EXHIBIT 7.2
ALLIANCE ENTERTAINMENT CORP.
PURCHASE AGREEMENT
December 20, 1996
To the Purchasers (the "Purchasers")
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named in Section 1 below
Dear Sirs:
The undersigned, ALLIANCE ENTERTAINMENT CORP., a Delaware corporation (the
"Company"), proposes to issue and sell to the Purchasers for cash (i) 57,500
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shares (the "Series B Shares") of its Series B Convertible Preferred Stock, par
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value $0.01 per share ("Series B Preferred Stock"), and (ii) notes in the
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aggregate principal amount of $10,000,000 exchangeable into shares of Series B
Preferred Stock (the "Convertible Notes"), subject to the terms and conditions
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set forth herein. In addition, pursuant to Section 1.4 herein, WCI will be
required to provide a standby purchase commitment in connection with a rights
offering (the "Rights Offering") to the holders of Common Stock of the Company
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to subscribe for an aggregate of approximately 3,500,000 shares (the "Series C
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Shares," and collectively with the Series B Shares, the "Shares") of its Series
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C Convertible Preferred Stock, par value $0.01 per share (the "Series C
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Preferred Stock," and collectively with the Series B Preferred Stock, the
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"Preferred Stock," and together with the Convertible Notes, the "Securities"),
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subject to the terms and conditions set forth herein.
The Securities will be issued pursuant to, and subject to, the terms and
conditions of this Agreement (the terms "this Agreement" or "Purchase Agreement"
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as used herein or in any Exhibit hereto shall mean this Agreement and the
Exhibits hereto individually and collectively as they may from time to time be
modified or amended).
As used in this Agreement, the following terms shall have the following
meanings:
"Bank Agreement" shall mean the Third Amended and Restated Credit Agreement
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dated as of July 25, 1995 among the Company, certain Subsidiaries of the Company
and the lenders named therein, as amended from time to time.
"BTC" shall mean BT Capital Partners, Inc.
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"Business Day" shall mean a day other than a Saturday, Sunday or other day
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on which commercial banks in New York City are authorized or required by law to
close.
"Closing Dates" shall mean the Series B Closing Date, the Convertible Note
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Closing Date and the Series C Closing Date.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
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"Common Stock" shall mean the Company's Common Stock, par value $0.0001 per
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share.
"Contingent Stock" shall mean the Tranche 1 Contingent Stock and the
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Tranche 2 Contingent Stock as such terms are defined in the Stock Acquisition
and Merger Agreement.
"Conversion Shares" shall mean shares of Common Stock issued or issuable
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upon conversion of Preferred Stock.
"Convertible Note Closing Date" shall mean the date of the Convertible Note
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Closing.
"CVI" shall mean Cypress Ventures, Inc., a wholly owned subsidiary of WCI.
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"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
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"fully diluted" shall mean taking into account all outstanding warrants and
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options to acquire Common Stock as though exercised, and all outstanding
securities convertible into Common Stock (including without limitation the
Preferred Stock) as though converted on the date of determination, but not
taking into account any Contingent Stock.
"Governmental Authority" shall mean any nation or government, any state or
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other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
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1976 or any successor law, together with the regulations and rules issued
thereunder.
"NYSE" shall mean the New York Stock Exchange.
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"Public Debt Indenture" shall mean the Indenture dated as of July 25, 1995
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among the Company, certain Subsidiaries of the Company and Bankers Trust
Company, as trustee, as amended from time to time.
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"Public Offering" shall mean any time a registration statement filed under
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the Securities Act respecting a primary offering of Common Stock (or securities
convertible into, or exchangeable for, Common Stock or rights to acquire Common
Stock or such securities), which is underwritten on a firmly committed basis, is
declared effective and the securities so registered are issued and sold.
"Rights" shall have the meaning set forth in Section 4.8.
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"Rights Offering" shall have the meaning set forth in the preamble of this
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Agreement.
"SEC" shall mean the Securities and Exchange Commission.
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"Securities" shall have the meaning set forth in the preamble of this
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Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended.
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"Series B and Convertible Notes Closing Date" shall mean the date of the
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closing of the purchase and sale of the Series B Shares and the Convertible
Notes.
"Series B Certificate of Designations" shall mean the certificate of
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designations establishing the terms of the Series B Preferred Stock.
"Series B Preferred Stock" shall have the meaning set forth in the preamble
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of this Agreement.
"Series B Shares" shall have the meaning set forth in the preamble of this
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Agreement.
"Series C Certificate of Designations" shall mean the certificate of
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designations establishing the terms of the Series C Preferred Stock.
"Series C Closing" shall mean the closing of the purchase and sale of the
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Series C Shares.
"Series C Closing Date" shall mean the date of the closing of the purchase
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and sale of Series C Shares pursuant to the terms and conditions of this
Agreement.
"Series C Preferred Stock" shall have the meaning set forth in the preamble
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of this Agreement.
"Series C Preferred Stock Notice" shall mean a written notice delivered by
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the Company to the Purchasers in which the
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Company elects to sell the Series C Shares to the Purchasers pursuant to Section
1.2(a) hereof.
"Series C Shares" shall have the meaning set forth in the preamble of this
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Agreement.
"Stock Acquisition and Merger Agreement" shall mean the Stock Acquisition
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and Merger Agreement, dated as of August 15, 1996 by and among Xxxxx X. Xxxxxx,
WCI, U.S. Equity Partners, L.P., U.S. Equity Partners (Offshore), L.P., Red Ant
Box, Inc., the Company and Alliance Acquisition Co. Inc.
"Subsidiary" shall mean each corporation or other entity, if any, of which
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the Company or another Subsidiary shall own at least fifty percent (50%) of (x)
the stock of any class having power under ordinary circumstances to vote for the
election of directors or (y) the capital or equity, however named.
"WCI" shall mean Xxxxxxxxxxx & Co., Inc.
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In connection with the issuance of the Securities, the Company agrees with
each of the Purchasers and the Purchasers severally agree with the Company as
follows:
Section 01. Purchase and Sale of Securities.
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01.1 Series B Preferred Stock. (a) Subject to the terms and conditions
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of this Agreement, the Company agrees to issue and sell to each Purchaser named
below, and such Purchaser agrees to purchase from the Company, on the Series B
and Convertible Notes Closing Date, at an aggregate price of $5,000,000, the
number of shares of Series B Preferred Stock set forth opposite such Purchaser's
name below:
Name and Address
of Purchaser Number of Shares
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Cypress Ventures, Inc. 57,500
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
(b) Certificate of Designation. The Series B Preferred Stock shall be
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issued pursuant to a certificate of designations substantially in the form of
Exhibit A hereto (the "Series B Certificate of Designations"), which shall be in
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effect on the Series B and Convertible Notes Closing Date.
