Registration of Securities Issued in a Business-Combination Transaction — Form S-4
Filing Table of Contents
Document/Exhibit Description Pages Size
1: S-4 Registration of Securities Issued in a 148 806K
Business-Combination Transaction
2: EX-1.1 Placement Agreement 27 117K
3: EX-3.1 Amended & Restated Certificate of Incorporation 39 131K
4: EX-3.2 Tvn Entertainment Corp. Bylaws 26 104K
5: EX-4.1 Securityholder Agreement Dated 8/29/1997 34 127K
6: EX-4.2 Amendment to Securityholders Agreement 3 19K
7: EX-4.3 Indenture - Tvn Entertainment Corp & Bank of Ny 104 454K
8: EX-4.4 Warrant Agreement-Tvn Entertainment & Bank of Ny 68 232K
9: EX-4.5 Warrant Registration Rights Agreement 15 60K
10: EX-4.7 Notes Registration Rights Agreement 22 94K
11: EX-5.1 Wilson Sonsini Goodrich & Rosati Opinion 3 22K
12: EX-10.1 Transponder Lease Agmt. - Galaxy Iii R 45 175K
21: EX-10.10 Employment Agreement - Arthur Fields 8 42K
22: EX-10.11 Employment Agreement - Michael Wex 6 34K
23: EX-10.12 Severance Agreement - John C. McWilliams 1 12K
24: EX-10.13 Employment Agreement - David Sears 4 22K
25: EX-10.14 Memorandum of Understanding 8 36K
13: EX-10.2 Galaxy Iii R Transponder Service Agreement 17 65K
14: EX-10.3 Transponder Lease Agreement - Galaxy Ix 32 136K
15: EX-10.4 Galaxy Ix Transponder Service Agreement 16 62K
16: EX-10.5 1996 Stock Option Plan - Tvn Entertainment Corp. 28 110K
17: EX-10.6 Service & License Agreement - Hits and Tvn 17 70K
18: EX-10.7 Csg Master Subscriber Mgmt Systems Agmt 28 143K
19: EX-10.8 Employment Agreement - Stuart Z. Levin 8 44K
20: EX-10.9 Employment Agreement - Jim Ramo 12 59K
26: EX-21.1 Subsidiaries of the Registrant 1 9K
27: EX-23.1 Consent of Pricewaterhousecoopers LLP 1 10K
28: EX-25.1 Statement of Eligibility of Trustee 4 25K
29: EX-27.1 Financial Data Schedule 2 12K
30: EX-99.1 Form of Letter of Transmittal 13 63K
31: EX-99.2 Form of Notice of Guaranteed Delivery 4 19K
32: EX-99.3 Form of Exchange Agent Agreement 9 38K
EXHIBIT 4.1
EXECUTION COPY
--------------
SECURITYHOLDERS AGREEMENT
dated as of August 29, 1997
among
TVN ENTERTAINMENT CORPORATION,
PRINCES GATE INVESTORS II, L.P.,
STORIE PARTNERS, L.P.,
WENONAH DEVELOPMENT CORP.,
JEROME H. TURK AND CAROLE TURK FAMILY TRUST
and
PG INVESTORS II, INC.
as Agent
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
[Download Table]
Page
----
SECTION 1.1. Definitions........................................ 1
ARTICLE II
RESTRICTIVE LEGEND
SECTION 2.1. Restrictive Legend................................. 7
ARTICLE III
REGISTRATION RIGHTS
SECTION 3.1. Demand Registration................................ 8
SECTION 3.2. Piggy-Back Registration............................ 9
SECTION 3.3. Reduction of Offering.............................. 9
SECTION 3.4. Registration Procedures............................ 9
SECTION 3.5. Shelf Registration................................. 12
SECTION 3.6. Registration Expenses.............................. 12
SECTION 3.7. Indemnification by the Issuer...................... 12
SECTION 3.8. Indemnification by Selling Holders................. 13
SECTION 3.9. Conduct of Indemnification Proceedings............. 13
SECTION 3.10. Contribution...................................... 14
SECTION 3.11. Participation in Underwritten Registrations....... 15
SECTION 3.12. Rule 144.......................................... 16
SECTION 3.13. Holdback Agreements............................... 16
SECTION 3.14. Exclusivity....................................... 17
ARTICLE IV
COVENANTS
SECTION 4.1. Information........................................ 17
SECTION 4.2. Prohibited Issuance of Additional Series B Stock... 18
SECTION 4.3. Lead Underwriter; Lead Manager; Lead Advisor....... 18
i
[Download Table]
Page
----
SECTION 4.4. Key Man Life Insurance............................. 19
SECTION 4.5. Approvals.......................................... 19
SECTION 4.6. Qualified Stock.................................... 20
ARTICLE V
BOARD OF DIRECTORS
SECTION 5.1. Number............................................. 21
SECTION 5.2. Appointment; Removal............................... 21
SECTION 5.3. Special Trigger Event.............................. 21
SECTION 5.4. Mechanics.......................................... 22
ARTICLE VI
THE AGENT
SECTION 6.1. Appointment and Authorization...................... 22
SECTION 6.2. Reliance by Issuer and Other Holders............... 22
SECTION 6.3. Liability of Agent................................. 22
SECTION 6.4. Indemnification.................................... 22
SECTION 6.5. Successor Agent.................................... 23
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. Headings........................................... 23
SECTION 7.2. No Inconsistent Agreements......................... 23
SECTION 7.3. Entire Agreement................................... 23
SECTION 7.4. Notices............................................ 24
SECTION 7.5. Applicable Law..................................... 24
SECTION 7.6. Severability....................................... 24
SECTION 7.7. Termination........................................ 24
SECTION 7.8. Successors, Assigns, Transferees................... 24
SECTION 7.9. Amendments; Waivers................................ 25
SECTION 7.10. Counterparts; Effectiveness....................... 25
SECTION 7.11. Recapitalization, etc............................. 25
SECTION 7.12. Remedies.......................................... 25
SECTION 7.13. Consent to Jurisdiction........................... 25
SECTION 7.14. Transferability................................... 26
ii
ARTICLE VIII
STORIE INVESTMENT
[Download Table]
Page
----
SECTION 8.1. Existing Investments............................... 26
SECTION 8.2. Conversion to Series B2 Stock; Reset of Warrant
Exercise Price.................................... 27
EXHIBIT A - Form of Management Reporting Package
iii
SECURITYHOLDERS AGREEMENT
-------------------------
SECURITYHOLDERS AGREEMENT (this "Agreement") dated as of August 29,
1997 among TVN Entertainment Corporation, a Delaware corporation (the "Issuer"),
Princes Gate Investors, II, L.P., a Delaware limited partnership, as purchaser
(the "Purchaser"), Storie Partners, L.P., Wenonah Development Corp., Jerome H.
Turk and Carole Turk Family Trust and PG Investors II Inc., a Delaware
corporation, as agent (the "Agent") for the Holders (as defined below) of PGI
Stock (as defined below).
WHEREAS, the Issuer and the Purchaser have entered into the Securities
Purchase Agreement (as defined below) pursuant to which the Purchaser has agreed
to purchase shares of Series B Stock (as defined below) in accordance with the
terms thereof and the Issuer has granted the Purchaser options to purchase
additional shares of Series B Stock; and
WHEREAS, the Storie Partners (as defined below) hold certain
indebtedness of the Issuer and wish to provide for the conversion thereof into
Series B Stock.
NOW THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions.
-----------
(a) The following terms, as used herein, have the following meanings:
"Affiliate", as applied to any Person, means any other Person
directly or indirectly controlling, controlled by, or under common control
with, such Person and "Affiliated" has a meaning correlative with the
foregoing. For purposes of this definition, "control" (including, with
correlative meaning, the terms "controlling", "controlled by" and "under
common control with"), as applied to any Person, means the ownership,
directly or indirectly, of more than 10 percent of the outstanding voting
securities of such Person or other ownership interests having ordinary
voting power to elect a majority of the board of directors of such Person
or other entity performing similar functions.
"Agent" has the meaning set forth in the first paragraph of this
Agreement.
"Agreement" has the meaning set forth in the first paragraph of this
Agreement.
