AGREEMENT
THIS AGREEMENT is made this 30th day of June, 1999 between
XxxxxxxxXxxxxxxxx.Xxx, Inc. ("BTR"), a Pennsylvania corporation with its
principal office at 00 Xxxx Xxxx, Xxxxxxxxx, XX 00000, and Xxxxx Holdings, Inc.
("Xxxxx"), a Delaware corporation with its principal office at 0 Xxxxxxx Xxxxxx,
Xxx Xxxx, XX 00000 (together, the "Parties").
BACKGROUND
BTR is in the business of producing and syndicating radio programming
for broadcast by its affiliated radio station network. Xxxxx is a holding
company, which through its subsidiaries is engaged in the development and/or
operation of certain commercial web sites on the Internet. In late May of 1999,
Xxxxx contacted BTR concerning possible strategic alliances between the two
companies. In this context, the Parties have reached an agreement which the
terms set forth below describe in detail.
TERMS OF AGREEMENT
THEREFORE, in light of the foregoing and in consideration of the
promises and the representations and covenants given and made by the respective
parties hereto, the Parties, intending to be legally bound by this Agreement,
agree as follows:
1. Cash. Immediately following execution of this Agreement, Xxxxx will deliver
Two Hundred and Fifty Thousand Dollars ($250,000) to the account designated
by BTR.
2. Advertising Credit. BTR shall issue to Xxxxx an advertising credit (the
"Credit") in the amount of Two Hundred Thousand Dollars ($200,000) to be
used according to the Terms of the Xxxxx Advertising Credit set forth in
Appendix 1 to this Agreement.
3. Shares of Common Stock. Immediately following execution of this Agreement,
BTR shall issue to Xxxxx a number of shares of its Series C Preferred
Stock, par value $.0001, which, upon issuance, shall represent a 5% voting
interest in the affairs of BTR and a preference of $250,000 for a period
and then $125,000 for a subsequent period under the designations governing
the classes of BTR's preferred stock described in Schedule 1 to this
Agreement (the "Shares").
4. Stock Purchase Option. Xxxxx shall have the right to purchase a number of
shares equal to and of the same class as the Shares (the "Option Shares")
any time prior to the first anniversary of this Agreement for an aggregate
exercise price of $250,000 (the "Option"); provided that Xxxxx must
exercise the Option in its entirety if at all.
5. Early Termination of Option. The Option may be terminated by BTR any time
after six months from the date of this Agreement if not exercised before
the eleventh business day following written notice from BTR that it has
generated revenue of $500,000 or more for any
Xxxxx Holdings, Inc. Agreement
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three month period during the term of the Option and that revenue in each
of the three months exceeded $125,000. (Revenues shall be determined on an
accrual basis and according to Generally Accepted Accounting Principals,
including a provision for doubtful accounts.)
6. Adjustment of Option Shares. In the event of any stock split, reverse stock
split or stock dividend occurring prior to Xxxxx'x exercising the Option,
the number of Option Shares shall be adjusted to preserve the proportionate
ownership interest represented by the Option Shares immediately prior to
the occurrence of such event. For so long as the Option remains unexercised
and has not been terminated, BTR shall give Xxxxx 15 days notice prior to
the earlier of the record date or effectiveness date of any event which
requires such an adjustment. BTR shall additionally provide Xxxxx with 15
days notice prior to the earlier of the record date or the effectiveness
date should BTR (1) declare a dividend of cash, evidences of indebtedness,
or warrants or other rights of subscription for the purchase of securities
or evidences of indebtedness, or (2) resolve to reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation, or sell, transfer or otherwise dispose of all or substantially
all its property, assets or business.
7. Reservation of Shares. BTR shall reserve and keep available for issue upon
the exercise of the Option the securities representing the Option Shares,
which when issued upon full payment of the exercise price of the Option
shall be duly and validly issued and fully paid and nonassessable.