(c) Payment of Purchase Price. The purchase price for the Series B Shares
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shall be payable on the Series B and Convertible Notes Closing Date, in cash by
wire transfer of immediately available funds pursuant to the Company's written
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instructions. The Series B and Convertible Notes Closing Date shall be December
20, 1996 or such later date as the parties mutually agree.
01.2 Convertible Notes. (a) Subject to the terms and conditions of this
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Agreement, the Company agrees to issue and sell to each Purchaser, and each
Purchaser severally agrees to purchase from the Company, at a price of 100% of
the principal amount thereof on the Series B and Convertible Notes Closing Date,
the principal amount of Convertible Notes set forth opposite such Purchaser's
name below:
Name and Address Principal Amount of
of Purchasers Convertible Notes
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Cypress Ventures, Inc. $2,500,000
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
BT Capital Partners, Inc. $7,500,000
000 Xxxxxxx Xxxxxx - 34th Floor
New York, New York 10006
(b) Form of Convertible Notes. The Convertible Notes shall be issued in
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the form annexed hereto as Exhibit C.
(c) Payment of Purchase Price. The purchase price for the Convertible
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Notes shall be payable on the Series B and Convertible Notes Closing Date, in
cash by wire transfer of immediately available funds pursuant to the Company's
written instructions. The Series B and Convertible Notes Closing Date shall be
the date that the conditions specified in Section 3.1 have been satisfied, or
such later date as may be mutually agreed upon by the parties hereto.
1.3 Financing Fee. The Company agrees to pay on the Series B and
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Convertible Notes Closing Date a financing fee of (i) $225,000 to WCI and (ii)
$225,000 to BTC.
1.4 Series C Preferred Stock. (a) Subject to the terms and conditions
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of this Agreement, WCI agrees to act as lead manager of the Rights Offering on a
best efforts basis and shall purchase up to 1,750,000 shares of Series C Stock
at a price of $10.00 per Share, in the event the Rights Offering is not fully
subscribed. WCI's obligation to purchase Series C Shares is subject to the
conditions set forth in Section 3.2. BTC shall have the right, and WCI agrees
to cooperate with BTC in the event BTC elects prior to the commencement of the
Rights Offering, to purchase the sum of (i) 50% of the Series C Shares that are
not subscribed for in the Rights Offering, and (ii) 50% of the aggregate number
of shares subscribed for by BTC and WCI.
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The subscription price and other material terms of the Rights Offering
shall be substantially as set forth in the Summary of Terms attached as Schedule
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1.4 hereto.
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(b) Certificate of Designations. The Series C Preferred Stock shall be
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issued pursuant to a certificate of designations substantially in the form of
Exhibit B hereto (the "Series C Certificate of Designations"), which shall be in
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effect on the Series C Closing Date.
(c) Payment of Purchase Price. The purchase price for the Series C Shares
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shall be payable on the Series C Closing Date, in cash by wire transfer of
immediately available funds pursuant to the Company's written instructions. The
Series C Closing Date shall be the date on which all the conditions to closing
set forth in Section 3.2 have been satisfied or waived.
(d) Financing Fee. The Company agrees to pay on the Series C Closing Date
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a financing fee in the aggregate amount of $1,050,000 to be allocated among WCI
and BTC pro rata based upon the commitment to purchase Series C Shares not
subscribed for in the Rights Offering and the number of shares purchased at the
Series C Closing.
(e) Syndication. The Purchasers shall have the right to assign their
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rights and obligations under this Agreement with respect to the purchase of the
Series C Shares, provided that (i) the assignees ("Substituted Purchasers")
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agree to be bound by the terms and conditions contained in this Agreement,
including, without limitation, the representations and covenants contained in
Sections 6 and 7 herein, in form and substance reasonably satisfactory to the
Company and its counsel, and (ii) no such assignment shall cause the Series C
Preferred Stock to be subject to the registration requirements of the Securities
Act, and provided further that the Purchasers shall not be relieved of their
obligations to purchase the Series C Shares if they assign their rights and
obligations hereunder.
01.5 Registration Rights. (a) The Company agrees to use best efforts to
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maintain with respect to the Conversion Shares and all other shares of Common
Stock held by the Purchasers on the Closing Date an effective registration
statement under the Securities Act and a current prospectus relating thereto,
and effective registration statements or qualifications under the securities
laws of each holder's state of residence, for a period of five (5) years after
the date hereof or, if later, until the Purchaser is no longer an affiliate (as
defined in the Exchange Act) of the Company. To the extent such registration
statements or qualifications are not maintained in effect, the Purchasers and
the Company shall have the rights and obligations set forth in Exhibit D
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attached hereto with respect to registrations of the Company's securities under
the Securities Act.
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(b) The rights of a Purchaser under Sections 2 and 3 of Exhibit D shall
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cease to be exercisable after the later of (a) the fifth anniversary of the date
of this Agreement, and (b) any date as of which the Purchasers have disposed of
shares of Common Stock constituting 90% of the Common Stock held by them
(including Conversion Shares issuable upon conversion of the Shares held by
them) on the date hereof, in either case provided that the Company shall
continue to comply with the public information requirements for the availability
of Rule 144 under the Securities Act with respect to subsequent sales by the
Purchaser.
Section 2. Representations of the Company.
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In order to induce the Purchasers to purchase the Securities, the Company
hereby represents and warrants to, and agrees with, the Purchasers and their
respective successors, endorsees and assigns that:
2.1 Certificate of Designations. The Company has filed the Series B
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Certificate of Designations and the Series C Certificate of Designations with
the Secretary of State of the State of Delaware. The Series B Certificate of
Designations and the Series C Certificate of Designations and the resolutions of
the Company's Board of Directors contained therein are in full force and effect.
2.2 Organizational Documents. The Company has delivered to the
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Purchasers an accurate and complete copy of (a) its Certificate of Incorporation
and all amendments thereto, certified by the Secretary of State of the State of
Delaware, and (b) its By-laws and all amendments thereto, certified by its
Secretary or Assistant Secretary.
2.3 Existence and Qualification. The Company is a corporation duly
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organized, validly existing and in good standing under the laws of the State of
Delaware. The Company is duly qualified to do business and in good standing as
a foreign corporation in each jurisdiction where failure to so qualify or be in
good standing as a foreign corporation could reasonably be expected to have a
material adverse effect on its business, operations, prospects, properties or
condition (financial or otherwise), or its ability to perform its obligations
hereunder.
