Stock Purchase Agreement
This Stock Purchase Agreement (the "Agreement") is dated as of September
10, 2004 by and between ROO Group, Inc., a Delaware corporation (the "ROO"), and
Avenue Group, Inc., a Delaware corporation ("Avenue") in connection with the
purchase by ROO of One Thousand (1,000) shares of .0001 par value common stock
(the "Bickhams Shares") of Bickhams Media, Inc., a Delaware corporation and an
wholly-owned subsidiary of Avenue ("Bickhams"). The Bickhams Shares consists of
all of the outstanding capital stock of Bickhams. Avenue acknowledges and
understands that the sale of the Bickhams Shares is not covered by an effective
Registration Statement pursuant to the United States Securities Act of 1933, as
amended (the "Act"). Accordingly, the reoffer and resale of the Shares by the
Guarantor will be restricted pursuant to the Act.
In consideration of the mutual promises contained herein and the terms and
conditions of this Agreement, Avenue and ROO agree and represent as follows:
A. PURCHASE OF THE XXXXXXX SHARES
1. ROO hereby agrees to subscribe to and purchase the Xxxxxxx Shares no later
than 1:00pm Los Angles time on September 15, 2004 (the "Termination Date") for
the following aggregate consideration:
(a) $300,000 in cash, immediately available funds or via wire transfer,
payable as follows:
(i) $250,000 on or before the Termination Date, and
(ii) $50,000 upon completion of audited financial statements for
Bickhams for the years ended December 31, 2003 and December 31, 2002 and
unaudited financial statements for the three and six month periods ending June
30, 2004 (the "Financials").
(b) Four Million (4,000,000) shares of ROO common stock issued on or
before the Termination Date in consideration for the Xxxxxxx Shares (the "ROO
Consideration Shares"). An additional Three Million (3,000,000) shares of ROO
common stock shall be issued on or before the Termination Date in consideration
for the Termination Letter, as defined below (the "Settlement Shares") (the
Consideration Shares and the Settlement Shares hereinafter collectively referred
to as the "ROO Shares").
(c) An executed guaranty by ROO of (i) all of the obligations of
XxxxxXxxx.xxx Networks, Inc., a Delaware corporation and a 50% owned subsidiary
of Bickhams ("VideoDome") under that certain promissory note of VideoDome to
Avenue dated October 2003 in the principal amount of Two Hundred Ninety Thousand
U.S. Dollars (US $290,000), a copy of which is attached hereto and made a part
hereof as Exhibit "A "(the "VideoDome Note") and (ii) the following payments:
(y) for a period of one year from the date hereof, Avenue shall receive no less
than Four Thousand Dollars ($4,000) per month from VideoDome and/or ROO as
principal reduction payments pursuant to the VideoDome Note, commencing one
month from the date hereof; PLUS, (z) the payment to Avenue one year from the
date of this Agreement of all amounts then outstanding under the VideoDome Note,
including but not limited to principal and accrued and unpaid interest due (the
"Guaranty"), a form of the Guaranty is attached hereto and made a part hereof as
Exhibit "B."
1
2. Except the $50,000 payment pursuant to Section 1(a)(ii) above, items (1)
through (3) above are hereinafter collectively referred to as the
"Consideration." Upon receipt by Avenue of the Consideration in full (the
"Closing Time"), Avenue agrees to deliver to ROO the Bickhams Shares, along with
stock powers executed in blank as well as the "Termination Letter," as
hereinafter defined. Avenue agrees that subject to and conditioned upon the
occurrence of the "Closing Time," Avenue shall deliver to ROO a termination
letter which shall serve to terminate the Registration Rights Agreement dated as
of November 28, 2003 (the "Registration Rights Agreement") and any and all
rights of Avenue against ROO whatsoever with respect thereto in the form as
attached hereto and made a part hereof as Exhibit "C." In consideration of
Avenue foregoing its rights under the Registration Rights Agreement, ROO has
agreed to issue hereunder the Settlement Shares. Anything to the contrary
contained herein notwithstanding, in the event the Closing Time has not occurred
on or before the Termination Date this Agreement shall automatically terminate,
be rendered null and void and be of no force and effect whatsoever without any
further action on the part of ROO or Avenue.