2
"Annual Budget" means the annual budget of the Issuer and its
Subsidiaries on a consolidated basis, which shall include (i) a detailed
projected statement of operations/income statement, statement of cash
flows, balance sheet and other financial data in reasonable detail, broken
down by quarter of the next succeeding Fiscal Year and (ii) a written
business plan describing the business activities of the Issuer and its
Subsidiaries for the next succeeding Fiscal Year and specifying quarterly
objectives, all in reasonable detail, adopted in accordance with the
procedures set forth in Section 4.5(a) herein. Notwithstanding the
foregoing, until April 1, 1998, Exhibit F to the Securities Purchase
Agreement shall be deemed to be the Annual Budget and to have been approved
in the manner provided for in Section 4.5 hereof.
"Board of Directors" means the Board of Directors of the Issuer.
"Business Day" means any day except a Saturday, Sunday or other day
on which commercial banks in the City of New York are authorized or
required by law to close.
"Charter" means the Amended and Restated Certificate of Incorporation
of the Issuer, as amended as of the Closing Date, in the form attached as
Exhibit C to the Securities Purchase Agreement.
"Closing Date" means the date of the Initial Closing.
"Certificate of Designations" means the Certificate of Voting Powers,
Designations, Preferences and Relative, Participating, Optional or other
Special Rights and Qualifications, Limitations and Restrictions Thereof of
the Series B Convertible Preferred Stock of the Issuer.
"Commission" means the Securities and Exchange Commission and any
successor agency having similar powers.
"Common Stock" means the Common Stock, par value $.001 per share, of
the Issuer.
"Director" means a member of the Board of Directors.
"Equity Securities" means the Series B Stock and the Series B Common
Shares.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor statute.
3
"Fiscal Year" means the fiscal year of the Issuer, beginning on
April 1 of each year, and ending on the following March 31.
"Holder" means any registered holder of shares of Series B Stock or
Series B Common Shares.
"Initial Closing" means the first date upon which shares of Series B
Stock are issued by the issuer.
"Initial Public Offering" means the first registration of Common
Stock after the date hereof under the Securities Act, using forms S-1, S-2
or S-3 or any successor forms.
"Issuer" has the meaning set forth in the first paragraph of this
Agreement.
"Liquidation Preference" has the meaning ascribed thereto in the
Certificate of Designations.
"Person" means an individual, general partnership, limited
partnership, corporation, limited liability company, trust, joint stock
company, association, joint venture or any other entity or organization,
whether or not a legal entity, including a government or political
subdivision or an agency or instrumentality thereof.
"Purchaser" has the meaning set forth in the first paragraph of this
Agreement.
"PGI Stock" means Series B1 Stock, Series B3 Stock and Series B4
Stock.
"Qualified Stock" means equity securities of the Issuer that are pari
passu with, or junior to, the Series B Stock with respect to dividends and
liquidation preference and the purchase price of which (in the opinion of
an investment bank of national standing selected by the Issuer and
reasonably acceptable to the Agent) implies an equity valuation per
outstanding (on a fully diluted basis) share of Common Stock of the Issuer
below (i) during the First Period, $6.8359 and (ii) during the Second
Period, $10.9374.
"Registrable Securities" means the Series B Common Shares; provided,
--------
in any event, that such securities shall cease to be Registrable Securities
when a registration statement relating to such securities shall have
declared effective by the Commission and such securities shall have been
disposed of pursuant to such effective registration statement or sold under
Rule 144 (but not Rule 144A).
4
"Registration Expenses" means all (i) registration and filing fees,
(ii) fees and expenses of compliance with securities or blue sky laws or
the rules of the National Association of Securities Dealers, Inc. or any
successor agency (including reasonable fees and disbursements of a
qualified independent underwriter, if any, counsel in connection therewith
and the reasonable fees and disbursements of counsel in connection with
blue sky qualifications of the Registrable Securities), (iii) printing
expenses, (iv) internal expenses of the Issuer (including, without
limitation, all salaries and expenses of officers and employees performing
legal or accounting duties), (v) fees and disbursements of counsel for the
Issuer, (vi) customary fees and expenses for independent certified public
accountants retained by the Issuer (including the expenses of any comfort
letters or costs associated with the delivery by independent certified
public accountants of a comfort letter or comfort letters), (vii) fees and
expenses of any special experts retained by the Issuer in connection with
such registration, (viii) reasonable fees and expenses of one counsel for
the Holders, (ix) fees and expenses of listing the Registrable Securities
on a securities exchange or on the NASDAQ National Market System, (x)
rating agency fees and (xi) other out-of-pocket expenses of the Issuer.
"Rule 144" means Rule 144 under the Securities Act, as such rule may
be amended from time to time.
"Rule 144A" means Rule 144A under the Securities Act, as such rule
may be amended from time to time.
"Rule 144(k)" means Rule 144(k) under the Securities Act, as such
rule may be amended from time to time.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, or any successor statute.
"Securities Purchase Agreement" means the Securities Purchase
Agreement dated as of the date hereof by and between the Issuer and the
Purchaser.
"Series A Preferred Stock" means the Series A Preferred Stock, par
value $.001 per share, of the Issuer, having the rights and privileges set
forth in the Charter.
"Series B Common Shares" means the shares of Common Stock issued or
to be issued upon conversion of the Series B Stock.
"Series B Stock" means the Issuer's Series B Convertible Preferred
Stock having the rights, preferences and privileges set forth in the
Certificate of Designations.
5
"Special Trigger Event" shall be deemed to occur if (i) the Issuer
has not, prior to the third anniversary of the Initial Closing, completed
an Initial Public Offering, underwritten by an investment bank of national
standing and generating gross proceeds to the Issuer which exceed $25
million; (ii) the Issuer is in default with a creditor or trade partner
with respect to a liability or obligation of at least $50,000, including,
but not limited to, any of the Key Creditors (as defined in the Securities
Purchase Agreement), for thirty days; (iii) the Issuer breaches any
covenant or agreement contained herein, in the Securities Purchase
Agreement or in the Certificate of Designations and such breach has not
been cured within ten days thereof; (iv) a court having jurisdiction in the
premises enters a decree or order for (A) relief in respect of the Issuer
or any of its Subsidiaries in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, (B)
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Issuer or any of its Subsidiaries
or for all or substantially all of the property and assets of the Issuer or
any of its Subsidiaries or (C) the winding up or liquidation of the affairs
of the Issuer or any of its Subsidiaries; (v) the Issuer or any of its
Subsidiaries (A) commences a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
consents to the entry of an order for relief in an involuntary case under
any such law, (B) consents to the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official of the Issuer or any of its Subsidiaries or for all or
substantially all of the property and assets of the Issuer or any of its
Subsidiaries or (C) effects any general assignment for the benefit of
creditors; or (vi) if the Chief Operating Officer of the Issuer hired on
the date of the Initial Closing is not employed by the Issuer on a full-
time basis at all times during the one year period after the Initial
Closing, except in the event of such person's death or disability or with
the approval of the Directors elected by the Holders, and the Corporation
shall not have replaced such Chief Operating Officer within 30 days of such
cessation with a person reasonably acceptable to the Directors elected by
the Holders; provided that with respect to the events referred to in items
(ii), (iii) and (vi) above, a Special Trigger Event shall be deemed not to
have occurred unless (A) the Issuer shall have failed to give written
notice of the occurrence of such event to the Agent and the Storie Holders
within five days of such occurrence or (B) the Agent or holders of 25% or
more of the Series B Stock shall have given the Issuer written notice
declaring such event to be a Special Trigger Event.
"Specified Item" means the items noted with footnote (S) on
Exhibit F to the Securities Purchase Agreement and the items noted with
footnote (S) in the Annual Budget.
"Storie Holder" means any holder of the 10% Convertible Notes or
Warrants.
6
"Storie Partners" means Storie Partners, L.P., Wenonah Development
Corp. and Jerome H. Turk and Carole Turk Family Trust.
"Storie Partners Agreements" means Warrants and 10% Convertible Notes
of the Issuer held by a Storie Holder.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than fifty percent (50%)
of the total voting power of shares of capital stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other
Subsidiaries of such Person or a combination thereof.
"10% Convertible Notes" means the 10% Convertible Notes of the Issuer
issued to the Storie Partners.
"Third Party" means a prospective purchaser of Equity Securities from
a Holder in an arm's-length transaction where such purchaser is not the
Issuer or an Affiliate of the Issuer.
