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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
PLATINUM ENTERTAINMENT, INC.
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(Name of Issuer)
Common Stock, par value $.001 per share
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(Title of Class of Securities)
727909103
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(CUSIP Number)
Steven D. Devick
Platinum Entertainment, Inc.
2001 Butterfield Road
Suite 1400
Downers Grove, Illinois 60515
(630) 769-0033
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
April 15, 1999
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(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 that is the subject of this Schedule 13D,
and is filing this schedule because of Sections 240.13d-1(e), 240.13d-1(f)
or 240.13d-1(g), check the following box. / /
*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 provided 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 ("Act") or otherwise subject to the
liabilities of that section of the Act but shall be subject to all
other provisions of the Act (however, see the Notes).
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CUSIP No 727909103
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1. Names of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).
Steven D. Devick
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2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) / /
(b) / /
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3. SEC Use Only
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4. Source of Funds
OO
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5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e) / /
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6. Citizenship or Place of Organization
United States
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7. Sole Voting Power
1,687,284
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8. Shared Voting Power
56,250
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Number of
Shares Bene- 9. Sole Dispositive Power
ficially by 1,687,284
Owned by ----------------------------------------------------------------
Each
Reporting 10. Shared Dispositive Power
Person With 56,250
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11. Aggregate Amount Beneficially Owned by Each Reporting Person
1,743,534
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12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions) / /
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13. Percent of Class Represented by Amount in Row (11)
21.0%
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14. Type of Report Person (See Instructions)
IN
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ITEM 1. SECURITY AND ISSUER
This Statement on Schedule 13D relates to the Common Stock, par value
$.001 (the "Common Stock"), of Platinum Entertainment, Inc. (the "Company"),
whose principal executive office is located at 2001 Butterfield Road, Suite
1400, Downers Grove, Illinois 60515.
ITEM 2. IDENTITY AND BACKGROUND
(a), (b), (c) and (f). This Statement on Schedule 13D is being filed on
behalf of Steven D. Devick. The present principal occupation or employment
of Mr. Devick is as Chairman of the Board, Chief Executive Officer and
President of the Company. The address of the principal business and
principal office of the Company is 2001 Butterfield Road, Downers Grove,
Illinois 60515. Mr. Devick is a United States citizen.
(d) and (e). During the past five years, Mr. Devick has not been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) nor was Mr. Devick a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction and as a result of which Mr.
Devick 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
On April 15, 1999, the Company issued, and Mr. Devick acquired from the
Company, 2,500 shares of Series D Convertible Preferred Stock, par value
$.001 per share (the "Series D Preferred Stock"), and a warrant (the
"Warrant") to purchase 504,167 shares of Common Stock for an aggregate
purchase price of $2,500,000 (the "Purchase Price").
The funds used by Mr. Devick to pay the Purchase Price were loaned to
Mr. Devick by a bank in the ordinary course of business.
ITEM 4. PURPOSE OF TRANSACTION
On April 15, 1999, Mr. Devick acquired securities of the Company in
addition to the securities of the Company that have been previously reported
by Mr. Devick on a statement 13G previously filed with the Commission on
February 13, 1997, and amended on February 13, 1998 and February 16, 1999. A
copy of the Certificate of the Powers, Designations, Preferences and Rights
of the Series D Preferred Stock (the "Series D Certificate") is attached
hereto as Exhibit 1 and incorporated herein by reference and a copy of the
Warrant is attached hereto as Exhibit 2 and incorporated herein by reference.
Set forth below is a summary of the material terms of the Series D Preferred
Stock and the Warrant. The following summary is qualified in its entirety by
reference to the Series D Certificate and the Warrant.
TERMS OF THE SERIES D PREFERRED STOCK
DIVIDENDS. The Series D Preferred Stock accrues dividends compounded
quarterly at an annual rate of 12% for the first year, 14% for the second
year, 16% for the third year, 18% for the fourth and fifth years and 20% at
all times thereafter, of the $1,000 per share liquidation value (the
"Liquidation Value").
OPTIONAL REDEMPTION. The Series D Preferred Stock is redeemable, in
whole or part, at the option of the Company, at any time, on at least 60
days' notice, at a redemption price equal to the Liquidation Value plus
accrued and unpaid dividends ( the "Redemption Value").
CONVERSION. A Series D Preferred stockholder has the right to convert
each share of Series D Preferred Stock, at the option of the holder, at any
time or times, commencing two years from the date of issuance, into shares of
Common Stock at $7.00 per share (the "Conversion Price"). The number of
shares of Common Stock issuable upon conversion of a share of the Series D
Preferred Stock will be such number as is equal to the quotient obtained by
dividing the then applicable Redemption Value of such share by the Conversion
Price. The Conversion Price and the number of shares issuable upon
conversion of the Series D Preferred Stock will be subject to adjustment upon
the occurrence of certain events as set forth in the Series D Certificate.
CHANGE OF CONTROL. In the event that there is a Change in Control of
the Company (as defined below), the Company will be obligated to offer to
purchase all of the outstanding shares of the Series D Preferred Stock at a
price equal to a premium over the then applicable Redemption Value (the
"Repurchase Price"). The Company is obligated to make such offer as soon as
practicable and if possible not less than 60 days prior to the effective date
of the Change in Control (the "Trigger Date"). Payment for the Series D
Preferred Stock tendered pursuant to such offer will be made on the Trigger
Date. "Change of Control" means (i) the direct or indirect sale, lease,
exchange or other transfer of all or substantially all of the assets of the
Company to any person or entity or group of persons or entitles acting in
concert as a partnership or other group (a "Group of Persons"), (ii) the
merger or consolidation of the Company with or into another corporation with
the effect that the then existing stockholders of the Company hold less than
50% of the combined voting power of the then outstanding securities of the
surviving corporation of such merger or the corporation resulting from such
consolidation ordinarily (and apart from rights accruing under special
circumstances) having the right to vote in the election of directors, (iii)
the replacement of a majority of the Board of Directors, over a two-year
period, from the directors who constituted a majority of the Board of
Directors at the beginning of such period, and such replacement shall not
have been approved by the Board of Directors (or its replacements approved by
the Board of Directors) as constituted at the beginning of such period, or
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(iv) a person or Group of Persons (other than the Purchasers (as defined in
the Series D Certificate) and their affiliates) shall, as a result of a
tender or exchange offer, open market purchases, privately negotiated
purchases or otherwise, have become the beneficial owner (within the meaning
of Rule 13d-3 under the Securities Exchange Act of 1934) of securities of the
Company representing 49% or more of the combined voting power of the then
outstanding securities of the Company ordinarily (and apart from rights
accruing under special circumstances) having the right to vote in the
election of directors. Notwithstanding the foregoing, no Change of Control
shall be deemed to have occurred (a) upon the acquisition of any shares of
Common Stock of the Company pursuant to the exercise of any warrants issued
pursuant to the Investment Agreement (as defined in the Certificate of
Designation), (b) upon exercise of any of the rights and privileges granted
to each of the Purchasers pursuant to Section 6.2.5 of the Investment
Agreement, (c) upon the exercise of any rights and privileges granted to the
holders of the Series B Convertible Preferred Stock (as defined in the Series
D Certificate) pursuant to Section 5.1 of the Powers, Designations,
Preferences and Rights of the Series B Convertible Preferred Stock, or (d)
otherwise as a result of the equity ownership or designation of directors by
the Investors or their affiliates, employees, partners or members.
The Repurchase Price will be payable (A) in cash, in the case of a
Change of Control pursuant to clauses (i) through (iii) of the definition of
Change in Control set forth above and (B) at the Company's election, either
in cash or in Common Stock, in the case of a Change in Control pursuant to
clause (iv) of the definition of Change in Control set forth above. If paid
in cash, the Repurchase Price shall be 110% of the then applicable Redemption
Value. If paid in Common Stock, the Repurchase Price shall be 125% of the
then applicable Redemption Value, and the shares issued will be registered
under the Securities Act of 1933, as amended, and the securities or blue sky
laws of any jurisdiction designated by any holder of Series D Preferred Stock
which accepts the Change in Control offer.
LIQUIDATION PREFERENCES. In the event of any voluntary or involuntary
dissolution, liquidation or winding up of the Company, the holders of the
Series D Preferred Stock will be entitled to receive, after payment or
provision for payment of the Company's debts and other obligations, in
preference to the holder of any class of stock junior to the Series D
Preferred Stock, an aggregate amount equal to the Liquidation Value plus
accrued and unpaid dividends.
VOTING RIGHTS. The Series D Preferred Stock shall have no voting rights
except as required by law; provided that so long as any of the shares of the
Series D Preferred Stock remain outstanding, the Company, shall not, without
the affirmative vote at a meeting or the written consent with or without a
meeting of the holders of the Series D Preferred Stock representing at least
a majority of the aggregate voting power (i) authorize or issue any stock
that is both junior to the Series B Convertible Preferred Stock and senior to
or on a parity with the Series D Preferred Stock or (ii) reclassify any stock
that is junior to the Series D Preferred Stock as both junior to the Series B
Convertible Preferred Stock and senior to or on a parity with the Series D
Preferred Stock.
TERMS OF THE WARRANT. The Common Stock underlying the Warrant may be
purchased at a price (the "Exercise Price") equal to $6.126 per share. The
Exercise Price may be paid in cash or equivalent shares. The Exercise Price
and the number of shares issuable upon exercise of the Warrant will be
subject to adjustment upon the occurrence of certain events as set forth in
the Warrant. If the Series D Preferred Stock is redeemed in full during the
twelve month period commencing on April 15, 1999, and ending on April 15,
2000, Mr. Devick will be required to return that portion of the Warrant (or
the equivalent shares of Common Stock representing shares received upon
exercise of the Warrant or part of the Warrant) exercisable into that number
of shares equal to (i) 5,041.06 shares, multiplied by (ii) the number of
months remaining in such twelve month period. In no event shall Mr. Devick
be required to return greater than that portion of the Warrant exercisable
into an aggregate 60,500 shares.
EXERCISE PERIOD. The Warrant is exercisable at any time, or from time
to time, from the date of issuance until April 15, 1999.
PUT OPTIONS. At any time on or after the fifth anniversary of the issue
date, any holder of the Warrant may require the Company to repurchase all of
its Warrant and shares of Common Stock issued in connection with the exercise
of its Warrant ("Five Year Put Option") at a price equal to the current
market price of the Common Stock less the Exercise Price for the Warrant. At
or any time after a Change of Control, any holder of the Warrant may require
the Company to repurchase its Warrant ("Change of Control Put Option") at
Fair Market Value (as defined in the Warrant). Change of Control under the
Warrant is defined in the same manner as such term is defined in the Series D
Certificate. The Company shall have no obligation to repurchase the Warrant
or shares of Common Stock issued in connection with the exercise of the
Warrant following the exercise of the Five Year Put Option, unless the
holders of not less than a majority of the shares of Common Stock issued or
issuable upon exercise of the Investor Warrants (as defined in the Warrant)
shall also have exercised the "five year put" provided for in the Investor
Warrants.
Mr. Devick may from time to time acquire additional shares of Common
Stock in the open market or in privately negotiated transactions, subject to
availability of Common Stock at prices deemed favorable, the Company's
business or financial condition and other factors and conditions Mr. Devick
deems appropriate. Alternatively, Mr. Devick may sell all or a portion of
the Series D Preferred Stock, Warrant, or Common Stock issued upon exercise
of the Warrant or conversion of the Series D Preferred Stock in privately
negotiated transactions or in the open market pursuant to the exercise of
certain registration rights granted in connection with the transaction
described above, however, in each case subject to the factors and conditions
referred to above and to the terms of the Series D Preferred Stock and
Warrant, as the case may be.
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Except as described in the Warrant or the Series D Certificate, and as
otherwise set forth in this Schedule 13D, Mr. Devick does not have any
present plans or proposals which relate to or would result in: (a) the
acquisition by any person 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
issuer or any of its subsidiaries; (c) a sale or transfer of a material
amount of assets of the Company or any of its subsidiaries; (d) 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; (f) any other material
change in the Company's business or corporate structure of the Company; (g)
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 to cease to be authorized to
be quoted in an inter-dealer quotation system of a registered national
securities association; (i) a class of equity securities of the Company
becoming eligible for termination of registration pursuant to Section
12(g)(4) of the Act; or (j) any action similar to any of those enumerated
above.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) Mr. Devick may be deemed to beneficially own an aggregate of
1,743,534 shares of Common Stock, which based on calculations made in
accordance with Rule 13-d-3(d) and there being 6,791,485 shares of Common
Stock outstanding on April 30, 1999, as disclosed by the Company in its Proxy
Statement filed with the Commission on April 30, 1999, represents
approximately 21.0% of the outstanding shares of Common Stock.
As set forth above, on April 15, 1999, the Company issued to Mr. Devick,
and Mr. Devick acquired, the Series D Preferred Stock and the Warrant.
Shares of Series D Preferred Stock are not convertible into shares of Common
Stock until April 15, 2001. Accordingly, pursuant to Rule 13d-3(d) of the
Securities Exchange Act of 1934, Mr. Devick is deemed to beneficially own
zero (0) shares of Common Stock in connection with the conversion of Series D
Preferred Stock. As of the date hereof, the Warrant may be exercised at any
time and from time to time on or after April 15, 1999 (but no later than
April 15, 2009), to purchase an aggregate 504,167 shares of Common Stock,
subject to adjustment under certain circumstances. Accordingly, Mr. Devick
may be deemed to beneficially own an aggregate of 504,167 shares of Common
Stock in connection with the exercise of the Warrant.
On December 12, 1997, the Company issued to Platinum Venture Partners
II, L.P. ("PVP II"), and PVP II acquired, 250 shares of Series C Convertible
Preferred Stock (the "Series C Preferred Stock") and a warrant (the "PVP II
Warrant") to purchase 450,000 shares of Common Stock. Mr. Devick is an
executive officer of the general partner of PVP II, and in such capacity, may
be deemed a beneficial owner with respect to Common Stock held by PVP II.
Mr. Devick has the right to purchase 56,250 shares of Common Stock pursuant
to the exercise of the PVP II Warrant. Mr. Devick disclaims beneficial
ownership with respect to the remaining shares that PVP II has the right to
purchase pursuant to the exercise of the PVP II Warrant. Shares of Series C
Preferred Stock are not convertible into shares of Common Stock until
December 12, 1997. Accordingly, pursuant to Rule 13d-3(d) of the Securities
Exchange Act of 1934, Mr. Devick is deemed to beneficially own zero (0)
shares of Common Stock in connection with the conversion of Series C
Preferred Stock.
Mr. Devick has the right to acquire 996,828 shares of Common Stock
pursuant to the exercise of stock options that are exercisable within 60 days.
(b) Mr. Devick has the sole power to direct the vote and the disposition
of 1,687,284 shares of Common Stock. In his capacity of executive officer of
the general partner of PVP II, Mr. Devick may be deemed to share the power to
direct the voting and disposition of the 56,250 shares of Common Stock that
Mr. Devick may purchase pursuant to the exercise of the PVP II Warrant.
(c) The acquisition of the Series D Preferred Stock and the Warrant, as
set forth above, was effected within the past 60 days.
