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EXHIBIT 4.1
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NOTE PURCHASE AGREEMENT
BETWEEN
QUOKKA SPORTS, INC.
GE CAPITAL EQUITY INVESTMENTS, INC.
AND
THE OTHER PURCHASERS SIGNATORY HERETO
DATED AS OF SEPTEMBER 15, 2000
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TABLE OF CONTENTS
PAGE
ARTICLE 1 AGREEMENT TO SELL AND PURCHASE.......................................... 1
Section 1.1 Sale and Purchase............................................. 1
ARTICLE 2 CLOSING, DELIVERY AND PAYMENT........................................... 2
Section 2.1 Closing....................................................... 2
Section 2.2 Delivery...................................................... 2
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................... 2
Section 3.1 Organization, Good Standing and Qualification................. 2
Section 3.2 Subsidiaries.................................................. 3
Section 3.3 Capitalization; Voting Rights................................. 4
Section 3.4 Authorization; Binding Obligations............................ 5
Section 3.5 SEC Reports; Financial Statements............................. 5
Section 3.6 Undisclosed Liabilities....................................... 6
Section 3.7 Agreements; Action............................................ 7
Section 3.8 Obligations to Related Parties................................ 7
Section 3.9 Changes....................................................... 8
Section 3.10 Title to Properties and Assets; Liens, Condition, Etc........ 8
Section 3.11 Intellectual Property........................................ 9
Section 3.12 Compliance with Law; Other Instruments....................... 10
Section 3.13 Litigation................................................... 11
Section 3.14 Tax Matters.................................................. 11
Section 3.15 Employees.................................................... 12
Section 3.16 Environmental and Safety Laws................................ 13
Section 3.17 Offering Valid............................................... 13
Section 3.18 Employee Benefit Plans....................................... 14
Section 3.19 Permits...................................................... 15
Section 3.20 No Broker.................................................... 15
Section 3.21 Disclosure................................................... 16
Section 3.22 Section 203.................................................. 16
Section 3.23 Employment, Confidential Information and Invention
Assignment Agreement......................................... 16
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TABLE OF CONTENTS
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Section 3.24 Insurance.................................................... 16
Section 3.25 Information Provided......................................... 17
Section 3.26 Principal Exchange Market.................................... 17
Section 3.27 No General Solicitation...................................... 17
Section 3.28 No Integrated Offering....................................... 17
Section 3.29 Form S-3..................................................... 17
Section 3.30 Poison Pill Provisions....................................... 17
Section 3.31 Internal Accounting Controls................................. 18
Section 3.32 Solvency..................................................... 18
Section 3.33 No Reliance on Purchasers.................................... 18
Section 3.34 Foreign Corrupt Practices Act................................ 19
Section 3.35 Acknowledgment of Dilution................................... 19
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER......................... 19
Section 4.1 Requisite Power and Authority................................. 19
Section 4.2 Investment Representations.................................... 20
Section 4.3 No Broker..................................................... 20
Section 4.4 Disclosure of Information..................................... 20
ARTICLE 5 COVENANTS............................................................... 20
Section 5.1 Access........................................................ 20
Section 5.2 Use of Proceeds............................................... 21
Section 5.3 Best Efforts.................................................. 21
Section 5.4 Notification of Certain Matters............................... 21
Section 5.5 Reservation of Shares; Stock Exchange Listing................. 21
Section 5.6 [INTENTIONALLY LEFT BLANK].................................... 22
Section 5.7 Listing Shares on Another Exchange............................ 22
Section 5.8 Lost, Stolen, Destroyed or Mutilated Notes and Warrants....... 22
Section 5.9 Notes on Conversion and Warrants on Exercise.................. 22
Section 5.10 Replacement Notes and Warrants............................... 22
Section 5.11 Notices...................................................... 23
Section 5.12 Right of First Refusal....................................... 23
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TABLE OF CONTENTS
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Section 5.13 [INTENTIONALLY LEFT BLANK]................................... 24
Section 5.14 Form D; Blue Sky Laws........................................ 24
Section 5.15 Nasdaq Rule.................................................. 24
Section 5.16 Form 8-K..................................................... 25
Section 5.17 [Intentionally Omitted]...................................... 25
ARTICLE 6 CONDITIONS TO CLOSING................................................... 25
Section 6.1 Conditions to Purchasers' Obligation to Purchase the Notes
and Warrants.................................................. 25
Section 6.2 Conditions to Obligations of the Company...................... 27
ARTICLE 7 INDEMNIFICATION......................................................... 28
Section 7.1 Indemnification............................................... 28
Section 7.2 Non-Exclusive Remedy.......................................... 28
Section 7.3 Specific Performance.......................................... 28
ARTICLE 8 MISCELLANEOUS........................................................... 29
Section 8.1 Other Definitions............................................. 29
Section 8.2 Governing Law; Jurisdiction; Waiver of Jury Trial............. 29
Section 8.3 [INTENTIONALLY LEFT BLANK].................................... 30
Section 8.4 Expenses...................................................... 30
Section 8.5 Successors and Assigns; Assignment............................ 30
Section 8.6 Entire Agreement; Supersedes Prior Agreement.................. 30
Section 8.7 Severability.................................................. 30
Section 8.8 Survival of Warranties........................................ 30
Section 8.9 Amendment and Waiver.......................................... 31
Section 8.10 Delays or Omissions.......................................... 31
Section 8.11 Notices...................................................... 31
Section 8.12 Titles and Subtitles......................................... 32
Section 8.13 [INTENTIONALLY LEFT BLANK]................................... 33
Section 8.14 Publicity.................................................... 33
Section 8.15 Counterparts; Execution by Facsimile Signature............... 33
Section 8.16 Purchasers' Obligations Several and Not Joint................ 33
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TABLE OF CONTENTS
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Section 8.17 Rescission and Withdrawal Right.............................. 33
Section 8.18 Obligations Absolute......................................... 33
Section 8.19 Non-Public Information....................................... 33
Section 8.20 No Strict Construction....................................... 33
Section 8.21 Trading Limitations.......................................... 34
Section 8.22 No Short-Selling............................................. 34
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QUOKKA SPORTS, INC.
NOTE PURCHASE AGREEMENT
THIS NOTE PURCHASE AGREEMENT (this "Agreement") is entered into as of
September 15, 2000, between QUOKKA SPORTS, INC., a Delaware corporation (the
"Company"), GE CAPITAL EQUITY INVESTMENTS, INC., a Delaware Corporation ("GE
Capital"), and the other purchasers named on Schedule 1.1 hereto (collectively
with GE Capital, the "Purchasers" and each individually, a "Purchaser").
RECITALS
WHEREAS, the Company has authorized the sale and issuance in a single
tranche of an aggregate principal amount of up to $100,000,000 of its 7%
Convertible Subordinated Promissory Notes, in the form of Notes attached hereto
as Exhibit A (the "Notes");
WHEREAS, the Purchasers desire to purchase the Notes on the terms and
conditions set forth herein, and the Company desires to issue and sell the Notes
to the Purchasers on the terms and conditions set forth herein;
WHEREAS, pursuant to the terms of the Notes, the Notes will be
convertible into shares ("Conversion Shares") of common stock, par value $.0001,
of the Company ("Common Stock") on the terms specified in the Notes;
WHEREAS, to induce the Purchasers to purchase the Notes, the Company has
agreed to issue to the Purchasers, for no additional cost, warrants (the
"Warrants") in the form attached as Exhibit B exercisable for shares of Common
Stock ("Warrant Shares"); and
WHEREAS, the Purchasers will have registration rights with respect to
such Common Shares and the Warrant Shares pursuant to the terms of that certain
Amended and Restated Investors' Rights Agreement to be entered into between the
Company and the Purchasers substantially in the form of Exhibit C hereto
("Investors' Rights Agreement").
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises hereinafter set forth, the parties hereto agree as follows:
ARTICLE 1
AGREEMENT TO SELL AND PURCHASE
SECTION 1.1 SALE AND PURCHASE.
Subject to the terms and conditions hereof, the Company hereby agrees to
issue and sell to the Purchasers, and each Purchaser, severally and not jointly,
agrees to purchase from the Company, on the Closing Date (as defined below), for
the amount in United States dollars (each such amount, the "Purchase Price") the
corresponding principal amount of Notes and the number of Warrants set forth
opposite each such Purchaser's name on Schedule 1.1 hereto. A Purchaser's
relative share of the aggregate Purchase Price as specified on Schedule 1.1
shall be
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such Purchaser's "Relative Percentage." The "Exercise Price" of the Warrants
delivered at the Closing shall be $8.00.
SECTION 1.2 TAX ALLOCATION.
The Company and the Purchasers hereby acknowledge and agree that the
Warrants are a part of an investment unit within the meaning of Section
1273(c)(2) of the Internal Revenue Code of 1986, as amended (the "Code"), which
includes the Notes. Notwithstanding anything to the contrary contained herein,
the Company and the Purchasers hereby further acknowledge and agree that for the
United States federal, state and local income tax purposes, the "issue price" of
the Warrants and the Notes under Section 1273(b) of the Code shall be mutually
agreed upon by the Purchasers and the Company within 90 days of the Closing
Date. The Company and the Purchasers agree to use the foregoing issue prices for
all income tax purposes with respect to this transaction.
ARTICLE 2
CLOSING, DELIVERY AND PAYMENT
SECTION 2.1 CLOSING.
The closing of the purchase and sale of up to $100,000,000 aggregate principal
amount of the Notes and Warrants exercisable for that number of Warrant Shares
equal to 36,250 Warrant Shares for each $1,000,000 original principal amount of
Notes (the "Closing"), shall take place at the offices of Xxxxxx Godward LLP
("CG"), at 10:00 a.m., local time on the date hereof. The date on which the
Closing occurs is referred to herein as the "Closing Date."
SECTION 2.2 DELIVERY.
At the Closing, subject to the terms and conditions hereof, the Company
will deliver to the Purchasers one or more certificates representing the Notes
and/or Warrants to be purchased at such Closing in the names and amounts set
forth in Schedule 1.1, in denominations (in the case of Notes) of at least
$10,000 and free and clear of any Encumbrances (as defined herein) (other than
those placed thereon by or on behalf of the Purchasers), and each Purchaser will
make payment to the Company of the Purchase Price set forth opposite its name on
Schedule 1.1 hereto, by wire transfer of immediately available funds to an
account designated by the Company.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each Purchaser as of the
date hereof and as of the Closing Date as follows:
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SECTION 3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION.
(a) Each of the Company and its Subsidiaries (as defined below) is a
corporation or other entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of incorporation or formation, as
the case may be, and has all requisite power and authority to own, lease and
operate its properties and assets and to carry on its business as currently
conducted. The Company has all requisite corporate power and authority to
execute and deliver this Agreement, the Noteholders Agreement in the form of
Exhibit D, the Investors' Rights Agreement, the Notes and the Warrants
(collectively, the "Transaction Documents"), to consummate the transactions
contemplated hereby and thereby and to perform its obligations hereunder and
thereunder. The Company has made available to the Purchasers a complete and
correct copy of the Restated Certificate (as defined in Section 3.12) and the
Bylaws (as defined in Section 3.12).
(b) Each of the Company and its Subsidiaries is duly qualified and
is authorized to do business and is in good standing as a foreign corporation or
other entity in all jurisdictions in which the character or location of its
activities or of the properties owned or operated by it makes such qualification
necessary, except for such failures which, individually or in the aggregate,
would not have a material adverse effect on the business, assets, operations,
liabilities, condition (financial or otherwise) or results of operations of the
Company and its Subsidiaries, taken as a whole, or on the ability of the Company
to perform its obligations under the Transaction Documents or to consummate the
transactions contemplated thereby (a "Material Adverse Effect").
SECTION 3.2 SUBSIDIARIES.
(a) As used herein, "Subsidiary" means, with respect to any Person
(as defined in Section 8.1(d)), (a) a corporation a majority of whose capital
stock with the general voting power under ordinary circumstances to vote in the
election of directors of such corporation (irrespective of whether or not, the
time, any other class or classes of securities shall have, or might have, voting
power by reason of the happening of any contingency) is at the time beneficially
owned by such Person, by one or more Subsidiaries of such Person or by such
Person and one or more Subsidiaries thereof, or (b) any other Person (other than
a corporation), including, without limitation, a joint venture, in which such
Person, one or more Subsidiaries thereof or such Person and one or more
Subsidiaries thereof, directly or indirectly, at the date of determination
thereof, (x) have at least majority ownership interest entitled to vote in the
election of directors, managers or trustees thereof (or other Persons performing
such functions) or (y) is a general partner or managing member. Schedule 3.2(a)
to the letter dated the date hereof delivered by the Company to the Purchasers
and designated the "Disclosure Letter" (the "Disclosure Letter") accurately sets
forth each Subsidiary of the Company, including its name, place of incorporation
or formation, and if not wholly owned directly or indirectly by the Company, the
record ownership as of the date of this Agreement of all capital stock or other
equity interests issued thereby. Except as set forth on Schedule 3.2(a) to the
Disclosure Letter, all shares of capital stock or other equity interests of any
Subsidiary have been duly authorized and validly issued, are fully paid and
nonassessable and are directly or indirectly owned by the Company or such other
person as is set forth herein, free and clear of any Encumbrance and have not
been issued in violation of, nor subject to, any preemptive, subscription or
other similar
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rights. "Encumbrance" means any security interest, pledge, mortgage, lien
(statutory or other), charge, option to purchase, lease or otherwise acquire any
interest or any claim, restriction, covenant, title defect, hypothecation,
assignment, deposit arrangement or other encumbrance of any kind or any
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever (including, without limitation, any conditional
sale or other title retention agreement).
(b) Except for the Subsidiaries and as set forth on Schedule 3.2(b)
to the Disclosure Letter, neither the Company nor any of its Subsidiaries owns
any capital stock, membership interests, security or other interest in any other
Person.
SECTION 3.3 CAPITALIZATION; VOTING RIGHTS.
(a) As of September 14, 2000, the capitalization of the Company
consisted of the following:
(i) 110,000,000 shares of Common Stock, of which (A)
46,383,304 shares are issued and outstanding, and (B) 16,151,723 shares have
been reserved for issuance under the Company's Stock Option Plans (as defined
below) of which (1) options to purchase 11,019,802 shares are outstanding, and
(2) options to purchase 1,120,360 shares have been exercised; and
(ii) 10,000,000 shares of Preferred Stock, par value $ .0001
(the "Preferred Shares"), none of which are issued and outstanding.
Since June 30, 2000 no shares of Common Stock or Preferred Shares have
been issued except for issuances of Common Stock under any Stock Option Plan.
(b) All issued and outstanding shares of the Company's capital stock
(i) have been duly authorized and validly issued, (ii) are fully paid and
nonassessable, (iii) were issued in compliance with all applicable state and
federal laws concerning the issuance of securities and (iv) were not issued in
violation of, or subject to, any preemptive, subscription or other similar
rights of any other Person.
(c) The Company has made available to the Purchasers a copy of the
Company's (i) 1999 Non-Employee Directors' Stock Option Plan, (ii) 1997 Stock
Option Plan, (iii) XxxxXxxxxxx.xxx, Inc. 1996 Stock Option Plan, (iv) option
agreements pursuant to which stock options have been granted outside of the
plans described in clauses (i) through (iii) above and (v) 1999 Employee Stock
Purchase Plan (collectively the stock option plans described in clauses (i)
through (iv) are hereinafter referred to as the "Stock Option Plans"). Other
than the 16,151,723 shares of Common Stock which were reserved for future
issuance to employees pursuant to outstanding stock option grants under the
Stock Options Plans (as defined above) and 1,000,000 shares of Common Stock
which were reserved for future issuance to employees pursuant to the Employee
Stock Purchase Plan, the stock options issued pursuant to the Stock Option
Plans, and except as may be granted pursuant to this Agreement or as set forth
on Schedule 3.3(c) to the Disclosure Letter, there are no outstanding
subscriptions, options, calls, warrants, rights (including conversion or
preemptive rights and rights of first refusal), proxy or stockholder agreements,
or agreements of any kind for the purchase or acquisition from the
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Company or any of its Subsidiaries of any of their securities, nor has the
Company nor any of its Subsidiaries taken or agreed to take any action to issue
or grant the same. Except as described in this Agreement or set forth on
Schedule 3.3(c) to the Disclosure Letter, (x) there are no outstanding
obligations of the Company or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any securities of the Company or any voting or equity
securities or interests of any of its Subsidiaries, (y) there is no voting
trust, proxy, stockholder or other agreements or understandings to which the
Company or any of its Subsidiaries or, to the knowledge of the Company, any of
its stockholders is a party or is bound with respect to the voting or transfer
of the capital stock or other voting securities of the Company or any of its
Subsidiaries and (z) there are no other subscriptions, options, calls, warrants
or other rights (including registration rights, whether demand or piggyback
registration rights), agreements, arrangements or commitments of any character
relating to the issued or unissued capital stock of the Company or any of its
Subsidiaries to which the Company or any of its Subsidiaries is a party. Except
as set forth on Schedule 3.3(c) to the Disclosure Letter, the consummation of
the transactions contemplated by the Transaction Documents (including, without
limitation the issuance of the Notes and the conversion of the Notes into shares
of Common Stock in accordance with the terms thereof) will not trigger the
anti-dilution provisions or other adjustment mechanisms of any outstanding
subscriptions, options, calls, warrants, commitments, contracts, preemptive
rights, rights of first refusal, demands, conversion rights or other agreements
or arrangements of any character or nature whatsoever under which the Company is
or may be obligated to issue or acquire shares of any of its capital stock. The
sale of the Notes is not and will not be subject to any preemptive rights,
rights of first refusal, subscription or similar rights that have not been
properly waived.
(d) The Notes have been duly and validly authorized, the Conversion
Shares have been duly and validly reserved for issuance, and when issued in
accordance with the provisions of this Agreement and the Notes, respectively,
the Notes and the Conversion Shares will be duly authorized, validly issued,
fully paid and nonassessable, will be delivered to the Purchasers (or their
permitted transferees) free and clear of all Encumbrances (other than those
placed thereon by or on behalf of the Purchasers (or their permitted
transferees)) and the Notes and the Conversion Shares will have the rights,
preferences, privileges and restrictions set forth in the Notes and Restated
Certificate, respectively.
SECTION 3.4 AUTHORIZATION; BINDING OBLIGATIONS.
The execution and delivery of the Transaction Documents, the
consummation of the transactions contemplated thereby and the performance of all
obligations of the Company thereunder have been duly authorized by all necessary
corporate action of the Company and its stockholders. The Transaction Documents
have been duly executed and delivered by the Company. The Transaction Documents
(assuming due execution and delivery by the Purchasers) are legal, valid and
binding obligations of the Company enforceable against it in accordance with
their terms, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of good
faith and fair dealing.
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SECTION 3.5 SEC REPORTS; FINANCIAL STATEMENTS.
(a) The Company has filed with the U.S. Securities and Exchange
Commission (the "SEC") all forms, reports and schedules, proxy statements
(collectively, and in each case including all exhibits and schedules thereto and
documents incorporated by reference therein and including all registration
statements and prospectuses filed with the SEC, the "SEC Reports") required to
be filed by the Company with the SEC since July 27, 1999. As of its date of
filing, except as set forth on Schedule 3.5(a) to the Disclosure Letter, each
SEC Report complied in all material respects with the requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or the
Securities Act of 1933, as amended (the "Securities Act") (as applicable), and
the rules and regulations promulgated thereunder and none of such SEC Reports
(including any and all financial statements included therein) contained when
filed or contains any untrue statement of a material fact or omitted or omits to
state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
(b) Each of the consolidated financial statements (including the
notes thereto) included in the SEC Reports (the "Financial Statements") complied
as to form, as of its date of filing with the SEC, in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, has been prepared in accordance with U.S.
generally accepted accounting principles ("GAAP") applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto)
and fairly presents the consolidated financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended, subject (in the
case of unaudited financial statements only) to normal year-end adjustments and
any other adjustments described therein or in the notes or schedules thereto or
the absence of footnotes.
(c) Schedule 3.5(c) to the Disclosure Letter contains the
preliminary Consolidated Statements of Operations for the Company and its
Subsidiaries for the three months ended June 30, 2000 (the "Unaudited Statements
of Operations"). The Unaudited Statements of Operations have been prepared in
accordance with GAAP applied in a consistent basis with the financial statements
and fairly presents the consolidated results of operations of the Company and is
consolidated subsidiaries for the three month period then ended, subject to
normal year-end adjustments, the absence of footnotes and other presentation
matters.
SECTION 3.6 UNDISCLOSED LIABILITIES.
Except as set forth on Schedule 3.6 to the Disclosure Letter and except
for (a) liabilities included or reserved for in (i) the unaudited consolidated
balance sheet of the Company as of June 30, 2000 included in its Quarterly
Report on Form 10-Q (the "10-Q") for the quarter ended June 30, 2000, or (ii)
the audited consolidated balance sheet of the Company as of December 31, 1999
included in its Annual Report on Form 10-K (the "10-K") for the fiscal year
ended December 31, 1999 (the "Balance Sheet"), and (b) current liabilities
incurred in the ordinary course of business consistent with past practice
subsequent to June 30, 2000, not in excess of $500,000, neither the Company nor
any of its Subsidiaries had, and since such date none of them
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has incurred, liabilities, including contingent liabilities, or any other
obligations whatsoever that could reasonably be expected to have a Material
Adverse Effect.
SECTION 3.7 AGREEMENTS; ACTION.
(a) Attached hereto as Schedule 3.7(a) to the Disclosure Letter is a
list of (i) all "material contracts" within the meaning of Item 601 of
Regulation S-K of the SEC, (ii) all of the Company's and its Subsidiaries'
contracts, agreements, leases or other instruments to which the Company or any
of its Subsidiaries is a party or by which the Company, its Subsidiaries or its
properties are bound, which involve payments by or to a Company or its
Subsidiaries during any fiscal year of more than $250,000, (iii) all of
Company's and its Subsidiaries' loan agreements, bank lines of credit
agreements, indentures, mortgages, deeds of trust, pledge and security
agreements, factoring agreements, conditional sales contracts, letters of credit
or other debt instruments evidencing indebtedness for money borrowed and all
such instruments or agreements other than for borrowed money representing
payment obligations of $250,000 or more, (iv) all material operating or capital
leases for equipment to which the Company or any of its Subsidiaries is a party,
(v) all contracts for the employment of any officer or employee, (vi) all
material consulting agreements, (vii) any guarantees by the Company or any of
its Subsidiaries, (viii) all material distributor and sales agency agreements,
(ix) all IP Contracts (as defined in Section 3.11), (x) all contracts
restricting the Company or any of its Subsidiaries from engaging in any line of
business or competing with any Person or in any geographical area, and (xi) all
contracts restricting the payment of interest upon, or the redemption or
conversion of, the Notes (collectively, the "Contracts").
(b) Except as set forth on Schedule 3.7(b) to the Disclosure Letter,
neither the Company nor any of its Subsidiaries is, nor to the Company's
knowledge is any other party to any Contract, in default under, or in breach or
violation of, any Contract and no event has occurred which, with the giving of
notice or passage of time or both would constitute a default by the Company or,
to the Company's knowledge, any other party under any Contract. Other than
Contracts which have terminated or expired in accordance with their terms, each
of the Contracts is in full force and effect and (assuming due execution and
delivery by the counterparties thereto) is a legal, valid and binding obligation
of the Company or its Subsidiary (as applicable) enforceable against the Company
or such Subsidiary in accordance with its terms (subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing) and neither the Company
nor any of its Subsidiaries has any knowledge that any Contract is not a legal,
valid and binding obligation of the other parties thereto.
SECTION 3.8 OBLIGATIONS TO RELATED PARTIES.
Except as disclosed in Schedule 3.8 to the Disclosure Letter or in the
10-K, there are no obligations of the Company or any of its Subsidiaries to
their respective officers or directors or family members (not more remote than
first cousin) or Affiliates thereof other than (a) for payment of salary for
services rendered, (b) reimbursement for reasonable expenses incurred on behalf
of the Company or one of its Subsidiaries' and (c) for other standard employee
benefits
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made generally available to all employees (including stock option agreements
outstanding under the Stock Option Plans). Except as disclosed in Schedule 3.8
to the Disclosure Letter, there are no currently effective agreements,
arrangements or other transactions between the Company or any of its
Subsidiaries and any Affiliate of the Company (other than it Subsidiaries).
SECTION 3.9 CHANGES.
(a) Except as set forth in Schedule 3.9(a) to the Disclosure Letter
or in the SEC Reports filed and publicly available prior to the date hereof,
since December 31, 1999, no events, changes or circumstances have occurred which
have had, or would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
(b) Except as set forth in Schedule 3.9(b) to the Disclosure Letter
and except as set forth in the SEC Reports filed and publicly available prior to
the date hereof, since December 31, 1999, the Company and its Subsidiaries have
carried on their respective businesses only in the ordinary course consistent
with their past practices.
(c) Except as disclosed on Schedule 3.9(c) to the Disclosure Letter
or in the SEC Reports filed and publicly available prior to the date hereof,
since December 31, 1999 the Company has not taken any action or omitted to take
any action and there has not occurred any event which, if it had taken place
following the date hereof and prior to the Closing, would not have been
permitted by Section 5.1 of this Agreement without the prior consent of the
Required Purchasers (as defined in Section 8.9).
(d) Except as disclosed on Schedule 3.9(d) to the Disclosure Letter
or in the SEC Reports filed and publicly available prior to the date hereof,
since December 31, 1999 the Company has not engaged in any sale, assignment,
disposition, conveyance, abandonment, transfer or license, and no event has
occurred causing the invalidation or cancellation, in whole or in part, of the
Intellectual Property (as defined in Section 3.11) other than in the ordinary
course of business consistent with past practice.
SECTION 3.10 TITLE TO PROPERTIES AND ASSETS; LIENS, CONDITION, ETC.
The Company and each of its Subsidiaries have good and merchantable
title to their respective personal property and assets, and good title to their
respective leasehold estates, in each case subject to no Encumbrance other than
(i) liens permitted by the Subordinated Loan and Security Agreement dated as of
February 12, 1999, as amended between the Company and Comdisco, Inc. (as
amended, the "Credit Agreement"), (ii) liens for current taxes not yet
delinquent and payable without penalty, (iii) minor Encumbrances which do not in
any case detract in any material respect from the value of the property subject
thereto or impair in any material respect the operations of the Company and its
Subsidiaries, taken as a whole and which have not arisen other than in the
ordinary course of business, (iv) Encumbrances relating to vendor or
installation purchases, so long as such Encumbrances extend only to the
properties or other assets whose purchase was so financed, and (v) as set forth
on Schedule 3.10 to the Disclosure Letter (collectively "Permitted
Encumbrances"). The Company and each of its Subsidiaries are in compliance in
all material respects with all material terms of each lease to which they are a
party or are otherwise bound. All material properties, equipment and systems
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of the Company and its Subsidiaries are in good repair, working order and
condition (ordinary wear and tear excepted) and are in compliance in all
material respects with all applicable standards and rules imposed (a) by any
governmental agency or authority in which such properties, equipment and systems
are located, and (b) under any agreements to which the Company or its
Subsidiaries are party.
SECTION 3.11 INTELLECTUAL PROPERTY.
(a) The Company and its Subsidiaries own or have a valid license to
use all intellectual property, including without limitation patents, trademarks,
service marks, trade names, corporate names, domain names, copyrights, trade
secrets, licenses, information and proprietary rights and processes
("Intellectual Property") necessary to conduct their businesses as now conducted
(the "Company IP") without any conflict, to the Company's knowledge, with, or
infringement of, the rights of others. Section 3.11(a) to the Disclosure Letter
sets forth a list of (i) all patents, trademark registrations, service xxxx
registrations, corporate name registrations, domain name registrations, trade
name registrations and copyright registrations, and all applications for any of
the foregoing, owned by the Company or any of its Subsidiaries or used by the
Company or any of its Subsidiaries in conducting its business as now conducted
(the "Registered Intellectual Property"); and (ii) all material licenses,
royalties, consents and other contracts or other agreements of the Company or
its Subsidiaries relating to Intellectual Property ("IP Contracts"). Except as
would not impair the Company's ability to timely perform its obligations under
the Transaction Documents, no IP Contracts are due to expire or terminate during
the next 18 months.
(b) The Intellectual Property owned by the Company or any of its
Subsidiaries is referred to herein as the "Owned Intellectual Property" and the
Intellectual Property licensed by the Company or its Subsidiaries from other
persons or entities is referred to herein as the "Licensed Intellectual
Property." The Company and its Subsidiaries own and possess all right, title and
interest in and to the Owned Intellectual Property free and clear of any
Encumbrances other than Permitted Encumbrances. The rights of the Company and
its Subsidiaries under all IP Contracts with respect to the Licensed
Intellectual Property are valid and enforceable by the Company or its Subsidiary
(as applicable) except as enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar Laws affecting creditors' rights generally and by such principles
of equity as may affect the availability of equitable remedies. The execution
and delivery of the Transaction Documents will not cause the acceleration,
termination or the incurrence of liability or fees under any IP Contract.
Neither the Company nor any of its Subsidiaries is or is alleged to be in breach
or default under any IP Contract and, to the Company and its Subsidiaries
knowledge, neither is any other party thereto.
(c) The Company has no Action (as defined in Section 3.13) pending
(or, to the Company's knowledge, threatened) against any other Person relating
to the Company IP, and, except as set forth in Section 3.11(c) to the Disclosure
Letter, no other person or entity has any Action pending (or to the Company's
and its Subsidiaries' knowledge, threatened) against the Company or any of its
Subsidiaries relating to the Company IP; and, to the Company's knowledge, the
Owned Intellectual Property does not infringe, misappropriate, or otherwise
impair ("Infringe"), and, except as set forth in Section 3.11(c) to the
Disclosure Letter, the
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businesses of the Company and its Subsidiaries as now conducted does not
Infringe, any Intellectual Property owned or controlled by any other Person. To
the Company's knowledge, there is no infringement by a third party of any of the
Company IP. There are no pending or outstanding, or, to the knowledge of the
Company, no threatened Actions or Laws (as defined in Section 3.12) that seek to
limit or challenge the validity, enforceability, ownership or use of any Company
IP.
(d) To the Company's knowledge, none of the employees of the Company
or of any of its Subsidiaries is obligated under any contract (including
licenses, covenants, or commitments of any nature) or other agreement, or
subject to any Law that would interfere with the use of such employee's best
efforts to promote the interests of the Company and its Subsidiaries or that
would conflict with the Company's and its Subsidiaries' businesses as conducted.
To the Company's knowledge, neither the execution nor delivery of the
Transaction Documents, nor the carrying on of the execution of the Company's or
any of its Subsidiaries' businesses by the employees of the Company and the
Subsidiaries, nor the conduct of the Company's and its Subsidiaries' businesses,
will conflict with or result in a breach of the terms, conditions, or provisions
of, or constitute a default under, any contract, covenant, or instrument under
which any of such employees is now obligated. Except as listed on Section
3.11(c) to the Disclosure Letter, it will not be necessary to use in the conduct
of the Company's and its Subsidiaries businesses any inventions of any of the
Company's or its Subsidiaries' employees (or persons it currently intends to
hire) made prior to their employment by the Company or its Subsidiaries, other
than those which have been assigned to the Company or its Subsidiaries. The
Company and its Subsidiaries take all reasonable actions to maintain and protect
the confidentiality and ownership of all its material Owned Intellectual
Property.
(e) The Company or its Subsidiaries (i) to their knowledge have the
exclusive right to use its name as a trademark, service xxxx and the name of a
corporation in any jurisdiction in which the Company or its Subsidiaries does
and proposes to do business, except as set forth in Section 3.11(e) to the
Disclosure Letter, (ii) to their knowledge, have all ownership rights to or the
right to use the domain names listed on Section 3.11(a) to the Disclosure Letter
(the "Domains"), and no other Person shall have any interest therein or any
license or other right to use the Domains, and (iii) except as set forth in
Section 3.11(e) to the Disclosure Letter, neither the Company nor its
Subsidiaries have received any notice of conflict during the past two years with
respect to the rights of others regarding the trademarks, service marks and
corporate name of the Company, its Subsidiaries or the Domains. Except as set
forth in Sections 3.11(e) to the Disclosure Letter, no other person or entity is
presently authorized by the Company or its Subsidiaries to use the name of
Company or its Subsidiaries.
SECTION 3.12 COMPLIANCE WITH LAW; OTHER INSTRUMENTS.
Neither the Company nor any of its Subsidiaries is in violation or
default of (i) the Company's Restated Certificate of Incorporation (the
"Restated Certificate") or its Bylaws, as amended (the "Bylaws"), or the
organizational documents of any of its Subsidiaries or (ii) of any judicial or
administrative judgment, decision, decree, order, settlement, injunction, writ,
stipulation, determination or award applicable to the Company, any of its
Subsidiaries, or their respective businesses, operations, assets, or properties
(each, an "Order") or any statute, law, ordinance, rule or regulation applicable
to the Company, any of its Subsidiaries, or their
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respective businesses, operations, assets, or properties (each, a "Law") and has
received no written notice of, and to the knowledge of the Company, no
investigation or review is in process or threatened by any governmental
authority with respect to, any violation or alleged violation of any Order or
Law except, in the case of any Orders or Laws, where such violations or defaults
would not, individually or in the aggregate, have a Material Adverse Effect. The
execution, delivery and performance of the Transaction Documents, and the
consummation of the transactions contemplated thereby, including, but not
limited to, the issuance of the Notes, the Warrants, the Warrant Shares and the
Conversion Shares, will not result in (a) (i) any violation, or be in conflict
with or constitute a default (with or without notice or lapse of time or both)
under the Restated Certificate or Bylaws or the organizational documents of any
of the Company's Subsidiaries, (ii) any violation, or be in conflict with or
constitute a default (with or without notice or lapse of time or both) under,
any term or provision of, or any right of termination, cancellation,
modification or acceleration arising under any Contract or cause any liabilities
or additional fees to be due thereunder or (iii) any violation under any Order
or Law applicable to the Company or any of its Subsidiaries or (b) the
imposition of any Encumbrance on the business or properties or assets of the
Company or any of its Subsidiaries. None of the execution and delivery of the
Transaction Documents, the consummation of the transactions contemplated thereby
or the performance of the obligations of the Company thereunder will result in
the suspension, revocation, impairment, forfeiture or nonrenewal of any Permit
applicable to the Company or any of its Subsidiaries, their businesses or
operations or any of their assets or properties. "Permits" means all material
licenses, permits, orders, consents, approvals, registrations, authorizations,
qualifications and filings with and under all federal, state, local or foreign
laws and governmental authorities and all industry or other non-governmental
self-regulatory organizations. Without limiting the foregoing, upon and
immediately following the Closing the Company will be in full compliance with
all covenants and obligations under its existing borrowing arrangements, without
taking into account any waivers from lenders.
SECTION 3.13 LITIGATION.
Except as set forth on Schedule 3.13 to the Disclosure Letter, there is
no Action (as defined below) pending, or to the Company's knowledge, currently
threatened against the Company or any of its Subsidiaries (including with
respect to any Company Plan (as defined in Section 3.18)). The foregoing
includes, without limitation, any material Order, action, claim, suit, audit,
assessment, arbitration or similar inquiry, or any proceeding or investigation
by or before any government authority (an "Action") pending or threatened
involving the prior employment of any of the Company's or any of its
Subsidiaries' employees, their use in connection with the Company's or any of
its Subsidiaries' business of any Intellectual Property rights of their former
employers, or their obligations under any agreements with prior employers.
Except as set forth on Schedule 3.13 to the Disclosure Letter, neither the
Company nor any of its Subsidiaries is a party or subject to the provisions of
any Order of any court or governmental authority. Except as set forth on
Schedule 3.13 to the Disclosure Letter, there is no Action by the Company or any
of its Subsidiaries against any other Person currently pending or which the
Company or any of its Subsidiaries intends to initiate.
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SECTION 3.14 TAX MATTERS.
(a) Except as set forth on Schedule 3.14(a) to the Disclosure
Letter, (i) all Tax Returns (as defined below) that are required to be filed by
or with respect to the Company and its Subsidiaries as of the date hereof and of
the Closing Date have been duly filed, (ii) all Taxes (as defined below) of the
Company and its Subsidiaries due and not yet delinquent and payable without
penalty, whether or not shown on the Tax Returns referred to in clause (i), have
been paid in full, (iii) the Tax Returns referred to in clause (i) have been
audited by the Internal Revenue Service or the appropriate state, local or
foreign taxing authority or the period for assessment of the Taxes in respect of
which such Tax Returns were required to be filed has expired, (iv) all
deficiencies asserted or assessments made as a result of such examinations have
been paid in full, (v) no issues that have been raised by the relevant taxing
authority in connection with the examination of any of the Tax Returns referred
to in clause (i) are currently pending, (vi) no waiver of statutes of limitation
have been given by or requested with respect to any Taxes of the Company or its
Subsidiaries, (vii) there are no liens for Taxes on any asset of the Company or
any of its Subsidiaries other than for current Taxes not yet due and payable, or
if due, are (A) not delinquent or (B) being contested in good faith by
appropriate proceedings, (viii) no consent has been filed relating to the
Company or any of its Subsidiaries pursuant to Section 341(f) of the Code, (ix)
neither the Company nor any Subsidiary has any current liability, or has
knowledge of any events or circumstances which could result in any liability,
for Taxes of any person (other than the Company and its Subsidiaries) (A) under
Treasury Regulation Section 1.1502-6 (or any similar provision of state, local
or foreign law), (B) as a transferee or successor, (C) by contract or (D)
otherwise, (x) the Company's methods of tax accounting are correct in all
material respects and (xi) the transfer pricing methodologies used by the
Company and its Subsidiaries are correct in all material respects.
(b) For purposes of this Agreement, the term (i) "Taxes" means all
taxes, charges, fees, levies, penalties or other assessments imposed by any
United States federal, state, local or foreign taxing authority, including, but
not limited to, income, excise, property, sales and use, transfer, franchise,
payroll, withholding, social security or other taxes, including any interest,
penalties or additions attributable thereto, and (ii) "Tax Return" means any
return, report, information return or other document (including any related or
supporting information) filed or required to be filed with any taxing authority
with respect to Taxes.
SECTION 3.15 EMPLOYEES.
Neither the Company nor any of its Subsidiaries is a party to any
collective bargaining agreement or other contract with a labor union. There is,
and during the past two years there has been, (i) no labor strike, labor
dispute, work stoppage or lockout pending, or to the Company's or its
Subsidiaries' knowledge, threatened against the Company or any Subsidiary; (ii)
no union or organizational campaign is in progress with respect to the
employees, and no other (formal or informal) union organization activities are
pending or, to the Company's knowledge, threatened between the Company or any
Subsidiary and their respective employees; (iii) neither the Company nor any of
its Subsidiaries is engaged in any unfair labor practice; (iv) there is no
unfair labor practice charge or complaint against the Company or any Subsidiary
pending or, to the Company's or its Subsidiaries' knowledge, threatened before
the National Labor Relations Board; (v) there are no pending or, to the
Company's and any Subsidiaries' knowledge,
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threatened charges against the Company or any Subsidiary before the Equal
Employment Opportunity Commission or any state or local agency responsible for
the prevention of unlawful employment practices; and (vi) neither the Company
nor any Subsidiary has received written notice during the past two years of the
intent of any governmental authority responsible for the enforcement of labor or
employment Laws to conduct an investigation of the Company and, to the Company's
and any Subsidiaries' knowledge, no such investigation is in progress.
SECTION 3.16 ENVIRONMENTAL AND SAFETY LAWS.
(a) Neither the Company nor any of its Subsidiaries has failed to
comply in any material respect with any Environmental Laws, except where such
failure to comply has not and would not reasonably be expected to result in a
Material Adverse Effect.
(b) Neither the Company nor any of its Subsidiaries has Released (as
defined below), generated or disposed of any Hazardous Substance (as defined
below) in a manner which could give rise to any liability under or relating to
any Environmental Laws (as defined below), except where such Release has not and
would not reasonably be expected to result in a Material Adverse Effect.
(c) There is no claim under or relating to Environmental Laws
pending or, to the knowledge of the Company, threatened against the Company or
any of its Subsidiaries or, to the knowledge of the Company, pending or
threatened against any other Person whose liability for any environmental claim
the Company or any of its Subsidiaries has retained or assumed either
contractually or by operation of law except for such claims that, if determined
adversely to the Company, would not reasonably be expected to result in a
Material Adverse Effect. Except as would not reasonably be expected to give rise
to a liability under or relating to any Environmental Laws, no real property
currently or formerly owned, operated or leased by the Company or any of its
Subsidiaries has been impacted by any Release or threatened Release of any
Hazardous Substance, except where such Release has not and would not reasonably
be expected to result in a Material Adverse Effect.
(d) For purposes of this Agreement, the term (i) "Environmental
Laws" means all applicable federal, foreign, state, local or municipal Laws or
Orders or other legally binding requirements relating to pollution or the
protection of human health or the environment, including, without limitation,
the Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C., Section 9601, et seq., as amended ("CERCLA"), the Resource Conservation
and Recovery Act, 42 U.S.C. Section 6901, et seq., as amended, the Clean Air
Act, 42 U.S.C. Section 7401 et seq., as amended, the Clean Water Act, 33 U.S.C.
Section et seq., the Toxic Substance Control Act, 15 U.S.C. Section 2601 et
seq., and the Occupational Safety and Health Act, 29 U.S.C. Section 651, et
seq.; (ii) "Hazardous Substances" means any pollutant, contaminant, toxic
substance, hazardous waste, hazardous material, or hazardous substance, or any
oil, petroleum or petroleum product, each as defined or listed in, or classified
pursuant to, any Environmental Laws or any other substance or force that could
result in liability under any Environmental Laws; and (iii) "Release" means any
spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping or disposing (including, without limitation, the
abandonment or discarding of barrels, containers and other receptacles).
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SECTION 3.17 OFFERING VALID.
Assuming the accuracy of the representations and warranties of the
Purchasers contained in Section 4.2 hereof, the offer, sale and issuance of the
Notes and the Warrants, the conversion of the Notes into the Conversion Shares
and the exercise of the Warrants into Warrant Shares will be exempt from the
registration requirements of the Securities Act and will have been registered or
qualified (or are exempt from registration and qualification) under the
registration, permit or qualification requirements of all applicable state
securities laws.
SECTION 3.18 EMPLOYEE BENEFIT PLANS.
(a) Schedule 3.18(a) to the Disclosure Letter contains a true and
complete list of each "employee benefit plan" (within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), stock purchase, stock option, severance, employment,
change-in-control, fringe benefit, bonus, incentive, deferred compensation and
all other employee benefit plans, agreements, programs, policies or other
arrangements, whether or not subject to ERISA, under which any employee or
former employee of the Company or its Subsidiaries has any present or future
right to benefits and under which the Company or its Subsidiaries has any
present of future liability. All such plans, agreements, programs, policies and
arrangements shall be collectively referred to as the "Company Plan."
(b) Except as disclosed in Schedule 3.18(b) to the Disclosure
Letter, with respect to each Company Plan, the Company has delivered to the
Purchasers to the extent requested a current, accurate and complete copy (or, to
the extent no such copy exists, an accurate description) thereof and, to the
extent applicable: (i) any related trust agreement or other funding instrument;
(ii) the most recent determination letter, if applicable; (iii) any summary plan
description and other material written communications (or in the absence of the
foregoing, a description of any oral communications) by the Company or any of
its Subsidiaries to their employees concerning the extent of the benefits
provided under a Company Plan and (iv) for the two most recent years (A) the
Form 5500 and attached schedules, (B) audited financial statements, (C)
actuarial valuation reports and (D) attorney's response to an auditor's request
for information.
(c) (i) Each Company Plan has been established and administered in
accordance with its terms and in substantial compliance with the applicable
provisions of ERISA, the Code and other applicable laws, rules and regulations
and neither the Company nor any of its Subsidiaries has incurred in respect of
any such Company Plan any material tax, fine, lien, penalty or other liability
imposed by ERISA, the Code or other applicable law, rule and regulations; (ii)
each Company Plan which is intended to be qualified within the meaning of Code
section 401(a) is so qualified and has received, to the extent applicable, a
favorable determination letter and nothing has occurred, whether by action or
failure to act, that could reasonably be expected to cause the loss of such
qualification; (iii) no event has occurred and no condition exists that would
subject the Company or any of its Subsidiaries, either directly or by reason of
their affiliation with any member of their "Controlled Group" (defined as any
organization which is a member of a controlled group of organizations within the
meaning of Code sections 414(b), (c), (m) or (o)), to any material tax, fine,
lien, penalty or other liability imposed by ERISA, the Code or other applicable
laws, rules and regulations; (iv) no Company
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Plan provides retiree welfare benefits and neither the Company nor any of its
Subsidiaries have any obligation to provide any retiree welfare benefits other
than as required by Section 4980B of the Code; and (v) neither the Company nor
any member of its Controlled Group has engaged in, or is a successor or parent
corporation to an entity that has engaged in, a transaction described in
Sections 4069 or 4212(c) of ERISA.
(d) No Company Plan is (i) subject to Title IV of ERISA or (ii) a
"multiemployer plan" (as such term is defined in section 3(37) of ERISA) and
neither the Company nor any of its Subsidiaries has incurred any withdrawal
liability or termination liability with respect to any such plan that remains
unsatisfied. The Company has not engaged in, and is not a successor or parent
corporation to any Person that has engaged in, a transaction described in
Section 4069 or 4212(c) of ERISA.
(e) Except as set forth on Schedule 3.18(e) to the Disclosure
Letter, no Company Plan exists that could result in the payment to any present
or former employee of the Company or its Subsidiaries of any money or other
property or accelerate or provide any other rights or benefits to any present or
former employee of the Company or its Subsidiaries as a direct result of the
transactions contemplated by this Agreement or as a result of transactions which
have occurred prior the date hereof or the Closing Date. Except as set forth on
Section 3.18(e) to the Disclosure Letter, there is no contract, plan or
arrangement (written or otherwise) covering any employee or former employee of
the Company or any of its Subsidiaries that, individually or collectively, could
give rise to the payment of any amount that would not be deductible pursuant to
the terms of Section 280G of the Code.
(f) With respect to any Company Plan, (i) no actions, suits or
claims (other than routine claims for benefits in the ordinary course) are
pending or, to the knowledge of the Company, threatened; and (ii) no facts or
circumstances exist that could reasonably be expected to give rise to any such
actions, suits or claims.
SECTION 3.19 PERMITS.
The Company and its Subsidiaries hold all Permits necessary for the
lawful conduct of their respective businesses as they are presently being
conducted. All such Permits are in full force and effect. The Company and its
Subsidiaries have complied with the terms of the Permits and, to the Company's
knowledge, there are no pending modifications, amendments or revocations of any
Permits. All fees due and payable from the Company or any of its Subsidiaries to
governmental authorities or other third parties pursuant to the Permits have
been paid. There are no pending or, to the knowledge of the Company, threatened,
suits, Actions, proceedings or investigations with respect to the possible
revocation, cancellation, suspension, limitation or nonrenewal of any Permits,
and there has occurred no event which (whether with notice or lapse of time or
both) could reasonably be expected to result in or constitute the basis for such
a revocation, cancellation, suspension, limitation or nonrenewal thereof.
SECTION 3.20 NO BROKER.
Except as set forth on Schedule 3.20 to the Disclosure Letter, neither
the Company nor any of its Subsidiaries has employed any broker or finder, or
incurred any liability for any
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brokerage or finders' fees or any similar fees or commissions in connection with
the transactions contemplated by this Agreement.
SECTION 3.21 DISCLOSURE.
Neither this Agreement (including all Exhibits and Schedules hereto) nor
any of the other agreements or instruments contemplated to be executed and
delivered by the Company in connection with this Agreement contain any untrue
statement of material fact; and none of such documents omits to state any
material fact necessary to make any of the representations, warranties or other
statements or information contained therein not misleading in light of the
circumstances under which such information was provided.
SECTION 3.22 SECTION 203.
In accordance with Section 203 of the Delaware General Corporation Law
("Section 203") the Board of Directors of the Company has approved the issuance
of the Notes, the Conversion Shares, the Warrants and the Warrant Shares to the
Purchasers and any transaction that results in any Purchaser or an "affiliate"
(as defined in Section 203) or "associate" (as defined in Section 203) of a
Purchaser becoming an "interested stockholder" (as defined in Section 203) of
such Purchaser, its affiliate or its associate (as applicable) would not have
been an interested stockholder if such Person (and its affiliates and
associates) did not own the Conversion Shares or the Warrant Shares for purposes
of Section 203. Accordingly, the ownership of the Conversion Shares and the
Warrant Shares for purposes of Section 203 by any Purchaser or its affiliate or
associate will not result in the provisions of Section 203 being applicable to a
"business combination" (as defined in Section 203) between such Person (or its
affiliate or associate) and the Company.
