EXHIBIT 1.1
EXECUTION COPY
TVN ENTERTAINMENT CORPORATION
Placement Agreement
-------------------
July 24, 1998
Xxxxxx Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
TVN Entertainment Corporation, a Delaware corporation (the "Company"),
proposes to issue and sell to you (the "Placement Agent") 200,000 Units (the
"Units"). Each Unit will consist of (i) one 14% Senior Note due 2008 of the
Company (collectively the "Notes" and each a "Note") issued pursuant to the
provisions of an Indenture to be dated as of July 29, 1998 (the "Indenture")
between the Company and The Bank of New York, as trustee (the "Trustee"), and
(ii) one Warrant (each a "Warrant" and collectively the "Warrants") entitling
the holder thereof to purchase initially 10.777 shares (the "Warrant Shares") of
common stock, par value $0.001 per share, of the Company (the "Common Stock")
from the Company at an exercise price of $0.01 per share, subject to adjustment
as provided in the Warrant Agreement (as defined below). The Warrants will be
issued pursuant to the provisions of a Warrant Agreement to be dated as of the
Closing Date (as defined in Section 4) (the "Warrant Agreement") between the
Company and The Bank of New York, as warrant agent (the "Warrant Agent"),
substantially in the form attached hereto as Exhibit A. The Units, Notes and
Warrants are collectively referred to herein as the "Securities."
The Units will be offered without being registered under the
Securities Act of 1933, as amended (the "Securities Act"), to qualified
institutional buyers in compliance with the exemption from registration provided
by Rule 144A under the Securities Act.
The Company will purchase, with a portion of the proceeds of the
issuance and sale of the Units, and pledge pursuant to a Collateral Pledge and
Security Agreement (the "Pledge Agreement") to be dated as of the Closing Date,
among the Company, the Trustee and The Bank of New York, as collateral agent
(the "Collateral Agent"), to the Trustee as security for the benefit of the
holders of the Notes, a portfolio of U.S. government securities in an amount
expected to be sufficient to provide for payment in full of the first six
scheduled interest payments on the Notes.
2
The Placement Agent and its direct and indirect transferees will be
entitled to the benefits of a Registration Rights Agreement relating to the
Notes (the "Notes Registration Rights Agreement"), dated the date hereof and to
be substantially in the form attached hereto as Exhibit B-1.
The Placement Agent and its direct and indirect transferees will be
entitled to the benefits of a Registration Rights Agreement relating to the
Warrants (the "Warrant Registration Rights Agreement"), dated the date hereof
and to be substantially in the form attached hereto as Exhibit B-2.
The Placement Agent and its direct and indirect transferees will be
entitled to the benefits of the Pledge Agreement, to be substantially in the
form of Exhibit E.
In connection with the sale of the Units, the Company has prepared a
preliminary private placement memorandum dated July 8, 1998 (the "Preliminary
Memorandum") and will prepare a final private placement memorandum (the "Final
Memorandum" and, with the Preliminary Memorandum, each a "Memorandum") setting
forth or including a description of the terms of the Units, Notes, Warrants and
the Common Stock, the terms of the offering and a description of the Company and
its business.
1. Representations and Warranties. The Company represents and
------------------------------
warrants to, and agrees with, the Placement Agent that as of the date hereof:
(a) The Preliminary Memorandum does not contain and the Final Memorandum,
in the form used by the Placement Agent to confirm sales and on the Closing Date
(as defined in Section 4), will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
except that the representations and warranties set forth in this Section 1(a) do
not apply to statements or omissions in either Memorandum based upon information
relating to the Placement Agent furnished to the Company in writing by the
Placement Agent expressly for use therein.
(b) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the State of Delaware, has the
corporate power and authority to own its property and to conduct its business as
described in each Memorandum and is duly qualified to transact business and is
in good standing in each jurisdiction in which the conduct of its business or
its ownership or leasing of property requires such qualification, except to the
extent that the failure to be so qualified or be in good standing would not have
a material adverse effect on the Company and its subsidiaries, taken as a whole.
(c) Each subsidiary of the Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the jurisdiction of
its incorporation, has the
3
corporate power and authority to own its property and to conduct its business as
described in each Memorandum and is duly qualified to transact business and is
in good standing in each jurisdiction in which the conduct of its business or
its ownership or leasing of property requires such qualification, except to the
extent that the failure to be so qualified or be in good standing would not have
a material adverse effect on the Company and its subsidiaries, taken as a whole;
all of the issued shares of capital stock of each subsidiary of the Company have
been duly and validly authorized and issued, are fully paid and non-assessable
and are owned directly by the Company, free and clear of all liens,
encumbrances, equities or claims.
(d) This Agreement has been duly authorized, executed and delivered by the
Company.
(e) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the section titled
"Capitalization" in the Final Memorandum. The shares of Common Stock
outstanding prior to the issuance of the Notes have been duly authorized and are
validly issued, fully paid and nonassessable. Since March 31, 1998, the Company
has only granted options to purchase 90,000 shares of Common Stock of the
Company.
(f) The Notes have been duly authorized by the Company and, when executed,
authenticated and delivered in accordance with the Indenture and paid for by the
Placement Agent in accordance with the terms of this Agreement, will be valid
and binding obligations of the Company, enforceable in accordance with their
terms, except as the enforcement thereof may be limited by (i) bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws relating to or affecting
enforcement of creditors' rights, (ii) general principles of equity (regardless
of whether enforcement is considered in a proceeding in equity or at law) or
(iii) applicable public policy considerations, and will be entitled to the
benefits of the Indenture.
(g) The Warrants have been duly authorized by the Company and, when
executed by the Company and countersigned by the Warrant Agent as provided in
the Warrant Agreement, and delivered to and paid for by the Placement Agent in
accordance with the terms of this Agreement, will be valid and binding
obligations of the Company, enforceable in accordance with their terms, except
as the enforcement thereof may be limited by (i) bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws relating to or affecting enforcement
of creditors' rights, (ii) general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law) or (iii)
applicable public policy considerations, and will be entitled to the benefits of
the Warrant Agreement.