Paragraphs (d) and (e) of Item 5 are not applicable to this filing.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
The Company has granted Mr. Devick certain piggyback registration rights
pursuant to a Registration Rights Agreement, dated April 15, 1999, which is
attached hereto as Exhibit 3 and incorporated herein by reference, on the
terms and conditions set forth therein, which requires the Company to
register for resale to the public the shares of Common Stock issuable upon
(i) exercise of the Warrant or (ii) conversion of Series D Preferred Stock.
Except as described elsewhere in this Schedule 13D and as set forth in
the Series D Certificate, the Warrant and the Registration Rights Agreement,
copies of which are attached hereto as Exhibits 1, 2 and 3 respectively, and
are incorporated herein by reference, to the best knowledge of Mr. Devick,
there exist no contracts, arrangements, understandings or relationships
(legal or otherwise) between him and any person with respect to any
securities of the Company, including but not limited to transfer or voting of
any securities of the Company, finder's fees, joint ventures, loan or option
arrangements, puts or calls, guarantees of profits, division of profits or
loss, or the giving or withholding of proxies.
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ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
1. Certificate of the Powers, Designations, Preferences and Rights of the
Series D Preferred Stock, dated April 14, 1999, governing Platinum
Entertainment, Inc.'s Series D Convertible Preferred Stock, par value $.001
per share.
2. Warrant, dated April 15, 1999, for 504,167 shares of Common Stock, par
value $.001 per share, of Platinum Entertainment, Inc. issued to Steven D.
Devick.
3. Registration Rights Agreement, dated April 15, 1999, among Platinum
Entertainment, Inc., Steven D. Devick, Craig J. Duchossois and Andrew J.
Filipowski.
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SIGNATURE
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.
Date: May 20, 1999
/s/ STEVEN D. DEVICK
-----------------------------------
Steven D. Devick
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Page No.
<S> <C>
1. Certificate of the Powers, Designations, Preferences and
Rights of the Series D Preferred Stock, dated April 14, 1999,
governing Platinum Entertainment, Inc.'s Series D Convertible
Preferred Stock, par value $.001 per share. . . . . . . . . . . . . .
2. Warrant, dated April 15, 1999, for 504,167 shares of Common
Stock, par value $.001 per share, of Platinum Entertainment,
Inc. issued to Steven D. Devick. . . . . . . . . . . . . . . . . . . .
3. Registration Rights Agreement, dated April 15, 1999, among
Platinum Entertainment, Inc., Steven D. Devick, Craig J.
Duchossois and Andrew J. Filipowski. . . . . . . . . . . . . . . . . .
</TABLE>
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PLATINUM ENTERTAINMENT, INC.
CERTIFICATE OF THE POWERS, DESIGNATIONS,
PREFERENCES AND RIGHTS OF THE
SERIES D CONVERTIBLE PREFERRED STOCK,
PAR VALUE $.001 PER SHARE
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
The following resolution was duly adopted by the Board of Directors of
Platinum Entertainment Inc., a Delaware corporation (the "Corporation"),
pursuant to the provisions of Section 151 of the General Corporation Law of the
State of Delaware, on April 9, 1999:
RESOLVED that, pursuant to the authority expressly granted to the
Board of Directors of the Corporation by the Certificate of Incorporation of the
Corporation, and pursuant to Section 151(g) of the General Corporation Law of
the State of Delaware, there be created from the 10,000,000 shares of Preferred
Stock, par value $.001 per share (the "Preferred Stock"), of the Corporation
authorized to be issued pursuant to the Certificate of Incorporation, a series
of Preferred Stock consisting of 4,200 shares of Series D Convertible Preferred
Stock (the "Series D Preferred Stock"), the voting powers, designations,
preferences and relative, participating, optional or other special rights of
which, and qualifications, limitations or restrictions thereof, shall be as
follows:
1. DEFINITIONS. As used herein, the following terms shall have the
following meanings:
1.1 "Affiliate" shall mean, with respect to any Person, any
other Person that, directly or indirectly, controls, is controlled by, or is
under common control with, such first Person. For the purpose of this
definition, "control" shall mean, as to any Person, the power to direct or cause
the direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
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1.2 "Affiliate Warrants" shall mean the warrant for an aggregate
of 135,000 shares of Common Stock issued to Platinum Venture Partners I, L.P.,
and the warrant for an aggregate of 315,000 shares of Common Stock issued to
Platinum Venture Partners II, L.P., each such warrant issued on the Closing Date
(as defined in the Investment Agreement).
1.3 "Board of Directors" shall mean the Board of Directors of
the Corporation or, with respect to any action to be taken by the Board of
Directors, any committee of the Board of Directors duly authorized to take such
action.
1.4 "Business Day" shall mean any day other than a Saturday,
Sunday or other day on which commercial banks in the City of New York are
authorized or required by law or executive order to close.
1.5 "Series D Warrants" means the warrant for an aggregate of up
to 847,000 shares of Common Stock to be issued to the initial purchasers of the
Series D Preferred Stock, on the Issue Date.
1.7 "Certificate of Incorporation" shall mean the Certificate of
Incorporation of the Corporation, as amended from time to time.
1.8 "Change of Control" shall mean (i) the direct or indirect
sale, lease, exchange or other transfer of all or substantially all of the
assets of the Corporation to any Person or group of Persons acting in concert as
a partnership or other group within the meaning of Rule 13d-5 under the Exchange
Act (a "GROUP OF PERSONS"), (ii) the merger or consolidation of the Corporation
with or into another corporation with the effect that the then existing
stockholders of the Corporation hold less than 50% of the combined voting power
of the then outstanding securities of the surviving corporation of such merger
or the corporation resulting from such consolidation ordinarily (and apart from
rights accruing under special circumstances) having the right to vote in the
election of directors, (iii) the replacement of a majority of the Board of
Directors, over a two-year period, from the directors who constituted the Board
of Directors at the beginning of such period, and such replacement shall not
have been approved by the Board of Directors (or its replacements approved by
the Board of Directors) as constituted at the beginning of such period, or (iv)
a Person or Group of Persons (other than the Investors and their Affiliates,
employees, partners or members) shall, as a result of a tender or exchange
offer, open market purchases, privately negotiated purchases or otherwise, have
become the beneficial owner (within the meaning of Rule 13d-3 under the Exchange
Act) of securities of the Corporation representing 49% or more of the combined
voting power of the then outstanding securities of the Corporation ordinarily
(and apart from rights accruing under special circumstances) having the right to
vote in the election of directors. Notwithstanding the foregoing, no Change of
Control shall be deemed to have occurred (a) upon the acquisition of any shares
of Common Stock of the Company pursuant to
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the exercise of any warrants issued pursuant to the Investment Agreement, (b)
upon the exercise of any of the rights and privileges granted to each of the
Purchasers pursuant to Section 6.2.5 of the Investment Agreement, (c) upon
the exercise of any rights and privileges granted to the holders of the
Series B Preferred Stock pursuant to Section 5.1 of the Series B Certificate
of Designation or (d) otherwise as a result of the equity ownership or
designation of directors by the Investors or their Affiliates, employees,
partners or members.
1.9 "Class A Common Stock" shall mean the class of Class A
Common Stock, par value $.001 per share, of the Corporation or any other class
of stock resulting from successive changes or reclassifications of such Class A
Common Stock consisting solely of changes in par value, or from par value to no
par value, or as a result of a subdivision or combination.
1.10 "Class B Common Stock" shall mean the class of Class B
Common Stock, par value $.001 per share, of the Corporation or any other class
of stock resulting from successive changes or reclassifications of such Class B
Common Stock consisting solely of changes in par value, or from par value to no
par value, or as a result of a subdivision or combination.
1.11 "Closing Price" of the Common Stock, as of any day, shall
mean (a) the last reported sale price of such stock (regular way), or, in case
no such sale takes place on such day, the average of the closing bid and asked
prices, in either case as reported on the principal national securities exchange
on which such stock is listed or admitted to trading or (b) if the Common Stock
is not listed or admitted to trading on any national securities exchange, the
last reported sale price, or in case no such sale takes place on such day, the
average of the highest reported bid and the lowest reported asked quotation for
the Common Stock, in either case reported on NASDAQ, or a similar service if
NASDAQ is no longer reporting such information.
1.12 "Common Stock" shall mean the class of Common Stock, par
value $.001 per share, of the Corporation or any other class of stock resulting
from successive changes or reclassifications of such Common Stock consisting
solely of changes in par value, or from par value to no par value, or as a
result of a subdivision or combination.
1.13 "Common Stock Conversion Rate" shall mean, as of any date, a
rate for each share of Series D Preferred Stock equal to (i) the Liquidation
Value thereof plus all accrued and unpaid dividends thereon (whether or not
declared), divided by (ii) the Conversion Price in effect as of such date.
1.14 "Conversion Price" shall mean $7.00 per share of Common
Stock. The Conversion Price as determined in accordance with the foregoing
shall be adjusted from time to time in accordance with the provisions of
Section 4.
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1.15 "Current Market Price" shall mean, with respect to each
share of Common Stock as of any date, the average of the daily Closing Prices
per share of Common Stock for the 10 consecutive Trading Days commencing 15
Trading Days prior to such date; provided that if on any such date the shares of
Common Stock are not listed or admitted for trading on any national securities
exchange or quoted by NASDAQ or a similar service, the Current Market Price for
a share of Common Stock shall be the fair market value of such share as
determined in good faith by the Board of Directors; PROVIDED, HOWEVER, that if
the holders of the shares of Series B Preferred Stock disagree with the Board's
determination of fair market value for purposes of the Series B Preferred Stock,
the fair market value for purposes of the Series D Preferred Stock shall be the
fair market value determined for purposes of the Series B Preferred Stock.
1.16 "Dividend Amount" shall mean an amount per share of Series D
Preferred Stock (rounded to the nearest $ .01) equal to (1) $30 per $1,000
Liquidation Value of Series D Preferred Stock during the first year after the
Issue Date, (2) $35 per $1,000 Liquidation Value of Series D Preferred Stock
during the second year after the Issue Date, (3) $40 per $1,000 Liquidation
Value of Series D Preferred Stock during the third year after the Issue Date,
(4) $45 per $1,000 Liquidation Value of Series D Preferred Stock during the
fourth and fifth years after the Issue Date and (5) $50 per $1,000 Liquidation
Value of Series D Preferred Stock at all times after the fifth anniversary of
the Issue Date.
1.17 "Dividend Rate" shall mean (1) 3% per quarter during the
first year after the Issue Date, (2) 3.5% per quarter during the second year
after the Issue Date, (3) 4% per quarter during the third year after the Issue
Date, (4) 4.5% per quarter during the fourth and fifth years after the Issue
Date and (5) 5% per quarter at all times after the fifth anniversary of the
Issue Date.
1.18 "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
1.19 "Excluded Securities" means (a) shares of Common Stock
issued upon conversion or exercise of convertible securities, warrants and
options of the Corporation outstanding on the Issue Date, (b) shares of Common
Stock, and options to purchase such shares, issued to officers, directors,
employees or former employees of, or consultants to, the Corporation or any of
its subsidiaries pursuant to any equity incentive plan, agreement or other
arrangement which has been approved by a vote of at least two-thirds (2/3rds) of
the Board of Directors, (c) shares of Common Stock issued upon conversion of
shares of the Company's Series B Preferred Stock, (d) shares of Common Stock
issued upon exercise of the warrants issued to the purchasers of the shares of
Series B Preferred Stock pursuant to the Investment Agreement, (e) shares of
Common Stock issued upon conversion of shares of the Series C Preferred Stock,
(f) shares of Common Stock issued upon exercise of
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the Affiliate Warrants and (g) shares of Common Stock issued upon exercise of
the Harnick Warrant (h) shares of Common Stock issued upon conversion of
shares of the Series D Preferred Stock, and (i) shares of common Stock issued
upon exercise of the Series D Warrants.
1.20 "Harnick Warrant" means the warrant to purchase 50,000
shares of Common Stock to be issued to Carl D. Harnick on the Closing Date (as
defined in the Investment Agreement).
1.21 "Issue Date" shall mean April 14, 1999.
1.22 "Investment Agreement" shall mean the Investment Agreement,
dated as of October 12, 1997, as amended, between the Corporation, the Investors
and certain other parties thereto, as hereafter amended from time to time.
1.23 "Investors" shall mean MAC Music LLC, a Delaware limited
liability company, and SK-Palladin Partners, LP, a Delaware limited partnership.
1.24 "Junior Stock" shall mean the Common Stock, the Class A
Common Stock, the Class B Common Stock, the Series A-1 Preferred Stock, the
Series A-2 Preferred Stock and the shares of any other class or series of stock
of the Corporation which, by the terms of the Certificate of Incorporation or of
the instrument by which the Board of Directors, acting pursuant to authority
granted in the Certificate of Incorporation, shall fix the relative rights,
preferences and limitations thereof, shall be junior to the Series D Preferred
Stock in respect of the right to receive dividends and to participate in any
distribution of assets other than by way of dividends.
1.24 "Liquidation Value" shall have the meaning assigned to such
term in Section 6.1 hereof.
1.26 "NASDAQ" shall mean the National Association of
Securities Dealers, Inc. Automated Quotation System.
1.27 "Parity Stock" shall mean shares of any other class or
series of stock of the Corporation which, by the terms of the Certificate of
Incorporation or of the instrument by which the Board of Directors, acting
pursuant to authority granted in the Certificate of Incorporation, shall fix the
relative rights, preferences and limitations thereof, shall, in the event that
the stated dividends thereon are not paid in full, be entitled to share ratably
with the Series D Preferred Stock in the payment of dividends, including
accumulations, if any, in accordance with the sums which would be payable on
such shares if all dividends were declared and paid in full, and shall, in the
event that the amounts payable thereon on liquidation are not paid in full, be
entitled to share ratably with the Series D
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Preferred Stock in any distribution of assets other than by way of dividends
in accordance with the sums which would be payable in such distribution if
all sums payable were discharged in full; PROVIDED, HOWEVER, that the term
"Parity Stock" shall be deemed to refer (i) in Section 2.2 hereof, to any
stock which is Parity Stock in respect of the right to receive dividends and
(ii) in Section 6 hereof, to any stock which is Parity Stock in respect of
any distribution of assets other than by way of dividends.
1.28 "Person" shall mean any individual, corporation,
partnership, joint venture, association, joint-stock company, trust, limited
liability company, unincorporated organization, estate, other entity or
government or any agency or political subdivision thereof.
1.29 "Pro Rata Repurchase" shall mean any purchase of shares of
Common Stock by the Corporation or by any of its subsidiaries whether for cash,
shares of capital stock of the Corporation, other securities of the Corporation,
evidences of indebtedness of the Corporation or any other Person or any other
property (including, without limitation, shares of capital stock, other
securities or evidences of indebtedness of a subsidiary of the Corporation), or
any combination thereof, effected while any of the shares of Series D Preferred
Stock are outstanding, which purchase is subject to Section 13(e) of the
Exchange Act or is made pursuant to an offer made available to all holders of
Common Stock.
1.30 "Senior Stock" shall mean the Series B Preferred Stock, the
Series C Preferred Stock and the shares of any class or series of stock of the
Corporation which, by the terms of the Certificate of Incorporation or of the
instrument by which the Board of Directors, acting pursuant to authority granted
in the Certificate of Incorporation, shall fix the relative rights, preferences
and limitations thereof, shall be senior to the Series D Preferred Stock in
respect of the right to receive dividends or to participate in any distribution
of assets other than by way of dividends.
