Amended and Restated Term Sheet dated 4/9/03 Between Palisade Capital, ▇▇▇
▇▇▇▇▇▇▇▇▇ and Certain Other Investors
AMENDED AND RESTATED
TERM SHEET FOR PROPOSED FUNDING FOR
THE SPORTS CLUB COMPANY, INC. TRANSACTION
DATED AS OF APRIL 9, 2003
(▇▇▇▇▇▇▇▇ AND RESTATING THAT CERTAIN TERM SHEET DATED AS OF MARCH 31, 2003)
THE COMPANY The Sports Club Company, Inc. (the "Company").
THE INSIDER STOCKHOLDERS ▇▇▇ ▇▇▇▇▇▇▇▇▇ and Millennium Partners (as defined
on Schedule B attached hereto)(and certain
affiliated persons and entities) (the "Insider
Stockholders").
THE SIGNING STOCKHOLDERS The Insider Stockholders, ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, and
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Capital Advisors, LP (and certain
affiliated persons and entities) (the "Signing
Stockholders").
THE SURVIVING STOCKHOLDERS The Signing Stockholders and the other
stockholders set forth on SCHEDULE A attached
hereto (collectively, the "Surviving
Stockholders") who elect to convert their shares
of Company Common (as defined below) into shares
of Surviving Common (as defined below). The
Surviving Stockholders shall be certain management
stockholders and certain key investors holding
shares of the Company's common stock, $0.01 par
value ("Company Common") and the Company's Series
B and Series C Convertible Preferred Stock (the
"Series B Preferred" and "Series C Preferred",
respectively).
THE INVESTORS Palisade Concentrated Equity Partnership, L.P.
("Palisade") or such other investors selected by
▇▇▇▇▇▇▇▇ and acceptable to the Company (the
"Investors").
AGGREGATE FUNDING (a) Approximately $18.50 million by the Investors,
plus (b) up to an additional $4.1 million by the
Insider Stockholders to the extent necessary to
purchase up to 1,380,688 shares of Company Common
included in, or constituting, the Public Stock (as
defined below). The Insider Stockholders shall
provide funds sufficient to purchase at $3.00 per
share an amount equal to the difference between
1,380,688 shares and the number of shares not
cashed out in the Merger (as defined below) by
Baron Capital, ▇▇▇▇▇▇▇▇ Group, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (the "Inside
Amount").
SECTION I - NON-BINDING PROVISIONS
DEAL STRUCTURE Palisade will invest on the terms set forth below
in a newly formed entity which will initially be a
partially-owned subsidiary of Palisade
("MergerCo"). The Company, Palisade and
MergerCo shall enter into an agreement and plan
of merger under which MergerCo shall merge (the
Confidential 1
Amended and Restated Term Sheet dated 4/9/03 Between Palisade Capital, ▇▇▇
▇▇▇▇▇▇▇▇▇ and Certain Other Investors
"Merger") with and into the Company, with the
Company surviving following the Merger (the
"Surviving Corporation"). The certificate of
incorporation and bylaws of MergerCo shall become
the certificate of incorporation (the "Charter")
and bylaws of the Surviving Corporation.
Except as set forth below, upon consummation of
the Merger, each share of outstanding Company
Common, other than the shares of Company Common
owned by MergerCo, would be converted into the
right to receive $3.00 per share in cash.
Simultaneous with the closing of the Merger, (A)
each share of Series B Preferred and Series C
Preferred of the Company will be converted, on a
[1] for [1] basis, into shares of Series 1
Preferred Stock and Series 2 Preferred Stock of
the Surviving Corporation (the "Series 1
Preferred" and "Series 2 Preferred",
respectively), and (B) each share of Series 3
Convertible Preferred Stock of MergerCo shall be
converted into one share of Series 3 Preferred (as
defined below). The Series 1 Preferred and the
Series 2 Preferred will have substantially similar
rights (subject to the priority of the Series 3
Preferred as defined below) to the Series B
Preferred and the Series C Preferred,
respectively.
SECURITIES PURCHASED Simultaneous with the closing of the Merger, (a)
the Surviving Stockholders and, to the extent not
included therein, the Insider Stockholders, will
contribute to MergerCo all shares of Company
Common owned by them, in exchange for the same
number and type of shares of common stock of
MergerCo (the "MergerCo Common"), and (b) the
Insider Stockholders shall purchase up to $2
million worth of Series 2 Preferred at the
original issue price and conversion rate of the
Series B Preferred and up to an additional $2.1
million of MergerCo Common at $3.00 per share. In
no event shall the aggregate amount of securities
purchased pursuant to the immediately preceding
sentence be less than the Inside Amount, which
shares will be converted into the same number of
shares of the common stock of Surviving
Corporation following the Merger (the "Surviving
Common").
Simultaneous with the closing of the Merger, the
Investors will purchase from MergerCo 1.25 million
shares of Series 3 Convertible Preferred Stock of
MergerCo for $5,000,000, which will convert on a
one share for one share basis into Series 3
Convertible Preferred Stock of the Surviving
Corporation ("Series 3 Preferred"), having the
rights and terms set forth below. In addition,
simultaneous with the closing of the Merger, the
Investors shall purchase 4,408,221 shares of
MergerCo Common, at $3.00 per share, which shares
shall be converted into the same number of shares
of Surviving Common.
PURCHASE PRICE FOR PUBLIC The price per share to be paid to the public
holders of the Company Common, other than the
Surviving Stockholders (the "Public Stock"), will
be $3.00 per share.
Confidential 2
Amended and Restated Term Sheet dated 4/9/03 Between Palisade Capital, ▇▇▇
▇▇▇▇▇▇▇▇▇ and Certain Other Investors
USE OF PROCEEDS To provide financing for the purchase of all of
the outstanding shares of Public Stock and to
provide the Surviving Corporation with general
working capital following the consummation of the
Merger.
CASH ON HAND CONDITION Immediately following the consummation of the
Merger and upon payment of the Transaction Fees
(as defined below), the Surviving Corporation
shall have at least $8.5 million dollars in cash
and cash equivalents on hand, including sums
borrowed from the Company's lines of credit in the
amount of $15,000,000 which were in existence on
February 28, 2003 (which shall become lines of
credit of the Surviving Corporation); if this
condition is neither satisfied nor waived by
Investors holding a majority of the Series 3
Preferred, the Investors, at their option, may
decline to provide the funding for the Merger.