8. Piggy-Back Registration. In the event BTR proposes to register any of its
securities under the Securities Act of 1933 other than pursuant to a
registration statement on Forms S-4 or S-8 or any successor to such forms,
Xxxxx may elect to have included in such registration statement all or a
portion of the Shares and the Option Shares, when and if acquired by Xxxxx,
subject to any lock-up, hold-back or cut-back requirements made by the
underwriter, if any, of the related offering and provided that no other
selling shareholder may be treated proportionately more favorably than
Xxxxx(the "Piggy-Back Registration Right"). At least 21 days prior to the
filing with the Securities and Exchange Commission of the registration
statement covering such securities, BTR shall mail or deliver to Xxxxx a
written notice of its intention to register such securities as well as all
other relevant information. In the event Xxxxx chooses to have included in
such registration such number of securities as it is entitled to include
pursuant to this paragraph, Xxxxx shall mail or deliver to BTR not more
than 10 days after the date of delivery to Xxxxx of the registration notice
from BTR a written notice specifying the securities to be registered.
9. Blue Sky Registration. To the extent Xxxxx elects to have any of its Shares
or Option Shares registered pursuant to the Piggy-Back Registration Right,
BTR shall additionally take such steps as are reasonably necessary and
feasible to cause such securities to additionally be registered under such
other securities or "blue sky" laws as shall be reasonably requested by
Xxxxx.
Xxxxx Holdings, Inc. Agreement
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10. Board Participation. Xxxxx shall have the right to receive notice of and to
have a designee attend as an ex officio member any and all meetings of the
Board of Directors of BTR for the life of the Option. Furthermore, upon
exercising the Option, Xxxxx shall have the right either to appoint one
director to the board of BTR for a period of three years from the date of
this Agreement or to continue to designate an ex officio member of the BTR
board for the same three year period.
11. Web Page Advertising For a period of three years from the date of this
Agreement, BTR will, at the request of Xxxxx, provide a banner ad on its
web page which includes a hyperlink to the web page of Xxxxx Holdings, Inc.
or such web page as Xxxxx Holdings, Inc. directs for a fee equal to the
lowest fee paid for similar advertising by any of BTR's advertising
clients, where such fee may be paid as a charge against the Credit.
12. Audio Streaming For a period of three years from the date of this
Agreement, Xxxxx shall have the right to stream BTR's live audio feed and
to archive and stream such portions of BTR's programming as it desires on
its own web page and the web pages of any of its Subsidiaries or such other
subsidiaries or affiliates to which BTR does not object based on reasonable
business concerns over propriety, competition, product integrity, corporate
image or the like.
13. Rights to Programming. Notwithstanding the right to use BTR's programming
granted in the preceding paragraph, BTR retains all rights to its
programming.
REPRESENTATIONS AND COVENANTS OF BTR
14. Organization and Standing. BTR is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Pennsylvania and is duly qualified as a foreign corporation in all
jurisdictions in which the failure to so qualify would have a material
adverse effect on the business, properties, prospects, condition (financial
or otherwise) or results of operations of BTR or on the consummation of any
of the transactions contemplated by this Agreement. A copy of BTR's
Articles of Incorporation and bylaws appear as Appendix 2 to this
Agreement.
15. Authority; Validity and Enforceability. The execution of this Agreement as
well as the performance of the obligations imposed by this Agreement have
been duly and validly authorized by BTR and upon execution this Agreement
shall be valid and binding upon BTR and 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.
16. Non-contravention. The execution and delivery by BTR of this Agreement and
the performance by BTR of the obligations imposed by this Agreement do not
and will not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default (or an event which, with notice,
lapse of time or both, would constitute a default) under (i) the articles
of incorporation or by-laws of the Company [a copy of each or which has
been
Xxxxx Holdings, Inc. Agreement
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provided as Appendix 2 of this Agreement] or (ii) any indenture, mortgage,
deed of trust or other material agreement or instrument to which BTR is a
party or by which its properties or assets are bound, or any law, rule,
regulation, decree, judgment or order of any court or public or
governmental authority having jurisdiction over BTR or any of the BTR's
properties or assets.
17. Capitalization. The authorized capital stock of BTR consists of 20,000,000
shares of Common Stock, $.0001 par value (the "Company Common Stock"), and
5,000,000 shares of preferred stock, par value $.0001. The number of
outstanding shares of BTR's preferred and common stock are set forth in
Schedule 1 to this Agreement. All of the issued and outstanding shares of
preferred stock and common stock have been duly authorized and validly
issued and are fully paid and non-assessable. As of the date hereof, BTR
has no outstanding stock options or warrants to purchase shares of Common
Stock except as specified in Schedule 2 of this Agreement. The Shares have
been duly and validly authorized and reserved for issuance by BTR, and when
issued pursuant to the terms of this Agreement will be duly and validly
issued, fully paid and non-assessable and will not subject the holder
thereof to personal liability by reason of being such holder. No
preemptive, subscription, "call" or similar rights to acquire either
preferred or common stock of BTR have been issued or granted to any person.
