Exhibit 10.4
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ZIFF XXXXX HOLDINGS INC.
STOCK PURCHASE AGREEMENT
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Dated as of August 30, 2001
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TABLE OF CONTENTS
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Page
Section 1. Authorization and Closing .................................. 1
1A. Authorization of the Preferred Stock ....................... 1
1B. Purchase and Sale of the Stock ............................. 2
1C. The Closing ................................................ 2
Section 2. Conditions of the Purchasers' Obligation at the Closing .... 2
2A. Representations and Warranties; Covenants .................. 2
2B. Third Amended and Restated Certificate of Incorporation .... 2
2C. Securities Law Compliance .................................. 2
2D. Closing Documents .......................................... 2
2E. Proceedings ................................................ 3
2F. Compliance with Applicable Laws ............................ 3
2G. Waiver ..................................................... 3
Section 3. Transfer of Restricted Securities .......................... 3
3A. General Provisions ......................................... 3
3B. Opinion Delivery ........................................... 3
3C. Legend ..................................................... 4
3D. Legend Removal ............................................. 4
Section 4. Representations and Warranties of the Company .............. 4
4A. Organization, Corporate Power and Licenses ................. 4
4B. Capital Stock and Related Matters .......................... 5
4C. Authorization; No Breach ................................... 5
4D. Litigation, etc ............................................ 6
4E. Brokerage .................................................. 6
4F. Governmental Consent, etc .................................. 6
4G. Investment Company ......................................... 6
Section 5. Representations and Warranties of the Purchasers ........... 6
5A. Purchasers' Investment Representations ..................... 6
Section 6. Definitions ................................................ 7
6A. Definitions ................................................ 7
Section 7. Commitment Regarding Subsequent Funding; Right to
Exchange Securities ........................................ 9
7A. Commitment to Provide Subsequent Funding ................... 9
7B. Terms of Subsequent Investment ............................. 9
7C. Right to Exchange Certain Existing Securities .............. 9
Section 8. Miscellaneous .............................................. 10
8A. Expenses ................................................... 10
8B. Subsequent Employee Agreements ............................. 10
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8C. Indemnification ............................................ 10
8D. Survival of Representations and Warranties ................. 10
8E. Remedies ................................................... 11
8F. Consent to Amendments ...................................... 11
8G. Successors and Assigns ..................................... 11
8H. Severability ............................................... 11
8I. No Third Party Beneficiaries ............................... 11
8J. Counterparts ............................................... 11
8K. Descriptive Headings; Interpretation ....................... 11
8L. Governing Law .............................................. 12
8M. Notices .................................................... 12
8N. No Strict Construction ..................................... 12
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Schedules and Exhibits
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List of Exhibits
List of Disclosure Schedules
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STOCK PURCHASE AGREEMENT
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THIS AGREEMENT (this "Agreement") is made as of August 30, 2001, by
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and among Ziff Xxxxx Holdings Inc., a Delaware corporation (the "Company") and
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the purchasers listed on the attached Schedule of Purchasers (the "Purchasers").
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Except as otherwise indicated herein, capitalized terms used herein are defined
in Section 6 hereof.
WHEREAS, the Company and the Purchasers are parties to a Stock
Purchase Agreement (the "Prior Agreement") dated as of July 13, 2001 pursuant to
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which the Purchasers purchased an aggregate of 70,735.56657 shares of the
Company's Series B Preferred Stock, par value $.01 per share ("Series B
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Preferred Stock") for an aggregate purchase price of $70,735,566.57 and an
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aggregate of 3,722.92456 shares of the Company's Series C Convertible Preferred
Stock, $.01 par value per share ("Series C Preferred Stock") for an aggregate
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purchase price of $3,722,924.56.
WHEREAS, as a result of the Company's financial condition and results
of operations, the Company is in urgent need of an immediate cash infusion of
$15,000,000.00 and anticipates needing further equity investments of
approximately $35,000,000.00 by November 30, 2001 in order to sustain its
operations.
WHEREAS, the Purchasers are willing (i) to invest $15,000,000.00 into
the Company on an expedited basis in the form of purchasing an aggregate of
$14,250,000.00 of Series B Preferred Stock and an aggregate of $750,000.00 of
Series C Preferred Stock (the "Initial Investment") and (ii) subject to the
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terms and conditions set forth in this Agreement, to commit to invest up to an
additional $35,000,000.00 into the Company (the "Subsequent Investment") on
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terms and conditions to be mutually agreed upon between the Company and the
Purchasers if the Company is unable to obtain an aggregate of $35,000,000.00 in
additional equity investments from the Company's existing investors (other than
the Purchasers) or from new third-party investors.
WHEREAS, as a condition to the willingness of the Purchasers to make
the Initial Investment in the form of Series B Preferred Stock and Series C
Preferred Stock and to commit to making the Subsequent Investment, the
Purchasers have required that the Company agree to exchange the securities
purchased by the Purchasers under the Prior Agreement and the securities
purchased by the Purchasers hereunder for other securities as described below.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be legally
bound, agree as follows:
Section 1. Authorization and Closing.
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11. Authorization of the Preferred Stock. The Company shall (prior to
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Closing, as defined below) authorize the issuance and sale to the Purchasers of
14,250.00 shares of its Series B Preferred Stock, and 750.00 shares of its
Series C Preferred Stock (collectively, the "Purchased Stock"), having the
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rights and preferences set forth in the Third Restated Certificate of
Incorporation attached as Exhibit A hereto.
