EXHIBIT 10.32
NETWORK EVENT THEATER, INC.
STOCK PURCHASE AGREEMENT
June 24, 1997
Network Event Theater, Inc.
STOCK PURCHASE AGREEMENT
June 24, 1997
The parties to this agreement are Warburg, Xxxxxx Emerging Growth
Fund, Inc., a Maryland corporation, and Small Company Growth Portfolio of
Warburg, Xxxxxx Institutional Fund, Inc., a Maryland corporation (collectively,
"Purchasers"), and Network Event Theater, Inc., a Delaware corporation (the
"Company").
The Company desires to sell to Purchasers shares of the Company's
Common Stock, par value $.01 per share ("Shares"), and Purchasers desire to
purchase those Shares from the Company, on the terms and subject to the
conditions set forth in this agreement.
Accordingly, the parties agree as follows:
1. Purchase and Sale of Shares.
1.1 Issuance and Sale of Shares. At the closing provided for in
section 1.2 , the Company shall issue and sell to the Purchasers an aggregate of
1,015,873 Shares, and each Purchaser shall purchase from the Company the number
of Shares set forth opposite that Purchaser's name on Schedule 1.1, at a price
of $3.9375 per Share (the "Purchase Price").
1.2 Closing. The closing shall take place on June 24, 1997 at the
offices of Proskauer Rose LLP, 1585 Broadway, New York, N.Y. 10036 or at such
other time and such place as the Company and the Purchasers mutually agree. The
date of the closing is referred to in this agreement as the "Closing Date". At
the closing, each Purchaser shall deliver to the Company, by check or by wire
transfer of immediately available funds, the Purchase Price of the Shares
purchased by that Purchaser and the Company shall deliver to the respective
Purchasers certificates for those Shares duly registered in their respective
names.
2. Representations and Warranties of the Company.
The Company represents and warrants to each Purchaser as follows:
2.1 Corporate Organization and Authority. The Company is a
corporation duly organized, validly existing, and in good standing under the law
of Delaware; has the full power and authority to own and operate its properties,
to carry on its business as now conducted and as proposed to be conducted, to
execute and deliver this agreement and to perform its obligations hereunder and
consummate the transactions contemplated hereby; and is qualified as a foreign
corporation in all jurisdictions in which qualification is required and in which
the failure to qualify would have a material adverse effect on the Company's
business, properties, or financial condition.
2.2 Capitalization. The Company is authorized to issue 17,000,000
Shares, of which 8,845,450 are duly and validly issued, fully-paid,
non-assessable and outstanding as of the date of this agreement, and 1,000,000
shares of preferred stock, par value $.01 per share, none of which is
outstanding. The Company has reserved (a) 340,000 Shares for issuance
upon exercise of outstanding options under the Company's stock option plan at
per share exercise prices ranging from $2.63 to $5.00 and having a weighted
average exercise price of $3.60 per share, (b) 40,000 Shares for issuance upon
exercise of options available for future grant under the Company's stock option
plan, (c) 552,560 Shares for issuance upon exercise of options granted to The
Fields & Xxxxxxx Company at a per share exercise price of $1.58, (d) up to
100,000 Shares for issuance upon exercise of contingent options granted to
American Passage Media Corporation at a per share exercise price of $2.627, (e)
2,645,000 Shares for issuance upon exercise of outstanding warrants at a per
share exercise price of $5.00, (f) 230,000 Shares for issuance upon exercise of
outstanding warrants issued to Whale Securities Co., L.P. at a per share
exercise price of $8.25, and (g) 230,000 Shares reserved for issuance upon
exercise of warrants underlying outstanding warrants issued to Whale Securities
Co., L.P. at a per share exercise price of $8.25. Except as set forth in this
section 2.2 and as contemplated by this agreement, there are no outstanding
options, warrants, conversion privileges, preemptive rights, or other rights or
agreements to purchase or otherwise acquire or issue any equity securities of
the Company. The Company has no obligation to repurchase or redeem any
outstanding securities. The issuance of the Shares contemplated by this
agreement will not result in any adjustment to the exercise prices of any of the
Company's outstanding options or warrants. The Company has delivered to the
Purchasers true and complete copies of the Company's Certificate of
Incorporation and By-Laws as in effect as of the date hereof. Except as provided
in the Underwriting Agreement dated April 2, 1996 between the Company and Whale
Securities Co., L.P. and the NET Portfolio Investors Agreement dated December
21, 1995 (and the Shareholders Agreement contemplated by that agreement), there
exist no agreements or understandings among the stockholders of the Company with
respect to their voting of securities of the Company or agreements pursuant to
which the Company is obligated to nominate persons for election or appointment
to the Company's board of directors. Except as provided by the Registration
Rights Agreement, the NET Portfolio Investors Agreement dated December 21, 1995
and registration rights agreements covering shares which have already been
registered by the Company, the Company is not under any obligation to register
any of its securities under the Securities Act of 1933, as amended (the
"Securities Act").
