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INVESTMENT AGREEMENT
among
RARE MEDIUM GROUP, INC.
and
EACH OF THE SIGNATORIES HERETO
Dated April 2, 2002
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TABLE OF CONTENTS
Page
Section 1. Definitions........................................................................................2
Section 2. Purchase of Non-Voting Stock by the Purchasers.....................................................4
2.1 SALE AND PURCHASE OF NON-VOTING STOCK....................................................................4
2.2 ADJUSTMENT OF PURCHASE PRICE.............................................................................5
2.3 DEEMED EXERCISE OF RIGHTS................................................................................5
2.4 FAILURE OF RIGHTS OFFERING TO OCCUR......................................................................5
Section 3. Representations and Warranties of the Purchasers...................................................5
3.1 ORGANIZATION.............................................................................................5
3.2 DUE AUTHORIZATION........................................................................................6
3.3 DUE EXECUTION; ENFORCEABILITY............................................................................6
3.4 CONSENTS.................................................................................................6
3.5 NO CONFLICTS.............................................................................................6
3.6 INVESTMENT REPRESENTATIONS AND WARRANTIES................................................................6
3.7 NO BROKERS...............................................................................................7
Section 4. Representations and Warranties of the Company......................................................7
4.1 ORGANIZATION.............................................................................................7
4.2 DUE AUTHORIZATION........................................................................................8
4.3 DUE EXECUTION; ENFORCEABILITY............................................................................8
4.4 CONSENTS.................................................................................................8
4.5 NO CONFLICTS.............................................................................................8
4.6 CAPITALIZATION...........................................................................................8
4.7 DUE ISSUANCE AND AUTHORIZATION OF CAPITAL STOCK..........................................................9
4.8 FORM S-3 ELIGIBILITY....................................................................................10
4.9 BOARD OF DIRECTORS......................................................................................10
Section 5. Conditions Precedent to Obligations of the Company................................................10
5.1 NO LITIGATION...........................................................................................10
5.2 PERFORMANCE.............................................................................................10
5.3 DELIVERIES..............................................................................................10
Section 6. Conditions Precedent to the Obligations of the Purchasers.........................................10
6.1 NO LITIGATION...........................................................................................10
6.2 PERFORMANCE.............................................................................................11
6.3 DELIVERIES..............................................................................................11
Section 7. Closing...........................................................................................11
Section 8. Covenants.........................................................................................11
8.1 THE TENDER OFFER........................................................................................11
8.2 SPECIAL MEETING OF STOCKHOLDERS.........................................................................12
8.3 THE RIGHTS OFFERING.....................................................................................13
8.4 LISTING OBLIGATION......................................................................................15
8.5 AMENDMENTS TO THE RIGHTS OF THE PURCHASERS..............................................................15
8.6 TRANSFER OF NON-VOTING STOCK............................................................................17
8.7 PRO-RATA VOTING PURCHASERS' TENDER SHARES...............................................................18
8.8 COOPERATION WITH THE RIGHTS OFFERING....................................................................18
8.9 COURT APPROVAL OF SETTLEMENT AGREEMENT..................................................................18
8.10 FURTHER ASSURANCES......................................................................................18
Section 9. Miscellaneous.....................................................................................18
9.1 NOTICES.................................................................................................18
9.2 INDEMNIFICATION.........................................................................................19
9.3 FEES AND EXPENSES.......................................................................................19
9.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES ETC..........................................................19
9.5 ASSIGNMENT..............................................................................................20
9.6 LEGEND..................................................................................................20
9.7 REMOVAL OF LEGEND.......................................................................................20
9.8 ENTIRE AGREEMENT........................................................................................20
9.9 WAIVERS AND AMENDMENTS..................................................................................21
9.10 GOVERNING LAW; JURISDICTION; VENUE; PROCESS.............................................................21
9.11 COUNTERPARTS............................................................................................21
9.12 HEADINGS................................................................................................21
INVESTMENT AGREEMENT
THIS INVESTMENT AGREEMENT (this "Agreement") is made this
2nd day of April, 2002 among Rare Medium Group, Inc., a Delaware
corporation (the "Company"), and each of the signatories identified on the
signature page to this Agreement (collectively, the "Purchasers" and,
individually, a "Purchaser").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, in connection with, and as part of, an agreement to
settle pending and threatened litigation in the matter of In Re Rare Medium
Group, Inc. Shareholders Litigation, Consolidated C.A. No. 18879NC, an
executed copy of which is attached hereto as Exhibit A (the "Settlement
Agreement"), the Company and the Purchasers desire to enter into this
Agreement;
WHEREAS, each Purchaser owns shares of the Company's Series A
Stock, Common Stock and Warrants;
WHEREAS, the Board of Directors has determined that, among other
things, in order to maintain the listing of the Company's Common Stock on
the Nasdaq, the Company desires to solicit proxies to vote at a special
meeting of stockholders (the "Special Meeting") to approve an amendment to
the Restated Charter which provides for a one for ten reverse stock split
(the "Reverse Stock Split") of each of the issued and outstanding shares of
Common Stock and Non-Voting Stock;
WHEREAS, in connection with the Settlement Agreement, the Board of
Directors has determined that it is in the best interests of the Company
and its stockholders to effect a rights offering ("Rights Offering") and to
distribute non-transferable rights (the "Rights") to purchase Common Stock
(or, in the case of Rights distributed to the Purchasers or any of their
Affiliates, Non-Voting Stock) to holders of Series A Stock, Common Stock
and Warrants;
WHEREAS, in connection with the Settlement Agreement, each of the
Purchasers has agreed to purchase shares in advance of the Rights Offering
equal to its pro rata share in the form of Non-Voting Stock in lieu of
Common Stock that otherwise would have been subject to the Rights
distributed to the Purchasers in the Rights Offering, at the same price at
which shares of Common Stock will be offered to the Company's other
stockholders pursuant to the Rights Offering (the "Advance Purchase");
WHEREAS, the Company also desires to submit for stockholders'
approval at the Special Meeting the issuance of the shares of Common Stock
in connection with the Rights Offering;
WHEREAS, in connection with the Settlement Agreement and to
provide additional liquidity to the stockholders, as soon as practicable
after the Closing, the Purchasers have agreed to commence a tender offer to
purchase up to 15,002,909 shares of Common Stock on the terms and subject
to the conditions set forth herein; and
WHEREAS, in order to facilitate the Settlement Agreement and the
Rights Offering, the Purchasers are, among other things, willing to
implement the independent directors agreement set forth in the Settlement
Agreement and willing to waive, under the circumstances set forth herein
and in the Settlement Agreement, certain rights related to their ownership
of Series A Stock and Warrants, including the cancellation of 20% of the
Warrants, altering the form of payment of the dividends on the Series A
Stock for a designated time period, foregoing certain anti-dilution rights,
foregoing certain over-subscription rights and agreeing to offer to
purchase shares of Common Stock at a premium to the market price;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained in this Agreement, the parties to this
Agreement hereby agree as follows:
Section 1. Definitions. For purposes of this Agreement, the following terms
will have the meaning set forth below:
"Adjustment Amount" has the meaning assigned it in Section 2.2(a).
"Advance Purchase" has the meaning assigned it in the Preamble.
"Affiliate" of any Person means any Person that directly or
indirectly controls, or is under common control with, or is controlled by,
such Person. As used in this definition, "control" (including with its
correlative meanings, "controlled by" and "under common control with")
shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person (whether
through ownership of securities or partnership or other ownership
interests, by contract or otherwise).
"Agreement" means this Investment Agreement.
"Board of Directors" means the Board of Directors of the Company.
"Business Day" means any day, other than Saturday, Sunday or a
federal holiday, and shall consist of the time period from 12:01 a.m.
through 12:00 midnight Eastern time.