(h) The shares of Common Stock issuable upon exercise of the Warrants (the
"Warrant Shares") have been duly authorized and reserved for issuance by the
Company and, when issued and delivered upon exercise of the Warrants in
accordance with the terms of the
4
Warrants and the Warrant Agreement, will be validly issued, fully paid and
nonassessable and the issuance of the Warrant Shares will not be subject to any
preemptive or similar rights.
(i) The Indenture has been duly authorized by the Company and, when
executed and delivered by the Company and the Trustee, will be a valid and
binding obligation of the Company, enforceable in accordance with its terms,
except as the enforcement thereof may be limited by (i) bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws relating to or affecting enforcement
of creditors' rights, (ii) general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law) or (iii)
applicable public policy considerations.
(j) The Warrant Agreement has been duly authorized by the Company and, when
executed and delivered by the Company and the Warrant Agent, will be a valid and
binding agreement of the Company, enforceable against the Company in accordance
with its terms, except as the enforcement thereof may be limited by (i)
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws relating to or
affecting enforcement of creditors' rights, (ii) general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law) or (iii) applicable public policy considerations.
(k) Each of the Notes Registration Rights Agreement and the Warrant
Registration Rights Agreement (collectively, the "Registration Rights
Agreements") has been duly authorized by the Company and, when executed and
delivered by the Company, will be a valid and binding agreement of the Company
enforceable against the Company in accordance with its terms, except as the
enforcement thereof may be limited by (i) bankruptcy, insolvency (including,
without limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or similar laws relating to or affecting enforcement of creditors'
rights, (ii) general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law) or (iii) applicable public
policy considerations.
(l) The Pledge Agreement has been duly authorized by the Company and, when
executed and delivered by the Company, the Trustee and the Collateral Agent,
will be a valid and binding agreement of the Company enforceable against the
Company in accordance with its terms, except as the enforcement thereof may be
limited by (i) bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or similar laws
relating to or affecting enforcement of creditors' rights, (ii) general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law) or (iii) applicable public policy
considerations.
(m) The execution and delivery by the Company of, and the performance by
the Company of its obligations under, this Agreement, the Registration Rights
Agreements, the
5
Indenture, the Notes, the Warrant Agreement, the Warrants, the Pledge Agreement
and the issuance, sale and delivery of the Units, the Notes and the Warrants and
the issuance of the Warrant Shares by the Company upon exercise of the Warrants
in accordance with the terms of the Warrants and the Warrant Agreement will not
contravene any provision of applicable law or the certificate of incorporation
or by-laws of the Company or any agreement or other instrument binding upon the
Company or any of its subsidiaries that is material to the Company and its
subsidiaries, taken as a whole, or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Company or any
subsidiary, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by the Company of its obligations under this Agreement, the
Registration Rights Agreements, the Indenture, the Notes, the Warrant Agreement,
the Warrants, the Pledge Agreement and the issuance, sale and delivery of the
Units, the Notes and the Warrants and the issuance of the Warrant Shares upon
exercise of the Warrants in accordance with the terms of the Warrants and the
Warrant Agreement, except such as may be required by the securities or Blue Sky
laws of the various states in connection with the offer and sale of the Units,
Notes or Warrants and by Federal and state securities laws with respect to the
Company's obligations under the Registration Rights Agreements.
(n) There has not occurred any material adverse change, or any development
involving a prospective material adverse change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Company and its
subsidiaries, taken as a whole, from that set forth in the Final Memorandum.
(o) There are no legal or governmental proceedings pending or, to the
knowledge of the Company, threatened to which the Company or any of its
subsidiaries is a party or to which any of the properties of the Company or any
of its subsidiaries is subject other than proceedings accurately described in
all material respects in each Memorandum and proceedings that would not
reasonably be expected to have a material adverse effect on the Company and its
subsidiaries, taken as a whole, or on the power or ability of the Company to
perform its obligations under this Agreement, the Registration Rights
Agreements, the Indenture, Notes, Warrant Agreement, Warrants, Warrant Shares or
the Pledge Agreement or to consummate the transactions contemplated by the Final
Memorandum.
(p) The Company and its subsidiaries (i) are in compliance with any and
all applicable foreign, federal, state and local laws and regulations relating
to the protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("Environmental Laws"),
(ii) have received all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective businesses and
(iii) are in compliance with all terms and conditions of any such permit,
license or approval, except where such noncompliance with Environmental Laws,
failure to receive required permits, licenses or other approvals or failure to
comply with the terms and conditions
6
of such permits, licenses or approvals would not, singly or in the aggregate,
have a material adverse effect on the Company and its subsidiaries, taken as a
whole.
(q) There are no costs or liabilities associated with Environmental Laws
(including, without limitation, any capital or operating expenditures required
for clean-up, closure of properties or compliance with Environmental Laws or any
permit, license or approval, any related constraints on operating activities and
any potential liabilities to third parties) which would, singly or in the
aggregate, have a material adverse effect on the Company and its subsidiaries,
taken as a whole.
(r) The Company is not, and after giving effect to the offering and sale
of the Securities and the application of the net proceeds thereof as described
in the Final Memorandum, will not be an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended.
(s) Neither the Company nor any affiliate (as defined in Rule 501(b) of
Regulation D under the Securities Act, an "Affiliate") of the Company (other
than the Placement Agent or Princes Gate Investors II, L.P., as to which the
Company makes no representation or warranty) has directly, or through any agent,
(i) sold, offered for sale, solicited offers to buy or otherwise negotiated in
respect of, any security (as defined in the Securities Act) which is or will be
integrated with the sale of the Units, Notes, Warrants or Warrant Shares in a
manner that would require the registration under the Securities Act of the
Units, Notes, Warrants or Warrant Shares or (ii) engaged in any form of general
solicitation or general advertising (as those terms are used in Regulation D
under the Securities Act) in connection with the offering of the Units, Notes,
Warrants or Warrant Shares or in any manner involving a public offering within
the meaning of Section 4(2) of the Securities Act.