3. Closing. The parties to this Agreement shall consummate the transactions
contemplated by this Agreement at a closing (the "Closing") to be held no later
than the Termination Date. The date of Closing is referred to herein as the
"Closing Date." The Closing shall take place at the offices of counsel to ROO,
or at such other place as may be mutually agreed upon by ROO and Avenue.
4. Deliveries at Closing. At Closing, the parties shall deliver all certificates
representing the ROO Shares and the Bickhams Shares and shall deliver all other
executed documents and agreements described in this Article A.
5. This Agreement is subject to, and conditioned upon, the approval by the Board
of Directors of Avenue on or before 12:00 pm midnight on September 12, 2004.
B. REPRESENTATIONS AND WARRANTIES
1. Avenue (with respect to itself and the Bickhams Shares)and ROO (with respect
to itself and the ROO Shares) hereby represent and warrant to one another as
follows:
(a) They are each corporations duly organized, validly existing and in
good standing under the laws of the State of Delaware;
(b) The execution, delivery and performance of this Agreement have been
duly authorized by their respective Boards of Directors. They have full
corporate power and authority to enter into this Agreement and to perform their
obligations hereunder. This Agreement constitutes a valid and legally binding
obligation of each Company, enforceable in accordance with its terms and
conditions except to the extent the same may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws relating to or affecting
the enforcement of creditors' rights or by general equitable principles.
2
(c) Upon the issuance and/or delivery of the Bickhams Shares and the ROO
Shares, respectively, upon the terms and conditions set forth herein, the ROO
Shares and the Bickhams Shares shall be validly issued, fully paid and
non-assessable.
(d) The Bickhams Shares and the ROO Shares are being transferred to ROO
and Avenue, respectively, free and clear of any liens, claims, charges, rights,
restrictions, options, preemptive rights, mortgages, deeds of trust, easements,
leases, hypothecations, assessments, pledges, encumbrances, claims of equitable
interest or security interests of any kind or nature whatsoever.
(e) The ROO Shares and the Bickhams Shares are each being offered and sold
under the exemption from registration provided for in Section 4(2) of the Act,
that their offers and sales were not subject to public advertisement or part of
any other sale of securities by either party, and no offering literature or
prospectus have been provided by either party to the other party with respect
thereto. The sale of the ROO Shares and the Bickhams Shares contemplated hereby
has not been scrutinized by the SEC or by and any administrative agency charged
with administration of the Securities laws of any state (except some states
where the transaction might be registered).
(f) Neither ROO nor Avenue has relied upon any representations or other
information (whether oral or written) from the other party, or any of their
respective officers, directors, employees or agents other than as expressly set
forth herein or, in the case of Avenue, the information regarding ROO as set
forth in ROO's publicly available filings with the SEC and its press releases.
2. Representations of ROO.
(a) ROO is an "accredited investor" as such term is defined pursuant to
Rule 501(a) promulgated under the Act.
(b) ROO recognizes that (i) Bickhams' principal asset consists of its 50%
ownership of the capital stock of VideoDome, (ii) to date VideoDome's business
and operations have relied almost entirely on the efforts of its other 50%
shareholders Xxxxxx and Vardit Aharanoff, ROO recognizes that there is no
guaranty that it will be able to maintain the services or cooperation of the
Aharanoffs with respect to the ongoing business or operations of ROO, (iii)
VideoDome has limited operating history and financial resources and will be
dependant on proceeds from ROO and other financings to implement its business
plan, and (iv) that investment in Bickhams involves substantial risks.
3
(c) there is no material adverse information regarding ROO, its business,
operations financial status or prospects except as set forth in ROO's publicly
available filings with the SEC or press releases.
3. Representations, Warranties and Covenants of Avenue
(a) The Bickhams Shares represent all of the issued and outstanding shares
of capital stock of Bickhams. There are no outstanding rights, options or
warrants to purchase any shares of capital stock of Bickhams.
(b) Avenue shall use reasonable commercial endeavors to cause Xxxxxxxx &
Company, P.A to perform its audits and reviews on Bickhams so that Bickhams may
issue the Financials within 30 days after the execution of this Agreement at
ROO's sole cost and expense.
(c) Bickhams' has at no time engaged in an operating business and its sole
asset currently consists of its 50% ownership of the capital stock of VideoDome.
