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Execution Copy
INVESTMENT AGREEMENT
By and Between
VALUEVISION INTERNATIONAL, INC.
AND
G.E. CAPITAL EQUITY INVESTMENTS, INC.
Dated as of March 8, 1999
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TABLE OF CONTENTS
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ARTICLE I. Definitions ........................................................ 1
Section 1.1 Definitions............................................... 1
ARTICLE II. Authorization, Sale and Purchase of the Securities ................ 6
Section 2.1 Authorization; Agreement to Sell and Purchase............. 6
Section 2.2 Closing................................................... 7
Section 2.3 Use of Proceeds........................................... 7
Section 2.4 Beneficial Ownership of Securities........................ 7
ARTICLE III. Representations and Warranties ................................... 8
Section 3.1 Representations and Warranties of the Company............. 8
Section 3.2 Representations and Warranties of the Purchaser........... 21
ARTICLE IV. Conduct of Business ............................................... 24
Section 4.1 Conduct of the Business Pending the Closing............... 24
Section 4.2 Access to Information..................................... 25
Section 4.3 No Solicitation........................................... 25
ARTICLE V. Other Agreements ................................................... 27
Section 5.1 Preparation of Proxy Statement............................ 27
Section 5.2 Shareholders Meeting...................................... 28
Section 5.3 Public Statements......................................... 28
Section 5.4 Reasonable Commercial Efforts............................. 28
Section 5.5 HSR Act................................................... 29
Section 5.6 Reservation of Shares..................................... 29
Section 5.7 Notification of Certain Matters........................... 29
Section 5.8 Further Assurances........................................ 29
ARTICLE VI. Conditions Precedent .............................................. 30
Section 6.1 Conditions of the Purchaser............................... 30
Section 6.2 Conditions of the Company................................. 31
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ARTICLE VII. Term ............................................................. 32
Section 7.1 Termination............................................... 32
Section 7.2 Effect of Termination..................................... 33
ARTICLE VIII. Miscellaneous ................................................... 33
Section 8.1 Survival of Representations and Warranties................ 33
Section 8.2 Notices................................................... 33
Section 8.3 Entire Agreement; Amendment............................... 34
Section 8.4 Counterparts.............................................. 35
Section 8.5 Governing Law; Jurisdiction; Waiver of Jury Trial......... 35
Section 8.6 Public Announcements...................................... 35
Section 8.7 Fees and Expenses......................................... 35
Section 8.8 Indemnification by the Company............................ 35
Section 8.9 Indemnification by the Purchaser.......................... 37
Section 8.10 Successors and Assigns; Third Party Beneficiaries......... 38
Section 8.11 Arbitration............................................... 38
Section 8.12 Specific Performance...................................... 39
Section 8.13 Headings, Captions and Table of Contents.................. 39
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SCHEDULES
3.1(b) - Capital Stock Obligations of Material Subsidiaries
3.1(c) - Conflicts
3.1(d) - Consents and Approvals of Company
3.1(e) - Common Stock Options and Obligations
3.1(f) - SEC Filings; Claims and Liabilities
3.1(i) - Legal Proceedings
3.1(j) - Certain Changes
3.1(k) - Employee Plans
3.1(m) - Material Agreements
3.1(o) - Tax Matters
3.1(u) - FCC Licenses and Applications
3.1(x) - Brokers and Finders
3.2(c) - Consents and Approvals
4.1 - Conduct of Business
5.4 - Required Consents
EXHIBITS
A - Form of Certificate of Designation
B - Form of Warrant
C - Form of Registration Rights Agreement
D - Form of Shareholder Agreement
E - Form of Operating Agreement
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INVESTMENT AGREEMENT
INVESTMENT AGREEMENT, dated as of March 8, 1999 (this
"Agreement"), by and between ValueVision International, Inc., a Minnesota
corporation (the "Company"), and G.E. Capital Equity Investments, Inc., a
Delaware corporation (the "Purchaser"). Capitalized terms not otherwise defined
where used shall have the meanings ascribed thereto in Article I.
WHEREAS, Purchaser has agreed to purchase from the Company,
and the Company has agreed to sell to the Purchaser, subject to the terms and
conditions of this Agreement, shares of the Company's Series A Redeemable
Convertible Preferred Stock and Warrants to purchase Common Stock; and
WHEREAS, the Company and the Purchaser desire to set forth
certain agreements herein.
NOW THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained and intending to be
legally bound hereby, the parties hereby agree as follows:
ARTICLE I.
Definitions
Section 1.1 Definitions. As used in this Agreement, the
following terms shall have the meanings set forth below:
"Affiliate" shall mean, with respect to any Person, any other
Person that directly or indirectly controls, is controlled by, or is
under common control with, such Person. As used in this definition,
"control" (including its correlative meanings, "controlled by" and
"under common control with") shall mean the possession, directly or
indirectly, of power to direct or cause the direction of management or
policies (whether through ownership of securities or partnership or
other ownership interests, by contract or otherwise).
"Ancillary Documents" shall mean the Distribution
Agreement, Certificate of Designation, Warrants, Shareholder
Agreement and the Registration Rights Agreement.
"Beneficially Own" shall have the meaning set forth in Rule
13d-3 under the Exchange Act.
"Business Day" shall mean any day, other than a
Saturday, Sunday or a day on which commercial banks in New
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Investment Agreement
York, New York are authorized or obligated by law or executive order to
close.
"Certificate of Designation" shall mean the Certificate of
Designation of the Shares of the Company, to be executed and filed with
the Secretary of State of the State of Minnesota on or prior to the
Closing Date, which shall be substantially in the form of Exhibit A
hereto.
"Closing" and "Closing Date" shall have the meanings
set forth in Section 2.2(a).
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Common Stock" shall mean the Common Stock, par value $0.01
per share, of the Company.
"Company" shall have the meaning set forth in the
preamble hereto.
"Company Plans" shall have the meaning set forth in
Section 3.1(k).
"Company Subsidiary" shall mean any Subsidiary of the
Company.
"Contractual Obligation" shall mean, as to any Person, any
provision of any note, bond or security issued by such Person, or of
any mortgage, indenture, deed of trust, lease, license, franchise,
contract, agreement, instrument or undertaking to which such Person is
a party or by which it or any of its property is subject.
"Distribution Agreement" shall mean the Distribution and
Marketing Agreement dated as of the date hereof between the Company and
NBC pursuant to which NBC has agreed to distribute certain programing
of the Company.
"Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
"Excluded Breach" shall mean any breach of a representation or
warranty hereunder, provided that (i) the Purchaser had actual
knowledge of the event or circumstance constituting such breach on or
prior to the date hereof and (ii) the Purchaser believed, on or prior
to the date hereof, that such circumstance or event constituted a
breach of such representation or warranty hereunder.
"FCC" shall mean the Federal Communications Commission.
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Investment Agreement
"GAAP" shall mean generally accepted accounting principles in
the United States of America in effect from time to time.
"Governmental Entity" shall mean any nation or government, any
state or other political subdivision thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government and any self-regulating
organization, securities exchange or securities trading system.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
"Intellectual Property" shall mean all material patents,
copyright registrations, mask work registrations, trademark and service
xxxx registrations, applications for any of the foregoing, designs,
copyrights, mask works, service marks, trade dress, trade names, secret
formulae, trade secrets, secret processes, computer programs,
confidential information and know-how.
"Lien" shall mean any mortgage, pledge, hypothecation,
assignment, encumbrance, lien (statutory or other) or security
agreement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement or
any financing lease having substantially the same effect as any of the
foregoing).
"Material Adverse Effect" shall mean a material adverse effect
on (i) with respect to the Company, the assets, business condition,
results of operations or financial condition of the Company and the
Company Subsidiaries taken as a whole or (ii) with respect to any
party, the ability of such party to timely perform its obligations
under this Agreement or any Ancillary Document to which it is a party.
The dollar thresholds set forth in the definition of "Material
Agreement" shall not affect the meaning and interpretation of "Material
Adverse Effect."
"Material Agreement" shall mean any contract, lease,
restriction, agreement, instrument or commitment to which the Company
or any Company Subsidiary is a party or by which its properties are
bound (i) which provides a benefit to the Company and the Company
Subsidiaries of, or commits the Company or any Company Subsidiary to
expend, $500,000 or more (or, in the case of any agreement with any
customer of the Company or any Company Subsidiary, $50,000 or more),
(ii) which if breached by any party thereto would result in liability
or loss to the Company and the Company Subsidiaries of $500,000 or more
(or in the case of any
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Investment Agreement
agreement with any customer of the Company or any Company Subsidiary,
$50,000 or more) or (iii) which provides for the distributions of
programming of the Company to more than 250,000 full-time equivalent
homes by any multichannel video programming distributor, including
without limitation, by a cable television system, MATV and SMATV
systems, MMDS, TVRO and other wireline, wireless or direct broadcast
satellite delivery methods.
"Material Subsidiaries" shall mean those Subsidiaries of the
Company that constitute "significant subsidiaries" as defined in Rule
1-02 of Regulation S-X under the Securities Act.
"NBC" shall mean National Broadcasting Company, Inc., a
Delaware corporation and Affiliate of the Purchaser.
"Operating Agreement" shall mean the Memorandum of
Understanding, dated as of the date hereof, between the Company,
Purchaser and NBC which shall be substantially in the form attached as
Exhibit E hereto.
"Options" shall mean stock options to purchase Common Stock
(i) issued or issuable under the Company's 1990 Stock Option Plan, (ii)
issued or issuable under the Company's 1994 Executive Stock Option Plan
(whether or not issued) and (iii) as set forth on Schedule 3.1(e)
hereto.
"Permits" shall have the meaning set forth in Section
3.1(h).
"Permitted Liens" shall mean (i) mechanics', carriers',
repairmen's or other like Liens arising or incurred in the ordinary
course of business, (ii) Liens arising under original purchase price
conditioned sales contracts and equipment leases with third parties
entered into in the ordinary course of business consistent with past
practice, (iii) statutory Liens for Taxes not yet due and payable and
(iv) other encumbrances or restrictions or imperfections of title which
do not materially impair the continued use and operation of the assets
to which they relate.
"Person" shall mean an individual, corporation, unincorporated
association, partnership, group (as defined in Section 13(d)(3) of the
Exchange Act), trust, joint stock company, joint venture, business
trust or unincorporated organization, limited liability company, any
Governmental Entity or any other entity of whatever nature.
"Preferred Stock" shall mean the preferred stock, par
value $0.01 per share, of the Company.
