SUBORDINATED NOTE AND WARRANT PURCHASE AGREEMENT
This Second Amendment to Subordinated Note and Warrant Purchase Agreement (this Amendment), dated as of July 14, 2004 (the Effective Date), amends that certain Subordinated Note and Warrant Purchase Agreement dated as of January 18, 2002, as amended by the First Amendment to Subordinated Note and Warrant Purchase Agreement dated August 25, 2003 (as so amended, the Original Agreement) between Monitronics International, Inc. (the Company) and The Northwestern Mutual Life Insurance Company (the Purchaser).
A. Pursuant to the Original Agreement, the Company issued and sold to the Purchaser 13.5% Subordinated Notes due 2009 in the aggregate principal amount of $40,000,000 (the Notes) and Common Stock Purchase Warrants to acquire up to an aggregate of 1,133,328 shares of Class A Common Stock, $.01 par value per share, of the Company.
B. On the date hereof, the Company and the holders of substantially all of the Companys Capital Stock intend to engage in a series of transactions (collectively, the Recapitalization) pursuant to which, among other things, (i) the Company will amend its Organizational Documents to cancel its various existing series of Preferred Stock and create a new, single series of Preferred Stock, (ii) the Companys principal shareholders will exchange their existing shares of Capital Stock of the Company for shares of the new series of Preferred Stock or for common stock of the Company and in connection therewith the Company will redeem certain existing shares of Preferred Stock for an aggregate redemption price of approximately $5,300,000 and (iii) two of the Companys shareholders will sell shares of the Companys common stock received in the shares exchange described above to two third parties.
C. As a condition to the Recapitalization Agreement and in connection with the consummation of the transactions contemplated thereby, the parties hereto desire to amend the Original Agreement and modify the terms of the Notes that will remain outstanding as hereinafter set forth.
NOW THEREFORE, in consideration of the premises and the agreements herein contained, and intending to be bound hereby, the parties hereby agree as follows:
1.01 Solely in connection with the Recapitalization, the Purchaser hereby waives the Companys obligations under the following Sections of the Original Agreement: Section 7.02(c)(i); Section 7.02(f); Section 7.02(h) and Section 7.02(i).
2. Amendment of Original Agreement.
2.01 Section 1.01 of the Original Agreement shall be amended by adding the following defined terms:
First Amendment means the First Amendment to Credit Agreement dated as of the First Amendment Closing Date by and among the Company and the Banks party thereto, which amends the Loan Agreement.
First Amendment Closing Date means July 14, 2004.
Stock Restriction Agreement means a Restricted Stock Ownership Agreement between the Company or a Subsidiary of the Company and an employee thereof, in substantially the form of Exhibit A to this Amendment.
2.02 Clause (d) of the definition of Fixed Charges in Section 1.01 of the Original Agreement is hereby amended by adding the following provision at the end thereof:
; provided, however, that the cash payments made to Windward Capital Partners II, L.P. and Windward Capital LP II, LLC as part of the Recapitalization (as defined in the First Amendment) shall not be considered a Fixed Charge.
2.03 The definition of Indebtedness in Section 1.01 of the Original Agreement is hereby amended by adding the following parenthetical phrase at the end thereof:
(it being understood that if mandatorily redeemable Preferred Stock is included within this definition and such Preferred Stock is mandatorily redeemable only upon the occurrence or satisfaction of specified conditions, such Preferred Stock shall not be considered mandatorily redeemable for the purposes of this clause unless such specified conditions have occurred or been satisfied).
2.04 The definition of NOI in the Section 1.01 of the Original Agreement is hereby amended by adding the following provision at the end thereof:
, plus (e) all transaction expenses paid by Borrower on a one-time basis in connection with the Recapitalization (as defined in the First Amendment).
2.05 Section 7.02(c)(ii) of the Original Agreement is hereby amended by deleting the term Effective Date appearing therein and inserting in lieu thereof the term First Amendment Closing Date.
2.06 Section 7.02(f)(iii) of the Original Agreement is hereby amended by deleting the term Effective Date appearing therein and inserting in lieu thereof the term First Amendment Closing Date.
