EXHIBIT 1
14024/034/AGT/key3hold.ed
CONFORMED COPY
SECURITYHOLDERS AGREEMENT
dated as of
August 18, 2000
among
KEY3MEDIA GROUP, INC.
and
THE SECURITYHOLDERS LISTED
ON THE SIGNATURE PAGES HEREOF
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TABLE OF CONTENTS
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PAGE
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions.....................................................1
ARTICLE 2
CORPORATE GOVERNANCE AND RESTRICTIONS ON TRANSFER
SECTION 2.01. Composition of the Board........................................4
SECTION 2.02. Removal.........................................................5
SECTION 2.03. Vacancies.......................................................5
SECTION 2.04. Meetings........................................................5
SECTION 2.05. Conflicting Charter or Bylaw Provisions.........................5
SECTION 2.06. Termination.....................................................6
ARTICLE 3
TRANSFER RESTRICTIONS
SECTION 3.01. Transfer by Holders.............................................6
SECTION 3.02. Restrictive Legends.............................................7
SECTION 3.03. Rights of First Offer...........................................7
ARTICLE 4
REGISTRATION RIGHTS
SECTION 4.01. Demand Registration.............................................8
SECTION 4.02. Piggyback Registration.........................................10
SECTION 4.03. Reduction of Offering..........................................10
SECTION 4.04. Registration Procedures........................................11
SECTION 4.05. Registration Expenses..........................................14
SECTION 4.06. Indemnification by the Issuer..................................14
SECTION 4.07. Indemnification by Selling Holders.............................14
SECTION 4.08. Conduct of Indemnification Proceedings.........................15
SECTION 4.09. Contribution...................................................16
SECTION 4.10. Participation in Underwritten Registrations....................18
SECTION 4.11. Rule 144.......................................................18
SECTION 4.12. Holdback Agreements............................................18
SECTION 4.13. Transfer of Registration Rights................................19
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PAGE
ARTICLE 5
MISCELLANEOUS
SECTION 5.01. Notices........................................................19
SECTION 5.02. Amendments; Waivers............................................19
SECTION 5.03. Termination....................................................20
SECTION 5.04. Successors, Assigns, Transferees...............................20
SECTION 5.05. Headings.......................................................20
SECTION 5.06. No Inconsistent Agreements.....................................20
SECTION 5.07. Severability...................................................20
SECTION 5.08. Recapitalization, Etc..........................................21
SECTION 5.09. Other Agreements...............................................21
SECTION 5.10. New York Law...................................................21
SECTION 5.11. Counterparts...................................................21
SECTION 5.12. Entire Agreement...............................................21
EXHIBIT A - Form of Opinion to be Delivered in Connection with Certain
Transfers
EXHIBIT B - Form of SOFTBANK Registration Rights Agreement
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SECURITYHOLDERS AGREEMENT
SECURITYHOLDERS AGREEMENT dated as of August 18, 2000 among KEY3MEDIA
GROUP, INC., a Delaware corporation (with its successors, the "Issuer"), and
the securityholders listed on the signature pages hereof (the "Holders").
WHEREAS, the Issuer has entered into a Securities Purchase Agreement
with the initial Holders hereunder dated as of August 4, 2000 pursuant to which
each such Holder has agreed to purchase the Securities (as defined below) in
accordance with the terms and conditions thereof; and
WHEREAS, the parties hereto desire to provide for certain rights and
obligations relating to their ownership interests in the Issuer and certain
matters relating to the conduct of the business and the affairs of the Issuer.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. (a) The following terms, as used herein,
have the following meanings:
"Affiliate" of any Person means any other Person directly or
indirectly controlling, controlled by or under common control with such Person.
For the pur poses of this definition, "control" when used with respect to any
Person, means the possession, directly or indirectly, of 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; and the
terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Board" means the Board of Directors of the Issuer.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in the City of New York are authorized by law to close.
"Commission" means the Securities and Exchange Commission.
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"Common Shares" means shares of voting common stock, par value $0.01
per share, of the Issuer.
"Debentures" means the Zero Coupon Senior Debentures due May 18, 2008
of the Issuer issued pursuant to the Securities Purchase Agreement, as amended
from time to time.
"Duly Endorsed" means duly endorsed in blank by the Person or Persons
in whose name a certificate is registered or accompanied by duly executed stock
powers with the signature(s) thereon guaranteed by a commercial bank or trust
company or a member of a national securities exchange or of the National
Association of Securities Dealers, Inc.
"Equity Securities" means the Warrants and the Common Shares
(including the Warrant Shares).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Agreement, the Issuer shall be deemed to own subject
to a Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capitalized lease or
other title retention agreement relating to such asset.
"Liquidity Event" has the meaning set forth in the Warrants.
"Person" means an individual, partnership, corporation, trust, joint
stock company, association, joint venture, or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"Registrable Securities" means the Warrant Shares; provided, that such
securities shall cease to be Registrable Securities when (i) a registration
statement relating to such securities shall have been declared effective by the
Commission and such securities shall have been disposed of pursuant to such
effective registration statement or (ii) such securities have been disposed of
pursuant to Rule 144 or may be disposed of pursuant to Rule 144(k) or, in
either case, any comparable successor rule or regulation.
"Registration Expenses" means all (i) registration and filing fees,
(ii) fees and expenses of compliance with securities or blue sky laws
(including reasonable fees and disbursements of a qualified independent
underwriter, if any, counsel in connection therewith and the reasonable fees
and disbursements of counsel in
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connection with blue sky qualifications of the Registrable Securities), (iii)
printing expenses, (iv) internal expenses of the Issuer (including, without
limitation, all salaries and expenses of officers and employees performing
legal or accounting duties), (v) fees and disbursements of counsel for the
Issuer, (vi) customary fees and expenses for independent certified public
accountants retained by the Issuer (including the expenses of any comfort
letters or costs associated with the delivery by independent certified public
accountants of a comfort letter or comfort letters), (vii) fees and expenses of
any special experts retained by the Issuer in connection with such
registration, (viii) fees and expenses of listing the Registrable Securities on
a securities exchange or on the NASDAQ National Market System, (ix) rating
agency fees, and (x) out-of-pocket expenses of the Issuer.