2.4 Power and Authority. The Company has all corporate power and
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authority necessary to own, operate or lease its properties and assets and to
conduct its business as now conducted by it. The Company has all corporate
power and authority necessary to issue the Securities, and to execute, deliver,
and perform its obligations under this Agreement (including without limitation
Exhibit D hereto) and the Securities (collectively, the "Transaction
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Documents").
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2.5 Corporate Action. The Company has taken all corporate action
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required to authorize the issuance of the Securities and the execution, delivery
and performance of the Transaction Documents.
2.6 Due Execution and Delivery. The Company has duly executed and
--------------------------
delivered each of the Transaction Documents, except that the Convertible Notes,
the Series B Shares and the Series C Shares shall not be executed and delivered
until their respective Closing Dates.
2.7 Consents; Governmental Approvals. No consent or approval of any
--------------------------------
person, firm or corporation, and no consent, license, approval or authorization
of, or registration, filing or declaration with, any Governmental Authority is
required to be obtained or made by or on behalf of the Company in connection
with the offer, issuance and sale of the Securities, the execution, delivery or
performance of any of the Transaction Documents or the completion of the
transactions contemplated thereby, except for (a) filings with the SEC, the NYSE
and under state securities laws that may be required, (b) filings under the HSR
Act contemplated by Section 4.5, (c) consent of the banks under the Bank
Agreement to permit the issuance of the Convertible Notes and (d) approval of
the stockholders of the Company contemplated by Section 4.6.
2.8 Binding Effect. Each of the Transaction Documents is a legal, valid
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and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally or limitations on the availability of
equitable remedies. The terms of the Series B Certificate of Designations and
the Series C Certificate of Designations applicable to the Series B Shares and
Series C Shares, respectively, and the Convertible Notes are legal, valid and
binding obligations of the Company, enforceable against it in accordance with
their terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally or limitations on the availability of equitable
remedies.
2.9 Absence of Conflicts. The issuance of the Securities and the
--------------------
execution, delivery and performance of the Transaction Documents by the Company
do not and will not (a) conflict with or violate any provision of the
Certificate of Incorporation, as amended, or By-laws of the Company, (b)
conflict with or result in a violation, breach or default by the Company under
(i) any provision of any existing statute, law, rule or regulation binding on it
or any order, judgment, award, decree, license or authorization of any court or
governmental instrumentality, authority, bureau or agency binding on it, or (ii)
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any material provision of any mortgage, indenture, lease or other contract,
agreement, instrument or undertaking to which it is a party or will be a party
immediately after the Series B and Convertible Notes Closing and the Series C
Closing, or by which or to which it or any of its property or assets is now or
immediately after such Closings will be bound or subject, or (c) result in the
creation or imposition of any lien, encumbrance or other charge on any of its
properties or assets.
2.10 No Defaults. None of the Company or its Subsidiaries is in default
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under or in violation of (a) its Certificate of Incorporation, as amended, or
By-laws, (b) any agreement or instrument to which it is a party relating to its
indebtedness for borrowed money, (c) any other agreement or instrument to which
it is a party, (d) any statute, rule, writ, injunction, judgment, decree, order
or regulation of any court or governmental authority having jurisdiction over
it, or (e) any license, permit, certification or approval requirement of any
customer, supplier, governmental authority or other person, in the case of (c),
(d) or (e) above, in any way that could reasonably be expected to have a
material adverse effect on the present or prospective business, operations,
prospects, properties, assets or condition (financial or otherwise) of such
corporation, or the Company's ability to perform its obligations under any of
the Transaction Documents.
2.11 Capitalization and Stockholders. As of November 30, 1996, the
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authorized capital stock of the Company consisted of: (i) 100,000,000 shares of
Common Stock, of which (A) 44,764,853 shares are issued and outstanding, all of
which are duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights, (B) no shares are held in the treasury of the
Company, (C) 13,966,551 shares are reserved for future issuance for the exercise
of outstanding stock options and (D) 1,670,773 shares are reserved for future
issuance for the exercise of warrants, and (ii) 10,000,000 shares of preferred
stock, of which 422,500 shares of Series A Convertible Preferred Stock
(initially convertible into 5,827,586 shares of Common Stock) are issued and
outstanding. Except for the Contingent Stock and as described in Schedule 2.11,
no shares of the capital stock or other equity securities of the Company are
authorized, issued or outstanding, or reserved for any other purpose, and there
are no options, warrants or other rights (including registration rights),
agreements, arrangements or commitments of any character (including, without
limitation, obligations to issue shares as the deferred purchase price for
acquisitions of stock or assets of third parties) to which the Company or any of
its Subsidiaries is a party relating to the issued or unissued capital stock or
other equity securities or ownership interests of the Company or any of its
Subsidiaries or obligating the Company or any of its Subsidiaries to grant,
issue or sell any shares of capital stock or other equity securities or
ownership interests of the Company or
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any of its Subsidiaries, by sale, lease, license or otherwise. The Company has
no outstanding bonds, debentures, notes or other obligations the holders of
which have the right to vote or which are convertible into or exercisable for
securities having the right to vote with the stockholders of the Company on any
matter. There are no outstanding contractual obligations, commitments,
understandings or arrangements of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire or make any payment in respect of any
shares of capital stock or other equity securities or ownership interests of the
Company or any of its Subsidiaries. There are no preemptive or similar rights
to purchase or otherwise acquire shares of capital stock of the Company.
Immediately after the Series B and Convertible Notes Closing and the Series C
Closing, all outstanding shares will be duly and validly issued and outstanding
and fully paid and nonassessable.
2.12 SEC Documents. (a) The Common Stock of the Company is registered
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pursuant to Section 12(g) of the Exchange Act and the Company has filed all
reports, schedules, forms, statements and other documents required to be filed
by it with the SEC pursuant to the reporting requirements of the Exchange Act,
including material filed pursuant to Section 13(a) or 15(d), in addition to one
or more registration statements and amendments thereto heretofore filed by the
Company with the SEC. The Company has delivered or made available to the
Purchasers true and complete copies of (i) its annual reports on Form 10-K and
quarterly reports on Form 10-Q for its 1994 and 1995 fiscal years, (ii) proxy
statements, information and solicitation materials filed by the Company with the
SEC since January 1, 1994, and (iii) each other report, registration statement,
proxy statement and other document filed with the SEC since the filing of its
most recent Form 10-K (all of the foregoing, collectively, the "SEC Documents").
