PURCHASE AGREEMENT
DATED AS OF
AUGUST 31 1999
BY AND BETWEEN
COLLEGE TELEVISION NETWORK, INC.
AND
U-C HOLDINGS, L.L.C.
TABLE OF CONTENTS
ARTICLE I DEFINITIONS......................................................................1
ARTICLE II INITIAL CLOSING.................................................................9
Section 2.1 Authorization of Initial Purchased Securities................................9
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Section 2.2 Purchase of Initial Purchased Securities.....................................9
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Section 2.3 Initial Closing..............................................................9
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ARTICLE III SUBSEQUENT CLOSINGS............................................................9
Section 3.1 Authorization of Additional Purchased Securities.............................9
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Section 3.2 Purchase of Additional Purchased Securities..................................9
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Section 3.3 Subsequent Closings.........................................................10
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ARTICLE IV PURCHASER'S REPRESENTATIONS....................................................11
Section 4.1 Investment Intention........................................................11
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Section 4.2 Accredited Investor.........................................................11
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Section 4.3 Corporate Existence.........................................................11
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Section 4.4 Corporate Power: Authorization: Enforceable Obligations.....................11
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ARTICLE V COMPANY'S REPRESENTATIONS, WARRANTIES AND COVENANTS.............................12
Section 5.1 Capitalization..............................................................12
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Section 5.2 Authorization and Issuance of the Initial Purchased Securities and the
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Additional Purchased Securities.........................................13
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Section 5.3 Securities Laws.............................................................13
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Section 5.4 Corporate Existence: Compliance with Law....................................13
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Section 5.5 Subsidiaries................................................................14
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Section 5.6 Corporate Power: Authorization: Enforceable Obligations.....................14
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Section 5.7 Financial Statements........................................................14
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Section 5.8 Ownership of Property.......................................................15
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Section 5.9 Material Contracts: Indebtedness............................................15
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Section 5.10 Environmental Protection....................................................16
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Section 5.11 Labor Matters...............................................................17
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Section 5.12 Taxes.......................................................................17
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Section 5.13 No Litigation...............................................................18
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Section 5.14 Brokers.....................................................................18
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Section 5.15 Management and Labor Agreements.............................................18
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Section 5.16 Patents, Trademarks, Copyrights and Licenses................................18
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Section 5.17 No Material Adverse Effect..................................................19
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Section 5.18 ERISA.......................................................................19
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Section 5.19 Registration Rights.........................................................21
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Section 5.20 Required Filings............................................................21
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Section 5.21 Full Disclosure.............................................................21
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Section 5.22 Schedule 14C:...............................................................21
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Section 5.23 Schedule 14C: Reclassification..............................................21
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Section 5.24 Credit Agreement............................................................22
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Section 5.25 Use of Proceeds.............................................................22
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ARTICLE VI CONDITIONS PRECEDENT TO INITIAL CLOSING........................................22
Section 6.1 Conditions Precedent........................................................22
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ARTICLE VII CONDITIONS PRECEDENT TO SUBSEQUENT CLOSING....................................24
Section 7.1 Conditions Precedent........................................................24
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ARTICLE VIII SECURITIES LAW MATTERS.......................................................27
Section 8.1 Legends.....................................................................27
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Section 8.2 Transfer of Restricted Securities...........................................27
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ARTICLE IX EXPENSES.......................................................................28
ARTICLE X LIMITATION ON CLAIMS OF THE PURCHASER...........................................28
Section 10.1 Limitation..................................................................28
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ARTICLE XI MISCELLANEOUS..................................................................29
Section 11.1 Notices.....................................................................29
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Section 11.2 Binding Effect: Benefits....................................................30
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Section 11.3 Amendment...................................................................30
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Section 11.4 Successors and Assigns: Assignability.......................................30
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Section 11.5 Remedies....................................................................31
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Section 11.6 Section and Other Headings..................................................31
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Section 11.7 Severability................................................................31
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Section 11.8 Entire Agreement............................................................31
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Section 11.9 Counterparts................................................................31
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Section 11.10 Publicity...................................................................31
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Section 11.11 Governing Law...............................................................31
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Section 11.12 No Strict Construction......................................................31
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SCHEDULES AND EXHIBITS
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Schedule 5.1 Stock, Preferred Stock, Options and Warrants
Schedule 5.4 Foreign Qualification
Schedule 5.5 Subsidiaries
Schedule 5.7 Financial Statements; Other Obligations
Schedule 5.8 Ownership of Property
Schedule 5.9 Material Contracts
Schedule 5.11 Labor Matters
Schedule 5.13 Litigation
Schedule 5.15 Management and Labor Agreements
Schedule 5.19 Registration Rights Schedule
Exhibit A Second Certificate of Designation
Exhibit B Opinion of Company Counsel
Exhibit C Capitalization Chart
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PURCHASE AGREEMENT
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THIS PURCHASE AGREEMENT, dated as of August 31, 1999, by and
between College Television Network, Inc., a Delaware corporation having an
office at 0000 Xxxx Xxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, XX 00000 (the "Company"),
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and U-C Holdings, L.L.C., a Delaware limited liability company (the
"Purchaser").
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On the terms and subject to the conditions set forth herein,
the Company has agreed to issue and sell to the Purchaser, and the Purchaser has
agreed to purchase from the Company, 1,000,000 shares of the Company's series A
convertible preferred stock, $.001 par value per share ("Series A Convertible
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Preferred") for an aggregate purchase price of $15,000,000.
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On the terms and subject to the conditions set forth herein,
upon the written notice from the Company pursuant to Section 3.3, Purchaser
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agrees to purchase, and the Company agrees to issue and sell to the Purchaser,
from time to time after the date of this Agreement, additional shares of Series
A Convertible Preferred for an aggregate purchase price of up to $10,000,000
less the Guaranty Amount, as defined below.
NOW, THEREFORE, in consideration of the premises and the
covenants hereinafter contained, it is agreed as follows:
ARTICLE I
DEFINITIONS
"Additional Purchased Securities" shall mean shares of Series
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A Convertible Preferred purchased by the Purchaser at each Subsequent Closing
from time to time pursuant to Section 3.2 and Section 3.3.
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"Affiliated Group" shall mean an affiliated group as defined
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in Section 1504 of the IRC (or any analogous combined, consolidated or unitary
group defined under state, local or foreign income tax law) of which Company is
or has been a member.
"Annual Report" shall mean the annual report of the Company on
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Form 10-KSB for the fiscal year ended December 31, 1998, which has been filed
with the SEC.
"Board" shall mean the board of directors of the Company.
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"Business Day" shall mean any day that is not a Saturday, a
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Sunday or a day on which banks are required or permitted to be closed in the
State of Illinois or the State of Georgia.
"Capitalization Chart" shall have the meaning set forth in
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Section 5.1.
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"Certificate of Incorporation" shall mean the Restated
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Certificate of Incorporation of the Company filed on November 10, 1997 with the
Secretary of State of the State of Delaware, and amended by the Articles of
Amendment to the Restated Certificate of Incorporation, filed on May 29, 1998
with the Secretary of State of the State of Delaware, and as modified by the
Original Certificate of Designation, filed on July 22, 1999, and by the Second
Certificate of Designation, filed on or about the date hereof, and as the same
may be further amended from time to time.
"Charges" shall mean (A) all federal, state, county, city,
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municipal, local, foreign or other governmental (including, without limitation,
PBGC taxes at the time due and payable, levies, assessments, charges, liens,
claims or encumbrances upon or relating to (i) the Company's employees, payroll,
income or gross receipts, (ii) the Company's ownership or use of any of its
assets, or (iii) any other aspect of the Company's business, or (B) any
liability of the Company for the payment of any amounts of the type described in
clause (A) arising as a result of being (or ceasing to be) a member of any
Affiliated Group (or being included (or required to be included) in any tax
return relating thereto).
"Class C Warrant" shall mean the Company's Class C Warrants
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listed on the Capitalization Chart attached hereto as Exhibit C.
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"Closing" shall mean each of the Initial Closing and each
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Subsequent Closing, and "Closing Date" shall mean each of the Initial Closing
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Date and each Subsequent Closing Date.
"COBRA" shall have the meaning set forth in Section 5.19(l)
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"Common Stock" shall mean the common stock of the Company with
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par value $.005 per share.
"Controlled Group" shall mean all members of a controlled
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group of corporations and all members of a controlled group of trades or
businesses (whether or not incorporated) under common control which, together
with the Company, are treated as a single employer under Section 414 of the Code
or Section 4001 of ERISA.
"Convertible Preferred" shall mean the convertible preferred
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stock, par value $.001 per share, of the Company having the rights and
preferences set forth in the Original Certificate of Designation.
"Environmental Laws" shall mean all federal, state and local
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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,
relative to the applicable Real Estate, 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).
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Environmental Laws include but are not limited to the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended (42
U.S.C. ss. 9601 et seq.) ("CERCLA"); the Hazardous Material Transportation Act,
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as amended (49 U.S.C. ss. 1801 et seq.); the Federal Insecticide, Fungicide, and
Rodenticide Act, as amended (7 U.S.C. ss. 136 et seq. ); the Resource
Conservation and Recovery Act, as amended (42 U.S.C. ss. 6901 et seq.) ("RCRA");
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the Toxic Substance Control Act, as amended (15 U. S.C. ss. 2601 et seq.); the
Clean Air Act, as amended (42 U. S.C. ss. 740 et seq.); the Federal Water
Pollution Control Act, as amended (33 U.S.C. ss. 1251 et seq.); the Occupational
Safety and Health Act, as amended (29 U.S.C. ss. 651 et sec.) ("OSHA"); and the
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Safe Drinking Water Act, as amended (42 U.S.C. ss. 300f et seq.), and any and
all regulations promulgated thereunder, and all analogous state and local
counterparts or equivalents and any transfer of ownership notification or
approval statutes.