"Rule 144" means Rule 144 under the Securities Act, as such rule may
be amended from time to time.
"Securities" means the Debentures and the Warrants.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Purchase Agreement" means the Securities Purchase
Agreement dated as of August 4, 2000 among the Issuer and the Purchasers, as
amended from time to time; provided that, for purposes of this Agreement, any
such amendment shall be effective only if consented to by the parties hereto.
"Stockholder" means each holder of Common Stock party to this
Agreement from time to time.
"Subject Securities" means the Equity Securities and the Debentures.
"Subsidiary" means, with respect to any Person, any corporation or
other entity of which a majority of the capital stock or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are at the time
directly or indirectly owned by such Person.
"Third Party" means a prospective purchaser of Warrants from a Holder
in an arm's-length transaction where such purchaser is not the Issuer, an
Affiliate of the Issuer or an Affiliate of such Holder.
"Underwriter" means a securities dealer who purchases any Registrable
Securities as a principal in connection with a distribution of such Registrable
Securities and not as part of such dealer's market-making activities.
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"Warrant Shares" means the Common Shares issued, or to be issued, upon
exercise of the Warrants.
"Warrants" means the warrants to purchase Common Shares issued to the
Purchasers pursuant to the Securities Purchase Agreement.
(b) Each of the following terms is defined in the Section set forth
opposite each term:
Term Section
---- -------
Demand Registrant 4.01
Demand Registration 4.01
Indemnified Party 4.08
Indemnifying Party 4.08
Offer Notice 3.03
Offer Period 3.03
Payout Date 2.06
Piggyback Registration 4.02
Princes Gate 2.01
Princes Gate Nominee 2.01
Proposed Sale Price 3.03
Replacement Princes Gate Nominee 2.03
Registration Request 4.01
Subject Warrants 3.03
Transfer 3.01
Transferor 3.03
Transfer Notice 3.03
Warrant Offer 3.03
ARTICLE 2
CORPORATE GOVERNANCE AND RESTRICTIONS ON TRANSFER
SECTION 2.01. Composition of the Board. (a) The Board shall consist
initially of 10 directors, one of whom (the "Princes Gate Nominee") shall be
designated by PG Investors III, Inc. ("Princes Gate").
(b) Each Stockholder entitled to vote for the election of directors
to the Board agrees that it will vote its Common Shares or execute written
consents, as the case may be, and take all other necessary action (including
causing the Issuer to call a special meeting of stockholders) in order to
ensure that the composition of the Board is as set forth in this Section 2.01.
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(c) The Issuer agrees that it will support the Princes Gate Nominee
for election to the Board.
SECTION 2.02. Removal. Each Stockholder agrees that if, at any time,
it is then entitled to vote for the removal of directors of the Issuer, it will
not vote any of its Common Shares in favor of the removal of the director that
is the Princes Gate Nominee, and the Issuer agrees that it will not support the
removal of such director, unless such removal shall be for cause or Princes
Gate shall have consented to such removal in writing.
SECTION 2.03. Vacancies. If, as a result of death, disability,
retirement, resignation, removal (with or without cause) or otherwise, the
director that is the Princes Gate Nominee shall cease to be a director:
(a) Princes Gate may designate another individual (the "Replacement
Princes Gate Nominee") to fill such capacity and serve as a director of the
Issuer; and
(b) each Stockholder then entitled to vote for the election of the
Replacement Princes Gate Nominee as a director of the Issuer agrees that it
will vote its Common Shares, or execute a written consent, as the case may be,
in order to ensure that the Replacement Princes Gate Nominee is elected to the
Board; and
(c) the Issuer agrees that it will support the Replacement Princes
Gate Nominee for election to the Board.
SECTION 2.04. Meetings. The Board shall hold a regularly scheduled
meeting at least once every fiscal quarter.
SECTION 2.05. Conflicting Charter or Bylaw Provisions. Each
Stockholder shall vote its Common Shares or execute written consents, as the
case may be, and take all other actions necessary, to ensure that the Issuer's
Charter and Bylaws do not at any time conflict with any provision of this
Agreement.
SECTION 2.06. Termination. (a) The rights and obligations of each
Stockholder and of Princes Gate under this Article 2 (other than Section
2.06(b)) shall terminate on the first date (the "Payout Date") on which no
Debentures shall be held by any Holders listed on the signature pages hereof or
any of their respective Affiliates.
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(b) On and after the Payout Date, Princes Gate agrees to cause the
removal or resignation of the director that is serving as the Princes Gate
Nominee on the Payout Date, and each Stockholder agrees to vote all of its
Common Shares on or after the Payout Date in favor for the removal of such
director.