1.31 "Series A-1 Preferred Stock" shall mean the class of
Series A-1 Non Convertible Preferred Stock, par value $.001 per share, of the
Corporation or any other class of stock resulting from successive changes or
reclassifications of such Series A-1 Non Convertible Preferred Stock consisting
solely of changes in par value, or from par value to no par value, or as a
result of a subdivision or combination.
1.32 "Series A-2 Preferred Stock" shall mean the class of
Series A-2 Convertible Preferred Stock, par value $.001 per share, of the
Corporation or any other class of stock resulting from successive changes or
reclassifications of such Series A-2 Convertible Preferred Stock consisting
solely of changes in par value, or from par value to no par value, or as a
result of a subdivision or combination.
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1.33 "Series B Preferred Stock" shall mean the class of Series B
Convertible Preferred Stock, par value $.001 per share, of the Corporation or
any other class of stock resulting from successive changes or reclassifications
of such Series B Convertible Preferred Stock consisting solely of changes in par
value, or from par value to no par value, or as a result of a subdivision or
combination.
1.34 "Series B Certificate of Designation" shall mean the
Certificate of the Powers, Designations, Preferences and Rights of the Series B
Convertible Preferred Stock, Par Value $.001 Per Share, in the form filed by the
Corporation with the Secretary of State of Delaware, as the same may be amended
from time to time.
1.35 "Trading Day" shall mean, so long as the Common Stock is
listed or admitted to trading on a national securities exchange, a day on which
the principal national securities exchange on which the Common Stock is listed
is open for the transaction of business, or, if the Common Stock is not so
listed or admitted for trading on any national securities exchange, a day on
which NASDAQ is open for the transaction of business.
2. DIVIDENDS.
2.1 The holders of the outstanding shares of Series D Preferred
Stock shall be entitled to receive quarterly dividends, when, as and if declared
by the Board of Directors out of funds legally available therefor. Each
quarterly dividend shall be an amount per share (rounded to the nearest $.01)
equal to the Dividend Amount and shall be payable on the last Business Day of
August, November, February and May in each year (each a "Dividend Payment
Date"), to the holders of record of Series D Preferred Stock at the close of
business on the preceding Business Day, or such other dates as are fixed by the
Board Directors within ten (10) days prior to the Dividend Payment Date (each a
"Record Date"). Such dividends shall become payable beginning on the first
Dividend Payment Date for which the Record Date is subsequent to the Issue Date.
Dividends on each share of Series D Preferred Stock shall be cumulative and
shall accrue on a day-to-day basis, whether or not earned, from and after the
day immediately succeeding the date on which such share was issued, and shall be
payable in cash (except upon conversion). Dividends on the Series D Preferred
Stock that are not declared and paid when due will compound quarterly on each
Dividend Payment Date at the Dividend Rate. Dividends payable for any partial
dividend period shall be computed on the basis of actual days elapsed over a 360
day year.
2.2 Except as hereinafter provided in this Section 2.2, unless
(a) full cumulative dividends on the outstanding shares of Series D Preferred
Stock and any Parity Stock that shall have accrued and become payable as of any
date shall have been paid, or declared and funds shall have been set apart for
payment thereof, and (b) all applicable redemption, exchange and repurchase
obligations with respect to the outstanding shares of
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Series D Preferred Stock and any Parity Stock shall have been satisfied, no
dividend or other distribution (payable other than in shares of Junior Stock)
shall be paid to the holders of Junior Stock or Parity Stock, and no shares
of Series D Preferred Stock, Parity Stock or Junior Stock shall be purchased
or redeemed by the Corporation or any of its subsidiaries (except by
conversion into or exchange for, or out of the net cash proceeds from the
concurrent sale of, Junior Stock), nor shall any monies be paid or made
available for a sinking fund for the purchase or redemption of any Series D
Preferred Stock, Junior Stock or Parity Stock. When dividends are not paid
in full upon the shares of Series D Preferred Stock and any Parity Stock, all
dividends declared upon shares of Series D Preferred Stock and all Parity
Stock shall be declared pro rata so that the amount of dividends declared per
share on Series D Preferred Stock and all such Parity Stock shall in all
cases bear to each other the same ratio that accrued cumulative dividends per
share on the shares of Series D Preferred Stock and all such Parity Stock
bear to each other. Holders of shares of Series D Preferred Stock shall not
be entitled to any dividends, whether payable in cash, property or stock, in
excess of full cumulative dividends, as herein provided, on Series D
Preferred Stock.
3. REDEMPTION.
3.1 The Corporation may, at its sole option, subject to the
provisions of Section 2.2, redeem at any time after the Issue Date, out of funds
legally available therefor, all of the outstanding shares of Series D Preferred
Stock at a redemption price for each share of Series D Preferred Stock called
for redemption pursuant to this Section 3.1 equal to the Redemption Price (as
hereinafter defined). The term "Redemption Price" shall mean, with respect to
each share of Series D Preferred Stock, an amount equal to the Liquidation Value
thereof and all accrued and unpaid dividends thereon to the redemption date.
With respect to each share of Series D Preferred Stock properly tendered for
redemption, if the Corporation fails to pay the redemption price upon such
tender, the Corporation shall also pay an amount equal to interest on the amount
determined in the above sentence at 12% per annum, compounded on a quarterly
basis, from the date fixed for redemption to the date the Redemption Price is
actually paid.
3.2 In the event the Corporation shall elect to redeem shares of
Series D Preferred Stock pursuant to Section 3.1, it shall provide notice of
such redemption by first class mail, postage prepaid, mailed not less than sixty
(60) nor more than ninety (90) days prior to the redemption date, to each record
holder of the shares to be redeemed, at such holder's address as the same
appears on the books of the Corporation. Each such notice shall state: (i) the
time and date as of which the redemption shall occur; (ii) the total number of
shares of Series D Preferred Stock to be redeemed and, if fewer than all the
shares held by such holder are to be redeemed, the number of such shares to be
redeemed from such holder; (iii) the Redemption Price; (iv) that shares of
Series D Preferred Stock called for redemption may be converted at any time
prior to the time and date fixed for redemption (unless (x) the Corporation
shall default in the payment of the Redemption Price, in which case such right
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shall not terminate at such time and date or (y) the holders of such shares do
not yet have the right to convert such shares under Section 4 below); (v) the
Common Stock Conversion Rate; (vi) the place or places where certificates for
such shares are to be surrendered for payment of the Redemption Price; and
(vii) that dividends on the shares to be redeemed will cease to accrue on such
redemption date.
3.3 If notice of redemption shall have been given by the
Corporation as provided in Section 3.2, dividends on the shares of Series D
Preferred Stock so called for redemption shall cease to accrue, such shares
shall no longer be deemed to be outstanding, and all rights of the holders
thereof as stockholders of the Corporation with respect to shares so called for
redemption (except the right to receive from the Corporation the Redemption
Price without interest and except the right to convert such shares in accordance
with Section 4) shall cease (including any right to receive dividends otherwise
payable on any Dividend Payment Date that would have occurred after the time and
date of redemption) from and after the time and date fixed in the notice of
redemption as the time and date of redemption (unless the Corporation shall
default in the payment of the Redemption Price, in which case such rights shall
not terminate at such time and date). Upon surrender (in accordance with the
notice of redemption) of the certificate or certificates for any shares to be so
redeemed (properly endorsed or assigned for transfer, if the Corporation shall
so require and the notice of redemption shall so state), such shares shall be
redeemed by the Corporation at the Redemption Price. In case fewer than all the
shares represented by any such certificate are to be redeemed, a new certificate
shall be issued representing the unredeemed shares, without cost to the holder
thereof, together with the amount of cash, if any, in lieu of fractional shares.
Subject to applicable escheat laws, any moneys so set aside by the Corporation
and unclaimed at the end of one year from the redemption date shall revert to
the general funds of the Corporation, after which reversion the holders of such
shares so called for redemption shall look only to the general funds of the
Corporation for the payment of the redemption price without interest. Any
interest accrued on funds so deposited shall be paid to the Corporation from
time to time.
4. CONVERSION RIGHTS.
4.1 Each holder of a share of Series D Preferred Stock shall
have the right, at any time after the second anniversary of the Issue Date, or,
as to any share of Series D Preferred Stock called for redemption with a date
fixed for redemption which is after the second anniversary of the Issue Date, at
any time prior to the time and date fixed for such redemption (unless the
Corporation defaults in the payment of the Redemption Price, in which case such
right shall not terminate at such time and date), to convert such share into
fully paid and nonassessable shares of Common Stock at the Common Stock
Conversion Rate as of the date of conversion.
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4.2 No fractional shares or scrip representing fractions of
shares of Common Stock shall be issued upon conversion of Series D Preferred
Stock. Instead of any fractional interest in a share of Common Stock that would
otherwise be deliverable upon the conversion of a share of Series D Preferred
Stock, the Corporation shall, subject to Section 4.5(e), make a cash payment
(calculated to the nearest $.01) equal to such fraction multiplied by the
Closing Price of the Common Stock on the last Trading Day prior to the date of
conversion.
4.3 Any holder of shares of Series D Preferred Stock electing to
convert such shares into Common Stock shall surrender the certificate or
certificates for such shares at the offices of the Corporation (or at such other
place as the Corporation may designate by notice to the holders of shares of
Series D Preferred Stock) during regular business hours, duly endorsed to the
Corporation or in blank, or accompanied by instruments of transfer to the
Corporation or in blank, in form reasonably satisfactory to the Corporation, and
shall give written notice to the Corporation at such offices that such holder
elects to convert such shares of Series D Preferred Stock. As soon as
practicable after any holder deposits certificates for shares of Series D
Preferred Stock, accompanied by the written notice above prescribed, the
Corporation shall issue and deliver at such office to the holder for whose
account such shares were surrendered, or to his nominee, certificates
representing the number of shares of Common Stock and the cash in lieu of
fractional shares, if any, to which such holder is entitled upon such
conversion.
4.4 Conversion shall be deemed to have been made as of the date
that certificates for the shares of Series D Preferred Stock to be converted and
the written notice, are received by the Corporation; and the Person entitled to
receive the Common Stock issuable upon such conversion shall be treated for all
purposes as the record holder of such Common Stock on such date. The
Corporation shall not be required to deliver certificates for shares of Common
Stock while the stock transfer books for such stock or for Series D Preferred
Stock are duly closed for any purpose, but certificates for shares of Common
Stock shall be issued and delivered as soon as practicable after the opening of
such books.
4.5 The Common Stock Conversion Rate shall be adjusted from time
to time as follows:
(a) If the Corporation shall, at any time or from time to
time while any shares of the Series D Preferred Stock are outstanding, (i) pay a
dividend on its Common Stock in shares of its capital stock, (ii) combine its
outstanding shares of Common Stock into a smaller number of shares,
(iii) subdivide its outstanding shares of Common Stock or (iv) issue by
reclassification of its shares of Common Stock any shares of capital stock of
the Corporation, then the Common Stock Conversion Rate in effect immediately
before such action shall be adjusted so that the holders of the Series D
Preferred Stock, upon conversion of shares thereof immediately following such
action, shall be entitled to receive the kind and
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amount of shares of capital stock of the Corporation which they would have
owned or been entitled to receive upon or by reason of such event if such
shares of Series D Preferred Stock had been converted immediately before the
record date or effective date for such action.
(b) If the Corporation shall, at any time or from time to
time while any of the Series D Preferred Stock is outstanding, issue or sell, or
fix a record date for the issuance of, (A) Common Stock (or securities
convertible or exchangeable into or exercisable for Common Stock) (other than
Excluded Securities) or (B) rights, options or warrants entitling the holders
thereof to subscribe for or purchase Common Stock (or securities convertible
into or exchangeable or exercisable for shares of Common Stock) (other than
Excluded Securities), in any such case, at a price per share (treating the price
per share of securities convertible into or exchangeable or exercisable for
Common Stock as equal to (x) the sum of (i) the price for a unit of the security
convertible into or exchangeable or exercisable for Common Stock plus (ii) any
additional consideration initially payable upon the conversion of such security
into or the exchange or exercise of such security for Common Stock, divided by
(y) the number of shares of Common Stock initially underlying such exercisable,
convertible or exchangeable security) that is less than the greater of the
Current Market Price of the Common Stock and the Conversion Price on the date of
such issuance or such record date (the "Measuring Price"), then the Common Stock
Conversion Rate shall be adjusted so that it shall equal the rate determined by
multiplying the Common Stock Conversion Rate in effect immediately prior to
giving effect to this Section 4.5 by a fraction, the numerator of which shall be
the number of shares of Common Stock outstanding (calculated to include the
shares of Common Stock underlying the warrants issued under the Investment
Agreement, the shares of Common Stock underlying the Affiliate Warrants, the
shares of Common Stock underlying the Harnick Warrant, the shares of Common
Stock underlying the Board Warrants and all then currently exercisable,
convertible and exchangeable securities that are "in-the-money") on the date of
issuance of such rights, options or warrants plus the number of additional
shares of Common Stock offered for subscription or purchase (or into or for
which the exercisable, convertible or exchangeable securities so offered are
initially exercisable, convertible or exchangeable), and the denominator of
which shall be the number of shares of Common Stock outstanding (calculated to
include the shares of Common Stock underlying the warrants issued under the
Investment Agreement, the shares of Common Stock underlying the Affiliate
Warrants, the shares of Common Stock underlying the Harnick Warrant, the shares
of Common Stock underlying the Board Warrants and all then currently
exercisable, convertible and exchangeable securities that are "in-the-money") on
the date of issuance of such rights, options or warrants plus the number of
shares which the aggregate offering price of the total number of shares so
offered for subscription or purchase (or the aggregate purchase price of the
exercisable, convertible or exchangeable securities so offered plus the
aggregate amount of any additional consideration initially payable upon
exercise, conversion or exchange for or into Common Stock) would purchase at
such Measuring Price.
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(c) If the Corporation shall, at any time or from time to
time while any of the Series D Preferred Stock is outstanding, distribute to all
holders of shares of its Common Stock (including any such distribution made in
connection with a consolidation or merger in which the Corporation is the
continuing or surviving corporation and the Common Stock is not changed or
exchanged) cash, evidences of indebtedness, securities or other assets
(excluding (i) ordinary course cash dividends to the extent such dividends do
not exceed the Corporation's retained earnings and (ii) dividends payable in
shares of Common Stock for which adjustment is made under Section 4.5(a)) or
rights, options or warrants to subscribe for or purchase securities of the
Corporation (excluding those for which adjustment is made under Section 4.5(b)),
then in each such case the Common Stock Conversion Rate shall be adjusted so
that it shall equal the rate determined by multiplying the Common Stock
Conversion Rate in effect immediately prior to the date of such distribution by
a fraction, the numerator of which shall be the Current Market Price of the
Common Stock on the record date referred to below, and the denominator of which
shall be such Current Market Price of the Common Stock less the then fair market
value (as determined by the Board of Directors in good faith or, if requested by
the holders of the Series B Preferred Stock in accordance with the terms of the
Series B Certificate of Designation, the fair market value determined pursuant
to the Series B Certificate of Designation) of the portion of the cash,
evidences of indebtedness, securities or other assets so distributed or of such
rights, options or warrants applicable to one share of Common Stock (provided
that such denominator shall never be less than $.01).