SECTION 3.23 EMPLOYMENT, CONFIDENTIAL INFORMATION AND INVENTION
ASSIGNMENT AGREEMENT.
Each employee, consultant and officer of the Company and its
Subsidiaries has executed an agreement with the Company or its Subsidiary
regarding confidentiality and proprietary information substantially in the form
or forms delivered to the counsel for the Purchasers. The Company is not aware
that any of the Company's or any of its Subsidiaries' employees or consultants
is in violation thereof, and the Company and its Subsidiaries will use their
best efforts to prevent any such violation. To the Company's knowledge, no
current employee, officer or consultant of the Company or its Subsidiaries has
excluded works or inventions from his or her assignment of inventions pursuant
to such employee, officer or consultant's Confidential Information and Invention
Assignment Agreement that were made prior to his or her employment with the
Company and are necessary in the conduct of the Company's and its Subsidiaries'
businesses.
SECTION 3.24 INSURANCE.
Schedule 3.24 hereto contains a complete and correct list of all
policies of insurance of any kind or nature covering Company and its
Subsidiaries, including, without limitation, policies of life, fire, theft,
employee fidelity and other casualty and liability insurance, indicating the
type of coverage, name of insured, the insurer, the premium, the expiration date
of each policy and the
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amount of coverage, and such policies are in full force and effect. Certificates
for each such policy showing the respective coverages and limits, including
deductibles, have been furnished or made available to Purchasers. Such policies
are in amounts customary for the industry in which Company or such Subsidiary
operates.
SECTION 3.25 INFORMATION PROVIDED.
Neither the Company nor any of its Subsidiaries or Affiliates, nor any
of their officers, directors, employees, consultants, agents or representatives,
have directly or indirectly provided any material, non-public information to the
Purchasers listed on Schedule 3.25 hereto.
SECTION 3.26 PRINCIPAL EXCHANGE MARKET.
The principal market on which the Common Stock is currently traded is
the Nasdaq National Market System.
SECTION 3.27 NO GENERAL SOLICITATION.
Neither the Company, nor any of its Subsidiaries or Affiliates, or, to
its knowledge, any person acting on its or their behalf has engaged in any form
of general solicitation or general advertising (within the meaning of Regulation
D under the Securities Act) in connection with the offer or sale of the Notes,
the Warrants, the Conversion Shares or the Warrant Shares.
SECTION 3.28 NO INTEGRATED OFFERING.
Neither the Company, nor any of its Subsidiaries or Affiliates, nor to
its knowledge any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would require registration under the
Act of the Notes, the Warrants, the Conversion Shares or the Warrant Shares.
The issuance of the Notes, the Warrants, the Conversion Shares or the
Warrant Shares to the Purchasers will not be integrated with any other issuance
of the Company's securities (past, current or future, other than the Notes, the
Conversion Shares, the Warrants and the Warrant Shares, a portion or all of
which may be integrated with other Notes, Conversion Shares, Warrants or Warrant
Shares) which requires stockholder approval under the rules of the NASDAQ
National Market System.
SECTION 3.29 FORM S-3.
The Company is eligible to file the Registration Statement (as defined
in the Investors' Rights Agreement) on Form S-3 under the Act and the rules
promulgated thereunder, and Form S-3 is permitted under the Act and the rules
promulgated thereunder to be used for the transactions contemplated by the
Transaction Documents.
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SECTION 3.30 POISON PILL PROVISIONS.
Neither the Company nor its Subsidiaries have a stockholder rights plan.
None of the acquisition of the Notes, the Warrants, the Conversion Shares or the
Warrant Shares nor the deemed beneficial ownership of shares of Common Stock
prior to, or the acquisition of such shares pursuant to, the conversion of Notes
or the exercise of the Warrants will in any event under any circumstance trigger
the poison pill provisions of any other or subsequently adopted plan or
agreement, or a substantially similar occurrence under any successor or similar
plan.
SECTION 3.31 INTERNAL ACCOUNTING CONTROLS.
The Company and each of its Subsidiaries maintain a system of internal
accounting controls sufficient, in the judgment of the Company's management, to
provide reasonable assurance that (a) transactions are executed in accordance
with management's general or specific authorizations, (b) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability, (c) access to assets is permitted only in accordance with
management's general or specific authorization and (d) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
SECTION 3.32 SOLVENCY.
(a) Based on the financial condition of the Company as of the
Closing Date, the Company's fair saleable value of its assets exceeds the amount
that will be required to be paid on or in respect of the Company's existing
debts and other liabilities (including known contingent liabilities) as they
mature.
(b) Based on the financial condition of the Company as of the
Closing Date, the Company's assets do not constitute unreasonably small capital
to carry out its business for the year 2000 as now conducted and as proposed to
be conducted, including the Company's year 2000 capital needs taking into
account the particular capital requirements of the business conducted by the
Company, and projected capital requirements and capital availability thereof.
(c) The Company does not intend to incur debts beyond its ability to
pay such debts as they mature (taking into account the timing and amounts of
cash to be payable on or in respect of its debt). Based on the financial
condition of the Company as of the Closing Date, the current cash flow of the
Company, together with the proceeds the Company would receive, were it to
liquidate all of its assets, after taking into account all anticipated uses of
the cash, would be sufficient to pay all amounts on or in respect of its debt
when such amounts are required to be paid.
(d) Neither the Company nor any of its Subsidiaries is subject to
any bankruptcy, insolvency or similar proceeding.
SECTION 3.33 NO RELIANCE ON PURCHASERS.
The Company acknowledges and agrees that each Purchaser is acting solely
in the capacity of an arm's length purchaser with respect to the Transaction
Documents and the
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performance under the Transaction Documents and the transactions contemplated
thereby. The Company further acknowledges that no Purchaser is acting as a
financial advisor or fiduciary of the Company (or in any similar capacity) with
respect to the Transaction Documents and the transactions contemplated hereby
and thereby. The Company further represents to the Purchaser that the Company's
decision to enter into the Transaction Documents has been based solely on the
independent evaluation by the Company and its representatives.
SECTION 3.34 FOREIGN CORRUPT PRACTICES ACT.
Neither the Company nor any Subsidiary, nor any director, officer,
agent, employee or other person acting on behalf of the Company or any
Subsidiary has, in the course of acting for, or on behalf of, the Company: (i)
directly or indirectly used any corporate funds for any unlawful contribution,
gift, entertainment or other unlawful expenses relating to political activity;
(ii) directly or indirectly made any direct or indirect unlawful payment to any
foreign or domestic government or party official or employee from corporate
funds; (iii) violated or is in violation of any provision of the U.S. Foreign
Corrupt Practices Act of 1977, as amended, or any similar treaties of the United
States; or (iv) directly or indirectly made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment to any foreign or domestic
government or party official or employee.
SECTION 3.35 ACKNOWLEDGMENT OF DILUTION.
The number of shares of Common Stock constituting Conversion Shares or
Warrant Shares may increase substantially in certain circumstances. The Company
acknowledges that, subject only to the restrictions specified in Section 5.15
and in Section 16 of the Warrant and Section 15 of the Note, its obligation to
issue shares of Common Stock in accordance with the Transaction Documents is
absolute and unconditional, regardless of the dilution that such issuance may
have on other shareholders of the Company.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Each of the Purchasers, severally and not jointly, hereby represents and
warrants to the Company as of the date hereof and as of the Closing Date as
follows:
SECTION 4.1 REQUISITE POWER AND AUTHORITY.
Such Purchaser has all requisite power and authority to execute and
deliver the Transaction Documents, to consummate the transactions contemplated
hereby and thereby and to perform its obligations hereunder and thereunder. All
action on such Purchaser's part necessary for the execution and delivery of the
Transaction Documents, the consummation of the transactions contemplated hereby
and thereby and the performance of all obligations of such Purchaser hereunder
and thereunder as of the Closing has been or will be effectively taken prior to
the Closing. The Transaction Documents have been or will be duly executed and
delivered by such Purchaser. The Transaction Documents (assuming due execution
and delivery by the Company) will be legal, valid and binding obligations of
such Purchaser, enforceable against it in accordance with their terms, subject
to the effects of bankruptcy, insolvency, fraudulent
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conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of good
faith and fair dealing.
SECTION 4.2 INVESTMENT REPRESENTATIONS.
Such Purchaser acknowledges that the Notes and the Warrants have not
been registered under the Securities Act or under any state securities laws.
Such Purchaser (a) is acquiring the Notes and the Warrants for its own account,
not as a nominee or agent, and not with the present view to, or for resale in
connection with, any distribution thereof in violation of applicable securities
laws, (b) is an "accredited investor" within the meaning of Regulation D, Rule
501(a), promulgated by the SEC, (c) acknowledges that the Notes and the Warrants
must be held indefinitely unless subsequently registered under the Securities
Act or unless an exemption from the registration requirements of the Securities
Act is available and (d) represents that by reason of its business or financial
experience, such Purchaser has the capacity to protect its own interests in
connection with the transactions contemplated by the Transaction Documents. Such
Purchaser has had an opportunity to discuss the Company's business, management
and financial affairs with the Company's management. Such Purchaser has had an
opportunity to ask questions of and receive answers from, officers of the
Company.
SECTION 4.3 NO BROKER.
Other than as may be incurred under or pursuant to the Engagement Letter
dated as of June 11, 2000 between the Company and Prudential Xxxxx Technology
Group, such Purchaser has not employed any broker or finder or incurred any
liability for any brokerage or finders' fees or any similar fees or commissions
in connection with the transactions contemplated by this Agreement. The Company
will be solely responsible for any amounts payable in connection with such
Engagement Letter.
SECTION 4.4 DISCLOSURE OF INFORMATION.
Such Purchaser represents that it has conducted its own due diligence
investigation of the Company, that it has had an opportunity to ask questions
and receive answers from the Company regarding the Notes, the Warrants and the
business, properties and financial condition of the Company and that it is not
relying on any other Purchaser for such matters.
ARTICLE 5
COVENANTS
SECTION 5.1 ACCESS.
The Company shall, and shall cause its Subsidiaries and their respective
officers, directors, employees, auditors and other agents to, (a) upon
reasonable notice, afford the officers, employees, auditors and other agents of
the Purchasers, during normal business hours reasonable access at all reasonable
times to its officers, employees, auditors, legal counsel, properties, offices,
plants and other facilities and to all financial books and records, (b) furnish
the Purchasers with all of its financial, operating and other data and
information as the Purchasers,
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through their officers, employees or agents, may from time to time reasonably
request and (c) afford the Purchasers the opportunity to discuss the Company's
affairs, finances and accounts with the Company's officers on a regular basis
upon reasonable notice and during normal business hours.
SECTION 5.2 USE OF PROCEEDS.
The Company may use a portion of the proceeds from the sale of the Notes
and Warrants to repay in full all indebtedness under the Company's Subordinated
Loan and Security Agreement dated as of February 12, 1999, as amended, with
Comdisco, Inc., as amended, and shall use the remainder for general corporate
purposes.
SECTION 5.3 BEST EFFORTS.
Subject to the other terms and conditions of this Agreement, each party
hereto agrees to use best efforts to take any and all actions required in order
to consummate the transactions contemplated in the Transaction Documents.
SECTION 5.4 NOTIFICATION OF CERTAIN MATTERS.
The Company shall give prompt notice to the Purchasers of the occurrence
or non-occurrence of any event known to the Company the occurrence or
non-occurrence of which would reasonably be expected to cause (i) any
representation or warranty contained in Section 3 that is qualified as to
materiality to be untrue, (ii) any representation or warranty contained in
Section 3 that is not so qualified as to materiality to be untrue in any
material respect, or (iii) the failure of the Company to comply with or satisfy
any covenant or agreement under the Transaction Documents.
SECTION 5.5 RESERVATION OF SHARES; STOCK EXCHANGE LISTING.
(a) The Company shall at all times reserve and keep available out of
its authorized but unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the Notes and the exercise of the Warrants, such
number of its shares of Common Stock as shall from time to time be sufficient to
effect the conversion of all outstanding Notes and the full exercise of the
Warrants and if at any time the number of authorized but unissued shares of
Common Stock shall not be sufficient to effect the conversion of all the then
outstanding Notes and the full exercise of the Warrants, the Company will take
such corporate action as may, in the opinion of its counsel, be necessary to
increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purpose, including without limitation
engaging in best efforts to obtain the requisite shareholder approval. Without
in any way limiting the foregoing, the Company agrees to reserve and at all
times keep available solely for purposes of conversion of Notes and the exercise
of the Warrants such number of authorized but unissued shares of Common Stock
that is at least equal to 200% of the aggregate shares issuable upon conversion
of Notes, and 200% of the aggregate shares issuable on exercise of the Warrants,
which number shall be appropriately adjusted for any stock split, reverse split,
stock dividend or reclassification of the Common Stock. If the Company, after
November 15, 2000, falls below the reserves specified in the immediately
preceding sentence and does not cure such non-compliance within 60 days of its
start, then the Purchasers will be
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entitled to the compensatory payments specified in Section 2.7(b)(i)(C) of the
Investors' Rights Agreement. If at any time the number of authorized but
unissued shares of Common Stock is not sufficient to effect the conversion of
all the then outstanding Notes or the full exercise of the Warrants, the
Purchasers shall be entitled to, inter alia, the Premium Price redemption rights
provided in the Investors' Rights Agreement.
(b) The Company shall at its expense (i) within twenty (20) days of
the Closing Date, prepare and submit an application to NASDAQ for listing the
Conversion Shares and Warrant Shares and (ii) cause all shares of Common Stock
issued upon the conversion of this Note to be listed at the time of such
issuance on NASDAQ and/or such other national securities exchange shares on
which shares of Common Stock are then listed on and shall maintain such listing.
SECTION 5.6 [INTENTIONALLY LEFT BLANK].
SECTION 5.7 LISTING SHARES ON ANOTHER EXCHANGE.
The Company shall not list its shares on an exchange other than the
NASDAQ National Market System, the American Stock Exchange or the New York Stock
Exchange (the "Approved Markets"); provided that the Company's Common Stock may
also be supplementally listed on a major overseas market as long as it is
primarily listed on an Approved Market.
SECTION 5.8 LOST, STOLEN, DESTROYED OR MUTILATED NOTES AND WARRANTS.
Upon receipt of evidence reasonably satisfactory to Company of the loss,
theft, destruction or mutilation of any Note and, in the case of loss, theft or
destruction, upon delivery of an indemnity reasonably satisfactory to Company
(which may be an undertaking by a Purchaser to so indemnify Company), or, in the
case of mutilation, upon surrender and cancellation thereof, Company will issue
a new Note of like tenor and principal amount as the lost, stolen, destroyed or
mutilated Note.
SECTION 5.9 NOTES ON CONVERSION AND WARRANTS ON EXERCISE.
(a) Upon any partial conversion by a Purchaser (or then holder of
Notes) of the Notes pursuant to the terms thereof, the Company shall issue and
deliver to such Purchaser (or holder) within three (3) Trading Days of the
Conversion Date (assuming delivery by such Purchaser of the Applicable
Warrants), a new Note for the principal amount of Notes which such Purchaser (or
holder) has not yet elected to convert but which is evidenced in part by the
Notes(s) submitted to the Company in connection with such conversion (with the
number of and denomination of such new Note(s) designated by such or holder).
(b) Upon any partial exercise by a Purchaser (or then holder of the
Warrants) of the Warrants, the Company shall issue and deliver to such Purchaser
(or holder) within three (3) Trading Days of the date on which such Warrants are
exercised (assuming delivery by such Purchaser of the Applicable Notes), a new
Warrant or Warrants representing the unexercised number of Warrant Shares in
accordance with the terms of such Warrants.
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SECTION 5.10 REPLACEMENT NOTES AND WARRANTS.
(a) Subject to Section 2.2 above, the Notes held by any Purchaser
(or then holder) may be exchanged by such Purchaser (or such holder) at any time
and from time to time for Notes with different denominations representing an
equal aggregate dollar amount of Notes, as requested by such Purchaser (or such
holder) upon surrendering the same. No service charge will be made for such
registration or transfer or exchange.
(b) The Warrants will be exchangeable at the option of the Purchaser
(or then holder of the Warrants) at the office of the Company for other Warrants
of different denominations entitling the holder thereof to purchase in the
aggregate the same number of Warrant Shares as are purchasable under such
surrendered Warrants. No service charge will be made for such transfer or
exchange.
SECTION 5.11 NOTICES.
The Company agrees to provide all holders of Notes and Warrants with
copies of all notices and information, including without limitation notices and
proxy statements in connection with any meetings, that are provided to the
holders of shares of Common Stock, contemporaneously with the delivery of such
notices or information to such Common Stock holders.
SECTION 5.12 RIGHT OF FIRST REFUSAL.
Subject to the limited exceptions described below and the transactions
contemplated by the Transaction Documents, the Company and its Subsidiaries
shall not after the Closing Date (a) sell to or contract with any party for any
(i) Common Stock, (ii) other equity securities, or (iii) securities that are
issued at a discount or convertible into or exchangeable for Common Stock or
other equity securities or, (b) enter into equity credit lines ("Future
Offerings") during the period (the "Right of First Refusal Period") beginning on
the Closing Date and ending on and including the date which is 180 days after
the date the Registration Statement (as defined in the Investors' Rights
Agreement) is declared effective by the SEC (the "Effectiveness Date"), unless
it shall have first delivered to each Purchaser or a designee appointed by such
Purchaser written notice (the "Future Offering Notice") describing the proposed
Future Offering, including the terms and conditions thereof, and providing each
Purchaser an option, as of the date of delivery of the Future Offering Notice,
to purchase up to its Relative Percentage of the Future Offering (the
limitations referred to in this sentence are collectively referred to as the
"Capital Raising Limitation"). A Purchaser can exercise its option to
participate in a Future Offering by delivering written notice thereof to
participate to the Company within 10 business days of receipt of a Future
Offering Notice, which notice shall state the quantity of securities being
offered in the Future Offering that such Purchaser will purchase, up to its
Relative Percentage of the Future Offering, and that number of securities it is
willing to purchase in excess of its Relative Percentage of the Future Offering.
In the event that one or more Purchasers fail to elect to purchase up to each
such Purchaser's Relative Percentage of the Future Offering, then each Purchaser
which has indicated that it is willing to purchase a number of securities in
excess of its Relative Percentage of the Future Offering shall be entitled to
purchase its pro rata portion (determined in the same manner as described in the
preceding sentence) of the securities in the
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Future Offering which one or more Purchaser has not elected to purchase. In the
event the Purchasers fail to elect to fully participate in the Future Offering
within the periods described in this Section 5.12, the Company shall have 60
days thereafter to sell the securities of the Future Offering that the
Purchasers did not elect to purchase, upon terms and conditions (including the
amount thereof), no more favorable to the buyers thereof than specified in the
Future Offering Notice. In the event the Company has not sold such securities of
the Future Offering within such 60 day period, or the terms and conditions
(including the amount) become more favorable than those specified in the Future
Offering Notice, then the Company shall not thereafter issue or sell such
securities during the Right of First Refusal Period without first offering such
securities to the Purchasers in the manner provided in this Section 5.12. If a
Future Offering Notice discloses that the relevant Future Offering shall include
multiple tranches, the Company need only deliver one Future Offering Notice
regarding such Future Offering, subject to the Company's obligation to re-offer
securities to the Purchasers if the terms and conditions (including the amount)
become more favorable than those specified in the Future Offering Notice. The
Capital Raising Limitation shall not apply to (i) any transaction (the primary
purpose of which is not to raise equity capital) involving the Company's
issuances of securities (A) as consideration in a merger or consolidation, (B)
in connection with any strategic partnership, joint venture or equipment lease
financing, or (C) as consideration for the acquisition of a business, product or
license or other assets by the Company, (ii) the issuance of Common Stock in a
firm commitment, underwritten public offering at not less than 90% of the
prevailing market price, (iii) the issuance of Common Stock upon the conversion
or exercise of options and warrants outstanding on the Closing Date, or (iv) the
issuance of not more than $75,000 worth of (x) options exercisable into Common
Stock or (y) restricted Common Stock to, employees, directors, officers or bona
fide consultants (unrelated to financing arrangements) pursuant to a plan or
arrangement approved by both the Company's Board of Directors and its
shareholders; provided that more than $75,000 of the securities described in (x)
and (y) above may be issued if also approved by persons to whom authority has
been delegated by a simply majority of the Company's independent, outside
directors. A director who has in the past, is now or in the future is scheduled
to be an officer of the Company shall not be deemed independent for these
purposes. The Purchasers shall not be required to participate or exercise their
right of first refusal with respect to a particular Future Offering in order to
exercise their right of first refusal with respect to later Future Offerings.
SECTION 5.13 [INTENTIONALLY LEFT BLANK].
SECTION 5.14 FORM D; BLUE SKY LAWS.
The Company agrees to file a Form D with respect to the Notes, Warrants,
Conversion Shares and Warrant Shares, as required under Regulation D and to
provide a copy thereof to each Purchaser promptly after such filing. The Company
shall, on or before each Closing Date, take such action as the Company shall
have reasonably determined is necessary to qualify the Notes, Warrants,
Conversion Shares and Warrant Shares for sale to the Purchasers at the Closing
pursuant to this Agreement under applicable securities or "blue sky" laws of the
states of the United States (or to obtain an exemption from such qualification),
and shall provide evidence of any such action so taken to each Purchaser on or
prior to the Closing Date.
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SECTION 5.15 NASDAQ RULE.
The Purchasers shall, in the aggregate, be entitled to convert Notes and
exercise Warrants into a total of up to 19.99% of the Company's outstanding
common stock issued and outstanding on the date hereof (which number shall at
least equal 9,270,639 shares) (the "MAXIMUM SHARE AMOUNT"), which number shall
be subject to readjustment for any stock split, stock dividend or
reclassification of the Common Stock) (the "NASDAQ CAP"). Each Purchaser shall
be entitled to convert that amount of its Notes and exercise that amount of its
Warrants into such total number of Common Stock equal to such Purchaser's pro
rata share of the Nasdaq Cap. Once a Purchaser has received its total pro rata
share upon conversion of its Notes and exercise of its Warrants, it may cause
(but only if the Company has failed by November 15, 2000 to receive shareholder
approval to authorize and issue all shares of Common Stock issuable upon
exercise of the Warrants and conversion of the Notes (the "REQUISITE VOTE")) the
Company to redeem its remaining Notes at a price equal to the Premium Redemption
Price (as defined in the Investors' Rights Agreement) plus accrued but unpaid
interest and default payments in effect at that time. If Purchaser has converted
all of its Notes and exercised all of its Warrants, but has not depleted the
total number of pro rata shares allocated to it, its remaining pro rata shares
shall be reallocated amongst the Purchasers still holding Notes on a pro rata
basis based on Relative Percentages. The restrictions and redemption obligations
set forth in this Section 5.15 shall cease to apply if (a) the Company obtains
the Requisite Vote to issue all Common Shares issuable upon exercise of the
Warrants and conversion of the Notes or (b) the Company provides the Purchasers
with irrevocable written notice, based upon the advice of its counsel, that any
such issuance of Common Shares upon conversion of the Notes and exercise of the
Warrants is not subject to the Nasdaq Cap pursuant to Nasdaq Rule 4460. The
Company will use its best efforts promptly to obtain either the Requisite Vote
or the irrevocable notice described in the preceding sentence and to provide the
Purchasers with a copy of same. Without limiting the foregoing, the Company
shall solicit and use its best efforts to obtain the Requisite Vote no later
than November 15, 2000, will solicit proxies in favor of issuing all Common
Shares issuable upon exercise of the Warrants and conversion of the Notes and
will use its best efforts to have all affiliates of the Company which own or
control shares of Common Stock to vote their shares in favor of such resolution.
If the Company shall fail to obtain the Requisite Vote by November 15, 2000,
then any Purchaser may but shall not be obligated to cause the Company to
repurchase all its Notes, Conversion Shares, Warrants and Warrant Shares at the
applicable Premium Redemption Price.
SECTION 5.16 FORM 8-K.
Simultaneously with the execution of this Agreement, the Company will
file with the SEC a Form 8-K describing the arrangements between the parties
hereto and attaching the Transaction Documents as exhibits.
SECTION 5.17
[INTENTIONALLY OMITTED].
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ARTICLE 6
CONDITIONS TO CLOSING
SECTION 6.1 CONDITIONS TO PURCHASERS' OBLIGATION TO PURCHASE THE NOTES
AND WARRANTS.
The Purchasers' obligation to purchase the Notes and Warrants at the
Closing is subject to the satisfaction (or waiver by the Purchasers in
accordance with Section 8.9) of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE OF OBLIGATIONS.
Each of the representations and warranties of the Company contained in this
Agreement that is qualified as to materiality or Material Adverse Effect shall
be true and correct, and each of the representations and warranties of the
Company contained in this Agreement that is not so qualified as to materiality
or Material Adverse Effect shall be true and correct in all material respects,
in each case as of the date hereof and as of the Closing Date (except for those
representations and warranties which address matters only as of a particular
date, which shall be true and correct, or true and correct in all material
respects, as the case may be, as of such date). The Company shall have performed
in all material respects all agreements, obligations, covenants and conditions
herein required to be performed or observed by it on or prior to the Closing
Date.
(b) LEGAL INVESTMENT. On the Closing Date, there shall not be in
effect any Law or Order directing that the purchase and sale of the Notes and
Warrants and the other transactions contemplated by the Transaction Documents
not be consummated or which has the effect of rendering it unlawful to
consummate such transactions.
(c) PROCEEDINGS AND LITIGATION. No Action shall have been commenced
by any governmental authority against any party hereto seeking to restrain or
delay the purchase and sale of the Notes or the other transactions contemplated
by the Transaction Documents.
(d) APPROVALS. All approvals, consents, permits and waivers of
governmental authorities and of the third parties listed on Schedule 6.1(d) to
the Disclosure Letter necessary or appropriate for consummation of the
transactions contemplated by the Transaction Documents shall have been obtained,
and no such approval, consent, permit or waiver of any governmental authority or
such other third party shall contain any term or condition that the Purchasers
in their reasonable discretion determine to be unduly burdensome.
(e) COMPLIANCE CERTIFICATE; SECRETARY'S CERTIFICATE. The Company
shall have delivered to Purchaser a compliance certificate, executed by the
Chief Executive Officer or the President of the Company, dated the Closing Date,
to the effect that the conditions specified in this Section 6.1 have been
satisfied (or waived by the Purchasers in accordance with Section 8.9). The
Company shall have delivered to the Purchaser a certificate executed by the
Secretary of the Company, dated the Closing Date, certifying as to (i) the
resolutions of the Board evidencing approval of the transactions contemplated by
the Transaction Documents and the
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authorization of the named officer or officers to execute and deliver the
Transaction Documents and (ii) certain of the officers of the Company, their
titles and examples of their signatures.
(f) NOTES. The Purchasers shall have received the Notes
substantially in the form of Exhibit A and the Warrants substantially in the
form of Exhibit B, in the amounts and names as set forth in Section 2.1 hereto
and such Notes and Warrants shall have been executed and delivered by the
Company.
(g) INVESTORS' RIGHTS AGREEMENT. The Purchasers shall have received
a copy of the Investors' Rights Agreement substantially in the form of Exhibit C
executed and delivered by the Company.
(h) NOTEHOLDERS AGREEMENT. The Purchasers shall have received a copy
of the Noteholders Agreement substantially in the form of Exhibit D executed and
delivered by the Company.
(i) LEGAL OPINION. The Purchasers shall have received the opinion of
Cooley Godward LLP, counsel to the Company, dated the Closing Date and
substantially in the form of Exhibit E.
(j) MINIMUM OFFERING. The Company will have sold Notes on the
Closing Date with an aggregate minimum principal amount of $55,000,000.
(k) PAYMENT OF FEES. The Company shall have paid all reasonable fees
and expenses of (i) GE Capital's outside counsel, Xxxxxxx Xxxxxxx & Xxxxxxxx,
(ii) GE Capital's consultants and accountants, (iii) Kleinberg, Kaplan, Xxxxx &
Xxxxx, P.C. and (iv) all special local counsel retained by GE Capital in
connection with the offering of the Notes and Warrants and the preparation of
the Transaction Documents.
(l) NASDAQ CAP PROXIES. The Company will provide the Purchasers with
copies of irrevocable proxies, representing in excess of 40% of Company voting
power, in favor of approving and authorizing the issuance of all of the shares
of Common Stock issuable upon exercise of the Warrants and conversion of the
Notes.
(m) WAIVERS. Each Purchaser identified on Schedule 3.25 shall have
executed and delivered to the Company a waiver of its right to receive
non-public information that has been or will be delivered or otherwise provided
to the other Purchasers, which waiver shall be in form and substance
satisfactory to the Company.
SECTION 6.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY.
The Company's obligation to issue and sell the Notes and Warrants at the
Closing is subject to the satisfaction (or waiver by the Company), on or prior
to the Closing, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. Each of the representations
and warranties of the Purchasers contained in this Agreement shall be true and
correct in all material respects as of the Closing Date. The Purchasers shall
have performed in all material respects all
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agreements, obligations, covenants and conditions herein required to be
performed or observed by them on or prior to the Closing Date.
(b) LEGAL INVESTMENT. On the Closing Date, there shall not be in
effect any Law or Order directing that the purchase and sale of the Notes and
Warrants and the other transactions contemplated by the Transaction Documents
not be consummated or which has the effect of rendering it unlawful to
consummate such transactions.
(c) PROCEEDINGS AND LITIGATION. No Action shall have been commenced
by any governmental authority against any party hereto seeking to restrain or
delay the purchase and sale of the Notes or Warrants or the other transactions
contemplated by the Transaction Documents.
(d) NOTEHOLDERS AGREEMENT. The Noteholders Agreement shall have been
executed and delivered by each of the Purchasers.
(e) INVESTORS' RIGHTS AGREEMENT. The Investors' Rights Agreement
shall have been executed and delivered by each of the Purchasers.
ARTICLE 7
INDEMNIFICATION
SECTION 7.1 INDEMNIFICATION.
The Company (the "Purchaser Indemnitor") shall defend, indemnify and
hold harmless the Purchasers and their Affiliates and each director, officer,
member, partner, employee and agent of such Persons (the "Purchaser
Indemnitees") against any obligations, loss, damage, claim, liability, judgment,
suits or settlement of any nature or kind, including all costs and expenses
relating thereto, including without limitation, interest, penalties and
reasonable attorneys' fees (including any attorneys' fees incurred in enforcing
this Section 7.1) (collectively "Damages"), arising out of, resulting from or
relating to:
(i) the breach of any representation or warranty of failure to
perform any covenants or agreements by the Company contained in Article 3, or
any certificate or document delivered pursuant to this Agreement, the Notes, the
Noteholders Agreement or the Investors' Rights Agreement;
(ii) the breach by the Company of any covenant or agreement
(whether to be performed prior to or after the Closing) contained in this
Agreement, the Notes, the Warrants, the Noteholders Agreement or the Investors'
Rights Agreement; or
(iii) the transactions contemplated hereby (other than Damages
resulting from a change in the price of the Company's common stock);
in each case other than Damages which are the result of such Purchaser's gross
negligence or willful misconduct.
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SECTION 7.2 NON-EXCLUSIVE REMEDY.
The indemnification remedies provided in this Article 7 shall not be
deemed to be exclusive. Accordingly, the exercise by any Person of any of its
rights under this Article 7 shall not be deemed to be an election of remedies
and shall not be deemed to prejudice, or to constitute or operate as a waiver
of, any other right or remedy that such Person may be entitled to exercise
(whether under this Agreement, any other Transaction Document, under any other
contract, under any law or otherwise).
SECTION 7.3 SPECIFIC PERFORMANCE.
The Company and the Purchasers acknowledge and agree that irreparable
damage to the Purchasers would occur in the event that any of the provisions of
the Transaction Documents were not performed in accordance with their specific
terms or were otherwise breached. It is accordingly agreed that each Purchaser
shall be entitled to an injunction or injunctions to prevent or cure breaches of
the provisions of the Transaction Documents and to enforce specifically the
terms and provisions hereof, this being in addition to any other remedy to which
any Purchaser may be entitled by law or equity.
ARTICLE 8
MISCELLANEOUS
SECTION 8.1 OTHER DEFINITIONS.
The following terms as used in this Agreement shall have the following
meanings:
(a) "Affiliate" means, with respect to any Person, any other Person
that directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with, such specified Person, for so
long as such Person remains so associated to the specified Person; provided that
beneficial ownership of 10% or more of voting interests of a Person shall be
deemed "control".
(b) "Control" (including the terms "controlled by" and "under common
control with"), with respect to the relationship between or among two or more
Persons, means the possession, directly or indirectly, of the power to direct or
cause the direction of the affairs or management of a Person, whether through
the ownership of voting securities, as trustee or executor, by contract or
otherwise.
(c) "Effective Registration" shall mean (i) the Company is in
compliance with the Transaction Documents; (ii) the resale of Purchaser
Registrable Securities (as defined in the Investors' Rights Agreement) is
covered by an effective registration statement and such registration statement
is not subject to any suspension or stop orders; (iii) the resale of such
securities may be effected pursuant to a current and deliverable prospectus that
is not subject to any blackout or similar circumstance; (iv) the securities are
listed on an Approved Market and are not subject to any trading suspension; (v)
no Interfering Event (as defined in the Investors' Rights Agreement) then
exists; and (vi) none of the Company or any direct or indirect subsidiary of the
Company is subject to any bankruptcy, insolvency or similar proceeding.
29.
35
(d) "Group" shall have the meaning assigned to it in Section
13(d)(3) of the Exchange Act.
(e) "Person" means any individual, corporation, limited liability
company, limited or general partnership, joint venture, association, joint-stock
company, trust, unincorporated organization, government or any agency or
political subdivisions thereof or any Group comprised of two or more of the
foregoing.
SECTION 8.2 GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL.
THIS AGREEMENT AND THE RIGHTS AND DUTIES OF THE PARTIES HEREUNDER SHALL
BE GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK APPLICABLE TO CONTRACTS EXECUTED AND TO BE PERFORMED ENTIRELY WITHIN
THAT STATE. EACH OF THE PARTIES HEREBY SUBMITS TO THE EXCLUSIVE PERSONAL
JURISDICTION AND WAIVES ANY OBJECTION AS TO VENUE IN EITHER (I) THE COUNTY OF
NEW YORK, STATE OF NEW YORK OR (II) THE COUNTY OF SAN FRANCISCO, STATE OF
CALIFORNIA. SERVICE OF PROCESS ON THE PARTIES IN ANY ACTION ARISING OUT OF OR
RELATING TO THIS AGREEMENT SHALL BE EFFECTIVE IF MAILED TO THE PARTIES IN
ACCORDANCE WITH SECTION 8.11 HEREOF. THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL
BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS
AGREEMENT.
SECTION 8.3 [INTENTIONALLY LEFT BLANK].
SECTION 8.4 EXPENSES.
At or before Closing or the termination of this Agreement, the Company
agrees to reimburse GE Capital, Xxxxxxx, Xxxxxxxx & Xxxxxxxx and Kleinberg,
Kaplan, Xxxxx & Xxxxx, P.C. on demand for all of their reasonable fees and
expenses, including the fees and expenses of attorneys, accountants and
consultants employed by it, in connection with (i) the preparation of the
Transaction Documents, (ii) any amendment, modification or waiver, or consent
with respect to, any of the Transaction Documents, (iii) any attempt to enforce
any rights of Purchasers against the Company, any of its Subsidiaries or any
other Person, that may be obligated to any Purchaser by virtue of any of the
Transaction Documents and the transactions contemplated thereby.
SECTION 8.5 SUCCESSORS AND ASSIGNS; ASSIGNMENT.
Except as otherwise expressly provided herein, the provisions hereof
shall inure to the benefit of, and be binding upon, the successors, permitted
assigns, heirs, executors and administrators of the parties hereto and shall
inure to the benefit of and be enforceable by each Person who shall be a holder
of the Notes from time to time. This Agreement may not be assigned by the
Company without the prior written consent of the Required Purchasers. This
Agreement may not be assigned by the Purchasers prior to the Closing without the
consent of the Company, except that each Purchaser may assign its rights and
obligations hereunder to any Affiliate or Affiliates. After the Closing, this
Agreement may be assigned by the Purchasers to
30.
36
any transferee of the Notes. Each assignee (i) agrees to be bound hereunder,
(ii) agrees that the representations and warranties made by the Purchasers
herein shall be deemed to have been made by such assignee and (iii) shall
execute a counterpart to this Agreement the execution of which shall constitute
such assignee's agreement to the terms of this Section 8.5. Any purported
assignment of this Agreement in violation of the provisions of this paragraph is
null and void.
SECTION 8.6 ENTIRE AGREEMENT; SUPERSEDES PRIOR AGREEMENT.
This Agreement and the Exhibits hereto, the Notes, the Noteholders
Agreement, the Investors' Rights 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 no party shall be
liable or bound to any other in any manner by any representations, warranties,
covenants and agreements except as specifically set forth herein and therein.
SECTION 8.7 SEVERABILITY.
In case any provision of this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
SECTION 8.8 SURVIVAL OF WARRANTIES.
The warranties, representations and covenants of the Company and
Purchasers contained in or made pursuant to this Agreement shall survive the
execution and delivery of this Agreement and the Closing, and shall continue as
long as any Notes or Warrants are outstanding or issuable.
SECTION 8.9 AMENDMENT AND WAIVER.
This Agreement may be amended or modified, and the rights of the Company
or Purchaser hereunder may only be waived, upon the written consent of the
Company and, prior to the Closing, the Purchasers obligated to purchase 66-2/3%
of the face amount of the Notes, provided that such Purchasers shall include
prior to the Closing GE Capital and, after the Closing, the holders of 66-2/3%
of the face amount of the Notes then outstanding (collectively, the "Required
Purchasers").
SECTION 8.10 DELAYS OR OMISSIONS.
It is agreed that no delay or omission to exercise any right, power or
remedy accruing to any party, upon any breach, default or noncompliance by
another party under this Agreement or the Noteholders Agreement, shall impair
any such right, power or remedy, nor shall it be construed to be a waiver of any
such breach, default or noncompliance, or any acquiescence therein, or of or in
any similar breach, default or noncompliance thereafter occurring. It is further
agreed that any waiver, permit, consent or approval of any kind or character on
Purchaser's part of any breach, default or noncompliance under this Agreement or
the Noteholders Agreement or any waiver on such party's part of any provisions
or conditions of this Agreement or the Noteholders Agreement, must be in writing
and shall be effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement or the
31.
37
Noteholders Agreement, by law, or otherwise afforded to any party, shall be
cumulative and not alternative.
SECTION 8.11 NOTICES.
All notices required or permitted hereunder shall be in writing and
shall be deemed effectively given: (a) upon personal delivery to the party to be
notified; (b) upon receipt of successful complete transmission when sent by
facsimile if sent during normal business hours of the recipient, if not, then on
the business day next succeeding receipt of successful, complete transmission;
(c) three (3) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (d) one (1) business day after
deposit with a nationally recognized overnight courier, specifying next day
delivery, with written verification of receipt. All communications shall be sent
to the addresses set forth below:
If to the Company:
Quokka Sports, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxx Xxxxxx, Esq.
with copies to:
Xxxxxx Godward, LLP
Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxxx Xxxxxxxx, Esq.
If to GE Capital:
GE Capital Equity Investments
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Attn: Quokka Sports Account Manager
with copies to:
GE Capital Equity Investments
000 Xxxx Xxxxx Xxxx
00.
00
Xxxxxxxx, Xxxxxxxxxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Attn: GE Equity Legal Counsel
Xxxxxxx Xxxxxxx & Xxxxxxxx
0000 Xxxxxxxx Xxx., Xxxxx 000
Xxxx Xxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxx Xxxxxxx, Esq.
Xxxxxxx Xxxxxxxxx, Esq.
If the other Purchasers and their counsel, to the address listed on
Schedule 1.1 hereof.
SECTION 8.12 TITLES AND SUBTITLES.
The titles of the sections and subsections of this Agreement are for
convenience of reference only and are not to be considered in construing this
Agreement.
SECTION 8.13 [INTENTIONALLY LEFT BLANK].
SECTION 8.14 PUBLICITY.
Neither Purchasers nor Company shall issue any press release or make any
public disclosure regarding the transactions contemplated hereby unless such
press release or public disclosure is approved by GE Capital and any other party
mentioned in such press release or public disclosure in advance. In addition,
the Company shall be prohibited from using the GE Capital name or the names of
any of its Affiliates, or the names of any other Purchaser in any press release,
promotional material, or other public filing or announcement without the prior
written consent of GE Capital or such affiliate, or such other Purchaser, as the
case may be. Notwithstanding the foregoing, each of the parties hereto may, in
documents required to be filed by it with the SEC or other regulatory bodies,
make such statements with respect to the transactions contemplated hereby as
each may be advised by counsel is legally necessary advisable and may make such
disclosure as it is advised by its counsel is required by law.
SECTION 8.15 COUNTERPARTS; EXECUTION BY FACSIMILE SIGNATURE.
This Agreement 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 Agreement may be executed by facsimile signature(s).
SECTION 8.16 PURCHASERS' OBLIGATIONS SEVERAL AND NOT JOINT.
All obligations of the Purchasers hereunder shall be several and not
joint and no Purchaser shall have any liability or obligation hereunder as a
result of any other Purchaser's breach of any provisions of this Agreement.
33.
39
SECTION 8.17 RESCISSION AND WITHDRAWAL RIGHT.
Notwithstanding anything to the contrary contained in (and without
limiting any similar provisions of) the Transaction Documents, wherever the
Purchasers exercise a right, election, demand or option under a Transaction
Document and the Company does not timely perform its related obligations within
the periods therein provided, then each Purchaser may rescind or withdraw, in
its sole discretion from time to time upon written notice to the Company, any
relevant notice, demand or election in whole or in part without prejudice to its
future actions and rights.
SECTION 8.18 OBLIGATIONS ABSOLUTE.
The Company's obligations under the Transaction Documents are
unconditional and absolute and not subject to any right of set off,
counterclaim, delay or reduction.
SECTION 8.19 NON-PUBLIC INFORMATION.
Under no circumstances will the Company directly or indirectly provide
material, non-public information to any of the Purchasers listed on Schedule
3.25 hereto or their respective representatives without that Purchaser's prior
written consent. Any information provided in violation of this provision may be
publicly disclosed without liability to such Purchaser or its representatives.
Each Purchaser agrees to keep confidential all proprietary and
non-public information regarding the Company and its Subsidiaries delivered to
such Purchaser in compliance with this Section 8.19; provided that nothing
herein shall prevent any Purchaser from disclosing any such information (a) to
the extent such proprietary and non-public information has been previously
disclosed publicly (other than as a result of a breach by such Purchaser of this
Section 8.19) or (b) to the extent disclosure is required by law, regulation,
judicial order or other legal process.
SECTION 8.20 NO STRICT CONSTRUCTION.
The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party.
34.
40
SECTION 8.21 TRADING LIMITATIONS. So long as the Notes, the Warrants or
the shares of Common Stock issuable upon exercise of the Warrants or conversion
of the Notes, in each case held by a Purchaser are outstanding, such Purchaser
covenants and agrees that it will conduct all transactions in the Common Stock
in compliance with applicable securities laws.
SECTION 8.22 [INTENTIONALLY OMITTED].
35.
41
IN WITNESS WHEREOF, the parties hereto have executed the NOTE PURCHASE
AGREEMENT as of the date set forth in the first paragraph hereof.
QUOKKA SPORTS, INC.
By: /s/ Signature
----------------------------------------
Name:
Title:
GE CAPITAL EQUITY INVESTMENTS, INC.
By: /s/ Signature
----------------------------------------
Name:
Title:
SIGNATURE PAGE FOR QUOKKA SPORTS, INC.
NOTE PURCHASE AGREEMENT
36.
42
IN WITNESS WHEREOF, the parties hereto have executed the NOTE PURCHASE
AGREEMENT as of the date set forth in the first paragraph hereof.
PURCHASER:
By: /s/ Signature
----------------------------------------
Name of Investor:
---------------------------
Name of Signatory:
-------------------------
Title:
-------------------------------------
SIGNATURE PAGE FOR QUOKKA SPORTS, INC.
NOTE PURCHASE AGREEMENT
37.
43
SCHEDULE 1.1
PURCHASERS
---------------------------------------------------------------------------
INVESTOR NAME & ADDRESS NOTES WARRANTS
---------------------------------------------------------------------------
Deutsche Bank Securities, Inc. $15,000,000 543,750
00 Xxxx 00xx Xxxxxx (00xx Xxxxx)
Xxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxx Xxxx, Xxxxx Xx and Xxxx Xxxxx
---------------------------------------------------------------------------
GE Capital Equity Investments, Inc. $10,000,000 362,500
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Attn: Quokka Account Manager
Legal Department
Tel: (203)
Fax: (203)
---------------------------------------------------------------------------
Societe Generale $7,500,000 271,875
0000 Xxx xx xxx Xxxxxxxx
0xx Xxxxx
XX XX 00000
Attn: Xxxxxxxxx Xxxxxx, Managing Director
Tel: (000) 000-0000
Fax: (000) 000-0000
---------------------------------------------------------------------------
Cranshire Capital, L.P. [Lakeshore] $7,000,000 253,750
000 Xxxxxx Xxxx
Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attn: Xxxx Xxxxxx
(00) 000-000-0000
---------------------------------------------------------------------------
Canadian Imperial Holdings Inc. [CIBC] $5,000,000 181,250
000 Xxxxxxxxx Xxx., 0xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000 (fax)
xxxx.xxxxx@xx.xxxx.xxx
OR
Attn: Xxxx Xxxx
Tel: (000) 000-0000
Fax: (000) 000-0000 (fax)
xxxx.xxxx@xx.xxxx.xxx
In-house Legal Counsel
Xxxxx Xxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
xxxxx.xxxxxxx@xx.xxxx.xxx
---------------------------------------------------------------------------
44
---------------------------------------------------------------------------
INVESTOR NAME & ADDRESS NOTES WARRANTS
---------------------------------------------------------------------------
DIRECTV Enterprises, Inc. $5,000,000 181,250
0000 X. Xxxxxxxx Xxx.
Xx Xxxxxxx, XX 00000
Attn: Xxxx Xxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
---------------------------------------------------------------------------
Genessee $5,000,000 181,250
Advantage Fund II Ltd.
X/X Xxxxx
Xxxx Xxxxxxxxx 0
Xxxxxxx, Xxxxxxxxxxx Antilles
Further to: Genesee Investments
000 Xxxx 00xx Xxxxxx, 00xx Xx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxxxx
Tel#: 000 000-0000
Fax#: 000 000-0000
Copy to: Genesee International Inc.
00000 Xxxxx Xxxx 0xx Xxxxxx
Xxxxx 0000
Xxxxxxxx, XX 00000-0000
Attn: Xxx Xxxxx
Fax: (000) 000-0000
---------------------------------------------------------------------------
Velocity Investment Partners Ltd. $5,000,000 181,250
c/o Velocity Capital Management LLC
000 X. Xxxxxx Xx.
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Portfolio Manager
Tel. 000-000-0000
Fax. 000-000-0000
---------------------------------------------------------------------------
Lionhart Investments Ltd. [Lakeshore] $3,000,000 108,750
Xxxxxx Business Court
00 Xxxx Xxxx
Xxxxxxxxx, XX XX00 0XX
Attn: Xxxx Xxxxxx
(00) 000-000-0000
45
---------------------------------------------------------------------------
INVESTOR NAME & ADDRESS NOTES WARRANTS
---------------------------------------------------------------------------
National Broadcasting Company, Inc. $2,500,000 90,625
00 Xxxxxxxxxxx Xxxxx
Xxxxx 0000 Xxxx
Xxx Xxxx, XX 00000
Attn: Xxx Xxxxxxxx, Vice President and CFO
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
National Broadcasting Company, Inc.
Law Department
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attn: Vice President, Corporate & Transactions
Law
Tel: (000) 000-0000
---------------------------------------------------------------------------
RS Orphan Fund, L.P. $2,775,000 100,593
c/o RS Investment Management
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx
(000) 000-0000
---------------------------------------------------------------------------
Accel VI L.P. $814,000 29,508
Accel Internet Fund II L.P. $104,000 3,770
Accel Kereitsu VI L.P. $13,000 471
Accel Investors '98 L.P. $69,000 2,501
000 Xxxxxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Notices to:
Accel Partners
Attn: Xxxxxx Sednaui
0 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
46
---------------------------------------------------------------------------
INVESTOR NAME & ADDRESS NOTES WARRANTS
---------------------------------------------------------------------------
Middlefield Ventures, Inc. $1,000,000 36,250
c/o Xxxxxx Xxxxxxxxxx
0000 Xxxxxxx Xxxxxxx Xxxx. XX0-000
Xxxxx Xxxxx, XX 00000-0000
Tel: 000-000-0000
Fax: 000-000-0000
Notices to:
Intel Corporation
0000 Xxxxxxx Xxxxxxx Xxxx.
Xxxxx Xxxxx, XX 00000
Attn: M&A Portfolio Manager - M/S RN6-46
Fax: (000) 000-0000
Copies to:
Intel Corporation
0000 Xxxxxxx Xxxxxxx Xxxx.
Xxxxx Xxxxx, XX 00000
Attn: General Counsel
Fax: (000) 000-0000
---------------------------------------------------------------------------
Media Technology Ventures, L.P. $746,496 27,061
Media Technology Ventures Entrepreneurs Fund, $96,388 3,494
L.P.