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12. Purchase and Sale of the Stock. On the basis of the
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representations, warranties, covenants and agreements set forth herein, but
subject to the terms and conditions set forth herein (including without
limitation the condition set forth in Section 1C below and the covenants of the
Company set forth in Section 7 below), at the Closing the Company shall sell to
the Purchasers and the Purchasers shall purchase from the Company an aggregate
of 14,250.00 shares of Series B Preferred Stock for an aggregate purchase price
of $14,250,000.00 and 750.00 shares of Series C Preferred Stock for an aggregate
purchase price of $750,000.00. The obligations of each Purchaser shall be
several, with each Purchaser obligated only to purchase the number of shares of
Purchased Stock set forth opposite such Purchaser's name on the Schedule of
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Purchasers attached hereto.
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13. The Closing. The closing of the purchase and sale of the
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Purchased Stock (the "Closing") shall take place at the offices of Xxxxxxxx &
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Xxxxx, 000 Xxxx Xxxxxxxx Xxxxx, Xxxxxxx, XX 00000, at 10:00 a.m. on August 30,
2001, or at such other place or on such other date as may be mutually agreeable
to the Company and the Purchasers. At the Closing, the Company shall deliver to
each Purchaser stock certificates evidencing the Purchased Stock to be purchased
by such Purchaser, registered in the Purchaser's or its nominee's name, upon
payment of the purchase price thereof by wire transfer of immediately available
funds in the amount set forth opposite such Purchaser's name.
Section 2. Conditions of the Purchasers' Obligation at the Closing.
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The obligations of the Purchasers to purchase and pay for the Purchased Stock at
the Closing is subject to the satisfaction as of the Closing of the following
conditions:
21. Representations and Warranties; Covenants. The representations
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and warranties contained in Section 4 hereof shall be true and correct in all
material respects at and as of the Closing as though then made, except to the
extent of changes caused by the execution, delivery and performance of the
agreements expressly referred to in this Section 2, and the Company shall have
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performed in all material respects all of the covenants and agreements required
to be performed by it hereunder prior to or at the Closing.
22. Securities Law Compliance. The Company shall have made all
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filings under all applicable federal and state securities laws necessary to
consummate the issuance of the Securities pursuant to this Agreement in
compliance with such laws.
23. Closing Documents. The Company shall have delivered to the
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Purchaser all of the following documents:
(i) an Officer's Certificate, dated the date of the Closing,
stating that the condition specified in Section 2A has been fully
satisfied;
(ii) certified copies of the resolutions duly adopted by the
Company's board of directors authorizing the execution, delivery and
performance of this Agreement, the issuance and sale of the Purchased
Stock, and the consummation of all other transactions contemplated by this
Agreement (the "Transactions");
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(iii) certified copies of the Company's Third Amended and
Restated Certificate of Incorporation and Bylaws, each as in effect at the
Closing;
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(iv) certificates evidencing the Purchased Stock, issued in the
Purchasers' respective names; and
(v) such other documents relating to the Transactions as the
Purchasers or their special counsel may reasonably request.
24. Proceedings. All corporate and other proceedings taken or
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required to be taken by the Company in connection with the Transactions to be
consummated at or prior to the Closing and all documents incident thereto shall
be reasonably satisfactory in form and substance to the Purchasers.
25. Compliance with Applicable Laws. The purchase of the Securities
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by the Purchasers hereunder shall not be prohibited by any applicable law or
governmental rule or regulation.
26. Waiver. Any condition specified in this Section 2 may be waived
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if consented to by the Purchasers.
Section 3. Transfer of Restricted Securities.
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31. General Provisions. Subject to restrictions on transfer contained
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in the Investor Rights Agreement, shares of Restricted Stock are transferable
only pursuant to (i) Public Offerings registered under the Securities Act, (ii)
Rule 144 or Rule 144A of the Securities and Exchange Commission (or any similar
rule or rules then in force) if such rule is available and (iii) subject to the
conditions specified in Section 3B below, any other legally available means of
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transfer.
32. Opinion Delivery. In connection with the transfer of any shares
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of Restricted Stock (other than a transfer described in Section 3A(i) or (ii)
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above), upon the request of the Company, the holder thereof shall deliver
written notice to the Company describing in reasonable detail the transfer or
proposed transfer, together with an opinion of Xxxxxxxx & Xxxxx or other counsel
which (to the Company's reasonable satisfaction) is knowledgeable in securities
law matters to the effect that such transfer of shares of Restricted Stock may
be effected without registration of such shares under the Securities Act. In
addition, if the holder of the shares of Restricted Stock delivers to the
Company an opinion of Xxxxxxxx & Xxxxx or such other counsel that no subsequent
transfer of such shares shall require registration under the Securities Act, the
Company shall promptly upon such contemplated transfer deliver new certificates
for such shares which do not bear the Securities Act legend set forth in Section
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3C. If the Company is not required to deliver new certificates for such shares
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not bearing such legend, the holder thereof shall not transfer the same until
the prospective transferee has confirmed to the Company in writing its agreement
to be bound by the conditions contained in this Section 3.