(d) If the Corporation or any subsidiary thereof shall, at
any time or from time to time while any of the Series D Preferred Stock is
outstanding, make a Pro Rata Repurchase, the Common Stock Conversion Rate shall
be adjusted by multiplying the Common Stock Conversion Rate in effect
immediately prior to such action by a fraction (which in no event shall be less
than one (1)), the numerator of which shall be the product of (i) the number of
shares of Common Stock outstanding immediately before such Pro Rata Repurchase
minus the number of shares of Common Stock repurchased in such Pro Rata
Repurchase and (ii) the Current Market Price of the Common Stock as of the day
immediately preceding the first public announcement by the Corporation of the
intent to effect such Pro Rata Repurchase, and the denominator of which shall be
(i) the product of (x) the number of shares of Common Stock outstanding
immediately before such Pro Rata Repurchase and (y) the Current Market Price of
the Common Stock as of the day immediately preceding the first public
announcement by the Corporation of the intent to effect such Pro Rata Repurchase
minus (ii) the aggregate purchase price of the Pro Rata Repurchase (provided
that such denominator shall never be less than $.01).
(e) All calculations under this Section 4.5 shall be
made to the nearest $.01 (with $.005 being rounded upward), one-hundredth of
a share (with .005 being rounded upward) or, in the case of a conversion
rate, one ten-thousandth (with .00005 being rounded upward). Notwithstanding
any other provision of this Section 4.5, the Corpora-
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tion shall not be required to make any adjustment of the Common Stock
Conversion Rate unless such adjustment would require an increase or decrease
of at least 0.05% of such rate. Any lesser adjustment shall be carried
forward and shall be made at the time of and together with the next
subsequent adjustment which, together with any adjustment or adjustments so
carried forward, shall amount to an increase or decrease of at least 0.05% in
such rate. Any adjustments under this Section 4.5 shall be made successively
whenever an event requiring such an adjustment occurs.
(f) Whenever an adjustment in the Common Stock Conversion
Rate is required, the Corporation shall promptly cause to be mailed (but in any
event not later than five (5) days after the date of the event giving rise to
such adjustment) first-class postage prepaid, to the holders of record of the
outstanding shares of Series D Preferred Stock, notice of such adjustment and a
certificate of a firm of independent public accountants of recognized national
standing selected by the Board of Directors (who shall be appointed at the
Corporation's expense and who may be the independent public accountants
regularly employed by the Corporation) setting forth the adjusted Common Stock
Conversion Rate in effect as of such date determined as provided herein. Such
notice and certificate shall set forth in reasonable detail such facts as shall
be necessary to show the reason for and the manner of computing such adjustment.
(g) In the event that at any time as a result of an
adjustment made pursuant to this Section 4.5, the holder of any share of Series
D Preferred Stock thereafter surrendered for conversion shall become entitled to
receive any shares of stock of the Corporation other than shares of Common
Stock, the conversion rate of such other shares so receivable upon conversion of
any such share of Series D Preferred Stock 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 Common Stock contained in subparagraphs (a) through
(f) and (h) of this Section 4.5, and the provisions of this Section 4 with
respect to the Common Stock shall apply on like or similar terms to any such
other shares and the determination of the Board of Directors as to any such
adjustment shall be conclusive.
(h) No adjustment shall be made pursuant to this Section if
the effect thereof would be to reduce the Conversion Price below the par value
of the Common Stock.
4.6 In case (a) any consolidation or merger to which the
Corporation is a party, other than a merger or consolidation in which the
Corporation is the surviving or continuing corporation and which does not result
in any reclassification of, or change (other than a change in par value or from
par value to no par value or from no par value to par value, or as a result of a
subdivision or combination) in, outstanding shares of Common Stock or (b) any
sale or conveyance of all or substantially all of the property and assets of the
Corporation is effected in such a way that the holders of Common Stock shall be
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entitled to receive stock or other securities or assets with respect to or in
exchange for Common Stock, then upon conversion of each share of Series D
Preferred Stock the holder thereof shall be entitled to receive the kind and
amount of shares of stock or other securities and property receivable upon
such consolidation, merger, sale or conveyance by a holder of the number of
shares of Common Stock into which such shares of Series D Preferred Stock
could have been converted immediately prior to such consolidation, merger,
sale or conveyance, subject to adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Section 4. The Corporation shall not enter into any of the transactions
referred to in clause (a) or (b) of the preceding sentence unless provision
shall be made so as to give effect to the provisions set forth in this
Section 4.6. The provisions of this Section 4.6 shall apply similarly to
successive consolidations, mergers, sales or conveyances.
4.7 The Corporation shall at all times reserve and keep
available, free from preemptive rights, out of its authorized but unissued
stock, for the purpose of effecting the conversion of the shares of Series D
Preferred Stock, such number of its duly authorized shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
outstanding shares of Series D Preferred Stock into such Common Stock at any
time (assuming that, at the time of the computation of such number of shares,
all such Common Stock would be held by a single holder). The Corporation shall
from time to time, in accordance with the laws of the State of Delaware, use its
best efforts to cause the authorized amount of Common Stock to be increased if
the aggregate of the authorized amount of the Common Stock remaining unissued
and the issued shares of such Common Stock in its treasury (other than any
shares of such Common Stock reserved for issuance in any other connection) shall
not be sufficient to permit the conversion of the shares of Series D Preferred
Stock into the Common Stock. The Corporation covenants that any shares of
Common Stock issued upon conversions of the Series D Preferred Stock shall be
validly issued, fully paid and nonassessable.
4.8 If any shares of Common Stock which would be issuable upon
conversion of shares of Series D Preferred Stock hereunder require registration
with or approval of any governmental authority before such shares may be issued
upon conversion, the Corporation will in good faith and as expeditiously as
possible cause such shares to be duly registered or approved, as the case may
be.
4.9 The Corporation shall pay any and all issue or other taxes
that may be payable in respect of any issue or delivery of shares of Common
Stock on conversion of shares of Series D Preferred Stock pursuant hereto. The
Corporation shall not, however, be required to pay any tax which is payable in
respect of any transfer involved in the issue or delivery of Common Stock in a
name other than that in which the shares of Series D Preferred Stock so
converted were registered, and no such issue or delivery shall be made unless
and
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until the person requesting such issue has paid to the Corporation the amount
of such tax, or has established, to the satisfaction of the Corporation, that
such tax has been paid.
4.10 For purposes of this Section 4, the number of shares of
Common Stock at any time outstanding shall not include any shares of Common
Stock then owned or held by or for the account of the Corporation or any
subsidiary. The Corporation shall not pay a dividend or make any distribution
on shares of Common Stock held in the treasury of the Corporation.
4.11 If any action or transaction would require adjustment of the
Common Stock Conversion Rate pursuant to more than one paragraph of this
Section 4, only one adjustment shall be made and each such adjustment shall be
the amount of adjustment that has the highest absolute value.
4.12 In case:
(a) of a consolidation or merger to which the Corporation
is a party and for which approval of any stockholders of the Corporation is
required; or
(b) of the voluntary or involuntary dissolution,
liquidation or winding up of the Corporation; or
(c) of any Pro Rata Repurchase;
then, in each case, the Corporation shall cause to be mailed, first-class
postage prepaid, to the holders of record of the outstanding shares of Series D
Preferred Stock, at least twenty (20) days prior to the applicable record date
hereinafter specified, a notice stating (x) the date on which a record is to be
taken for the purpose of any distribution or grant of rights or warrants
triggering an adjustment to the Common Stock Conversion Rate pursuant to this
Section 4, or, if a record is not to be taken, the date as of which the holders
of record of Common Stock entitled to such distribution, rights or warrants are
to be determined, or (y) the date on which any reclassification, consolidation,
merger, sale, conveyance, dissolution, liquidation, winding up or Pro Rata
Repurchase is expected to become effective, and the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange
their Common Stock for securities or other property deliverable upon such
reclassification, consolidation, merger, sale, conveyance, dissolution,
liquidation, winding up or Pro Rata Repurchase. Failure to give the notice
specified hereunder shall have no effect on the status or effectiveness of the
action to which the required notice relates.
5. VOTING. The shares of Series D Preferred Stock shall have no
voting rights except as required by law except as set forth below:
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(a) So long as any of the shares of the Series D Preferred Stock
remain outstanding, unless a greater percentage shall then be required by law,
the Company shall not, without the affirmative vote at a meeting or the written
consent with or without a meeting of the holders of the Series D Preferred Stock
representing at least a majority of the aggregate voting power (i) authorize or
issue any stock that is both junior to the Series B Preferred Stock and senior
to or on a parity with the Series D Preferred Stock or (ii) reclassify any stock
that is junior to the Series D Preferred Stock as both junior to the Series B
Preferred Stock and senior to or on a parity with the Series D Preferred Stock.
6. LIQUIDATION RIGHTS.
6.1 Upon the dissolution, liquidation or winding up of the
Corporation, whether voluntary or involuntary, the holders of the shares of
Series D Preferred Stock shall be entitled to receive out of the assets of the
Corporation available for distribution to stockholders, in preference to the
holders of, and before any payment or distribution shall be made on, Junior
Stock, the amount of $1,000 per share (the "Liquidation Value"), plus an amount
equal to all accrued and unpaid dividends to the date of final distribution
(whether or not declared).
6.2 Neither the sale, exchange or other conveyance (for cash,
shares of stock, securities or other consideration) of all or substantially all
the property and assets of the Corporation nor the merger or consolidation of
the Corporation into or with any other corporation, or the merger or
consolidation of any other corporation into or with the Corporation, shall be
deemed to be a dissolution, liquidation or winding up, voluntary or involuntary,
for the purposes of this Section 6.
6.3 After the payment to the holders of the shares of Series D
Preferred Stock of full preferential amounts provided for in this Section 6, the
holders of Series D Preferred Stock as such shall have no right or claim to any
of the remaining assets of the Corporation.
6.4 In the event the assets of the Corporation available for
distribution to the holders of shares of Series D Preferred Stock upon any
dissolution, liquidation or winding up of the Corporation, whether voluntary or
involuntary, shall be insufficient to pay in full all amounts to which such
holders are entitled pursuant to Section 6.1, no such distribution shall be made
on account of any shares of any Parity Stock upon such dissolution, liquidation
or winding up unless proportionate distributive amounts shall be paid on account
of the shares of Series D Preferred Stock, ratably, in proportion to the full
distributable amounts for which holders of all Parity Stock are entitled upon
such dissolution, liquidation or winding up.
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7. CHANGE OF CONTROL
7.1 In the event that the Corporation becomes aware of a Change
of Control or pending Change of Control, the Corporation shall make an offer
(the "Change of Control Offer") to purchase all of the outstanding shares of
Series D Preferred Stock at a purchase price for each share of Series D
Preferred Stock equal to the Repurchase Price (as hereinafter defined) on the
effective date of such Change of Control (the "Trigger Date"). The Repurchase
Price will be payable (x) in cash, in the case of a Change of Control pursuant
to clause (i) through (iii) of the definition of a Change of Control and (y), at
the Corporation's election, either in cash or in Common Stock, in the case of a
Change of Control pursuant to clause (iv) of the definition of a Change of
Control. In the event that the Corporation elects to pay the Repurchase Price
in Common Stock, such Common Stock shall be concurrently registered under the
Act and under the securities or blue sky laws of any jurisdiction designated by
any holder of Series D Preferred Stock which accepts the Change of Control
Offer. The term "Repurchase Price" shall mean, with respect to each share of
Series D Preferred Stock, (x) if paid in cash, 110% of the sum of the
Liquidation Value thereof and any accrued and unpaid dividends thereon to the
date of such purchase, or (y) if paid in Common Stock, 125% of the sum of the
Liquidation Value thereof and any accrued and unpaid dividends thereon to the
date of such purchase. With respect to each share of Series D Preferred Stock
properly tendered for repurchase, if the Corporation fails to pay the Repurchase
Price upon such tender, the Corporation shall also pay an amount equal to
interest on the amount determined in the above sentence at 12% per annum,
compounded on a quarterly basis, from the date fixed for repurchase to the date
the Repurchase Price is actually paid. The Change of Control Offer must be made
as soon as practicable and if possible not less than sixty (60) days prior to
the Trigger Date, shall remain open for at least orty (40) and not more than
fifty (50) days (or such longer time as may be required by applicable law or
regulation) and shall comply, to the extent required, with the applicable
requirements of Rule 14e-1 under the Exchange Act and any other applicable
securities laws and regulations.
7.2 In the event the Corporation is required to make a Change of
Control Offer pursuant to Section 7.1, it shall provide notice of such Change of
Control Offer (the "Notice of Offer") by first class mail, postage prepaid, to
each record holder of the shares of Series D Preferred Stock, at such holder's
address as the same appears on the books of the Corporation. Each such Notice
of Offer shall state: (i) that the Corporation is offering to purchase all
outstanding shares of Series D Preferred Stock and that such offer is
irrevocable; (ii) the Trigger Date, which will be the date on which any such
purchase will be consummated; (iii) the total number of shares of Series D
Preferred Stock which the Corporation is offering to purchase from such holder;
(iv) the Repurchase Price; (v) the last day on which the Change of Control Offer
may be accepted (the "Expiration Date"), (vi) the place or places where
certificates for shares of Series D Preferred Stock are to be surrendered for
payment of the Repurchase Price and (vii) in the event of a Change of Control
pursuant to clause (iv) of the definition of a Change of Control, the terms,
amount and kind of
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consideration paid and the identity, if known by the Corporation, of the
Person or Group of Persons triggering such Change of Control and whether the
Corporation is electing to pay the Repurchase Price in cash or Common Stock.
7.3 Any holder of outstanding shares of Series D Preferred Stock
may, at its sole option, elect to accept the Change of Control Offer with
respect to all or less than all of such holder's outstanding Series D Preferred
Stock by delivering written notice of such acceptance to the Corporation on or
before the Expiration Date. On the Trigger Date, the Corporation will pay to
each holder that has accepted the Change of Control Offer the Repurchase Price
for the shares of Series D Preferred Stock which such holder has elected to sell
to the Corporation against delivery (in accordance with the Notice of Offer) of
the certificate or certificates for any shares to so purchased (properly
endorsed or assigned for transfer, if the Corporation shall so require and the
Notice of Offer shall so state). In case fewer than all the shares represented
by any such certificate are to be repurchased, a new certificate shall be issued
representing the shares which are not purchased, without cost of the holder
thereof, together with the amount of cash, if any, in lieu of fractional shares.
8. OTHER PROVISIONS.
8.1 Shares of Series D Preferred Stock issued and reacquired
will, upon compliance with the applicable requirements of Delaware law, have the
status of authorized but unissued shares of Preferred Stock of the Corporation
undesignated as to series and may with any and all other authorized but unissued
shares of Preferred Stock of the Corporation be designated or redesignated and
issued or reissued, as the case may be, as part of any series of Preferred Stock
of the Corporation, except that any issuance or reissuance of shares of Series D
Preferred Stock must be in compliance with this certificate of designation.
8.2 The Corporation shall be entitled to recognize the exclusive
right of a Person registered on its records as the holder of shares of Series D
Preferred Stock, and such record holder shall be deemed the holder of such
shares for all purposes.
8.3 All notice periods referred to herein shall commence on the
date of the mailing of the applicable notice.
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IN WITNESS WHEREOF, Platinum Entertainment, Inc. has caused this
certificate to be signed and attested this 14th day of April 1999.
PLATINUM ENTERTAINMENT, INC.