Media Technology Equity Partners, L.P. $142,216 5,155
Media Technology Entrepreneurs Fund II, L.P. $9,900 359
Thomson management growth fund, L.P. $5,000 000
Xxx Xxxxx Xxxxxx, Xxxxx 0
Xxx Xxxxx, XX 00000
Attn: Xxxxxx Xxxxx
Tel: (000) 000-0000
---------------------------------------------------------------------------
RS Orphan Offshore Fund, L.P. $1,225,000 44,406
c/o RS Investment Management
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx
(000) 000-0000
---------------------------------------------------------------------------
Taib Bank E.C. $500,000 18,125
Xxxx Center, Xxxxxxxxxx Xxxx
X.X. Xxx 00000
Xxxxxx, Xxxxxxx
Attn: Xxxxxx Xxxxx, Vice President
Tel: 973.533334
Tel: 000 000000 (direct)
Fax: 973.533174
Email: xxxxxx@xxxx.xxx
With copy to:
c/o Xxxxx Xxxxxxxxxx
Investor Relations Manager, M.E.
Carolina Financial Securities
Tel: 000.000.0000
Fax: 000.000.0000
47
---------------------------------------------------------------------------
INVESTOR NAME & ADDRESS NOTES WARRANTS
---------------------------------------------------------------------------
Xxxxxxxx X. Xxxxxxxxx $500,000 18,125
000 Xxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Tel: (000) 000-0000
---------------------------------------------------------------------------
Xxxxxxxx X. Xxx $200,000 7,250
The Shennan 1995 Trust $200,000 7,250
Xxxxxxxx X. Xxx $100,000 3,625
c/o Trinity Ventures
0000 Xxxx Xxxx Xxxx, Xxxxxxxx 0
Xxxxx Xxxx, XX 00000
Attn: Xxx Xxx
Tel: 000-000-0000
---------------------------------------------------------------------------
Wakefield Group II LLC $500,000 18,125
0000 Xxxx Xxxxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxx Xxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
---------------------------------------------------------------------------
Xxxx X. Xxxxxxxx and Xxxxxxx X. Xxxxxxxx $500,000 18,125
TTEES U/T/A DTD 7/6/98
c/o RS Investment Management
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx
(000) 000-0000
---------------------------------------------------------------------------
Rana General Holding Ltd. $500,000 18,125
c/o Rana Investment Company
X.X. Xxx 00000, Xxxxxx 00000
Xxxxx Xxxxxx
Tel: 000.0.000.0000
Fax: 000.0.000.0000
---------------------------------------------------------------------------
AIM Group $500,000 18,125
c/o Xxxxx Xxxxxxxxxx
Investor Relations Manager, M.E.
Carolina Financial Securities
Tel: 000.000.0000
Fax: 000.000.0000
---------------------------------------------------------------------------
Xxxxxxx X. Xxxxxx $300,000 10,875
00 X. Xxx Xxxxxxx Xxxxx Xxxx.
Xxxxxxxx, XX 00000
Tel: (000) 000-0000
---------------------------------------------------------------------------
X.X. Xxxxxx Capital $1,500,000 54,375
48
---------------------------------------------------------------------------
INVESTOR NAME & ADDRESS NOTES WARRANTS
---------------------------------------------------------------------------
Xxxxx Xxxxxxx $100,000 3,625
c/o RS Investment Management
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
---------------------------------------------------------------------------
TOTAL $76,900,000 2,787,624
---------------------------------------------------------------------------
49
SCHEDULE 3.25
Deutsche Bank Securities, Inc.
Societe Generale
Cranshire Capital, L.P. [Lakeshore]
Canadian Imperial Holdings Inc. [CIBC]
Genessee
Advantage Fund II Ltd.
Velocity Investment Partners Ltd.
Lionhart Investments Ltd. [Lakeshore]
RS Orphan Fund, L.P.
Middlefield Ventures, Inc.
RS Orphan Offshore Fund, L.P.
Taib Bank X.X.
Xxxxxxxx X. Xxxxxxxxx
Xxxxxxxxx Group II LLC
Xxxx X. Xxxxxxxx and Xxxxxxx X. Xxxxxxxx TTEES U/T/A DTD 7/6/98
Rana General Holding Ltd.
AIM Group
Xxxxxxx X. Xxxxxx
X.X. Xxxxxx Capital
Xxxxx Xxxxxxx
50
EXHIBIT A
7.0% CONVERTIBLE
SUBORDINATED PROMISSORY NOTE
$ New York, New York
September 15, 2000
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE
OFFERED OR SOLD EXCEPT IN COMPLIANCE THEREWITH. THIS NOTE IS ALSO
SUBJECT TO RESTRICTIONS ON TRANSFER SET FORTH IN THE NOTEHOLDERS
AGREEMENT, DATED AS OF SEPTEMBER 15, 2000 (THE "NOTEHOLDERS
AGREEMENT"), AS SUCH AGREEMENT MAY BE AMENDED, SUPPLEMENTED OR
OTHERWISE MODIFIED FROM TIME TO TIME.
FOR VALUE RECEIVED, the undersigned, QUOKKA SPORTS, INC., a Delaware
corporation (the "COMPANY"), promises to pay to (the "INVESTOR"), in
lawful money of the United States and in immediately available funds, the
principal amount of $ (together with increases to such amount
pursuant to Section 1 below, the "FACE AMOUNT") together with interest thereon
calculated from the date hereof and delay or default payments ("PAYMENTS")
thereon, all in accordance with the provisions of this Note.
This Note was issued pursuant to the Note Purchase Agreement, dated as
of September 15, 2000, as amended (the "AGREEMENT"), among the Company, GE
Capital Equity Investments, Inc. and the other parties thereto. Unless the
context otherwise requires, as used herein, "NOTE" means any of the 7.0%
Convertible Subordinated Promissory Notes issued pursuant to the Agreement and
any other similar convertible subordinated promissory notes issued by the
Company in exchange for, or to effect a transfer of, any Note and "NOTES" means
all such Notes in the aggregate.
1. ACCRUAL OF INTEREST. Except as otherwise expressly provided in
Section 6 hereof, interest shall accrue at the rate of seven percent (7.0%) per
annum (based on a year of 365 days for the actual days elapsed) on the Face
Amount and, if not paid in cash on the Interest Payment Date (as defined below)
shall result, on each Interest Payment Date, in a corresponding increase in the
then outstanding Face Amount of the Notes.
2. PAYMENT OF PRINCIPAL AND INTEREST ON NOTE.
(a) SCHEDULED PAYMENT OF PRINCIPAL. The Company shall pay the Face
Amount, together with all accrued and unpaid interest and Payments thereon, if
any, in cash to the holder of this Note on September 15, 2005 (the "FINAL
MATURITY DATE").
(b) PAYMENT OF INTEREST. Commencing on December 31, 2000, the
Company shall pay interest on this Note quarterly in arrears on March 31, June
30, September 30 and December 31 of each year and on the Final Maturity Date, or
if any such day is not a business day, on the next succeeding business day (each
an "INTEREST PAYMENT DATE") to holders of record
51
on the immediately preceding March 15, June 15, September 15 and December 15,
respectively. Any interest and Payments payable on this Note shall be paid, at
the Company's option, either in cash or by adding an amount equal to the
interest and Payments payable on such Interest Payment Date ("PIK INTEREST") to
the then outstanding Face Amount of this Note on such Interest Payment Date,
subject, in the case of any Note held by General Electric Company, General
Electric Capital Services, Inc., National Broadcasting Company, Inc. or any of
their respective subsidiaries (collectively, "GE") only, to the provision of
Section 2(d). If the Company chooses to pay the interest and Payments due on a
particular Interest Payment Date in cash, the Company shall deliver an
irrevocable written notice in the form of Exhibit 1 to the holder of this Note
five (5) business days prior to such Interest Payment Date. Following each
Interest Payment Date in which the Company has elected not to pay interest due
on such Interest Payment Date in cash, the Company shall promptly deliver a
written notice to the holder of this Note specifying (a) the amount of the
increase to the Face Amount of this Note as a result of the interest and
Payments on the immediately preceding Interest Payment Date and (b) the
aggregate Face Amount of this Note immediately following such Interest Payment
Date. If no such notice is delivered, by default PIK Interest will be paid on
the Interest Payment Date.
(c) PRO RATA PAYMENT. The Company agrees that any payments to the
holders of the Notes (including, without limitation, upon acceleration pursuant
to Section 6) (whether for principal, interest, or otherwise) shall be made pro
rata among all such holders based upon the aggregate unpaid principal amount of
the Notes held by each such holder. If any holder of a Note obtains any payment
(whether voluntary, involuntary, by application of offset or otherwise) of
principal, interest or Payments on such Note in excess of such holder's pro rata
share of payments obtained by all holders of the Notes, such holder shall make
payments to the other holders of the Notes based on such participation in the
Notes held by them as is necessary to cause such holders to share the excess
payment ratably among each of them as provided in this Section 2(c).
(d) CERTAIN INTEREST PAYMENTS TO GE. Notwithstanding any provisions
to the contrary in the Notes, the Agreement or any Transaction Documents, the
Company agrees that if the number of shares of Common Stock that may be acquired
by GE upon conversion of this Note pursuant to the terms hereof, when added to
the total number of shares of Common Stock deemed beneficially owned by GE and
GE's affiliates (as defined in Rule 144 of the Act), would result in GE or any
of its affiliates beneficially owning 10% or more of the Company's outstanding
Common Stock (as determined in accordance with Section 13(d) of the Act and the
rules promulgated by the Securities and Exchange Commission thereunder) (the
"10% CAP"), GE may notify the Company of such circumstance and any interest
payable to GE after the date of such notice shall be paid in cash; provided that
the Company is not obligated to make such payments in cash if GE notifies the
Company (which notice shall be made in good faith by GE) that the number of
shares of Common Stock that may be acquired by GE upon conversion of this Note
pursuant to the terms hereof, when added to the total number of shares of Common
Stock deemed beneficially owned by GE and GE's affiliates (as calculated above),
will not exceed the 10% Cap.
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3. OPTIONAL REDEMPTION.
(a) OPTIONAL REDEMPTION. From and after the 18 month anniversary of
the Issue Date (as hereinafter defined), the Company, at its option, may upon
written notice redeem the Notes, in whole but not in part and from all but not
less than all the holders of the Notes, to the extent it has funds legally
available and irrevocably reserved therefor and such redemption is not
prohibited by the terms of its outstanding indebtedness, at the redemption price
of 100% of the Face Amount thereof, plus an amount equal to the accrued and
unpaid interest and Payments thereon, if any, to the redemption date; provided
(i) the Closing Price of the Common Stock (as defined below) on each of the
thirty (30) consecutive trading days immediately preceding the Redemption Record
Date (defined below) equals or exceeds 200% of the initial Conversion Price (as
hereinafter defined) and there has been Effective Registration on each of such
thirty (30) consecutive trading days, and (ii) the Company is permitted (without
the necessity of any further approvals or action) by law and under the rules of
any securities exchange on which the Common Stock is traded to convert all the
Notes (assuming full exercise of all Warrants) into shares of Common Stock and
the Company intends and has the financial resources and ability to repurchase
all of the outstanding Notes, and certifies to those facts in its written notice
of redemption. As used herein, the "CLOSING PRICE" of any security on any day
means the last reported sale price regular way on such day or, in the case no
such sale takes place on such day, the average of the reported closing bid and
asked prices regular way of the Common Stock, in each case as quoted on NASDAQ.
Nothing in this Section 3 shall prevent the holder from converting at any time
prior to the payment of the redemption proceeds of this Note. As used herein and
in the other Transaction Documents, the term "EFFECTIVE REGISTRATION" shall have
the meaning specified in the Agreement.
(b) PAYMENT OF REDEMPTION PRICE.
(i) The amount of the redemption price on the Notes redeemed, on
any redemption set forth herein, shall be paid to the holders of the Notes in
cash.
(ii) The Company's written notice shall specify the time and
place of the redemption of all but not less than all the Notes, calling upon
each holder of record to surrender to the Company on the redemption date at the
place designated in the notice all the Notes still owned of record by such
holder on the redemption date. The date such written notice is received by a
holder is the "REDEMPTION RECORD DATE." The redemption date shall be not fewer
than thirty (30) nor more than sixty (60) trading days after the Redemption
Record Date. Such written redemption notice will be of no effect unless (i)
there shall be Effective Registration and (ii) the Company shall have complied
with its obligations to convert Notes pursuant to the terms of Section 4 hereof,
in the case of each of clause (i) and clause (ii), during the period of the
Redemption Record Date through the redemption date, inclusive. On or after the
redemption date, each holder of Notes to be redeemed shall present and surrender
such holder's Notes to the Company at the place designated in the redemption
notice and thereupon the redemption price of the Notes, and any unpaid interest
and Payments thereon to the redemption date, shall be paid in cash to or on the
order of the person whose name appears in the Note Register (as herein defined)
as the owner thereof, and each surrendered Note shall be canceled by the
Company. Any notice of redemption by the Company shall be irrevocable, and any
failure by the Company to redeem all the unconverted Notes for cash on the
redemption date
3.
53
under this Section 3 shall result (without limiting the holder's other rights
under Section 6 and the other provisions of the Transaction Documents) in the
automatic and permanent termination of all its rights under this Section 3.
(iii) If a notice of redemption has been given pursuant to this
Section 3 and any holder of Notes shall, prior to the close of business on the
business day immediately preceding the redemption date, give written notice to
the Company pursuant to Section 4 below of the conversion of any or all of the
Notes held by the holder and to be redeemed, then such redemption shall not
become effective as to such Notes to be converted and such conversion shall
become effective as provided in Section 4 below.
4. CONVERSION RIGHTS; ADJUSTMENTS. The holders of the Notes shall have
conversion rights as follows (the "CONVERSION RIGHTS"):
(a) HOLDER'S RIGHT TO CONVERT. At any time after the date hereof and
provided that all filings by the holder of this Note, if any, to be made under
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, as
required with respect to such holder by Section 2.23 of the Noteholders
Agreement dated the date hereof (as such agreement may be amended, supplemented
or otherwise modified from time to time, the "NOTEHOLDERS AGREEMENT") have been
made and all related waiting periods applicable to the holder of this Note have
expired or have been terminated early, the Face Amount of this Note plus all
accrued and unpaid interest and Payments thereon shall be convertible, in whole
or in part (subject to Section 16 hereof), at the option of the holder thereof,
at any time and from time to time into fully paid and nonassessable shares of
the Company's Common Stock, par value $.0001 per share (the "COMMON STOCK") at
the then effective Conversion Rate (as defined below) (each such conversion, a
"HOLDER'S OPTIONAL CONVERSION").
The "CONVERSION RATE", as of any Conversion Date (as defined below),
shall equal an amount determined by dividing (i) the portion of the Face Amount
proposed to be converted into common stock outstanding on such date, plus the
ratable portion of any accrued and unpaid interest and Payments on the Notes
proposed to be converted into common stock, by (ii) the Conversion Price (as
defined below) in effect as of such Conversion Date. The Conversion Price at
which shares of Common Stock shall be deliverable upon conversion of the Notes
without the payment of additional consideration by the holder thereof (the
"CONVERSION PRICE") shall initially be $5.415. Such initial Conversion Price and
the rate at which the Notes may be converted into shares of Common Stock, shall
be subject to adjustment as provided below.
(b) FRACTIONAL SHARES. No fractional shares of Common Stock shall be
issued upon conversion of the Notes. In lieu of fractional shares, the Company
shall pay cash equal to such fraction multiplied by the Closing Price per share
of Common Stock on the trading date immediately preceding the related Conversion
Date (as defined below).
(c) MECHANICS OF CONVERSION.
(i) In order to exercise its rights pursuant to a holder's
Optional Conversion, the holder shall deliver written notice in the form of
Exhibit 2 to the Company stating that such holder elects to convert all or part
of the Face Amount, plus the ratable portion
4.
54
of any accrued but unpaid interest and Payments, represented by such Note or
Notes. Such notice shall state the Face Amount, plus the ratable portion of any
accrued but unpaid interest and Payments, of Notes which the holder seeks to
convert and shall be accompanied within one (1) trading day by the Note or Notes
subject to conversion. The date contained in the notice shall be the conversion
date ("CONVERSION DATE") and the holder shall be deemed to own the underlying
Common Stock as of such date. As soon as practicable (but no later than three
days) after the Conversion Date, the Company shall promptly issue and deliver at
such office to such holder a certificate or certificates for the number of
shares of Common Stock to which such holder is entitled (which number of shares
may be reduced by the Company in accordance with Section 16 hereof so as not to
exceed the Holder's pro rata share of the Maximum Share Amount) and, in the case
where only part of a Note is converted, the Company shall execute and deliver
(at its own expense) a new Note of any authorized denomination as requested by a
holder in an aggregate principal amount equal to and in exchange for the
unconverted portion of the principal amount of the Note so surrendered.
Notwithstanding anything to the contrary in this Section 4, in the case where
only a part of a Note is converted, the amount of the unconverted portion of
such Note shall be at least $10,000. In lieu of delivering physical certificates
representing the Common Stock issuable upon conversion of Notes, provided the
Company's transfer agent is participating in the Depository Trust Company
("DTC") Fast Automated Securities Transfer ("FAST") program, upon request of the
holder, the Company shall use its reasonable best efforts to cause its transfer
agent to electronically transmit the shares of Common Stock issuable upon
conversion or exercise to the holder, by crediting the account of holder's prime
broker with DTC through its Deposit Withdrawal Agent Commission ("DWAC") system.
The time periods for delivery described above shall apply to the electronic
transmittals through the DWAC system. The parties agree to coordinate with DTC
to accomplish this objective. The conversions pursuant to Sections 4 shall be
deemed to have been made immediately prior to the close of business on the
Conversion Date. The person or persons entitled to receive the Common Stock
issuable upon such conversion shall be treated for all purposes as the record
holder or holders of such Common Shares at the close of business on the
Conversion Date.
(ii) The Company shall at all times during which the Notes shall
be outstanding, reserve and keep available out of its authorized but unissued
stock, for the purpose of effecting the conversion of the Notes, such number of
its duly authorized shares of Common Stock as shall from time to time be
sufficient to effect the conversion of 200% of the outstanding Notes. Before
taking any action which would cause an adjustment reducing the Conversion Price
below the then par value of the shares of Common Stock issuable upon conversion
of the Notes, the Company will take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Company may validly and
legally issue fully paid and nonassessable shares of Common Stock at such
adjusted Conversion Price.
(iii) All Notes (or the portions thereof) which shall have been
surrendered for conversion as herein provided shall no longer be deemed to be
outstanding and all rights with respect to such Notes, including the rights, if
any, to receive interest, notices and consent rights shall immediately cease and
terminate on the Conversion Date, except only the right of the holders thereof
to receive shares of Common Stock or cash, as the case may be, in exchange
therefor, and, if applicable, cash for any fractional shares of Common Stock.
Any Notes, to the extent so converted, shall be retired and canceled.
5.
55
(iv) If a Holder's Optional Conversion is in connection with an
underwritten offering of securities registered pursuant to the Securities Act of
1933, as amended, the conversion may, at the option of any holder tendering
Notes for conversion, be conditioned upon the closing with the underwriter of
the sale of securities pursuant to such offering, in which event the holders
entitled to receive the Common Stock issuable upon such conversion of the Notes
shall not be deemed to have converted such Notes until immediately prior to the
closing of the sale of securities.
(v) The period beginning February 15, 2001 and ending on the
seventy-fifth (75th) trading day thereafter (such period to be extended one day
for each day (A) there has been a lack of Effective Registration beyond the
earlier of January 15, 2001 and the one hundred twentieth (120th) day following
the applicable Issue Date or (B) there shall have existed a Blackout (as defined
in the Investor Rights Agreement)) shall be known as the "RESET PERIOD." At any
time during the Reset Period, subject to the Nasdaq Cap, the holder shall have
the right but not the obligation to convert all or a portion of the Note at a
price (the "RESET PRICE"), in lieu of using the otherwise applicable Conversion
Price, equal to the simple average of the seven (7) lowest daily volume weighted
average prices (as reported on the Bloomberg "volume at price" function) during
the twenty-five (25) trading days (some or all of which may occur before the
Reset Period) preceding the otherwise applicable Conversion Date, not to exceed
the Conversion Price. Effective as of the day immediately following termination
of the Reset Period the Conversion Price will be adjusted to equal the lower of
(i) the Conversion Price in effect on the last day of the Reset Period and (ii)
the average of the three (3) lowest Reset Prices that could have been calculated
during the Reset Period. Upon the occurrence of any of the events set forth in
clauses (e) through (i) of this Section 4 during the Reset Period the provisions
of this clause (v) shall be equitably adjusted to fully protect the economic
interests of the holder of this Note.
(vi) If, before or during the Reset Period under this
outstanding Note, the closing price of a share of Common Stock on the Principal
Market (as defined in the Agreement) equals or exceeds $13.50 (subject to
equitable adjustment of such amount in the event of the occurrence of any of the
events set forth in clauses (e) through (i) of this Section 4) for each of any
twenty-five (25) consecutive trading days during which there is Effective
Registration, then there will be no further, future resets under Section 4(c)(v)
of the Notes. The Reset Prices utilized for purpose of clause (ii) of Section
4(c)(v) of the Notes will thereupon be the basis for determining the Reset Price
of the Notes. Such Reset Price will become effective at the close of trading on
the Principal Market on such 25th trading day and thereafter.
(d) ADJUSTMENTS TO CONVERSION PRICE FOR DILUTING ISSUES.
(i) SPECIAL DEFINITIONS. For purposes of this Section 4(d), the
following definitions shall apply:
(A) "OPTION" shall mean Rights, options or warrants to
subscribe for, purchase or otherwise acquire Common Stock or Convertible
Securities, other than such Rights, options or warrants granted to employees,
directors or bona fide consultants of the Company pursuant to plans or
arrangements approved by the Company's board of directors.
6.
56
(B) "CONVERTIBLE SECURITIES" shall mean any evidences of
indebtedness, shares or other securities directly or indirectly convertible into
or exchangeable for Common Stock.
(C) "ADDITIONAL SHARES OF COMMON STOCK" shall mean all
shares of Common Stock issued (or, pursuant to Section 4(d)(ii) below, deemed to
be issued) by the Company after September ___, 2000 (the "ISSUE DATE") other
than the Reserved Employee Shares.
(D) "RIGHTS TO ACQUIRE COMMON STOCK" (or "RIGHTS") shall
mean all rights issued by the Company to acquire Common Stock whether by
exercise of a warrant, option or similar call, or conversion of any existing
instruments, in either case for consideration fixed, in amount or by formula, as
of the date of issuance.
(E) "RESERVED EMPLOYEE SHARES" shall mean shares of Common
Stock issued after the Issue Date to employees, directors or bona fide
consultants of the Company or any affiliate, pursuant to stock purchase or stock
option plans or arrangements approved by the Company's board of directors or
shares issued after repurchase pursuant to any restricted stock purchase
agreement following a termination, in an aggregate amount of up to the sum of
(i) 16,031,363 shares of Common Stock, (ii) an additional 1,500,000 shares of
Common Stock for each twelve month period that begins (each January 31st) after
the Issue Date while the Notes are outstanding and (iii) that number of
additional shares of Common Stock equal to 10% of the number of shares of Common
Stock issued as consideration in an acquisition of a business, assets or a legal
entity that is permitted pursuant to the provisions of the Noteholder's
Agreement and is approved by the Company's board of directors.
(ii) ISSUE OF SECURITIES DEEMED ISSUE OF ADDITIONAL SHARES OF
COMMON STOCK. If the Company at any time or from time to time after the Issue
Date issues (other than pursuant to the Transaction Documents) any Options or
Convertible Securities or Rights to Acquire Common Stock, then the maximum
number of shares of Common Stock (as set forth in the instrument relating
thereto without regard to any provision contained therein for a subsequent
adjustment of such number) issuable upon the exercise of such Options, Rights to
Acquire Common Stock or, in the case of Convertible Securities, the conversion
or exchange of such Convertible Securities, shall be deemed to be Additional
Shares of Common Stock issued as of the time of such issue; provided, however,
that in any such case:
(A) No further adjustment in the Conversion Price shall be
made upon the subsequent issue of shares of Common Stock upon the exercise of
such Options, Rights or conversion or exchange of such Convertible Securities;
(B) Upon the expiration or termination of any unexercised
Option, Right or Convertible Security issued or granted after the Issue Date,
the Conversion Price shall be adjusted immediately to reflect the applicable
Conversion Price which would have been in effect had such Option, Right or
Convertible Security (to the extent outstanding immediately prior to such
expiration or termination) never been issued; and
7.
57
(C) In the event of any change in the number of shares of
Common Stock issuable upon the exercise, conversion or exchange of any Option,
Right or Convertible Security, including, but not limited to, a change resulting
from the anti-dilution provisions thereof, the Conversion Price then in effect
shall forthwith be readjusted to such Conversion Price as would have been
obtained had the Conversion Price adjustment that was originally made upon the
issuance of such Option, Right or Convertible Security which were not exercised
or converted prior to such change been made upon the basis of such change, but
no further adjustment shall be made for the actual issuance of Common Stock upon
the exercise or conversion of any such Option, Right or Convertible Security.
(iii) ADJUSTMENT OF CONVERSION PRICE UPON ISSUANCE OF ADDITIONAL
SHARES OF COMMON STOCK.
(A) If the Company shall at any time after the Issue Date
issue Additional Shares of Common Stock (including Additional Shares of Common
Stock deemed to be issued pursuant to Section 4(d)(ii) but excluding shares
issued as a dividend or distribution as provided in Section 4(g) or upon a stock
split or combination as provided in Section 4(e)), without consideration, or for
a consideration per share less than the average Closing Price per share of
Common Stock for the ten (10) consecutive trading days immediately preceding the
date of such issue (the "MARKET PRICE"), then and in such event, the Conversion
Price shall be reduced, concurrently with such issuance, to a price (calculated
to the nearest cent) determined by multiplying such Conversion Price by a
fraction, the numerator of which shall be the sum of (A) the number of shares of
Common Stock outstanding immediately prior to such issuance plus (B) the number
of shares of Common Stock which the aggregate consideration received by the
Company for the total number of Additional Shares of Common Stock so issued
would purchase at the Market Price per share of Common Stock on the date
immediately prior to such issue and the denominator of which shall be the sum of
(1) the number of shares of Common Stock outstanding immediately prior to such
issuance plus (2) the number of such Additional Shares of Common Stock so
issued.
(B) If the Company shall at any time after the Issue Date
issue Additional Shares of Common Stock (including Additional Shares of Common
Stock deemed to be issued pursuant to Section 4(d)(ii), but excluding shares
issued as a dividend or distribution as provided in Section 4(g) or upon a stock
split or combination as provided in Section 4(e)), for a consideration per share
less than the Conversion Price (as adjusted) on the date of and immediately
prior to such issue, then and in such event, the Conversion Price shall be
reduced, concurrently with such issuance, to a price (calculated to the nearest
cent) determined by multiplying such Conversion Price by a fraction, the
numerator of which shall be the sum of (A) the number of shares of Common Stock
outstanding immediately prior to such issuance plus (B) the number of shares of
Common Stock which the aggregate consideration received by the Company for the
total number of Additional Shares of Common Stock so issued would purchase if
the amount paid for such shares was equal to the Conversion Price and the
denominator of which shall be the sum of (1) the number of shares of Common
Stock outstanding immediately prior to such issuance plus (2) the number of such
Additional Shares of Common Stock so issued.
8.
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(C) If the Company shall at any time after the Issue Date
issue Additional Shares of Common Stock (including Additional Shares of Common
Stock deemed to be issued pursuant to Section 4(d)(ii), but excluding shares
issued as a dividend or distribution as provided in Section 4(g) or upon a stock
split or combination as provided in Section 4(e)), for a consideration per share
that is less than the Fair Market Value and less than the Conversion Price (as
adjusted), in each case on the date of and immediately prior to such issue, then
and in such event, the Conversion Price shall be reduced, to equal the lesser of
(a) the Conversion Price as adjusted pursuant to Section 4(d)(iii)(a) or (b) the
Conversion Price as adjusted pursuant to Section 4(d)(iii)(b).
Notwithstanding the foregoing, the applicable Conversion Price shall not
be reduced if the amount of such reduction would be an amount less than $.01,
but any such amount shall be carried forward and reduction with respect thereto
made at the time of and together with any subsequent reduction which, together
with such amount and any other amount or amounts so carried forward, shall
aggregate $.01 or more. No adjustment of the Conversion Price pursuant to this
Section 4(d) shall have the effect of increasing the Conversion Price above the
Conversion Price in effect immediately prior to such adjustment.
(iv) DETERMINATION OF CONSIDERATION. For purposes of this
Section 4(d), "FAIR MARKET VALUE" of the consideration received by the Company
for the issue of any Additional Shares of Common Stock shall be computed as
follows:
(A) CASH AND PROPERTY. Such consideration shall:
(1) insofar as it consists of cash, be computed at the
aggregate of cash received by the Company, excluding amounts paid or payable for
accrued interest or accrued dividends;
(2) insofar as it consists of property other than cash,
be computed at the Fair Market Value thereof at the time of such issue, as
determined in good faith by the Company's board of directors with the assistance
of qualified professionals, as necessary; and
(3) in the event Additional Shares of Common Stock are
issued together with other shares or securities or other assets of the Company
for consideration which covers both, be the proportion of such consideration so
received, computed as provided in clauses (1) and (2) above, as determined in
good faith by the Company's board of directors.
(B) OPTIONS, RIGHTS AND CONVERTIBLE SECURITIES. The
consideration per share received by the Company for Additional Shares of Common
Stock deemed to have been issued pursuant to Section 4(d)(ii), relating to
Options, Rights and Convertible Securities, shall be determined by dividing
(1) the total amount, if any, received or receivable by
the Company as consideration for the issue of such Options, Rights or
Convertible Securities, plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating thereto, without regard
to any provision contained therein for a subsequent adjustment of
9.
59
such consideration) payable to the Company upon the exercise of such Options,
Rights or the conversion or exchange of such Convertible Securities, by
(2) the maximum number of shares of Common Stock (as set
forth in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such number) issuable upon the
exercise of such Options, Rights or the conversion or exchange of such
Convertible Securities.
(e) ADJUSTMENT FOR STOCK SPLITS AND COMBINATIONS. If the Company
shall at any time or from time to time after the Issue Date effect a subdivision
of the outstanding Common Stock, the Conversion Price then in effect immediately
before that subdivision shall be proportionately decreased. If the Company shall
at any time or from time to time after the Issue Date combine the outstanding
shares of Common Stock, the Conversion Price then in effect immediately before
the combination shall be proportionately increased. Any adjustment under this
paragraph shall become effective at the close of business on the date the
subdivision or combination becomes effective.
(f) ADJUSTMENT FOR CERTAIN DIVIDENDS AND DISTRIBUTIONS. In the event
the Company at any time or from time to time after the Issue Date shall make or
issue a dividend or other distribution payable in Additional Shares of Common
Stock, then and in each such event the Conversion Price shall be decreased as of
the time of such issuance, by multiplying such Conversion Price by a fraction,
the numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to such issuance and the denominator of which
shall be the total number of shares of Common Stock outstanding immediately
prior to such issuance plus the number of such Additional Shares of Common Stock
issuable in payment of such dividend or distribution.
(g) ADJUSTMENTS FOR OTHER DIVIDENDS AND DISTRIBUTIONS. In the event
the Company at any time, or from time to time after the Issue Date shall make or
issue, a dividend or other distribution payable in securities of the Company
(other than shares of Common Stock) or other assets or properties (including,
without limitation, cash dividends), then and in each such event provision shall
be made so that the holders of the Notes shall receive in addition to the number
of shares of Common Stock receivable upon conversion of the Notes, the amount of
securities of the Company or other assets or properties that they would have
received had their Notes been converted into Common Stock on the date of such
event and had thereafter, during the period from the date of such event to and
including the Conversion Date, retained such securities or other assets or
properties receivable by them as aforesaid during such period giving application
to all adjustments called for during such period, under this paragraph with
respect to the rights of the holders of the Notes; provided that, in the event
rights or benefits under such securities, assets or properties shall terminate
prior to the time that the holder of this Note may elect to convert this Note
into shares of Common Stock, such amount of securities, assets or properties
that the holder would have received had such holder converted his or her notes
immediately prior to the distribution shall be distributed to the holder of this
Note on the date the securities, assets or properties are distributed to the
holders of Common Stock.
(h) ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE OR SUBSTITUTION. If
the Common Stock issuable upon the conversion of the Notes shall be changed into
the same or a
10.
60
different number of shares of any class or classes of stock, whether by capital
reorganization, reclassification, or otherwise (other than a subdivision or
combination of shares, stock dividend or reorganization, reclassification,
merger, consolidation or asset sale provided for elsewhere in this Section 4),
then and in each such event the holder of each Note (whether then outstanding or
thereafter issued) shall have the right thereafter to convert such Note into the
kind and amount of shares of stock and other securities and property receivable
upon such reorganization, reclassification, or other change, by holders of the
number of shares of Common Stock into which all such Notes might have been
converted immediately prior to such reorganization, reclassification, or change,
all subject to further adjustment as provided herein or with respect to such
other securities or property by the terms thereof.
(i) REORGANIZATIONS, MERGERS, CONSOLIDATIONS OR ASSET SALES. If at
any time after the Issue Date there is a tender offer, exchange offer, merger,
consolidation, recapitalization, sale of all or substantially all of the
Company's assets or reorganization involving the Common Stock (collectively, a
"CAPITAL REORGANIZATION") (other than a merger, consolidation, sale of assets,
recapitalization, subdivision, combination, reclassification, exchange or
substitution of shares provided for elsewhere in this Section 4), as part of
such Capital Reorganization, provision shall be made so that the holders of
Notes (whether then outstanding or thereafter issued) will thereafter be
entitled to receive upon conversion of the Notes the number of shares of stock
or other securities or property of the Company to which a holder of the number
of shares of Common Stock deliverable upon conversion would have been entitled
on such Capital Reorganization, subject to adjustment in respect to such stock
or securities by the terms thereof. In any such case, appropriate adjustment
will be made in the application of the provisions of this Section 4 with respect
to the rights of the holders of Notes after the Capital Reorganization to the
end that the provisions of this Section 4 (including adjustment of the
Conversion Price then in effect and the number of shares issuable upon
conversion of the Notes) will be applicable after that event and be as nearly
equivalent as practicable. In the event that the Company is not the surviving
entity of any such Capital Reorganization, each Note shall become Notes of such
surviving entity, with the same powers, rights and preferences as provided
herein. The adjustment provided in this Section 4(i) shall not impact the rights
of the holders of the Note set forth in Section 5.
(j) NO IMPAIRMENT. The Company will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Company, but will at all
times in good faith assist in the carrying out of all the provisions of this
Section 4 and in the taking of all such action as may be necessary or
appropriate in order to protect the conversion rights of the holders of the
Notes against impairment to the extent required hereunder. Nothing in this
Section 4 shall affect the continued accrual of interest on the Notes in
accordance with the terms of this Note.
(k) CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this Section 4,
the Company at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder, if
any, of Notes outstanding a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment are
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based and shall file a copy of such certificate with its corporate records. The
Company shall, upon the reasonable written request of any holder of Notes,
furnish or cause to be furnished to such holder a similar certificate setting
forth (i) such adjustments and readjustments, (ii) the Conversion Price then in
effect, and (iii) the number of shares of Common Stock and the amount, if any,
of other property which then would be received upon the conversion of Notes.
Despite such adjustment or readjustment, the form of each or all Notes, if the
same shall reflect the initial or any subsequent Conversion Price, need not be
changed in order for the adjustments or readjustments to be valid in accordance
with the provisions of this Note, which shall control.
(l) NOTICE OF RECORD DATE. In the event:
(i) that the Company declares a dividend (or any other
distribution) on its Common Stock payable in Common Stock or other securities of
the Company;
(ii) that the Company subdivides or combines its outstanding
shares of Common Stock;
(iii) of any reclassification of the Common Stock of the Company
(other than a subdivision or combination of its outstanding shares of Common
Stock or a stock dividend or stock distribution thereon);
(iv) of any Capital Reorganization; or
(v) of the involuntary or voluntary dissolution, liquidation or
winding up of the Company;
THEN the Company shall cause to be filed at its principal office, and
shall cause to be mailed to the holders of the Notes at their last addresses as
shown on the records of the Company, at least ten (10) days prior to the record
date specified in (A) below or twenty (20) days prior to the date specified in
(B) below, a notice stating
(A) the record date of such dividend, distribution,
subdivision or combination, or, if a record is not to be taken, the date as of
which the holders of Common Stock of record to be entitled to such dividend,
distribution, subdivision or combination are to be determined, or
(B) the date on which such reclassification, Capital
Reorganization, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of Common Stock
of record shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such reclassification, Capital
Reorganization, dissolution or winding up.
5. REPURCHASE RIGHT UPON A CHANGE OF CONTROL.
(a) In the event that a Change of Control (as herein defined) shall
occur, then each holder shall have the right (the "REPURCHASE RIGHT"), at the
holder's option to require the Company to repurchase, and upon the exercise of
such right the Company shall repurchase, all of such holder's Notes, or any
portion of the principal amount thereof requested by such holder that
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is equal to $10,000 or any integral multiple thereof, on the date (the
"REPURCHASE DATE") that is thirty (30) days after the date of the Company Notice
(as defined in Section 5(b)) at a purchase price equal to the Premium Redemption
Price (as defined in the Investors' Rights Agreement). "CHANGE OF CONTROL" means
(a) the acquisition of ownership, directly or indirectly, beneficially or of
record, by any Person or group (within the meaning of Rule 13d-5 under the
Securities Exchange Act of 1934 as in effect on the date hereof) of shares
representing a majority of the aggregate ordinary voting power represented by
the issued and outstanding Common Stock; (b) any transaction or series of
related transactions (including without limitation, any reorganization, merger
or consolidation) such that the outstanding shares of the Common Stock (or
securities which are convertible into or exchangeable for Common Stock) are
exchanged for or converted into securities which represent less than 51% of the
voting securities of the surviving entity; (c) any transaction or series of
related transactions (including without limitation, any reorganization, merger
or consolidation) such that the Company's shareholders immediately prior to such
transaction or series of transactions own less than 51% of the voting securities
of the surviving entity; (d) the sale, lease, transfer, conveyance or other
disposition, in one or a series of related transactions, of all or substantially
all of the Company's assets; or (e) the occupation of a majority of the seats
(other than vacant seats) on the board of directors of the Company by Persons
who were neither (i) nominated by the board of directors of the Company nor (ii)
appointed by directors so nominated.
(b) "PERSON" means any natural person, corporation, limited
liability company, trust, joint venture, association, company, partnership,
governmental authority or other entity.
(c) On or before the 3rd day after a Change of Control, the Company
shall give to all holders of Notes notice (the "COMPANY NOTICE"), of the
occurrence of the Change of Control and of the Repurchase Right set forth herein
arising as a result thereof. Each notice of a repurchase right shall be mailed
to the holders of the Notes at their last address as shown on the records of the
Company and shall state:
(i) the Repurchase Date;
(ii) the date by which the repurchase right must exercised;
(iii) the Premium Redemption Price;
(iv) a description of the procedure which a Holder must follow
to exercise a repurchase right, and the place or places where such Notes, are to
be surrendered for payment of the Premium Redemption Price;
(v) that on the Repurchase Date the Premium Redemption Price
will become due and payable upon each such Note designated by the Holder to be
repurchased, and that interest thereon shall cease to accrue on and after said
date;
(vi) the Conversion Rate then in effect, the date on which the
right to convert the principal amount of the Notes to be repurchased will
terminate and the place where such Notes may be surrendered for conversion; and
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(vii) the place or places that the Notes with the option to
elect repayment upon a Change of Control shall be delivered.
No failure of the Company to give the foregoing notices or defect
therein shall limit any holder's right to exercise a Repurchase Right or affect
the validity of the proceedings for the repurchase of Securities.
If any of the foregoing provisions or other provisions of this Section 5
are inconsistent with applicable law, such law shall govern.
(d) To exercise a Repurchase Right, a holder shall deliver to the
Company on or before the 15th day after the date of the Company Notice (i)
written notice of the holder's exercise of such right, which notice shall set
forth the name of the holder, the Face Amount, interest and Payments of the
Notes to be repurchased, and a statement that an election to exercise the
Repurchase Right is being made thereby, and (ii) the Notes with respect to which
the Repurchase Right is being exercised. Such written notice shall be
irrevocable, except that the right of the Holder to convert the Notes with
respect to which the Repurchase Right is being exercised shall continue until
midnight (Eastern Time) on the business day immediately preceding the Repurchase
Date.
(e) In the event a Repurchase Right shall be exercised in accordance
with the terms hereof, the Company shall pay or cause to be paid to the holders
of Notes the Premium Redemption Price in cash within three (3) trading days
after the Repurchase Date, together with accrued and unpaid interest to the
Repurchase Date payable with respect to the Notes as to which the repurchase
right has been exercised.
(f) If any Note (or portion thereof) surrendered for repurchase
shall not be so paid on the Repurchase Date, the Premium Redemption Price shall,
until paid, bear interest to the extent permitted by applicable law from the
Repurchase Date at the rate of 15% per annum, and each Note shall remain
convertible into Common Stock until the principal of such Note (or portion
thereof, as the case may be) shall have been paid or duly provided for.
(g) Any Note which is to be repurchased only in part shall be
surrendered to the Company and the Company shall execute and make available for
delivery to the holder of such Note without service charge, a new Note or Notes,
containing identical terms and conditions, each in an authorized denomination in
aggregate principal amount equal to and in exchange for the unrepurchased
portion of the principal of the Note so surrendered.
6. EVENTS OF DEFAULT.
(a) DEFINITION. For purposes of this Note, an Event of Default shall
be deemed to have occurred if:
(i) the Company fails to pay when due the principal of or
premium, if any, on any Note when due at its stated maturity, upon optional
redemption, upon required repurchase, upon declaration or otherwise;
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(ii) (A) the Company or any of its Subsidiaries makes an
assignment for the benefit of creditors, (B) an order, judgment or decree is
entered adjudicating the Company or any of its Subsidiaries bankrupt or
insolvent, (C) any order for relief with respect to the Company or any of its
Subsidiaries is entered under the Bankruptcy Reform Act, Title 11 of the United
States Code, (D) the Company or any of its Subsidiaries petitions or applies to
any tribunal for the appointment of a custodian, trustee, receiver or liquidator
of the Company or any of its Subsidiaries or of any substantial part of the
assets of the Company or any of its Subsidiaries, or commences any proceeding
relating to the Company or any of its Subsidiaries under any bankruptcy
reorganization, arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction, or (E) any such petition or application is
filed, or any such proceeding is commenced, against the Company or any of its
Subsidiaries and either (1) the Company or any of its Subsidiaries by any act
indicates its approval thereof, consent thereto or acquiescence therein or (2)
such petition, application or proceeding is not dismissed within sixty (60)
days;
(iii) a judgment in excess of $1,000,000 (net of any insurance
coverage accepted by the carrier) is rendered against the Company and, within
sixty (60) days after entry thereof, such judgment is not discharged or
execution thereof stayed pending appeal, or within sixty (60) days after the
expiration of any such stay, such judgment is not discharged or paid; provided
that if such unstayed or undischarged judgment exceeds 20% of the sum of the
Company's cash on hand and Cash Equivalents (as defined in the Noteholders
Agreement), in each case at the Initial Closing under the Agreement, the
judgment shall be deemed for purposes of remedies to be an event of default
under Section 6(a)(v);
(iv) the Company defaults under any mortgage, indenture,
agreement or instrument under which there may be issued or by which there may be
secured or evidenced any indebtedness for money borrowed by the Company or any
of its Subsidiaries (or the payment of which is guaranteed by the Company or any
of its Subsidiaries) the aggregate outstanding principal amount of which exceeds
$4,000,000, other than indebtedness owed to the Company or any of its
Subsidiary, whether such indebtedness or guarantee now exists, or is created
after the date hereof which default:
(A) is caused by a failure to pay principal of, or interest
or premium, if any, on such indebtedness prior to the expiration of the grace
period provided in such indebtedness ("payment default"); or
(B) results in the acceleration of such indebtedness prior
to its maturity ("cross acceleration provision");
(v) failure of the Company to redeem all the unconverted Notes
for cash on the redemption date if the Company has elected to exercise its
optional redemption rights pursuant to Section 3 or the failure of the Company
to comply with its obligations under Sections 4 or 5;
(vi) an Interfering Event (as defined in the Investors' Rights
Agreement) with respect to any Investor;
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(vii) only to the extent not otherwise covered under (i) through
(vi) above, the failure to comply with the terms of or a breach of a covenant or
a breach of a representation or warranty (except for an immaterial breach of a
representation or warranty not otherwise qualified by materiality) contained in
the Transaction Documents for a period of thirty (30) days following notice of
such failure from holders of the Notes, but only to the extent such breach is
curable.
(b) CONSEQUENCES OF EVENTS OF DEFAULT.
(i) Subject to the provisions of Section 11 of this Note, if an
Event of Default has occurred pursuant to Sections 6(a)(i), (v) or (vi) of this
Note, then the holder of the Note may declare all or any portion of the
outstanding principal amount of and accrued but unpaid interest and Payments on
the Note due and payable and demand immediate payment of the Premium Redemption
Price thereon. If an Event of Default specified in Section 6(a)(ii) occurs, all
of the Notes shall automatically and immediately become due and payable at the
Premium Redemption Price. The Company shall give prompt written notice of any
such demand to the other holders, if any, of any portion of the Notes, each of
which may demand immediate payment of all or any portion of such holder's
portion of the Notes. If any holder of the Notes demands immediate payment of
all or any portion of such holder's portion of the Notes, the Company shall,
subject to the other provisions of this Note (including Section 11), immediately
pay the Premium Redemption Price in cash to such holder.
(ii) Subject to the provisions of Section 11 of this Note, if an
Event of Default has occurred pursuant to Sections 6(a)(iii), (iv) or (vii) of
this Note, then (in addition to the other remedies available) the holders of not
less than 25% of the aggregate principal amounts of all Notes then outstanding
may declare, by written notice to the Company, all or any portion of the Notes
due and payable at the applicable Premium Redemption Price.
(iii) During the continuance of an Event of Default, the
interest on the Note shall accrue at a rate of eleven percent (11.0%) per annum
(based on a year of 365 days) on the Face Amount, plus any accrued but unpaid
interest and Payments hereon.
(iv) Subject to the other provisions of this Note (including
Section 11), each holder of any portion of this Note shall also have, upon the
occurrence and continuance of an Event of Default, any other rights which such
holder may have pursuant to applicable law or contract.
7. AMENDMENT AND WAIVER. Except as otherwise expressly provided herein,
the provisions of this Note may be amended and the Company may take any action
herein prohibited, or omit to perform any act herein required to be performed by
it, only if the Company has obtained the written consent of the holders of at
least 66 2/3% of the aggregate principal amount then outstanding of the Notes;
provided that no such action shall change (i) the amount of Notes whose holders
must consent to an amendment, (ii) the stated rate of or extend the stated time
for or manner in which interest accrues or payment of interest is made on any
Note, (iii) reduce the amount of or any provision relating to the scheduled
payment of principal on the Notes, (iv) reduce the premium payable upon the
redemption or repurchase of any Note, change the time at which any Note may be
redeemed or repurchased or amend the conversion rights as
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66
set forth under Sections 4 or 5, (v) alter or adversely affect the rights of any
holder under Section 3, (vi) modify the provisions of Section 11 in a manner
adverse to the holders of any Notes, (vii) make any Note payable in any money or
at any place other than as stated in the Note, (viii) impair the right of any
holder to receive payment of, premium, if any, principal and interest on such
holder's Notes on or after the due dates therefore or to institute suit for the
enforcement of any payment on or with respect to such holder's Notes, or (ix)
make any change in the amendment provisions which require each holder's consent
or in the waiver provisions, in each such case without the consent of the
applicable holder if such change is adverse to such holder.
8. PLACE OF PAYMENT. Payments of principal and interest and all notices
and other communications to the Investor hereunder or with respect hereto are to
be delivered to the Investor at the address identified on Schedule 1.1 attached
to the Agreement or to such other address or to the attention of such other
person as specified by prior written notice to the Company, including any
transferee of this Note.