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33. Legend. Each certificate representing shares of Restricted Stock
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shall be imprinted with a legend in substantially the following form:
"The securities represented by this certificate were originally issued on
August 30, 2001, and have not been registered under the Securities Act of
1933, as amended or any applicable state securities laws. The transfer of
the securities represented by this
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certificate is subject to the conditions specified in a Stock Purchase
Agreement dated as of August 30, 2001 and an Investor Rights Agreement,
dated as of April 5, 2000 as amended and modified from time to time,
between the issuer (the "Company") and certain investors, and the Company
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reserves the right to refuse the transfer of such securities until such
conditions have been fulfilled with respect to such transfer. A copy of
such conditions shall be furnished by the Company to the holder hereof upon
written request and without charge."
34. Legend Removal. If any shares of Restricted Stock become eligible
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for sale pursuant to Rule 144(k), the Company shall, upon the request of the
holder of such Restricted Securities, remove the legend set forth in Section 3C
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from the certificates for such Restricted Securities.
Section 4 Representations and Warranties of the Company. As a material
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inducement to the Purchasers to enter into this Agreement and purchase the
Purchased Stock:
41. Organization, Corporate Power and Licenses. The Company is a
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corporation duly organized, validly existing and in good standing under the laws
of Delaware and is qualified to do business in every jurisdiction in which the
failure to so qualify would reasonably be expected to have a material adverse
effect on the financial condition, operating results, assets, operations or
business prospects of the Company and its Subsidiaries taken as a whole. The
Company possesses all requisite corporate power and authority and all material
licenses, permits and authorizations necessary to own and operate its
properties, to carry on its businesses as now conducted and presently proposed
to be conducted and to carry out the transactions contemplated by this Agreement
(including, without limitation, the issuance of the Purchased Stock hereunder).
The copies of the Company's Third Amended and Restated Certificate of
Incorporation and Bylaws which have been furnished to the Purchasers reflect all
amendments made thereto at any time prior to the date of this Agreement and are
correct and complete.
42. Capital Stock and Related Matters.
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(i) As of the Closing and immediately thereafter, the authorized
capital stock of the Company shall consist of (a) 120,000,000 shares of
Common Stock, of which 76,049,301.77 shares shall be issued and
outstanding; (b) 350,000 shares of Series A Preferred Stock, of which
337,582.50 shares shall be issued and outstanding, (c) 142,500 shares of
Series B Preferred Stock, of which 84,985.56657 shares shall be issued and
outstanding and (d) 7,500 shares of Series C Preferred Stock, of which
4,472.92456 shares shall be issued and outstanding. The attached
Capitalization Schedule sets forth the ownership of the Company as of and
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immediately after the Closing. As of the Closing, the Company shall not
have outstanding (or any commitments to issue) any stock or securities
convertible or exchangeable for any shares of its capital stock or
containing any profit participation features, nor shall it have outstanding
any rights or options to subscribe for or to purchase its capital stock or
any stock or securities convertible into or exchangeable for its capital
stock or any stock appreciation rights or phantom stock plans, except as
set forth on the attached Capitalization Schedule. As of the Closing, the
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Company shall not be subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of its capital stock
or any warrants, options or other rights to acquire its capital stock
except pursuant to the Executive Stock Agreements and the Investor Rights
Agreement. All of the outstanding shares of the Company's capital stock
are, and as of the Closing shall be, validly issued, fully paid and
nonassessable.
(ii) There are no statutory or, to the Company's actual
knowledge, contractual stockholders preemptive rights or rights of refusal
with respect to the issuance of the Purchased Stock hereunder or any other
capital stock or other securities of the Company, except as set forth in
the Investor Rights Agreement. Based upon the representations and
warranties of the Purchasers set forth herein, and to the Company's
knowledge, the Company has not violated any applicable federal or state
securities laws in connection with the offer, sale or issuance of any of
its capital stock or other securities, and the offer, sale and issuance of
the Purchased Stock hereunder do not require registration under the
Securities Act or any applicable state securities laws. To the Company's
actual knowledge, there are no agreements between the Company's
stockholders with respect to the voting or transfer of the Company's
capital stock or with respect to any other aspect of the Company's affairs,
except for the Investor Rights Agreement and Executive Stock Agreements
between the Company and certain of its executives. The Company has not
granted any registration rights other than under the Investor Rights
Agreement.
43. Authorization; No Breach. The execution, delivery and performance
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of this Agreement (including the issuance and delivery of the Purchased Stock
hereunder) have been duly and validly authorized by the Company's board of
directors. This Agreement constitutes a valid and binding obligation of the
Company, enforceable in accordance with its terms. The execution and delivery by
the Company of this Agreement, the offering, sale and issuance of the Purchased
Stock hereunder and the fulfillment of and compliance with the respective terms
hereof and thereof by the Company, do not and shall not (i) conflict with or
result in a breach of the terms, conditions or provisions of, (ii) constitute a
default under, (iii) result in the creation of any lien, security interest,
charge or encumbrance upon the Company's capital stock or assets pursuant to,
(iv) give any third party the right to modify, terminate or accelerate any
obligation under, (v) result in a violation of, or (vi) require any
authorization, consent, approval, exemption or other action by or notice or
declaration to, or filing with, any court or administrative or governmental body
or agency or other
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Person pursuant to, the Third Amended and Restated Certificate of Incorporation
or Bylaws of the Company, or any law, statute, rule or regulation to which the
Company is subject, or any agreement, instrument, order, judgment or decree to
which the Company is subject.
