SUBSCRIPTION AGREEMENT
FOR
SERIES C STOCK
(NEW INVESTORS)
This SUBSCRIPTION AGREEMENT, dated as of the 11th day of February,
1998, is made between JAMtv Corporation, a Delaware corporation (the "Company"),
and __________________________________________, being referred to herein as the
"Subscriber."
W I T N E S S E T H :
WHEREAS, the Company is authorized to issue a series of shares of
Series C Convertible Preferred Stock, par value $.01 per share (the "Series C
Stock"), such Series C Stock having the rights, preferences, and privileges
as set forth in the resolutions of the Board of Directors creating the Series
C Stock, which resolutions are included in the Certificate of Designations
filed with the State of Delaware pursuant to Section 151(g) of the Delaware
General Corporation Law (the "Certificate of Designations");
WHEREAS, the Company desires to issue to the Subscriber, and the
Subscriber desires to purchase and receive from the Company, shares of Series
C Stock as described in this Agreement; and
WHEREAS, in connection with the offer and sale of the Series C Stock
hereunder, the Subscriber shall become a party to that certain Stockholders'
Agreement, dated as of June 2, 1997, among the Company and the other parties
named therein, as amended from time to time (the "Stockholders' Agreement");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, the parties hereby agree as follows:
1. PURCHASE OF SHARES
1.1 ISSUANCE OF SHARES. Subject to the terms and conditions
of this Agreement, Subscriber hereby subscribes for, and the Company agrees
to sell to Subscriber, an aggregate of __________ shares of the Series C
Stock (the "Subscribed Shares") upon the terms and conditions of this
Agreement. The purchase by and sale to the Subscriber of the Subscribed
Shares is made only by means of this Agreement and any supplements or
amendments hereto. The Subscriber hereby agrees that this subscription is
and shall be irrevocable.
1.2 CONSIDERATION FOR SHARES. The consideration to the
Company for the Subscribed Shares shall be $7.50 per share (the "Purchase
Price"), and the representations, warranties, covenants, and other
undertakings of Subscriber set forth herein. Simultaneously
with the execution of this Agreement, the Subscriber shall pay to the Company
the Purchase Price in cash or such other form of immediately available funds
as is acceptable by the Company.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to, and covenants with, the Subscriber as
follows:
2.1 ORGANIZATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware and has all requisite corporate power and authority to own, lease
and operate its properties, to carry on its business as presently conducted
and as proposed to be conducted and to carry out the transactions
contemplated by this Agreement.
2.2 AUTHORIZATION. The execution, delivery and performance
by the Company of each of this Agreement, Amendment No. 2 ("Amendment No. 2")
to the Registration Rights Agreement, dated as of June 2, 1997, among the
Company and the parties named therein, as amended on October 31, 1997 (the
"Registration Rights Agreement"), and the Joinder to Stockholders' Agreement
(this Agreement, Amendment No. 2, and the Joinder to Stockholders' Agreement
are hereafter referred to collectively as the "Transaction Documents"), has
been duly authorized by all requisite corporate action by the Company, and
this Agreement constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms except to the
extent that enforceability may be limited by bankruptcy, insolvency or other
similar laws affecting creditors' rights generally or equitable principles.
The execution, delivery and performance of the Transaction Documents
and the consummation of the transactions contemplated thereby, the compliance
with the provisions hereof by the Company and the issuance, sale and delivery
of the Subscribed Shares and the Series C Reserved Shares (as defined in
Section 2.4 below) by the Company will not:
(a) violate any court order or legal requirement applicable to
the Company or any of its properties or assets,
(b) conflict with or result in any breach of any of the terms,
conditions or provisions of, or constitute (with due notice or lapse of
time, or both) a default (or give rise to any right of termination,
cancellation or acceleration) under, or result in the creation of any
encumbrance upon any of the properties or assets of the Company under,
(i) the Certificate of Incorporation, (ii) the by-laws of the Company or
(iii) any note, indenture, mortgage, lease agreement or other contract,
agreement or instrument to which the Company is a party or by which it
or any of its properties or assets is bound or affected, or
(c) require the approval, consent, authorization or act of, or
the making of any declaration, filing or registration with, any person
(other than such notifications or filings
2
required under applicable state securities laws, if any, which shall
be made by the Company on a timely basis).