"Transfer" means any transfer, in whole or in part, by sale, pledge,
assignment, grant or other means.
"Underwriter" means a securities dealer who purchases any Registrable
Securities as a principal in connection with a distribution of such
Registrable Securities and not as part of such dealer's market-making
activities.
"Voting Securities" means any class or series of capital stock and
any bond, debenture or other obligation of the Issuer having the right to
vote generally on matters voted on by the stockholders of the Issuer.
"Warrants" means warrants of the Issuer issued to the Storie Partners
and cancelled and reissued on the date hereof.
7
(b) Each of the following terms is defined in the Section opposite
such term:
[Download Table]
Term Section
---- -------
Demand Registrant 3.1
Demand Registration 3.1
Effective Date 7.10
First Period 4.6
Indemnified Party 3.9
Indemnifying Party 3.9
1% holders 3.2
Piggy-Back Registration 3.2
Registration Request 3.1
Second Period 4.6
Selling Holder 3.2
ARTICLE II
RESTRICTIVE LEGEND
SECTION 2.1. Restrictive Legend.
------------------
(a) For so long as this Agreement remains in effect, each certificate
representing an Equity Security owned by any Holder or a subsequent transferee
shall (unless otherwise permitted by the provisions of Section 2.1(b) or
required by the Charter) include a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN COMPLIANCE WITH THE ACT,
THE RULES AND REGULATIONS PROMULGATED THEREUNDER AND ANY APPLICABLE
STATE SECURITIES LAWS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
SECURITYHOLDERS AGREEMENT DATED AS OF AUGUST 29, 1997 THAT FIXES
CERTAIN RIGHTS AND OBLIGATIONS OF THE COMPANY AND THE HOLDER OF THIS
SECURITY. A COPY OF THE AGREEMENT IS ON FILE AT THE COMPANY'S
PRINCIPAL OFFICE.
8
(b) Any Holder or transferee of an Equity Security may, upon providing
evidence reasonably satisfactory to the Issuer that such Equity Security either
is not a "restricted security" (as defined in Rule 144), may be sold pursuant to
Rule 144(k) or has been registered under the Securities Act, exchange the
certificate representing such Equity Security for a new certificate that does
not bear the legend set forth in Section 2.1(a).
ARTICLE III
REGISTRATION RIGHTS
SECTION 3.1. Demand Registration.
-------------------
(a) Request for Registration. At any time after the consummation of
------------------------
the Issuer's Initial Public Offering for a period of five years from the closing
of the Initial Public Offering, the holders of outstanding Registrable
Securities that constitute both (A) at least 20% of the then outstanding number
of shares of Registrable Securities and (B) at least 1% of the then outstanding
Common Stock of the Issuer, treating Series B Stock on an as-converted basis for
purposes of calculating such 1%, (such Holders collectively, a "Demand
Registrant"), may make a written request (the "Registration Request") for
registration (a "Demand Registration") under the Securities Act of Registrable
Securities having an anticipated sale price of at least $10 million. The
Registration Request will specify the number and class of Registrable Securities
proposed to be sold and will also specify the intended method of disposition
thereof. The Issuer shall not be obligated to effect more than one Demand
Registration in any six-month period and shall not be obligated to effect any
Demand Registration unless the offering of the securities registered thereby:
(a) is underwritten by an investment bank of national standing, (b) is limited
to purchases by ten or fewer sophisticated investors or (c) involves an orderly
plan of distribution reasonably acceptable to the Issuer.
(b) Effective Registration. A registration requested pursuant to this
----------------------
Section 3.1 shall be deemed not to be effected (i) if a registration statement
with respect thereto shall not have become effective, (ii) if, after it has
become effective, such registration is interfered with for any reason by any
stop order, injunction or other order or requirement of the Commission or any
other governmental agency or any court, and the result of such interference is
to prevent a Holder from disposing of the Registrable Securities to be sold
thereunder in accordance with the intended methods of disposition or (iii) if
the closing specified in the purchase agreement or underwriting agreement
entered into in connection with any underwritten registration shall not have
occurred.
9
(c) Underwriting. If the Demand Registrant so elects, the offering of
------------
Registrable Securities pursuant to a Demand Registration shall be in the form of
an underwritten offering consistent with the covenants of the Issuer set forth
in Section 4.3 hereof.
SECTION 3.2. Piggy-Back Registration. If the Issuer proposes to file
-----------------------
a registration statement under the Securities Act with respect to an offering of
its equity securities other than in the Initial Public Offering or any
registration of the Series B Stock concurrent with the Issuer's Initial Public
Offering (i) for its own account (other than a registration statement on Form S-
4 or S-8 (or any substitute form that may be adopted by the Commission)) or (ii)
for the account of any holders ("1% holders") of at least 1% of the then
outstanding Common Stock of the Issuer, treating Series B Stock on an as-
converted basis for purposes of calculating such 1%, then the Issuer shall give
written notice of such proposed filing to the Agent, the Storie Holders and each
Holder of more than 5% of the shares of Registrable Securities then outstanding
as soon as practicable (but in any event not less than 20 days before the
anticipated filing date), and such notice shall offer such 1% holders the
opportunity to register such number of shares of Registrable Securities that are
then eligible for registration. If any Holder wishes to register securities of
the same class or series as the Issuer or such holder, such registration shall
be on the same terms and conditions as the registration of the Issuer or such
holders' securities (a "Piggy-Back Registration"). If the Piggy-Back
Registration is of a different class, then the Issuer has the option of
effecting a concurrent registration. Holders participating in a Piggy-Back
Registration, together with the Demand Registrant, if any, are referred to
herein as "Selling Holders."
SECTION 3.3. Reduction of Offering. Notwithstanding anything
---------------------
contained in any other Section herein, if the lead Underwriter of an offering
described in Section 3.1 or 3.2 delivers a written opinion to the Issuer that
the success of such offering would be materially and adversely affected by
inclusion of all the securities of each class requested to be included, then the
Issuer may, upon written notice to the Holders, reduce (if and to the extent
stated by such Underwriter to be necessary to eliminate such effect) the number
of the securities of each class requested to be registered so that the resultant
aggregate number of the securities of each class requested to be registered that
will be included in such registration shall be equal to the numbers of the
securities of each class stated in such Underwriter's letter; provided, however,
-------- -------
that priority in such registration shall be as follows:
(a) if such registration has been initiated by a Demand Registrant,
then, (i) first, securities offered for the account of the Selling Holders,
pro rata based on the number of shares of Registerable Securities and
Series B Stock then owned by each Selling Holder and (ii) second,
securities offered for the account of the Issuer; and
(b) if such registration has been initiated by the Issuer, then (i)
first for the account of the Issuer and (ii) second, pro rata among the
Selling Holders, based on the
10
number of shares of Registrable Securities and Series B Stock then owned by
each Selling Holder.
SECTION 3.4. Registration Procedures. Whenever the Issuer is
-----------------------
required to effect the registration of Registrable Securities pursuant to
Section 3.1 hereof, the Issuer will use its best efforts to effect the
registration and the sale of such Registrable Securities in accordance with the
intended method of disposition thereof as quickly as practicable, and in
connection with any such Registration Request:
(a) The Issuer will as expeditiously as possible prepare and file with
the Commission a registration statement on any form for which the Issuer
then qualifies or which counsel for the Issuer shall deem appropriate and
which form shall be available for the sale of the Registrable Securities to
be registered thereunder in accordance with the intended method of
distribution thereof, and use its best efforts to cause such filed
registration statement to become and remain effective until all Registrable
Securities requested to be registered thereunder have been sold thereunder.
(b) The Issuer will, if requested, prior to filing a registration
statement or prospectus or any amendment or supplement thereto, furnish to
the Selling Holders and each Underwriter, if any, such number of copies of
such registration statement, each amendment and supplement thereto (in each
case including all exhibits thereto and documents incorporated by reference
therein), the prospectus included in such registration statement (including
each preliminary prospectus) and such other documents as the Selling
Holders or such Underwriter may reasonably request in order to facilitate
the sale of the Registrable Securities.
(c) After the filing of the registration statement, the Issuer will
promptly notify the Selling Holders of any comments from or any material
correspondence with the Commission or the National Association of
Securities Dealers, Inc. and of any stop order issued or threatened by the
Commission and take all reasonable actions required to prevent the entry of
such stop order or to remove it if entered.