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(b) As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Exchange Act and the rules and
regulations of the SEC promulgated thereunder and other federal, state and local
laws, rules and regulations applicable to such SEC Documents, and none of the
SEC Documents contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
2.13 Financial Statements. The financial statements of the Company
--------------------
included in the SEC Documents comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC or other applicable rules and regulations with respect thereto. Such
financial statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(except (a) as may be otherwise indicated in such
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financial statements or the notes thereto or (b) in the case of unaudited
interim statements, to the extent they may not include footnotes or may be
condensed or summary statements) and fairly present in all material respects the
financial position of the Company as of the dates thereof and the results of
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments which adjustments
could not reasonably be expected, individually or in the aggregate, to have a
material adverse effect on the financial condition of the Company and subject to
adjustments as previously disclosed to the Purchasers).
2.14 No Material Adverse Change. Since September 30, 1996, the date
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through which the most recent quarterly report of the Company on Form 10-Q has
been prepared and filed with the SEC, a copy of which is included in the SEC
Documents, there has been no material adverse change in the businesses,
properties, prospects, operations or financial condition of the Company and its
Subsidiaries, except as otherwise disclosed or reflected in other SEC Documents,
or otherwise disclosed to the Purchasers on or before the Series B and
Convertible Notes Closing Date with respect to facts existing prior to the
Series B and Convertible Notes Closing Date.
2.15 No Undisclosed Events or Circumstances. No event or circumstance
--------------------------------------
has occurred or exists with respect to the Company or its Subsidiaries, or their
respective businesses, properties, prospects, operations or financial condition,
which, under applicable law, rule or regulation, requires public disclosure or
announcement by the Company and which has not been so publicly disclosed or
announced, or otherwise disclosed to the Purchasers on or before the Series B
and Convertible Notes Closing Date with respect to facts existing prior to the
Series B and Convertible Notes Closing Date.
2.16 No General Solicitation. Neither the Company, nor any of its
-----------------------
affiliates, nor, to its knowledge, any person acting on its or their behalf has
engaged in any form of general solicitation or general advertising (within the
meaning of Regulation D under the Securities Act) in connection with the offer
or sale of the Securities.
2.17 No Integrated Offering. Neither the Company, nor any of its
----------------------
affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would require registration of the
Securities under the Securities Act.
2.18 Brokers. The Company represents and warrants that it has employed
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no brokers, agents or finders in carrying on the
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negotiations relating to this Agreement or to the transactions herein
contemplated.
2.19 Untrue or Misleading Statements. Neither this Agreement nor any
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other Transaction Document or other agreement, certificate, instrument or
written statement furnished by or on behalf of the Company or, to the best of
the Company's knowledge, by any other person, firm or corporation, to the
Purchasers in connection with the transactions contemplated by this Agreement,
contains any untrue statement of a material fact or omits a material fact
necessary to make the statements contained therein not misleading in light of
the circumstances in which such statements were made.
2.20 Receivables. Except to the extent, if any, reserved for on the
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September 30, 1996 balance sheet (after giving effect to the previously
disclosed restructuring or other charges to be effected in the fourth quarter of
1996 and except with respect to transactions not material, singly or in the
aggregate, to the Company as a whole) all Receivables reflected on such balance
sheet:
(a) arose from the sale of inventory or services to persons not affiliated
with the Company and in the ordinary course of business; and
(b) constitute or will constitute, as the case may be, valid and
collectible claims of the Company not subject to valid claims of set-off or
other defenses or counterclaims other than normal cash discounts and product
returns in the ordinary course of business.
2.21 Inventories. Subject to amounts reserved therefor on the September
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30, 1996 balance sheet (after giving effect to the previously disclosed
restructuring and other charges to be effected in the fourth quarter of 1996 and
except for amounts which are not, singly or in the aggregate, material to the
Company as a whole):
(a) the values at which all inventories are carried on the September 30,
1996 balance sheet reflect the historical inventory valuation policy of the
Company and comply with generally accepted accounting principles;
(b) the Company has good and marketable title to the inventories included
on the balance sheet;
(c) the Company is not under any obligation or liability with respect to
accepting returns of items of inventory or merchandise in the possession of its
customers other than in the ordinary course of business; and
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(d) the inventories are in good and merchantable condition in all material
respects, are suitable and usable for the purposes for which they are intended
and are in a condition such that they can be sold in the ordinary course of
business.
2.22 Fairness Opinion. The Company has received the opinion of Xxxxxx
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Xxxxxxx Incorporated as to the fairness to the Company, as of the date of this
Agreement, of the issuance of the Securities and the other transactions
contemplated hereby, from a financial point of view.
2.23 Customers. As of the date hereof, the Company has not received any
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oral or written notice and has no reason to believe that any of the Company's
top ten customers in terms of gross revenues for the twelve months ending
December 31, 1996 has ceased, or will cease, to use the products, equipment,
goods or services of the Company or has substantially reduced, or will
substantially reduce, the use of such products, equipment, goods or services at
any time; provided, however, that in the event the Company shall have received
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notice or have any reason to believe that such circumstances exist on or after
the Series B Closing Date but prior to the Series C Closing, it shall promptly
so inform the Purchasers in writing.
Section 03. Conditions Precedent.
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3.1 Conditions Precedent for Series B and Convertible Notes Closing. The
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obligation of WCI to purchase Series B Shares and WCI and BT Capital Partners to
purchase Convertible Notes hereunder on the Series B and Convertible Notes
Closing Date shall be subject to the satisfaction of each of the following
conditions precedent on or prior to such Series B and Convertible Notes Closing
Date:
(a) Representations. All representations and warranties made in this
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Agreement and in any other agreement, certificate or instrument furnished to the
Purchasers in connection herewith shall be true and correct in all material
respects with the same force and effect as though such representations and
warranties had been made at the time of, and immediately after giving effect to,
the sale of Series B Shares.
(b) Officer's Certificate. The Company shall deliver to the Purchasers a
---------------------
certificate of its President, Senior Executive Vice President or Executive Vice
President dated the Series B and Convertible Notes Closing Date, in form and
substance reasonably satisfactory to the Purchasers and their counsel,
certifying the satisfaction of the conditions in Section 3.1(a).
(c) No Material Adverse Change. The Purchasers shall be satisfied that no
--------------------------
event, circumstance or condition shall have
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occurred and be continuing that could reasonably be expected to have a material
adverse effect on the Company's business, operations, prospects, properties or
condition (financial or otherwise), or its ability to perform its obligations
hereunder.
(d) Suspension of Trading. Trading in the Company's Common Stock shall not
---------------------
have been suspended by the SEC or any exchange on which it is listed for trading
(except for any suspension of trading of limited duration agreed to by the
Company solely to permit dissemination of material information regarding the
Company), and trading in securities generally as reported by such exchange(s)
shall not have been suspended or limited, other than a temporary suspension in
trading to provide for an orderly market.