2.3 Authorization. All corporate action on the part of the
Company, its officers, directors and stockholders, necessary for the
authorization, execution and delivery of this agreement and the Registration
Rights Agreement referred to in section 4.5, the performance of all obligations
of the Company under this agreement and the Registration Rights Agreement, and
the authorization, sale, issuance and delivery of the Shares, has been taken,
and assuming due execution and delivery by each Purchaser, this agreement and
the Registration Rights Agreement constitute valid and binding obligations of
the Company enforceable against the Company in accordance with their respective
terms.
2.4 Validity of Shares. Upon receipt by the Company of the
Purchase Price and issuance and delivery of the Shares, the Shares will be duly
and validly issued (including, without limitation, issued in compliance with
applicable federal and state securities laws), fully-paid and non-assessable.
2.5 No Conflict with Other Instruments. The execution and
delivery of this agreement and the Registration Rights Agreement and the
performance of all obligations of the Company under this agreement and the
Registration Rights Agreement will not result in any
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violation of, be in conflict with, or constitute a default under, with or
without the passage of time or the giving of notice: (a) any provision of the
Company's certificate of incorporation or by-laws; (b) any material contract,
obligation or commitment to which the Company is a party or by which it is
bound; or (c) any statute, rule or governmental regulation or order applicable
to the Company.
2.6 SEC Reports. The Company has provided Purchasers with a copy
of its Transaction Report on Form 10-KSB for the transition period ended June
30, 1996, its Quarterly Reports on Form 10-QSB for the fiscal quarters ended
March 31, 1996, September 30, 1996, December 31, 1996 and March 31, 1997, and
its Current Report on Form 8-K dated August 21, 1996 (the "SEC Reports"), as
filed with the Securities and Exchange Commission. On the date of its filing,
none of the SEC Reports contained any untrue statement of a material fact or
omitted to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they, were made, not misleading. The
SEC Reports are the only reports that have been filed by the Company with the
SEC under the Securities Exchange Act of 1934. The Company has filed all
reports, registrations statements and other documents required to be filed by it
under applicable federal and state securities laws.
2.6 Changes in Condition. Since March 31, 1997 there has not been
(a) any change in the business, assets, properties, financial condition or
operating results of the Company from that reflected in the Form 10-QSB for the
fiscal quarter ended that date, except changes in the ordinary course of
business which individually, or in the aggregate, have not had a material
adverse effect on the Company, or (b) any other event or condition, of which the
Company has knowledge, of any character which might have a material adverse
effect on the business, assets, properties, financial condition or operating
results of the Company.
2.7 Financial Statements. The financial statements contained in
the SEC Reports fairly present the financial position and results of operations
of the Company as of their respective dates and for the respective periods then
ended, in accordance with generally accepted accounting principles consistently
applied.
2.8 Consents. No consent, approval, order or authorization of any
federal, state or local governmental authority or other person or entity with
respect to the Company is required in connection with the sale and purchase of
Shares as contemplated by this agreement.
2.9 Litigation. There is no action, proceeding or investigation
pending or threatened against the Company that, either individually or in the
aggregate, would have a material adverse effect on the business, assets,
properties, financial condition or operating results of the Company or that
seeks to prohibit or restrain the transactions contemplated hereby. There is no
judgment, decree or order of any court in effect against the Company and the
Company is not in default with respect to any order of any governmental
authority to which the Company is a party or by which it is bound. There is
currently pending no action, suit, proceeding or investigation initiated by the
Company.
3. Representations and Warranties of Purchasers; Securities Laws.
3.1 Representations and Warranties of Purchasers. Each Purchaser
severally and not jointly represents and warrants to the Company that:
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(a) All action on the part of that Purchaser, and its officers,
directors and stockholders, necessary for the authorization, execution and
delivery of this agreement and the Registration Rights Agreement and the
performance of all of its obligations under this agreement and the Registration
Rights Agreement has been taken, and assuming due execution and delivery by the
Company, this agreement and the Registration Rights Agreement constitute valid
and binding obligations of that Purchaser enforceable against it in accordance
with their terms.