DIVIDENDS The Series 3 Preferred shall entitle the holder(s)
to accumulated dividends at a rate of 12.0% per
annum (based on the original issue price rather
than on the liquidation preference amount thereof)
from and after the date of issue, which shall be
paid prior and in preference to any dividends
(including accrued dividends) on the Series 1
Preferred, Series 2 Preferred, Surviving Common
and any other class of equity security that is
junior to the Series 3 Preferred with respect to
the payment of dividends. Credit for dividends
will be accumulated on a quarterly basis and, will
be paid (A) in cash (when permitted by (i)
applicable law, (ii) the Indenture (as defined
below), and (iii) the Company's current credit
facility with Comerica or any replacement thereof
which is equal to or greater than the aggregate
credit line under the current Comerica facility,
or, (B) in any event, at the option of the
Investors, in shares of Series 4 Preferred (as
defined below). Additionally, holders of the
Series 3 Preferred will be entitled to participate
on an as-converted basis in any dividends paid on
the Surviving Common.
"Series 4 Preferred" means a series of preferred
stock of the Surviving Corporation which is
identical in all respects to the Series 3
Preferred except that for the issue price ($3.00),
conversion price ($3.00), antidilution trigger
($3.00) and liquidation preference amount (as set
forth below) shall be as set forth herein. Except
as otherwise expressly set forth herein, all
references to Series 3 Preferred in this term
sheet shall be deemed to be a reference to both
the Series 3 Preferred and the Series 4 Preferred
except for the designation of the Series 3
Preferred's liquidation preference, antidilution
trigger, conversion rate and issue price. In
addition, except as otherwise expressly stated in
this term sheet, the Series 4 Preferred and Series
3 Preferred shall vote as a single class on all
matters and have all of the same features, rights
and privileges.
RANKING The Series 3 Preferred will, with respect to
dividends and rights on liquidation, rank senior
to the Surviving Common and all other classes of
Surviving Corporation's other equity securities.
Confidential 3
Amended and Restated Term Sheet dated 4/9/03 Between Palisade Capital, ▇▇▇
▇▇▇▇▇▇▇▇▇ and Certain Other Investors
LIQUIDATION PREFERENCE In the event of a Liquidation Event (as defined
below), the holders of the Series 3 Preferred will
be entitled to receive, prior and in preference to
any distribution of any of the assets of the
Surviving Corporation to holders of any Series 1
Preferred, Series 2 Preferred, Surviving Common
and any other class of equity security that is
junior to the Series 3 Preferred, the Liquidation
Preference (as defined below)
"Liquidation Preference" means (i) approximately
$14.58 per share of Series 3 Preferred (the $14.58
liquidation preference assumes that the Investors
invest $18,224,663 in the Series 3 Preferred and
MergerCo Common; accordingly, that $14.58 amount
shall be adjusted up or down to reflect the entire
aggregate initial investment in the Series 3
Preferred and MergerCo Common by the Investors as
contemplated in this term sheet), (ii) $3.00 per
share of Series 4 Preferred, and (iii) any accrued
but unpaid dividends on such preferred.
"Liquidation Event" means (i) any liquidation,
dissolution, or winding up of the surviving
corporation, whether voluntary or involuntary,
(ii) the insolvency of the surviving corporation,
(iii) a consolidation or merger of the surviving
corporation with or into any other corporation or
corporations which results in the stockholders of
the surviving corporation owning less than 50% of
the outstanding capital stock of the surviving
entity, (iv) a sale of all or substantially all of
the assets of the surviving corporation, (v) the
issuance and/or sale by the surviving corporation
and/or its stockholders in a single or integrated
transaction of shares of surviving common (or
securities convertible into, or exercisable or
exchangeable for, shares of surviving common)
constituting a majority of the shares of surviving
common outstanding immediately following such
issuance and/or sale (treating all securities
convertible into shares of surviving common as
having been fully converted and all options and
other rights to acquire shares of surviving common
or securities convertible into shares of surviving
common as having been fully exercised), and (vi)
any other form of acquisition or business
transaction, in a single or integrated
transaction, pursuant to which a change of control
occurs such that the person, entity or "group" (as
defined under section 13(d)(3)of the `34 act)
seeking to acquire the surviving corporation
and/or its capital stock has the power to elect a
majority of the board of directors as a result of
the transaction or integrated transaction.
CONVERSION The Series 3 Preferred will initially be
convertible into Surviving Common at $4.00 per
share and, together with the MergerCo Common
(converted into Surviving Common) being purchased
by the Investors in this transaction, will
represent approximately twenty one and two thirds
percent (21.66%) of the Surviving Corporation
(assuming the conversion of the Series B Preferred
and the Series C Preferred) following the Merger.
The parties hereto acknowledge that the Company
does not currently have any warrants outstanding.
The parties further acknowledge that setting the
conversion rate of the Series 3 Preferred at the
$4 per share
Confidential 4
Amended and Restated Term Sheet dated 4/9/03 Between Palisade Capital, ▇▇▇
▇▇▇▇▇▇▇▇▇ and Certain Other Investors
rate confirms the agreement among the parties to
base the conversion rate on the amount paid in
respect of the shares of Series 3 Preferred rather
than on the liquidation preference amount for
those shares of Series 3 Preferred.
Each share of the Surviving Corporation's
preferred stock held by the Investors will be
convertible into the number of shares of Surviving
Common determined by dividing (i) the Applicable
Issue Price (as defined below), by (ii) the
Applicable Conversion Price (as hereinafter
defined) in effect at the date any such shares are
surrendered for conversion. The "Applicable
Conversion Price" shall, initially, be $4.00 for
the Series 3 Preferred and $3.00 for Series 4
Preferred, each as adjusted in accordance with the
adjustments and anti-dilution provisions described
below. The "Applicable Issue Price" shall be $4.00
for the Series 3 Preferred and $3.00 for the
Series 4 Preferred. Each share of Series 3
Preferred and each share of Series 4 Preferred
will automatically convert into Surviving Common
on the basis described in this section upon the
earlier of (i) the consent of the holders of at
least a majority in interest of the outstanding
shares of Series 3 Preferred and Series 4
Preferred, or (ii) a Qualified IPO (as defined
below).