(t) Subject to Sections 3 and 4 and assuming the accuracy of the
representations and warranties of the Placement Agent set forth in Section 7, it
is not necessary in connection with the offer, sale and delivery of the Units,
Notes or Warrants to the Placement Agent in the manner contemplated by this
Agreement to register the Units, Notes or Warrants under the Securities Act or
to qualify the Indenture under the Trust Indenture Act of 1939, as amended.
(u) The Securities satisfy the requirements set forth in Rule 144A(d)(3)
under the Securities Act.
(v) The terms of the Units, Warrants, Warrant Agreement, Notes, Indenture
and Warrant Shares conform in all material respects to the respective
descriptions thereof contained in the Final Memorandum under the headings
"Description of the Units," "Description of the Warrants," "Description of the
Notes," and "Description of Capital Stock," respectively.
7
(w) The Company has all necessary consents, authorizations, approvals,
orders, certificates and permits of and from, and has made all declarations and
filings with, all federal, state, local and other governmental authorities and
all courts and other tribunals, to own, lease, license and use its properties
and assets and to conduct its business in the manner described in each
Memorandum, except to the extent that the failure to obtain such consents,
authorizations, approvals, orders, certificates and permits or to make such
filings would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(x) Subsequent to the dates as of which information is given in the
Preliminary Memorandum, (i) the Company has not incurred any material liability
or obligation, direct or contingent, nor entered into any material transaction
not in the ordinary course of business; (ii) the Company has not purchased any
of its outstanding capital stock, nor declared, paid or otherwise made any
dividend or distribution of any kind on its capital stock; and (iii) there has
not been any change in the capital stock, short-term debt or long-term debt of
the Company, except in each case as described in the Final Memorandum.
(y) The Company has good and marketable title in fee simple to all real
property and good and marketable title to all personal property owned by it
which is material to its business, in each case free and clear of all liens,
encumbrances and defects except such as do not materially affect the value of
such property and do not interfere with the use made and proposed to be made of
such property by the Company; and any real property and buildings held under
lease by the Company are held by them under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere with the
use made and proposed to be made of such property and buildings by the Company.
(z) The Company owns or possesses, or can acquire on reasonable terms, all
licenses, inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information, systems
or procedures), trademarks, service marks and trade names, and to the Company's
knowledge, all patents and patent rights necessary to carry on its respective
business in all material respects as described in each Memorandum, and, except
as set forth in each Memorandum, the Company has not received any correspondence
relating to any of the foregoing or notice of infringement of or conflict with
asserted rights of others with respect to any of the foregoing which the Company
believes would, singly or in the aggregate, have a material adverse effect on
the Company and its subsidiaries, taken as a whole.
(aa) No material labor dispute with the employees of the Company exists,
or, to the knowledge of the Company, is imminent; and the Company is not aware
of any existing, threatened or imminent labor disturbance by the employees of
any of its principal suppliers, manufacturers or contractors that could
reasonably be expected to result in any material adverse effect on the Company
and its subsidiaries, taken as a whole.
8
(bb) The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the business in which it is engaged for corporations similarly
situated and of comparable financial condition; the Company has not been refused
any insurance coverage sought or applied for; and the Company has no reason to
believe that it will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business at a cost that would not have a
material adverse effect on the Company and its subsidiaries, taken as a whole.
(cc) The Company possesses all certificates, authorizations and permits
issued by the appropriate federal, state or foreign regulatory authorities
necessary to conduct its respective business, except to the extent that the
failure to possess such certificates, authorizations and permits would not have
a material adverse effect on the Company and its subsidiaries, taken as a whole,
and the Company has not received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or permit
which, if the subject of an unfavorable decision, ruling or finding, would
result in material adverse effect on the Company and its subsidiaries, taken as
a whole.
(dd) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(ee) The Company is, and upon consummation of the transactions contemplated
by this Agreement will be, solvent. As used herein, the term "solvent" means,
with respect to the Company on a particular date, that on such date (i) the fair
market value of the assets of the Company is greater than the total amount of
liabilities (including contingent liabilities) of the Company, (ii) the present
fair salable value of the assets of the Company is greater than the amount that
will be required to pay the probable liabilities of the Company on its debts as
they become absolute and matured, (iii) the Company is able to pay its debts and
other liabilities, including contingent obligations, as they mature and (iv) the
Company does not have an unreasonably small capital for the business or any
transactions in which it is engaged or about to be engaged.
(ff) The accountants who certified the financial statements and supporting
schedules included in each Memorandum are independent certified public
accountants with respect to the Company and its subsidiaries within the meaning
of Regulation S-X under the Securities Act.
9
(gg) The financial statements, together with the related schedules and
notes, included in each Memorandum present fairly the financial position of the
Company at the dates indicated and the statement of operations, stockholders'
equity and cash flows of the Company for the periods specified; said financial
statements have been prepared in conformity with generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
involved. The selected financial data and the summary financial information
included in each Memorandum present fairly the information shown therein and
have been compiled on a basis consistent with that of the audited financial
statements included in the Final Memorandum.
(hh) The authorized, issued and outstanding capital stock of the Company is
as set forth in each Memorandum in the column entitled "Actual" under the
caption "Capitalization" (except for subsequent issuances, if any, pursuant to
this Agreement, pursuant to the employee benefit plan referred to each
Memorandum or pursuant to the exercise of convertible securities or options
referred to in each Memorandum). The shares of issued and outstanding capital
stock of the Company have been duly authorized and validly issued and are fully
paid and non-assessable and are free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity. None of the outstanding
shares of the capital stock of the Company was issued in violation of the
preemptive or other similar rights of any security holder of the Company.
(ii) All United States federal income tax returns of the Company required
by law to be filed have been filed and all taxes shown by such returns or
otherwise assessed, which are due and payable, have been paid, except
assessments against which appeals have been or will be promptly taken and as to
which adequate reserves in accordance with GAAP have been provided. The Company
has filed all other tax returns that are required to have been filed by it
pursuant to applicable foreign, state, local or other law except insofar as the
failure to file such returns would not result in a material adverse effect on
the Company and its subsidiaries, taken as a whole, and has paid all taxes due
pursuant to such returns or pursuant to any assessment received by the Company,
except for such taxes, if any, as are being contested in good faith and as to
which adequate reserves in accordance with GAAP have been provided. The
charges, accruals and reserves on the books of the Company in respect of any
income and corporation tax liability for any years not finally determined are
adequate to meet any assessments or re-assessments for additional income tax for
any years not finally determined, except to the extent of any inadequacy that
would not result in a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(jj) Except as disclosed in the Offering Memorandum, there are no persons
with registration right or other similar rights to have any securities
registered by the Company under the Securities Act.