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Investment Agreement
"Purchaser" shall mean G.E. Capital Equity Investments,
Inc. a Delaware corporation.
"Registration Rights Agreement" shall mean the registration
rights agreement to be executed by the Purchaser and the Company at the
Closing, which shall be substantially in the form attached as Exhibit C
hereto.
"Replacement Warrant" shall have the meaning set forth
in Section 2.4(b).
"Requirement of Law" shall mean, as to any Person, the
certificate of incorporation and by-laws or other organizational
documents of such Person, and any law, statute, order, treaty, rule or
regulation, or judgment, decree, determination or order of any
arbitrator, court or other Governmental Entity, applicable to or
binding upon such Person or any of its property.
"Restricted Party" shall have the meaning set forth in
the Shareholder Agreement.
"SEC" shall mean the United States Securities and
Exchange Commission.
"Securities" shall mean the Shares and the Warrants.
"Securities Act" shall mean the Securities Act of
1933, as amended.
"Shareholder Agreement" shall mean the Shareholder Agreement,
to be executed and delivered by the Company and the Purchaser at
Closing, which shall be substantially in the form of Exhibit D hereto.
"Shareholder Approval" shall have the meaning set forth
in Section 5.1.
"Shareholders Meeting" shall have the meaning set forth
in Section 5.2
"Shareholders Vote" shall mean the vote of the shareholders of
the Company taken at the Shareholders Meeting.
"Shares" shall have the meaning set forth in Section
2.1(a).
"Subsidiary" shall mean, as to any Person, a corporation,
partnership, limited liability company, joint venture or other entity
of which shares of stock or other ownership interests having ordinary
voting power (other than
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Investment Agreement
stock or such other ownership interests having such power only by
reason of the happening of a contingency) to elect a majority of the
board of directors or other managers of such corporation, partnership
or other entity are at the time owned, or the management of which is
otherwise controlled, directly or indirectly through one or more
intermediaries, or both, by such Person.
"Surviving Representations and Warranties" shall mean the
representations and warranties contained in Section 3.1(e)(ii) and
Section 3.1(t).
"Tax" or, collectively, "Taxes" shall mean any and all
federal, state, local and foreign taxes, assessments and other
governmental charges, duties, impositions and liabilities, including
taxes based upon or measured by gross receipts, income, profits, sales,
use and occupation, and value added, ad valorem, transfer, gains,
franchise, withholding, payroll, recapture, employment, excise,
unemployment insurance, social security, business license, occupation,
business organization, stamp, environmental and property taxes,
together with all interest, penalties and additions imposed with
respect to such amounts. For purposes of this Agreement, "Taxes" also
includes any obligations under any agreements or arrangements with any
other person with respect to Taxes of such other person (including
pursuant to Treas. Reg. Section 1.1502-6 or comparable provisions of
state, local or foreign tax law) and including any liability for taxes
of any predecessor entity.
"Tax Returns" shall mean any return, amended return or other
report required to be filed with respect to any Tax, including
declaration of estimated tax and information returns.
"Underlying Shares" shall have the meaning set forth in
Section 3.1(e)(ii).
"Warrant" shall have the meaning set forth in Section 2.1(a),
which shall be substantially in the form of Exhibit B hereto.
"Warrants" shall mean the Warrant together with the
Replacement Warrant.
ARTICLE II.
Authorization, Sale and Purchase of the Securities
Section 2.1 Authorization; Agreement to Sell and Purchase. (a)
Upon and subject to the terms and conditions set forth in this Agreement, the
Company has authorized the issuance
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and sale to Purchaser of (i) 5,339,500 shares of Series A Redeemable Convertible
Preferred Stock (the "Shares") which, in accordance with the terms and
conditions set forth in the Certificate of Designation, shall be convertible
into an equal number of shares of Common Stock (subject to adjustment under the
terms of the Certificate of Designations) and (ii) the warrant (the "Warrant")
to purchase shares of Common Stock. The Shares and the Warrants are collectively
referred to as the "Securities".
(b) Upon and subject to the terms and conditions of this
Agreement, and in reliance upon the representations and warranties hereinafter
set forth, the Company agrees to issue, sell and deliver to the Purchaser at the
Closing provided for in Section 2.2 hereof, and Purchaser agrees to purchase
from the Company, the Securities for an aggregate purchase price of $44,265,000.
Section 2.2 Closing. (a) Subject to the satisfaction or waiver
of the conditions set forth in this Agreement, the purchase and sale of the
Securities pursuant to Section 2.1 (the "Closing") shall take place at the
offices of Xxxxxxx Xxxxxxx & Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx,
within three Business Days after the conditions in Sections 6.1 and 6.2 are
satisfied or waived by the Purchaser or the Company, as the case may be (the
"Closing Date"), or at such other time and place as may be mutually agreed upon
by Purchaser and the Company.
(b) At the Closing: (i) the Company shall deliver to the
Purchaser, against payment of the purchase price therefor, stock and warrant
certificates for the Securities to be sold in accordance with the provisions of
Section 2.1, registered in the name of the Purchaser or its nominee (subject to
the provisions herein and in the Ancillary Documents) and in such denominations
as the Purchaser shall specify not less than two Business Days prior to the
Closing Date; (ii) the Purchaser, in full payment for the Securities, against
delivery of the stock and warrant certificates referred to above, shall deliver
to the Company on the Closing Date immediately available funds, by wire transfer
to such account as the Company shall specify at least three Business Days prior
to the Closing Date, in the amount of the purchase price to be paid hereunder by
the Purchaser pursuant to Section 2.1(b); and (iii) each party shall take or
cause to happen such other actions, and shall execute and deliver such other
instruments or documents, as shall be required under Article VI hereof.
Section 2.3 Use of Proceeds. The proceeds of the sale of the
Securities shall be used by the Company for general corporate purposes.
Section 2.4 Beneficial Ownership of Securities. The
Company hereby acknowledges and agrees that the Purchaser is
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Investment Agreement
entering into an arrangement with NBC (and/or one of its Subsidiaries) regarding
the joint voting and control by the Purchaser and NBC (and/or one or more of
their respective Subsidiaries) of the Warrants, the Preferred Stock and the
Common Stock issuable upon exercise or conversion thereof. Therefore, both the
Purchaser and NBC (and/or one of its Subsidiaries) will be deemed to
Beneficially Own such securities and the Company hereby acknowledges and agrees
to such Beneficial Ownership arising from its issuance of such securities. In
the event that NBC and the Purchaser are no longer Affiliates of each other, the
Company and Purchaser agree that the Warrant shall immediately terminate and the
Company shall issue a new warrant to NBC or its Subsidiary (the "Replacement
Warrant") having the same terms as the Warrant, except that the provision
described in this sentence will not be contained in the Replacement Warrant. NBC
or one of its Subsidiaries will at all times own at least 50% of the economic
interest in the Replacement Warrant. The Company hereby acknowledges and agrees
that NBC shall be a third party beneficiary hereunder, entitled to the benefits
of this Section 2.4 and to enforce its provisions.
ARTICLE III.
Representations and Warranties
Section 3.1 Representations and Warranties of the Company. The
Company represents and warrants to the Purchaser as of the date hereof and as of
the Closing Date as follows:
(a) Organization and Good Standing of the Company. The Company
is a corporation duly organized, validly existing and in good standing
under the laws of the State of Minnesota and has all requisite
corporate power and authority to own, operate and lease its properties
and to carry on its businesses as they are now being conducted. The
Company is duly licensed or qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each
other jurisdiction in which its ownership or leasing of properties, or
the conduct of its businesses requires such licensing or qualification
and good standing, except where the failure to be so licensed or
qualified or in good standing in any such jurisdiction would not have a
Material Adverse Effect.
(b) Organization and Good Standing of Company Subsidiaries.
The Company owns, directly or indirectly, all the shares of outstanding
capital stock of each Material Subsidiary, free and clear of all Liens,
except such Liens which do not have a Material Adverse Effect. There
are (i) no equity securities of any of the Material Subsidiaries that
are required to be issued by reason of any options, warrants, rights to
subscribe to, calls, preemptive rights or commitments of any character
whatsoever, (ii) outstanding
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no securities or rights convertible into or exchangeable for shares of
any capital stock of any Material Subsidiary and (iii) no contracts,
commitments, understandings or arrangements by which any Material
Subsidiary is bound to issue additional shares of its capital stock or
rights convertible into or exchangeable for its capital stock or
options, warrants or rights to purchase or acquire any additional
shares of its capital stock. Except as set forth in Schedule 3.1(b),
none of the Material Subsidiaries is subject to any obligation
(contingent or otherwise) to repurchase, redeem or otherwise acquire or
retire any of its capital stock. All of the shares of capital stock of
each of the Material Subsidiaries are duly and validly authorized and
issued, fully paid and nonassessable. Each Material Subsidiary is a
corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation, and has all requisite
corporate power and authority to own, operate and lease its properties
and to carry on its businesses as they are now being conducted, and is
duly licensed or qualified to do business and is in good standing in
each other jurisdiction in which its ownership or leasing of
properties, or the conduct of its businesses, requires such licensing
or qualification and good standing, except where the failure to be so
licensed or qualified or in good standing in any such jurisdiction
would not have a Material Adverse Effect.
(c) Authorization; No Conflicts. The Company has full
corporate power and authority to enter into this Agreement and the
Ancillary Documents and to perform its obligations hereunder and
thereunder. The execution, delivery and performance by the Company of
this Agreement and each Ancillary Document and the consummation of the
Company's obligations hereunder and thereunder have been duly
authorized by all necessary corporate action. This Agreement has been,
and on or prior to the Closing Date each Ancillary Document will be,
duly and validly executed and delivered by the Company. The Company's
Board of Directors has resolved to recommend that its shareholders vote
for the Shareholder Approval. This Agreement constitutes, and upon its
execution and delivery on or prior to the Closing Date, each Ancillary
Document will constitute, a valid and legally 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
creditors generally and by general equitable principles. Except as set
forth in Schedule 3.1(c), the execution, delivery and performance of
this Agreement and the Ancillary Documents by the Company, the
consummation of the transactions by the Company contemplated hereby and
thereby and the compliance by the Company with the provisions hereof
and thereof will not conflict with, violate or result in a breach of
any provision of, require a
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consent, approval or notice under, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of or accelerate the
performance required by, or result in a right of termination or
acceleration under, or result in the creation of any Lien upon any of
the properties or assets of the Company or Material Subsidiaries under,
(i) the articles of incorporation, by-laws or other governing
instrument of the Company or any Material Subsidiary, (ii) any
Contractual Obligation of the Company or any Material Subsidiary or
(iii) assuming that the filings, consents and approvals specified in
Schedule 3.1(d) have been obtained or made and any waiting period
applicable thereto has expired or been terminated, any Requirement of
Law applicable to the Company or any Material Subsidiary, except, in
the case of clauses (ii) and (iii) above, such conflicts, violations,
breaches, consents, approvals, notices, defaults, terminations,
accelerations or Liens which would not have a Material Adverse Effect.
