EXHIBIT 10.12
This Securities Purchase Agreement (the "Purchase Agreement") contains certain
representations and warranties (the "Representations") by ARTISTdirect, Inc.
(the "Company") in favor of the Buyers named therein (the "Buyers"). The
Purchase Agreement states in Section 9(h) that no person, other than the parties
to the agreement, is entitled to rely on the Representations contained in the
Purchase Agreement. The Purchase Agreement is filed in accordance with the rules
of the Securities and Exchange Commission as a material agreement, and is
intended by the Company solely as a record of the material agreement the Company
has reached with the Buyers. The filing of the Purchase Agreement is not
intended to waive or modify Section 9(h) thereof, or as a mechanism to update,
supersede or otherwise modify prior disclosures of information and risks
concerning the Company which the Company has made to its stockholders.
Investors and potential investors should also be aware that certain
Representations made to the Buyers are not intended to be affirmative
representations of facts, situations or circumstances, but are instead designed
and intended to allocate certain risks between the Company, on the one hand, and
the Buyers, on the other hand. The use of representations and warranties to
allocate risk is a standard device in investment and other commercial contracts.
Accordingly, stockholders should not rely on the Representations as affirmations
or characterizations of information concerning the Company as of the date of the
Purchase Agreement, or as of any other date.
EXECUTION
COPY
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "AGREEMENT"), dated as of July 28,
2005, by and among ARTISTdirect, Inc., a Delaware corporation, with headquarters
located at 00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000
(the "COMPANY"), and the investors listed on the Schedule of Buyers attached
hereto (individually, a "BUYER" and collectively, the "BUYERS").
WHEREAS:
A. The Company and each Buyer is executing and delivering this Agreement
in reliance upon the exemption from securities registration afforded by Section
4(2) of the Securities Act of 1933, as amended (the "1933 ACT"), and Rule 506 of
Regulation D ("REGULATION D") as promulgated by the United States Securities and
Exchange Commission (the "SEC") under the 1933 Act.
B. The Company has authorized a new series of convertible subordinated
notes of the Company, which notes shall be convertible into the Company's common
stock, $0.01 par value per share (the "COMMON STOCK"), in accordance with the
terms of such notes.
C. Each Buyer wishes to purchase, and the Company wishes to sell, upon the
terms and conditions stated in this Agreement, (i) that aggregate principal
amount of notes, in substantially the form attached hereto as Exhibit A (as
amended or modified from time to time, collectively, the "NOTES"), set forth
opposite such Buyer's name in column (3) on the Schedule of Buyers attached
hereto (which aggregate amount for all Buyers shall be $31,460,500) (as
converted, collectively, the "CONVERSION SHARES") and (ii) warrants, in
substantially the form attached hereto as Exhibit B (the "WARRANTS"), to acquire
up to that number of additional shares of Common Stock set forth opposite such
Buyer's name in column (4) of the Schedule of Buyers attached hereto (as
exercised, collectively, the "WARRANT SHARES").
D. The Notes bear interest, which at the option of the Company, subject to
certain conditions, may be paid in shares of Common Stock ("INTEREST SHARES").
E. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement,
substantially in the form attached hereto as Exhibit C (as amended or modified
from time to time, the "REGISTRATION RIGHTS AGREEMENT"), pursuant to which the
Company has agreed to provide certain registration rights with respect to the
Conversion Shares, the Interest Shares and the Warrant Shares under the 1933 Act
and the rules and regulations promulgated thereunder, and applicable state
securities laws.
F. The Notes, the Conversion Shares, the Interest Shares, the Warrants and
the Warrant Shares collectively are referred to herein as the "SECURITIES."
NOW, THEREFORE, the Company and each Buyer hereby agree as follows:
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1. PURCHASE AND SALE OF NOTES AND WARRANTS.
(a) Purchase of Notes and Warrants.
(i) Subject to the satisfaction (or waiver) of the conditions
set forth in Sections 6 and 7 below, the Company shall issue and sell to each
Buyer, and each Buyer severally, but not jointly, agrees to purchase from the
Company on the Closing Date (as defined below), (w) a principal amount of Notes
as is set forth opposite such Buyer's name in column (3) on the Schedule of
Buyers and (x) Warrants to acquire up to that number of Warrant Shares as is set
forth opposite such Buyer's name in column (4) on the Schedule of Buyers (the
"CLOSING").
(ii) Closing. The date and time of the Closing (the "CLOSING
DATE") shall be 10:00 a.m., New York City time, on the date hereof (or such
later date as is mutually agreed to by the Company and each Buyer) after
notification of satisfaction (or waiver) of the conditions to the Closing set
forth in Sections 6 and 7 below at the offices of Xxxxxxx Xxxx & Xxxxx LLP, 000
Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
(iii) Purchase Price. The aggregate purchase price for the
Notes and the Warrants to be purchased by each Buyer at the Closing (the
"PURCHASE PRICE") shall be the amount set forth opposite such Buyer's name in
column (5) of the Schedule of Buyers less in the case of DKR SoundShore Oasis
Holding Fund Ltd. ("OASIS") (a Buyer), a withholding amount with respect to
certain expenses in accordance with Section 4(g). Each Buyer shall pay $1.00 for
each $1.00 of principal amount of Notes and related Warrants to be purchased by
such Buyer at the Closing.
(b) Form of Payment. On the Closing Date, (i) each Buyer shall pay
its Purchase Price to the Company for the Notes and the Warrants to be issued
and sold to such Buyer at the Closing, by wire transfer of immediately available
funds in accordance with the Company's written wire instructions, and (ii) the
Company shall deliver to each Buyer (A) the Notes (in the principal amounts as
such Buyer shall request) which such Buyer is then purchasing and (B) the
Warrants (in the amounts as such Buyer shall request) such Buyer is purchasing,
in each case duly executed on behalf of the Company and registered in the name
of such Buyer or its designee.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
Each Buyer represents and warrants with respect to only itself that:
(a) No Public Sale or Distribution. Such Buyer is (i) acquiring the
Notes and the Warrants, (ii) upon conversion or exchange of the Notes will
acquire the Conversion Shares, (iii) upon exercise of the Warrants will acquire
the Warrant Shares and (iv) may acquire Interest Shares in accordance with the
Notes, in each case, for its own account and not with a view towards, or for
resale in connection with, the public sale or distribution thereof, except
pursuant to sales registered or exempted under the 1933 Act; provided, however,
that by making the representations herein, such Buyer does not agree to hold any
of the Securities for any minimum or other specific term and reserves the right
to dispose of the Securities at any time in accordance with or pursuant to an
effective registration statement or an exemption from registration under the
1933 Act and any applicable state securities laws. Such Buyer is acquiring the
Securities
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hereunder in the ordinary course of its business. Such Buyer does not presently
have any agreement or understanding, directly or indirectly, with any Person (as
defined below) to distribute any of the Securities.