By: /s/ Douglas C. Laux
------------------------------------
Name: Douglas C. Laux
Title: Chief Operating Officer
and Chief Financial Officer
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NEITHER THIS WARRANT NOR ANY SECURITIES ACQUIRED UPON THE EXERCISE OF
THIS WARRANT (THE "SECURITIES") HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND
NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS OR AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS AS
EVIDENCED BY AN OPINION OF COUNSEL DELIVERED AND REASONABLY ACCEPTABLE TO THE
COMPANY.
______________________________________________
PLATINUM ENTERTAINMENT, INC.
COMMON STOCK PURCHASE WARRANT
_______________________________________________
This certifies that, for good and valuable consideration, Platinum
Entertainment, Inc., a Delaware corporation (the "Company"), grants to Steven
Devick, his successors and permitted assigns (the "Warrantholder"), the right to
subscribe for and purchase from the Company Five Hundred Four Thousand One
Hundred Sixty-Six and One Sixty-Fifth (504,166.65) validly issued, fully paid
and nonassessable shares (the "Warrant Shares") of the Company's Common Stock,
par value $.001 per share (the "Common Stock"), at the purchase price per share
equal to the Exercise Price, as defined herein, at any time prior to 5:00 p.m.,
Central Standard Time, on April 15, 2009 (the "Expiration Date"), subject to the
terms, conditions and adjustments herein set forth. References herein to
"Warrants" or "Warrant" shall mean this Warrant.
This Warrant is being issued in connection with the issue and sale by
the Company of shares of its Series D Convertible Preferred Stock, par value
$.001 per share (the "Series D Preferred Stock").
The "Exercise Price" shall mean $6.126; which price is equal to the
average of the daily Closing Price per share of Common Stock for the trailing 30
consecutive trading days from and including April 9, 1999. The Exercise Price
as determined in accordance with the foregoing shall be adjusted from time to
time in accordance with the provisions of Section 6.
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1. EXERCISE OF WARRANTS.
1.1 EXERCISE OF WARRANT. This Warrant may be exercised, in
whole or in part, at any time or from time to time prior to the Expiration Date,
by surrendering to the Company at its principal office this Warrant, with an
Exercise Form (as defined herein) duly executed by the Warrantholder and
accompanied by payment of the Exercise Price for the number of shares of Common
Stock specified in such Exercise Form.
1.2 CASHLESS EXERCISE. In lieu of the payment of the Exercise
Price, the Warrantholder shall have the right (but not the obligation) to
require the Company to convert this Warrant, in whole or in part, into shares of
Common Stock (the "Conversion Right") as provided for in this Section 1.2. Upon
exercise of the Conversion Right, the Company shall deliver to the Warrantholder
(without payment by the Warrantholder of any of the Exercise Price) that number
of shares of Common Stock equal to the quotient obtained by dividing (x) the
value of the Warrant or portion thereof being exercised at the time the
Conversion Right is exercised (determined by subtracting the aggregate Exercise
Price in effect immediately prior to the exercise of the Conversion Right for
the number of shares for which the Warrant is being exercised from the aggregate
Current Market Price (as defined herein) of the shares of Common Stock issuable
upon exercise of the Warrant for the number of shares for which the Warrant is
being exercised immediately prior to the exercise of the Conversion Right) by
(y) the Current Market Price of one share of Common Stock immediately prior to
the exercise of the Conversion Right. The Conversion Right may be exercised at
any time or from time to time prior to the Expiration Date by surrendering to
the Company at its principal office this Warrant, with an Exercise Form duly
executed by the Warrantholder and indicating that the Warrantholder wishes to
exercise the Conversion Right and specifying the total number of shares of
Common Stock for which the Warrant is being exercised.
1.3 DELIVERY OF WARRANT SHARES; EFFECTIVENESS OF EXERCISE.
(a) DELIVERY OF WARRANT SHARES. A stock certificate or
certificates for the Warrant Shares specified in the Exercise Form along with a
check for the amount of cash to be paid in lieu of fractional shares, if any,
shall be delivered to the Warrantholder within 10 Business Days after the
Exercise Date (as defined herein); PROVIDED, HOWEVER, that if the Conversion
Right is exercised in accordance with Section 1.2 and a determination by the
Board of Directors is required to determine the Current Market Price of the
Common Stock, such delivery shall be made promptly after such determination is
made. If this Warrant shall have been exercised only in part, the Company
shall, at the time of delivery of the stock certificate or certificates and cash
in lieu of fractional shares, if any, deliver to the Warrantholder a
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new Warrant evidencing the rights to purchase the remaining Warrant Shares,
which new Warrant shall in all other respects be identical with this Warrant.
(b) EFFECTIVENESS OF EXERCISE. The exercise of this
Warrant shall be deemed to have been effective immediately prior to the close of
business on the Business Day on which this Warrant is exercised in accordance
with Section 1.1 or 1.2 (the "Exercise Date"). The Person in whose name any
certificate for shares of Common Stock shall be issuable upon such exercise
shall be deemed to be the record holder of such shares of Common Stock for all
purposes on the Exercise Date.
1.4 PAYMENT OF TAXES. The issuance of certificates for Warrant
Shares shall be made without charge to the Warrantholder for any stock transfer
or other issuance tax in respect thereof; PROVIDED, HOWEVER, that the
Warrantholder shall be required to pay any and all taxes that may be payable in
respect of any transfer involved in the issuance and delivery of any certificate
in a name other than that of the then Warrantholder as reflected upon the books
of the Company.
2. RESTRICTIVE LEGENDS.
2.1 WARRANTS. Except as otherwise permitted by this Section 2,
each Warrant (and each Warrant issued in substitution for any Warrant pursuant
to Section 4) shall be stamped or otherwise imprinted with a legend in
substantially the following form:
NEITHER THIS WARRANT NOR ANY SECURITIES ACQUIRED UPON THE EXERCISE OF
THIS WARRANT (THE "SECURITIES") HAVE BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES
LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED,
SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE
STATE SECURITIES LAWS OR AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER
SUCH ACT AND SUCH LAWS AS EVIDENCED BY AN OPINION OF COUNSEL DELIVERED AND
REASONABLY ACCEPTABLE TO THE COMPANY.
2.2 WARRANT SHARES. Except as otherwise permitted by this
Section 2, each stock certificate for Warrant Shares issued upon the exercise of
any Warrant and each stock certificate issued upon the direct or indirect
transfer of any such Warrant Shares shall be stamped or otherwise imprinted with
a legend in substantially the following form:
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THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE
OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
AND APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION FROM REGISTRATION
UNDER SUCH ACT AND SUCH LAWS AS EVIDENCED BY AN OPINION OF COUNSEL
DELIVERED AND REASONABLY ACCEPTABLE TO THE COMPANY.
2.3 REMOVAL OF LEGENDS. Notwithstanding the foregoing, the
Warrantholder may require the Company to issue a Warrant or a stock certificate
for Warrant Shares, in each case without a legend, if either (i) such Warrant or
such Warrant Shares, as the case may be, have been registered for resale under
the Securities Act and sold pursuant to such registration or (ii) if reasonably
requested by the Company, the Warrantholder has delivered to the Company an
opinion of legal counsel (from a firm reasonably satisfactory to the Company)
which opinion shall be addressed to the Company and be reasonably satisfactory
in form and substance to the Company's counsel, to the effect that such
registration is not required with respect to such Warrant or such Warrant
Shares, as the case may be.
3. RESERVATION AND REGISTRATION OF SHARES, ETC.
The Company covenants and agrees as follows:
(a) All Warrant Shares that are issued upon the exercise of
this Warrant will, upon issuance, be validly issued, fully paid and
nonassessable, not subject to any preemptive rights, and free from all taxes,
liens, security interests, charges, and other encumbrances with respect to the
issuance thereof, other than taxes in respect of any transfer occurring
contemporaneously with such issue.
(b) During the period within which this Warrant may be
exercised, the Company will at all times have authorized and reserved, and keep
available free from preemptive rights, a sufficient number of shares of Common
Stock to provide for the exercise of the rights represented by this Warrant.
4. LOSS OR DESTRUCTION OF WARRANT.
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Subject to the terms and conditions hereof, upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant and, in the case of loss, theft or
destruction, of such bond or indemnification as the Company may reasonably
require, and, in the case of mutilation, upon surrender and cancellation of
this Warrant, the Company will execute and deliver a new Warrant of like tenor.
5. OWNERSHIP OF WARRANT.
The Company may deem and treat the Person in whose name this Warrant
is registered as the holder and owner hereof (notwithstanding any notations of
ownership or writing hereon made by anyone other than the Company) for all
purposes and shall not be affected by any notice to the contrary, until
presentation of this Warrant for registration of transfer.
6. CERTAIN ADJUSTMENTS.
6.1 The number of Warrant Shares purchasable upon the exercise
of this Warrant and the Exercise Price shall be subject to adjustment as
follows:
(a) STOCK DIVIDENDS, SUBDIVISION, COMBINATION OR
RECLASSIFICATION OF COMMON STOCK. If at any time after the date of the issuance
of this Warrant the Company shall (i) declare a stock dividend on the Common
Stock payable in shares of its capital stock (including Common Stock),
(ii) increase the number of shares of Common Stock outstanding by a subdivision
or split-up of shares of Common Stock, (iii) decrease the number of shares of
Common Stock outstanding by a combination of shares of Common Stock or
(iv) issue any shares of its capital stock in a reclassification of the Common
Stock, then, on the record date for such dividend or the effective date of such
subdivision or split-up, combination or reclassification, as the case may be,
the number and kind of shares to be delivered upon exercise of this Warrant will
be adjusted so that the Warrantholder will be entitled to receive the number and
kind of shares of capital stock that such Warrantholder would have owned or been
entitled to receive upon or by reason of such event had this Warrant been
exercised immediately prior thereto, and the Exercise Price will be adjusted as
provided below in paragraph (i).
(b) REORGANIZATION, ETC. If at any time after the date of
issuance of this Warrant any consolidation of the Company with or merger of the
Company with or into any other Person (other than a merger or consolidation in
which the Company is the surviving or continuing corporation and which does not
result in any reclassification of, or change (other than a change in par value
or from par value to no par value or from no par value to par value, or as a
result of a subdivision or
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<PAGE>
combination) in, outstanding shares of Common Stock) or any sale, lease or
other transfer of all or substantially all of the assets of the Company to
any other person (each, a "Reorganization Event"), shall be effected in such
a way that the holders of Common Stock shall be entitled to receive cash,
stock, other securities or assets (whether such cash, stock, other securities
or assets are issued or distributed by the Company or another Person) with
respect to or in exchange for Common Stock, then, upon exercise of this
Warrant the Warrantholder shall have the right to receive the kind and amount
of cash, stock, other securities or assets receivable upon such
Reorganization Event by a holder of the number of shares of Common Stock that
such Warrantholder would have been entitled to receive upon exercise of this
Warrant had this Warrant been exercised immediately before such
Reorganization Event, subject to adjustments that shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Section 6.1. Notwithstanding the foregoing, if more than 20% in aggregate
value of the cash, stock, other securities or assets deliverable to such
holder in accordance with the foregoing provisions of this Section 6(b) would
consist of cash or debt securities, then the Warrantholder shall have the
right (the "Special Reorganization Right") at its election, exercisable by
giving written notice to the Company prior to 120 days following the
consummation of such Reorganization Event to receive from the Company, and
the Company shall pay to the Warrantholder promptly after the exercise by the
Warrantholder of the Special Reorganization Right, instead of the cash,
stock, other securities or assets otherwise deliverable to such holder, an
amount of cash equal to the fair market value of this Warrant immediately
prior to the announcement of such Reorganization Event, to be determined by
an Independent Financial Expert giving due consideration to such factors as
the financial condition and prospects of the Company, the remaining unexpired
term of the Warrant and the market price of the Common Stock of the Company
after announcement of such Reorganization Event. The Company shall not enter
into any of the transactions referred to in this Section 6.1(b) unless
effective provision shall be made so as to give effect to the provisions set
forth in this Section 6.1(b).
(c) CERTAIN ISSUANCES OF COMMON STOCK. If at any time
after the date of issuance of this warrant the Company shall issue or sell, or
fix a record date for the issuance of, (A) Common Stock (or securities
convertible into or exchangeable or exercisable for Common Stock) (other than
Excluded Securities) or (B) rights, options or warrants entitling the holders
thereof to subscribe for or purchase Common Stock (or securities convertible
into or exchangeable or exercisable for Common Stock) (other than Excluded
Securities), in any such case, at a price per share (treating the price per
share of the securities convertible into or exchangeable or exercisable for
Common Stock as equal to (x) the sum of (i) the price for a unit of the security
convertible into or exchangeable or exercisable for Common Stock plus (ii) any
additional consideration initially payable upon the conversion of such security
into Common Stock or the exchange or exercise of such security for Common Stock
divided by (y) the number of shares of Common Stock initially underlying such
convertible,
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exchangeable or exercisable security) that is less than the greater of the
Current Market Price of the Common Stock and the Exercise Price on the date
of such issuance or such record date (the "Measuring Price") then,
immediately after the date of such issuance or sale or on such record date,
the number of shares of Common Stock to be delivered upon exercise of this
Warrant shall be increased so that the Warrantholder thereafter shall be
entitled to receive the number of shares of Common Stock determined by
multiplying the number of shares of Common Stock such Warrantholder would
have been entitled to receive immediately before the date of such issuance or
sale or such record date by a fraction, the denominator of which shall be the
number of shares of Common Stock outstanding (calculated to include the
shares of Common Stock underlying the Warrants, the Investor Warrants, the
Affiliate Warrants, the Harnick Warrant and all then currently exerciseable,
convertible and exchangeable securities that are "in the money") on such date
plus the number of shares of Common Stock that the aggregate offering price
of the total number of shares so offered for subscription or purchase (or the
aggregate purchase price of the convertible, exchangeable or exerciseable
securities so offered plus the aggregate of amount of any additional
consideration initially payable upon conversion into Common Stock or exchange
or exercise for Common Stock) would purchase at the Measuring Price and the
numerator of which shall be the number of shares of Common Stock outstanding
(calculated to include the shares of Common Stock underlying the Warrants,
the Investor Warrants, Affiliate Warrants, the Harnick Warrant and all then
currently exerciseable, convertible and exchangeable securities that re "in
the money") on such date plus the number of additional shares of Common Stock
offered for subscription or purchase (or into or for which the convertible or
exchangeable securities or rights, options or warrants so offered are
initially convertible or exchangeable or exercisable, as the case may be),
and the Exercise Price shall be adjusted as provided below in paragraph (i).
"Excluded Securities" means (A) shares of Common Stock issued upon conversion
or exercise of convertible securities, warrants and options of the Company,
outstanding on the date this Warrant is originally issued, (B) shares of
Common Stock, and options to purchase such shares, issued to officers,
directors, employees or former employees of, or consultants to, the Company
or any of its subsidiaries pursuant to any equity incentive plan, agreement
or other arrangement which has been approved by a vote of at least two-thirds
(2/3) of the Board of Directors of the Company, (C) shares of Common Stock
issued upon conversion of shares of the Company's Series B Convertible
Preferred Stock, par value $.001 per share (the "Series B Preferred Stock"),
(D) shares of Common Stock issued upon exercise of the Investor Warrants,
including any increase in the number of shares of Common Stock issuable under
such Investor Warrants as a result of the conditional annual increase
provision included therein, (E) shares of Common Stock issued upon conversion
of shares of the Company's Series C Convertible Preferred Stock, par value
$.001 per share (the "Series C Preferred Stock"), (F) shares of Common Stock
issued upon exercise of the Affiliate Warrants, (G) shares of Common Stock
issued upon exercise of the Harnick Warrant, (H) shares of Common Stock
issuable upon conversion of shares
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of the Company's Series D Preferred Stock, and (I) shares of Common Stock
issued upon exercise of any Warrant.