"Environmental Liabilities and Costs" shall mean all
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liabilities, obligations, responsibilities, remedial actions, losses, damages,
punitive damages, consequential damages, treble damages, costs and expenses
(including, without limitation, all fees, disbursements and expenses of counsel,
experts and consultants and costs of investigation and feasibility studies),
fines, penalties, sanctions and interest incurred as a result of any claim,
suit, action or demand by any Person, whether based in contract, tort, implied
or express warranty, strict liability, criminal or civil statute or common law
(including, without limitation, any thereof arising under any Environmental Law,
permit, order or agreement with any Governmental Authority) and which relate to
any health or safety condition regulated under any Environmental Law or in
connection with any other environmental matter or Spill or the presence of a
hazardous substance or threatened Spill of any Hazardous Substance.
"ERISA" shall mean the Employee Retirement Income Security Act
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of 1974 (or any successor legislation thereto), as amended from time to time and
any regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to the Company, any
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trade or business (whether or not incorporated) under common control with the
Company and which, together with the Company, are treated as a single employer
within the meaning of Section 414(b), (c), (m) or (o) of the IRC, excluding the
Purchaser and each other Person which would not be an ERISA Affiliate if the
Purchaser did not own any issued and outstanding shares of Stock of the Company.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
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as amended, and all rules and regulations promulgated thereunder.
"Financials" shall mean the financial statements referred to
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in Section 5.7 hereof.
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"Fiscal Year" shall mean the twelve month period ending
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December 31. Subsequent changes of the fiscal year of the Company shall not
change the term "Fiscal Year," unless the Purchaser shall consent in writing to
such change.
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"GAAP" shall mean generally accepted accounting principles in
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the United States of America as in effect from time to time.
"Governmental Authority" shall mean any nation or government,
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any state or other political subdivision thereof, and any agency, department or
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Guaranty Amount" shall mean at any given time the sum of (i)
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the maximum amount which could be payable at such time by the Purchaser pursuant
to the Guaranty, plus (ii) the aggregate amount of payments actually made by the
Purchaser from time to time pursuant to the Guaranty plus (iii) the maximum
amount which could be payable at such time and by Xxxxxx Xxxxx & Partners II,
L.P., a Delaware limited partnership (the "Fund"), and by Xxxxxx Xxxxx &
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Partners Dutch, L.P., a Delaware limited partnership ("Dutch" and together with
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the Fund, the "Funds"), pursuant to the guaranty dated as of August 31, 1999, by
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each of the Fund and Dutch in favor of Canadian Imperial Bank of Commerce
("CIBC") and/or its affiliates or co-lenders (the "Fund Guaranty"), plus
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(without duplication for subparagraph (i) above) (iv) the aggregate amount of
any payments actually made by each of the Fund and Dutch from time to time
pursuant to the Fund Guaranty.
"Guaranteed Indebtedness" shall mean, as to any Person, any
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obligation of such Person guaranteeing any Indebtedness, lease, dividend, or
other obligation ("primary obligations") of any other Person (the "primary
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obligor") in any manner including, without limitation, any obligation or
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arrangement of such Person (a) to purchase or repurchase any such primary
obligation, (b) to advance or supply funds (i) for the purchase or payment of
any such primary obligation or (ii) 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, (c) 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 (d) to indemnify the owner of such
primary obligation against loss in respect thereof.
"Guaranty" means that certain Guaranty, dated as of August 31,
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1999, by the Purchaser in favor of CIBC and/or its affiliates or co-lenders.
"Hazardous Substances" shall have the meaning set forth in
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Section 5.10(a) hereof.
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"Indebtedness" of any Person shall mean (i) all indebtedness
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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, (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
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limited to repossession or sale of such property), (iv) all capital lease
obligations required to be capitalized in accordance with GAAP, (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 and (vii) all liabilities
under Title IV of ERISA.
"Initial Closing" shall have the meaning set forth in Section
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2.3 hereof and "Initial Closing Date" shall have the meaning set forth in
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Section 2.3 hereof.
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"Initial Purchased Securities" shall mean the Series A
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Convertible Preferred purchased by the Purchaser at the Initial Closing pursuant
to Section 2.2 of this Agreement.
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"IRC" shall mean the Internal Revenue Code of 1986, as
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amended, and any successor thereto.
"IRS" shall mean the Internal Revenue Service, or any
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successor thereto.
"Lien" shall mean any mortgage or deed of trust, pledge,
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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" shall mean material adverse effect
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on the business, assets, operations, prospects or financial or other condition
of the Company.
"Material Contracts" shall mean (i) all of the Company's
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contracts, agreements, leases or other instruments to which the Company is a
party or by which the Company or its properties are bound, which in the
Company's good faith judgment are required to be disclosed as exhibits to the
Company's annual report on Form 10-KSB, (ii) all of the Company's 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, (iii) all material
operating or capital leases for equipment to which the Company is a party, (iv)
all non-competition and similar agreements other than as contained in employment
agreements to which the Company is a party, (v) all contracts for the employment
of any officer or employee, (vi) all consulting agreements, (vii) any guarantees
by the Company, (viii) all distributor and sales agency agreements, (ix) all
other material contracts not made in the ordinary course of business, and (x)
all material contracts relating to the operation of the Company or, the
production of or programming for the Company or related to the technology
utilized by the Company.
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"MPM" shall mean Armed Forces Communications, Inc., a New York
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corporation doing business as Market Place Media.
"Multiemployer Plan" shall mean a "multiemployer plan" as
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defined in Section 4001 (a)(3) of ERISA, and to which Company or any ERISA
Affiliate is making, is obligated to make, has made or been obligated to make,
contributions on behalf of participants who are or were employed by any of them.
"Options" shall mean the options listed on the Capitalization
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Chart attached hereto as Exhibit C.
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"Original Certificate of Designation" shall mean the
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Certificate of Designation filed with the Secretary of State of the State of
Delaware on July 22, 1999 which contains the terms and preferences of the
Company's Convertible Preferred.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
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any successor thereto.
"Pension Plan" shall mean all "employee benefit plans", as
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defined in Section 3(3) of ERISA, and any other employee benefit arrangements or
payroll practices, including, without limitation, severance pay, sick leave,
vacation pay, salary continuation for disability, consulting or other
compensation agreements, retirement, deferred compensation, bonus, stock
purchase, hospitalization, medical insurance, life insurance and scholarship
programs (the "Plans") maintained by the Company or to which the Company
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contributed, contributes or is obligated to contribute thereunder, and (ii) all
"employee pension plans", as defined in Section 3(2) of ERISA, maintained by the
Company or any of its ERISA Affiliates to which the Company or any of its ERISA
Affiliates contributed, contributes or is obligated to contribute thereunder.
"Permitted Indebtedness" shall mean, with respect to the
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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 is a party as lessee made
in the ordinary course of business, (iv) public or statutory obligations of the
Company; (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.
"Person" shall mean any individual, sole proprietorship,
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partnership, limited liability company, joint venture, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
entity or government (whether federal, state, county, city, municipal or
otherwise, including, without limitation, any instrumentality, division, agency,
body or department thereof).
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"Private Placement Warrants" shall mean the Company's private
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placement warrants listed on the Capitalization Chart attached hereto as Exhibit
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"Registration Rights Agreement" shall mean the Registration
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Rights Agreement between Company and the Purchaser, dated as of April 25, 1997,
as such agreement may be amended, supplemented or otherwise modified from time
to time in accordance with the terms thereof.
"Restricted Securities" shall mean (i) the Initial Purchased
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Securities and the Additional Purchased Securities issued hereunder, and (ii)
any securities issued and exchanged with respect to the securities referred to
in clause (i) by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, reclassification, merger, consolidation
or other reorganization. As to any particular Restricted Securities, such
securities shall cease to be Restricted Securities when they have been (a)
effectively registered under the Securities Act and disposed of in accordance
with the registration statement covering them, (b) been distributed to the
public through a broker, dealer or market maker pursuant to Rule 144 (or any
similar provision then in force) under the Securities Act or become eligible for
sale pursuant to Rule 144(k) (or any similar provision then in force) under the
Securities Act or (c) been otherwise transferred and new certificates for them
not bearing the Securities Act legend set forth in Section 8.1 have been
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delivered by Company in accordance with Section 8.2. Whenever any particular
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securities cease to be Restricted Securities, the holder thereof shall be
entitled to receive from Company, without expense, new securities of like tenor
nor bearing a Securities Act legend of the character set forth in Section 8.1.
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"SEC" shall mean the U.S. Securities and Exchange Commission,
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or any successor thereto.
"Second Certificate of Designation" means the Second
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Certificate of Designation of the Company containing the terms of the Company's
Series A Convertible Preferred, having the rights and preferences set forth on
Exhibit A attached hereto.
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"Securities Act" shall mean the Securities Act of 1933, as
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amended, and all rules and regulations promulgated thereunder.
"Series A Convertible Preferred" shall mean the Series A
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Convertible Preferred stock of the Company defined in the recitals and having
the rights and preferences set forth in the Second Certificate of Designation.
"Shareholder Approval" shall have the meaning as such term is
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defined in the Second Certificate of Designation.
"Spill" shall have the meaning set forth in Section 5.10.