4. ROO and Avenue shall indemnify and hold harmless one another or any of their
respective officers, employees, registered representatives, agents, attorneys,
directors, or control persons of any such entity (collectively,
"Representatives") who was or is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, against losses, liabilities and
expenses (including reasonable attorneys' fees, judgments, fines and amounts
paid in settlement or otherwise) incurred by the ROO, Avenue or their respective
Representatives, by reason of or arising from or relating to any actual or
alleged breach of any of their representations, warranties, covenants or
agreements set forth in this Agreement which is not remedied by timely notice to
the other party as provided above.
C. UNDERSTANDINGS
1. ROO and /or Avenue acknowledge and agree, as the case may be, as follows:
(a) No federal or state agency has made any finding or determination as to
the fairness of this offering for investment, nor any recommendation or
endorsement of the Xxxxxxx Shares or the ROO Shares.
(b) Currently, there is no public market for the Xxxxxxx Shares and there
is no certainty that such a market will ever develop. There can be no assurance
that ROO will be able to sell or dispose of the Xxxxxxx Shares. Moreover, no
assignment, sale, transfer, exchange or other disposition of the Xxxxxxx Shares
can be made other than in accordance with all applicable securities laws.
(c) Any information which the either party receives which is not contained
in the publicly available information or reports filed with the SEC and is not
otherwise available to the public shall be deemed to be confidential and
nonpublic, and all such information shall be kept in confidence by the receiving
party and shall not be used by receiving party for their personal benefit (other
than in connection with the transactions contemplated by this Agreement) nor
disclosed to any third party for any reason; provided, that this obligation
shall not apply to any such information which (i) is part of the public
knowledge or literature and readily accessible at the date hereof; (ii) becomes
part of the public knowledge or literature and readily accessible by publication
(except as a result of a breach of these provisions); or (iii) is received from
third parties (except third parties who disclose such information in violation
of any confidentiality agreements).
4
(d) The parties each have sufficient knowledge and experience in financial
and business matters so that they are is capable of evaluating the merits and
risks of investment in Bickhams and ROO, as the case may be, and of making an
informed investment decision.
(e) The parties each have had prior personal or business relationships
with the one another or by reason of their business or financial experience,
have the capacity to protect their own interest in connection with this
transaction.
2. The representations, warranties, understandings, acknowledgments and
agreements of the parties to this Agreement are true and accurate as of the date
hereof and shall survive thereafter.
3. Immediately following the Closing Date, Avenue shall deliver to ROO the
resignations of all of the then serving members of the Board of Directors and
officers of Bickhams.
4. As soon as practicable after the Closing Date, Avenue agrees to deliver to
ROO the corporate minute books for Bickhams and original or copies of such other
Bickhams corporate documents and files as ROO may reasonably request.
5. ROO agrees that it shall cause Xxxxxxx'x representatives on the Board of
Directors of VideoDome to vote in favor of continuing to support VideoDome's
business and operations and the compensation packages payable to Xxxxxx and
Xxxxxx Xxxxxxxxx at a level comparable or greater than what is currently being
provided.
6. ROO agrees for a period of 2 years from the date of this Agreement, it shall
cause VideoDome to continue to provide without charge to Avenue and its
subsidiaries, information technology services comparable to those currently
provided, including video streaming.
7. ROO agrees that it shall cause Xxxxxxx'x representatives on the Board of
Directors of VideoDome to vote in favor of appointing Xxxxxx Xxxxx and Xxxxx
Xxxxx to the board of VideoDome and immediately upon appointment Xxxx Xxxxxxx
and Xxxxxxxx Xxxxxx will resign from VideoDome's board.
D. MISCELLANEOUS
1. All pronouns and any variations thereof used herein shall be deemed to refer
to the masculine, feminine, singular, or plural as the identity of the person or
persons may require.
5
2. Neither this Agreement nor any provisions hereof shall be waived, modified,
changed, discharged, terminated, revoked, or canceled except by an instrument in
writing signed by the party against whom any change, discharge, or termination
is sought.
3. Notices required or permitted to be given hereunder shall be in writing and
shall be deemed to be sufficiently given when personally delivered or sent by
registered mail, return receipt requested, addressed to the other party at the
address of such party set forth on the signature page, as amended from time to
time, or, in the case of the Purchaser, at the address provided in this
Agreement, or to such other address furnished by notice given in accordance with
this Article D.
4. Failure of either party to exercise any right or remedy under this Agreement
or any other agreement between the parties, or otherwise, or delay by either
party in exercising such right or remedy, will not operate as a waiver thereof.