(d) EXTRAORDINARY DISTRIBUTIONS. If at any time after the
date of issuance of this Warrant the Company shall distribute to all holders of
its Common Stock (including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation and the Common Stock is not changed or exchanged) cash, evidences of
indebtedness, securities or other assets (excluding (i) ordinary course cash
dividends to the extent such dividends do not exceed the Company's retained
earnings and (ii) dividends payable in shares of capital stock for which
adjustment is made under Section 6.1(a)) or rights, options or warrants to
subscribe for or purchase securities of the Company (excluding those for which
adjustment is made under Section 6.1(c)), then the number of shares of Common
Stock to be delivered to such Warrantholder upon exercise of this Warrant shall
be increased so that the Warrantholder thereafter shall be entitled to receive
the number of shares of Common Stock determined by multiplying the number of
shares such Warrantholder would have been entitled to receive immediately before
such record date by a fraction, the denominator of which shall be the Current
Market Price per share of Common Stock on such record date minus the then fair
market value (as reasonably determined by the Board of Directors of the Company
in good faith) of the portion of the cash, evidences of indebtedness, securities
or other assets so distributed or of such rights or warrants applicable to one
share of Common Stock (provided that such denominator shall in no event be less
than $.01) and the numerator of which shall be the Current Market Price per
share of the Common Stock, and the Exercise Price shall be adjusted as provided
below in paragraph (h).
(e) PRO RATA REPURCHASES. If at any time after the date of
issuance of this Warrant, the Company or any subsidiary thereof shall make a Pro
Rata Repurchase, then the number of shares of Common Stock to be delivered to
such Warrantholder upon exercise of this Warrant shall be increased so that the
Warrantholder thereafter shall be entitled to receive the number of shares of
Common Stock determined by multiplying the number of shares of Common Stock such
Warrantholder would have been entitled to receive immediately before such Pro
Rata Repurchase by a fraction (which in no event shall be less than one) the
denominator of which shall be (i) the product of (x) the number of shares of
Common Stock outstanding immediately before such Pro Rata Repurchase and (y) the
Current Market Price of the Common Stock as of the day immediately preceding the
first public announcement by the Company of the intent to effect such Pro Rata
Repurchase minus (ii) the aggregate purchase price of the Pro Rata Repurchase
(provided that such denominator shall never be less than $.01), and the
numerator of which shall be the product of (i) the number of shares of Common
Stock outstanding immediately before such Pro Rata Repurchase minus the number
of shares of Common Stock repurchased in such Pro Rata Repurchase and (ii) the
Current Market Price of the Common Stock as of the day immediately
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preceding the first public announcement by the Company of the intent to
effect such Pro Rata Repurchase.
(f) FRACTIONAL SHARES. No fractional shares of Common
Stock or scrip shall be issued to any Warrantholder in connection with the
exercise of this Warrant. Instead of any fractional shares of Common Stock that
would otherwise be issuable to such Warrantholder, the Company will pay to such
Warrantholder a cash adjustment in respect of such fractional interest in an
amount equal to that fractional interest of the then Current Market Price per
share of Common Stock.
(g) CARRYOVER. Notwithstanding any other provision of this
Section 6.1, no adjustment shall be made to the number of shares of Common Stock
to be delivered to the Warrantholder (or to the Exercise Price) if such
adjustment represents less than .05% of the number of shares to be so delivered,
but any lesser adjustment shall be carried forward and shall be made at the time
and together with the next subsequent adjustment that together with any
adjustments so carried forward shall amount to .05% or more of the number of
shares to be so delivered.
(h) EXERCISE PRICE ADJUSTMENT. Whenever the number of
Warrant Shares purchasable upon the exercise of the Warrant is adjusted as
provided pursuant to this Section 6.1, the Exercise Price per share payable upon
the exercise of this Warrant shall be adjusted by multiplying such Exercise
Price immediately prior to such adjustment by a fraction, of which the numerator
shall be the number of Warrant Shares purchasable upon the exercise of the
Warrant immediately prior to such adjustment, and of which the denominator shall
be the number of Warrant Shares purchasable immediately thereafter; PROVIDED,
HOWEVER, that the Exercise Price for each Warrant Share shall in no event be
less than the par value of such Warrant Share.
(i) MULTIPLE ADJUSTMENTS. If any action or transaction
would require adjustment of the number of shares of Common Stock to be delivered
to the Warrantholder upon exercise of this Warrant pursuant to more than one
paragraph of this Section 6.1, only one adjustment shall be made and each such
adjustment shall be the amount of adjustment that has the highest absolute
value.
6.2 NOTICE OF ADJUSTMENT. Whenever the number of Warrant Shares
or the Exercise Price of such Warrant Shares is adjusted, as herein provided,
the Company shall promptly mail by first class mail, postage prepaid, to the
Warrantholder, notice of such adjustment or adjustments and a certificate of a
firm of independent public accountants of recognized national standing selected
by the Board of Directors of the Company (who shall be appointed at the
Company's expense and who may be the independent public accountants regularly
employed by the Company) setting forth the number of Warrant Shares and the
Exercise Price of such Warrant Shares after such
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adjustment, setting forth a brief statement of the facts requiring such
adjustment and setting forth the computation by which such adjustment was
made.
7. PUT RIGHTS. The Warrantholder shall have the following Put
Rights:
(a) At the earlier of (i) the fifth anniversary of the date
hereof and (ii) a Change of Control, the Warrantholder may notify the Company in
writing (the "PUT NOTICE") of the Warrantholder's desire to cause the Company to
repurchase, in the case of clause (i) above, all (but not less than all) of the
Warrant Shares (issued or represented by the Warrant) at a price per share equal
to the Repurchase Price (the "Five-Year Put"), or, in the case of clause (ii)
above, the Warrant at the Change of Control Repurchase Price (the "Change of
Control Put").
(b) If the Company receives a Put Notice pursuant to
Section 7(a), it shall deliver to the Warrantholder, by first class mail,
postage prepaid, mailed as soon as practicable and if possible within thirty
(30) days of the receipt by the Company of the Put Notice, a notice stating: (i)
the date as of which such repurchase shall occur (which date (the "Put Closing")
shall be not less than ten (10) nor more than thirty (30) days following the
date of such notice, but in any event prior to the Expiration Date); (ii) in the
case of a Five-Year Put, the number of Warrant Shares (issued or represented by
this Warrant) to be purchased from the Warrantholder and the Repurchase Price
(which shall be calculated as of the date of the Put Notice) or, in the case of
a Change of Control Put, the Change of Control Repurchase Price; and (iii) the
place or places where certificate or certificates representing this Warrant or
Warrant Shares are to be surrendered for payment; PROVIDED, HOWEVER, that the
Company shall have no obligation to send the notice set forth above or to
repurchase the Warrants and Warrant Shares following the exercise of the Five
Year Put (and the provisions of paragraph (c) below shall not be applicable to
any failure by the Company to repurchase the Warrants and the Warrant Shares
following the exercise of the Five Year Put), unless the holders of not less
than a majority of the shares of Common Stock issued or issuable upon exercise
of the Investor Warrants (the "Investor Warrant Shares") shall also have
exercised the "five year put" provided for in the Investor Warrants.
(c) With respect to Warrants and Warrant Shares properly
tendered for repurchase, if the Company fails to pay the Repurchase Price or the
Change of Control Repurchase Price on the date fixed for repurchase, the
Corporation shall also pay interest thereon at the rate of 12% per annum,
compounded on a quarterly basis, until such time as such satisfaction shall have
occurred.
(d) At the Put Closing, the Warrantholder shall deliver to
the Company the certificate or certificates representing the Warrantholder's
Warrant or Warrant Shares and the Company shall deliver to the Warrantholder an
amount equal
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to, in the case of a Five-Year Put, the product obtained by multiplying (i)
the number of such Warrant Shares (issued or represented by this Warrant) by
(ii) the Repurchase Price or, in the case of a Change of Control Put, the
Change of Control Repurchase Price, by cashier's or certified check payable
to the Warrantholder or by wire transfer of immediately available funds to an
account designated by the Warrantholder.
(e) The Company shall not (and shall not permit any
Affiliate of the Company to) enter into any contract or other consensual
arrangement that by its terms restricts the Company's ability to honor the Put.
8. AMENDMENTS. Any provision of this Warrant may be amended and the
observance thereof waived only with the written consent of the Company and the
Warrantholder.
9. NOTICES OF CORPORATE ACTION. So long as this Warrant has not
been exercised in full, in the event of:
(a) any consolidation or merger involving the Company and
any other party or any transfer of all or substantially all the assets of the
Company to any other party, or
(b) any voluntary or involuntary dissolution, liquidation
or winding-up of the Company,
the Company will mail, by first class mail, postage prepaid, to the
Warrantholder a notice specifying (i) the date or expected date on which any
such record is to be taken for the purpose of a dividend, distribution or right
and the amount and character of any such dividend, distribution or right and
(ii) the date or expected date on which a reorganization, reclassification,
recapitalization, consolidation, merger, transfer, dissolution, liquidation or
winding-up is to take place and the time, if any such time is to be fixed, as of
which the holders of record of Common Stock (or other securities) shall be
entitled to exchange their shares of Common Stock (or other securities) for the
securities or other property deliverable upon such reorganization,
reclassification, recapitalization, consolidation, merger, transfer,
dissolution, liquidation or winding-up. Such notice shall be delivered as soon
as practicable and if possible at least 20 days prior to the date therein
specified in the case of any date referred to in the foregoing subdivisions (i)
and (ii). Failure to give the notice specified hereunder shall have no effect
on the status or effectiveness of the action to which the required notice
relates.
10. DEFINITIONS.
As used herein, unless the context otherwise requires, the following
terms have the following meanings:
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"Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly, controls, is controlled by, or is under common control
with such first Person. For the purpose of this definition, "control" shall
mean, as to any Person, the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities, by contract or otherwise.
"Affiliate Warrants" mean the warrants issued in connection with the
issue and sale by the Company of shares of its Series C Preferred Stock on the
Closing Date (as defined in the Investment Agreement).
"Business Day" means any day other than a Saturday, Sunday or a day on
which national banks are authorized by law or executive order to close in the
State of New York.
"Change of Control" shall mean (i) the direct or indirect sale,
lease, exchange or other transfer of all or substantially all of the assets of
the Company to any Person or entity or group of Persons or entities acting in
concert as a partnership or other group within the meaning of Rule 13d-5 under
the Exchange Act (a "GROUP OF PERSONS"), (ii) the merger or consolidation of the
Company with or into another corporation with the effect that the then existing
stockholders of the Company hold less than 50% of the combined voting power of
the then outstanding securities of the surviving corporation of such merger or
the corporation resulting from such consolidation ordinarily (and apart from
rights accruing under special circumstances) having the right to vote in the
election of directors, (iii) the replacement of a majority of the Board of
Directors of the Company, over a two-year period, from the directors who
constituted the Board of Directors at the beginning of such period, and such
replacement shall not have been approved by the Board of Directors of the
Company (or its replacements approved by the Board of Directors of the Company)
as constituted at the beginning of such period, (iv) a Person or Group of
Persons (other than the Investors and their Affiliates, employees, partners or
members) shall, as a result of a tender or exchange offer, open market
purchases, privately negotiated purchases or otherwise, have become the
beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of
securities of the Company representing 49% or more of the combined voting power
of the then outstanding securities of the Company ordinarily (and apart from
rights accruing under special circumstances) having the right to vote in the
election of directors. Notwithstanding the foregoing, no Change in Control shall
be deemed to have occurred (a) upon the acquisition of any shares of Common
Stock of the Company pursuant to the exercise of the Investor Warrants, (b) upon
the exercise of any of the rights and privileges granted to each of the
Investors pursuant to Section 6.2.5 of the Investment Agreement, (c) upon the
exercise of any rights and privileges granted to the holders of the Series B
Preferred Stock pursuant to the Certification of the Powers, Designations,
Preferences and Rights of the Series B Preferred Stock or (d) otherwise as a
result of the
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equity ownership or designation of directors by the Investors or their
Affiliates, employees, partners or members.
"Change of Control Repurchase Price" means (i) if any Investor
Warrants are then outstanding, an amount in cash, on a per Warrant Share basis,
equal to the "Change of Control Repurchase Price" (on a per Investor Warrant
Share basis) for the Investor Warrants, or (ii) if no Investor Warrants are then
outstanding, an amount of cash equal to the fair market value of this Warrant
immediately prior to the announcement of a Change of Control, to be determined
by an Independent Financial Expert selected by the Company and a majority in
interest of the Warrant Shares, giving due consideration to such factors as the
financial condition and prospects of the Company, the remaining unexpired term
of this Warrant and the market price of the Common Stock of the Company after
announcement of such Change of Control.
"Closing Price" of the Common Stock as of any day, means (a) the last
reported sale price of such stock (regular way) or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, in either
case as reported on the principal national securities exchange on which the
Common Stock is listed or admitted to trading or (b) if the Common Stock is not
listed or admitted to trading on any national securities exchange, the last
reported sale price or, in case no such sale takes place on such day, the
average of the highest reported bid and lowest reported asked quotation for the
Common Stock, in either case reported on the National Association of Securities
Dealers, Inc. Automated Quotation System ("NASDAQ"), or a similar service if
NASDAQ is no longer reporting such information.
"Common Stock" has the meaning specified on the cover of this Warrant.
"Company" has the meaning specified on the cover of this Warrant.
"Current Market Price" means, with respect to each share of Common
Stock as of any date, the average of the daily Closing Prices per share of
Common Stock for the 10 consecutive trading days commencing 15 trading days
prior to such date; provided that if on any such date the shares of Common Stock
are not listed or admitted for trading on any national securities exchange or
quoted by NASDAQ or a similar service, the Current Market Price for a share of
Common Stock shall be the fair market value of such share as determined in good
faith by the Board of Directors of the Company; provided that if the holders of
a majority in interest of the Investor Warrant Shares disagree with the Board of
Director's determination of fair market value for purposes of the Investor
Warrants, the fair market value for purposes of this Warrant shall be the same
as the fair market value determined for purposes of the Investor Warrants.
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"Exercise Form" means an Exercise Form in the form annexed hereto as
Exhibit A.
"Expiration Date" has the meaning specified on the cover of this
Warrant.
"Harnick Warrant" means the warrant to purchase 50,000 shares of
Common Stock issued to Carl D. Harnick at the closing of the Investment
Agreement.
"Independent Financial Expert" means an independent nationally
recognized investment banking firm.
"Investment Agreement" means the Investment Agreement, dated as of
October 12, 1997, as amended and as hereafter amended, among the Investors and
the Company.
"Investors" means MAC Music LLC, a Delaware limited liability company,
and SK-Palladin Partners, LP, a Delaware limited partnership.
"Investor Warrants" mean the warrants issued to the Investors pursuant
to the Investment Agreement.
"Investor Warrant Shares" mean the shares of Common Stock issued or
issuable upon exercise of the Investor Warrants.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, limited liability company,
unincorporated organization, estate, other entity or government or any agency or
political subdivision thereof.