(e) Voting Agreement. The parties thereto shall have executed and
----------------
delivered to the Purchasers a Voting Agreement substantially in the forms of
Exhibit E attached hereto.
---------
(f) Legal Opinion. The Company shall have delivered to the Purchasers the
-------------
executed legal opinions of Xxxxxxxxxxx X. Xxxxx and Messrs. Xxxxxx Xxxxxx &
Xxxxxxx, counsel to the Company, dated the Series B and Convertible Notes
Closing Date in form and substance reasonably satisfactory to the Purchasers and
their counsel.
(g) Bank Agreement. The Bank Agreement shall have been amended in form
--------------
satisfactory to the Purchasers to permit the issuance of the Convertible Notes.
(h) Fees. The Purchasers (or their agents) shall have received the fees
----
and other amounts payable on the Series B and Convertible Notes Closing Date
referred to in Section 9.5 and in Section 1.3.
(i) Board of Directors Representation. On or before the Series B and
---------------------------------
Convertible Notes Closing Date, Messrs. Bassin, Hochman, Marx, Newman, Xxxxxx
and Xxxxx shall have resigned (effective upon the designation of their
successors) from the Board of Directors of the Company, and there shall have
been elected and qualified pursuant to the By-laws of the Company as successor
directors to such resigning directors on the Board of Directors of the Company
four persons designated by WCI and two persons designated by BTC, such persons
to be in addition to existing designees of BTC and WCI serving on the Board of
Directors.
(j) AT Employment Agreement. The Company and Xxxxx Xxxxxx shall have
-----------------------
executed an amendment to the AT Employment Agreement (as such term is defined in
the Stock Acquisition and Merger Agreement) in the form attached as Exhibit F
hereto.
-14-
(k) Restated By-laws. The By-laws of the Company shall have been amended
----------------
to read as set forth in Exhibit G hereto.
(l) Stock Acquisition and Merger Agreement. The Company, WCI and Xxxxx
--------------------------------------
Teller shall have executed a waiver with respect to the Stock Acquisition and
Merger Agreement in the form attached as Exhibit H hereto.
(m) Additional Documents. Each Purchaser shall have received all such
--------------------
agreements, documents, instruments, approvals, certificates, legal opinions and
information as such Purchaser shall reasonably request in connection with this
Agreement, the Shares and the transactions herein and therein contemplated, all
of which shall be in form and substance reasonably satisfactory to the
Purchasers and their counsel.
(n) Additional Matters. All other documents and legal matters in
------------------
connection with the transactions contemplated by this Agreement shall be
reasonably satisfactory to the Purchasers.
3.2 Conditions for Series C Closing. The obligation of WCI and BTC to
-------------------------------
purchase Series C Shares hereunder on the Series C Closing Date shall be subject
to the satisfaction of each of the following conditions precedent on, or prior
to, the Series C Closing Date:
(a) Series B and Convertible Notes Closing. The Series B and Convertible
--------------------------------------
Notes Closing shall have occurred.
(b) Rights Offering. The Rights Offering shall have expired in accordance
---------------
with its terms and all Series C Shares subscribed for shall have been purchased.
The registration statement and any prospectus (and all amendments thereto)
relating to the Rights Offering shall not contain any untrue statement of fact
which, in the Purchaser's opinion, is material, or omit to state any fact which,
in the Purchaser's opinion, is material and is required to be stated therein or
is necessary to make the statements therein not misleading.
(c) Subscriptions. Persons other than WCI shall have purchased or shall
-------------
purchase simultaneously with the Series C Shares at least 1,750,000 shares of
the Series C Shares.
(d) Representations. All representations and warranties made in this
---------------
Agreement and in any other agreement, certificate or instrument furnished to the
Purchasers in connection herewith (except that representations and warranties
given as of a specific date need only be true and correct as of the date
specified) shall be true and correct in all material respects with the same
force and effect as though such representations and warranties had been made at
the time of, and immediately after giving effect to, the sale of the Series C
Shares on the Series C Closing Date.
-15-
(e) No Defaults Under Indebtedness. The Company shall not be in default
------------------------------
under the Bank Agreement or the Public Debt Indenture on the Series C Closing
Date after giving effect to the Series C Closing.
(f) Additional Officer's Certificate. The Company shall deliver to the
--------------------------------
Purchasers a certificate of its President, Senior Executive Vice President or
Executive Vice President dated the Series C Closing Date, in form and substance
reasonably satisfactory to the Purchasers and their counsel, certifying the
satisfaction of the condition in Section 3.3(c).
(g) Legal Opinion. The Company shall have delivered to the Purchasers the
-------------
executed legal opinion of Messrs. Xxxxxx Xxxxxx & Xxxxxxx, counsel to the
Company, dated the Series C Closing Date, in form and substance reasonably
satisfactory to the Purchasers and their counsel.
(h) Fees. The Purchasers (or their agents) shall have received the fees
----
and other amounts payable on the Series C Closing Date referred to in Section
9.5 and in Section 1.3(d).
(i) Bank Agreement. The Bank Agreement shall have been amended in a manner
--------------
reasonably satisfactory to the Purchasers.
(j) No Material Adverse Change. On or after the date hereof, the
--------------------------
Purchasers shall be satisfied, in the exercise of their reasonable business
judgment, that no event, circumstance or condition has had, or shall have
occurred and be continuing that could reasonably be expected to have, a material
adverse effect on the Company's business, operations, properties or condition
(financial or otherwise) taken as a whole, or its ability to substantially
perform its obligations hereunder, under the Notes or with respect to the
Preferred Stock.
(k) Restructuring Plan. WCI shall be afforded an opportunity to review and
------------------
to have access to the Company's third party consultants involved in the
Company's restructuring plans. As promptly as practicable, WCI shall (i) suggest
any modifications to the Company's restructuring plans they feel are advisable
and (ii) in good faith notify the Company if the Purchasers do not reasonably
believe that the savings reflected in such restructuring plan are reasonably
achievable. The Company agrees to consider in good faith any suggestions
presented by WCI with respect to the restructuring plan.
(l) Market Conditions. Trading in the Company's securities or in
-----------------
securities generally on the New York Stock Exchange or in the over-the-counter
market shall not have been suspended, other than a temporary suspension of
trading to provide for an orderly market, or a general banking moratorium shall
not have been declared by Federal or state authorities.
-16-
(m) No Bankruptcy Proceeding. There shall not be pending against the
------------------------
Company or a substantial part of its property any voluntary or involuntary
insolvency proceeding under any bankruptcy law and no order shall have been
entered and be in effect with respect to the Company or any substantial part of
its property under any bankruptcy law.
