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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 16, 1998
UNAPIX ENTERTAINMENT, INC.
DELAWARE 1-11976 95-4404537
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(State or other (Commission File No.) (IRS Employer ID No.)
jurisdiction of
incorporation)
200 MADISON AVENUE, NEW YORK, NY 10016
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(Address of principal executive offices)
212-252-7600
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Registrant's telephone number, including area code
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(Former name or former address, if changed since last report)
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Item 5 - Other Events.
On July 16, 1998, the Company consummated a private placement of (a) 300
shares of its Series B Preferred Stock ("Preferred Stock"), and (b) a three
year warrant to purchase 200,000 shares of the Company's common stock
("Common Stock") at an exercise price of $5.16 per share to KA Investments
LDC, an accredited investor (the "Investor"), for a gross purchase price of
$3,000,000.
Each share of the Preferred Stock:
- - has a stated value of $10,000;
- - provides for dividends cumulatively at the rate of 6% per annum,
payable quarterly in cash or, at the Company's option, under certain
circumstances, Common Stock (the "Dividend Stock");
- - is non-voting; and
- - is convertible at any time on or after the 180th day (the "180th Day")
after July 16, 1998 into common stock at a conversion price equal to
the lesser of (i) $5.16 and (ii) the average closing sales price
for any two trading days during the ten trading day period prior to
conversion (which two trading days shall be selected by the holder of
the Preferred Stock), but not less than 80% of the average closing
sales price (the "Average Closing Price"), as reported by the American
Stock Exchange, over the five trading days preceding July 16, 1998
(the "Conversion Price"). The Conversion Price is subject to
antidilution adjustments. Prior to the 180th Day, conversions are
only permitted at a conversion price greater than 101% of the Average
Closing Price. Any remaining shares of Preferred Stock will be
automatically converted into Common Stock on June 16, 2000 (which date
may be extended under certain circumstances).
Pursuant to a Registration Rights Agreement between the Company and the
Investor dated July 15, 1998, (the "Registration Rights Agreement") the Company
is obligated to (a) file a Form S-3 Shelf Registration Statement under the
Securities Act of 1933, as amended (the "Act") to register the shares of Common
Stock underlying the Preferred Stock and the Warrants, as well as two years of
anticipated Dividend Stock on or before September 14, 1998 (the "Registration
Statement"), (b) use its best efforts to have the Registration Statement be
declared effective under the Act as promptly as possible but in any event prior
to November 12, 1998 and (c) maintain the effectiveness of the Registration
Statement for three years thereafter. Under certain circumstances, the holders
of the Common Stock subject to the Registration Statement may effect an
underwritten offering of such stock.
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Holders of Preferred Stock are entitled to certain specified remedies,
and under certain circumstances are entitled to require the Company to redeem
their shares of Preferred Stock at a premium, if the Company does not timely
comply with its obligations with respect to the Preferred Stock.
The private placement was facilitated by Reedland Capital Partners
("Reedland") in consideration for which Reedland received $150,000 in cash and a
three year common stock purchase warrant to purchase 50,000 share of common
stock at an exercise price of $5.16 per share.
The net proceeds to the Company of approximately $2,820,000 will be used
for production budget funding and working capital purposes.
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Item 7 - Financial Statements, Pro Forma Financial Statements and Exhibits
(a) Financial Statements
None.
(b) Pro Forma Financial Statements
None.
(c) Exhibits
The following Exhibits are filed as part of this Form 8-K:
3.1 Certificate of Designation with respect to the Series B Preferred Stock.
10.1 Convertible Preferred Stock Purchase Agreement, dated as of July 15, 1998,
between KA Investments LDC and the Registrant.
10.2 Registration Rights Agreement, dated as of July 15, 1998, between the
Investor and the Registrant.
10.3 Form of Common Stock Purchase Warrant dated July 16, 1998 in favor of KA
Investments LDC respecting 200,000 shares of underlying common stock.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.
(Registrant) UNAPIX ENTERTAINMENT, INC.
Dated: July 21, 1998 By: /s/ David M. Fox
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David M. Fox, Chief Executive Officer
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Exhibit 3.1
CERTIFICATE OF DESIGNATION, POWERS, PREFERENCES AND RIGHTS OF
THE 6% SERIES B CONVERTIBLE PREFERRED STOCK OF
UNAPIX ENTERTAINMENT, INC.
Unapix Entertainment, Inc., a Delaware Corporation (the "Company"),
pursuant to Section 151 of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by the
Certificate of Incorporation of the Company, the Board of Directors of the
Company at a meeting thereof duly called and held on July 9, 1998, at which a
quorum was present and acting throughout, duly adopted the resolutions attached
as EXHIBIT 1 creating a series of 300 shares of Preferred Stock with a par value
of $0.01 each and a stated value of $10,000 each to be designated "6% Series B
Preferred Stock."
IN WITNESS WHEREOF, Unapix Entertainment, Inc. has caused this certificate
to be signed by its duly authorized officer this tenth day of July, 1998.
UNAPIX ENTERTAINMENT, INC.
By:
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David M. Fox, Chief Executive Officer
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EXHIBIT 1
July 9, 1998 Board of Directors Resolutions Excerpt
RESOLVED, that the officers of the Company be, and each of them
hereby is, authorized and empowered, acting for, on behalf of and in
the name of the Company, to effect a private placement (the "Private
Placement") of its Preferred Stock, substantially on the terms set
forth on Exhibit A annexed hereto (the "Term Sheet"), with such
changes thereto (including, without limitation, reductions in the
conversion or exercise prices or modifications of the reset provisions
relating thereto) as the officers shall determine to be necessary,
desirable or appropriate, their execution or delivery of any
documents, instruments or agreements with respect thereto to be
conclusive evidence of such determination; and be it further
RESOLVED, that the certificate attached hereto as Exhibit B1
representing the statements of rights preferences and designations of
the Company's Series B Preferred Stock to be issued in connection with
the Private Placement is hereby adopted in substantially the form as
attached with such changes thereto as one or more officers of the
Company may deem immaterial, desirable and appropriate to consummate
the Private Placement (the "Certificate of Designation").
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EXHIBIT B1
TERMS OF PREFERRED STOCK
Section 1. DESIGNATION, AMOUNT AND PAR VALUE. The series of
preferred stock shall be designated as 6% Series B Convertible Preferred Stock
(the "PREFERRED STOCK") and the number of shares so designated shall be 300
(which shall not be subject to increase without the consent of the holders of
the Preferred Stock (each, a "HOLDER" and collectively, the "HOLDERS")); Each
share of Preferred Stock shall have a par value of $.01 and a stated value of
$10,000 (the "STATED VALUE").
Section 2. DIVIDENDS.
(a) Holders of Preferred Stock shall be entitled to receive, when and
as declared by the Board of Directors out of funds legally available therefor,
and the Company shall pay, cumulative dividends at the rate per share (as a
percentage of the Stated Value per share) equal to 6% per annum, payable on a
quarterly basis on March 31, June 30, September 30 and December 31 of each year
during the term hereof (each a "DIVIDEND PAYMENT DATE"), commencing on June 30,
1998, in cash or shares of Common Stock (as defined in Section 7) at, subject to
the terms and conditions set forth herein, the option of the Company. Dividends
on the Preferred Stock shall be calculated on the basis of a 360-day year, shall
accrue daily commencing on the Original Issue Date (as defined in Section 7),
and shall be deemed to accrue from such date whether or not earned or declared
and whether or not there are profits, surplus or other funds of the Company
legally available for the payment of dividends. Any dividends not paid on any
Dividend Payment Date shall continue to accrue and shall be due and payable upon
conversion of the Preferred Stock. A party that holds shares of Preferred Stock
on a Dividend Payment Date will be entitled to receive such dividend payment and
any other accrued and unpaid dividends which accrued prior to such Dividend
Payment Date, without regard to any sale or disposition of such Preferred Stock
subsequent to the applicable record date. All overdue accrued and unpaid
dividends and other amounts due herewith shall entail a late fee at the rate of
15% per annum (to accrue daily, from the date such dividend is due hereunder
through and including the date of payment). Except as otherwise provided
herein, if at any time the Company pays less than the total amount of dividends
then accrued on account of the Preferred Stock, such payment shall be
distributed ratably among the Holders based upon the number of shares held by
each Holder. Payment of dividends on the Preferred Stock is further subject to
the provisions of Section 5(c)(i). The Company shall provide the Holders notice
of its intention to pay dividends in cash or shares of Common Stock not less
than 10 Trading Days prior to the Dividend Payment Date for so long as shares of
Preferred Stock are outstanding. If dividends are paid in shares of Common
Stock, the number of shares of Common Stock issuable on account of such
dividend shall equal the cash amount of such dividend on such Dividend Payment
Date divided by the Conversion Price (as defined below) on such date.
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(b) Notwithstanding anything to the contrary contained herein, the
Company may not issue shares of Common Stock in payment of dividends (and must
deliver cash in respect thereof) on the Preferred Stock if:
(i) the number of shares of Common Stock at the time authorized,
unissued and unreserved for all purposes is insufficient to pay such dividends
in shares of Common Stock;
(ii)such shares are not registered for resale pursuant to an
effective registration statement that names the recipient of such dividend as a
selling stockholder thereunder and may not be sold without volume restrictions
pursuant to Rule 144 promulgated under the Securities Act of 1933, as amended
(the "SECURITIES ACT"), as determined by counsel to the Company pursuant to a
written opinion letter, addressed to the Company's transfer agent in the form
and substance acceptable to the Holders and such transfer agent;
(iii)the Common Stock is not then listed on the American Stock
Exchange (the "AMEX") or on the New York Stock Exchange, Nasdaq SmallCap Market
or Nasdaq National Market (each, a "SUBSEQUENT MARKET");
(iv) the Company has failed to timely satisfy its conversion
obligations hereunder (which failure shall not have been cured prior to the date
of payment of such dividend); or
(v) the issuance of such shares would result in the recipient
thereof beneficially owning, as determined in accordance with Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended (the 'EXCHANGE
ACT"), more than 4.999% of the then issued and outstanding shares of Common
Stock.
Payment of dividends hereunder in shares of Common Stock shall
also be subject to the provisions of Section 5(a)(iii).
(c) So long as any Preferred Stock shall remain outstanding, neither
the Company nor any subsidiary thereof shall redeem, purchase or otherwise
acquire directly or indirectly any Junior Securities (as defined in Section 7),
nor shall the Company directly or indirectly pay or declare any dividend or make
any distribution (other than a dividend or distribution described in Section 5)
upon, nor shall any distribution be made in respect of, any Junior Securities,
nor shall any monies be set aside for or applied to the purchase or redemption
(through a sinking fund or otherwise) of any Junior Securities or shares pari
passu with the Preferred Stock, except for repurchases effected by the Company
on the open market, pursuant to a direct stock purchase plan or repurchase or
redemption at an aggregate price for all such redemptions and repurchases of not
more than $75,000 and/or up to 250,000 shares of Common Stock issued (in the
case of redemption shares) to redeem Company warrants outstanding on the
Original Issue Date, and except that the Company may make regularly scheduled
dividend payments in respect of classes of preferred stock of the Company if the
Company shall be in
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compliance with provisions of this Certificate of Designation and shall be
current with respect to the payment of dividends hereunder.
Section 3. VOTING RIGHTS. Except as otherwise provided herein
and as otherwise required by law, the Preferred Stock shall have no voting
rights. However, so long as any shares of Preferred Stock are outstanding, the
Company shall not and shall cause its subsidiaries not to, without the
affirmative vote of the Holders of all of the shares of the Preferred Stock then
outstanding,(a) alter or change adversely the powers, preferences or rights
given to the Preferred Stock, (b) alter or amend this Certificate of
Designation, (c) authorize or create any class of stock ranking as to dividends
or distribution of assets upon a Liquidation (as defined in Section 4) senior to
or otherwise PARI PASSU with or senior to the Preferred Stock, except for any
series of Preferred Stock issued and sold in accordance with the Purchase
Agreement, (d) amend its Certificate of Incorporation, bylaws or other charter
documents so as to affect adversely any rights of any Holders, (e) increase the
authorized number of shares of Preferred Stock, or (f) enter into any agreement
with respect to the foregoing.
Section 4. LIQUIDATION. Upon any liquidation, dissolution or
winding-up of the Company, whether voluntary or involuntary (a "LIQUIDATION"),
the Holders shall be entitled to receive out of the assets of the Company,
whether such assets are capital or surplus, for each share of Preferred Stock an
amount equal to the Stated Value plus all due but unpaid dividends per share,
whether declared or not, before any distribution or payment shall be made to the
holders of any Junior Securities, and if the assets of the Company shall be
insufficient to pay in full such amounts, then the entire assets to be
distributed to the Holders of Preferred Stock shall be distributed among the
Holders of Preferred Stock ratably in accordance with the respective amounts
that would be payable on such shares if all amounts payable thereon were paid in
full. A sale, conveyance or disposition of all or substantially all of the
assets of the Company or the effectuation by the Company of a transaction or
series of related transactions in which more than 50% of the voting power of the
Company is disposed of, or a consolidation or merger of the Company with or into
any other company or companies shall not be treated as a Liquidation, but
instead shall be subject to the provisions of Section 5. The Company shall mail
written notice of any such Liquidation, not less than 45 days prior to the
payment date stated therein, to each record Holder of Preferred Stock.
Section 5. CONVERSION.
(a)(i) Each share of Preferred Stock shall be convertible into shares
of Common Stock (subject to reduction pursuant to Section 5(a)(iii) hereof and
Section 3.8 of the Purchase Agreement) at the Conversion Ratio (as defined in
Section 7) at the option of the Holder at any time and from time to time after
the Original Issue Date, PROVIDED, that prior to the 180th day following the
Original Issue Date conversions at the option of the Holder shall only be
permitted at a Conversion Price greater than 101% of the Closing Price (as
defined in Section 7). Holders shall effect conversions by surrendering the
certificate or certificates representing the shares of Preferred Stock to be
converted to the Company, together with the form of conversion notice attached
hereto as EXHIBIT A (a "CONVERSION NOTICE"). Each Conversion Notice shall
specify the
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number of shares of Preferred Stock to be converted and the date on which such
conversion is to be effected, which date may not be prior to the date the Holder
delivers such Conversion Notice by facsimile (the "CONVERSION DATE"). If no
Conversion Date is specified in a Conversion Notice, the Conversion Date shall
be the date that the Conversion Notice is deemed delivered hereunder. If the
Holder is converting less than all shares of Preferred Stock represented by the
certificate or certificates tendered by the Holder with the Conversion Notice,
or if a conversion hereunder cannot be effected in full for any reason, the
Company shall promptly deliver to such Holder (in the manner and within the time
set forth in Section 5(b)) a certificate for such number of shares as have not
been converted.
(ii) Any outstanding shares of Preferred Stock not theretofore
converted or redeemed on the second anniversary of the Original Issue Date (the
"TERM") shall automatically be converted into shares of Common Stock at the
Conversion Price then in effect; PROVIDED, that notwithstanding the foregoing,
no such conversion shall occur unless (a) the Underlying Shares that would then
be issuable upon such conversion could either be resold by the applicable Holder
without volume restrictions pursuant to Rule 144(k) promulgated under the
Securities Act or there is then an effective Underlying Securities Registration
Statement (as defined in Section 7) covering such shares of Common Stock and (b)
the Company has a sufficient number of authorized and unreserved shares of
Common Stock to issue upon such conversion. Further, the number of shares of
Preferred Stock that are subject to conversion pursuant to this section shall be
limited to the number of Underlying Shares which may be issued upon such
conversion at the prevailing Conversion Price in accordance with Rule 713
promulgated under the rules of the AMEX (or any successor provisions of same
effect). Any shares of Preferred Stock which cannot be converted at the then
Conversion Price as a result of such rule shall be subject to the provisions of
Section 5(a)(iii). Notwithstanding the foregoing or anything to the contrary
contained herein, (x) if there shall have occurred a Triggering Event (as
defined in Section 6) and the Holder shall not have required the Company to
redeem all of the Preferred Stock held by such Holder, the Term shall be deemed
extended by a number of days as equals the product of 1.5 and the number of days
that such Triggering Event shall exist, and (x) if the Holder is requested to
refrain from disposing of Underlying Shares under an Underlying Securities
Registration Statement (which restriction the Company may not impose for a
period of more than 90 days) following the execution by the Company after one
year of the Original Issue Date of an underwriting agreement which provides for
a firm commitment primary underwritten offering by the Company of Common Stock
in excess of $10,000,000 (a "STANDSTILL"), the Term shall be deemed extended for
a number days equal to the duration of the Standstill (which shall be in
addition to any extension of the Term pursuant to clause (y) above). A Holder
shall be under no obligation to Standstill as a result of underwriting
arrangements entered into by the Company prior to the expiration of one year
from the Original Issue Date.
(iii) If on any Conversion Date (A) the Common Stock is listed
for trading on the AMEX, (B) the Conversion Price then in effect is such that
the aggregate number of shares of Common Stock that would then be issuable upon
conversion in full of all then outstanding shares of Preferred Stock, together
with any shares of the Common Stock previously issued upon conversion of the
shares of Preferred Stock and as payment of dividends thereon,
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would equal or exceed 20% of the number of shares of the Common Stock
outstanding on the Original Issue Date (such number of shares as would not equal
or exceed such 20% limit, the "ISSUABLE MAXIMUM"), and (C) the Company shall not
have previously obtained the vote of shareholders (the "SHAREHOLDER APPROVAL"),
if any, as may be required by the rules and regulations of AMEX (or successor
entity) applicable to approve the issuance of Common Stock in excess of the
Issuable Maximum in a private placement whereby shares of Common Stock are
deemed to have been issued at a price that is less than the greater of book or
fair market value of the Common Stock, then the Company shall issue to the
Holder so requesting a conversion a number of shares of Common Stock equal to
the Issuable Maximum and, with respect to the remainder of the aggregate stated
value of the shares of Preferred Stock then held by such Holder for which a
conversion in accordance with the Conversion Price would result in an issuance
of Common Stock in excess of the Issuable Maximum, the Company shall have the
option, exercisable by written notice to the Holders delivered within seven (7)
days after the triggering Conversion Date, to perform under either of clause (2)
or clause (3) below, in which case the payment of the Discount Equivalent or
applicable Mandatory Redemption Amount, as the case may be, shall be made in
full within seven (7) days after the date of such notice by the Company. If the
Company fails to make an election pursuant to the immediately preceding sentence
within the time period permitted by such sentence or, if it shall have timely
elected to perform under either clause (2) or clause (3) and shall have failed
to pay the full Discount Equivalent or Mandatory Redemption Amount thereunder
within seven (7) days of such notice, then the converting Holder shall have the
option to declare any such notice void AB INITIO and require the Company to
either (1) use its best efforts to obtain the Shareholder Approval applicable to
such issuance as soon as is possible, but in any event not later than the 60th
day after such request, or (2)(i) issue and deliver to such Holder a number of
shares of Common Stock as equals (x) the aggregate Stated Value of the shares of
Preferred Stock tendered for conversion in respect of the Conversion Notice at
issue but for which a conversion in accordance with the other terms hereof would
result in an issuance of Common Stock in excess of the Issuable Maximum, divided
by (y) the Initial Conversion Price (as defined below), and (ii) cash in an
amount equal to the product of (x) the Per Share Market Value on the Conversion
Date and (y) the number of shares of Common Stock in excess of such Holder's pro
rata portion of the Issuable Maximum that would have otherwise been issuable to
the Holder in respect of such conversion but for the provisions of this Section
(such amount of cash being hereinafter referred to as the "DISCOUNT
EQUIVALENT"), or (3) pay cash to the converting Holder in an amount equal to the
Mandatory Redemption Amount (as defined in Section 7) for the number of
Underlying Shares in or issuable upon such conversion in excess of the Issuable
Maximum. If the Company fails to pay the Discount Equivalent or the Mandatory
Redemption Amount, as the case may be, in full pursuant to this Section within
seven (7) days after the date payable, the Company will pay interest thereon at
a rate of 15% per annum to the converting Holder, accruing daily from the
Conversion Date until such amount, plus all such interest thereon, is paid in
full.
