EXHIBIT 10.14
STOCK PURCHASE AND ADVERTISING AGREEMENT
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THIS STOCK PURCHASE AND ADVERTISING AGREEMENT (this "Agreement") is
dated as of the 28th day of May, 1999 by and between the National Broadcasting
Company, Inc. ("NBC") and xxxxxxxxxxx.xxx inc., a Michigan corporation (the
"Company").
RECITALS:
A. xxxxxxxxxxx.xxx inc. was formed on December 21, 1994 as
Interactive Coupon Marketing Group, Inc., and changed its name to
xxxxxxxxxxx.xxx inc. on November 18, 1998. The Company is in the business
("Business") of providing direct marketing services, including targeted sales
promotions and coupons on the Internet.
B. The Company desires to issue and sell 597.188 shares of its
Common Stock, no par value (the "Shares") to NBC and NBC desires to purchase the
Shares from the Company on the terms and subject to the conditions set forth in
this Agreement.
C. The Company desires to purchase and use, and NBC desires to
provide to the Company, certain NBC Television Network ("NBC TV") advertising
inventory on the terms and subject to the conditions set forth in this
Agreement.
SECTION 1
AUTHORIZATION AND SALE OF SHARES
1.1 Authorization of the Shares. The Company has authorized the sale
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and issuance of 597.188 shares of its Common Stock, no par value (the "Shares")
to NBC. The Shares shall have the rights, privileges and preferences set forth
in the Company's Articles of Incorporation attached as Exhibit A hereto (the
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"Articles").
1.2 Purchase and Sale of Common Stock; Antidilution.
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1.2.1 Purchase and Sale. Upon the terms and subject to the
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conditions hereof and in reliance upon the representations, warranties and
agreements contained herein, the Company hereby issues and sells to NBC and NBC
hereby purchases from the Company, 597.188 shares of the Company's Common Stock,
at a purchase price of $5,023.54 per share.
1.2.2 Antidilution. If, after the date of this Agreement and
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prior to the first to occur of the completion of the Company's initial public
offering or August 1, 2000, the Company issues its Common Stock, or securities
which are convertible into the Company's Common Stock, at a price per share (the
"New Issuance Price") of less than $5,023.54, then the Company shall issue that
number of additional shares of its Common Stock to NBC equal to the product of
(a) the number of shares of Company Stock issued to NBC under this Agreement,
after adjustment , if any, pursuant to Section 2.3, and (b) a fraction, the
numerator of which is $5,023.54 minus the New Issuance Price and the denominator
of which is the New Issuance Price. The calculations under this clause 1.2.2
will be adjusted to reflect the numbers of shares and price per share of the
Company's Common Stock appropriate to account for any stock split,
stock dividend, reclassification or other similar change in the Company's Common
Stock affecting all shares of Common Stock generally.
1.3 Delivery. Concurrent with execution and delivery of this
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Agreement, the Company is delivering to NBC a certificate representing the
Shares registered in NBC's name under the terms and subject to the conditions of
this Agreement against payment of the purchase price for the Shares by telecast
of the Spots pursuant to Section 2 of this Agreement.
SECTION 2
PURCHASE OF ADVERTISING
2.1 Spots. NBC shall provide the Company with the use of thirty (30)
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second advertising spots (each, a "Spot") to be telecast on NBC TV during the 12
month period (the "Broadcast Period") beginning on October 1, 1999 or such other
date as NBC and the Company shall agree in writing signed by both the Company
and NBC. The Spots will be aired during the programs set forth in the attached
Exhibit B, or at other dates, days and times and during programs substantially
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similar in the aggregate to those set forth in Exhibit B. All such Spots run by
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the Company shall be subject to NBC TV's standard terms and conditions for such
advertising which are described in the "Participating Sponsorship Agreement"
attached hereto as Exhibit C (the "Standard Terms") and which are made a part of
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this Agreement in their entirety; provided, however, that in the case of a
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conflict between the terms of this Agreement and the terms of the Standard
Terms, the terms of this Agreement shall govern. For purposes of the Standard
Terms, the Company shall be both the "Advertiser" and the "Agency" as such terms
are used therein. The Company acknowledges that if it fails to deliver any of
the material required by NBC to air the Company's Spots during any particular
Program pursuant to the procedures in the Standard Terms, then NBC TV shall be
deemed to have telecast such Spot during the relevant Program for purposes
hereof even if such Spot is not actually shown when the Program is telecast.
2.2 Value of Spots. NBC agrees to telecast Spots with a total spot
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value of $3,000,000 (the "Total Spot Value") calculated, for each Spot, at [*].