"Closing" has the meaning assigned it in Section 2.1.
"Closing Date" has the meaning assigned it in Section 7.
"Common Stock" means the Company's Common Stock, par value $0.01
per share.
"Company" has the meaning assigned it in the Preamble.
"Conversion Proposal" means a proposal contained in a Proxy
Statement approving the exchange of Non-Voting Stock for Common Stock, on a
one for one basis, under the circumstances contemplated by Section 8.6(b)
in respect of which a majority of those shares represented at the Special
Meeting, are voted in favor thereof.
"Disposition" has the meaning assigned it in Section 8.6(b).
"Encumbrances" means any liens, claims, judgments, charges,
mortgages, security interests, pledges, other encumbrances or preemptive or
any other similar rights of any or all of the stockholders of the Company
or others.
"Expiration Date" has the meaning assigned it in Section 8.1(a).
"Final" means the date on which an order is affirmed on appeal, or
otherwise becomes no longer subject to judicial review or modification,
whether by lapse of time to appeal or otherwise.
"Final Judgment" has the meaning assigned it in Section III(H) of
the Settlement Agreement.
"Indemnitees" has the meaning assigned it in Section 9.2.
"Independent Directors Agreement" has the meaning assigned to it
in Section III(C)(6) of the Settlement Agreement.
"Nasdaq" means the Nasdaq National Market System.
"Non-Voting Stock" means the Company's Non-Voting Common Stock,
par value $0.01 per share.
"Notice" has the meaning assigned it in Section 8.6(a).
"Offer" has the meaning assigned it in Section 8.1(a).
"Offer Documents" has the meaning assigned it in Section 8.1(c).
"Offer Price" has the meaning assigned it in Section 8.1(a).
"Offer to Purchase" means an offer to purchase pursuant to the
terms of the Offer.
"Original Investment Agreement" means the Amended and Restated
Securities Purchase Agreement among the Company and the Purchasers dated as
of June 4, 1999.
"Person" includes all natural persons, corporations, business
trusts, limited liability companies, associations, companies, partnerships,
joint ventures and other entities and governments and agencies and
political subdivisions.
"Proxy Statement" means a Proxy Statement on Schedule 14A
(together with any amendments and supplements thereto and including the
exhibits thereto).
"Purchase Price" has the meaning assigned it in Section 2.1.
"Purchasers" has the meaning assigned it in the Preamble.
"Restated Charter" means the Company's Restated Certificate of
Incorporation.
"Restated Bylaws" means the Company's Amended and Restated By-laws.
"Reverse Split Stock" has the meaning assigned it in the Preamble.
"Rights" means the non-transferable rights to purchase Common
Stock or, in the case of Rights distributed to the Purchasers or any of
their Affiliates, Non-Voting Stock.
"Rights Offering" has the meaning assigned it in the Preamble.
"Rights Shares" means the shares of Common Stock and Non-Voting
Stock issuable upon exercise of the Rights.
"Schedule TO" means a Transaction Statement on Schedule TO
(together with any amendments and supplements thereto and including the
exhibits thereto).
"SEC" means the Securities and Exchange Commission.
"Securities" means any of a Purchaser's shares of Common Stock,
Non-Voting Stock, Series A Stock or Warrants, including, without
limitation, any securities acquired in the Offer or otherwise after the
date hereof.
"Securities Act" means the Securities Act of 1933, as amended.
"Series A Stock" means the Company's Series A Convertible
Preferred Stock, par value $0.01 per share.
"Settlement Agreement" has the meaning assigned it in the
Preamble.
"Special Meeting" has the meaning assigned it in the Preamble.
"Subscription Price" has the meaning assigned it in Section
8.3(b).
"Tendered Shares" means up to 15,002,909 shares of Common Stock
validly tendered in the Offer on or prior to the Expiration Date and not
withdrawn prior to the Expiration Date.
"Transfer" has the meaning assigned it in Section 8.6(a).
"Voting Power" means, calculated at a particular point in time,
the aggregate votes represented by all of the then outstanding Common
Stock, Series A Stock and any other securities of the Company then entitled
to vote generally in the election of directors of the Company.
"Warrants" means the Company's Series 1-A Warrants to purchase
Common Stock and Series 2-A Warrants to purchase Common Stock.
Section 2. Purchase of Non-Voting Stock by the Purchasers.
2.1 Sale and Purchase of Non-Voting Stock. Pursuant to the terms
and subject to the conditions of this Agreement, the Company agrees to
issue, sell and deliver to each Purchaser, and each Purchaser, severally
and not jointly, agrees to purchase from the Company, at the closing of the
transactions contemplated by this Section 2 (the "Closing"), 38,765,848
shares of Non-Voting Stock for a purchase price per share of $0.255 (the
"Purchase Price"), subject to adjustment as provided in Section 2.2. Each
Purchaser will pay the Purchase Price for and will receive such number of
shares of Non-Voting Stock as set forth in Schedule 1 hereto.
2.2 Adjustment of Purchase Price. Recognizing that it is the
intention of the Company and the Purchasers that the price per share paid
by the Purchasers pursuant to Section 2.1 for the Non-Voting Stock equal
the price per share to be established for the Rights Offering, the Company
and the Purchasers agree that within five (5) Business Days following the
effectiveness of the registration statement covering the Rights in the
Rights Offering:
(a) In the event that the Subscription Price exceeds the
Purchase Price, then each Purchaser will deliver to the Company by
wire transfer of immediately available funds an amount equal to
the product of (i) the number of shares of Non-Voting Stock
purchased by such Purchaser at the Closing, multiplied by (ii) the
difference between the Subscription Price and the Purchase Price
(the "Adjustment Amount"); or
(b) In the event that the Subscription Price is less than
the Purchase Price, then the Company will deliver to each
Purchaser by wire transfer of immediately available funds the
Adjustment Amount.
2.3 Deemed Exercise of Rights. The Non-Voting Stock acquired by
the Purchasers in Section 2.1 will be deemed to be the exercise of the
Rights that otherwise would have been distributable and exercisable by the
Purchasers in the Rights Offering based on the number of shares of Series A
Stock, Common Stock and Warrants held by the Purchasers on the day prior to
the Closing Date, other than any Rights that may be exercisable as a result
of the Purchaser's oversubscription privileges, as discussed in Section
8.3(c).
2.4 Failure of Rights Offering to Occur. In the event that the
Rights Offering does not occur on or prior to June 30, 2003 or is not
approved at the Special Meeting, then a committee consisting of all of the
independent directors (as such term is defined in Nasdaq Marketplace Rule
4200(a)(14)) of the Company desiring to serve on such committee may elect
to cause the sale and purchase of the Non-Voting Stock to be rescinded and
the Non-Voting Stock to be immediately cancelled. In such event, within
five Business Days of such date (i) each Purchaser will surrender the
certificates representing the Non-Voting Stock for cancellation; provided
that such certificates will be automatically cancelled, without any action
on the part of the Company or such Purchaser, whether or not surrendered,
and (ii) the Company will deliver to each Purchaser, by wire transfer of
immediately available funds, the aggregate Purchase Price paid by such
Purchaser plus interest accrued thereon at the prime rate of interest
reported in the Wall Street Journal on the date of determination.
Section 3. Representations and Warranties of the Purchasers. Each Purchaser
hereby severally, and not jointly, represents and warrants to the Company
as follows:
3.1 Organization. It (a) is duly organized, validly existing and
in good standing under the laws of the jurisdiction of its organization,
(b) is duly qualified or licensed to do business and is in good standing
under the laws of each jurisdiction where the nature of the property owned
or leased by it or the nature of the business conducted by it makes such
qualification or license necessary, except where the failure to be so
qualified or licensed (individually or in the aggregate) could not
reasonably be expected to either prevent or materially delay its ability to
perform its obligations hereunder, and (c) has all power and authority to
carry on its business as it now is being conducted and to consummate the
transactions contemplated by this Agreement.