"Qualified IPO" means a firm commitment
underwritten public offering, led by a nationally
recognized investment banking firm, of shares of
Surviving Common in which the gross cash proceeds
to the Surviving Corporation exceed $50 million
(before deduction of underwriters commissions,
filing fees and other offering expenses), and the
price per share is at least equal to $16.00 per
share (which price shall be subject to equitable
adjustment whenever there shall occur a stock
split, stock dividend, combination,
reorganization, reclassification, recapitalization
or other similar event involving Surviving
Corporation's securities).
ADJUSTMENTS TO THE
CONVERSION PRICE AND
ANTI-DILUTION PROVISIONS The Applicable Conversion Price shall be subject
to (i) equitable adjustment as the result of any
subdivision, combination of shares or
recapitalization, stock dividends, stock splits
and similar transactions affecting the Surviving
Common, and (ii) weighted average anti-dilution
protection providing for adjustment of the
Applicable Conversion Price in the event of
issuance of Surviving Common (or any security or
instrument which is convertible into, or
exercisable for, Surviving Common), other than
Excluded Securities (as defined below) of the
Surviving Corporation at a price per share less
than the Applicable Conversion Price then in
effect immediately prior to such issue or sale.
"Excluded Securities" means securities issued (i)
upon conversion of any Series 1 or Series 2
Preferred Stock (or any other Preferred Stock
issued after the consummation of the Merger in
accordance with the terms hereof); (ii) of shares
or grant of options or other rights to purchase
shares
Confidential 5
Amended and Restated Term Sheet dated 4/9/03 Between Palisade Capital, ▇▇▇
▇▇▇▇▇▇▇▇▇ and Certain Other Investors
of Surviving Common under the Surviving
Corporation's written equity incentive programs
for employees and directors in effect as of
February 28, 2003, or as approved by the Board
(including the Palisade Director (as defined
below) ); (iii) to licensors, banks or other
sources of debt financing or to lessors of real or
personal property pursuant to bank financing,
license or lease transactions approved by the
Board of Directors (including the Palisade
Director); (iv) pursuant to a stock split of the
Surviving Common or declared dividend or
distribution on the Surviving Common; (v) for
consideration other than cash in any merger,
consolidation, acquisition or other business
combination or any strategic alliance, joint
venture or business partnership approved by a
majority of the disinterested members of the Board
of Directors; (vi) pursuant to any options,
warrants and other convertible securities
outstanding as of the date of issuance of the
Series 3 Preferred; (vii) pursuant to a Qualified
IPO; (viii) securities issued to ▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇ and Millennium as guarantors of
Surviving Corporation's indebtedness owing to any
lending institution pursuant to the terms of the
Indemnification and Contribution Agreement, dated
as of July 3, 2001 by and between such guarantors
and the Company, as in effect on the date hereof,
whether such indebtedness is existing as of the
consummation of the Merger or thereafter; and (ix)
securities issued as "PIK" dividends under the
Series 1 or Series 2 Preferred, or under any other
securities which by their terms shall not be
subject to the pre-emptive rights of the Series 3
Preferred.
REDEMPTION Subject to applicable provisions of the Delaware
General Corporation Law, the Series 3 Preferred
and Series 4 Preferred then outstanding, in
addition to the Survivor Common issued to the
Investors in connection with the Merger
(collectively, the "Investor Holdings") shall be
redeemable, at the option of the Investors, if,
after five (5) years from the date of issuance,
the Surviving Corporation has not consummated a
Qualified IPO. The Investor Holdings shall be
redeemable, at the option of the Surviving
Corporation, commencing six (6) years from the
date of issuance. In each case the redemption
price paid for the Investor Holdings shall be the
greater of (i) the aggregate Liquidation
Preference of the Investor Holdings as of the
redemption date, or (ii) fair market value per
share (as determined by a third-party appraiser
selected by the Surviving Corporation and a
majority in interest of the holders of the Series
3 Preferred and Series 4 Preferred) of the
Investor Holdings as of the redemption date;
provided that in making such determination of fair
market value, the appraiser shall determine
separately and in writing the discount for
minority interest and the discount for illiquidity
of the securities and shall apply whichever amount
yields a smaller discount; provided further that,
if at the time of such determination, the Investor
Holdings is not deemed by the appraiser to be a
minority interest, then neither discount shall
apply.
Confidential 6
Amended and Restated Term Sheet dated 4/9/03 Between Palisade Capital, ▇▇▇
▇▇▇▇▇▇▇▇▇ and Certain Other Investors
PROTECTIVE PROVISIONS The following protective provisions shall also each be granted in favor of each of ▇▇▇
▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, acting independently, provided that such rights shall
automatically be extinguished on the first to occur of (a) a Qualified IPO or (b) for each,
the date on which the aggregate number of shares of Surviving Common and preferred stock of
the Surviving Corporation held by him falls below the Protective Provision Ownership
Threshold (as defined below); and provided further that these rights are personal to ▇▇▇
▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ and cannot be transferred to any subsequent holder of the
securities now held by either or both of them. The following protective provisions shall
also each be granted in favor of Millenium Partners but shall attach and be transferable
with the Series 2 Preferred held by Millennium Partners at the closing of the Merger (the
"Series 2 Protected Shares"), provided that such rights shall automatically be extinguished
on the first to occur of (a) a Qualified IPO or (b) the date on which the holder of the
Series 2 Protected Shares falls below the Protective Provision Ownership Threshold (as
defined below). In addition, the following protective provisions shall also each be granted
in favor of the holders of the Series 1 Preferred Stock, the Series 3 Preferred Stock and
the Series 4 Preferred Stock, (each such Series, a "Protected Series"), provided that such
rights shall automatically be extinguished on the first to occur of (a) a Qualified IPO or
(b) the date on which the then-current holder(s) of any such Protected Series hold, in
aggregate, a number of shares that is less than the applicable Protective Provision
Ownership Threshold (as defined below) for that Protected Series. Such rights shall attach
to and be transferable with the shares of such Protected Series.
Each of the foregoing shall also have the preemptive rights and tag-along rights set forth
herein under the headings "Preemptive Rights" and "Tag-Along Rights" with respect to Subject
Securities on the same conditions set forth above, provided that the term "Protective
Provision Ownership Threshold" shall be changed to Preemptive Rights Ownership Threshold (as
defined below) in order to determine whether such rights continue to apply.