The Company agrees that NBC makes no guarantee regarding what the actual rating
for any particular Program will be and, therefore, will not be obligated to
provide any make-goods hereunder.
2.3 Liability for Failure to Broadcast Spots. In the event that NBC
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does not telecast Spots equal to the Total Spot Value within the Broadcast
Period, then as liquidated damages and not a penalty, and as the sole damages
for such failure, NBC shall pay the Company, on or before October 5, 2000, an
amount equal to the difference (the "Differential Value") between the Total
Spot Value and the value of the Spots actually telecast, as calculated pursuant
to Section 2.2 above. The Differential Value will be paid by the surrender to
the Company by NBC of that number of the Shares equal to the Differential Value
divided by $5,023.54.
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[*] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTION.
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SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to NBC as follows:
3.1 Organization and Standing; Charter and By-laws. The Company is a
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corporation duly organized, validly existing and in good standing under the laws
of the State of Michigan, and the Company is authorized to exercise all of its
corporate powers, rights and privileges. True and accurate copies of the
Articles of Incorporation and the by-laws of the Company, each as in effect on
the date hereof, have been delivered to the Purchasers. The Company has no
direct or indirect subsidiaries.
3.2 Capitalization. The authorized capital stock of the Company on
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the date hereof consists of 60,000 shares of Common Stock, no par value ("Common
Stock"). On the date hereof, before giving effect to the issuance of the
Shares, 26,873.463 shares of Common Stock are outstanding. The Company has
reserved 2,642.38 shares of Common Stock for issuance to employees, consultants
and directors pursuant to outstanding options under its 1997 Stock Option Plan.
Except as set forth herein and in Schedule 3.2 attached, there are no
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outstanding rights, options, warrants, preemptive rights, conversion or exchange
rights or agreements for the purchase, acquisition or receipt from the Company
of any shares of capital stock or any other securities of the Company. The
right of first refusal afforded IntelliQuest Information Group, Inc. does not
apply to the issuance of the Shares. The Company is not a party to any existing
agreement with any person or entity which requires the Company to purchase from
such person or entity any of its capital stock, any securities convertible into
or exchangeable or exercisable for any of its capital stock, or any right,
options or warrants for its capital stock. All voting rights in the Company are
vested in the Common Stock as set forth in the Articles of Incorporation.
Except as set forth in Schedule 3.2 attached, the Company is not a party to any
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voting trusts, voting agreements, proxies or other agreements, instruments or
understandings, and to the knowledge of the CEO, COO and CFO of the Company,
there are no other voting trusts, voting agreements, proxies or other
agreements, instruments or understandings with respect to the voting of the
capital stock of the Company. Subject to the accuracy of the representations
and warranties of NBC set forth in Section 4, all of the Shares are being issued
in compliance with all applicable Federal and state securities laws.
3.3 Corporate Power: Authorization. The Company has all requisite
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legal and corporate power to enter into this Agreement, to issue and sell the
Shares as provided hereunder, and to carry out and perform its obligations under
the terms of this Agreement. All corporate action on the part of the Company and
its officers, directors and stockholders that is necessary for the
authorization, execution and delivery of this Agreement by the Company, for the
performance of the Company's obligations hereunder and for the issuance and
delivery of the Shares has been taken; and this Agreement constitutes a legal
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, subject to: (i) judicial principles respecting or
limiting the availability of specific performance, injunctive relief and other
equitable remedies; and (ii) bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect generally relating to or
affecting creditors' rights. The execution and delivery of this Agreement by
the Company and the performance of its obligations hereunder will not violate or
conflict with any order of any court or other agency of government, any
judgment, decree, or any agreement, license or other instrument, or to the
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knowledge of the CEO, COO and CFO of the Company, any statute, regulation, rule
or provision of law to which the Company is a party or by which it or any of its
assets are bound.
3.4 Validity of Securities. The Shares, when issued, sold, delivered
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and paid for in accordance with the terms of this Agreement, will be duly and
validly issued, fully paid and non-assessable and will be free and clear of any
liens, charges, encumbrances, restrictions, preemptive rights or rights of first
refusal of any kind; provided, however, that the Shares will be subject to the
restrictions of the Agreement referenced in Section 5 and may be subject to
restrictions on transfer under state and federal securities laws.
3.5 Consents and Waivers. The Company has obtained any and all
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consents, permits and waivers and made all filings necessary or appropriate for
consummation of the transactions contemplated by this Agreement.