3.2 Due Authorization. It has the requisite limited liability
company or partnership power and authority to enter into, execute and
deliver this Agreement and to perform its obligations under this Agreement
and has taken all necessary limited liability company or partnership action
required for the due authorization, execution, delivery and performance by
it of this Agreement.
3.3 Due Execution; Enforceability. This Agreement has been duly
and validly executed and delivered by each Purchaser and constitutes its
valid and binding obligation, enforceable against it in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and subject, as to enforceability, to general principles
of equity, including principles of commercial reasonableness, good faith
and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
3.4 Consents. Except for filings, permits, authorizations,
consents and approvals as may be required under, and other applicable
requirements of federal securities laws, applicable state securities or
blue sky laws, to the best knowledge of the Purchasers, neither the
execution, delivery or performance of this Agreement by such Purchaser, nor
the consummation by it of the obligations and transactions contemplated by
this Agreement requires any consent of, authorization by, exemption from,
filing with, or notice to any governmental entity or any other Person.
3.5 No Conflicts. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not (a) conflict with or result in any breach of any
provision of its certificate or articles of limited partnership or limited
liability company, as the case may be, partnership agreement, operating
agreement or other governing documents, (b) conflict with or result in the
breach of the terms, conditions or provisions of or constitute a default
(or an event which with notice or lapse of time or both would become a
default) under, or give rise to any right of termination, acceleration or
cancellation under, any material agreement, lease, mortgage, license,
indenture, instrument or other contract to which it is a party or by which
any of its properties or assets are bound, or (c) result in a violation of
any law, rule, regulation, order, judgment or decree (including, without
limitation, federal and state securities laws and regulations) applicable
to it or by which any of its properties or assets are bound or affected,
except in the case of clauses (b) or (c), where such conflicts or
violations would not prevent or materially delay its ability to consummate
the transactions contemplated by this Agreement.
3.6 Investment Representations and Warranties.
(a) The shares of Non-Voting Stock being acquired by it
hereunder are being acquired for its own account, for the purpose
of investment and not with a view to or for sale in connection
with any public resale or distribution thereof in violation of
applicable securities laws.
(b) It is an "accredited investor" within the meaning of
Rule 501(a) promulgated under the Securities Act.
(c) It (i) has been furnished with or has had full access to
all of the information that it considers necessary or appropriate
to make an informed investment decision with respect to the
Non-Voting Stock and that it has requested from the Company, (ii)
has had an opportunity to discuss with management of the Company
the intended business and financial affairs of the Company and to
obtain information necessary to verify, any information furnished
to it or to which it had access, and (iii) can bear the economic
risk of such investment in the Non-Voting Stock, has such
knowledge and experience in business and financial matters so as
to enable it to understand and evaluate the risks of and form an
investment decision with respect to its investment in the
Non-Voting Stock and to protect its own interests in connection
with such investment.
(d) It has no need for liquidity in its investment in the
Non-Voting Stock and is able to bear the economic risk of its
investment in the Non-Voting Stock and the complete loss of all of
such investment.
(e) It understands that the transferability of the
Non-Voting Stock is restricted, and that such restrictions will be
reflected in an appropriate legend on the instruments representing
the Non-Voting Stock.
(f) It recognizes that an investment in the Company involves
certain risks and has taken full cognizance of, and understands
all of, the risks related to the acquisition of the Non-Voting
Stock. It further acknowledges and understands that no federal or
state agency has made any recommendation or endorsement of the
Non-Voting Stock or any finding or determination as to the
fairness of the investment therein.
3.7 No Brokers. No broker's or finder's fees or commissions will
be payable by any Purchaser with respect to the transactions contemplated
by Section 2, and such Purchaser hereby indemnifies and holds the Company
harmless from any claim, demand or liability for broker's or finder's fees
alleged to have been incurred at the instance of such Purchaser or any
Person acting on behalf of or at the request of such Purchaser.
Section 4. Representations and Warranties of the Company. The Company
represents and warrants to each Purchaser as follows:
4.1 Organization. The Company (a) is duly organized, validly
existing and in good standing under the laws of the State of Delaware, (b)
is duly qualified or licensed to do business as a foreign corporation and
is in good standing under the laws of each jurisdiction where the nature of
the property owned or leased by it or the nature of the business conducted
by it makes such qualification or license necessary, except where the
failure to be so qualified or licensed would not reasonably be expected to
have a material adverse effect, and (c) has all corporate power and
authority to own or lease and operate its assets and carry on its business
as presently being conducted and to consummate the transactions
contemplated by this Agreement.
4.2 Due Authorization. The Company has the full corporate power
and authority to enter into, execute and deliver this Agreement and to
perform fully its obligations under this Agreement and has taken all
necessary corporate action required for the due authorization, execution,
delivery and performance by it of this Agreement.
4.3 Due Execution; Enforceability. This Agreement has been duly
and validly executed and delivered by the Company and constitutes its valid
and binding obligation, enforceable against it in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and subject, as to enforceability, to general principles
of equity, including principles of commercial reasonableness, good faith
and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
4.4 Consents. Except for the need to obtain stockholder approval
as contemplated by Section 8.2 hereof, and filings, permits,
authorizations, consents and approvals as may be required under, and other
applicable requirements of federal securities laws, applicable state
securities or blue sky laws, to the best knowledge of the Company, neither
the execution, delivery or performance of this Agreement by the Company,
nor the consummation by it of the obligations and transactions contemplated
by this Agreement requires any consent of, authorization by, exemption
from, filing with, or notice to any governmental entity or any other
Person.
4.5 No Conflicts. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not (a) conflict with or result in any breach of any
provision of the Restated Charter or Restated Bylaws, (b) conflict with or
result in the breach of the terms, conditions or provisions of or
constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give rise to any right of
termination, acceleration or cancellation under, any material agreement,
lease, mortgage, license, indenture, instrument or other contract to which
it is a party or by which any of its properties or assets are bound, or (c)
result in a violation of any law, rule, regulation, order, judgment or
decree (including, without limitation, federal and state securities laws
and regulations) applicable to it or by which any of its properties or
assets are bound or affected, except in the case of clauses (b) or (c),
where such conflicts or violations would not prevent or materially delay
its ability to consummate the transactions contemplated by this Agreement.
4.6 Capitalization.
(a) Immediately before the Closing, the authorized capital
stock of the Company will consist of (i) 200,000,000 shares of
Common Stock; (ii) 100,000,000 shares of Non-Voting Stock; and
(iii) 10,000,000 shares of preferred stock, par value $0.01 per
share, of which 2,000,000 are designated as Series A Stock and
8,000,000 are undesignated as to series. The Company has no other
class of capital stock authorized, issued or outstanding. The
capitalization of the Company as of the date hereof, including,
without limitation, the number of shares issued and outstanding,
the number of shares issuable and reserved for issuance pursuant
to the Company's stock option plans, the number of shares issuable
and reserved for issuance pursuant to securities exercisable for,
or convertible into or exchangeable for any shares of capital
stock, is set forth on Schedule 4.6(a).