"Protective Provision Ownership Threshold" for a given holder or a given Protected Series,
means 50.1% of the aggregate number of shares of Surviving Common and preferred stock of the
Surviving Corporation held by that holder or, for Protected Series, held by the holders of
that Protected Series, at the time of the closing of the Merger; provided that for purposes
of this definition, such securities shall only include shares of Surviving Common and
preferred stock of the Surviving Corporation, as the case may be, on an as converted to
Surviving Common basis (excluding therefrom stock options and other grants made under any
Surviving Corporation equity incentive program).
Confidential 7
Amended and Restated Term Sheet dated 4/9/03 Between Palisade Capital, ▇▇▇
▇▇▇▇▇▇▇▇▇ and Certain Other Investors
"Preemptive Rights Ownership Threshold" means the same thing as a Protective Provision
Ownership Threshold, provided that for purposes of this definition, the applicable
percentage shall be 25% rather than 50.1%.
For so long as the Protective Provisions apply to the Series 3 Preferred and Series 4
Preferred issued hereunder, consent of holders of a majority of such securities then
outstanding, voting as a single class, will be required to:
a) alter or change the rights, preferences or privileges of the Series 3 Preferred,
whether by merger, consolidation or otherwise,
b) increase or decrease (other than by redemption or conversion) the authorized number of
shares of Series 3 Preferred,
c) create any new class or series of equity security having rights or preferences on a
parity with or senior or superior to the Series 3 Preferred with respect to voting,
dividends, liquidation preference or redemption features (or reclassify any then
currently outstanding equity security in a similar manner), whether by merger,
consolidation or otherwise,
d) amend the Charter or the Surviving Corporation's bylaws in a way that adversely affects
the rights of the Series 3 Preferred, whether by merger, consolidation or otherwise,
e) permit any subsidiary to issue stock (other than to its parent),
f) effect any voluntary Liquidation Event unless in connection with such Liquidation Event
(i) the holders of the Investor Holdings receive cash equal to or greater than 2x (if
such transaction is consummated on or prior to the second anniversary of the closing of
the Merger) and, at any time thereafter, equal to or greater than 3x, the original
amount invested in respect of such Investor Holdings and (ii) the transaction giving
rise to such Liquidation Event was approved by a majority of the disinterested members
of the Board of Directors,
g) repurchase or redeem any securities, other than (i) a redemption of the Series 3
Preferred as described herein, (ii) mandatory redemption of the Series 1 Preferred or
the Series 2 Preferred initiated by the holders thereof in accordance with the terms of
the Charter (as in effect from time to time), (iii) repurchases of stock issued to
employees, directors or consultants as approved by the Board of Directors upon
termination of employment, directorship or consultancy, and any other shares of common
stock presently subject to repurchase rights approved by the Board of Directors, or
(iv) other repurchases or redemptions of stock issued to employees of less than
aggregate of $2,000,000 of securities in any 12 month rolling period,
h) unless approved by the disinterested members of the Board of Directors, effect any
material transaction with any member of senior management or other affiliates, except
for transactions pursuant to
Confidential 8
Amended and Restated Term Sheet dated 4/9/03 Between Palisade Capital, ▇▇▇
▇▇▇▇▇▇▇▇▇ and Certain Other Investors
written agreements with such senior manager or other affiliate which were, on or prior
to February 28, 2003, in effect,
i) enter into a new line of business or change the primary line of business from the
current line of business,
j) (A) make any single acquisition of or investment in any other person or entity that
involves the payment of cash or property in excess of $1,000,000, or (B) make
acquisitions of or investments in other persons or entities that involve the payment of
cash or property in excess of $3,000,000, in the aggregate, in any calendar year, in
either case other than (i) an acquisition or investment authorized in the Surviving
Corporation's approved annual budget or business plan, (ii) an acquisition pursuant to
the terms of that certain management agreement currently being negotiated by the
Company and Millennium Partners or one of its affiliates (provided that Millennium
Partners and the Company shall provide a copy thereof to the Investors as soon as
possible after that agreement has been signed), or (iii) any transaction involving the
creation of a partnership, limited liability company or other venture involving the
Company and one or more third parties relating predominantly to the financing,
development or operation of The Sports Club/LA ▇▇▇▇▇▇▇ Hills or any other "step-out"
club facility ("Step Out Financings"),
k) incur indebtedness for borrowed money in the aggregate amount of more than $20,000,000,
unless authorized in the Surviving Corporation's approved annual budget or business
plan; provided that, any sale, lease, exchange, mortgage, pledge or other disposition
of less than 35% of the assets of the Company in a single transaction or series of
transactions, solely relating to the real property and improvements of either (or both)
of The Sports Club/LA--Los Angeles and The Sports Club/Irvine (the "Sports Club
Financings") shall not be subject to the consents or approvals contemplated by this
paragraph,
l) enter into an operating or capital lease for an amount of more than $10,000,000, unless
authorized in the Surviving Corporation's approved annual budget or business plan
m) increase the amount of stock options available to be issued under the Surviving
Corporation's employee option plans above the amount reserved for issuance under that
plan as of February 28, 2003,
n) unless approved by the Board of Directors or the Compensation Committee (including, in
either case, all of the Series 3 Directors thereon), issue more than 100,000 new
options, in the aggregate, to any one employee,
o) hire or fire the chief executive officer of the Surviving Corporation,
p) permit any subsidiary to do any of the foregoing, or
q) enter into an agreement or understanding (orally or in writing) to do any of the
foregoing.
Confidential 9
Amended and Restated Term Sheet dated 4/9/03 Between Palisade Capital, ▇▇▇
▇▇▇▇▇▇▇▇▇ and Certain Other Investors
BOARD COMPOSITION Following the consummation of the Merger, and so long as more than twenty five percent
(25%) of the Series 3 Preferred is outstanding, the Surviving Corporation's board of
directors (the "Board") shall consist of seven (7) directors, at least two (2) of whom shall
be independent directors. Palisade shall be entitled to designate two directors (each a
"Series 3 Director"), one of whom may be an affiliate of Palisade (the "Palisade Director")
and one of whom shall be an independent director. The Surviving Stockholders shall be
entitled to designate four directors and to nominate the other independent director. Each of
the Series 3 Directors, including the independent director designated by ▇▇▇▇▇▇▇▇, shall
have the right (but not the obligation) to be a member of the audit and compensation
committees of the Board, and any other committees which the Board establishes. At such time,
if ever, that the number of shares of Series 3 Preferred outstanding at any time shall fall
below the 25% threshold specified above, then the two directors appointed by ▇▇▇▇▇▇▇▇ will
resign upon request by the other members of the Surviving Corporation's Board.