44. Litigation, etc. There are no actions, suits, proceedings,
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orders, investigations or claims pending or, to the Company's actual knowledge,
threatened against the Company or pending or threatened by the Company against
any third party, at law or in equity, or before or by any governmental
department, commission, board, bureau, agency or instrumentality (including any
actions, suits, proceedings or investigations with respect to the transactions
contemplated by this Agreement) or otherwise.
45. Brokerage. There are no claims for brokerage commissions,
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finders' fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement binding
upon the Company.
46. Governmental Consent, etc. To the actual knowledge of the
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Company: (i) no permit, consent, approval or authorization of, or declaration to
or filing with, any governmental authority is required in connection with the
execution, delivery and performance by the Company of this Agreement, or the
consummation by the Company of the Transactions and (ii) no permit, consent,
approval or authorization of, or declaration to or filing with, any governmental
authority was required in connection with the formation of the Company, other
than filing with the Delaware Secretary of State.
47. Investment Company. The Company is not an "investment company" as
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defined under the Investment Company Act of 1940, as amended.
Section 5. Representations and Warranties of the Purchasers.
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51. Purchasers' Investment Representations. As a material inducement
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to the Company to enter into this Agreement and to sell the Purchased Stock
hereunder, each Purchaser represents and warrants, severally and not jointly, to
the Company as of the date hereof as follows:
(i) Such Purchaser is acquiring the Restricted Stock purchased
hereunder for its own account with the present intention of holding such
securities for purposes of investment, has no intention of selling such
securities in a public distribution in violation of the federal securities
laws or any applicable state securities laws, was not organized or
reorganized for the purpose of purchasing the Restricted Stock purchased
hereunder, and conducts other business or holds other investments; provided
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that nothing contained herein shall prevent such Purchaser and subsequent
holders of Restricted Stock from transferring such securities in compliance
with the provisions of Section 3 hereof and the Investor Rights Agreement.
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(ii) Such Purchaser is an "accredited investor" (as defined)
under Regulation D under the Securities Act, is sophisticated in financial
matters and is able to evaluate the risks and benefits of the investment in
the Purchased Stock.
(iii) Such Purchaser is able to bear the economic risk of its
investment in the Purchased Stock for an indefinite period of time because
the Purchased Stock has not been
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registered under the Securities Act and, therefore, cannot be sold unless
subsequently registered under the 1933 Act or an exemption from such
registration is available.
(iv) Such Purchaser has had an opportunity to ask questions and
receive answers concerning the terms and conditions of the offering of the
Purchased Stock and has had full access to such other information
concerning the Company as it has requested.
(v) This Agreement constitutes the legal, valid and binding
obligation of such Purchaser, enforceable in accordance with its terms, and
the execution, delivery and performance of this Agreement by such Purchaser
does not and shall not conflict with, violate or cause a breach of any
agreement, contract or instrument to which such Purchaser is a party or any
judgment, order or decree to which such Purchaser is subject.
(vi) Such Purchaser is a resident of the state indicated in its
address as set forth on the Schedule of Purchasers attached hereto.
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Section 6. Definitions.
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61. Definitions. For the purposes of this Agreement, the following
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terms have the meanings set forth below:
"Independent Third Party" means any Person who, immediately prior to
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the contemplated transaction, does not own in excess of 5% of the Company's
Common Stock on a fully-diluted basis (a "5% Owner"), who is not controlling,
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controlled by or under common control with any such 5% Owner and who is not the
spouse or descendent (by birth or adoption) of any such 5% Owner or a trust for
the benefit of such 5% Owner and/or such other Persons.
"Investor Rights Agreement" means the that certain agreement dated as
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of April 5, 2000, as amended, by and among the Company and its stockholders.
"Material Adverse Effect" means a material adverse effect upon (a) the
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business, operations, prospects, properties, assets or condition (financial or
otherwise) of the Company and its subsidiaries, on an individual basis or taken
as a whole, or (b) the ability of the Company to perform its obligations under
this Agreement.
"Officer's Certificate" means a certificate signed by the Company's
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president or its chief financial officer, stating that (i) the officer signing
such certificate has made or has caused to be made such investigations as are
necessary in order to permit him to verify the accuracy of the information set
forth in such certificate and (ii) to the best of such officer's actual
knowledge, such certificate does not misstate any material fact and does not
omit to state any fact necessary to make the certificate not misleading.
"Person" means an individual, a partnership, a corporation, a limited
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liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Public Offering" means any offering of the Company's equity
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securities to the public
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pursuant to an effective registration statement under the Securities Act, or any
comparable statement under any similar federal statute then in force.
"Restricted Stock" means (i) the Purchased Stock issued hereunder, and
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(ii) any Preferred Stock issued with respect to the Purchased Stock referred to
in clause (i) above by way of a stock dividend or stock split or in connection
with a combination of shares, recapitalization, merger, consolidation or other
reorganization. As to any particular shares of Restricted Stock, such shares
shall cease to be Restricted Stock when they have (a) been effectively
registered under the Securities Act and disposed of in accordance with the
registration statement covering them, (b) been distributed to the public through
a broker, dealer or market maker pursuant to Rule 144 (or any similar provision
then in force) under the Securities Act or become eligible for sale pursuant to
Rule 144(k) (or any similar provision then in force) under the Securities Act or
(c) been otherwise transferred and new certificates for them not bearing the
Securities Act legend set forth in Section 3C have been delivered by the
Company. Whenever any particular securities cease to be Restricted Stock, the
holder thereof shall be entitled to receive from the Company, without expense,
new shares of like tenor not bearing a Securities Act legend of the character
set forth in Section 3C.