(d) Consents. Except as set forth in Schedule 3.1(d), no
consent, approval, order or authorization of, registration, declaration
or filing with, or notice to, any Governmental Entity is required on
the part of the Company or any of its Subsidiaries in connection with
the execution and delivery by the Company of this Agreement and the
Ancillary Documents, the consummation by the Company of the
transactions contemplated hereby and thereby or the performance by the
Company of its obligations hereunder and thereunder, except for (i) the
filing of all notices, reports and other documents required by, and the
expiration of all waiting periods under, the HSR Act and the rules and
regulations promulgated by the FCC, (ii) such filings as may be
required under the blue sky laws of the various states, (iii) the
filing of the Certificate of Designation with the Secretary of State of
the State of Minnesota and (iv) such consents, approvals, orders,
authorizations, registrations, declarations, filings or notices of
which the failure to make or obtain would not have a Material Adverse
Effect.
(e) Capitalization. (i) As of the date hereof, the authorized
capital stock of the Company consists of 100,000,000 shares of
undesignated capital stock. As of the date hereof, 25,988,466 shares of
Common Stock are issued and outstanding, no shares of Common Stock are
held in treasury, and no shares of Common Stock are reserved for
issuance upon exercise of outstanding stock options except for
4,410,070 shares reserved in respect of Options. As of the date hereof,
no shares of Preferred Stock are designated, and no shares are issued
and outstanding. All of the issued and outstanding shares of the
Company's capital stock have been duly and validly authorized and
issued and are fully paid and nonassessable and not subject to
preemptive rights.
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(ii) Upon delivery of and payment for the Shares on
the Closing Date as provided herein, such Shares will be duly and
validly authorized and issued, fully paid and nonassessable and not
subject to preemptive rights, and the Purchaser will acquire good title
thereto, free and clear of all Liens (other than any Lien created by
the Purchaser). The shares of Common Stock into which the Shares are
convertible and the shares of Common Stock issuable upon exercise of
the Warrants (collectively, the "Underlying Shares") have been reserved
for issuance and, when issued upon conversion of the Shares or exercise
of the Warrants, will be duly and validly authorized and issued, fully
paid and nonassessable and not subject to preemptive rights, and the
owner of such shares will acquire good title thereto, free and clear of
all Liens (other than any Lien created by such owner).
(iii) Other than (A) the requirement to issue
warrants to purchase shares of Common Stock pursuant to the terms and
conditions of the Distribution Agreement, (B) the requirement to issue
the Shares pursuant to the terms and conditions of this Agreement, (C)
the requirement to issue the Underlying Shares, (D) the requirement to
issue shares of Common Stock pursuant to Options set forth on Schedule
3.1(e) and (E) as set forth in Schedule 3.1(e), (1) no equity
securities of the Company are or may become required to be issued by
reason of any options, warrants, rights to subscribe to, calls,
preemptive rights, or commitments of any character whatsoever, (2)
there are outstanding no securities or rights convertible into or
exchangeable for shares of any capital stock of the Company and (3)
there are no contracts, commitments, understandings or arrangements by
which the Company is or will be bound to issue additional shares of its
capital stock or securities or rights convertible into or exchangeable
for shares of its capital stock or options, warrants or rights to
purchase or acquire any additional shares of its capital stock. Except
as set forth in Schedule 3.1(e), the Company is not subject to any
obligation (contingent or otherwise) to repurchase, redeem or otherwise
acquire or retire any of its capital stock. As of the Closing Date and
after giving effect to the Closing (and to all transactions to be
effected simultaneously therewith), there shall be issued no class or
series of Preferred Stock other than the Shares.
(iv) Except as set forth on Schedule 3.1(e), the
Company is not a party to, and the Company has no knowledge of any,
voting trusts, proxies or any other agreements or understandings with
respect to the voting of any capital stock of the Company.
(v) Except as set forth in Schedule 3.1(e), the
Company has not granted or agreed to grant any rights
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relating to the registration of its securities under applicable federal
and state securities laws, including piggyback rights.
(vi) Except as set forth on Schedule 3.1(e), the
consummation of the transactions contemplated by this Agreement will
not trigger the anti-dilution provisions or other price adjustment
mechanisms of any outstanding subscriptions, options, warrants, calls,
contracts, preemptive rights, demands, commitments, conversion rights
or other agreements or arrangements of any character or nature
whatsoever under which the Company is or may be obligated to issue or
acquire its capital stock.
(f) SEC Filings, Financial Information, Liabilities. The
Company has filed and made available to the Purchaser a true and
complete copy of each report, schedule, registration statement and
definitive proxy statement required to be filed with the SEC since
January 1, 1996 (the "SEC Documents"). Except as set forth in Schedule
3.1(f), as of their respective dates, the SEC Documents, after giving
effect to any amendments and supplements thereto filed prior to the
date hereof, complied in all material respects with the requirements of
the Securities Act or the Exchange Act, as the case may be, applicable
to such SEC Documents. None of the SEC Documents when filed, after
giving effect to any amendments and supplements thereto filed prior to
the date hereof, contained any untrue statement of a material fact or
omitted to state any 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. The financial
statements of the Company included in the SEC Documents comply as to
form in all material respect with the applicable accounting
requirements and with the published rules and regulations of the SEC
with respect thereto, have been prepared in accordance with GAAP during
the period involved (except as may be indicated in the notes thereto
or, in the case of the unaudited statements, as permitted by Form 10-Q
of the SEC, or for normal year-end adjustments) and fairly present in
all material respects the consolidated financial position of the
Company and its consolidated Subsidiaries as at the dates thereof and
the consolidated results of their operations and cash flows for the
periods then ended. Except as set forth in Schedule 3.1(f) and except
as set forth in the SEC Documents (including any item accounted for in
the financial statements contained in the SEC Documents or set forth in
the notes thereto) as of January 31, 1998, neither the Company nor any
of its Subsidiaries had, and since such date neither the Company nor
any of its Subsidiaries has incurred, any claims, liabilities or
obligations of any nature (whether accrued, absolute, contingent or
otherwise) which, individually or in the aggregate, would have a
Material Adverse Effect(other
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Investment Agreement
than claims, liabilities or obligations contemplated by this Agreement
or the Ancillary Documents or expressly permitted to be incurred
pursuant to this Agreement or the Ancillary Documents). In addition,
since January 31, 1998, there has not been any declaration, setting
aside or payment of a dividend or other distribution with respect to
shares of capital stock of the Company or any material change in
accounting methods or practices by the Company or any of its
Subsidiaries.
(g) Compliance with Applicable Law. Each of the Company and
each Material Subsidiary is and has been at all times since January 1,
1996, in compliance with all applicable Requirements of Law, other than
where the failure to be in compliance would not have a Material Adverse
Effect.
(h) Permits. Each of the Company and each of the Material
Subsidiaries has all licenses, permits, orders, approvals,
registrations, authorizations and qualifications of or with all
Governmental Entities necessary to enable it to own its properties and
conduct its businesses as presently conducted (collectively, the
"Permits"), except to the extent that the failure to have any such
Permits would not have a Material Adverse Effect. Each of the Company
and each Material Subsidiary is in compliance with the Permits, except
to the extent that the failure to be in compliance with any such
Permits would not have a Material Adverse Effect.
(i) Legal Proceedings. Except as set forth in Schedule 3.1(i),
there are no legal or administrative proceedings or arbitrations, and
no claims, actions or governmental investigations of any nature pending
against the Company or any Company Subsidiary or to which the Company
or any Company Subsidiary or any of their properties or assets is
subject, and, to the knowledge of the Company, there has not been
threatened any such proceeding, arbitration, claim, action or
governmental investigation against the Company or any of the Company
Subsidiaries, in each case, which would, if adversely determined, have
a Material Adverse Effect. Except as set forth in Schedule 3.1(i),
neither the Company nor any Company Subsidiary has been permanently or
temporarily enjoined or barred by any order, judgment or decree of any
Governmental Entity from engaging in or continuing any conduct or
practice in connection with the businesses conducted by the Company and
the Company Subsidiaries.
(j) Absence of Certain Changes. Except as set forth in
Schedule 3.1(j) hereto, since January 31, 1998, the businesses of the
Company and the Material Subsidiaries have been operated in the usual
and ordinary course consistent with past practice (except as disclosed
in the SEC Documents
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Investment Agreement
filed prior to the date hereof and the negotiation, execution, delivery
and performance of this Agreement and the Ancillary Documents and the
transactions contemplated hereby and thereby) and there has been no
event, condition or change that has had a Material Adverse Effect.
(k) Employee Benefits. (i) Each "employee benefit plan"
(within the meaning of section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), and any other employee
plan, agreement or arrangement that is maintained or otherwise
contributed to by the Company or the Company Subsidiaries for the
benefit of their employees or with respect to which the Company or the
Company Subsidiaries has or could reasonably be expected to have any
liability (collectively, "Company Plans" as listed on Schedule 3.1(k)),
has been administered and is in compliance in all material respects
with the terms of such plan and all applicable laws, rules and
regulations. The Company is not party to any multiemployer plans.
(ii) Other than claims for benefits in the ordinary
course, there are no pending or, to the knowledge of the Company,
threatened, actions, claims or lawsuits against the Company, any of its
Subsidiaries or any Company Plan involving or arising out of any
Company Plan.
(iii) The Company and the Company Subsidiaries have
not incurred, and no event has occurred with respect to any Company
Plan which would result in, any material liability under ERISA or the
Code, including but not limited to liability resulting from a complete
or partial withdrawal from a "multiemployer plan" (as such term is
defined in section 3(37) of ERISA) or a termination of a Company Plan
which is covered by Title IV of ERISA, but which is not a multiemployer
plan.
(iv) Except as set forth in Schedule 3.1(k) hereto,
no Company Plan exists which could result in the payment to any
employee of the Company or any Company Subsidiary of any money or other
property or rights or accelerate or provide any other rights or
benefits to any such employee as a result of the transaction
contemplated by this Agreement or the Ancillary Documents, whether or
not such payment would constitute a parachute payment within the
meaning of Section 280G of the Code.