9. COSTS OF COLLECTION. In the event that the Company fails to pay when
due (including, without limitation upon acceleration in connection with an Event
of Default) the full amount of principal and/or interest hereunder, the Company
shall indemnify and hold harmless the holder of any portion of this Note from
and against all reasonable costs and expenses incurred in connection with the
enforcement of this provision or collection of such principal and interest,
including, without limitation, reasonable attorneys' fees and expenses.
10. WAIVERS. The Company hereby waives presentment, demand, notice,
protest and all other demands and notices in connection with the delivery,
acceptance, performance, default or enforcement of this Note.
11. SUBORDINATION. The Company agrees, and by the acceptance hereof each
holder agrees, as follows:
(a) SUBORDINATION OF LIABILITIES. The Company, for itself, its
successors and assigns, covenants and agrees, and each holder of this Note
(together with its successors and assigns, the "holder of this Note") by its
acceptance hereof likewise covenants and agrees, that the payment of the
principal of, interest on, and all other amounts owing in respect of, this Note
(the "SUBORDINATED INDEBTEDNESS") is hereby expressly subordinated, to the
extent and in the manner hereinafter set forth, to the prior payment in full in
cash of all Senior Indebtedness. The provisions of this Section 11 shall
constitute a continuing offer to all persons or other entities who, in reliance
upon such provisions, become holders of, or continue to hold, Senior
Indebtedness, and such provisions are made for the benefit of the holders of
Senior Indebtedness, and such holders are hereby made obligees hereunder the
same as if their names were written herein as such and they and/or each of them
may proceed to enforce such provisions. No provisions of this Section 11 shall
prevent the occurrence of any default or Event of Default hereunder.
(b) COMPANY NOT TO MAKE PAYMENTS WITH RESPECT TO SUBORDINATED
INDEBTEDNESS IN CERTAIN CIRCUMSTANCES:
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(i) In the event of a Senior Payment Default (as hereinafter
defined), then, upon receipt by the Company and the holders of Subordinated
Indebtedness of written notice of such Senior Default (a "SENIOR PAYMENT DEFAULT
NOTICE") from the holders of at least a majority in principal amount of
outstanding Senior Indebtedness to which such Senior Payment Default relates or
any duly authorized representative of such holders, no payment (other than a
payment in the form of any other indebtedness of the Company which is
subordinated to the payment of the Senior Indebtedness to the same extent as
this Note is subordinated to the Senior Indebtedness or payments made in equity
securities of the Company, including as a result of the conversion of the Notes
into Shares of Common Stock) shall be made by the Company on account of
principal of (or premium, if any) or interest on the Subordinated Indebtedness
unless and until (i) such Senior Payment Default shall have been cured or waived
or shall have ceased to exist or (ii) all amounts then due and payable in
respect of Senior Indebtedness shall have been paid in full in cash, or
provision shall have been made for such payment (such period during which a
Senior Default continues being, a "PAYMENT DEFAULT BLOCKAGE PERIOD").
(ii) In the event that any Senior Nonmonetary Default (as
hereinafter defined) shall have occurred and be continuing, then, upon the
receipt by the Company and the holders of Subordinated Indebtedness of written
notice of such Senior Nonmonetary Default (a "SENIOR NONMONETARY DEFAULT
NOTICE") from the holders of a majority in principal amount of outstanding
Senior Indebtedness to which such Senior Nonmonetary Default relates or any duly
authorized representative of such holders, no payment (other than a payment in
the form of any other indebtedness of the Company which is subordinated to the
payment of the Senior Indebtedness to the same extent as the Note is
subordinated to the Senior Indebtedness or payments made in equity interests of
the company, including as a result of the conversion of the Notes into Shares of
Common Stock) shall be made by the Company on account of principal of (or
premium, if any) or interest on the Subordinated Indebtedness during the period
(the "NONMONETARY DEFAULT BLOCKAGE PERIOD") commencing on the date of receipt of
such Senior Nonmonetary Default Notice and ending on the earlier of (a) the date
on which such Senior Nonmonetary Default shall have been cured or waived or
shall have ceased to exist and any acceleration of Senior Indebtedness shall
have been rescinded or annulled or the Senior Indebtedness to which such Senior
Nonmonetary Default relates shall have been discharged or (b) the 179th day
after the date of receipt of such written notice; provided, however, that not
more than one Senior Nonmonetary Default Notice shall be given during any period
of 360 consecutive days, regardless of the number of defaults with respect to
Senior Indebtedness during such 360-day period. For all purposes of this Section
11(b)(ii), no event of default which existed or was continuing on the date of
commencement of any Nonmonetary Default Blockage Period with respect to any
Senior Indebtedness shall be, or be made, the basis for the commencement of
another Nonmonetary Default Blockage Period by the holders (or any duly
authorized agent or other representative thereof) of such Senior Indebtedness
whether or not within a period of 360 consecutive days, unless such event of
default shall have been cured or waived for a period of not less than 90
consecutive days (it being acknowledged that any subsequent action, or any
breach of any financial covenants for a period commencing after the date of
commencement of such Nonmonetary Default Blockage Period that, in either case,
would give rise to an event of default pursuant to any provisions under which an
event of default previously existed or was continuing shall constitute a new
event of default for this purpose).
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(iii) If an Event of Default shall occur and be continuing at
any time during the continuance of a Payment Default Blockage Period or a
Nonmonetary Default Blockage Period, no holder of Subordinated Indebtedness
shall ask, demand or xxx for any payment or distribution or seek any other
remedy in respect of the Subordinated Indebtedness or commence or join in with
any other creditor (other than the agent for the holders of Senior Indebtedness)
in commencing any bankruptcy, insolvency, receivership or similar proceedings
prior to the earliest to occur of (i) acceleration of any Senior Indebtedness or
any other exercise of remedies by the holders of Senior Indebtedness, including
without limitation, any realization on collateral or any reduction of
commitments (other than a voluntary reduction of commitments by the Company) as
a result of the occurrence and continuance of any event of default under any
agreement or instrument evidencing Senior Indebtedness, (ii) the occurrence of
an Event of Default specified in Sections 6(a)(ii) hereof or (iii) the earlier
to occur of (x) 179 days after the commencement of such Payment Blockage Period
or Nonmonetary Blockage Period or (y) the expiration of such Payment Blockage
Period or Nonmonetary Default Blockage Period.
(iv) Except for the payment of interest in kind as contemplated
by Section 2(b) and the exercise of Conversion Rights as contemplated by Section
4, the Company may not, directly or indirectly, make any payment of any kind or
character of any Subordinated Indebtedness and may not acquire any Subordinated
Indebtedness for cash or property until all Senior Indebtedness has been paid in
full in cash if such payment is prohibited by the terms of any Senior
Indebtedness or if any default or event of default under any Senior Indebtedness
is then in existence or would result therefrom.
(v) In the event that, notwithstanding the other provisions of
this Section 11(b), the Company shall make (or any other person or entity on
behalf of the Company shall make) any payment on account of the Subordinated
Indebtedness (other than as contemplated by this Note) or shall acquire any
Subordinated Indebtedness for cash or property at a time when payment is not
permitted by such provisions, such payment shall be held by the holder of this
Note, in trust for the benefit of, and shall be paid forthwith over and
delivered to, the holders of Senior Indebtedness or their representative, agent
or trustee under the loan agreement, indenture or other agreement pursuant to
which any Senior Indebtedness may have been issued or incurred, as their
respective interests may appear, for application pro rata to the payment of all
Senior Indebtedness remaining unpaid to the extent necessary to pay all Senior
Indebtedness in full in cash in accordance with the terms of such Senior
Indebtedness, after giving effect to any concurrent payment or distribution to
or for the holders of Senior Indebtedness. Without in any way modifying the
provisions of this Section 11 or affecting the subordination effected hereby, if
notice has not been previously given, the Company shall give the holder of this
Note prompt written notice of any event which would prevent payments under this
Section 11(b).
(c) SUBORDINATION TO PRIOR PAYMENT OF ALL SENIOR INDEBTEDNESS ON
DISSOLUTION, LIQUIDATION OR REORGANIZATION OF THE COMPANY. Upon any payment or
distribution of assets of the Company of any kind or character (whether in cash,
properties or securities) in connection with any total or partial dissolution,
winding up, liquidation or reorganization of the Company (whether in bankruptcy,
insolvency, receivership or similar proceedings or upon an assignment for the
benefit of creditors, marshaling of assets of the Company or otherwise):
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(i) the holders of all Senior Indebtedness shall first be
entitled to receive payment in full in cash of all Senior Indebtedness before
the holder of this Note is entitled to receive any payment of any kind or
character on account of the Subordinated Indebtedness other than equity
securities of the Company or debt securities that are subordinated to the Senior
Indebtedness to substantially the same extent as, or to a greater extent than,
the Notes are subordinated to Senior Indebtedness;
(ii) any payment or distribution of assets of the Company of any
kind or character (other than equity securities of the Company or debt
securities that are subordinated to the Senior Indebtedness to substantially the
same extent as, or to a greater extent than, the Notes are subordinated to
Senior Indebtedness), whether in cash, property or securities to which the
holder of this Note would be entitled except for the provisions of this Section
11, shall be paid by the liquidating trustee or agent or other person making
such payment or distribution, whether a trustee in bankruptcy, a receiver or
liquidating trustee or other trustee or agent, directly to the holders of Senior
Indebtedness or their representative, agent or trustee under any loan agreement,
indenture or other agreement under which any instruments evidencing any such
Senior Indebtedness may have been issued, to the extent necessary to make
payment in full in cash of all Senior Indebtedness remaining unpaid, after
giving effect to any concurrent payment or distribution to the holders of such
Senior Indebtedness; and
(iii) in the event that, notwithstanding the foregoing
provisions of this Section 11(c), any payment or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, shall
be received in violation hereof by the holder of this Note on account of
Subordinated Indebtedness before all Senior Indebtedness is paid in full in
cash, such payment or distribution shall be received and held in trust for and
shall be paid over to the holders of the Senior Indebtedness remaining unpaid or
their representative, agent or trustee under any loan agreement, indenture or
other agreement under which any instruments evidencing any of such Senior
Indebtedness may have been issued, for application to the payment of such Senior
Indebtedness until all such Senior Indebtedness shall have been paid in full in
cash after giving effect to any concurrent payment or distribution to the
holders of such Senior Indebtedness.
To the extent any payment of Senior Indebtedness (whether by or on
behalf of the Company, as proceeds of security or enforcement of any right of
setoff or otherwise) is declared to be fraudulent or preferential, set aside or
required to be paid to any receiver, trustee in bankruptcy, liquidating trustee,
agent or other similar person under any bankruptcy, insolvency, receivership,
fraudulent conveyance or similar law, then, if such payment is recovered by, or
paid over to, such receiver, trustee in bankruptcy, liquidating trustee, agent
or other similar person, the Senior Indebtedness or part thereof originally
intended to be satisfied shall be deemed to be reinstated and outstanding as if
such payment has not occurred. If the holder of this Note does not file a proper
claim or proof of debt in the form required in any bankruptcy, insolvency,
receivership, reorganization or similar proceeding prior to 30 days before the
expiration of the time to file such claim or claims, then any of the holders of
the Senior Indebtedness or their representative, agent or trustee is hereby
authorized to file an appropriate claim for and on behalf of the holder of this
Note.
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(d) SUBROGATION. Subject to the prior payment in full in cash of
all Senior Indebtedness and subject to the penultimate sentence of Section
11(c), the holder of this Note shall be subrogated to the rights of the holders
of Senior Indebtedness to receive payments or distributions of assets of the
Company applicable to the Senior Indebtedness until all amounts owing on this
Note shall be paid in full, and for the purpose of such subrogation no payments
or distributions to the holders of the Senior Indebtedness by or on behalf of
the Company or by or on behalf of the holder of this Note by virtue of this
Section 11 which otherwise would have been made to the holder of this Note
shall, as between the Company, its creditors other than the holders of Senior
Indebtedness, and the holder of this Note, be deemed to be payment by the
Company to or on account of the Senior Indebtedness, it being understood that
the provisions of this Section 11 are and are intended solely for the purpose of
defining the relative rights of the holder of this Note, on the one hand, and
the holders of the Senior Indebtedness, on the other hand.
(e) OBLIGATION OF THE COMPANY UNCONDITIONAL. Nothing contained
in this Section 11 or in this Note or any of the other Transaction Documents (as
defined in the Agreement) is intended to or shall impair, as between the Company
and the holder of this Note, the obligation of the Company, which is absolute
and unconditional, to pay to the holder of this Note the principal of and
interest and Payments on this Note as and when the same shall become due and
payable in accordance with its terms, or is intended to or shall affect the
relative rights of the holder of this Note and creditors of the Company other
than the holders of the Senior Indebtedness, nor shall anything herein or
therein prevent the holder of this Note from exercising all remedies otherwise
permitted by applicable law upon an event of default under this Note, subject to
the provisions of this Section 11 and Section 6 of this Note, including the
rights of the holders of Senior Indebtedness in respect of assets of the Company
received upon the exercise of any such remedy. Upon any distribution of assets
of the Company referred to in this Section 11, the holder of this Note shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending, or a certificate of the liquidating
trustee or agent or other person making any distribution to the holder of this
Note, for the purpose of ascertaining the persons entitled to participate in
such distribution, the holders of the Senior Indebtedness and other indebtedness
of the Company, the amount thereof or payable thereon, the amount or amounts
paid or distributed thereon and all other facts pertinent thereto or to this
Section 11. Subject to Section 11(c)(iii), this Section 11 shall not impair the
ability of a holder of a Note to declare an Event of Default.
(f) SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF
COMPANY OR HOLDERS OF SENIOR INDEBTEDNESS. No right of any present or future
holders of any Senior Indebtedness to enforce subordination as herein provided
shall at any time in any way be prejudiced or impaired by any act or failure to
act on the part of the Company or by any act or failure to act by any such
holder, or by any noncompliance by the Company with the terms and provisions of
this Note, regardless of any knowledge thereof which any such holder may have or
be otherwise charged with. The holders of the Senior Indebtedness may, without
in any way affecting the obligations of the holder of this Note with respect
hereto, at any time and from time to time and in their absolute discretion,
change the manner, place or terms of payment of, change or extend the time of
payment of, or renew, alter or increase, any Senior Indebtedness or amend,
modify or supplement any agreement or instrument governing or evidencing such
Senior
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Indebtedness or any other document referred to therein, or exercise or refrain
from exercising any other of their rights under the Senior Indebtedness
including, without limitation, the waiver of default thereunder and the release
or impairment of any collateral securing such Senior Indebtedness, all without
notice to or assent from the holder of the Note.
(g) SENIOR INDEBTEDNESS. The term "SENIOR INDEBTEDNESS" shall mean
all Obligations of the Company under, or in respect of, any other indebtedness,
whether outstanding on the date hereof or hereafter created, incurred or
assumed, which the Company specifically designates in writing as "SENIOR
INDEBTEDNESS" for purposes of this Note; provided, however, that no Senior
Indebtedness shall by its terms prohibit the repayment of the principal amount
outstanding under this Note and accrued interest and Payments thereon at
maturity unless an event of default under such Senior Indebtedness has occurred
and is continuing thereunder, and provided further that such term specifically
shall be deemed to exclude all trade payables, taxes, equity securities
obligations and indebtedness in violation of limits on indebtedness, including
Section 2.3 of the Noteholders Agreement. As used herein, the term "OBLIGATION"
shall mean any principal, interest, premium, Payments, fees, expenses,
indemnities, reimbursements and other liabilities and obligations (including any
guaranties of the foregoing liabilities and obligations) payable under the
documentation governing any indebtedness (including interest after the
commencement of any bankruptcy, insolvency, receivership or similar proceeding
at the rate provided for in the respective issue of Senior Indebtedness, whether
or not such interest is an allowed claim against the debtor in any such
proceeding).
(h) OTHER DEFINED TERMS. The term "SENIOR PAYMENT DEFAULT" shall
mean any default in the payment of principal (or premium, if any) or interest
on, or other amount payable in respect of, any Senior Indebtedness when due
that, by the terms of any instrument pursuant to which any Senior Indebtedness
is outstanding, permits one or more holders of such Senior Indebtedness (or a
trustee or agent or behalf of the holders thereof) to declare such Senior
Indebtedness due and payable prior to the date on which it would otherwise
become due and payable, other than a Senior Nonmonetary Default. The term
"SENIOR NONMONETARY DEFAULT" shall mean the occurrence or existence of any
event, circumstance, condition or state of facts that, by the terms of any
instrument pursuant to which any Senior Indebtedness is outstanding, permits one
or more holders of such Indebtedness (or a trustee or agent on behalf of the
holders thereof) to declare such Senior Indebtedness due and payable prior to
the date on which it would otherwise become due and payable, other than a Senior
Payment Default.
12. BENEFITS OF THE AGREEMENT. The Investor and all transferees (to the
extent permitted in the Agreement) shall be entitled to the rights and benefits
granted to them in the Agreement.
13. REGISTRATION OF TRANSFER AND EXCHANGE GENERALLY.
(a) REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE GENERALLY.
The Company shall keep at its principal executive offices a register (the
register maintained in such being herein sometimes collectively referred to as
the "NOTE REGISTER") in which the Company shall provide for the registration of
Notes and of transfers and exchanges of Notes.
22.
72
Subject to the provisions of the Noteholders Agreement regarding
restrictions on transfer and provided the transferee agrees to be bound by the
terms of the Note Purchase Agreement, upon surrender for registration of
transfer of any Note at its principal executive office, the Company shall
execute and deliver, in the name of the designated transferee or transferees,
one or more new Notes in denominations of not less than $500,000 each (provided
that if necessary to enable the registration by a holder of its entire holding
of Notes, one Note may be in a denomination of less than $500,000) or integral
multiples thereof, of a like aggregate principal amount and bearing such
restrictive legends as may be required by law.
At the option of a holder, Notes may be exchanged for other Notes of any
authorized denominations, of a like aggregate principal amount and bearing such
restrictive legends as may be required by law upon surrender of the Notes to be
exchanged at the Company's principal executive offices. Whenever any Notes are
so surrendered for exchange, the Company shall execute and make available for
delivery the Notes which the holder making the exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Company, evidencing the same debt, and
entitled to the same benefits as the Notes surrendered upon such registration of
transfer or exchange.
Every Note presented or surrendered for registration of transfer or for
exchange shall (if so required by the Company) be duly endorsed, or be
accompanied by a written instrument of transfer, in form satisfactory to the
Company, duly executed by the holder thereof or his attorney duly authorized in
writing.
No service charge shall be made for any registration of transfer or
exchange of Notes.
(b) MUTILATED, DESTROYED, LOST AND STOLEN NOTES. If any mutilated
Note is surrendered to the Company, the Company shall execute and make available
for delivery in exchange therefor a new Note of like tenor and principal amount
and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company (i) evidence to its
reasonable satisfaction of the destruction, loss or theft of any Note and (ii)
such security or indemnity as may be required by the Company to save itself
harmless, then, in the absence of notice to the Company that such Note has been
acquired by a protected purchaser, the Company shall execute and make available
for delivery, in lieu of any such destroyed, lost or stolen Note, a new Note of
like tenor and principal amount and bearing a number not contemporaneously
outstanding.
In case any such mutilated, destroyed, lost or stolen Note has become or
is about to become due and payable, the Company in its discretion may, instead
of issuing a new Note, pay such Note, subject to the holders' conversion rights
pursuant to Section 3 hereof.
Every new Note issued pursuant to this Section in lieu of any mutilated,
destroyed, lost or stolen Note shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Note shall be at any time enforceable by anyone.
23.
73
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.
14. GOVERNING LAW. THIS NOTE AND THE RIGHTS AND DUTIES OF THE COMPANY
AND THE HOLDER HEREOF SHALL BE GOVERNED BY, CONSTRUED IN AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
EXECUTED AND TO BE PERFORMED ENTIRELY WITHIN THAT STATE. THE COMPANY AND THE
HOLDER HEREBY SUBMIT TO THE EXCLUSIVE PERSONAL JURISDICTION AND WAIVE ANY
OBJECTION AS TO VENUE IN EITHER (I) THE COUNTY OF NEW YORK, STATE OF NEW YORK OR
(II) THE COUNTY OF SAN FRANCISCO, STATE OF CALIFORNIA. THE COMPANY AND THE
HOLDER WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE
OR DEFEND ANY RIGHTS UNDER THIS NOTE.
15. LIMITATIONS ON HOLDER'S RIGHT TO CONVERT.
(a) Notwithstanding anything to the contrary contained herein and
provided that this Section 15 shall not apply to any Note held by GE, the number
of shares of Common Stock that may be acquired by the holder upon conversion of
this Note pursuant to the terms hereof shall not exceed a number that, when
added to the total number of shares of Common Stock deemed beneficially owned by
such holder (other than by virtue of the ownership of securities or rights to
acquire securities that have limitations on the holder's right to convert,
exercise or purchase similar to the limitation set forth herein), together with
all shares of Common Stock deemed beneficially owned (other than by virtue of
the ownership of securities or rights to acquire securities that have
limitations on the right to convert, exercise or purchase similar to the
limitation set forth herein) by the holder's "affiliates" (as defined in Rule
144 of the Act) ("AGGREGATION PARTIES") that would be aggregated for purposes of
determining whether a group under Section 13(d) of the Securities Exchange Act
of 1934 as amended, exists, would exceed 9.99% of the total issued and
outstanding shares of the Common Stock (the "RESTRICTED OWNERSHIP PERCENTAGE").
Each holder shall have the right (i) at any time and from time to time to reduce
its ownership percentage below the Restricted Ownership Percentage immediately
upon notice to the Company and (ii) (subject to waiver) at any time and from
time to time, to increase its Restricted Ownership Percentage immediately in the
event of the announcement as pending or planned, of a Change of Control
Transaction. A "CHANGE OF CONTROL TRANSACTION" shall be defined as the
announcement or occurrence of an event of:
(i) any consolidation or merger of the Company with or into any
other corporation or other entity or person (whether or not the Company is the
surviving corporation), or any other corporate reorganization or transaction or
series of related transactions in which in excess of 50% of the Company's voting
power is transferred through a merger, consolidation, tender offer or similar
transaction,
(ii) any person (as defined in Section 13(d) of the Exchange
Act), together with its affiliates and associates (as such terms are defined in
Rule 405 under the 1933 Act), beneficially owns or is deemed to beneficially own
(as described in Rule 13d-3 under the
24.
74
Exchange Act without regard to the 60-day exercise period) in excess of 50% of
the Company's voting power,
(iii) there is a replacement of more than one-half of the
members of the Company's Board of Directors which is not approved by those
individuals who are members of the Company's Board of Directors on the date
thereof, in one or a series of related transactions, or
(iv) a sale or transfer of all or substantially all of the
assets of the Company, determined on a consolidated basis.
(b) The Holder covenants at all times on each day (each such day
being referred to as a "COVENANT DAY") as follows: During the balance of such
Covenant Day and the succeeding sixty-one (61) days (the balance of such
Covenant Day and the succeeding 61 days being referred to as the "COVENANT
PERIOD") such holder will not acquire shares of Common Stock pursuant to any
right existing at the commencement of the Covenant Period to the extent the
number of shares so acquired by such holder and its Aggregation Parties
(ignoring all dispositions) would exceed:
(x) the Restricted Ownership Percentage of the total number of
shares of Common Stock outstanding at the commencement of the
Covenant Period,
minus
(y) the number of shares of Common Stock owned by such holder and
its Aggregation Parties at the commencement of the Covenant
Period.
A new and independent covenant will be deemed to be given by the holder
as of each moment of each Covenant Day. No covenant will terminate, diminish or
modify any other covenant. The holder agrees to comply with each such covenant.
This Section 15 controls in the case of any conflict with any other provision of
any other agreement to which the Company and the holder may be a party.
(c) The Company's obligation to issue shares of Common Stock which
would exceed such limits referred to in this Section 15 shall be suspended to
the extent necessary until such time, if any, as shares of Common Stock may be
issued in compliance with such restrictions.
16. NASDAQ LIMITATION ON CONVERSION OF NOTES.
(a) Notwithstanding anything to the contrary contained herein, until
the Requisite Vote is obtained, the number of shares of Common Stock that may be
acquired by the Holder upon conversion of this Note pursuant to the terms hereof
shall not exceed a number that, when added to the number of Warrant Shares
issued by the Company to such Purchaser, would exceed such Holder's pro rata
share of the Maximum Share Amount ("Holder's Pro Rata Amount"). This Section 16
shall terminate and be of no further force and effect when the Requisite Vote is
obtained.
25.
75
(b) The Holder agrees that, to enable the Company to comply with the
Nasdaq Cap prior to obtaining the Requisite Vote, the Company is required to and
shall be allowed to limit the number of Conversion Shares issued by the Company
to the Holder and the number of Warrant Shares issued to the Holder to the
Holder's Pro Rata Amount.
17. INCORPORATION OF TERMS. All capitalized terms not otherwise defined
in this Note shall have the definition set forth in the Agreement.
26.
76
IN WITNESS WHEREOF, the Company has executed and delivered this Note on
September 15, 2000.
QUOKKA SPORTS, INC.
By:
--------------------------------
Name:
Title:
77
EXHIBIT 1
PAYMENT STATEMENT
Date: ______________
To: ________________________ ("HOLDER")
Re: 7% CONVERTIBLE SUBORDINATED PROMISSORY NOTE DUE 2005 ("NOTE") OF QUOKKA
SPORTS, INC. (THE "COMPANY").
The Company hereby irrevocably elects to pay interest on the Note, for
the Interest Payment Date indicated below, in the following manner (the Company
should check its selection):
____ cash interest; or
____ PIK Interest.
Interest Payment Date: _________________________
If the selection above is PIK Interest, the Company should fill
in the following:
Outstanding Principal Amount prior
to issuance of this Payment Statement: US$ _______________
PIK Interest: US$ _______________
Outstanding Principal Amount after
issuance of this Payment Statement: US$ _______________
The Company hereby certifies to the Holder, its successors and assigns
that the Face Amount due under the Note after delivery of this Payment Statement
equals the amount indicated below. Capitalized terms used in this Payment
Statement and not otherwise defined shall have the meaning ascribed thereto in
the Note.
IN WITNESS WHEREOF, this Payment Statement has been duly executed and
delivered on the date first written above.
QUOKKA SPORTS, INC.
By:
--------------------------------
Name:
Title:
78
EXHIBIT 2
(TO BE EXECUTED BY REGISTERED HOLDER
IN ORDER TO CONVERT NOTE)
CONVERSION NOTICE
FOR
7% CONVERTIBLE SUBORDINATED PROMISSORY NOTE DUE 2005
The undersigned, as Holder of the 7% Convertible Subordinated Promissory
Note Due 2005 of QUOKKA SPORTS, INC. (the "COMPANY"), in the outstanding
principal amount of U.S. $_____________ (the "Note"), hereby elects to convert
that portion of the outstanding principal amount of the Note shown on the next
page into shares of Common Stock, $.0001 par value per share (the "COMMON
STOCK"), of the Company according to the conditions of the Note, as of the date
written below. The undersigned hereby requests that share certificates for the
Common Stock to be issued to the undersigned pursuant to this Conversion Notice
be issued in the name of, and delivered to, the undersigned or its designee as
indicated below. If shares are to be issued in the name of a person other than
the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto. No fee will be charged to the Holder for any conversion, except
for transfer taxes, if any.
Conversion Information: NAME OF HOLDER:
-----------------------------------
By:
-----------------------------------------------
Print Name:
Print Title:
Print Address of Holder:
-----------------------------------------------
-----------------------------------------------
Issue Common Stock to:
------------------------
at:
--------------------------------------------
Electronically transmit and credit Common Stock
to: at:
------------ --------------------------
-----------------------------------------------
Date of Conversion
-----------------------------------------------
Applicable Conversion Price
THE COMPUTATION OF THE NUMBER OF COMMON SHARES TO
BE RECEIVED IS SET FORTH ON THE ATTACHED PAGE
79
Page 2 to Conversion Notice for:
------------------------------------------------
(NAME OF HOLDER)
COMPUTATION OF NUMBER OF COMMON SHARES TO BE RECEIVED
A. Face Amount converted: $
---------
B. Accrued, unpaid interest on Face Amount converted: $
---------
X. Xxxxx payments due Holder on Face Amount converted: $
---------
TOTAL DOLLAR AMOUNT CONVERTED (TOTAL OF A + B + C) $
---------
Conversion Price $
---------
Number of Shares of Common Stock = Total dollar amount converted = $
----------------------------- ---------
Conversion Price $
---------
Number of shares of Common Stock =
-----------------------------
If the conversion is not being settled by DTC, please issue and deliver _____
certificate(s) for shares of Common Stock in the following amount(s):
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Please issue and deliver _____ new Note(s) in the following amounts:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
80
EXHIBIT B
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE. THESE SECURITIES
MAY NOT BE SOLD EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
REGULATION D PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT") OR OTHERWISE. THIS WARRANT SHALL NOT CONSTITUTE AN OFFER TO SELL NOR A
SOLICITATION OF AN OFFER TO BUY THE SECURITIES IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION WOULD BE UNLAWFUL. THE SECURITIES ARE "RESTRICTED" AND MAY
NOT BE RESOLD OR TRANSFERRED EXCEPT AS PERMITTED UNDER THE ACT PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM.
COMMON STOCK PURCHASE WARRANT
No. W
To Purchase Shares of $.0001 Par Value Common Stock ("COMMON STOCK") of
QUOKKA SPORTS, INC.
THIS CERTIFIES that, for value received, (the "INVESTOR") is
entitled, upon the terms and subject to the conditions hereinafter set forth, at
any time on or after the date hereof and on or prior to 5:00 p.m. New York City
Time on September 15, 2005 (the "TERMINATION DATE"), but not thereafter, to
subscribe for and purchase from QUOKKA SPORTS, INC., a Delaware corporation (the
"COMPANY"), shares of Common Stock of the Company (the "WARRANT
SHARES"). The "EXERCISE PRICE" is $8.00. The Exercise Price and the number of
shares for which the Warrant is exercisable shall be subject to adjustment as
provided herein. This Warrant is being issued in connection with the Note
Purchase Agreement dated September 15, 2000 (the "Agreement") entered into
between the Company, the Investor and the other purchasers thereunder.
1. TITLE OF WARRANT. Prior to the expiration hereof and subject to
compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in respect of the right to purchase any part of the
Warrant Shares, at the office or agency of the Company by the holder hereof in
person or by duly authorized attorney, upon surrender of this Warrant together
with (a) the Assignment Form annexed hereto properly endorsed, and (b) any other
documentation reasonably necessary to satisfy the Company that such transfer is
in compliance with all applicable securities laws.
2. AUTHORIZATION OF SHARES. The Company covenants that all shares of
Common Stock which may be issued upon the exercise of rights represented by this
Warrant will, upon exercise of the rights represented by this Warrant and
payment of the Exercise Price as set forth herein will be duly authorized,
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges in respect of the issue thereof (other than taxes in respect of any
transfer occurring contemporaneously with such issue or otherwise specified
herein).
1.
81
3. EXERCISE OF WARRANT.
(a) Subject to Section 19 hereof and provided that all filings by
the holder of this Warrant, if any, to be made under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended, as required with respect to such
Investor by Section 2.23 of the Noteholders Agreement (as defined in the
Agreement) have been made and related waiting periods applicable to the holder
of this Warrant have expired or have been terminated early, exercise of the
purchase rights represented by this Warrant may be made at any time or times, in
whole or in part before the close of business on the Termination Date, or such
earlier date on which this Warrant may terminate as provided in paragraph 11
below, by the delivery by facsimile or overnight courier of the Notice of
Exercise annexed hereto duly completed and executed, to be followed within one
full business day by the surrender of this Warrant at the principal office of
the Company (or such other office or agency of the Company as it may designate
by notice in writing to the registered holder hereof at the address of such
holder appearing on the books of the Company), together with delivery to the
Company by such holder of all certifications or documentation reasonably
necessary to establish, to the reasonable satisfaction of the Company, that any
such exercise has been undertaken in compliance with all applicable federal and
state securities laws, and upon payment of the full Exercise Price of the shares
thereby purchased; whereupon the holder of this Warrant shall be entitled to
receive a certificate for the number of shares of Common Stock so purchased. The
exercise will be deemed to have occurred as of the date contained in the Notice
of Exercise. Certificates for shares purchased hereunder shall be delivered to
the holder hereof within three (3) Trading Days after the date on which this
Warrant shall have been exercised as aforesaid. Payment of the Exercise Price of
the shares shall be by certified check or cashier's check or by wire transfer
(of same day funds) to an account designated by the Company in an amount equal
to the Exercise Price multiplied by the number of shares being purchased.
(b) Alternatively, the Warrant holder may exercise this Warrant,
in whole or in part in a "cashless" or "net-issue" exercise by delivering to the
offices of the Company or any transfer agent for the Common Stock this Warrant,
together with a Notice of Exercise specifying the number of Warrant Shares to be
delivered to such Warrant holder ("DELIVERABLE SHARES") and the number of
Warrant Shares with respect to which this Warrant is being surrendered in
payment of the aggregate Exercise Price for the Deliverable Shares ("SURRENDERED
SHARES").
The number of Deliverable Shares shall be calculated as follows:
# of Deliverable Shares = # of Surrendered Shares x Fair Market Value of Common Stock less Exercise Price
-----------------------------------------------------
Fair Market Value of Common Stock
"FAIR MARKET VALUE" shall have the meaning specified in Section
12(c).
In the event that the Warrant is not exercised in full, the
number of Warrant Shares shall be reduced by the number of such Warrant Shares
for which this Warrant is exercised and/or surrendered, and the Company, at its
expense, shall within three (3) Trading Days issue and deliver to or upon the
order of the Warrant holder a new Warrant of like tenor in the name of Warrant
holder or as Warrant holder (upon payment by Warrant holder of any applicable
transfer taxes) may request, reflecting such adjusted Warrant Shares.
2.
82
All exercises will be deemed to occur as of the date of the
Notice of Exercise, and certificates for shares of Common Stock purchased
hereunder shall be delivered to the holder hereof within three (3) Trading Days
after the date on which this Warrant shall have been exercised as aforesaid. The
Warrant holder may withdraw its Notice of Exercise under Section 3(a) or 3(b) at
any time thereafter if the Company fails to timely deliver the applicable
certificates to the Warrant holder as provided in this Agreement.
(c) In lieu of delivering physical certificates representing the
Common Stock issuable upon exercise, provided the Company's transfer agent is
participating in the Depository Trust Company ("DTC") Fast Automated Securities
Transfer ("FAST") program, upon request of the Warrant Holder, the Company shall
use its reasonable best efforts to cause its transfer agent to electronically
transmit the Common Stock issuable upon exercise to the Warrant Holder by
crediting the account of Warrant Holder's prime broker with DTC through its
Deposit Withdrawal Agent Commission ("DWAC") system. The time periods for
delivery described in the immediately preceding paragraph shall apply to the
electronic transmittals described herein.
The term "TRADING DAY" means (x) if the Common Stock is listed on
the New York Stock Exchange or the American Stock Exchange, a day on which there
is trading on such stock exchange, or (y) if the Common Stock is not listed on
either of such stock exchanges but sale prices of the Common Stock are reported
on an automated quotation system, a day on which trading is reported on the
principal automated quotation system on which sales of the Common Stock are
reported, or (z) if the foregoing provisions are inapplicable, a day on which
quotations are reported by National Quotation Bureau Incorporated.
(d) From and after the Effectiveness Date (as defined in the
Agreement), the Company, at its option, may upon written notice to all but not
fewer than all Investors compel the exercise of one-half (1/2) of each
Investor's unexercised Warrants at the exercise price in effect on the date of
such notice; provided (i) the closing price of a share of Common Stock on the
Principal Market (as defined in the Agreement) equals or exceeds 200% of the
Exercise Price (as such price would be adjusted pursuant to Section 12) for each
of the twenty-five (25) consecutive Trading Day period immediately preceding the
date of the written notice, (ii) there has been Effective Registration on each
of such twenty-five (25) consecutive Trading Day period, (iii) the Company has
otherwise complied with its obligations under this Warrant during such
twenty-five (25) consecutive Trading Day period, and (iv) all filings by the
holder of this Warrant, if any, to be made under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, as required with respect to such Investor
by Section 2.23 of the Noteholders Agreement (as defined in the Agreement) have
been made and related waiting periods applicable to the holder of this Warrant
have expired or have been terminated early. Such exercise shall occur within 10
Trading Days following the date of that notice.
4. NO FRACTIONAL SHARES OR SCRIP. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant.
5. CHARGES, TAXES AND EXPENSES. Issuance of certificates for shares of
Common Stock upon the exercise of this Warrant shall be made without charge to
the holder hereof for any issue or transfer tax or other incidental expense in
respect of the issuance of such certificate, all of which taxes and expenses
shall be paid by the Company, and such certificates shall be
3.
83
issued in the name of the holder of this Warrant or in such name or names as may
be directed by the holder of this Warrant; provided, however, that in the event
certificates for shares of Common Stock are to be issued in a name other than
the name of the holder of this Warrant, this Warrant when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto duly
executed by the holder hereof; and provided further, that the Company shall not
be required to pay any tax or taxes which may be payable in respect of any
transfer involved in the issuance of any Warrant certificates or any
certificates for the Warrant Shares other than the issuance of a Warrant
Certificate to the Investor in connection with the Investor's surrender of a
Warrant Certificate upon the exercise of less than all of the Warrants evidenced
thereby, and the Company shall not be required to issue or deliver such
certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.
6. CLOSING OF BOOKS. The Company will at no time close its shareholder
books or records in any manner which interferes with the timely exercise of this
Warrant.
7. NO RIGHTS AS SHAREHOLDER UNTIL EXERCISE. Subject to Section 12 of
this Warrant and the provisions of any other written agreement between the
Company and the Investor, the Investor shall not be entitled to vote or receive
dividends or be deemed the holder of Warrant Shares or any other securities of
the Company that may at any time be issuable on the exercise hereof for any
purpose, nor shall anything contained herein be construed to confer upon the
Investor, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action (whether upon any recapitalization, issuance of stock,
reclassification of stock, change of par value, or change of stock to no par
value, consolidation, merger, conveyance or otherwise) or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise until the
Warrant shall have been exercised as provided herein. However, at the time of
the exercise of this Warrant pursuant to Section 3 hereof, the Warrant Shares so
purchased hereunder shall be deemed to be issued to such holder as the record
owner of such shares as of the close of business on the date on which this
Warrant shall have been exercised.
8. ASSIGNMENT AND TRANSFER OF WARRANT. This Warrant may be assigned in
whole or in part by the surrender of this Warrant and the Assignment Form
annexed hereto duly executed at the office of the Company (or such other office
or agency of the Company as it may designate by notice in writing to the
registered holder hereof at the address of such holder appearing on the books of
the Company); provided, however, that this Warrant may not be resold or
otherwise transferred except (i) in a transaction registered under the
Securities Act of 1933, as amended (the "ACT"), (ii) a sale in compliance with
Rule 144, or (iii) in a transaction pursuant to an exemption, if available, from
registration under the Act and whereby, if requested by the Company, an opinion
of counsel reasonably satisfactory to the Company is obtained by the holder of
this Warrant to the effect that the transaction is so exempt; provided that no
such opinion of counsel shall be required for an assignment to an affiliate.
9. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT. The Company
represents warrants and covenants that (a) upon receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of any Warrant or stock certificate representing
4.
84
the Warrant Shares, and in case of loss, theft or destruction, of indemnity
reasonably satisfactory to it, and (b) upon surrender and cancellation of such
Warrant or stock certificate, if mutilated, the Company will made and deliver a
new Warrant or stock certificate of like tenor and dated as of such
cancellation, in lieu of this Warrant or stock certificate, without any charge
therefor. This Warrant is exchangeable at any time for an equal aggregate number
of Warrants of different denominations, as requested by the holder surrendering
the same, or in such denominations as may be requested by the Holder following
determination of the Exercise Price. No service charge will be made for such
registration or transfer, exchange or reissuance.
10. SATURDAYS, SUNDAYS, HOLIDAYS, ETC. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday, then such action may be
taken or such right may be exercised on the next succeeding Trading Day.
11. EFFECT OF CERTAIN EVENTS. If at any time while this Warrant or any
portion thereof is outstanding and unexpired there shall be (i) a sale or
conveyance of all or substantially all of the Company's assets or (ii) a
transaction (by merger or otherwise) in which more than 50% of the voting power
of the Company is disposed of (collectively, a "SALE OR MERGER TRANSACTION"), in
which the consideration to be received by the Company or its shareholders
consists solely of cash, and in case the Company shall at any time effect a Sale
or Merger Transaction in which the consideration to be received by the Company
or its shareholders consists in part of consideration other than cash, the
holder of this Warrant shall have the right but not the obligation thereafter to
purchase, by exercise of this Warrant and payment of the aggregate Exercise
Price in effect immediately prior to such action, the kind and amount of shares
and other securities and property which it would have owned or have been
entitled to receive after the happening of such transaction had this Warrant
been exercised immediately prior thereto, subject to further adjustment as
provided in Section 12.
12. ADJUSTMENTS OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The
number of and kind of securities purchasable upon exercise of this Warrant and
the Exercise Price shall be subject to adjustment from time to time as follows:
(a) SUBDIVISIONS, COMBINATIONS AND OTHER ISSUANCES. If the
Company shall at any time after the date hereof but prior to the expiration of
this Warrant subdivide its outstanding securities as to which purchase rights
under this Warrant exist, by split-up, spin-off, or otherwise, or combine its
outstanding securities as to which purchase rights under this Warrant exist, the
number of Warrant Shares as to which this Warrant is exercisable as of the date
of such subdivision, split-up, spin-off or combination shall forthwith be
proportionately increased in the case of a subdivision, or proportionately
decreased in the case of a combination. Appropriate proportional adjustments
(decrease in the case of subdivision, increase in the case of combination) shall
also be made to the Exercise Price payable per share, so that the aggregate
Exercise Price payable for the total number of Warrant Shares purchasable under
this Warrant as of such date shall remain the same as it would have been before
such subdivision or combination.
(b) STOCK DIVIDEND. If at any time after the date hereof the
Company declares a dividend or other distribution on Common Stock payable in
Common Stock or other securities
5.
85
or rights convertible into Common Stock ("COMMON STOCK EQUIVALENTS") without
payment of any consideration by holders of Common Stock for the additional
shares of Common Stock or the Common Stock Equivalents (including the additional
shares of Common Stock issuable upon exercise or conversion thereof), then the
number of shares of Common Stock for which this Warrant may be exercised shall
be increased as of the record date (or the date of such dividend distribution if
no record date is set) for determining which holders of Common Stock shall be
entitled to receive such dividends, in proportion to the increase in the number
of outstanding shares (and shares of Common Stock issuable upon conversion of
all such securities convertible into Common Stock) of Common Stock as a result
of such dividend, and the Exercise Price shall be proportionately reduced so
that the aggregate Exercise Price for all the Warrant Shares issuable hereunder
immediately after the record date (or on the date of such distribution, if
applicable), for such dividend shall equal the aggregate Exercise Price so
payable immediately before such record date (or on the date of such
distribution, if applicable).
(c) OTHER DISTRIBUTIONS. If at any time after the date hereof the
Company distributes to holders of its Common Stock, other than as part of its
dissolution, liquidation or the winding up of its affairs, any shares of its
capital stock, any evidence of indebtedness or any of its assets (other than
Common Stock), then the number of Warrant Shares for which this Warrant is
exercisable shall be increased to equal: (i) the number of Warrant Shares for
which this Warrant is exercisable immediately prior to such event, (ii)
multiplied by a fraction, (A) the numerator of which shall be the Fair Market
Value (as defined below) per share of Common Stock on the record date for the
dividend or distribution, and (B) the denominator of which shall be the Fair
Market Value price per share of Common Stock on the record date for the dividend
or distribution minus the amount allocable to one share of Common Stock of the
value (as determined in good faith by the Board of Directors of the Company) of
any and all such evidences of indebtedness, shares of capital stock, other
securities or property, so distributed. For purposes of this Warrant, "FAIR
MARKET VALUE" shall equal the 10 Trading Day average closing trading price of
the Common Stock on the Principal Market for the 10 Trading Days preceding the
date of determination or, if the Common Stock is not listed or admitted to
trading on any Principal Market, the average of the closing bid and asked prices
on the over-the-counter market as furnished by any New York Stock Exchange
member firm reasonably selected from time to time by the Company for that
purpose and reasonably acceptable to the Holder, or, if the Common Stock is not
listed or admitted to trading on the Principal Market or traded over-the-counter
and the average price cannot be determined as contemplated above, the Fair
Market Value of the Common Stock shall be as reasonably determined in good faith
by the Company's Board of Directors. The Exercise Price shall be reduced to
equal: (i) the Exercise Price in effect immediately before the occurrence of any
event (ii) multiplied by a fraction, (A) the numerator of which is the number of
Warrant Shares for which this Warrant is exercisable immediately before the
adjustment, and (B) the denominator of which is the number of Warrant Shares for
which this Warrant is exercisable immediately after the adjustment.
(d) MERGER, ETC. If at any time after the date hereof there shall
be a merger or consolidation of the Company with or into or a transfer of all or
substantially all of the assets of the Company to another entity, then the
Warrant Holder shall be entitled to receive upon or after such transfer, merger
or consolidation becoming effective, and upon payment of the Exercise Price then
in effect, the number of shares or other securities or property of the Company
or of the successor corporation resulting from such merger or consolidation,
which would have been
6.
86
received by Warrant Holder for the shares of stock subject to this Warrant had
this Warrant been exercised just prior to such transfer, merger or consolidation
becoming effective or to the applicable record date thereof, as the case may be.
The Company will not merge or consolidate with or into any other corporation, or
sell or otherwise transfer its property, assets and business substantially as an
entirety to another corporation, unless the corporation resulting from such
merger or consolidation (if not the Company), or such transferee corporation, as
the case may be, shall expressly assume in writing the due and punctual
performance and observance of each and every covenant and condition of this
Warrant to be performed and observed by the Company.
(e) RECLASSIFICATION, ETC. If at any time after the date hereof
there shall be a reorganization or reclassification of the securities as to
which purchase rights under this Warrant exist into the same or a different
number of securities of any other class or classes, then the Warrant Holder
shall thereafter be entitled to receive upon exercise of this Warrant, during
the period specified herein and upon payment of the Exercise Price then in
effect, the number of shares or other securities or property resulting from such
reorganization or reclassification, which would have been received by the
Warrant Holder for the shares of stock subject to this Warrant had this Warrant
at such time been exercised.
(f) EXERCISE PRICE ADJUSTMENT. In the event that the Company
issues or sells any Common Stock or securities which are convertible into or
exchangeable for its Common Stock or any convertible securities, or any warrants
or other rights to subscribe for or to purchase or any options for the purchase
of its Common Stock or any such convertible securities (other than shares or
options issued or which may be issued pursuant to (i) the Company's current or
future employee, director or bona fide consultant option plans or shares issued
upon exercise of options, warrants or rights outstanding on the date of the
Agreement and listed in the Company's most recent periodic report filed under
the Exchange Act (ii) strategic corporate alliances not undertaken principally
for financing purposes, (iii) arrangements with the Investor, or (iv)
acquisitions of other entities by the Company) at an effective Exercise Price
per share which is less than the greater of the Exercise Price then in effect or
the fair market value (as described in Section 12(c) above) of the Common Stock
on the trading day next preceding such issue or sale, then in each such case,
the Exercise Price in effect immediately prior to such issue or sale shall be
reduced effective concurrently with such issue or sale to an amount determined
by multiplying the Exercise Price then in effect by a fraction, (x) the
numerator of which shall be the sum of (1) the number of shares of Common Stock
outstanding immediately prior to such issue or sale, plus (2) the number of
shares of Common Stock which the aggregate consideration received by the Company
for such additional shares would purchase at such fair market value or, Exercise
Price as the case may be, then in effect; and (y) the denominator of which shall
be the number of shares of Common Stock of the Company outstanding immediately
after such issue or sale.
For the purposes of the foregoing adjustment, in the case of the
issuance of any convertible securities, warrants, options or other rights to
subscribe for or to purchase or exchange for, shares of Common Stock
("CONVERTIBLE SECURITIES"), the maximum number of shares of Common Stock
issuable upon exercise, exchange or conversion of such Convertible Securities
shall be deemed to be outstanding, provided that no further adjustment shall be
made (assuming no subsequent "reset", repricing, or similar event) upon the
actual issuance of Common Stock upon exercise, exchange or conversion of such
Convertible Securities.
7.
87
The number of shares which may be purchased hereunder shall be
increased proportionately to any reduction in Exercise Price pursuant to this
paragraph 12(f), so that after such adjustments the aggregate Exercise Price
payable hereunder for the increased number of shares shall be the same as the
aggregate Exercise Price in effect just prior to such adjustments.