(kk) No part of the proceeds of the sale of the Units, Notes or Warrants
will be used for any purpose that violates the provisions of any of Regulation
G, T, U or X of the Board of
10
Governors of the Federal Reserve System or any other applicable regulation of
such Board of Governors.
(ll) The Units, Notes and Warrants are eligible for resale pursuant to Rule
144A and will not be, at the Closing Date (as defined in Section 4), of the same
class as securities listed on a national securities exchange registered under
Section 6 of the Securities Exchange Act of 1934 (the "Exchange Act"), or quoted
in a U.S. automated interdealer quotation system.
(mm) Any certificate signed by any officer of the Company delivered to the
Placement Agent or to counsel for the Placement Agent shall be deemed a
representation and warranty by the Company to the Placement Agent as to the
matters covered thereby.
2. Agreements to Sell and Purchase. The Company hereby agrees to
-------------------------------
sell to the Placement Agent, and the Placement Agent, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees to purchase from the Company the respective number of
Units set forth in Schedule I hereto opposite its name at a purchase price of
$970.00 per Unit (the "Purchase Price") plus accrued interest on the Notes, if
any, from July 29, 1998 to the date of payment and delivery.
The Company hereby agrees that, without the prior written consent of
Xxxxxx Xxxxxxx & Co. Incorporated on behalf of the Placement Agent, it will not,
during the period ending 90 days after the date of the Final Memorandum, (i)
offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or (ii) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic consequences
of ownership of the Common Stock, whether any such transaction described in
clause (i) or (ii) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise. The foregoing sentence shall not apply
to (A) the sale of the Units, Notes, Warrants or Warrant Shares under this
Agreement or (B) the issuance by the Company of any shares of Common Stock upon
the exercise of an option or warrant or the conversion of a security outstanding
on the date hereof of which the Placement Agent has been advised in writing.
The Company hereby agrees that, without the prior written consent of
Xxxxxx Xxxxxxx & Co. Incorporated on behalf of the Placement Agent, it will not,
during the period beginning on the date hereof and continuing to and including
the Closing Date, offer, sell, contract to sell or otherwise dispose of any debt
or preferred stock of the Company or warrants to purchase debt or preferred
stock of the Company substantially similar to the Units, Notes, Warrants or
Warrant Shares (other than the sale of the Units, Notes, Warrants or Warrant
Shares under this Agreement.)
11
3. Terms of Offering. The Placement Agent will make an offering of
-----------------
the Units purchased by the Placement Agent hereunder on the terms to be set
forth in the Final Memorandum as soon as practicable after this Agreement is
entered into as in your judgment is advisable.
4. Payment and Delivery. Payment for the Units shall be made to the
--------------------
Company in Federal or other funds immediately available in New York City against
delivery of such Units for the respective accounts of the Placement Agent at
10:00 a.m., New York City time, on July 29, 1998, or at such other time on the
same or such other date, not later than [________], 1998, as shall be designated
in writing by you. The time and date of such payment are hereinafter referred
to as the "Closing Date."
Certificates for the Units, Notes and Warrants shall be in definitive
or global form, as specified by you, and registered in such names and in such
denominations as you shall request in writing not less than one full business
day prior to the Closing Date. The certificates evidencing the Units, Notes and
Warrants shall be delivered to you on the Closing Date for the account of the
Placement Agent, with any transfer taxes payable in connection with the transfer
of the Units, Notes or Warrants to the Placement Agent duly paid, against
payment of the purchase price therefor.
5. Conditions to the Placement Agent's Obligations. The obligations
-----------------------------------------------
of the Placement Agent under this Agreement to purchase the Units on the Closing
Date will be subject to the following conditions:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date there shall not have occurred any change, or any
development involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations, of the Company and its
subsidiaries, taken as a whole, from that set forth in the Final Memorandum
(exclusive of any amendments or supplements thereto subsequent to the date of
this Agreement) that, in your judgment, is material and adverse and that makes
it, in your judgment, impracticable to market the Units on the terms and in the
manner contemplated in the Final Memorandum.
(b) You shall have received on the Closing Date a certificate, dated
the Closing Date and signed by an executive officer of the Company, to the
effect set forth in clause (a) above and to the effect that the representations
and warranties of the Company contained in this Agreement are true and correct
as of the Closing Date and that the Company has complied with all of the
agreements and satisfied all of the conditions on its part to be performed or
satisfied on or before the Closing Date.
The officer signing and delivering such certificate may rely upon the
best of his or her knowledge as to proceedings threatened.
12
(c) You shall have received on the Closing Date an opinion of Xxxxxx
Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation, counsel for the Company,
dated the Closing Date, in the form of Exhibit C hereto.
(d) You shall have received on the Closing Date an opinion of Shearman
& Sterling, counsel for the Placement Agent, dated the Closing Date, in form and
substance satisfactory to you, and such counsel shall have received such
documents and information as they may reasonably request to enable them to pass
upon such matters.
(e) You shall have received on each of the date hereof and the Closing
Date a letter, dated the date hereof or the Closing Date, as the case may be, in
form and substance satisfactory to you, from the Company's independent public
accountants, containing statements and information of the type ordinarily
included in accountants' "comfort letters" with respect to the financial
statements and certain financial information contained in the Final Memorandum;
provided that the letter delivered on the Closing Date shall use a "cut-off
date" not earlier than the date hereof.
(f) The "lock-up" agreements, each substantially in the form of
Exhibit D hereto, between you and certain shareholders, officers and directors
of the Company relating to sales and certain other dispositions of shares of
common stock or certain other securities, delivered to you on or before the date
hereof, shall be in full force and effect on the Closing Date.