(v) The present value of all benefit obligations
under each Company Plan which is covered by Title IV of ERISA but which
is not a multiemployer plan (based upon those assumptions used to fund
such Plans) did not, as of the last annual valuation date prior to the
date on which this representation is made or deemed made, exceed the
value of the assets of such Plan allocable to such benefit obligations.
The Company and its Subsidiaries have no
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Investment Agreement
material liability with respect to "Expected Post-Retirement
Benefit Obligations" within the meaning of Statement of
Financial Accounting Standards No. 106 ("FAS 106").
(l) Labor Matters. Since January 1, 1996, (i) there has been
no attempt or plan to organize any employees of the Company or any
Material Subsidiary and (ii) no strike, work-stoppage or lockout or
labor dispute between the Company or any Material Subsidiary on the one
hand and any group of employees on the other hand. To the knowledge of
the Company, no such organization effort, strike, work stoppage,
lockout or labor dispute is threatened by any group of employees of the
Company or any Material Subsidiary or is otherwise anticipated to
occur. No employee of the Company or any Material Subsidiary is the
subject of any collective bargaining agreement.
(m) Material Agreements. The Company has made available to the
Purchaser a true and correct copy of all Material Agreements. Each
Material Agreement is valid, binding, in full force and effect and
enforceable by the Company or the relevant Company Subsidiary in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors generally and by general equitable
principles. Except as disclosed in Schedule 3.1(m), the Company and the
Company Subsidiaries have performed all material obligations required
to be performed by them to date under the Material Agreements and they
are not (with or without the lapse of time or the giving of notice, or
both) in breach or default in any material respect thereunder and, to
the knowledge of the Company, no other party to any of the Material
Agreements is (with or without the lapse of time or the giving of
notice, or both) in breach or default in any material respect
thereunder.
(n) Title to Properties; Insurance. The Company and the
Material Subsidiaries have good and valid title to their respective
material properties and assets (or valid title insurance enforceable
for the fair value of such properties or assets) and all of such
material properties and assets are free of all Liens other than
Permitted Liens. The Company and the Material Subsidiaries have at all
times maintained in full force and effect property damage, liability
and other insurance with reputable insurers at levels of coverage
reasonable and customary in the applicable industry. All of the
material tangible assets of the Company and the Material Subsidiaries
are in good operating condition and repair, ordinary wear and tear
excepted and taking into account the respective ages of such assets.
The condition of all material leased personal property of the Company
and the Material Subsidiaries is consistent in all material respects
with the condition
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Investment Agreement
required of such property by the terms of the applicable lease.
(o) Taxes. (i) The Company and each of its Subsidiaries have
(A) filed all federal, state, local and foreign Tax Returns and reports
required to be filed by them (taking into account all applicable
extensions) which are correct and complete in all material respects,
(B) paid or accrued all Taxes due and payable, and (C) paid all Taxes
for which a notice of assessment or collection has been received (other
than Taxes that are being contested in good faith by appropriate
proceedings and that have been reserved against in accordance with
GAAP), except in the case of clause (A), (B) or (C) for any such
filings, payments or accruals that are not reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect.
Except as set forth on Schedule 3.1(o), there are no audits known by
the Company to be pending or contemplated with respect to the Company's
Tax Returns. Neither the Internal Revenue Service (the "IRS") nor any
other taxing authority has asserted any claim for Taxes, or to the
knowledge of the Company, is threatening to assert any claims for
Taxes, which claims, individually or in the aggregate, are reasonably
likely to have a Material Adverse Effect. The Company and each of its
Subsidiaries have withheld or collected and paid over to the
appropriate governmental authorities (or are properly holding for such
payment) all Taxes required by law to be withheld or collected, except
for amounts that are not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect. Neither the Company nor
any of its Subsidiaries has made an election under Section 341(f) of
the Code. There are no liens for Taxes upon the assets of the Company
or any of its Subsidiaries (other than liens for Taxes that are not yet
due or that are being contested in good faith by appropriate
proceedings), except for liens that are not reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect. No
extension of a statute of limitations relating to any Taxes is in
effect with respect to the Company or any of its Subsidiaries.
(ii) Neither the Company nor any of its Subsidiaries has been
a member of an affiliated group of corporations filing a consolidated
federal income tax return (or a group of corporations filing a
consolidated, combined or unitary income tax return under comparable
provisions of state, local or foreign tax laws), other than a group the
common parent of which was the Company or any Subsidiary of the
Company.
(iii) Neither the Company nor any of its Subsidiaries has any
obligation under any agreement or arrangement with any other person
with respect to Taxes of such other person (including pursuant to
Treas. Reg. Section 1.1502-6 or
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Investment Agreement
comparable provisions of state, local or foreign tax law) and including
any liability for Taxes or any predecessor entity, except for
obligations that are not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect.
(iv) Neither the Company nor any of its Subsidiaries has been
a United States real property holding corporation within the meaning of
Section 897(c)(2) of the Code during the applicable period specified in
Section 897(c)(1)(A)(ii) of the Code.
(p) Environmental Matters. To the knowledge of the
Company,
(i) The Company and the Company Subsidiaries hold and
are in compliance with all Environmental Permits, and are in
compliance with all applicable Environmental Laws, except to
the extent any failure to hold any such Environmental Permit
or any such noncompliance would not result in a Material
Adverse Effect;
(ii) Neither the Company nor any Company Subsidiary
has received any Environmental Claim, nor to their knowledge
is any Environmental Claim threatened, which would result in a
Material Adverse Effect;
(iii) Hazardous Materials have not been generated,
transported, treated, stored, disposed of, released or
threatened to be released by the Company or any Company
Subsidiary at, on, from or under any property or facility
currently owned, operated or otherwise used by the Company or
any Company Subsidiary, in violation of any Environmental Law,
which would result in a Material Adverse Effect;
(iv) There are no past or present actions,
activities, events, conditions or circumstances, including
without limitation the release, threatened release, emission,
discharge, generation, treatment, storage or disposal of
Hazardous Materials by the Company or any Company Subsidiary,
that would give rise to a Material Adverse Effect;
(v) The Company and the Company Subsidiaries have not
assumed, contractually or by operation of law, any material
liabilities under any Environmental Laws;
(vi) The Company and the Company Subsidiaries have
not entered into, have not agreed to, and are not subject to
any judgment, decree, order or other similar requirement of
any governmental authority under any Environmental Laws,
including without limitation those relating to compliance with
Environmental Laws or to
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Investment Agreement
investigation, cleanup, remediation or removal of Hazardous
Substances; and
(vii) For purposes of this Agreement, the following
terms shall have the following meanings:
"Environmental Claim" means any written
notice, claim, demand, action, suit, complaint,
proceeding which has been served upon or delivered or
otherwise transmitted to the Company or any Company
Subsidiary, by any Person alleging material liability
or potential material liability (including without
limitation material liability or potential material
liability for investigatory costs, cleanup costs,
governmental response costs, natural resource
damages, property damage, personal injury, fines or
penalties) arising out of, relating to, based on or
resulting from (i) the presence, discharge, emission,
release or threatened release of any Hazardous
Materials at, on, from or under any property or
facility currently owned by the Company, (ii)
circumstances forming the basis of any violation or
alleged violation of any Environmental Law or
Environmental Permit, or (iii) otherwise relating to
liabilities under any Environmental Law.
"Environmental Permits" means all permits,
licenses, registrations and other governmental
authorizations required under Environmental Laws for
the Company and the Company Subsidiaries to
conduct their operations.
"Environmental Laws" means all applicable
statutes, rules, regulations, ordinances, orders, and
decrees of any Governmental Entity relating in any
manner to contamination, pollution or protection of
human health or the environment, including the
Comprehensive Environmental Response, Compensation
and Liability Act, the Solid Waste Disposal Act, the
Clean Air Act, the Clean Water Act, the Toxic
Substances Control Act, the Emergency Planning and
Community-Right-to-Know Act, the Safe Drinking Water
Act and similar state laws.
"Hazardous Materials" means all hazardous,
dangerous or toxic substances, wastes, materials or
chemicals, petroleum (including, but not limited to,
crude oil or any fraction thereof) and petroleum
products, pollutants, contaminants and all other
materials or substances regulated pursuant to any
Environmental Law.
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Investment Agreement
(q) Intellectual Property. (i) The Company either owns,
licenses or otherwise has rights to all Intellectual Property used by
or necessary to the Company in the conduct of its business as now
conducted. No proceedings have been instituted or are pending or to the
Company's knowledge threatened that challenge the validity of the
ownership or use by the Company of such Intellectual Property, except
for such proceedings which would not have a Material Adverse Effect.
The Company knows of no infringing use or infringement of any of such
Intellectual Property by any other Person. The Company has taken such
security measures as it deems reasonably appropriate to protect the
secrecy, confidentiality and value of its trade secrets.
(r) Absence of Certain Business Practices. Neither the Company
nor any officer, employee or agent thereof, nor any other Person acting
on behalf of the Company, has, directly or indirectly, within the past
five years given or agreed to give any gift or similar benefit to any
customer, supplier, governmental employee or other Person or entity who
is or may be in a position to help or hinder the Company (or assist the
Company in connection with any actual or proposed transaction) which
(x) subjects any party or any of their respective Subsidiaries, to any
damage or penalty in any civil, criminal or governmental litigation or
proceeding which would have a Material Adverse Effect, (y) if not given
in the past, could have had a Material Adverse Effect or (z) if not
continued in the future, could have a Material Adverse Effect.
(s) Proxy Statement. The Proxy Statement shall not (other than
information supplied in writing by the Purchaser and its Affiliates for
inclusion in the Proxy Statement), on the date the Proxy Statement is
first mailed to shareholders of the Company and at the time of the
Shareholders Vote, contain any statement which, at such time and light
of the circumstances under which it shall be made, is false or
misleading with respect to any material fact, omit to state any
material fact necessary in order to make the statements made in the
Proxy Statement not false or misleading, or omit to state any material
fact necessary to correct any statement in any earlier communication
with respect to the solicitation of proxies for the Shareholders'
Meeting which has become false or misleading. If at any time prior to
the Shareholders Vote any event relating to the Company or any of its
Affiliates, officers or directors should be discovered by the Company
which should be set forth in the supplement to the Proxy Statement, the
Company shall promptly inform the Purchaser.