(b) Except as contemplated by this Agreement, the Original
Investment Agreement, the Restated Charter and the Warrants, and
as set forth on Schedule 4.6(b), as of the date of this Agreement,
(i) there are no outstanding options, warrants, scrip, dividends,
rights to subscribe to, calls or commitments of any character
whatsoever to which the Company is a party relating to, or
securities or rights convertible into or exercisable or
exchangeable for, any shares of capital stock of the Company, or
arrangements by which the Company is or may become bound to issue
additional shares of capital stock nor are any such issuances or
arrangements contemplated, (ii) there are no agreements or
arrangements under which the Company is obligated to register the
sale of any of its securities under the Securities Act, and (iii)
the Company has no obligation (contingent or otherwise) to
purchase, redeem or otherwise acquire any of its equity securities
or any interests therein or to pay any dividend or make any
distribution in respect thereof. Except as provided in the
Original Investment Agreement, the Restated Charter, the Warrants
or as set forth on Schedule 4.6(b), there are no securities or
instruments containing antidilution or similar provisions that
will be triggered by the issuance of the Non-Voting Stock in
accordance with the terms of this Agreement. Except as
contemplated by this Agreement, the Original Investment Agreement,
the Restated Charter and the Warrants and as set forth on Schedule
4.6(b), the Company is not a party to, and has no knowledge of the
existence of, any voting trust or other voting agreement with
respect to any of the securities of the Company or to any
agreement relating to the issuance, sale, redemption, transfer or
other disposition of the capital stock of the Company. To the best
of the Company's knowledge, except as contemplated by this
Agreement, the Original Investment Agreement, the Restated Charter
and the Warrants, no stockholder of the Company has any agreement
obligating such stockholder to transfer shares of the Company.
4.7 Due Issuance and Authorization of Capital Stock. All of the
outstanding shares of capital stock of the Company have been, or upon
issuance will be, validly issued, fully paid and nonassessable. Except as
contemplated in this Agreement, the Original Investment Agreement, the
Restated Charter and the Warrants, or as disclosed on Schedule 4.7, no
shares of capital stock of the Company are subject to preemptive rights or
any other similar rights of any or all of the stockholders of the Company
and the issuance and delivery of the Non-Voting Stock to the Purchasers
pursuant to the terms hereof will be duly authorized, validly issued, fully
paid and non-assessable, and will vest in the Purchasers legal and valid
title to the Non-Voting Stock, free and clear of all Encumbrances and will
not be subject to preemptive rights or other similar rights of any or all
of the stockholders of the Company and will not impose personal liability
upon any or all of the Purchasers thereof. The Company will receive at the
Closing an opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP with respect
to the Non-Voting Stock to be issued at the Closing substantially similar
to the opinion to be received by the Company pursuant to Item 601(b)(5) of
Regulation S-K under the Securities Act in connection with the registration
statement relating to the Rights Offering.
4.8 Form S-3 Eligibility. The Company is currently eligible under
the eligibility requirements of General Instruction I.B.4 to Registration
Statement on Form S-3 to register the resale of its Common Stock and
Non-Voting Stock on a registration statement on Form S-3 under the
Securities Act. To the knowledge of the Company, there exists no facts or
circumstances that would prohibit or delay the preparation and filing of a
registration statement on Form S-3 with respect to the shares of Common
Stock and Non-Voting Stock in accordance with the terms of the registration
rights previously granted to the Purchasers in the Original Investment
Agreement.
4.9 Board of Directors. The Board of Directors has declared that
the Reverse Stock Split, the Rights Offering, the Settlement Agreement, the
Conversion Proposal, this Agreement and the transactions contemplated
hereby are advisable and in the best interests of the Company and its
stockholders. The Board of Directors has recommended that the stockholders
approve (i) an amendment to the Restated Charter in order to effect the
Reverse Stock Split, (ii) the issuance of the Rights Shares in connection
with the Rights Offering; and (iii) the Conversion Proposal.
Section 5. Conditions Precedent to Obligations of the Company. The
obligation of the Company to proceed with the Closing will be subject to
the fulfillment of the following conditions, any of which may be waived, in
whole or in part, by the Company:
5.1 No Litigation. No temporary restraining order or preliminary
or permanent injunction or other order of a court or governmental or
regulatory agency of competent jurisdiction directing that the transactions
contemplated in this Agreement not be consummated will be in effect, and
there will be no outstanding threat by any governmental or regulatory
agency of competent jurisdiction to obtain a temporary restraining order or
preliminary or permanent injunction with respect to the transactions
contemplated by this Agreement.
5.2 Performance. The Purchasers will have performed in all
material respects all of the covenants and agreements set forth in this
Agreement expressly required to be performed by them at or prior to the
Closing, and will have obtained all consents and approvals required to be
obtained by the Purchasers for the consummation of the transactions
contemplated by this Agreement.
5.3 Deliveries. Each Purchaser will have delivered to the Company
the following items:
(a) the Purchase Price payable by wire transfer, in
immediately available funds to an account that the Company will
designate in writing to the Purchasers at least two (2) Business
Days prior to the Closing Date; and
(b) Evidence of the execution and delivery of the Settlement
Agreement.
Section 6. Conditions Precedent to the Obligations of the Purchasers. The
obligations of the Purchasers to proceed with the Closing will be subject
to the fulfillment of the following conditions, any of which may be waived,
in whole or in part, by the Purchasers:
6.1 No Litigation. No temporary restraining order or preliminary
or permanent injunction or other order of a court or governmental or
regulatory agency of competent jurisdiction directing that the transactions
contemplated in this Agreement not be consummated will be in effect, and
there will be no outstanding threat by any governmental or regulatory
agency of competent jurisdiction to obtain a temporary restraining order or
preliminary or permanent injunction with respect to the transactions
contemplated by this Agreement.
6.2 Performance. The Company will have performed in all material
respects all of the covenants and agreements set forth in this Agreement
expressly required to be performed by it at or prior to the Closing, and
will have obtained all consents and approvals required to be obtained by
the Company for the consummation of the transactions contemplated by this
Agreement.
6.3 Deliveries. The Company will have delivered to the Purchasers
the following items:
(a) Stock Certificates representing the shares of Non-Voting
Stock referred to in Section 2.1 (in such denominations as will be
specified in writing by each Purchaser), each of which will be
registered in each Purchaser's name;
(b) Copies of resolutions of the Board of Directors,
certified by the Secretary of the Company: (i) approving and
authorizing the issuance of the Non-Voting Stock to the
Purchasers, (ii) approving and authorizing the execution, delivery
and performance of this Agreement, the Settlement Agreement and
all other documents and instruments to be delivered pursuant
hereto and thereto, (iii) determining that the Reverse Stock
Split, the Rights Offering, this Agreement, the Settlement
Agreement, the Conversion Proposal and the transactions
contemplated hereby and thereby, are advisable and in the best
interests of the Company and its stockholders, (iv) approving the
Reverse Stock Split, the Rights Offering, this Agreement, the
Settlement Agreement, the Conversion Proposal and the transactions
contemplated hereby and thereby, and (v) approving and authorizing
the filing and distribution of proxy materials and Rights Offering
documents with the SEC and, ultimately, to the stockholders; and
(c) Evidence of the execution and delivery of the Settlement
Agreement.
Section 7. Closing. The Closing will occur at the offices of Akin, Gump,
Strauss, Xxxxx & Xxxx, L.L.P., 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, at 9:00 a.m., New York time, on or before the next Business Day
after the satisfaction or waiver of all of the conditions to the Closing
set forth in Section 5 and Section 6 of this Agreement or such other
location, date and time as agreed upon by the Purchasers and the Company
(the "Closing Date"). In addition, the parties will execute and deliver the
documents referred to in Section 5 and Section 6 hereof.