(g) The Placement Agent and its counsel shall have been furnished with
such other documents and certificates as they shall reasonably request.
6. Covenants of the Company. In further consideration of the
------------------------
agreements of the Placement Agent contained in this Agreement, the Company
covenants as follows:
(a) To furnish to you in New York City, without charge, prior to 10:00
a.m. New York City time on the business day next succeeding the date of this
Agreement and during the period mentioned in Section 6(c), as many copies of the
Final Memorandum and any supplements and amendments thereto as you may
reasonably request.
(b) Before amending or supplementing either Memorandum, to furnish to you
a copy of each such proposed amendment or supplement and not to use any such
proposed amendment or supplement to which you reasonably object.
(c) If, during such period after the date hereof and prior to the date on
which all of the Units shall have been sold by the Placement Agent, any event
shall occur or condition exist as a result of which it is necessary in the
opinion of counsel to the Placement Agent to make the statements therein, in the
light of the circumstances when such Memorandum is delivered to a purchaser, not
misleading, or if, in the opinion of counsel to the Placement Agent it is
necessary
13
to amend or supplement such Memorandum to comply with applicable law, forthwith
to prepare and furnish, at its own expense, to the Placement Agent, either
amendments or supplements to such Memorandum so that the statements in such
Memorandum as so amended or supplemented will not, in the light of the
circumstances when such Memorandum is delivered to a purchaser, be misleading or
so that such Memorandum, as so amended or supplemented, will comply with
applicable law.
(d) To use its best efforts to qualify the Units, Notes and Warrants for
offer and sale under the securities or Blue Sky laws of such jurisdictions as
you shall reasonably request.
(e) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to the performance of its obligations under this Agreement,
including: (i) the fees, disbursements and expenses of the Company's counsel and
the Company's accountants in connection with the issuance and sale of the Units
and all other fees or expenses in connection with the preparation of each
Memorandum and all amendments and supplements thereto, including all printing
costs associated therewith, and the delivering of copies thereof to the
Placement Agent, in the quantities herein above specified, (ii) all costs and
expenses related to the transfer and delivery of the Units to the Placement
Agent, including any transfer or other taxes payable thereon, (iii) the cost of
printing or producing any Blue Sky or legal investment memorandum in connection
with the offer and sale of the Units under state securities laws and all
expenses in connection with the qualification of the Units for offer and sale
under state securities laws as provided in Section 6(d) hereof, including filing
fees and the reasonable fees and disbursements of counsel for the Placement
Agent in connection with such qualification and in connection with the Blue Sky
or legal investment memorandum, (iv) all document production charges and
expenses of counsel to the Placement Agent (but not including its fees for
professional services) in connection with the preparation of this Agreement, (v)
the fees and expenses, if any, incurred in connection with the admission of the
Units, Notes, Warrants or Warrant Shares for trading in PORTAL or any
appropriate market system, (vi) the costs and charges of the Trustee, the
Warrant Agent and any transfer agent, registrar or depositary, (vii) the cost of
the preparation, issuance and delivery of the Units, (viii) the costs and
expenses of the Company relating to investor presentations on any "road show"
undertaken in connection with the marketing of the offering of the Units,
including, without limitation, expenses associated with the production of road
show slides and graphics, fees and expenses of any consultants engaged in
connection with the road show presentations with the prior approval of the
Company, travel and lodging expenses of the representatives and officers of the
Company and any such consultants, and the cost of any aircraft chartered in
connection with the road show, and (ix) all other costs and expenses incident to
the performance of the obligations of the Company hereunder for which provision
is not otherwise made in this Section. It is understood, however, that except
as provided in this Section, Section 8, and the last paragraph of Section 10,
the Placement Agent will pay all of their costs and expenses, including fees and
disbursements of their counsel, transfer taxes payable on resale of any of the
Units by them and any advertising expenses connected with any offers they may
make.
14
(f) Neither the Company nor any Affiliate (except the Placement Agent and
Princes Gate Investors II, L.P., as to which the Company makes no covenants)
will sell, offer for sale or solicit offers to buy or otherwise negotiate in
respect of any security (as defined in the Securities Act) which could be
integrated with the sale of the Units, Notes or Warrants in a manner which would
require the registration under the Securities Act of the Units, the Notes or the
Warrants.
(g) Not to solicit any offer to buy or offer or sell the Units, Notes,
Warrants or Warrant Shares by means of any form of general solicitation or
general advertising (as those terms are used in Regulation D under the
Securities Act) or in any manner involving a public offering within the meaning
of Section 4(2) of the Securities Act.
(h) While any of the Units, the Notes or the Warrants remain outstanding,
to make available, upon request, to any seller of the Units, Notes, Warrants or
Warrant Shares the information specified in Rule 144A(d)(4) under the Securities
Act, unless the Company is then subject to Section 13 or 15(d) of the Exchange
Act.
(i) During the period of two years after the Closing Date, the Company
will not, and will not permit any of its affiliates (as defined in Rule 144
under the Securities Act) (other than the Placement Agent and Princes Gate
Investors II, L.P., as to which the Company makes no covenants) to resell any of
the Units, Notes, Warrants or Warrant Shares which constitute "restricted
securities" under Rule 144 that have been reacquired by any of them.
(j) To use its best efforts to permit the Units, Notes, Warrants and
Warrant Shares to be designated PORTAL securities in accordance with the rules
and regulations adopted by the National Association of Securities Dealers, Inc.
relating to trading in the PORTAL Market.
7. Offering of Securities; Restrictions on Transfer. (a) The
------------------------------------------------
Placement Agent represents and warrants that it is a qualified institutional
buyer as defined in Rule 144A under the Securities Act (a "QIB"). The Placement
Agent agrees with the Company that (i) it will not solicit offers for, or offer
or sell, the Units, Notes or Warrants by any form of general solicitation or
general advertising (as those terms are used in Regulation D under the
Securities Act) or in any manner involving a public offering within the meaning
of Section 4(2) of the Securities Act and (ii) it will solicit offers for Units,
Notes or Warrants only from, and will offer Units, Notes or Warrants only to,
persons that it reasonably believes to be QIBs.