(t) Antitakeover Statutes. The Board of Directors of the
Company has taken all actions necessary under the MBCA, including
approving the transactions contemplated by the
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Investment Agreement
Agreement and each of the Ancillary Documents to which it is a party,
to ensure that Section 302A.673 of the MBCA applicable to a "business
combination" does not, and will not, apply to the transactions
contemplated hereunder and thereunder or any "business combination"
with any Restricted Party occurring after the date hereof. The
restrictions contained in Section 302A.671 of the MBCA applicable to
"control share acquisitions" will not apply to the authorization,
execution, delivery and performance of this Agreement or any of the
Ancillary Documents by the Company or to any shares of Common Stock or
Preferred Stock acquired at any time by the Purchaser pursuant to
Section 2.1 of this Agreement, the Warrant or the warrants to be issued
to NBC pursuant to the Distribution Agreement, or upon conversion of
the Preferred Stock (as applicable), provided that the Company makes no
representation or warranty regarding Section 2.4 of this Agreement or
to any assignment of the Securities or the warrants to be issued to NBC
pursuant to the Distribution Agreement or to any securities issuable
upon conversion or exercise of the Securities or the warrants to be
issued to NBC pursuant to the Distribution Agreement. No other "fair
price," "moratorium," or other similar anti-takeover statute or
regulation is applicable to the Company or (by reason of the Company's
participation therein) the transactions contemplated by this Agreement
or the Ancillary Documents.
(u) FCC Licenses and Applications. Set forth on Schedule
3.1(u) is a list of (i) all licenses relating to television stations
that are owned or operated by the Company or its Subsidiaries ("FCC
Licenses") and (ii) all applications for FCC Licenses or for television
station construction permits that are pending before the FCC as of the
date hereof. The FCC Licenses are the only licenses relating to
television stations that are required by applicable FCC law to be held
by the Company and its Subsidiaries in order to conduct the business of
the Company and its Subsidiaries as it is currently conducted.
(v) Year 2000 Compliance. The Company has adopted and
implemented a commercially reasonable plan to provide (x) that the
change of the year from 1999 to the year 2000 will not materially and
adversely affect the information and business systems of the Company or
its Subsidiaries and (y) that the impacts of such change on the vendors
and customers of the Company and its Subsidiaries will not have a
Material Adverse Effect. In the Company's reasonable best estimate, no
expenditures materially in excess of currently budgeted items
previously disclosed to the Purchaser will be required in order to
cause the information and business systems of the Company and its
Subsidiaries to operate properly following the change of the year 1999
to the year 2000. The Company reasonably expects that it will resolve
any material
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Investment Agreement
issues related to such change of the year in accordance with the
timetable set forth in such plan (and in any event on a timely basis in
order to be resolved before the year 2000). Between the date of this
Agreement and the Shareholders Meeting, the Company shall continue to
use commercially reasonable efforts to implement such plan.
(w) Subscribers. The Company has an Existing Subscriber Base
of at least 14.4 million FTE Subscribers represented by existing
carriage agreements, each of which is in full force and effect and is
the legal, valid and binding obligation of the Company, and to the
knowledge of the Company, the other parties thereto. The terms
"Existing Subscriber Base", "FTE" and "Subscriber" shall have the
meanings set forth in the Distribution Agreement.
(x) Brokers and Finders. Except as set forth in Schedule
3.1(x), neither the Company nor any Company Subsidiary has utilized any
broker, finder, placement agent or financial advisor or incurred any
liability for any fees or commissions in connection with any of the
transactions contemplated hereby or by the Ancillary Documents. The
Company is solely responsible for all fees or other amounts that may be
payable to each Person listed on Schedule 3.1(x).
Section 3.2 Representations and Warranties of the Purchaser.
The Purchaser represents and warrants to, and agrees with, the Company as
follows:
(a) Organization and Good Standing. Each of the Purchaser and
NBC is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the requisite
power and authority to enter into this Agreement and the Ancillary
Documents to which it is a party and to carry out its obligations
hereunder and thereunder. Each of the Purchaser and NBC is duly
licensed or qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of the State of New
York. In addition, NBC is duly licensed or qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it conducts
business, except where the failure to be so licensed or qualified or in
good standing in any such jurisdiction would not have a Material
Adverse Effect.
(b) Authorization; No Conflicts. The execution and delivery of
this Agreement and the Ancillary Documents to which the Purchaser or
NBC is a party and the consummation of the transactions contemplated
hereby and thereby have been authorized by all necessary corporate
action on behalf of the Purchaser and NBC, as applicable. This
Agreement has
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Investment Agreement
been, and on or prior to the Closing Date each of the Ancillary
Documents to which the Purchaser and NBC is a party will be, duly and
validly executed and delivered on behalf of the Purchaser or NBC, as
applicable, and this Agreement is, and upon their execution and
delivery on or prior to the Closing Date each of the Ancillary
Documents to which the Purchaser or NBC is a party will be, a valid and
binding obligation of the Purchaser or NBC, as applicable, enforceable
against it in accordance with its terms. The execution, delivery and
performance of this Agreement and the Ancillary Documents to which the
Purchaser or NBC is a party, the consummation by the Purchaser and NBC,
as applicable, of the transactions contemplated hereby and thereby and
the compliance by Purchaser or NBC, as applicable, with the provisions
hereof and thereof will not conflict with, violate or result in a
breach of any provision of, require a consent, approval or notice
under, or constitute a default (or an event, which, with notice or
lapse of time or both, would constitute a default) under, (i) any
organizational document of the Purchaser or NBC, (ii) any Contractual
Obligation of the Purchaser or NBC, or (iii) assuming that the
clearances, filings, consents and approvals specified in Schedule
3.2(c) have been obtained or made and any waiting period applicable
thereto has expired or been terminated, any Requirement of Law
applicable to the Purchaser or NBC, except, in the case of clauses (ii)
and (iii) above, such conflicts, violations, breaches, consents,
approvals, notices, defaults, terminations, accelerations or Liens
which would not have a Material Adverse Effect.
(c) Consents and Approvals. Except as set forth in Schedule
3.2(c), no consent, approval, order or authorization of, registration,
declaration or filing with, or notice to, any Governmental Entity is
required on the part of Purchaser or NBC in connection with the
execution and delivery by Purchaser and NBC, as applicable, of this
Agreement and the Ancillary Documents to which the Purchaser or NBC is
a party, the consummation by the Purchaser and NBC, as applicable, of
the transactions contemplated hereby and thereby or the performance by
the Purchaser and NBC, as applicable, of its obligations hereunder and
thereunder, except for (i) the filing of all notices, reports and other
documents required by, and the expiration of all waiting periods under,
the HSR Act and the rules and regulations promulgated by the FCC, and
(ii) such consents, approvals, orders, authorizations, registrations,
declarations, filings or notices of which the failure to make or obtain
would not have a Material Adverse Effect. Each of Purchaser and NBC is
fully qualified under the FCC's rules, regulations, and policies
(including, but not limited to, its television network and its multiple
ownership rules) to consummate the transactions contemplated by this
Agreement and the Ancillary Documents, and such consummation shall not
cause
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Investment Agreement
the Company to be deemed to be an attributable owner of, or vertically
integrated with, any cable system for purposes of any of the provisions
of 47 C.F.R. part 76, or to be deemed an "affiliate" of any cable
system for purposes of the commercial leased access rules as
established in 47 C.F.R. Section 76.970(b).
(d) Compliance with Applicable Law. Each of the Purchaser and
NBC is and has been at all times since January 1, 1996, in compliance
with all applicable Requirements of Law, other than where the failure
to be in compliance would not have a Material Adverse Effect.
(e) Proxy Statement. The information supplied in writing by
the Purchaser or NBC for inclusion in the Proxy Statement shall not, on
the date the Proxy Statement is first mailed to shareholders of the
Company and at the time of the Shareholders Vote, contain any statement
which, at such time and in light of the circumstances under which it
shall be made, is false or misleading with respect to any material
fact, omit to state any material fact necessary in order to make such
statements made in the Proxy Statement not false or misleading, or omit
to state any material fact necessary to correct any statement in any
earlier communication with respect to the solicitation of proxies for
the Shareholders' Meeting which has become false or misleading. If at
any time prior to the Shareholders Vote any event relating to the
Purchaser or NBC or any of their respective Affiliates should be
discovered by the Purchaser or NBC which should be set forth in the
supplement to the Proxy Statement, the Purchaser or NBC, as applicable,
shall promptly inform the Company.
(f) Securities Act. The Purchaser (i) is acquiring the
Securities solely for the purpose of investment and not with a view to,
or for resale in connection with, any distribution thereof in violation
of the Securities Act; (ii) has had the opportunity to ask questions of
the officers and directors of, and has had access to information
concerning, the Company and the Securities; (iii) is an "accredited
investor" as defined in Rule 501(a) under the Securities Act; (iv) has
such knowledge, sophistication and experience in business and financial
matters so as to be capable of evaluating the merits and risks of the
investment in the Company and the Securities; (v) has so evaluated the
merits and risks of such investment; (vi) is able to bear the economic
risk of such investment; and (vii) is able to afford a complete loss of
such investment.
(g) Brokers and Finders. The Purchaser has not utilized any
broker, finder, placement agent or financial advisor or incurred any
liability for any fees or
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Investment Agreement
commissions in connection with any of the transactions contemplated
hereby or by the Ancillary Documents.
ARTICLE IV.
Conduct of Business
Section 4.1 Conduct of the Business Pending the Closing. The
Company agrees that except with the prior written consent of the Purchaser and
except as may be contemplated by this Agreement or the Ancillary Documents, and
except as set forth on Schedule 4.1, prior to the Shareholders Vote, it and its
Subsidiaries shall operate their businesses only in the usual, regular and
ordinary manner, on a basis consistent with past practice and, to the extent
consistent with such operation, use its reasonable efforts to preserve its
present business organization intact, keep available the services of its present
employees, preserve its present business relationships and maintain all rights,
privileges and franchises necessary or desirable in the normal conduct of the
Company's businesses. Without limitation of the foregoing, from the date hereof
until the Shareholders Vote, except as contemplated by this Agreement or the
Ancillary Documents, and except as set forth in Schedule 4.1 hereto, the Company
shall not:
(a) amend the articles of incorporation or bylaws of
the Company or any Material Subsidiary;
(b) issue, purchase or redeem, or authorize or propose the
issuance, purchase or redemption of, or declare or pay any dividend
with respect to, any shares of capital stock of the Company or any
class of securities convertible into, or rights, warrants or options to
acquire, any such shares or other convertible securities other than (i)
pursuant to Options outstanding on the date hereof and (ii) Options to
be issued to officers, directors, employees and/or consultants
exercisable in an aggregate amount not exceed the number of authorized
Shares under the Company's 1990 Stock Option Plan and the Company's
1994 Executive Stock Option Plan;
(c) except as set forth on Schedule 4.1, take any action that
would be prohibited by Section 3.4(a) of the Shareholder Agreement if
such Section were in effect and the Closing had occurred;
(d) other than in the ordinary course consistent with past
practices, form any joint venture, acquire or dispose of any business
or of any assets or acquire or dispose of any minority investment in
any Person;
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Investment Agreement
(e) enter into any transaction involving the merger,
consolidation or sale of all or substantially all of the assets of the
Company or any Material Subsidiary other than any such merger,
consolidation or sale solely involving the Company and its
Subsidiaries;
(f) file any voluntary petition for bankruptcy or receivership
or fail to oppose any other person's petition for bankruptcy or action
to appoint a receiver of the Company or any Material Subsidiary; or
(g) authorize any of, or commit or agree to take any of, the
foregoing actions.