"Sale of the Company" means the sale of the Company to an Independent
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Third Party or group of Independent Third Parties pursuant to which such party
or parties acquire (i) capital stock of the Company possessing the voting power
under normal circumstances to elect a majority of the Board (whether by merger,
consolidation or sale or transfer of the Company's capital stock) or (ii) all or
substantially all of the Company's assets determined on a consolidated basis.
"Securities Act" means the Securities Act of 1933, as amended, or any
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similar federal law then in force.
"Securities and Exchange Commission" means the U.S. Securities and
----------------------------------
Exchange Commission and includes any governmental body or agency succeeding to
the functions thereof.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
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as amended, or any similar federal law then in
"Subsidiary" means, with respect to any Person, any corporation,
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limited liability company, partnership, association or other business entity of
which (i) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited
liability company, partnership, association or other business entity, a majority
of the partnership or other similar ownership interest thereof is at the time
owned or controlled, directly or indirectly, by any Person or one or more
Subsidiaries of that Person or a combination thereof. For purposes hereof, a
Person or Persons shall be deemed to have a majority ownership interest in a
limited liability company, partnership, association or other business entity if
such Person or Persons shall be allocated a majority of limited liability
company, partnership, association or other business entity gains or losses or
shall be or control any managing director or general partner of such limited
liability company, partnership, association or other business entity.
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Section 7. Commitment Regarding Subsequent Funding; Right to Exchange
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Securities.
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7A. Commitment to Provide Subsequent Funding. In the event that the
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Company is unable to obtain, on terms satisfactory to the Company and one or
more prospective investors, aggregate gross proceeds of at least $35,000,000.00
from equity investments by Persons other than the Purchasers (including pursuant
to the exercise of preemptive rights by the Company's other stockholders
pursuant to Section 4 of the Investor Rights Agreement) after the date hereof
and on or prior to November 30, 2001 (the "Funding Determination Date"), then,
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subject to the terms and conditions of this Section 7, each Purchaser severally
hereby agrees to invest in the Company up to the amount equal to its Pro Rata
Share of the difference between (i) $35,000,000.00 and (ii) the aggregate gross
proceeds received by the Company from equity investments by Persons other than
the Purchasers after the date hereof and on or prior to November 30, 2001 (the
"Commitment Amount"). Promptly following the Funding Determination Date, the
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Company shall notify the Purchasers if it has obtained equity funding from
Persons other than the Purchasers and, to the extent the Company has obtained
any such equity funding, the terms and conditions of such investment (the "Third
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Party Investment"). For purposes hereof, the "Pro Rata Share" for a Purchaser
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means the amount invested by such Purchaser at the Closing divided by
$15,000,000.
7B. Terms of Subsequent Investment. If, pursuant to Section 7A above,
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the Company notifies the Purchasers that it has failed to obtain, prior to the
Funding Determination Date, aggregate gross proceeds of at least $35,000,000.00
from equity investments by Persons other than the Purchasers after the date
hereof, the Company shall have the right to require each Purchaser to make an
investment in the Company in an aggregate amount equal to such Purchaser's Pro
Rata Share of the Commitment Amount (such Purchaser's "Committed Investment").
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Notwithstanding the foregoing, the Company shall not have the right to require
the Purchasers to make an investment in the Company pursuant to this Section 7B
if the Company has suffered, since June 30, 2001 (i.e., the date of the most
recent consolidated balance sheet of the Company delivered to the Purchasers), a
Material Adverse Effect, or if facts, events or circumstances exist or have
occurred which are reasonably likely to result in a Material Adverse Effect. In
exchange for a Committed Investment, each Purchaser shall receive securities and
other rights which are mutually acceptable to the Company and the Purchasers
(which terms may vary from, and be more favorable to the Purchasers than, the
terms and conditions of the Purchased Stock), provided that (i) if the Company
has obtained a Third Party Investment, the securities and other rights issued to
the Purchasers shall be no less favorable to the Purchasers than the securities
and other rights issued in such Third Party Investment are to the purchasers
thereof; and (ii) the issuance of the securities and other rights to the
Purchasers in such Committed Investment must be on terms and conditions which
have been determined to be fair to the Company from a financial standpoint by a
nationally recognized investment banking or financial advisory firm, as
reflected in a written opinion of such firm to the Company. The parties agree to
negotiate in good faith concerning the terms and conditions of the Committed
Investment and the Company will pay all costs and expenses of the investment
banking or financial advisory firm referred to above.