In the event of any such issuance for a consideration which is
less than such fair market value and also less than the Exercise Price then in
effect, then there shall be only one such adjustment by reason of such issuance,
such adjustment to be that which results in the greatest reduction of the
Exercise Price computed as aforesaid.
13. VOLUNTARY ADJUSTMENT BY THE COMPANY. The Company may at its option,
at any time during the term of this Warrant, reduce but not increase (except in
connection with the application of Section 12 hereunder) the then current
Exercise Price to any amount and for any period of time deemed appropriate by
the Board of Directors of the Company.
14. NOTICE OF ADJUSTMENT. Whenever the number of Warrant Shares or
number or kind of securities or other property purchasable upon the exercise of
this Warrant or the Exercise Price is adjusted, the Company shall promptly mail
to the holder of this Warrant a notice setting forth the number of Warrant
Shares (and other securities or property) purchasable upon the exercise of this
Warrant and the Exercise Price of such Warrant Shares after such adjustment and
setting forth a brief statement of the facts requiring such adjustment.
15. AUTHORIZED SHARES. The Company covenants that during the period the
Warrant is outstanding and exercisable, it will reserve from its authorized and
unissued Common Stock a sufficient number of shares to provide for the issuance
of the Warrant Shares upon the exercise of any purchase rights under this
Warrant. The Company further covenants that its issuance of this Warrant shall
constitute full authority to its officers who are charged with the duty of
executing stock certificates to execute and issue the necessary certificates for
the Warrant Shares upon the exercise of the purchase rights under this Warrant
(subject to Section 19). The Company will take all such reasonable action as may
be necessary to assure that such Warrant Shares may be issued as provided herein
without violation of any applicable law or regulation, or of any requirements of
the American Stock Exchange or any domestic securities exchange upon which the
Common Stock may be listed.
16. 9.99% LIMITATION.
(a) Notwithstanding anything to the contrary contained herein and
provided that this Section 16 shall not apply to any Warrants held by General
Electric Company, General Electric Capital Services, Inc., National Broadcasting
Company, Inc. or their respective subsidiaries, the number of shares of Common
Stock that may be acquired by the Investor upon exercise pursuant to the terms
hereof shall not exceed a number that, when added to the total number of shares
of Common Stock deemed beneficially owned by such holder (other than by virtue
of the ownership of securities or rights to acquire securities (including the
Warrants) that have limitations on the Investor's right to convert, exercise or
purchase similar to the limitation set forth herein (the "EXCLUDED SHARES")),
together with all shares of Common Stock deemed beneficially owned (not counting
such affiliate's Excluded Shares) by the holder's "affiliates" (as defined Rule
144 of the Act) ("AGGREGATION PARTIES") that would be aggregated for purposes of
8.
88
determining whether a group under Section 13(d) of the Securities Exchange Act
of 1934, as amended, exists, would exceed 9.99% of the total issued and
outstanding shares of the Company's Common Stock (the "RESTRICTED OWNERSHIP
PERCENTAGE"). Each Holder shall have the right (w) at any time and from time to
time to reduce its Restricted Ownership Percentage immediately upon notice to
the Company and (x) at any time and from time to time, to increase its
Restricted Ownership Percentage immediately in the event of the announcement as
pending or planned of a Major Transaction (as such term is defined in the
Investment Agreement).
(b) The Investor covenants at all times on each day (each such
day being referred to as a "COVENANT DAY") as follows: During the balance of
such Covenant Day and the succeeding sixty-one (61) days (the balance of such
Covenant Day and the succeeding 61 days being referred to as the "COVENANT
PERIOD") such Investor will not acquire shares of Common Stock pursuant to any
right (including the exercise of the Adjustment Warrant) existing at the
commencement of the Covenant Period to the extent the number of shares so
acquired by such holder and its Aggregation Parties (ignoring all dispositions)
would exceed:
(x) the Restricted Ownership Percentage of the total number
of shares of Common Stock outstanding at the
commencement of the Covenant Period,
MINUS
(y) the number of shares of Common Stock owned by such
holder and its Aggregation Parties at the commencement
of the Covenant Period.
A new and independent covenant will be deemed to be given by the
holder as of each moment of each Covenant Day. No covenant will terminate,
diminish or modify any other covenant. The holder agrees to comply with each
such covenant. This Section 16 controls in the case of any conflict with any
other provision of the Transaction Documents.
The Company's obligation to issue Adjustment Shares which would
exceed such limits referred to in this Section 16 shall be suspended to the
extent necessary until such time, if any, as Adjustment Shares may be issued in
compliance with such restrictions.
17. COMPLIANCE WITH SECURITIES LAWS.
(a) The holder hereof acknowledges that the Warrant Shares
acquired upon the exercise of this Warrant, if not registered (or if no
exemption from registration exists), will have restrictions upon resale imposed
by state and federal securities laws. Each certificate representing the Warrant
Shares issued to the Holder upon exercise (if not registered or if no exemption
from registration exists) will bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED WITH
THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE
IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED,
TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
9.
89
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS, BASED ON AN OPINION LETTER OF COUNSEL SATISFACTORY TO THE
COMPANY OR A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION.
(b) Without limiting the Investor's right to transfer, assign or
otherwise convey the Warrant or Warrant Shares in compliance with all applicable
securities laws, the Investor of this Warrant, by acceptance hereof,
acknowledges that this Warrant and the Warrant Shares to be issued upon exercise
hereof are being acquired solely for the Investor's own account and not as a
nominee for any other party, and that the Investor will not offer, sell or
otherwise dispose of this Warrant or any Warrant Shares to be issued upon
exercise hereof except under circumstances that will not result in a violation
of applicable federal and state securities laws. Upon exercise of this Warrant,
the Investor shall, if requested by the Company, confirm in writing, in a form
satisfactory to the Company, that the Warrant Shares of Common Stock so
purchased are being acquired solely for the Investor's own account and not as a
nominee for any other party, for investment, and not with a view toward
distribution or resale.
(c) Neither this Warrant nor any Share of Common Stock issued
upon exercise of this Warrant may be offered for sale or sold, or otherwise
transferred or sold in any transaction which would constitute a sale thereof
within the meaning of the Act, unless (i) such security has been registered for
sale under the Act and registered or qualified under applicable state securities
laws relating to the offer and sale of securities, or (ii) exemptions from the
registration requirements of the Act and the registration or qualification
requirements of all such state securities laws are available and the Company
shall have received an opinion of counsel that the proposed sale or other
disposition of such securities may be effected without registration under the
Act, such counsel and such opinion to be satisfactory to the Company.
(d) Investor recognizes that investing in the Warrant and the
Warrant Shares involves a high degree of risk, and Investor is in a financial
position to hold the Warrant and the Warrant Shares indefinitely and is able to
bear the economic risk and withstand a complete loss of its investment in the
Warrant and the Warrant Shares. The Investor is a sophisticated investor and is
capable of evaluating the merits and risks of investing in the Company. The
Investor has had an opportunity to discuss the Company's business, management
and financial affairs with the Company's management, has been given full and
complete access to information concerning the Company, and has utilized such
access to its satisfaction for the purpose of obtaining information or verifying
information and have had the opportunity to inspect the Company's operation.
Investor has had the opportunity to ask questions of, and receive answers from,
the management of the Company (and any person acting on its behalf) concerning
the Warrant and the Warrant Shares and the agreements and transactions
contemplated hereby, and to obtain any additional information as Investor may
have requested in making its investment decision. The initial Investor in this
Warrant is an "accredited investor", as defined by Regulation D promulgated
under the Act.
10.
90
18. MISCELLANEOUS.
(a) ISSUE DATE; CHOICE OF LAW; VENUE; JURISDICTION. THIS WARRANT
AND THE RIGHTS AND DUTIES OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY,
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS EXECUTED AND TO BE PERFORMED ENTIRELY WITHIN THAT STATE.
EACH OF THE PARTIES HEREBY SUBMITS TO THE EXCLUSIVE PERSONAL JURISDICTION AND
WAIVES ANY OBJECTION AS TO VENUE IN EITHER (I) THE COUNTY OF NEW YORK, STATE OF
NEW YORK OR (II) THE COUNTY OF SAN FRANCISCO, STATE OF CALIFORNIA. SERVICE OF
PROCESS ON THE PARTIES IN ANY ACTION ARISING OUT OF OR RELATING TO THIS WARRANT
SHALL BE EFFECTIVE IF MAILED TO THE PARTIES IN ACCORDANCE WITH SECTION 18(c)
HEREOF. THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS WARRANT.
(b) MODIFICATION AND WAIVER. This Warrant and any provisions
hereof may be changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of the same is sought. Any
amendment effected in accordance with this paragraph shall be binding upon the
Investor, each future holder of this Warrant and the Company. No waivers of, or
exceptions to, any term, condition or provision of this Warrant, in any one or
more instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such term, condition or provision.
(c) NOTICES. Any notice, request or other document required or
permitted to be given or delivered to the Investor or future holders hereof or
the Company shall be personally delivered or shall be sent by certified or
registered mail, postage prepaid, to the Investor or each such holder at its
address as shown on the books of the Company or to the Company at the address
set forth in the Agreement. All notices under this Warrant shall be deemed to
have been given when received.
A party may from time to time change the address to which notices
to it are to be delivered or mailed hereunder by notice in accordance with the
provisions of this Section 18(c).
(d) SEVERABILITY. Whenever possible, each provision of this
Warrant shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
the validity, legality or enforceability of any other provision of this Warrant
in such jurisdiction or affect the validity, legality or enforceability of any
provision in any other jurisdiction, but this Warrant shall be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision had never been contained herein.
(e) NO IMPAIRMENT. The Company will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith
11.
91
assist in the carrying out of all such terms and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of the
Warrant Holder against impairment. Without limiting the generality of the
foregoing, the Company (a) will not increase the par value of any Warrant Shares
above the amount payable therefor on such exercise, and (b) will take all such
action as may be reasonably necessary or appropriate in order that the Company
may validly and legally issue fully paid and nonassessable Warrant Shares on the
exercise of this Warrant.
19. NASDAQ LIMITATION ON EXERCISE OF WARRANTS.
(a) Notwithstanding anything to the contrary contained herein,
until the Requisite Vote is obtained, the number of shares of Common Stock that
may be acquired by the Investor upon exercise of this Warrant pursuant to the
terms hereof shall not exceed a number that, when added to the number of
Conversion Shares issued by the Company to such Investor, would exceed such
Investor's pro rata share of the Maximum Share Amount ("Investor's Pro Rata
Amount"). This Section 19 shall terminate and be of no further force and effect
when the Requisite Vote is obtained.
(b) The Investor agrees that, to enable the Company to comply
with the Nasdaq Cap prior to obtaining the Requisite Vote, the Company shall be
required and allowed to limit the number of Warrant Shares issued by the Company
to the Investor and the number of Conversion Shares issued to the Investor to
the Investor's Pro Rata Amount.
20. INCORPORATION OF TERMS. All capitalized terms not otherwise defined
in this Warrant shall have the definition set forth in the Agreement.
12.
92
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officers thereunto duly authorized.
Dated: September 15, 2000
QUOKKA SPORTS, INC.
By:
--------------------------
Name:
Title:
AGREED AND ACCEPTED
THIS 15TH DAY OF SEPTEMBER, 2000
Name of Investor:
-------------------------
Signature:
--------------------------------
Name of Signatory:
------------------------
Title of Signatory:
-----------------------
93
NOTICE OF EXERCISE
To: QUOKKA SPORTS, INC.
(1) The undersigned hereby elects:
(A) to purchase ________ shares of Common Stock of QUOKKA SPORTS,
INC. pursuant to the terms of the attached Warrant, and tenders herewith payment
of the Exercise Price in full, together with all applicable transfer taxes, if
any.
(B) in a "cashless" or "net-issue exercise" for, and to purchase
thereunder, ______ shares of Common Stock, and herewith makes payment therefor
with _______ Surrendered Shares.
(2) Please issue a certificate or certificates representing said shares
of Common Stock in the name of the undersigned or in such other name as is
specified below:
-------------------------------
(Name)
-------------------------------
(Address)
-------------------------------
(3) Please issue a new Warrant for the unexercised portion of the
attached Warrant in the name of the undersigned or in such other name as is
specified below:
Other Name:
--------------------
------------------------------------
(Name)
------------------------------- ------------------------------------
(Date) (Signature)
------------------------------------
(Address)
94
ASSIGNMENT FORM
(To assign the foregoing warrant, execute this form
and supply required information.
Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, the foregoing Warrant of QUOKKA SPORTS, INC. and all
rights evidenced thereby are hereby assigned to
_______________________________________________________________ whose address is
-------------------------------------------------------------------------------.
--------------------------------------------------------------------------------
Dated: ___________, 2000
Holder's Signature:
---------------------------------------
Holder's Address:
-----------------------------------------
-----------------------------------------
Signature Guaranteed:
-----------------------------------------------------------
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in an fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.
95
EXHIBIT C
QUOKKA SPORTS, INC.
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
AS OF SEPTEMBER 15, 2000
96
TABLE OF CONTENTS
PAGE
SECTION 1. GENERAL ............................................................ 1
1.1 Definitions ........................................................ 1
SECTION 2. REGISTRATION; RESTRICTIONS ON TRANSFER ............................. 5
2.1 Restrictions on Transfer ........................................... 5
2.2 Demand Registration ................................................ 8
2.3 Piggyback Registrations ............................................ 9
(a) Underwriting ............................................... 10
(b) Right to Terminate Registration ............................ 11
2.4 Form S-3 Registration .............................................. 11
2.5 Form S-3 Registration for ZoneNetwork Registrable Securities ....... 13
2.6 Form S-3 Registration for Xxxx.xxx Registrable Securities .......... 14
2.7 Form S-3 Registration For Holders of Purchaser Registrable
Securities ......................................................... 15
(i) Delay in Effectiveness of Registration Statement ... 18
(ii) No Listing; Premium Price Redemption for
Delisting of Class of Shares ....................... 19
(iii) Blackout Periods ................................... 19
(iv) Redemption for Exercise Deficiency ................. 19
(v) Premium Redemption Price for Defaults .............. 20
(vi) Cumulative Remedies ................................ 20
(vii) Certain Acknowledgments ............................ 21
2.8 Expenses of Registration ........................................... 22
2.9 Obligations of the Company ......................................... 23
2.10 Termination of Registration Rights ................................. 24
2.11 Delay of Registration; Furnishing Information ...................... 24
2.12 Indemnification .................................................... 24
2.13 Assignment of Registration Rights .................................. 27
2.14 [Intentionally Omitted - Refer to Section 4.6] ..................... 27
2.15 Limitation on Subsequent Registration Rights ....................... 27
2.16 "Market Stand-Off" Agreement ....................................... 27
2.17 Rule 144 Reporting ................................................. 27
i.
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TABLE OF CONTENTS
(CONTINUED)
PAGE
SECTION 3. AFFIRMATIVE COVENANTS .............................................. 28
3.1 Confidential Information, etc. ..................................... 28
SECTION 4. MISCELLANEOUS ...................................................... 29
4.1 GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL .................. 29
4.2 Survival ........................................................... 29
4.3 Successors and Assigns ............................................. 29
4.4 Entire Agreement ................................................... 29
4.5 Severability ....................................................... 29
4.6 Amendment and Waiver ............................................... 29
4.7 Delays or Omissions ................................................ 30
4.8 Notices ............................................................ 30
4.9 Attorneys' Fees .................................................... 30
4.10 Titles and Subtitles ............................................... 31
4.11 Counterparts ....................................................... 31
ii.
98
QUOKKA SPORTS, INC.
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
THIS AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT (the "RIGHTS
AGREEMENT") is entered into as of the 15th day of September, 2000, by and among
QUOKKA SPORTS, INC., a Delaware corporation (the "COMPANY") and the holders of
the Company's Common Stock, Warrants and Convertible Subordinated Notes set
forth on Exhibit A hereto (the "INVESTORS"). This Rights Agreement amends,
restates and supersedes in its entirety that certain Amended and Restated
Investors' Rights Agreement dated March 31, 2000 (the "ORIGINAL INVESTORS'
RIGHTS AGREEMENT") which was entered into in connection with the Company's
issuance of shares of its Common Stock to the stockholders of XxxxXxxxxxx.xxx,
Inc. pursuant to that certain Agreement and Plan of Merger dated March 1, 2000
(the "AGREEMENT AND PLAN OF MERGER").
RECITALS
WHEREAS, the Company and certain of its current stockholders and warrant
holders entered into the Original Investors' Rights Agreement; and
WHEREAS, the Company will issue shares of its Common Stock to certain
members of Xxxx.xxx, L.L.C. pursuant to that certain Purchase Agreement and Plan
of Reorganization dated June 8, 2000 (the "AGREEMENT") and will issue
Convertible Subordinated Notes to certain investors pursuant to the Note
Purchase Agreement (as defined below); and
WHEREAS, pursuant to the Agreement and the Note Purchase Agreement, the
Company agreed to solicit the consent of the Investors (as such term was defined
in the Original Investors' Rights Agreement) to amend and restate the Original
Investors' Rights Agreement in order to include the shares of Common Stock
issued pursuant to the Agreement and the Conversion Shares and Purchaser Warrant
Shares issued pursuant to the Note Purchase Agreement as set forth herein; and
WHEREAS, the parties hereto desire to amend the Original Investors'
Rights Agreement as described above.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this Rights
Agreement, in the Agreement and the Note Purchase Agreement, the parties
mutually agree as follows:
SECTION 1. GENERAL.
1.1 DEFINITIONS. As used in this Rights Agreement the following terms
shall have the following respective meanings:
"APPROVED MARKET" means the New York Stock Exchange, the American Stock
Exchange, the Nasdaq National Market System or the Nasdaq Small Cap Market.
1.
99
"CONVERSION SHARES" means the shares of the Company's Voting Common
Stock issuable upon conversion of the Convertible Notes.
"CONVERSION VALUE" shall mean the value that a Purchaser would be
entitled to receive upon (i) conversion of the Convertible Note at the
Conversion Price (or Reset Price, if lower) then in existence, followed by (ii)
the subsequent sale of the Conversion Shares received thereby at the greater of
the Market Price for Shares of Common Stock in existence at the time (A) of the
closing of a redemption of a Convertible Note or (B) of the event triggering the
right to redemption.
"CONVERTIBLE NOTE CLOSING" means the closing of the sale of the
Convertible Notes and Purchaser Warrants pursuant to the Note Purchase
Agreement.
"CONVERTIBLE NOTE CLOSING DATE" means the date of the Convertible Note
Closing.
"CONVERTIBLE NOTES" means the Company's 7.0% Convertible Subordinated
Promissory Notes issued pursuant to the Note Purchase Agreement.
"DERIVATIVE TRANSACTIONS" shall have the meaning specified in Section
2.1(a).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FORM S-3" means such form under the Securities Act as in effect on the
date hereof or any successor registration form under the Securities Act
subsequently adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the SEC.
"XXXX.XXX REGISTRABLE SECURITIES" means any of the shares of the
Company's Common Stock issued pursuant to the Agreement.
"HOLDER" means any person owning of record any shares of the Shares,
Warrants or Registrable Securities that have not been sold to the public or any
assignee of record of such Registrable Securities in accordance with Section
2.13 hereof.
"INITIAL OFFERING" means the Company's first firm commitment
underwritten public offering of its Common Stock registered under the Securities
Act, which occurred on July 27, 1999.
"MARKET PRICE FOR SHARES OF COMMON STOCK" shall mean the price of one
share of Voting Common Stock determined as follows:
(i) If the Voting Common Stock is approved for trading on the NASDAQ
National Market System or the Nasdaq Small-Cap Market, the last reported "BID"
price thereon on the date of valuation;
(ii) If clause (i) above does not apply and the Voting Common Stock is
listed on NYSE or the American Stock Exchange, the closing bid price on such
exchange on the date of valuation;
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(iii) If neither clause (i) nor clause (ii) above applies but the Voting
Common Stock is quoted in the over-the-counter market, another recognized
exchange, on the pink sheets or bulletin board, (A) the last sales price on the
date of valuation or, if there is no such sales price, (B) the mean between the
last reported "BID" and "ASKED" prices thereof on the date of valuation; and
(iv) If neither clause (i), (ii) or (iii) above applies, the market
value as determined by a nationally recognized investment banking firm or other
nationally recognized financial advisor retained by the Company and reasonably
acceptable to the Purchasers for such purpose, taking into consideration, among
other factors, the earnings history, book value and prospects for the Company,
and the prices at which shares of Voting Common Stock recently have been traded.
Such determination shall be conclusive and binding on all persons.
"NON-VOTING COMMON STOCK" means such shares of the Company's Non-Voting
Common Stock sold pursuant to the Common Stock Purchase Agreement dated April
12, 1997 or the Common Stock Purchase Agreement dated January 31, 1997.
"NOTE PURCHASE AGREEMENT" means the Note Purchase Agreement dated as of
September 15, 2000 between the Company, GE Capital Equity Investments, Inc. and
the other Purchasers signatory thereto.
"OLD REGISTRABLE SECURITIES" means (i) any of the Shares, if such Shares
are shares of the Company's Voting Common Stock; (ii) any shares of the
Company's Voting Common Stock issued pursuant to the exercise of the Warrants;
and (iii) any shares of the Company's Voting Common Stock issued as (or issuable
upon the conversion or exercise of any warrants, right or other security which
is issued as) a dividend or other distribution with respect to, or in exchange
for or in replacement of, such above-described securities or the Warrants.
"PREMIUM REDEMPTION PRICE" shall mean as to the Convertible Notes:
(a) as used in all cases other than Sections 6(a)(i), (ii),
(iii), (iv) and (vii) of the Convertible Note, the greater of (A) 115% of the
sum of (I) the Face Value thereof, (II) accrued but unpaid interest thereon, and
(III) unpaid delay or default amounts thereon or (B) the Conversion Value, and
(b) as used in Sections 6(a)(i), (ii), (iii), (iv) and (vii) of
the Convertible Note only, 115% of the sum of (A) the Face Value thereof, (B)
accrued but unpaid interest thereon, and (C) unpaid delay or default amounts
thereon.
"PURCHASERS" means the investors purchasing Company securities pursuant
to the Note Purchase Agreement, and their transferees and assigns.
"PURCHASER REGISTRABLE SECURITIES" means (i) the Conversion Shares, (ii)
the Purchaser Warrant Shares, (iii) securities issued or issuable upon any stock
split, stock dividend, recapitalization or similar event with respect to the
foregoing, and (iv) other securities issued as a dividend or other distribution
with respect to, in exchange for or in replacement of the securities referred to
in the preceding clauses.
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"PURCHASER REGISTRATION STATEMENT" has the meaning specified in Section
2.7.
"PURCHASER SECURITIES" means the Purchaser Registrable Securities, the
Purchaser Warrants and the Convertible Notes.
"PURCHASER WARRANTS" means the Company's Common Stock Purchase Warrants
issued in connection with the Note Purchase Agreement.
"PURCHASER WARRANT SHARES" means the shares of the Company's Voting
Common Stock issuable upon exercise of the Purchaser Warrants.
"REGISTER," "REGISTERED," and "REGISTRATION" refer to a registration
(including a Shelf Registration) effected by preparing and filing a registration
statement in compliance with the Securities Act, and the declaration or ordering
of effectiveness of such registration statement or documents.
"REGISTRABLE SECURITIES" shall mean the Xxxx.xxx Registrable Securities,
ZoneNetwork Registrable Securities and the Old Registrable Securities.
Notwithstanding the foregoing, Registrable Securities shall not include any
securities (i) sold by a person to the public either pursuant to a registration
statement or Rule 144, (ii) sold in a private transaction in which the
transferor's rights under Section 2 of this Rights Agreement are not assigned or
(iii) held by a Holder whose registration rights have expired under Section 2.10
hereto.
"REGISTRABLE SECURITIES THEN OUTSTANDING" shall be the number of shares
that are Registrable Securities and either (1) are then issued and outstanding
or (2) are issuable pursuant to then exercisable or convertible securities.
"REGISTRATION EXPENSES" shall mean all expenses incurred by the Company
in complying with Sections 2.2, 2.3, 2.4, 2.6 and 2.7 hereof, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company, reasonable fees and disbursements not
to exceed Fifteen Thousand Dollars ($15,000) of a single special counsel for the
Holders of Registrable Securities (which counsel shall be selected by the
holders of a majority of the Registrable Securities and subject to the approval
of the Company, which approval shall not be unreasonably withheld), reasonable
fees and disbursements not to exceed Fifteen Thousand Dollars ($15,000) of a
single special counsel for the Holders of Purchaser Registrable Securities
(which counsel shall be selected by the holders of a majority of the Purchaser
Registrable Securities), blue sky fees and expenses and the expense of any
special audits incident to or required by any such registration (but excluding
the compensation of regular employees of the Company which shall be paid in any
event by the Company).
"SEC" or "COMMISSION" means the Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SELLING EXPENSES" shall mean all underwriting discounts and selling
commissions applicable to the sale.
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"SERIES A PREFERRED" means the Company's Series A Preferred Stock that
was converted into Common Stock upon the initial public offering of the
Company's equity securities.
"SERIES B PREFERRED" means the Company's Series B Preferred Stock that
was converted into Common Stock upon the initial public offering of the
Company's equity securities.
"SERIES C PREFERRED" means the Company's Series C Preferred Stock that
was converted into Common Stock upon the initial public offering of the
Company's equity securities.
"SERIES D PREFERRED" means the Company's Series D Preferred Stock that
was converted into Common Stock upon the initial public offering of the
Company's equity securities.
"SHARES" shall mean (i) the Company's Common Stock issued upon
conversion of the Series D Preferred, (ii) the Company's Common Stock issued
upon conversion of the Series C Preferred, (iii) the Company's Common Stock
issued upon conversion of the Series B Preferred, (iv) the Company's Common
Stock issued upon conversion of the Series A Preferred, (v) the Company's Voting
Common Stock issued pursuant to that certain Common Stock Purchase Agreement
dated August 19, 1997 by and among the Company and the Purchasers set forth on
Exhibit A thereto, (vi) the Company's Voting Common Stock and Voting Common
Stock issued upon conversion of the Non-Voting Common Stock issued pursuant to
that certain Common Stock Purchase Agreement dated April 2, 1997 by and between
the Company and Xxxxxxx X. Xxxxxxxx and (vii) the Company's Voting Common Stock
issued pursuant to that certain Common Stock Purchase Agreement dated January
31, 1997 between the Company and Quokka Sports Pty Ltd. as trustee for Ozware
Developments Unit Trust.
"TRANSACTION DOCUMENTS" means the Note Purchase Agreement, the
Noteholders Agreement (as defined in the Note Purchase Agreement), the
Convertible Notes, the Purchaser Warrants and this Rights Agreement.
"WARRANTS" means (i) the warrants to purchase Voting Common Stock of the
Company issued pursuant to that certain Note and Warrant Purchase Agreement
dated October 31, 1997 among the Company and the Purchasers set forth on Exhibit
A thereto and (ii) the warrants, if any, held by Intel Corporation, MediaOne
Interactive Services, Inc. ("MEDIAONE"), any affiliate of MediaOne to whom such
warrants have been originally issued, NBC/Quokka Ventures, LLC or its assigns,
Comdisco, Inc. or its assigns, Championship Auto Racing Teams, Inc. or its
assigns, @Home or its assigns and National Broadcasting Corporation, Inc. or its
assigns.
"VOTING COMMON STOCK" means the Company's $.0001 par value Common Stock.
"ZONENETWORK REGISTRABLE SECURITIES" means any of the shares of the
Company's Common Stock issued pursuant to the Agreement and Plan of Merger.
SECTION 2. REGISTRATION; RESTRICTIONS ON TRANSFER.
2.1 RESTRICTIONS ON TRANSFER. Provisions (a) through (d) apply to
Holders; provisions (e) through (g) apply to Purchasers.
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(a) Each Holder agrees not to make any disposition of all or any
portion of the Non-Voting Common Stock, Shares or Registrable Securities unless
and until:
(i) There is then in effect a registration statement under
the Securities Act covering such proposed disposition and such disposition is
made in accordance with such registration statement; or
(ii) (A) The disposition is made under Rule 144 or its
equivalent, (B) such Holder shall have notified the Company of the proposed
disposition and shall have furnished the Company with a statement of the
circumstances surrounding the proposed disposition, and (C) such Holder shall
have furnished the Company with an opinion of counsel that such disposition will
not require registration under the Securities Act if reasonably requested by the
Company, which request shall only be made in unusual circumstances; or
(iii) (A) The transferee has agreed in writing to be bound
by the terms of this Rights Agreement, (B) such Holder shall have notified the
Company of the proposed disposition and shall have furnished the Company with a
statement of the circumstances surrounding the proposed disposition, and (C) if
reasonably requested by the Company, such Holder shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration of such shares under the
Securities Act. Notwithstanding anything to the contrary in this Section
2.1(a)(iii), any Holder of Xxxx.xxx Registrable Securities may engage in
derivative, hedging or similar transactions (each, a "DERIVATIVE TRANSACTION")
without complying with the requirement set forth in subsection (A) above,
provided that: (i) such Derivative Transaction complies with the other
restrictions set forth in this Section 2.1; (ii) the transferee in such
Derivative Transaction shall have no registration rights under this Rights
Agreement until such transferee has agreed in writing to be bound by the terms
of this Rights Agreement; and (iii) as to Holders of Xxxx.xxx Registrable
Securities only, such Derivative Transaction does not have a settlement date
(the date on which the ownership of the underlying Registrable Securities should
be transferred) prior to one year from the date hereof.
(iv) Notwithstanding the provisions of paragraphs (i), (ii)
and (iii) above, no such registration statement or opinion of counsel shall be
necessary for a transfer by a Holder which is (A) a partnership to its partners
or former partners in accordance with partnership interests, (B) a corporation
to its shareholders in accordance with their interest in the corporation, or to
a wholly-owned subsidiary or an affiliate of such corporation (the term
"AFFILIATE" being defined herein as any other person or entity directly or
indirectly controlling, controlled by or under common control with such person
or entity, with "CONTROL" meaning the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
person or entity, whether through the ownership of voting securities or voting
interests, by contract or otherwise), (C) a limited liability company to its
members or former members in accordance with their interest in the limited
liability company, or (D) to the Holder's family member or trust for the benefit
of an individual Holder, provided any such transferee will be subject to the
terms of this Rights Agreement to the same extent as if he were an original
Holder hereunder.
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(b) Each certificate representing the Shares or Registrable
Securities shall (unless otherwise permitted by the provisions of this Rights
Agreement) be stamped or otherwise imprinted with legends substantially similar
to the following (in addition to any legend required under applicable state
securities laws or as provided elsewhere in this Rights Agreement):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER
THE ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT
REQUIRED.
THE SALE, TRANSFER OR ASSIGNMENT OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO THE TERMS OF AN AMENDED AND RESTATED INVESTORS'
RIGHTS AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER OR HIS
PREDECESSOR IN INTEREST. COPIES OF SUCH AGREEMENT MAY BE OBTAINED BY WRITTEN
REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE
COMPANY.
(c) The Company shall be obligated to reissue promptly unlegended
certificates at the request of any holder thereof if the holder shall have
obtained an opinion of counsel (which counsel may be counsel to the Company)
reasonably acceptable to the Company to the effect that the securities proposed
to be disposed of may lawfully be so disposed of without registration,
qualification or legend.
(d) Any legend endorsed on an instrument pursuant to applicable
state securities laws and the stop-transfer instructions with respect to such
securities shall be removed upon receipt by the Company of an order of the
appropriate blue sky authority authorizing such removal.
(e) Each Purchaser agrees to only dispose of the Purchaser
Registrable Securities pursuant to a Purchaser Registration Statement or an
exemption from applicable securities law registration requirements.
(f) Each certificate representing the Purchaser Registrable
Securities shall be stamped or otherwise imprinted with a legend substantially
in the following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED FOR OFFER OR SALE UNDER THE
SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR
OFFERED FOR SALE EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
SAID ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN APPLICABLE EXEMPTION FROM
SUCH REGISTRATION REQUIREMENTS.
The Company agrees to reissue certificates for Purchaser Registrable
Securities without the legend set forth above within 3 trading days of receipt
of a written request from a Purchaser, which request shall include such
information as is reasonably necessary for the Company and its counsel to
determine that such Purchaser Registrable Securities (i) have been sold to a
purchaser
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or purchasers who (in the opinion of counsel to the seller or such purchaser(s),
in form and substance reasonably satisfactory to the Company and its counsel)
are able to dispose of such shares publicly without registration under the Act,
(ii) have been sold pursuant to an effective registration statement, (iii) may
be sold pursuant to Rule 144(k), or (iv) have been sold in compliance with Rule
144.
(g) Nothing in this Rights Agreement will restrict the Purchasers
from engaging in Derivative Transactions with respect to the Purchaser
Securities. Furthermore, nothing herein shall limit the right of any Purchaser
to pledge the Purchaser Securities pursuant to a bona fide margin account or
lending arrangement entered into in compliance with law, including applicable
securities laws.
2.2 DEMAND REGISTRATION.
(a) Subject to the conditions of this Section 2.2, if the Company
shall receive a written request from the Holders of more than fifty percent
(50%) of the Registrable Securities then outstanding (the "INITIATING HOLDERS")
that the Company file a registration statement under the Securities Act covering
the registration of Registrable Securities having an aggregate offering price to
the public in excess of $10,000,000, then the Company shall, within twenty (20)
days of the receipt thereof, give written notice of such request to all Holders,
and subject to the limitations of this Section 2.2, use its best efforts to
effect, as soon as practicable, the registration under the Securities Act of all
Registrable Securities that the Holders request to be registered.
Notwithstanding any provision herein to the contrary, (i) one hundred percent
(100%) of the ZoneNetwork Registrable Securities held by each Holder of
ZoneNetwork Registrable Securities, and each such Holder's permitted transferees
or assignees, shall not be included in the Registrable Securities then
outstanding for the purposes of this Section 2.2(a) until the date six (6)
months from the date of the Original Investors' Rights Agreement, and thereafter
fifty percent (50%) of the ZoneNetwork Registrable Securities held by each
Holder of ZoneNetwork Registrable Securities, and each such Holder's permitted
transferees or assignees, shall not be included in the Registrable Securities
then outstanding until the date twelve (12) months from the date of the Original
Investors' Rights Agreement and (ii) one hundred percent (100%) of the Xxxx.xxx
Registrable Securities held by each Holder of Xxxx.xxx Registrable Securities,
and each such Holder's permitted transferees or assignees, shall not be included
in the Registrable Securities then outstanding for the purposes of exercising
the demand rights set forth in this Section 2.2(a) until the date six (6) months
from the date hereof, and thereafter fifty percent (50%) of the Xxxx.xxx
Registrable Securities held by each Holder of Xxxx.xxx Registrable Securities,
and each such Holder's permitted transferees or assignees, shall not be included
in the Registrable Securities then outstanding for the purposes of exercising
the demand rights set forth in this Section 2.2(a) until the date twelve (12)
months from the date hereof; provided that the restrictions set forth in this
sentence shall not be interpreted to limit the ability of any Holder of Xxxx.xxx
Registrable Securities from exercising their rights pursuant to Section 2.3
hereunder.
(b) If the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
this Section 2.2 or any request pursuant to Section 2.3 or 2.4 and the Company
shall include such information in the written notice referred to in Section
2.4(a). In such event, the right of any Holder to include its Registrable
Securities in such
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registration shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting (unless otherwise mutually agreed by a majority in interest of the
Initiating Holders and such Holder) to the extent provided herein. All Holders
proposing to distribute their securities through such underwriting shall enter
into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by a majority in interest of the
Initiating Holders (which underwriter or underwriters shall be reasonably
acceptable to the Company). Notwithstanding any other provision of this Section
2.2, if the underwriter advises the Company that marketing factors require a
limitation of the number of securities to be underwritten (including Registrable
Securities) then the Company shall so advise all Holders of Registrable
Securities which would otherwise be underwritten pursuant hereto, and the number
of shares that may be included in the underwriting shall be allocated to the
Holders of such Registrable Securities which would otherwise be underwritten
pursuant hereto on a pro rata basis based on the number of Registrable
Securities held by all such Holders (including the Initiating Holders). Any
Registrable Securities excluded or withdrawn from such underwriting shall be
withdrawn from the registration.
(c) The Company shall not be required to effect a registration
pursuant to this Section 2.2:
(i) after the Company has effected two (2) registrations
pursuant to this Section 2.2, and such registrations have been declared or
ordered effective by the SEC; or
(ii) if the Company shall furnish to Holders requesting the
filing of a registration statement pursuant to this Section 2.2, a certificate
signed by the Chairman of the Board stating that in the good faith judgment of
the Board of Directors of the Company, it would be seriously detrimental to the
Company and its shareholders for such registration statement to be effected at
such time, in which event the Company shall have the right to defer such filing
for a period of not more than sixty (60) days after receipt of the request of
the Initiating Holders; provided that such right to delay a request shall be
exercised by the Company not more than twice in any twelve (12) month period.
2.3 PIGGYBACK REGISTRATIONS. The Company shall notify all Holders of
Registrable Securities and all Purchasers of Purchaser Registrable Securities in
writing at least thirty (30) days prior to the filing of any registration
statement under the Securities Act for purposes of a public offering of
securities of the Company (including, but not limited to, registration
statements under Sections 2.2, 2.4, 2.5 or 2.6 or relating to secondary
offerings of securities of the Company, but excluding any Purchaser Registration
Statements under Section 2.7, registration statements relating to employee
benefit plans or with respect to corporate reorganizations or other transactions
under Rule 145 of the Securities Act) and will afford each such Holder an
opportunity to include in such registration statement all or part of such
Registrable Securities or Purchaser Registrable Securities held by such Holder
or Purchasers respectively. Each Holder or Purchaser desiring to include in any
such registration statement all or any part of the Registrable Securities or
Purchaser Registrable Securities, respectively, held by it shall, within fifteen
(15) days after the above-described notice from the Company, so notify the
Company in writing. Such notice shall state the intended method of disposition
of the Registrable Securities or Purchaser Registrable Securities by such Holder
or Purchaser. If a Holder or Purchaser decides not to include all of its
Registrable Securities or Purchaser
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Registrable Securities in any registration statement thereafter filed by the
Company, such Holder or Purchaser shall nevertheless continue to have the right
to include any Registrable Securities or Purchaser Registrable Securities in any
subsequent registration statement or registration statements as may be filed by
the Company with respect to offerings of its securities, all upon the terms and
conditions set forth herein. Notwithstanding any provision herein to the
contrary, (i) one hundred percent (100%) of the ZoneNetwork Registrable
Securities held by each Holder of ZoneNetwork Registrable Securities, and each
such Holder's permitted transferees or assignees, shall not be included in the
Registrable Securities for the purposes of this Section 2.3 until the date six
(6) months from the date of the Original Investors' Rights Agreement, and
thereafter fifty percent (50%) of the ZoneNetwork Registrable Securities held by
each Holder of ZoneNetwork Registrable Securities, and each such Holder's
permitted transferees or assignees, shall not be included in the Registrable
Securities until the date twelve (12) months from the date of the Original
Investors' Rights Agreement and (ii) fifty percent (50%) of the Xxxx.xxx
Registrable Securities held by each Holder of Xxxx.xxx Registrable Securities,
and each such Holder's permitted transferees or assignees, shall not be included
in the Registrable Securities for the purposes of this Section 2.3 until the
date twelve (12) months from the date hereof.
(a) UNDERWRITING. If the registration statement under which the
Company gives notice under this Section 2.3 is for an underwritten offering, the
Company shall so advise the Holders of Registrable Securities and the Purchasers
of Purchaser Registrable Securities. In such event, the right of any such Holder
or Purchaser to be included in a registration pursuant to this Section 2.3 shall
be conditioned upon such Holder's or Purchaser's participation in such
underwriting and the inclusion of such Holder's Registrable Securities or
Purchaser's Purchaser Registrable Securities in the underwriting to the extent
provided herein. All Holders or Purchasers proposing to distribute their
Registrable Securities or Purchaser Registrable Securities through such
underwriting shall enter into an underwriting agreement in customary form with
the underwriter or underwriters selected for such underwriting by the Company.
Notwithstanding any other provision of this Rights Agreement, if the underwriter
determines in good faith that marketing factors require a limitation of the
number of shares to be underwritten, the number of shares that may be included
in the underwriting shall be allocated first, to the Company; second, to the
Holders and Purchasers on a pro rata basis based on the total number of
Registrable Securities and Purchaser Registrable Securities held by the Holders
and Purchasers who wish to sell in such offering; and third, to any shareholder
of the Company (other than a Holder of Registrable Securities or a Purchaser of
Purchaser Registrable Securities) on a pro rata basis. Notwithstanding the
immediately preceding sentence, in no event shall the amount of securities of
the selling Holders or Purchasers included in the registration be reduced below
twenty-five percent (25%) of the total amount of securities included in such
registration. In no event will shares of any other selling shareholder be
included in any such registration which would reduce the number of shares which
may be included by Holders or Purchasers without the written consent of Holders
or Purchasers of more than fifty percent (50%) of the aggregate number of
Registrable Securities and Purchaser Registrable Securities proposed to be sold
in the offering. Notwithstanding anything to the contrary in this Section
2.3(a), (i) in the event of a registration pursuant to Section 2.5 in which the
underwriter determines in good faith that marketing factors require a limitation
of the number of shares to be underwritten, the number of shares that may be
included in the underwriting shall be allocated first, to the Holders of
ZoneNetwork Registrable Securities; second, to the Company; third, to other
Holders or Purchasers on a pro rata basis based on the total number of
Registrable Securities and Purchaser Registrable Securities held by
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such other Holders or Purchasers who wish to sell in such offering; and fourth,
to any shareholder of the Company (other than a Holder of ZoneNetwork
Registrable Securities, other Registrable Securities or Purchaser Registrable
Securities) on a pro rata basis; (ii) in the event of a registration pursuant to
Section 2.6 in which the underwriter determines in good faith that marketing
factors require a limitation of the number of shares to be underwritten, the
number of shares that may be included in the underwriting shall be allocated
first, to the Holders of Xxxx.xxx Registrable Securities; second, to the
Company; third, to other Holders or Purchasers on a pro rata basis based on the
total number of Registrable Securities and Purchaser Registrable Securities held
by such other Holders or Purchasers who wish to sell in such offering; and
fourth, to any shareholder of the Company (other than a Holder or Purchaser of
Xxxx.xxx Registrable Securities, other Registrable Securities or Purchaser
Registrable Securities) on a pro rata basis; or (iii) in the event of a
registration pursuant to Section 2.7(c) in which the underwriter determines in
good faith that marketing factors require a limitation of the number of shares
to be underwritten, the number of shares that may be included in the
underwriting shall be allocated first, to the Purchasers of Purchaser
Registrable Securities; second, to the Company; third, to other Holders on a pro
rata basis based on the total number of Registrable Securities held by such
other Holders who wish to sell in such offering; and fourth, to any shareholder
of the Company (other than a Holder of Registrable Securities or Purchaser of
Purchaser Registrable Securities) on a pro rata basis.
(b) RIGHT TO TERMINATE REGISTRATION. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
Section 2.3 prior to the effectiveness of such registration whether or not any
Holder or Purchaser has elected to include securities in such registration. The
Registration Expenses of such withdrawn registration shall be borne by the
Company in accordance with Section 2.8 hereof.
2.4 FORM S-3 REGISTRATION. In the event the Company shall receive a
written request from the Holders of more than fifty percent (50%) of the
Registrable Securities then outstanding (the "INDICATING HOLDERS") that the
Company effect a registration on Form S-3 (or any successor to Form S-3) or any
similar short-form registration statement and any related qualification or
compliance with respect to all or a part of the Registrable Securities owned by
such Holder or Holders, the Company will:
(a) promptly give written notice of the proposed registration,
and any related qualification or compliance, to all other Holders of Registrable
Securities; and
(b) as soon as practicable, effect such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Indicating
Holder's or Indicating Holders' Registrable Securities as are specified in such
request, together with all or such portion of the Registrable Securities of any
other Holder or Holders joining in such request as are specified in a written
request given to the Company by any such other Holder or Holders within fifteen
(15) days after receipt of such written notice from the Company; provided,
however, that the Company shall not be obligated to effect any such
registration, qualification or compliance pursuant to this Section 2.4:
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(i) if Form S-3 (or any successor or similar form) is not
available for such offering by the Holders, or
(ii) if the Holders, together with the holders of any other
securities of the Company entitled to inclusion in such registration, propose to
sell Registrable Securities and such other securities (if any) at an aggregate
price to the public of less than $1,000,000, or
(iii) if the Company shall furnish to the Holders a
certificate signed by the Chairman of the Board of Directors of the Company
stating that in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company for such Form S-3
Registration to be effected at such time, in which event the Company shall have
the right to defer the filing of the Form S-3 registration statement for (a) a
period of not more than sixty (60) days after receipt of the request of the
Indicating Holder or Indicating Holders under this Section 2.4; and (b) a period
of not more than thirty (30) days after the lapse of the sixty (60) day deferral
referenced in Section 2.4(b)(iii)(a) immediately above; provided, that such
rights to delay a request shall be exercised by the Company not more than once
in any twelve (12) month period, or
(iv) if the Company has, within the twelve (12) month period
preceding the date of such request, already effected one (1) registration on
Form S-3 for the Holders pursuant to this Section 2.4,
(v) in any particular jurisdiction in which the Company
would be required to qualify to do business or to execute a general consent to
service of process in effecting such registration, qualification or compliance,
unless the Registrable Securities would not, on account of this limitation, be
available for offer and sale in at least twenty states, or
(vi) if the Company has, within the one hundred eighty (180)
day period preceding the date of such request, effected a Company initiated
registration (other than a registration effected solely to qualify an employee
benefit plan or to effect a business combination pursuant to Rule 145).
(c) Subject to the foregoing, the Company shall file a Form S-3
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders.
Notwithstanding any provision herein to the contrary, (i) one hundred
percent (100%) of the ZoneNetwork Registrable Securities held by each Holder of
ZoneNetwork Registrable Securities, and each such Holder's permitted transferees
or assignees, shall not be included in the Registrable Securities then
outstanding for the purposes of this Section 2.4 until the date six (6) months
from the date of the Original Investors' Rights Agreement, and thereafter fifty
percent (50%) of the ZoneNetwork Registrable Securities held by each Holder of
ZoneNetwork Registrable Securities, and each such Holder's permitted transferees
or assignees, shall not be included in the Registrable Securities then
outstanding until the date twelve (12) months from the date of the Original
Investors' Rights Agreement (ii) one hundred percent (100%) of the Xxxx.xxx
Registrable Securities held by each Holder of Xxxx.xxx Registrable Securities,
and each such Holder's permitted transferees or assignees, shall not be included
in the Registrable
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Securities then outstanding for the purposes of exercising the demand rights set
forth in this Section 2.4 until the date six (6) months from the date hereof,
and thereafter fifty percent (50%) of the Xxxx.xxx Registrable Securities held
by each Holder of Xxxx.xxx Registrable Securities, and each such Holder's
permitted transferees or assignees, shall not be included in the Registrable
Securities then outstanding for the purposes of exercising the demand rights set
forth in this Section 2.4 until the date twelve (12) months from the date
hereof; provided that the restrictions set forth in this sentence shall not be
interpreted to limit the ability of any Holder of Xxxx.xxx Registrable
Securities from exercising their rights pursuant to Section 2.3 hereunder.
2.5 FORM S-3 REGISTRATION FOR ZONENETWORK REGISTRABLE SECURITIES.
Following the date six months from the date of the Original Investors' Rights
Agreement, in the event the Company shall receive a written request from the
Holders of more than fifty percent (50%) of the ZoneNetwork Registrable
Securities then outstanding (the "ZONENETWORK INITIATING HOLDERS") that the
Company effect a registration on Form S-3 (or any successor to Form S-3) or any
similar short-form registration statement and any related qualification or
compliance with respect to all or a part of the ZoneNetwork Registrable
Securities owned by such Holder or Holders, the Company will:
(a) promptly give written notice of the proposed registration,
and any related qualification or compliance, to all other Holders of Registrable
Securities; and
(b) as soon as practicable, effect such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such ZoneNetwork
Initiating Holder's or ZoneNetwork Initiating Holders' ZoneNetwork Registrable
Securities as are specified in such request, together with all or such portion
of the Registrable Securities of any other Holder or Holders joining in such
request as are specified in a written request given to the Company by any such
other Holder or Holders within fifteen (15) days after receipt of such written
notice from the Company; provided, however, that the Company shall not be
obligated to effect any such registration, qualification or compliance pursuant
to this Section 2.5:
(i) if Form S-3 (or any successor or similar form) is not
available for such offering by the Holders, or
(ii) if the Holders propose to sell ZoneNetwork Registrable
Securities at an aggregate price to the public of less than $10,000,000, or
(iii) if the Company shall furnish to the Holders a
certificate signed by the Chairman of the Board of Directors of the Company
stating that in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company for such Form S-3
Registration to be effected at such time, in which event the Company shall have
the right to defer the filing of the Form S-3 registration statement for (a) a
period of not more than sixty (60) days after receipt of the request of the
ZoneNetwork Initiating Holder or ZoneNetwork Initiating Holders under this
Section 2.5; and (b) a period of not more than thirty (30) days after the lapse
of the sixty (60) day deferral referenced in Section 2.5(b)(iii)(a) immediately
above; provided, that such rights to delay a request shall be exercised by the
Company not more than once in any twelve (12) month period, or
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(iv) if the Company has already effected two (2)
registrations on Form S-3 for the Holders pursuant to this Section 2.5,
(v) in any particular jurisdiction in which the Company
would be required to qualify to do business or to execute a general consent to
service of process in effecting such registration, qualification or compliance,
unless the Registrable Securities would not, on account of this limitation, be
available for offer and sale in at least twenty states, or
(vi) if the Company has, within the one hundred eighty (180)
day period preceding the date of such request, effected a Company initiated
registration (other than a registration effected solely to qualify an employee
benefit plan or to effect a business combination pursuant to Rule 145).