(d) The Issuer will use its best efforts to (i) register or qualify
the Registrable Securities under such other securities or blue sky laws of
such jurisdictions in the United States or elsewhere as the Selling Holders
reasonably request to keep such registration or qualification in effect for
so long as such registration statement remains in effect, and to take any
other action which may be reasonably necessary or advisable to enable the
Selling Holders to consummate the disposition in such jurisdictions of the
securities owned by the Selling Holders and (ii) cause such disposition and
Registrable Securities to be registered with or approved by such other
governmental agencies or authorities as may be necessary by virtue of the
business and operations of the Issuer, to enable the
11
Selling Holders to consummate the disposition of such Registrable
Securities; provided that the Issuer will not be required to (i) qualify
--------
generally to do business in any jurisdiction where it would not otherwise
be required to qualify but for this paragraph (d), (ii) subject itself to
taxation in any such jurisdiction other than taxation arising with respect
to the registration of securities or (iii) consent to general service of
process in any such jurisdiction.
(e) At any time when a prospectus relating to the sale of Registrable
Securities is required to be delivered under the Securities Act, the Issuer
will immediately notify the Selling Holders of the occurrence of an event
requiring the preparation of a supplement or amendment to such prospectus
so that, as thereafter delivered to the purchasers of such Registrable
Securities, such prospectus will not contain an untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading and
promptly make available to the Selling Holders and the Underwriters any
such supplement or amendment. The Selling Holders agree that, upon receipt
of any notice from the Issuer of the happening of any event of the kind
described in the preceding sentence, the Selling Holders will forthwith
discontinue the offer and sale of Registrable Securities pursuant to the
registration statement covering such Registrable Securities until receipt
of the copies of such supplemented or amended prospectus and, if so
directed by the Issuer, the Selling Holders will deliver to the Issuer all
copies, other than permanent file copies then in the possession of the
Selling Holders, of the most recent prospectus covering such Registrable
Securities at the time of receipt of such notice.
(f) The Issuer will enter into customary agreements (including an
underwriting agreement in customary form) and take such other actions as
are necessary or desirable in order to expedite or facilitate the
disposition of such Registrable Securities.
(g) The Issuer will furnish to the Selling Holders and to each
Underwriter, if any, addressed to the Selling Holders or such Underwriter,
of (i) an opinion or opinions of counsel to the Issuer and (ii) a comfort
letter or comfort letters from the Issuer's independent public accountants,
each in such form and covering such matters as the Selling Holders or the
lead Underwriter requests.
(h) The Issuer will otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to
its securityholders, as soon as reasonably practicable, an earnings
statement covering a period of 12 months, beginning within three months
after the effective date of the registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities
Act.
12
(i) The Issuer will provide and cause to be maintained a transfer
agent and registrar for all Registrable Securities covered by such
registration statement from and after a date not later than the effective
date of such registration statement.
(j) The Issuer will use its best efforts (i) to cause all such
Registrable Securities covered by such registration statement to be listed
on any national securities exchange (if such Registrable Securities are not
already listed), and on each other securities exchange on which similar
securities issued by the Issuer are then listed, if the listing of such
Registrable Securities is then permitted under the rules of such exchange;
or (ii) to secure the designation of all such Registrable Securities
covered by such registration statement as a NASDAQ "national market system
security" within the meaning of Rule 11Aa2-1 of the Commission or, failing
that, to secure NASDAQ authorization for listing or quoting such
Registrable Securities, in each case if the Registrable Securities so
qualify, and, without limiting the generality of the foregoing, to arrange
for at least two market makers to register as such with respect to such
Registrable Securities with the National Association of Securities Dealers,
in the case of each action referred to in this clause (ii) if requested by
a Selling Holder or by the lead Underwriter.
SECTION 3.5. Shelf Registration. At any time after 180 days
------------------
following the closing of the Initial Public Offering, the Issuer, upon the
request of any Holders of more than 20% of the shares of Registrable Securities
and Series B Stock then outstanding will use its best efforts to file a "shelf"
registration statement (the "Shelf Registration") with respect to the
Registrable Securities on an appropriate form pursuant to Rule 415 (or any
similar provision that may be adopted by the Commission) under the Securities
Act and to cause such Shelf Registration to become effective and to keep such
Shelf Registration effective and the disclosure therein current and complete
until the Holders shall no longer hold any Registrable Securities. Any sale of
Registrable Securities pursuant to the Shelf Registration in an underwritten
public offering shall be deemed to be a Demand Registration subject to the
provisions of Sections 3.1, 3.3 and 3.13 hereof. Registrable Securities shall
not be sold pursuant to the Shelf Registration unless the offering of the
securities registered thereby: (a) is underwritten by an investment bank of
national standing or (b) involves an orderly plan of distribution reasonably
acceptable to the Issuer.
SECTION 3.6. Registration Expenses. Registration Expenses incurred
---------------------
in connection with any registration made or requested to be made pursuant to
this Article III will be borne by the Issuer, whether or not any registration
statement becomes effective.
SECTION 3.7. Indemnification by the Issuer. The Issuer agrees to
-----------------------------
indemnify and hold harmless each Selling Holder, its officers, directors and
agents, and each Person, if any, who controls each such Selling Holder within
the meaning of Section 15 of the Securities
13
Act or Section 20 of the Exchange Act, from and against any and all losses,
claims, damages, liabilities and expenses caused by any untrue statement or
alleged untrue statement of a material fact contained in any registration
statement or prospectus relating to the Registrable Securities (as amended or
supplemented if the Issuer shall have furnished any amendments or supplements
thereto) or any preliminary prospectus, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary in order to make the statements therein (in the case of a prospectus,
in the light of the circumstances under which they were made) not misleading
except insofar as such losses, claims, damages, liabilities or expenses are
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon information furnished in writing to the Issuer by or on
behalf of any such Selling Holder expressly for use therein. The Issuer also
agrees, to the extent permitted by applicable law, to indemnify any Underwriters
of the Registrable Securities, their officers and directors and each Person who
controls such underwriters on substantially the same basis as that of the
indemnification of the Selling Holders provided in this Section 3.7.
SECTION 3.8. Indemnification by Selling Holders. Each Selling Holder
----------------------------------
agrees, severally but not jointly, to indemnify and hold harmless the Issuer,
its officers, directors and agents and each Person, if any, who controls the
Issuer within the meaning of either Section 15 of the Securities Act of Section
20 of the Exchange Act, to the same extent as the foregoing indemnity from the
Issuer to such Selling Holder, but only with reference to information related to
such Selling Holder furnished in writing by such Selling Holder (or by the
Purchaser on its behalf) expressly for use in any registration statement or
prospectus relating to the Registrable Securities, or any amendment or
supplement thereto, or any preliminary prospectus. Each Selling Holder also
agrees to indemnify and hold harmless Underwriters of the Registrable
Securities, their officers and directors and each Person who controls such
Underwriters on substantially the same basis as that of the indemnification of
the Issuer provided in this Section 3.8.
SECTION 3.9. Conduct of Indemnification Proceedings. In case any
--------------------------------------
proceeding (including any governmental investigation) shall be instituted
involving any Person in respect of which indemnity may be sought pursuant to
Section 3.7 or 3.6, such Person (the "Indemnified Party") shall promptly notify
the Person against whom such indemnity may be sought (the "Indemnifying Party")
in writing and the Indemnifying Party upon request of the Indemnified Party
shall retain counsel reasonably satisfactory to the Indemnified Party to
represent the Indemnified Party and any others the Indemnifying Party may
designate in such proceeding and shall pay the reasonable fees and disbursements
of such counsel related to the proceeding. In any such proceeding, any
Indemnified Party shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Party
unless (i) the Indemnifying Party and the Indemnified Party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the Indemnified Party
and the Indemnifying Party and representation of
14
both parties by the same counsel would be in conflict or otherwise inappropriate
due to actual or potential differing interests between them. It is understood
that the Indemnifying Party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees
and expenses of more than one separate firm of attorneys (in addition to any
local counsel) at any time for all such Indemnified Parties, and that all such
fees and expenses shall be reimbursed as they are incurred. In the case of any
such separate firm for the Indemnified Parties, such firm shall be designated in
writing by the Indemnified Parties. The Indemnifying Party shall not be liable
for any settlement of any proceeding effected without its consent, but if
settled with such consent, or if there be a final judgment for the plaintiff,
the Indemnifying Party shall indemnify and hold harmless such Indemnified
Parties from and against any loss or liability (to the extent stated above) by
reason of such settlement or judgment. Notwithstanding the foregoing sentence,
if at any time an Indemnified Party shall have requested an Indemnifying Party
to reimburse the Indemnified Party for fees and expenses of counsel as
contemplated by the third sentence of this paragraph, the Indemnifying Party
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 30
Business Days after receipt by such Indemnifying Party of the aforesaid request
and (ii) such Indemnifying Party shall not have reimbursed the Indemnified Party
in accordance with such request prior to the date of such settlement, unless the
Indemnifying Party has contested such reimbursement obligation and provides
reasonable assurances that such payment can be made upon resolution of such
dispute. No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending or threatened proceeding
in respect of which any Indemnified Party is or could have been a party and
indemnity could have been sought hereunder by such Indemnified Party, unless
such settlement (x) includes an unconditional release of such Indemnified Party
from all liability arising out of such proceeding and (y) provides that such
Indemnified Party does not admit any fault or guilt with respect to the subject
matter of such proceeding.