(b) (i) Not later than the latest to occur of (x) the third (3rd)
Trading Day after any Conversion Date, (y) the second (2nd) Business Day after
delivery to the Company of the shares of Preferred Stock tendered for conversion
pursuant to a Conversion Notice or (z) the second (2nd) Business Day after
receipt by the Company of a notice by a converting Holder that
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such certificates have been lost, stolen or destroyed which notice shall be
accompanied by a bond (or other adequate security) reasonably satisfactory to
the Company to indemnify the Company from any loss incurred by it in connection
therewith (such date, the "DUE DATE"), the Company will deliver to the Holder
(i) a certificate or certificates which shall be free of restrictive legends and
trading restrictions (other than those required by Section 3.1(b) of the
Purchase Agreement) representing the number of shares of Common Stock being
acquired upon the conversion of shares of Preferred Stock (subject to reduction
pursuant to Section 5(a)(iii) and Section 3.8 of the Purchase Agreement), (ii)
one or more certificates representing the number of shares of Preferred Stock
not converted, (iii) a bank check in the amount of accrued and unpaid dividends
(if the Company has elected to pay accrued dividends in cash), and (iv) if the
Company has elected and is permitted hereunder to pay accrued dividends in
shares of Common Stock, certificates, which shall be free of restrictive legends
and trading restrictions (other than those required by Section 3.1 (b) of the
Purchase Agreement), representing such shares of Common Stock. The Company
shall, upon request of the Holder, if available, use its best efforts to deliver
any certificate or certificates required to be delivered by the Company under
this Section electronically through the Depository Trust Corporation or another
established clearing corporation performing similar functions. If in the case
of any Conversion Notice such certificate or certificates, including for
purposes hereof, any shares of Common Stock to be issued on the Conversion Date
on account of accrued but unpaid dividends hereunder, are not delivered to or as
directed by the applicable Holder by the Due Date, the Holder shall be entitled
by written notice to the Company at any time on or before its receipt of such
certificate or certificates thereafter, to rescind such conversion, in which
event the Company shall immediately return the certificates representing the
shares of Preferred Stock tendered for conversion.
(ii) If the Company fails to deliver to the Holder such
certificate or certificates pursuant to Section 5(b)(i), including for purposes
hereof, any shares of Common Stock to be issued on the Conversion Date on
account of accrued but unpaid dividends hereunder, by the Trading Day after the
Due Date, the Company shall pay to such Holder, in cash, as liquidated damages
and not as a penalty, $5,000 for each day after such third Trading Day until
such certificates are delivered. Nothing herein shall limit a Holder's right to
pursue actual damages for the Company's failure to deliver certificates
representing shares of Common Stock upon conversion within the period specified
herein and such Holder shall have the right to pursue all remedies available to
it at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief. The exercise of any such rights shall not
prohibit the Holders from seeking to enforce damages pursuant to any other
Section hereof or under applicable law. Further, if the Company shall not have
delivered any cash due in respect of conversions of Preferred Stock or as
payment of dividends thereon by the third (3rd) Trading Day after the Conversion
Date, the Holder may, by notice to the Company, require the Company to issue
Underlying Shares pursuant to Section 5(c), except that for such purpose the
Conversion Price applicable thereto shall be the lesser of the Conversion Price
on the Conversion Date and the Conversion Price on the date of such Holder
demand. Any such Underlying Shares will be subject to the provision of this
Section.
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(iii) In addition to any other rights available to the Holder,
if the Company fails to deliver to the Holder such certificate or certificates
pursuant to Section 5(b)(i), including for purposes hereof, any shares of Common
Stock to be issued on the Conversion Date on account of accrued but unpaid
dividends hereunder, by the Trading Day after the Due Date, and if after such
Trading Day the Holder purchases (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by such Holder of
the Underlying Shares which the Holder anticipated receiving upon such
conversion (a "BUY-IN"), then the Company shall pay in cash to the Holder (in
addition to any remedies available to or elected by the Holder) the amount by
which (x) the Holder's total purchase price (including brokerage commissions, if
any) for the shares of Common Stock so purchased exceeds (y) the aggregate
stated value of the shares of Preferred Stock for which such conversion was not
timely honored. For example, if the Holder purchases shares of Common Stock
having a total purchase price of $11,000 to cover a Buy-In with respect to an
attempted conversion of $10,000 aggregate stated value of the shares of
Preferred Stock, the Company shall be required to pay the Holder $1,000. The
Holder shall provide the Company written notice indicating the amounts payable
to the Holder in respect of the Buy-In.
(c)(i) The conversion price for each share of Preferred Stock (the
"CONVERSION PRICE") in effect on any Conversion Date shall be the lesser of (a)
120% of the Closing Price (the "INITIAL CONVERSION PRICE") and (b) the average
of the Per Share Market Values for two (2) Trading Days (which need not be
consecutive Trading Days) during the ten (10) Trading Days prior to the date of
the applicable Conversion Notice, which Per Share Market Values shall be chosen
by the converting Holder, PROVIDED, that, except as otherwise set forth herein,
the Conversion Price shall not be less than the Floor (as defined in Section 7);
PROVIDED, HOWEVER, that, (a) if the Underlying Securities Registration Statement
is not filed on or prior to the Filing Date (as defined in the Registration
Rights Agreement), or (b) if the Company fails to file with the Commission a
request for acceleration in accordance with Rule 461 promulgated under the
Securities Act within five (5) days of the date that the Company is notified
(orally or in writing, whichever is earlier) by the Commission that an
Underlying Securities Registration Statement will not be "reviewed," or not
subject to further review, or (c) if the Underlying Securities Registration
Statement is not declared effective by the Commission on or prior to the 120th
day after the Original Issue Date, or (d) if such Underlying Securities
Registration Statement is filed with and declared effective by the Commission
but thereafter ceases to be effective as to all Registrable Securities (as such
term is defined in the Registration Rights Agreement) at any time prior to the
expiration of the "Effectiveness Period" (as such term is defined in the
Registration Rights Agreement), without being succeeded within 15 Trading Days
by a subsequent Underlying Securities Registration Statement or post-effective
amendment, as applicable, filed with and declared effective by the Commission,
or (e) if trading in the Common Stock shall be suspended for more than five (5)
consecutive Trading Days or seven (7) Trading Days in the aggregate, or (f) if
the conversion rights of the Holders are suspended for any reason, or (g) if the
Company is required to convene a shareholders meeting pursuant to Section
5(a)(iii) and fails to convene a meeting of shareholders within the time periods
specified in Section 5(a)(iii) or does so convene a meeting of shareholders
within such time period but fails to obtain Shareholder Approval at such meeting
(any such failure or breach being referred to as an "EVENT," and for
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purposes of clauses (a) and (c) the date on which such Event occurs, or for
purposes of clause (b) the date on which such five (5) day period is exceeded,
or for purposes of clause (d) the date which such 15 Trading Day-period is
exceeded, or for purposes of clause (e) the date on which such five (5) Trading
Day period is exceeded, being referred to as "EVENT DATE"), the Company will pay
to the Holder, in cash, as liquidated damages and not as a penalty, on the Event
Date, 1.0% of the Stated Value of the shares of Preferred Stock then
outstanding, and, on the 30th day after the Event Date, and on each 30 day
anniversary of the Event Date thereafter, until the triggering Event is cured,
1.5% of the Stated Value of the shares of Preferred Stock then outstanding (for
example, the cumulative liquidated damages under this Section for an Event cured
on the 91st day following an Event Date shall equal 2.5% as of the 30th day
following the Event Date, 4.0% as of the 60th day following the Event Date and
5.5% as of the 90th day following the Event Date).
(ii) If the Company, at any time while any shares of Preferred
Stock are outstanding, shall (a) pay a stock dividend or otherwise make a
distribution or distributions on shares of its Junior Securities or pari passu
securities payable in shares of Common Stock (other than regularly scheduled
dividend payments made on classes of preferred stock of the Company when the
Company is in compliance with the provisions of this Certificate of Designation
and shall be current with respect to the payment of dividends hereunder), (b)
subdivide outstanding shares of Common Stock into a larger number of shares, (c)
combine outstanding shares of Common Stock into a smaller number of shares, or
(d) issue by reclassification of shares of Common Stock any shares of capital
stock of the Company, the Initial Conversion Price shall be multiplied by a
fraction of which the numerator shall be the number of shares of Common Stock
outstanding before such event and of which the denominator shall be the number
of shares of Common Stock outstanding after such event. Any adjustment made
pursuant to this Section 5(c)(ii) shall become effective immediately after the
record date for the determination of stockholders entitled to receive such
dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or re-classification.
(iii) If the Company, at any time while any shares of
Preferred Stock are outstanding, shall issue rights, warrants or options to all
holders of Common Stock entitling them to subscribe for or purchase shares of
Common Stock at a price per share less than the Per Share Market Value at the
record date mentioned below, then the Initial Conversion Price shall be
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock outstanding immediately prior to the issuance of such rights,
warrants or options, plus the number of shares of Common Stock which the
aggregate offering price of the total number of shares so offered would purchase
at such Per Share Market Value, and the denominator of which shall be the sum of
the number of shares of Common Stock outstanding immediately prior to such
issuance plus the number of shares of Common Stock offered for subscription or
purchase. Such adjustment shall be made whenever such rights or warrants are
issued, and shall become effective immediately after the record date for the
determination of stockholders entitled to receive such rights or warrants.
However, upon the expiration of any right, warrant or option to
<PAGE>
purchase shares of Common Stock the issuance of which resulted in an adjustment
in the Conversion Price pursuant to this Section 5(c)(iii), if any such right,
warrant or option shall expire and shall not have been exercised, the Conversion
Price shall immediately upon such expiration shall be recomputed and effective
immediately upon such expiration shall be increased to the price which it would
have been (but reflecting any other adjustments in the Conversion Price made
pursuant to the provisions of this Section 5 upon the issuance of other rights
or warrants) had the adjustment of the Conversion Price made upon the issuance
of such rights, warrants, or options been made on the basis of offering for
subscription or purchase only that number of shares of Common Stock actually
purchased upon the exercise of such rights, warrants or options actually
exercised.
(iv) If, other than pursuant to written obligations existing on
the Original Issued Date or transactions closed prior to the Original Issue
Date, (but not post-Original Issue Date amendments thereto) the Company or any
subsidiary thereof, as applicable with respect to Common Stock Equivalents (as
defined below), at any time while any shares of Preferred Stock are outstanding,
shall issue shares of Common Stock or rights, warrants, options or other
securities or debt that is convertible into or exchangeable for shares of Common
Stock ("COMMON STOCK EQUIVALENTS") entitling any Person (other than employees
and officers of the Company) to acquire shares of Common Stock at a price per
share less than the Conversion Price at such time, then the Conversion Price
(for so long as it exceeds such price) and the Initial Conversion Price shall
each be multiplied by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to the issuance of shares
of Common Stock or such Common Stock Equivalents plus the number of shares of
Common Stock which the offering price for such shares of Common Stock or Common
Stock Equivalents would purchase at the Conversion Price or Initial Conversion
Price (as applicable), and the denominator of which shall be the sum of the
number of shares of Common Stock outstanding immediately prior to such issuance
plus the number of shares of Common Stock so issued or issuable, provided, that
for purposes hereof, all shares of Common Stock that are issuable upon exercise
or exchange of Common Stock Equivalents shall be deemed outstanding immediately
after the issuance of such Common Stock Equivalents. Such adjustment shall be
made whenever such shares of Common Stock or Common Stock Equivalents are
issued. No adjustment under this Section 5(c)(iv) shall be made in respect of
Common Stock Equivalents (or derivative securities requiring the issuance
thereof) outstanding as of the Series B Closing Date. However, upon the
expiration of any right or warrant to purchase shares of the Common Stock the
issuance of which resulted in an adjustment in the Conversion Price or Initial
Conversion Price pursuant to this Section, if any such right or warrant shall
expire and shall not have been exercised, the Conversion Price and Initial
Conversion Price shall immediately upon such expiration be recomputed and
effective immediately upon such expiration be increased to the price which it
would have been (but reflecting any other adjustments in the Conversion Price or
Initial Conversion Price made pursuant to the provisions of this Section
5(c)(iv) after the issuance of such rights or warrants) had the adjustment of
the Conversion Price or Initial Conversion Price made upon the issuance of such
rights or warrants been made on the basis of offering for subscription or
purchase of only that number of shares of the Common Stock actually purchased
upon the exercise of such rights or warrants actually exercised.
<PAGE>
(v) If the Company, at any time while shares of Preferred Stock
are outstanding, shall distribute to all holders of Common Stock (and not to
Holders of Preferred Stock) evidences of its indebtedness or assets or rights or
warrants to subscribe for or purchase any security (excluding those referred to
in Sections 5(c)(ii)-(iv) above), then in each such case the Initial Conversion
Price at which each share of Preferred Stock shall thereafter be convertible
shall be determined by multiplying the Initial Conversion Price in effect
immediately prior to the record date fixed for determination of stockholders
entitled to receive such distribution by a fraction of which the denominator
shall be the Per Share Market Value of Common Stock determined as of the record
date mentioned above, and of which the numerator shall be such Per Share Market
Value of the Common Stock on such record date less the then fair market value at
such record date of the portion of such assets or evidence of indebtedness so
distributed applicable to one outstanding share of Common Stock as determined by
the Board of Directors in good faith; PROVIDED, HOWEVER, that in the event of a
distribution exceeding ten percent (10%) of the net assets of the Company, if
the Holders of a majority in interest of the Preferred Stock dispute such
valuation, such fair market value shall be determined by a nationally recognized
or major regional investment banking firm or firm of independent certified
public accountants of recognized standing (which may be the firm that regularly
examines the financial statements of the Company) (an "APPRAISER") selected in
good faith by the Holders of a majority in interest of the shares of Preferred
Stock then outstanding; and PROVIDED, FURTHER, that the Company, after receipt
of the determination by such Appraiser shall have the right to select an
additional Appraiser, in good faith, in which case the fair market value shall
be equal to the average of the determinations by each such Appraiser. In either
case the adjustments shall be described in a statement provided to the Holders
of Preferred Stock of the portion of assets or evidences of indebtedness so
distributed or such subscription rights applicable to one share of Common Stock.
Such adjustment shall be made whenever any such distribution is made and shall
become effective immediately after the record date mentioned above.
(vi) All calculations under this Section 5 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be.
(vii) Whenever the Conversion Price is adjusted pursuant to
Section 5(c)(i),(ii),(iii),(iv), or (v) the Company shall promptly mail to each
Holder, a notice setting forth the Conversion Price after such adjustment and
setting forth a brief statement of the facts requiring such adjustment.
(viii) In case of any reclassification of the Common Stock, or
any compulsory share exchange pursuant to which the Common Stock is converted
into other securities, cash or property (other than compulsory share exchanges
which constitute Change of Control Transactions), the Holders of the Preferred
Stock then outstanding shall have the right thereafter to convert such shares
only into the shares of stock and other securities, cash and property receivable
upon or deemed to be held by holders of Common Stock following such
reclassification or share exchange, and the Holders of the Preferred Stock shall
be entitled upon conversion to receive such amount of securities, cash or
property as a holder of the number of
<PAGE>
shares of the Common Stock of the Company into which such shares of Preferred
Stock could have been converted immediately prior to such reclassification or
share exchange would have been entitled. This provision shall similarly apply
to successive reclassifications or share exchanges.
(ix) If (a) the Company shall declare a dividend (or any other
distribution) on its Common Stock, (b) the Company shall declare a special
nonrecurring cash dividend on or a redemption of its Common Stock, (c) the
Company shall authorize the granting to all holders of the Common Stock rights
or warrants to subscribe for or purchase any shares of capital stock of any
class or of any rights, (d) the approval of any stockholders of the Company
shall be required in connection with any reclassification of the Common Stock of
the Company, any consolidation or merger to which the Company is a party, any
sale or transfer of all or substantially all of the assets of the Company, of
any compulsory share of exchange whereby the Common Stock is converted into
other securities, cash or property, or (e) the Company shall authorize the
voluntary or involuntary dissolution, liquidation or winding up of the affairs
of the Company; then the Company shall cause to be filed at each office or
agency maintained for the purpose of conversion of Preferred Stock, and shall
cause to be mailed to the Holders of Preferred Stock at their last addresses as
they shall appear upon the stock books of the Company, at least 20 calendar days
prior to the applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution, redemption, rights or warrants, or if a record is not to
be taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distributions, redemption, rights or warrants are to
be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of Common Stock of
record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange; PROVIDED, HOWEVER, that
the failure to mail such notice or any defect therein or in the mailing thereof
shall not affect the validity of the corporate action required to be specified
in such notice. Holders are entitled to convert shares of Preferred Stock
during the 20-day period commencing the date of such notice to the effective
date of the event triggering such notice.
(d) The Company covenants that it will at all times reserve and keep
available out of its authorized and unissued Common Stock solely for the purpose
of issuance upon conversion of Preferred Stock and payment of dividends on
Preferred Stock, each as herein provided, free from preemptive rights or any
other actual contingent purchase rights of persons other than the Holders of
Preferred Stock, not less than such number of shares of Common Stock as shall
(subject to any additional requirements of the Company as to reservation of such
shares set forth in the Purchase Agreement) be issuable (taking into account the
adjustments and restrictions of Section 5(a) and Section 5(c)) upon the
conversion of all outstanding shares of Preferred Stock and payment of dividends
hereunder. The Company covenants that all shares of Common Stock that shall be
so issuable shall, upon issue, be duly and validly authorized, issued and fully
paid, nonassessable and freely tradeable, subject to the legend requirements of
Section 3.1(b) of the Purchase Agreement.
<PAGE>
(e) Upon a conversion hereunder the Company shall not be required to
issue stock certificates representing fractions of shares of Common Stock, but
may if otherwise permitted, make a cash payment in respect of any final fraction
of a share based on the Per Share Market Value at such time. If the Company
elects not, or is unable, to make such a cash payment, the Holder of a share of
Preferred Stock shall be entitled to receive, in lieu of the final fraction of a
share, one whole share of Common Stock.
(f) The issuance of certificates for shares of Common Stock on
conversion of Preferred Stock shall be made without charge to the Holders
thereof for any documentary stamp or similar taxes that may be payable in
respect of the issue or delivery of such certificate, provided that the Company
shall not be required to pay any tax that may be payable in respect of any
transfer involved in the issuance and delivery of any such certificate upon
conversion in a name other than that of the Holder of such shares of Preferred
Stock so converted and the Company shall not be required to issue or deliver
such certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.
(g) Shares of Preferred Stock converted into Common Stock shall be
canceled. The Company may not reissue any shares of Preferred Stock.
(h) Any and all notices or other communications or deliveries to be
provided by the Holders of the Preferred Stock hereunder, including, without
limitation, any Conversion Notice, shall be in writing and delivered personally,
by facsimile or sent by a nationally recognized overnight courier service,
addressed to the attention of the Chief Executive Officer and General Counsel of
the Company at the facsimile telephone number or address of the principal place
of business of the Company as set forth in the Purchase Agreement, which may be
altered as provided in the Purchase Agreement by notice to the Holders. Any and
all notices or other communications or deliveries to be provided by the Company
hereunder shall be in writing and delivered personally, by facsimile or sent by
a nationally recognized overnight courier service, addressed to each Holder of
Preferred Stock at the facsimile telephone number or address of such Holder
appearing on the books of the Company, or if no such facsimile telephone number
or address appears, at the principal place of business of the Holder. Any
notice or other communication or deliveries hereunder shall be deemed given and
effective on the earliest of (i) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified in this Section prior to 7:00 p.m. (New York City time), (ii) the date
after the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile telephone number specified in this Section later than
7:00 p.m. (New York City time) on any date and earlier than 11:59 p.m. (New York
City time) on such date, (iii) upon receipt, if sent by a nationally recognized
overnight courier service, or (iv) upon actual receipt by the party to whom such
notice is required to be given.
Section 6. REDEMPTION UPON CERTAIN EVENTS.