Section 8. Covenants. The Company and the Purchasers hereby agree to do the
following:
8.1 The Tender Offer.
(a) As promptly as is practicable after the Closing Date,
the Purchasers will commence a tender offer to purchase up to
15,002,909 shares of Common Stock (the "Offer") at a price per
share equal to 105% of the average closing prices of the Common
Stock on Nasdaq for the five days immediately preceding the
commencement of the Offer (the "Offer Price"). However, the Offer
Price will be no more than 130% and no less than 90% of the
Purchase Price specified in Section 2.1. The initial expiration
date for the Offer will be the twenty-first Business Day from and
after the date the Offer is commenced, including the date of
commencement as the first Business Day (such initial expiration
date as it may be extended in accordance with applicable
securities laws, the "Expiration Date"). The obligations of the
Purchasers to accept for payment and to pay for Tendered Shares
will be subject only to those conditions set forth in Annex A
hereto and such other customary conditions as are reasonably
satisfactory to the Company and the Purchasers. The Purchasers
will, on the terms and subject to the prior satisfaction or waiver
of the conditions of the Offer, accept for payment and purchase,
as soon as practicable after the Expiration Date, all Tendered
Shares.
(b) The Offer will be made by means of an Offer to Purchase.
Subject to the terms and conditions of the Offer, the Purchasers
will use their commercially reasonable efforts to take, or cause
to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws to
consummate the Offer. The Purchasers recognize and acknowledge
that the Company will remain neutral and will not take a position
with respect to the Offer.
(c) As promptly as practicable on the date the Offer is
commenced, with respect to the Offer, the Purchasers, together
with such other Persons as are required to be included as parties
to such filing, if any, will file with the SEC the Schedule TO.
The Schedule TO will contain or incorporate by reference the Offer
to Purchase and a form of letter of transmittal and any other
documents related to the Offer (the Schedule TO, the Offer to
Purchase, the letter of transmittal and such other documents,
together with any amendments and supplements thereto, collectively
will be referred to herein as the "Offer Documents"). The Company
and its counsel will be given an opportunity to review and comment
on the Schedule TO. The Offer Documents will comply in all
material respects with the provisions of applicable federal
securities laws. The Purchasers will take all steps necessary to
cause the Offer Documents to be filed with the SEC and to be
disseminated to the stockholders of the Company, in each case as
and to the extent required by applicable federal securities laws.
The Company will provide to the Purchasers the Company's
stockholder list and security position lists in respect of the
Common Stock for the purpose of distributing the Offer Documents
to stockholders. Each of the Purchasers promptly will correct any
information provided by it for use in the Offer Documents if and
to the extent that such information becomes false or misleading in
any material respect, and each of the Purchasers will take all
steps necessary to cause the Offer Documents, as so corrected, to
be filed with the SEC and to be disseminated to the stockholders
of the Company, in each case as and to the extent required by
applicable federal securities laws.
8.2 Special Meeting of Stockholders.
(a) The Company will call the Special Meeting which will be
held in accordance with the requirements of the Delaware General
Corporation Law, the Restated Charter and the Restated Bylaws. At
the Special Meeting, the Board of Directors will submit to a vote
of the stockholders proposals regarding (i) an amendment to the
Restated Charter in order to effect the Reverse Stock Split, (ii)
the issuance of the Rights Shares in connection with the Rights
Offering, and (iii) the Conversion Proposal, and subject to their
fiduciary duties, the Board of Directors will recommend to its
stockholders approval of such matters.
(b) As promptly as is practicable after the Closing, the
Company will prepare and file with the SEC the Proxy Statement
covering the solicitation of proxies for the Special Meeting to
approve the Reverse Stock Split, the Rights Offering and the
Conversion Proposal. Each of the Purchasers and its counsel will
be given an opportunity to review and comment upon the Proxy
Statement before it is filed with the SEC. In addition, the
Company will provide the Purchasers and their counsel with any
written comments or other written communications that the Company
or its counsel receives from time to time from the SEC or its
staff with respect to the Proxy Statement promptly after the
receipt of such comments or other communications.
8.3 The Rights Offering.
(a) As promptly as practicable after the Closing Date, the
Company will prepare and file with the SEC a registration
statement on Form S-3 (or, if Form S-3 is not then available to
the Company, on such form of registration statement as is then
available to effect a registration of securities), covering the
issuance of the Rights and the Rights Shares. The Company will not
permit any securities other than the Rights and the Rights Shares
to be included in such registration statement. The registration
statement (and each amendment or supplement thereto, and each
request for acceleration of effectiveness thereof) will be
provided to the Purchasers and their counsel prior to its filing
with or other submission to the SEC. The registration statement
will comply in all material respects with the provisions of
applicable federal securities laws. The Company promptly will
correct any information provided by it for use in the registration
statement if and to the extent that such information becomes false
or misleading in any material respect, and the Company will take
all steps necessary to cause the registration statement, as so
corrected, to be filed with the SEC and to be disseminated to the
distributees of the Rights, in each case as and to the extent
required by applicable federal securities laws. The Purchasers and
their counsel will be given a reasonable opportunity to review and
comment upon the registration statement before it is filed with
the SEC. In addition, the Company will provide the Purchasers and
their counsel with any written comments or other written
communications that the Company or its counsel receives from time
to time from the SEC or its staff with respect to the registration
statement promptly after the receipt of such comments or other
communications. The Company will use its best efforts to cause the
registration statement to be filed pursuant to this Section 8.3(a)
to be declared effective by the SEC as soon as possible after the
registration statement is filed with the SEC, but in no event
prior to the Expiration Date.
(b) Promptly following the setting of the Subscription Price
and the effective date of the registration statement, the Company
will commence the Rights Offering. In the Rights Offering, the
Company will distribute, at no cost to the record holders of the
Series A Stock, Common Stock and the Warrants, (i) one Right for
each share of Common Stock, (ii) one Right for each share of
Common Stock into which the Series A Stock is convertible and
(iii) one Right for each share of Common Stock into which 80% of
the Warrants are exercisable. Each Right will entitle the holder
to purchase, at the election of the holder thereof, one share of
Common Stock, or in the case of Rights distributed to the
Purchasers or any of their Affiliates, Non-Voting Stock, for a
subscription price per share equal to 85% of the average closing
prices of the Common Stock on Nasdaq over a number of trading days
to be determined in good faith by the Board of Directors (but such
period of trading days will not commence earlier than six (6)
Business Days after the closing of the Offer) immediately
preceding the effective date of the registration statement (the
"Subscription Price"). However, the Subscription Price will be no
more than 130% and no less than 70% of the Purchase Price
specified in Section 2.1. The Rights Offering will remain open for
at least twenty (20) Business Days. The Rights will expire at 5:00
p.m., New York, New York local time on the third Business Day
following the date of the Special Meeting, except as otherwise
required by applicable law or the preceding sentence. Consummation
of the Rights Offering will be subject to approval of the issuance
of shares of Common Stock thereunder by the stockholders of the
Company in accordance with the Marketplace Rules of the NASD.
(c) Each holder of Rights who exercises in full its basic
subscription privilege will be entitled to subscribe for
additional Rights Shares at the Subscription Price. The Rights
received by the Purchasers with respect to their basic
subscription privilege will be deemed to have been exercised by
the Advance Purchase. If the number of Rights Shares remaining
after the exercise of all basic subscription privileges is not
sufficient to satisfy all oversubscription privileges, the Rights
holders will be allocated Rights Shares pro rata and in proportion
to the number of Rights Shares purchased through the basic
subscription privilege; provided, however, that the
oversubscription rights of the Purchasers will assume that the
Purchasers' basic subscription privilege was limited to 12,709,499
shares of Common Stock. If the pro rata allocation exceeds the
number of Rights Shares requested on the subscription certificate,
then the Rights holder only will receive the number of Rights
Shares requested, and the remaining Rights Shares from such Rights
holder's pro rata allocation will be divided among other Rights
holders exercising their oversubscription privileges. If the pro
rata allocation is less than the number of Rights Shares requested
on the subscription certificate, then the excess funds paid by
that Rights holder as the Subscription Price for the Rights Shares
not issued will be returned without interest or deduction.