Subject to the foregoing, the Company shall file a Form S-3 registration
statement covering the ZoneNetwork Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders. Notwithstanding any provision herein to the
contrary, in the event the Company so elects, the Company shall be able to
include other equity securities of the Company is such Form S-3 registration
statement, provided that such inclusion does not reduce the number of
ZoneNetwork Registrable Securities included therein.
Notwithstanding any provision herein to the contrary, fifty percent
(50%) of the ZoneNetwork Registrable Securities held by each Holder of
ZoneNetwork Registrable Securities, and each such Holder's permitted transferees
or assignees, shall not be included in the ZoneNetwork Registrable Securities
then outstanding for the purposes of this Section 2.5 until the date twelve (12)
months from the date of the Original Investors' Rights Agreement.
2.6 FORM S-3 REGISTRATION FOR XXXX.XXX REGISTRABLE SECURITIES. Following
the date six months from the date hereof, in the event the Company shall receive
a written request from the Holders of more than fifty percent (50%) of the
Xxxx.xxx Registrable Securities then outstanding (the "XXXX.XXX INITIATING
HOLDERS") that the Company effect a registration on Form S-3 (or any successor
to Form S-3) or any similar short-form registration statement and any related
qualification or compliance with respect to all or a part of the Xxxx.xxx
Registrable Securities owned by such Holder or Holders, the Company will:
(a) promptly give written notice of the proposed registration,
and any related qualification or compliance, to all other Holders of Registrable
Securities; and
(b) as soon as practicable, effect such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Xxxx.xxx
Initiating Holder's or Xxxx.xxx Initiating Holders' Xxxx.xxx Registrable
Securities as are specified in such request, together with all or such portion
of the Registrable Securities of any other Holder or Holders joining in such
request as are specified in a written request given to the Company by any such
other Holder or Holders within fifteen (15) days after receipt of such written
notice from the Company; provided, however, that the Company shall not be
obligated to effect any such registration, qualification or compliance pursuant
to this Section 2.6:
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(i) if Form S-3 (or any successor or similar form) is not
available for such offering by the Holders, or
(ii) if the Holders propose to sell Xxxx.xxx Registrable
Securities at an aggregate price to the public of less than $10,000,000, or
(iii) if the Company shall furnish to the Holders a
certificate signed by the Chairman of the Board of Directors of the Company
stating that in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company for such Form S-3
Registration to be effected at such time, in which event the Company shall have
the right to defer the filing of the Form S-3 registration statement for (a) a
period of not more than sixty (60) days after receipt of the request of the
Xxxx.xxx Initiating Holder or Xxxx.xxx Initiating Holders under this Section
2.6; and (b) a period of not more than thirty (30) days after the lapse of the
sixty (60) day deferral referenced in Section 2.6(b)(iii)(a) immediately above;
provided, that such rights to delay a request shall be exercised by the Company
not more than once in any twelve (12) month period, or
(iv) if the Company has already effected two (2)
registrations on Form S-3 for the Holders pursuant to this Section 2.6,
(v) in any particular jurisdiction in which the Company
would be required to qualify to do business or to execute a general consent to
service of process in effecting such registration, qualification or compliance,
unless the Registrable Securities or Purchaser Registrable Securities would not,
on account of this limitation, be available for offer and sale in at least
twenty states, or
(vi) if the Company has, within the one hundred eighty (180)
day period preceding the date of such request, effected a Company initiated
registration (other than a registration effected solely to qualify an employee
benefit plan or to effect a business combination pursuant to Rule 145).
Subject to the foregoing, the Company shall file a Form S-3 registration
statement covering the Xxxx.xxx Registrable Securities and other securities so
requested to be registered as soon as practicable after receipt of the request
or requests of the Holders. Notwithstanding any provision herein to the
contrary, in the event the Company so elects, the Company shall be able to
include other equity securities of the Company is such Form S-3 registration
statement, provided that such inclusion does not reduce the number of Xxxx.xxx
Registrable Securities included therein.
Notwithstanding any provision herein to the contrary, fifty percent
(50%) of the Xxxx.xxx Registrable Securities held by each Holder of Xxxx.xxx
Registrable Securities, and each such Holder's permitted transferees or
assignees, shall not be included in the Xxxx.xxx Registrable Securities then
outstanding for the purposes of this Section 2.6 until the date twelve (12)
months from the date hereof.
2.7 FORM S-3 REGISTRATION FOR HOLDERS OF PURCHASER REGISTRABLE
SECURITIES. Notwithstanding any other provision of this Rights Agreement, the
Company shall use its best efforts to effect the registration of the Purchaser
Registrable Securities issued in connection
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herewith (including without limitation the execution of an undertaking to file
post-effective amendments, appropriate qualification under applicable "BLUE SKY"
or other state securities laws and appropriate compliance with applicable
regulations issued under the Securities Act) as would permit or facilitate the
sale or distribution of all the Purchaser Registrable Securities in the manner
(including manner of sale) reasonably requested by the Purchaser and in all U.S.
jurisdictions. Such best efforts by the Company shall include the following:
(a) The Company shall, as expeditiously as reasonably possible
after the Convertible Note Closing Date:
(i) But in any event within 35 days thereafter, prepare and
file a shelf registration statement with the Commission on Form S-3 under the
Securities Act (or in the event that the Company is ineligible to use such form,
such other form as the Company is eligible to use under the Securities Act)
covering the sale from time to time by the Purchasers of the Purchasers
Registrable Securities (such registration statement, including any amendments or
supplements thereto and prospectuses contained therein, is referred to herein as
the "PURCHASER REGISTRATION STATEMENT"), which Purchaser Registration Statement,
to the extent allowable under the Securities Act and the rules promulgated
thereunder (including Rule 416), shall state that the initial Purchaser
Registration Statement also covers such number of additional shares of Voting
Common Stock as may become issuable to prevent dilution resulting from stock
splits, stock dividends or similar events. The number of shares of Voting Common
Stock initially included in the initial Purchaser Registration Statement shall
not exceed the number of shares allowed under Rule 415 and in no event will
exceed 150% of the number of shares of Voting Common Stock into which (i) the
Convertible Notes may be converted and (ii) the Purchaser Warrants may be
exercised. Thereafter, the Company shall use its best efforts to cause such
Purchaser Registration Statement to be declared effective as soon as
practicable, and in any event prior to January 15, 2001 (the "EFFECTIVENESS
DEADLINE"). The Company shall provide Purchasers and their legal counsel
reasonable opportunity, but not less than four (4) full business days, to review
the Purchaser Registration Statement or amendment or supplement thereto prior to
filing. Without limiting the foregoing, the Company will promptly respond to all
SEC comments, inquiries and requests, and shall request acceleration of
effectiveness at the earliest practicable date.
(ii) Prepare and file with the SEC such amendments and
supplements to such Purchaser Registration Statement and the prospectus used in
connection with such Purchaser Registration Statement, or prepare and file such
additional registration statements, as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities covered
by such Purchaser Registration Statement in accordance with the intended methods
of disposition by the seller thereof as set forth in the Purchaser Registration
Statement and notify the Purchasers of the filing and effectiveness of such
Registration Statement and any amendments or supplements.
(iii) After the registration, furnish to each Purchaser such
numbers of copies of a current prospectus conforming with the requirements of
the Act, copies of the Purchaser Registration Statement, any amendment or
supplement thereto and any documents incorporated by reference therein and such
other documents as such Purchaser may reasonably
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require in order to facilitate the disposition of Purchaser Registrable
Securities owned by such Purchaser.
(iv) Use its best efforts to register and qualify the
securities covered by such Purchaser Registration Statement under such other
securities or "BLUE SKY" laws of all U.S. jurisdictions; 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.
(v) Notify each Purchaser immediately of the happening of
any event (but not the substance or details of any such event unless
specifically requested by a Purchaser) as a result of which the prospectus
(including any supplements thereto or thereof and any information incorporated
or deemed to be incorporated by reference therein) included in such Purchaser
Registration Statement, as then in effect, includes an untrue statement of
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing, and use its best efforts to promptly update and/or
correct such prospectus, subject to the Suspension Grace Period in Section
2.7(b)(iii).
(vi) Notify each Purchaser immediately of the issuance by
the Commission or any state securities commission or agency of any stop order
suspending the effectiveness of the Purchaser Registration Statement or the
initiation of any proceedings for that purpose. The Company shall use its best
efforts to prevent the issuance of any stop order and, if any stop order is
issued, to obtain the lifting thereof at the earliest possible time.
(vii) Permit a single firm of counsel, designated by the
holders of a majority of the Purchaser Registrable Securities included in the
Purchaser Registration Statement, to review and comment on the Purchaser
Registration Statement and all amendments and supplements thereto within a
reasonable period of time, but not less than four (4) full business days, prior
to each filing, and shall not file any document in a form to which such counsel
reasonably objects.
(viii) Use its best efforts to list the Purchaser
Registrable Securities covered by such Purchaser Registration Statement with all
securities exchange(s) and/or markets on which the Common Stock is then listed
and prepare and file any required filings with the National Association of
Securities Dealers, Inc. or any exchange or market where the Common Stock is
then traded.
(ix) If applicable, take all steps necessary to enable
Purchasers to avail themselves of the prospectus delivery mechanism set forth in
Rule 153 (or successor thereto) under the Act.
(b) Set forth below in this Section 2.7(b) are (I) events that
may arise that the Purchasers consider will interfere with the full enjoyment of
their rights under the Note Purchase Agreement and this Rights Agreement (the
"INTERFERING EVENTS"), and (II) certain remedies applicable in each of these
events.
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Paragraphs (i) through (v) of this Section 2.7(b) describe the
Interfering Events, provide a remedy to the Purchasers if an Interfering Event
occurs and provide that the Purchasers may require that the Company redeem
outstanding Convertible Notes at a specified price if certain Interfering Events
are not timely cured.
Paragraph (v) provides, inter alia, that if payments required as the
remedy in the case of certain of the Interfering Events are not paid when due,
the Company may be required by the Investors to redeem outstanding Securities at
a specified price.
The preceding paragraphs in this Section 2.7(b) are meant to serve only
as an introduction to this Section 2.7(b), are for convenience only, and are not
to be considered in applying, construing or interpreting this Section 2.7(b).
(i) DELAY IN EFFECTIVENESS OF REGISTRATION STATEMENT.
(A) In the event that the Purchaser Registration
Statement has not been declared effective by the Effectiveness Deadline, then
the Company shall pay in cash to each Purchaser a Monthly Delay Payment (as
defined below) for each 30 day period (or portion thereof) thereafter during
which the Purchaser Registration Statement has not been declared effective,
which Monthly Delay Payments shall not in the aggregate exceed the maximum
percentage permitted by law.
(B) If the Purchaser Registration Statement has not
been declared effective by February 15, 2001, then each Purchaser shall have the
right but not the obligation (until such time as the Purchaser Registration
Statement is declared effective) to require the Company to redeem the
Convertible Notes, in whole or in part at the Premium Redemption Price. Each
Purchaser shall exercise such right by providing the Company with written notice
thereof (the "PUT NOTICE"), which such Put Notice shall include the type and
amount of each security that the Purchaser seeks to have redeemed and a date at
least five (5) business days from the date thereof on which the Purchaser seeks
the redemption to occur (the "REDEMPTION DATE").
(C) As used in this Rights Agreement, a "MONTHLY DELAY
PAYMENT" shall be a payment in immediately available funds equal to 1% of the:
(I) Face Amount of the Convertible Notes, (II) all accrued but unpaid interest
thereon and (III) all unpaid penalties payable thereon, held by a Purchaser for
each 30 day period (or portion thereof) that the specified condition in this
Section 2.7(b) has not been fulfilled or the specified deficiency has not been
remedied, (prorated in each case as appropriate, it being understood that the
aggregate Monthly Delay Payment paid to all Purchasers in any one month shall
not exceed the 1% figure referenced above). Payment of the Monthly Delay
Payments and Premium Redemption Price shall be due and payable from the Company
to such Purchaser within five (5) business days of demand therefor. Without
limiting the foregoing, if payment in immediately available funds of the Premium
Redemption Price is not made within such 5 business day period, the Purchaser
may revoke and withdraw in whole or in part its election to cause the Company to
make such mandatory purchase at any time prior to its receipt of such cash,
without prejudice to its ability to elect to receive that particular or other
Premium Redemption Price payments in the future.
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(ii) NO LISTING; PREMIUM PRICE REDEMPTION FOR DELISTING OF
CLASS OF SHARES.
(A) In the event that the Company fails, refuses or is
unable to cause the Purchaser Registrable Securities covered by the Purchaser
Registration Statement to be listed with the Approved Market and each other
securities exchange and market on which the Common Stock is then traded at all
times during the period ("LISTING PERIOD") commencing the earlier of the
effective date of the Purchaser Registration Statement or the Effectiveness
Deadline and continuing thereafter for so long as the Purchaser Warrants or
Convertible Notes are outstanding, then the Company shall pay in cash to each
Purchaser a Monthly Delay Payment for each 30-day period (or portion thereof)
during the Listing Period from and after such failure, refusal or inability to
so list the Purchaser Registrable Securities until the Purchaser Registrable
Securities are so listed.
(B) In the event that shares of Voting Common Stock of
the Company are delisted from the Approved Market at any time following the
Convertible Note Closing Date and remain delisted for 5 consecutive business
days, then at the option of each Purchaser and to the extent such Purchaser so
elects, the Company shall on 2 business days notice either (1) pay in cash (as
provided in Section 2(b)(v)) to such Purchaser a Monthly Delay Payment for each
30-day period (or portion thereof) that the shares are delisted or (2) redeem
the Purchaser Registrable Securities held by such Purchaser, in whole or in
part, at a redemption price equal to the Premium Redemption Price; provided,
however, that such Purchaser may revoke such request at any time prior to
receipt of payment of such Monthly Delay Payments or Premium Redemption Price,
as the case may be; provided, further, that the Company's obligation to pay the
Monthly Delay Payment (other than accrued but unpaid Monthly Delay Payments at
the time of the Company's cure) and/or redeem the Purchaser Registrable
Securities after receipt of a Purchaser notice shall cease if the delisting has
been cured by the Company prior to the payment and/or redemption.
(iii) BLACKOUT PERIODS. In the event any Purchaser is unable
to sell Purchaser Registrable Securities under the Purchaser Registration
Statement for more than an aggregate of forty-five (45) days in any 12 month
period ("SUSPENSION GRACE PERIOD"), including without limitation by reason of a
suspension of trading of the Voting Common Stock on the Approved Market, any
suspension or stop order with respect to the Purchaser Registration Statement or
the fact that an event has occurred as a result of which the prospectus
(including any supplements thereto) included in such Purchaser Registration
Statement then in effect includes an untrue statement of material fact or omits
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing,
or the number of shares of Voting Common Stock covered by the Purchaser
Registration Statement is insufficient at such time to make such sales (a
"BLACKOUT"), then the Company shall pay in cash to each Purchaser a Monthly
Delay Payment for each 30-day period (or portion thereof) from and after the
expiration of the Suspension Grace Period. In lieu of receiving the Monthly
Delay Payment as provided above, a Purchaser shall have the right but not the
obligation to elect (until the Company has no longer exceeded the Suspension
Grace Period) to have the Company redeem its Convertible Notes at the price
equal to the Premium Redemption Price.
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(iv) REDEMPTION FOR EXERCISE DEFICIENCY. In the event that
the Company does not have a sufficient number of shares of Voting Common Stock
available to satisfy the Company's obligations to any Purchaser upon receipt of
a notice of exercise of a Purchaser Warrant or Convertible Note from an
Investor, or is otherwise unable or unwilling for any reason (other than, prior
to the earlier of November 15, 2000 or shareholder approval, the Nasdaq Cap) to
issue Voting Common Stock as required by, and in accordance with the provisions
of, the Purchaser Warrants, the Convertible Notes or the Note Purchase Agreement
(each, an "EXERCISE DEFICIENCY"), then:
(A) The Company shall provide to each Purchaser a
Monthly Delay Payment for each 30 day period or portion thereof (appropriately
prorated) following the Exercise Deficiency, on the terms set forth in Section
2.7(b)(i)(C) above.
(B) At any time five (5) days after the commencement of
the running of the first 30-day period described above in clause (A) of this
paragraph (iv) and until the Exercise Deficiency is cured by the Company, at the
request of any Purchaser, the Company promptly shall purchase from such
Purchaser, and on the terms set forth in Section 2.7(b)(i)(C) above, the
Convertible Notes in each case as a result of the Exercise Deficiency at the
Premium Redemption Price, on the terms set forth in Section 2.7(b)(i)(C) above.
(v) PREMIUM REDEMPTION PRICE FOR DEFAULTS.
(A) The Company acknowledges that any failure, refusal
or inability by the Company to perform the obligations described in the
foregoing paragraphs (i) through (iv) will cause the Purchasers to suffer
damages in an amount that will be difficult to ascertain, including without
limitation damages resulting from the loss of liquidity in the Purchaser
Registrable Securities and the additional investment risk in holding the
Purchaser Registrable Securities. Accordingly, the parties agree, after
consulting with counsel, that it is appropriate to include in this Rights
Agreement the foregoing provisions for Monthly Delay Payments and mandatory
redemptions in order to compensate the Purchasers for such damages. The parties
acknowledge and agree that the Monthly Delay Payments and mandatory redemptions
set forth above represent the parties' good faith effort to quantify such
damages and, as such, agree that the form and amount of such payments and
mandatory redemptions are reasonable and will not constitute a penalty.
(B) In the event that the Company fails to pay any
Monthly Delay Payment within 5 business days of demand therefor, each Purchaser
shall have the right until the delinquent Monthly Delay Payment is paid to sell
to the Company any or all of its Convertible Notes at the Premium Redemption
Price on the terms set forth in Section 2.7(b)(i)(B) above.
(vi) CUMULATIVE REMEDIES. Each Monthly Delay Payment
triggered by an Interfering Event provided for in the foregoing paragraphs (i)
through (v) shall be in addition to each other Monthly Delay Payment triggered
by another Interfering Event; provided that even if more than one Interfering
Event shall be occurring at one time, only a single Monthly Delay Payment shall
be due. The Monthly Delay Payments and mandatory redemptions provided for above
are in addition to and not in lieu or limitation of any other rights the
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Purchasers may have at law, in equity or under the terms of the Transaction
Documents including without limitation the right to specific performance. Each
Purchaser shall be entitled to specific performance of any and all obligations
of the Company in connection with the registration rights of the Purchasers
hereunder.
(vii) CERTAIN ACKNOWLEDGMENTS. The Company acknowledges that
any failure, refusal or inability by the Company described in the foregoing
paragraphs (i) through (v) will cause the Purchasers to suffer damages in an
amount that will be difficult to ascertain, including without limitation damages
resulting from the loss of liquidity in the Purchaser Registrable Securities and
the additional investment risk in holding the Purchaser Registrable Securities.
Accordingly, the parties agree that it is appropriate to include in this Rights
Agreement the foregoing provisions for Monthly Delay Payments and mandatory
redemptions in order to compensate the Purchasers for such damages. The parties
acknowledge and agree that the Monthly Delay Payments and mandatory redemptions
set forth above represent the parties' good faith effort to quantify such
damages and, as such, agree that the form and amount of such Monthly Delay
Payments and mandatory redemptions are reasonable and will not constitute a
penalty. The parties agree that the provisions of this clause (vii) consist of
certain acknowledgments and agreements concerning the remedies of the Purchasers
set forth in clauses (i) through (v) and paragraph (vi) of this paragraph;
nothing in this clause (vii) imposes any additional default payments and
mandatory redemptions for violations under this Rights Agreement.
(c) Supplement or amend the Purchaser Registration Statement or
cause the related prospectus to be amended or supplemented if required under the
Securities Act or by the rules, regulations or instructions applicable to the
registration form used for such Purchaser Registration or with respect to
updated information about the Purchasers of Purchaser Registrable Securities, to
use all reasonable best efforts to cause any such amendment to become effective
and such Purchaser Registration Statement or related prospectus to become usable
as soon as practicable thereafter and to furnish to the Purchasers of Purchaser
Registrable Securities included in the Purchaser Registration Statement copies
of any such supplement or amendment promptly after its being used or filed with
the SEC.
(d) Use commercially reasonable efforts to make available one or
more executive officers of the Company to participate with the managing
underwriters in a "ROAD SHOW" or other selling efforts that may be reasonably
requested by the Purchasers of Purchaser Registrable Securities to facilitate
the disposition of the Purchaser Registrable Securities being registered by
them.
(e) If the Purchasers of at least twenty-five percent (25%) of
the Purchaser Registrable Securities then outstanding (the "INITIATING
PURCHASERS") give notice to the Company that they intend to distribute the
Purchaser Registrable Securities by means of an underwriting, they shall so
advise the Company and the Company shall include such information in a written
notice to the remaining Purchasers of Purchaser Registrable Securities. In such
event, the right of any Purchaser to include its Purchaser Registrable
Securities in such registration shall be conditioned upon such Purchaser's
participation in such underwriting and the inclusion of such Purchaser's
Purchaser Registrable Securities in the underwriting (unless otherwise mutually
agreed by a majority in interest of the Initiating Purchasers and such
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Purchaser) to the extent provided herein. All Purchasers proposing to distribute
their securities through such underwriting shall enter into an underwriting
agreement in customary form with the underwriter or underwriters selected for
such underwriting by a majority in interest of the Initiating Purchasers (which
underwriter or underwriters shall be reasonably acceptable to the Company).
Notwithstanding any other provision of this Section 2.7(e), if the underwriter
advises the Company that marketing factors require a limitation of the number of
securities to be underwritten (including Purchaser Registrable Securities) then
the Company shall so advise all Purchasers of Purchaser Registrable Securities
which would otherwise be underwritten pursuant hereto, and the number of shares
that may be included in the underwriting shall be allocated to the Purchasers of
such Purchaser Registrable Securities which would otherwise be underwritten
pursuant hereto on a pro rata basis based on the number of Purchaser Registrable
Securities held by all such Purchasers (including the Initiating Purchasers).
Any Purchaser Registrable Securities excluded or withdrawn from such
underwriting shall be withdrawn from the registration.
(f) Subject to the provisions of Section 2.7(b)(iii), each
Purchaser of Purchaser Registrable Securities agrees, by acquisition of such
Purchaser Registrable Securities that, upon actual receipt of any notice from
the Company pursuant to Section 2.7(a)(v) or Section 2.9(f), such Purchaser will
immediately discontinue any sales of such Purchaser Registrable Securities until
such Purchaser's receipt of an amended Purchaser Registration Statement,
supplemented or amended prospectus thereunder, or until it is advised in writing
by the Company that the use of the applicable Purchaser Registration Statement
may be resumed.
(g) Without limiting the remedies available to the Purchasers of
Purchaser Registrable Securities, the Company acknowledges that any failure by
the Company to comply with its obligations under this Section 2.7 may result in
material irreparable injury to the Purchasers of Purchaser Registrable
Securities for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that, in the event
of any such failure, the Purchasers of Purchaser Registrable Securities may
obtain such relief as may be required to specifically enforce the Company's
obligations under this Section 2.7.
2.8 EXPENSES OF REGISTRATION. Except as specifically provided in this
Section 2.8, all Registration Expenses incurred in connection with any
registration under Section 2.2, Section 2.3, Section 2.4, Section 2.5, Section
2.6 or Section 2.7 herein shall be borne by the Company. All Selling Expenses
incurred in connection with any registrations hereunder shall be borne by the
holders of the securities so registered pro rata on the basis of the number of
shares sold. The Company shall not, however, be required to pay for expenses of
any registration proceeding begun pursuant to Section 2.2, the request of which
has been subsequently withdrawn by the Initiating Holders, unless (a) the
withdrawal is based upon material adverse information concerning the Company of
which the Initiating Holders were not aware at the time of such request or (b)
the Holders of a majority of Registrable Securities agree to forfeit their right
to one requested registration pursuant to Section 2.2, in which event such right
shall be forfeited by all Holders). Additionally, the Company shall not be
required to pay for expenses in any registration proceeding begun pursuant to
Section 2.4, Section 2.5 or Section 2.6, the request of which has been
subsequently withdrawn by the Holders of the Registrable Securities, to be
included therein unless (a) the withdrawal is based upon material adverse
information concerning the Company of which the Initiating Holders were not
aware at the time of such request or (b)
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the Holders of a majority of Registrable Securities then agree that such
registration shall be deemed a completed registration for the purpose of Section
2.4(b), 2.5(b) or 2.6(b), as applicable. If the Holders are required to pay the
Registration Expenses, such expenses shall be borne by the Holders of securities
(including Registrable Securities) requesting such registration in proportion to
the number of shares for which such registration was requested.
2.9 OBLIGATIONS OF THE COMPANY. Without limiting the requirements of
Section 2.7, whenever required to effect the registration of any Registrable
Securities or Purchaser 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 or Purchaser Registrable Securities and
use all reasonable efforts to cause such registration statement to become
effective, and with respect to Registrable Securities only, upon the request of
the Holders of a majority of the Registrable Securities registered thereunder,
keep such registration statement effective for up to ninety (90) days or, if
earlier, until the Holder or Holders have completed the distribution related
thereto.
(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
Securities Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish to the applicable Holders such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities or Purchaser Registrable Securities being registered by them.
(d) 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.
(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(s) of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder covered by such registration statement at
any time when a prospectus relating thereto is required to be delivered under
the Securities 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, and promptly file,
and use reasonable efforts to cause to become effective, an amendment to such
registration statement to cause such registration statement not to include an
untrue statement of material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing.
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(g) Furnish, at the request of a majority of the Holders
participating in the registration, on the date that such Registrable Securities
or Purchaser Registrable Securities are delivered to the underwriters for sale,
if such securities are being sold through underwriters, or, if such securities
are not being sold through underwriters, on the date that the registration
statement with respect to such securities becomes effective, (i) an opinion,
dated as of such date, of the counsel representing the Company for the purposes
of such registration, in form and substance as is customarily given to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities or
Purchaser Registrable Securities and (ii) a letter dated as of such date, from
the independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and if permitted by applicable accounting standards, to the Holders
requesting registration of Registrable Securities or Purchaser Registrable
Securities.
2.10 TERMINATION OF REGISTRATION RIGHTS. All registration rights granted
under this Section 2 shall terminate and be of no further force and effect ten
(10) years after the date of the Company's Initial Offering. In addition, a
Holder's or Purchaser's registration rights shall expire if (i) the Company has
completed its Initial Offering and is subject to the provisions of the Exchange
Act, (ii) such Holder or Purchaser (together with its affiliates, partners and
former partners) holds less than 1% of the Company's outstanding Common Stock
(treating all shares of convertible Preferred Stock and all Convertible Notes on
an as converted basis) and (iii) all Registrable Securities or Purchaser
Registrable Securities held by and issuable to such Holder or Purchaser may be
sold under Rule 144(k); provided, however, that a Purchaser shall have
registration rights as long as such Purchaser has Purchaser Warrants or
Convertible Notes outstanding.
2.11 DELAY OF REGISTRATION; FURNISHING INFORMATION.
(a) 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 2.
(b) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to Section 2.2, 2.3, 2.4, 2.5, 2.6 or 2.7
with respect to a particular Holder or Purchaser that such selling Holder or
Purchaser shall furnish to the Company such information regarding itself, the
Registrable Securities or Purchaser Registrable Securities held by it and the
intended method of disposition of such securities as shall be required to effect
the registration of Registrable Securities or Purchaser Registrable Securities.
(c) Each Holder as to which any Shelf Registration is being
effected agrees to furnish promptly to the Company (unless the Holder has
otherwise provided such information to the Company or the Company otherwise has
actual knowledge of such updated information) all information required to be
disclosed so that the information previously furnished to the Company by such
Holder is not materially misleading and does not omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances in which they were made.
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2.12 INDEMNIFICATION. In the event any Registrable Securities or
Purchaser Registrable Securities are included in a registration statement under
Section 2.2, 2.3, 2.4, 2.5, 2.6 or 2.7:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder or Purchaser, the partners, officers, affiliates,
directors and legal counsel of each Holder or Purchaser, any underwriter (as
defined in the Securities Act) for such Holder and each person, if any, who
controls such Holder or Purchaser or underwriter within the meaning of the
Securities Act or the Exchange Act, against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject under the
Securities Act, the Exchange Act or other federal or state law, insofar as such
losses, 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") by the Company: (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 Securities Act, the Exchange Act, any state
securities law or any rule or regulation promulgated under the Securities Act,
the Exchange Act or any state securities law in connection with the offering
covered by such registration statement; and the Company will reimburse (as and
when incurred from time to time) each such Holder, Purchaser, partner, officer
or director, underwriter or controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action or enforcing the provisions of
this Section 2.12; provided, however, that the indemnity agreement contained in
this Section 2.12(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 such 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
such Holder, Purchaser, partner, officer, affiliate, director, underwriter or
controlling person of such Holder or Purchaser.
(b) To the extent permitted by law, each Holder or Purchaser
will, severally and not jointly, if Registrable Securities or Purchaser
Registrable Securities held by such Holder or Purchaser are included in the
securities as to which such registration qualifications or compliance is being
effected, indemnify and hold harmless the Company, each of its directors, its
officers, affiliates and legal counsel and each person, if any, who controls the
Company within the meaning of the Securities Act, any underwriter and any other
Holder selling securities under such registration statement or any of such other
Holder's partners, directors or officers or any person who controls such Holder
or Purchaser, against any losses, claims, damages or liabilities (several but
not joint) to which the Company or any such director, officer, affiliate,
controlling person, underwriter or other such Holder or Purchaser, or partner,
director, officer or controlling person of such other Holder or Purchaser may
become subject under the Securities Act, the Exchange 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
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conformity with written information furnished by such Holder or Purchaser
under an instrument duly executed by such Holder or Purchaser and stated to be
specifically for use in connection with such registration; and each such Holder
or Purchaser, severally and not jointly, will reimburse (as and when incurred
from time to time) any legal or other expenses reasonably incurred by the
Company or any such director, officer, controlling person, underwriter or other
Holder or Purchaser, or partner, officer, director or controlling person of such
other Holder or Purchaser in connection with investigating or defending any such
loss, claim, damage, liability or action if it is judicially determined that
there was such a Violation; provided, however, that the indemnity agreement
contained in this Section 2.12(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 or Purchaser, which consent shall not
be unreasonably withheld; provided further, that in no event shall any indemnity
under this Section 2.11 exceed the net proceeds from the offering received by
such Holder or Purchaser.
(c) Promptly after receipt by an indemnified party under this
Section 2.12 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 party under this Section 2.12, 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 shall
have the right to retain its own counsel, with the reasonable fees and expenses
to be paid by the indemnifying party, 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 or if the
counsel retained by the indemnifying party fails to assume the representation of
the indemnified party. The failure to deliver written notice to the indemnifying
party within a reasonable time of the commencement of any such action, shall not
relieve such indemnifying party of any liability to the indemnified party under
this Section 2.12, except to the extent that the indemnifying party is
materially prejudiced by such delay, but the omission so 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 2.12.
(d) If the indemnification provided for in this Section 2.12 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any losses, claims, damages or liabilities referred to
herein, the indemnifying party, in lieu of indemnifying such indemnified party
thereunder, shall to the extent permitted by applicable law contribute to the
amount paid or payable by such indemnified party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the Violation(s) that resulted in such
loss, claim, damage or liability, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by a court of law by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or
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omission; provided, that in no event shall any contribution by a Holder
hereunder exceed the proceeds from the offering received by such Holder or
Purchaser.
(e) The obligations of the Company, Purchasers and Holders under
this Section 2.12 shall survive completion of any offering of Registrable
Securities or Purchaser Registrable Securities in a registration statement. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement 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 in respect to such claim or litigation.
2.13 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company
to register Registrable Securities or Purchaser Registrable Securities pursuant
to this Section 2 may be assigned by a Holder or Purchaser to any transferee or
assignee of Registrable Securities or Purchaser Registrable Securities which (i)
is a person or entity which holds Registrable Securities or Purchaser
Registrable Securities, as the case may be, pursuant to a transfer permitted by
Section 2.1, or (ii) acquires at least fifty thousand (50,000) shares of
Registrable Securities or Purchaser Registrable Securities, as the case may be
(as adjusted for stock splits and combinations).
2.14 [INTENTIONALLY OMITTED - REFER TO SECTION 4.6].
2.15 LIMITATION ON SUBSEQUENT REGISTRATION RIGHTS. After the date of
this Rights Agreement, the Company shall not, without the prior written consent
of the Holders of more than fifty percent (50%) of the aggregate number of
Registrable Securities and the Purchasers of Purchaser Registrable Securities,
enter into any agreement with any holder or prospective holder of any securities
of the Company that would grant such holder registration rights senior to those
granted to the Holders or Purchasers hereunder.
2.16 "MARKET STAND-OFF" AGREEMENT. Each Holder (but not Purchasers of
Purchaser Registrable Securities and not Holders with respect to any Purchaser
Registrable Securities held by them) hereby agrees that such Holder shall not
sell or otherwise transfer or dispose of any Common Stock (or other securities)
of the Company held by such Holder (other than those included in the
registration) for a period specified by the representative of the underwriters
of Common Stock (or other securities) of the Company not to exceed ninety (90)
days following the effective date of each registration statement filed by the
Company, provided that all officers and directors of the Company enter into
similar agreements and that, to the extent that any such officer or director is
released from any such agreement, the Holders shall also be released to such
extent from the restriction contained in this Section 2.16. Nothing in this
Section 2.16 shall limit the ability of any Holder of Xxxx.xxx Registrable
Securities or any Purchaser Registrable Securities from engaging in derivative,
hedging or similar transactions in compliance with Section 2.1 hereof.
Each Holder agrees to execute and deliver such other agreements as may
be reasonably requested by the Company or the underwriter which are consistent
with the foregoing or which are necessary to give further effect thereto. The
obligations described in this Section 2.16 shall not apply to a registration
relating solely to employee benefit plans on Form S-1 or Form S-8 or
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similar forms that may be promulgated in the future, or a registration relating
solely to a Commission Rule 145 transaction on Form S-4 or similar forms that
may be promulgated in the future. The Company may impose stop-transfer
instructions with respect to the shares of Common Stock (or other securities)
subject to the foregoing restriction until the end of said ninety (90) day
period.
2.17 RULE 144 REPORTING. With a view to making available to the Holders
and Purchasers the benefits of certain rules and regulations of the SEC which
may permit the sale of the Registrable Securities and Purchaser Registrable
Securities to the public without registration, the Company agrees to use its
best efforts to:
(a) Make and keep public information available, as those terms
are understood and defined in SEC Rule 144 or any similar or analogous rule
promulgated under the Securities Act, at all times after the effective date of
the first registration filed by the Company for an 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 Exchange Act;
(c) So long as a Holder or Purchaser owns any Registrable
Securities or Purchaser Registrable Securities, furnish to such Holder forthwith
upon request: a written statement by the Company as to its compliance with the
reporting requirements of said Rule 144 of the Securities Act, and of the
Exchange Act (at any time after it has become subject to such reporting
requirements); a copy of the most recent annual or quarterly report of the
Company; and such other reports and documents as a Holder may reasonably request
in availing itself of any rule or regulation of the SEC allowing it to sell any
such securities without registration.
SECTION 3. AFFIRMATIVE COVENANTS.
3.1 CONFIDENTIAL INFORMATION, ETC. Each Investor (other than the
Purchasers) agrees that (a) all information received by such Investor pursuant
to the Original Investor Rights Agreement or any predecessor thereof and (b) any
other information, including without limitation information relating to the
Company's customers, technology, processes or formulas, that (i) is disclosed by
the Company to such Investor and (ii) is identified by the Company as being
confidential or proprietary ("CONFIDENTIAL INFORMATION"), shall be considered
confidential information. Each Investor (other than the Purchasers) further
agrees that such Investor shall hold all such Confidential Information in
confidence and shall not disclose any such Confidential Information to any third
party other than such Investor's counsel or accountants nor shall such Investor
use such Confidential Information for any purpose other than evaluation of such
Investor's investment in the Company; provided, however, that the foregoing
obligation to hold in confidence and not to disclose Confidential Information
shall not apply to any such information that (1) was available to the public
prior to disclosure by the Company, (2) becomes available to the public through
no fault of such Investor, (3) is disclosed to such Investor on a
non-confidential basis by a third party, provided that such Investor determines
after reasonable inquiry that the third party has a legal right to make such
disclosure, (4) is independently developed by such Investor or (5) is required
by law or a judicial or administrative order. The Company agrees not to provide
any Confidential Information or any other material non-public
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information to a Purchaser without the prior written consent of such Purchaser,
whereupon a Purchaser shall be deemed (with respect to any Confidential
Information so provided) subject to the above restrictions otherwise applicable
to Investors other than the Purchasers. Any information directly or indirectly
provided by the Company to a Purchaser in contravention of this Section 3.1 may
be disclosed to the market by such Purchaser without liability to such
Purchaser.
SECTION 4. MISCELLANEOUS.
4.1 GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL. THIS RIGHTS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE OF
CALIFORNIA AS APPLIED TO AGREEMENTS AMONG CALIFORNIA RESIDENTS ENTERED INTO AND
TO BE PERFORMED ENTIRELY WITHIN CALIFORNIA. EACH OF THE PARTIES HEREBY SUBMITS
TO THE EXCLUSIVE PERSONAL JURISDICTION AND WAIVES ANY OBJECTION TO SERVICE IN
EITHER (I) THE COUNTY OF NEW YORK, STATE OF NEW YORK, OR (II) THE COUNTY OF SAN
FRANCISCO, STATE OF CALIFORNIA. THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS
RIGHTS AGREEMENT.
4.2 SURVIVAL. The representations, warranties, covenants, and agreements
made herein shall survive any investigation made by any Holder or Purchaser and
the closing of the transactions contemplated hereby. All statements as to
factual matters contained in any certificate or other instrument delivered by or
on behalf of the Company pursuant hereto in connection with the transactions
contemplated hereby shall be deemed to be representations and warranties by the
Company hereunder solely as of the date of such certificate or instrument.
4.3 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 and shall inure to the benefit of and be enforceable by each
person who shall be a holder of Registrable Securities or Purchaser Registrable
Securities from time to time; provided, however, that prior to the receipt by
the Company of adequate written notice of the transfer of any Registrable
Securities or Purchaser Registrable Securities specifying the full name and
address of the transferee, the Company may deem and treat the person listed as
the holder of such shares in its records as the absolute owner and holder of
such shares for all purposes, including the payment of dividends or any
redemption price.
4.4 ENTIRE AGREEMENT. This Rights Agreement constitutes the full and
entire understanding and agreement between the parties with regard to the
subject matter hereof.
4.5 SEVERABILITY. In case any provision of this Rights Agreement shall
be invalid, illegal, or unenforceable, the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
4.6 AMENDMENT AND WAIVER.
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(a) Except as specifically set forth below, any provision of this
Rights Agreement 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 and
Purchasers of more than fifty percent (50%) of the aggregate number of
Registrable Securities and Purchaser Registrable Securities then outstanding;
provided, however, that if such amendment or waiver differentiates among
similarly situated stockholders or materially, adversely affects specific
stockholders or groups of stockholders then the consent of the holders of more
than fifty percent (50%) of the Registrable Securities or Purchaser Registrable
Securities then outstanding held by such affected stockholders or group of
stockholders shall additionally be required. Notwithstanding the foregoing, any
amendment or waiver of Section 2.7 or any provision that adversely affects,
reduces, delays, or impairs the rights of, or increases the obligations or costs
of ("ADVERSELY AFFECT"), the Purchasers of Purchaser Registrable Securities
(even if in a manner that is the same or similar to how it affects Holders of
Registrable Securities) shall require the written consent of the Company and the
Purchasers of more than sixty-six and two-thirds percent (66 2/3%) of the Face
Amount of the Purchaser Registrable Securities then outstanding, which amendment
or waiver shall be binding upon each Purchaser of Purchaser Registrable
Securities and the Company; provided, however, that it will not be deemed to
Adversely Affect the Purchasers if additional Investors become parties to this
Rights Agreement and thereby become participants in the piggyback allocations
under Section 2.3 hereof. Any amendment or waiver effected in accordance with
this Section 4.6 shall be binding upon each Holder or Purchaser and the Company.
By acceptance of any benefits under Section 2, Holders of Registrable Securities
and Purchasers of Purchaser Registrable Securities hereby agree to be bound by
the provisions hereunder.
(b) Notwithstanding the foregoing, this Rights Agreement may be
amended with only the written consent of the Company to include additional
purchasers of Shares or Purchaser Registrable Securities as "INVESTORS,"
"HOLDERS", and "PURCHASERS".
4.7 DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power, or remedy accruing to any Holder or Purchaser, upon
any breach, default or noncompliance of the Company under this Rights Agreement
shall impair any such right, power, or remedy, nor shall it be construed to be a
waiver of any such breach, default or noncompliance, or any acquiescence
therein, or of any similar breach, default or noncompliance thereafter
occurring. It is further agreed that any waiver, permit, consent, or approval of
any kind or character on any Holder's or Purchaser's part of any breach, default
or noncompliance under this Rights Agreement or any waiver on such Holder's or
Purchaser's part of any provisions or conditions of this Rights Agreement must
be in writing and shall be effective only to the extent specifically set forth
in such writing. All remedies, either under this Rights Agreement, by law, or
otherwise afforded to Holders, shall be cumulative and not alternative.
4.8 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified, (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient; if not, then on the next business
day, (iii) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, (iv) one (1) day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt, or (v) if earlier, upon receipt. All
communications shall be sent to the party to be notified at the
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address as set forth on Exhibit A hereto or at such other address as such party
may designate by ten (10) days advance written notice to the other parties
hereto.
4.9 ATTORNEYS' FEES. In the event that any dispute among the parties to
this Rights Agreement should result in litigation, the prevailing party in such
dispute shall be entitled to recover from the losing party all fees, costs and
expenses of enforcing any right of such prevailing party under or with respect
to this Rights Agreement, including without limitation, such reasonable fees and
expenses of attorneys and accountants, which shall include, without limitation,
all fees, costs and expenses of appeals.
4.10 TITLES AND SUBTITLES. The titles of the sections and subsections of
this Rights Agreement are for convenience of reference only and are not to be
considered in construing this Rights Agreement.
4.11 COUNTERPARTS. This Rights Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
31.
129
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTORS' RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: INVESTORS:
QUOKKA SPORTS, INC.
By: /s/ Signature By: /s/ Signature
------------------------------ ---------------------------------
Xxxx Xxxxxxx
President
Name of Investor:
-------------------
Name of Signatory:
------------------
(if applicable)
Title of Signatory:
-----------------
(if applicable)
SIGNATURE PAGE FOR QUOKKA SPORTS, INC.
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
130
EXHIBIT A
ADDRESSES
THE COMPANY
Quokka Sports, Inc.
000 Xxxxxxx Xxxxxx, Xxxxxx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xx. Xxxx Xxxxxxx
Telephone: 000-000-0000
Fax: 000-000-0000
INVESTORS
HOLDERS
Xx. Xxxxxxx X. Xxxxxxxx
Incline Village
000 Xxxxxxxx Xxxxx
X.X. Xxx 0000
Xxxxxxx Xxxxxxx, XX 00000
Telephone: 000-000-0000
Fax: 000-000-0000
Bayview Investors Ltd.
c/x Xxxxxxxxx, Xxxxxxxx & Company
000 Xxxxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xx Xxxxxxx
Telephone: 000-000-0000
Fax: 000-000-0000
Wakefield Group II LLC
0000 Xxxx Xxxxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxx Xxxxxxx
Telephone: 000-000-0000
Fax: 000-000-0000
Xxxxxxx Revocable Trust u/a/d
8/21/92
Xxxxxx X. Xxxxxxx, ttee
Xxxxxxx X. Xxxxxxx, ttee
0000 Xxxxx xx xx Xxxxxx
Xxx Xxx, XX 00000
Telephone: 000-000-0000
Fax: 000-000-0000
Xxxx Xxxxxx
Koninklijke Philips Electronics
Xxxxxxxx Xxxxx XXX00
Xxxxxxxxxxx 0
XX-0000XX Xxxxxxxxx
Xxxxxxxxxxx
Telephone: x00 (00) 00 00 000
Fax: x00 (00) 00 00 000
Xxxx Xxxxxxx
c/o Quokka Sports, Inc.
Ground Floor
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Telephone: 000-000-0000
Fax: 000-000-0000
X-0.
000
Xxxxxxxxx Partners, L.P.
c/o Xxxx Xxxxxxx, General Partner
Quokka Sports, Inc.
Ground Floor
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Telephone: 000-000-0000
Fax: 000-000-0000
(with a copy to: Xxxx X. Xxxxxxx)
Altheimer & Xxxx Law Offices
00 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Telephone: 000-000-0000
Fax: 000-000-0000)
Xxxx Xxxxxxxx
c/o Quokka Sports, Inc.
Ground Floor
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Telephone: 000-000-0000
Fax: 000-000-0000
Intel Corporation
c/o Xxxxxx Xxxxxxxxxx
0000 Xxxxxxx Xxxxxxx Xxxx. XX0-000
Xxxxx Xxxxx, XX 00000-0000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Xxxxx Xxxxxx
c/o Quokka Sports, Inc.
Ground Floor
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Telephone: 000-000-0000
Fax: 000-000-0000
Media Technology Ventures, L.P.
Media Technology Ventures
Entrepreneurs Fund, L.P.
Media Technology Equity Partners,
L.P.
Xxx Xxxxx Xxxxxx, Xxxxx Xxx
Xxx Xxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx
Telephone: 000-000-0000
Fax: 000-000-0000
Trinity Ventures Ltd.
Trinity Ventures V, L.P.
Trinity V, side-by-side fund, L.P.
c/o Xx. Xxxxx X. Xxxxxxx, Xx.
0000 Xxxx Xxxx Xxxx
Xxxx. 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
Telephone: 000-000-0000
Fax: 000-000-0000
GC&H Investments
c/o Cooley Godward LLP
Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000-0000
Attn: Xxxx Xxxxxxx
Telephone: 000-000-0000
Fax: 000-000-0000
Stanford University
Stanford Management Company
c/o Xxxxx Xxxxxx 0000
Xxxx Xxxx Xxxx Xxxxx Xxxx, XX 00000
Telephone: 000-000-0000
Fax: 000-000-0000
Accel VI L.P.
Accel Internet Fund II L.P.
Accel Keiretsu VI L.P.
Accel Investors '98 L.P.
000 Xxxxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxx
Telephone: 000-000-0000
Fax: 000-000-0000
A-2.
132
(Copy to: Accel Partners)
Xxx Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: X. Xxxxxx Sednaoui
Telephone: (000) 000-0000
Fax: (000) 000-0000)
MediaOne Interactive Services, Inc.
Attn: Xxxx Xx Xxxxxx
c/o AT&T Broadband
000 Xxxxxxxxx Xxxxx Xxxx, Xxxxx 000,
Xxxxxxxxx, XX 00000.
Telephone: 000-000-0000
Fax: 000-000-0000
The Xxxx Family 1982 Trust, dated
12/1/82,as amended
Attn: Xxxxxx Xxxx
0000 Xxxxx Xxxxx, #000
Xxx Xxxxx, XX 00000
Telephone: 000-000-0000
Fax: 000-000-0000
Outcast Communications, Inc.
c/o Xxxxx Xxxxxxxx
0000X Xxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Telephone: 000-000-0000
Fax: 000-000-0000
The Xxx Xxxxxxx and XxXxxx X.
Xxxxxx Family Trust U/T/D 4/8/92
c/o Quokka Sports, Inc.
000 Xxxxxxx Xxxxxx, Xxxxxx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxx Xxxxxxx
Telephone: 000-000-0000
Fax: 000-000-0000
The Xxxxxxx Family Irrevocable
Trust Dtd. 12/27/95 FBO Xxxxx X.