(b) The Placement Agent represents, warrants, and agrees with respect to
offers and sales outside the United States that:
(i) it understands that no action has been or will be taken in any
jurisdiction by the Company that would permit a public offering of the
Units, Notes or Warrants, or possession or distribution of either
Memorandum or any other offering or publicity
15
material relating to the Units, Notes or Warrants, in any country or
jurisdiction where action for that purpose is required;
(ii) the Placement Agent will comply with all applicable laws and
regulations in each jurisdiction in which it acquires, offers, sells or
delivers Units, Notes or Warrants or has in its possession or distributes
either Memorandum or any such other material, in all cases at its own
expense; and
(iii) the Units, the Notes and the Warrants have not been and will
not be registered under the Securities Act and may not be offered or sold
within the United States or to, or for the account or benefit of, U.S.
persons except in accordance with Rule 144A under the Securities Act or
pursuant to another exemption from the registration requirements of the
Securities Act.
8. Indemnification and Contribution. (a) The Company agrees to
--------------------------------
indemnify and hold harmless the Placement Agent, and each person, if any, who
controls the Placement Agent within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, or is under common control
with, or is controlled by, such Placement Agent, from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred by the Placement Agent or any such
controlling of affiliated person in connection with defending or investigating
any such action or claim) caused by any untrue statement or alleged untrue
statement of a material fact contained in either Memorandum (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact necessary to make the statements therein in light of the
circumstances under which they were made not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue statement
or omission or alleged untrue statement or omission based upon information
relating to the Placement Agent furnished to the Company in writing by the
Placement Agent through you expressly for use therein.
(b) The Placement Agent agrees to indemnify and hold harmless the
Company, its directors, its officers and each person, if any, who controls the
Company within the meaning of either Section 15 of the Securities Act or Section
20 of the Exchange Act to the same extent as the foregoing indemnity from the
Company to the Placement Agent, but only with reference to information relating
to the Placement Agent furnished to the Company in writing by the Placement
Agent through you expressly for use in either Memorandum or any amendments or
supplements thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to either paragraph (a) or (b) above, such
person (the "indemnified party") shall promptly notify the person against whom
such indemnity may be sought (the "indemnifying party") in writing and the
16
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any necessary local counsel) for all such indemnified parties and that all
such fees and expenses shall be reimbursed as they are incurred. Such firm
shall be designated in writing by Xxxxxx Xxxxxxx & Co. Incorporated in the case
of parties indemnified pursuant to paragraph (a) above and by the Company in the
case of parties indemnified pursuant to paragraph (b) above. The indemnifying
party shall not be liable for any settlement of any proceeding effected without
its written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by the second
and third sentences of this paragraph, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days after
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party in accordance
with such request prior to the date of such settlement. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(d) To the extent the indemnification provided for in paragraph (a) or
(b) of this Section 8 is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages or liabilities, then each indemnifying
party under such paragraph, in lieu of indemnifying such indemnified party
thereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabilities (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, on the one hand, and the Placement Agent, on the other hand, from the
offering of the Units, Notes and Warrants or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
17
above but also the relative fault of the Company on the one hand and the
Placement Agent on the other hand in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Placement Agent on the other hand in connection
with the offering of the Units, Notes and Warrants shall be deemed to be in the
same respective proportions as the net proceeds from the offering of the Units,
Notes and Warrants (before deducting expenses) received by the Company and the
total discounts and commissions received by the Placement Agent in respect
thereof bear to the aggregate offering price of the Units, Notes and Warrants.
The relative fault of the Company on the one hand and of the Placement Agent on
the other hand shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or by the Placement Agent and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
(e) The Company and the Placement Agent agree that it would not be
just or equitable if contribution pursuant to this Section 8 were determined by
pro rata allocation or by any other method of allocation that does not take
--- ----
account of the equitable considerations referred to in paragraph (d) above. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in paragraph (d) above shall be
deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8, the Placement Agent shall not be required to
contribute any amount in excess of the amount by which the total price at which
the Units, Notes and Warrants resold by it in the initial placement of the
Units, Notes and Warrants were offered to investors exceeds the amount of any
damages that the Placement Agent has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The remedies provided
for in this Section 8 are not exclusive and shall not limit any rights or
remedies which may otherwise be available to any indemnified party at law or in
equity.
(f) The indemnity and contribution provisions contained in this
Section 8 and the representations, warranties and other statements of the
Company contained in this Agreement shall remain operative and in full force and
effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of any Placement Agent or any person
controlling any Placement Agent or by or on behalf of the Company, its officers
or directors or any person controlling the Company and (iii) acceptance of and
payment for any of the Units, Notes and Warrants.
18
9. Termination. This Agreement shall be subject to termination by
-----------
notice given by you to the Company, if (a) after the execution and delivery of
this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of the
New York Stock Exchange, the American Stock Exchange, the National Association
of Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses (a)(i) through (iv), such event singly or
together with any other such event makes it, in your judgment, impracticable to
market the Units, Notes and Warrants on the terms and in the manner contemplated
in the Final Memorandum.
10. Effectiveness; Defaulting Placement Agents. This Agreement shall
------------------------------------------
become effective upon the execution and delivery hereof by the parties hereto.
If this Agreement shall be terminated by the Placement Agent because
of any failure or refusal on the part of the Company to comply with the terms or
to fulfill any of the conditions of this Agreement, or if for any reason the
Company shall be unable to perform its obligations under this Agreement, the
Company will reimburse the Placement Agent for all out-of-pocket expenses
(including the fees and disbursements of its counsel) reasonably incurred by the
Placement Agent in connection with this Agreement or the offering contemplated
hereunder.
11. Notices. All notices and other communications under this
-------
Agreement shall be in writing and mailed, delivered or sent by facsimile
transmission to: if sent to the Placement Agent, Xxxxxx Xxxxxxx & Co.