(b) Accredited Investor Status. Such Buyer is an "accredited
investor" as that term is defined in Rule 501(a) of Regulation D. Such Buyer has
knowledge and experience in financial and business matters as to be capable to
evaluating the merits and risks of purchasing the Securities. Except in the case
of Broadband Capital Management, LLC ("Broadband"), such Buyer is not a
registered broker dealer or an affiliate of a broker dealer registered under
Section 15(a) of the Securities Exchange Act of 1934, as amended (the "1934
Act") or a member of the National Association of Securities Dealers, Inc.
(c) Reliance on Exemptions. Such Buyer understands that the
Securities are being offered and sold to it in reliance on specific exemptions
from the registration requirements of United States federal and state securities
laws and that the Company is relying in part upon the truth and accuracy of, and
such Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of such Buyer
to acquire the Securities.
(d) Information. Such Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Securities
that have been requested by such Buyer. Such Buyer and its advisors, if any,
have been afforded the opportunity to ask questions of the Company. Neither such
inquiries nor any other due diligence investigations conducted by such Buyer or
its advisors, if any, or its representatives shall modify, amend or affect such
Buyer's right to rely on the Company's representations and warranties contained
herein. Such Buyer understands that its investment in the Securities involves a
high degree of risk. Such Buyer has sought such accounting, legal and tax advice
as it has considered necessary to make an informed investment decision with
respect to its acquisition of the Securities.
(e) No Governmental Review. Such Buyer understands that no United
States federal or state agency or any other government or governmental agency
has passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.
(f) Transfer or Resale. Such Buyer understands that except as
provided in the Registration Rights Agreement: (i) the Securities have not been
and are not being registered under the 1933 Act or any state securities laws,
and may not be offered for sale, sold, assigned or transferred unless (A)
subsequently registered thereunder, (B) such Buyer shall have delivered to the
Company an opinion of counsel reasonably acceptable to the Company, in a
generally acceptable form, to the effect that such Securities to be sold,
assigned or transferred may be sold, assigned or transferred pursuant to an
exemption from such registration, or (C) such Buyer provides the Company with
reasonable assurance that such Securities can be sold, assigned or transferred
pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act, as amended,
(or a successor rule thereto) (collectively, "RULE 144"); (ii) any sale of the
Securities made in
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reliance on Rule 144 may be made only in accordance with the terms of Rule 144
and further, if Rule 144 is not applicable, any resale of the Securities under
circumstances in which the seller (or the Person (as defined in Section 3(s))
through whom the sale is made) may be deemed to be an underwriter (as that term
is defined in the 0000 Xxx) may require compliance with some other exemption
under the 1933 Act or the rules and regulations of the SEC promulgated
thereunder; and (iii) neither the Company nor any other Person is under any
obligation to register the Securities under the 1933 Act or any state securities
laws or to comply with the terms and conditions of any exemption thereunder.
(g) Legends. Such Buyer understands that the certificates or other
instruments representing the Notes and Warrants and, until such time as the
resale of the Conversion Shares and the Warrant Shares have been registered
under the 1933 Act as contemplated by the Registration Rights Agreement, the
stock certificates representing the Conversion Shares and the Warrant Shares,
except as set forth below, shall bear any legend as required by the "blue sky"
laws of any state and a restrictive legend in substantially the following form
(and a stop-transfer order may be placed against transfer of such stock
certificates):
[NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
[CONVERTIBLE] [EXERCISABLE] HAVE BEEN][THE SECURITIES REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR (B) AN OPINION OF COUNSEL SELECTED BY THE HOLDER, IN A
GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER
SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN
OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
The legend set forth above shall be removed and the Company shall cause its
transfer agent to issue a certificate without such legend to the holder of the
Securities upon which it is stamped, if, unless otherwise required by state
securities laws, (i) such Securities are registered for resale under the 1933
Act provided that the Buyer hereby covenants that any such resales by such Buyer
shall be done in accordance with the plan of distribution set forth in the
effective registration statement, (ii) in connection with a sale, assignment or
other transfer, such holder provides the Company with an opinion of counsel
reasonably acceptable to Company, in a generally acceptable form, to the effect
that such sale, assignment or transfer of the Securities may be made without
registration under the applicable requirements of the 1933 Act, or (iii) such
holder provides the Company with reasonable assurance that the Securities can be
sold, assigned or transferred pursuant to Rule 144 or Rule 144A.
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(h) Validity; Enforcement. Such Buyer has the requisite power and
authority to enter into this Agreement and the Registration Rights Agreement and
to purchase the Securities in accordance with the terms hereof. This Agreement
and the Registration Rights Agreement have been duly and validly authorized,
executed and delivered on behalf of such Buyer and shall constitute the legal,
valid and binding obligations of such Buyer enforceable against such Buyer in
accordance with their respective terms, except as such enforceability may be
limited by general principles of equity or to applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to, or
affecting generally, the enforcement of applicable creditors' rights and
remedies.
(i) Residency. Such Buyer is a resident of that jurisdiction
specified below its address on the Schedule of Buyers.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as set forth in the Disclosure Schedule, the Company
represents and warrants to each of the Buyers that:
(a) Organization and Qualification. The Company and its
"SUBSIDIARIES" (which for purposes of this Agreement means any entity in which
the Company, directly or indirectly, owns capital stock or holds an equity or
similar interest) are entities duly incorporated and validly existing in good
standing under the laws of the jurisdiction in which they are formed, and have
the requisite power and authorization to own their properties and to carry on
their business as now being conducted. Each of the Company and its Subsidiaries
is duly qualified as a foreign entity to do business and is in good standing in
every jurisdiction in which its ownership of property or the nature of the
business conducted by it makes such qualification necessary, except to the
extent that the failure to be so qualified or be in good standing would not have
a Material Adverse Effect. As used in this Agreement, "MATERIAL ADVERSE EFFECT"
means any material adverse effect on the business, properties, assets,
operations, results of operations, condition (financial or otherwise) or
prospects of the Company and its Subsidiaries, taken as a whole, or on the
transactions contemplated hereby and the other Transaction Documents (as defined
below) or by the agreements and instruments to be entered into in connection
herewith or therewith, or on the authority or ability of the Company to perform
its obligations under the Transaction Documents. The Company has no Subsidiaries
except as set forth on Schedule 3(a).