<PAGE>
(a) Upon the occurrence of a Triggering Event, each Holder shall (in
addition to all other rights it may have hereunder or under applicable law),
have the right, exercisable at the sole option of such Holder, to require the
Company to redeem all or a portion of the Preferred Stock then held by such
Holder for a redemption price, in cash, equal to the sum of (i) the Mandatory
Redemption Amount plus (ii) the product of (A) the number of Underlying Shares
issued in respect of conversions or as payment of dividends hereunder and then
held by the Holder and (B) the Per Share Market Value on the date such
redemption is demanded or the date that is one Business Day prior to the date
that the redemption price hereunder is paid in full, whichever is greater. If
the Company fails to pay the redemption price hereunder in full pursuant to
this Section within twenty (20) days after the date of a demand therefor, the
Company will pay interest thereon at a rate of 15% per annum, accruing daily
from such twentieth (20th) day until the redemption price, plus all such
interest thereon, is paid in full. For purposes of this Section, a share of
Preferred Stock is outstanding until such date as the Holder shall have received
Underlying Shares upon a conversion (or attempted conversion) thereof.
A "Triggering Event" means any one or more of the following events
(whatever the reason and whether it shall be voluntary or involuntary or
effected by operation of law or pursuant to any judgement, decree or order of
any court, or any order, rule or regulation of any administrative or
governmental body):
(i) the failure of an Underlying Securities Registration
Statement to be declared effective by the Commission on or prior to the 180th
day after the Original Issue Date;
(ii) if, during the Effectiveness Period, the effectiveness of
the Underlying Securities Registration Statement lapses for any reason such
that, for five (5) consecutive Trading Days, or the Holder shall not be
permitted to resell Registrable Securities under the Underlying Securities
Registration Statement (other than in connection with a Standstill not exceeding
90 days and other than a Blackout Period as permitted pursuant to the
Registration Rights Agreement);
(iii) the failure of the Common Stock to be listed on the
AMEX or on a Subsequent Market or the suspension of the Common Stock from the
AMEX or on a Subsequent Market for a period of five (5) consecutive Trading Days
or seven (7) Trading Days in the aggregate;
(iv) the Company shall fail for any reason to deliver
certificates representing Underlying Shares issuable upon a conversion hereunder
that comply with the provisions hereof prior to the 10th day after the
Conversion Date or the Company shall provide notice to any Holder, including by
way of public announcement, at any time, of its intention not to comply with
requests for conversion of any Preferred Stock in accordance with the terms
hereof;
(v) the Company shall be a party to any Change of Control
Transaction, shall agree to sell (in one or a series of related transactions)
all or substantially all of its assets (whether or not such sale would
constitute a Change of Control Transaction) or shall
<PAGE>
redeem more than a de minimis number of shares of Common Stock or other Junior
Securities (other than redemptions of Underlying Shares and other than as
expressly permitted herein);
(vi) an Event shall not have been cured to the satisfaction of
the Holders prior to the expiration of thirty (30) days from the Event Date
relating thereto (other than an Event caused by the failure of an Underlying
Securities Registration Statement to be declared effective by the Effectiveness
Date);
(vii) the Company shall fail for any reason to deliver the
certificate or certificates required pursuant to Section 5(b)(iii) or the cash
pursuant to a Buy-In within seven (7) days after notice is deemed delivered
hereunder; or
(viii) the Company shall fail to have available a sufficient
number of authorized and unreserved shares of Common Stock to issue to such
Holder upon a conversion hereunder (in which case, notwithstanding anything
herein to the contrary, if such failure is the only reason for such Event of
Default, then the Company need not redeem Underlying Shares pursuant to clause
(ii) of the first sentence of Section 6(a) above).
(b) If the Company requires a Standstill prior to the one year
anniversary of the Original Issue Date, each Holder shall have the right to
require the Company to redeem the shares of Preferred Stock held by such Holder
at a redemption price equal to the sum of (i) 115% of the aggregate Stated
Values of such Holders shares of Preferred Stock, (ii) the product of (A) the
number of Underlying Shares issued in respect of conversions or as payment of
dividends hereunder and then held by the Holder and (B) the Per Share Market
Value on the date such redemption is demanded or the Trading Day prior to the
date the redemption price hereunder is paid in full, whichever is greater and
(iii) all other amounts, costs, expenses and liquidated damages due in respect
of such shares of Preferred Stock. If the Company fails to pay the redemption
price hereunder in full pursuant to this Section within twenty (20) days after
the date of a demand therefor, the Company will pay interest thereon at a rate
of 15% per annum, accruing daily from such seventh day until the redemption
price, plus all such interest thereon, is paid in full. For purposes of this
Section, a share of Preferred Stock is outstanding until such date as the Holder
shall have received Underlying Shares upon a conversion (or attempted
conversion) thereof.
Section 7. DEFINITIONS. For the purposes hereof, the following
terms shall have the following meanings:
"CHANGE OF CONTROL TRANSACTION" means the occurrence of any of (i) an
acquisition after the date hereof by an individual or legal entity or "group"
(as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of in
excess of 50% of the voting securities of the Company, (ii) a replacement of
more than one-half of the members of the Company's board of directors which is
not approved by those individuals who are members of the board of directors on
the date hereof in one or a series of related transactions, (iii) the merger of
the Company with
<PAGE>
or into another entity, consolidation or sale of all or substantially all of the
assets of the Company in one or a series of related transactions, unless
following such transaction, the holders of the Company's securities continue to
hold at least 50% of such securities following such transaction or (iv) the
execution by the Company of an agreement to which the Company is a party or by
which it is bound, providing for any of the events set forth above in (i), (ii)
or (iii).
"CLOSING PRICE" means the average closing sales price of the Common
Stock as reported on the AMEX for the five (5) Trading Days immediately
preceding the Original Issue Date.
"COMMON STOCK" means the Company's common stock, $.01 par value, and
stock of any other class into which such shares may hereafter have been
reclassified or changed.
"CONVERSION RATIO" means, at any time, a fraction, of which the
numerator is Stated Value plus accrued but unpaid dividends (including any
accrued but unpaid late fees thereon) but only to the extent not paid in shares
of Common Stock in accordance with the terms hereof, and of which the
denominator is the Conversion Price at such time.
"FLOOR" mean 80% of the Closing Price, subject to adjustment pursuant
to Section 5(c).
"JUNIOR SECURITIES" means the Common Stock and all other equity
securities of the Company which are junior in rights and liquidation preference
to the Preferred Stock.
"MANDATORY REDEMPTION AMOUNT" for each share of Preferred Stock means
the sum of (i) the greater of (A) 130% of the Stated Value and all accrued
dividends with respect to such share, and (B) the product of (a) the Per Share
Market Value on the Trading Day immediately preceding (x) the date of the
Triggering Event or the Conversion Date, as the case may be, or (y) the date of
payment in full by the Company of the applicable redemption price, whichever is
greater, and (b) the Conversion Ratio calculated on the date of the Triggering
Event, and (ii) all other amounts, costs, expenses and liquidated damages due in
respect of such shares of Preferred Stock.
"ORIGINAL ISSUE DATE" shall mean the date of the first issuance of any
shares of the Preferred Stock regardless of the number of transfers of any
particular shares of Preferred Stock and regardless of the number of
certificates which may be issued to evidence such Preferred Stock.
"PER SHARE MARKET VALUE" means on any particular date (a) the closing
sales price per share of the Common Stock on such date on the AMEX or on such
Subsequent Market on which the Common Stock is then listed or traded, or if
there is no such price on such date, then the closing sales price on such
exchange or quotation system on the date nearest preceding such date, or (b) if
the Common Stock is not listed then on the AMEX or on a Subsequent Market, the
closing sales price for a share of Common Stock in the over-the-counter market,
as reported by the National Quotation Bureau Incorporated or similar
organization or agency succeeding to its
<PAGE>
functions of reporting prices) at the close of business on such date, or (c) if
the Common Stock is not then reported by the National Quotation Bureau
Incorporated (or similar organization or agency succeeding to its functions of
reporting prices), then the average of the "Pink Sheet" quotes for the relevant
conversion period, as determined in good faith by the Holder, or (d) if the
Common Stock is not then publicly traded the fair market value of a share of
Common Stock as determined by an Appraiser selected in good faith by the Holders
of a majority in interest of the shares of the Preferred Stock; PROVIDED,
HOWEVER, that the Company, after receipt of the determination by such Appraiser,
shall have the right to select an additional Appraiser, in which case, the fair
market value shall be equal to the average of the determinations by each such
Appraiser; and PROVIDED, FURTHER that all determinations of the Per Share Market
Value shall be appropriately adjusted for any stock dividends, stock splits or
other similar transactions during such period.
"PERSON" means a corporation, an association, a partnership,
organization, a business, an individual, a government or political subdivision
thereof or a governmental agency.
"PURCHASE AGREEMENT" means the Convertible Preferred Stock Purchase
Agreement, dated as of the Original Issue Date, among the Company and the
original Holder of the Preferred Stock.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of the Original Issue Date, by and among the Company and the
original Holder of the Preferred Stock.
"TRADING DAY" means (a) a day on which the Common Stock is traded on
the AMEX or on a Subsequent Market, or (b) if the Common Stock is not listed on
the AMEX or on a Subsequent Market, a day on which the Common Stock is traded in
the over-the-counter market, as reported by the OTC Bulletin Board, or (c) if
the Common Stock is not quoted on the OTC Bulletin Board, a day on which the
Common Stock is quoted in the over-the-counter market as reported by the
National Quotation Bureau Incorporated (or any similar organization or agency
succeeding its functions of reporting prices); PROVIDED, HOWEVER, that in the
event that the Common Stock is not listed or quoted as set forth in (a), (b) and
(c) hereof, then Trading Day shall mean any day except Saturday, Sunday and any
day which shall be a legal holiday or a day on which banking institutions in the
State of New York are authorized or required by law or other government action
to close.
"UNDERLYING SECURITIES REGISTRATION STATEMENT" means a registration
statement that meets the requirement of the Registration Rights Agreement and
requires the resale of all Underlying Shares by the recipient thereof, who shall
be named as a "selling stockholder" thereunder.
"UNDERLYING SHARES" means, collectively, the shares of Common Stock
into which the Shares are convertible and the shares of Common Stock issuable
upon payment of dividends thereon in accordance with the terms hereof.
<PAGE>
EXHIBIT A
NOTICE OF CONVERSION
(To be Executed by the Registered Holder
in order to Convert shares of Preferred Stock)
The undersigned hereby elects to convert the number of shares of 6% Series B
Convertible Preferred Stock indicated below, into shares of Common Stock, $.01
par value (the "COMMON STOCK"), of Unapix Entertainment, Inc. (the "COMPANY")
according to the conditions hereof, as of the date written below. If shares are
to be issued in the name of a person other than undersigned, the undersigned
will pay all transfer taxes payable with respect thereto and is delivering
herewith such certificates and opinions as reasonably requested by the Company
in accordance therewith. No fee will be charged to the Holder for any
conversion, except for such transfer taxes, if any.
Conversion calculations:
Date to Effect Conversion
Number of shares of Preferred Stock to be Converted
Number of shares of Common Stock to be Issued
Applicable Conversion Price
Signature
Address
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
Between
UNAPIX ENTERTAINMENT, INC.
and
KA INVESTMENTS LDC
Dated as of July 15, 1998
- --------------------------------------------------------------------------------
<PAGE>
CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT (this "AGREEMENT"), dated as
of July 15, 1998, between Unapix Entertainment, Inc., a Delaware corporation
(the "COMPANY"), and KA Investments LDC, a Cayman Islands corporation (the
"PURCHASER").
WHEREAS, subject to the terms and conditions set forth in this Agreement,
the Company desires to issue and sell to the Purchaser and the Purchaser desires
to purchase from the Company, shares of the Company's 6% Series B Convertible
Preferred Stock, par value $.01 per share (the "PREFERRED STOCK").
IN CONSIDERATION of the mutual covenants contained in this Agreement, the
Company and Purchaser agree as follows:
ARTICLE I.
PURCHASE AND SALE OF PREFERRED STOCK
11. PURCHASE AND SALE. (a) Subject to the terms and conditions set forth
herein, the Company shall issue and sell to the Purchaser, and the Purchaser
shall purchase from the Company 300 shares of Preferred Stock (the "SHARES").
(b) The Shares shall have the respective rights, preferences and
privileges set forth in EXHIBIT A attached hereto, which shall be incorporated
into a Certificate of Designation to be approved by the Purchaser and filed on
or prior to the Closing Date (as defined below) by the Company with the
Secretary of State of Delaware (the "CERTIFICATE OF DESIGNATION").
For purposes of this Agreement, "CONVERSION PRICE," "ORIGINAL ISSUE DATE,"
"CONVERSION DATE," "TRADING DAY" and "PER SHARE MARKET VALUE" shall have the
meanings set forth in EXHIBIT A.
12. PURCHASE PRICE. The purchase price per Share shall be $10,000.
13. THE CLOSING.
(a) The closing of the purchase and sale of the Shares (the
"CLOSING") shall take place at the offices of Robinson Silverman Pearce Aronsohn
& Berman LLP ("ROBINSON SILVERMAN"), 1290 Avenue of the Americas, New York, New
York 10104, immediately following the execution hereof or such later date as the
parties shall agree. The date of the Closing is hereinafter referred to as the
"CLOSING DATE."
(b) At the Closing, the parties shall deliver or shall cause to be
delivered the following: (i) the Company shall deliver to the Purchaser (1)
stock certificates representing the Shares, registered in the name of the
Purchaser, (2) a three year non-callable common stock purchase warrant in the
form of EXHIBIT B (the "WARRANT") entitling the Purchaser to purchase an
<PAGE>
aggregate of 200,000 shares of the Company's common stock, $.01 par value per
share (the "COMMON STOCK"), at an exercise price equal to 120% of the average of
the closing sales prices of the Common Stock as reported on the American Stock
Exchange (the "AMEX") for the five (5) Trading Days immediately preceding the
Closing Date (the "CLOSING PRICE"), registered in the name of the Purchaser, (3)
the legal opinion of St. John & Wayne, L.L.C., outside counsel to the Company,
substantially in the form of EXHIBIT D, dated the Closing Date, and (4) all
other documents, instruments and writings required to have been delivered at or
prior to the Closing Date by the Company pursuant to this Agreement, including
an executed Registration Rights Agreement, dated the date hereof, between the
Company and the Purchaser, in the form of EXHIBIT C (the "REGISTRATION RIGHTS
AGREEMENT"), and the Irrevocable Transfer Agent Instructions, dated the Closing
Date, in the form of EXHIBIT E, delivered to and acknowledged by the Company's
transfer agent (the "TRANSFER AGENT INSTRUCTIONS"); and (ii) the Purchaser shall
deliver to the Company (1) $3,000,000 in United States dollars in immediately
available funds by wire transfer to an account designated in writing by the
Company for such purpose prior to the Closing Date, and (2) all documents,
instruments and writings required to have been delivered at or prior to the
Closing Date by the Purchaser pursuant to this Agreement, including an executed
Registration Rights Agreement.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES
21. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY. The
Company hereby makes the following representations and warranties to the
Purchaser:
(a) ORGANIZATION AND QUALIFICATION. The Company is a corporation,
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware, with the requisite corporate power and authority to own and
use its properties and assets and to carry on its business as currently
conducted. The Company has no subsidiaries other than as set forth in SCHEDULE
2.1(A) (collectively the "SUBSIDIARIES"). Except as set forth in SCHEDULE
2.1(A), each of the Subsidiaries is an entity, duly incorporated or otherwise
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (as applicable), with the full
corporate power and authority to own and use its properties and assets and to
carry on its business as currently conducted. Except as set forth in SCHEDULE
2.1(A), each of the Company and the Subsidiaries is duly qualified to do
business and is in good standing as a foreign corporation in each jurisdiction
in which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not, individually or in the aggregate, (x)
adversely affect the legality, validity or enforceability of the Securities (as
defined below) or any of this Agreement, the Certificate of Designation, the
Warrant or the Registration Rights Agreement (collectively, the "TRANSACTION
DOCUMENTS"), (y) have or result in a material adverse effect on the results of
operations, assets, prospects, or condition (financial or otherwise) of the
Company and
<PAGE>
the Subsidiaries, taken as a whole, or (z) adversely impair the Company's
ability to perform fully on a timely basis its obligations under any of the
Transaction Documents (any of (x), (y) or (z), being a "MATERIAL ADVERSE
EFFECT").
(b) AUTHORIZATION; ENFORCEMENT. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents, and otherwise to carry out
its obligations thereunder. The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated thereby have been duly authorized by all necessary
action on the part of the Company and no further action is required by the
Company. Each of the Transaction Documents has been duly executed by the
Company and, when delivered (or filed, as the case may be) in accordance with
the terms hereof, will constitute the valid and binding obligation of the
Company enforceable against the Company in accordance with its terms. Neither
the Company nor any Subsidiary is in violation of any of the provisions of its
respective certificate of incorporation, by- laws or other charter documents.
(c) CAPITALIZATION. The number of authorized, issued and outstanding
capital stock of the Company is set forth in SCHEDULE 2.1(C). No shares of
Common Stock are entitled to preemptive or similar rights, nor is any holder of
the Common Stock entitled to preemptive or similar rights arising out of any
agreement or understanding with the Company by virtue of any of the Transaction
Documents. Except as disclosed in SCHEDULE 2.1(C), there are no outstanding
options, warrants, script rights to subscribe to, calls or commitments of any
character whatsoever relating to, or, except as a result of the purchase and
sale of the Shares and the Warrant, securities, rights or obligations
convertible into or exchangeable for, or giving any person any right to
subscribe for or acquire any shares of Common Stock, or contracts, commitments,
understandings, or arrangements by which the Company or any Subsidiary is or may
become bound to issue additional shares of Common Stock, or securities or rights
convertible or exchangeable into shares of Common Stock. To the knowledge of
the Company, except as specifically disclosed in the SEC Documents (as defined
below) or SCHEDULE 2.1(C), no Person or group of related Persons beneficially
owns (as determined pursuant to Rule 13d-3 promulgated under the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT")) or has the right to
acquire by agreement with or by obligation binding upon the Company beneficial
ownership of in excess of 5% of the Common Stock. A "PERSON" means an
individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any kind.
(d) ISSUANCE OF THE SHARES AND THE WARRANT. The Shares and the
Warrant are duly authorized, and, when issued and paid for in accordance with
the terms hereof, shall have been validly issued, fully paid and nonassessable,
free and clear of all liens, encumbrances and rights of first refusal of any
kind (collectively, "LIENS"). The Company has on the date hereof and will, at
the Closing Date and at all times while the Shares and the Warrant are
outstanding, maintain an adequate reserve of duly reserved shares of Common
Stock, reserved for issuance to
<PAGE>
the holders of the Shares and the Warrant to enable it to perform its
conversion, exercise and other obligations under this Agreement, the Certificate
of Designation and the Warrant. Such number of reserved and available shares
of Common Stock is not less than the sum of (i) 120% of the number of shares of
Common Stock which would be issuable upon conversion in full of the Shares,
assuming such conversion were effected on the Original Issue Date, (ii) the
number of shares of Common Stock issuable upon exercise in full of the Warrant,
and (iii) the number of shares Common Stock which would be issuable upon payment
of dividends on the Shares, assuming each Share is outstanding for two years and
all dividends are paid in shares of Common Stock. The shares of Common Stock
issuable upon conversion of the Shares, as payment of dividends thereon, and
upon exercise of the Warrant are collectively referred to herein as the
"UNDERLYING SHARES." The Shares, the Warrant and Underlying Shares are,
collectively, the "SECURITIES." When issued in accordance with the Certificate
of Designation and upon exercise of the Warrant, in accordance with their terms,
the Underlying Shares shall have been duly authorized, validly issued, fully
paid and nonassessable, free and clear of all Liens.