"Pro Rata Repurchase" means any purchase of shares of Common Stock by
the Company or by any of its subsidiaries whether for cash, shares of capital
stock of the Company, other securities of the Company, evidences of indebtedness
of the Company or any other Person or any other property (including, without
limitation, shares of capital stock, other securities or evidences of
indebtedness of a subsidiary of the Company), or any combination thereof, which
purchase is subject to Section 13(e) of the Securities Exchange Act of 1934, as
amended, or is made pursuant to an offer made available to all holders of Common
Stock.
"Repurchase Price" means, on any date, the Current Market Price per
share of Common Stock as of such date, less the per share Exercise Price;
PROVIDED, that if at the time of determination of the Repurchase Price, the
Warrantholder shall be entitled to receive any securities or property other than
Common Stock, the Repurchase
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<PAGE>
Price shall include a cash amount per Warrant Share equal to that portion of
the fair value of such securities or property allocable to each Warrant Share.
"Securities Act" has the meaning specified on the cover of this
Warrant.
"Warrantholder" has the meaning specified on the cover of this
Warrant.
"Warrant Shares" has the meaning specified on the cover of this
Warrant; provided, however, that Warrant Shares shall not include shares sold to
the public pursuant to Rule 144 under the Securities Act of 1933, as amended, or
pursuant to an effective registration statement under the Securities Act.
11. MISCELLANEOUS.
11.1 ENTIRE AGREEMENT. This Warrant constitutes the entire
agreement between the Company and the Warrantholder with respect to this
Warrant.
11.2 BINDING EFFECT; BENEFITS. This Warrant shall inure to the
benefit of and shall be binding upon the Company and the Warrantholder and their
respective successors and assigns. Nothing in this Warrant, expressed or
implied, is intended to or shall confer on any person other than the Company and
the Warrantholder, or their respective successors or assigns, any rights,
remedies, obligations or liabilities under or by reason of this Warrant.
11.3 SECTION AND OTHER HEADINGS. The section and other headings
contained in this Warrant are for reference purposes only and shall not be
deemed to be a part of this Warrant or to affect the meaning or interpretation
of this Warrant.
11.4 NOTICES. All notices and other communications required or
permitted hereunder shall be in writing and shall be delivered personally,
telecopied or sent by certified, registered or express mail, postage prepaid.
Any such notice shall be deemed given when so delivered personally, telecopied
or sent by certified, registered or express mail, as follows:
(a) if to the Company, addressed to:
Platinum Entertainment, Inc.
2001 Butterfield Road
Downers Grove, Illinois 60515
Telecopy: (630) 769-0049
Attention: Chief Executive Officer
with a copy to:
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Katten, Muchin & Zavis
525 West Monroe Street, Suite 1600
Chicago, Illinois 60661
Telecopy: (312) 902-1061
Attention: Matthew S. Brown, Esq.
(b) if to the Warrantholder, addressed to:
______________________________________
______________________________________
______________________________________
Telecopy:
Any party may by notice given in accordance with this Section 11.4 designate
another address or person for receipt of notices hereunder.
11.5 SEVERABILITY. Any term or provision of this Warrant which
is invalid or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the terms and provisions of this Warrant or
affecting the validity or enforceability of any of the terms or provisions of
this Warrant in any other jurisdiction.
11.6 GOVERNING LAW. This Warrant shall be deemed to be a
contract made under the laws of the State of Delaware and for all purposes shall
be governed by and construed in accordance with the laws of such State
applicable to such agreements made and to be performed entirely within such
State.
11.7 CERTAIN REMEDIES. The Warrantholder shall be entitled to
an injunction or injunctions to prevent breaches of the provisions of this
Warrant and to enforce specifically the terms and provisions of this Warrant in
any court of the United States or any court of any state having jurisdiction,
this being in addition to any other remedy to which the Warrantholder may be
entitled at law or in equity.
11.8 NO RIGHTS OR LIABILITIES AS STOCKHOLDER. Nothing contained
in this Warrant shall be deemed to confer upon the Warrantholder any rights as a
stockholder of the Company or as imposing any liabilities on the Warrantholder
to purchase any securities whether such liabilities are asserted by the Company
or by creditors or stockholders of the Company or otherwise.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be
signed by its duly authorized officer.
PLATINUM ENTERTAINMENT, INC.
By: /s/ Douglas C. Laux
----------------------------------------
Name: Douglas C. Laux
Title: Chief Operating Officer and
Chief Financial Officer
Dated: April 15, 1999
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<PAGE>
EXHIBIT A
EXERCISE FORM
(To be executed upon exercise of this Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant, to purchase __________ of the Warrant Shares and
[herewith tenders payment for such Warrant Shares to the order of Platinum
Entertainment, Inc. in the amount of $__________] [hereby exercises its
Conversion Right] in accordance with the terms of this Warrant. The undersigned
requests that a certificate for [such Warrant Shares] [that number of Warrant
Shares to which the undersigned is entitled as calculated pursuant to
Section 1.2] be registered in the name of the undersigned and that such
certificates be delivered to the undersigned's address below.
Dated:__________________________
Signature____________________________
____________________________
(Print Name)
____________________________
(Street Address)
____________________________
(City) (State) (Zip Code)
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REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement"), dated as of
April 9, 1999, is among Platinum Entertainment, Inc., a Delaware corporation
(the "COMPANY"), Steven Devick, Andrew Filipowski, and Craig Duchossois
(collectively, the "Series D Purchasers").
WHEREAS, the Company and the Series D Purchasers deem it desirable to
enter into this Agreement in order to induce the Series D Purchasers to purchase
an aggregate of up to 4,200 shares of Series D Preferred Stock, par value $.001
per share (the "SERIES D PREFERRED STOCK") and warrants (the "WARRANTS",
together with the Series D Preferred Stock, the "SECURITIES") for up to an
aggregate of 847,000 shares of common stock of the Company, par value $.001 per
share ("COMMON STOCK"), such securities to be issued and sold to the Series D
Purchasers on Wednesday, April 14, 1999.
In consideration of the mutual promises and covenants herein contained
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as follows:
1. DEFINITIONS.
The terms defined in this Section 1 shall have the following meanings
for all purposes of this Agreement:
"Act" means the Securities Act of 1933, as amended, or any superseding
Federal statute, and the rules and regulations promulgated thereunder, all as
the same shall be in effect from time to time. References to a particular
section of the Securities Act of 1933, as amended, shall include a reference to
the comparable section, if any, of any such superseding Federal statute.
"Business Day" means any day other than a Saturday, Sunday or federal
holiday, and consists of the time period from 12:00 a.m. through 12:00 midnight,
New York City time.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any superseding Federal statute, and the rules and regulations promulgated
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Securities Exchange Act of 1934, as amended, shall
include a reference to the comparable section, if any, of such superseding
Federal statute.
"Investment Agreement" means The Investment Agreement, dated October
12, 1997, as amended, among the Company, MAC Music LLC and SK-Palladin Partners,
LP.
"Investors" means MAC Music LLC together with SK-Palladin Partners,
LP.
<PAGE>
"Investor Warrants" means the warrants initially issued to the
Investors pursuant to the Investment Agreement.
"Person" means any individual, firm, corporation, partnership,
limited liability company or partnership, trust, incorporated or
unincorporated association, joint venture, joint stock company, government
(or an agency or political subdivision thereof) or other entity of any kind,
and shall include any successor (by merger or otherwise) of such entity.
"Registrable Securities" shall mean the shares of Common Stock issued
or issuable upon conversion or exercise of the Securities.
"SEC" means the Securities and Exchange Commission.
"Series B Preferred Stock" means the Series B Convertible Preferred
Stock, par value $.001 per share, initially issued to the Investors pursuant
to the Investment Agreement.
"Series D Preferred Stock" means the Series D Convertible Preferred
Stock, par value $.001 per share, issued to the Series D Purchasers.
"Transfer" means, with respect to any Securities, any sale,
assignment, transfer or disposition by gift or otherwise, including without
limitation, any distribution in liquidation or otherwise by a corporation or
partnership or other Person.
2. SECURITIES SUBJECT TO THIS AGREEMENT.
2.1. REGISTRABLE SECURITIES. Registrable Securities will cease to be
Registrable Securities when such Registrable Securities are sold pursuant to
Rule 144 under the Act or a registration statement covering such Registrable
Securities has been declared effective under the Securities Act by the SEC and
such Registrable Securities have been disposed of pursuant to such effective
registration statement.
2.2. HOLDERS OF REGISTRABLE SECURITIES. A Person is deemed to be a
holder of Registrable Securities whenever such Person owns of record
Registrable Securities, or holds a warrant to purchase, or a security
convertible into or exercisable or exchangeable for, Registrable Securities
whether or not such acquisition or conversion has actually been effected and
disregarding any legal restrictions upon the exercise of such rights. If the
Company receives conflicting instructions, notices or elections from two or
more persons with respect to the same Registrable Securities, the Company may
act upon the basis of the instructions, notice or election received from the
registered owner of such Registrable Securities. Registrable Securities
issuable upon exercise of an option or upon conversion of another security
shall be deemed outstanding.
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<PAGE>
3. PIGGY-BACK REGISTRATION.
3.1. PIGGY-BACK RIGHTS. If the Company proposes to file a
registration statement under the Act with respect to an offering by the
Company for its own account or for the account of any other holder of
registration rights exercising demand registration rights (such other holder
or registration rights being "DEMAND HOLDER") of any class of equity
securities (other than a registration statement on Form S-4 or S-8 or any
successor or other forms not available for registering equity securities for
sale to the public), then the Company shall give written notice of such
proposed filing to each holder of Registrable Securities at least thirty (30)
days before the anticipated filing date, and such notice shall describe in
detail the proposed registration and distribution (including those
jurisdictions where registration under the securities or blue sky laws is
intended) and offer such holders the opportunity to register such number of
Registrable Securities as each such holder may request. The Company shall
use its best efforts (within ten (10) days of the notice provided for in the
preceding sentence) to cause the managing underwriter or underwriters of a
proposed underwritten offering (the "UNDERWRITER") to permit the holders of
Registrable Securities that have requested to participate in the
registration for such offering to include such Registrable Securities in such
offering on the same terms and conditions as the securities of the Company or
the Demand Holder, as the case may be, included therein. Notwithstanding the
foregoing, (x) if in the opinion of the Underwriter the total amount or kind
of securities which the holders of Registrable Securities, the Company and
any other persons or entities intend to include in such offering (the "TOTAL
SECURITIES") is sufficiently large so as to have a material adverse effect on
the distribution of the Total Securities, then the amount or kind of
securities to be offered for the account of such holders of Registrable
Securities and such other persons or entities other than (i) the Company, if
such registration is being filed for the Company's own account, or (ii) the
Demand Holders, if such registration is being made at the demand of a Demand
Holder, shall be reduced pro rata (to zero, if necessary) to the extent
necessary to reduce the Total Securities to the amount recommended by the
Underwriter and (y) holders of Registrable Securities shall have no piggyback
rights in connection with a registration statement filed as a result of the
exercise of a demand registration right by the holders of Series B Preferred
Stock or Investor Warrants (or, in each case, shares of Common Stock issued
or issuable upon exercise thereof) pursuant to the Investment Agreement
unless holders of (x) 66 2/3% of the outstanding shares of Series B Preferred
Stock, if any, and (y) 66 2/3% in interest of the shares of Common Stock
underlying the Investor Warrants consent in writing to the grant of such
piggyback rights.
3.2. EXPENSES. The Company shall bear all Registration Expenses in
connection with any registration pursuant to this Section 3.
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<PAGE>
4. HOLDBACK AGREEMENTS.
4.1. RESTRICTIONS ON PUBLIC SALE BY HOLDERS OF REGISTRABLE SECURITIES.
To the extent not inconsistent with applicable law, each holder of Registrable
Securities participating in such registration agrees not to effect any public
sale or distribution of any Registrable Securities being registered or of any
securities convertible into or exchangeable or exercisable for such Registrable
Securities, including a sale pursuant to Rule 144 under the Securities Act,
during the ten (10) Business Days prior to, and during the ninety (90) days
beginning on, the effective date of such registration statement (except as part
of such registration), if and to the extent requested by the Company in the case
of a non-underwritten public offering or if and to the extent requested by the
Underwriter in the case of an underwritten public offering.
4.2. RESTRICTIONS ON PUBLIC SALE BY THE COMPANY. The Company
agrees not to effect any public sale or distribution of any of its equity
securities, or any securities convertible into or exchangeable or exercisable
for such equity securities (except pursuant to registrations on Form S-4 or
S-8 or any successor or other forms not available for registering equity
securities for sale to the public) during the ten (10) Business Days prior
to, and during the ninety (90) day period beginning on, the later of (i) the
effective date of any registration statement in which the holders of
Registrable Securities are participating and (ii) the commencement of a
public distribution of the Registrable Securities pursuant to such
registration statement.