ARTICLE 3
TRANSFER RESTRICTIONS
SECTION 3.01. Transfer by Holders. (a) Each Holder understands and
agrees that the Securities purchased by such Holder pursuant to the Securities
Purchase Agreement and the Warrant Shares have not been registered under the
Securities Act and are restricted securities. Each Holder agrees that it may
transfer, sell, assign, or otherwise dispose of ("Transfer") its Subject
Securities, in whole or in part, only subject to compliance with all applicable
securities laws and the other provisions of this Agreement; provided that with
respect to any Transfer (other than in a Transfer (x) pursuant to a registered
public offering under the Securities Act or (y) in compliance with Rule 144),
the Holder shall give the Issuer at least two Business Days prior notice of the
proposed transfer and the transferee shall have executed and delivered (i) to
each other party hereto an instrument confirming that such transferee (1)
agrees to be bound by the terms of this Agreement applicable to the transferor
(whereupon such transferee shall become a Holder for purposes of this
Agreement), (2) is an "Accredited Investor" as such term is defined in
Regulation D under the Securities Act, and (3) is acquiring the relevant
Subject Securities for its own account and without a view to the resale or
distribution of such Subject Securities or any interest therein other than in a
transaction exempt from registration under the Securities Act (subject to the
rights such transferee will acquire pursuant to Article 4 of this Agreement
upon becoming a Holder for purposes of this Agreement) and (ii) at the request
of the Issuer, to the Issuer and the transferor, an opinion of counsel (which
may be counsel to the Holder or the transferee) substantially in the form set
forth in Exhibit A* or in such other form as shall be reasonably satisfactory
to the Issuer.
(b) Any attempt to transfer any Subject Securities not in compliance
with this Agreement shall be null and void and the Issuer shall not, and shall
cause any transfer agent not to, give any effect in the Issuer's stock records
to such attempted transfer. In furtherance of the foregoing, the Issuer shall
be entitled to give a stop order to any transfer agent with respect to any such
attempted transfer.
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* Currently being prepared and reviewed internally by Davis Polk
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SECTION 3.02. Restrictive Legends. (a) Each certificate for Subject
Securities issued to any Holder or to a subsequent transferee shall (unless
otherwise permitted by the provisions of Section 3.02(b)) include a legend in
substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OR FOREIGN
JURISDICTION AND MAY NOT BE OFFERED OR SOLD EXCEPT IN COMPLIANCE
THEREWITH. THIS SECURITY ALSO IS SUBJECT TO ADDITIONAL RESTRICTIONS,
INCLUDING RESTRICTIONS ON TRANSFER, AS SET FORTH IN THE
SECURITYHOLDERS AGREEMENT, DATED AS OF AUGUST 18, 2000 A COPY OF WHICH
MAY BE OBTAINED FROM KEY3MEDIA GROUP, INC.
(b) If any Subject Securities (x) have been disposed of in a
registered public offering under the Securities Act or (y) may be disposed of
pursuant to Rule 144(k) or (z) have been disposed of pursuant to Rule 144, the
Issuer shall, upon the written request of the holder thereof, issue to such
holder a new certificate evidencing such Subject Securities without the legend
required by Section 3.02(a) endorsed thereon, and the Issuer shall be obligated
to issue such new certificate.
SECTION 3.03. Rights of First Offer. (a) If any Holder desires to
transfer any Warrants to any Third Party as permitted by Section 3.02, such
Holder (the "Transferor") shall give written notice (a "Transfer Notice") to
the Issuer that such Transferor desires to do so and setting forth the number
of Warrants proposed to be transferred by the Transferor pursuant to such
proposed transfer (the "Subject Warrants"), the consideration per Warrant (the
"Proposed Sale Price") that such Transferor proposes to be paid for such
Warrants (which consideration must consist solely of cash) and any other
material terms sought by such Transferor.
(b) The giving of a Transfer Notice to the Issuer by a Transferor
shall constitute an offer (the "Warrant Offer") by such Transferor to sell to
the Issuer for cash on the terms set forth in the Transfer Notice the Subject
Warrants at a purchase price per Warrant equal to the Proposed Sale Price. The
Issuer shall have a 5-day period (the "Offer Period") (calculated from and
including the day on which the Issuer receives the relevant Transfer Notice) in
which to accept the Warrant Offer as to all of the Subject Warrants by giving a
written notice of acceptance to such Transferor prior to the expiration of such
Offer Period. If the Issuer fails to notify such Transferor prior to the
expiration of such Offer Period, the Issuer will be deemed to have declined
such Warrant Offer.
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(c) If the Issuer does not elect to purchase all of the Subject
Warrants pursuant to a Warrant Offer, the relevant Transferor shall not be
required to sell any Subject Warrants with respect to such Warrant Offer.
(d) If the Issuer elects to purchase all of the Subject Warrant
pursuant to any Warrant Offer, the Issuer shall purchase and pay in immediately
available funds for such Subject Warrants on the fifth day on which the Issuer
shall have notified the relevant Transferor of acceptance of its Warrant Offer
provided that if the purchase by the Issuer is subject to regulatory approval,
the five day period in which it may be consummated shall be extended until the
expiration of five business days after all such approvals shall have been
received.
(e) Upon rejection (including deemed rejection) of any Warrant Offer,
the relevant Transferor shall have a 120-day period (calculated from and
including the day on which such Warrant Offer is rejected (or deemed to be
rejected)) during which to effect a transfer of any or all of the Subject
Warrants on more favorable (as to the Transferor) terms and conditions than
those set forth in the relevant Offer Notice; provided that if the transfer is
subject to regulatory approval, the 120-day period in which it may be
consummated shall be extended until the expiration of five business days after
all such approvals shall have been received. If such Transferor does not
consummate the sale of the Subject Warrants subject to the Warrant Offer in
accordance with the foregoing time limitations, such Transferor may not sell
any Warrants in accordance with Section 3.01 without repeating the foregoing
procedures.