INFORMATION RIGHTS The Surviving Corporation shall provide to an Investor who holds shares of Series 3
Preferred:
a) Monthly, year-to-date consolidated financial statements in accordance with generally
accepted accounting principles consistently applied (including profit and loss
statement and balance sheet), as soon as reasonably practicable after such financial
statements become available in final form to the Surviving Corporation's management,
and in any event within 20 days of the end of a month;
b) Quarterly management report summarizing operations and business outlook, as soon as
reasonably practicable after such reports become available in final form to the
Surviving Corporation's management, and in any event within 30 days of the end of a
quarter;
c) Annual independent certified audit within 90 days after the year's end from Surviving
Corporation's independent accounting firm;
d) Before each year end, any projections for the next year which are provided to the
Board;
e) Within 20 days after filing or receipt thereof, as applicable, provide (i) pleadings of
any material lawsuits filed by or against the Surviving Corporation or any subsidiary;
and (ii) written notice of all commenced legal or arbitration proceedings, and all
proceedings by or before any governmental or regulatory authority or agency, in which
the Surviving Corporation or any subsidiary is a party, provided that, in both cases,
(x) the Surviving Corporation will not be required to provide information or documents
that would cause the Surviving Corporation or any subsidiary to lose the benefit of
attorney/client privilege or violate a confidentiality obligation and (y) the Surviving
Corporation will not be required to provide information or documents
Confidential 10
Amended and Restated Term Sheet dated 4/9/03 Between Palisade Capital, ▇▇▇
▇▇▇▇▇▇▇▇▇ and Certain Other Investors
with respect to any lawsuit or other proceeding in which the Surviving Corporation or
any subsidiary is adverse to the holders of Series 3 Preferred or the Investors;
f) As soon as reasonably practicable, provide notice of (i) material lawsuits threatened
against the Surviving Corporation or any subsidiary and (ii) material developments in
any commenced legal proceeding to which the Surviving Corporation or any subsidiary is
a party, provided that, in both cases, (x) the Surviving Corporation will not be
required to provide information or documents that would cause the Surviving Corporation
or any subsidiary to lose the benefit of attorney/client privilege or violate a
confidentiality obligation, and (y) the Surviving Corporation will not be required to
provide information or documents with respect to any lawsuit or other proceeding in
which the Surviving Corporation or any subsidiary is adverse to the holders of Series 3
Preferred or the Investors;
g) Within 20 days after filings, copies of all material documents filed with government
agencies outside of the ordinary course of business;
h) Within 10 days after receipt, provide copies of any notifications received by the
Surviving Corporation or any subsidiary regarding material defaults on any loans,
leases or material contracts to which the Surviving Corporation or any subsidiary is a
party or pursuant to which any of its properties or assets are bound;
i) As soon as is made available to the Board of Directors in final form, but in any event
within 30 days before the commencement of each new fiscal year, a budget consisting of
a business plan and projected financial statements for such fiscal year;
j) With reasonable promptness, such other notices, information and data with respect to
the Surviving Corporation or any subsidiary as the Surviving Corporation delivers
generally to the holders of Surviving Common in respect of their holdings; and
k) Such other information concerning the business, financial condition or corporate
affairs of the Surviving Corporation or any subsidiary as may be reasonably requested
(and which shall not substantially interfere with the management of the Surviving
Corporation or any subsidiary by the Surviving Corporation's or any subsidiary's senior
management).
In addition, the Surviving Corporation shall permit any Investor holding at least 5% of the
Series 3 Preferred then issued and outstanding (or its authorized representative) to visit
and inspect the properties of the Surviving Corporation and its subsidiaries, including
their respective corporate and financial records, and to discuss its business and finances
with officers of the Surviving Corporation and its subsidiaries, as applicable, during
normal business hours, following reasonable notice and as often as may be reasonably
requested, so long as any such visit or
Confidential 11
Amended and Restated Term Sheet dated 4/9/03 Between Palisade Capital, ▇▇▇
▇▇▇▇▇▇▇▇▇ and Certain Other Investors
inspection does not interrupt the business of the Surviving Corporation or any such
subsidiary. Notwithstanding the foregoing, (x) the Surviving Corporation will not be
required to provide, or provide access to, information or documents that would cause the
Surviving Corporation to lose the benefit of attorney/client privilege or violate a
confidentiality obligation and (y) the Surviving Corporation will not be required to
provide, or provide access to, information or documents with respect to any lawsuit or other
proceeding in which the Surviving Corporation is adverse to the holders of Series 3
Preferred or the Investors.
REGISTRATION RIGHTS
a) If, at any time subsequent to six(6) months after the closing of an initial public
offering of the Surviving Corporation's securities ("IPO"), including a Qualified IPO,
the holders of a majority of the Registrable Shares (as defined below) then outstanding
(calculated on an as-converted to common stock basis) request that the Surviving
Corporation file a registration statement with the Securities and Exchange Commission
(the "SEC"), the Surviving Corporation will use its best efforts to cause such
Registrable Shares to be registered under the Securities Act of 1933, as amended, and
under applicable state "Blue Sky" laws, as soon as reasonably practicable (and in any
event within 90 days of request), subject to customary underwriters' cutbacks and
blackouts; provided that, the Surviving Corporation shall not be obligated to effect
more than three (3) registrations pursuant to this subsection (a). Demand rights under
this subsection (a) will be triggered if requested by holders of at least 25% of the
Registrable Shares having a minimum aggregate value at the time of such request of
$2,000,000. In no event, however, shall the Company be required to file and cause to
become effective more than two (2) registration statements during any year, and holders
of Registrable Shares will not exercise any such demand registration rights if
Surviving Corporation would be required to incur the expense of an audit of its
financial statements at any time other than in connection with its annual year-end
audit.
b) The holders of the Registrable Shares shall have the right to request that the
Surviving Corporation file a registration statement on Form S-3 (or any successor form)
covering the Registrable Shares at any time after the Surviving Corporation is eligible
to use such form, provided that the minimum aggregate value of the shares so registered
shall be at least $1,000,000, and, in such case, the Surviving Corporation will use its
best efforts to cause such shares to be registered, subject to customary underwriters'
cutbacks and blackouts, as soon as practicable (and in any event within 90 days of
request). Any demand registration made pursuant to this subsection (b) and declared
effective by the Securities and Exchange Commission shall count toward the three (3)
demand rights afforded holders of Registrable Securities pursuant to subsection (a).