(d) The closing of the purchase of the oversubscription
privilege by each Purchaser will occur at the time, for the
Subscription Price, in the manner, and on the terms and conditions
(other than as modified by this Section 8.3) as set forth in the
Rights Offering.
(e) The Company will pay all expenses associated with the
registration statement referred to in Section 8.3(a) and the
Rights Offering, including, without limitation, filing and
printing fees, fees and expenses of the subscription agent,
counsel and accounting fees and expenses, costs associated with
clearing the Rights and Rights Shares for sale under applicable
state securities laws, listing fees and the Purchasers reasonable
fees in connection with the registration including, without
limitation, the reasonable attorneys' fees of counsel to the
Purchasers.
8.4 Listing Obligation. So long as the Company has securities
listed on Nasdaq or any other stock exchange, the Company will take all
reasonable steps necessary, and pay all reasonable fees required, to list
all of the shares of Common Stock issued pursuant to the Rights Offering on
Nasdaq or such other stock exchanges or systems of automated dissemination
of quotations of securities prices in the United States of America on which
the Common Stock then is listed. Following the initial listing of such
shares, the Company, consistent with the Board of Directors' fiduciary
duties, will use its reasonable efforts to maintain the listing of such
shares whenever the Company's Common Stock is listed on any such exchange.
8.5 Amendments to the Rights of the Purchasers. In order to
facilitate the Settlement Agreement and the transactions contemplated in
this Agreement:
(a) On the date that the Final Judgment becomes Final:
(i) The Purchasers will surrender to the Company for
cancellation Warrants to acquire 2,752,452 shares of Common
Stock, comprised of Series 1-A Warrants to acquire 299,943
shares of Common Stock and Series 2-A Warrants to acquire
2,452,509 shares of Common Stock;
(ii) The Company and the Purchasers will effect the
Independent Directors Agreement; and
(iii) Notwithstanding anything to the contrary set
forth in the Restated Charter, the Purchasers irrevocably
waive their right to elect to receive dividends on the
Series A Stock in cash, rather than in kind, for any
dividend payment date occurring after June 30, 2002 and on
or prior to June 30, 2004.
(b) On the date of this Agreement:
(i) Notwithstanding anything to the contrary set forth
in the Restated Charter and the Warrants, the Purchasers
waive any adjustment to the conversion price of the Series A
Stock and the exercise price of the Warrants pursuant to the
anti-dilution provisions contained in such documents only
with respect to (i) shares of Non-Voting Stock issued to the
Purchasers at the Closing; (ii) the Rights (whether or not
exercised) issued to the Purchasers; (iii) the Rights issued
to the other stockholders of the Company which expire
unexercised; and (iv) shares of Non-Voting Stock issued to
the Purchasers pursuant to any exercise of the
oversubscription privilege by the Purchasers in the Rights
Offering. The conversion price and the exercise price will
be adjusted in accordance with their terms as a result of
any other issuance of Common Stock in the Rights Offering.
(ii) The first sentence of the definition of
"Purchaser Shares" set forth in Section 9.1 of the Original
Investment Agreement is hereby deleted in its entirety and
replaced with the following: "Purchaser Shares" means at any
time, without duplication, (i) Conversion Shares and Warrant
Shares issuable upon conversion of Series A Preferred Shares
or exercise of Series 1-A Warrants or Series 2-A Warrants;
and (ii) all shares of Common Stock and Non-Voting Common
Stock owned at any time by the Purchaser or any Holder.
(iii) At any meeting of the stockholders of the
Company, however called, or in connection with any written
consent of the holders of capital stock, each Purchaser will
vote all of its shares of Common Stock, Non-Voting Stock (if
and to the extent that such shares are entitled to vote
pursuant to the General Corporation Law of the State of
Delaware) or Series A Stock, including, without limitation,
any securities acquired in the Offer or otherwise after the
date hereof, in favor of the approval of the issuance of the
Rights Shares in connection with the Rights Offering, the
Company's proposed amendment to its Restated Charter in
order to effect the Reverse Stock Split, and all other
actions required in furtherance of either proposal;
provided, however, that all shares of Common Stock acquired
in the Offer will be voted pro rata with all other votes
cast at such meeting (or by written consent) by holders of
Common Stock.
(iv) Until the earliest to occur of: (i) the record
date for the Special Meeting, (ii) the date that the Board
of Directors decides not to consummate the Rights Offering
or (iii) September 30, 2002, no Purchaser will (x) sell,
exchange, pledge, encumber or otherwise transfer or dispose
of, or agree to sell, exchange, pledge, encumber or
otherwise transfer or dispose of, any of its Securities, or
any interest therein, (y) deposit its Securities into a
voting trust or enter into a voting agreement or arrangement
with respect to such Securities or grant any proxy with
respect thereto, or (z) enter into any agreement,
arrangement, commitment, understanding or undertaking to do
any of the foregoing;
(v) Each Purchaser, in its capacity as a holder of all
of the outstanding shares of the Series A Stock, hereby
consents to the Rights Offering for purposes of Section
8.2(c) of the Original Investment Agreement.
(vi) Each Purchaser hereby agrees that it will not
sell, exchange, pledge, encumber or otherwise transfer or
dispose of, or agree to sell, exchange, pledge, encumber or
otherwise transfer or dispose of, any shares of Series A
Stock or Warrants unless such transferee agrees in writing,
in addition to any requirements set forth in the Original
Investment Agreement, to comply with and be bound by
Sections 8.5(a)(i), 8.5(a)(ii), 8.5(a)(iii), 8.5(b)(i),
8.5(b)(iii), 8.5(b)(v), 8.5(b)(vii) and 8.5(b)(viii) hereof.
(vii) Each Purchaser hereby waives its
over-subscription rights arising under Section 7.12 of the
Original Investment Agreement with respect to the Rights
Offering.
(viii) Each Purchaser hereby agrees in connection with
the Rights Offering that such Purchaser will not and will
cause all of its direct and indirect transferees and assigns
(and subsequent transferees and assigns) of Common Stock,
Non-Voting Stock, Series A Stock, Warrants and/or Rights,
including, without limitation, any securities acquired in
the Offer or otherwise after the date hereof, not to, with
respect to Rights distributed to such Purchaser and all such
transferees and assigns, exercise or transfer such Rights
(or exercise any over-subscription privilege except in
accordance with Section 8.3(c)) and will hold such Rights
until such time as they expire without value.
8.6 Transfer of Non-Voting Stock.
(a) Following the expiration of the restrictions set forth
in Section 8.5(b)(iv), if a Purchaser or any subsequent transferee
desires to sell, assign, pledge or otherwise transfer (each, a
"Transfer") any shares of Non-Voting Stock to any Person, other
than an Affiliate of such Purchaser, which Transfer of Non-Voting
Stock is not the subject of an effective registration statement
under the Securities Act and in accordance with the plan of
distribution described in such registration statement, the holder
thereof will give written notice to the Company of such holder's
intention to effect such Transfer and to comply in all other
respects with this Section 8.6 ("Notice"). Each such Notice shall
describe the manner and circumstances of the proposed Transfer. If
within five business days after receipt by the Company of such
Notice, the Company requests an opinion of counsel for such holder
that the proposed Transfer may be effected without registration of
such shares of Non-Voting Stock under the Securities Act, then the
Company shall not be required to register such Transfer, and such
holder shall not be entitled to effect such Transfer, unless and
until the Company receives such an opinion of counsel (which
counsel and opinion shall each be reasonably satisfactory to the
Company). Such holder shall thereupon be entitled to Transfer such
shares in accordance with the terms of the Notice delivered by
such holder to the Company. Each certificate representing such
Non-Voting Stock issued upon or in connection with such Transfer
shall bear the restrictive legends required by Section 9.6.