Xxxxxxx
The Xxxxxxx Family Irrevocable
Trust Dtd. 12/27/95 FBO Xxxxx X.
Xxxxxxx
The Xxxxxxx Family Irrevocable
Trust Dtd. 12/27/95 FBO Xxxxxx X.
Xxxxxxx
Xxxxxxx X. Xxxxxx, Trustee
c/o Quokka Sports, Inc.
000 Xxxxxxx Xxxxxx, Xxxxxx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxx Xxxxxxx
Telephone: 000-000-0000
Fax: 000-000-0000
Xxxxxxx Xxxxx Xxxxxxxx Trust
Xxxxx Xxxxxxx Xxxxxxx Xxxxxxxx Trust
Xxxx Xxxxxxxx Xxxxx Xxxxxxxx Trust
Xxxx Xxxxxxx Xxxxxxxx Trust
Xxxxxx, Xxxxxx & Xxxxxxx, LLP
Xxx Xxxxxxxx Xxxx., Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Telephone: 000-000-0000
Attn: Xxxxxx X. Xxxxxx
The Ignite Group
c/o Xxxxx Xxxxx, Venture Partner
000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Omega Ventures II, L.P.
Omega Ventures II Cayman, L.P.
Crossover Fund II, L.P.
Crossover Fund IIA, L.P.
c/o Xx Xxxxxxx
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
A-3.
133
Xxxxxxx Xxxxxx
c/o Growth Phase Europe Ltd.
00 Xxxxxxxxxx Xxxxxxx
Xxxxxx, Xxxxxxx X0 0XX
(With a copy to:
Growth Phase Europe
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxx Xxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000)
Xxxxxxx Xxxxxxxx
00 Xxxxxxx Xxxxxx
Xxxxxx XX0, Xxxxxxx
-- Send documents DHL to:
SeeligerY Conde
Xxxxxxxxx, 00
00000 Xxxxxx, Xxxxxx
Xxxxx
Telephone: x00 0 000 00 00
Fax: x00 (0) 000 00 00
Xxxxxx 1991 Revocable Trust
Xxxxx Xxxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
M. Xxxxxxxxx Xxxxxxx
c/o Quokka Sports, Inc.
000 Xxxxxxx Xxxxxx, Xxxxxx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxx Xxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
Liberty QS, Inc.
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
E-mail: xxxxx@xxxxxxxxxxxx.xxx
(with a copy to General Counsel at
the same Address)
Hearst Communications, Inc.
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxx, Vice President
Phone: (000) 000-0000
Fax: (000) 000-0000
E-mail: xxxxxxxx@xxxxxx.xxx
MeriTech Capital Partners LP
000 Xxxxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attn: Xxx Xxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
E-mail: xxxxx@xxxxxxxxxxxxxxx.xxx
Comcast Interactive Investments, Inc.
0000 Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxx, Vice President
Phone: (000) 000-0000
Fax: (000) 000-0000
E-Mail: xxxxx_xxxxxxxx@xxxxxxx.xxx
AtHome Corporation
000 Xxxxxxxx Xxxxxx
Xxxxxxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
A-4.
134
(with a copy to:
Xxxx Xxxxxxx
Excite @Home
000 Xxxxxxxx Xxxxxx
Xxxxxxx Xxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Crossover Fund II
c/o Omega Ventures
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attn: Xxx Xxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
E-mail: xxx_xxxx@xxxx.xxx
Pivotal Partners, L.P.
0 Xxxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxxxxxxx Xxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
E-mail: xxxxx@xx.xxxxxxxx.xxx
BT (Netherlands) Holdings B.V.
Xxxxxxxxxxxxxxx 00
0000 XX Xxxxxxxxx
Xxx Xxxxxxxxxxx
Attn: Company Secretary
(with a copy to:
Xxxxx Xxxxxxx
Phone: 000-00-000-000-0000
Fax: 000-00-000-000-0000
E-mail: xxxxx.x.xxxxxxx@xx.xxx
Xxxxxxx Xxxxxxx
0000 00xx Xxxxxx XX. Xxx. X
Xxxxxxx, XX 00000
Xxxx Xxxxxxxx
0000 X. Xxxxx Xx.
Xxxxxxx Xxxxxxxxx, XX 00000
Phone: 000-000-0000
Xxxxxx Armor
0000 Xxxxx Xxx Xxxxx
Xxxx Xxxxx, XX 00000
Tel: 000-000-0000
Xxxxxx Xxxxxx
0000-0xx Xxxxxx Xxxxx, #0000
Xxxxxxx, XX 00000
Phone: 000-000-0000
Xxxxx Xxxxxx
XX Xxx 0000
Xxxxxxx, XX 00000
Jolie Backer
XX Xxx 0000
Xxxxxxx, XX 00000
Xxxx Xxxxxxxxxx
0000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Phone: 000-000-0000
Xxxxxx X. Xxxxxx
0000 Xxxx Xxxxxxxxxx Xxxx. #0X
Xxxxxxx, XX 00000
Xxxxxxxxx Xxxxx
0000 Xxx Xxxxx Xx.
Xxxxxxx, XX 00000-0000
Phone: 000-000-0000
Xxxxxx Xxxxxxxxxxx
Xxx Xxxxx & Asso
0000 00xx Xxx. XX
Xxxxxx Xxxxxx, XX 00000
Phone: 000-000-0000
BMK Investments
c/o Xxxx Xxxxx
0000 XX Xxxxxx Xx.
Xxxxxxxxxx Xxxxxx, XX 00000
Phone: 000-000-0000
Xxxxxxx Xxxxxxxx
0000 0xx Xxxxxx X, #0000
Xxxxxxx, XX 00000
A-5.
000
Xxxxxx & Xxxxxx Xxxxxx
XX Xxx 0000
Xxxxxxx, XX 00000
Phone: 000-000-0000
Xxxxx Xxxxxx
0000 X. Xxxxxx Xxxx Xx. XX
Xxxxxxxx, XX 00000
Phone: 000-000-0000
Xxxxx Xxxxxx
000 Xxxx. Xxxxxx Xxxx., #00
Xxxx Xxxxx, XX 00000
Phone: 000-000-0000
Xxxx Xxxxxxxx
000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Xxxx Xxxxxxx
000 Xxxxxx Xxxxxx, #0
Xxxxxxxx, XX 00000
Xxx Xxxxxx
Xxxxxxxx.xxx
00 Xxxxxxx
Xxxxxxx, XX 00000
Phone: 000-000-0000 x 000
Xxxxx Xxxx
CobWeb, Inc.
0000 00xx Xxxxxx XX, Xxxxx X0
Xxxxxxxx, XX 00000
Tel: 000-000-0000
Xxxx Xxxxx
0000 XX 00xx, #000
Xxxxxx Xxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
Xxxxxx Xxxxx
0000 Xxxxxxxxx Xxx
Xxxxxxxx, XX 00000
Phone: 000-000-0000
Xxxxx Xxxxxx
iTango Software
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Phone: 000-000-0000 x000
Fax: 000-000-0000
Xxxx Xxxxxxxx
Dawntreader
000 Xxxxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
Xxxxx Xxxxxx
0000 Xxxxxx Xxxxx
Xxxxxx Xxxxxx, XX 00000
Xxx Xxxxxxxx
00000 000xx Xx XX
Xxxxxxxxxxx, XX 00000
Phone: 000-000-0000
Xxxx Xxx
XX Xxx 0000
Xxxxx Xxxxxx, XX 00000
Tel: 000-000-0000
Evergreen Partners
0000 Xxxxx Xxx., #0000
Xxxxxxx, XX 00000
Xxxx Xxxxxxxx
00000 XX 00xx Xxxxx
Xxxxxxxx, XX 00000
Phone: 000-000-0000
Fingerhut Companies, Inc.
c/o Xxxxxxx Xxxxxxx
0000 Xxxxx Xxxx
Xxxxxxxxxx, XX 00000
Phone: 000-000-0000
Fax: (000) 000-0000
Xxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxx, XX 00000
Phone: 000-000-0000
A-6.
000
Xxxx Xxxxxxxxxxx
00000-000xx Xxxxx XX
Xxxxxxxxxxx, XX 00000-0000
Phone: 000-000-0000 x000
Skip Franklin
Xxxxxxxxxx.xxx
0000-000xx Xxxxxx XX, #000
Xxxxxxxx, XX 00000
Phone: 000-000-0000
Fax: (000) 000-0000
Xx. Xxxxxxx Xxxxx
00 Xxxxxxxx Xxxx
Xxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
Xxxxxxxx Xxxxx
00000 Xxxxxxxxx Xx. XX
Xxxxxxx, XX 00000
Phone: 000-000-0000
Xxxxx Xxxxxxx
The Genesis Group
c/o eTranslate
000 Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Phone: 000-000-0000
Xxxx Xxxxxxxxxx
00000 XX 000xx Xx.
Xxxxxxxxxxx, XX 00000
Phone: 000-000-0000
Xxxxxxx Xxxxxxxx
0000 0xx Xxx. #0000
Xxxxxxx, XX 00000
Phone: 000-000-0000
Xxxxx Xxxxxxxxxx
XxxxXxxxxxx.xxx
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Tel: 000-000-0000 x000
Fax: 000-000-0000
Xxxxx Xxxxxxxxx
0000 0xx Xxx., Xxxxx 0000
Xxxxxxx, XX 00000
Phone: 000-000-0000
Xxxx Xxxxx
Bear Xxxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Phone: 000-000-0000
Xxx Xxxxxxx
00000 XX 00xx Xxx
Xxxxxxxx, XX 00000
Phone: 000-000-0000
Xxxxxx Xxxxx
0000 Xxxxxxx Xxx.
Xxxxxxx, XX 00000
Phone: 000-000-0000
Xxxxx Xxxxxxx
0000 0xx Xxx. #0000
Xxxxxxx, XX 00000
Xxxx Xxxxxxx
00000 XX 0xx, #X-000
Xxxxxxxx, XX 00000
Phone: 000-000-0000
Xxxx (Nick) Xxxxxx
0000 00xx Xxx. X
Xxxxxx Xxxxxx, XX 00000
Phone: 000-000-0000
Xxxxxxx Xxxxxxx
000 Xxxx Xxxx Xxxxxx
Xxxxxxx, XX 00000
Phone: 000-000-0000
Xxxxxx Investments, LLC
Attn. Xxxxxx Xxxxxx
Xxxxx & Company
000 0xx Xxxxxx
Xxx Xxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
A-7.
137
Xxxxx Xxxxxxxx
0000 Xxxxx Xxx., #0000
Xxxxxxx, XX 00000
Phone: 000-000-0000
X.X. Xxxxx
c/o Design Variations
000 X Xxxxxx, Xxxxx 000
Xxx Xxxxxx, XX 00000
Xxxxxxx Xxxxxxx
000 0xx Xxxxxx X.
Xxxxxxx, XX 00000
Tel: 000-000-0000
Xxxxx Xxxxx
0000 00xx Xxx. X
Xxxxxxx, XX 00000
Phone: 000-000-0000
Johan Liedgren
0000 00xx Xxx. X
Xxxxxxx, XX 00000
Phone: 000-000-0000
Xxxx Xxxxxx
0000 Xxxxx Xxxxx Xx.
Xxxxxxxx, XX 00000
Xxxxx Xxxx-Xxxxxxx
0000 Xxxxxxxx Xxxxx X.
Xxxxxxx, XX 00000
Tel: 000-000-0000 x000
Fax: 000-000-0000
Xxxxxxx X. Xxx
0000 000xx Xxx. XX
Xxxxxxxx, XX 00000
Phone: 000-000-0000
Xxxxx Xxxxxxxxx
c/o Xxxxx Xxxxxxxxx
0000 XX 0xx Xxxxxx
Xxxxxx, XX 00000
Phone: 000-000-0000
Xxxxx Xxxxxxxxx
0000 XX 0xx Xxxxxx
Xxxxxx, XX 00000
Phone: 000-000-0000
Xxxx Xxxxxxx
0000 Xxxxxxxxxx #0
Xxxxxxx, XX 00000
Tel: 000-000-0000 x000
Fax: 000-000-0000
Marketwave, Inc.
Attn. Xxxxxx Xxxxxxxxxx
000 Xxxxx Xxxx Xxx. #000
Xxxxxxx, XX 00000
Phone: 000-000-0000
Xxxxx Xxxxx
0000 Xxxxxxx Xxx
Xxx Xxxxxxxxx, XX
Tel: 000-000-0000
Xxxxxx XxXxxx
0000 Xxxxxxx Xxx. X
Xxxxxxx, XX 00000
Phone: 000-000-0000
Xxxxx XxXxxxxx
00000 XX 00xx Xxxxx
Xxxxxxx, XX 00000
Phone: 000-000-0000
Xxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxx, XX 00000
Phone: 000-000-0000
Xxxxxx Xxxxx Partners
Attn. Xxxxx Xxxxx
000 Xxxxxxxxx Xxx., 00xx Xxxxx
Xxx Xxxx, XX 00000-0000
Phone: 000-000-0000
Xxxxxx & Xxxxx Xxxxxxx
000 00xx Xxx. X
Xxxxxxx, XX 00000
Phone: 000-000-0000
A-8.
138
MST Partnership
c/o Tote
0000 Xxxxx Xxx, Xxxxx 0000
Xxxxxxx, XX 00000
Phone: 000-000-0000
Xxxxxxx Xxxxxx
0000-000xx Xxxxx XX
Xxxxxxxx, XX 00000
Tel: 000-000-0000 x000
Xxxxxx Xxxxxxxx
000 0xx Xxx. X
Xxxxxxx, XX 00000
Phone: 000-000-0000
Xxxxxx Xxxxxxxx
Timeless Toys
0000 Xxxxx Xxxxx, #X
Xxx Xxxxx, XX 00000-0000
Phone: 000-000-0000
Fax: 000-000-0000
Xxxxxx Xxxxxxxxx
Nordstrom's
000 Xxxxxxxxxx Xxx, #000
Xxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
Xxxx Xxxxxx
000 Xxxxxx Xxxxx XX
Xxxxxxxx, XX 00000
Phone: 000-000-0000
Xxxxx O'Dell
00000 XX 000xx Xx.
Xxxxxxx, XX 00000
Phone: 000-000-0000
Xxxxxxx X'Xxxxx
X.X. Xxx 0000
Xxxxxxxx, XX 00000
Phone: 000-000-0000
Xxx X'Xxxxx
0000 Xxxxxxxxx Xxxxx Xx.
Xxxxxx, XX 00000
Phone: 000-000-0000
X. X. Xxxxx
0000 Xxxx Xxxxxx Xx. XX
Xxxx Xxxxx, XX 00000
Phone: 000-000-0000
Xxxxxxx Xxxxx
C/o CobWeb
0000 00xx Xxxxxx XX, Xxxxx X0
Xxxxxxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
Xxxxx Xxxxxxxx
00 Xxxxx Xxx Xx.
Xxxxxx Xxxxxx, XX 00000-0000
Phone: 000-000-0000
Xxxxx Xxxxxxxxx
0000 00xx Xxx. X
Xxxxxxx, XX 00000
Phone: 000-000-0000
Xxxx Xxxxxx
0000 00xx Xxx. XX
Xxxxxx Xxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
Xxxxx Xxxxxx
000 X. Xxxxx Xxxxx
Xxx Xxxxxxx, XX 00000
Tel: 000-000-0000
Xxxx Xxxxx
0000 X 00xx
Xxxxxxx, XX 00000
Phone: 000-000-0000 x000
Fax: 000-000-0000
A-9.
139
Xxxx Xxxxx
000 Xxxxxxx Xxxxxx, #0
Xxxxxxxxxx Xxxxx, XX 00000
Xxxxxxxxx Xxxxxxx
000 X 00xx
Xxxxxxx, XX 00000
Xxxxxx Xxxxx
0000 0xx Xxxxxx, #000
Xxxxxxx, XX 00000
Xxxxxx Xxxxxxxxx
000 Xxxxxx
Xxxx Xxxxxx, XX 00000
Xxxxxxx Xxxxxxxxx
0000 000 Xxx., XX
Xxxxxxx, XX 00000
Phone: 000-000-0000
Xxxx Xxxxxxx
0000 Xxxxxx Xxxxxx Xx.
Xxxxxx, XX 00000
Xxxxxxx Xxxxxxxx
00000 XX 000xx Xx.
Xxxxxxx, XX 00000
Phone: 000-000-0000
Xxxx Xxxxxxxxxx
J-Max Capital
0000 0xx Xxx., #0000
Xxxxxxx, XX 00000
Phone: 000-000-0000
Xxxxxx Xxxxxxxxxx
Access Long Distance
000 Xxxxx Xxxxxx, #0000
Xxxxxxx, XX 00000
Phone: 000-000-0000
Fax: (000) 000-0000
Xxxx Xxxxxxx
Xxxxxxxxxx.xxx
0000 XX 0xx Xxx
Xxxx Xxxxxxxxxx, XX 00000
Tel: 000-000-0000
Xxx Xxxxxx
0000 Xxxxxx Xxxxxx, XX, #000
Xxxxxxx, XX 00000
Phone: 000-000-0000
The Stusser Group
Attn. Xxxxxx Xxxxxxx
0000 0xx Xxx., #0000
Xxxxxxx, XX 00000
Phone: 000-000-0000
Xxxxxx & Xxxx Xxxxxx
000 Xxxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Phone: 000-000-0000
Xxxx Xxxxxxxx
0000 00xx Xxx. XX
Xxxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
Xxxx Xxxxxxxx
00000-0xx Xxxxxx XX
Xxxxxxx, XX 00000
Tel: 000-000-0000 x000
Fax: 000-000-0000
Vans, Inc.
Attn. Xxxxx Xxxxxxxx
00000 Xxxxxxxxx Xxx.
Xxxxx Xx Xxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
Xxxxxxx Xxxx
0000 Xxxx Xxxxx Xxxxxx #000
Xxxxxxxx, XX 00000
Tel: 000-000-0000
Xxxxxxx Xxxxxx
0000 Xxxx Xxxxxx Xxx
Xxxxxx Xxxxxx, XX 00000
Phone: 000-000-0000
A-10.
000
Xxxxx Xxxxxx
0 Xxxxxxx Xxxxx
Xxxxxx, XX 00000
Phone: 000-000-0000
Xxxx Xxxxxxxxx
0000 Xxxxxxxxx Xxxxxx X., #000
Xxxxxxx, XX 00000
Tel: 000-000-0000 x000
Fax: 000-000-0000
GolfData Corporation
0000 XxXxxxxxxx Xxxxxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attn: Xxxx Xxxxxxx
with a copy to:
Satex Investment Partners
0000 XxXxxxxxxx Xxxxxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxx
Media One Interactive Services, Inc.
0000 X. Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Director of Finance
Fax: 000-000-0000
with a copy to:
Media One Group, Inc.
000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attn: General Counsel
The New York Times Magazine Group, Inc.
0000 Xxxx Xxxxxx
Xxxxxxxx, XX
Attn: Xxxxxx Xxxxxx
Fax: 000-000-0000
with a copy to:
The New York Times Company
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Secretary
Fax: 000-000-0000
Total Sports Inc.
000 Xxxxxxxxxxxx Xxxxxx Xxxx, 0xx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxx, III
Fax: 000-000-0000
with a copy to:
J. Xxxxxxxxxxx Xxxxx
Xxxxxx Xxxxxxx Xxxxx & Xxxxxx LLP
0000 Xxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000 Fax: 000-000-0000
Xxxx Candies
X.X. Xxx 00
Xxxxxxx 00
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxx Candies
Fax: 000-000-0000
X-00.
000
XXXXXXXXXX
Xxxxxxxx Bank
00 Xxxx 00xx Xxxxxx (00xx Xxxxx)
Xxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxx Xxxx, Xxxxx Xx and Xxxx
Xxxxx
GE Capital Equity Investments, Inc.
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Attn: Quokka Account Manager
Tel: (203)
Fax: (203)
Societe General
0000 Xxx xx xxx Xxxxxxxx
0xx Xxxxx
XX, XX 00000
Attn: Xxxxxxxxx Xxxxxx, Managing
Director
Tel: (000) 000-0000
Fax: (000) 000-0000
Cranshire Capital, L.P.
000 Xxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attn: Xxxx Xxxxxx
Tel: (000) 000-0000
Canadian Imperial Holdings Inc.
[CIBC]
000 Xxxxxxxxx Xxx., 0xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000 (fax)
OR
Attn: Xxxx Xxxx
Tel: (000) 000-0000
Fax: (000) 000-0000 (fax)
with a copy to:
In-house Legal Counsel
Xxxxx Xxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
DIRECTV Enterprises, Inc.
0000 X. Xxxxxxxx Xxx.
Xx Xxxxxxx, XX 00000
Attn: Xxxx Xxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
Genessee/Advantage Fund II Ltd.
X/X Xxxxx
Xxxx Xxxxxxxxx 0
Xxxxxxx, Xxxxxxxxxxx Antillies
with a copy to:
Genesee Investments
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Genesee International Inc.
00000 Xxxxx Xxxx 0xx Xxxxxx
Xxxxx 0000
Xxxxxxxx, XX 00000-0000
Attn: Xxx Xxxxx
Fax: (000) 000-0000
Velocity Investment Partners Ltd.
c/o Velocity Capital Management LLC
000 X. Xxxxxx Xx., Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Portfolio Manager
Tel. (000) 000-0000
Fax. (000) 000-0000
Lionhart Investments Ltd.
Xxxxxx Business Court
00 Xxxx Xxxx
Xxxxxxxxx, XX XX00 0XX
Attn: Xxxx Xxxxxx
(00) 000-000-0000
National Broadcasting Company, Inc.
A-12.
142
00 Xxxxxxxxxxx Xxxxx
Xxxxx 0000 Xxxx
Xxx Xxxx, XX 00000
Attn: Xxx Xxxxxxxx, Vice President
and CFO
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
National Broadcasting Company, Inc.
Law Department
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attn: Vice President, Corporate &
Transactions Law
Tel: (000) 000-0000
RS Orphan Fund, L.P.
c/o RS Investment Management
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx
(000) 000-0000
Accel VI L.P.
Accel Internet Fund II L.P.
Accel Keiretsu VI L.P.
Accel Investor '98 L.P.
000 Xxxxxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Notices to:
Accel Partners
Attn: Xxxxxx Sednaui
0 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Middlefield Ventures, Inc.
[Intel Corporation]
c/o Xxxxxx Xxxxxxxxxx
0000 Xxxxxxx Xxxxxxx Xxxx. XX0-000
Xxxxx Xxxxx, XX 00000-0000
Tel: (000) 000-0000
Fax: (000) 000-0000
Notices to:
Intel Corporation
0000 Xxxxxxx Xxxxxxx Xxxx.
Xxxxx Xxxxx, XX 00000
Attn: M&A Portfolio Manager -
M/S RN6-46
Fax: (000) 000-0000
Copies to:
Intel Corporation
0000 Xxxxxxx Xxxxxxx Xxxx.
Xxxxx Xxxxx, XX 00000
Attn: General Counsel
Fax: (000) 000-0000
Media Technology Ventures, L.P.
Media Technology Ventures
Entrepreneurs Fund, L.P.
Media Technology Equity Partners, L.P.
Media Technology Entrepreneurs
Fund II, X.X.
Xxxxxxx Management Growth
Fund, L.P.
Xxx Xxxxx Xxxxxx, Xxxxx 0
Xxx Xxxxx, XX 00000
Attn: Xxxxxx Xxxxx
Tel: (000) 000-0000
RS Orphan Offshore Fund, L.P.
c/o RS Investment Management
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx
(000) 000-0000
Taib Bank X.X.
Xxxx Center, Diplomatic Area
X.X. Xxx 00000
Xxxxxx, Xxxxxxx
Attn: Xxxxxx Xxxxx, Vice President
Tel: (973) 533334
Tel: (973) 533562 (direct)
Fax: (973) 533174
With copy to:
c/o Xxxxx Xxxxxxxxxx
Investor Relations Manager, M.E.
Carolina Financial Securities
Tel: (000) 000-0000
A-13.
143
Fax: (000) 000-0000
Xxxxxxxx X. Xxxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Tel: (000) 000-0000
Xxxxxxxx X. Xxx
The Shennan 1995 Trust
Xxxxxxxx X. Xxx
c/o Trinity Ventures
0000 Xxxx Xxxx Xxxx, Xxxxxxxx 0
Xxxxx Xxxx, XX 00000
Attn: Xxx Xxx
Tel: (000) 000-0000
Wakefield Group II LLC
0000 Xxxx Xxxxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxx Xxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
Xxxx X. Xxxxxxxx and Xxxxxxx X.
Xxxxxxxx TTEES U/T/A DTD 7/6/98
c/o RS Investment Management
Attn: Xxxx X. Xxxxxxxx
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
(000) 000-0000
Rana General Holding Ltd.
c/o Rana Investment Company
X.X. Xxx 00000, Xxxxxx 00000
Xxxxx Xxxxxx
Tel: 000.0.000.0000
Fax: 000.0.000.0000
AIM Group
c/o Xxxxx Xxxxxxxxxx
Investor Relations Manager, M.E.
Carolina Financial Securities
Tel: (000) 000-0000
Fax: (000) 000-0000
Xxxxxxx X. Xxxxxx
00 X. Xxx Xxxxxxx Xxxxx Xxxx.
Xxxxxxxx, XX 00000
Tel: (000) 000-0000
X.X. Xxxxxx Capital
Xxxxx Xxxxxxx
c/o RS Investment Management
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
A-14.
144
EXHIBIT D
NOTEHOLDERS AGREEMENT
AMONG
QUOKKA SPORTS, INC.,
GE CAPITAL EQUITY INVESTMENTS, INC.
AND
THE OTHER SIGNATORIES HERETO
DATED AS OF SEPTEMBER 15, 2000
145
TABLE OF CONTENTS
PAGE
ARTICLE 1 DEFINITIONS....................................................................... 1
Section 1.1 Certain Defined Terms................................................. 1
Section 1.2 Other Definitional Provisions......................................... 10
Section 1.3 Accounting Terms...................................................... 10
ARTICLE 2 COVENANTS......................................................................... 11
Section 2.1 Payment of Notes...................................................... 11
Section 2.2 SEC Reports and Available Information................................. 11
Section 2.3 Limitation on Indebtedness............................................ 11
Section 2.4 Limitation on Restricted Payments..................................... 11
Section 2.5 Limitation on Sales of Assets and Subsidiary Stock.................... 12
Section 2.6 Minimum Revenue....................................................... 12
Section 2.7 Minimum Operating Income/Maximum Operating Loss....................... 12
Section 2.8 Limitation on Affiliate Transactions.................................. 13
Section 2.9 Repurchase Right Upon a Change of Control............................. 13
Section 2.10 Limitation on Sale of Capital Stock and Merger of Subsidiaries........ 13
Section 2.11 Limitation on Liens................................................... 14
Section 2.12 Limitation on Restricted Investments and Acquisitions................. 14
Section 2.13 Limitation on Lines of Business....................................... 14
Section 2.14 Corporate Existence................................................... 14
Section 2.15 Tax Compliance........................................................ 15
Section 2.16 Payment of Taxes and Other Claims..................................... 15
Section 2.17 Payments for Consent.................................................. 15
Section 2.18 Compliance with Law................................................... 15
Section 2.19 Compliance Certificate................................................ 15
Section 2.20 Statement by Officers as to Default................................... 16
Section 2.21 Insurance............................................................. 16
Section 2.22 Access................................................................ 16
Section 2.23 HSR Approval.......................................................... 16
Section 2.24 Nasdaq Listing........................................................ 17
ARTICLE 3 SUCCESSOR COMPANY................................................................. 17
i
146
TABLE OF CONTENTS
(CONTINUED)
PAGE
Section 3.1 Merger and Consolidation.............................................. 17
ARTICLE 4 [RESERVED]........................................................................ 18
ARTICLE 5 TRANSFERS......................................................................... 18
Section 5.1 Noteholder Transferees................................................ 18
Section 5.2 Legends............................................................... 19
ARTICLE 6 MISCELLANEOUS..................................................................... 19
Section 6.1 Termination........................................................... 19
Section 6.2 Amendments and Waivers................................................ 19
Section 6.3 Successors, Assigns and Transferees................................... 20
Section 6.4 Notices............................................................... 20
Section 6.5 Further Assurances.................................................... 20
Section 6.6 Entire Agreement...................................................... 20
Section 6.7 Delays or Omissions................................................... 20
Section 6.8 Governing Law; Jurisdiction; Waiver of Jury Trial..................... 21
Section 6.9 Severability.......................................................... 21
Section 6.10 Effective Date........................................................ 21
Section 6.11 Enforcement........................................................... 21
Section 6.12 Titles and Subtitles.................................................. 22
Section 6.13 Counterparts; Facsimile Signatures.................................... 22
ii
147
QUOKKA SPORTS, INC.
NOTEHOLDERS AGREEMENT
THIS NOTEHOLDERS AGREEMENT (this "AGREEMENT") is entered as of September
15, 2000, among Quokka Sports, Inc., a Delaware corporation (the "COMPANY"), GE
Capital Equity Investments, Inc., a Delaware corporation ("GE CAPITAL") and the
other signatories hereto (together with GE Capital, the "NOTEHOLDERS").
RECITALS
WHEREAS, the Company and the Noteholders have entered into a Note
Purchase Agreement, dated as of September 15, 2000, as amended, supplemented or
otherwise modified from time to time (the "Note Purchase Agreement"), pursuant
to which the Noteholders will purchase in a single tranche an aggregate of up to
$100 million aggregate principal amount of 7.0% convertible subordinated notes
of the Company (the "Notes") and certain Warrants (the "Warrants");
WHEREAS, the parties hereto desire to enter into certain arrangements
relating to the Company and the Notes, to be effective as of the Closing (each
as defined below).
NOW, THEREFORE, in consideration of the foregoing recitals and of the
mutual promises hereinafter set forth, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1 CERTAIN DEFINED TERMS.
As used herein, the following terms shall have the following meanings:
"AFFILIATE" means, with respect to any Person, any other Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with, such specified Person, for so
long as such Person remains so associated to the specified Person.
"APPROVED MARKET" has the meaning set forth in the Note Purchase
Agreement.
"BENEFICIAL OWNER" or "BENEFICIALLY OWN" has the meaning given such term
in Rule 13d-3 under the Exchange Act and a Person's beneficial ownership of
Common Stock or other Voting Stock of the Company shall be calculated in
accordance with the provisions of such Rule; provided, however, that for
purposes of determining beneficial ownership, (i) a Person shall be deemed to be
the beneficial owner of any security which may be acquired by such Person
whether within 60 days or thereafter, upon the conversion, exchange or exercise
of any warrants, options, rights or other securities and (ii) no Person shall be
deemed to beneficially own any security solely as a result of such Person's
execution of this Agreement.
1.
148
"BOARD" means the Board of Directors of the Company.
"BUSINESS DAY" means any day that is not a Saturday, a Sunday or other
day on which banks are required or authorized by law to be closed in The City of
New York.
"CAPITAL LEASE" shall mean, with respect to any Person, any lease of any
property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, either would be required to be classified and accounted
for as a capital lease on a balance sheet of such Person or otherwise be
disclosed as a capital lease in a note to such balance sheet, other than, in the
case of the Company or any of its Subsidiaries, any such lease under which the
Company or such Subsidiary is the lessor.
"CAPITAL LEASE OBLIGATION" shall mean, with respect to any Capital
Lease, the amount of the obligation of the lessee thereunder that, in accordance
with GAAP, would appear on a balance sheet of such lessee in respect of such
Capital Lease or otherwise be disclosed in a note to such balance sheet.
"CAPITAL STOCK" means, with respect to any Person at any time, any and
all shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of capital stock, partnership interests (whether
general or limited) or equivalent ownership interests in or issued by such
Person, and with respect to the Company includes, without limitation, any and
all shares of Common Stock and Preferred Stock.
"CASH EQUIVALENTS" shall mean (i) marketable direct obligations issued
or unconditionally guaranteed by the United States of America or any agency
thereof maturing within one year from the date of acquisition thereof; (ii)
commercial paper maturing no more than one year from the date of creation
thereof and at the time of their acquisition having the highest rating
obtainable from either Standard & Poor's Corporation or Xxxxx'x Investors
Service, Inc.; and (iii) certificates of deposit, maturing not more than one
year from the date of creation thereof, issued by commercial banks incorporated
under the laws of the United States of America, each having combined capital,
surplus and undivided profits of not less than $200,000,000 and having a rating
of "A" or better by a nationally recognized rating agency.
"CHANGE OF CONTROL" shall have the meaning specified in the Note.
"CLOSING" has the meaning assigned to such term in the Note Purchase
Agreement.
"COMMON STOCK" means the Company's Common Stock, without par value and
any securities issued in respect thereof, or in substitution therefore, in
connection with any stock split, dividend or combination, or any
reclassification, recapitalizations, merger, consolidation, exchange or other
similar reorganization.
"COMPANY" means Quokka Sports, Inc., together with its successors by
merger or otherwise.
"COMPETITOR" shall mean any media company (including their Affiliates)
that, as a material portion of its business, produces in-depth coverage of
specific sporting events for
2.
149
distribution primarily by means of Interactive Delivery; provided, however, that
Competitor shall not include the General Electric Company or any of its
affiliates.
"CONSOLIDATED OPERATING INCOME" means, for any period, the Company's Net
Income, adjusted to add back (i) minority interest in net income of consolidated
subsidiaries, (ii) consolidated interest expense, (iii) amortization of goodwill
and other intangibles (iv) one-time charges on the Company's consolidated income
statement, (v) provisions for income taxes, minus, (vi) minority interest in net
loss of consolidated subsidiaries, (vii) consolidated interest income, and
(viii) one-time gains on the Company's consolidated income statement, in each
case for the Company and its Subsidiaries determined on a consolidated basis in
accordance with GAAP applied on a basis consistent with the Company's
consolidated financial statements included in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1999.
"CONSOLIDATED REVENUE" means, for any period, the consolidated revenue
for the Company and its Subsidiaries, determined on a consolidated basis in
accordance with GAAP.
"CONTROL" (including the terms "CONTROLLED BY" and "UNDER COMMON CONTROL
WITH"), with respect to the relationship between or among two or more Persons,
means the possession, directly or indirectly, of the power to direct or cause
the direction of the affairs or management of a Person, whether through the
ownership of Voting Stock, as trustee or executor, by contract or otherwise.
"CONVERSION SHARES" means the shares of Common Stock to be issued upon
the conversion of the Notes, as provided for in the Notes.
"DEFAULT" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"DIRECTOR" means any member of the Board.
"ENVIRONMENTAL LAWS" shall mean all federal, state and local laws,
statutes, ordinances and regulations, now or hereafter in effect, and in each
case as amended or supplemented from time to time, and any judicial or
administrative interpretation thereof, including, without limitation, any
applicable judicial or administrative order, consent decree or judgment,
relating to the regulation and protection of human health, safety, the
environment and natural resources (including, without limitation, ambient air,
surface water, groundwater, wetlands, land surface or subsurface strata,
wildlife, aquatic species and vegetation). Environmental Laws include but are
not limited to the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended (42 U.S.C. Section 9601 et seq.) ("CERCLA");
the Hazardous Material Transportation Act, as amended (49 U.S.C. Section 1801 et
seq.); the Federal Insecticide, Fungicide, and Rodenticide Act, as amended (7
U.S.C. Section 136 et seq.); the Resource Conservation and Recovery Act, as
amended (42 U.S.C. Section 6901 et seq.) ("RCRA"); the Toxic Substance Control
Act, as amended (15 U.S.C. Section 2601 et seq.); the Clean Air Act, as amended
(42 U.S.C. Section 740 et seq.); the Federal Water Pollution Control Act, as
amended (33 U.S.C. Section 1251 et seq.); the Occupational Safety and Health
Act, as amended (29 U.S.C. Section 651 et seq.) ("OSHA"); and the Safe Drinking
Water Act, as amended (42 U.S.C. Section 300f et seq.), and any and all
regulations
3.
150
promulgated thereunder, and all analogous state and local counterparts or
equivalents and any transfer of ownership notification or approval statutes.
"ERISA" means the Employee Retirement Income Security Act of 1974 (or
any successor legislation thereto), as amended from time to time and any
regulations promulgated thereunder.
"EVENT OF DEFAULT" shall have the meaning assigned to such term in
Section 6 of the Note.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"FACE AMOUNT" has the meaning assigned to such term in the Note.
"FISCAL YEAR" means the fiscal year of the Company ending on December 31
of each year.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time, including those set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board.
"GUARANTEED INDEBTEDNESS" shall mean, as to any Person, any obligation
of such Person guaranteeing any Indebtedness, lease, dividend, or other
obligation ("primary obligations") of any other Person (the "primary obligor")
in any manner (except for endorsements for collection or deposit in the ordinary
course of business) including, without limitation, any obligation or arrangement
of such Person (i) to purchase or repurchase any such primary obligation, (ii)
to advance or supply funds (a) for the purchase or payment of any such primary
obligation or (b) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency or any balance sheet
condition of the primary obligor, (iii) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation, or (iv) to indemnify the owner of such primary obligation against
loss in respect thereof.
"HOLDER" means any Noteholder and any other holder of Notes (including
any direct or indirect Transferees of a Noteholder) entitled to the rights, and
bound by the obligations, under this Agreement in accordance with Section
5.1(b).
"HSR ACT" means the Xxxx-Xxxxx Xxxxxx Antitrust Improvements Act of
1976, as amended.
"INCUR" means issue, create, assume, guarantee, incur or otherwise
become liable for; provided, however, that any Indebtedness or Capital Stock of
a Person existing at the time such Person becomes a Subsidiary (whether by
merger, consolidation, acquisition or otherwise) will be deemed to be incurred
by such Subsidiary at the time it becomes a Subsidiary; and the terms "Incurred"
and "Incurrence" have meanings correlative to the foregoing.
4.
151
"INDEBTEDNESS" means, with respect to any Person on any date of
determination (without duplication) (i) all indebtedness of such Person for
borrowed money or for the deferred purchase price of property or services
(including, without limitation, reimbursement and all other obligations with
respect to surety bonds, letters of credit and bankers' acceptances, whether or
not matured, but not including obligations to trade creditors incurred in the
ordinary course of business), (ii) all obligations evidenced by notes, bonds,
debentures or similar instruments (but specifically excluding the Warrants),
(iii) all indebtedness created or arising under any conditional sale or other
title retention agreements with respect to property acquired by such Person
(even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (iv) all Capital Lease Obligations, (v) all Guaranteed Indebtedness,
(vi) all Indebtedness referred to in clause (i), (ii), (iii), (iv) or (v) above
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in property
(including, without limitation, accounts and contract rights) owned by such
Person, even though such Person has not assumed or become liable for the payment
of such Indebtedness (but only to the extent of the fair market value of such
property in the case of such indebtedness that has not been assumed by such
Person) and (vii) all liabilities under Title IV of ERISA.
"INTERACTIVE DELIVERY" shall mean the delivery of content for use by an
end user to a monitor or viewing screen, whereby such delivery occurs by means
of telephone lines, cable television systems, optical fiber connections,
cellular phones, satellites, wireless broadcast or other means of transmissions
now known or hereafter devised, provided that the end user has the ability to
selectively manipulate the presentation to effect substantive content changes
during its use (e.g., a user can select the Internet page which such user will
view). For purposes of clarity, it is understood that Interactive Delivery will
not include transmission of any kind, now or hereafter devised, which makes
programs and other audio and/or visual recordings of any length, available for
viewing in a linear predetermined presentation (e.g., broadcast television,
cable television, pay-per-view, video-on-demand) with selective manipulation
available to the viewer, for example, time delay viewing of a program, color
adjustment, volume control, choice of camera feeds, or textual and/or visual
and/or audio material which enhances or provides additional information
supplementary to and related to the subject matter of the linear predetermined
presentation or presentations, such as (i) a separate stream of material with no
return path, (ii) a separate stream of material with a return path that is not
integrated or connected with the device delivering the linear presentation, or
(iii) a separate stream of material with a return path that permits responses
(e.g., polling) that do not effect sufficient content change to or manipulation
of the linear presentation so as to constitute Interactive Delivery (as an
example of an insufficient change, acknowledging poll results); provided,
however, that Interactive Delivery shall not include the delivery of Interactive
or Enhanced TV or the delivery (whether by Interactive Delivery or otherwise) of
audio and/or visual recordings of two minutes or more in length. In addition,
Interactive Delivery shall not include the deliver of content to the end user
which occurs principally by transporting a physical object incorporating the
content, such as magnetic disks or optical disks (for example, CD-ROM).
"INTERACTIVE OR ENHANCED TV" shall mean (a) television or
television-like programs (i.e., full motion video no less than two minutes in
length, including, without limitation, everything broadcast on the National
Broadcasting Company ("NBC") Television Network, all current and future
television stations owned and operated by NBC or any cable or digital
5.
152
network owned or controlled by NBC ("Television Programs")) which are delivered
via any transmission method and which incorporate interactively with the end
user (via any back channel) such as choice of camera feeds, click-to-order,
polling, game playing and VCR-type functionality (e.g., time shifting, cue and
review, indexing, slow motion, etc.), (b) all interactive content and/or
applications that are related to, and delivered simultaneously with, such
Television Programs and/or (c) any other content and/or applications which are
intended to be viewed using a device, a primary purpose of which is the viewing
of Television Programs.
"INVESTORS RIGHTS AGREEMENT" means the Amended and Restated Investors
Rights Agreement, dated as of September 15, 2000, among the Company and the
other signatories thereto.
"ISSUE DATE" means the date on which the Notes were originally issued.
"LIEN" means any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, security interest,
easement or encumbrance, or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement perfecting a security interest
as to assets owned by the relevant Person under the Uniform Commercial Code or
comparable law of any jurisdiction).
"MATERIAL ADVERSE EFFECT" with respect to any Person means any event,
circumstance, occurrence or omission which, individually or in the aggregate,
would have a material adverse effect on the business, assets, operations,
liabilities, condition (financial or other) or results of operations of such
Person and its Subsidiaries, taken as a whole, or on the ability of such Person
to perform its obligations under this Agreement, the Notes, the Investors Rights
Agreement or the Note Purchase Agreement.
"NET INCOME" means, for any period, the consolidated net income or loss,
as the case may be, of the Company and its Subsidiaries determined on a
consolidated basis in accordance with GAAP applied on a basis consistent with
the Company's consolidated financial statements included in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1999.
"NOTES" means the Company's 7.0% convertible subordinated notes.
"NOTEHOLDERS" has the meaning assigned to such term in the preamble.
"OFFICER" means the Chairman of the Board, the President, any Vice
President, the Treasurer, the Corporate Controller or the Secretary of the
Company.
"OFFICERS' CERTIFICATE" means a certificate signed by two Officers or by
an Officer and either an Assistant Treasurer or an Assistant Secretary of the
Company.
"OPINION OF COUNSEL" means a written opinion from legal counsel who is
acceptable to the Required Holder. The counsel may be an employee of or counsel
to the Company.
6.
153
"PERMITTED INDEBTEDNESS" means, with respect to the Company, (i) taxes
or assessments or other governmental charges or levies, either not yet due and
payable or to the extent that nonpayment thereof is permitted by the terms of
this Agreement; (ii) obligations under workmen's compensation, unemployment
insurance, social security or public liability laws or similar legislation;
(iii) bids, tenders, contracts (other than contracts for the payment of money)
or leases to which the Company or any of its Subsidiaries is a party as lessee
made in the ordinary course of business; (iv) public or statutory obligations of
the Company or any of its Subsidiaries; (v) all deferred taxes and (vi) all
unfunded pension fund and other employee benefit plan obligations and
liabilities but only to the extent permitted to remain unfunded under applicable
law.
"PERMITTED LIENS" means, with respect to any Person:
(1) Liens securing Indebtedness and other obligations under Senior
Indebtedness permitted to be incurred under this Agreement;
(2) pledges or deposits by such Person under workmen's compensation
laws, unemployment insurance laws or similar legislation, or good faith deposits
in connection with bids, tenders, contracts (other than for the payment of
Indebtedness) or leases to which such Person is a party, or deposits to secure
public or statutory obligations of such Person or deposits or cash or United
States government bonds to secure surety or appeal bonds to which such Person is
a party, or deposits as security for contested taxes or import or customs duties
or for the payment of rent, in each case Incurred in the ordinary course of
business;
(3) Liens imposed by law, including carriers', warehousemen's and
mechanics' Liens, in each case for sums not yet due or being contested in good
faith by appropriate proceedings if a reserve or other appropriate provisions,
if any, as shall be required by GAAP shall have been made in respect thereof;
(4) Liens for taxes, assessments or other governmental charges not
yet subject to penalties for non-payment or which are being contested in good
faith by appropriate proceedings provided appropriate reserves required pursuant
to GAAP have been made in respect thereof;
(5) Liens in favor of issuers of surety or performance bonds or
letters of credit or bankers' acceptances issued pursuant to the request of and
for the account of such Person in the ordinary course of its business; provided,
however, that such letters of credit do not constitute Indebtedness;
(6) encumbrances, easements or reservations of, or rights of others
for, licenses, rights of way, sewers, electric lines, telegraph and telephone
lines and other similar purposes, or zoning or other restrictions as to the use
of real properties or liens incidental to the conduct of the business of such
Person or to the ownership of its properties which do not in the aggregate
materially adversely affect the value of said properties or materially impair
their use in the operation of the business of such Person;
7.
154
(7) leases and subleases and licenses and sublicenses of property
which do not materially interfere with the ordinary conduct of the business of
the Company or any of its Subsidiaries;
(8) judgment Liens not giving rise to an Event of Default so long as
such Lien is adequately bonded and any appropriate legal proceedings which may
have been duly initiated for the review of such judgment have not been finally
terminated or the period within which such proceedings may be initiated has not
expired;
(9) Liens for the purpose of securing the payment of all or a part
of the purchase price of, or Capital Lease Obligations with respect to, assets
or property acquired or constructed in the ordinary course of business provided
that:
(a) the aggregate principal amount of Indebtedness secured by
such Liens is otherwise permitted to be Incurred under this Agreement and does
not exceed the cost of the assets or property so acquired or constructed; and
(b) such Liens are created within 180 days of construction or
acquisition of such assets or property and do not encumber any other assets or
property of the Company or any Subsidiary other than such assets or property and
assets affixed or appurtenant thereto;
(10) Liens arising solely by virtue of any statutory or common law
provisions relating to banker's Liens, Liens in favor of securities
intermediaries, rights of set-off or similar rights and remedies as to deposit
accounts or securities accounts or other funds maintained with a depositary
institution or securities intermediaries; provided that:
(a) such deposit account is not a dedicated cash collateral
account and is not subject to restrictions against access by the Company in
excess of those set forth by regulations promulgated by the Federal Reserve
Board; and
(b) such deposit account is not intended by the Company or any
Subsidiary to provide collateral to the depository institution;
(11) Liens arising from Uniform Commercial Code financing statement
filings regarding operating leases entered into by the Company and its
Subsidiaries in the ordinary course of business;
(12) Liens existing on the Issue Date;
(13) Liens on property or shares of stock of a Person at the time
such Person becomes a Subsidiary; provided, however, that such Liens are not
created, incurred or assumed in connection with, or in contemplation of, such
other Person becoming a Subsidiary; provided further, however, that any such
Lien may not extend to any other property owned by the Company or any
Subsidiary;
(14) Liens on property at the time the Company or a Subsidiary
acquired the property, including any acquisition by means of a merger or
consolidation with or into the
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Company or any Subsidiary; provided, however, that such Liens are not created,
incurred or assumed in connection with, or in contemplation of, such
acquisition; provided further, however, that such Liens may not extend to any
other property owned by the Company or any Subsidiary; and
(15) Liens securing Indebtedness or other obligations of a
Subsidiary owing to the Company or a Wholly-Owned Subsidiary.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company, government or any agency or political subdivision hereof or
any other entity.
"PREFERRED STOCK," as applied to the Capital Stock of any Person, means
Capital Stock of any class or classes (however designated) which is preferred as
to the payment of dividends, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such Person, over shares
of Capital Stock of any other class of such Person.
"RELATED BUSINESS" means any business which is the same as or reasonably
related, ancillary or complementary to any of the businesses of the Company and
its Subsidiaries on the Issue Date.
"REQUIRED HOLDERS" means the Holders of 66 2/3% of the Face Amount of
the Notes then outstanding.
"RESTRICTED PAYMENT" shall mean (i) the declaration of any dividend or
the incurrence of any liability to make any other payment or distribution of
cash or other property or assets in respect of the Capital Stock of the Company
or any of its Subsidiaries or (ii) any payment on account of the purchase,
redemption or other retirement of the Capital Stock of the Company or any of its
Subsidiaries or any other payment or distribution made in respect of any Capital
Stock of the Company, either directly or indirectly.
"SEC" means the U.S. Securities and Exchange Commission or any other
federal agency then administering the Securities Act or the Exchange Act and
other federal securities laws.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SENIOR INDEBTEDNESS" shall have the meaning set forth in Section 11(g)
of the Notes.