3.6 Financial Statements. Attached hereto as Exhibit E are the
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following financial statements (collectively the "Financial Statements"): (i)
audited balance sheet and statement of income, changes in stockholders' equity,
and cash flow as of and for the fiscal year ended December 31, 1998 (the "Most
Recent Fiscal Year End") for the Company; and (ii) unaudited balance sheet and
statement of income, changes in stockholders' equity, and cash flow (the "Most
Recent Financial Statements") as of and for the three (3) months ended March 31,
1999 for the Company. The Financial Statements (including the notes thereto)
have been prepared in accordance with GAAP (except that the Most Recent
Financial Statements are subject to normal, recurring year-end adjustments and
do not have footnotes which may be required by GAAP) applied on a consistent
basis throughout the periods covered thereby, taken as a whole present fairly
the financial condition of the Company as of such dates and the results of
operations of the Company for such periods, and are consistent with the books
and records of the Company (which books and records are correct and complete in
all material respects). Since the date of the Most Recent Financial
Statements, there has been no material adverse change in the assets, liabilities
or financial condition of the Company from that reflected on the Most Recent
Financial Statements, except for changes in the ordinary course of business.
3.7 Title to Assets. Except as set forth on Schedule 3.7 attached,
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the Company has good and marketable title to all of its owned assets, and good
leasehold interests in its leased properties, free and clear of all
encumbrances, except for (a) liens arising by operation of law in the ordinary
course of business that, individually and in the aggregate, do not in any
material respect interfere with the use of any of the assets subject thereto,
(b) minor imperfections of title which do not materially detract from the value
of the property affected or materially impair the operations of the Company and
(c) liens for taxes not yet due and payable.
3.8 Intellectual Property Rights. The Company owns, is licensed to
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use or otherwise has sufficient rights to use, or is in the process of acquiring
sufficient rights to use, such patents, trademarks, copyrights, service marks
and applications and registrations therefor, and trade names, customer lists,
trade secrets, proprietary processes and formulae, inventions, know-how, other
confidential proprietary information, and other industrial and intellectual
property rights as are necessary to permit the Company to carry on its business
as presently conducted or as presently proposed to be conducted. Except as set
forth on Schedule 3.8 attached, the Company has not received notice from any
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third party nor is the Company otherwise aware that any product or service
marketed or sold by the Company violates any intellectual property
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right of a third party. Except as set forth on Schedule 3.8 attached, there is
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no pending or, to the knowledge of the CEO, COO or CFO of the Company,
threatened claim or litigation against the Company contesting the right to use
its intellectual property rights, asserting the misuse of any thereof, or
asserting the infringement or other violation of any intellectual property
rights of a third party.
3.9 Compliance with Laws; Governmental Authorizations. The Company
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is in compliance with all laws, rules and regulations that, if violated, would
have a material adverse effect on its assets, business, or property. The
Company is not required to hold or maintain any material governmental
authorizations, licenses or permits in the conduct of its business as presently
conducted and as currently proposed to be conducted.
3.10 Litigation. Except as set forth on Schedule 3.8 attached, there
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are no (a) actions, suits, claims, investigations or other proceedings by or
before any governmental authority or arbitrator pending or, to the knowledge of
the CEO, COO or CFO of the Company, threatened against the Company, or (b)
judgments, decrees, injunctions or orders of any governmental authority or
arbitrator against the Company, except to the extent that any of the foregoing
if determined adversely to the Company, would not have a material adverse effect
on the Company, its financial condition or its assets.
3.11 Taxes. The Company has filed all tax returns, Federal, state,
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foreign, county and local, required to be filed by it, and has paid all taxes
shown to be due by such returns as well as all other taxes, assessments and
governmental charges which have become due or payable, other than those being
contested in good faith. The Company has established adequate reserves for all
taxes accrued but not yet payable.
3.12 Brokers and Finders. No person or entity acting on behalf or
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under the authority of the Company is or will be entitled to any broker's,
finder's, or similar fee or commission in connection with the issuance of the
Shares or the consummation of any of the transactions contemplated herein.
3.13 Insurance. The Company maintains fire and casualty insurance
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policies, with extended coverage, sufficient in amount to allow it to replace
any of its properties which might be damaged or destroyed, and liability
policies in amounts reasonable and customary for the Company's business.
SECTION 4
REPRESENTATIONS, WARRANTIES OF NBC
AND RESTRICTIONS ON TRANSFER IMPOSED BY THE ACT
4.1 Representations and Warranties. NBC hereby represents and
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warrants to the Company as follows:
4.1.1 Authorization.
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All action on the part of NBC necessary for the execution, delivery
and performance of this Agreement, and the consummation of the transactions
contemplated hereby has been taken and, assuming due execution and delivery by
the Company, this
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Agreement constitutes a legal, valid, binding and enforceable obligation of NBC,
subject to: (i) judicial principles respecting or limiting the availability of
specific performance, injunctive relief, and other equitable remedies; and (ii)
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect generally relating to or affecting creditors' rights.