(b) Following the expiration of the restrictions set forth
in Section 8.5(b)(iv), if a Purchaser desires to Transfer any
shares of Non-Voting Stock to any Person, other than an Affiliate
of such Purchaser, in an amount not to exceed more than 10% of the
Voting Power of the Company and such transferee will not, to the
knowledge of such Purchaser, after giving effect to such Transfer
beneficially own securities representing more than 15% of the
Voting Power (a "Disposition"), then, at the request of such
Purchaser, the Company will exchange such shares of Non-Voting
Stock for shares of Common Stock. A Purchaser may also exchange
shares of Non-Voting Stock for shares of Common Stock if, after
giving effect to such exchange, the Purchasers collectively will
own no more than 29.9% of the Voting Power of the Company (an
"Exchange"). In order to effect any such Disposition or Exchange,
such Purchaser will deliver to the Company Notice of such
Disposition or Exchange, and shall otherwise comply with the terms
of Section 8.6(a) above. Upon surrender of certificates
representing the shares of Non-Voting Stock that are being
exchanged as part of such Disposition or Exchange, the Company
will issue to the transferee or such Purchaser, as the case may
be, certificates representing the appropriate number of shares of
Common Stock.
(c) Notwithstanding the foregoing, the Company shall have no
obligation under Section 8.6(b) to exchange any shares of
Non-Voting Stock for Common Stock unless the Conversion Proposal
has been approved by the Company's stockholders.
(d) Until the earliest to occur of: (i) the date that the
Rights Offering is not approved at the Special Meeting, (ii) the
consummation of the Rights Offering or (ii) June 30, 2003, each
Purchaser agrees that it will not Transfer any shares of
Non-Voting Stock to any Person, in accordance with Section 8.6(b),
unless such transferee agrees in writing to comply with and be
bound by Section 2.4 hereof.
8.7 Pro-Rata Voting Purchasers' Tender Shares. So long as any
Tendered Shares are held by the Purchasers or any Affiliates, the
Purchasers or any Affiliates will cause all such shares held by them, which
would otherwise entitle the Purchasers or any Affiliates, collectively, to
cast more than 29.9% of the Voting Power of the Company, to be voted at any
meeting of stockholders and in connection with any action by written
consent, pro rata with all other votes cast at such meeting (or by written
consent) by holders of Common Stock.
8.8 Cooperation with the Rights Offering. Each Purchaser
acknowledges that the Company intends to undertake the Rights Offering,
and, in such regard, such Purchaser will, and will cause its designees on
the Company's Board of Directors to, cooperate with the Company, subject to
their fiduciary duties to the Company, in order to facilitate the Rights
Offering.
8.9 Court Approval of Settlement Agreement. The parties will use
their best efforts to (i) obtain court approval of the Settlement Agreement
and (ii) obtain an order approving the Settlement Agreement which will
become Final. However, except as set forth in Section 8.5(a), the parties
acknowledge that the parties' obligations hereunder are not subject to, or
contingent upon, such approval.
8.10 Further Assurances. From time to time after the Closing, the
parties hereto shall execute, acknowledge and deliver to the other party
such other instruments, documents, and certificates and will take such
other actions as the other party may reasonably request in order to
consummate the transactions contemplated by this Agreement and the
Settlement Agreement.
Section 9. Miscellaneous.
9.1 Notices. Any notice or other communication required or which
may be given pursuant to this Agreement will be in writing and either
delivered personally to the addressee, telecopied to the addressee or
mailed, certified or registered mail, postage prepaid, and will be deemed
given when so delivered personally or telecopied or, if mailed, five (5)
days after the date of mailing, as follows:
(i) if to the Purchasers, to:
c/o Apollo Advisors IV, L.P.
1301 Avenue of the Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxx
Facsimile: (000) 000-0000
With a copy to:
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, P.C.
Facsimile: (000) 000-0000
(ii) if to the Company, to:
00 Xxxx 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
With a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx, L.L.P.
0 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx
Facsimile: (000) 000-0000
9.2 Indemnification. The Company will indemnify, save and hold
harmless each and all of the Purchasers, and each and all of their
respective directors, officers, stockholders, employees, partners, members,
managers, representatives, Affiliates, attorneys and agents and each and
all of their respective heirs, successors, legal administrators and
permitted assigns (the "Indemnitees") from and against any and all
liability, loss, cost, damage, reasonable attorneys' and accountants' fees
and expenses, court costs and all other out-of-pocket expenses incurred by
any or all of the Indemnitees in connection with or arising from the
execution, delivery and performance by the Company of this Agreement and
the transactions contemplated by this Agreement, except to the extent of
any willful misconduct or gross negligence of the Indemnitees. This
indemnification provision will be in addition to the rights of each and all
of the Indemnitees to bring an action against the Company for breach of any
term of this Agreement.
9.3 Fees and Expenses. The Company will pay and hold each and all
of the Purchasers harmless from liability for the payment of all reasonable
legal expenses incurred by each and all of the Purchasers in connection
with the preparation and negotiation of this Agreement, the other documents
referred to in Sections 5, 6 and 8 of this Agreement, and the consummation
of all of the various transactions contemplated by this Agreement.
9.4 Survival of Representations and Warranties etc. All
representations and warranties made in, pursuant to or in connection with
this Agreement will survive the execution and delivery of this Agreement
indefinitely, notwithstanding any investigation at any time made by or on
behalf of any party hereto; and all statements contained in any
certificate, instrument or other writing delivered by or on behalf of any
party hereto pursuant to this Agreement or in connection with or in
contemplation of the transactions contemplated by this Agreement will
constitute representations and warranties by such party pursuant to this
Agreement.
9.5 Assignment. This Agreement will be binding upon and inure to
the benefit of each and all of the parties to this Agreement and each and
all of the other Indemnitees, and neither this Agreement nor any of the
rights, interests or obligations hereunder will be assigned by any of the
parties to this Agreement without the prior written consent of the other
parties. This Agreement can be assigned by any or all of the Purchasers to
any Affiliate of Apollo Management IV, L.P. over which Apollo Management
IV, L.P. or its Affiliates exercises investment authority, including with
respect to voting and dispositive rights; provided, any such assignee
assumes the obligations of the assignor hereunder and agrees in writing to
be bound by the terms of this Agreement in the same manner as the assignor.
Notwithstanding the foregoing, no such assignment shall relieve the
assignor of its obligations hereunder if such assignee fails to perform
such obligations.
9.6 Legend. Each Purchaser agrees with the Company that the
certificates evidencing the shares of Non-Voting Stock to be purchased
hereunder will bear the following legends:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO VOTING, TRANSFER
AND OTHER RESTRICTIONS CONTAINED IN AN INVESTMENT AGREEMENT, DATED AS OF
APRIL 2, 2002, BETWEEN RARE MEDIUM GROUP, INC. AND APOLLO INVESTMENT FUND
IV, L.P., APOLLO OVERSEAS PARTNERS IV, L.P. AND AIF IV/RRRR LLC (THE
"INVESTMENT AGREEMENT"), AND ARE OTHERWISE SUBJECT TO THE PROVISIONS OF
SUCH INVESTMENT AGREEMENT.
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD OR TRANSFERRED
UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING
SUCH SECURITIES OR THE SECURITIES ARE SOLD AND TRANSFERRED IN A TRANSACTION
THAT IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS
OF SUCH ACT.