2.3 CAPITALIZATION. (a) The authorized capital stock of
the Company immediately prior to the consummation of the transactions
contemplated hereby shall consist of:
(i) 2,500,000 shares of Series A Preferred Stock, par value
$.01 per share, of which 1,666,666 shares of Series A-I Convertible
Preferred Stock and 200,000 shares of Series A-II Convertible Preferred
Stock are issued and outstanding;
(ii) 500,000 shares of Series B Preferred Stock, par value $.01
per share, of which 472,000 shares are issued and outstanding;
(iii) 400,000 shares of Series C Stock, none of which are
outstanding;
(iv) 1,100,000 shares of preferred stock, par value $.01 per
share, issuable in series, none of which are outstanding; and
(v) 8,000,000 shares of Common Stock, of which (w) 1,150,530
shares are issued and outstanding; (x) 2,500,000 shares have been
reserved for issuance upon conversion of the Series A Preferred Stock;
(y) 500,000 shares have been reserved for issuance upon conversion of
the Series B Preferred Stock; and (z) 400,000 shares shall have been
duly reserved for issuance upon conversion of the Series C Stock;
In addition, shares of Common Stock have been reserved for issuance by the
Company pursuant to the terms of the Plan and the Warrant, each of which is
described on SCHEDULE 2.3 hereto.
(b) Except as set forth on SCHEDULE 2.3 hereto, there are no
preemptive or similar rights to purchase or otherwise acquire shares of the
capital stock of the Company pursuant to any provision of law, the
Certificate of Incorporation or by-laws of the Company (in each case as
amended and in effect on the date hereof), or any agreement to which the
Company is a party; and, there is, to the best knowledge of the Company, no
agreement, restriction or encumbrance (such as a right of first refusal,
right of first offer, proxy, voting agreement, voting trust, registration
rights agreement, stockholders' agreement, etc.) with respect to the sale or
voting of any shares of capital stock of the Company (whether outstanding or
issuable upon conversion or exercise of outstanding securities). The
transactions contemplated by this Agreement will not trigger any
anti-dilution protection provisions given by the Company to any person or
entity (including without limitation, any stockholder, lender, warrant
holder, lessor and/or licensee). Except as set forth on SCHEDULE 2.3, there
are no contracts relating to the issuance, sale or transfer of any equity
securities or other securities of the Company. Except for its wholly-owned
subsidiary, JAMtv Interactive Services Corporation, an Illinois corporation,
the Company does not own and does not have any contract to acquire equity
securities or other securities of any other party or any direct or indirect
equity or ownership interest in any other business.
3
2.4 ISSUANCE OF SERIES C STOCK AND RESERVATION OF SERIES C
RESERVED SHARES. The Company has authorized (a) the issuance of up to
400,000 shares of Series C Stock, and (b) the reservation of such number of
shares of Common Stock as is necessary, but not less than 400,000 shares of
Common Stock, for issuance upon conversion of the Series C Stock (such
reserved shares being referred to herein as the "SERIES C RESERVED SHARES").
2.5 AUTHORIZATION OF THE SERIES C STOCK AND SERIES C
RESERVED SHARES. The authorization, issuance, sale and delivery of the
Series C Stock and the authorization, reservation, issuance, sale and
delivery of the Series C Reserved Shares have been duly authorized by all
requisite corporate action of the Company, and when issued, sold and
delivered in accordance with this Agreement, the Series C Stock and the
Series C Reserved Shares will be validly issued and outstanding, fully paid
and nonassessable with no personal liability attaching to the ownership
thereof, and not subject to preemptive or any other similar rights of the
stockholders of the Company or others. The terms, designations, powers,
preferences and relative, participating, optional and other special rights,
and the qualifications, limitations and restrictions, of the Series C Stock
are as stated in the Certificate of Designations.
2.6 FINANCIAL STATEMENTS. The Company has previously
delivered a copy of its unaudited consolidated balance sheet dated as of
December 31, 1997 and Consolidated Statement of Operations dated as of
December 31, 1997 (the "Financial Statements"). The Financial Statements
fairly present the financial condition and results of operations as at
December 31, 1997 and for the periods therein referred to and have been
prepared in accordance with GAAP, subject to the absence of notes and
year-end adjustments for expenses incurred in connection with the issuance of
stock and the grant of stock options to non-employees of the Company.