ARTICLE 4
REGISTRATION RIGHTS
SECTION 4.01. Demand Registration. (a) Request for Registration. For
so long as any Holder owns any Registrable Securities, the holders of a
majority of the outstanding Registrable Securities (determined on a fully
diluted basis assuming the exercise or conversion of all Warrants then
outstanding) (such Holders collectively, a "Demand Registrant") may make a
written request (the "Registration Request") for registration (a "Demand
Registration") under the Securities Act; provided that the Demand Registrant
shall have the right to make a Registration Request pursuant to this Section
4.01(a) at any date (a "test date") only if at such test date the aggregate
number of Registrable Securities requested to be registered pursuant to such
Registration Request is equal to the lesser of (i) Registrable Securities
having a value (based on the average closing sale price per Common Share for
ten consecutive trading days preceding the test date) of not less than
$20,000,000, (ii) a number that is at least 1/5 of the maximum number of
<PAGE>
Warrant Shares that would have been issuable upon exercise of all of the
Warrants on the test date assuming none of the Warrants have been Transferred
or exercised or have expired and the Liquidity Event has not occurred on or
prior to the test date or (iii) all of the Registrable Securities then held by
the Demand Registrant. The Registration Request will specify the number and
class of Registrable Securities proposed to be sold and will also specify the
intended method of disposition thereof. No more than five Registration Requests
may be made by all Holders in the aggregate pursuant to this Section 4.01(a);
provided that (1) the Issuer shall not be obligated to effect more than one
Demand Registration in any six-month period and (2) if the Liquidity Event has
not occurred on or prior to any date set forth below, then effective on and as
of each such date the number of Registration Requests that may be made by all
Holders in the aggregate pursuant to this Section 4.01(a) shall be increased by
one:
Date
---------------
August 18, 2002
August 18, 2003
August 18, 2004
August 18, 2005
(b) Effective Registration. A registration requested pursuant to this
Section 4.01 shall not be deemed to be effected (i) if a registration statement
with respect thereto shall not have become effective, (ii) if, after it has
become effective, such registration is interfered with for any reason by any
stop order, injunction or other order or requirement of the Commission or any
other governmental agency or any court, and the result of such interference is
to prevent the Holder from disposing of the Registrable Securities to be sold
thereunder in accordance with the intended methods of disposition or (iii) if
the conditions to closing specified in the purchase agreement or underwriting
agreement entered into in connection with any underwritten registration shall
not be satisfied or waived with the consent of the Issuer, the Holder or the
lead Underwriter, as applicable.
(c) Underwriting. If the Demand Registrant so elects, the offering of
Registrable Securities pursuant to a Demand Registration shall be in the form
of an underwritten offering. The Demand Registrant shall select the
book-running lead Underwriter and any additional investment bankers and
managers in connection with the offering, each of which shall be reasonably
satisfactory to the Company.
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SECTION 4.02. Piggyback Registration. If the Issuer proposes to file a
registration statement under the Securities Act with respect to an offering of
its equity securities (i) for its own account (other than a registration
statement on Form S-4 or S-8 (or any substitute form that may be adopted by the
Commission)) or (ii) for the account of any holders of its securities, then the
Issuer shall give written notice of such proposed filing to the Holders as soon
as practicable (but in any event not less than 20 days before the anticipated
filing date), and such notice shall offer the Holders the opportunity to
register (a "Piggyback Registration") any or all of the Registrable Securities.
If any Holder wishes to register Registrable Securities of the same class or
series as the Issuer or any other holder of its securities, such registration
shall be on the same terms and conditions as the registration of the Issuer's
or such other holder's securities. If, at any time after giving written notice
of its intention to register any equity securities and prior to the effective
date of a registration statement filed in connection with such registration,
the Issuer or such holder shall determine for any reason not to register such
securities, the Issuer or such holder may, at its election, give written notice
of such determination to each Holder and, thereupon, shall not be obligated to
register any Registrable Securities in connection therewith.
SECTION 4.03. Reduction of Offering. Notwithstanding any provision to
the contrary contained in any other Section herein, if the lead Underwriter of
an offering described in Section 4.01 or 4.02 delivers written notice to the
Issuer that the offering price of the securities proposed to be included in
such offering would be materially and adversely affected by inclusion of all
the securities of each class requested to be included, the number of securities
to be registered by each holder shall be reduced to the extent recommended by
such lead Underwriter; provided, that (i) priority in a registration initiated
by Holders pursuant to Section 4.01 shall be (a) first, the securities offered
for the account of such Holders, (b) second, pro rata among any other
securities of the Issuer (if any) requested to be registered by any holder of
securities of the Issuer pursuant to a contractual right of registration and
(c) last, the securities (if any) being registered by the Issuer for its own
account, (ii) priority in a registration initiated pursuant to Section 4.02(i)
hereof shall be (a) first, securities offered for the account of the Issuer,
(b) second, the Common Shares held by the Holders and any other holders of
Common Shares (if any) in each case requested to be registered thereby and (c)
third, pro rata among other securities of the Issuer (if any) requested to be
registered pursuant to a contractual right of registration and (iii) priority
in a registration initiated pursuant to Section 4.02(ii) hereof shall be (a)
first, securities offered for the account of the holders for whose account the
Issuer is effecting such registration, (b) second, pro rata among any other
securities of the Issuer (including without limitation any Registrable
Securities) requested to be registered pursuant to a contractual right of
registration and (c) last, the securities (if any) being registered by the
Issuer for its own account.
<PAGE>
SECTION 4.04. Registration Procedures. Whenever the Issuer is required
to effect the registration of Registrable Securities pursuant to Section 4.01
hereof, the Issuer will use its commercially reasonable efforts to effect the
registration and the sale of such Registrable Securities in accordance with the
intended method of disposition thereof as promptly as practicable, and in
connection with any such Registration Request:
(a) The Issuer will as expeditiously as possible prepare and file
with the Commission a registration statement on any form for which the Issuer
then qualifies or which counsel for the Issuer shall deem appropriate and which
form shall be available for the sale of the Registrable Securities to be
registered thereunder in accordance with the intended method of distribution
thereof, and use its commercially reasonable efforts to cause such filed
registration statement to become and remain effective for a period of 90 days
or such shorter period as necessary to complete the disposition of all
securities covered by such registration statement in accordance with the
intended method or methods of disposition thereof, provided that if the Issuer
shall furnish to the Demand Registrant a certificate signed by either its
Chairman, President, or Vice-President stating that in his good faith judgment
the Demand Registration would materially interfere with any proposed material
acquisition, disposition, financing or other similar transaction involving the
Company, the Issuer shall have a period of not more than 120 days within which
to file (or to delay the effectiveness of) such registration statement measured
from the date of receipt of the Registration Request in accordance with Section
4.01.