SECTION 3.10. Contribution.
------------
(a) To the extent the indemnification provided for herein is for any
reason unavailable to the Indemnified Parties in respect of any losses, claims,
damages or liabilities referred to herein, then each such Indemnifying Party, in
lieu of indemnifying such Indemnified Party, shall contribute to the amount paid
or payable by such Indemnified Party as a result of such losses, claims, damages
or liabilities (i) as between the Issuer and any Selling Holder on the one hand
and the Underwriters on the other, in such proportion as is appropriate to
reflect the relative benefits received by the Issuer and such Selling Holder on
the one hand and the Underwriters on the other from the offering of the
securities, or if such allocation is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits but also
the relative fault of the Issuer and such Selling Holder on the one hand and of
the Underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations
15
and (ii) as between the Issuer on the one hand and any Selling Holder on the
other, in such proportion as is appropriate to reflect the relative fault of the
Issuer and of such Selling Holder in connection with such statements or
omissions, as well as any other relevant equitable considerations. The relative
benefits received by the Issuer and any Selling Holder on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion as the
total proceeds from the offering (net of underwriting discounts and commissions
but before deducting expenses) received by the Issuer and such Selling Holder
bear to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of the
prospectus. The relative fault of the Issuer and any Selling Holder on the one
hand and of the Underwriters on the other shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Issuer and such Selling Holder or by the
Underwriters. The relative fault of the Issuer on the one hand and any Selling
Holder on the other shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by such party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
(b) The Issuer and each Selling Holder agree that it would not be just
and equitable if contribution pursuant to this Section 3.10 were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as a result of
the losses, claims, damages or liabilities referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such Indemnified
Party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 3.10, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
such Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission, and no Selling Holder
shall be required to contribute any amount in excess of the amount by which the
total price at which the Registrable Securities of such Selling Holder were
offered to the public (less underwriters' discounts and commissions) exceeds the
amount of any damages which such Selling Holder has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
16
SECTION 3.11. Participation in Underwritten Registrations. No Person
-------------------------------------------
may participate in any underwritten registration hereunder unless such Person
(a) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by such Person and (b) completes and executes
all questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements and these registration rights.
SECTION 3.12. Rule 144. The Issuer covenants that it will file any
--------
reports required to be filed by it under the Securities Act and the Exchange Act
and will take such further action as the Selling Holder shall reasonably
request, all to the extent required from time to time to enable the Selling
Holders to sell Registrable Securities without registration under the Securities
Act pursuant to (a) Rule 144 under the Securities Act and Rule 144A under the
Securities Act, as such Rules are amended from time to time, or (b) any similar
rule or regulation hereafter adopted by the Commission. Upon the request of the
Agent, the Issuer will deliver to the Agent a written statement as to whether it
has complied with such requirements.
SECTION 3.13. Holdback Agreements.
-------------------
(a) Restrictions on Public Sale by Holder of Registrable Securities.
---------------------------------------------------------------
If and to the extent requested by the Issuer, in the case of a non-underwritten
public offering, and if and to the extent requested by the lead Underwriter or
Underwriters, in the case of an underwritten public offering, the Holders agree
not to effect, except as part of such registration or a concurrent registration,
any public sale or distribution of the issue being registered or a similar
security of the Issuer, or any securities convertible into or exchangeable or
exercisable for such securities, including a sale pursuant to Rule 144 or Rule
144A, during the 10 days prior to, and during such period that the Issuer (in
the case of a non-underwritten public offering) or the lead Underwriter (in the
case of an underwritten public offering) may reasonably request, but in no event
longer than (1) in the case of the Initial Public Offering, 180 days and (2) in
all other cases, 60 days, in each case beginning on, the effective date of the
registration statement.
(b) Restrictions on Public Sale by the Issuer. The Issuer agrees (i)
-----------------------------------------
not to effect any public sale or distribution of any securities similar to those
being registered in accordance with Section 3.1 or Section 3.2 hereof, or any
securities convertible into or exchangeable or exercisable for such securities,
during the 10 days prior to, and during such period as the lead Underwriter may
reasonably request, but in no event longer than 180 days, beginning on, the
effective date of any registration statement (except pursuant to such
registration statement and except pursuant to registrations on Form S-4 or S-8
or any successor or similar form thereto or pursuant to an unregistered offering
to employees of the Issuer or its Subsidiaries pursuant to an employee benefit
plan as defined in Rule 405 of Regulation C of the Securities Act) or the
commencement of a public distribution of Registrable Securities; and (ii) that
any agreement entered into after the date of this Agreement pursuant to which
the Issuer
17
issues or agrees to issue any privately placed securities shall contain a
provision under which holders of such securities agree not to effect any public
sale or distribution of any such securities during the periods described in (a)
above, in each case including a sale pursuant to Rule 144 (except as part of any
such registration, if permitted); provided, however, that the provisions of this
-------- -------
paragraph (b) shall not prevent the exercise, conversion or exchange of any
securities pursuant to their terms into or for other securities.
SECTION 3.14. Exclusivity. The Issuer shall not grant any
-----------
registration rights or register any of its securities except pursuant to this
Agreement or with the consent of the Holders of a majority of the shares of
Series B Stock outstanding.
ARTICLE IV
COVENANTS
SECTION 4.1. Information. So long as any shares of the Series B
-----------
Stock remain outstanding, the Issuer shall deliver to each of the Holders (or in
the case of clause (c), (d), (e) and (f) below, the Agent and any Storie Holders
holding more than 150,000 shares of Series B Stock):
(a) as soon as practicable and in any event within sixty (60) days
after the end of the first three fiscal quarters, consolidated balance sheets of
the Issuer and its Subsidiaries as at the end of such period and the related
consolidated statements of income, stockholders' equity and cash flow of the
Issuer and its Subsidiaries for such fiscal quarter, setting forth in each case
in comparative form the consolidated figures for the corresponding periods of
the previous fiscal year, all in reasonable detail and certified by the Issuer's
Chief Financial Officer that they fairly present the financial condition of the
Issuer and its Subsidiaries as at the dates indicated and the results of their
operations and changes in their financial position for the periods indicated in
accordance with generally accepted accounting principles consistently applied
except as described therein, subject to changes resulting from normal year-end
adjustment;
(b) as soon as practicable and in any event within one hundred twenty
(120) days after the end of each fiscal year of the Issuer commencing with the
fiscal year ending March 31, 1998, and with respect to the fiscal year ended
March 31, 1997, no later than September 15, 1997, consolidated balance sheets of
the Issuer and its Subsidiaries as at the end of such year and the related
consolidated statements of income, stockholders' equity and cash flow of the
Issuer and its Subsidiaries for such fiscal year, setting forth in each case, in
comparative form the consolidated figures for the previous year, all in
reasonable detail and accompanied by a report thereon of independent certified
public accountants of recognized national standing selected by the Issuer, which
report shall be unqualified as to scope of audit
18
and shall state that such consolidated financial statements present fairly the
financial position of the Issuer and its Subsidiaries as at the dates indicated
and the results of their operations and changes in their financial position for
the periods indicated in conformity with generally accepted accounting
principles applied on a basis consistent with prior years (except as otherwise
stated therein) and that the examination by such accountants in connection with
such consolidated financial statements has been made in accordance with
generally accepted auditing standards;
(c) as soon as practicable and in any event no later than thirty (30)
days after the end of each fiscal month of the Issuer, the TVN Entertainment
Corporation Management Reporting Package, substantially in the form of and
covering such items set forth in Exhibit A hereto, for such month;
(d) promptly upon receipt thereof, copies of all reports submitted to
the Issuer by independent public accountants in connection with each annual,
interim or special audit of the Issuer's financial statements made by such
accountant, including, without limitation, the comment letter submitted by such
accountants to management in connection with their annual audit;
(e) promptly upon their becoming available, copies of all financial
statements, reports, notices and proxy statements sent or made available
generally by the Issuer to its securityholders or by any Subsidiary of the
Issuer to its securityholders other than the Issuer or another Subsidiary, of
all regular and periodic reports and all registration statements and
prospectuses, if any, filed by the Issuer or any of its Subsidiaries with any
securities exchange or with the Commission or any governmental authority
succeeding to any of its functions, and of all press releases and other written
statements made available generally by the Issuer or any Subsidiary to the
public or to other investors in the Issuer;
(f) within five (5) Business Days after the last day of each fiscal
quarter, a certificate signed by the Issuer's Chief Financial Officer certifying
that the Issuer is in compliance in all material respects with the terms and
conditions of this Agreement, the Charter and the Securities Purchase Agreement;
and
(g) from time to time such additional information regarding the
financial position or business of the Issuer and its Subsidiaries as the Agent
or the Storie Holders may reasonably request.