Confidential 12
Amended and Restated Term Sheet dated 4/9/03 Between Palisade Capital, ▇▇▇
▇▇▇▇▇▇▇▇▇ and Certain Other Investors
c) The holders of the Registrable Shares shall also have unlimited "piggy-back" rights,
subject to underwriters' cutbacks, with respect to registrations by the Surviving
Corporation or other shareholders of the Surviving Corporation (other than
registrations on Form S-8 (or any successor form), and registrations on Form S-4 (or
any successor form) made in connection with an acquisition).
d) All registration rights are transferable by an Investor to any transferee of
Registrable Shares issued to that Investor hereunder.
e) The Surviving Corporation shall bear all registration expenses (exclusive of
underwriting discounts and commissions), subject to customary exceptions for withdrawn
registrations and the like, in a demand or piggyback registration, including reasonable
and customary fees and expenses of counsel to the Investors. All underwriting discounts
and commissions in respect of Registrable Shares shall be paid by the Investors pro
rata on the basis of the number of shares so registered.
f) The registration rights will be subject to additional terms and conditions as are
reasonable and customary, including indemnification, the period of time in which the
registration statement will be kept effective, reporting obligations under the
Securities Exchange Act of 1934, as amended (the "'34 Act"), and underwriting
arrangements.
g) If requested by the underwriters and the Surviving Corporation, the holders of
Registrable Shares shall not sell or otherwise transfer any securities of the Surviving
Corporation for a period of up to 180 days following the effective date of the
registration statement for the Surviving Corporation's Qualified IPO and up to 90 days
following the effective date of any follow-on offering, provided that, and so long as,
the Surviving Corporation's officers, directors and all holders of more than 2% of the
Surviving Corporation's outstanding capital stock are locked up for the same period and
on the same terms.
h) Registration rights terminate upon the earlier of (i) five years following the
Qualified IPO, if any and (ii) with respect to a particular holder, whenever, and for
so long as, such holder is, and remains, eligible to sell all its Registrable Shares
under Rule 144(k).
i) For so long as (i) the registration rights described above have not terminated or
expired and (ii) the Investors hold, in the aggregate, at least 25% of the Series 3
Preferred issued to them hereunder, no future registration rights may be granted
without consent of the holders of a majority of the Registrable Shares, unless such
rights are subordinated to the Investors' registration rights.
j) In the event of an IPO, if the underwriter exercises an overallotment provision,
holders of the Registrable Shares will be entitled to sell up to 10% of the
overallotment prior to the Surviving Corporation selling any additional stock, subject
to underwriter's customary cutback. If such overallotment is insufficient to permit
each of the holders of
Confidential 13
Amended and Restated Term Sheet dated 4/9/03 Between Palisade Capital, ▇▇▇
▇▇▇▇▇▇▇▇▇ and Certain Other Investors
Registrable Shares to exercise their right to sell such portion of their respective
Registrable Shares as each such holder elects, then the number of Registrable Shares
sold in the overallotment by holders of Registrable Shares shall be determined on a pro
rata basis. Any shares not sold in the overallotment by the holders of the Registrable
Shares may be sold by the Surviving Corporation or such stockholder(s) as the Surviving
Corporation may permit.
"Registrable Shares" means (1) shares of Surviving Common which were issued to the Investors
hereunder, (2) shares of Surviving Common which are issued or issuable upon conversion of
the Series 3 Preferred, and (3) any shares of Surviving Common issued to or issuable to
(whether upon conversion or exercise of or in exchange for any other security) any holder of
the securities described in subsections (1) or (2) of this definition.
PREEMPTIVE RIGHTS For so long as an Investor holds at least 25% of the Series 3 Preferred issued to it
hereunder, prior to a Qualified IPO, a merger, or an acquisition of all or substantially all
of the equity securities or assets of the Surviving Corporation approved by the Board of
Directors (including both Series 3 Directors) (an "Approved Acquisition"), such Investor
shall have the right to purchase its pro rata share, based on such Investor's holdings of
Surviving Common and Surviving Common issuable upon conversion of Series 3 Preferred as
compared with the total outstanding Surviving Common (on an as-converted to common basis),
of all new issuances of Surviving Common or Preferred Stock except issuances of Excluded
Securities.
TAG-ALONG RIGHTS For so long as at least 25% of the Series 3 Preferred issued hereunder remains outstanding,
if, at any time prior to a Qualified IPO or an Approved Acquisition, a holder of any Subject
Security (as defined below) seeks to sell, transfer or convey ("Transfer") any such Subject
Security, such Transfer shall be subject to customary Tag-Along Rights in favor of the
holders of the Series 3 Preferred, provided that, such holders comply with the requirements
of the purchaser of such securities in accordance with the terms and conditions of the
operative purchase agreement. In such event, the holder of Series 3 Preferred will have the
right to participate in the Transfer on the same terms as the selling shareholder on a
pro-rata basis, subject to certain customary limitations.
"Subject Securities" means the Series 1 Preferred, the Series 2 Preferred and the Surviving
Common (other than that which are Registrable Shares) or any security which is exercisable
or exchangeable for or convertible into any of the foregoing (other than the Series 3
Preferred).
RIGHT OF FIRST OFFER Prior to a Qualified IPO or Approved Acquisition, if Palisade or any Investor, on the one
hand, or any Surviving Stockholder, on the other (in each such case, a "Selling
Stockholder"), wishes to sell, transfer or convey any securities of Surviving Corporation
owned by such person or entity,
Confidential 14
Amended and Restated Term Sheet dated 4/9/03 Between Palisade Capital, ▇▇▇
▇▇▇▇▇▇▇▇▇ and Certain Other Investors
including shares of Surviving Common and shares of the Series 1, 2 and 3 Preferred (the
"Offered Shares"), then the Selling Stockholder must offer to sell the Offered Shares first
to Surviving Corporation, and, secondly, to the other non-Selling Stockholders (if Surviving
Corporation elects not to, or cannot legally, purchase all Offered Shares) at the price, and
on the terms proposed by the Selling Stockholder (the "Proposed Terms"). Surviving
Corporation shall have the right (the "Surviving Corporation Right") to purchase all, but
not less than all, of the Offered Shares in accordance with the Proposed Terms. If the
Surviving Corporation does not exercise the Surviving Corporation Right to purchase all
Offered Shares, then the non-Selling Stockholders will be permitted to purchase all (but not
less than all) of the Offered Shares, in accordance with the Proposed Terms, in the ratio
that the number of securities of Surviving Corporation owned by non-Selling Shareholders
wishing to exercise their rights hereunder (assuming conversion of all convertible
securities, options and warrants owned by such person(s), including the Series 1, 2 and 3
Preferred) bears to the total number of shares of Surviving Common outstanding as of such
date (again, assuming conversion of all such convertible securities, options and warrants).