No waiver by either party will be effective unless and until it is in writing
and signed by such party.
5. Arbitration.
(a) Any dispute, controversy or claim arising out of, relating to, or in
connection with, this Agreement, or the breach, termination or validity thereof,
except for claims for equitable, including injunctive, relief, shall be finally
settled by arbitration conducted in accordance with this Section. The
arbitration shall be conducted in accordance with the rules of the American
Arbitration Association (the "AAA") in effect at the time of the arbitration,
except as they may be modified herein or by mutual agreement of the parties. The
seat of the arbitration shall be Los Angeles, CA.. Each party hereby irrevocably
submits to the jurisdiction of the arbitrator in Los Angeles, CA and waives any
defense in an arbitration based upon any claim that such party is not subject
personally to the jurisdiction of such arbitrator, that such arbitration is
brought in an inconvenient forum or that such venue is improper.
(b) The arbitration shall be conducted by one arbitrator, who shall be
appointed by the AAA. The arbitrator shall have the authority only to enforce
the legal and contractual rights of the parties and shall not add to, modify,
disregard, or refuse to enforce any contractual provision. There shall be no
pre-arbitration discovery. The parties acknowledge and agree that by entering
into this Agreement they are agreeing to this arbitration provision and are
waiving all rights to a trial by jury. The arbitral award shall be in writing
and shall be final and binding on the parties. The award shall include an award
of costs, including the fees and costs of the arbitrators and reasonable
attorneys' fees and disbursements in accordance with the arbitrator's view of
the merits of the parties' respective positions in the dispute. Except upon a
finding of actual fraud, intentional or knowing misrepresentation, willful and
knowing omissions of material fact or willful misconduct, no such award shall
include punitive damages. Judgment upon the award may be entered by any
governmental authority having jurisdiction thereof or having jurisdiction over
the parties or their assets.
6
6. This Agreement shall be enforced, governed and construed in all respects in
accordance with the laws of the State of California (without giving effect to
principles of conflicts of law) and shall be binding upon and shall inure to the
benefit of the parties and their respective heirs, estate, legal
representatives, successors and assigns.
7. In the event that any provision of this Agreement is invalid or unenforceable
under any applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any provision hereof which
may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision hereof.
8. This Agreement along with the Exhibits hereto constitutes the entire
agreement among the parties hereto with respect to the subject matter hereof and
supersede any and all prior or contemporaneous representations, warranties,
agreements and understandings in connection therewith. Except as otherwise
provided in this Section 8, this Agreement may be amended only by a writing
executed by all parties hereto. No party shall be liable or bound to the other
in any manner by any warranties, representations or covenant except as
specifically set forth herein.
9. The terms and conditions of this Agreement shall inure to the benefit of and
be binding upon the respective successors and assigns of the parties hereto.
Nothing in this Agreement, express or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors and
assigns, any rights, remedies, obligations, or liabilities under or by reason of
this Agreement, except as expressly provided herein.
10. This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
11. The titles of the paragraphs and subparagraphs of this Agreement are for
convenience and are not to be considered in construing this Agreement.
12. Any notice required or permitted hereunder shall be given in writing and
shall be deemed effectively given upon personal delivery or if deposited the
United States Post Office, be registered or certified mail, addressed to a party
at its address hereinafter shown below its signature or at such other address as
such party may designate by ten (10) days advance written notice to the other
party.
13. The warranties and representations of the parties contained in or made
pursuant to this Agreement shall survive the executions and delivery of this
Agreement and the closing hereunder.
7
IN WITNESS WHEREOF, the parties hereto have executed this Agreement this
10th day of September, 2004.
ROO Group, Inc.
/s/ Xxxxxx Xxxxx
------------------------------
By: Xxxxxx Xxxxx
Its: CEO
Avenue Group, Inc.,
/s/ Xxxxxxxx Xxxxxx
------------------------------
By: Xxxxxxxx Xxxxxx
Its: Executive Vice President
NEITHER THE XXXXXXX SHARES NOR THE ROO SHARES HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED UNLESS THEY ARE REGISTERED UNDER THE ACT OR AN EXEMPTION
THEREFROM IS AVAILABLE.