SECTION 4.2. Prohibited Issuance of Additional Series B Stock. As
------------------------------------------------
long as any of the shares of Series B Stock remain outstanding, the Issuer shall
not issue any shares of Series B Stock to any Person other than pursuant to the
Securities Purchase Agreement and Article VIII hereof.
19
SECTION 4.3. Lead Underwriter; Lead Manager; Lead Advisor. For a
--------------------------------------------
period of three years from the Initial Closing, in the event that the Issuer or
any of its Subsidiaries shall engage in any public offering or private placement
of any of its securities or any sale, transfer or other disposition of any
material assets, or any merger, consolidation or other material corporate
transaction, the Purchaser shall have the right to designate Morgan Stanley &
Co. Incorporated (or any successor thereto) to act as lead (or, at its option
co-) underwriter, placement agent or advisor to the Issuer or such Subsidiary.
The commissions, discounts and compensation paid to Morgan Stanley & Co.
Incorporated (or any successor thereto) shall be consistent with the
commissions, discounts and compensation paid to Morgan Stanley & Co.
Incorporated (or any successor thereto) with respect to similar transactions.
SECTION 4.4. Key Man Life Insurance. Within 30 days after the
----------------------
Initial Closing, the Issuer will obtain "key man" insurance on the Issuer's
Chief Executive Officer and Chief Operating Officer, in an amount equal to $10
million and $5 million, respectively, and will maintain such insurance while any
PGI Stock is outstanding. Such insurance shall pay benefits in the event that
either such officer is unable to perform services for the Issuer in such
capacity, shall have other terms acceptable to, and shall be underwritten by a
Person that is, acceptable to the Agent. The Holders of PGI Stock shall, on a
pro rata basis (based on Liquidation Preference) be the beneficiaries of such
insurance for the Chief Executive Officer during the first six months after the
Initial Closing and the Issuer shall be the beneficiary thereafter; the Issuer
shall be the beneficiary of such insurance for the Chief Operating Officer.
SECTION 4.5. Approvals.
---------
(a) The Issuer will adopt an Annual Budget for the coming Fiscal Year
at a regularly scheduled meeting of the Board of Directors, held no later than
the February 15 of the immediately preceding Fiscal Year; provided that the
--------
Annual Budget must be approved by a majority of the Directors appointed by a
majority of the Holders pursuant to Article V hereof. Each Annual Budget will
contain Specified Items of the nature of the Specified Items on Exhibit F to the
Securities Purchase Agreement.
(b) Unless specifically approved or consented to in writing by a
majority of the Holders or a majority of Directors appointed by a majority of
the Holders pursuant to Article V, and except as otherwise expressly provided by
this Agreement, the Issuer and its Subsidiaries shall not, and no Person acting
on behalf of the Issuer or any of its Subsidiaries shall permit or cause the
Issuer or any of its Subsidiaries to:
(i) incur or make any expenditure or commitment with respect to a
Specified Item during any period in an amount exceeding 115% of the amount
approved for such Specified Item with respect to such period in the Annual
Budget or make any change
20
(other than a deminimus change) to or take any action inconsistent (other
than an immaterial action) with the applicable Annual Budget;
(ii) add to, or permit, an increase in the number of members of the
Board of Directors of the Issuer (other than the Chief Operating Officer of
the Issuer and other than as provided for in Section 5.2 hereof);
(iii) hire, remove or change the Issuer's or any material
Subsidiary's President, Chief Executive Officer, Chief Financial Officer,
Senior Executive Vice President, Chief Operating Officer or any other
executives with comparable levels of responsibility or materially amend the
employment contract or arrangements with any such Person;
(iv) do or permit any act which would make the Issuer or any
Subsidiary thereof subject to federal or state bankruptcy or insolvency
laws;
(v) authorize any amendment to the Charter or by-laws of the Issuer
or any material Subsidiary, except as required by law;
(vi) merge or consolidate with or into any Person or enter into a
similar business combination transaction, or convey, sell, transfer, lease
or otherwise dispose of (whether in one transaction or in a series of
transactions) all or a substantial part of the Issuer's or any material
Subsidiary's assets or take any action to bring about a liquidation,
winding-up or dissolution of the Issuer or any Subsidiary thereof;
(vii) issue or grant any capital stock, stock options, warrants or
other securities exchangeable or exercisable for or convertible into any
capital stock; provided that, notwithstanding the foregoing, the Issuer may
issue stock options to employees of the Issuer or any Subsidiary for an
aggregate of up to 100,000 shares of Common Stock, each having an exercise
price equal to at least the fair market value (as defined in the
Certificate of Designations) of the shares subject to such options on the
date of grant, as determined by the Board of Directors and options to
purchase up to an aggregate of 599,775 shares of Common Stock, with an
exercise price of $0.75 per share, granted to the Chief Operating Officer
of the Corporation;
(viii) engage in any transaction with any Affiliate or any Director
or officer of the Issuer or any material Subsidiary or any relative of any
such Director or officer; or
(ix) authorize, release, circulate, or permit the release of any
public announcement or press release relating to (A) the Purchaser, the
Agent, Morgan Stanley
21
& Co. Incorporated or any of its Affiliates, or (B) the hiring of a Chief
Operating Officer of the Issuer.
(c) The provisions of this Section 4.5 (other than (b)(ix)(A)) shall
no longer be binding (i) upon the consummation of any Initial Public Offering
underwritten by an investment bank of national standing and generating gross
proceeds to the Issuer in excess of $25 million or (ii) if at any time the
Purchaser and its Affiliates do not beneficially own a majority of the shares of
PGI Stock and one Person, together with its Affiliates, does not own a majority
of the shares of outstanding PGI Stock.
SECTION 4.6. Qualified Stock. Each Holder agrees to approve the
---------------
issuance of Qualified Stock generating up to $15.625 million of gross proceeds
to the Issuer during the period beginning on the date hereof and ending on the
date that is six months after the date hereof (the "First Period") and Qualified
Stock generating gross proceeds to the Issuer of up to $15.625 million during
the period beginning on the date that is six months after the date hereof and
ending on the first anniversary hereof (the "Second Period"). In the event of
an issuance of Qualified Stock during the First Period, the Purchaser shall have
the option (1) to purchase up to $15.625 million of such Qualified Stock, on the
same terms and conditions as were applicable to the transaction or transactions
giving rise to such option or (2) to reduce the purchase price of the Series B3
Stock that it has an option to purchase pursuant to Section 2.02(a) of the
Securities Purchase Agreement to a price, per share of Series B3 Stock, equal to
the price per share of Common Stock implied by the sale price of such Qualified
Stock. In the event of an issuance of Qualified Stock during the Second Period,
the Purchaser shall have the option (1) to purchase up to $15.625 million of
such Qualified Stock, on the same terms and conditions as were applicable to the
transaction or transactions giving rise to such option or (2) to reduce the
purchase price of the Series B4 Stock that it has an option to purchase pursuant
to Section 2.02(b) of the Securities Purchase Agreement to a price, per share of
Series B4 Stock, equal to the price per share of Common Stock implied by the
sale price of such Qualified Stock.