2.7 ABSENCE OF UNDISCLOSED LIABILITIES. Except to the
extent disclosed or provided for on the Financial Statements, the Company
does not have any debts, liabilities or obligations, whether matured or
unmatured, fixed or contingent (including, without limitation, obligations as
the guarantor) other than those incurred since December 31, 1997, in the
ordinary course of business consistent with past practice.
2.8 NO MATERIAL ADVERSE CHANGES. Since December 31, 1997,
there has been no material adverse change in the financial condition,
operating results, assets, operations or business prospects of the Company.
2.9 COMPLIANCE WITH ORDERS AND LAWS. The Company is not in
default with respect to any judgment, order, award or decree of any foreign,
federal, state, local or other court or tribunal or any award in any
arbitration proceeding known to or served upon the Company. The Company has
complied with all foreign, federal, state and local laws, statutes,
regulations, rules, codes or ordinances enacted, adopted, issued or
promulgated by any foreign, federal, state, local or other governmental
authority or regulatory body, or common law applicable to its business,
operations, properties, assets, products and services, and the Company has
all necessary permits, licenses and other authorizations required to conduct
its business as conducted and
4
proposed to be conducted, except where the failure to so comply or obtain
such permits, licenses or authorizations could not reasonably be expected to
have a material adverse effect on the business, operations, affairs or
financial condition of the Company or any of its properties or assets.
2.10 ABSENCE OF CERTAIN DEVELOPMENTS. Except for the
issuance of Series B Convertible Preferred Stock and Series C Stock and the
registration and other rights granted by the Company in connection therewith,
and except for the grant of stock options under the Company's stock option
plan described in SCHEDULE 2.3, since the date of the Financial Statements,
there has not been any:
(i) change in the authorized or issued capital stock of the
Company; grant of any right to purchase shares of capital stock of the
Company; issuance of any security convertible into capital stock of the
Company; grant of any registration rights with respect to shares of
capital stock of the Company; purchase, redemption, retirement, or other
acquisition by the Company of any shares of its capital stock; or the
declaration or payment of any dividend or other distribution or payment
in respect of shares of capital stock of the Company;
(ii) amendment of (a) the Certificate of Incorporation or
by-laws of the Company, (b) the Stockholders' Agreement, or (c)
Registration Rights Agreement;
(iii) adoption of, or increase in the payments to or benefits
under any profit sharing, bonus, deferred compensation, savings,
insurance, pension, retirement or other employee benefit plan for or
with any Company employees;
(iv) material change in the accounting methods used by the
Company;
(v) entry into by the Company or any agreement, arrangement,
understanding or commitment other than in the ordinary course of
business; or
(vi) any substantial losses or waiver of any rights of
material value, whether or not in the ordinary course of business.
2.11 LITIGATION. Except as set forth in SCHEDULE 2.11
attached hereto, there is no litigation or governmental proceeding or
investigation pending, or, to the knowledge of the Company, threatened
against the Company affecting any of its properties or assets, nor, to the
knowledge of the Company, has there occurred any event or does there exist
any condition on the basis of which it is reasonably likely that any such
litigation, proceeding or investigation might properly be instituted. There
are no actions or proceedings pending, or to the Company's knowledge,
threatened (nor is there any reasonable basis therefor which is known to the
Company) which might result, either in any case or in the aggregate, in any
material adverse change in the business, operations, affairs or financial
condition of the Company or in any of its
5
properties or assets, or which might call into question the validity of this
Agreement, or any action taken or to be taken pursuant hereto.
2.12 INTELLECTUAL PROPERTY. Except as disclosed on SCHEDULE
2.11 (regarding pending or threatened claims), the Company owns or otherwise
has the right to use all of the patents, trademarks, service marks, trade
names, and copyrights necessary for the conduct of the Company's business as
currently conducted or as proposed to be conducted. The Company has a
contractual right to use the "Rolling Stone Trademarks" and certain other
intellectual property pursuant to an Affiliation Agreement dated November 10,
1997 between the Company and Straight Arrow Publishers Company, L.P., without
violating or conflicting with the rights of others, except as provided in
such Affiliation Agreement.