(b) The Issuer will, if requested, prior to filing a registration
statement or prospectus or any amendment or supplement thereto, furnish to the
Demand Registrant and each Underwriter, if any, such number of copies of such
registration statement, each amendment and supplement thereto (in each case
including all exhibits thereto and documents incorporated by reference
therein), the prospectus included in such registration statement (including
each preliminary prospectus) and such other documents as the Demand Registrant
or such Under writer may reasonably request in order to facilitate the sale of
the Registrable Securities.
(c) After the filing of the registration statement, the Issuer will
promptly notify the Demand Registrant of any stop order issued or threatened by
the Commission and take all reasonable actions required to prevent the entry of
such stop order or to remove it if entered.
(d) The Issuer will use its commercially reasonable efforts to (i)
register or qualify the Registrable Securities under such other securities or
blue sky laws of such jurisdictions in the United States as the Demand
Registrant reasonably
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requests to keep such registration or qualification in effect for so long as
such registration statement remains in effect, and to take any other action
which may be reasonably necessary or advisable to enable the Demand Registrant
to consummate the disposition in such jurisdictions of the securities owned by
the Demand Registrant and (ii) cause such Registrable Securities 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 Issuer, to
enable the Demand Registrant to consummate the disposition of such Registrable
Securities; provided, that the Issuer will not be required to (i) qualify
generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this paragraph (d), (ii) subject itself to taxation
in any such jurisdiction other than taxation arising with respect to the
registration of securities or (iii) consent to general service of process in
any such jurisdiction.
(e) At any time when a prospectus relating to the sale of Registrable
Securities is required to be delivered under the Securities Act, the Issuer
will immediately notify the Demand Registrant of the occurrence of an event
requiring the preparation of a supplement or amendment to such prospectus so
that, as thereafter delivered to the Holders of such Registrable Securities,
such prospectus will 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, in light of the circumstances under which they were
made, not misleading and promptly make available to the Demand Registrant and
the Underwriters any such supplement or amendment. The Demand Registrant agrees
that, upon receipt of any notice from the Issuer of the happening of any event
of the kind described in the preceding sentence, the Demand Registrant will
forthwith discontinue the offer and sale of Registrable Securities pursuant to
the registration statement covering such Registrable Securities until receipt
of the copies of such supplemented or amended prospectus and, if so directed by
the Issuer, the Demand Registrant will deliver to the Issuer all copies, other
than permanent file copies then in the possession of the Demand Registrant, of
the most recent prospectus covering such Registrable Securities at the time of
receipt of such notice. In the event the Issuer shall give such notice, the
Issuer shall extend the period during which such registration statement shall
be maintained effective as provided in Section 4.04(a) hereof by the number of
days during the period from and including the date of the giving of such notice
to the date when the Issuer shall make available to the Demand Registrant such
supplemented or amended prospectus.
(f) The Issuer will enter into customary agreements (including an
underwriting agreement in customary form) and take such other actions as are
reasonably required in order to expedite or facilitate the disposition of such
Registrable Securities.
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(g) The Issuer will furnish to the Demand Registrant and to each
Underwriter, if any, a signed counterpart, addressed to the Demand Registrant
or such Underwriter, of (i) an opinion or opinions of counsel to the Issuer and
(ii) a comfort letter or comfort letters from the Issuer's independent public
accountants, each in customary form and covering such matters as are
customarily covered by opinions and comfort letters, as the Demand Registrant
or the lead Underwriter therefor reasonably requests.
(h) The Issuer will otherwise use its commercially reasonable efforts
to comply with all applicable rules and regulations of the Commission, and make
available to its securityholders, as soon as reasonably practicable, an
earnings statement covering a period of 12 months, beginning within three
months after the effective date of the registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities Act.
(i) The Issuer will provide and cause to be maintained a transfer
agent and registrar for all Registrable Securities covered by such registration
statement from and after a date not later than the effective date of such
registration statement.
(j) The Issuer will use its best efforts (i) to cause all Registrable
Securities covered by such registration statement to be listed on any national
securities exchange (if such Registrable Securities are not already listed),
and on each other securities exchange, on which similar securities issued by
the Issuer are then listed, if the listing of such Registrable Securities is
then permitted under the rules of such exchange; or (ii) to secure the
designation of all such Registrable Securities covered by such registration
statement as a NASDAQ "national market system security" within the meaning of
Rule 11Aa2-1 of the Commission or, failing that, to secure NASDAQ authorization
for such Registrable Securities, in each case if the Registrable Securities so
qualify, and, without limiting the generality of the foregoing, to arrange for
at least two market makers to register as such with respect to such Registrable
Securities with the National Association of Securities Dealers, in the case of
each action referred to in this clause (ii) if requested by the Holder or by
the lead Underwriter.
SECTION 4.05. Registration Expenses. Registration Expenses incurred in
connection with any registration made or requested to be made pursuant to this
Article 4 will be borne by the Issuer, whether or not any such registration
statement becomes effective, to the extent permitted by applicable law.