4.1.2 Investment.
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(a) NBC has been advised that the Shares have not been registered
under the Securities Act of 1933, as amended (the "Act"), or registered or
qualified under any applicable state securities laws on the ground that no
distribution or public offering of the Shares is to be effected, and that in
this connection the Company is relying in part on the representations of NBC set
forth in this Section 4;
(b) NBC has been further advised that no public market now exists
for any of the securities issued by the Company and that a public market may
never exist for the Shares;
(c) NBC is purchasing the Shares for its own account and not for
any other person;
(d) By reason of its business or financial experience, NBC has the
capacity to protect its own interest in connection with the transactions
contemplated hereunder, is able to bear the risks of an investment in the
Company, and can afford a complete loss of such investment;
(e) NBC is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Shares; and
(f) NBC has had the opportunity to ask questions regarding the
Company and the Company has provided information in response to the questions.
4.1.3 Federal Securities Laws. In order to enable the Company to
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determine whether the sale of the Shares is exempt from registration under the
Act, NBC represents that it is an Accredited Investor (as defined in Rule 501 of
the Rules and Regulations under the Securities Act of 1933) and is acquiring the
Shares for its own account, for investment, and not with a view to, or for sale
in connection with, any distribution thereof.
4.2 Transfer of Securities. The Shares shall not be transferable except
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(a) to an affiliate of NBC who expressly agrees to be bound by the terms of this
Agreement and the letter agreement with the underwriters named therein
referenced in Exhibit F or (b) upon the conditions specified in this Section
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4.2, which conditions are intended to insure compliance with the provisions of
the Act with respect to the transfer of such securities.
4.2.1 Legend. Unless and until otherwise permitted by this Section
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4.2, each certificate representing the Shares will be endorsed with a legend
substantially in the following form:
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"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS,
AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS (A)
COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE STATE
SECURITIES LAWS, OR (B) THE COMPANY HAS BEEN FURNISHED WITH AN
OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY TO THE
EFFECT THAT SUCH SALE, PLEDGE OR TRANSFER IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REOUIREMENTS OF THE
SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
4.2.2 Restrictions on Transfer. The Shares shall not be sold,
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assigned, pledged or transferred, and the Company shall not be required to
record any such sale, assignment, pledge or transfer, in its stock transfer
records unless and until one of the following events shall have occurred:
(a) the Company shall have received an opinion of counsel, which may
be NBC in-house counsel, in form and substance reasonably acceptable to the
Company and its counsel, stating that the contemplated transfer is exempt from
registration under the Act as then in effect, and the Rules and Regulations of
the Securities and Exchange Commission (the "Commission") thereunder and any
applicable state securities laws, which may include an opinion that the Shares
can be sold pursuant to Rule 144 under the Act;
(b) the Company shall have been furnished with a letter from the
Commission in response to a written request in form and substance reasonably
acceptable to counsel for the Company setting forth all of the facts and
circumstances surrounding the contemplated sale, assignment, pledge or transfer,
stating that the Commission will take no action with regard to the contemplated
sale, assignment, pledge or transfer; or
(c) the Shares are transferred pursuant to a registration statement
which has been filed with the Commission and has become effective.
Within three business days after delivery to the Company and its
counsel of an opinion described in clause (a) above, the Company either shall
deliver to the proposed transferor a statement to the effect that such opinion
is not satisfactory in the reasonable opinion of its counsel (and shall specify
in detail the legal analysis supporting any such conclusion) or shall authorize
the Company's transfer agent to make the requested transfer.
4.2.3 Termination of Restrictions and Removal of Legend. The
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restrictions on transfer imposed by this Section 4.2 shall cease and terminate
as to the Shares when (i) such securities (as applicable) shall have been
effectively registered under the Act and sold by the holder thereof in
accordance with such registration, or (ii) an acceptable opinion as described in
Section 4.2.2 (a) or a "no action" letter described in Section 4.2.2 (b)
states that all future transfers of such securities by the transferor or the
contemplated transferee would be exempt from registration under the Act. When
the restrictions on transfer contained in this Section 4.2 have terminated as
provided above, the holder of the securities as to which such restrictions
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shall have terminated or the transferee of such holder shall be entitled to
receive promptly from the Company, without expense to him, new certificates not
bearing the legends set forth in Section 4.2.1 hereof.