18. Senior Classes of Preferred Stock. BTR shall not, prior to December 31,
1999, issue any shares of its Preferred Stock where such shares have been
designated to have a preference which is senior in priority to the
preference of BTR's Class C Preferred Stock.
REPRESENTATIONS OF XXXXX
19. Organization and Standing. Xxxxx is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and
is duly qualified as a foreign corporation in all jurisdictions in which
the failure to so qualify would have a material adverse effect on the
business, properties, prospects, condition (financial or otherwise) or
results of operations of BTR or on the consummation of any of the
transactions contemplated by this Agreement.
20. Authority; Validity and Enforceability. The execution of this Agreement as
well as the performance of the obligations imposed by this Agreement have
been duly and validly authorized by Xxxxx and upon execution this Agreement
shall be valid and binding upon Xxxxx and 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.
21. Non-contravention. The execution and delivery by Xxxxx of this Agreement
and the performance by Xxxxx of the obligations imposed by this Agreement
do not and will not conflict with or result in a breach by Xxxxx of any of
the terms or provisions of, or constitute a default (or an event which,
with notice, lapse of time or both, would constitute a default) under (i)
the articles of incorporation or by-laws of the Company or (ii) any
indenture,
Xxxxx Holdings, Inc. Agreement
Page 5 of 14
mortgage, deed of trust or other material agreement or instrument to which
the Company is a party or by which its properties or assets are bound, or
any law, rule, regulation, decree, judgment or order of any court or public
or governmental authority having jurisdiction over the Company or any of
the Company's properties or assets.
22. Investment Intent. Xxxxx is purchasing the Shares and the Option Shares, if
Xxxxx exercises the Option, for its own account, for investment purposes
only and not with a view towards or in connection with the public sale or
distribution thereof in violation of the Securities Act of 1933.
23. Investor Sophistication. Xxxxx is (i) experienced in making investments of
the kind contemplated by this Agreement, (ii) capable, by reason of its
business and financial experience, of evaluating the merits and risks of an
investment in the Shares and the Option Shares, and (iii) able to afford
the loss of its investment in the Shares and the Option Shares.
24. Not a Public Offering or Sale. Xxxxx understands that the Shares are being
sold by BTR in reliance on section 4(2) of the Securities Act of 1933, as
amended, and that the Company is relying upon the accuracy of, and Xxxxx'x
compliance with, each of Xxxxx'x representations, warranties and covenants,
respectively and severally, as set forth in this Agreement to determine the
applicability of referenced section 4(2) for Xxxxx'x purchase of the
Shares.
25. Access to Information. Xxxxx acknowledges that it has been furnished with
or provided access to all materials relating to the business, financial
position and results of operations of BTR, and all other materials
requested by Xxxxx, respectively, to enable it to make an informed
investment decision with respect to the Shares and that in making its
decision to purchase the Shares it has been given an opportunity to ask
questions of and to receive answers from BTR's executive officers,
directors and management personnel concerning the terms and conditions of
the Agreement and the operations and financial condition of BTR.
CERTAIN COVENANTS AND ACKNOWLEDGMENTS
26. Restrictive Legend. Xxxxx acknowledges and agrees that, upon issuance
pursuant to this Agreement, the Shares and the Option Shares shall bear a
legend in substantially the following form (and a stop-transfer order may
be placed against transfer of such securities):
THESESECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF
ANY STATE, AND ARE BEING OFFERED AND SOLD PURSUANT TO AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH
LAWS. THESE SECURITIES MAY NOT BE SOLD OR TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR SUCH OTHER
LAWS.
Xxxxx Holdings, Inc. Agreement
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MISCELLANEOUS
27. Notices. Except as otherwise provided herein, any notice or other
communication or delivery required or permitted hereunder shall be in
writing and shall be delivered personally or sent by certified mail,
postage prepaid, or by a nationally recognized overnight courier service,
and shall be deemed given when so delivered personally or by overnight
courier service, or, if mailed, three (3) days after the date of deposit in
the United States mails, as follows:
if to Xxxxx, to:
Xxxxx Holdings, Inc.
Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxxx Xxxxxxxx, Executive Vice-President
with a copy to:
Xxxxx Xxxxxxx, LLP
Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx X. Xxxxxxxx, Esq.
if to BTR, to:
XxxxxxxxXxxxxxxxx.Xxx, Inc.
Xxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, CEO
28. Assignment. This Agreement shall be assignable by either of the Parties
only with the prior written consent of the other party which may be
withheld only where such assignment could cause material detriment to the
business purpose of the party solicited for consent, and any attempted
assignment contrary to the provisions hereby shall be null and void, except
that Xxxxx need not obtain BTR's written consent to assignments of the
rights under this Agreement to any of its wholly owned subsidiaries listed
on Schedule 3 to this Agreement.
29. Severability. The provisions of this Agreement shall be severable, and if
any part of any provision shall be held invalid or unenforceable, or any
separate covenant contained in any provision is held to be unduly
restrictive and void by a final decision of any court or other tribunal of
competent jurisdiction, such part, covenant or provision shall be construed
or limited in scope to give maximum lawful validity, and the remaining
provisions of this Agreement shall nonetheless remain in full force and
affect.
30. Entire Agreement. This Agreement contains the entire agreement of the
Parties relating to the subject matter hereof, superseding and terminating
all prior agreements or understandings, whether oral or written, between
the Parties relative to the subject matter
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hereof, and this Agreement may not be extended, amended, modified or
supplemented without the prior written consent of the Parties.
31. Waivers. Any waiver of the performance of the terms or provisions of this
Agreement shall be effective only if in writing and signed by the party
against whom such waiver is to be enforced. The failure of either party to
exercise any of his or its rights under this Agreement or to require the
performance of any term or provision of this Agreement, or the waiver of
any subsequent breach of the same or any other term or provision of this
Agreement, shall not prevent a subsequent exercise or enforcement of such
rights or be deemed a waiver of any subsequent breach of the same or any
other term or provision of this Agreement.
32. Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the Commonwealth of Pennsylvania.
33. Choice of Forum and Limitations. Any action to resolve any dispute under
this Agreement may be brought only in a court of competent jurisdiction in
the Commonwealth of Pennsylvania. No action arising from a dispute based on
this Agreement may be brought more than one (1) year after the cause of
action has accrued.
34. Counterparts. This Agreement and any amendment or modification hereof may
be executed in two or more counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument.
35. Facsimile Signatures. A copy of this Agreement bearing a facsimile
signature shall be deemed to bear an original signature in all states which
may have jurisdiction over this Agreement.
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Xxxxx Holdings, Inc. Agreement
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IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement on the date first above written.
XXXXXXXXXXXXXXXXX.XXX, INC.
By: ______________________________
Name: Xxxxxxx X. Xxxxxx
Title: Chief Executive Officer
XXXXX HOLDINGS, INC.
By: ______________________________
Name: Xxxxxxxxx Xxxxxxxx
Title: Executive Vice President
Xxxxx Holdings, Inc. Agreement
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APPENDIX 1
TERMS OF USE OF THE XXXXX ADVERTISING CREDIT
1. Xxxxx may utilize the Credit for advertising time to be broadcast any time
prior to 12:00 a.m. EST on the third anniversary of this agreement, subject
to availability and to BTR's right to preempt such advertising as limited
by paragraph 5, below; provided that, to the extent at least one third of
the Credit is not utilized by the second anniversary of this agreement,
that portion of the Credit will expire and further provided that, BTR may
refuse to provide advertising time representing a conversion of more than
one tenth of the original Credit in a single calendar month.
2. The Credit shall convert to advertising time at 16% of the rates specified
in BTR's Advertising Rate Card. (A copy of BTR's Advertising Rate Card is
attached to this Agreement as Appendix 2.)
3. In the event BTR's Advertising Rate Card changes, Xxxxx shall be entitled
to purchase advertising time according to the replaced Advertising Rate
Card for a period of 120 days subsequent to BTR's notice to Corporation of
such change.