(e) NO CONFLICTS. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated thereby do not and will not (i) conflict with or
violate any provision of its certificate of incorporation, bylaws or other
charter documents (each as amended through the date hereof), or (ii) subject to
obtaining the Required Approvals, conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, credit facility, indenture or instrument
(evidencing a Company debt or otherwise) to which the Company or any Subsidiary
is a party or by which any property or asset of the Company or any Subsidiary is
bound or affected, or (iii) result in a violation of any law, rule, regulation,
order, judgment, injunction, decree or other restriction of any court or
governmental authority to which the Company is subject (including Federal and
state securities laws and regulations), or by which any property or asset of the
Company is bound or affected, except in the case of each of clauses (ii) and
(iii), as could not, individually or in the aggregate, have or result in a
Material Adverse Effect. The business of the Company is not being conducted in
violation of any law, ordinance or regulation of any governmental authority,
except for violations which, individually or in the aggregate, could not have or
result in a Material Adverse Effect.
(f) CONSENTS AND APPROVALS. Neither the Company nor any Subsidiary
is required to obtain any consent, waiver, approval, authorization or order of,
give any notice to, or make any filing or registration with, any court or other
Federal, state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the Company of the
Transaction Documents, other than (i) as have been made (in the case of filings
and registrations) or obtained (in the case of consents, waivers, orders,
approvals or authorizations) and subject, in the case of the consent and waiver
of Imperial Bank, to the terms and conditions contained therein (to which
Purchaser is a party), (ii) the filings of the Certificate of Designation with
the Secretary of State of Delaware, (iii) the filing of Underlying Securities
Registration Statement with the Securities and Exchange Commission (the
"COMMISSION")
<PAGE>
pursuant to the Registration Rights Agreement, (iv) the application(s) to the
AMEX for the listing of the Underlying Shares with the AMEX (and with any other
national securities exchange or market on which the Common Stock is then
listed), (v) the filing of a Form D with the Commission, and (vi) in all other
cases where the failure to obtain such consent, waiver, authorization or order,
or to give such notice or make such filing or registration could not have or
result in, individually or in the aggregate, a Material Adverse Effect (the
"REQUIRED APPROVALS").
(g) LITIGATION; PROCEEDINGS. Except as specifically disclosed in the
SEC Documents, there is no action, suit, notice of violation, proceeding or
investigation pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of its Subsidiaries or any of their respective
properties before or by any court, governmental or administrative agency or
regulatory authority (Federal, state, county, local or foreign) which (i)
adversely affects or challenges the legality, validity or enforceability of any
of the Transaction Documents or the Securities or (ii) could reasonably be
expected to, individually or in the aggregate, have or result in a Material
Adverse Effect.
(h) NO DEFAULT OR VIOLATION. Neither the Company nor any Subsidiary
(i) is in default under or in violation of (and no event has occurred which has
not been waived which, with notice or lapse of time or both, would result in a
default by the Company or any Subsidiary under), nor has the Company or any
Subsidiary received notice of a claim that it is in default under or that it is
in violation of, any indenture, loan or credit agreement or any other agreement
or instrument to which it is a party or by which it or any of its properties is
bound, (ii) is in violation of any order of any court, arbitrator or
governmental body, or (iii) is in violation of any statute, rule or regulation
of any governmental authority, except as could not individually or in the
aggregate, have or result in a Material Adverse Effect.
(i) SCHEDULES. The Schedules to this Agreement furnished by or on
behalf of the Company do not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
(j) PRIVATE OFFERING. Assuming the accuracy of the representations
and warranties of the Purchaser set forth in Sections 2.2(b)-(f), the offer,
issuance and sale of the Securities to the Purchaser as contemplated hereby are
exempt from the registration requirements of the Securities Act of 1933, as
amended (the "SECURITIES ACT"). Neither the Company nor any Person acting on
its behalf has taken any action which might subject the offering, issuance or
sale of the Securities to the registration requirements of the Securities Act.
(k) SEC DOCUMENTS; FINANCIAL STATEMENTS. The Company has filed all
reports required to be filed by it under the Exchange Act, including pursuant to
Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or
such shorter period as the Company was required by law to file such material)
(the foregoing materials being collectively referred to
<PAGE>
herein as the "SEC DOCUMENTS" and, together with the Schedules to this Agreement
the "DISCLOSURE MATERIALS") on a timely basis or has received a valid extension
of such time of filing and has filed any such SEC Documents prior to the
expiration of any such extension. As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the
Securities Act and the Exchange Act and the rules and regulations of the
Commission promulgated thereunder, and none of the SEC Documents, when filed,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. All material agreements to which the Company is a party or to which
the property or assets of the Company are subject have been filed as exhibits to
the SEC Documents as required. The financial statements of the Company included
in the SEC Documents comply in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with respect
thereto as in effect at the time of filing. Such financial statements were
prepared by the Company's independent certified public accountants in accordance
with generally accepted accounting principles applied on a consistent basis
("GAAP") during the periods involved, except as may be otherwise specified in
such financial statements or the notes thereto, and fairly present in all
material respects the financial position of the Company as of and for the dates
thereof and the results of operations and cash flows for the periods then ended,
subject, in the case of unaudited statements, to normal, immaterial, year- end
audit adjustments. Since December 31, 1997, except as specifically disclosed in
the SEC Documents, (a) there has been no event, occurrence or development that
could reasonably be expected to have or result in a Material Adverse Effect, (b)
the Company has not incurred any liabilities (contingent or otherwise) other
than (x) liabilities incurred in the ordinary course of business consistent with
past practice and (y) liabilities not required to be reflected in the Company's
financial statements pursuant to GAAP, (c) the Company has not altered its
method of accounting or the identity of its auditors and (d) the Company has not
declared or made any payment or distribution of cash or other property to its
stockholders or officers or directors (other than in compliance with existing
Company stock option plans) with respect to its capital stock, or purchased,
redeemed (or made any agreements to purchase or redeem) any shares of its
capital stock. The Company last filed audited financial statements with the
Commission on April 15, 1998, and has not received any comments from the
Commission in respect thereof.
(l) INVESTMENT COMPANY. The Company is not, and is not an Affiliate
(as defined in Rule 405 under the Securities Act) ) of, an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
(m) CERTAIN FEES. Except for certain fees payable by the Company to
Reedland Capital Partners, no fees or commissions will be payable by the Company
to any broker, financial advisor or consultant, finder, placement agent,
investment banker, or bank with respect to the transactions contemplated by this
Agreement. The Purchaser shall have no obligation with respect to any fees or
with respect to any claims made by or on behalf of other Persons for fees of a
type contemplated in this Section that may be due in connection with the
transactions contemplated by this Agreement. The Company shall indemnify and
hold harmless
<PAGE>
the Purchaser, its employees, officers, directors, agents, and partners, and
their respective Affiliates, from and against all claims, losses, damages, costs
(including the costs of preparation and attorney's fees) and expenses suffered
in respect of any such claimed or existing fees, as such fees and expenses are
incurred.
(n) SOLICITATION MATERIALS. Neither the Company nor any Person
acting on the Company's behalf has (i) distributed any offering materials in
connection with the offering and sale of the Securities, or (ii) solicited any
offer to buy or sell the Securities by means of any form of general solicitation
or advertising.
(o) FORM S-3 ELIGIBILITY. The Company is, and at the Closing Date
will be, eligible to register securities for resale with the Commission under
Form S-3 promulgated under the Securities Act.
(p) EXCLUSIVITY. The Company shall not issue and sell the Shares to
any Person other than the Purchaser other than with the specific prior written
consent of the Purchaser.
(q) SENIORITY. No class of equity securities of the Company is
senior to the Shares in right of payment, whether upon liquidation or
dissolution, or otherwise.
(r) PATENTS AND TRADEMARKS. The Company has, or has rights to use,
all patents, patent applications, trademarks, trademark applications, service
marks, trade names, copyrights, licenses and rights (collectively, the
"INTELLECTUAL PROPERTY RIGHTS") which are necessary for use in connection with
its business, and which the failure to so have would have a Material Adverse
Effect. To the best knowledge of the Company, all such Intellectual Property
Rights are enforceable and there is no existing infringement by another Person
of any of the Intellectual Property Rights.
(s) LISTING AND MAINTENANCE REQUIREMENTS COMPLIANCE. The Company has
not in the two years preceding the date hereof received notice (written or oral)
from the AMEX or any other stock exchange, market or trading facility on which
the Common Stock is or has been listed (or on which it has been quoted) to the
effect that the Company is not in compliance with the listing or maintenance
requirements of such exchange or market. The Company is in compliance with all
such maintenance requirements.
(t) REGISTRATION RIGHTS; RIGHTS OF PARTICIPATION. Except as
described on SCHEDULE 6(B) to the Registration Rights Agreement, (i) the Company
has not granted or agreed to grant to any Person any rights (including
"piggy-back" registration rights) to have any securities of the Company
registered with the Commission or any other governmental authority which has not
been satisfied and (ii) no Person, has any right of first refusal, preemptive
right, right of participation, or any similar right to participate in the
transactions contemplated by the Transaction Documents.
<PAGE>
(u) REGULATORY PERMITS. The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate Federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses as described in the SEC Documents, except where the failure to
possess such permits could not, individually or in the aggregate, have or result
in a Material Adverse Effect ("MATERIAL PERMITS"), and neither the Company nor
any such Subsidiary has received any notice of proceedings relating to the
revocation or modification of any Material Permit.
(v) Disclosure. The Company confirms that it has not provided the
Purchaser or its agents or counsel with any information that constitutes or
might constitute material non-public information. The Company understands and
confirms that the Purchaser shall be relying on the foregoing representations in
effecting transactions in securities of the Company.
2.2 Representations and Warranties of the Purchaser. The Purchaser hereby
represents and warrants to the Company as follows:
(a) Organization; Authority. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation with the requisite corporate power and
authority, to enter into and to consummate the transactions contemplated by the
Transaction Documents and otherwise to carry out its obligations thereunder.
The purchase by the Purchaser of the Securities hereunder has been duly
authorized by all necessary action on the part of the Purchaser. Each of this
Agreement and the Registration Rights Agreement has been duly executed and
delivered by the Purchaser and constitutes the valid and legally binding
obligation of the Purchaser, enforceable against it in accordance with its
terms.
(b) Investment Intent. The Purchaser is acquiring the Securities for
its own account for investment purposes only and not with a view to or for
distributing or reselling such Securities or any part thereof or interest
therein, without prejudice, however, to the Purchaser's right, subject to the
provisions of this Agreement and the Registration Rights Agreement, at all times
to sell or otherwise dispose of all or any part of such Securities pursuant to
an effective registration statement under the Securities Act and in compliance
with applicable state securities laws or under an exemption from such
registration.
(c) Purchaser Status. At the time the Purchaser was offered the
Shares and the Warrant, it was, and at the date hereof, it is, and at the
Closing Date and each exercise date under the Warrant, it will be, an
"accredited investor" as defined in Rule 501(a) under the Securities Act.
(d) Experience of the Purchaser. The Purchaser either alone or
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the
<PAGE>
Securities, and has so evaluated the merits and risks of such investment.
(e) Ability of the Purchaser to Bear Risk of Investment. The
Purchaser is able to bear the economic risk of an investment in the Securities
and, at the present time, is able to afford a complete loss of such investment.
(f) Access to Information. The Purchaser acknowledges receipt of the
Disclosure Materials and further acknowledges that it has reviewed the
Disclosure Materials and has been afforded (i) the opportunity to ask such
questions as it has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions of the
offering of the Securities and the merits and risks of investing in the
Securities; (ii) access to information about the Company and the Company's
financial condition, results of operations, business, properties, management and
prospects sufficient to enable it to evaluate its investment; and (iii) the
opportunity to obtain such additional information which the Company possesses or
can acquire without unreasonable effort or expense that is necessary to make an
informed investment decision with respect to the investment and to verify the
accuracy and completeness of the information contained in the Disclosure
Materials. Neither such inquiries nor any other investigation conducted by or
behalf of the Purchaser or its representatives or counsel shall modify, amend or
affect the Purchaser's right to rely on the truth, accuracy and completeness of
the Disclosure Materials and the Company's representations and warranties
contained in the Transaction Documents.
(g) General Solicitation. The Purchaser is not purchasing the Shares
as a result of or subsequent to any advertisement, article, notice or other
communication published in any newspaper, magazine or similar media or broadcast
over television or radio or presented at any seminar.
(h) Reliance. The Purchaser understands and acknowledges that (i)
the Securities are being offered and sold to it without registration under the
Securities Act in a private placement that is exempt from the registration
provisions of the Securities Act and (ii) the availability of such exemption,
depends in part on, and the Company will rely upon the accuracy and truthfulness
of, the foregoing representations and the Purchaser hereby consents to such
reliance.
The Company acknowledges and agrees that the Purchaser makes no
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 2.2.
ARTICLE I
OTHER AGREEMENTS OF THE PARTIES
3.1 TRANSFER RESTRICTIONS. (a) Securities may only be disposed pursuant
to an
<PAGE>
effective registration statement under the Securities Act, to the Company or
pursuant to an available exemption from or in a transaction not subject to the
registration requirements of the Securities Act. In connection with any
transfer of Securities other than pursuant to an effective registration
statement or to the Company, except as otherwise set forth herein, the Company
may require the transferor thereof to provide to the Company an opinion of
counsel selected by the transferor, the form and substance of which opinion
shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration under the Securities Act. The Company
shall not be obligated to permit transfers of Securities (other than pursuant to
an effective registration statement or pursuant to Rule 144 promulgated under
the Securities Act) to more than seven (7) Persons who are not either Affiliates
of the Purchaser or investment funds under common management with the Purchaser.
Notwithstanding the foregoing, the Company hereby consents to and agrees to
register on the books of the Company and with any transfer agent for the
securities of the Company any transfer of Securities by the Purchaser to an
Affiliate of the Purchaser or to an investment fund under common management with
the Purchaser, or any transfer among any such Affiliates or funds, provided that
transferee certifies to the Company that it is an "accredited investor" as
defined in Rule 501(a) under the Securities Act and that it is acquiring the
Securities solely for investment purposes. Any such transferee shall agree in
writing to be bound by the terms of this Agreement and shall have the rights of
a Purchaser under this Agreement and the Registration Rights Agreement.
(b) The Purchaser agrees to the imprinting, so long as is required by
this Section 3.1(b), of the following legend on the Securities:
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE [CONVERTIBLE] [EXERCISABLE] HAVE BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY
STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT
BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN
A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, AS EVIDENCED BY AN OPINION OF COUNSEL, THE FORM AND
SUBSTANCE OF WHICH OPINION SHALL BE REASONABLY SATISFACTORY TO THE COMPANY,
AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
[FOR SHARES ONLY] THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN RESTRICTIONS ON CONVERSION SET FORTH IN A CONVERTIBLE
PREFERRED STOCK PURCHASE AGREEMENT, DATED AS OF JULY 15, 1998, BETWEEN
UNAPIX ENTERTAINMENT, INC. (THE "COMPANY") AND THE ORIGINAL HOLDER
<PAGE>
HEREOF. A COPY OF THAT AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE
COMPANY.
Underlying Shares shall not contain the legend set forth above nor any
other legend if the conversion of Shares, the payment of dividends thereon,
exercise of the Warrant or other issuances of Underlying Shares as contemplated
hereby or by the Certificate of Designation occurs at any time while an
Underlying Securities Registration Statement is effective under the Securities
Act (provided the Purchaser shall have delivered to the Company an indemnity
against losses, claims and damages suffered by the Company as a result of a
failure by the Purchaser to comply with applicable prospectus delivery
requirements) or in the event there is not an effective Underlying Securities
Registration Statement at such time, if in the opinion of counsel to the Company
such legend is not required under applicable requirements of the Securities Act
(including judicial interpretations and pronouncements issued by the staff of
the Commission). The Company shall cause its counsel to issue the Transfer Agent
instructions attached hereto as Exhibit E to the Company's transfer agent on the
day that the Underlying Securities Registration Statement is declared effective
by the Commission. The Company agrees that it will provide the Purchaser, upon
request, with a certificate or certificates representing Underlying Shares, free
from such legend at such time as such legend is no longer required hereunder.
The Company may not make any notation on its records or give instructions to any
transfer agent of the Company which enlarge the restrictions of transfer set
forth in this Section.
3.2 ACKNOWLEDGMENT OF DILUTION. The Company acknowledges that the
issuance of the Underlying Shares upon (i) conversion of the Shares and payment
of dividends thereon in accordance with the terms of the Certificate of
Designation and (ii) exercise of the Warrant, may result in dilution of the
outstanding shares of Common Stock, which dilution may be substantial under
certain market conditions. The Company further acknowledges that its obligation
to issue Underlying Shares upon (x) conversion of the Shares and payment of
dividends thereon in accordance with the terms of the Certificate of
Designation, and (y) exercise of the Warrant, is unconditional and absolute,
subject to the limitations set forth herein in the Certificate of Designation or
pursuant to the Warrant, regardless of the effect of any such dilution.
3.3 FURNISHING OF INFORMATION. As long as the Purchaser owns Securities,
the Company covenants to timely file (or obtain extensions in respect thereof
and file within the applicable grace period) all reports required to be filed by
the Company after the date hereof pursuant to Section 13(a) or 15(d) of the
Exchange Act. As long as the Purchaser owns Securities, if the Company is not
required to file reports pursuant to such sections, it will prepare and furnish
to the Purchaser and make publicly available in accordance with Rule 144(c)
promulgated under the Securities Act annual and quarterly financial statements,
together with a discussion and analysis of such financial statements in form and
substance substantially similar to those that would otherwise be required to be
included in reports required by Section 13(a) or 15(d) of the Exchange Act, as
well as any other information required thereby, in the time period that such
filings would have been required to have been made under the Exchange Act. The
<PAGE>
Company further covenants that it will take such further action as any holder of
Securities may reasonably request, all to the extent required from time to time
to enable such Person to sell Underlying Shares without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144
promulgated under the Securities Act, including the legal opinion referenced
above in this Section. Upon the request of any such Person, the Company shall
deliver to such Person a written certification of a duly authorized officer as
to whether it has complied with such requirements.
3.4 BLUE SKY LAWS. In accordance with the Registration Rights Agreement,
the Company shall qualify or exempt the issuance and sale of the Underlying
Shares under the securities or Blue Sky laws of such jurisdictions as the
Purchaser may reasonably request and shall continue such qualification or
exemption at all times until the Purchaser notifies the Company in writing that
it no longer owns Securities; provided, however, that neither the Company nor
its Subsidiaries shall be required in connection therewith to qualify as a
foreign corporation where they are not now so qualified or to take any action
that would subject the Company to general service of process in any such
jurisdiction where it is not then so subject or subject the Company to any
material tax in any such jurisdiction where it is not then so subject.
3.5 INTEGRATION. The Company shall not, and shall use its best efforts to
ensure that, no Affiliate shall, sell, offer for sale or solicit offers to buy
or otherwise negotiate in respect of any security (as defined in Section 2 of
the Securities Act) that would be integrated with the offer or sale of the
Securities in a manner that would require the registration under the Securities
Act of the sale of the Securities to the Purchaser.
3.6 INCREASE IN AUTHORIZED SHARES. At such times as the Company would be,
if a notice of conversion or exercise (as the case may be) were to be delivered
on such date, precluded from (a) converting the Shares in full, assuming all
Shares were converted at a Conversion Price equal to the Floor (as defined in
the Purchase Agreement), (b) paying any earned and unpaid dividends in respect
of the Shares in shares of Common Stock, based upon payment at a time when the
Conversion Price is equal to the Floor, or (c) honoring the exercise in full of
the Warrant due to the unavailability of a sufficient number of shares of
authorized but unissued or reserved Common Stock, the Board of Directors of the
Company shall promptly (and in any case, within 30 Business Days from such date)
prepare and mail to the stockholders of the Company proxy materials requesting
authorization to amend the Company's Certificate of Incorporation to increase
the number of shares of Common Stock which the Company is authorized to issue to
at least such number of shares as reasonably requested by the Purchaser in order
to provide for such number of authorized and unissued shares of Common Stock to
enable the Company to comply with its conversion, exercise and reservation of
shares obligations as set forth in this Agreement, the Certificates of
Designation and the Warrant (the sum of (x) the number of then authorized shares
of Common Stock, (y) the number of shares of Common Stock then outstanding plus
all shares of Common Stock issuable upon exercise of all outstanding options,
warrants and convertible instruments, and (z) the sum of (i) the number of
Underlying Shares as are then issuable upon a conversion in full of all then
outstanding Shares based upon a
<PAGE>
Conversion Price equal to the Floor, and as payment of dividends thereon at a
time when the Conversion Price is equal to the Floor, and (ii) the number of
Underlying Shares as are issuable upon exercise in full of the Warrant, shall be
a reasonable number). In connection therewith, the Board of Directors shall (a)
adopt proper resolutions authorizing such increase, (b) recommend to and
otherwise use its best efforts to promptly and duly obtain stockholder approval
to carry out such resolutions (and hold a special meeting of the stockholders no
later than the 60th day after delivery of the proxy materials relating to such
meeting) and (c) within 5 business Days of obtaining such stockholder
authorization, file an appropriate amendment to the Company's Certificate of
Incorporation to evidence such increase.