4.2.4 Brokers and Finders. No person or entity acting on behalf or
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under the authority of NBC is or will be entitled to any broker's, finder's, or
similar fee or commission in connection with the issuance of the Shares or the
consummation of any of the transactions contemplated herein.
SECTION 5
UNDERWRITERS' LOCK-UP AGREEMENT
5.1 Underwriters' Letter Agreement. Simultaneously with the execution and
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delivery of this Agreement, NBC will execute and deliver to the underwriters
named therein a letter in the form attached as Exhibit F.
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SECTION 6
REGISTRATION RIGHTS
The Company covenants and agrees as follows:
6.l Definitions. For purposes of this Section 6:
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(a) The terms "register", "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Act, and the declaration or ordering of
effectiveness of such registration statement or document;
(b) The term "Registrable Securities" means (i) the Shares; and (ii)
any Common Stock of the Company issued as (or issuable upon the conversion or
exercise of any warrant, right or other security which is issued as) a dividend
or other distribution with respect to, or in exchange for or in replacement of
the Shares; provided, however, that Common Stock or other securities shall only
be treated as Registrable Securities if and so long as (1) they have not been
sold to or through a broker or dealer or underwriter in a public distribution or
a public securities transaction, and (2) they have not been sold in a
transaction exempt from the registration and prospectus delivery requirements of
the Act under Section 4(1) thereof so that all transfer restrictions and
restrictive legends with respect thereto are removed upon the consummation of
such sale;
(c) The number of shares of "Registrable Securities then outstanding"
shall be determined by the number of shares of Common Stock outstanding which
are, and the number of shares of Common Stock issuable pursuant to then
exercisable or convertible securities which are, Registrable Securities;
(d) The term "Holder" means any person who is the record owner of
Registrable Securities, or any assignee thereof in accordance with Section 6.12
hereof; and
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(e) The term "SEC" means the Securities and Exchange Commission or any
other federal agency at the time administering the Act.
6.2 Company Registration. If, after completion of the Company's initial
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public offering of Common Stock, and for a period of three years thereafter,
(but without any obligation to do so) the Company proposes to register any of
its stock or other securities under the Act in connection with the public
offering of such securities solely for cash (other than a registration relating
solely to the sale of securities to participants in a Company stock plan, or a
registration on any form which does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of the Registrable Securities or a SEC Rule 145 transaction),
the Company shall, at such time, promptly give each Holder written notice of
such registration. Upon the written request of each Holder given within ten (10)
days after receipt of such notice by the Holder given in accordance with Section
8.4, the Company shall, subject to the provisions of Sections 6.4, 6.5, 6.6, 6.7
and 6.8, cause to be registered under the Act all of the Registrable Securities
that each such Holder has requested to be registered. Notwithstanding the
foregoing, the Company will not be required to give notice to the Holders of
Registrable Securities if the underwriters managing the proposed offering have
advised the Company in writing that in their judgment market conditions will not
allow the inclusion of any secondary shares in such offering. In the event the
managing underwriters and the Company subsequently determine to add any
secondary shares in the offering, such notice shall be provided, and each Holder
shall have the registration rights provided in this Section 6.
6.3 Demand Registration. Subject to the terms of this Agreement, in the
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event that prior to a date three years after the date of this Agreement (the
"Demand Expiration Date"), the Company shall receive from the Holders of Shares
representing at least seventy-five percent (75%) of the Registrable Securities
then outstanding, at any time after six (6) months after the effective date of
the registration statement covering the Company's initial public offering, a
written notice that it or they intend to offer or cause to be offered for public
sale at least fifty percent (50%) of the Registrable Securities then outstanding
(or any lesser percentage if the aggregate offering price to the public is
greater than $5,000,000), the Company will so notify all Holders. Upon written
request of any Holder given within fifteen (15) days after the receipt by such
Holder from the Company of such notification, the Company will use its best
efforts to cause such of the Registrable Securities as may be requested by any
Holder (including the Holder giving the initial notice of intent to offer) to be
registered under the Securities Act as expeditiously as possible (a "Demand
Registration"). The Company shall not be required to effect more than one (1)
Demand Registration pursuant to this Section 6.3. If (i) in the good faith
judgment of the Board of Directors of the Company, a Demand Registration would
be materially detrimental to the Company and the Board of Directors of the
Company concludes, as a result, that it is essential to defer the filing of such
registration statement at such time, and (ii) the Company shall furnish to each
Holder a certificate signed by the President of the Company stating that, in the
good faith judgment of the Board of Directors of the Company, it would be
materially detrimental to the Company for such registration statement to be
filed in the near future, then the Company shall have the right to defer such
filing for the period during which such Demand Registration would be materially
detrimental, provided that the Company may not defer the filing for a period of
more than ninety (90) days after receipt of the request for a Demand
Registration, and more than once in any 12-month period. In the event that the
Company elects to defer a Demand Registration to a date occurring after the
Demand
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Expiration Date, the Demand Expiration Date shall be extended until such time as
the Demand Registration is complete.