(b) Authorization; Enforcement; Validity. The Company has the
requisite power and authority to enter into and perform its obligations under
this Agreement, the Notes, the Registration Rights Agreement, the Irrevocable
Transfer Agent Instructions (as defined in Section 5(b)), the Warrants, the
Voting Agreements, the Lock-Up Agreements and each of the other agreements
entered into by the parties hereto in connection with the transactions
contemplated by this Agreement (collectively, the "TRANSACTION DOCUMENTS") and
to issue the Securities in accordance with the terms hereof and thereof. The
execution and delivery of the Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby,
including, without limitation, the issuance of the Notes and the Warrants, the
reservation for issuance and the issuance of the Conversion Shares issuable upon
conversion of the Notes, the reservation for issuance and the issuance of the
Interest Shares issuable in connection with the Notes and the reservation for
issuance and
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issuance of Warrant Shares issuable upon exercise of the Warrants have been duly
authorized by the Company's Board of Directors and (other than the Stockholder
Approval (as defined in Section 4(r)) no further corporate action is required by
the Company, its Board of Directors or its stockholders. This Agreement and the
other Transaction Documents have been duly executed and delivered by the
Company, and constitute the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms,
except as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally, the enforcement of applicable
creditors' rights and remedies.
(c) Issuance of Securities. The issuance of the Notes and the
Warrants are duly authorized and are free from all taxes, liens and charges with
respect to the issue thereof. As of the date hereof, the Company has 8,003,712
shares of Common Stock reserved solely for issuance of Conversion Shares, of
which up to 100,000 shall be specifically reserved for conversion of Notes held
by Broadband or Buyers affiliated with Broadband for the purpose of securing,
and to the extent necessary to secure, the Stockholder Consent (as defined
herein). Immediately following the Closing, the Board will authorize the Company
to undertake the actions necessary to amend its Certificate of Incorporation by
soliciting the Stockholder Consent such that a number of shares of Common Stock
shall be duly authorized and reserved for issuance which equals at least 130% of
the sum of the maximum number of shares Common Stock issuable as Interest Shares
pursuant to the terms of the Notes, issuable upon conversion of the Notes and
issuable upon exercise of the Warrants. Upon issuance or conversion or exchange
in accordance with the Notes or exercise in accordance with the Warrants, as the
case may be, the Interest Shares, the Conversion Shares and the Warrant Shares,
respectively, will be validly issued, fully paid and nonassessable and free from
all preemptive or similar rights, taxes, liens and charges with respect to the
issue thereof, with the holders being entitled to all rights accorded to a
holder of Common Stock. The offer and issuance by the Company of the Securities
in accordance with this Agreement is exempt from registration under the 1933
Act.
(d) No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without limitation, the
issuance of the Notes and the Warrants and the reservation for issuance and
issuance of the Interest Shares, the Conversion Shares and the Warrant Shares)
will not (following receipt of Stockholder Approval) (i) result in a violation
of any certificate of incorporation, certificate of formation, any certificate
of designations or other constituent documents of the Company or any of its
Subsidiaries, any capital stock of the Company or any of its Subsidiaries or
bylaws of the Company or any of its Subsidiaries or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company is a party, or (iii) result in a violation of
any law, rule, regulation, order, judgment or decree (including federal and
state securities laws and regulations and the rules and regulations of the OTC
Bulletin Board (the "PRINCIPAL MARKET")) applicable to the Company or any of its
Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries is bound or affected.
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(e) Consents. Except as disclosed on Schedule 3(e), the Company is
not required to obtain any consent, authorization or order of, or make any
filing (other than the filing with the SEC of a Form D, a proxy statement on
Schedule 14A and one or more Registration Statements in accordance with the
requirements of the Registration Rights Agreement and such filings as may be
required pursuant to state "blue sky" laws to permit resale of the Securities)
or registration with, any court, governmental agency or any regulatory or
self-regulatory agency or any other Person in order for it to execute, deliver
or perform any of its obligations under or contemplated by the Transaction
Documents, in each case in accordance with the terms hereof or thereof. All
consents, authorizations, orders, filings and registrations which the Company is
required to obtain pursuant to the preceding sentence have been obtained or
effected on or prior to the Closing Date, and the Company and its Subsidiaries
are unaware of any facts or circumstances which might prevent the Company from
obtaining or effecting any of the registration, application or filings pursuant
to the preceding sentence. The Company is not in violation of the listing
requirements of the Principal Market and has no knowledge of any facts which
would reasonably lead to delisting or suspension of the Common Stock in the
foreseeable future. For purposes of this Agreement, "Knowledge" shall mean
actual knowledge of the Company's executive officers.
(f) Acknowledgment Regarding Buyer's Purchase of Securities. Except
as set forth on Schedule 3(f), the Company acknowledges and agrees that each
Buyer is acting solely in the capacity of an arm's length purchaser with respect
to the Transaction Documents and the transactions contemplated hereby and
thereby and that no Buyer is (i) an officer or director of the Company, (ii) an
"affiliate" of the Company (as defined in Rule 144) or (iii) to the Company's
Knowledge, a "beneficial owner" of more than 10% of the shares of Common Stock
(as defined for purposes of Rule 13d-3 of the Securities Exchange Act of 1934,
as amended (the "1934 ACT")). The Company further acknowledges that no Buyer is
acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to the Transaction Documents and the transactions
contemplated hereby and thereby, and any advice given by a Buyer or any of its
representatives or agents in connection with the Transaction Documents and the
transactions contemplated hereby and thereby is merely incidental to such
Buyer's purchase of the Securities. The Company further represents to each Buyer
that the decision of the Company and each of the Subsidiaries to enter into the
Transaction Documents, as applicable, has been based solely on the independent
evaluation by the Company, its Subsidiaries and their representatives.