7C. Right to Exchange Certain Existing Securities. As a material
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inducement to the Purchasers to purchase the Purchased Stock hereunder and to
make the commitments set forth in Sections 7A and 7B above, the Company
covenants and agrees that it shall deliver to the Purchasers, promptly upon
receipt thereof from, or delivery thereof by the Company to, any third party,
copies of
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all documents relating to any proposed or consummated Third Party Investment,
including without limitation any letter of intent, term sheet or letter
agreement proposing or setting forth proposed terms for any Third Party
Investment or draft or definitive agreements relating to any proposed or
consummated Third Party Investment, and shall notify the Purchasers in writing
promptly upon execution of any definitive agreement providing for any Third
Party Investment, and in any event at least five (5) business days prior to the
consummation of any such investment (such notice, a "Third Party Investor
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Notice"), and shall also promptly notify the Purchasers in writing of the
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consummation of each such Third Party Investment.
(i) If the Purchasers consummate a Committed Investment, then
the Purchasers may exchange all, but not less than all, of the Series B
Preferred Stock and the Series C Preferred Stock purchased under the Prior
Agreement or this Agreement for securities of the same classes and in the
same proportions as those issued, and at the same price and on the same
other terms on which such securities are issued, to the Purchasers in
exchange for cash upon consummation of the Committed Investment.
(ii) If the Purchasers do not consummate a Committed Investment,
but the Company consummates a Third Party Investment pursuant to an
agreement entered into at any time on or prior to November 30, 2001, then
upon the request of any Purchaser by written notice to the Company not
later than the last to occur of (i) 30 days after delivery to the
Purchasers of a Third Party Investor Notice, (ii) 10 days after
consummation of any equity financing described in any Third Party Investor
Notice, or (iii) December 31, 2001, the Purchasers may elect by written
notice to the Company to exchange all, but not less than all, of the Series
B Preferred Stock and the Series C Preferred Stock purchased under the
Prior Agreement or this Agreement for securities of the same classes and in
the same proportions as those issued, and at the same price and on the same
other terms on which such securities are issued, upon consummation of a
Third Party Investment.
(iii) The Company shall take all actions necessary (including
executing all necessary agreements and instruments and obtaining all
necessary third party and stockholder consents) in order to effect promptly
any exchange of securities requested by the Purchasers pursuant to this
Section 7. The shares of Series B Preferred Stock and Series C Preferred
Stock delivered by any Purchaser in any exchange pursuant to this Section 7
will be deemed to have cash value equal to the aggregate purchase price
paid by such Purchaser for such shares plus the aggregate amount of unpaid
dividends which have accrued on such shares through the date of such
exchange.
Section 8. Miscellaneous.
-------------
81. Expenses. The Company shall pay to the Purchasers, and hold the
--------
Purchasers harmless against liability for the payment of, (i) the fees and
expenses of its special counsel arising in connection with the negotiation and
execution of this Agreement and the consummation of the transactions
contemplated by this Agreement, which shall be payable at the Closing or, if the
Closing does not occur, payable upon demand, (ii) the fees and expenses incurred
with respect to any amendments or waivers (whether or not the same become
effective) under or in respect of this Agreement, the agreements contemplated
hereby or the Third Amended and Restated Certificate of Incorporation, (iii) the
fees and expenses incurred with respect to the enforcement of the rights
10
granted under this Agreement, the agreements contemplated hereby and the Third
Amended and Restated Certificate of Incorporation, (iv) the reasonable fees and
expenses incurred by the Purchasers in connection with any transaction, claim or
event which WS believes affects the Company and as to which the Purchasers seeks
the advice of outside professionals, and (iv) the fees and expenses incurred by
the Purchasers in connection with a Sale of the Company.
82. Subsequent Employee Agreements. After the date hereof, any
-------------------------------
agreement entered into by the Company providing for the issuance to employees of
stock or other equity securities exercisable for or convertible into stock shall
contain repurchase provisions granting the Purchasers the right to repurchase
the employee stock to the extent not repurchased by the Company, on terms no
less favorable than are contained in the Executive Stock Agreements entered into
by the Company as of the date hereof; provided, however, that the requirement
--------
contained herein can be waived in writing by the Purchasers.
83. Indemnification. The Company hereby covenants and agrees to
---------------
indemnify and hold harmless the Purchasers, their respective officers,
directors, stockholders, partners, affiliates, successors, assigns, agents and
other representatives, from and against any and all damages, losses, claims,
liabilities, deficiencies, costs and expenses (including, without limitation,
reasonable attorneys' fees), resulting from any material breach of any of the
representations, warranties or covenants of the Company under this Agreement.
84. Survival of Representations and Warranties. All representations
------------------------------------------
and warranties contained herein or made in writing by any party in connection
herewith shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, regardless of any
investigation made by the Purchasers or on their behalf, through the first
anniversary of the Closing; provided, however, that the representations and
--------
warranties contained in Section 4B, Section 4C and Section 4D hereof shall
---------- ---------- ----------
survive the Closing for the applicable statute of limitations, giving effect to
any waiver, mitigation or extension thereof.
85. Remedies. The Purchasers shall have all rights and remedies set
--------
forth in this Agreement, the Investor Rights Agreement, the Third Amended and
Restated Certificate of Incorporation and all rights and remedies which the
Purchasers have been granted at any time under any other agreement or contract
and all of the rights which the Purchasers have under any law. The Purchasers
shall be entitled to enforce such rights specifically (without posting a bond or
other security), to recover damages by reason of any breach of any provision of
this Agreement and to exercise all other rights granted by law.
86. Consent to Amendments. Except as otherwise expressly provided
---------------------
herein, the provisions of this Agreement may be amended and the Company may take
any action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of the
Purchasers.