2.07 Section 7.02(f)(v) of the Original Agreement is hereby amended by (a) adding and Common Stock after the words Preferred Stock, (b) deleting the amount Fifty Thousand Dollars ($50,000) appearing therein and inserting in lieu thereof the amount One Hundred Fifty Thousand Dollars ($150,000) and (c) adding the following provision at the end thereof:
; provided, however, that, in addition to any of the foregoing expenses, the Company may pay or reimburse out-of-pocket expenses incurred by securities holders in the Company to the extent any such expenses are incurred in connection with the
Recapitalization (as defined in the First Amendment), including without limitation expenses incurred by ABRY Partners IV, L.P. and/or Affiliates thereof in connection with filings made in accordance with the provisions of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and for reasonable out-of-pocket attorneys fees and expenses incurred by such entity or entities in connection therewith.
2.08 Section 7.02(f) of the Original Agreement is hereby amended to add the following:
(vi) redemptions of Capital Stock from employees of the Company or a Subsidiary of the Company pursuant to and in accordance with the terms of a Stock Restriction Agreement, provided that the aggregate amount of such redemptions in any fiscal year of the Company shall not exceed Fifty Thousand Dollars ($50,000),
3. Representations and Warranties.
3.01 Registration Rights. Other than pursuant to the terms of the Fifth Amended and Restated Registration Agreement, dated July 14, 2004, by and among the Company and the Pledgors, the Warrant Agreement, dated November 10, 1994, between the Company and Heller Financial, Inc., the Affiliate Registration Agreement and the Registration Rights Agreement, dated August 25, 2003, among the Company, Banc of America Securities LLC and Fleet Securities, Inc., no Person has demand or other rights to cause the Company or any of its Subsidiaries to file any registration statement under the Securities Act relating to any securities of the Company or any of its Subsidiaries or any right to participate in any such registration statement.
3.02 Authorization, Validity and Enforceability. This Amendment has been duly authorized, executed and delivered by the Company and constitutes, and the Original Agreement, as amended by and through the date hereof, and the Notes constitute, legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except as the enforcement hereof may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of rights of creditors generally and except to the extent that enforcement of rights and remedies set forth therein may be limited by equitable principles (regardless of whether enforcement is considered in a court of law or a proceeding in equity).
3.03 Representations and Warranties Incorporated from Loan Agreement. Each of the representations and warranties (and each associated schedule) given by the Company to the Banks in the Loan Agreement is true and correct in all material respects as of the First Amendment Closing Date.
3.04 Compliance. The Company is in compliance in all material respects with all of the terms and provisions set forth in the Original Agreement on its part to be observed or performed on or prior to the date of this Amendment.
3.05 No Material Adverse Effect. Since March 31, 2004, there has been no change in the assets or liabilities or in the financial or other condition of the Company or any of its Subsidiaries that could have a Material Adverse Effect.
4.01 Effect. Except as amended hereby, the Original Agreement shall remain in full force and effect.
4.02 Defined Terms. All capitalized terms used but not specifically defined herein shall have the same meanings given such terms in the Original Agreement unless the context clearly indicates or dictates a contrary meaning.
4.03 Notices. All notices, requests, demands and other communications provided for in this Amendment shall be delivered in compliance with Section 9.03 of the Original Agreement.
4.04 Costs, Expenses, Taxes. The Company agrees to pay on demand all costs and expenses of the Purchaser in connection with the preparation, execution and delivery of this Amendment and other instruments and documents to be delivered hereunder.
4.05 Governing Law. This Amendment shall be governed by, and construed and enforced in accordance with, the internal laws of the State of New York.
4.06 Counterparts. This Amendment may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and each of the parties hereto may execute this Amendment by signing any of such counterparts.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands as of the date first above written.
|THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY|
/s/ David A. Barras
David A. Barras
Its Authorized Representative
|MONITRONICS INTERNATIONAL, INC.|
/s/ James R. Hull
James R. Hull
RESTRICTED STOCK OWNERSHIP AGREEMENT
This RESTRICTED STOCK OWNERSHIP AGREEMENT (the Agreement) is made as of January , 2002, by and between Monitronics International, Inc., a Texas corporation (the Company), and , an employee of the Company (the Employee).