SECTION 4.06. Indemnification by the Issuer. To the extent permitted
by applicable law, the Issuer agrees to indemnify and hold harmless each
Selling
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Holder, its officers, directors and agents, and each Person, if any, who
controls each such Selling Holder within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages, liabilities and expenses caused by any untrue
statement or alleged untrue statement of a material fact contained in any
registration statement or prospectus relating to the Registrable Securities (as
amended or supplemented if the Issuer shall have furnished any amendments or
supplements thereto) or any preliminary prospectus, or caused by any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in the case of any
prospectus in light of the circumstances in which they were made, not
misleading, except insofar as such losses, claims, damages, liabilities or
expenses are caused by any such untrue statement or omission or alleged untrue
statement or omission based upon information furnished in writing to the Issuer
by or on behalf of any such Selling Holder expressly for use therein. The
Issuer also agrees, to the extent permitted by applicable law, to indemnify any
Underwriters of the Registrable Securities, their officers and directors and
each Person who controls such underwriters on substantially the same basis as
that of the indemnification of the Selling Holders provided in this Section
4.06.
SECTION 4.07. Indemnification by Selling Holders. To the extent
permitted by applicable law, each Selling Holder agrees, severally but not
jointly, to indemnify and hold harmless the Issuer, its officers, directors and
agents and each Person, if any, who controls the Issuer within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act, to
the same extent as the foregoing indemnity from the Issuer to such Selling
Holder, but only with reference to information related to such Selling Holder
furnished in writing by or on behalf of such Selling Holder expressly for use
in any registration statement or prospectus relating to the Registrable
Securities, or any amendment or supplement thereto, or any preliminary
prospectus. Each Selling Holder also agrees, to the extent permitted by
applicable law, to indemnify and hold harmless Underwriters of the Registrable
Securities, their officers and directors and each Person who controls such
Underwriters on substantially the same basis as that of the indemnification of
the Issuer provided in this Section 4.07.
SECTION 4.08. Conduct of Indemnification Proceedings. Promptly after
receipt by any person (the "Indemnified Party") of notice of any demand, claim
or circumstances which would or might give rise to a claim or the commencement
of any action, proceeding or investigation in respect of which indemnity may be
sought pursuant to Section 4.06 or 4.07, such Indemnified Party shall give
notice thereof to the Person against whom such indemnity may be sought (the
"Indemnifying Party"). Notwithstanding the foregoing, the failure so to give
prompt notice to such person will not relieve such Indemnifying Party from
liability, except to the extent such failure or delay prejudices such
Indemnifying
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Party. The Indemnifying Party shall be entitled to participate in the defense
of any third party claim and, subject to the limitations set forth in this
Section 4, shall be entitled to assume, control and appoint lead counsel for
such defense, in each case at its expense. The Indemnifying Party shall not be
entitled to assume or maintain control of the defense of any third party claim
if (i) the third party claim relates to or arises in connection with any
criminal proceeding, action, indictment, allegation or investigation, (ii) to
the extent (but solely to the extent) such third party claim seeks an
injunction or equitable relief against the Indemnified Party or (iii) the
Indemnifying Party has failed or is failing to defend the third party claim and
fails, after written notice from the Indemnified Party, to promptly remedy the
same. If the Indemnifying Party shall assume the control of the defense of any
third party claim in accordance with the provisions of this Section 4, the
Indemnifying Party shall obtain the prior written consent of the Indemnified
Party before entering into any settlement of such third party claim if the
settlement does not expressly and unconditionally release the Indemnified Party
from all liabilities and obligations with respect to such third party claim or
the settlement (i) imposes injunctive or other equitable relief against the
Indemnified Party or (ii) includes an admission of any criminal violation,
gross negligence or willful misconduct on the part of the Indemnified Party. If
the Indemnified Party reasonably believes that, at any time during the pendency
of such third party claim, issues have been or are likely to be asserted, or
potentially settled or compromised, that are likely to materially and adversely
affect such Indemnified Party or its Affiliates other than as a result of money
damages or other money payments for which it is indemnified, then such
Indemnified Party may, deliver a written notice to the Indemnifying Party
explaining the basis for the Indemnified Party's belief. Thereafter, such
Indemnifying Party shall obtain the prior written consent of such Indemnified
Party before entering into any settlement of such third party claim, which
consent may be withheld, provided that such Indemnified Party will be
responsible for (i) all costs and expenses (including reasonable attorneys
fees) incurred by such Indemnifying Party in connection with the defense or any
resolution thereof and related matters after the date of such withholding of
consent and (ii) any final judgment entered against such Indemnified Party or
any later settlement in the case, to the extent the amount to be paid by such
Indemnifying Party pursuant to such judgment or later settlement exceeds the
amount that would have been paid by such Indemnifying Party under the proposed
settlement. If any Indemnified Person settles any claim, action or proceeding
without the consent of the Indemnifying Party, it shall not be entitled to any
indemnification or contribution hereunder in respect of such claim, action or
proceeding.
The Indemnified Party shall be entitled to participate in the
defense of any third party claim and to employ counsel of its choice for such
purpose. The fees and expenses of such separate counsel shall be borne by the
Indemnified Party; provided that the Indemnifying Party shall pay the fees and
expenses of
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<PAGE>
such separate counsel incurred by the Indemnified Party prior to the date the
Indemnifying Party assumes control of, or after the date the Indemnifying Party
ceases to control, the defense of the third party claim or if the Indemnified
Party shall have been advised by its counsel that there may be one or more
defenses available to it which are different from, additional to, or would
otherwise conflict with, the defenses available to the Indemnifying Party. It
is understood that in no event shall an Indemnifying Party, in respect of the
legal expenses of any Indemnified Party in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm (in addition to any local counsel) for
all Indemnified Parties.