87. Successors and Assigns. Except as otherwise expressly provided
----------------------
herein, all covenants and agreements contained in this Agreement by or on behalf
of any of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto whether so expressed or
not. In addition, and whether or not any express assignment has been made, the
provisions of this Agreement which are for the Purchasers' benefit as a
purchaser or holder of any
11
class of Preferred Stock are also for the benefit of, and enforceable by, any
subsequent holder of such Preferred Stock.
88. Severability. Whenever possible, each provision of this Agreement
------------
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
89. No Third Party Beneficiaries. Nothing herein expressed or implied
----------------------------
is intended or shall be construed to confer upon or give to any Person other
than the parties hereto and their respective permitted successors and assigns,
any rights or remedies under or by reason of this Agreement.
810. Counterparts. This Agreement may be executed simultaneously in
------------
two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together shall constitute
one and the same Agreement.
811. Descriptive Headings; Interpretation. The descriptive headings of
-------------------------------------
this Agreement are inserted for convenience only and do not constitute a
substantive part of this Agreement. The use of the word "including" in this
Agreement shall be by way of example rather than by limitation.
812. Governing Law. All issues and questions concerning the
-------------
construction, validity, enforcement and interpretation of this Agreement and the
exhibits and schedules hereto shall be governed by, and construed in accordance
with, the laws of the State of Illinois, without giving effect to any choice of
law or conflict of law rules or provisions (whether of the State of Illinois or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Illinois. In furtherance of the foregoing,
the internal law of the State of Illinois shall control the interpretation and
construction of this Agreement (and all schedules and exhibits hereto), even
though under that jurisdiction's choice of law or conflict of law analysis, the
substantive law of some other jurisdiction would ordinarily apply.
813. Notices. All notices, demands or other communications to be given
-------
or delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given (i) when delivered personally to
the recipient, (ii) one business day after being sent to the recipient by
reputable overnight courier service (charges prepaid), (iii) upon
machine-generated acknowledgment of receipt after transmittal by facsimile if so
acknowledged to have been received before 5:00 p.m. on a business day at the
location of receipt and otherwise on the next following business day, provided
--------
that such notice, demand or other communication is also deposited within 24
hours thereafter with a reputable overnight courier service (charges prepaid)
for delivery to the same Person, or (iv) five days after being mailed to the
recipient by certified or registered mail, return receipt requested and postage
prepaid. Such notices, demands and other communications shall be sent to the
Purchasers at the addresses and telecopier numbers indicated on the Schedule of
-----------
Purchasers attached hereto, and to the Company at the following address and
----------
telecopier number:
12
Ziff Xxxxx Holdings Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Chief Executive Officer
with a copy to:
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxxxx, Esq.
Xxxxx X. Breach, Esq.
or to such other address and telecopier number or to the attention of such other
person as the recipient party has specified by prior written notice to the
sending party.
814. No Strict Construction. The parties hereto have participated
----------------------
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Agreement.
* * *
13
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
ZIFF XXXXX HOLDINGS INC.
By: /s/ Xxxxxx XxXxxxx
---------------------------------------------
Its: Chief Operating Officer
---------------------------------------------
XXXXXX XXXXX & PARTNERS III, L.P.
XXXXXX XXXXX & PARTNERS DUTCH III-A, L.P.
XXXXXX XXXXX & PARTNERS DUTCH III-B, L.P.
XXXXXX XXXXX & PARTNERS III-C, L.P.
By: Xxxxxx Xxxxx & Partners
Management III, L.P.
Its: General Partner
By: Xxxxxx Xxxxx & Partners Management III, L.L.C.
Its: General Partner
By: /s/ Avy Xxxxx
---------------------------------------------
Its: Member
LIST OF EXHIBITS AND SCHEDULES
------------------------------
Exhibits
--------
Exhibit A - Third Amended and Restated of Certificate of Incorporation
Disclosure Schedules
--------------------
Capitalization Schedule
Schedule of Purchasers.
----------------------
EXHIBIT A
See attached.
Capitalization Schedule
-----------------------
Outstanding Capital Stock As of Closing
---------------------------------------
-----------------------------------------------------------------------------------------------------------------
No. of Shares No. of Shares No. of No. of Shares
of of Shares of of
Series A Series B Series C Common
-------- -------- -------- ------
Preferred Preferred Preferred Stock
--------- --------- --------- -----
Stock Stock Stock
----- ----- -----
-----------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxx & Partners II, L.P. 89,288.12 18,797,498.79
-----------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxx & Partners Dutch, 5,711.88 1,202,501.21
L.P.
-----------------------------------------------------------------------------------------------------------------
Abu Dhabi Investment Authority 14,250.00 3,000,000.00
-----------------------------------------------------------------------------------------------------------------
The Chase Manhattan Bank as 9,500.00 2,000,000.00
Trustee for First Plaza Group
Trust
-----------------------------------------------------------------------------------------------------------------
Co-Investment Partners, L.P. 14,250.00 3,000,000.00
-----------------------------------------------------------------------------------------------------------------
DLJ Diversified Partners, L.P. 1,749.34 368,282.80
-----------------------------------------------------------------------------------------------------------------
DLJ Diversified Partners-A, L.P. 649.65 136,767.60
-----------------------------------------------------------------------------------------------------------------
DLJ EAB Partners, L.P. 134.34 28,282.80
-----------------------------------------------------------------------------------------------------------------
DLJ ESC II L.P. 5,642.42 1,187,878.80
-----------------------------------------------------------------------------------------------------------------
DLJ First Esc L.P. 57.58 12,121.20
-----------------------------------------------------------------------------------------------------------------
DLJ Merchant Banking Partners 1,191.61 250,865.40
II-A, L.P.