WHEREAS, pursuant to this Agreement, the Company desires to transfer to the Employee shares (the Shares) of the Companys Class A Common Stock, $0.01 par value, per share (the Common Stock) which shares shall be subject to certain restrictions as set forth herein and shall be herein referred to as the Restricted Shares; and
WHEREAS, Company and Employee desire to enter into this Agreement to provide for restrictions on transfer and forfeiture of the Restricted Shares prior to the vesting of such Restricted Shares and removal of such forfeiture restrictions upon vesting of the Restricted Shares.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants and agreements set forth herein, together with other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
1. Purchase of Restricted Shares. Concurrently with execution of this Agreement, Employee has purchased the Restricted Shares and paid the purchase price of $0.01 per share (the Purchase Price). Concurrently with execution of this Agreement and payment of the Purchase Price, Employee shall also execute and deliver to Company an executed blank Stock Power of Attorney in the form attached hereto as Exhibit A with respect to the Restricted Shares.
2. Repurchase Right.
2.1 Grant. Employee hereby grants to Company the right (the Repurchase Right) exercisable at any time during the 180-day period following the date Employees employment by Company is terminated for any reason, to repurchase at the Purchase Price all or any portion of the Restricted Shares in which Employee is not, at the time of his or her termination of employment, vested in accordance with the Vesting Schedule described in Section 2.3 and set forth in the form attached hereto as Exhibit B (such shares to be hereinafter referred to as the Unvested Shares).
2.2 Exercise of the Repurchase Right. The Repurchase Right shall be exercisable by written notice delivered to Employee prior to the expiration of the 180-day exercise period. The notice shall indicate the number of Unvested Shares to be repurchased and the date on which the repurchase is to be effected, such date to be not more than 30 days after the date of such notice. The certificates representing the Unvested Shares to be repurchased shall be delivered to Company prior to the close of business on the date specified for the repurchase. Concurrently with the receipt of such stock certificates, Company shall pay to Employee, in cash or cash equivalents (including the cancellation of any purchase-money indebtedness), an amount
equal to the Purchase Price previously paid for the Unvested Shares which are to be repurchased from Employee.
2.3 Termination of the Repurchase Right. The Repurchase Right shall terminate with respect to any Unvested Shares for which it is not timely exercised under Section 2.2. In addition, the Repurchase Right shall terminate and cease to be exercisable with respect to any and all Unvested Shares in which Participant vests in accordance with the Vesting Schedule set forth in Exhibit B.
Notwithstanding the foregoing, the Unvested Shares shall become fully vested and shall no longer be subject to the Repurchase Right upon a Change of Control. For purposes of this Agreement, a Change of Control shall have the meaning set forth in Section 10.2.
2.4 Recapitalization. Any new, substituted or additional securities or other property (including cash paid other than as a regular cash dividend) which is by reason of any Recapitalization distributed with respect to the Unvested Shares shall be immediately subject to the Repurchase Right, but only to the extent the Unvested Shares are at the time covered by such right. Appropriate adjustments to reflect such distribution shall be made to the number and/or class of Unvested Shares subject to this Agreement and to the price per share to be paid upon the exercise of the Repurchase Right in order to reflect the effect of any such Recapitalization upon Companys capital structure; provided, however, that the aggregate purchase price shall remain the same. For purposes of this Agreement, a Recapitalization shall mean any stock split, stock dividend, recapitalization, reorganization, combination of shares, exchange of shares, or other change affecting the outstanding Common Stock as a class without the Companys receipt of consideration.
2.5 Corporate Transaction.
(a) The Repurchase Right shall be assignable by Company to any successor entity of Company in a merger or consolidation, share exchange, or sale, transfer or other disposition of all or substantially all of the Companys assets in complete liquidation or dissolution of the Company; subject, however, to termination on the Repurchase Right in accordance with Section 2.3 if a Change of Control has occurred as a result thereof. However, to the extent the successor entity does not accept such assignment, the Repurchase Right shall lapse immediately prior to the consummation of the transaction with such successor entity.
(b) To the extent the Repurchase Right remains in effect following any such transaction, such right shall apply to the new capital stock or other property (including any cash payments) received in exchange for the Unvested Shares in consummation of such transaction, but only to the extent the Unvested Shares are at the time covered by such right. Appropriate adjustments shall be made to the price per share payable upon exercise of the Repurchase Right to reflect the effect of such transaction upon Companys capital structure; provided, however, that the aggregate purchase price shall remain the same.
3. Delivery of Certificates. The certificates representing any Restricted Shares which are subject to the Repurchase Right shall be held in escrow in accordance with the provisions of this Agreement.