8
EXHIBIT A
VIDEODOME NOTE
9
EXHIBIT B
ROO GROUP, INC. GUARANTY
This Guaranty (the "Guaranty") is made entered into this 10th day of September,
2004 by the ROO Group, Inc., a Delaware corporation (the "Guarantor") in favor
of the Avenue Group, Inc., a Delaware corporation (the "Company"), pursuant to
that certain Agreement dated September 10, 2004 ( the "Agreement") between ROO
and the Company.
In connection with the foregoing, the Guarantor hereby agrees, subject to the
terms hereof, to:
A. Unconditionally guarantee and agree to be liable for the full and
indefeasible payment and performance when due of all now existing and future
indebtedness, obligations or liabilities of VideoDome Xxxxxxxx.xxx, Inc
("VideoDome") to the Company under that certain promissory note in the original
principal amount of $290,000USD dated October 2003 (the "Promissory Note"),
howsoever arising, whether direct or indirect, absolute or contingent, secured
or unsecured, whether arising under the Promissory Note as now written or as
amended or supplemented hereafter, or by operation of law or otherwise. The
Company represents that as of the date hereof the outstanding principal balance
on the Promissory Note is $288,000USD.
B. To pay to the Company on demand the amount of all expenses (including
reasonable attorney's fees) incurred by the Company in collecting or attempting
to collect any of the Guarantor's obligations to it under this Guaranty; and
agrees to pay any interest at the highest lawful rate on all amounts payable to
the Company under the Promissory Note, even if such amount cannot be collected
from VideoDome.
C. Notwithstanding anything to the contrary contained elsewhere herein or
in the Promissory Note, to unconditionally guarantee and agree to be liable for
the full and indefeasible payment to the Company of (i) no less than Four
Thousand Dollars ($4,000.00) per month of outstanding principal under the
Promissory Note for a period of twelve (12) months with the first payment due on
the date hereof and (ii) the remaining outstanding principal balance of the
Promissory Note plus any accrued and unpaid interest due thereunder one year
from the date of this Guaranty ((i) and (ii) collectively referred to as the
"Guarantor's Payment Obligations") .
All of the obligations, liabilities, expenses and interest set forth in items A.
through C. above are hereinafter collectively called the "Obligations." To the
extent the Company receives payment on account of Obligations guaranteed hereby,
which payment is thereafter set aside or required to be repaid by it in whole or
in part, then, to the extent of any sum not finally retained by the Company
(regardless of whether such sum is recovered from the Company by the VideoDome,
its trustee, or any other party acting for, on behalf of or through the
VideoDome or its representative), the Guarantors' obligation to the Company
under this Guaranty, as amended, modified or supplemented, shall remain in full
force and effect (or be reinstated) until the Guarantor have made payment to the
Company therefor, which payment shall be due upon demand.
This Guaranty is executed as an inducement to the Company to enter into
the Agreement and to allow the consummation of the transactions contemplated
thereby without the payment in full of the Promissory Note. The Guarantor agrees
that the Guaranty is a portion of the Consideration received by the Company
pursuant to the Agreement.
10
Notice of acceptance of this Guaranty, the amendment, execution or
termination of the Agreement or any other agreements in connection therewith,
and presentment, demand, protest, notice of protest, notice of non-payment and
all other notices to which the Guarantor may be entitled (whether under this
Guaranty or the Agreement), and the Company's reliance on this Guaranty are
hereby waived. The Guarantors also waives notice of: changes in terms or
extensions of the time of payment under the Promissory Note, the taking and
releasing of collateral or guarantees and the settlement, compromise or release
of any Obligations, and agree that, as to the Guarantor, the amount of the
Obligations shall not be diminished by any of the foregoing. The Guarantor also
agrees that the Company need not attempt to collect any Obligations from
VideoDome or any other obligor or to realize upon any collateral, but may
require the Guarantor to make immediate payment of Obligations to the Company
when due or at any time thereafter. The Company shall not be liable for failure
to collect Obligations or to realize upon any collateral or security therefor,
or any part thereof, or for any delay in so doing, nor shall the Company be
under any obligation to take any action whatsoever with regard thereto.
This Guaranty is absolute, unconditional and continuing, regardless of the
validity, regularity or enforceability of any of the Obligations or the fact
that a security interest or lien in any collateral or security therefor may not
be enforceable by the Company or may otherwise be subject to equities or
defenses or prior claims in favor of others or may be invalid or defective in
any way and for any reason, including any action, or failure to act, on the part
of the Company. Payment by the Guarantor shall be made to the Company in US
dollars at its office in California from time to time on demand as Obligations
become due, and one or more successive or concurrent actions may be brought
hereon against the Guarantor either in the same action or in separate actions.