(g) No General Solicitation; Placement Agent's Fees. Neither the
Company, nor any of its affiliates, nor any Person acting on its or their
behalf, has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D) in connection with the offer or sale of the
Securities. The Company shall be responsible for the payment of any placement
agent's fees, financial advisory fees, or brokers' commissions (other than for
persons engaged by any Buyer or its investment advisor) relating to or arising
out of the transactions contemplated hereby. The Company shall pay, and hold
each Buyer harmless against, any liability, loss or expense (including, without
limitation, reasonable attorney's fees and out-of-pocket expenses) arising in
connection with any such claim. The Company acknowledges that it has engaged
Broadband Capital Management LLC as placement agent (together the "AGENT") in
connection with the sale of the Securities. Other than the Agent, the Company
has not engaged any placement agent or other agent in connection with the sale
of the Securities.
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(h) No Integrated Offering. None of the Company, its Subsidiaries,
any of their affiliates, and any Person acting on their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would require registration of any of
the Securities under the 1933 Act or cause this offering of the Securities to be
integrated with prior offerings by the Company for purposes of the 1933 Act or
any applicable stockholder approval provisions, including, without limitation,
under the rules and regulations of the Principal Market.
(i) Dilutive Effect. The Company understands and acknowledges that
the number of Conversion Shares issuable upon conversion of the Notes and the
Warrant Shares issuable upon exercise of the Warrants will increase in certain
circumstances. The Company further acknowledges that its obligation to issue
Conversion Shares upon conversion of the Notes in accordance with this Agreement
and the Notes and its obligation to issue the Warrant Shares upon exercise of
the Warrants in accordance with this Agreement and the Warrants is, in each
case, absolute and unconditional regardless of the dilutive effect, which may be
substantial, that such issuance may have on the ownership interests of other
stockholders of the Company.
(j) Application of Takeover Protections; Rights Agreement. The
Company and its board of directors have taken all necessary action, if any, in
order to render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Certificate of Incorporation
or the laws of the jurisdiction of its formation or otherwise which is or could
become applicable to any Buyer as a result of the transactions contemplated by
this Agreement, including, without limitation, the Company's issuance of the
Securities and any Buyer's ownership of the Securities. The Company has not
adopted a stockholder rights plan or similar arrangement relating to
accumulations of beneficial ownership of Common Stock or a change in control of
the Company.
(k) SEC Documents; Financial Statements. Except as disclosed on
Schedule 3(k), during the two (2) years prior to the date hereof, the Company
has filed all reports, schedules, forms, statements and other documents required
to be filed by it with the SEC pursuant to the reporting requirements of the
1934 Act (all of the foregoing filed prior to the date hereof and all exhibits
included therein and financial statements, notes and schedules thereto and
documents incorporated by reference therein being hereinafter referred to as the
"SEC DOCUMENTS"). The Company has delivered to the Buyers or their respective
representatives, as and if requested, true, correct and complete copies of the
SEC Documents not available on the XXXXX system. As of their respective dates,
the SEC Documents complied in all material respects with the requirements of the
1934 Act and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents, and none of the SEC Documents, at the time they
were filed with the SEC, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. As of their respective dates, the
financial statements of the Company included in the SEC Documents complied as to
form in all material respects with the applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto. Such
financial statements have been prepared in accordance with generally accepted
accounting principles, consistently applied, during the periods involved (except
(i) as may be otherwise indicated in such financial statements or the notes
thereto, or (ii) in the case of unaudited interim
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statements, to the extent they may exclude footnotes, may be condensed or
summary statements or subject to year end adjustments) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments).
(l) Absence of Certain Changes. Except as set forth in Schedule
3(l), since December 31, 2004, there has been no material adverse change and no
material adverse development in the business, properties, operations, condition
(financial or otherwise), results of operations or prospects of the Company or
its Subsidiaries. Since December 31, 2004, the Company has not (i) declared or
paid any dividends, (ii) sold any assets, individually or in the aggregate, in
excess of $100,000 outside of the ordinary course of business, (iii) had capital
expenditures, individually or in the aggregate, in excess of $100,000 or (iv)
waived any material rights with respect to any Indebtedness or other rights in
excess of $100,000 owed to it. The Company has not taken any steps to seek
protection pursuant to any bankruptcy law nor does the Company have any
Knowledge or reason to believe that its creditors intend to initiate involuntary
bankruptcy proceedings or any actual knowledge of any fact which would
reasonably lead a creditor to do so. The Company is not as of the date hereof,
and after giving effect to the transactions contemplated hereby to occur at the
Closing will not be, Insolvent (as defined below). For purposes of this Section
3(l), "INSOLVENT" means (i) the present fair saleable value of the Company's
assets is less than the amount required to pay the Company's total Indebtedness
(as defined in Section 3(s)), (ii) the Company is unable to pay its debts and
liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured, (iii) the Company intends to incur or
believes that it will incur debts that would be beyond its ability to pay as
such debts mature or (iv) the Company has unreasonably small capital with which
to conduct the business in which it is engaged as such business is now conducted
and is proposed to be conducted.
(m) No Undisclosed Events, Liabilities, Developments or
Circumstances. Except as disclosed on Schedule 3(m), no event, liability,
development or circumstance has occurred or exists, or is reasonably expected to
occur with respect to the Company or its Subsidiaries or their respective
business, properties, prospects, operations or financial condition, that would
be required to be disclosed by the Company under applicable securities laws with
the SEC relating to an issuance and sale by the Company of its Common Stock and
which has not been publicly announced.
(n) Conduct of Business; Regulatory Permits. Neither the Company nor
its Subsidiaries is in violation of any term of or in default under its
Certificate of Incorporation or Bylaws or their organizational charter or
certificate of incorporation or bylaws, respectively. Neither the Company nor
any of its Subsidiaries is in violation of any judgment, decree or order or any
statute, ordinance, rule or regulation applicable to the Company or its
Subsidiaries, and neither the Company nor any of its Subsidiaries will conduct
its business in violation of any of the foregoing, except for possible
violations which would not, individually or in the aggregate, have a Material
Adverse Effect. Without limiting the generality of the foregoing, the Company
has not received notice of a violation of any of the rules, regulations or
requirements of the Principal Market and has no knowledge of any facts or
circumstances that would reasonably lead to delisting or suspension of the
Common Stock by the Principal Market in the foreseeable
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future. Since December 31, 2004, (i) the Common Stock has been designated for
quotation on the Principal Market, (ii) trading in the Common Stock has not been
suspended by the SEC or the Principal Market and (iii) the Company has received
no communication, written or oral, from the SEC or the Principal Market
regarding the suspension or delisting of the Common Stock from the Principal
Market. The Company and its Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate regulatory authorities
necessary to conduct their respective businesses, except where the failure to
possess such certificates, authorizations or permits would not have,
individually or in the aggregate, a Material Adverse Effect, and neither the
Company nor any such Subsidiary has received any notice of proceedings relating
to the revocation or modification of any such certificate, authorization or
permit.