9.7 Removal of Legend. The Securities Act legend endorsed on the
certificates pursuant to Section 9.6 hereof will be removed and the Company
will issue a certificate without such legend to the holder thereof at such
time as the securities evidenced thereby cease to be restricted securities
upon the earliest to occur of: (i) a registration statement with respect to
the sale of such securities will have become effective under the Securities
Act and such securities will have been disposed of in accordance with such
registration statement, (ii) the securities will have been sold to the
public pursuant to Rule 144 (or any successor provision) under the
Securities Act, or (iii) such securities may be sold by the holder without
restriction or registration under Rule 144(k) under the Securities Act (or
any successor provision).
9.8 Entire Agreement. This Agreement (including any schedules to
this Agreement) contains the entire agreement between the Company, on the
one hand, and each Purchaser, on the other hand, with respect to the
transactions contemplated by this Agreement and supersedes all prior
agreements and representations, written or oral, with respect thereto.
9.9 Waivers and Amendments. This Agreement may be amended,
modified, superseded, cancelled, renewed or extended, and the terms and
conditions of this Agreement may be waived, only by a written instrument
signed by the parties or, in the case of a waiver, by the party waiving
compliance. No delay on the part of any party in exercising any right,
power or privilege pursuant to this Agreement will operate as a waiver
thereof, nor will any waiver on the part of any party of any right, power
or privilege pursuant to this Agreement, nor will any single or partial
exercise of any right, power or privilege pursuant to this Agreement,
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege pursuant to this Agreement. The rights and
remedies provided pursuant to this Agreement are cumulative and are not
exclusive of any rights or remedies which any party otherwise may have at
law or in equity.
9.10 Governing Law; Jurisdiction; Venue; Process. THIS AGREEMENT
WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK WITHOUT REGARD TO ANY CHOICE OF LAW OR CONFLICT OF LAW
PROVISION OR RULE THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF NEW YORK. Any legal or equitable
action or proceeding arising out of or in connection with this Agreement or
in any certificate, report or other instrument delivered under or pursuant
to any term of this Agreement will be brought in the courts of the State of
New York, in the County and City of New York or of the United States
District Court for the Southern District of New York, and by execution and
delivery of this Agreement, each of the parties hereby irrevocably accepts
for itself and in respect of its property, generally and unconditionally,
the exclusive jurisdiction of the aforesaid courts. Each of the parties
hereby irrevocably waives any objection which it may now or hereafter have
to laying of jurisdiction or venue of any actions or proceedings arising
out of or in connection with this Agreement or in any certificate, report
or other instrument delivered under or pursuant to any term of this
Agreement brought in the courts referred to above and hereby further
irrevocably waive and agree, not to plead or claim in any such court that
any such action or proceeding has been brought in an inconvenient forum.
Each of the parties further agrees that the mailing by certified or
registered mail, return receipt requested, of any process required by any
such court will constitute valid and lawful service of process against it,
without necessity for service by any other means provided by statute or
rule of court.
9.11 Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original but all of which
together will constitute one and the same instrument. All such counterparts
will be deemed an original, will be construed together and will constitute
one and the same instrument.
9.12 Headings. The headings in this Agreement are for reference
purposes only and will not in any way affect the meaning or interpretation
of this Agreement.
[Execution Page Follows]
IN WITNESS WHEREOF, the parties have duly executed this Agreement
as of the date first above written.
RARE MEDIUM GROUP, INC.
By: /s/ Xxxxx Xxxxxxx
Name: Xxxxx Xxxxxxx
Title: Senior Vice President, Finance
and Treasurer
APOLLO INVESTMENT FUND IV, L.P.
By: APOLLO ADVISORS IV, L.P.
its general partner
By: Apollo Capital Management IV, Inc.
its general partner
By: /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Vice President
APOLLO OVERSEAS PARTNERS IV, L.P.
By: APOLLO ADVISORS IV, L.P.
its managing general partner
By: Apollo Capital Management IV, Inc.
its general partner
By: /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Vice President
AIF IV/RRRR LLC
By: /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Manager
SCHEDULE 1
Number of Shares of
Non-Voting Stock Aggregate
Purchaser being Purchased Purchase Price
--------------------------------- ------------------- --------------
Apollo Investment Fund IV, L.P. 29,686,886 $ 7,570,155.93
Apollo Overseas Partners IV, L.P. 1,593,276 $ 406,285.38
AIF IV/RRRR LLC 7,485,686* $ 1,908,849.93
TOTAL 38,765,848 $ 9,885,291.24
* All or any portion of these shares may be transferred to AIF IV/RRRR LLC
from Apollo Investment Fund IV, L.P. after the Closing Date.
ANNEX A
-------
CONDITIONS TO THE OFFER
Capitalized terms used but not defined in this Annex A will have the
meanings set forth in the Investment Agreement (the "Agreement") of which
this Annex A is a part.
Notwithstanding any other provision of the Offer, subject to the
provisions of the Agreement, the Purchasers will not be required to accept
for payment or, subject to any applicable rules and regulations of the SEC
(including those relating to the obligation of the Purchaser to pay for, or
return, Tendered Shares promptly after termination or withdrawal of the
Offer), pay for any Tendered Shares pursuant to the Offer, and the
Purchasers may delay their acceptance for payment of or, subject to the
restriction referred to above, payment for, any Tendered Shares, and the
Purchasers may amend or terminate the Offer and not accept for payment any
Tendered Shares, if (i) the Agreement is not in full force and effect,
other than due to actions of a Purchaser, or (ii) at any time on or after
the date of the Agreement and prior to the acceptance of Tendered Shares
for payment pursuant to the Offer, any of the following events will occur:
(a) there will be instituted or pending or threatened by or before
any governmental entity any suit, action or proceeding which (i) (A) seeks
to impose material limitations on the ability of the Purchasers to pay for
or purchase some or all of the Tendered Shares pursuant to the Offer, or
(B) renders the Purchasers unable to accept for payment, pay for or
purchase some or all of the Tendered Shares pursuant to the Offer, (ii)
seeks to restrain or prohibit the making or consummation of the Offer or
the performance of any of the transactions contemplated by the Agreement,
(iii) challenges the acquisition by the Purchasers of any Tendered Shares
pursuant to the Offer or (iv) challenges the validity or enforceability of
the Agreement or the Settlement Agreement;
(b) there will have been any statute, rule, regulation, judgment,
order or injunction promulgated, entered, enforced, enacted or issued by
any governmental entity applicable to the Offer which is reasonably likely
to result, directly or indirectly, in any of the consequences referred to
in clauses (i) through (iii) of paragraph (a) above;
(c) the representations and warranties of the Company set forth in
the Agreement will not be true and accurate in all respects, in each
instance as of the date of consummation of the Offer as though made on or
as of such date (except for those representations and warranties that
address matters only as of a particular date or only with respect to a
specific period of time which need only be true and accurate as of such
date or with respect to such period), and the effect thereof, either
individually or in the aggregate, is a material adverse effect, or the
Company will have breached or failed to perform or comply in any material
respect with any obligation, agreement or covenant required by the
Agreement to be performed or complied with by it;
(d) the Company and the Purchasers agree to the termination of the
Offer; or
(e) there will have occurred (i) any general suspension of trading
in securities on NASDAQ, which suspension or limitation will continue for
at least three (3) consecutive trading days, or (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States (whether or not mandatory).
that, in the reasonable judgment of the Purchasers, regardless of the
circumstances giving rise to any such condition, makes it inadvisable to
proceed with the Offer or with such acceptance for payment, purchase of, or
payment for Tendered Shares.
The failure by the Purchasers at any time to exercise any of the
foregoing rights will not be deemed a waiver of any right, and each such
right will be deemed an ongoing right that may be asserted at any time and
from time to time.