SECTION 4.09. Contribution. (a) If the indemnification provided for
herein is for any reason unavailable to the Indemnified Parties in respect of
any losses, claims, damages or liabilities referred to herein, then each such
Indemnifying Party, to the extent permitted by applicable law, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such losses, claims, damages
or liabilities (i) as between the Issuer and any Selling Holder on the one hand
and the Underwriters on the other, in such proportion as is appropriate to
reflect the relative benefits received by the Issuer and such Selling Holder on
the one hand and the Underwriters on the other from the offering of the
securities, or if such allocation is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits but also
the relative fault of the Issuer and such Selling Holder on the one hand and of
the Underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations and (ii) as between the Issuer on the
one hand and any Selling Holder on the other, in such proportion as is
appropriate to reflect the relative fault of the Issuer and of such Selling
Holder in connection with such statements or omissions, as well as any other
relevant equitable considerations. The relative benefits received by the Issuer
and any Selling Holder on the one hand and the Underwriters on the other shall
be deemed to be in the same proportion as the total proceeds from the offering
(net of underwriting discounts and commissions but before deducting expenses)
received by the Issuer and such Selling Holder bear to the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the prospectus. The relative fault of
the Issuer and any Selling Holder on the one hand and of the Underwriters on
the other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Issuer and such Selling Holder or by the Underwriters. The relative fault
of the Issuer on the one hand and any Selling Holder on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material
16
<PAGE>
fact or the omission or alleged omission to state a material fact relates to
information supplied by such party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
(b) The Issuer and each Selling Holder agree that it would not be
just and equitable if contribution pursuant to this Section 4.09 were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an Indemnified Party as a
result of the losses, claims, damages or liabilities referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such Indemnified Party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 4.09, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Registrable Securities underwritten by it
and distributed to the public were offered to the public exceeds the amount of
any damages which such Underwriter has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission, and
no Selling Holder shall be required to contribute any amount in excess of the
amount by which the total price at which the Registrable Securities of such
Selling Holder were offered to the public (less underwriters' discounts and
commissions) exceeds the amount of any damages which such Selling Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
SECTION 4.10. Participation in Underwritten Registrations. No Person
may participate in any underwritten registration hereunder unless such Person
(a) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements and these
registration rights.
SECTION 4.11. Rule 144. If the Issuer shall have filed a registration
statement pursuant to the requirements of Section 12 of the Exchange Act or a
registration statement pursuant to the requirements of the Securities Act
relating to any class of equity securities, the Issuer covenants that it will
file any reports
17
<PAGE>
required to be filed by it under the Securities Act and the Exchange Act and
will take such further action as the Selling Holder shall reasonably request,
all to the extent required from time to time to enable the Selling Holders to
sell Registrable Securities without registration under the Securities Act
within the limitation of the exemptions provided by (i) Rule 144 under the
Securities Act, as such Rule is amended from time to time, or (ii) any similar
rule or regulation hereafter adopted by the Commission.
SECTION 4.12. Holdback Agreements. (a) Restrictions on Public Sale by
Holder of Registrable Securities. If and to the extent requested by the lead
Underwriter of an underwritten public offering of equity securities of the
Issuer, the Holders agree not to effect, except as part of such registration or
a concurrent registration, any public sale or distribution of the issue being
registered or a similar security of the Issuer, or any securities convertible
into or exchangeable or exercisable for such securities, including a sale
pursuant to Rule 144, during the seven days prior to, and during such period
that the lead Underwriter may reasonably request, in any event no greater than
the lesser of (i) 90 days or (ii) such lesser period for which any other Person
that has entered into a holdback agreement in connection with such offering is
bound, beginning on, the effective date of such registration statement.
(b) Restrictions on Public Sale by the Issuer. The Issuer agrees (i)
not to effect any public sale or distribution of any securities similar to
those being registered in accordance with Sections 4.01 or 4.02 hereof, or any
securities convertible into or exchangeable or exercisable for such securities,
during the seven days prior to, and during such period as the lead Underwriter
may reasonably request, no greater than 90 days, beginning on, the effective
date of any registration statement (except as part of such registration
statement and except pursuant to registrations on Form S-4 or S-8 or any
successor or similar form thereto); and (ii) that any agreement entered into
after the date of this Agreement pursuant to which the Issuer issues or agrees
to issue any privately placed securities shall contain a provision under which
holders of such securities agree not to effect any public sale or distribution
of any such securities during the periods described in (i) above, in each case
including a sale pursuant to Rule 144 (except as part of any such registration,
if permitted).
SECTION 4.13. Transfer of Registration Rights. The rights of each
Holder under this Article 4 are transferable to each transferee of such Holder
to whom the transferor Transfers any Warrants or Warrant Shares as permitted by
Section 3.01; it being understood that any such transfer shall not increase the
aggregate number of Registration Requests that the Holders shall have the right
to make pursuant to Section 4.01.
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ARTICLE 5
MISCELLANEOUS
SECTION 5.01. Notices. Any notice, request, instruction or
other document to be given hereunder by any party hereto to another party
hereto shall be in writing (including fax or similar writing) and shall be
given to such party at its address or telecopier number set forth on its
signature page, or to such other address as the party to whom notice is to be
given may provide in a written notice to the party giving such notice, a copy
of which written notice shall be on file with the Secretary of the Issuer. Each
such notice, request or other communication shall be effective (i) if given by
fax, when such fax is transmitted to the fax number specified in this Section
and the appropriate confirmation is received or (ii) if given by mail, 72 hours
after such communication is deposited in the mails with first class postage
prepaid addressed as aforesaid or (iii) if given by any other means, when
delivered at the address specified in this Section 5.01.
SECTION 5.02. Amendments; Waivers. (a) No failure or delay on
the part of any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein provided shall
be cumulative and not exclusive of any rights or remedies provided by law.