Incorporated, 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, attention: High Yield New
Issues Group, facsimile number (000) 000-0000 and if sent to the Company, to
0000 Xxxx Xxxxxxx Xxxxxx, 0/xx/ Xxxxx, Xxxxxxx, Xxxxxxxxxx 00000, attention:
Xxxxxx Xxxxxx, Esq., facsimile number (000) 000-0000.
12. Counterparts. This Agreement may be signed in any number of
------------
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
13. Applicable Law. This Agreement shall be governed by and
--------------
construed in accordance with the laws of the State of New York.
14. Headings. The headings of the sections of this Agreement have
--------
been inserted for convenience of reference only and shall not be deemed a part
of this Agreement.
19
Please confirm your agreement to the foregoing by signing in the space
provided below for that purpose and returning to us a copy hereof, whereupon
this Agreement shall constitute a binding agreement between us.
Very truly yours,
TVN ENTERTAINMENT
CORPORATION
By: /s/ Xxxxxx Xxxxxx
---------------------------------------
Name: Xxxxxx Xxxxxx
Title: Senior Executive Vice President
Agreed, July 24, 1998
XXXXXX XXXXXXX & CO.
INCORPORATED
By: /s/ Xxxxx X. Xxxx
-----------------------
Name: Xxxxx X. Xxxx
Title: Vice President
SCHEDULE I
Number Units
Placement Agent To Be Purchased
--------------- ---------------------
Xxxxxx Xxxxxxx & Co. Incorporated....... 200,000
Total.............................. 200,000
EXHIBIT C
---------
Opinion of Counsel
for the Company
The opinion of the counsel for the Company to be delivered pursuant to
Section 5(c) of the Placement Agreement shall be to the effect that:
(A) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property
and to conduct its business as described in the Final Memorandum, and is
duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that
the failure to be so qualified or be in good standing would not have a
material adverse effect on the Company and its subsidiaries, taken as a
whole;
(B) Each subsidiary of the Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to
own its property and to conduct its business as described in the Final
Memorandum and is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except to the
extent that the failure to be so qualified or be in good standing would not
have a material adverse effect on the Company and its subsidiaries, taken
as a whole; all of the issued shares of capital stock of each subsidiary of
the Company have been duly and validly authorized and issued, are fully
paid and non-assessable, and are owned directly by the Company, free and
clear of all liens, encumbrances, equities or claims.
(C) The Placement Agreement has been duly authorized, executed and
delivered by the Company;
(D) Each of the Registration Rights Agreements have been duly
authorized, executed and delivered by the Company and (assuming the due
authorization, execution and delivery thereof by the Placement Agent) is a
valid and binding agreement of the Company in accordance with its terms,
except as the enforcement thereof may be limited by (i) bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws relating to or
affecting enforcement of creditors' rights, (ii) general principles of
equity (regardless of whether enforcement is considered in a proceeding in
equity or at law) or (iii) applicable public policy considerations.
C-1
(E) The Notes are in the form contemplated by the Indenture and have
been duly authorized by the Company and when executed by the Company and
authenticated by the trustee (assuming the due authorization, execution and
delivery of the Indenture by the Trustee) and delivered in accordance with
the Indenture and paid for by the Placement Agent in accordance with the
terms of the Placement Agreement, will be valid and binding obligations of
the Company, enforceable in accordance with their terms, except as the
enforcement thereof may be limited by (i) bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws relating to or affecting
enforcement of creditors' rights, (ii) general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity
or at law) or (iii) applicable public policy considerations, and will be
entitled to the benefits of the Indenture.
(F) The Indenture has been duly authorized, executed and delivered by
the Company and (assuming the due authorization, execution and delivery of
the Indenture by the Trustee) is a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms,
except as the enforcement thereof may be limited by (i) bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws relating to or
affecting enforcement of creditors' rights, (ii) general principles of
equity (regardless of whether enforcement is considered in a proceeding in
equity or at law) or (iii) applicable public policy considerations.
(G) The Warrants are in the form contemplated by the Warrant Agreement
and have been duly authorized by the Company and when executed by the
Company and countersigned by the Warrant Agent as provided in the Warrant
Agreement (assuming the due authorization, execution and delivery of the
Warrant Agreement by the Warrant Agent), and delivered to and paid for by
the Placement Agent in accordance with the terms of the Placement
Agreement, will be valid and binding obligations of the Company,
enforceable in accordance with their terms, except as the enforcement
thereof may be limited by (i) bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or similar laws relating to or affecting enforcement of
creditors' rights, (ii) general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law) or (iii)
applicable public policy considerations, and will be entitled to the
benefits of the Warrant Agreement.
(H) The Warrant Agreement has been duly authorized, executed and
delivered by the Company and (assuming the due authorization, execution and
delivery of the Warrant Agreement by the Warrant Agent) is a valid and
binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as the enforcement thereof may be limited
by (i) bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or similar
laws relating to or affecting enforcement of creditors' rights, (ii)
general principles of
equity (regardless of whether enforcement is considered in a proceeding in
equity or at law) or (iii) applicable public policy considerations.
(I) The Warrant Shares have been duly authorized and reserved for
issuance by the Company and, when issued and delivered upon exercise of the
Warrants in accordance with the terms of the Warrants and the Warrant
Agreement, will be validly issued, fully paid and nonassessable and will
not be subject to any preemptive or similar rights.
(J) The Pledge Agreement has been duly authorized, executed and
delivered by the Company and (assuming the due authorization, execution and
deliver of the Pledge Agreement by the Collateral Agent) is a valid and
binding agreement of the Company enforceable against the Company in
accordance with its terms, except as the enforcement thereof may be limited
by (i) bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or similar
laws relating to or affecting enforcement of creditors' rights, (ii)
general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law) or (iii) applicable public
policy considerations.
(K) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in each Memorandum.
(L) The shares of Common Stock outstanding on the date hereof have
been duly authorized and are validly issued, fully paid and non-assessable.