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"Stock" shall mean all shares, options, warrants, general or
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limited partnership interests, limited liability company membership interest,
participations or other equivalents (regardless of how designated) of or in a
corporation, partnership, limited liability company or equivalent entity whether
voting or nonvoting, including, without limitation, common stock, preferred
stock, or any other equity security (as such term is defined in Rule 3a11-1 of
the General Rules and Regulations promulgated by the SEC under the Exchange
Act).
"Subsequent Closing" shall have the meaning set forth in
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Section 3.3 hereof and "Subsequent Closing Date" shall have the meaning set
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forth in Section 3.3 hereof.
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"Subsidiary" shall mean, with respect to any Person, (a) any
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corporation of which an aggregate of more than 50% of the outstanding Stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, Stock of any other class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time, directly or indirectly,
owned legally or beneficially by such Person and/or one or more Subsidiaries of
such Person, and (b) any partnership or other entity in which such Person and/or
one or more Subsidiaries of such Person shall have an interest (whether in the
form of voting or participation in profits or capital contribution) of more than
50%.
"Transaction Documents" shall mean this Agreement, the
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Registration Rights Agreement, the Second Certificate of Designation, the
Guaranty, the Fund Guaranty, the CIBC Credit Agreement (defined in Section 5.24)
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and all certificates and other documents related to the transactions
contemplated hereby and thereby.
"Warrants" shall mean the Company's Private Placement Warrants
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and Class C Warrants.
References to this "Agreement" shall mean this Purchase and
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Recapitalization Agreement, including all amendments, modifications and
supplements and any exhibits or schedule to any of the foregoing, and shall
refer to the Agreement as the same may be in effect at the time such reference
becomes operative.
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 computations hereunder shall be
computed, unless otherwise specifically provided herein, in accordance with GAAP
consistently applied. 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. The words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement, as a whole, including the exhibits and
schedules hereto, as the same may from time to time be amended, modified or
supplemented, and not to any particular section, subsection or clause contained
in this Agreement. Wherever from the context it appears appropriate, each term
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stated in either the singular or plural shall include the singular and the
plural, and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, the feminine and the neuter.
ARTICLE II
INITIAL CLOSING
Section 2.1 Authorization of Initial Purchased Securities. At
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or prior to the Initial Closing, the Company shall have duly authorized the
issuance and sale of the Initial Purchased Securities.
Section 2.2 Purchase of Initial Purchased Securities. Subject
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to the terms and conditions set forth in this Agreement, on the Initial Closing
Date (as defined below), the Purchaser will purchase from the Company, and the
Company will sell to the Purchaser, an aggregate of 1,000,000 shares of Series A
Convertible Preferred for a purchase price of $15 per share (the "Per Share
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Price") for an aggregate purchase price of $15,000,000 (the "Initial Purchase
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Price"). The Initial Purchase Price will be payable in full by the Purchaser on
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the Initial Closing Date in cash by wire transfer of immediately available funds
to an account designated by the Company.
Section 2.3 Initial Closing. The closing of the purchase and
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sale of the Initial Purchased Securities (the "Initial Closing") shall take
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place simultaneously with the execution of this Agreement (the "Initial Closing
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Date") at the New York office of Xxxxxxxx & Xxxxx located at 153 East 53rd
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Street, New York, New York, or such other place as shall be mutually agreed to
by the parties hereto. On the Initial Closing Date, the Company will deliver to
the Purchaser a certificate representing the shares of Series A Convertible
Preferred representing the Initial Purchased Securities to be purchased by the
Purchaser registered in the name of the Purchaser against delivery by the
Purchaser of the Initial Purchase Price by payment of cash by wire transfer of
immediately available funds to the Company in accordance with Section 2.2
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hereof.
ARTICLE III
SUBSEQUENT CLOSINGS
Section 3.1 Authorization of Additional Purchased Securities.
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At or prior to the first Subsequent Closing, the Company shall duly authorize
the issuance and sale of the Additional Purchased Securities to be purchased at
such Subsequent Closing.
Section 3.2 Purchase of Additional Purchased Securities.
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Subject to the terms and conditions set forth in this Agreement, from time to
time after the Initial Closing and until:
(a) the first anniversary of the Initial Closing, with
respect to the purchase of Additional Purchased Securities upon the Company's
written notice in accordance with Section 3.3(a) below, the Purchaser may
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purchase from the Company at any Subsequent Closing Additional Purchased
Securities, up to a cumulative total amount (assuming a Guaranty Amount
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equal to zero/1/) of 666,667 shares of Series A Convertible Preferred, at price
per share equal to the Per Share Price for an aggregate purchase price of up to
$10,000,000 less the Guaranty Amount; and
(b) so long as both the Guaranty and the Fund Guaranty
remain outstanding, or the Purchaser and the Funds have any outstanding
obligations thereunder, the Purchaser shall have the right to purchase from the
Company at any Subsequent Closing, in accordance with Section 3.3(b) below,
-------------
Additional Purchased Securities up to an aggregate number of shares equal to the
quotient obtained by dividing the initial Guaranty Amount by the Per Share
Price, at a price per share equal to the Per Share Price for an aggregate
purchase price of up to the initial Guaranty Amount.
With respect to either Section 3.2(a) and Section 3.2(b) above, the aggregate
-------------- --------------
purchase price for the Additional Purchased Securities purchased at any
Subsequent Closing shall be equal to the Per Share Price multiplied by the
number of shares of Series A Convertible Preferred purchased at such Subsequent
Closing.
Section 3.3 Subsequent Closings. Subject to the terms and
-------------------
conditions herein (including the satisfaction of the conditions set forth in
Article VII), upon either (a) the Company's written notice specifying (i) the
-----------
proposed Subsequent Closing Date (which shall not be less than 20 nor more than
60 Business Days after delivery of such notice), (ii) the amount of Additional
Purchased Securities to be purchased and (iii) such other information as may be
requested by the Purchaser or (b) a payment by the Purchaser with respect to the
Guaranty, or a payment by either the Fund or Dutch with respect to the Fund
Guaranty, in each case whether as a result of a call by CIBC or a voluntary
investment which has the effect of reducing the amount outstanding under the
Guaranty, which the Purchaser and the Funds may elect to make such payment by
the purchase of a number of Additional Purchased Securities equal to the
quotient obtained by dividing the amount of such payment by the Per Share Price
for an aggregate purchase price equal to the amount of such payment then the
closing of each such purchase and sale of the Additional Purchased Securities
(each, a "Subsequent Closing") shall take place on such proposed Subsequent
------------------
Closing Date, or other date mutually agreed to by the parties hereto (the
"Subsequent Closing Date"), at the offices of Xxxxxxxx & Xxxxx at 000 Xxxx
-----------------------
Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx or at 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx
Xxxx, or such other place as shall be mutually agreed to by the parties hereto.
On each Subsequent Closing Date, the Company will deliver to the Purchaser a
certificate representing the number of shares of Series A Convertible Preferred
purchased at such Subsequent Closing purchased at such Subsequent Closing which
together represent the Additional Purchased Securities purchased by the
Purchaser at such Subsequent Closing to be registered in the name of the
Purchaser against delivery by the Purchaser of the purchase price therefor by
payment of cash to the Company in accordance with Section 3.2.
------------
--------------------------
/1/ As of the date hereof, the Guaranty Amount is equal to $6,000,000 and the
Purchaser may purchase up to an additional amount of 266.667 ($10 million less
$6 million divided by $15) shares of Series A Convertible Preferred.
-10-
ARTICLE IV
PURCHASER'S REPRESENTATIONS
As of the Initial Closing and as of each Subsequent Closing,
the Purchaser makes the following representations and warranties to the Company,
each and all of which shall survive the execution and delivery of this Agreement
and each Closing hereunder:
Section 4.1 Investment Intention. The Purchaser is purchasing
--------------------
the Initial Purchased Securities and the Additional Purchased Securities for its
own account, for investment purposes and not with a view to the distribution
thereof. The Purchaser will not, directly or indirectly, offer, transfer, sell,
assign, pledge, hypothecate or otherwise dispose of any of the Initial Purchased
Securities or the Additional Purchased Securities (or solicit any offers to buy,
purchase, or otherwise acquire any of the Initial Purchased Securities or the
Additional Purchased Securities ), except in compliance with the Securities Act.
Section 4.2 Accredited Investor. The Purchaser is an
-------------------
"accredited investor" (as that term is defined in Rule 501 of Regulation D under
the Securities Act) and by reason of its business and financial experience, it
has such knowledge, sophistication and experience in business and financial
matters as to be capable of evaluating the merits and risks of the prospective
investment, is able to bear the economic risk of such investment and it is able
to afford a complete loss of such investment.
Section 4.3 Corporate Existence. The Purchaser is a limited
-------------------
liability company duly organized, validly existing and in good standing under
the laws of its jurisdiction of formation.
Section 4.4 Corporate Power: Authorization: Enforceable
-------------------------------------------
Obligations. The execution, delivery and performance by the Purchaser of the
-----------
Transaction Documents to be executed by it: (i) are within Purchaser's power, as
applicable; (ii) have been duly authorized by all necessary action, as
applicable; (iii) are not in contravention of any provision of the Purchaser's
governing documents, as applicable; and (iv) will not violate any law or
regulation, or any order or decree of any court or governmental instrumentality
binding on the Purchaser. The Purchaser has full power and authority to perform
its obligations under the Transaction Documents. The Transaction Documents to
which the Purchaser is a party have each been duly executed and delivered by
Purchaser and constitute the legal, valid and binding obligations of the
Purchaser, enforceable against it in accordance with their respective terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity).