(n) Additional Documents. Each Purchaser shall have received all such
--------------------
agreements, documents, instruments, approvals, certificates, legal opinions and
information as such Purchaser shall reasonably request in connection with this
Agreement, the Shares and the transactions herein and therein contemplated, all
of which shall be in form and substance reasonably satisfactory to the
Purchasers and their counsel.
(o) Additional Matters. All other documents and legal matters in
------------------
connection with the transactions contemplated by this Agreement shall be
reasonably satisfactory to the Purchasers.
Section 04. Covenants.
---------
The Company covenants and agrees that:
4.1 Registration and Listing. The Company will cause its Common Stock to
------------------------
continue to be registered under Section 12(b) or 12(g) of the Exchange Act, will
comply in all respects with its reporting and filing obligations under the
Exchange Act, will comply with all requirements related to any registration
statement filed pursuant to this Agreement and will not take any action or file
any document (whether or not permitted by the Securities Act or the Exchange Act
or the rules thereunder) to terminate or suspend such registration or to
terminate or suspend its reporting and filing obligations under such Acts. The
Company will take all action within its power to continue the listing or trading
of its Common Stock on the NYSE and will comply in all respect with the
Company's reporting, filing and other obligations under the bylaws or rules of
such exchange.
4.2 Financial Statements and Information. The Company will furnish or
------------------------------------
cause to be furnished to each of the Purchasers (as long as such Purchaser
remains the beneficial owner of at least 25% of the Securities purchased
hereunder) the following financial statements and information:
(a) All reports and other written communications delivered by the Company
to its stockholders as such, and all registration statements (when available to
the public) and periodic reports filed by the Company or any officer or director
thereof with the SEC or any securities exchange, pursuant to the Securities Act,
the Exchange Act, or the rules of such securities exchange.
-17-
(b) With reasonable promptness, all financial statements or reports
(including comment letters to management) furnished to the Company by its
independent certified public accountants.
4.3 Use of Proceeds. The Company will use the proceeds received from the
---------------
sales of the Securities for general corporate purposes.
4.4 Compliance with Applicable Law. The Company will comply, and cause
------------------------------
each Subsidiary to comply, with each statute, law, rule, regulation, order or
other governmental requirement, noncompliance with which (in any one instance or
in the aggregate) is likely to materially adversely affect (a) the business,
operations, property or financial condition of the Company or such Subsidiary,
or (b) the Company's ability to perform its obligations to the Purchasers.
4.5 Pre-Merger Notification Act Compliance. If in connection with any
--------------------------------------
proposed conversion, exchange of the Convertible Notes or the issuance or
conversion of Preferred Stock the Company or a Purchaser determines that a
filing is required under the HSR Act, as promptly as practicable after
notification of the proposed conversion is received the Company will make all
such filings required by the HSR Act to be made in order to complete the
proposed conversion. The Purchasers will cooperate with the Company to the
extent reasonably necessary to complete such filings. The Company will pay all
filing fees required in connection with such filings. The issuance of
Conversion Shares resulting from such conversion may be delayed until two (2)
days after the expiration of the applicable waiting period following such
filing(s).
4.6 Stockholder Approval. The Company shall exert its best efforts to
--------------------
obtain the stockholders' approval and authorization of the issuance of Common
Stock upon conversion of the Series B Preferred Stock and the Series C Preferred
Stock as promptly as practicable after the Series B and Convertible Notes
Closing Date and the Series C Closing Date, respectively, all in accordance with
the terms of the Certificate of Designations, and all to the extent necessary to
satisfy the requirements of Rule 312.03 of the New York Stock Exchange Listed
Company Manual, as applied to the issuance of Common Stock upon conversion of
the Preferred Stock.
4.7 Further Assurances. The Company will execute and deliver or cause to
------------------
be executed and delivered such further instruments and do or cause to be done
such further acts as may be reasonably necessary to carry out its obligations
under this Agreement.
4.8 Rights Offering. The Company shall, as promptly as practicable, use
---------------
its best efforts to (a) file with the SEC and have declared effective a
Registration Statement covering (i) the distribution to holders of the Company's
common stock rights
-18-
("Rights") to subscribe for and purchase an aggregate of 3,500,000 shares of
------
Series C Preferred Stock (the "Rights Offering"), (ii) the registration of the
---------------
Series C Preferred Stock issuable upon exercise of such Rights and (iii) the
registration of the Company common stock issuable upon conversion of such Series
C Preferred Stock; and (b) cause the Series C Preferred Stock and the common
stock issuable upon conversion thereof to be approved for listing on the NYSE.
The Rights Offering and the Rights shall have substantially the terms and
conditions set forth on Schedule 1 hereto.
4.9 Nomination of Certain Officers. For so long as WCI and BTC hold 50%
------------------------------
or more of the Securities issued to them pursuant to this Agreement, WCI and BTC
(or in the event WCI or BTC holds 50% or more of the Securities purchased by it
and the other does not hold 50% or more of the Securities purchased by it, then
such 50% or more holder alone) shall have the exclusive power to nominate a
candidate to be considered for the position of Executive Vice President-Finance,
subject to the consent of the Co-Chairman and Chief Executive Officer of the
Company, whose consent shall not be unreasonably withheld. Such Co-Chairman and
Chief Executive Officer shall not remove the Executive Vice President - Finance
without the approval of the Board of Directors of the Company which shall be the
only limitation of such Co-Chairman and Chief Executive Officer's power to fire
employees, and such Co-Chairman and Chief Executive Officer shall retain the
exclusive power to nominate a candidate to be considered as the executive in
charge of distribution operations or logistics (or other similar position
involving the supervision of the warehousing and shipping of inventory), subject
to the consent of WCI and BTC so long as WCI and BTC hold 50% or more of the
Securities issued to them pursuant to the Purchase Agreement (or in the event
WCI or BTC holds 50% or more of the Securities purchased by it pursuant to the
Purchase Agreement and the other does not hold 50% or more of the Securities
purchased by it pursuant to the Purchase Agreement, then such 50% or more holder
alone), which consent shall not be unreasonably withheld.
4.10 Board of Directors Representation. In the event the Series C
---------------------------------
Closing shall occur and BTC does not commit to purchase at least 50% of the
Series C Shares not subscribed for in the Rights Offering exclusive of shares
subscribed for by WCI and BTC, then BTC shall cause one of the persons
designated by BTC pursuant to Section 3.1(i) to serve on the Board of Directors
of the Company to resign, WCI shall designate a replacement and BTC shall cause
the other Directors designated by BTC to vote in favor of such replacement. In
the event the Series C Closing shall occur and BTC commits to purchase at least
50% of the Series C Shares, and WCI does not purchase at least 50% of the Series
C Shares not subscribed for in the Rights Offering exclusive of shares
subscribed for by WCI and BTC, then WCI shall cause one of the persons
designated by WCI pursuant to Section 3.1(i) to serve on
-19-
the Board of Directors of the Company to resign, BTC shall designate a
replacement and WCI shall cause the other directors designated by WCI to vote in
favor of such replacement.