(o) Foreign Corrupt Practices. Neither the Company, nor any of its
Subsidiaries, nor any director, officer, agent, employee or other Person acting
on behalf of the Company or any of its Subsidiaries has, in the course of its
actions for, or on behalf of, the Company (i) used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses relating
to political activity; (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds; (iii)
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate,
payoff, influence payment, kickback or other unlawful payment to any foreign or
domestic government official or employee.
(p) Xxxxxxxx-Xxxxx Act. Except as described on Schedule 3(p), the
Company's Form 10-K for the year ended December 31, 2004 or in the Form 10-QSB
for the quarter ended March 31, 2005, the Company is in compliance with any and
all applicable requirements of the Xxxxxxxx-Xxxxx Act of 2002 that are effective
as of the date hereof for the Company, and any and all applicable rules and
regulations promulgated by the SEC thereunder that are effective as of the date
hereof for the Company, except where such noncompliance would not have,
individually or in the aggregate, a Material Adverse Effect.
(q) Transactions With Affiliates. Except as set forth on Schedule
3(q) or in the SEC Documents filed at least ten (10) days prior to the date
hereof and other than the grant of stock options disclosed on Schedule 3(r),
none of the officers, directors or employees of the Company is presently a party
to any transaction with the Company or any of its Subsidiaries (other than for
ordinary course services as employees, officers or directors), including any
contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or from,
or otherwise requiring payments to or from any such officer, director or
employee or, to the knowledge of the Company, any corporation, partnership,
trust or other entity in which any such officer, director, or employee has a
substantial interest or is an officer, director, trustee or partner.
(r) Equity Capitalization. As of the date hereof, the authorized
capital stock of the Company consists of (i) 15,000,000 shares of Common Stock,
of which as of the date hereof, 3,825,019 are issued and 3,502,117 are
outstanding 1,565,710 shares are reserved for issuance pursuant to the Company's
stock option and purchase plans and reserved for issuance pursuant to securities
(other than the Notes and the Warrants) exercisable or exchangeable for, or
convertible into, shares of Common Stock and (ii) 5,000,000 shares of preferred
stock, $0.01 par value per share, of which as of the date hereof none of which
is issued and outstanding or
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reserved for issuance. All of such outstanding shares have been, or upon
issuance will be, validly issued and are fully paid and nonassessable. Except as
disclosed in Schedule 3(r): (i) none of the Company's share capital is subject
to preemptive rights or any other similar rights or any liens or encumbrances
suffered or permitted by the Company; (ii) there are no outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, or exercisable
or exchangeable for, any share capital of the Company or any of its
Subsidiaries, or contracts, commitments, understandings or arrangements by which
the Company or any of its Subsidiaries is or may become bound to issue
additional share capital of the Company or any of its Subsidiaries or options,
warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, or exercisable
or exchangeable for, any share capital of the Company or any of its
Subsidiaries; (iii) there are no outstanding debt securities, notes, credit
agreements, credit facilities or other agreements, documents or instruments
evidencing Indebtedness (as defined in Section 3(s)) of the Company or any of
its Subsidiaries or by which the Company or any of its Subsidiaries is or may
become bound; (iv) there are no financing statements securing obligations in any
material amounts, either singly or in the aggregate, filed in connection with
the Company; (v) except as set forth on Schedule 3(r) there are no agreements or
arrangements under which the Company or any of its Subsidiaries is obligated to
register the sale of any of their securities under the 1933 Act (except the
Registration Rights Agreement) or any other registration rights granted to
certain other investors financing the MD Acquisition or any finder's fees paid
in connection with this Agreement; (vi) except as set forth on Schedule 3(r),
there are no outstanding securities or instruments of the Company or any of its
Subsidiaries which contain any redemption or similar provisions, and there are
no contracts, commitments, understandings or arrangements by which the Company
or any of its Subsidiaries is or may become bound to redeem a security of the
Company or any of its Subsidiaries; (vii) there are no securities or instruments
containing anti-dilution or similar provisions that will be triggered by the
issuance of the Securities; (viii) the Company does not have any stock
appreciation rights or "phantom stock" plans or agreements or any similar plan
or agreement; and (ix) the Company and its Subsidiaries have no liabilities or
obligations required to be disclosed in the SEC Documents but not so disclosed
in the SEC Documents, other than those (A) incurred in the ordinary course of
the Company's or its Subsidiaries' respective businesses or (B) incurred in
connection with the MD Acquisition and which, individually or in the aggregate,
do not or would not have a Material Adverse Effect. The Company has furnished to
the Buyer true, correct and complete copies of the Company's Certificate of
Incorporation, as amended and as in effect on the date hereof (the "CERTIFICATE
OF INCORPORATION"), and the Company's Bylaws, as amended and as in effect on the
date hereof (the "BYLAWS"), and the terms of all securities convertible into, or
exercisable or exchangeable for, shares of Common Stock and the material rights
of the holders thereof in respect thereto.