-11-
ARTICLE V
COMPANY'S REPRESENTATIONS, WARRANTIES AND COVENANTS
As of the Initial Closing and as of each Subsequent Closing,
the Company makes the following representations, warranties and covenants to the
Purchaser, each and all of which shall survive the execution and delivery of
this Agreement and each Closing hereunder:
Section 5.1 Capitalization.
--------------
(a) The "Capitalization Chart" attached hereto as
--------------------
Exhibit C sets forth a true and complete description of all authorized, issued
---------
and outstanding shares of Common Stock, Convertible Preferred and Series A
Convertible Preferred of the Company by including a description of (i) the
number of shares of each class of Stock of the Company issued and outstanding
and (ii) the number and class of all outstanding warrants, options and other
securities convertible into, or exchangeable for, shares of Common Stock or
other securities of the Company. After giving effect to the purchase of the
Initial Purchased Securities, 1,155,426 shares of Common Stock are reserved for
issuance upon exercise of the Private Placement Warrants, 924,832 shares of
Common Stock are reserved for issuance upon exercise of the Class C Warrants,
4,366,660 shares of Common Stock are reserved for issuance upon conversion of
the Series A Convertible Preferred outstanding as of the date hereof (including
the Series A Convertible Preferred purchased at the Initial Closing), and
2,915,933 shares of Common Stock are reserved for issuance upon exercise of the
Options.
(b) All issued and outstanding Stock of the Company
listed on the Capitalization Chart is duly authorized, validly issued, fully
paid and non-assessable. Schedule 5.1 hereto or the Annual Report contains a
------------
complete and correct list of all stockholders of the Company owning, to the
knowledge of the Company, more than 5% of the outstanding Stock of the Company
and the number of shares or warrants owned by each. Except as set forth on
Schedule 5.1 or the Annual Report and except as to the outstanding Series A
------------
Convertible Preferred, Options and Warrants, (i) there is no existing option,
warrant, call, commitment or other agreement to which the Company is a party
requiring, and there are no convertible securities of the Company outstanding
which upon conversion would require, the issuance of any additional shares of
Stock of the Company or other securities convertible into shares of equity
securities of the Company, (ii) there are no agreements or obligations
(contingent or otherwise) requiring the Company to repurchase or otherwise
acquire or retire any shares of its capital stock or any warrants, options or
other rights to acquire its capital stock, and (iii) there are no agreements to
which the Company is a party or, to the knowledge of the Company, to which any
stockholder or warrant holder of the Company is a party, with respect to the
voting or transfer of the Stock of the Company. Except as set forth on Schedule
--------
5.1 or the Annual Report, there are no stockholders' preemptive rights or rights
---
of first refusal or other similar rights with respect to the issuance of the
Initial Purchased Securities or the Additional Purchased Securities by the
Company. True and correct copies of the Certificate of Incorporation and by-laws
of the Company have been delivered to the Purchaser.
-12-
Section 5.2 Authorization and Issuance of the Initial
-----------------------------------------
Purchased Securities, and the Additional Purchased Securities. The issuance of
-------------------------------------------------------------
the to the Initial Purchased Securities, and the Additional Purchased Securities
purchased pursuant to the Guaranty or the Fund Guaranty, has been duly
authorized by all necessary corporate action on the part of the Company and,
upon delivery to the Purchaser of certificates therefor against payment in
accordance with the terms hereof, the Initial Purchased Securities and the
Additional Purchased Securities will have been validly issued and fully paid and
nonassessable, free and clear of all pledges, liens, encumbrances and preemptive
rights, subject to reclassification of the Convertible Preferred into the Series
A Convertible Preferred in accordance with Section 6.1(d). The issuance of
-------------
shares upon the conversion of the Series A Convertible Preferred has been duly
authorized by all necessary corporate action on the part of the Company and,
when issued upon conversion of the Series A Convertible Preferred, such Common
Stock will have been validly issued and fully paid and non-assessable.
Section 5.3 Securities Laws. In reliance on the
---------------
representations of the Purchaser contained in Section 4.1 and 4.2, the offer,
----------- ---
issuance, sale and delivery of the Initial Purchased Securities and the
Additional Purchased Securities, as provided in this Agreement, are exempt from
the registration requirements of the Securities Act and all applicable state
securities laws, and are otherwise in compliance with such laws. Neither the
Company nor any Person acting on its behalf has taken or will take any action
(including, without limitation, any offering of any securities of the Company
under circumstances which would require the integration of such offering with
the offering of the Initial Purchased Securities or the Additional Purchased
Securities under the Securities Act and the rules and regulations of the SEC
thereunder) which might subject the offering, issuance or sale of the Initial
Purchased Securities or the Additional Purchased Securities to the registration
requirements of Section 5 of the Securities Act. No information contained in the
documents filed with the SEC contains any untrue statement of a material fact,
or omits to state a material fact necessary to make the statements contained
therein not misleading in light of the circumstances under which made.
Section 5.4 Corporate Existence: Compliance with Law. The
----------------------------------------
Company (i) is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware; (ii) except as indicated on
Schedule 5.4, is duly qualified as a foreign corporation and in good standing
------------
under the laws of Massachusetts, New York, Illinois, California, Arizona and
Georgia and each jurisdiction where its ownership or lease of property or the
conduct of its business requires such qualification (except for jurisdictions in
which such failure to so qualify or to be in good standing would not have a
Material Adverse Effect); (iii) has the requisite corporate power and authority
and the legal right to own, pledge, mortgage or otherwise encumber and operate
its properties, to lease the property it operates under lease, and to conduct
its business as now being conducted in all material respects; (iv) has, or has
applied for, all material licenses, permits, consents or approvals from or by,
and has made all material filings with, and has given all material notices to,
all Governmental Authorities having jurisdiction, to the extent required for
such ownership, operation and conduct; (v) is in compliance with its Certificate
of Incorporation and by-laws in all material respects; and (vi) is in compliance
with all applicable provisions of applicable laws, including, but not limited
to, the Securities Act and the Exchange Act, except for such non-
-13-
compliance which would not have a Material Adverse Effect. The Company has
timely filed all reports with the SEC as is required by the Securities Act and
Exchange Act and the Rule 144 exemption is available to qualified holders of
Stock of the Company.
Section 5.5 Subsidiaries. Except with respect to the
------------
acquisition of MPM and as listed on the Schedule 5.5, there currently exist no
------------
Subsidiaries of the Company and the Company has no equity interest in any other
Person.
Section 5.6 Corporate Power: Authorization: Enforceable
-------------------------------------------
Obligations. The execution, delivery, and performance by the Company of
-----------
this Agreement, the other Transaction Documents to which it is a party and all
instruments and documents to be delivered by the Company, the issuance and sale
of the Initial Purchased Securities, and the Additional Purchased Securities
purchased pursuant to the Guaranty or the Fund Guaranty, and the consummation of
the other transactions contemplated by any of the foregoing (subject to the
reclassification of the Convertible Preferred into the Series A Convertible
Preferred in accordance with Section 6.1(d)): (i) are within the Company's
--------------
corporate power and authority, (ii) have been duly authorized by all necessary
or proper corporate action; (iii) are not in contravention of any provision of
the Company's Certificate of Incorporation or by-laws; (iv) will not violate any
law or regulation, or any order or decree of any court or governmental
instrumentality; (v) will not conflict with or result in the breach or
termination of, constitute a default under or accelerate any performance
required by, any indenture, mortgage, deed of trust, lease, agreement or other
instrument to which the Company is a party or by which the Company or any of
their property is bound, (vi) will not result in the creation or imposition of
any Lien upon the capital stock or any of the property of the Company; and (vii)
do not require the consent or approval of, or any filing with, any Governmental
Authority or any other Person (except to the extent previously obtained or
made). Except for the Shareholder Approval, the execution, delivery and
performance of this Agreement and the transactions contemplated herein do not
require approval or consent of the shareholders or other holders of Stock of the
Company or the approval or authorization of any Governmental Authority, NASDAQ
(except for the listing of additional shares pursuant to NASD Rule 4310(c)(17)
regarding notice of issuance of additional securities), other securities
exchange or any other Person. Each of this Agreement and the other Transaction
Documents shall have been duly executed and delivered by the Company and each
shall then constitute a legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).
Section 5.7 Financial Statements.
--------------------
(a) The audited financial statements of the Company
dated as of December 31, 1998 (the "Financials") have been prepared in
----------
accordance with the books and records of the Company, present fairly the
financial condition of the Company as of the respective dates
-14-
indicated and the results of operations for the respective periods indicated,
and have been prepared in accordance with GAAP applied on a consistent basis.
(b) Except as set forth on Schedule 5.7 or the Annual
------------
Report, the Company has no material obligations, contingent or otherwise,
including, without limitation, liabilities for Charges, long-term leases or
long-term commitments which are not reflected in the Financials, other than
those incurred since December 31, 1998, in the ordinary course of business (none
of which is a liability resulting from breach of contract, breach of warranty,
tort, infringement, or any claim or lawsuit).
(c) No dividends or other distributions have been
declared, paid or made upon any Stock of the Company, nor has any Stock of the
Company been redeemed, retired, purchased or otherwise acquired for value by the
Company since December 31, 1998.
Section 5.8 Ownership of Property.