Section 4.2 Access to Information. Subject to applicable laws
and existing confidentiality agreements, the Company and its Subsidiaries shall
afford the officers, employees, auditors and other agents of the Purchaser and
NBC reasonable access during normal business hours to their officers, employees,
properties, offices, plants and other facilities, and contracts, commitments,
books and records relating thereto, and shall furnish such Persons all such
documents and such financial, operating and other data and information regarding
such businesses and Persons that are in the possession of such Person as the
Purchaser or NBC, as applicable, through their respective officers, employees or
agents may from time to time reasonably request. All such information will be
provided subject to the terms of the confidentiality agreements dated June 24,
1998 between the Company and the Purchaser and dated January 28, 1999 (as
amended February 28, 1999) between the Company and NBC.
Section 4.3 No Solicitation. (a) Prior to the Shareholders
Vote, the Company shall not, nor shall it permit any of its Subsidiaries to, nor
shall it authorize or permit any officer, director or employee of, or any
investment banker, attorney or other advisor or representative of, the Company
or any of its Subsidiaries to, directly or indirectly, (i) take any action to
solicit, initiate, encourage or knowingly facilitate any Material Transaction
Proposal or the submission of a Material Transaction Proposal or (ii) enter into
or participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, a Material Transaction Proposal;
provided that, in response to an unsolicited bona fide Takeover Proposal, the
Company may, to the extent that the Board of Directors of the Company determines
in good faith based on the advice of outside legal counsel that such action is
required to comply with their fiduciary duties under applicable law, (A) furnish
information with respect to the Company and its Subsidiaries to the Person
making such Takeover Proposal and its representatives and discuss such
information with such Person and its representatives and (B) participate in
negotiations regarding such Takeover Proposal. The Company will promptly notify
the Purchaser of receipt of any request for information or any
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Investment Agreement
Material Transaction Proposal, the material terms and conditions of such request
or Material Transaction Proposal and the identity of the Person making any such
request or Material Transaction Proposal, and will keep the Purchaser fully
informed on a current basis of the status and details of any such request or
Material Transaction Proposal. The Company will immediately cease and cause to
be terminated any existing activities, discussions and negotiations conducted
heretofore with respect to any Material Transaction Proposal.
(b) Prior to the Shareholders Vote, the Board of Directors of
the Company shall not (i) approve or recommend or propose publicly to approve or
recommend any Material Transaction Proposal, (ii) cause or agree to cause the
Company or any of its Subsidiaries to enter into any agreement (including,
without limitation, any letter of intent or agreement in principle) related to a
Material Transaction Proposal or (iii) withdraw or modify, in a manner adverse
to the Purchaser, the approval or recommendation of the Board of Directors of
the Company for the transactions contemplated by this Agreement. Notwithstanding
the foregoing, if the Board of Directors of the Company receives a Takeover
Proposal without having violated Section 4.3(a) hereof, the Board of Directors
of the Company may, to the extent it determines in good faith based on the
advice of outside legal counsel that such action is required to comply with
their fiduciary duties under applicable law, take any action specified in
clauses (i) or (ii) above with respect to such Takeover Proposal, but in each
case only at a time that is at least five (5) business days after receipt by the
Purchaser of written notice from the Company advising the Purchaser that the
Board of Directors of the Company has resolved to take such action.
(c) As used herein, "Material Transaction Proposal" means any
inquiry, proposal or offer from any Person relating to (i) the direct or
indirect acquisition or purchase of 5% or more of the assets (based on the fair
market value thereof) of the Company and its Subsidiaries, taken as a whole, or
of 5% or more of any class of equity securities of the Company or any of its
Subsidiaries or any tender offer or exchange offer (including by the Company or
its Subsidiaries) that if consummated would result in any person beneficially
owning 5% or more of any class of equity securities of the Company or any of its
Subsidiaries, or (ii) any merger, consolidation, business combination, sale of
all or substantially all assets, recapitalization, liquidation, dissolution or
similar transaction involving the Company or any of its Subsidiaries other than
the transactions contemplated by this Agreement. As used herein, "Takeover
Proposal" means any inquiry, proposal or offer from any Person relating to (A)
any of the matters set forth in clause (i) of the definition of Material
Transaction Proposal but replacing "5%" with "50%" each place "5%" is used in
such definition, (B) a sale of all or substantially all of the assets of the
Company and its Subsidiaries or (C) a merger or consolidation of the Company as
a result of which the
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Investment Agreement
shareholders of the Company immediately prior to such transaction would not
beneficially own immediately after such transaction 50% or more of the resulting
or surviving entity (or the parent thereof).
ARTICLE V.
Other Agreements
Section 5.1 Preparation of Proxy Statement. (a) As soon as
practicable after the execution of this Agreement, the Company shall prepare and
cause to be filed with the SEC preliminary proxy materials (the "Proxy
Statement") for the solicitation of approval of the shareholders of the Company
of (i) the issuance by the Company of shares of Common Stock pursuant to, and
purchase of shares of Common Stock by the exercise of, the Warrants, (ii) such
other transactions contemplated hereby and pursuant to the Ancillary Documents
as may reasonably require approval of the Company's shareholders (together with
clause (i), the "Shareholder Approval"), (iii) the election of directors and
(iv) such other matters as the Company and the Purchaser may reasonably agree.
Subject to compliance by the Purchaser of its covenants in this Section 5.1, the
Company shall cause the Proxy Statement related thereto to materially comply
with applicable law and the rules and regulations promulgated by the SEC, to
respond promptly to any comments of the SEC or its staff and the Company shall
use reasonable best efforts to cause the Proxy Statement to be mailed to the
Company's shareholders as promptly as practicable. Each of the parties hereto
shall promptly furnish to the other party all information concerning itself, its
shareholders and its Affiliates that may be required or reasonably requested in
connection with any action contemplated by this Section 5.1. If any event
relating to any party occurs, or if any party becomes aware of any information,
that should be disclosed in an amendment or supplement to the Proxy Statement,
then such party shall inform the other thereof and shall cooperate with each
other in filing such amendment or supplement with the SEC and, if appropriate,
in mailing such amendment or supplement to the shareholders of the Company. The
Proxy Statement shall include the recommendations of the Board of Directors of
the Company in favor of the exercise of the Warrant and the transactions
contemplated hereby and thereby.
(b) Each of the Company and the Purchaser agrees with respect
to the information to be supplied by such party that: (i) none of the
information to be supplied by such party or its Affiliates for inclusion in the
Proxy Statement will, at the time the Proxy Statement is mailed to the
shareholders of the Company, or as of the Shareholders Vote, contain any untrue
statement of a material fact or omit to state any material fact required to be
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Investment Agreement
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading; and (ii) as to
matters respecting such party, the Proxy Statement will comply as to form in all
material respects with the provisions of the Exchange Act, and the rules and
regulations promulgated by the SEC thereunder.
Section 5.2 Shareholders Meeting. The Company shall promptly
after the date hereof take all action necessary in accordance with applicable
law and its articles of incorporation and bylaws to hold and convene a meeting
of the Company's shareholders (the "Shareholders Meeting") to provide for the
Shareholders Vote with respect to the matters subject to Shareholder Approval
and with respect to the other matters to be voted upon pursuant to Section
5.1(a). Except as required by the SEC or applicable court order, the Company
shall not postpone or adjourn (other than for the absence of a quorum) the
Shareholders Meeting without the consent of the Purchaser. The Company shall
take all other action necessary or advisable to secure the Shareholder Approval.
Notwithstanding anything to the contrary contained herein, the Shareholders
Meeting, the Shareholders Vote and the Shareholder Approval shall not be a
condition to the consummation of the Closing or the sale and purchase of the
Securities.
Section 5.3 Public Statements. Before any party or any
Affiliate of such party shall release any information concerning this Agreement
or the Ancillary Documents or the matters contemplated hereby or thereby which
is intended for or may result in public dissemination thereof, such party shall
cooperate with the other parties, shall furnish drafts of all documents or
proposed oral statements to the other parties, provide the other parties the
opportunity to review and comment upon any such documents or statements and
shall not release or permit release of any such information without the consent
of the other parties, except to the extent required by applicable law or the
rules of any securities exchange or automated quotation system on which its
securities or those of its Affiliate are traded.
Section 5.4 Reasonable Commercial Efforts. Subject to the
terms and conditions provided in this Agreement, each party shall use reasonable
commercial efforts to take promptly, or cause to be taken, all actions, and to
do promptly, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated hereby, to obtain all necessary waivers, consents and
approvals and to effect all necessary registrations and filings, including
without limitation the filings and consents set forth on Schedule 5.4 hereto
(the "Required Consents") and to remove any injunctions or other impediments or
delays, legal or otherwise, in order to consummate and make effective the
transactions contemplated by this
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Investment Agreement
Agreement for the purpose of securing to the parties hereto the benefits
contemplated by this Agreement; provided that notwithstanding anything to the
contrary in this Agreement, no party nor any of their Affiliates shall be
required to make any disposition, including, without limitation, any disposition
of, or any agreement to hold separate, any Subsidiary, asset or business, and no
party hereto nor any of their Affiliates shall be required to make any payment
of money nor shall any party or its Affiliates be required to comply with any
condition or undertaking or take any action which, individually or in the
aggregate, would materially adversely affect the economic benefits to such party
of the transactions contemplated hereby and the Ancillary Documents, taken as a
whole or materially adversely affect any other business of such party or its
Affiliates.