3.7 LISTING AND RESERVATION OF UNDERLYING SHARES. (a) The Company shall
(i) not later than the 10th day following the Closing Date, prepare and file
with the AMEX (as well as any other national securities exchange or market or
trading or quotation facility on which the Common Stock is then listed) an
additional shares listing application covering a number of shares of Common
Stock which is at least equal to the number of shares required to be reserved
pursuant to Section 2.1(d), (ii) take all steps necessary to cause the such
shares to be approved for listing in the AMEX (as well as on any other national
securities exchange or market or trading or quotation facility on which the
Common Stock is then listed) as soon as possible thereafter, and (iii) provide
to the Purchaser evidence of such listing, and the Company shall maintain the
listing of its Common Stock thereon.
(b) The Company shall maintain a reserve of Common Stock for issuance
upon conversion of the Shares (and for payment of dividends thereon in shares of
Common Stock) and upon exercise of the Warrant in accordance with its terms, in
such amount as may be required to perform its obligations in full under the
Transaction Documents, which reserve shall include a number of shares of Common
Stock equal to no less than two times the number of shares of Common Stock as
would be issuable upon conversion in full of the Shares, upon payment of
dividends thereon and upon conversion in full of the Warrant.
3.8 PURCHASER OWNERSHIP OF COMMON STOCK. The Purchaser agrees not to
convert Shares or exercise the Warrant to the extent such conversion or exercise
would result in the Purchaser beneficially owning (as determined in accordance
with Section 13(d) of the Exchange Act and the rules thereunder) in excess of
4.999% of the then issued and outstanding shares of Common Stock, including
shares issuable upon conversion of the Shares and exercise of the Warrant held
by such Purchaser after application of this Section. To the extent that the
limitation contained in this Section applies, the determination of whether
Shares are convertible (in relation to other securities owned by a Purchaser)
and of which Shares are convertible shall be in the sole discretion of the
Purchaser, and the submission of Shares for conversion shall be deemed to be
such Purchaser's determination of whether such Shares are convertible (in
relation to other securities owned by a Purchaser) and of which portion of such
Shares are convertible, in each case subject to such aggregate percentage
limitation, and the Company shall have no obligation to verify or confirm the
accuracy of such determination. Nothing contained herein shall be deemed to
restrict the right of the Purchaser to convert Shares or exercise the Warrant at
such
<PAGE>
time as such conversion will not violate the provisions of this Section. The
provisions of this Section will not apply to any conversion pursuant to Section
5(a)(iii) of the Certificates of Designation, and may be waived by the Purchaser
upon not less than 75 days prior notice to the Company, and the provisions of
this Section shall continue to apply until such 75th day (or later, if stated in
the notice of waiver).
3.9 CONVERSION PROCEDURES. The Transfer Agent Instructions, Conversion
Notice (as defined in Exhibit A and Notice of Exercise under the Warrant set
forth the totality of the procedures with respect to the conversion of the
Shares and exercise of the Warrant, including the form of legal opinion, if
necessary, that shall be rendered to the Company's transfer agent and such other
information and instructions as may be reasonably necessary to enable the
Purchaser to convert its Shares and exercise the Warrant as contemplated in the
Shares and the Warrant (as applicable).
3.10 NOTICE OF BREACHES. (a) Each of the Company and the Purchaser shall
give prompt written notice to the other of any breach by it of any
representation, warranty or other agreement contained in any Transaction
Document, as well as any events or occurrences arising after the date hereof
which would reasonably be likely to cause any representation or warranty or
other agreement of such party, as the case may be, contained therein to be
incorrect or breached as of the Closing Date. However, no disclosure by either
party pursuant to this Section shall be deemed to cure any breach of any
representation, warranty or other agreement contained in any Transaction
Document.
(b) Notwithstanding the generality of Section 3.10(a), the Company
shall promptly notify the Purchaser of any notice or claim (written or oral)
that it receives from any lender of the Company to the effect that the
consummation of the transactions contemplated by the Transaction Documents
violates or would violate any written agreement or understanding between such
lender and the Company, and the Company shall promptly furnish by facsimile to
the holders of the Shares a copy of any written statement in support of or
relating to such claim or notice.
3.11 CONVERSION AND EXERCISE OBLIGATIONS OF THE COMPANY. The Company shall
honor conversions of the Shares and exercises of the Warrant and shall deliver
Underlying Shares in accordance with the respective terms and conditions and
time periods set forth in the respective Certificate of Designation and the
Warrant.
3.12 RIGHT OF FIRST REFUSAL; SUBSEQUENT REGISTRATIONS. (a) The Company
shall not, directly or indirectly, without the prior written consent of
Purchaser, offer, sell, grant any option to purchase, or otherwise dispose of
(or announce any offer, sale, grant or any option to purchase or other
disposition) any of its or its Affiliates' equity or equity-equivalent
securities or any instrument that is convertible into or exchangeable for Common
Stock in a transaction not registered under the Securities Act (a "Subsequent
Placement") for a period of 12 months after the Closing Date, except (i) the
granting of options or warrants to employees, officers and
<PAGE>
directors, and the issuance of shares upon exercise of options granted, by the
Company, (ii) shares issued upon exercise of any currently outstanding warrants
or options and upon conversion of any currently outstanding convertible
securities of the Company in each case disclosed in Schedule 2.1(c), (iii)
shares of Common Stock issued upon conversion of Shares, as payment of dividends
thereon, or upon exercise of the Warrant in accordance with their respective
terms, (iv) securities issued by the Company in connection with acquisitions of
non-affiliated entities and in connection with the transactions disclosed under
the heading "Other Contractual Commitments" on Schedule 2.1(c), in the amounts
set forth under such heading, (v) issuances of up to an aggregate of 250,000
shares of Common Stock to holders of Company issued warrants disclosed in
Schedule 2.1(c) in connection with redemptions thereof, and (vi) placements of
securities that are not subject to the registration requirements of the
Securities Act to either General Cinema Corporation, Pegasus Investors, L.P.,
Phil Maisel or any of their respective Affiliates so long as any such placements
that are comprised in whole or in part of securities as are convertible or
exchangeable for Common Stock are not so convertible or exchangeable prior to
the earlier to occur of (x) the 120th day following the date upon which the
Purchaser can initially convert the Shares pursuant to the Certificate of
Designation and (y) such time as at least 85% of the Shares have been converted
(the earlier to occur of (x) and (y) above, hereinafter referred to as the
"Disposition Event"), and, provided, further, that if such placement consists of
a sale of Common Stock, no disposition by the holder thereof may occur until
the occurrence of the Disposition Event, unless, in any such case, (A) the
Company delivers to the Purchaser a written notice (the "Subsequent Placement
Notice") of its intention to effect such Subsequent Placement, which Subsequent
Placement Notice shall describe in reasonable detail the proposed terms of such
Subsequent Placement, the amount of proceeds intended to be raised thereunder,
the Person(s) or, if not then known, a list of not more than seven (7) potential
investors with whom such Subsequent Placement shall be affected, and attached to
which shall be a term sheet or similar document relating thereto, and (B) the
Purchaser shall not have notified the Company by 5:00 p.m. (New York City time)
on the fifth (5th) Trading Day after its receipt of the Subsequent Placement
Notice of its willingness to provide (or to cause its sole designee to provide),
subject to completion of mutually acceptable documentation, financing to the
Company on substantially the terms set forth in the Subsequent Placement Notice.
If the Purchaser shall fail to notify the Company of its intention to enter into
such negotiations within such time period, the Company may effect the Subsequent
Placement upon the terms and to the Person(s) or investors (or Affiliates
thereof) identified in the Subsequent Placement Notice; provided, that the
Company shall provide the Purchaser with a second Subsequent Placement Notice,
and the Purchaser shall again have the right of first refusal set forth above in
this Section, if the Subsequent Placement subject to the initial Subsequent
Placement Notice shall not have been consummated for any reason on the terms
set forth in such Subsequent Placement Notice within thirty (30) Trading Days
after the date of the initial Subsequent Placement Notice with one or more of
the Persons or investors (or Affiliates thereof) identified in the Subsequent
Placement Notice.
(b) Except for (x) Underlying Shares, (y) other "Registrable
Securities" (as
<PAGE>
such term is defined in the Registration Rights Agreement) to be registered in
accordance with the Registration Rights Agreement, and (z) Company securities to
be registered for resale in connection with financings permitted pursuant to
paragraph (a)(i) through (iv) of this Section, the Company shall not, without
the prior written consent of the Purchaser (i) issue or sell any of its or any
of its Affiliates' equity or equity-equivalent securities pursuant to Regulation
S promulgated under the Securities Act, or (ii) register for resale any
securities of the Company for a period of not less than 90 Trading Days after
the date that an Underlying Securities Registration Statement is declared
effective by the Commission. Any days that the Purchaser is unable to sell
Underlying Shares under an Underlying Securities Registration Statement shall be
added to such 90 Trading Day period.
3.13 CERTAIN SECURITIES LAWS DISCLOSURES; PUBLICITY. The Company shall
timely file with the Commission a Form D promulgated under the Securities Act as
required under Regulation D promulgated under the Securities Act and provide a
copy thereof to the Purchaser promptly after the filing thereof. The Company
shall (i) issue a press release acceptable to the Purchaser disclosing the
transactions contemplated hereby within three (3) Business Days after the
Closing Date and (ii) file with the Commission a Report on Form 8-K disclosing
the transactions contemplated hereby within ten (10) Business Days after the
applicable Closing Date, provided that the Company may satisfy the requirements
of this clause (ii) by the filing of its quarterly report on form 10-QSB within
fifteen (15) Business Days of the Closing Date.
3.14 USE OF PROCEEDS. The Company shall use the net proceeds from the sale
of the Securities hereunder for working capital purposes and not for the
satisfaction of any portion of Company debt (other than payments under the
Company's credit facility with Imperial Bank and payments on account of trade
payables) or to redeem any Company equity or equity-equivalent securities.
Pending application of the proceeds of this placement in the manner permitted
hereby, the Company will invest such proceeds in interest bearing accounts
and/or short-term, investment grade interest bearing securities.
3.15 TRANSFER OF INTELLECTUAL PROPERTY RIGHTS. Except in connection with
the sale of all or substantially all of the assets of the Company or in the
ordinary course of the Company's business consistent with past practice, the
Company shall not transfer, sell or otherwise dispose of any Intellectual
Property Rights, or allow any of the Intellectual Property Rights to become
subject to any Liens, or fail to renew such Intellectual Property Rights (if
renewable and it would otherwise lapse if not renewed), without the prior
written consent of the Purchaser.
3.16 STANDSTILL AGREEMENT. If after the first anniversary of the Closing
Date, the Company shall enter into an underwriting agreement which provides for
a firm commitment underwriting on a primary basis of in excess of $10,000,000 of
the Common Stock (for which no shares of Common Stock are to be sold for any
other selling stockholders), then upon request by the Company the Purchaser
shall not dispose of any Securities for a period of up to 90 days after the date
of such agreement (a "Standstill"). The Company shall provide the Purchaser
with a notice of such underwriting agreement and the duration of the Standstill.
In the event of a
<PAGE>
Standstill, at the Purchaser's option, the maturity of the Preferred Stock shall
be extended by a number of days equal to the duration of the Standstill. Prior
to the first anniversary of the Closing Date, if the Company, shall enter into
such an underwriting agreement for the Common Stock, the Purchaser shall not be
required to Standstill unless the Company shall have redeemed all Shares held by
the Purchaser in accordance with Section 6(b) of the Certificates of
Designation. No Standstill shall affect the Purchaser's right to convert Shares
or the Company's obligation to honor such conversions in accordance with the
terms of the Certificates of Designation.
3.17 REIMBURSEMENT. If the Purchaser, other than by reason of its gross
negligence or willful misconduct, becomes involved in any capacity in any
action, proceeding or investigation brought by or against any Person, including
stockholders of the Company, in connection with or as a result of the
consummation of the transactions contemplated by Transaction Documents, the
Company will reimburse the Purchaser for its reasonable legal and other expenses
(including the cost of any investigation and preparation, but not internal
salary costs) incurred in connection therewith, as such expenses are incurred.
The reimbursement obligations of the Company under this paragraph shall be in
addition to any liability which the Company may otherwise have, shall extend
upon the same terms and conditions to any Affiliates of the Purchaser who are
actually named in such action, proceeding or investigation, and partners,
directors, agents, employees and controlling persons (if any), as the case may
be, of the Purchaser and any such Affiliate, and shall be binding upon and inure
to the benefit of any successors, assigns, heirs and personal representatives of
the Company, the Purchaser and any such Affiliate and any such Person. The
Company also agrees that neither the Purchaser nor any such Affiliates,
partners, directors, agents, employees or controlling persons shall have any
liability to the Company or any person asserting claims on behalf of or in right
of the Company in connection with or as a result of the consummation of the
Transaction Documents except to the extent that any losses, claims, damages,
liabilities or expenses incurred by the Company result from the gross negligence
or willful misconduct of the Purchaser or entity in connection with the
transactions contemplated by this Agreement.
ARTICLE IV
MISCELLANEOUS
4.1 FEES AND EXPENSES. At the Closing the Company shall pay $15,000
to Robinson Silverman in connection with the preparation and negotiation of the
Transaction Documents. Other than the amount contemplated in the immediately
prior sentence, and except as otherwise set forth in the Registration Rights
Agreement, each party shall pay the fees and expenses of its advisers, counsel,
accountants and other experts, if any, and all other expenses incurred by such
party incident to the negotiation, preparation, execution, delivery and
performance of this Agreement. The Company shall pay all stamp and other taxes
and duties levied in connection with the issuance of the Securities pursuant
hereto.
<PAGE>
4.2 ENTIRE AGREEMENT; AMENDMENTS. This Agreement, together with the
Exhibits and Schedules hereto, the Registration Rights Agreement, the
Certificate of Designation and the Warrant contain the entire understanding of
the parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, oral or written, with respect to such matters,
which the parties acknowledge have been merged into such documents, exhibits and
schedules.
4.3 NOTICES. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Section prior to 7:00 p.m. (New
York City time) on a Business Day, (ii) the Business Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in the Purchase Agreement later than 7:00
p.m. (New York City time) on any date and earlier than 11:59 p.m. (New York City
time) on such date, (iii) the Business Day following the date of mailing, if
sent by nationally recognized overnight courier service, or (iv) upon actual
receipt by the party to whom such notice is required to be given. The address
for such notices and communications shall be as follows:
If to the Company: Unapix Entertainment, Inc.
200 Madison Avenue
New York, NY 10016
Facsimile No.: (212) 252-7628
Attn: Michael R. Epps, Esq.
<PAGE>
With copies to: St. John & Wayne, L.L.C.
Two Penn Plaza East
Newark, NJ 07105-2249
Facsimile No.: (973) 491-3555
Attn: Lee A. Albanese, Esq.
If to the Purchaser: KA Investments LDC
c/o Tarmachan Capital Management
1712 Hopkins Crossroads
Minnetonka, MN 55305
Facsimile No.: (612) 542-4244
Attn: Bruce Lieberman
With copies to: Robinson Silverman Pearce Aronsohn &
Berman LLP
1290 Avenue of the Americas
New York, NY 10104
Facsimile No.: (212) 541-4630
Attn: Kenneth L. Henderson
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
4.4 AMENDMENTS; WAIVERS. No provision of this Agreement may be
waived or amended except in a written instrument signed, in the case of an
amendment, by both the Company and the Purchaser; or, in the case of a waiver,
by the party against whom enforcement of any such waiver is sought. No waiver
of any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any other provision, condition or requirement hereof, nor shall any delay or
omission of either party to exercise any right hereunder in any manner impair
the exercise of any such right accruing to it thereafter.
4.5 HEADINGS. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
4.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchaser. Except as set forth in
Section 3.1(a), the Purchaser may not assign this Agreement or any of the rights
or obligations hereunder without the consent of the Company. This provision
shall not limit the Purchaser's right to transfer securities or transfer or
assign rights hereunder or under the Registration Rights Agreement.
<PAGE>
4.7 NO THIRD-PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.
4.8 GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the internal laws of the State of New York
without regard to the principles of conflicts of law thereof.
4.9 SURVIVAL. The representations, warranties, agreements and
covenants contained herein shall survive each Closing and the delivery and
conversion or exercise (as the case may be) of the Shares and the Warrant.
4.10 EXECUTION. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
4.11 PUBLICITY. The Company and the Purchaser shall consult with each
other in issuing any press releases or otherwise making public statements with
respect to the transactions contemplated hereby and neither party shall issue
any such press release or otherwise make any such public statement without the
prior written consent of the other, which consent shall not be unreasonably
withheld or delayed, except that no prior consent shall be required if such
disclosure is required by law, in which such case the disclosing party shall
provide the other party with prior notice of such public statement.
Notwithstanding the foregoing, the Company shall not publicly disclose the name
of the Purchaser without the prior written consent of the Purchaser, except to
the extent such disclosure (but not any disclosure as to the controlling Persons
thereof) is required by applicable law or securities exchange rules, in which
case the Company shall provide the Purchaser with prior notice of such
disclosure.
4.12 SEVERABILITY. In case any one or more of the provisions of this
Agreement shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Agreement shall not
in any way be affecting or impaired thereby and the parties will attempt to
agree upon a valid and enforceable provision which shall be a reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Agreement.
4.13 REMEDIES. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, the Purchaser
will be entitled to
<PAGE>
specific performance of the obligations of the Company under the Transaction
Documents. Each of the Company and the Purchaser agree that monetary damages
may not be adequate compensation for any loss incurred by reason of any breach
of its obligations described in the foregoing sentence and hereby agrees to
waive in any action for specific performance of any such obligation the defense
that a remedy at law would be adequate.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOLLOWS]
<PAGE> IN WITNESS WHEREOF, the parties hereto have caused this
Convertible Preferred Stock Purchase Agreement to be duly executed by
their respective authorized signatories as of the date first indicated
above.
.
UNAPIX ENTERTAINMENT, INC.
By:
-------------------------------------
Name:
Title:
KA INVESTMENTS LDC
By:
-------------------------------------
Name:
Title:
<PAGE>
EXHIBIT 10.2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made
and entered into as of July 15, 1998, between Unapix Entertainment,
Inc., a Delaware corporation (the "Company"), and KA Investments LDC, a
Cayman Islands corporation (the "Purchaser").
This Agreement is made pursuant to the Convertible Preferred
Stock Purchase Agreement, dated as of the date hereof between the
Company and the Purchaser (the "Purchase Agreement").
The Company and the Purchaser hereby agree as follows:
1. DEFINITIONS
Capitalized terms used and not otherwise defined herein that
are defined in the Purchase Agreement shall have the meanings given such
terms in the Purchase Agreement. As used in this Agreement, the
following terms shall have the following meanings:
"ADVICE" shall have meaning set forth in Section 3(o).
"AFFILIATE" means, with respect to any Person, any other
Person that directly or indirectly controls or is controlled by or under
common control with such Person. For the purposes of this definition,
"control," when used with respect to any Person, means the possession,
direct or indirect, 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 of
"affiliated," "controlling" and "controlled" have meanings correlative
to the foregoing.
"BLACKOUT PERIOD" shall have the meaning set forth in Section
3(o).
"BUSINESS DAY" means any day except Saturday, Sunday and any
day which shall be a legal holiday or a day on which banking
institutions in the state of New York generally are authorized or
required by law or other government actions to close.
"CLOSING DATE" shall have the meaning set forth in the
Purchase Agreement.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means the Company's common stock, $.01 par
<PAGE>
value.