In the event any claim or action, or action on any judgment, based on this
Guaranty, is made or brought against the Guarantor, the Guarantor agrees not to
assert against the Company any set-off or counterclaim which the Company may
have, and, further, the Guarantors agree not to deduct, set-off, or seek to
counterclaim for or recoup, any amounts which are or may be owed by the Company
to the Guarantor under the Agreement or otherwise, or for any loss of
contribution from any other guarantor. Furthermore, in any litigation based on
the Guaranty in which the Company and the Guarantor shall be adverse parties,
the Guarantor hereby waives trial by jury and waive the right to interpose any
defense based upon any Statute of Limitations or any claim of laches and waive
the performance of each and every condition precedent to which the Guarantor
might otherwise be entitled by law. All sums at any time to the credit of the
Guarantor and any property of the Guarantor on which the Company at any time
have a lien or security interest, or of which the Company at any time have
possession, shall secure payment and performance of all Obligations and any and
all other obligations of the Guarantor to the Company however arising.
Upon the occurrence of any of the following events:
(1) any Event of Default or default by VideoDome under the Promissory
Note;
(2) failure of the Guarantor to (a) pay when due any of the Guarantor's
Payment Obligations or (b) to pay any other Obligation due hereunder
or to observe or perform any agreements, warranties or covenants in
any material respect contained herein where such failure continues
unremedied for a period of no less than 10 days from the occurrence
thereof; or
11
(3) (a) calling of a meeting of the creditors of the Guarantor for the
purposes of compromising the debts of the Guarantor;
(b) failure of the Guarantor to meet their debts as they mature;
(c) commencement by the Guarantor of any bankruptcy, insolvency,
arrangement, reorganization, receivership or similar proceeds under
federal or state law (herein collectively "Insolvency Proceeding");
(d) commencement of any Insolvency Proceeding against the Guarantor,
then, in the case of event (1) above the liability of the Guarantor for the
entire Obligations shall mature, and in the case of events (2) and (3)(a)
through (e) above the liability of the Guarantor with respect to which such
event relates for the entire Obligations shall mature even if the liability of
the VideoDome therefor does not. In addition to and not in lieu of the
foregoing, in the case of the occurrence of (2) or (3) above (a "Conversion
Event"), the Guarantor agrees that the Company may in its sole discretion
convert all or any portion of the Obligations into common stock ("Common Stock")
of the Guarantor (the "Conversion Shares") at a Conversion Price which is equal
to Five Cents per share subject to adjustment and or the issuance of substitute
securities to take into effect any stock split, recapitalization,
reorganization, stock dividend, merger or consolidation prior to the issuance of
the "Conversion Notice," as hereinafter defined (the "Conversion Price"). In the
event of a reorganization or merger of the Guarantor where the Guarantor is not
the surviving entity ("Reorganization"), notwithstanding anything to the
contrary contained elsewhere herein, the Company shall be entitled to treat such
Reorganization as a Conversion Event and deliver the Conversion Notice prior to
the consummation of such Reorganization so that it will receive the same
consideration as the other shareholders of the Guarantor upon the consummation
of the Reorganization. The Guarantor agrees to issue and deliver the Conversion
Shares to the Company as soon as practicable, but in any event no later than ten
(10) business days after its receipt of any Conversion Notice. In the event
Guarantor fails to deliver the Conversion Shares in a timely manner, the Company
shall be entitled to receive additional conversion shares equal to two percent
(2% ) of the Conversion Shares initially requested for each day the Guarantor is
late in delivering the full amount of Conversion Shares due. A form of the
Conversion Notice is attached hereto as Appendix 1.
The Guarantor expressly waives any and all rights of subrogation,
reimbursement, indemnity, exoneration, contribution or any other claim which it
may now or hereafter have against the Company or any other person directly or
contingently liable for the Obligations guaranteed hereunder, or against or with
respect to the Company's property (including, without limitation, property
collateralizing its Obligations to the Company) arising from the existence or
performance of this Guaranty, until such time and all obligations are
indefeasibly paid in full and the Agreement is terminated.
