the event of any question as to any of the provisions hereof or its duties
hereunder, and it shall incur no liability and shall be fully protected in
acting in good faith in accordance with the opinion and instructions of such
counsel.
(d) Limitation of Duties. The Escrow Agent shall have no duties
--------------------
except those which are expressly set forth herein and it shall not be bound by
any other agreement of the parties hereto (whether or not it has any knowledge
thereof).
(e) Discharge of Escrow Agent. Upon delivery of the Escrow Deposit
-------------------------
pursuant to the terms of Section 5 above, the Escrow Agent shall thereafter be
---------
discharged from any further obligations hereunder. The Escrow Agent is hereby
authorized, in any and all events, to comply with and obey any and all final
judgments, orders and decrees of any court of competent jurisdiction which may
be filed, entered or issued, and all final arbitration awards and, if it shall
so comply or obey, it shall not be liable to any other person by reason of such
compliance or obedience.
8. Indemnification. The Company agrees to indemnify the Escrow
---------------
Agent for and to hold it harmless against any loss, liability, cost, damage,
judgment, reasonable expense (including reasonable attorneys' fees and expenses,
whether such attorney is retained or specially employed) and obligation of every
kind the Escrow Agent may incur or be required to pay which is incurred without
gross negligence, willful misconduct or bad faith on the part of the Escrow
Agent arising out of or in connection with its performance under this Escrow
Agreement. In case of fedwire transfer instructions, the Escrow Agent is
expressly authorized to rely on the accounting numbers and ABA routing number
identified therein and may process such instruction in conclusive reliance
thereon.
-6-
<PAGE>
9. Escrow Costs. The Escrow Agent shall be entitled to be paid a
------------
fee for its services pursuant to the attached Fee Schedule and to be reimbursed
------------
for its reasonable costs and expenses incurred in connection with maintaining
the Escrow Deposit hereunder, which fee, costs and expenses shall be paid by the
Company (the "Escrow Fees"). In the event the Escrow Agent releases the Escrow
-----------
Deposit in accordance with the provisions of Section 5(b) above, the Purchaser
------------
shall reimburse the Company for 50% of the Escrow Fees.
10. Limitations on Rights to Escrow Funds. Except as provided in
-------------------------------------
Section 1 above, none of the Parties shall have any right, title or interest in
- ---------
or to, or possession of, the Escrow Deposit or the Escrow Account and therefore
shall not have the ability to pledge, convey, hypothecate or grant as security
all or any portion of the Escrow Deposit unless and until such Escrow Deposit
has been released pursuant to Section 5 above. Accordingly, the Escrow Agent
---------
shall be in sole possession of the Escrow Deposit and shall not act as custodian
of the Parties under this Escrow Agreement for the purposes of perfecting a
security interest therein, and no creditor of any of the Parties shall have any
right to have or to hold or otherwise attach or seize all or any portion of the
Escrow Deposit as collateral for any obligation and shall not be able to obtain
a security interest in any of the Escrow Deposit unless and until such Escrow
Deposit has been released pursuant to Section 5 above.
---------
11. Notices. All notices, demands or other communications to be given
-------
or delivered under or by reason of the provisions of this Escrow Agreement shall
be in writing and shall be deemed to have been given when delivered personally
or by telecopy (and confirmed by telecopy answerback) to the recipient, one day
after being sent to the recipient by reputable overnight courier service
(charges prepaid) or five days after being mailed to the recipient by certified
or registered mail, return receipt requested and postage prepaid. Such notices,
demands and other communications shall be sent to the Escrow Agent, the
Purchaser, and the Company at the addresses indicated below or to such other
address or to the attention of such other person as the recipient party has
specified by prior written notice to the sending party.
The Company:
-----------
UC Television Network Corp.
645 Fifth Avenue, East Wing
New York, New York 10022
Attention: Peter Kauff
Telecopy No.: (212) 755-5992
Telephone No.: (212) 888-0617
with copies to:
--------------
(which shall not constitute notice to the Company)
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, New York 10022
Attention: Richard Marlin
Telecopy No.: (212) 751-8000
Telephone No.: (212) 715-9204
-7-
<PAGE>
The Purchaser:
-------------
U-C Holdings, LLC
227 West Monroe Street
Suite 4300
Chicago, IL 60606
c/o Willis Stein & Partners
Attention: Beth F. Johnston
Telecopy No.: (312) 422-2424, 2418
Telephone No.: (312) 422-2400
with a copy to:
--------------
(which shall not constitute notice to the Purchaser)
Morris, Manning & Martin, L.L.P.
3343 Peachtree Road, N.E.
1600 Atlanta Financial Center
Atlanta, Georgia 30326
Attention: Neil H. Dickson, Esq.
Telecopy No.: (404) 365-9532
Telephone No.: (404) 233-7000
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attention: Margaret A. Gibson, Esq.