(s) Indebtedness and Other Contracts. Except as disclosed in
Schedule 3(s), neither the Company nor any of its Subsidiaries (i) has any
outstanding Indebtedness (as defined below), (ii) is a party to any contract,
agreement or instrument, the violation of which, or default under which, by the
other party(ies) to such contract, agreement or instrument would result in a
Material Adverse Effect, (iii) is in violation of any term of or in default
under any contract, agreement or instrument relating to any Indebtedness, except
where such violations and defaults would not result, individually or in the
aggregate, in a Material Adverse Effect, or (iv) is a party to any contract,
agreement or instrument relating to any Indebtedness, the performance of which,
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in the judgment of the Company's officers, has or is expected to have a Material
Adverse Effect. Schedule 3(s) provides a detailed description of the material
terms of any such outstanding Indebtedness. For purposes of this Agreement: (x)
"INDEBTEDNESS" of any Person means, without duplication (A) all indebtedness for
borrowed money, (B) all obligations issued, undertaken or assumed as the
deferred purchase price of property or services including, without limitation,
"capital leases" in accordance with U.S. generally accepted accounting
principles (other than trade payables entered into in the ordinary course of
business), (C) all reimbursement or payment obligations with respect to letters
of credit, surety bonds and other similar instruments, (D) all obligations
evidenced by notes, bonds, debentures or similar instruments, including
obligations so evidenced incurred in connection with the acquisition of
property, assets or businesses, (E) all indebtedness created or arising under
any conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to any property or assets acquired with
the proceeds of such indebtedness (even though the rights and remedies of the
seller or bank under such agreement in the event of default are limited to
repossession or sale of such property), (F) all monetary obligations under any
leasing or similar arrangement which, in connection with generally accepted
accounting principles, consistently applied for the periods covered thereby, is
classified as a capital lease, (G) all indebtedness referred to in clauses (A)
through (F) above secured by (or for which the holder of such Indebtedness has
an existing right, contingent or otherwise, to be secured by) any mortgage,
lien, pledge, charge, security interest or other encumbrance upon or in any
property or assets (including accounts and contract rights) owned by any Person,
even though the Person which owns such assets or property has not assumed or
become liable for the payment of such indebtedness, and (H) all Contingent
Obligations in respect of indebtedness or obligations of others of the kinds
referred to in clauses (A) through (G) above; (y) "CONTINGENT OBLIGATION" means,
as to any Person, any direct or indirect liability, contingent or otherwise, of
that Person with respect to any indebtedness, lease, dividend or other
obligation of another Person if the primary purpose or intent of the Person
incurring such liability, or the primary effect thereof, is to provide assurance
to the obligee of such liability that such liability will be paid or discharged,
or that any agreements relating thereto will be complied with, or that the
holders of such liability will be protected (in whole or in part) against loss
with respect thereto; and (z) "PERSON" means an individual, a limited liability
company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or agency
thereof.
(t) Absence of Litigation. There is no action, suit, proceeding,
inquiry or investigation before or by the Principal Market, any court, public
board, government agency, self-regulatory organization or body pending or, to
the Company's Knowledge, threatened against or affecting the Company, the Common
Stock or any of the Company's Subsidiaries or any of the Company's or the
Company's Subsidiaries' officers or directors, except as set forth in Schedule
3(t).
(u) Insurance. The Company and each of its Subsidiaries are insured
by insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its Subsidiaries are
engaged. Neither the Company nor any such Subsidiary has been refused any
insurance coverage sought or applied for and neither the Company nor any such
Subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect.
-12-
(v) Employee Relations. (i) Neither the Company nor any of its
Subsidiaries is a party to any collective bargaining agreement or employs any
member of a union. The Company and its Subsidiaries believe that their relations
with their employees are satisfactory. No executive officer of the Company (as
defined in Rule 501(f) of the 0000 Xxx) has notified the Company that such
officer intends to leave the Company or otherwise terminate such officer's
employment with the Company. No executive officer of the Company, to the
Knowledge of the Company, is, or is now expected to be, in violation of any
material term of any employment contract, confidentiality, disclosure or
proprietary information agreement, non-competition agreement, or any other
contract or agreement or any restrictive covenant, and the continued employment
of each such executive officer does not subject the Company or any of its
Subsidiaries to any liability with respect to any of the foregoing matters.
(ii) The Company and its Subsidiaries are in compliance with
all federal, state, local and foreign laws and regulations respecting labor,
employment and employment practices and benefits, terms and conditions of
employment and wages and hours, except where failure to be in compliance would
not, either individually or in the aggregate, reasonably be expected to result
in a Material Adverse Effect.
(w) Title. Neither the Company nor any Subsidiary owns any real
property. The Company and its Subsidiaries have good and marketable title to all
personal property owned by them which is material to the business of the Company
and its Subsidiaries, in each case free and clear of all liens, encumbrances and
defects except such as do not materially affect the value of such property and
do not interfere with the use made and proposed to be made of such property by
the Company and any of its Subsidiaries. Any real property and facilities held
under lease by the Company and any of its Subsidiaries are held by them under
valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of such
property and buildings by the Company and its Subsidiaries.
(x) Intellectual Property Rights. The Company and its Subsidiaries
own or possess adequate rights or licenses to use all trademarks, service marks,
and all applications and registrations therefor, trade names, patents, patent
rights, copyrights, original works of authorship, inventions, licenses,
approvals, governmental authorizations, trade secrets and other intellectual
property rights ("INTELLECTUAL PROPERTY RIGHTS") necessary to conduct their
respective businesses as now conducted. Except as set forth in Schedule 3(x),
none of the Company's Intellectual Property Rights have expired or terminated,
or are expected to expire or terminate, within three years from the date of this
Agreement. The Company does not have any knowledge of any infringement by the
Company or its Subsidiaries of Intellectual Property Rights of others. There is
no claim, action or proceeding pending, or to the knowledge of the Company,
being threatened, against the Company or its Subsidiaries regarding its
Intellectual Property Rights. The Company is unaware of any facts or
circumstances which might give rise to any of the foregoing infringements or
claims, actions or proceedings. The Company and its Subsidiaries have taken
reasonable security measures to protect the secrecy, confidentiality and value
of all of their Intellectual Property Rights.
-13-
(y) Environmental Laws. The Company and its Subsidiaries (i) are in
compliance with any and all Environmental Laws (as hereinafter defined), (ii)
have received all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses and (iii)
are in compliance with all terms and conditions of any such permit, license or
approval where, in each of the foregoing clauses (i), (ii) and (iii), the
failure to so comply could be reasonably expected to have, individually or in
the aggregate, a Material Adverse Effect. The term "ENVIRONMENTAL LAWS" means
all federal, state, local or foreign laws relating to pollution or protection of
human health or the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata), including,
without limitation, laws relating to emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants, or toxic or
hazardous substances or wastes (collectively, "HAZARDOUS MATERIALS") into the
environment, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous Materials,
as well as all authorizations, codes, decrees, demands or demand letters,
injunctions, judgments, licenses, notices or notice letters, orders, permits,
plans or regulations issued, entered, promulgated or approved thereunder.
(z) Subsidiary Rights. Except as set forth in Schedule 3(z), the
Company or one of its Subsidiaries has the unrestricted right to vote, and
(subject to limitations imposed by applicable law) to receive dividends and
distributions on, all capital securities of its Subsidiaries as owned by the
Company or such Subsidiary.