6.4 Obligations of the Company. Whenever required under Section 6.2 or
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6.3 to effect the registration of any Registrable Securities, the Company shall,
as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective, and, upon the request of the Holders
of a majority of the Registrable Securities registered thereunder, keep such
registration statement effective for up to 135 days or until all of the
securities registered thereunder are sold, whichever occurs sooner.
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Act, and such other documents as they may reasonably request in order to
facilitate the disposition of Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Each Holder participating
in such underwriting shall also enter into and perform its obligations under
such an agreement. In the event the Company elects to participate in the
offering by selling securities for the Company's account, the Company shall be
entitled to select the underwriter(s).
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing.
(g) Use best efforts to cause the Registrable Securities covered by
such registration to be listed with any securities exchange on which the
Company's common Stock is then listed.
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Each Holder agrees that, upon receipt of any notice from the Company of the
happening of any event described in Section 6.4(f), such Holder shall forthwith
discontinue disposition of Registrable Securities until receipt of notice that
such condition no longer exists.
6.5 Furnish Information. It shall be a condition precedent to the
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obligations of the Company to take any action pursuant to this Section 6 with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of such securities
as shall be reasonably requested by the Company or as shall be required to
effect the registration of such Holder's Registrable Securities.
6.6 Underwriting Requirements. In connection with any offering involving
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an underwriting of shares of the Company's capital stock, the Company shall not
be required under Section 6.2 or 6.3 to include any of the Holders' securities
in such underwriting unless they accept the terms of the underwriting as agreed
upon between the Company and the underwriters selected by the persons entitled
to select the underwriters, and then only in such quantity as the underwriters
determine in their sole discretion will not jeopardize the success of the
offering by the Company. If the total amount of securities, including
Registrable Securities, requested by selling stockholders to be included in such
offering exceeds the amount of securities sold other than by the Company that
the underwriters determine in their sole discretion is compatible with the
success of the offering, then the Company shall be required to include in the
offering only that number of such securities, including Registrable Securities,
which the underwriters determine in their sole discretion will not jeopardize
the success of the offering (the securities so included to be apportioned pro
rata among all selling stockholders according to the total amount of securities
owned by each selling stockholder or in such other proportions as shall mutually
be agreed to by such selling stockholders). For purposes of the preceding
parenthetical concerning apportionment, for any selling stockholder which is a
holder of Registrable Securities and which is a partnership or corporation, the
partners, retired partners and stockholders of such holder, or the estates and
family members of any such partners and retired partners and any trusts for the
benefit of any of the foregoing persons shall be deemed to be a single "selling
stockholder" and any pro-rata reduction with respect to such "selling
stockholder" shall be based upon the aggregate amount of shares owned by all
entities and individuals included in such "selling stockholder," as defined in
this sentence.
6.7 Delay of Registration. No Holder shall have any right to obtain or
----------------------
seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 6.
6.8 Indemnification. In the event any Registrable Securities are included
---------------
in a registration statement under this Section 6:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder and each officer and director thereof, any underwriter
(as defined in the Act) for such Holder and each person, if any, who controls
such Holder or underwriter within the meaning of the Act or the Securities
Exchange Act of 1934, as amended (the "1934 Act"), against any losses, claims,
damages, or liabilities (joint or several) to which they may become subject
under the Act, or the 1934 Act or other federal or state law, insofar as such
losses,
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claims, damages, or liabilities (or actions in respect thereof) arise out of or
are based upon any of the following statements, omissions or violations
(collectively a "Violation"): (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Act, the 1934 Act, any state securities law or
any rule or regulation promulgated under the Act, or the 1934 Act or any state
securities law; and the Company will pay to each such Holder, officer, director,
underwriter or controlling person, as incurred, any legal or other expenses
reasonably incurred by one law firm retained by them (or such additional law
firms retained by a Holder or Holders if such Holder or Holders reasonably
believe there exists a conflict of interest among them) in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the indemnity agreement contained in this subsection
6.8(a) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of the Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any loss, claim, damage, liability or
action to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by any such Holder,
underwriter or controlling person.