ARTICLE V
BOARD OF DIRECTORS
SECTION 5.1. Number. The Board of Directors shall initially consist
------
of five Directors and shall be increased as specified in Section 5.2 below.
SECTION 5.2. (a) Appointment; Removal. The Holders of a majority of
--------------------
the shares of the PGI Stock shall have the right to appoint one Director (and
remove and replace such Director) if any PGI Stock is outstanding; two Directors
(and remove and replace such Directors) if PGI stock having a Liquidation
Preference of at least $7.5 million is outstanding;
22
three Directors (and remove and replace such Directors) if PGI Stock having a
Liquidation Preference of at least $15.0 million is outstanding; and four
Directors (and remove and replace such Directors) if PGI Stock having a
Liquidation Preference of at least $30.0 million is outstanding.
(b) Chief Operating Officer. Notwithstanding the foregoing, the
-----------------------
Issuer's stockholders may elect, and the Holders agree to vote for the election
of, the Issuer's Chief Operating Officer to the Board of Directors; provided
that such Chief Operating Officer is hired in compliance with Section
4.5(b)(iii) hereof and Sections 5.01(j) and 5.01(k) of the Securities Purchase
Agreement.
SECTION 5.3. Special Trigger Event. Notwithstanding anything to the
---------------------
contrary set forth herein, upon the occurrence of any Special Trigger Event, the
Holders of a majority of the shares of the PGI Stock then outstanding shall have
the right to immediately appoint on that date, and thereafter, a majority of the
Directors (and remove and replace such Directors), until the Special Trigger
Event has been cured and no longer of any force or effect.
SECTION 5.4. Mechanics. Any appointment, removal or replacement
---------
referred to in Section 5.2 or Section 5.3 shall be effective immediately upon
the sending by the Agent of written notice to the Issuer.
ARTICLE VI
THE AGENT
SECTION 6.1. Appointment and Authorization. Each Holder of PGI Stock
-----------------------------
irrevocably appoints and authorizes the Agent to receive all notices required to
be given to any Holder of PGI Stock and to take all such actions and to exercise
all such rights and powers as agent on its behalf as are conferred upon such
Holder of PGI Stock under this Agreement, together with all such powers as are
reasonably incidental thereto. The Agent hereby acknowledges and confirms its
acceptance of such appointment. Such authority may be exercised by the Agent in
its absolute discretion.
SECTION 6.2. Reliance by Issuer and Other Holders. The Issuer shall
------------------------------------
be entitled to treat the Agent as attorney-in-fact of each Holder of PGI Stock
with respect to all matters under this Agreement and shall not seek to
communicate with any Holder of PGI Stock as to matters under this Agreement
except through the Agent.
SECTION 6.3. Liability of Agent. Neither the Agent nor any of its
------------------
Affiliates nor any of their respective directors, officers, agents or employees
shall be liable to the Holders
23
of PGI Stock for any action taken or not taken by it in connection herewith in
the absence of bad faith on the part of the Agent. Neither the Agent nor any of
its Affiliates nor any of their respective directors, officers, agents or
employees shall be responsible for or have any duty to the Holders of PGI Stock
to ascertain, inquire into or verify (i) any statement, warranty or
representation made in connection with this Agreement or the Securities Purchase
Agreement; (ii) the performance or observance of any of the covenants or
agreements of any other party to this Agreement; or (iii) the validity,
effectiveness or genuineness of this Agreement or any other instrument or
writing furnished in connection herewith. The Agent shall not incur any
liability to the Holders of PGI Stock by acting in reliance upon any notice,
consent, certificate, statement, or other writing believed by it to be genuine
or to be signed by the proper party or parties.
SECTION 6.4. Indemnification. Each Holder of PGI Stock jointly and
---------------
not severally shall indemnify, when and as suffered or incurred, the Agent, its
Affiliates and their respective directors, officers, agents and employees (to
the extent not reimbursed by the Issuer) against any cost, expense (including
the reasonable fees and expenses of counsel), claim, demand, action, loss or
liability (except such as result from such indemnitees' gross negligence or
willful misconduct) that such indemnitees may suffer or incur in connection with
this Agreement or any action taken or omitted by such indemnitees hereunder.
SECTION 6.5. Successor Agent. The Agent may resign at any time by
---------------
giving notice thereof to the Holders of PGI Stock and the Issuer. Upon any such
resignation, the Holders of PGI Stock shall have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by the
Holders of PGI Stock, and shall have accepted such appointment, within 30 days
after the retiring Agent gives notice of resignation, then the retiring Agent
may, on behalf of the Holders of PGI Stock, appoint a successor Agent. Upon the
acceptance of its appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the rights
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations hereunder. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Article shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. Headings. The headings in this Agreement are for
--------
convenience of reference only and shall not control or affect the meaning or
construction of any provisions hereof.
24
SECTION 7.2. No Inconsistent Agreements. The Issuer is not a party
--------------------------
to and will not hereafter enter into any agreement with respect to its
securities which is inconsistent with, or otherwise grant rights superior to,
the rights granted to the Holders under this Agreement; and each of the Issuer
and the Holders represents that it is not and agrees that it will not become a
party to any other agreement relating to the voting or transfer of Voting
Securities, or the management of the Issuer, or granting any registration rights
to any Person with respect to any of the Issuer's equity securities. The Issuer
agrees that it will not amend or modify the Storie Partners Agreements without
the prior consent of the Holders.
SECTION 7.3. Entire Agreement. This Agreement, the Securities
----------------
Purchase Agreement and the Certificate of Designations constitute the entire
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein, and there are no restrictions, promises,
representations, warranties, covenants, or undertakings with respect to the
subject matter hereof, other than those expressly set forth or referred to
herein or therein. This Agreement and the documents referred to in the
preceding sentence supersede all prior agreements and understandings between the
parties hereto with respect to the subject matter hereof.
SECTION 7.4. Notices. Any notice, request, instruction or other
-------
document to be given hereunder by any party hereto to another party hereto shall
be in writing (including telex, telecopier or similar writing) and shall be
given to such party by certified first class mail at its address with a return
receipt requested, by Federal Express or similar overnight mail service with
signature required for receipt, or by telex or telecopy at the telex or
telecopier number set forth on its signature page or to such other address as
the party to whom notice is to be given may provide in a written notice to the
party giving such notice, a copy of which written notice shall be on file with
the Secretary of the Issuer. Each such notice, request or other communication
shall be effective (i) if given by telex or telecopy, which such telex or
telecopy is transmitted to the telex or telecopy number specified in its
signature page and the appropriate answerback or confirmation, as the case may
be, is received, and a copy of such notice is sent by overnight mail service or
(ii) if given by mail or overnight courier, 72 hours after such communication is
deposited in the mails with first class postage prepaid or given to overnight
courier service, addressed as aforesaid.
SECTION 7.5. Applicable Law. This Agreement shall be governed by and
--------------
construed in accordance with the laws of the State of Delaware.
SECTION 7.6. Severability. The invalidity or unenforceability of any
------------
provisions of this Agreement in any jurisdiction shall not affect the validity,
legality or enforceability of the remainder of this Agreement in such
jurisdiction or the validity, legality or enforceability of this Agreement,
including any such provision, in any other jurisdiction, it
25
being intended that all rights and obligations of the parties hereunder shall be
enforceable to the fullest extent permitted by law.
SECTION 7.7. Termination. This Agreement shall terminate and be of
-----------
no further force or effect: (i) with respect to each Holder when such Holder no
longer owns any Equity Securities (except as to matters preceding the Holder's
disposition of Equity Securities); and (ii) with respect to all Holders, upon
the consummation of an Initial Public Offering underwritten by an investment
bank of national standing generating gross proceeds to the Issuer of at least
$25 million; provided that the provisions of Article I, Section 2.1, Article
--------
III, Sections 4.3 and 4.5(b)(ix)(A), Article VI, and this Section 7.7 shall
survive any such termination.