4. Shareholder Rights. Until such time as the Company exercises the Repurchase Right, Employee (or any permitted successor in interest) shall have all the rights of a shareholder (including voting, dividend and liquidation rights) with respect to the Restricted Shares, subject, however, to the transfer restrictions of Sections 5.2 and 6.
5. Securities Law Compliance.
5.1 Restricted Securities. The Shares have not been registered under the Securities Act of 1933, as amended (the 1933 Act), and are being issued to Employee in reliance upon the exemption from such registration provided by, among other exemptions, the nonpublic offering exemption provided by Section 4(2) of the 1933 Act and, therefore, are subject to restrictions on further transfer under the 1933 Act. Employee hereby confirms that Employee has been informed that the Shares are restricted securities under the 1933 Act and may not be resold or transferred unless the Shares are first registered under the Federal securities laws or unless an exemption from such registration is available. Accordingly, Employee hereby acknowledges that Employee is prepared to hold the Shares for an indefinite period and that Employee is aware that Rule 144 issued under the 1933 Act which exempts certain resales of unrestricted securities is not presently available to exempt the resale of the Shares from the registration requirements of the 1933 Act.
5.2 Disposition of Shares. Employee shall make no disposition of the Shares, which are not subject to the Repurchase Right, unless and until there is compliance with all of the following requirements:
(a) Employee shall have provided Company with a written summary of the terms and conditions of the proposed disposition.
(b) Employee shall have complied with all requirements of this Agreement applicable to the disposition of the Shares.(c) Employee shall have provided Company with written assurances, in form and substance satisfactory to Company, that 1. the proposed disposition does not require registration of the Shares under the 1933 Act or 2. all appropriate action necessary for compliance with the registration requirements of the 1933 Act or any exemption from registration available under the 1933 Act (including Rule 144) has been taken.
Company shall not be required (A) to transfer on its books any Shares which have been sold or transferred in violation of the provisions of this Agreement or (B) to treat as the owner of the Shares, or otherwise to accord voting, dividend or liquidation rights to, any transferee to whom the Shares have been transferred in contravention of this Agreement.
5.3 Restrictive Legends. The stock certificates for all the Shares shall be endorsed with the legend set forth in subsection (a) below, and the stock certificates for the Restricted Shares shall be endorsed with the legend set forth in subsection (b) below:
(a) The shares represented by this certificate have not been registered under the Securities Act of 1933. The shares may not be sold or offered for sale in the absence of 3. an effective registration statement for the shares under such Act, 4. a no action letter of the Securities and Exchange Commission with respect to such sale or offer or 5. satisfactory
assurances to the Company that registration under such Act is not required with respect to such sale or offer.
(b) The shares represented by this certificate are unvested and are subject to certain repurchase rights granted to the Company and accordingly may not be sold, assigned, transferred, encumbered, or in any manner disposed of except in conformity with the terms of a written agreement dated January , 2002 between the Company and the registered holder of the shares (or the predecessor in interest to the shares). A copy of such agreement is maintained at the Companys principal corporate offices.
6. Additional Transfer Restrictions. Notwithstanding any other provision of this Agreement, the Employee shall not transfer, assign, encumber or otherwise dispose of any of the Restricted Shares which are subject to the Repurchase Right.
7.1 Deposit. Upon issuance, the certificates for the Restricted Shares which are subject to the Repurchase Right shall be deposited in escrow with the Company to be held in accordance with the provisions of this Section 7. Each deposited certificate shall be accompanied by a duly-executed Stock Power of Attorney in the form of Exhibit A. The deposited certificates, together with any other assets or securities from time to time deposited with Company pursuant to the requirements of this Agreement, shall remain in escrow until such time or times as the certificates (or other assets and securities) are to be released or otherwise surrendered for cancellation in accordance with 7.3. Upon delivery of the certificates (or other assets and securities) to Company, Employee shall be issued a receipt acknowledging the number of Restricted Shares (or other assets and securities) delivered in escrow.
7.2 Recapitalization Reorganization. Any new, substituted or additional securities or other property which is by reason of any Recapitalization as contemplated under Section 2.4, distributed with respect to the Restricted Shares shall be immediately delivered to Company to be held in escrow under this Section 7, but only to the extent the Restricted Shares are at the time subject to the escrow requirements hereunder. However, all regular cash dividends on the Restricted Shares (or other securities at the time held in escrow) shall be paid directly to Employee and shall not be held in escrow.