(b) The execution and delivery of this agreement by that
Purchaser and the performance of all obligations of that Purchaser under this
agreement will not result in any violation of, be in conflict with, or
constitute a default under, with or without the passage of time or the giving of
notice: (i) any provision of that Purchaser's charter documents; (ii) any
material contract, obligation or commitment to which that Purchaser is a party
or by which it is bound; or (iii) any statute, rule or governmental regulation
or order applicable to that Purchaser.
4. Securities Act Matters.
4.1 Purchase for Investment. This agreement is made with each
Purchaser in reliance upon that Purchaser's representation to the Company, which
by that Purchaser's execution of this agreement that Purchaser hereby confirms,
that the Shares to be purchased by that Purchaser will be acquired for
investment for that Purchaser's own account, not as a nominee or agent, and,
other than as contemplated by the Registration Rights Agreement or otherwise in
accordance with applicable securities laws, not with a view to the sale or
distribution of any part thereof, and without present intention of selling,
granting any participation in, or otherwise distributing any of the Shares. By
executing this agreement, each Purchaser further represents that it has no
contract, undertaking, agreement or arrangement with any person to sell or
transfer any of the Shares.
4.2 Exemption. Each Purchaser acknowledges that it understands
that the offering and sale of the Shares to Purchasers pursuant to this
agreement will not be registered under the Securities Act on the grounds that
the offering and sale are exempt from registration pursuant to Section 4(2) of
the Securities Act, and that the Company's reliance upon such exemption is
predicated, in part, upon that Purchaser's representations set forth in this
agreement.
4.3 Additional Securities Act Representations. Each Purchaser
represents that: (a) it has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of its
prospective investment in the Shares; (b) it has received all the information it
has requested from the Company and considers necessary or appropriate for
deciding whether to purchase the Shares; (c) it has the ability to bear the
economic risks of its investment; (d) it is able, without materially impairing
its financial condition, to hold the Shares for an indefinite period of time and
to suffer complete loss on its investment; and (e) it is an "accredited
investor" within the meaning of Rule 501 under the Securities Act.
4.4 Legends. The certificates for the Shares sold to Purchasers
shall bear the following legend:
"The Shares represented by this certificate have not been
registered under the Securities Act of 1933 ("Act") and may not
be transferred unless a Registration Statement under the Act is
in effect as to that transfer or, in the opinion of counsel
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reasonably satisfactory to the Company, registration under the
Act is unnecessary for that transfer to comply with the Act."
4.5 Registration Rights. At the closing, the Company and each
Purchaser shall execute and deliver an agreement substantially in the form of
the registration rights agreement ("Registration Rights Agreement") attached as
exhibit 4.5 to this agreement, which provides for registration under the
Securities Act of the Shares to be issued to Purchasers pursuant to this
agreement. Notwithstanding anything to the contrary in the Registration Rights
Agreement, until the expiration of the ninety day period commencing on the
Closing Date, none of the Purchasers shall sell any of the Shares that it
acquires pursuant to this agreement.
5. Conditions to Purchasers' Obligations. The obligations of each
Purchaser to purchase Shares under Section 1 of this agreement are subject to
the fulfillment at or before the closing of each of the following conditions
(any of which may be waived in writing by that Purchaser):
5.1 Representations and Warranties. The representations and
warranties of the Company contained in section 2 shall be true in all material
respects on and as of the Closing Date with the same effect as though those
representations and warranties had been made on and as of the Closing Date.
5.2 Performance of Obligations. The Company shall have performed
in all material respects all agreements and obligations that are required to be
performed by it under this agreement on or before the Closing Date.
5.3 Registration Rights Agreement. The Company and each of the
Purchasers shall have executed and delivered the Registration Rights Agreement.
5.4 Opinion of Counsel. There shall have been delivered to
Purchasers an opinion of counsel to the Company in substantially the form of
Exhibit 5.4.
5.5 Due Diligence. Each of the Purchasers and their respective
counsel shall have had an opportunity to review all information regarding the
Company and all material agreements to which the Company or its stockholders are
a party which they have reasonably requested.
5.6 Proceedings Satisfactory. All corporate and legal proceedings
taken by the Company in connection with the transactions contemplated by this
agreement shall be reasonably satisfactory to each Purchaser.
6. Conditions to Company's Obligations. The obligations of the
Company to issue and sell Shares to the respective Purchasers are subject to the
fulfillment at or before the Closing of each of the following conditions (any of
which may be waived in writing by the Company):
6.1 Representations and Warranties. The representations and
warranties of Purchasers contained in section 3 and 4 shall be true in all
material respects on and as of he Closing Date with the same effect as though
those representations and warranties had been made on and as of the Closing
Date.