If the non-Selling Stockholders do not exercise their right to purchase all of the Offered
Shares in accordance with the Proposed Terms, the Selling Stockholder may sell the Offered
Shares to a third-party upon terms and conditions no more favorable than the Proposed Terms.
The Definitive Documents (as hereinafter defined) shall provide customary notice, exercise
requirements, payment terms and other terms and conditions as are typically included in such
provisions. Notwithstanding the foregoing, any holder of less than 5% of the Surviving
Common (on a fully-diluted as converted basis), shall be subject to the obligations of this
Right of First Offer but shall not be entitled to the benefits thereof.
VOTING AGREEMENT In connection with the execution of a definitive merger agreement, the Investors identified
by ▇▇▇▇▇▇▇▇ shall enter into a voting agreement with the Surviving Stockholders and Palisade
pursuant to which such Investors shall give the Surviving Stockholders or their nominee an
irrevocable proxy to vote their shares in favor of the Merger and the transactions
contemplated hereby and such Insider Stockholders agree to vote their shares in favor
thereof.
ROLLOVER AGREEMENT In connection with the execution of a definitive merger agreement, certain Investors
identified by ▇▇▇▇▇▇▇▇ shall enter into a Rollover Agreement with MergerCo, pursuant to
which such Investors shall agree to convert the securities of MergerCo owned by them into
shares of capital stock of the Surviving Corporation containing similar terms following the
Merger.
INDEMNITY AGREEMENT: In connection with the closing of the Merger, the Surviving Corporation shall enter into an
Indemnity Agreement with Palisade agreeing to indemnify Palisade in connection with any
breach of any representation or
Confidential 15
Amended and Restated Term Sheet dated 4/9/03 Between Palisade Capital, ▇▇▇
▇▇▇▇▇▇▇▇▇ and Certain Other Investors
warranty contained in the definitive merger agreement (other than a representation or
warranty made by Palisade).
EMPLOYMENT AGREEMENTS The executive officers of the Company identified by Palisade following its due diligence
review of the Company shall enter into employment agreements with the Surviving Corporation
in form and substance reasonably satisfactory to Palisade and such executive officers.
KEY MAN INSURANCE The Surviving Corporation will obtain a key man insurance policy in the amount of $1
million to cover ▇▇▇ ▇▇▇▇▇▇▇▇▇.
CONDITIONS PRECEDENT The conditions precedent to the completion of the Merger will include, among others: (i) the
concurrence of the special committee of the Company's board of directors ("Special
Committee") that the price of $3.00 to be paid for the Public Stock is fair from a financial
point of view, (ii) the absence of any objection by the Special Committee to any other
aspect of the terms and conditions of the proposed agreement of merger, (iii) the approval
of the terms and conditions of the Merger and all Definitive Documents by (A) the Company's
board of directors and (B) the Surviving Stockholders and (C) the Investors, (iv) the
negotiation and execution of Definitive Documents (as hereinafter defined), (v) the
satisfactory completion of due diligence by the Investors and their representatives, (vi)
the absence of any material adverse change in the business of the Company, (vii) the receipt
by the Investors of an opinion of counsel to the Company as to certain matters, in form and
substance acceptable to the Investors, (viii) the receipt of the Noteholders' Consent (as
defined below), together with an opinion of special counsel to the Company, addressed to the
Trustee under the Indenture, to the effect that the "Change of Control" provisions set forth
in the Indenture may be amended by the approval or consent of holders of a majority in
principal amount of the Senior Notes then outstanding provided that such opinion is either
addressed to Palisade or such special counsel delivers a letter to Palisade allowing
Palisade to rely on such opinion; (ix) the Special Committee's (and the Company's Board's)
having taken such action as is necessary to render the Company Rights Agreement (as defined
below) inapplicable to the Merger and the other transactions contemplated hereby, and (x)
the solicitation of proxies in accordance with Regulation 14D of the '34 Act, and the
approval by the Company's shareholders of the Merger and the Definitive Documents.
"Noteholders' Consent" means the consent of the holders of Senior Notes necessary to amend
the terms of the Indenture dated April 1, 1999 between the Company and U.S. Bank Trust
National Association, as trustee (the "Indenture"), to eliminate the change of control
repurchase obligation as set forth in the Indenture resulting from the Merger or the other
transactions contemplated hereby.
Confidential 16
Amended and Restated Term Sheet dated 4/9/03 Between Palisade Capital, ▇▇▇
▇▇▇▇▇▇▇▇▇ and Certain Other Investors
"Company Rights Agreement" means the Rights Agreement dated as of October 6, 1998 by and
between the Company and American Stock Transfer & Trust Company, as amended.
CLOSING The closing is anticipated to occur once the Company has received all necessary approvals
for the Transaction.