7.3 Release/Surrender. The Restricted Shares, together with any other assets or securities held in escrow hereunder, shall be subject to the following terms relating to their release from escrow or their surrender to Company for repurchase and cancellation:
(a) Should Company elect to exercise the Repurchase Right with respect to any Unvested Shares, then the escrowed certificates for those Unvested Shares (together with any other assets or securities attributable thereto) shall be surrendered to Company concurrently with the payment to Employee of an amount equal to the aggregate Purchase Price paid for those Unvested Shares, and Employee shall cease to have any further rights or claims with respect to such Unvested Shares (or other assets or securities attributable thereto).
(b) Should Company elect not to exercise the Repurchase Right with respect to any Unvested Shares held at the time in escrow hereunder, then the escrowed
certificates for those shares (together with any other assets or securities attributable thereto) shall be immediately released to Employee.
(c) As the Unvested Shares (or any other assets or securities attributable thereto) vest in accordance with the Vesting Schedule described in Section 2.3 and set forth in Exhibit B, the certificates for those vested shares (as well as all other vested assets and securities) shall be released from escrow upon Employees request, but not more frequently than once every six months.
(d) All Unvested Shares which vest (and any other vested assets and securities attributable thereto) shall be released within 30 days after the termination of Employees employment with Company for any reason.
8. Special Tax Election.
8.1 Section 83(b) Election. Under section 83 of the Internal Revenue Code of 1986 (the Code), the excess of the fair market value of the Shares on the date any forfeiture restrictions applicable to such shares lapse over the Purchase Price paid for such shares will be reportable as ordinary income on the lapse date. For this purpose, the term forfeiture restrictions, among other things, includes the right of Company to repurchase the Unvested Shares pursuant to the Repurchase Right. Employee may elect under section 83(b) of the Code to be taxed at the time the Shares are acquired, rather than when and as such Shares cease to be subject to such forfeiture restrictions. Such election must be filed with the Internal Revenue Service within 30 days after the date of this Agreement. Regardless of whether the fair market value of the Shares on the date of this Agreement exceeds the Purchase Price paid, the election must be made to avoid adverse tax consequences in the future. THE FORM FOR MAKING THIS ELECTION IS ATTACHED AS EXHIBIT C HERETO. EMPLOYEE UNDERSTANDS THAT FAILURE TO MAKE TO MAKE THIS FILING WITHIN THE APPLICABLE 30-DAY PERIOD WILL RESULT IN THE RECOGNITION OF ORDINARY INCOME AS THE FORFEITURE RESTRICTIONS LAPSE.
8.2 Filing Responsibility. EMPLOYEE ACKNOWLEDGES THAT IT IS EMPLOYEES SOLE RESPONSIBILITY, AND NOT COMPANYS, TO FILE A TIMELY ELECTION UNDER SECTION 83(b) OF THE CODE, EVEN IF EMPLOYEE REQUESTS COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON HIS OR HER BEHALF. EMPLOYEE FURTHER ACKNOWLEDGES THAT THE COMPANY RECOMMENDS THAT EMPLOYEE CONSULT WITH A TAX PROFESSIONAL BEFORE MAKING AN ELECTION UNDER SECTION 83(b) OF THE CODE.
9.1 Assignment. Company may assign the Repurchase Right to any person or entity selected by the Board.
9.2 No Employment or Service Contract. Nothing in this Agreement shall confer upon Employee any right to continue in the employment of Company for any period of specific duration or interfere with or otherwise restrict in any way the rights of Company (or any parent or subsidiary employing or retaining Employee) or of Employee, which rights are hereby
expressly reserved by each, to terminate Employees employment with Company at any time for any reason, with or without cause.
9.3 Notices. Any notice required to be given under this Agreement shall be in writing and shall be deemed effective upon personal delivery or upon deposit in the U.S. mail, registered or certified, postage prepaid and properly addressed to the party entitled to such notice at the address indicated below such partys signature line on this Agreement or at such other address as such party may designate by ten days advance written notice under this paragraph to all other parties to this Agreement.
9.4 No Waiver. The failure of Company in any instance to exercise the Repurchase Right shall not constitute a waiver of any other repurchase rights that may subsequently arise under the provisions of this Agreement or any other agreement between Company and Employee. No waiver of any breach or condition of this Agreement shall be deemed to be a waiver of any other or subsequent breach or condition, whether of like or different nature.