-----------------------------------------------------------------------------------------------------------------
DLJ Merchant Banking Partners 29,921.45 6,299,252.40
II, L.P.
-----------------------------------------------------------------------------------------------------------------
DLJ Millennium Partners, L.P. 483.80 101,851.80
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
No. of Shares No. of Shares No. of No. of Shares
of of Shares of of
Series A Series B Series C Common
-------- -------- -------- ------
Preferred Preferred Preferred Stock
--------- --------- --------- -----
Stock Stock Stock
----- ----- -----
-----------------------------------------------------------------------------------------------------------------
DLJ Millennium Partners-A, L.P. 94.36 19,865.40
-----------------------------------------------------------------------------------------------------------------
DLJ Offshore Partners II, C.V. 1,471.38 309,764.40
-----------------------------------------------------------------------------------------------------------------
DLJMB Funding II, Inc. 6,104.07 1,285,067.40
-----------------------------------------------------------------------------------------------------------------
GS Private Equity Partners II, 4,225.99 889,682.00
L.P.
-----------------------------------------------------------------------------------------------------------------
GS Private Equity Partners II 2,188.51 460,739.80
Offshore, L.P.
-----------------------------------------------------------------------------------------------------------------
GS Private Equity Partners II - 1,750.81 368,591.80
Direct Investment Fund, L.P.
-----------------------------------------------------------------------------------------------------------------
GS Private Equity Partners III, 4,429.43 932,511.20
L.P.
-----------------------------------------------------------------------------------------------------------------
GS Private Equity Partners III 1,032.61 217,391.40
Offshore, L.P.
-----------------------------------------------------------------------------------------------------------------
GS Private Equity Partners 622.65 131,083.80
Connecticut, L.P.
-----------------------------------------------------------------------------------------------------------------
NAS Partners I L.L.C. 54.98 11,575.00
-----------------------------------------------------------------------------------------------------------------
Nassau Capital Partners Fund III 7,070.02 1,488,425.00
L.P.
-----------------------------------------------------------------------------------------------------------------
Norwest Equity Partners VII, L.P. 7,125.00 1,500,000.00
-----------------------------------------------------------------------------------------------------------------
Xxxxx X. Xxxxxxx, Xx. 8,455.00 4,146,000.00
-----------------------------------------------------------------------------------------------------------------
Xxxxxx XxXxxxx 142.50 522,916.67
-----------------------------------------------------------------------------------------------------------------
Xxxxx Xxxxxxxxxx 475.00 127,288.13
-----------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
No. of Shares No. of Shares No. of No. of Shares
of of Shares of of
Series A Series B Series C Common
-------- -------- -------- ------
Preferred Preferred Preferred Stock
--------- --------- --------- -----
Stock Stock Stock
----- ----- -----
---------------------------------------------------------------------------------------------------------------------
Xx Xxxxxxx 285.00 552,916.67
---------------------------------------------------------------------------------------------------------------------
Xxxxx Xxxxxxx 475.00 346,458.33
---------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxx & Partners III, L.P. 111,096.47938 79,508.18732 4,184.64143 23,388,732.50
---------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxx & Partners Dutch 3,345.06994 2,393.95927 125.99786 704,225.25
III-A, L.P.
---------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxx & Partners Dutch 3,345.06994 2,393.95927 125.99786 704,225.25
III-B, L.P.
---------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxx & Partners III-C, 963.38074 689.46071 36.28741 202,817.00
L.P.
---------------------------------------------------------------------------------------------------------------------
Other Management Stockholders 1,353,721.98
---------------------------------------------------------------------------------------------------------------------
Total Authorized Shares: 350,000.00 142,500.00 7,500.00 120,000,000.00
---------------------------------------------------------------------------------------------------------------------
Stock Options
The Company has two option plans pursuant to which the Company has authorized
for issuance an aggregate of 2,630,000 shares of Common Stock upon the exercise
of stock options granted under such plans.
SCHEDULE OF PURCHASERS
--------------------------------------------------------------------------------------------
HOLDER NUMBER OF SHARES OF NUMBER OF SHARES OF
SERIES B PREFERRED SERIES C PREFERRED
--------------------------------------------------------------------------------------------
Xxxxxx Xxxxx & Partners III, L.P. 13,331.57753 701.66197
c/o Xxxxxx Xxxxx & Partners
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
--------------------------------------------------------------------------------------------
Xxxxxx Xxxxx & Partners Dutch III-A, L.P. 401.40839 21.12676
c/o Xxxxxx Xxxxx & Partners
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
--------------------------------------------------------------------------------------------
Xxxxxx Xxxxx & Partners Dutch III-B, L.P. 401.40839 21.12676
c/o Xxxxxx Xxxxx & Partners
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
--------------------------------------------------------------------------------------------
Xxxxxx Xxxxx & Partners III-C, L.P. 115.60569 6.08451
c/o Xxxxxx Xxxxx & Partners
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
--------------------------------------------------------------------------------------------