---------------------
(a) The Company does not own any real estate. Except
as set forth on Schedule 5.8 or the Annual Report, the Company owns, has a valid
------------
leasehold interest in, or has a valid license to use, all material assets,
properties and rights, whether tangible or intangible, necessary for the conduct
of its business as presently conducted and as presently proposed to be
conducted.
(b) All real property leased by the Company is set
forth on Schedule 5.8 or the Annual Report. Each of such leases is valid and
------------
enforceable in accordance with its terms (subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity)) and is in full force
and effect. Except as set forth on Schedule 5.8 or the Annual Report, the
------------
Company is not in default of its obligations under any material lease or has it
delivered or received any notice of default under any such lease, nor to the
knowledge of the Company has any event occurred which, with the giving of
notice, the passage of time or both, would constitute a default under any such
lease.
Section 5.9 Material Contracts: Indebtedness. Each Material
--------------------------------
Contract is a valid and binding agreement of the Company enforceable against the
Company in accordance with its terms (subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commerical reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity)), and the Company has
no knowledge that any Material Contract is not a valid and binding agreement
against the other parties thereto. Except as set forth in Schedule 5.9 or the
------------
Annual Report, the Company is not in material default or breach (whether with or
without the passage of
-15-
time, the giving of notice or both) or in receipt of any claims of default or
breach in either case that could reasonably be expected to have a Material
Adverse Effect, nor to the Company's knowledge is any third party in default or
breach, under or with respect to any Material Contract. Except as set forth on
Schedule 5.9 or the Annual Report, the Company has no Indebtedness, except
------------
Permitted Indebtedness and except for indebtedness under that certain Credit
Agreement, dated as of July 13, 1999, by and between the Company and LaSalle
Bank National Association.
Section 5.10 Environmental Protection.
------------------------
(a) To the Company's actual knowledge without
independent investigation, all real property owned, leased or otherwise operated
by the Company and each Subsidiary (a "Facility") is free of contamination from
--------
any substance, waste or material (i) currently identified to be toxic or
hazardous pursuant to, or which may result in liability under, any Environmental
Law or (ii) within the definition of a substance which is toxic or hazardous
under any Environmental Law, including, without limitation, any asbestos, PCB,
radioactive substance, methane, volatile hydrocarbons, industrial solvents, oil
or petroleum or chemical liquids or solids, liquid or gaseous products, or any
other material or substance which has in the past or could at any time in the
future cause or constitute a health, safety, or environmental hazard to any
Person or property or result in any Environmental Liabilities and Costs
("Hazardous Substance") of more than $25,000 or which, in either case, could
-------------------
have a Material Adverse Effect. Nor has the Company caused or suffered to occur
any release, Spill, migration, leakage, discharge, spillage, uncontrolled loss,
seepage, or filtration of Hazard Substances at or from the Facility (a "Spill")
-----
which could result in Environmental Liabilities and Costs in excess of $25,000.
(b) The Company and each Subsidiary has generated,
treated, stored and disposed of any Hazardous Substances in full compliance with
applicable Environmental Laws, except for such non-compliances which would not
have a Material Adverse Effect.
(c) The Company and each Subsidiary has obtained, or
has applied for, and is in full compliance with and in good standing under all
permit required under Environmental Laws (except for such failures which would
not have a Material Adverse Effect). The Company does not have any knowledge of
any proceedings to substantially modify or to revoke any such permit.
(d) There are no investigations, proceedings or
litigation pending or, to the Company's knowledge, threatened, affecting or
against the Company or the Facilities relating to Environmental Laws or
Hazardous Substances.
(e) Since April 25, 1997, the Company has not
received any communication or notice (including, without limitation, requests
for information) indicating the potential of Environmental Liabilities and Costs
against the Company.
-16-
Section 5.11 Labor Matters.
-------------
(a) There are no strikes or other labor disputes
against the Company pending or to the Company's knowledge threatened. Hours
worked by and payment made to employees of the Company have not been in
violation of the Fair Labor Standards Act or any other applicable law dealing
with such matters. All payments due from the Company on account of employee
health and welfare insurance have been paid or accrued as a liability on the
books of the Company. There is no organizing activity involving the Company
pending or, to the Company's knowledge, threatened by any labor union or group
of employees that individually or in the aggregate could reasonably be expected
to have a Material Adverse Effect. There are no representation proceedings
pending or, to the Company's knowledge, threatened with the National Labor
Relations Board, and no labor organization or group of employees of the Company
has made a pending demand for recognition. Except as set forth on Schedule 5.11,
-------------
there are no complaints or charges against the Company pending or, to the
Company's knowledge, threatened to be filed with any federal, state, local or
foreign court, governmental agency or arbitrator based on, arising out of, in
connection with, or otherwise relating to the employment or termination of
employment by the Company of any individual.
(b) The Company is not, and during the five years
preceding the date hereof was not, a party to any labor or collective bargaining
agreement and there are no labor or collective bargaining agreements which
pertain to employees of the Company.
Section 5.12 Taxes. All federal, state, local and foreign tax
-----
returns, reports and statements required to be filed by the Company and each
Affiliated Group have been timely filed with the appropriate Governmental
Authority except where the failure to file such report or statement would not
have a Material Adverse Effect and all such returns, reports and statements are
true, correct and complete in all material respects. All Charges and other
impositions due and payable for the periods covered by such returns, reports and
statements have been paid prior to the date on which any fine, penalty, interest
or late charge may be added thereto for nonpayment thereof or any such fine,
penalty, interest or late charge has been paid. Proper and accurate amounts have
been withheld by the Company from its employees, independent contractors, or
other third parties for all periods in full and complete compliance with the
tax, social security and unemployment withholding provisions of applicable
federal, state, local and foreign law and such withholdings have been timely
paid to the respective governmental agencies. The Company has not executed or
filed with the IRS or any other Governmental Authority any agreement or other
document extending, or having the effect of extending, the period for assessment
or collection of any Charges. No tax audits or other administrative or judicial
proceedings are pending or threatened with regard to any Charges for which the
Company may be liable and which would reasonably be expected to have a Material
Adverse Effect and no assessment of Charges is proposed against the Company. The
Company has not filed a consent pursuant to IRC Section 341(f) or agreed to have
IRC Section 341(f)(2) apply to any dispositions of subsection (f) assets (as
such term is defined in IRC Section 341(f)(4)). None of the property owned by
the Company is property which such the Company is required to treat as being
owned by any other Person pursuant to the provisions of Section 168(f)(8) of the
Internal
-17-
Revenue Code of 1954, as amended, and in effect immediately prior to the
enactment of the Tax Reform Act of 1986 or is "tax-exempt" use property, within
the meaning of IRC Section 168(h). The Company has not agreed or has been
requested to make any adjustment under IRC Section 481(a) by reason of a change
in accounting method or otherwise. The Company has no obligation under any
written tax sharing agreement. The Company is not a party to or bound by any tax
allocation or tax sharing agreement and has no current or potential contractual
obligation to indemnify any other person with respect to any Charges. The
Company has not made any payments, and is not and will not become obligated
(under any contract entered into on or before the Initial Closing Date) to make
any payments, that will be non-deductible under Section 280G of the IRC (or any
corresponding provision of state, local or foreign income tax law). The Company
will not be required (A) as a result of a change in method of accounting for a
taxable period ending on or prior to the Initial Closing Date, to include any
adjustment in taxable income for any taxable period (or portion thereof) ending
after the Initial Closing Date or (B) as a result of any deferred intercompany
gain described in Treasury Regulation Sections 1. 1502-13 of former Treasury
Regulations Section 1. 1502-14 or any excess loss account described in Treasury
Regulation Section 1. 1502-19 (or any corresponding or similar provision or
administrative rule of federal, state, local or foreign income tax law), to
include any item of income in taxable income for any taxable period (or portion
thereof) ending after the Initial Closing Date, in each case, which would
reasonably be expected to have a Material Adverse Effect. The Company has not
been a member of an Affiliated Group other than one of which the Company was the
common parent, or filed or been included in a combined, consolidated or unitary
income tax return, other than one filed by the Company.
Section 5.13 No Litigation. Except as set forth on Schedule
------------- --------
5.13, no action, claim or proceeding is now pending or, to the knowledge of the
----
Company, threatened against the Company (or to the Company's knowledge, pending
or threatened against or affecting any of the officers, directors or employees
of the Company with respect to its business or proposed business activities), or
pending or threatened by the Company against any third party, at law, in equity
or otherwise, before any court, board, commission, agency or instrumentality of
any federal, state, or local government or of any agency or subdivision thereof,
or before any arbitrator or panel of arbitrators.
Section 5.14 Brokers. No broker or finder acting on behalf of
-------
the Company brought about the consummation of the transactions contemplated
pursuant to this Agreement and the Company has no obligation to any Person in
respect of any finder's or brokerage fees (or any similar obligation) in
connection with the transactions contemplated by this Agreement. The Company is
solely responsible for the payment of all such finder's or brokerage fees.
Section 5.15 Management and Labor Agreements. Except as set
-------------------------------
forth on Schedule 5.15 or the Annual Report, there are no management agreements
-------------
covering officers of the Company.
Section 5.16 Patents, Trademarks, Copyrights and Licenses. The
--------------------------------------------
Company owns all licenses, patents, patent applications, copyrights, service
marks, trademarks and registrations and applications for registration thereof,
and trade names necessary to continue to conduct its business as heretofore
conducted by it and now being conducted by it. To the Company's knowledge, the
-18-
Company conducts its businesses without infringement or claim of infringement of
any license, patent, copyright, service xxxx, trademark, trade name, trade
secret or other intellectual property right of others and the Company has
received no notices claiming any such infringement. To the Company's knowledge,
there is no infringement by others of any license, patent, copyright, service
xxxx, trademark, trade name, trade secret or other intellectual property right
of the Company.