(aa) Tax Status. The Company and each of its Subsidiaries (i) has
made or filed all foreign, federal and state income and all other tax returns,
reports and declarations required to be paid or filed by any jurisdiction to
which it is subject, (ii) has paid or accrued all taxes and other governmental
assessments and charges that are material in amount, shown or determined to be
due on such returns, reports and declarations, except those being contested in
good faith and (iii) has set aside on its books provision reasonably adequate
for the payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. There are no unpaid or unaccrued taxes
in any material amount claimed to be due by the taxing authority of any
jurisdiction, and the officers of the Company know of no basis for any such
claim. No liens have been filed and no claims are being asserted by or against
the Company or any of its Subsidiaries with respect to any taxes (other than
liens for taxes not yet due and payable). Except as disclosed on Schedule (aa),
neither the Company nor its Subsidiaries has received notice of assessment or
proposed assessment of any taxes claimed to be owed by it or any other Person on
its behalf. Neither the Company nor its Subsidiaries is a party to any tax
sharing or tax indemnity agreement or any other agreement of a similar nature
that remains in effect. Each of the Company and its Subsidiaries has complied in
all respects with all applicable legal requirements relating to the payment and
withholding of taxes and, within the time and in the manner prescribed by law,
has withheld from wages, fees and other payments and paid over to the proper
governmental or regulatory authorities all amounts required, except where such
failures to comply would not result, individually or in the aggregate, in a
Material Adverse Effect.
(bb) Internal Accounting Controls. Except as disclosed on Schedule
3(bb) or in the Company's Form 10-K for the year ended December 31, 2004, the
Company and each of its Subsidiaries maintain a system of internal accounting
controls sufficient to provide reasonable
-14-
assurance that (i) transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset and liability
accountability, (iii) access to assets or incurrence of liabilities is permitted
only in accordance with management's general or specific authorization and (iv)
the recorded accountability for assets and liabilities is compared with the
existing assets and liabilities at reasonable intervals and appropriate action
is taken with respect to any difference.
(cc) Ranking of Notes. Except as set forth on Schedule (cc), no
Indebtedness of the Company is senior to or ranks pari passu with the Notes in
right of payment, whether with respect of payment of redemptions, interest,
damages or upon liquidation or dissolution or otherwise.
(dd) Manipulation of Price. The Company has not, and to its
knowledge no one acting on its behalf has, (i) taken, directly or indirectly,
any action designed to cause or to result in the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
any of the Securities, (ii) sold, bid for, purchased, or paid any compensation
for soliciting purchases of, any of the Securities, or (iii) paid or agreed to
pay to any person any compensation for soliciting another to purchase any other
securities of the Company.
(ee) Disclosure. Other than in connection with the acquisition of
MediaDefender, Inc. (the "MD ACQUISITION"), the Company confirms that neither it
nor any other Person acting on its behalf has provided any of the Buyers or
their agents or counsel with any information that constitutes or could
reasonably be expected to constitute material, nonpublic information. The
Company understands and confirms that each of the Buyers will rely on the
foregoing representations in effecting transactions in securities of the
Company. The Company has provided each Buyer with a true, correct and complete
copy of all of the documentation in connection with the MD Acquisition (the "MD
DOCUMENTS"). Assuming the accuracy of representations and warranties provided by
MediaDefender, Inc., in the Agreement and Plan of Merger of even date herewith,
all disclosure provided in this Agreement and in the schedules hereto are true
and correct and does not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. Each press release issued by the Company during the twelve (12)
months preceding the date of this Agreement did not at the time of release
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading.
4. COVENANTS.
(a) Best Efforts. Each party shall use its best efforts timely to
satisfy each of the conditions to be satisfied by it as provided in Sections 6
and 7 of this Agreement.
(b) Form D and Blue Sky. The Company agrees to file a Form D with
respect to the Securities as required under Regulation D and to provide a copy
thereof to each Buyer promptly after such filing. The Company shall, on or
before the Closing Date, take such action as the Company shall reasonably
determine is necessary in order to obtain an exemption for or to
-15-
qualify the Securities for sale to the Buyers at the Closing pursuant to this
Agreement under applicable securities or "Blue Sky" laws of the states of the
United States (or to obtain an exemption from such qualification), and shall
provide evidence of any such action so taken to the Buyers on or prior to the
Closing Date. The Company shall make all filings and reports relating to the
offer and sale of the Securities required under applicable securities or "Blue
Sky" laws of the states of the United States following the Closing Date.
(c) Reporting Status. Until the date on which the Investors (as
defined in the Registration Rights Agreement) shall have sold all the Conversion
Shares and Warrant Shares and none of the Notes or Warrants is outstanding (the
"REPORTING PERIOD"), the Company shall use its best efforts to timely file (or
obtain extensions in respect thereof and file within the applicable period) all
reports required to be filed with the SEC pursuant to the 1934 Act, and the
Company shall not terminate its status as an issuer required to file reports
under the 1934 Act even if the 1934 Act or the rules and regulations thereunder
would otherwise permit such termination.
(d) Use of Proceeds. The Company will use the proceeds from the sale
of the Securities for the MD Acquisition and costs and expenses related thereto
and for general working capital purposes and not for (A) repayment of any other
outstanding pari passu or junior Indebtedness of the Company or (B) redemption
or repurchase of any of its equity securities.
(e) Financial Information. The Company agrees to send the following
to each Investor during the Reporting Period (i) unless the following are filed
with the SEC through XXXXX and are available to the public through the XXXXX
system, within one (1) Business Day after the filing thereof with the SEC, a
copy of its Annual Reports on Form 10-K or 10-KSB, any interim reports or any
consolidated balance sheets, income statements, stockholders' equity statements
and/or cash flow statements for any period other than annual, any Current
Reports on Form 8-K and any registration statements (other than on Form S-8) or
amendments filed pursuant to the 1933 Act and (ii) copies of any notices and
other information made available or given to the stockholders of the Company
generally, contemporaneously with the making available or giving thereof to the
stockholders.
(f) Listing. The Company shall promptly secure the listing of all of
the Registrable Securities (as defined in the Registration Rights Agreement)
upon each national securities exchange and automated quotation system, if any,
upon which the Common Stock is then listed (subject to official notice of
issuance) and shall maintain such listing of all Registrable Securities from
time to time issuable under the terms of the Transaction Documents. The Company
shall maintain the Common Stocks' authorization for quotation on the Principal
Market. Neither the Company nor any of its Subsidiaries shall take any action
which would be reasonably expected to result in the delisting or suspension of
the Common Stock on the Principal Market. The Company shall pay all fees and
expenses in connection with satisfying its obligations under this Section 4(f).