(b) To the extent permitted by law, each selling Holder will indemnify
and bold harmless the Company, each of its directors, each of its officers who
has signed the registration statement, each person, if any, who controls the
Company within the meaning of the Act, any underwriter, any other Holder selling
securities in such registration statement and any controlling person of any such
underwriter or other Holder, against any losses, claims, damages or liabilities
(joint or several) to which any of the foregoing persons may become subject,
under the Act, or the 1934 Act or other federal or state law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereto) arise out
of or are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by such Holder expressly for use in connection
with such registration; and each such Holder will pay, as incurred, any legal or
other expenses reasonably incurred by any person intended to be indemnified
pursuant to this subsection 6.8(b), in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the indemnity agreement contained in this subsection 6.8(b) shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the Holder, which
consent shall not be unreasonably withheld; provided, that, in no event shall
any indemnity under this subsection 6.8(b) exceed the net proceeds from the
offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this Section
6.8 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying xxxxx under this Section 6.8, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified
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parties which may be represented without conflict by one counsel) shall have the
right to retain one separate counsel, with the fees and expenses to be paid by
the indemnifying xxxxx, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if and only to the extent such failure is
prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
6.8, but the failure to deliver written notice to the indemnifying party will
not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 6.8. No indemnifying party will consent to
entry of any judgment or enter into any settlement (i) without the consent of
the indemnified party, which consent shall not be unreasonably withheld, or (ii)
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release from all liability
with respect to such claim or litigation.
(d) The obligations of the Company and Holders under this Section 6.8
shall survive the completion of any offering of Registrable Securities in a
registration statement under this Section 6, and otherwise.
6.9 Reports Under Securities Exchange Act of 1934. With a view to making
----------------------------------------------
available to the Holders the benefits of Rule 144 promulgated under the Act and
any other rule or regulation of the SEC that may at any time permit a Holder to
sell securities of the Company to the public without registration, the Company
agrees to:
(a) make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times after ninety (90) days
after the effective date of the first registration statement filed by the
Company for the offering of its securities to the general public;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act; and
(c) furnish to any Holder, so long as the Holder owns any Registrable
Securities, forthwith upon request (i) a written statement by the Company that
it has complied with the reporting requirements of SEC Rule 144 (at any time
after ninety (90) days after the effective date of the first registration
statement filed by the Company), the Act and the 1934 Act (at any time after it
has become subject to such reporting requirements), (ii) a copy of the most
recent annual or quarterly report of the Company and such other reports and
documents so filed by the Company, and (iii) such other information as may be
reasonably requested in availing any Holder of any rule or regulation of the SEC
which permits the selling of any such securities without registration or
pursuant to such form.
6.10 Expenses of Registration. The Company shall bear and pay all expenses
-------------------------
incurred in connection with any registration, filing or qualification of
Registrable Securities with respect to any registration pursuant to Section 6.2
and only one registration pursuant to Section 6.3, including (without
limitation) all registration, filing, and qualification fees, printers and
accounting fees relating or apportionable thereto, but excluding underwriting
discounts
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and commissions, legal or other professional fees of the Holders and stock
transfer taxes relating to Registrable Securities.
6.11 Assignment of Registration Rights. The rights to cause the Company to
----------------------------------
register Registrable Securities pursuant to this Section 6 may only be assigned
to a purchaser, assignee or transferee of the underlying Registrable Securities,
who agrees to be bound by the terms of this Agreement.
6.12 Limitations on Subsequent Registration Rights. From and after the
----------------------------------------------
date of this Agreement, the Company shall not, without the prior written consent
of the Holders of a majority of the outstanding Registrable Securities, enter
into any agreement with any holder or prospective holder of any securities of
the Company which would allow such holder or prospective holder to include such
securities in any registration filed under Section 6.3 hereof, unless under the
terms of such agreement, such holder or prospective holder may include such
securities in any such registration only to the extent that the inclusion of his
securities will not reduce the amount of the Registrable Securities of the
Holders which is included; provided, however, the Company may grant additional
rights to participate in Company registrations not filed pursuant to Section 6.3
to other holders such that any participation will be pro rata to such holders'
ownership of Company Common Stock.
6.13 Amendment of Registration Rights. Any provision of this Section 6 may
---------------------------------
be amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Holders of a majority of the Registrable
Securities then outstanding. Any amendment or waiver effected in accordance
with this paragraph shall be binding upon each holder of any Registrable
Securities then outstanding, each future holder of all such Registrable
Securities, and the Company.
6.14 Termination. Except as provided in Sections 6.2 and 6.3, the rights
-----------
provided in this Section 6 shall terminate on the third anniversary of this
Agreement.