Section 5.17 No Material Adverse Effect. To the Company's
--------------------------
knowledge, no event has occurred since April 25, 1997 which has had or could be
reasonably expected to have a Material Adverse Effect; provided, however, the
Purchaser acknowledges that it has been advised that the Company has operated at
a loss and has had negative cash flow since October 31, 1998.
Section 5.18 ERISA.
-----
(a) During the twelve-consecutive-month period prior
to the date of the execution and delivery of this Agreement, (i) no steps have
been taken to terminate any Pension Plan and (ii) no contribution failure has
occurred with respect to any Pension Plan sufficient to give rise to a Lien
under Section 302(f) of ERISA. No condition exists or event or transaction has
occurred with respect to any Pension Plan which could result in the incurrence
by the Company of any material liability, fine or penalty, other than the
obligations of the Company to fund the benefits provided under the Pension Plan.
(b) All contributions (if any) have been made to any
Multiemployer Plan that are required to be made by the Company or any other
member of the Controlled Group under the terms of the plan or of any collective
bargaining agreement or by applicable law; neither the Company nor any member of
the Controlled Group has withdrawn or partially withdrawn from any Multiemployer
Plan, incurred any withdrawal liability with respect to any such plan or
received notice of any claim or demand for withdrawal liability or partial
withdrawal liability from any such plan, and no condition has occurred which, if
continued, might result in a withdrawal or partial withdrawal from any such
plan; and neither the Company nor any member of the Controlled Group has
received any notice that any Multiemployer Pension Plan is in reorganization,
that increased contributions may be required to avoid a reduction in plan
benefits or the imposition of any excise tax, that any such plan is or has been
funded at a rate less than that required under Section 412 of the IRC, that any
such plan is or may be terminated, or that any such plan is or may become
insolvent.
(c) The Pension Plans and the trusts maintained
pursuant thereto are exempt from federal income taxation under Section 501 of
the IRC, and nothing has occurred with respect to the operation of the Pension
Plans which could cause the loss of such qualification or exemption or the
imposition of any liability, penalty, or tax under ERISA or the IRC.
(d) All contributions required by law or pursuant to
the terms of the Plans (without regard to any waivers granted under Section 412
of the IRC) to any funds or trusts established thereunder or in connection
therewith have been made by the due date thereof (including
-19-
any valid extension) and no accumulated funding deficiencies exist in any of the
Pension Plans subject to Section 412 of the IRC.
(e) There is no "amount of unfunded benefit
liabilities" as defined in Section 4001 (a) (18) of ERISA in any of the
respective Pension Plans, which are subject to Title IV of ERISA. Each of the
respective Pension Plans are fully funded in accordance with the actuarial
assumptions used by the PBGC to determine the level of funding required in the
event of the termination of the Pension Plan and all benefit liabilities do not
exceed the assets of such Pension Plans.
(f) There have been no "reportable events" as that
term is defined in Section 404 of ERISA and the regulations thereunder with
respect to the Pension Plans subject to Title IV of ERISA which would require
the giving of notice, or any event requiring disclosure under Sections
4041(c)(3)(C), 4063(a) or 4068(f) of ERISA.
(g) There is no material violation of ERISA with
respect to the filing of applicable reports, documents, and notice, regarding
the Plans with the Secretary of Labor and the Secretary of the Treasury or the
furnishing of such documents to the participants or beneficiaries of the Plans.
(h) To the knowledge of the Company, there are no
pending actions, claims or lawsuits which have been asserted or instituted
against the Plans, the assets of any of the trusts under such Plans or the plan
sponsor or the plan administrator, or against any fiduciary of the Plans with
respect to the operation of such Plans (other than routine benefit claims), nor
does the Company have knowledge of facts which could form the basis for any such
claim or lawsuit.
(i) All amendments and actions required to bring the
Plans into conformity in all material respects with all of the applicable
provisions of ERISA and other applicable laws have been made or taken except to
the extent that such amendments or actions are not required by law, regulation
or order pronounced by the IRS, to be made or taken until a date after the
applicable Closing Date.
(j) The Plans have been maintained, in all material
respects, in accordance with their terms and with all provisions of ERISA
(including rules and regulations thereunder) and other applicable Federal and
state law, and the Company or "party in interest" or "disqualified person" with
respect to the Plans has engaged in a "prohibited transaction" within the
meaning of Section 4975 of the IRC or Section 406 of ERISA.
(k) Neither the Company nor any ERISA Affiliate has
terminated any Pension Plan subject to Title IV, or incurred any outstanding
liability under Section 4062 of ERISA to the PBGC, or to a trustee appointed
under Section 4042 of ERISA.
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(l) Neither the Company nor any ERISA Affiliate
maintains retiree life and retiree health insurance plans which are Welfare
Plans and which provide for continuing benefits or coverage for any participant
or any beneficiary of a participant except as may be required under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA").
-----
The Company and each ERISA Affiliate which maintains a Welfare Plan has complied
with the notice and continuation requirements of COBRA and the regulations
thereunder in all material respects.
(m) Neither the Company nor any ERISA Affiliate has
contributed or been obligated to contribute to a Multiemployer Plan as of the
applicable Closing.
(n) Neither the Company nor any ERISA Affiliate has
withdrawn in a complete or partial withdrawal from any Multiemployer Plan prior
to the applicable Closing Date, nor has any of them incurred any liability due
to the termination or reorganization of a Multiemployer Plan.
Section 5.19 Registration Rights. Except as listed on Schedule
------------------- --------
5.19 and except pursuant to the Registration Rights Agreement or as set forth in
----
the Annual Report, the Company is not under obligation to register any of its
securities pursuant to the Securities Act.
Section 5.20 Required Filings. As of the date hereof, the
----------------
Company has made all required filings under the Securities Act and Exchange Act
and all information contained in such filings are true and correct in all
material respects and do not contain any untrue information or omit to state a
material fact necessary to make any statements contained in such filings not
misleading in light of the circumstances under which they were made.
Section 5.21 Full Disclosure. No information contained in this
---------------
Agreement, any other Transaction Document, the Financials or any written
statement furnished by or on behalf of the Company pursuant to the terms of this
Agreement contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained herein or therein not
misleading in light of the circumstances under which they were made.
Section 5.22 Schedule 14C: Shareholder Approval. The Company
----------------------------------
shall upon receiving Shareholder Approval use its best efforts to prepare and
file as promptly as practicable with the SEC a Schedule 14C Information
Statement (with respect to Rule 4460(i) of the NASDAQ Stock Market, Inc.'s
Marketplace Rules) required under the Exchange Act and take all actions
necessary to have such Schedule 14C Information Statement become effective as
promptly as practicable (but in no event later than February 28, 2000).
Section 5.23 Schedule 14C: Reclassification. Within 14
------------------------------
calendar days of the date hereof, the Company shall as promptly as practicable
prepare and file with the SEC a Schedule 14C Information Statement (with respect
to the reclassification of the Convertible Preferred into the Series A
Convertible Preferred) required under the Securities Exchange Act of 1934 and
take all actions necessary to have such Schedule 14C Information Statement
become effective as promptly as practicable and immediately upon such
effectiveness the Company shall file a Plan of Reclassification and amendment to
its Designation of Preferred Stock redesignating the Convertible Preferred into
Series A Preferred Stock (but in no event later than 45 calendar days after the
date hereof).
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Section 5.24 Credit Agreement. All of the representations and
----------------
warranties contained in that certain Credit Agreement, dated as of the date
hereof, by and between MPM, CIBC, as Agent, CIBC World Markets Corp., and the
several banks and lending institutions made party thereto from time to time, are
true and correct as of the date hereof and are hereby incorporated herein by
reference.
Section 5.25 Use of Proceeds. The Company shall make use of
---------------
the proceeds from the purchase of the Initial Purchased Securities for the
limited purpose of acquiring MPM pursuant to the Stock Purchase Agreement, dated
as of dated as of July 16, 1999, between the Company and MPM, and all
representations and warranties of the Company contained therein are true and
correct as of the date hereof and, to the knowledge of the Company, all other
representations and warranties contained therein are true and correct as of the
date hereof, and all such representations and warranties are hereby incorporated
herein by reference.
ARTICLE VI
CONDITIONS PRECEDENT TO INITIAL CLOSING
Section 6.1 Conditions Precedent. The obligation of the
--------------------
Purchaser to purchase the Initial Purchased Securities pursuant to Section 2.2
-----------
hereof at the Initial Closing is subject to the condition that the Purchaser
shall have received and the following shall have been delivered to the Purchaser
on the Initial Closing Date, each dated the Initial Closing Date unless
otherwise indicated, in form and substance satisfactory to the Purchaser, and
the following actions shall occur on or before the Initial Closing Date, unless
waived by the Purchaser:
(a) A favorable opinion of Xxxxxx, Xxxxxxx & Xxxxxx,
L.L.P. counsel to the Company, substantially in the form attached hereto as
Exhibit B.
---------
(b) Resolutions of the Board or an executive
committee or special finance committee of the Company, certified by the
Secretary or Assistant Secretary of the Company, as of the Initial Closing Date,
to be duly adopted and in full force and effect on such date, authorizing, in
the case of the Board, (i) the consummation of each of the transactions
contemplated by this Agreement and (ii) officers to execute and deliver this
Agreement and each other Transaction Document to which it is a party.