12
This Guaranty embodies the whole agreement of the parties with respect
thereto and may not be modified except in writing, and no course of dealing
between the Company and the Guarantor shall be effective to change or modify
this Guaranty. The Company's failure to exercise any right hereunder shall not
be construed as a waiver of the right to exercise the same or any other right at
any other time and from time to time thereafter, and such rights shall be
considered as cumulative rather than alternative. No knowledge of any breach or
other nonobservance by the Guarantor of the terms and provisions of this
Guaranty shall constitute a waiver thereof, nor a waiver of any obligations to
be performed by the Guarantor hereunder.
Absent a breach of this Guaranty by the Guarantor or a default by the
Guarantor in the payment of any Obligation due under this Guaranty, this
Guaranty may be not be assigned by the Company. Upon the occurrence of any such
breach or default by the Guarantor, in addition to any other rights that the
Company may have under law, in equity or pursuant to this Guaranty, the Company
may in its sole discretion sell, assign and/or transfer this Guaranty or any
rights due it hereunder to any third party. In such event, the Guaranty shall be
for its benefit and for the benefit of any of its assignees or transferees, and
shall cover any Obligations owed to the Company at the time of assignment or
transfer.
Upon a default by VideoDome under the Promissory Note, the Company may
elect to non-judicially or judicially foreclose against any real or personal
property security it holds for the Obligations, or any part thereof, or exercise
any other remedy against the Company or any security. No such action by the
Company will release or limit the liability of the Guarantor hereunder, even if
the effect of that action is to deprive the Guarantor of the right to collect
reimbursement from VideoDome of any for any sums paid by the Guarantor to the
Company hereunder.
The Guarantor hereby acknowledges and agrees that the Guarantor is
knowingly waiving in advance as a result of the provisions hereof a complete or
partial defense to its guaranty it may later have had arising from CCP Section
580d or 580a based upon the Company's subsequent election to conduct a private
nonjudicial foreclosure sale, even though such election would destroy, diminish
or affect the Guarantor's rights against the principal obligor and the
Guarantor's rights to pursue the principal obligor for reimbursement,
subrogation, contribution, or indemnity.
Without limiting the foregoing or any provision hereof, the Guarantor
hereby expressly waives any and all rights, estoppels and benefits which might
otherwise be available from time to time under California Civil Code Sections
2809, 2810, 2819, 2839, 2845, 2849, 2850, 2899 and 3433, and California Code of
Civil Procedure Sections 580a, 580b, 580d and 726, or any of such sections.
The Guarantor represents and warrants to the Company that the execution,
delivery and performance of this Guaranty, and of any documents securing the
obligations under this Guaranty, (a) are not done with actual intent to hinder,
delay or defraud creditors, (b) are not done at a time when the fair value of
its assets, are less than its debts, including, without limitation, its
obligations, (c) are not done at a time when it intends or believes or
reasonably should believe that it will incur debts beyond its ability to pay as
such debts mature or otherwise become due, and (d) based upon its historical
needs and future projections, are not done at a time when it is engaged in
business or a transaction, or is about to engage in business or a transaction,
for which the property remaining in its hand is an unreasonably small capital or
for which its remaining assets are unreasonably small in relation to such
business or transaction absent extraordinary and unforeseen circumstances. The
Guarantor hereby confirms that each of the waivers set forth herein are made
with full knowledge of their significance and consequences and after due
deliberation.
13
Anything to the contrary contained elsewhere herein notwithstanding,
provided that the Guarantor is not in breach of any of its obligations under
this Guaranty or in default of the payment of any obligation hereunder, the
Company agrees as follows: (i) not to require the immediate payment of all
outstanding principal and accrued and unpaid interest the Promissory Note for a
period of one year from the date hereof; (ii) that subject to and conditioned
upon payment in full of the Obligations due the Company hereunder, the Company
hereby agrees to assign the Promissory Note and all of the Company's rights
hereunder to the Guarantor.
This instrument is executed and given in addition to, and not in
substitution, reduction, replacement, or satisfaction of, any other endorsements
or guarantees of the Obligations, now existing or hereafter executed by the
Guarantor or others in the Company's favor.
When used in this agreement, all pronouns shall, wherever applicable, be
deemed to include the singular and plural as well as the masculine, feminine,
and neuter genders. This agreement shall inure to the benefit of the Company,
the Company's successors and assigns and any parent, subsidiary or affiliate of
the Company; shall be binding upon the Guarantor and upon its administrators,
successors and assigns.