"EFFECTIVENESS DATE" means the 120th day following the Closing
Date.
"EFFECTIVENESS PERIOD" shall have the meaning set forth in
Section 2(a).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"FILING DATE" means the 60th day following the Closing Date.
"FLOOR" shall have the meaning set forth in the Certificate of
Designation.
"HOLDER" or "HOLDERS" means the holder or holders, as the case
may be, from time to time of Registrable Securities.
"INDEMNIFIED PARTY" shall have the meaning set forth in
Section 5(c).
"INDEMNIFYING PARTY" shall have the meaning set forth in
Section 5(c).
"LOSSES" shall have the meaning set forth in Section 5(a).
"PERSON" means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, joint venture,
limited liability company, joint stock company, government (or an agency
or political subdivision thereof) or other entity of any kind.
"PREFERRED STOCK" means the Company's shares of 6% Series B
Preferred Stock, $.01 par value, to be issued to the Purchaser pursuant
to the Purchase Agreement.
"PROCEEDING" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
"PROSPECTUS" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an
effective registration statement in reliance upon Rule 430A promulgated
under the Securities Act), as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any portion of
the Registrable Securities covered by the Registration Statement, and
all other amendments and supplements to the Prospectus, including
post-effective amendments, and all material incorporated by reference or
deemed to be incorporated by reference in
<PAGE>
such Prospectus.
"REGISTRABLE SECURITIES" means the shares of Common Stock
issuable upon (i) conversion in full of the Preferred Stock (ii)
exercise in full of the Warrants, and (iii) payment of dividends in
respect of the Preferred Stock, assuming all such dividends are paid in
shares of Common Stock, provided, however that in order to account for
the fact that the number of shares of Common Stock that is issuable upon
conversion of the Preferred Stock is determined in part upon the market
price of the Common Stock at the time of conversion, Registrable
Securities shall include (but not be limited to) a number of shares of
Common Stock equal to no less than the sum of (1) the number of shares
of Common Stock into which the shares of Preferred Stock are
convertible, assuming such conversion occurred at a conversion price
equal to the Floor for such shares of Preferred Stock, (2) the number of
shares of Common Stock issuable upon exercise of the Warrants, and (3)
the number of shares of Common Stock issuable on payment of dividends on
the Preferred Stock assuming all shares of Preferred Stock are
outstanding for the full term thereof and all dividends are paid in
shares of Common Stock.
"REGISTRATION STATEMENT" means the registration statement and
any additional registration statements contemplated by Section 2(a),
including (in each case) the Prospectus, amendments and supplements to
such registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material
incorporated by reference or deemed to be incorporated by reference in
such registration statement.
"RULE 144" means Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to
time, or any similar rule or regulation hereafter adopted by the
Commission having substantially the same effect as such Rule.
"RULE 158" means Rule 158 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to
time, or any similar rule or regulation hereafter adopted by the
Commission having substantially the same effect as such Rule.
"RULE 415" means Rule 415 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to
time, or any similar rule or regulation hereafter adopted by the
Commission having substantially the same effect as such Rule.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SPECIAL COUNSEL" means one special counsel to the Holders,
for which the Holders will be reimbursed by the Company pursuant to
Section 4.
"UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING" means a
registration in connection with which securities of the Company are sold
to an
<PAGE>
underwriter for reoffering to the public pursuant to an effective
registration statement.
"WARRANTS" means, collectively, the Warrant to acquire 200,000
shares of Common Stock to be issued to the Purchaser pursuant to the
Purchase Agreement and the Warrant to acquire 50,000 shares of Common
Stock to be issued to Reedland Capital Partners pursuant to its
engagement letter with the Company relating to the transactions
contemplated by the Purchase Agreement.
2. SHELF REGISTRATION
(a) On or prior to the Filing Date, the Company shall prepare
and file with the Commission a "Shelf" Registration Statement covering
all Registrable Securities for an offering to be made on a continuous
basis pursuant to Rule 415. The Registration Statement shall be on Form
S-3 (except if the Company is not then eligible to register for resale
the Registrable Securities on Form S-3, in which case such registration
shall be on another appropriate form in accordance herewith). The
Registration Statement shall state, to the extent permitted by Rule 416
under the Securities Act, that it also covers such indeterminate number
of shares of Common Stock as may be required to effect (i) conversion of
the Preferred Stock to prevent dilution resulting from stock splits,
stock dividends or similar events, or by reason of changes in the
Conversion Price in accordance with the terms of the Certificates of
Designation (as defined in the Purchase Agreement) and (ii) exercise of
the Warrants in full to prevent dilution resulting from stock splits,
stock dividends or similar events, or by reason of changes in the
Exercise Price (as defined in the Warrants) in accordance with the terms
of the Warrants. The Company shall use its best efforts to cause the
Registration Statement to be declared effective under the Securities Act
as promptly as possible after the filing thereof, but in any event prior
to the Effectiveness Date, and shall use its best efforts to keep such
Registration Statement continuously effective under the Securities Act
until the date which is three years after the date that such
Registration Statement is declared effective by the Commission or such
earlier date when all Registrable Securities covered by such
Registration Statement have been sold or may be sold without volume
restrictions pursuant to Rule 144(k) as determined by the counsel to the
Company pursuant to a written opinion letter to such effect, addressed
and acceptable to the Company's transfer agent (the "Effectiveness
Period"), provided, however, that the Company shall not be deemed to
have used its best efforts to keep the Registration Statement effective
during the Effectiveness Period if it voluntarily takes any action that
would result in the Holders not being able to sell the Registrable
Securities covered by such Registration Statement during the
Effectiveness Period, unless such action is required under applicable
law or the Company has filed a post-effective amendment to the
Registration Statement and the Commission has not declared it effective.
(b) If the Holders of a majority of the Registrable
Securities so elect, an offering of Registrable Securities pursuant to
the Registration Statement may be effected on one occasion in the form
of an Underwritten
<PAGE>
Offering. In such event, and, if the managing underwriters advise the
Company and such Holders in writing that in their opinion the amount of
Registrable Securities proposed to be sold in such Underwritten Offering
exceeds the amount of Registrable Securities which can be sold in such
Underwritten Offering, there shall be included in such Underwritten
Offering the amount of such Registrable Securities which in the opinion
of such managing underwriters can be sold, and such amount shall be
allocated pro rata among the Holders proposing to sell Registrable
Securities in such Underwritten Offering.
(c) If any of the Registrable Securities are to be sold in an
Underwritten Offering, the investment banker in interest that will
administer the offering will be selected by the Holders of a majority of
the Registrable Securities included in such offering upon consultation
with the Company. No Holder may participate in any Underwritten
Offering hereunder unless such Holder (i) agrees to sell its Registrable
Securities on the basis provided in any underwriting agreements approved
by the Persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents required under
the terms of such arrangements.
3. REGISTRATION PROCEDURES
In connection with the Company's registration obligations
hereunder, the Company shall:
(a) Prepare and file with the Commission on or prior to the
Filing Date, a Registration Statement on Form S-3 (or if the Company is
not then eligible to register for resale the Registrable Securities on
Form S-3 such registration shall be on another appropriate form in
accordance herewith, or, in connection with an Underwritten Offering
hereunder, such other form agreed to by the Company and by the Holders
of Registrable Securities) in accordance with the method or methods of
distribution thereof as specified by the Holders (except if otherwise
directed by the Holders), and cause the Registration Statement to become
effective and remain effective as provided herein; provided, however,
that not less than (x) five (5) Business Days prior to the filing of a
Registration Statement or any related Prospectus or (y) two (2) Business
Days prior filing of any amendment or supplement thereto, the Company
shall, (i) furnish to the Holders, their Special Counsel (who shall be
the only Person that the Company is required to deliver such
communications to if there are in excess of ten (10) Holders) and any
managing underwriters, copies of all such documents proposed to be
filed, which documents (other than those incorporated or deemed to be
incorporated by reference) will be subject to the review of such
Holders, their Special Counsel and such managing
<PAGE>
underwriters, and (ii) cause its officers and directors, counsel and
independent certified public accountants to respond to such inquiries as
shall be necessary, in the reasonable opinion of respective counsel to
such Holders and such underwriters, to conduct a reasonable
investigation within the meaning of the Securities Act. The Company
shall not file the Registration Statement or any such Prospectus or any
amendments or supplements thereto to which the Holders of a majority of
the Registrable Securities, their Special Counsel, or any managing
underwriters, shall reasonably object on a timely basis (which the
parties agree shall be three (3) Business Days from the date of the
receipt of a proposed filing of a Registration Statement or Prospectus,
or two (2) Business Days from the date of receipt of a proposed filing
of a supplement or amendment thereto, by the Holders of a majority of
the Registrable Securities).
(b) (i) Prepare and file with the Commission such
amendments, including post-effective amendments, to the Registration
Statement as may be necessary to keep the Registration Statement
continuously effective as to the applicable Registrable Securities for
the Effectiveness Period and prepare and file with the Commission such
additional Registration Statements in order to register for resale under
the Securities Act all of the Registrable Securities; (ii) cause the
related Prospectus to be amended or supplemented by any required Pro
spectus supplement, and as so supplemented or amended to be filed
pursuant to Rule 424 (or any similar provisions then in force)
promulgated under the Securities Act; (iii) respond as promptly as
reasonably possible to any comments received from the Commission with
respect to the Registration Statement or any amendment thereto and as
promptly as reasonably possible provide the Holders true and complete
copies of all correspondence from and to the Commission relating to the
Registration Statement; and (iv) comply in all material respects with
the provisions of the Securities Act and the Exchange Act with respect
to the disposition of all Registrable Securities covered by the
Registration Statement during the applicable period in accordance with
the intended methods of disposition by the Holders thereof set forth in
the Registration Statement as so amended or in such Prospectus as so
supplemented.
(c) Notify the Holders of Registrable Securities to be sold,
their Special Counsel and any managing underwriters as promptly as
reasonably possible (and, in the case of (i)(A) below, not less than (x)
five (5) Business Days prior to the filing of a Registration Statement
or any related Prospectus or (y) two (2) Business Days prior filing of
any amendment or supplement thereto or other filing) and (if requested
by any such Person) confirm such notice in writing no later than one (1)
Business Day following the day (i)(A) when a Prospectus or any
Prospectus supplement or post-effective amendment to the Registration
Statement is proposed to be filed; (B) when the Commission notifies the
Company whether there will be a "review" of such Registration Statement
and whenever the Commission comments in writing on such Registration
Statement (the Company shall provide true and complete copies thereof
and all written responses thereto to each of the Holders); and (C) with
respect to the Registration Statement or any post-effective amendment,
when the same has become effective; (ii) of any request by the
Commission or any other
<PAGE>
Federal or state governmental authority for amendments or supplements to
the Registration Statement or Prospectus or for additional information;
(iii) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement covering any or all of the
Registrable Securities or the initiation of any Proceedings for that
purpose; (iv) if at any time any of the representations and warranties
of the Company contained in any agreement (including any underwriting
agreement) contemplated hereby ceases to be true and correct in all
material respects; (v) of the receipt by the Company of any notification
with respect to the suspension of the qualification or exemption from
qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding for
such purpose; and (vi) of the occurrence of any event that makes any
statement made in the Registration Statement or Prospectus or any
document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires any revisions to the
Registration Statement, Prospectus or other documents so that, in the
case of the Registration Statement or the Prospectus, as the case may
be, it will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading.
(d) Use its best efforts to avoid the issuance of, or, if
issued, obtain the withdrawal of (i) any order suspending the
effectiveness of the Registration Statement, or (ii) any suspension of
the qualification (or exemption from qualification) of any of the
Registrable Securities for sale in any jurisdiction, at the earliest
practicable moment.
(e) If requested by any managing underwriter or the Holders
of a majority in interest of the Registrable Securities to be sold in
connection with an Underwritten Offering, (i) promptly incorporate in a
Prospectus supplement or post-effective amendment to the Registration
Statement such information as such managing underwriters and such
Holders reasonably agree should be included therein, and (ii) make all
required filings of such Prospectus supplement or such post-effective
amendment as soon as practicable after the Company has received
notification of the matters to be incorporated in such Prospectus
supplement or post-effective amendment; provided, however, that the
Company shall not be required to take any action pursuant to this
Section 3(e) that would, in the opinion of counsel for the Company,
violate applicable law or be materially detrimental to the business
prospects of the Company.
(f) Furnish to each Holder, their Special Counsel and any
managing underwriters, without charge, at least one conformed copy of
each Registration Statement and each amendment thereto, including
financial
<PAGE>
statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference, and all exhibits to the extent
requested by such Person (including those previously furnished or
incorporated by reference) promptly after the filing of such documents
with the Commission.
(g) Promptly deliver to each Holder, their Special Counsel,
and any underwriters, without charge, as many copies of the Prospectus
or Prospectuses (including each form of prospectus) and each amendment
or supplement thereto as such Persons may reasonably request; and the
Company hereby consents to the use of such Prospectus and each amendment
or supplement thereto by each of the selling Holders and any
underwriters in connection with the offering and sale of the Registrable
Securities covered by such Prospectus and any amendment or supplement
thereto.
(h) Prior to any public offering of Registrable Securities,
use its best efforts to register or qualify or cooperate with the
selling Holders, any underwriters and their Special Counsel in
connection with the registration or qualification (or exemption from
such registration or qualification) of such Registrable Securities for
offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as any Holder or underwriter
requests in writing, to keep each such registration or qualification (or
exemption therefrom) effective during the Effectiveness Period and to do
any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered
by a Registration Statement; provided, however, that the Company shall
not be required to qualify generally to do business in any jurisdiction
where it is not then so qualified or to take any action that would
subject it to general service of process in any such jurisdiction where
it is not then so subject or subject the Company to any material tax in
any such jurisdiction where it is not then so subject.
(i) Cooperate with the Holders and any managing underwriters
to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be delivered to a transferee
pursuant to a Registration Statement, which certificates shall be free,
to the extent permitted by applicable law, of all restrictive legends,
and to enable such Registrable Securities to be in such denominations
and registered in such names as any such managing underwriters or
Holders may request at least two Business Days prior to any sale of
Registrable Securities.
(j) Upon the occurrence of any event contemplated by Section
3(c)(vi), as promptly as reasonably possible, prepare a supplement or
amendment, including a post-effective amendment, to the Registration
Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, and file
any other required document so that, as thereafter delivered, neither
the Registration Statement nor such Prospectus will contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made,
<PAGE>
not misleading.
(k) Use its best efforts to cause all Registrable Securities
relating to such Registration Statement to be listed on the American
Stock Exchange (the "AMEX") and any other securities exchange, quotation
system, market or over-the-counter bulletin board, if any, on which
similar securities issued by the Company are then listed as and when
required pursuant to the Purchase Agreement.
(l) Enter into such agreements (including an underwriting
agreement in form, scope and substance as is customary in Underwritten
Offerings), but not lock-up agreements relating to issuance of
securities by the Company on a primary basis, and take all such other
actions in connection therewith (including those reasonably requested by
any managing underwriters and the Holders of a majority of the
Registrable Securities being sold) in order to expedite or facilitate
the disposition of such Registrable Securities, and whether or not an
underwriting agreement is entered into, (i) make such representations
and warranties to such Holders and such underwriters as are customarily
made by issuers to underwriters in underwritten public offerings, and
confirm the same if and when requested; (ii) in the case of an
Underwritten Offering obtain and deliver copies thereof to each Holder
and the managing underwriters, if any, of opinions of counsel to the
Company and updates thereof addressed to each Holder and each such
underwriter, in form, scope and substance reasonably satisfactory to any
such managing underwriters and Special Counsel to the selling Holders
covering the matters customarily covered in opinions requested in
Underwritten Offerings and such other matters as may be reasonably
requested by such Special Counsel and underwriters; (iii) in the case of
an Underwritten Offering, at the time of delivery of any Registrable
Securities sold pursuant thereto, use its best reasonable efforts to
obtain and deliver copies to the Holders and the managing underwriters,
if any, of "cold comfort" letters and updates thereof from the
independent certified public accountants of the Company (and, if
necessary, any other independent certified public accountants of any
subsidiary of the Company or of any business acquired by the Company for
which financial statements and financial data is, or is required to be,
included in the Registration Statement), addressed to the Company in
form and substance as are customary in connection with Underwritten
Offerings; (iv) if an underwriting agreement is entered into, the same
shall contain indemnification provisions and procedures no less
favorable to the selling Holders and the underwriters, if any, than
those set forth in Section 5 (or such other provisions and procedures
acceptable to the managing underwriters, if any, and holders of a
majority of Registrable Securities participating in such Underwritten
Offering); and (v) deliver such documents and certificates as may be
reasonably requested by the Holders of a majority of
<PAGE>
the Registrable Securities being sold, their Special Counsel and any
managing underwriters to evidence the continued validity of the
representations and warranties made pursuant to clause 3(l)(i) above and
to evidence compliance with any customary conditions contained in the
underwriting agreement or other agreement entered into by the Company.
(m) Make available for inspection by the selling Holders, any
representative of such Holders, any underwriter participating in any
disposition of Registrable Securities, and any attorney or accountant
retained by such selling Holders or underwriters, at the offices where
normally kept, during reasonable business hours, all financial and other
records, pertinent corporate documents and properties of the Company and
its subsidiaries, and cause the officers, directors, agents and
employees of the Company and its subsidiaries to supply all information
in each case reasonably requested by any such Holder, representative,
underwriter, attorney or accountant in connection with the Registration
Statement; provided, that, as a condition to the disclosure of any
information that is determined in good faith by the Company in writing
to be of a confidential nature at the time of intended delivery of such
information, the Company may require the recipient thereof to enter into
a customary and reasonable confidentiality agreement.
(n) Comply with all applicable rules and regulations of the
Commission.
(o) The Company may require each selling Holder to furnish to
the Company such information regarding the distribution of such
Registrable Securities and the beneficial ownership of Common Stock held
by such Holder as is required by law to be disclosed in the Registration
Statement, and the Company may exclude from such registration the
Registrable Securities of any such Holder who unreasonably fails to
furnish such information within a reasonable time after receiving such
request.
If the Registration Statement refers to any Holder by name or
otherwise as the holder of any securities of the Company, then such
Holder shall have the right to require (if such reference to such Holder
by name or otherwise is not required by the Securities Act or any
similar Federal statute then in force) the deletion of the reference to
such Holder in any amendment or supplement to the Registration Statement
filed or prepared subsequent to the time that such reference ceases to
be required.
Each Holder covenants and agrees that (i) it will not sell any
Registrable Securities under the Registration Statement until it has
received copies of the Prospectus as then amended or supplemented as
contemplated in Section 3(g) and notice from the Company that such
Registration Statement and any post-effective amendments thereto have
become effective as contemplated by Section 3(c) and (ii) it and its
officers, directors or Affiliates, if any, will comply with the
prospectus delivery requirements of the Securities Act as applicable to
it in connection with sales of Registrable Securities pursuant to the
<PAGE>
Registration Statement.
Each Holder agrees by its acquisition of such Registrable
Securities that, upon receipt of a notice from the Company of the
occurrence of any event of the kind described in Section 3(c)(ii),
3(c)(iii), 3(c)(iv), 3(c)(v) or 3(c)(vi), such Holder will forthwith
discontinue disposition of such Registrable Securities under the
Registration Statement until such Holder's receipt of the copies of the
supplemented Prospectus and/or amended Registration Statement
contemplated by Section 3(j), or until it is advised in writing (the
"Advice") by the Company that the use of the applicable Prospectus may
be resumed, and, in either case, has received copies of any additional
or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus or Registration Statement.
If there is a significant business opportunity (including but
not limited to the acquisition or disposition of assets (other than in
the ordinary course of business) or any merger, consolidation, tender
offer or other similar transaction) available to the Company which the
Board reasonably determines not to be in the Company's best interest to
disclose, then the Company may suspend the right of the Holders to sell
Registrable Securities under a Registration Statement for a period not
to exceed 20 Business Days during the Effectiveness Period (the
"Blackout Period"). If the Company exercises its rights under this
paragraph, the days during which the Conversion Price is to be
determined shall be tolled.