Section 5.5 HSR Act. The Company and the Purchaser will each
make as promptly as practicable all filings it is required to make under the HSR
Act with regard to the transactions which are the subject of this Agreement and
each of them will take all reasonable steps within its control (including
providing information to the Federal Trade Commission and the Department of
Justice) to cause the waiting periods required by the HSR Act to be terminated
or to expire as promptly as practicable. The Company and the Purchaser will each
provide information and cooperate in all other respects to assist the other of
them in making its filings under the HSR Act.
Section 5.6 Reservation of Shares. The Company agrees to keep
reserved for issuance at all time prior to conversion of the Shares and the
exercise of the Warrants the aggregate number of Underlying Shares issuable upon
conversion of the Shares and the exercise of the Warrants.
Section 5.7 Notification of Certain Matters. Each party to
this Agreement shall give prompt notice to each other party of the occurrence or
non-occurrence of any event, the occurrence or non-occurrence of which is likely
to cause any condition of any party contained in Article VI of this Agreement to
not be satisfied at or prior to the Shareholders Vote; provided, however, that
the delivery of any notice pursuant to this Section 5.7 shall not limit or
otherwise affect any remedies available to the party receiving such notice. No
disclosure by any party pursuant to this Section 5.7, however, shall be deemed
to amend or supplement the disclosures set forth on the Schedules to Article III
or prevent or cure any misrepresentations, breach of warranty or breach of
covenant.
Section 5.8 Further Assurances. Each party shall execute and
deliver such additional instruments and other documents and shall take such
further actions as may be necessary or appropriate to effectuate, carry out and
comply with all of the terms of this Agreement and the transactions contemplated
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Investment Agreement
hereby, including without limitation making application as soon as practicable
for all consents and approvals required in connection with the transactions
contemplated hereby and diligently pursuing the receipt of such consents and
approvals in good faith.
ARTICLE VI.
Conditions Precedent
Section 6.1 Conditions of the Purchaser. The obligation of the
Purchaser to purchase the Securities at the Closing is subject to the
satisfaction or waiver of each of the following conditions precedent at or prior
to the Closing:
(a) Representations and Warranties; Covenants. The
representations and warranties of the Company contained in this
Agreement and the Ancillary Documents shall be true and correct in all
material respects on and as of the date of this Agreement or the date
of such Ancillary Documents, as the case may be, and on and as of the
Closing Date, with the same effect as though made on and as of such
date, except (i) to the extent any such representation and warranty is
made as of a specified date, in which case such representation and
warranty shall be true and correct in all material respects on and as
of such specified date and (ii) where the inaccuracy of such
representation and warranty constitutes an Excluded Breach, and the
Company shall have performed in all material respects all obligations,
agreements, undertakings, covenants and conditions of this Agreement
and the Ancillary Documents required to be performed by it at or prior
to the Closing Date.
(b) No Litigation. There shall not be in effect any order,
decree or injunction of a court or agency of competent jurisdiction
which enjoins or prohibits consummation of the transactions
contemplated hereby or in the Ancillary Documents. No action, suit,
investigation, arbitration, or administrative or governmental
proceeding by any Governmental Entity shall be pending, seeking to
restrain, prohibit or invalidate the transactions contemplated by this
Agreement, or any of the Ancillary Documents.
(c) Regulatory Approvals. All permits, consents,
authorizations, orders and approvals of, and filings and registrations
required under any Federal or state law, rule or regulation for or in
connection with the execution and delivery of this Agreement and the
Ancillary Documents and the consummation by the parties hereto of the
transactions contemplated hereby and thereby shall have been obtained
or made and all statutory waiting periods thereunder in respect
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Investment Agreement
thereof shall have expired, except where the failure to obtain any
permit, consent, authorization, order or approval, or make any filing
or registration would not have a Material Adverse Effect.
(d) Company Certificate. The Company shall have delivered to
the Purchaser a certificate, dated the Closing Date, signed by its
chief executive officer or its chief financial officer, in form and
substance reasonably satisfactory to the Purchaser, to the effect that
the conditions set forth in Sections 6.1(a) and (b) have been
satisfied.
(e) Shareholder Agreement. The Shareholder Agreement shall
have been duly executed and delivered by the Company.
(f) Registration Rights Agreement. The Registration Rights
Agreement shall have been duly executed and delivered by the Company.
(g) Certificate of Designation. The Certificate of Designation
shall have been duly filed with the Secretary of State of the State of
Minnesota.
(h) Distribution Agreement. The Distribution Agreement shall
be in full force and effect and the Warrants to purchase 1,450,000
shares of Common Stock pursuant thereto shall have been issued to NBC.
(i) Legal Opinion. The Purchaser shall have received from
counsel for the Company, an opinion in form and substance reasonably
acceptable to the Purchaser, addressed to the Purchaser.
Section 6.2 Conditions of the Company. The obligation of the
Company to sell the Securities at the Closing is subject to satisfaction or
waiver of each of the following conditions precedent at or prior to the Closing:
(a) Representations and Warranties; Covenants. The
representations and warranties of the Purchaser contained in this
Agreement and the Ancillary Documents shall be true and correct in all
material respects on and as of the date of this Agreement and on and as
of the Closing Date with the same effect as though made on and as of
such date, except to the extent any such representation and warranty is
made as of a specified date, in which case such representation and
warranty shall be true and correct in all material respects on and as
of such specified date, and the Purchaser shall have performed in all
material respects all obligations, agreements, undertakings, covenants
and conditions of this Agreement and the Ancillary Documents required
to be performed by it at or prior to the Closing.
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Investment Agreement
(b) No Litigation. There shall not be in effect any order,
decree or injunction of a court or agency of competent jurisdiction
which enjoins or prohibits consummation of the transactions
contemplated hereby or in the Ancillary Documents. No action, suit,
investigation, arbitration, or administrative or governmental
proceeding by any Governmental Entity shall be pending, seeking to
restrain, prohibit or invalidate the transactions contemplated by this
Agreement, or any of the Ancillary Documents.
(c) Regulatory Consents. All permits, consents,
authorizations, orders and approvals of, and filings and registrations
required under Federal or state law, rule or regulation for or in
connection with the execution and delivery of this Agreement and the
Ancillary Documents and the consummation by the parties hereto of the
transactions contemplated hereby and thereby shall have been obtained
or made and all statutory waiting periods thereunder in respect thereof
shall have expired, except where the failure to obtain any permit,
consent, authorization, order or approval, or make any filing or
registration would not have a Material Adverse Effect.
(d) The Purchaser's Certificate. The Purchaser shall have
delivered to the Company a certificate, dated the Closing Date, in form
and substance reasonably satisfactory to the Company to the effect that
the foregoing conditions set forth in Sections 6.2(a) and (b) have been
satisfied.
(e) Shareholder Agreement. The Shareholder Agreement shall
have been duly executed and delivered by the Purchaser.
(f) Distribution Agreement. The Distribution Agreement shall
be in full force and effect.
(g) Legal Opinion. The Company shall have received from
counsel for the Purchaser, an opinion in form and substance reasonably
acceptable to the Company, addressed to the Company.
(h) Operating Agreement. The Operating Agreement shall be in
full force and effect.
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Investment Agreement
ARTICLE VII.
Term
Section 7.1 Termination. This Agreement may be
terminated on or any time prior to the Closing:
(a) by the mutual written consent of the Purchaser and the
Company; or
(b) by either the Company or Purchaser if the Closing shall
have not have occurred on or prior to August 31, 1999 (the "Termination
Date"), unless the failure of such occurrence shall be due to the
failure of the party seeking to terminate this Agreement to perform or
observe its agreements set forth herein required to be performed or
observed by such party on or before the Closing; or
(c) by the Company or the Purchaser pursuant to notice if any
Governmental Entity of competent jurisdiction shall have denied any
approval under any of the laws, rules or regulations described in
Section 3.1(d) or 3.2(c) necessary for the consummation of the
transactions contemplated hereby by a final and unappealable order.
Section 7.2 Effect of Termination. In the event of the
termination of this Agreement as provided in Section 7.1, this Agreement shall
forthwith become void, except for the obligations set forth in this Section and
in Sections 8.6 and 8.7 and there shall be no liability or obligation on the
part of the parties hereto except as otherwise provided in this Agreement. The
termination of this Agreement under Section 7.1(b) shall not relieve any party
of any liability for breach of this Agreement prior to the date of termination.
ARTICLE VIII.
Miscellaneous
Section 8.1 Survival of Representations and Warranties. All
representations and warranties made herein or in any certificates delivered in
connection with the Closing shall survive for a period of eighteen months after
the Closing, provided, however, that (a) the Surviving Representations and
Warranties shall not terminate pursuant to this Section 8.1 and shall continue
to survive indefinitely and (b) the representations and warranties in Section
3.1(o) shall survive until 30 days after the expiration of the applicable
statute of limitations relating to the taxes or other matters covered.
Section 8.2 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed
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Investment Agreement
to have been duly given, if delivered personally, by telecopier or sent by
overnight courier as follows:
(a) If to the Purchaser, to:
G.E. Capital Equity Investments, Inc.
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxx Xxxxxx
Fax: (000) 000-0000
with copies to:
National Broadcasting Company, Inc.
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
Fax: (000) 000-0000
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxxxx
Fax: (000) 000-0000
(b) If to the Company, to:
ValueVision International, Inc.
0000 Xxxxx Xxx Xxxx
Xxxx Xxxxxxx, Xxxxxxxxx 00000-0000
Attention: General Counsel
Fax: (000) 000-0000
With a copy to:
Xxxxxx & Xxxxxxx
000 Xxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx
Fax: (000) 000-0000
or to such other address or addresses as shall be designated in writing. All
notices shall be effective when received.
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Investment Agreement
Section 8.3 Entire Agreement; Amendment. This Agreement, the
Ancillary Documents and the documents described herein and therein or attached
or delivered pursuant hereto or thereto set forth the entire agreement between
the parties hereto with respect to the transactions contemplated by this
Agreement. Any provision of this Agreement may be amended or modified in whole
or in part at any time by an agreement in writing between the parties hereto
executed in the same manner as this Agreement. No failure on the part of any
party to exercise, and no delay in exercising, any right shall operate as a
waiver thereof nor shall any single or partial exercise by any party of any
right preclude any other or future exercise thereof or the exercise of any other
right.
Section 8.4 Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to constitute an
original, but all of which together shall constitute one and the same document.
SECTION 8.5 GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL.
THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK APPLICABLE TO CONTRACTS EXECUTED AND PERFORMED WITHIN SUCH
STATE, AND EACH PARTY HEREBY SUBMITS TO THE JURISDICTION OF ANY STATE OR U.S.