SECTION II - BINDING PROVISIONS
EXCLUSIVITY In exchange for the Investors committing time and incurring expense to close the
transactions contemplated hereby, the Signing Stockholders each agree that until June 8,
2003, they shall not, directly or indirectly, make any solicitations, enter into any
negotiations or discuss a possible financing, merger, sale, recapitalization or any possible
disposition of all or substantially all of the assets of the Company or the capital stock of
the Company, including the shares of capital stock of the Company owned by them (a
"Transaction"), with any party other than ▇▇▇▇▇▇▇▇ and the Investors; provided, however,
that nothing in this Section II shall prevent or preclude any one or more of the Signing
Stockholders from entering into any such negotiations or discussions with regard to, or from
otherwise investigating, considering, approving or entering into, any Transaction or
potential Transaction that is being investigated, considered, negotiated or discussed, or
that is proposed to be entered into, by the Special Committee or its advisors, or from
discussing Transactions or potential Transactions with the Special Committee and its
advisors. Notwithstanding the foregoing, in the event that the transaction contemplated by
this Term Sheet has not been abandoned by the parties hereto and any one or more of the
Signing Stockholders enter or enters into any such negotiations or discussions and as a
result of such negotiations or discussions the Signing Stockholders intend to enter, prior
to June 8, 2003, into an agreement relating to such Transaction, the Signing Stockholders
shall give Palisade notice of such intent at least three (3) days prior to entering into
such other transaction, and during such three day period shall negotiate in good faith with
Palisade in order that Palisade shall have the opportunity to propose revised terms and
conditions to the terms and and conditions set forth in this Term Sheet. Nothing in this
Section II shall be construed to prevent or preclude any Signing Stockholder, or any
designee of a Signing Stockholder on the Board of Directors of the Company from fulfilling
his or her fiduciary duty in his or her capacity as a director or officer of the Company.
EXPENSES If the Company, MergerCo and Palisade do not enter into the definitive agreement for any
reason (including if the Company enters into an alternative transaction), other than as a
result of a breach of the terms of this Term Sheet by ▇▇▇▇▇▇▇▇, then ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ and Millennium Partners, on a joint and several basis, shall pay all
reasonable expenses incurred by the Investors in connection with their due diligence, legal
review and documentation of the investment, including without
Confidential 17
Amended and Restated Term Sheet dated 4/9/03 Between Palisade Capital, ▇▇▇
▇▇▇▇▇▇▇▇▇ and Certain Other Investors
limitation reasonable fees and expenses of legal counsel (the "Palisade Fees"). Such
Palisade Fees shall be payable within thirty (30) days of receipt of invoices therefor. For
purposes of this provision, failure to enter into a definitive agreement resulting from an
inability of the parties to agree on the terms of the exclusivity, termination fee and
expense provisions of a definitive agreement shall not be deemed a breach of the terms of
this Term Sheet by ▇▇▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ and Millennium Partners
shall, on a joint and several basis, pay the Palisade Fees to Palisade pursuant to the terms
of this provision.
CONFIDENTIALITY The terms herein are confidential and will not be disclosed except as otherwise agreed in
advance in writing by each of the parties hereto, subject to the parties reporting and
disclosure obligations under the '34 Act.
COUNTERPARTS This Term Sheet may be executed in any number of counterparts, each of which shall be an
original, but all of which together shall constitute one instrument. This Term Sheet may
also be executed via facsimile, which shall be deemed an original.
GOVERNING LAW This Term Sheet and the related transaction documents and all matters arising directly or
indirectly herefrom and therefrom shall be governed by the laws of the State of Delaware on
all matters, in each case, without reference to the choice or conflicts of law provisions
thereof.
EFFECT OF TERM SHEET The parties expressly agree that no binding obligations will be created until Definitive
Documents are executed and delivered by the parties, other than as set forth under the
heading "Binding Provisions" (namely, "Exclusivity, "Expenses," "Confidentiality,"
"Counterparts," "Governing Law," and "Effect of this Term Sheet") which are intended to be
and shall be legally binding. Subject to the foregoing, it is understood that any of the
parties is free to terminate the discussions at any time and for any reason prior to the
execution of Definitive Documents.
[Signature Pages Follow]
Confidential 18
Amended and Restated Term Sheet dated 4/9/03 Between Palisade Capital, ▇▇▇
▇▇▇▇▇▇▇▇▇ and Certain Other Investors
This Term Sheet is hereby accepted and agreed to as of April 9, 2003, by each of
the following:
PALISADE CONCENTRATED EQUITY PARTNERSHIP, L.P.
By: Palisade Concentrated Holdings, LLC, its general partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Member
Signed on April 9, 2003
THE SIGNING STOCKHOLDERS:
/s/ ▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------
▇▇▇ ▇▇▇▇▇▇▇▇▇
Signed on April 10, 2003
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
Signed on April 10, 2003
MILLENNIUM PARTNERS LLC
By: Millennium Partners Management LLC, its manager
By: Millennium Manager I, Inc., its managing member
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Its:
Signed on April 9, 2003
MILLENNIUM ENTERTAINMENT PARTNERS L.P.
By: Millennium Entertainment Associates L.P., its general partner
By: Millennium Entertainment Corp., its general partner
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Its:
Signed on April 9, 2003
Confidential 19
Amended and Restated Term Sheet dated 4/9/03 Between Palisade Capital, ▇▇▇
▇▇▇▇▇▇▇▇▇ and Certain Other Investors
MDP VENTURES I LLC
By: Millennium Development Partners L.P., its managing member
By: Millennium Development Associates L.P., its general partner
By: Millennium Development Corp., its general partner
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Its:
Signed on April 9, 2003
MDP VENTURES II LLC
By: Millennium Development Partners II, LLC, its managing member
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Its:
Signed on April 9, 2003
MILLENNIUM DEVELOPMENT PARTNERS L.P.
By: Millennium Development Associates LP, its general partner
By: Millennium Development Associates L.P., its general partner
By: Millennium Development Corp., its general partner
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Its:
Signed on April 9, 2003
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ CAPITAL ADVISORS, LP.
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Investment Management, Inc, its general partner I
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Managing Director
Signed on April 10, 2003
Confidential 20
Amended and Restated Term Sheet dated 4/9/03 Between Palisade Capital, ▇▇▇
▇▇▇▇▇▇▇▇▇ and Certain Other Investors
SCHEDULE A
SURVIVING STOCKHOLDERS
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Capital Advisors, LP
▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
Millennium Partners LLC
Millennium Entertainment Partners L.P.
MDP Ventures I LLC
MDP Ventures II LLC
Millennium Development Partners ▇.▇.
▇▇▇▇▇ Capital
▇▇▇▇▇▇▇▇ Group
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Confidential 21
Amended and Restated Term Sheet dated 4/9/03 Between Palisade Capital, ▇▇▇
▇▇▇▇▇▇▇▇▇ and Certain Other Investors
SCHEDULE B
MILLENIUM PARTNERS ENTITIES
For purposes of this Term Sheet, "Millennium Partners" means the following
entities, collectively:
Millennium Partners LLC
Millennium Entertainment Partners L.P.
MDP Ventures I LLC
MDP Ventures II LLC
Millennium Development Partners L.P.
Confidential 22