(M) The execution and delivery by the Company of, and the performance
by the Company of its obligations under, the Placement Agreement, the
Registration Rights Agreements, the Indenture, the Notes, the Warrant
Agreement, the Warrants and the Pledge Agreement and the issuance, sale and
delivery of the Units, the Notes and the Warrants and the issuance of the
Warrant Shares upon exercise of the Warrants in accordance with the terms
of the Warrants and the Warrant Agreement will not contravene any provision
of applicable law or the certificate of incorporation or by-laws of the
Company or, to such counsel's knowledge, any agreement or other instrument
binding upon the Company or any of its subsidiaries or, to such counsel's
knowledge, any judgment, order or decree of any governmental body, agency
or court having jurisdiction over the Company or any of its subsidiaries,
and no consent, approval, authorization or order of, or qualification with,
any governmental body or agency is required for the performance by the
Company of its obligations under the Placement Agreement, the Registration
Rights Agreements, the Indenture, the Notes, the Warrant Agreement, the
Warrants and the Pledge Agreement and the issuance, sale and delivery of
the Units, the Notes and the Warrants and the issuance of the Warrant
Shares upon exercise of the Warrants in accordance with the terms of the
Warrants and the Warrant Agreement, except such as may be required by the
securities or Blue Sky laws of the various states in
C-3
connection with the offer and sale of the Units, Notes or Warrants and by
Federal and state securities laws with respect to the Company's obligations
under the Notes Registration Rights Agreement and Warrant Registration
Rights Agreement.
(N) To such counsel's knowledge, there is not pending or threatened
any legal or governmental proceedings to which the Company or any of its
subsidiaries is a party or to which any of the properties of the Company or
any of its subsidiaries is subject other than proceedings fairly summarized
in all material respects in each Memorandum and proceedings that would not
have a material adverse effect on the Company and its subsidiaries, taken
as a whole, or on the power or ability of the Company to perform its
obligations under the Placement Agreement, the Registration Rights
Agreements, the Indenture, the Notes, the Warrant Agreement, the Warrants
and the Pledge Agreement or to consummate the transactions contemplated by
the Final Memorandum.
(O) The Company is not and, after giving effect to the sale of the
Units, Notes and Warrants and the application of the net proceeds therefrom
as described in the Final Memorandum, will not be, an "investment company"
or an entity "controlled" by an "investment company," as such terms are
defined in the Investment Company Act of 1940, as amended.
(P) Based upon the representations, warranties, and agreements of the
Company in Sections 1(p), 1(v), 6(f), 6(g) and 6(i) of the Placement
Agreement and of the Placement Agent in Section 7 of the Placement
Agreement, it is not necessary in connection with the offer, sale and
delivery of the Units, the Notes or the Warrants to the Placement Agent
under the Placement Agreement or in connection with the initial resale of
the Units, the Notes or the Warrants by the Placement Agent in accordance
with Section 6 of the Placement Agreement to register the Units, the Notes
or the Warrants under the Securities Act or to qualify the Indenture under
the Trust Indenture Act of 1939, as amended, it being understood that no
opinion is expressed as to any subsequent resale of any Units, Notes or
Warrants.
(Q) The statements in the Final Memorandum under the captions "Risk
Factors--Original Issue Discount", "Description of the Units", "Description
of the Notes","Description of the Warrants", "Description of Capital
Stock", "Private Placement" and "Transfer Restrictions", insofar as such
statements constitute a summary of the legal matters, documents or
proceedings referred to therein, fairly present the information
respectively called for with respect to such legal matters, documents or
proceedings and fairly summarize in all material respects the matters
respectively referred to therein.
(R) Such counsel is of the opinion that the statements in the Final
Memorandum, under the caption "Certain Federal Income Tax Considerations"
are accurate and fairly summarize the matters referred to therein.
C-4
(S) While we have not performed any independent check or verification
of the information contained in the Final Memorandum (except with respect
to paragraphs (P) and (Q) above), we have participated in the drafting and
preparation of each of the Memoranda (and any amendments or supplements
thereto) and in the course of such participation, nothing has come to our
attention that leads us to believe that, except for financial statements,
financial data and schedules as to which we express no belief, the Final
Memorandum contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
C-5
EXHIBIT D
FORM OF LOCK-UP LETTER
July 24, 1998
Xxxxxx Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Dear Sirs and Mesdames:
The undersigned understands that Xxxxxx Xxxxxxx & Co. Incorporated
("XXXXXX XXXXXXX") proposes to enter into a Placement Agreement (the "PLACEMENT
AGREEMENT") with TVN Entertainment Corporation, a Delaware corporation (the
"COMPANY"), providing for the offering (the "OFFERING") by the Xxxxxx Xxxxxxx
(the "PLACEMENT AGENT"), of 200,000 Units (the "Units"), each Unit consisting of
one 14% Senior Note due 2008 with a principal amount of $1,000 (collectively the
"Notes") and one Warrant (each a "Warrant" and collectively, the "Warrants")
entitling the holder thereof to purchase 10.777 shares of Common Stock, par
value $0.001 per share, of the Company.
To induce the Placement Agent to continue its efforts in connection
with the Offering, the undersigned hereby agrees that, without the prior written
consent of Xxxxxx Xxxxxxx on behalf of the Placement Agent, it will not, during
the period commencing on the date hereof and ending 90 days after the date of
the final offering memorandum relating to the Offering (the "FINAL MEMORANDUM"),
(1) offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase, lend, or otherwise transfer or dispose of, directly or
indirectly, any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock or (2) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of the Common Stock, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of Common
Stock or such other securities, in cash or otherwise. The foregoing sentence
shall not apply to transactions relating to shares of Common Stock or other
securities acquired in open market transactions after the completion of the
Offering. In addition, the undersigned agrees that, without the prior written
consent of Xxxxxx Xxxxxxx on behalf of the Placement Agent, it will not, during
the period commencing on the date hereof and ending 90 days after the date of
the Final Memorandum, make any demand for or exercise any right with respect to,
the registration of any shares of
D-1
Common Stock or any security convertible into or exercisable or exchangeable for
Common Stock.
Whether or not the Offering actually occurs depends on a number of
factors, including market conditions. Any Offering will be made only pursuant
to a Placement Agreement, the terms of which are subject to negotiation between
the Company and the Placement Agent.
Very truly yours,
_____________________
Name:
_____________________
(Address)
D-2