2.13 RELATIONSHIPS WITH RELATED PERSONS. There are no
loans, leases, royalty agreements or other continuing transactions between
(a) the Company or any of its customers or suppliers, and (b) any officer,
employee, consultant or director of the Company or any person owning five
percent (5%) or more of the capital stock of the Company, or to the Company's
knowledge, any member of the immediate family of such officer, employee,
consultant, director or stockholder or any corporation or other entity
controlled by such officer, employee, consultant, director or stockholder, or
a member of the immediate family of such officer, employee, consultant,
director or stockholder, except as provided on SCHEDULE 2.13 attached hereto.
2.14 FULL DISCLOSURE. The Company has made available to the
Subscriber, or has otherwise disclosed in writing in, or pursuant to, this
Agreement all facts material to the business, operations, assets or condition
(financial or otherwise) of the Company. No representation or warranty to
Subscriber contained in this Agreement, and no statement contained in the
Schedules to this Agreement, or any certificate, list or other writing
furnished by the Company to Subscriber pursuant to the provisions hereof,
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements herein or therein not
misleading.
2.15 STOCKHOLDERS' AGREEMENT. Attached hereto as EXHIBIT A
is a true and complete copy of the Stockholders' Agreement, as amended to the
date hereof, which has not since been modified or amended in any respect.
2.16 REGISTRATION RIGHTS. Attached hereto as EXHIBIT B is a
true and complete copy of the Registration Rights Agreement, as amended to
the date hereof, which has not since been modified or amended in any respect.
2.17 CERTIFICATE OF INCORPORATION. Attached hereto as
EXHIBIT C is a true and complete copy of the Company's Second Amended and
Restated Certificate of Incorporation, as amended to the date hereof.
6
3. REPRESENTATIONS, WARRANTIES, AND COVENANTS OF THE SUBSCRIBER.
The Subscriber represents and warrants to the Company as follows:
(i) The Subscriber is acquiring the Series C Stock being
purchased by it hereunder for its own account, for investment and
not with a view to the distribution thereof within the meaning of
the Securities Act of 1933, as amended (the "Securities Act");
(ii) The Subscriber understands that (i) the Series C
Stock has not been, and that the Series C Reserved Shares will
not be, registered under the Securities Act, by reason of their
issuance by the Company in a transaction exempt from the
registration requirements of the Securities Act and (ii) the
Series C Stock and the Series C Reserved Shares may not be sold
unless such disposition is registered under the Securities Act or
is exempt from registration;
(iii) The Subscriber further understands that the
exemption from registration afforded by Rule 144 (the provisions
of which are known to the Subscriber) promulgated under the
Securities Act depends on the satisfaction of various conditions,
and that, if applicable, Rule 144 may afford the basis for sales
only in limited amounts;
(iv) The Subscriber has not employed any broker or
finder in connection with the transactions contemplated by this
Agreement;
(v) The Subscriber is an "Accredited Investor" (as
defined in Rule 501(a) under the Securities Act);
(vi) The Subscriber has such knowledge and experience in
financial or business matters that it is capable of evaluating the
merits and risks of the transactions contemplated by this Agreement;
(vii) The Subscriber has been furnished with any materials which
the Subscriber has requested relating to the Company, its business and
financial condition and the offering of the Series C Stock, and the
Subscriber has been afforded an opportunity to ask questions and receive
answers concerning such matters;
(viii) The Subscriber has full power and authority
without the consent or approval of any court, agency or other
third party, to enter into and perform this Agreement. This
Agreement has been duly authorized by all necessary action on the
part of the Subscriber. When duly executed and delivered this
Agreement will constitute a valid and binding agreement of the
Subscriber enforceable against the Subscriber in accordance with
its terms except to the extent that enforceability may be limited
by bankruptcy, insolvency or other similar laws affecting
7
creditors' rights generally or equitable principles.
4. MISCELLANEOUS PROVISIONS.
4.1 TRANSFER TAXES. The Company will be liable for and
will pay, and will hold the Subscriber harmless from, any and all liability
with respect to any stamp, transfer or similar taxes arising from the
execution, delivery or performance of this Agreement or any modification,
amendment or alteration of the terms or provisions of this Agreement, and
that it will similarly be liable for, pay and hold the Subscriber harmless
from all issue taxes in respect of the issuance of the Series C Stock and the
Series C Reserved Shares to such Subscriber.