Section 5. Investment Representation.
-------------------------
5.1 Securities Act. Each Purchaser acknowledges that (a) the Securities
--------------
being acquired by such Purchaser are not being registered under the Securities
Act (other than the Series C Shares in connection with the Rights Offering) on
the ground that the issuance thereof is exempt from registration under Section
4(2) of the Securities Act as not involving any public offering, and (b) the
Company's reliance on such exemption is predicated in part on the representation
hereby made to the Company by such Purchaser that it is sophisticated in
financial affairs and is able to evaluate the risks inherent in investing in the
Securities and is capable of bearing the economic loss of its entire investment,
and is acquiring its Securities for investment for its own account, with no
present intention of dividing its participation with others or reselling or
otherwise distributing the same, subject, nevertheless, to any requirement of
law that the disposition of its property shall at all times be within its
control. None of the Purchasers is aware of any particular occasion, event or
circumstance upon the occurrence or happening of which it intends to dispose of
its Securities.
5.2 Resales. None of the Purchasers will sell or transfer all or any
-------
part of its Securities unless and until it shall first have given notice to the
Company describing such sale or transfer and furnished to the Company either (i)
an opinion, reasonably satisfactory to counsel for the Company, of Shearman &
Sterling, Xxxxx & Xxx Xxxxxx or other counsel skilled in securities matters
(selected by such Purchaser and reasonably satisfactory to the Company) to the
effect that the proposed sale or transfer may be made without registration under
the Securities Act, or (ii) an interpretive letter from the staff of the SEC to
the effect that no enforcement action will be recommended if the proposed sale
or transfer is made without registration under the Securities Act, in either
case accompanied by evidence that such transfer will be in compliance with
applicable state securities ("blue sky") laws; provided, however, that the
-------- -------
foregoing shall not apply with respect to (1) any transfer pursuant to an
effective registration statement under the Securities Act, or pursuant to Rule
144 thereunder, or (2) any transfers between a Purchaser and any institutional
affiliate of such Purchaser for its own account.
5.3 Legends. The Company may place appropriate legends on the
-------
certificates for the Securities and Conversion Shares concerning the
restrictions set forth in this Section 6 and may refuse to transfer any of the
Securities or Conversion Shares on its books should the holder thereof attempt
to transfer any of them otherwise than in compliance herewith and therewith.
The Company
-20-
agrees to reissue certificates representing the Securities or, if applicable,
the Conversion Shares without the legend provided for above at such time as (i)
the holder thereof is permitted to dispose of such Securities or Conversion
Shares pursuant to Rule 144(k) under the Securities Act, (ii) the Securities or
Conversion Shares are sold to a purchaser or purchasers who (in the opinion of
counsel to such purchasers, in form and substance reasonably satisfactory to the
Company and its counsel) are able to dispose of such Securities or Conversion
Shares publicly without registration under the Securities Act, or (iii) such
securities are registered under the Securities Act.
Section 6. Transfers.
---------
Subject only to compliance with the requirements of Section 5.2, each
Purchaser shall be entitled to assign and transfer all or any part of its
Securities or Conversion Shares, or any interest or participation therein, and
its related rights under this Agreement; and upon the assignment or transfer by
such Purchaser of all or any part of its Securities or Conversion Shares or its
interest therein (except in a Public Offering, or a sale pursuant to Rule 144
under the Securities Act), the term "Purchaser" as used herein shall thereafter
include, to the extent of the interest so assigned or transferred, the assignee
or transferee of such interest. Notwithstanding the foregoing, except for sales
on the NYSE or otherwise made in the open market, or pursuant to a Public
Offering, Securities shall not be transferred to a competitor of the Company
without the prior consent of the Company's Board of Directors.
Section 7. Effectiveness of Agreement.
--------------------------
The covenants contained in this Agreement shall continue in full force and
effect with respect to the Purchasers until all Shares of Preferred Stock and
the Notes have been redeemed (and the redemption price therefor paid in full) or
have been converted, and all Conversion Shares have been sold by the Purchasers
in a Public Offering or pursuant to Rule 144 under the Securities Act, except
that (i) the covenants contained in Section 1.4 shall terminate as provided in
Section 1.4(b), and (ii) the covenants contained in Sections 4.2(b) shall
terminate at such time as the total number of shares of Common Stock held by the
Purchasers does not exceed [twenty-five (25)] percent of the fully diluted
outstanding shares of Common Stock of the Company purchased by such Purchaser
pursuant to this Agreement.
Section 8. Judicial Proceedings.
--------------------
8.1 Jurisdiction. The Company irrevocably submits to the non-exclusive
------------
jurisdiction of any New York State or Federal court sitting in the City of New
York over any suit, action or proceeding arising out of or relating to this
Agreement or any of
-21-
the Securities or Conversion Shares. To the fullest extent it may effectively
do so under applicable law, the Company irrevocably waives and agrees not to
assert, by way of motion, as a defense or otherwise, any claim that it is not
subject to the jurisdiction of any such court, any objection that it may now or
hereafter have to the laying of the venue of any such suit, action or proceeding
brought in any such court and any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.
8.2 Judgments. The Company agrees, to the fullest extent it may
---------
effectively do so under applicable law, that a judgment in any suit, action or
proceeding of the nature referred to in Section 8.1 brought in any such court
shall, subject to such rights of appeal on issues other than jurisdiction as may
be available, be conclusive and binding upon the Company and may be enforced in
the courts of the United States of America or the State of New York (or any
other courts to the jurisdiction of which the Company is or may be subject) by a
suit upon such judgment.
8.3 Service. The Company consents to service of process in any suit,
-------
action or proceeding of the nature referred to in Section 8.1 by mailing a copy
thereof by registered or certified mail, postage prepaid, return receipt
requested, to its address specified in or designated pursuant to Section 9.1.
Such service (a) shall be deemed in every respect effective service of process
upon the Company in any such suit, action or proceeding and (b) shall, to the
fullest extent permitted by law, be taken and held to be valid personal service
upon and personal delivery to the Company.
8.4 Other Service or Jurisdiction. Nothing in this Section 8 shall
-----------------------------
affect the right of any of the Purchasers to serve process in any manner
permitted by law, or limit any right that any of the Purchasers may have to
bring proceedings against the Company in the courts of any jurisdiction or to
enforce in any lawful manner a judgment obtained in one jurisdiction in any
other jurisdiction.