"SIGNIFICANT HOLDER" means any Person holding at the time of
determination (together with their Affiliates) Notes with a Face Amount equal to
10% of the Face Amount of Notes issued on the Issue Date provided, however, that
if a Significant Holder shall become a Competitor, such Person shall no longer
be entitled to the rights of a Significant Holder hereunder.
"SUBORDINATED INDEBTEDNESS" means the Notes and any other Indebtedness
of the Company that specifically provides that such Indebtedness is to rank
equally with or junior to the Notes in right of payment and is not subordinated
by its terms in right of payment to any Indebtedness or other obligation of the
Company which is not Senior Indebtedness.
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"SUBSIDIARY" of any Person means any corporation, association,
partnership, joint venture, limited liability company or other business entry of
which more than 50% of the total voting power of shares of Capital Stock or
other interests (including partnership and joint venture interests) entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by (1) such Person, (2) such Person and one or more
Subsidiaries of such Person or (3) one or more Subsidiaries of such Person.
Unless otherwise specified herein, each reference to a Subsidiary will refer to
a Subsidiary of the Company.
"TRANSACTION DOCUMENTS" shall have the meaning set forth in the Note
Purchase Agreement.
"TRANSFER" means, directly or indirectly, to sell, transfer, assign,
pledge, encumber, hypothecate or similarly dispose of, either voluntarily or
involuntarily, or to enter into any contract, option or other arrangement or
understanding with respect to the sale, transfer, assignment, pledge,
encumbrance, hypothecation or similar disposition of, any Notes.
"TRANSFEREE" means any Person to whom any Noteholder or any Transferee
thereof Transfers the Notes of the Company in accordance with the terms hereof.
"VOTING STOCK" of a Person means all classes of Capital Stock of such
Person then outstanding and normally entitled to vote in the election of
directors or other similar governing body.
"WARRANT SHARES" shall have the meaning set forth in the Note Purchase
Agreement.
"WHOLLY-OWNED SUBSIDIARY" means a Subsidiary of the Company, all of the
Capital Stock of which (other than directors' qualifying shares) is owned by the
Company or another Wholly-Owned Subsidiary.
SECTION 1.2 OTHER DEFINITIONAL PROVISIONS.
(a) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Article and
Section references are to this Agreement unless otherwise specified.
(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 1.3 ACCOUNTING TERMS. Any accounting term used in this Agreement shall
have, unless otherwise specifically provided herein, the meaning customarily
given such term in accordance with GAAP, and all financial data required to be
submitted by this Agreement shall be prepared and computed, unless otherwise
specifically provided herein, in accordance with GAAP. That certain terms or
computations are explicitly modified by the phrase "in accordance with GAAP"
shall in no way be construed to limit the foregoing. In the event that GAAP
changes during the term of this Agreement such that any covenants contained
herein would then be calculated in a different manner or with different
components, (a) the parties hereto agree to
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amend this Agreement in such respects as are necessary to conform those
covenants as criteria for evaluating the Company's financial condition to
substantially the same criteria as were effective prior to such change in GAAP
and (b) the Company shall be deemed to be in compliance with such covenants
during the sixty day period following any such change in GAAP if and to the
extent that the Company would have been in compliance therewith under GAAP as in
effect immediately prior to such change.
ARTICLE 2
COVENANTS
SECTION 2.1 PAYMENT OF NOTES.
The Company shall promptly pay the principal of and interest on the
Notes on the dates and in the manner provided in the Notes and in this
Agreement.
SECTION 2.2 SEC REPORTS AND AVAILABLE INFORMATION.
The Company will file with the SEC the annual reports and the
information, documents and other reports (or copies of such portions of any of
the foregoing as the SEC may by rules and regulations prescribe) that are
specified in Sections 13 and 15(d) of the Exchange Act within the time periods
specified therein. In the event that the Company is not permitted to file such
reports, documents and information with the SEC pursuant to the Exchange Act,
the Company will nevertheless provide such Exchange Act information to the
Significant Holders as if the Company were subject to the specific reporting
requirements of Section 13 or 15(d) of the Exchange Act within the time periods
specified therein.
SECTION 2.3 LIMITATION ON INDEBTEDNESS.
The Company will not, and will not permit any of its Subsidiaries to,
Incur or suffer to exist any Indebtedness except: (i) Indebtedness evidenced by
the Notes; (ii) Indebtedness existing on the date hereof; (iii) Permitted
Indebtedness; (iv) outstanding Indebtedness owing by the Company to any of its
Wholly-Owned Subsidiaries or by any of the Company's Wholly-Owned Subsidiaries
to any other Wholly-Owned Subsidiaries or the Company; (vi) other Indebtedness
in an aggregate amount not to exceed $25,000,000 at any time, provided that no
event shall have occurred and be continuing or would result from the Incurrence
of such Indebtedness which constitutes or would constitute a Default or Event of
Default; (v) refinancings, extensions or other modifications of any of the items
of Indebtedness outstanding on the date hereof and described in the foregoing
clauses (i) through (iv).
SECTION 2.4 LIMITATION ON RESTRICTED PAYMENTS.
The Company will not and will not permit any of its Subsidiaries to make
any Restricted Payments nor will the Company permit any Subsidiary to make such
payments with respect to the Company's Capital Stock; provided, however, that
(a) the Company may declare and pay dividends on its Capital Stock payable in
shares of its Capital Stock if it complies with the provisions of the Notes
relating thereto, (b) Subsidiaries of the Company may pay dividends to the
Company or Subsidiaries of the Company (and make pro rata dividend payments to
other
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equity holders of NBC/Quokka Ventures, LLC), (c) the Company may make payments
by the Company for the repurchase of Capital Stock of the Company held by a
deceased former employee following the death of such employee, to the extent
repurchased with the proceeds of an insurance policy on the life of such
employee, and (d) the Company may make payments for the repurchase of Capital
Stock held by former employees of the Company in an aggregate amount not to
exceed $1,000,000 in any calendar year.
SECTION 2.5 LIMITATION ON SALES OF ASSETS AND SUBSIDIARY STOCK.
The Company will not, and will not permit any of its Subsidiaries to,
(i) sell, transfer, convey or otherwise dispose of any assets or properties or
(ii) liquidate, dissolve or wind up the Company, or any of its Subsidiaries,
except for transfers to the Company, whether voluntary or involuntary; provided,
however, that the foregoing shall not prohibit (i) the sale of inventory in the
ordinary course of business, (ii) the sale of surplus or obsolete equipment and
fixtures or other property that is not useful in the business of the Company and
its Subsidiaries, (iii) transfers resulting from any casualty or condemnation of
assets or properties, (iv) leases and subleases and licenses and sublicenses of
property in the ordinary course of the business of the Company and its
Subsidiaries, or (v) the sale of property provided that the book value of such
property, when added to all other property sold, transferred, conveyed or
otherwise disposed of since the date of this Agreement does not exceed on
aggregate amount of $3,000,000 in any calendar year.
SECTION 2.6 MINIMUM REVENUE.
The Company's Consolidated Revenue for each fiscal year indicated below
prior to the year the Company acquires Total Sports, Inc., a Delaware
corporation ("Total Sports") will equal or exceed the amount set forth opposite
such fiscal year:
2000 $ 48,000,000
2001 $ 69,000,000
2002 $ 98,000,000
2003 $137,000,000
2004 $192,000,000
The Company's Consolidated Revenue for the fiscal year in which the
Company acquires Total Sports and each subsequent fiscal year will equal or
exceed the amount set forth below opposite such fiscal year:
2000 $ 50,000,000
2001 $ 88,000,000
2002 $123,000,000
2003 $172,000,000
2004 $241,000,000
SECTION 2.7 MINIMUM OPERATING INCOME/MAXIMUM OPERATING LOSS.
The Company's Consolidated Operating Income for each fiscal year
indicated below prior to the year the Company acquires Total Sports, (i) will
not be more than the amount set
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forth opposite such fiscal year if such amount is negative or (ii) will equal or
exceed the amount set forth opposite such fiscal year if such amount is
positive:
2000 $(80,000,000)
2001 $(50,000,000)
2002 $(10,000,000)
2003 $ 15,000,000
2004 $ 29,000,000
The Company's Consolidated Operating Income for each fiscal year in
which the Company acquires Total Sports and each subsequent fiscal year (i) will
not be more than the amount set forth below opposite such fiscal year if such
amount is negative and (ii) will equal or exceed the amount set forth below
opposite such fiscal year if such amount is positive:
2000 $(83,000,000)
2001 $(38,000,000)
2002 $ (5,000,000)
2003 $ 19,000,000
2004 $ 36,000,000
SECTION 2.8 LIMITATION ON AFFILIATE TRANSACTIONS.
The Company shall not and shall not permit any of its Subsidiaries to
enter into or be a party to any transaction with any Affiliate of the Company or
such Subsidiary, except (i) transactions expressly permitted hereby, (ii)
transactions in the ordinary course of and pursuant to the reasonable
requirements of the Company's or such Subsidiary's business and upon fair and
reasonable terms that are fully disclosed to the Board and are no less favorable
to the Company or such Subsidiary than would be obtained in a comparable
arm's-length transaction with a Person not an Affiliate of the Company or such
Subsidiary, (iii) transactions between the Company and its Wholly-Owned
Subsidiaries or between such Subsidiaries and (iv) payment of compensation to
employees and directors' fees.
SECTION 2.9 REPURCHASE RIGHT UPON A CHANGE OF CONTROL.
The Company will not agree to or permit a Change of Control unless it
has available to it cash or guaranteed financing sufficient to repurchase such
Notes, and irrevocably and unconditionally agrees to repurchase the Notes
pursuant to Section 5 thereof, and such repurchases pursuant to Section 5 would
not be prohibited or delayed by the terms of any Indebtedness or other
obligation of the Company or its Subsidiaries.
SECTION 2.10 LIMITATION ON SALE OF CAPITAL STOCK AND MERGER OF SUBSIDIARIES.
The Company will not, and will not permit any Subsidiary of the Company
to, transfer, convey, sell, lease or otherwise dispose of any Voting Stock of
any Subsidiary or to issue any of the Voting Stock of a Subsidiary (other than,
if necessary, shares of its Voting Stock constituting directors' qualifying
shares) to any Person except to the Company or a Wholly-Owned Subsidiary. The
Company will not permit any Subsidiaries to merge or consolidate with or into
any other Person other than the Company or a Wholly-Owned Subsidiary.
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SECTION 2.11 LIMITATION ON LIENS.
The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly, create, incur or suffer to exist any Lien (other than
Permitted Liens) upon any of its property or assets (including Capital Stock),
whether owned on the date of this Agreement or acquired thereafter.
SECTION 2.12 LIMITATION ON RESTRICTED INVESTMENTS AND ACQUISITIONS.
The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly, in any transaction or series of transactions, acquire or
invest in any assets or business of any Person for cash in excess of 20% of the
sum of the cash on hand and Cash Equivalents, in each case at the Closing. The
Company will not, and will not permit any of its Subsidiaries to, directly or
indirectly, in any transaction or related series of transactions, acquire or
invest in, whether for cash, debt, Capital Stock, or other property or assets or
by guaranty of any obligation, any assets or business of any Person other than
(i) acquisitions of assets in the ordinary course of business of the Company,
(ii) acquisitions by the Company or its Wholly-Owned Subsidiaries from the
Company or any such Wholly-Owned Subsidiary or investments therein, (iii) Board
approved acquisitions of the assets or business of another Person where the sole
consideration is the Capital Stock of the Company; provided, that after giving
effect to such acquisition, the Company would be permitted to Incur $1 of
additional Indebtedness pursuant to Section 2.3 and no Default or Event of
Default shall occur, (iv) investments in Cash Equivalents that comply with the
investment policy approved by the board of directors of the Company, (v)
investments existing as of the date hereof, (vi) guaranties that comply with
Section 2.3, (vii) investments received in connection with the bankruptcy or
reorganization in settlement of delinquent obligations of, or other disputes
with, Persons arising in the ordinary course of business and (viii) accounts
receivable in the ordinary course of business. Except as permitted in this
Agreement (including this Section 2.12), the Company shall not, and shall not
permit any of its Subsidiaries to invest in any Person if, after giving effect
thereto, such Person would be an Affiliate of Company, other than investments in
existing Wholly-Owned Subsidiaries of Company.
SECTION 2.13 LIMITATION ON LINES OF BUSINESS.
The Company will not, and will not permit any Subsidiary to, engage in
any business other than a Related Business.
SECTION 2.14 CORPORATE EXISTENCE.
Subject to Section 3.1, the Company shall, and shall cause each of its
Subsidiaries to: (i) do or cause to be done all things reasonably necessary to
preserve and keep in full force and effect its corporate existence, and its
rights and franchises; and (ii) at all times to use commercially reasonable
efforts to maintain, preserve and protect all of its material patents,
trademarks and trade names, and preserve all the remainder of its material
assets, in use or useful in the conduct of its business and keep the same in
good repair, working order and condition (taking into consideration ordinary
wear and tear) and from time to time make, or cause to be
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made, all needful and proper repairs, renewals and replacements, betterments and
improvements thereto consistent with industry practices.
SECTION 2.15 TAX COMPLIANCE.
The Company shall pay all transfer, excise or similar taxes (not
including income or franchise taxes) in connection with the issuance, sale,
delivery or transfer by the Company to the Holders of the Notes, the Warrants,
the Warrant Shares and the Conversion Shares, and shall indemnify and save each
Holder harmless without limitation as to time against any and all liabilities
with respect to such taxes. The Company shall not be responsible for any taxes
in connection with the transfer of the Notes, the Warrants, the Warrant Shares
or such Conversion Shares by the holder thereof. The obligations of the Company
under this Section 2.15 shall survive the payment, prepayment, conversion or
redemption of the Notes and the termination of this Agreement.
SECTION 2.16 PAYMENT OF TAXES AND OTHER CLAIMS.
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (i) all material taxes, assessments and
governmental charges levied or imposed upon the Company or any Subsidiary or
upon the income, profits or property of the Company or any Subsidiary and (ii)
all lawful claims for labor, materials and supplies, which, if unpaid, might by
law become a material liability or lien upon the property of the Company or any
Subsidiary; provided, however, that the Company shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith
by appropriate proceedings and for which appropriate reserves, if necessary (in
the good faith judgment of management of the Company), are being maintained in
accordance with GAAP or where the failure to effect such payment would not be
reasonably likely to cause a Material Adverse Effect.
SECTION 2.17 PAYMENTS FOR CONSENT.
Neither the Company nor any of its Subsidiaries will, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fees or otherwise, to any Holder of any Notes or Warrants for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of the Transaction Documents unless such consideration is offered to be paid or
is paid to all Holders of the Notes or Warrants that consent, waive or agree to
amend in the time frame set forth in the solicitation documents relating to such
consent, waiver or agreement.
SECTION 2.18 COMPLIANCE WITH LAW.
The Company will, and will cause each of its Subsidiaries to, comply
with all laws, including Environmental Laws, applicable to it, except where the
failure to comply would not be reasonably likely to result in a Material Adverse
Effect.
SECTION 2.19 COMPLIANCE CERTIFICATE.
The Company shall deliver to the Holders within 120 days after the end
of each Fiscal Year an Officers' Certificate stating that in the course of the
performance by the signers of their
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duties as Officers of the Company they would normally have knowledge of any
Default or Event of Default and whether or not the signers know of any Default
or Event of Default that occurred during such period. If they do, the
certificate shall describe the Default or Event of Default, its status and what
action the Company is taking or proposes to take with respect thereto.
SECTION 2.20 STATEMENT BY OFFICERS AS TO DEFAULT.
The Company shall deliver to the Holders, as soon as possible and in any
event within five days after the Company becomes aware of the occurrence of any
Event of Default or an event which, with notice or the lapse of time or both,
would constitute an Event of Default, an Officers' Certificate setting forth the
details of such Event of Default or default and the action which the Company
proposes to take with respect thereto.
SECTION 2.21 INSURANCE.
The Company will maintain with financially sound and reputable insurers
(i) business interruption insurance in a minimum amount of $6,000,000 and (ii)
insurance covering such other liabilities and hazards and in such amounts as
customarily maintained by other companies operating similar businesses.
SECTION 2.22 ACCESS.
The Company shall permit representatives of the Significant Holders to
visit and inspect any of the properties of Company and its Subsidiaries, to
examine the corporate books and make copies or extracts therefrom and to discuss
the affairs, finances and accounts of the Company and its Subsidiaries with the
principal officers of the Company, all at such reasonable times, upon reasonable
notice but no more often than once per quarter.
SECTION 2.23 HSR APPROVAL.
(a) The Company shall promptly make any and all filings which it is
required to make under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), for the sale or issuance of the Notes and the
Warrants and the Conversion Shares and the Warrant Shares and the Company agrees
to furnish any Holder with such necessary information and reasonable assistance
as such Holder may reasonably request in connection with its preparation of any
necessary filings or submissions to the Federal Trade Commission ("FTC") or the
Antitrust Division of the U.S. Department of Justice (the "Antitrust Division"),
including, without limitation, any filings or notices necessary under the HSR
Act. Any such actions, if necessary, with respect to the conversion of the Notes
into Conversion Shares and the exercise of the Warrants for Warrant Shares shall
be taken by the Company at such times thereafter as the Holder shall reasonably
request. The Company shall, at its own expense, use all reasonable efforts to
respond to any request for additional information, or other formal or informal
request for information, witnesses or documents which may be made by any
governmental authority pertaining to the Company with respect to the sale of the
Notes and the Warrants and the issuance of the Conversion Shares and the Warrant
Shares and shall keep such Holder fully apprised of its actions with respect
thereto.
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(b) Each Holder shall promptly make any and all filings which it is
required to make under the HSR Act with respect to the purchase or issuance of
the Notes and the Warrants and the Conversion Shares and the Warrant Shares and
such Holder agrees to furnish the Company with such necessary information and
reasonable assistance as it may request in connection with its preparation of
any necessary filings or submissions to the FTC or the Antitrust Division,
including, without limitation, any filings or notices necessary under the HSR
Act. Each Holder will, at its own expense, use all reasonable efforts to respond
promptly to any request for additional information, or other formal or informal
request for information, witnesses or documents which may be made by any
governmental authority pertaining to such Holders, as case may be, with respect
to the sale of the Notes and the Warrants and the issuance of the Common Stock
issuable upon conversion of the Notes and exercise of the Warrants shall keep
the Company fully apprised of its actions with respect thereto.
(c) Each of the parties hereto shall use their commercially
reasonable efforts to give such notices and obtain all other authorizations,
consents, orders and approvals of all governmental authorities and other third
parties that may be or become necessary for its execution and delivery of, and
the performance of its obligations pursuant to this Agreement and will cooperate
fully with the other parties hereto in promptly seeking to obtain all such
authorizations, consents, orders and approvals.
(d) The Company shall pay all expenses and fees payable to
governmental authorities in connection with filings made pursuant to this
Section 2.23.
SECTION 2.24 NASDAQ LISTING.
The Company shall not voluntarily remove the Common Stock from listing
on an Approved Market.
ARTICLE 3
SUCCESSOR COMPANY
SECTION 3.1 MERGER AND CONSOLIDATION.
The Company shall not consolidate with or merge with or into, or convey,
transfer or lease all or substantially all its assets to, any Person, unless:
(i) the resulting, surviving or transferee Person (the
"Successor Company") shall be a corporation, partnership, trust or limited
liability company organized and existing under the laws of the United States of
America, any State thereof or the District of Columbia and the Successor Company
(if not the Company) shall expressly assume, by written agreement executed and
delivered to the Holders, in form satisfactory to the Required Holders, all the
obligations of the Company under the Transaction Documents;
(ii) immediately after giving effect to such transaction (and
treating any Indebtedness that becomes an obligation of the Successor Company or
any Subsidiary of the Successor Company as a result of such transaction as
having been Incurred by the Successor
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Company or such Subsidiary at the time of such transaction), no Default or Event
of Default shall have occurred and be continuing; and
(iii) the Company shall have delivered to the Holders an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such written agreement, if any, comply
with this Agreement.
For purposes of this Section 3.1, the sale, lease, conveyance,
assignment, transfer, or other disposition of all or substantially all of the
properties and assets of one or more Subsidiaries of the Company, which
properties and assets, if held by the Company instead of such Subsidiaries,
would constitute all or substantially all of the properties and assets of the
Company on a consolidated basis, shall be deemed to be the transfer of all or
substantially all of the properties and assets of the Company.
The Successor Company will succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Agreement, but, in the
case of a lease of all or substantially all its assets, the Company will not be
released from the obligation to pay the principal of and interest on the Notes
and perform the other obligations of the Company under the Transaction
Documents.
Notwithstanding the first sentence of this Section 3.1, (i) any
Subsidiary of the Company may consolidate with, merge into or transfer all or
part of its properties and assets to the Company, and (ii) the Company may merge
with an Affiliate incorporated solely for the purpose of reincorporating the
Company in another jurisdiction to realize tax or other benefits.
ARTICLE 4
[RESERVED]
ARTICLE 5
TRANSFERS
SECTION 5.1 NOTEHOLDER TRANSFEREES.
(a) The provisions hereof shall inure to the benefit of, to be
binding upon and be enforceable by, any Transferee.
(b) Prior to the consummation of a Transfer from a Noteholder, to
the extent rights and obligations are to be assigned, and as a condition
thereto, the applicable Transferee shall agree in writing with the other parties
hereto to be bound by the terms and conditions of this Agreement and provide the
Company and the other parties to this Agreement at such time complete
information for notices under this Agreement.
(c) Notwithstanding anything to the contrary in this Agreement, any
Transfer permitted or required by this Agreement shall be in compliance with
federal and state securities
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laws, including without limitation the Securities Act. Notwithstanding anything
to the contrary in this Agreement, each Noteholder agrees (and, by its
acceptance of a Note, each Transferee agrees) that without the Company's consent
it (i) shall not Transfer any Note to any Person that is not an Institutional
Investor, (iii) that it shall not Transfer any Note to any Person that, together
with such Person's Affiliates, will hold (after such Transfer) less than
$1,000,000 in Face Amount of Notes (unless less than $1,000,000 is all that
remains to transfer) and (iii) that it shall not Transfer any Note to a
Competitor. An "Institutional Investor" shall be defined as a "qualified
institutional buyer" (as such term is defined under Rule 144A promulgated under
the Securities Act or any successor law, rule or regulation) or "accredited
investor" (as such term is defined under Regulation D promulgated under the
Securities Act, or any successor law, rule or regulation).
SECTION 5.2 LEGENDS.
Each certificate representing shares of Conversion Shares will bear a
legend on the face thereof in accordance with the form set forth in Section
2.1(f) of the Amended and Restated Investors' Rights Agreement, dated as of the
date hereof (the "INVESTOR RIGHTS AGREEMENT"), among the Company and the
Investors named therein, and the Company shall reissue certificates representing
shares of Conversion Shares upon the terms and subject to the conditions set
forth in Section 2.1(f) of the Investor Rights Agreement.
ARTICLE 6
MISCELLANEOUS
SECTION 6.1 TERMINATION.
The provisions of this Agreement shall terminate when the Company has
paid or caused to be paid all sums payable by it under the Notes. Nothing herein
shall relieve any party from any liability for the breach of any of the
agreements set forth in this Agreement.
SECTION 6.2 AMENDMENTS AND WAIVERS.
No modification, amendment or waiver of any provision of this Agreement
shall be effective against the Company or any Holder unless such modification,
amendment or waiver is approved in writing by the Company and the Required
Holders; provided, that no such action shall change Sections 2.1, 2.9, 3.1 or
this 6.2 without approval of the Holders of all of the outstanding Notes. The
failure of any party to enforce any of the provisions of this Agreement shall in
no way be construed as a waiver of such provisions and shall not affect the
right of such party thereafter to enforce each and every provision of this
Agreement in accordance with its terms.
SECTION 6.3 SUCCESSORS, ASSIGNS AND TRANSFEREES.
This Agreement shall bind and inure to the benefit of and be enforceable
by the parties hereto and their respective successors and permitted assigns.
This Agreement may not be assigned by the Company and may be assigned by any
Holder to any Affiliate or Affiliates
19.
166
thereof and, subject to the Transfer provisions herein, to any other third
party. Any purported assignment in violation of this Section 6.3 shall be null
and void.
SECTION 6.4 NOTICES.
All notices required or permitted hereunder shall be in writing and
shall be deemed effectively given: (a) upon personal delivery to the party to be
notified; (b) upon receipt of confirmation of successful, complete transmission
when sent by facsimile if sent before 6:00 p.m. Pacific Time on such day;
provided that all notices relating to conversions, calls, puts and redemptions
may be sent until midnight Eastern Time; (c) three (3) days after having been
sent by registered or certified mail, return receipt requested, postage prepaid;
or (d) one (1) business day after deposit with a nationally recognized overnight
courier, specifying next day delivery, with written verification of receipt. All
communications shall be sent, with respect to the Company and GE Capital, to
their respective addresses specified in the Note Purchase Agreement (or at such
other address as any such party may specify by notice complying with the
requirements of this Section 6.4) and, with respect to any other Holder, to the
address of such Holder as shown in the stock record books of the Company (or at
such other address as any such Holder may specify to all of the above by notice
complying with the requirements of this Section 6.4).
SECTION 6.5 FURTHER ASSURANCES.
At any time or from time to time after the date hereof, the parties
agree to cooperate with each other, and at the request of any other party, to
execute and deliver any further instruments or documents and to take all such
further action as the other party may reasonably request in order to evidence or
effectuate the consummation of the transactions contemplated hereby and to
otherwise carry out the intent of the parties hereunder.
SECTION 6.6 ENTIRE AGREEMENT.
Except as otherwise expressly set forth herein, this document and the
other Transaction Documents embody the complete agreement and understanding
among the parties hereto with respect to the subject matter hereof and supersede
and preempt any prior understandings, agreements or representations by or among
the parties, written or oral, that may have related to the subject matter hereof
in any way.
SECTION 6.7 DELAYS OR OMISSIONS.
It is agreed that no delay or omission to exercise any right, power or
remedy accruing to any party, upon any breach, default or noncompliance by
another party under this Agreement, shall impair any such right, power or
remedy, nor shall it be construed to be a waiver of any such breach, default or
noncompliance, or any acquiescence therein, or of or in any similar breach,
default or noncompliance thereafter occurring. It is further agreed that any
waiver, permit, consent or approval of any kind or character on the part of any
party hereto of any breach, default or noncompliance under this Agreement or any
waiver on such party's part of any provisions or conditions of this Agreement,
must be in writing and shall be effective only to the extent specifically set
forth in such writing. All remedies, either under this Agreement, by law, or
otherwise afforded to any party, shall be cumulative and not alternative.
20.
167
SECTION 6.8 GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL.
THIS AGREEMENT AND THE RIGHTS OF THE PARTIES HEREUNDER SHALL BE GOVERNED
BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS EXECUTED AND TO BE PERFORMED ENTIRELY WITHIN THAT STATE.
EACH OF THE PARTIES HEREBY SUBMITS TO THE EXCLUSIVE PERSONAL JURISDICTION AND
WAIVES ANY OBJECTION AS TO VENUE IN EITHER (I) THE COUNTY OF NEW YORK, STATE OF
NEW YORK OR (II) COUNTY OF SAN FRANCISCO, STATE OF CALIFORNIA. SERVICE OF
PROCESS ON THE PARTIES IN ANY ACTION ARISING OUT OF OR RELATING TO THIS
AGREEMENT SHALL BE EFFECTIVE IF MAILED TO THE PARTIES IN ACCORDANCE WITH SECTION
6.4 HEREOF. THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT.
SECTION 6.9 SEVERABILITY.
Whenever possible, each provision of this Agreement shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision
or any other jurisdiction, but this Agreement shall be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision had never been contained herein.
SECTION 6.10 EFFECTIVE DATE.
This Agreement shall become effective immediately upon the Closing.
SECTION 6.11 ENFORCEMENT.
Each party hereto acknowledges that money damages would not be an
adequate remedy in the event that any of the covenants or agreements in this
Agreement are not performed in accordance with its terms, and it is therefore
agreed that in addition to and without limiting any other remedy or right it may
have, the non-breaching party will have the right to an injunction, temporary
restraining order or other equitable relief in any court of competent
jurisdiction enjoining any such breach and enforcing specifically the terms and
provisions hereof.
SECTION 6.12 TITLES AND SUBTITLES.
The titles of the sections and subsections of this Agreement are for
convenience of reference only and are not to be considered in construing this
Agreement.
SECTION 6.13 COUNTERPARTS; FACSIMILE SIGNATURES.
This Agreement 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 Agreement may be executed by facsimile signature(s).
21.
168
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
22.
169
IN WITNESS WHEREOF, the parties hereto have executed the NOTEHOLDERS
AGREEMENT as of the date set forth in the first paragraph hereof.
QUOKKA SPORTS, INC.
By: /s/ Signature
----------------------------------------
Name:
--------------------------------------
Tile:
--------------------------------------
IN WITNESS WHEREOF, the parties hereto have executed the NOTEHOLDERS
AGREEMENT as of the date set forth in the first paragraph hereof.
GE CAPITAL EQUITY INVESTMENTS, INC.
By: /s/ Signature
----------------------------------------
Name:
--------------------------------------
Tile:
--------------------------------------
IN WITNESS WHEREOF, the parties hereto have executed the NOTEHOLDERS
AGREEMENT as of the date set forth in the first paragraph hereof.
PURCHASER:
By: /s/ Signature
----------------------------------------
Name of Investor:
--------------------------
Name of Signatory:
-------------------------
Tile:
--------------------------------------
SIGNATURE PAGE FOR QUOKKA SPORTS, INC.
NOTEHOLDERS AGREEMENT
000
XXXXXXX X
XXXXXXXXX XX XXX Xxxxxxx, XX
000 000-0000
Xxx Xxxxxxxx Xxxxx Xxxxxx, XX
20th Floor 000 000-0000
Xxx Xxxxxxxxx, XX
00000-0000 Xxxxxxxx, XX
Main 415 693-2000 425 893-7700
Fax 000 000-0000
Menlo Park, CA
000 000-0000
xxx.xxxxxx.xxx Palo Alto, CA
000 000-0000
Reston, VA
703 262-8000
XXXXX X. XXXXXX
000 000-0000 San Diego, CA
xxxxxxxx@xxxxxx.xxx 858 550-6000
September 15, 2000
GE Capital Equity Investments, Inc.
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
The other Purchasers listed on SCHEDULE A
attached to this opinion letter
RE: QUOKKA SPORTS, INC.
Ladies and Gentlemen:
We have acted as counsel for Quokka Sports, Inc., a Delaware corporation (the
"Company"), in connection with (i) the Note Purchase Agreement dated as of
September 15, 2000 (the "Agreement"), by and among the Company and GE Capital
Equity Investments, Inc., a Delaware corporation ("GE Capital"), and the other
purchasers named in Schedule 1.1 thereto (collectively, with GE Capital, the
"Noteholders"), (ii) each of the Company's 7% Convertible Subordinated
Promissory Notes dated September 15, 2000 (the "Notes") issued under and
pursuant to the Agreement, (iii) the Noteholders Agreement dated as of September
15, 2000 (the "Noteholders Agreement"), by and among the Company and the
Noteholders (iv) each of the Company's Common Stock Purchase Warrants dated
September 15, 2000 (the "Warrants") issued under and pursuant to the Agreement
and (v) the Amended and Restated Investors' Rights Agreement dated as of
September 15, 2000 (the "Investors' Rights Agreement"), by and among the Company
and the holders of the Company's capital stock and warrants to purchase the
Company's capital stock named on Exhibit A thereto.
This opinion is furnished to you at the request and on behalf of the Company
pursuant to Section 6.1(i) of the Agreement. Capitalized terms used but not
defined herein have the meanings given them in the Noteholders Agreement.
In connection with this opinion, we have examined the following documents:
(a) the Agreement;
(b) the separate Notes, made by the Company in favor of each of the
Noteholders in the original principal amount of Notes purchased by such
Noteholder;
(c) the separate Warrants, issued by the Company to each of the
Investors;
(d) the Noteholders Agreement; and
(e) the Investors' Rights Agreement.
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GE Capital Equity Investments, Inc. and
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September 15, 2000
Page 2
In addition, for purposes of rendering our opinions below, we have
examined the following:
(f) the Amended and Restated Certificate of Incorporation of the Company
(the "Restated Certificate") as certified by the Secretary of State of the State
of Delaware on July 26, 2000;
(g) the Bylaws of the Company certified to us by an officer of the
Company to be in full force and effect as of the date of this opinion letter;
(h) the Resolutions adopted by the board of directors of the Company at
a meeting held on September 8, 2000;
(i) the Certificate of Status issued by the Secretary of State of the
State of Delaware stating that the Company is a domestic corporation in good
standing in such state, dated July 20, 2000, and verbal update as of September
15, 2000;
(j) the certificates listed in SCHEDULE B attached to this opinion
letter dated the indicated dates and issued by the secretary of state or other
indicated governmental authority of the indicated states stating that the
Company is qualified to do business as a foreign corporation in such states; and
(k) certificate of tax good standing for the Company issued by the
Franchise Tax Board of the State of California on July 27, 2000, and verbal
update as of September 15, 2000.
Items (a) through (e) above are hereinafter from time to time collectively
referred to as the "Note Documents"; items (f) and (g) above are hereinafter
collectively referred to as the "Organizational Documents"; and items (i)
through (k) above are hereafter referred to as the "Good Standing Certificates."
In connection with this opinion, we have examined and relied upon the
representations and warranties as to factual matters contained in and made
pursuant to the Note Documents by the various parties and upon originals or
copies certified to our satisfaction of such records, documents, certificates,
memoranda and other instruments as in our judgment are necessary or appropriate
to enable us to render the opinions expressed below. Where we render an opinion
"to our knowledge" or concerning an item "known to us" or our opinion otherwise
refers to our knowledge, it is based solely upon (a) an inquiry of attorneys
currently within this firm who worked on this transaction or who regularly
perform substantive legal services for the Company and (b) receipt of
certificates executed by officers of the Company covering such matters. We have
made no further investigation.
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GE Capital Equity Investments, Inc. and
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September 15, 2000
Page 3
In rendering the opinions expressed below, we have assumed, without
investigation: (a) the genuineness and authenticity of all signatures on
original documents (except that such assumption is not made, as to the Company,
with respect to the signature of person(s) executing the Note Documents on
behalf of the Company); (b) the authenticity of all documents submitted to us as
originals; (c) the conformity to originals of all documents submitted to us as
copies; (d) the accuracy, completeness and authenticity of certificates of
public officials; (e) the due incorporation or formation, valid existence and
the corporate power to enter into, and perform in accordance with their
respective terms, the Note Documents of all parties thereto (except that such
assumption is not made with respect to the Company); and (e) the due
authorization, execution and delivery of all documents (except that such
assumption is not made with respect to the due execution and delivery of the
Note Documents by the Company), in each case where the authorization, execution
and delivery thereof by such parties are prerequisites to the effectiveness of
such documents.
We have also assumed, without investigation, that: (i) all individuals executing
and delivering documents had the legal capacity to so execute and deliver; (ii)
the Note Documents are obligations binding upon all parties (except that such
assumption is not made, as to the Company, with respect to the Note Documents);
(iii) there are no extrinsic agreements or understandings among the parties to
the Note Documents that would modify or interpret the terms of the Note
Documents or the respective rights or obligations of the parties thereunder; and
(iv) at the time any Noteholder commences any enforcement of, or any exercise of
any remedy to collect, in the courts of the State of California, the obligations
of the Company under any Note Document, such Noteholder shall have filed any
required California franchise or income tax returns and have paid any required
California franchise or income taxes.
Our opinions expressed below are expressed with respect only to the laws of the
State of California, the General Corporation Law of the State of Delaware and
the federal laws of the United States and are expressed only as to the outcome
that would pertain were California law, the General Corporation Law of the State
of Delaware or the federal laws of the United States (excluding choice of law
principles and excluding the effect of any law other than California law, the
General Corporation Law of the State of Delaware or the federal laws of the
United States) the governing law applicable to the relevant issue. We express no
opinion as to whether the laws of any particular jurisdiction apply. We note
that the parties to the Agreement, the Noteholders Agreement, the Notes and the
Warrants have designated the laws of the State of New York as the laws governing
such Note Documents. Accordingly, with your permission, our opinion in paragraph
4 below as to the validity, binding effect and enforceability of the Agreement,
the Noteholders Agreement, the Notes and the Warrants, respectively, are
premised upon the result that would obtain if a California court were to apply
the internal laws of the State of California (notwithstanding the designation of
the laws of the State of New York) to govern the interpretation and enforcement
of the Agreement, the
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GE Capital Equity Investments, Inc. and
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September 15, 2000
Page 4
Noteholders Agreement, the Notes and the Warrants. Neither special rulings of
any governmental authorities nor opinions of counsel in said jurisdiction have
been obtained.
Our opinion in paragraph 1 below as to the good standing of the Company as a
domestic corporation in the State of Delaware and as a foreign corporation in
the States of California, Connecticut, Georgia, Illinois, Maryland, Michigan,
New York and Nevada, and the District of Columbia, is based solely upon our
review of the Good Standing Certificates. We have made no further investigation.
We express no opinion as to the enforceability of provisions in the Note
Documents (a) imposing late charges, premiums, penalties or forfeitures, (b)
imposing an increase in interest rate upon delinquency in payment or the
occurrence of a default or (c) requiring any prepayment fee, breakage or yield
maintenance charges, including, without limitation, a requirement for the
payment thereof upon the occurrence of a default under the Note Documents for
whatever cause or upon acceleration of the obligations evidenced by the Notes,
in each case, to the extent that a court may find any such contractual
provisions unreasonable or deem any of them penalties.
We express no opinion relative to the applicability or effect of any law, rule
or regulation relating to antitrust or limitations on corporate dividends or
distributions payable to equity holders, nor as to compliance with any antifraud
law, rule or regulation relating to securities or as to the sale or issuance
thereof (except as set forth in our opinion in paragraph 8 below).
We express no opinion as to the enforceability of "choice of forum" or
"submission to jurisdiction" provisions contained in any of the other Note
Documents.
We express no opinion as to usury to the extent any Noteholder and its
respective transferees or assigns, if any, are not exempt from the usury
restrictions of Section 1 of Article XV of the California Constitution. We
express no opinion as to whether, or the basis on which, any Noteholder or any
of its respective transferees or assigns is in fact exempt from the usury
restrictions of Section 1 of Article XV of the California Constitution.
On the basis of the foregoing, in reliance thereon, and with the foregoing
qualifications, we are of the opinion that:
1. The Company has been duly incorporated and is a validly existing
corporation in good standing under the laws of the State of Delaware and has the
requisite corporate power to own its property and assets, to conduct its
business as it is currently being conducted and to enter into and perform its
obligations under the Note Documents. The Company is qualified as a foreign
corporation to do business and is in good standing in the States of California,
Connecticut, Georgia, Illinois, Maryland, Michigan, New York and Nevada and the
District of Columbia.
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GE Capital Equity Investments, Inc. and
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September 15, 2000
Page 5
2. The execution, delivery and performance by the Company of the Note
Documents and the issuance of the Notes and the Warrants have been duly
authorized by all requisite corporate action on the part of the Company and do
not require any further approval of its directors or shareholders.
3. The Company has duly executed and delivered each of the Note
Documents.
4. Each of the Note Documents constitutes a valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms,
except to the extent that the enforcement thereof may be limited by: (a) general
equity principles and the limitations on the availability of equitable relief,
including, without limitation, specific performance; (b) the effect of
applicable bankruptcy, insolvency, fraudulent transfer or conveyance,
reorganization, arrangement, dissolution, moratorium or other similar laws
relating to or affecting creditors' rights generally; (c) limitations created by
or arising under statute or case law on a debtor's ability to waive rights or
benefits; (d) limitations created by or arising under statute or case law on the
enforceability of certain covenants and provisions of agreements where (i) the
breach of such covenants or provisions imposes restrictions or burdens upon the
debtor and it cannot be demonstrated that the enforcement of such restrictions
or burdens is reasonably necessary for the protection of the creditor or (ii)
the creditor's enforcement of such covenants or provisions under the
circumstances would violate the creditor's implied covenant of good faith and
fair dealing; (e) the effect of California Civil Code Section 1717 on the
recovery of attorneys' fees in contract actions; (f) limitations imposed by
California law on the appointment of receivers; (g) the effect of California
Civil Code Section 3433; and (h) limitations imposed by law and public policy on
indemnification or exculpation. Notwithstanding the limitations on rights,
remedies and waivers set forth in this paragraph, such limitations do not render
the Note Documents invalid as a whole, and there exist (in the Note Documents
and pursuant to applicable law) legally adequate remedies for the realization by
the Noteholders of the principal benefits intended to be provided by the Note
Documents (but subject to the economic consequences of any delay that may result
under applicable law or judicial decisions).
5. The execution and delivery by the Company of each of the Note
Documents, the performance by the Company of the Note Documents and the issuance
of the Notes and the Warrants will not violate or contravene or be in conflict
with: (a) any provision of the Organizational Documents; (b) any provision of
the General Corporation Law of the State of Delaware and any provision of any
federal or California law, rule or regulation applicable to the Company in
commercial transactions of the nature contemplated by the Note Documents; (c)
any order, judgment or decree of any court or other governmental agency which is
known to us and which is binding on the Company or any of its property; and (d)
any material term or condition of any agreement, contract, undertaking,
indenture or instrument to which the Company is a party and which the Company
has represented to us to be material to the
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GE Capital Equity Investments, Inc. and
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Page 6
business of the Company (collectively, the "Material Contracts", which Material
Contracts are listed in SCHEDULE C attached to this opinion letter).
6. No further consents, approvals, authorizations, registrations,
declarations or filings are required to be obtained or made by the Company from
or with any federal or California governmental authority or pursuant to the
General Corporation Law of the State of Delaware in order for it to execute,
deliver or perform its obligations under the Note Documents, other than those
consents, approvals, authorizations, registrations, declarations or filings that
have already been obtained and remain in full force and effect and except for
(a) the filing of a Form D (the "Form D") with the Securities and Exchange
Commission pursuant to Regulation D promulgated under the Securities Act of
1933, as amended (the "Securities Act") and (b) the filing of the Form D with
requisite state jurisdictions.
7. To our knowledge, no action, suit, other legal proceeding,
arbitration proceeding or investigation is pending by or before any court or
governmental authority or in any formal arbitration, or is overtly threatened,
against the Company or any of its properties that relates to any of the
transactions contemplated by the Note Documents.
8. Subject to timely filing of the Form D pursuant to Securities and
Exchange Commission Regulation D, (a) the offer and sale of the Notes and
Warrants pursuant to the terms of the Agreement are exempt from the registration
requirements of the Securities Act and (b) the qualification of an indenture
with respect to the Agreement and the Notes under the Trust Indenture Act of
1939, as amended, is not required in connection with such transaction.
9. The issue and sale of the Notes and the carrying out of the
transactions contemplated by the Agreement and the other Note Documents do not
violate Regulations T, U or X of the Board of Governors of the Federal Reserve
System.
10. The Company's authorized capital stock, as of September 14, 2000,
consists of (a) 110,000,000 shares of Common Stock, $0.0001 par value per share,
of which 46,383,304 shares are issued and outstanding; and (b) 10,000,000 shares
of Preferred Stock, $0.0001 par value per share, of which no shares are issued
and outstanding. The outstanding shares of Common Stock have been duly
authorized and validly issued and are fully paid and nonassessable. The shares
of Common Stock issuable upon conversion of the Notes and exercise of the
Warrants have been duly authorized and, upon issuance and delivery upon
conversion of the Notes and exercise of the Warrants in accordance with the
terms of the Notes and Warrants, will be validly issued, outstanding, fully paid
and nonassessable. Other than as disclosed in the Agreement, and the Disclosure
Letter delivered in connection with the Agreement, there are no preemptive
rights or, to the best of our knowledge, any options, warrants, conversion
privileges or other rights presently outstanding to purchase any of the
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GE Capital Equity Investments, Inc. and
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September 15, 2000
Page 7
authorized but unissued capital stock of the Company, other than the conversion
privileges of the Notes.
Our opinions set forth above are limited to the matters expressly set forth in
this opinion letter, and no opinion may be implied or may be inferred beyond the
matters expressly stated. This opinion speaks only as to law and facts in effect
or existing as of the date hereof and we undertake no obligation or
responsibility to update or supplement this opinion to reflect any facts or
circumstances that may hereafter come to our attention or any changes in any law
which may hereafter occur.
This opinion letter is intended solely for the benefit of the addressees of this
letter, and is not to be made available to or relied upon by any other person,
firm or entity without our prior written consent (provided, that copies of this
opinion letter may be made available to the counsel, transferees and regulators
of the addressees of this letter).
Very truly yours,
Xxxxxx Godward LLP
By /s/ Xxxxx X. Xxxxxx
---------------------------------
Xxxxx X. Xxxxxx
177
SCHEDULE A
ADDITIONAL PURCHASERS
[schedule omitted]
178
SCHEDULE B
FOREIGN STATUS CERTIFICATES
STATE DATE OF CERTIFICATE VERBAL UPDATE
California July 14, 2000 9/15/00
Connecticut July 14, 2000 9/15/00
Georgia July 14, 2000 9/15/00
Illinois July 21, 2000 9/15/00
Maryland July 14, 2000 9/15/00
Michigan July 14, 2000 9/15/00
New York July 12, 2000 9/15/00
Nevada July 13, 2000 9/15/00
District of Columbia July 20, 2000 9/15/00
179
SCHEDULE C
MATERIAL CONTRACTS
- Form of Indemnity Agreement entered into by the Company with its directors
and certain executive officers.
- 1999 Non-Employee Directors' Stock Option Plan.
- Form of Nonstatutory Stock Option Agreement under the 1999 Non-Employee
Directors' Stock Option Plan.
- Amended and Restated 1997 Equity Incentive Plan
- Form of Stock Option Agreement under the Amended and Restated 1997 Equity
Incentive Plan
- XxxxXxxxxxx.xxx, Inc. 1996 Stock Option Plan
- 1999 Employee Stock Purchase Plan.
- Form of 1999 Employee Stock Purchase Plan Offering.
- Master Venture Agreement by and between the Company, NBC Olympics, Inc. and
NBC/Quokka Ventures, LLC, ("NQV") dated February 9, 1999.
- Operating Agreement of NBC/Quokka Ventures, LLC, by and between the Company
and NBC Olympics, Inc. dated February 9, 1999, as amended.
- Lease by and between the Company and 0000 Xxxxx Xxxxxx Associates, LLC
dated April 23, 1999.
- Office Lease Agreement by and between the Company and EOP-Mission Street,
L.L.C. dated May 27, 1999, as amended.
- Lease by and between the Company and SKS Xxxxxxx Associates, LLC dated July
16, 1999, as amended.
- Xxxx.xxx Purchase Agreement and Xxxx.xxx Purchase Agreement Amendment
- Agreement and Plan of Merger and Reorganization by and between the Company,
Montana Acquisition Corporation and XxxxXxxxxxx.xxx, Inc. dated March 1,
2000 (the "ZoneNetwork Merger Agreement").
180
- Escrow Agreement by and between the Company, the shareholders of
XxxxXxxxxxx.xxx, Inc., identified on Exhibit A thereto, the persons set
forth on Exhibit B thereto, Fingerhut Companies, Inc., Xxxxxxx X. Xxxxxxx,
as representative, and State Street Bank and Trust Company of California,
N.A. dated March 1, 2000 (the "ZoneNetwork Escrow Agreement"), a true and
correct copy of which has been provided to counsel for GE Capital under
separate cover.
- Digital Entertainment Partnership Agreement by and between the Company and
Compaq Computer Corporation dated January 1, 1999. Letter from Compaq
Computer Corporation to the Company dated June 27, 2000.
- Subordinated Loan and Security Agreement by and between the Company and
Comdisco, Inc. dated February 12, 1999, as amended on September 28, 1999.
Subordination Agreement by and between the Company and Comdisco, Inc. dated
February 12, 1999, as amended on September 28, 1999. Subordinated
Promissory Note issued to Comdisco, Inc. dated October 1, 1999.
- Amended and Restated Loan and Security Agreement by and between the Company
and Silicon Valley Bank dated June 7, 1999.
- Key Employee Agreement by and between the Company and Xxxxxx Xxxxxxxxx
dated March 15, 1999.
- Employment Agreement by and between the Company and Xxxxxxx Xxxxx dated
January 18, 2000.
- Consulting Agreement by and between the Company and Xxxxx Xxxxxxx, III
dated July 20, 2000.
- Employment Agreement by and between the Company and Xxxx Xxxxxxxxx date
July 20, 2000.
- Memorandum of Agreement by and between the Company and Intel Corporation
dated September 15, 1999.
- Agreement and Plan of Merger by and between the Company and Total Sports,
Inc. dated July 20, 2000.