FEDERAL COURT SITTING WITHIN THE COUNTY OF NEW YORK OR COUNTY OF HENNEPIN. THE
PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR
PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS
AGREEMENT.
Section 8.6 Public Announcements. Each of the Company, the
Purchaser and NBC agrees to hold in strict confidence and not to disclose to
others the status of any discussions or relations among the parties with respect
to the subject matter of this Agreement or the Ancillary Documents until such
time as the parties mutually agree to publicly disclose such information or are
legally obligated to disclose such information or are obligated by applicable
Nasdaq rules to disclose such information.
Section 8.7 Fees and Expenses. Each party shall bear its own
costs and expenses incurred in connection with this Agreement and the Ancillary
Documents and the transactions contemplated hereby, including the fees and
expenses of their respective accountants and counsel.
Section 8.8 Indemnification by the Company. (a) Subject to the
provisions of Section 8.8(d), the Company agrees to indemnify and save harmless
the Purchaser and each of the respective partners, officers, directors,
employees, agents and Affiliates of the Purchaser in their respective capacities
as such (the "Purchaser Indemnitees"), from and against any and all actions,
suits, claims, proceedings, costs, damages, judgments,
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Investment Agreement
amounts paid in settlement (subject to Section 8.8(b)) and expenses (including
without limitation reasonable attorneys' fees and disbursements)(collectively,
"Losses"), relating to or arising out of any inaccuracy in or breach of the
representations, warranties, covenants or agreements made by the Company herein
other than any inaccuracy or breach of any representation or warranty that
constitutes an Excluded Breach.
(b) A Purchaser Indemnitee shall give written notice to the
Company of any claim with respect to which it seeks indemnification promptly
after the discovery by such party of any matters giving rise to a claim for
indemnification; provided that the failure of any Purchaser Indemnitee to give
notice as provided herein shall not relieve the Company of its obligations under
this Section 8.8 unless and to the extent that the Company shall have been
materially prejudiced by the failure of such Purchaser Indemnitee to so notify
the Company. In case any such action, suit, claim or proceeding is brought
against a Purchaser Indemnitee, the Company shall be entitled to participate in
the defense thereof and, to the extent that it may wish, to assume the defense
thereof, with counsel reasonably satisfactory to the Purchaser, and after notice
from the Company of its election so to assume the defense thereof, the Company
will not be liable to such Purchaser Indemnitee under this Section 8.8 for any
legal or other expense subsequently incurred by such Purchaser Indemnitee in
connection with the defense thereof; provided, however, that (i) if the Company
shall elect not to assume the defense of such claim or action or (ii) if outside
legal counsel to the Purchaser Indemnitee reasonably determines that there may
be a conflict between the positions of the Company and of the Purchaser
Indemnitee in defending such claim or action, then separate counsel shall be
entitled to participate in and conduct the defense, and the Company shall be
liable for any legal or other expenses reasonably incurred by the Purchaser
Indemnitee in connection with the defense (but only with respect to one such
separate counsel). The Company shall not be liable for any settlement of any
action, suit, claim or proceeding effected without its written consent;
provided, however, that the Company shall not unreasonably withhold, delay or
condition its consent. The Company further agrees that it will not, without the
Purchaser Indemnitee's prior written consent (which consent shall not be
unreasonably withheld), settle or compromise any claim or consent to entry of
any judgment in respect thereof in any pending or threatened action, suit, claim
or proceeding in respect of which indemnification may be sought hereunder unless
such settlement or compromise includes an unconditional release of the Purchaser
and each other Purchaser Indemnitee from all liability arising out of such
action, suit, claim or proceeding.
(c) The indemnification provided for in this Section 8.8 shall
be the exclusive post-Closing remedy available to the Purchaser with respect to
any inaccuracy in or breach of any representation or warranty made by the
Company in this Agreement;
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Investment Agreement
provided that nothing herein shall prevent the Purchaser from pursuing any
remedies legally available for fraud or fraudulent misrepresentation. Any
payment made pursuant to this Section 8.8 shall be treated as an adjustment to
the purchase price.
(d) Notwithstanding anything to the contrary in this
Agreement, the Company shall only indemnify and hold harmless the Purchaser
Indemnitees under Section 8.8(a) with respect to any Loss relating to or arising
out of any inaccuracy in or breach of any representation or warranty made by the
Company if, and only if, such Loss, together with the aggregate of all other
Losses relating to or arising out of any inaccuracy in or breach of any
representation or warranty made by the Company shall exceed $500,000, whereupon
the Company shall be liable for all such Losses up to the aggregate purchase
price set forth in Section 2.1(b) hereof.
Section 8.9 Indemnification by the Purchaser. (a) The
Purchaser agrees to indemnify and save harmless the Company and each of the
respective partners, officers, directors, employees, agents and Affiliates of
the Company in their respective capacities as such (the "Company Indemnitees")
from and against any and all Losses relating to or arising out of any inaccuracy
in or breach of the representations, warranties, covenants or agreements made by
the Purchaser herein.
(b) A Company Indemnitee shall give written notice to
Purchaser of any claim with respect to which it seeks indemnification promptly
after the discovery by such party of any matters giving rise to a claim for
indemnification; provided that the failure of any Company Indemnitee to give
notice as provided herein shall not relieve Purchaser of its obligations under
this Section 8.9 unless and to the extent that Purchaser shall have been
materially prejudiced by the failure of such Company Indemnitee to so notify the
Purchaser. In case any such action, suit, claim or proceeding is brought against
a Company Indemnitee, the Purchaser shall be entitled to participate in the
defense thereof and, to the extent that it may wish, to assume the defense
thereof, with counsel reasonably satisfactory to the Company, and after notice
from the Purchaser of its election so to assume the defense thereof, the
Purchaser will not be liable to such Company Indemnitee under this Section 8.9
for any legal or other expense subsequently incurred by such Company Indemnitee
in connection with the defense thereof; provided, however, that (i) if the
Purchaser shall elect not to assume the defense of such claim or action or (ii)
if outside legal counsel to the Company Indemnitee reasonably determines that
there may be a conflict between the positions of the Purchaser and of the
Company Indemnitee in defending such claim or action, then separate counsel
shall be entitled to participate in and conduct the defense, and the Purchaser
shall be liable for any legal or other expenses reasonably incurred by the
Company Indemnitee in connection with the defense (but only with respect to one
such
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Investment Agreement
separate counsel). The Purchaser shall not be liable for any settlement of
any action, suit, claim or proceeding effected without its written consent;
provided, however, that the Purchaser shall not unreasonably withhold, delay or
condition its consent. The Purchaser further agrees that it will not, without
the Company Indemnitee's prior written consent (which consent shall not be
unreasonably withheld), settle or compromise any claim or consent to entry of
any judgment in respect thereof in any pending or threatened action, suit, claim
or proceeding in respect of which indemnification may be sought hereunder unless
such settlement or compromise includes an unconditional release of the Company
and each other Company Indemnitee from all liability arising out of such action,
suit, claim or proceeding.
(c) The indemnification provided for in this Section 8.9 shall
be the exclusive post-Closing remedy available to the Company with respect to
any inaccuracy in or breach of any representation or warranty made by Purchaser
in this Agreement; provided that nothing herein shall prevent the Company from
pursuing any remedies legally available for fraud or fraudulent
misrepresentation. Any payment made pursuant to this Section 8.9 shall be
treated as an adjustment to the purchase price.
Section 8.10 Successors and Assigns; Third Party
Beneficiaries. Subject to applicable law and the following sentence, the
Purchaser may assign its rights under this Agreement in whole or in part only to
any Affiliate of the Purchaser, but no such assignment shall relieve the
Purchaser of its obligations hereunder. The Purchaser shall not assign any
rights under this Agreement to any Affiliate if (a) such assignment would cause
any representation or warranty of the Purchaser to become materially untrue or
incorrect, (b) such Affiliate does not expressly assume pursuant to a document
in form and substance reasonably satisfactory to the Company all of the
obligations of the Purchaser associated with the rights proposed to be assigned
or (c) such assignment would materially delay or impair consummation of the
transactions contemplated by this Agreement or the Ancillary Documents. The
Company may not assign any of its rights or delegate any of its duties under
this Agreement without the prior written consent of the Purchaser. Any purported
assignment in violation of this Section shall be void. NBC shall be a third
party beneficiary with respect to Sections 2.1, 2.4, and any representations and
warranties, covenants or agreements herein relating to the Warrants and shall be
entitled to the benefit of such provisions.
Section 8.11 Arbitration. Any controversy, dispute or claim
arising out of, in connection with or in relation to the interpretation,
performance or breach of this Agreement, shall be determined, at the request of
any party, by arbitration in a city mutually agreeable to the parties to such
controversy, dispute or claim, or, failing such agreement, in New York, New York
or Minneapolis, Minnesota, before and in accordance with the then-
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Investment Agreement
existing Rules for Commercial Arbitration of the American Arbitration
Association, and any judgment or award rendered by the arbitrator will be final,
binding and unappealable and judgment may be entered by any state or Federal
court having jurisdiction thereof. The pre-trial discovery procedures of the
Federal Rules of Civil Procedure shall apply to any arbitration under this
Section 8.11. Any controversy concerning whether a dispute is an arbitrable
dispute or as to the interpretation or enforceability of this Section 8.11 shall
be determined by the arbitrator. The arbitrator shall be a retired or former
United States District Judge or other person acceptable to each of the parties,
provided such individual has substantial professional experience with regard to
corporate or partnership legal matters. The parties intend that this agreement
to arbitrate be valid, enforceable and irrevocable.
Section 8.12 Specific Performance. The parties hereto agree
that irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions of this Agreement
in addition to any other remedy to which they are entitled at law or in equity.
Section 8.13 Headings, Captions and Table of Contents. The
section headings, captions and table of contents contained in this Agreement are
for reference purposes only, are not part of this Agreement and shall not affect
the meaning or interpretation of this Agreement.
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Investment Agreement
IN WITNESS WHEREOF, this Agreement has been executed by the
parties hereto or by their respective duly authorized representatives, all as of
the date first above written.
VALUEVISION INTERNATIONAL, INC.
By: /s/ Xxxx XxXxxxxxx
-------------------------------------
Name: Xxxx XxXxxxxxx
Title: Chief Executive Officer
G.E. CAPITAL EQUITY INVESTMENTS, INC.
By: /s/ Xxxxx Xxxxx
-------------------------------------
Name: Xxxxx Xxxxx
Title: Department Operations Manager
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