(c) A copy of governmental certificate, dated the
most recent practicable date prior to the Initial Closing Date, with telegram
updates where available, showing that the Company is organized and in good
standing in the State of Delaware and is qualified as a foreign corporation and
in good standing in all other jurisdictions in which it is qualified to transact
business.
(d) A copy of the organizational charter and all
amendments thereto of the Company, certified as of a recent date by the
Secretary of State of the State of Delaware, as amended to reflect (i) the
reduction in the number of shares of Convertible Preferred authorized in the
Original
-22
Certificate of Designation from 2,000,000 shares to 309,998 shares of
Convertible Preferred and (ii) the filing of the Second Certificate of
Designation (with respect to the designation of the Series A Convertible
Preferred). A copy of the Plan of Reclassification of the Company, dated as of
the date hereof and approved by the Board and the shareholders of the Company in
accordance with Delaware General Corporation Law, shall be filed with the
Secretary of State of the State of Delaware) (the "Charter") after the filing of
-------
the Schedule 14C referenced in Section 5.23 (the "Plan of Reclassification"),
------------ ------------------------
and copies of the Company's by-laws, both certified by the Secretary or
Assistant Secretary of the Company as true and correct as of the Initial Closing
Date.
(e) Certificates of the Secretary or an Assistant
Secretary of the Company, dated the Initial Closing Date, as to the incumbency
and signatures of the officers of the Company executing this Agreement, the
Initial Purchased Securities, each other Transaction Document to which it is a
party and any other certificate or other document to be delivered pursuant
hereto or thereto, together with evidence of the incumbency of such Secretary or
Assistant Secretary.
(f) A copy of all third party consents and approvals
(including, without limitation, the consent of LaSalle Bank National
Association, to the extent required) that are necessary for the consummation of
the transactions contemplated hereby or that are required in order to prevent a
breach of or default under, a termination or modification of, or acceleration of
the terms of, any contract, agreement or document required to be listed on the
attached Schedule 5.9 or the Annual Report, in each case on terms and conditions
------------
reasonably satisfactory to the Purchaser.
(g) A copy of all governmental and regulatory
consents and approvals that are necessary for the consummation of the
transactions contemplated hereby, in each case on terms and conditions
satisfactory to the Purchaser.
(h) No suit, action or other proceeding shall be
pending before any court or governmental regulatory body or authority in which
it is sought to restrain or prohibit the transactions contemplated hereby, or
that could have a Material Adverse Effect, and no injunction, judgment, order,
decree or ruling with respect thereto shall be in effect.
(i) Since the December 31, 1998, there shall have
been no material adverse change or material adverse development in the business,
financial condition, business prospects, operating results, assets, operations
or customer, supplier or employee relations of the Company.
(j) The Company shall have delivered to the Purchaser
a copy of the fairness opinion (the "Fairness Opinion") relating to the
----------------
transaction contemplated herein from Texada Capital Corporation, which fairness
opinion shall indicate that the price for the Series A Convertible Preferred
purchased pursuant to Section 2.2 is fair to the Company and its stockholders
-----------
(other than as to the Purchaser).
(k) The Initial Purchased Securities shall have been
delivered to the Purchaser.
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(l) The number of shares of Convertible Preferred
authorized in the Original Certificate of Designation shall have been reduced by
duly authorized Board action from 2,000,000 shares to 309,998 shares of
Convertible Preferred and the Second Certificate of Designation containing the
terms of the Series A Convertible Preferred, Plan of Reclassifications and
redesignations of the Convertible Preferred to Series A Convertible Preferred,
shall have been duly adopted by Board action and filed with the Secretary of the
State of Delaware.
(m) WSP shall receive a fairness opinion from CIBC
relating to the transaction contemplated herein, which fairness opinion shall
indicate that the transactions herein are fair to Xxxxxx Xxxxx & Partners, L.P.
and its affiliates.
ARTICLE VII
CONDITIONS PRECEDENT TO SUBSEQUENT CLOSING
Section 7.1 Conditions Precedent. The obligation of the
--------------------
Purchaser to purchase the Additional Purchased Securities at any Subsequent
Closing pursuant to Section 3.2 hereof is subject to the condition that the
-----------
Purchaser shall have received and the following shall have been delivered to the
Purchaser on each Subsequent Closing Date, each dated as of such Subsequent
Closing Date unless otherwise indicated, in form and substance satisfactory to
the Purchaser, and the following actions shall occur on or before each
Subsequent Closing Date, unless waived in writing by the Purchaser:
(a) The representations and warranties of the Company
contained in Article V shall be true and correct in all material respects as if
---------
made on such Subsequent Closing Date.
(b) There shall not have occurred or be continuing
any "Event of Noncompliance" or "Special Event of Noncompliance" with respect to
the Series A Convertible Preferred, as such terms are defined in the Second
Certificate of Designation.
(c) If the proposed use of the funds is to consummate
an acquisition, then the Purchaser shall have completed its business, legal,
accounting and other due diligence investigation and evaluation of the Company
and its affiliates and shall be satisfied in its sole discretion with the result
thereof and with the documentation relating to such acquisition.
(d) If the proposed use of the funds is for working
capital purposes, then the Purchaser shall be satisfied in its sole discretion
with the intended use of funds.
(e) The Purchaser shall have received all necessary
internal approvals for the purchase of such Additional Purchases Securities and
shall be satisfied with the use of proceeds of its financing in each case in its
sole discretion.
(f) The Purchaser shall have received a favorable
opinion of Xxxxxx, Xxxxxxx
-24-
& Xxxxxx L.L.P., counsel to the Company, substantially in the form attached
hereto as Exhibit B.
---------
(g) The Purchaser shall have received funding from
its members in amounts sufficient to pay the purchase price for the Additional
Purchased Securities.
(h) Resolutions of the board of directors, executive
committee or special finance committee of the Company, certified by the
Secretary or Assistant Secretary of the Company, as of each Subsequent Closing
Date, to be duly adopted and in full force and effect on such date, authorizing
the consummation of each purchase of Additional Purchased Securities.
(i) A copy of governmental certificate, dated the
most recent practicable date prior to each Subsequent Closing Date, with
telegram updates where available, showing that the Company is organized and in
good standing in the State of Delaware and is qualified as a foreign corporation
and in good standing in all other jurisdictions in which it is qualified to
transact business.
(j) A copy of the organizational charter and all
amendments thereto of the Company, certified as of a recent date by the
Secretary of State of the State of Delaware, and copies of the Company's
by-laws, certified by the Secretary or Assistant Secretary of the Company as
true and correct as of each Subsequent Closing Date.
(k) Certificates of the Secretary or an Assistant
Secretary of the Company, dated as of Subsequent Closing Date, as to the
incumbency and signatures of the officers of the Company executing the purchase
of the Additional Purchased Securities and any other certificate or other
document to be delivered pursuant hereto or thereto, together with evidence of
the incumbency of such Secretary or Assistant Secretary.
(l) A copy of all third party consents and approvals
(including, without limitation, the consent of LaSalle Bank National Association
and/or CIBC, in each case only to the extent required) that are necessary for
the consummation of the transactions contemplated hereby or that are required in
order to prevent a breach of or default under, a termination or modification of,
or acceleration of the terms of, any contract, agreement or document in each
case on terms and conditions reasonably satisfactory to the Purchaser.
(m) A copy of all governmental and regulatory
consents and approvals that are necessary for the consummation of the
transactions contemplated hereby, in each case on terms and conditions
satisfactory to the Purchaser.
(n) No suit, action or other proceeding shall be
pending before any court or governmental regulatory body or authority in which
it is sought to restrain or prohibit the transactions contemplated hereby, or
that could have a Material Adverse Effect, and no injunction, judgment, order,
decree or ruling with respect thereto shall be in effect.
(o) Since the Initial Closing Date, there shall have
been no material adverse
-25-
change or material adverse development in the business, financial condition,
business prospects, operating results, assets, operations or customer, supplier
or employee relations of the Company.
(p) the Fairness Opinion shall not have been
withdrawn, revised or amended in any way and, at the request of the Purchaser,
the Company shall have delivered to the Purchaser an updated Fairness Opinion
relating to the transaction contemplated herein, which fairness opinion shall
indicate that the price for the Additional Purchased Securities purchased at
each Subsequent Closing pursuant to Section 3.2 is fair to the Company and its
-----------
stockholders.
(q) The Additional Purchased Securities shall be
delivered to the Purchaser.
(r) Prior to or as of each Subsequent Closing, the
Company shall have duly authorized a sufficient number of shares of Series A
Convertible Preferred to permit the issuance of the Additional Purchased
Securities purchased at each such Subsequent Closing, and the Company shall have
duly authorized a sufficient number of shares of Common Stock for the conversion
of such Additional Purchased Securities pursuant to terms and provisions listed
in the Second Certificate of Designation.
(s) The Shareholder Approval Effective Date (as
defined in the Second Certificate of Designation) shall have occurred on or
prior to February 28, 2000 in accordance with Section 5.22.
------------
(t) The Company shall have filed the Plan of
Reclassification with the Secretary of State of the State of Delaware, and such
filing shall have become effective within 45 days after the date hereof in
accordance with Section 5.23, and the Company shall have reduced the number of
------------
authorized shares of Convertible Preferred to zero.
(u) There shall have been no material change in the
Market Price (as defined in the Second Certificate of Designation) of, or in the
public market for, the Common Stock or the public markets generally.
(v) Such other documents as the Purchaser may
reasonably request.
ARTICLE VIII
SECURITIES LAW MATTERS
Section 8.1 Legends.