SECTION 7
CONFIDENTIALITY, DISCLOSURE AND INFORMATION RIGHTS
7.1 Confidentiality and Disclosure. Neither party shall issue a press
------------------------------
release or make any statement to the general public concerning this Agreement,
the Spots, or the existence thereof, without the express prior written consent
of the other; provided, however, that NBC agrees that the Company may file this
-------- -------
Agreement with the Securities and Exchange Commission (the "SEC") and may
describe the terms of this transaction identifying NBC and the subject matter of
this Agreement in any filing with the SEC and other applicable regulatory
agencies substantially in the form attached as Schedule 7.1. The Company agrees
------------
that any description not in the form of that in Schedule 7.1 will first be
------------
submitted to NBC for not less than three business days for prior approval, which
approval will not unreasonably be withheld, conditioned or delayed. The Company
agrees to request from the SEC confidential treatment of the pricing terms
(including the calculation of the Differential Value) of this Agreement, Exhibit
-------
B to this Agreement and any other terms mutually agreed upon by the parties.
-
-14-
7.2 Information Rights. For so long as NBC is a stockholder of the
------------------
Company and the Company is not subject to the periodic reporting requirements of
the Securities Exchange Act of 1934, the Company shall furnish to NBC: (a) its
audited annual financial statements as soon as practicable after the end of each
fiscal year, and (b) its most recent quarterly financial statements (which may
or may not be audited) as soon as practicable after NBC requests the same. NBC
shall keep all documents provided to it under this Section 7.2 strictly
confidential and shall not disclose any of such information to any person or
entity without the prior written consent of the Company.
SECTION 8
MISCELLANEOUS
8.1 Governing Law. This Agreement shall be governed in all respects by
--------------
the laws of the State of Michigan.
8.2 Successors and Assigns. Except as otherwise expressly provided
-----------------------
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
8.3 Entire Agreement. This Agreement and the other documents delivered
-----------------
pursuant hereto constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and thereof.
8.4 Notices, Etc. All notices and other communications required or
-------------
permitted hereunder shall be in writing and shall be deemed effectively given
upon personal delivery, upon receipt by verified facsimile transmission, upon
receipt by overnight courier or upon the third day following mailing by
registered air mail, postage prepaid, addressed (a) if to NBC, to 00 Xxxxxxxxxxx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attn: Xxxxxxx Xxxxxxx, with a copy to Law
Department, Corporate and Transactions Group, or at such other address as it
shall have furnished to the Company, (b) if to the Company, to xxxxxxxxxxx.xxx
inc., 0000 Xxxx Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000-0000, Attn:
Xxxxxx Xxxxxx, with a copy to Xxxxxxx Xxxxxx, Golden & Xxxxxx, P.C., 000 Xxxx
Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxx 00000, or at such other address as
the Company shall have furnished to NBC.
8.5 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.6 Drafting. This Agreement has been drafted jointly by the Company and
--------
NBC and the terms and provisions hereof shall not be construed in favor of
either party on the basis of that party's participation in or contribution to
the drafting of such terms or provisions.
8.7 Arbitration. Any and all disputes between the parties arising out of
-----------
any provision of this Agreement shall be resolved in accordance with the
procedure set forth in this Section 8.7. The Parties shall submit all disputes
under this Agreement to arbitration. Such arbitration shall be conducted in
accordance with the rules of the Center for Public Resources Rules for Non-
Administered Arbitration of Business Disputes by one arbitrator from the CPR
-15-
Panels of Distinguished Neutrals. The arbitration shall be governed by the
United States Arbitration Act, 9 U.S.C., Sections 1 - 16, and judgment on the
award rendered by the arbitrator may be entered by any court having jurisdiction
thereof. The place of the arbitration shall be the New York, New York
metropolitan area. The arbitrator shall make written findings of fact and
conclusions of law, and the decision of the arbitrator shall be final. Each
party shall pay its own expenses of arbitration and the expense of the
arbitrator shall be equally shared; provided, however, that if in the opinion of
the arbitrator any claim for indemnification under the Agreement or any defense
in objection thereto was unreasonable, the arbitrator may assess, as part of
their award, all or any part of the arbitration expenses (including reasonable
attorney's fees) of the other party and of the arbitrator against the party
raising such unreasonable claim, defense or objection.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
themselves or by their respective representatives thereunto duly authorized as
of the day and year first above written.
xxxxxxxxxxx.xxx inc.
By: /s/ Xxxxxx Xxxxxx Dated: May 28, 1999
----------------------------------- ------------------------------
Xxxxxx Xxxxxx
Chief Executive Officer
National Broadcasting Company, Inc.
By: /s/ Xxxxxx X. Xxxxxx Dated: May 28, 1999
----------------------------------- ------------------------------
Its: Executive Vice President
-----------------------------------
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