5. REGISTRATION PROCEDURES.
5.1. OBLIGATIONS OF THE COMPANY. Whenever registration of
Registrable Securities has been requested pursuant to Section 3 of this
Agreement, the Company shall use reasonable efforts to effect the
registration and sale of such Registrable Securities in accordance with the
intended method of distribution thereof, and in connection with any such
request, the Company shall, as soon as reasonably practicable:
(a) prepare and file with the SEC (in any event not later than
thirty (30) business days after receipt of a request to file a registration
statement with respect to Registrable Securities) a registration statement
on any form for which the Company then qualifies which counsel for the
Company shall deem appropriate and which form shall be available for the
sale of such Registrable Securities in accordance with the intended method
of distribution thereof, and use its best efforts to cause such
registration statement to become effective under the Act; provided,
however, that before filing a registration statement or prospectus or any
amendments or supplements thereto, the Company shall (A) provide counsel
selected by the holders of a majority of the Registrable Securities being
registered
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<PAGE>
in such registration ("HOLDERS' COUNSEL") with an opportunity to
participate in the preparation of such registration statement and each
prospectus included therein (and each amendment or supplement thereto) to
be filed with the SEC, which documents shall be subject to the review of
Holders' Counsel, and (B) notify the Holders' Counsel and each seller of
Registrable Securities of any stop order issued or threatened by the SEC
and take all reasonable action required to prevent the entry of such stop
order or to remove it if entered;
(b) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for a period which will terminate when all Registrable
Securities covered by such registration statement have been sold (but not
before the expiration of the ninety (90) day period referred to in
Section 4(3) of the Act and Rule 174 thereunder, if applicable), and comply
with the provisions of the Act with respect to the disposition of all
securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the sellers thereof
set forth in such registration statement;
(c) furnish to each seller of Registrable Securities, prior to
filing a registration statement, copies of such registration statement as
is proposed to be filed, and thereafter such number of copies of such
registration statement, each amendment and supplement thereto (in each case
including all exhibits thereto), the prospectus included in such
registration statement (including each preliminary prospectus) and such
other documents as each such seller may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such
seller;
(d) use reasonable efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of such
jurisdictions as any seller of Registrable Securities requests, and to
continue such qualification in effect in such jurisdiction for as long as
is permissible pursuant to the laws of such jurisdiction, or for as long as
any such seller requests or until all of such Registrable Securities are
sold, whichever is shortest, and do any and all other acts and things which
may be reasonably necessary or advisable to enable any such seller to
consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller; provided, however, that the Company shall
not be required to (A) qualify generally to do business in any jurisdiction
where it would not otherwise be required to qualify but for this Section
5.1(d), (B) subject itself to taxation in any such jurisdiction or (C)
consent to general service of process in any such jurisdiction;
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(e) use reasonable efforts to cause the Registrable Securities
covered by such registration statement to be registered with or approved by
such other governmental agencies or authorities as may be necessary by
virtue of the business and operations of the Company to enable the seller
or sellers of Registrable Securities to consummate the disposition of such
Registrable Securities;
(f) notify each seller of Registrable Securities at any time
when a prospectus relating thereto is required to be delivered under the
Act, upon discovery that, or upon the happening of any event as a result of
which, the prospectus included in such registration statement contains an
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances under which they were made,
and the Company shall promptly prepare a supplement or amendment to such
prospectus and furnish to each seller a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so
that, after delivery to the purchasers of such Registrable Securities, such
prospectus shall not contain an untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances
under which they were made;
(g) enter into and perform customary agreements (including an
underwriting agreement in customary form with the Underwriter, if any,
selected as provided in Section 3) and take such other actions as are
reasonably required in order to facilitate the disposition of such
Registrable Securities;
(h) make available for inspection by any seller of Registrable
Securities, any managing underwriter participating in any disposition
pursuant to such registration statement, Holders' Counsel and any attorney,
accountant or other agent retained by any such seller or any managing
underwriter (each, an "INSPECTOR" and collectively, the "INSPECTORS"), all
financial and other records, pertinent corporate documents and properties
of the Company and its subsidiaries (collectively, the "RECORDS") as shall
be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's and its subsidiaries' officers,
directors and employees, and the independent public accountants of the
Company, to supply all information reasonably requested by any such
Inspector in connection with such registration statement;
(i) if such sale is pursuant to an underwritten offering, obtain
a "cold comfort" letter from the Company's independent public accountants
in customary form and covering such matters of the type customarily covered
by
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"cold comfort" letters as Holders' Counsel or the managing underwriter
reasonably requests;
(j) furnish, at the request of any seller of Registrable
Securities on the date such securities are delivered to the underwriters
for sale pursuant to such registration or, if such securities are not being
sold through underwriters, on the date the registration statement with
respect to such securities becomes effective, an opinion, dated such date,
of counsel representing the Company for the purposes of such registration,
addressed to the underwriters, if any, and to the seller making such
request, covering such legal matters with respect to the registration in
respect of which such opinion is being given as such seller may reasonably
request and are customarily included in such opinions;
(k) otherwise use reasonable efforts to comply with all
applicable rules and regulations of the SEC, and make available to its
security holders, as soon as reasonably practicable but no later than
fifteen (15) months after the effective date of the registration statement,
an earnings statement covering a period of twelve (12) months beginning
after the effective date of the registration statement, in a manner which
satisfies the provisions of Section 11(a) of the Act;
(l) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are
then listed (including NASDAQ), provided, that the applicable listing
requirements are satisfied;
(m) provide officers' certificates and other customary closing
documents;
(n) cooperate with each seller of Registrable Securities and
each underwriter participating in the disposition of such Registrable
Securities and their respective counsel in connection with any filings
required to be made with the National Association of Securities Dealers,
Inc. (the "NASD"); and
(o) use reasonable efforts to take all other steps necessary to
effect the registration of the Registrable Securities contemplated hereby.
5.2. NOTICE TO DISCONTINUE. Each holder of Registrable Securities
agrees that, upon receipt of any notice from the Company of the happening of
any event of the kind described in Section 5.1(f), such holder shall
forthwith discontinue disposition of Registrable Securities pursuant to the
registration statement covering such Registrable Securities until such
holder's receipt of the copies of the supplemented or amended prospectus
contemplated by Section 5.1(f) and, if so directed by the Company, such
holder shall deliver to the Company (at the Company's expense) all copies,
other than
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permanent file copies then in such holder's possession, of the prospectus
covering such Registrable Securities which is current at the time of receipt
of such notice. If the Company shall give any such notice, the Company shall
extend the period during which such registration statement shall be
maintained effective pursuant to this Agreement (including without limitation
the period referred to in Section 5.1(b)) by the number of days during the
period from and including the date of the giving of such notice pursuant to
Section 5.1(f) to and including the date when the holder shall have received
the copies of the supplemented or amended prospectus contemplated by and
meeting the requirements of Section 5.1(f).
6. REGISTRATION EXPENSES. The Company shall pay all expenses (other
than underwriting discounts and commissions) arising from or incident to the
performance of, or compliance with, this Agreement, including without
limitation, (i) SEC, stock exchange, NASDAQ and NASD registration and filing
fees, (ii) all fees and expenses incurred in complying with securities or
blue sky laws (including reasonable fees, charges and disbursements of
counsel in connection with blue sky qualifications of the Registrable
Securities), (iii) all printing, messenger and delivery expenses, (iv) the
fees, charges and disbursements of counsel to the Company and of its
independent public accountants and any other accounting and legal fees,
charges and expenses incurred by the Company (including without limitation
any expenses arising from any special audits incident to or required by any
registration or qualification), and (v) any liability insurance or other
premiums for insurance obtained by the Company and the reasonable fees,
charges and expenses of any special experts retained by the Company in
connection with any piggy-back registration pursuant to the terms of this
Agreement, regardless of whether such registration statement is declared
effective. In connection with each registration hereunder, the Company shall
reimburse the holders of Registrable Securities being registered in such
registration for the reasonable fees, charges and disbursements of not more
than one counsel chosen by the holders of a majority of Registrable
Securities being registered in such registration. All of the expenses
described in this Section 6 are referred to herein as "REGISTRATION EXPENSES."
7. INDEMNIFICATION; CONTRIBUTION.
7.1. INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify, to the fullest extent permitted by law, each holder of Registrable
Securities, its officers, directors, partners, employees, advisors and agents
and each Person who controls (within the meaning of the Act or the Exchange
Act) such holder from and against any and all losses, claims, damages,
liabilities and expenses (including reasonable costs of investigation)
arising out of or based upon any untrue, or alleged untrue, statement of a
material fact contained in any registration statement, prospectus or
preliminary prospectus or notification or offering circular (as amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto) or arising out of or based upon any omission or alleged
omission to state therein a material fact required to
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<PAGE>
be stated therein or necessary to make the statements therein not misleading,
except insofar as the same are caused by or contained in any information
furnished in writing to the Company by such holder expressly for use therein
and provided further that the Company will not be liable to any holder of
Registrable Securities or any person controlling such holder with respect to
any loss, claim, liability, expense, charge or damage arising out of or based
on any untrue statement or alleged untrue statement or omission or alleged
omission to state a material fact in any preliminary prospectus which is
corrected in the prospectus. The Company shall also indemnify any
underwriters of the Registrable Securities, their officers, directors and
employees and each Person who controls such underwriters (within the meaning
of the Act and the Exchange Act) to the same extent as provided above with
respect to the indemnification of the holders of Registrable Securities.
7.2. INDEMNIFICATION BY HOLDERS. In connection with any
registration statement in which a holder of Registrable Securities is
participating pursuant to Section 3 hereof, each such holder shall furnish to
the Company in writing such information with respect to such holder as the
Company may reasonably request or as may be required by law for use in
connection with any such registration statement or prospectus and each
holder, by its participation in such registration, agrees to indemnify, to
the extent permitted by law, the Company, any underwriter retained by the
Company and their respective directors, officers, employees and each Person
who controls the Company or such underwriter (within the meaning of the Act
and the Exchange Act) to the same extent as the foregoing indemnity from the
Company to the holders of Registrable Securities, but only with respect to
any such information furnished in writing by or on behalf of such holder.
7.3. CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any Person entitled
to indemnification hereunder (the "REGISTRATION RIGHTS INDEMNIFIED PARTY")
agrees to give prompt written notice to the indemnifying party (the
"REGISTRATION RIGHTS INDEMNIFYING PARTY") after the receipt by the
Registration Rights Indemnified Party of any written notice of the
commencement of any action, suit, proceeding or investigation or threat
thereof made in writing for which the Registration Rights Indemnified Party
intends to claim indemnification or contribution pursuant to this Agreement;
provided, that the failure so to notify the Registration Rights Indemnifying
Party shall not relieve the Registration Rights Indemnifying Party of any
liability that it may have to the Registration Rights Indemnified Party
hereunder unless, and only to the extent that, such failure results in the
Registration Rights Indemnifying Party's forfeiture of substantial rights or
defenses. If notice of commencement of any such action is given to the
Registration Rights Indemnifying Party as above provided, the Registration
Rights Indemnifying Party shall be entitled to participate in and, to the
extent it may wish, jointly with any other Registration Rights Indemnifying
Party similarly notified, to assume the defense of such action at its own
expense, with counsel chosen by it and satisfactory to such Registration
Rights Indemnified Party. The Registration Rights
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Indemnified Party shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of
such counsel (other than reasonable costs of investigation) shall be paid by
the Registration Rights Indemnified Party unless (i) the Registration Rights
Indemnifying Party agrees to pay the same, (ii) the Registration Rights
Indemnifying Party fails to assume the defense of such action with counsel
satisfactory to the Registration Rights Indemnified Party in its reasonable
judgment, (iii) the named parties to any such action (including any impleaded
parties) have been advised by such counsel that either (A) representation of
such Registration Rights Indemnified Party and the Registration Rights
Indemnifying Party by the same counsel would be inappropriate under
applicable standards of professional conduct or (B) there may be one or more
legal defenses available to the Registration Rights Indemnified Party which
are different from or additional to those available to the Registration
Rights Indemnifying Party. No Registration Rights Indemnifying Party shall,
without the prior written consent of each Registration Rights Indemnified
Party, settle, compromise or consent to the entry of any judgment unless such
settlement, compromise or consent includes an unconditional release of the
Registration Rights Indemnified Party from all liability relating thereto.
In either of such cases the Registration Rights Indemnifying Party shall not
have the right to assume the defense of such action on behalf of such
Registration Rights Indemnified Party. No Registration Rights Indemnifying
Party shall be liable for any settlement entered into without its written
consent, which consent shall not be unreasonably withheld, conditioned or
delayed.
7.4. CONTRIBUTION. If the indemnification provided for in this
Section 7 from the Indemnifying Party is unavailable to a Registration Rights
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 Registration Rights Indemnified Party, shall
contribute to the amount paid or payable by such Registration Rights
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 Registration Rights Indemnifying Party and Registration Rights
Indemnified Party 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 faults of such Registration
Rights Indemnifying Party and Registration Rights Indemnified Party 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 Registration Rights Indemnifying
Party or Registration Rights Indemnified Party, 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, subject to the limitations set forth in Sections 7.1,
7.2 and 7.3, any legal or other
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fees, charges 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 7.4 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 Section 11(f) of the Act) shall be entitled to contribution from
any person.
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8. RULE 144. The Company covenants that it shall file any reports
required to be filed by it under the Exchange Act and the rules and
regulations adopted by the Commission thereunder; and that it shall take such
further action as each holder of Registrable Securities may reasonably
request (including providing any information necessary to comply with Rules
144 and 144A under the Securities Act), all to the extent required from time
to time to enable such holder to sell Registrable Securities without
registration under the Act within the limitation of the exemptions provided
by (a) Rule 144 or Rule 144A under the Act, as such rules may be amended from
time to time, or (b) any similar rules or regulations hereafter adopted by
the SEC. The Company shall, upon the request of any holder of Registrable
Securities, deliver to such holder a written statement as to whether it has
complied with such requirements.
9. MISCELLANEOUS.
9.1. PERFORMANCE; WAIVER. The provisions of this Agreement may be
modified or amended, and waivers and consents to the performance and
observance of the terms hereof may be given by written instrument executed
and delivered by the Company and the Purchasers. The failure at any time to
require performance of any provision hereof shall in no way affect the full
right to require such performance at any time thereafter (unless performance
thereof has been waived in accordance with the terms hereof for all purposes
and at all times by the parties to whom the benefit of such performance is to
be rendered). The waiver by any party to this Agreement of a breach of any
provision hereof shall not be taken or held to be a waiver of any succeeding
breach of such provision of any other provision or as a waiver of the
provision itself.
9.2. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of the
parties hereto. The Company may not assign any of its rights under this
Agreement, except to a successor-in-interest to the Company, without the
written consent of the Affiliates. No Person other than the parties hereto
and their successors and permitted assigns is intended to be a beneficiary of
this Agreement.
9.3. NOTICES. All notices or other communications given or made
hereunder shall be validly given or made if in writing and delivered by
facsimile transmission or in Person at, mailed by registered or certified
mail, return receipt requested, postage prepaid, or sent by a reputable
overnight courier to, the following addresses (and shall be deemed effective
at the time of receipt thereof).
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If to the Company:
Platinum Entertainment, Inc.
20001 Butterfield Road, Suite 1400
Downers Grove, Illinois 60515
Telecopy: (630) 769-0049
Attention: Chief Executive Officer
with a copies to:
Katten, Muchin & Zavis
525 West Monroe Street, Suite 1600
Chicago, Illinois
Telecopy: (312) 902-1061
Attention: Matthew S. Brown, Esq.
If to the holders of Registrable Securities, to the addresses set
forth on on the stock record books of the Company.
or to such other address as the party to whom notice is to be given may have
previously furnished notice in writing to the other in the manner set forth
above.
9.4. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS APPLICABLE TO
AGREEMENTS MADE AND PERFORMED ENTIRELY WITHIN SUCH STATE. EACH OF THE
PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE STATE AND FEDERAL
COURTS IN THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT.
9.5. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, void or unenforceable, each of the Company and the Affiliates
directs that such court interpret and apply the remainder of this Agreement
in the manner that it determines most closely effectuates their intent in
entering into this Agreement, and in doing so particularly take into account
the relative importance of the term, provision, covenant or restriction being
held invalid, void or unenforceable.
9.6. HEADINGS; INTERPRETATION. The index and section headings
herein are for convenience only and shall not affect the construction hereof.
References to sections means sections of this Agreement unless the context
otherwise requires. References to herein or hereof mean this Agreement.
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9.7. ENTIRE AGREEMENT. This Agreement embodies the entire
agreement between the parties relating to the subject matter hereof and
supersedes any and all prior oral or written agreements, representations or
warranties, contracts, understandings, correspondence, conversations, and
memoranda, whether written or oral, between the Company and the Affiliates,
or between or among any agents, representatives, parents, predecessors in
interest or successors in interest, with respect to the subject matter hereof.
9.8. NO THIRD PARTY RIGHTS. Except for the indemnified parties,
this Agreement is intended solely for the benefit of the parties hereto and
is not intended to confer any benefits upon, or create any rights in favor
of, any Person (including, without limitation, any stockholder or debtholder
of the Company) other than the parties hereto.
9.9. REMEDIES FOR BREACH. The parties agree that in addition to
any other rights or remedies which may be available at law or equity, the
parties shall be entitled to seek specific performance of any obligation of
any party hereto.
9.10. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original and both of which together shall
be deemed to be one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
PLATINUM ENTERTAINMENT, INC.
By: /s/ Douglas C. Laux
----------------------------------------------
Name: Douglas C. Laux
Title: Chief Operating Officer and
Chief Financial Officer
/s/ Steven D. Devick
--------------------------------------------
Steven D. Devick
/s/ Andrew J. Filipowski
--------------------------------------------
Andrew J. Filipowski
/s/ Craig J. Duchossois
--------------------------------------------
Craig J. Duchossois
14