4. REGISTRATION EXPENSES
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by the Company, except as and to the
extent specified in Section 4(b), shall be borne by the Company whether
or not pursuant to an Underwritten Offering and whether or not the
Registration Statement is filed or becomes effective and whether or not
any Registrable Securities are sold pursuant to the Registration
Statement. The fees and expenses referred to in the foregoing sentence
shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses (A) with respect to
filings required to be made with the AMEX or each other securities
exchange or market on which Registrable Securities are required
hereunder to be listed and (B) in compliance with state securities or
Blue Sky laws (including, without limitation, fees and disbursements of
counsel for the Holders in connection with Blue Sky qualifications or
exemptions of the Registrable Securities and determination of the
eligibility of the Registrable Securities for investment under the laws
of such jurisdictions as the managing underwriters, if any, or the
Holders of a majority of Registrable Securities may designate)), (ii)
printing expenses (including, without limitation, expenses of printing
certificates for Registrable Securities and of printing prospectuses if
the printing of prospectuses is requested by the managing underwriters,
if any, or by the holders of a majority of the Registrable Securities
included in the Registration Statement), (iii) messenger, telephone and
delivery expenses, (iv)
<PAGE>
fees and disbursements of counsel for the Company and Special Counsel
for the Holders (which, in the case of Special Counsel for the Holders,
shall not exceed $7,500), (v) Securities Act liability insurance, if the
Company so desires such insurance, and (vi) fees and expenses of all
other Persons retained by the Company in connection with the
consummation of the transactions contemplated by this Agreement. In
addition, the Company shall be responsible for all of its internal
expenses incurred in connection with the consummation of the
transactions contemplated by this Agreement (including, without
limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit,
the fees and expenses incurred in connection with the listing of the
Registrable Securities on any securities exchange as required hereunder.
(b) If the Holders require an Underwritten Offering pursuant
to the terms hereof, the Company shall be responsible for all costs,
fees and expenses in connection therewith, except for the fees and
disbursements of the Underwriters (including any underwriting
commissions and discounts) and their legal counsel and accountants. By
way of illustration which is not intended to diminish from the
provisions of Section 4(a), the Holders shall not be responsible for,
and the Company shall be required to pay the fees or disbursements
incurred by the Company (including by its legal counsel and accountants)
in connection with, the preparation and filing of a Registration
Statement and related Prospectus for such offering, the maintenance of
such Registration Statement in accordance with the terms hereof, the
listing of the Registrable Securities in accordance with the
requirements hereof, and printing expenses incurred to comply with the
requirements hereof. Notwithstanding the foregoing or anything to the
contrary contained herein, if the Company shall have caused a
Registration Statement hereunder covering all of the Registrable
Securities to be declared effective on or prior to the Effectiveness
Date and maintained the effectiveness of such Registration Statement in
accordance with the terms hereof (without default hereunder or blackout,
except to the extent specifically permitted by Section 3(o) hereof), any
Underwritten Offering hereunder required by the Holders shall be at the
expense of the Holders requiring the same unless the Company offers
shares in such Underwritten Offering.
5. INDEMNIFICATION
(a) INDEMNIFICATION BY THE COMPANY. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold
harmless each Holder, the officers, directors, agents (including any
underwriters retained by such Holder in connection with the offer and
sale of Registrable Securities), brokers (including brokers who offer
and sell
<PAGE>
Registrable Securities as principal as a result of a pledge or any
failure to perform under a margin call of Common Stock), investment
advisors and employees of each of them, each Person who controls any
such Holder (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) and the officers, directors, agents and
employees of each such controlling Person, to the fullest extent
permitted by applicable law, from and against any and all losses,
claims, damages, liabilities, costs (including, without limitation,
costs of preparation and attorneys' fees) and expenses (collectively,
"Losses"), as incurred, arising out of or relating to any untrue or
alleged untrue statement of a material fact contained in the
Registration Statement, any Prospectus or any form of prospectus or in
any amendment or supplement thereto or in any preliminary prospectus, or
arising out of or relating to any omission or alleged omission of a
material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or form of prospectus
or supplement thereto, in light of the circumstances under which they
were made) not misleading, except to the extent, but only to the extent,
that such untrue statements or omissions are based solely upon
information regarding such Holder furnished in writing to the Company by
such Holder expressly for use therein, which information was reasonably
relied on by the Company for use therein or to the extent that such
information relates to such Holder or such Holder's proposed method of
distribution of Registrable Securities and was reviewed and expressly
approved in writing by such Holder expressly for use in the Registration
Statement, such Prospectus or such form of Prospectus or in any
amendment or supplement thereto. The Company shall notify the Holders
promptly of the institution, threat or assertion of any Proceeding of
which the Company is aware in connection with the transactions
contemplated by this Agreement.
(b) INDEMNIFICATION BY HOLDERS. Each Holder shall, severally
and not jointly, indemnify and hold harmless the Company, its directors,
officers, agents and employees, each Person who controls the Company
(within the meaning of Section 15 of the Securities Act and Section 20
of the Exchange Act), and the directors, officers, agents or employees
of such controlling Persons, to the fullest extent permitted by
applicable law, from and against all Losses (as determined by a court of
competent jurisdiction in a final judgment not subject to appeal or
review) arising solely out of or based solely upon any untrue statement
of a material fact contained in the Registration Statement, any
Prospectus, or any form of prospectus, or in any amendment or supplement
thereto, or arising solely out of or based solely upon any omission of a
material fact required to be stated therein or necessary to make the
statements therein not misleading to the extent, but only to the extent,
that such untrue statement or omission is contained in any information
so furnished in writing by such Holder to the Company specifically for
inclusion in the Registration Statement or such Prospectus and that such
information was reasonably relied upon by the Company for use in
<PAGE>
the Registration Statement, such Prospectus or such form of prospectus
or to the extent that such information relates to such Holder or such
Holder's proposed method of distribution of Registrable Securities and
was reviewed and expressly approved in writing by such Holder expressly
for use in the Registration Statement, such Prospectus or such form of
Prospectus, or in any amendment or supplement thereto. In no event
shall the liability of any selling Holder hereunder be greater in amount
than the dollar amount of the net proceeds received by such Holder upon
the sale of the Registrable Securities giving rise to such
indemnification obligation.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. If any Proceeding
shall be brought or asserted against any Person entitled to indemnity
hereunder (an "Indemnified Party"), such Indemnified Party shall
promptly notify the Person from whom indemnity is sought (the
"Indemnifying Party") in writing, and the Indemnifying Party shall
assume the defense thereof, including the employment of counsel
reasonably satisfactory to the Indemnified Party and the payment of all
fees and expenses incurred in connection with defense thereof; provided,
that the failure of any Indemnified Party to give such notice shall not
relieve the Indemnifying Party of its obligations or liabilities
pursuant to this Agreement, except (and only) to the extent that it
shall be finally determined by a court of competent jurisdiction (which
determination is not subject to appeal or further review) that such
failure shall have proximately and materially adversely prejudiced the
Indemnifying Party.
An Indemnified Party shall have the right to employ separate
counsel in any such Proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Party or Parties unless: (1) the
Indemnifying Party has agreed in writing to pay such fees and expenses;
or (2) the Indemnifying Party shall have failed promptly to assume the
defense of such Proceeding and to employ counsel reasonably satisfactory
to such Indemnified Party in any such Proceeding; or (3) the named
parties to any such Proceeding (including any impleaded parties) include
both such Indemnified Party and the Indemnifying Party, and such
Indemnified Party shall have been advised by counsel that a conflict of
interest is likely to exist if the same counsel were to represent such
Indemnified Party and the Indemnifying Party (in which case, if such
Indemnified Party notifies the Indemnifying Party in writing that it
elects to employ separate counsel at the expense of the Indemnifying
Party, the Indemnifying Party shall not have the right to assume the
defense thereof and such counsel shall be at the expense of the
Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent,
which consent shall not be unreasonably withheld. No Indemnifying Party
shall, without the prior written consent of the Indemnified Party,
effect any settlement of any pending Proceeding in respect of which any
Indemnified Party is a party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on
claims that are the subject matter of such Proceeding.
<PAGE>
All fees and expenses of the Indemnified Party (including
reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party,
as incurred, within 10 Business Days of written notice thereof to the
Indemnifying Party (regardless of whether it is ultimately determined
that an Indemnified Party is not entitled to indemnification hereunder;
provided, that the Indemnifying Party may require such Indemnified Party
to undertake to reimburse all such fees and expenses to the extent it is
finally judicially determined that such Indemnified Party is not
entitled to indemnification hereunder).
(d) CONTRIBUTION. If a claim for indemnification under
Section 5(a) or 5(b) is unavailable to an Indemnified Party (by reason
of public policy or otherwise), then each Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid
or payable by such Indemnified Party as a result of such Losses, in such
proportion as is appropriate to reflect the relative fault of the
Indemnifying Party and Indemnified Party in connection with the actions,
statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such
Indemnifying Party and 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 of a material fact, has been taken or made
by, or relates to information supplied by, such Indemnifying Party or
Indemnified Party, and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such action,
statement or omission. The amount paid or payable by a party as a
result of any Losses shall be deemed to include, subject to the
limitations set forth in Section 5(c), any reasonable attorneys' or
other reasonable fees or expenses incurred by such party in connection
with any Proceeding to the extent such party would have been indemnified
for such fees or expenses if the indemnification provided for in this
Section was available to such party in accordance with its terms.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 5(d) were determined
by pro rata allocation or by any other method of allocation that does
not take into account the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of this
Section 5(d), no Holder shall be required to contribute, in the
aggregate, any amount in excess of the amount by which the proceeds
actually received by such Holder from the sale of the Registrable
Securities subject to the Proceeding exceeds the amount of any damages
that such 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.
<PAGE>
The indemnity and contribution agreements contained in this
Section are in addition to any liability that the Indemnifying Parties
may have to the Indemnified Parties.
6. MISCELLANEOUS
(a) REMEDIES. In the event of a breach by the Company or by
a Holder, of any of their obligations under this Agreement, each Holder
or the Company, as the case may be, in addition to being entitled to
exercise all rights granted by law and under this Agreement, including
recovery of damages, will be entitled to specific performance of its
rights under this Agreement. The Company and each Holder agree that
monetary damages would not provide adequate compensation for any losses
incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate.
(b) NO INCONSISTENT AGREEMENTS. Neither the Company nor any
of its subsidiaries has, as of the date hereof, nor shall the Company or
any of its subsidiaries, on or after the date of this Agreement, enter
into any agreement with respect to its securities that is inconsistent
with the rights granted to the Holders in this Agreement or otherwise
conflicts with the provisions hereof. Except as and to the extent
specified in Schedule 6(b) hereto, neither the Company nor any of its
subsidiaries has previously entered into any agreement granting any
registration rights with respect to any of its securities to any Person.
Without limiting the generality of the foregoing, without the written
consent of the Holders of a majority of the then outstanding Registrable
Securities, the Company shall not grant to any Person the right to
request the Company to register any securities of the Company under the
Securities Act unless the rights so granted are subject in all respects
to the prior rights in full of the Holders set forth herein, and are not
otherwise in conflict or inconsistent with the provisions of this
Agreement.
(c) NO PIGGYBACK ON REGISTRATIONS. Except as and to the
extent specified in Schedule 6(b) hereto, neither the Company nor any of
its security holders (other than the Holders in such capacity pursuant
hereto) may include securities of the Company in the Registration
Statement other than the Registrable Securities, and the Company shall
not after the date hereof enter into any agreement providing any such
right to any of its security holders, unless such agreements or the
inclusion therein would not cause the effectiveness of the Registration
Statement to lapse or violate Section 3.12 of the Purchase Agreement.
(d) Piggy-Back Registrations. If at any time when there is
not an effective Registration Statement covering all of the Registrable
Securities and the Underlying Shares, the Company shall determine to
prepare and file with the Commission a registration statement relating
to an offering for its own account or the account of others under the
Securities Act of any of its equity
<PAGE>
securities, other than on Form S-4 or Form S-8 (each as promulgated
under the Securities Act) or their then equivalents relating to equity
securities to be issued solely in connection with any acquisition of any
entity or business or equity securities issuable in connection with
stock option or other employee benefit plans, then the Company shall
send to each holder of Registrable Securities written notice of such
determination and, if within fifteen (15) days after receipt of such
notice, any such holder shall so request in writing, the Company shall
include in such registration statement all or any part of such
Registrable Securities such holder requests to be registered; provided,
however, that the Company shall not be required to register any
Registrable Securities pursuant to this Section 7(d) that are eligible
for sale pursuant to Rule 144(k) of the Commission.
(e) AMENDMENTS AND WAIVERS. The provisions of this
Agreement, including the provisions of this sentence, may not be
amended, modified or supplemented, and waivers or consents to departures
from the provisions hereof may not be given, unless the same shall be in
writing and signed by the Company and the Holders of at least two-thirds
of the then outstanding Registrable Securities; provided, however, that,
for the purposes of this sentence, Registrable Securities that are
owned, directly or indirectly, by the Company, or an Affiliate of the
Company are not deemed outstanding. Notwithstanding the foregoing, a
waiver or consent to depart from the provisions hereof with respect to a
matter that relates exclusively to the rights of Holders and that does
not directly or indirectly affect the rights of other Holders may be
given by Holders of at least a majority of the Registrable Securities to
which such waiver or consent relates; provided, however, that the
provisions of this sentence may not be amended, modified, or
supplemented except in accordance with the provisions of the immediately
preceding sentence.
(f) NOTICES. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in
writing and shall be deemed given and effective on the earliest of (i)
the date of transmission, if such notice or communication is delivered
via facsimile at the facsimile telephone number specified in this
Section prior to 7:00 p.m. (New York City time) on a Business Day, (ii)
the Business Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone
number specified in the Purchase Agreement later than 7:00 p.m. (New
York City time) on any date and earlier than 11:59 p.m. (New York City
time) on such date, (iii) the Business Day following the date of
mailing, if sent by nationally recognized overnight courier service, or
(iv) upon actual receipt by the party to whom such notice is required to
be given. The address for such notices and communications shall be as
follows:
<PAGE>
If to the Company: Unapix Entertainment, Inc.
200 Madison Avenue
New York, NY 10016
Facsimile No.: (212) 252-7628
Attn: Chief Executive Officer and General
Counsel
With copies to: St. John & Wayne, L.L.C.
Two Penn Plaza East
Newark, NJ 07105-2249
Facsimile No.: (973) 491-3555
Attn: Lee A. Albanese, Esq.
If to the Purchaser: KA Investments LDC
c/o Tarmachan Capital Management, L.L.C.
1712 Hopkins Crossroads
Minnetonka, MN 55305
Facsimile No.: (612) 542-4244
Attn: Bruce Lieberman
-and-
Robinson Silverman Pearce Aronsohn &
Berman LLP
1290 Avenue of the Americas
New York, NY 10104
Facsimile No.: (212) 541-4630
Attn: Kenneth L. Henderson
If to any other Person who is then the registered Holder:
To the address of such Holder as it appears
in the stock transfer books of the Company
or such other address as may be designated in writing hereafter, in the
same manner, by such Person.
(g) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of
each of the parties and shall inure to the benefit of each Holder. The
Company may not assign its rights or obligations hereunder without the
prior written consent of each Holder. Each Holder may assign their
respective rights hereunder in the manner and to the Persons as
permitted under the Purchase Agreement.
(h) ASSIGNMENT OF REGISTRATION RIGHTS. The rights of each
<PAGE>
Holder hereunder, including the right to have the Company register for
resale Registrable Securities in accordance with the terms of this
Agreement, shall be automatically assignable by each Holder to any
Affiliate of such Holder, any other Holder or Affiliate of any other
Holder and up to four other assignees of all or a portion of the shares
of Preferred Stock, the Warrants or the Registrable Securities if: (i)
the Holder agrees in writing with the transferee or assignee to assign
such rights, and a copy of such agreement is furnished to the Company
within a reasonable time after such assignment, (ii) the Company is,
within a reasonable time after such transfer or assignment, furnished
with written notice of (a) the name and address of such transferee or
assignee, and (b) the securities with respect to which such registration
rights are being transferred or assigned, (iii) following such transfer
or assignment the further disposition of such securities by the
transferee or assignees is restricted under the Securities Act and
applicable state securities laws, (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this Section,
the transferee or assignee agrees in writing with the Company to be
bound by all of the provisions of this Agreement, and (v) such transfer
shall have been made in accordance with the applicable requirements of
the Purchase Agreement. The rights to assignment shall apply to the
Holders (and to subsequent) successors and assigns.
(i) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an
original and, all of which taken together shall constitute one and the
same Agreement. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile
signature were the original thereof.
(j) GOVERNING Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without
regard to principles of conflicts of law.
(k) CUMULATIVE REMEDIES. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
(l) SEVERABILITY. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in
full force and effect and shall in no way be affected, impaired or
invalidated, and the parties hereto shall use their reasonable efforts
to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term,
provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of
<PAGE>
the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such
that may be hereafter declared invalid, illegal, void or unenforceable.
(m) HEADINGS. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning
hereof.
(n) SHARES HELD BY THE COMPANY AND ITS AFFILIATES. Whenever the
consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the
Company or its Affiliates (other than any Holder or transferees or
successors or assigns thereof if such Holder is deemed to be an
Affiliate solely by reason of its holdings of such Registrable
Securities) shall not be counted in determining whether such consent or
approval was given by the Holders of such required percentage.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE TO FOLLOW]
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
UNAPIX ENTERTAINMENT, INC.
By:
-------------------------------------
Name:
Title:
KA INVESTMENTS LDC
By:
-------------------------------------
Name:
Title:
<PAGE>
Exhibit 10.3
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT,
AS EVIDENCED BY AN OPINION OF COUNSEL, THE FORM AND SUBSTANCE OF WHICH
OPINION SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY, OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREUNDER AND IN
COMPLIANCE WITH APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.
UNAPIX ENTERTAINMENT, INC.
WARRANT
Dated: July 16, 1998
Unapix Entertainment, Inc., a Delaware corporation (the "Company"),
hereby certifies that, for value received, KA Investments LDC, or its
registered assigns ("Holder"), is entitled, subject to the terms set forth
below, to purchase from the Company up to a total of 200,000 shares of
Common Stock, $.01 par value per share (the "Common Stock"), of the Company
(each such share, a "Warrant Share" and all such shares, the "Warrant
Shares") at an exercise price equal to $5.16 per share (as adjusted from
time to time as provided in Section 9, the "Exercise Price"), at any time
and from time to time from and after the date hereof and through and
including July 16, 2001 (the "Expiration Date"), and subject to the
following terms and conditions:
i. Registration of Warrant. The Company shall register this
Warrant, upon records to be maintained by the Company for that purpose (the
"Warrant Register"), in the name of the record Holder hereof from time to
time. The Company may deem and treat the registered Holder of this Warrant
as the absolute owner hereof for the purpose of any exercise hereof or any
distribution to the Holder, and for all other purposes, and the Company
shall not be affected by notice to the contrary.
<PAGE>
ii. REGISTRATION OF TRANSFERS AND EXCHANGES.
(a) The Company shall register the transfer of any portion
of this Warrant in the Warrant Register, upon surrender of this Warrant,
with the Form of Assignment attached hereto duly completed and signed, to
the Transfer Agent or to the Company at the office specified in or pursuant
to Section 3(b). Upon any such registration or transfer, a new warrant to
purchase Common Stock, in substantially the form of this Warrant (any such
new warrant, a "New Warrant"), evidencing the portion of this Warrant so
transferred shall be issued to the transferee and a New Warrant evidencing
the remaining portion of this Warrant not so transferred, if any, shall be
issued to the transferring Holder. The acceptance of the New Warrant by
the transferee thereof shall be deemed the acceptance of such transferee
of all of the rights and obligations of a holder of a Warrant.
(b) This Warrant is exchangeable, upon the surrender hereof
by the Holder to the office of the Company specified in or pursuant to
Section 3(b) for one or more New Warrants, evidencing in the aggregate the
right to purchase the number of Warrant Shares which may then be purchased
hereunder. Any such New Warrant will be dated the date of such exchange.
iii. DURATION AND EXERCISE OF WARRANTS.