(b) Neither this Agreement nor any term or provision hereof
may be amended or waived with respect to any Holder in any manner other than by
instrument in writing signed, in the case of an amendment, by such Holder and
the Issuer, or in the case of a waiver, by the party against whom the
enforcement of such waiver is sought.
SECTION 5.03. Termination. This Agreement shall terminate and be of no
further force or effect with respect to each Holder upon such date that such
Holder no longer holds any Warrants or Warrant Shares; provided that (i) the
rights and obligations of the Issuer and the Holders under Sections 4.06
through 4.09 shall survive any such termination and (ii) the rights and
obligations of the parties hereto under Article 2 (other than Section 2.06(b))
shall terminate in accordance with Section 2.06(a).
SECTION 5.04. Successors, Assigns, Transferees. The provisions of this
Agreement shall be binding upon and accrue to the benefit of the parties hereto
and their respective heirs, successors and assigns. Neither this Agreement nor
any provision hereof shall be construed so as to confer any right or benefit
upon any Person other than the parties to this Agreement and their respective
successors and permitted assigns.
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SECTION 5.05. Headings. The headings in this Agreement are for
convenience of reference only and shall not control or affect the meaning or
construction of any provisions hereof.
SECTION 5.06. No Inconsistent Agreements. The Issuer will not
hereafter enter into any agreement with respect to its securities which is
inconsistent with or grant registration rights superior to the registration
rights granted to the Holders of Equity Securities in this Agreement. The
Issuer represents and warrants to each Holder that it has not previously
entered into any agreement with respect to any of its debt or equity securities
granting any registration rights to any Person except the Registration Rights
Agreement between the Issuer and SOFTBANK Corp., in the form attached as
Exhibit B hereto.
SECTION 5.07. Severability. The invalidity or unenforceability of any
provisions of this Agreement in any jurisdiction shall not affect the validity,
legality or enforceability of the remainder of this Agreement in such
jurisdiction or the validity, legality or enforceability of this Agreement,
including any such provision, in any other jurisdiction, it being intended that
all rights and obligations of the parties hereunder shall be enforceable to the
fullest extent permitted by law.
SECTION 5.08. Recapitalization, Etc. In the event that any capital
stock or other securities are issued in respect of, in exchange for, or in
substitution of, any Common Shares by reason of any reorganization,
recapitalization, reclassification, merger, consolidation, spin-off, partial or
complete liquidation, stock dividend, split-up, sale of assets, distribution to
stockholders or combination of the Common Shares or any other change in capital
structure of the Issuer, appropriate adjustments shall be made with respect to
the relevant provisions of this Agreement so as to fairly and equitably
preserve, as far as practicable, the original rights and obligations of the
parties hereto under this Agreement.
SECTION 5.09. Other Agreements. Nothing contained in this Agreement
shall be deemed to be a waiver of, or release from, any obligations any party
hereto may have under, or any restrictions on the transfer of Common Shares or
other securities of the Issuer or any direct or indirect subsidiary of the
Issuer imposed by, any other agreement.
SECTION 5.10. New York Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 5.11. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original with the same effect
as if the signatures thereto and hereto were upon the same instrument.
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SECTION 5.12. Entire Agreement. This Agreement, together with the
Securities Purchase Agreement and the Securities, constitutes the entire
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein, and there are no restrictions, promises,
representations, warranties, covenants, or undertakings with respect to the
subject matter hereof, other than those expressly set forth or referred to
herein or therein. This Agreement, the Securities Purchase Agreement and the
Securities supersede all prior agreements and understandings between the
parties hereto with respect to the subject matter hereof.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized signatories as of the date
first above written.
KEY3MEDIA GROUP, INC.
By: /s/ Ned S. Goldstein
----------------------------------------
Title: Executive Vice President and
General Counsel
Key3Media Group, Inc.
5700 Wilshire Blvd, Suite 325
Los Angeles, CA 90036
Telephone: (323) 354-3006
Telecopy: (323) 954-3010
Attention: Peter Knepper and
Ned Goldstein, Esq.
with copies to:
Sullivan & Cromwell
125 Broad Street
New York, NY 10004-2498
Telephone: (212) 558-4066
Telecopy: (212) 558-3335
Attention: Duncan McCurrach
<PAGE>
PRINCES GATE INVESTORS III, L.P.
By PG INVESTORS III, INC.,
as General Partner
By: /s/ Pietro Cinquegrana
---------------------------------------------
Title: Vice President
Address: PG Investors III, Inc.
c/o Morgan Stanley & Co.
Incorporated
1585 Broadway
New York, New York 10036
Attention: James M. Wilmott and Pietro
Cinquegrana
Telephone: (212) 761-7860 and (212) 761-7724
Telecopier: (212) 761-0518 and (212) 761-9869
<PAGE>
MORGAN STANLEY DEAN WITTER
EQUITY FUNDING, INC.
By: /s/ Pietro Cinquegrana
---------------------------------------------
Title: Vice President
Address: PG Investors III, Inc.
c/o Morgan Stanley & Co.
Incorporated
1585 Broadway
New York, New York 10036
Attention: James M. Wilmott and Pietro
Cinquegrana
Telephone: (212) 761-7860 and (212) 761-7724
Telecopier: (212) 761-0518 and (212) 761-9869
<PAGE>
PG INVESTORS III, INC.,
By: /s/ Pietro Cinquegrana
---------------------------------------------
Title: Vice President
Address: PG Investors III, Inc.
c/o Morgan Stanley & Co.
Incorporated
1585 Broadway
New York, New York 10036
Attention: James M. Wilmott and Pietro
Cinquegrana
Telephone: (212) 761-7860 and (212) 761-7724
Telecopier: (212) 761-0518 and (212) 761-9869