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6.2 Performance of Obligations. Each of the Purchasers shall have
performed in all material respects all agreements and obligations that are
required to be performed by it under this agreement on or before the Closing
Date.
6.3 Registration Rights Agreement. The Registration Rights
Agreement shall have been executed and delivered by the Purchasers.
7. Additional Agreements of the Company. The Company further agrees
as follows:
7.1 Information Provided to Stockholders. The Company shall
provide each Purchaser, for so long as that Purchaser holds Shares, with copies
of all reports, proxy statements and other financial information the Company
provides to its stockholders, including, without limitation, any information
provided to any stockholder or group of stockholders by agreement.
7.2 Stockholders' Meetings. The Company shall hold annual
meetings of its stockholders.
7.3 Publicity. The Company shall not use or make reference to the
name of any Purchaser or any of its affiliates in any press release or other
document without that Purchaser's prior approval unless the use or reference to
that Purchaser is required by law, in which event the Company will consult with
that Purchaser prior to such publication; provided, however, that no approval of
or consultation with Purchasers shall be required to file this agreement and the
Registration Rights Agreement as an exhibit to any report required to be filed
by the Company with the SEC pursuant to the Securities Exchange Act of 1934.
7.4 Use of Proceeds. The Company shall use the net proceeds from
the sale of the Shares contemplated hereby for working capital and general
corporate purposes, the growth of its existing businesses, and the possible
acquisition of other businesses related to its existing businesses.
7.5 Board Representation. If for any reason Xxxxxx Xxxxx ceases
to be an officer and director of the Company, upon Purchasers' request at any
time thereafter (so long as Purchaser owns Shares acquired pursuant to this
agreement) the Company shall use its best efforts to cause the election to the
Company's board of directors of a person nominated by Purchasers.
8. Survival of Representations and Warranties; Indemnification.
8.1 Survival. The representations and warranties of the parties
contained in this agreement (other than the representations and warranties of
the Company set forth in sections 2.2, 2.3, 2.4 and 2.5, which shall survive
without limitation as to time) shall survive the execution and delivery of this
agreement and the closing for a period of two years; provided, however, that no
claim may be made with respect to any representation or warranty that is
accurate as of the date of such execution and delivery and as of the Closing
Date.
8.2 Indemnification By the Company. Subject to section 8.4, after
the closing the Company shall indemnify and hold harmless each Purchaser and
each of its officers, directors, employees, agents and legal counsel and each
person controlling that Purchaser, from
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all losses, damages, expenses, liabilities, claims, assessments and judgments
(including reasonable costs and attorneys' fees and other expenses arising out
of any claim, or the defense or investigation thereof, made with respect to any
of the foregoing) incurred or suffered by any of them arising out of, based upon
or resulting from any breach by the Company of the Company's representations,
warranties, or covenants made to that Purchaser in this agreement.
8.3 Indemnification By Purchasers. Subject to section 8.4, after
the closing each Purchaser, severally and not jointly, shall indemnify and hold
harmless the Company and each of its officers, directors, employees, agents and
legal counsel and each person controlling the Company, from all losses, damages,
expenses, liabilities, claims, assessments and judgments (including reasonable
costs and attorneys' fees and other expenses arising out of any claim, or the
defense or investigation thereof, made with respect to any of the foregoing)
incurred or suffered by any of them arising out of, based upon or resulting from
any breach by that Purchaser of the representations, warranties, or covenants
made by that Purchaser in this agreement.
8.4 Notice of Claims; Participation in Suits. Any claim pursuant
to this section 8 with respect to a breach of a representation or warranty
(other than a representation or warranty of the Company set forth in Section
2.2, 2.3, 2.4 and 2.5, which shall survive without limitation as to time) must
be made within two years after the Closing Date. If a party ("Indemnified
Party") makes any claim against the other party ("Indemnifying Party") for
indemnification, the claim shall be in writing and shall state in general terms
the facts upon which the claim is based. If any claim or demand is asserted
against an Indemnified Party by a third party, the Indemnified Party shall give
the Indemnifying Party written notice of the claim or demand within 30 days
after receipt, and the Indemnifying Party shall have the right to assume the
defense of the claim with counsel selected by the Indemnifying Party and
reasonably satisfactory to the Indemnified Party, but the Indemnifying Party
shall not settle the claim without the consent of the Indemnified Party, which
consent shall not be unreasonably withheld. Notwithstanding the foregoing, a
failure to so notify an Indemnifying Party shall not relieve such Indemnifying
Party from its indemnification obligations unless such Indemnifying Party is
materially prejudiced by such failure. The Indemnified Party shall have the
right to select separate counsel for the defense of the claim, at the expense of
the Indemnifying Party, if the Indemnifying Party and the Indemnified Party have
conflicting interests with respect to the claim.