SECTION 7.8. Successors, Assigns, Transferees. The provisions of
--------------------------------
this Agreement shall be binding upon and accrue to the benefit of the parties
hereto and their respective heirs, successors and assigns. Neither this
Agreement nor any provision hereof shall be construed so as to confer any right
or benefit upon any Person other than the parties to this Agreement and their
respective successors and assigns.
SECTION 7.9. Amendments; Waivers.
-------------------
(a) No failure or delay on the part of any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
(b) Neither this Agreement nor any term or provision hereof may be
amended or waived except by an instrument in writing signed, in the case of an
amendment, by the parties thereto or, in the case of a waiver, by the party
against whom the enforcement of such waiver is sought.
SECTION 7.10. Counterparts; Effectiveness. This Agreement may be
---------------------------
executed in any number of counterparts, each of which shall be an original with
the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received a counterpart hereof signed by the other party hereto, and the
closing under the Securities Purchase Agreement shall have occurred (the
"Effective Date").
SECTION 7.11. Recapitalization, etc. If any capital stock or other
---------------------
securities are issued in respect of, or in exchange or substitution for, any
Equity Securities by reason of any reorganization, recapitalization,
reclassification, merger, consolidation, spin-off, partial or
26
complete liquidation, stock dividend, split-up, sale of assets, distribution to
stockholders or combination of the shares of Common Stock or any other change in
capital structure of the Issuer, appropriate adjustments shall be made with
respect to the relevant provisions of this Agreement so as to fairly and
equitably preserve, as far as practicable, the original rights and obligations
of the parties hereto under this Agreement.
SECTION 7.12. Remedies. The parties hereby acknowledge that money
--------
damages would not be adequate compensation for the damages that a party would
suffer by reason of a failure of any other party to perform any of the
obligations under this Agreement. Therefore, each party hereto agrees that
specific performance is the only appropriate remedy under this Agreement and
hereby waives the claim or defense that any other party has an adequate remedy
at law.
SECTION 7.13. Consent to Jurisdiction. Each Holder and the Issuer
-----------------------
irrevocably submit to the non-exclusive jurisdiction of any Court of Chancery of
Delaware or United States Federal Court sitting in Delaware over any suit,
action or proceeding arising out of or relating to this Agreement, the
Certificate of Designations or the Securities Purchase Agreement. Each of the
Holders of PGI Stock hereby irrevocably appoints the Agent as its authorized
agent to accept and acknowledge on its behalf service of any and all process
which may be served in any such suit, action or proceeding in any such court and
represents and warrants that such agent has accepted such appointment. Each
Holder of PGI Stock consents to process being served in any such suit, action or
proceeding by serving a copy thereof upon the agent for service of process
referred to above, provided that to the extent lawful and possible, written
notice of such service shall also be mailed to such Holder. Each Holder of PGI
Stock agrees that such service shall be deemed in every respect effective
service of process upon such Holder of PGI Stock in any such suit, action or
proceeding and shall be taken and held to be valid personal service upon and
personal delivery to such Holder. Nothing in this paragraph shall affect or
limit any right to serve process in any manner permitted by law, to bring
proceedings in the courts of any jurisdiction or to enforce in any lawful manner
a judgment obtained in one jurisdiction in any other jurisdiction.
SECTION 7.14. Transferability. The Holders shall have the right to
---------------
Transfer (i) Series B Stock to their respective Affiliates and (ii) Series B
Stock to any Person that, after such transfer, would hold Series B Stock having
a Liquidation Preference of at least $50,000 and Common Stock to any Person
that, after such transfer, would hold not less than 5,000 shares of Common
Stock; provided that each such transfer is made in compliance with the
--------
Securities Act and the Issuer receives evidence of such compliance reasonably
satisfactory to it; provided further that the Purchaser, together with its
Affiliates, or one other Person, together with its Affiliates, shall at all
times beneficially own not less than a majority of the shares of outstanding PGI
Stock.
27
ARTICLE VIII
STORIE INVESTMENT
SECTION 8.1. Existing Investments. Each of the Persons indicated
--------------------
below represents to the Purchaser that (i) it owns one or more 10% Convertible
Notes having a principal amount not exceeding the amount set forth next to its
name below and Warrants to purchase a number of shares of Series B2 Stock (as
defined in the Certificate of Designations) not exceeding the number of shares
set forth next to its name below, (ii) has duly authorized, executed and
delivered this Agreement, (iii) this Agreement is enforceable against such
Person and (iv) the execution, delivery and performance of this Agreement does
not conflict with or contravene any agreement, document, law, order or judgment
applicable to such Person.
[Download Table]
Convertible Notes Warrants
----------------- --------
Storie Partners, L.P. $5,500,000 366,668 shares
Wenonah Development Corp. $1,000,000 66,667 shares
Jerome H. Turk and Carole Turk Family Trust $1,000,000 66,667 shares
SECTION 8.2. Conversion to Series B2 Stock; Reset of Warrant Exercise
--------------------------------------------------------
Price. Effective upon the date hereof, the 10% Convertible Notes of each holder
-----
thereof shall be converted into the number of shares of Series B2 Stock set
forth next to its name below. Each such share shall have an Original
Liquidation Preference (as defined in the Certificate of Designations) of
$5.8105.
[Download Table]
Storie Partners, L.P. 946,563 shares
Wenonah Development Corp. 172,102 shares
Jerome H. Turk and Carole Turk Family Trust 172,102 shares
In addition, each such Person agrees that the exercise price of the Warrants per
share of Series B2 Stock is $5.8105 and that the Warrants expire on December 31,
1998.
28
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed, as of the day and year first above written.
TVN ENTERTAINMENT
CORPORATION/(1)/
By: /s/ Arthur Fields
________________________________
Name: Arthur Fields
Title: Senior Executive Vice
President
PRINCES GATE INVESTORS II, L.P./(2)/
By: PG Investors II, Inc.
General Partner
By: /s/ David Powers
________________________________
Name:
Title:
STORIE PARTNERS, L.P./(3)/
By: /s/ Steven A. Ledger
________________________________
Name: Steven A. Ledger
Title: Managing Partner
WENONAH DEVELOPMENT CORP./(4)/
By: /s/ Clifford L. Michel
________________________________
Name: Clifford L. Michel
Title: President
29
JEROME H. TURK AND CAROLE TURK FAMILY
TRUST/(5)/
By: /s/ Jerome H. Turk
________________________________
Name: Jerome H. Turk
Title: Trustee
PG INVESTORS II, INC.
AS AGENT/(2)/
By: /s/ David Powers
________________________________
Name:
Title:
(1) Address: 2901 W. Alameda Avenue
Seventh Floor
Burbank, CA 91505
Telecopier number: (818) 846-4626
Attention: Stuart Levin
Arthur Fields
(2) Address: 1585 Broadway, 36th Floor
New York, NY 10036
Attention: David R. Powers
Lea Ann Garrison
Telecopier number: (212) 761-9869
(3) Address: Attn: Steve Ledger
Storie Partners
1 Bush Street, Suite 1350
San Francisco, CA 94104
Telecopier number: (415) 434-8043
(4) Address: Attn: C. L. Michel, Esq.
Wenonah Development Corp.
c/o Cahill Gordon & Riendel
80 Pine Street, 17th Floor
New York, NY 10015
Telecopier number: (212) 747-1868
30
(5) Address: Jerome H. Turk and Carole Turk Family Trust
c/o Fitzgeralds Gaming Corp.
301 Fremont Street
Las Vegas, NV 89101
Telecopier number: (702) 382-5562
Dates Referenced Herein and Documents Incorporated by Reference
| Referenced-On Page |
|---|
| This ‘S-4’ Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| Filed on: | | 5/20/99 | | | | | | | None on these Dates |
| | 12/31/98 | | 31 |
| | 4/1/98 | | 6 |
| | 3/31/98 | | 21 |
| | 9/15/97 | | 21 |
| | 8/29/97 | | 1 | | 11 |
| | 3/31/97 | | 21 |
| List all Filings |
↑Top
Filing Submission 0000944209-99-000871 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)
Copyright © 2024 Fran Finnegan & Company LLC – All Rights Reserved.
About — Privacy — Redactions — Help —
Sun., Apr. 28, 6:37:48.1pm ET 