8.5 Waiver of Jury Trial. THE COMPANY HEREBY EXPRESSLY WAIVES ANY RIGHT
--------------------
IT MAY HAVE NOW OR HEREAFTER TO A JURY TRIAL IN ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE SHARES OR THE
CONVERSION SHARES.
8.6 Remedies for Breach. Upon breach or default by the Company with
-------------------
respect to any obligation hereunder, under the Shares or the Conversion Shares,
the Purchasers (or their agents) shall be entitled to protect and enforce their
rights at law, or in equity or by other appropriate proceedings for specific
performance of such obligation, or for an injunction against such breach or
default, or in aid of the exercise of any power or remedy granted hereby or
thereby or by law.
-22-
Section 9. Miscellaneous.
-------------
9.1 Notices. All notices, requests, demands or other communications to or
-------
upon the respective parties hereto shall be in writing and shall be deemed to
have been given or made, and all financial statements, information and the like
required to be delivered hereunder shall be deemed to have been delivered, five
(5) days after deposited in the mails, registered or certified with postage
prepaid, addressed to the Company at 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000 Attention: President, with a copy to the counsel for the Company,
Xxxxxxxxxxx X. Xxxxx, Esq., 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, and
to the Purchasers at their respective addresses set forth in Section 1 of this
Agreement, or to such other address as any of them shall specify in writing to
the others. The Company shall maintain registers of the holders of the
Securities and the Conversion Shares which shall contain the last address
specified as provided in the preceding sentence. No other method of giving
notice is hereby precluded. Upon reasonable request of any Purchaser, the
Company will deliver to such Purchaser, at the Company's expense, additional
copies of all financial statements, information and the like required hereunder.
9.2 Cumulative Remedies, Etc. No failure or delay on the part of any of
------------------------
the Purchasers in exercising any right, power or privilege hereunder, and no
course of dealing between the Company and the Purchasers, or any of them, shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege hereunder preclude the simultaneous or later exercise
of any other right, power or privilege. The rights and remedies herein
expressly provided are cumulative and not exclusive of any rights or remedies
which the Purchasers, or any of them, would otherwise have. No notice to or
demand on the Company in any case shall entitle the Company to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the Purchasers, or any of them, to take any other or
further action in any circumstances without notice or demand.
9.3 No Oral Changes; Assignment; Survival of Representations. This
--------------------------------------------------------
Agreement may not be changed or terminated orally. This Agreement shall be
binding upon the Company and the Purchasers and their successors and assigns.
The Company shall not make any assignment of its rights under this Agreement or
subject this Agreement or its rights hereunder to any lien or security interest
of any kind whatsoever; and any such assignment, lien or security interest shall
be absolutely void and unenforceable as against the Purchasers. All agreements,
representations and warranties made herein or in writing otherwise in connection
herewith shall survive the issuance of the Securities.
9.4 Several Obligations. The Purchasers shall not be jointly obligated
-------------------
hereunder; their obligations are several. The
-23-
sales of Securities to the Purchasers shall be deemed separate sales to each
Purchaser.
9.5 Expenses. The Company agrees to pay and save the Purchasers harmless
--------
against liability for the payment of all out-of-pocket expenses arising in
connection with the negotiation, preparation, execution, delivery and
enforcement of, and any amendment, supplement or modification to, or waiver of
any provision of, this Agreement or the Securities, and the reasonable fees and
disbursements of Shearman & Sterling and Xxxxx & Xxx Xxxxxx, such fees and
disbursements in respect of such preparation, execution and delivery to be paid
by the Company on the Series B and Convertible Notes Closing Date. Such other
expenses shall be paid promptly by the Company as and when payment thereof is
requested by the Purchasers. The obligations provided for in this Section 9.5
shall survive any termination of this Agreement.
9.6 Indemnification. The Company agrees to indemnify and hold harmless
---------------
each Purchaser, its subsidiaries, directors, officers and employees, to the
maximum extent permitted by law, from and against any and all liability
(including, without limitation, reasonable legal fees incurred in defending
against any such liability) under, arising out of or relating to this Agreement,
the Securities, the transactions contemplated hereby or thereby or in connection
herewith or therewith, and all action or failures to act and the transactions
contemplated thereby, including (to the maximum extent permitted by law) any
liability arising under Federal or state securities laws, except to the extent
such liability shall result from any act or omission on such Purchaser's part
constituting willful misconduct or gross negligence or the inaccuracy of
representations in Section 5. The obligations of the Company under this Section
9.6 shall survive and continue to be in full force and effect notwithstanding
the Shares not having been purchased, the redemption of the Shares or the
termination of this Agreement.
9.7 Publicity. Each party to this Agreement agrees not to disclose the
---------
name of the other, the existence of this Agreement or the terms hereof in any
press release or other public disclosure, or in any proxy statements, prospectus
or other, similar materials filings with any governmental entity, unless,
required by law or in each such case, and the other party first has reviewed and
approved such usage, with such review and approval not to be unreasonably
delayed or withheld.
9.8 Governing Law. THIS AGREEMENT AND THE OTHER AGREEMENTS AND
-------------
INSTRUMENTS EXECUTED AS PROVIDED HEREIN, AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER AND THEREUNDER, SHALL BE CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAWS.
-24-
9.9 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
9.10 Captions; Gender. The descriptive headings of the Sections of this
----------------
Agreement are inserted for convenience only and shall not affect the meaning,
construction or interpretation of any of the provisions hereof. The use of the
neuter form of a pronoun shall be deemed, where appropriate, to include the
masculine and feminine forms of such pronoun.
-25-
If you are in agreement with the foregoing, please sign in the space
provided below.
ALLIANCE ENTERTAINMENT CORP.
By: /s/ Xxxxxxxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxxxxxxx X. Xxxxx
Title: Executive Vice President
The foregoing is hereby accepted
and agreed to as of the date
first above written.
Purchasers:
----------
CYPRESS VENTURES, INC.
By: /s/ X. Xxxxxxxx Xxxxxxx
------------------------------
Name: X. Xxxxxxxx Xxxxxxx
Title: Managing Director
XXXXXXXXXXX & CO., INC.
By: /s/ X. Xxxxxxxx Xxxxxxx
------------------------------
Name: X. Xxxxxxxx Xxxxxxx
Title: Managing Director
BT CAPITAL PARTNERS, INC.
By: /s/ Xxxxxx Xxxxxxxxxx
-------------------------------
Name: Xxxxxx Xxxxxxxxxx
Title: Managing Director
-26-