9.5 Cancellation of Shares. If Company shall make available, at the time and place and in the amount and form provided in this Agreement, the consideration for the Restricted Shares to be repurchased in accordance with the provisions of this Agreement, then from and after such time, the person from whom such shares are to be repurchased shall no longer have any rights as a holder of such shares (other than the right to receive payment of such consideration in accordance with this Agreement). Such shares shall be deemed purchased in accordance with the applicable provisions hereof, and Company shall be deemed the owner and holder of such shares, whether or not the certificates therefor have been delivered as required by this Agreement.
9.6 Undertaking. Employee hereby agrees to take whatever additional action, including the furnishing of information to the Company, and execute whatever additional documents Company may deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on either Employee or the Restricted Shares pursuant to the provisions of this Agreement.
9.7 Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Texas without resort to that States conflict-of-laws rules.
9.8 Successors and Assigns. The provisions of this Agreement shall inure to the benefit of, and be binding upon, Company and its successors and assigns and upon Employee, Employees assigns and the legal representatives, heirs and legatees of Employees estate, whether or not any such person shall have become a party to this Agreement and have agreed in writing to join herein and be bound by the terms hereof.
9.9 Administration. The Company retains administration rights with respect to this Agreement. These rights include the discretion to i. adopt, amend, and rescind administrative and interpretive rules and regulations relating to the Agreement; ii. construe the
Agreement; and iii. delegate its duties hereunder to such agents as it may appoint from time to time.
9.10 Taxes. The Company may from time to time, in its discretion, require Employee to pay to the Company, the amount that the Company deems necessary to satisfy the Companys current or future obligation to withhold federal, state or local income or other taxes that Employee incurs as a result of this Agreement. With respect to any required tax withholding, Employee may iv. direct the Company to withhold from the shares of Common Stock to be issued to Employee the number of shares necessary to satisfy the Companys obligation to withhold taxes, that determination to be based on the shares fair market value at the time as of which such determination is made; v. deliver to the Company sufficient shares of Common Stock to satisfy the Companys tax withholding obligations, based on the shares fair market value at the time as of which such determination is made; or vi. deliver sufficient cash to the Company to satisfy its tax withholding obligations. If Employee elects to use such a stock withholding feature, Employee must make the election at the time and in the manner that the Company prescribes. The Company may, at its sole option, deny Employees request to satisfy withholding obligations through Common Stock instead of cash. In the event the Company subsequently determines that the aggregate fair market value of any shares of Common Stock withheld as payment of any tax withholding obligation is insufficient to discharge that tax withholding obligation, then Employee shall pay to the Company, immediately upon the Companys request, the amount of that deficiency. Determination of the Common Stocks fair market value shall be made in good faith by the Company.
9.11 Amendments. The Company may amend, alter, suspend, discontinue or terminate this Agreement; provided that, without the consent of Employee, no such Company action may materially and adversely affect the rights of Employee under this Agreement without Employees consent.
9.12 Severability. If any provision of this Agreement is held to be illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining provisions hereof, but such provision shall be fully severable and the Agreement shall be construed and enforced as if the illegal or invalid provision had never been included herein.
9.13 No Liability for Good Faith Determinations. The Company and the members of the Board shall not be liable for any act, omission or determination taken or made in good faith with respect to this Agreement or the Restricted Shares granted hereunder.
9.14 No Guarantee of Interests. The Board and the Company do not guarantee the Common Stock of the Company from loss or depreciation.
10.1 Board means the Companys Board of Directors.
10.2 Change in Control means the event that is deemed to have occurred if: i. the Company shall not be the surviving entity in any merger or consolidation (or survives only as a Subsidiary of an entity other than a previously wholly owned subsidiary of the Company), ii. the Company sells, leases or exchanges or agrees to sell, lease or exchange all or substantially all
of its assets to any other person or entity (other than a wholly-owned subsidiary of the Company), iii. the Company is to be dissolved and liquidated, or iv. any person or entity, including a group as contemplated by Section 13(d)(3) of the Exchange Act (other than any stockholder or holder of warrants or options to acquire capital stock of the Company on the date hereof), acquires or for the first time controls or is able to vote (directly or through nominees or beneficial ownership) after the date hereof (other than as the direct result of a transfer by descent or distribution of a decedents estate) fifty percent (50%) or more of the deemed issued and outstanding stock of the Company having power ordinarily to vote for directors of the Company (on a fully-diluted, as converted basis).