4.2 EXCHANGES; LOST, STOLEN OR MUTILATED CERTIFICATES.
Upon surrender by the Subscriber to the Company of any certificate
representing shares of Series C Stock or Series C Reserved Shares purchased
or acquired hereunder, the Company at its expense will issue in exchange
therefor, and deliver to such Subscriber, a new certificate or certificates
representing such shares, in such denominations as may be requested by such
Subscriber. Upon receipt of evidence satisfactory to the Company of the
loss, theft, destruction or mutilation of any certificate representing any
Series C Stock or Series C Reserved Shares purchased or acquired by the
Subscriber hereunder, and in case of any such loss, theft or destruction,
upon delivery of any indemnity agreement satisfactory to the Company, or in
any case of any such mutilation, upon surrender and cancellation of such
certificate, the Company at its expense will issue and deliver to such
Subscriber a new certificate for such Series C Stock or Series C Reserved
Shares of like tenor, in lieu of such lost, stolen or mutilated certificate.
4.3 NO BROKER'S COMMISSION. The Subscriber and the Company
agree that none of the parties has employed or retained any person, firm, or
Company as a broker, dealer, or sales agent to bring about or to represent
any of them in the transaction contemplated by this Agreement. The Company
shall not be liable to the Subscriber for any costs, fees or expenses in the
nature of any commission to a broker, dealer or sales agent. The Company
will reimburse the Subscriber for reasonable legal fees and expenses incurred
by the Subscriber in connection with its purchase of the Series C Stock,
provided that the Company shall have no liability to reimburse Subscriber and
all other subscribers for Series C Stock for legal fees and expenses
exceeding $25,000 in the aggregate.
4.4 CONSTRUCTION. This Agreement shall be governed by, and
construed and enforced in accordance with, the internal laws of the State of
Illinois without giving effect to the conflict of law provisions thereof.
4.5 SURVIVAL OF REPRESENTATIONS. All representations,
warranties, covenants, and agreements made herein shall survive the execution
and delivery of this Agreement.
4.6 NOTICES. All notices hereunder shall be in writing and
shall be deemed to
8
have been given at the time when mailed by certified mail, return receipt
requested and postage prepaid, addressed as follows:
If to the Company:
JAMtv Corporation
000 Xxxxx XxXxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxxxx
with a copy to:
Xxxxxxxx & Xxxxxx
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
If to the Subscriber:
___________________________________
___________________________________
___________________________________
Facsimile:_________________________
4.7 ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the Company, the Subscriber, and their respective
successors and permitted assigns. The Subscriber shall not assign this
Agreement without the prior written consent of the Company.
4.8 AMENDMENTS AND WAIVERS. This Agreement and the exhibit
hereto set forth the entire understanding of the parties with respect to the
investment contemplated hereby. This Agreement may be amended only by an
instrument in writing signed by both parties.
4.9 INTERPRETATION. In case any or one or more of the
provisions contained in this Agreement shall, for any reason, be held to be
invalid, illegal, or unenforceable in any respect, such invalidity,
illegality, or unenforceability shall not affect any other provisions of this
Agreement, and this Agreement shall be construed as if such invalid, illegal,
or unenforceable provision had never been contained herein.
9
4.10 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, and all of
which together shall constitute one and the same instrument.
4.11 HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not constitute a part hereof.
4.12 ATTENDANCE AT BOARD MEETINGS. The Company will permit
one representative of the holders of Series C Stock as is designated by the
holders of Series C Stock, with the approval of the Chief Executive Officer
of the Company, exercisable in his sole discretion, to attend meetings of the
Board of Directors of the Company.
4.13 DELIVERY OF AUDITED FINANCIAL STATEMENTS. Promptly
upon the written request of the Subscriber, and subject to Subscriber's
written confidentiality obligations to the Company, the Company will deliver
to the Subscriber the audited consolidated financial statements of the
Company and the accompanying report of the Company's independent auditors.
[intentionally left blank]
10
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first above written.
JAMTV CORPORATION
By:
------------------------------------
Xxxxxx X. Xxxxxxx,
Chief Executive Officer
SUBSCRIBER
---------------------------------------
[Print Name]
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
11