(a) This Warrant shall be exercisable by the registered
Holder on any business day before 5:30 P.M., Eastern time, at any time and
from time to time on or after the date hereof to and including the
Expiration Date. At 5:30 P.M., Eastern time on the Expiration Date, the
portion of this Warrant not exercised prior thereto shall be and become
void and of no value. Prior to the Expiration Date, the Company may not
call or otherwise redeem this Warrant without the prior written consent of
the Holder.
(b) Subject to Sections 2(b), 6 and 10, upon surrender of
this Warrant, with the Form of Election to Purchase attached hereto duly
completed and signed, to the Company at its address for notice set forth
in Section 12 and upon payment of the Exercise Price multiplied by the
number of Warrant Shares that the Holder intends to purchase hereunder, in
lawful money of the United States of America, in cash or by certified or
official bank check or checks, all as specified by the Holder in the Form
of Election to Purchase, the Company shall promptly (but in no event later
than 3 business days after the Date of Exercise) issue or cause to be
issued and cause to be delivered to or upon the written order of the Holder
and in such name or names as the Holder may designate, a certificate for
the Warrant Shares issuable upon such exercise, free of restrictive legends
other than as required by applicable law. Any person so designated by the
Holder to receive Warrant Shares shall be deemed to have become holder of
record of such Warrant Shares as of the Date of Exercise of this Warrant.
<PAGE>
A "Date of Exercise" means the date on which the Company
shall have received (i) this Warrant (or any New Warrant, as applicable),
with the Form of Election to Purchase attached hereto (or attached to such
New Warrant) appropriately completed and duly signed, and (ii) payment of
the Exercise Price for the number of Warrant Shares so indicated by the
holder hereof to be purchased.
(c) This Warrant shall be exercisable, either in its
entirety or, from time to time, for a portion of the number of Warrant
Shares. If less than all of the Warrant Shares which may be purchased
under this Warrant are exercised at any time, the Company shall issue or
cause to be issued, at its expense, a New Warrant evidencing the right to
purchase the remaining number of Warrant Shares for which no exercise has
been evidenced by this Warrant.
iv. PIGGYBACK REGISTRATION RIGHTS. During the term of this
Warrant, the Company may not file any registration statement with the
Securities and Exchange Commission (other than registration statements of
the Company filed on Form S-8 or Form S-4, each as promulgated under the
Securities Act of 1933, as amended (the "Securities Act"), pursuant to
which the Company is registering securities pursuant to a Company employee
benefit plan or pursuant to a merger, acquisition or similar transaction
including supplements thereto, but not additionally filed registration
statements in respect of such securities) at any time when there is not an
effective registration statement covering the resale of the Warrant Shares
and naming the Holder as a selling stockholder thereunder, unless the
Company provides the Holder and Robinson Silverman Pearce Aronsohn & Berman
LLP, attention Kenneth L. Henderson, with not less than 15 days notice of
its intention to file such registration statement and provides the Holder
the option to include any or all of the applicable Warrant Shares therein.
The piggyback registration rights granted to the Holder pursuant to this
Section shall continue until all of the Holder's Warrant Shares have been
sold in accordance with an effective registration statement or upon the
Expiration Date. The Company will pay all registration expenses in
connection therewith.
v. DEMAND REGISTRATION RIGHTS. At any time during the term of
this Warrant when the Warrant Shares are not registered pursuant to an
effective registration statement, the Holder may make a written request for
the registration under the Securities Act (a "Demand Registration"), of all
of the Warrant Shares (the "Registrable Securities"), and the Company shall
use its best efforts to effect such Demand Registration as promptly as
possible, but in any case within 90 days thereafter. Any request for a
Demand Registration shall specify the aggregate number of Registrable
Securities proposed to be sold
<PAGE>
and shall also specify the intended method of disposition thereof. The
right to cause a registration of the Registrable Securities under this
Section 5 shall be limited to one such registration. In any registration
initiated as a Demand Registration, the Company will pay all of its
registration expenses in connection therewith. A Demand Registration shall
not be counted as a Demand Registration hereunder until the registration
statement filed pursuant to the Demand Registration has been declared
effective by the Securities and Exchange Commission and maintained
continuously effective for a period of at least 360 days or such shorter
period when all Registrable Securities included therein have been sold in
accordance with such registration statement, provided, however that any
days on which such registration statement is not effective or on which the
Holder is not permitted by the Company or any governmental authority to
sell Warrant Shares under such registration statement shall not count
towards such 360 day period.
vi. PAYMENT OF TAXES. The Company will pay all documentary
stamp taxes attributable to the issuance of Warrant Shares upon the
exercise of this Warrant; provided, however, that the Company shall not be
required to pay any tax which may be payable in respect of any transfer
involved in the registration of any certificates for Warrant Shares or
Warrants in a name other than that of the Holder, and the Company shall not
be required to issue or cause to be issued or deliver or cause to be
delivered the certificates for Warrant Shares unless or until the person
or persons requesting the issuance thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid. The Holder shall be responsible for
all other tax liability that may arise as a result of holding or
transferring this Warrant or receiving Warrant Shares upon exercise hereof.
vii. REPLACEMENT OF WARRANT. If this Warrant is mutilated, lost,
stolen or destroyed, the Company shall issue or cause to be issued in
exchange and substitution for and upon cancellation hereof, or in lieu of
and substitution for this Warrant, a New Warrant, but only upon receipt of
evidence reasonably satisfactory to the Company of such loss, theft or
destruction and indemnity, if requested, satisfactory to it. Applicants
for a New Warrant under such circumstances shall also comply with such
other reasonable regulations and procedures and pay such other reasonable
charges as the Company may prescribe.
viii. RESERVATION OF WARRANT SHARES. The Company covenants
that it will at all times reserve and keep available out of the aggregate
of its authorized but unissued Common Stock, solely for the purpose of
enabling it to issue Warrant Shares upon exercise of this Warrant as herein
provided, the number of Warrant Shares which are then issuable and
deliverable upon the exercise of this entire Warrant, free from preemptive
rights or any other actual contingent purchase rights of persons other than
the Holder (taking into account the adjustments and restrictions of Section
9). The Company covenants that all Warrant Shares that shall be so
issuable and deliverable shall, upon issuance and
<PAGE>
the payment of the applicable Exercise Price in accordance with the terms
hereof, be duly and validly authorized, issued and fully paid and
nonassessable.
ix. CERTAIN ADJUSTMENTS. The Exercise Price and number of
Warrant Shares issuable upon exercise of this Warrant are subject to
adjustment from time to time as set forth in this Section 9. Upon each
such adjustment of the Exercise Price pursuant to this Section 9, the
Holder shall thereafter prior to the Expiration Date be entitled to
purchase, at the Exercise Price resulting from such adjustment, the number
of Warrant Shares obtained by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of Warrant Shares
issuable upon exercise of this Warrant immediately prior to such adjustment
and dividing the product thereof by the Exercise Price resulting from such
adjustment.
(a) If the Company, at any time while this Warrant is
outstanding, (i) shall pay a stock dividend (except scheduled dividends
paid on outstanding preferred stock as of the date hereof which contain a
stated divided rate) or otherwise make a distribution or distributions on
shares of its Common Stock (as defined below) or on any other class of
capital stock and not the Common Stock) payable in shares of Common Stock,
(ii) subdivide outstanding shares of Common Stock into a larger number of
shares, or (iii) combine outstanding shares of Common Stock into a smaller
number of shares, the Exercise Price shall be multiplied by a fraction of
which the numerator shall be the number of shares of Common Stock
(excluding treasury shares, if any) outstanding before such event and of
which the denominator shall be the number of shares of Common Stock
(excluding treasury shares, if any) outstanding after such event. Any
adjustment made pursuant to this Section shall become effective immediately
after the record date for the determination of stockholders entitled to
receive such dividend or distribution and shall become effective
immediately after the effective date in the case of a subdivision or
combination, and shall apply to successive subdivisions and combinations.
(b) In case of any reclassification of the Common Stock,
any consolidation or merger of the Company with or into another person, the
sale or transfer of all or substantially all of the assets of the Company
or any compulsory share exchange pursuant to which the Common Stock is
converted into other securities, cash or property, then the Holder shall
have the right thereafter to exercise this Warrant only into the shares of
stock and other securities and property receivable upon or deemed to be
held by holders of Common Stock following such reclassification,
consolidation, merger, sale, transfer or share exchange, and the Holder
shall be entitled upon such event to receive such amount of securities or
property equal to the amount of Warrant Shares such Holder would have been
entitled to had such Holder exercised this Warrant immediately prior to
such reclassification, consolidation, merger, sale, transfer or share
exchange. The terms of any such consolidation, merger, sale, transfer or
share exchange shall include such terms so as to continue to give to the
Holder the right to receive the securities or property set forth in this
Section 9(b) upon any exercise following any such reclassification,
consolidation,
<PAGE>
merger, sale, transfer or share exchange.
(c) If the Company, at any time while this Warrant is
outstanding, shall distribute to all holders of Common Stock (and not to
holders of this Warrant) evidences of its indebtedness or assets or rights
or warrants to subscribe for or purchase any security (excluding those
referred to in Sections 9(a), (b) and (d)), then in each such case the
Exercise Price shall be determined by multiplying the Exercise Price in
effect immediately prior to the record date fixed for determination of
stockholders entitled to receive such distribution by a fraction of which
the denominator shall be the Exercise Price determined as of the record
date mentioned above, and of which the numerator shall be such Exercise
Price on such record date less the then fair market value at such record
date of the portion of such assets or evidence of indebtedness so
distributed applicable to one outstanding share of Common Stock as
determined by the Company's independent certified public accountants that
regularly examines the financial statements of the Company (an
"Appraiser").
(d) If, at any time while this Warrant is outstanding, the
Company shall issue or cause to be issued rights or warrants to acquire or
otherwise sell or distribute shares of Common Stock to all holders of
Common Stock for a consideration per share less than the Exercise Price
then in effect, then, forthwith upon such issue or sale, the Exercise Price
shall be reduced to the price (calculated to the nearest cent) determined
by multiplying the Exercise Price in effect immediately prior thereto by
a fraction, the numerator of which shall be the sum of (i) the number of
shares of Common Stock outstanding immediately prior to such issuance, and
(ii) the number of shares of Common Stock which the aggregate consideration
received (or to be received, assuming exercise or conversion in full of
such rights, warrants and convertible securities) for the issuance of such
additional shares of Common Stock would purchase at the Exercise Price, and
the denominator of which shall be the sum of the number of shares of Common
Stock outstanding immediately after the issuance of such additional shares.
Such adjustment shall be made successively whenever such an issuance is
made.
(e) For the purposes of this Section 9, the following
clauses shall also be applicable:
(i) RECORD DATE. In case the Company shall take a
record of the holders of its Common Stock for the purpose of entitling them
(A) to receive a dividend or other distribution payable in Common Stock or
in securities convertible or exchangeable into shares of Common Stock, or
(B) to subscribe for or purchase Common Stock or securities convertible or
exchangeable into shares of Common Stock, then such record date shall be
deemed to be the date of the
<PAGE>
issue or sale of the shares of Common Stock deemed to have been issued or
sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be.
(ii) TREASURY SHARES. The number of shares of Common
Stock outstanding at any given time shall not include shares owned or held
by or for the account of the Company, and the disposition of any such
shares shall be considered an issue or sale of Common Stock.
(f) All calculations under this Section 9 shall be made to
the nearest cent or the nearest 1/100th of a share, as the case may be.
(g) Whenever the Exercise Price is adjusted pursuant to
Section 9(c) above, the Holder, after receipt of the determination by the
Appraiser, shall have the right to select an additional appraiser (which
shall be a nationally recognized accounting firm), in which case the
adjustment shall be equal to the average of the adjustments recommended by
each of the Appraiser and such appraiser. The Holder shall promptly mail
or cause to be mailed to the Company, a notice setting forth the Exercise
Price after such adjustment and setting forth a brief statement of the
facts requiring such adjustment. Such adjustment shall become effective
immediately after the record date mentioned above.
(h) If:
(i) the Company shall declare a dividend (or any
other distribution) on its Common Stock; or
(ii) the Company shall declare a special
nonrecurring cash dividend on or a
redemption of its Common Stock; or
(iii) the Company shall authorize the granting to
all holders of the Common Stock rights or
warrants to subscribe for or purchase any
shares of capital stock of any class or of
any rights; or
(iv) the approval of any stockholders of the
Company shall be required in connection with
any reclassification of the Common Stock of
the Company, any consolidation or merger to
which the Company is a party, any sale or
transfer of all or
<PAGE>
substantially all of the assets of the
Company, or any compulsory share exchange
whereby the Common Stock is converted into
other securities, cash or property; or
(v) the Company shall authorize the voluntary
dissolution, liquidation or winding up of
the affairs of the Company,
then the Company shall cause to be mailed to each Holder at their last
addresses as they shall appear upon the Warrant Register, at least 30
calendar days prior to the applicable record or effective date hereinafter
specified, a notice stating (x) the date on which a record is to be taken
for the purpose of such dividend, distribution, redemption, rights or
warrants, or if a record is not to be taken, the date as of which the
holders of Common Stock of record to be entitled to such dividend,
distributions, redemption, rights or warrants are to be determined or (y)
the date on which such reclassification, consolidation, merger, sale,
transfer or share exchange is expected to become effective or close, and
the date as of which it is expected that holders of Common Stock of record
shall be entitled to exchange their shares of Common Stock for securities,
cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution,
liquidation or winding up; provided, however, that the failure to mail such
notice or any defect therein or in the mailing thereof shall not affect the
validity of the corporate action required to be specified in such notice.
x. PAYMENT OF EXERCISE PRICE. The Holder may pay the Exercise
Price in one of the following manners:
(a) CASH EXERCISE. The Holder shall deliver immediately
available funds; or
(b) CASHLESS EXERCISE. The Holder shall surrender this
Warrant to the Company together with a notice of cashless exercise, in
which event the Company shall issue to the Holder the number of Warrant
Shares determined as follows:
X = Y (A-B)/A
where:
X = the number of Warrant Shares to be issued
to the Holder.
Y = the number of Warrant Shares with respect to which
this Warrant is being exercised.
A = the average of the closing sale prices of the
Common Stock for the five (5) Trading Days
<PAGE>
immediately prior to (but not including) the Date of
Exercise.
B = the Exercise Price.
For purposes of Rule 144 promulgated under the Securities Act, it is
intended, understood and acknowledged that the Warrant Shares issued in a
cashless exercise transaction shall be deemed to have been acquired by the
Holder, and the holding period for the Warrant Shares shall be deemed to
have been commenced, on the issue date. Notwithstanding anything to the
contrary contained herein, the Holder may only pay the Exercise Price by
cashless exercise when there is not then an effective registration
statement registering the resale of the Warrant Shares and naming the
Holder as a "Selling Stockholder" thereunder.
xi. FRACTIONAL SHARES. The Company shall not be required to
issue or cause to be issued fractional Warrant Shares on the exercise of
this Warrant. The number of full Warrant Shares which shall be issuable
upon the exercise of this Warrant shall be computed on the basis of the
aggregate number of Warrant Shares purchasable on exercise of this Warrant
so presented. If any fraction of a Warrant Share would, except for the
provisions of this Section 11, be issuable on the exercise of this Warrant,
the Company shall pay an amount in cash equal to the Exercise Price
multiplied by such fraction.
xii. NOTICES. Any and all notices or other communications or
deliveries hereunder shall be in writing and shall be deemed given and
effective on the earliest of (i) the date of transmission, if such notice
or communication is delivered via facsimile at the facsimile telephone
number specified in this Section prior to 7:00 p.m. (New York City time)
on a business day, (ii) the business day after the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Section later than 7:00 p.m. (New York
City time) on any date and earlier than 11:59 p.m. (New York City time) on
such date, (iii) the business day following the date of mailing, if sent
by nationally recognized overnight courier service, or (iv) upon actual
receipt by the party to whom such notice is required to be given. The
addresses for such communications shall be: (i) if to the Company, to
Unapix Entertainment, Inc., 200 Madison Avenue, New York, NY 10016,
Attention: Chief Executive Officer and General Counsel, or to facsimile no.
(212) 252-7628, or (ii) if to the Holder, to the Holder at the address or
facsimile number appearing on the Warrant Register or such other address
or facsimile number as the Holder may provide to the Company in accordance
with this Section 12.
xiii. WARRANT AGENT.
<PAGE>
(a) The Company shall serve as warrant agent under this
Warrant. Upon thirty (30) days' notice to the Holder, the Company may
appoint a new warrant agent.
(b) Any corporation into which the Company or any new
warrant agent may be merged or any corporation resulting from any
consolidation to which the Company or any new warrant agent shall be a
party or any corporation to which the Company or any new warrant agent
transfers substantially all of its corporate trust or shareholders services
business shall be a successor warrant agent under this Warrant without any
further act. Any such successor warrant agent shall promptly cause notice
of its succession as warrant agent to be mailed (by first class mail,
postage prepaid) to the Holder at the Holder's last address as shown on the
Warrant Register.
xiv. MISCELLANEOUS.
(a) This Warrant shall be binding on and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. This Warrant may be amended only in writing signed by the Company
and the Holder.
(b) Subject to Section 14(a), above, nothing in this
Warrant shall be construed to give to any person or corporation other than
the Company and the Holder any legal or equitable right, remedy or cause
under this Warrant. This Warrant shall inure to the sole and exclusive
benefit of the Company and the Holder.
(c) This Warrant shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York
without regard to the principles of conflicts of law thereof.
(d) The headings herein are for convenience only, do not
constitute a part of this Warrant and shall not be deemed to limit or
affect any of the provisions hereof.
(e) In case any one or more of the provisions of this
Warrant shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Warrant shall
not in any way be affected or impaired thereby and the parties will attempt
in good faith to agree upon a valid and enforceable provision which shall
be a commercially reasonable substitute therefor, and upon so agreeing,
shall incorporate such substitute provision in this Warrant.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be
duly executed by its authorized officer as of the date first indicated
above.
UNAPIX ENTERTAINMENT, INC.
By:
---------------------------------------
Name:
Title:
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed by the Holder to exercise the right to purchase shares of
Common Stock under the foregoing Warrant)
To Unapix Entertainment, Inc.:
In accordance with the Warrant enclosed with this Form of Election to
Purchase, the undersigned hereby irrevocably elects to purchase
_____________ shares of Common Stock ("Common Stock"), $.01 par value per
share, of Unapix Entertainment, Inc. and , if such Holder is not utilizing
the cashless exercise provisions set forth in this Warrant, encloses
herewith $________ in cash, certified or official bank check or checks,
which sum represents the aggregate Exercise Price (as defined in the
Warrant) for the number of shares of Common Stock to which this Form of
Election to Purchase relates, together with any applicable taxes payable
by the undersigned pursuant to the Warrant.
The undersigned requests that certificates for the shares of Common
Stock issuable upon this exercise be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER
--------------------------------
(Please print name and address)
If the number of shares of Common Stock issuable upon this exercise
shall not be all of the shares of Common Stock which the undersigned is
entitled to purchase in accordance with the enclosed Warrant, the
undersigned requests that a New Warrant (as defined in the Warrant)
evidencing the right to purchase the shares of Common Stock not issuable
pursuant to the exercise evidenced hereby be issued in the name of and
delivered to:
(Please print name and address)
Dated: ,
<PAGE>
Name of Holder:
(Print)
-------------------------------
(By:)
----------------------------------
(Name:)
(Title:)
(Signature must conform in all
respects to name of holder as
specified on the face of the Warrant)
<PAGE>
FORM OF ASSIGNMENT
[To be completed and signed only upon transfer of Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ________________________________ the right represented by
the within Warrant to purchase ____________ shares of Common Stock of
Unapix Entertainment, Inc. to which the within Warrant relates and appoints
________________ attorney to transfer said right on the books of Unapix
Entertainment, Inc. with full power of substitution in the premises.
Dated:
_______________, ____
-----------------------------------------------
(Signature must conform in all respects to name
of holder as specified on the face of the
Warrant)
---------------------------------------
Address of Transferee
---------------------------------------
---------------------------------------
In the presence of:
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