10.3 Exchange Act means the Securities Exchange Act of 1934, as amended from time to time, including rules thereunder and successor provisions and rules thereto.
10.4 Person means any person or entity of any nature whatsoever, specifically including an individual, a firm, a company, a corporation, a partnership, a trust or other entity; a Person, together with that Persons Affiliates and Associates (as those terms are defined in Rule 12b-2 under the Exchange Act), and any Persons acting as a partnership, limited partnership, joint venture, association, syndicate or other group (whether or not formally organized), or otherwise acting jointly or in concert or in a coordinated or consciously parallel manner (whether or not pursuant to any express agreement), for the purpose of acquiring, holding, voting or disposing of securities of the Company with such Person, shall be deemed a single Person.
10.5 Subsidiary means with respect to any Person, any corporation or other entity of which a majority of the voting power of the voting equity securities or equity interest is owned, directly or indirectly, by that Person.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date first indicated above.
MONITRONICS INTERNATIONAL, INC.
The undersigned spouse of Employee has read and hereby approves the foregoing Restricted Stock Ownership Agreement. In consideration of Company granting Employee the right to acquire the Shares in accordance with the terms of such Agreement and the Stock Option Agreement, the undersigned hereby agrees to be irrevocably bound by all the terms of such Restricted Stock Ownership Agreement, including (without limitation) the right of Companys (or its assignee) to purchase any Restricted Shares in which Employee is not vested.
STOCK POWER OF ATTORNEY
FOR VALUE RECEIVED, the undersigned does hereby transfer to , shares (the Shares) of the common stock, par value $0.01 per share, of Monitronics International, Inc., a Texas corporation (the Company), represented by certificate numbers through standing in the name of the undersigned on the books of said Company, and does hereby irrevocably appoint attorney to transfer the said Shares of stock on the books of said Company, with full power of substitution in the premises.
Effective as of:
UNVESTED SHARES VESTING
INTERNAL REVENUE CODE SECTION 83(B) ELECTION FORM
To effectuate an election pursuant to section 83(b) of the Internal Revenue Code of 1986, as amended (the Code):
|A.||Fill in any omitted information on this election form (the Form);|
|B.||Sign and date the Form before a notary public and return one copy of the Form to:|
12801 Stemmons Freeway
Dallas, Texas 75234
|C.||Mail a copy of the Form to the Service Center where you file your Internal Revenue Service tax return WITHIN 30 DAYS OF RECEIPT OF THE PROPERTY; and|
|D.||Attach one copy of the Form to your income tax return for calendar year 2002.|
|II.||Code Section 83(b) Election|
|3.||Taxpayer identification number:|
|C.||Date and Taxable Year of Transfer|
|1.||Property transfer date: January  2002|
|2.||The taxable year in which property was transferred: Calendar year 2002|
|D.||The nature of the restriction to which the property is subject|
The property is subject to a repurchase right of the Company which terminates as the shares vest as set forth below:
[Fill in vesting schedule]
|1.||Fair market value of property at time of transfer (determined without regard to restrictions that will lapse, including any substantial risk of forfeiture restrictions): $0.01 per share|
|2.||Amount paid for property: $0.01 per share|
|3.||Excess of fair market value over the amount paid: $0|
I elect under section 83(b) of the Code to have $0 included in my ordinary compensation income for taxable year ending December 31, 2002 with respect to the transfer of the above described property. This amount represents the excess of the fair market value of the property at the time of transfer over the amount paid for such property. I have furnished my employer, for whom services were performed in connection with the transfer of the property, with a copy of this statement. I am the recipient of the above described property and therefore need not inform a third party transferee of this election.
Signature of Taxpayer
On this day of , 200 , before me, a Notary Public in and for STATE
and, , personally appeared , acknowledging the
foregoing election to be his act and deed and desires that the same may be recorded as such.
Witness my hand and notarial seal the day and year first above written.
My Commission Expires:
NOTE: If you make an election pursuant to this Form, copies of the Form must be:
|1.||Mailed within 30 days of receipt of the property to the Service Center where you file your Internal Revenue Service tax return;|
|2.||Provided to the representative of the entity for which you performed services as discussed above;|
|3.||Attached to your income tax return for the year of transfer.|