9. Miscellaneous.
9.1 Finders. The parties represent and warrant that they have not
employed or utilized the services of any broker or finder in connection with
this agreement or the transactions contemplated by it, except that the Company
has used the services of Whale Securities Co., L.P. and shall be solely
responsible for its fees.
9.2 Expenses. The Company and the Purchasers will each bear their
respective legal and other fees and expenses in connection with the negotiation,
documentation and consummation of the transactions contemplated in this
agreement.
9.3 Headings. The section headings of this agreement are for
reference purposes only and are to be given no effect in the construction or
interpretation of this agreement.
9.4 Notices. Any notice required or permitted under this
agreement shall be given in writing and shall be conclusively deemed effectively
given upon personal
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delivery, 24 hours after facsimile transmission (receipt acknowledged), one day
after deposit with a nationally recognized overnight courier, or five days after
deposit in the United States mail, by registered or certified mail, postage
prepaid, addressed to the parties at the following addresses (or to such other
address as a party may have specified by notice given to the other party
pursuant to this provision) (a) if to the Company, to Network Event Theater,
Inc.,149 Xxxxx Xxxxxx, Xxx Xxxx, X.X. 00000, Xxxxxxxxx: Chairman (fax:
000-000-0000); with a copy to Xxxxxxx X. Xxxxxx, Esq., Proskauer Rose LLP, 0000
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (fax: 000-000-0000); and (b) if to any
Purchaser, to it at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Xxxxxx X. Xxxxx, c/o Warburg, Xxxxxx Counsellors, Inc. (fax: 000-000-0000); with
a copy to Xxxxxx X. Xxxxxx, Esq., Xxxxxxx Xxxx & Xxxxxxxxx, 000 Xxxx 00xx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (fax: 000-000-0000).
9.5 Waiver. Any party may waive compliance by another with any of
the provisions of this agreement. No waiver of any provision shall be construed
as a waiver of any other provision. Any waiver must be in writing and must be
signed by the party waiving any provision hereof.
9.6 Entire Agreement. This agreement and the Registration
Agreement contain a complete statement of all of the terms of the arrangements
among the parties with respect to their subject matter, supersede any previous
agreements and understandings between the parties with respect to those matters,
and cannot be changed or terminated orally. Except as specifically set forth in
this agreement, there are no representations or warranties by any party in
connection with the transactions contemplated by this agreement.
9.7 Governing Law. Except to the extent that the General
Corporation Law of Delaware applies to matters related to the internal
governance of the Company, this agreement shall be governed by and construed in
accordance with the law of the State of New York applicable to agreements made
and to be performed in New York.
9.8 Jurisdiction. The courts of the State of New York in New York
County and the United States District Court for the Southern District of New
York shall have jurisdiction over the parties with respect to any dispute or
controversy among them arising under or in connection with this agreement and,
by execution and delivery of this agreement, each of the parties to this
agreement submits to the jurisdiction of those courts, including, but not
limited to, the in personam and subject matter jurisdiction of those courts,
waives any objection to such jurisdiction on the grounds of venue or forum non
conveniens, the absence of in personam or subject matter jurisdiction and any
similar grounds, consents to service of process by mail (in accordance with
section 9.4) or any other manner permitted by law, and irrevocably agrees to be
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bound by any judgment rendered thereby in connection with this agreement. These
consents to jurisdiction shall not be deemed to confer rights on any person
other than the parties to this agreement.
Network Event Theater, Inc.
By:/s/Xxxxxx X. Xxxxx
---------------------------
Chairman of the Board and
Chief Executive Officer
WARBURG, XXXXXX EMERGING GROWTH
FUND, INC.
By:/s/Xxxxxx X. Xxxxx
---------------------------
Name:Xxxxxx X. Xxxxx
Title:Vice President and Secretary
WARBURG, XXXXXX INSTITUTIONAL FUND, INC.,
on behalf of Small Company Growth Portfolio
By:/s/Xxxxxx X. Xxxxx
Name:Xxxxxx X. Xxxxx
Title:Vice President and Secretary
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