-------
(a) Each certificate representing the Initial
Purchased Securities or the Additional Purchased Securities shall bear a legend
substantially in the following form:
"THE STOCK REPRESENTED BY THIS CERTIFICATE HAS BEEN ACQUIRED
-26-
BY THE HOLDER FOR ITS OWN ACCOUNT, FOR INVESTMENT PURPOSES AND
NOT WITH A VIEW TO THE DISTRIBUTION OF SUCH STOCK. THE SHARES
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
"ACT") AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT
OR AN EXEMPTION THEREFROM."
Section 8.2 Transfer of Restricted Securities
---------------------------------
(a) Restricted Securities are transferable only
pursuant to (i) public offerings registered under the Securities Act, (ii) Rule
144 or Rule 144A of the Securities and Exchange Commission (or any similar rule
or rules then in force) if such rule is available and (iii) subject to the
conditions specified in subparagraph (b) below, any other legally available
means to transfer.
(b) In connection with the transfer of any Restricted
Securities (other than a transfer described in clause (i) or (ii) of
subparagraph (a) above), the holder thereof shall deliver written notice to the
Company describing in reasonable detail the transfer or proposed transfer,
together with an opinion of counsel which (to the Company's reasonable
satisfaction) is knowledgeable in securities law matters to the effect that such
transfer of Restricted Securities may be effected without registration of such
Restricted Securities under the Securities Act. In addition, if the holder of
the Restricted Securities delivers to the Company an opinion of counsel that no
subsequent transfer of such Restricted Securities shall require registration
under the Securities Act, the Company shall promptly upon such contemplated
transfer deliver new certificates or instruments, as the case may be, for such
Restricted Securities which do not bear the Securities Act legend set forth in
Section 8.1 above. If the Company is not required to deliver new certificate or
-----------
instruments, as the case may be, for such Restricted Securities not bearing such
legend, the holder thereof shall not transfer the same until the prospective
transferee has confirmed to the Company in writing its agreement to be bound by
the conditioned contained in this Section 8.2.
-----------
(c) Upon the request of a holder of Restricted
Securities, the Company shall promptly supply to such holder or such holder's
prospective transferees all information regarding the Company required to be
delivered in connection with a transfer pursuant to Rule 144 or 144A of the
Securities and Exchange Commission.
(d) If any Restricted Securities become eligible for
sale pursuant to Rule 144(k), the Company shall, upon the request of the holder
of such Restricted Securities, remove the legend set forth in Section 7.1 from
-----------
the certificates or instruments, as the case may be, representing such
Restricted Securities.
-27-
ARTICLE IX
EXPENSES
The Company shall pay all reasonable out-of-pocket expenses of
(i) the Purchaser in connection with the preparation, review or negotiation of
the Transaction Documents and the transactions contemplated thereby, including
cost incurred in connection with the Initial Closing and each Subsequent
Closing, (ii) stamp and other taxes which may be payable in respect of the
execution and delivery of this Agreement, the issuance and delivery of the
Initial Purchased Securities or the Additional Purchased Securities, and the
issuance and delivery of any Common Stock upon the conversion of the Series A
Convertible Preferred and (iii) the Purchaser or its managing member in
connection with (A) any amendment, modification or waiver, or consent with
respect to, any of the Transaction Documents, and (B) any attempt by the
Purchaser or its managing member to enforce any of its rights against the
Company or any other Person under or pursuant to of any of the Transaction
Documents (including the reasonable fees and expenses of all of its counsel and
consultants retained in connection with the Transaction Documents and the
transactions contemplated thereby).
ARTICLE X
LIMITATION ON CLAIMS OF THE PURCHASER
Section 10.1 Limitation.
----------
(a) The Purchaser shall not bring any action or claim
against the Company for damages for a breach of any representation, warranty or
covenant contained herein by the Company until such damages exceed $100,000 at
which time the Purchaser may bring an action for all claims.
(b) The Company shall not bring any action or claims
against the Purchaser for damages for a breach of any representation, warranty
or covenant contained herein by the Purchaser until such damages exceed
$100,000, at which time the Company may bring an action for all claims.
ARTICLE XI
MISCELLANEOUS
Section 11.1 Notices. Whenever it is provided herein that any
-------
notice, demand, request, consent, approval, declaration or other communication
shall or may be given to or served upon any of the parties by another, or
whenever any of the parties desires to give or serve upon another any such
communication with respect to this Agreement, each such notice, demand, request,
consent, approval, declaration or other communication shall be in writing and
either shall be delivered in person with receipt acknowledged or by registered
or certified mail, return receipt requested, postage prepaid, or by telecopy and
confirmed by telecopy answerback addressed as follows:
-28-
If to the Purchaser:
U-C Holdings, L.L.C.
000 X. Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Avy X. Xxxxx
Xxxxxx X. Xxxx
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxxxxx & Xxxxx
000 X. Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxxx X. Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
If to the Company:
College Television Network, Inc.
0000 Xxxx Xxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxx
Telecopy No.: (000) 000-0000
with copies to:
Xxxxxx, Xxxxxxx & Xxxxxx, L.L.P.
0000 Xxxxxxxxx Xxxx, X.X.
1600 Atlanta Financial Center
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxx X. Xxxxxxx, Esq.
Telecopy No.: (000) 000-0000
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration or other communication hereunder shall be deemed
to have been duly given or served on the date on which personally delivered,
with receipt acknowledged, telecopied and confirmed by telecopy answerback, or
three (3) Business Days after the same shall have been deposited with the United
States mail.
Section 11.2 Binding Effect: Benefits. Except as otherwise
------------------------
provided herein, this
-29-
Agreement shall be binding upon and inure to the benefit of the parties to this
Agreement and their respective successors and permitted assigns. Nothing in this
Agreement, express or implied, is intended or shall be construed to give any
person other than the parties to this Agreement or their respective successors
or assigns any legal or equitable right, remedy or claim under or in respect of
any agreement or any provision contained herein.
Section 11.3 Amendment. No amendment or waiver of any
---------
provision of this Agreement or any other Transaction Document nor consent to any
departure by the Company therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Company and the Purchaser, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given. No action taken pursuant to this
Agreement, including, without limitation, any investigation by or on behalf of
any party, shall be deemed to constitute a waiver by the party taking such
action, of compliance with any representations, warranties, covenants or
agreements contained herein. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
preceding or succeeding breach and no failure by either party to exercise any
right or privilege hereunder shall be deemed a waiver of such party's rights or
privileges hereunder or shall be deemed a waiver of such party's rights to
exercise the same at any subsequent time or times hereunder.
Section 11.4 Successors and Assigns: Assignability. Neither
-------------------------------------
this Agreement nor any right, remedy, obligation or liability arising hereunder
or by reason hereof shall be assignable by the Company without the prior written
consent of the Purchaser. All covenants contained herein shall bind and inure to
the benefit of the parties hereto and their respective successors and assigns
(including any subsequent holder of any of the Initial Purchased Securities, the
Additional Purchased Securities or any Common Stock issuable upon exercise of
the Initial Purchased Securities or the Additional Purchased Securities).
Section 11.5 Remedies. The Purchaser, in addition to being
--------
entitled to exercise all rights granted by law, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement. The
Company agrees that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach of the provisions of this Agreement and
hereby agrees to waive the defense in any action for specific performance that a
remedy at law would be adequate. In any action or proceeding brought to enforce
any provision of this Agreement or where any provision hereof is validly
asserted as a defense, the successful party shall be entitled to recover
reasonable attorneys' fees in addition to any other available remedy.
Section 11.6 Section and Other Headings. The section and other
--------------------------
headings contained in this Agreement are for reference purposes only and shall
not affect the meaning or interpretation of this Agreement.
Section 11.7 Severability. In the event that any one or more
------------
of the provisions contained in this Agreement shall be determined to be invalid,
illegal or unenforceable in any respect for any reason, the validity, legality
and enforceability of any such provision or provisions in every
-30-
other respect and the remaining provisions of this Agreement shall not be in any
way impaired.
Section 11.8 Entire Agreement. This Agreement and the
----------------
agreements and documents referred to herein contain the entire agreement and
understanding between the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, whether written or oral,
relating to such subject matter in any way.
Section 11.9 Counterparts. This Agreement may be executed in
------------
any number of counterparts, each of which shall be deemed to be an original and
all of which together shall be deemed to be one and the same instrument.
Section 11.10 Publicity. Neither the Purchaser nor the 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 the other party in advance. 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 or advisable, and may make such disclosure as it is advised by its
counsel is required by law.
Section 11.11 Governing Law. This Agreement shall be governed
-------------
by, construed and enforced in accordance with, the laws of the Delaware without
regard to the principles thereof relating to conflict of laws. 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 11.1 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 11.12 No Strict Construction. The language used in
----------------------
this Agreement shall be deemed to be the language chosen by the parties hereto
to express their mutual intent, and no rule of strict construction shall be
applied against any party.
* * * * *
-31-
-32-
IN WITNESS WHEREOF, the Company and the Purchaser has executed
this Agreement as of the day and year first above written.
COLLEGE TELEVISION NETWORK, INC.
By: /s/ Xxxxxx Xxxxx
Its: President
U-C HOLDINGS, L.L.C.
By: XXXXXX XXXXX & PARTNERS, L.P.
Its: Managing Member
By: Xxxxxx Xxxxx & Partners, L.L.C.
Its: General Partner
By: /s/ Xxxxxx X. Xxxx
----------------------------------
Xxxxxx X. Xxxx
Its: Managing Director