4. BTR may preempt advertising scheduled pursuant to the terms of the Credit
in favor of cash sales of advertising at or above 50% of the rates
specified for such spot in BTR's Advertising Rate Card.
5. Xxxxx may guarantee any of the spots it schedules and thereby exempt its
scheduled spot from BTR's right of preemption by paying 64% of the rate
specified for such spot by the Advertising Rate Card.
6. Xxxxx'x right to guarantee its scheduled spots is limited such that Xxxxx'x
guaranteed spots may not constitute more than 10% of BTR's scheduled
advertising spots during the programming hours 6 a.m. to 9 p.m., Monday
through Friday.
7. The Credit shall be assignable by Xxxxx only with the prior written consent
of BTR where such consent may be withheld only where such assignment could
cause material detriment to the business purpose of the party solicited for
consent, and any attempted assignment contrary to the provisions hereby
shall be null and void, except that Xxxxx need not obtain BTR's written
consent to assignments of the Credit to any of its wholly owned
subsidiaries listed on Schedule 3 to this Agreement.
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Xxxxx Holdings, Inc. Agreement
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SCHEDULE 1
CAPITALIZATION OF XXXXXXXXXXXXXXXXX.XXX, INC.
PRO FORMA
OUTSTANDING AFTER
XXXXX PURCHASE
OUTSTANDING
--------------------------------------------------------------------------------
LONG TERM DEBT 0 0
PREFERRED STOCK, PAR VALUE $.0001.
5,000,000 SHARES AUTHORIZED.
CLASS A 1,043,743 1,043,743
CLASS B 2,977,882 2,977,882
CLASS C 564,056
COMMON STOCK, PAR VALUE $.0001 5,588,334 5,588,334
20,000,000 SHARES AUTHORIZED.
* The shares to be issued to Xxxxx were calculated on a fully diluted basis.
* BTR has made three designations within its authorized preferred stock -
Class A, Class B, and Class C. The distinctions among these three classes
of preferred stock lapse on December 31, 2000 at which time all preferred
and common stock shall have identical rights. At that time BTR shall
exchange the preferred stock certificates of each class for common stock
certificates representing a same number of respective shares. Until that
time, the distinction between any two classes will relate to the occurrence
of a Fundamental Transaction which shall mean any sale, liquidation, filing
by BTR for protection from its creditors under the Bankruptcy Code, or
similar event involving the exchange or modification of BTR's outstanding
common stock for value. Class B and Class C preferred stock share on a pari
passu basis a liquidation preference relative to Class A preferred stock
and common stock. Each share of Class C preferred stock shall have a
liquidation preference of $.4432 until January 1, 2000, at which time the
Class C preferred stock preference shall become $ .2217 per share. The
Class B preferred stock has a per share liquidation preference of $ .10.
Any distribution according to the preferences of the Class C and Class B
preferred stock shall be made on a pro rata basis derived from the
respective preference amounts at the time the Fundamental Event occurs.
Following fulfillment of the liquidation preferences for Classes B and C
preferred stock, Class A preferred stock shall have a $1.00 preference
relative to the common stock and the further participation of the Classes B
and C of the preferred stock. Once the Class A preferred stock liquidation
preference has been fulfilled, the common stock shares and the Class B and
Class C preferred stock shares will share
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equally in the remaining proceeds of the Fundamental Event with no further
participation by the Class A preferred stock.
* 1.1 million shares of BTR's Preferred Stock have been designated Class A
shares of the Preferred Stock.
* 3 million shares of BTR's preferred stock have been designated Class B
shares of the Preferred Stock.
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Xxxxx Holdings, Inc. Agreement
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SCHEDULE 2
OUTSTANDING OPTIONS AND WARRANTS
HOLDER NO. OF SHARES EXERCISE PRICE TERM
--------------------------------------------------------------------------------
Xxxxx Xxxxxxxx 564,056 $.05 3yrs
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Xxxxx Holdings, Inc. Agreement
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SCHEDULE 3
WHOLLY-OWNED SUBSIDIARIES OF XXXXX HOLDINGS, INC.
1. Xxxxx-E Commerce Corp.
2. Astratek, Inc.
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Xxxxx Holdings, Inc. Agreement
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APPENDIX 2
1. Articles of Incorporation
2. Articles of Amendment
3. By-Laws