All Disputes arising between the parties hereto with respect to the
making, construction, terms, or interpretation of this Guaranty or any breach
thereof, or the rights or obligations of any party hereto or thereto, shall, in
lieu of court action, be submitted to mandatory, binding arbitration, pursuant
to the terms of Section E5 of the Agreement.
BY INITIALING IN THE SPACE BELOW, THE COMPANY AND THE GUARANTOR ARE
AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE
"ARBITRATION OF DISPUTES" SECTION OF THIS GUARANTY DECIDED BY NEUTRAL
ARBITRATION AS PROVIDED BY THE LAWS OF THE STATE OF CALIFORNIA AND THE PARTIES
HERETO ARE GIVING UP ANY RIGHTS THEY MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED
IN A COURT OR JURY TRIAL. BY INITIALING IN THE SPACE BELOW THE PARTIES ARE
GIVING UP THEIR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS THOSE RIGHTS ARE
SPECIFICALLY INCLUDED IN THE "ARBITRATION OF DISPUTES" SECTION OF THE AGREEMENT.
IF EITHER PARTY REFUSES TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS
PROVISION, THEY MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE LAWS OF
THE STATE OF CALIFORNIA. THE PARTIES AGREE THAT THEIR AGREEMENT TO THIS
ARBITRATION SECTION IS VOLUNTARY.
THE PARTIES ACKNOWLEDGE AND AGREE THAT THEY HAVE READ AND UNDERSTAND THE
FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT OF THE MATTERS INCLUDED IN
THE "ARBITRATION OF DISPUTES" SECTION OF THE AGREEMENT TO NEUTRAL ARBITRATION.
14
GUARANTOR'S INITIALS ______
COMPANY'S INITIALS ______
The parties hereby consents to the in personam jurisdiction of the courts
of the State of California to enforce the judgment of the arbitrator as provided
above. In the event that either party brings any action or suit in any court of
record of the State of California to enforce any such judgment of the arbitrator
hereunder, service of process may be made by mailing a copy of the summons to
the Guarantor or the Company at their then principal place of business as set
forth in their most recent filings with the Securities and Exchange Commission.
This Guaranty may be executed in any number of counterparts, each of which
when so executed shall be deemed an original and such counterparts shall
together constitute but one and the same document.
This Guaranty shall be governed by and construed in accordance with the
laws of the State of California.
IN WITNESS WHEREOF the Guarantor has executed and delivered this Guaranty
effective as of the date above set forth.
ROO GROUP, INC.
/s/ Xxxxxx Xxxxx
------------------------------
By: Xxxxxx Xxxxx
Its: Chief Executive Officer
15
APPENDIX 1
CONVERSION NOTICE
Date: _________ __, 200_
To: ROO Group, Inc.
Pursuant to that certain Guaranty dated September __, 2004 of ROO Group,
Inc., as Guarantor (the "Guaranty") to the undersigned, the undersigned may
elect to convert all or any portion of the Obligations into common stock of the
Guarantor upon the occurrence of a Conversion Event.
The undersigned hereby certifies that a Conversion Event has occurred and
effective as of the date hereof, hereby irrevocably elects to convert at ____
cents ($0.__) per share, $_________ the Obligations due under the Guaranty or
__________ Conversion Shares.
Except as otherwise expressly defined herein, capitalized terms shall have
the meaning ascribed to them in the Guaranty.
Please deliver the Conversion Shares to the undersigned at:
--------------------------
--------------------------
---------------------------
Attention: _______________________
AVENUE GROUP, INC.
By: ________________________
Its: _______________________
16
EXHIBIT "C"
TERMINATION NOTICE
September __, 2004
ROO GROUP, INC.
00 XXXXX XXXXXX
XXXXX 0X
XXX XXXX, XX 00000
Attention: Xxxxxx Xxxxx
Chief Executive Officer
Avenue Group, Inc. ("Avenue") hereby agrees that effective immediately the
Registration Rights Agreement dated as of November 28, 2003 is terminated and
rendered null and void. In connection with the foregoing, Avenue agrees to waive
any and all rights of Avenue may have against ROO whatsoever with respect
thereto.
Very truly yours,
Avenue Group, Inc.
By:____________________
Xxxx Xxxxxxx
Its: Chief Executive Officer
17