Telecopy No.: (312) 861-2200
Telephone No.: (312) 861-2000
The Escrow Agent:
----------------
LaSalle National Bank
135 S. LaSalle Street, Room 1825
Chicago, IL 60603
Attention: Diane Swanson
Telecopy No.: (312) 904-2236
Telephone No.: (312) 904-2936
12. Entire Agreement; Amendments. This Escrow Agreement, together
----------------------------
with the Purchase Agreement and other Transaction Documents, contains the entire
understanding of the parties hereto with respect to the subject matter hereof
and supersedes any prior understandings or agreements by or among the parties
hereto, whether written or oral, which may have related to the subject matter
hereof in any way. This Escrow Agreement may be amended, or any provision of
this Escrow Agreement may be waived, so long as such amendment or waiver is set
forth in a writing executed by each of the Parties (a copy of which shall be
promptly provided by the Company to the Escrow Agent); provided that if any such
-------- ----
amendment or waiver would have the effect of increasing
-8-
<PAGE>
or expanding the Escrow Agent's obligations or duties under this Escrow
Agreement, the written consent of the Escrow Agent shall be required in addition
to the written consent of the Parties. No course of dealing between or among the
parties hereto shall be deemed effective to modify, amend or discharge any part
of this Escrow Agreement of any rights or obligations of any party hereto under
or by reason of this Escrow Agreement.
13. Assigns and Assignment. This Escrow Agreement and all actions
----------------------
taken hereunder shall inure to the benefit of and shall be binding upon all of
the parties hereto and upon all of their respective successors and assigns;
provided that the Escrow Agent shall not be permitted to assign its obligations
- -------- ----
hereunder.
14. Taxation of Interest Earned on Investment of Escrow Amount. The
----------------------------------------------------------
Company hereby acknowledges that, for federal and state income tax purposes, the
interest earned on the investment of the Escrow Funds shall be income of the
Company. The tax identification number of the Company is 13-3557317. The
Escrow Agent shall be responsible for reporting any interest earned to the
Internal Revenue Service.
15. No Other Third Party Beneficiaries. Nothing herein expressed or
----------------------------------
implied is intended or shall be construed to confer upon or to give any person
other than the Escrow Agent, the Parties and their permitted assigns any rights
or remedies under or by reason of this Escrow Agreement.
16. Interpretation. The headings in this Escrow Agreement are
--------------
inserted for convenience of reference only and shall not be a part of or control
or affect the meaning hereof.
17. No Waiver. No failure or delay by a party hereto in exercising
---------
any right, power or privilege hereunder shall operate as a waiver thereof, and
no single or partial exercise thereof shall preclude any right of further
exercise or the exercise of any other right, power or privilege. The right of
the Parties to receive all or a portion of the Escrow Deposit under the
circumstances described in Section 5 above is in addition to, and not in lieu
---------
of, any other remedies that any such party may have against another pursuant to
the Purchase Agreement in the event of a breach of the Purchase Agreement.
18. Severability. The parties hereto agree that (a) the provisions
------------
of this Escrow Agreement shall be severable in the event that for any reason
whatsoever the provisions hereof are invalid, void or otherwise unenforceable,
(b) such invalid, void or otherwise unenforceable provisions shall be
automatically replaced by other provisions which are as similar as possible in
terms to such invalid, void or otherwise unenforceable provisions, but are valid
and enforceable, and (c) the remaining provisions shall remain enforceable to
the fullest extent permitted by law.
19. No Strict Construction. The language used in this Escrow
----------------------
Agreement shall be deemed to be the language chosen by the parties hereto to
express their collective mutual intent, and no rule of strict construction shall
be applied against any person. The term "including" as used herein shall be by
way of example, and shall not be deemed to constitute a limitation of any term
or provision contained herein. Each defined term used in this Escrow Agreement
has a comparable meaning when used in its plural or singular form.
-9-
<PAGE>
20. Releases on Non-business Days. In the event that a release of
-----------------------------
Escrow Deposit hereunder is required to be made on a date that is not a business
day, such release may be made on the next succeeding business day with the same
force and effect as if made when required.
21. Governing Law. All issues and questions concerning the
-------------
construction, validity, enforcement and interpretation of this Escrow Agreement
shall be governed by, and construed in accordance with, the laws of the State of
Illinois without giving effect to any choice of law or conflict of law rules or
provisions (whether of the State of Illinois or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than the State
of Illinois. In furtherance of the foregoing, the internal law of the State of
Illinois shall control the interpretation and construction of this Escrow
Agreement, even though under that jurisdiction's choice of law or conflict of
law analysis, the substantive law of some other jurisdiction would ordinarily
apply.
22. Counterparts. This Escrow Agreement may be executed by the
------------
parties hereto individually or in any combination, in one or more counterparts
(including by means of telecopied signature pages), each of which shall be an
original and all of which shall together constitute one and the same agreement.
* * * *
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement
as of the date first written above.
UC TELEVISION NETWORK CORP.
By: _______________________________
Its: _______________________________
U-C HOLDINGS, L.L.C.
By: WILLIS STEIN & PARTNERS, L.P.
Its: Managing Member
By: Willis Stein & Partners, L.P.
Its: General Partner
By: _______________________________
Its: Manager
LASALLE NATIONAL BANK
By: _______________________________
Its: _______________________________
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<PAGE>
SCHEDULE I
----------
LaSalle National Bank
Chicago, Illinois
ABA # 071000505
Attention: Diane Swanson
FBO Trust 62-7739-006
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