(g) Fees. The Company shall reimburse Oasis (a Buyer) or its
designee(s) for all reasonable costs and expenses incurred in connection with
the transactions contemplated by the Transaction Documents (including all
reasonable legal fees and disbursements in connection therewith, documentation
and implementation of the transactions contemplated by the
-16-
Transaction Documents and due diligence in connection therewith) ("EXPENSES"),
up to a maximum reimbursement of $140,000, including the $25,000 payment
previously made to Xxxxxxx Xxxx & Xxxxx LLP in accordance with the term sheet
with respect to the Transaction Documents (the "FEE CAP"); provided, however,
the Company shall not be obligated to pay more than $25,000 in Expenses if the
Company terminates this agreement pursuant to Section 8. Subject to the Fee Cap,
Oasis shall withhold any Expenses not previously reimbursed from its Purchase
Price at the Closing. The Company shall be responsible for the payment of any
placement agent's fees, financial advisory fees, or broker's commissions (other
than for Persons engaged by any Buyer) relating to or arising out of the
transactions contemplated hereby, including, without limitation, any fees or
commissions payable to the Agent. The Company shall pay, and hold each Buyer
harmless against, any liability, loss or expense (including, without limitation,
reasonable attorney's fees and out-of-pocket expenses) arising in connection
with any claim relating to any such payment. Except as otherwise set forth in
the Transaction Documents, each party to this Agreement shall bear its own
expenses in connection with the sale of the Securities to the Buyers.
(h) Pledge of Securities. The Company acknowledges and agrees that
the Securities may be pledged by an Investor (as defined in the Registration
Rights Agreement) in connection with a bona fide margin agreement or other loan
or financing arrangement that is secured by the Securities. The pledge of
Securities shall not be deemed to be a transfer, sale or assignment of the
Securities hereunder, and no Investor effecting a pledge of Securities shall be
required to provide the Company with any notice thereof or otherwise make any
delivery to the Company pursuant to this Agreement or any other Transaction
Document, including, without limitation, Section 2(f) hereof; provided that an
Investor and its pledgee shall be required to comply with the provisions of
Section 2(f) hereof in order to effect a sale, transfer or assignment of
Securities to such pledgee. The Company hereby agrees to execute and deliver
such documentation as a pledgee of the Securities may reasonably request in
connection with a pledge of the Securities to such pledgee by an Investor.
(i) Disclosure of Transactions and Other Material Information. On or
before 5:30 p.m., New York Time, on the fourth Business Day following the date
of this Agreement, the Company shall file a press release and one or more
Current Reports on Form 8-K describing the terms of the transactions
contemplated by the Transaction Documents, as well as the material terms of the
MD Acquisition in the form required by the 1934 Act and attaching the material
Transaction Documents (including, without limitation, this Agreement (and all
schedules to this Agreement), the form of each of the Notes, the form of
Warrant, the Registration Rights Agreement) and the MD Documents as exhibits to
such filing (including all attachments, the "8-K FILING"). From and after the
filing of the 8-K Filing with the SEC, no Buyer shall be in possession of any
material, nonpublic information received from the Company, any of its
Subsidiaries or MediaDefender, Inc. or any of their respective officers,
directors, employees or agents, that is not disclosed in the 8-K Filing. The
Company shall not, and shall cause each of its Subsidiaries and its and each of
their respective officers, directors, employees and agents, not to, provide any
Buyer with any material, nonpublic information regarding the Company or any of
its Subsidiaries from and after the filing of the 8-K Filing with the SEC
without the express written consent of such Buyer. In the event of a breach of
the foregoing covenant by the Company, any of its Subsidiaries, or any of its or
their respective officers, directors, employees and agents, in addition to any
other remedy provided herein or in the Transaction Documents, a Buyer shall
-17-
have the right to make a public disclosure, in the form of a press release,
public advertisement or otherwise, of such material, nonpublic information
without the prior approval by the Company, its Subsidiaries, or any of its or
their respective officers, directors, employees or agents. No Buyer shall have
any liability to the Company, its Subsidiaries, or any of its or their
respective officers, directors, employees, stockholders or agents for any such
disclosure. Subject to the foregoing, neither the Company nor any Buyer shall
issue any press releases or any other public statements with respect to the
transactions contemplated hereby; provided, however, that the Company shall be
entitled, without the prior approval of any Buyer, to make any press release or
other public disclosure with respect to such transactions (i) in substantial
conformity with the 8-K Filing and contemporaneously therewith and (ii) as is
required by applicable law and regulations (provided that in the case of clause
(i) each Buyer shall be consulted by the Company in connection with and given an
opportunity to review and comment on any such press release or other public
disclosure prior to its release).
(j) Restriction on Redemption and Cash Dividends. So long as any
Notes are outstanding, the Company shall not, directly or indirectly, redeem, or
declare or pay any cash dividend or distribution on, the Common Stock without
the prior express written consent of the holders of Notes representing not less
than a majority of the aggregate principal amount of the then outstanding Notes.
(k) Additional Notes; Variable Securities; Dilutive Issuances. So
long as any Buyer beneficially owns any Securities, the Company will not issue
any Notes other than to the Buyers as contemplated hereby and the Company shall
not issue any other securities that would cause a breach or default under the
Notes. For long as any Notes or Warrants remain outstanding, the Company shall
not, in any manner, issue or sell any rights, warrants or options to subscribe
for or purchase Common Stock or directly or indirectly convertible into or
exchangeable or exercisable for Common Stock at a price which varies or may vary
with the market price of the Common Stock, including by way of one or more
reset(s) to any fixed price unless the conversion, exchange or exercise price of
any such security cannot be less than the then applicable Conversion Price (as
defined in the Notes) with respect to the Common Stock into which any Note is
convertible or the then applicable Exercise Price (as defined in the Warrants)
with respect to the Common Stock into which any Warrant is exercisable. For long
as any Notes or Warrants remain outstanding, the Company shall not, in any
manner, enter into or affect any Dilutive Issuance (as defined in the Notes) if
the effect of such Dilutive Issuance is to cause the Company to be required to
issue upon conversion of any Note or exercise of any Warrant any shares of
Common Stock in excess of that number of shares of Common Stock which the
Company may issue upon conversion of the Notes and exercise of the Warrants
without breaching the Company's obligations under the rules or regulations of
the Principal Market.
(l) Corporate Existence. So long as any Buyer beneficially owns any
Securities, the Company shall not be party to any Fundamental Transaction (as
defined in the Notes) unless the Company is in compliance with the applicable
provisions governing Fundamental Transactions set forth in the Notes and the
Warrants.
(m) Reservation of Shares. Immediately following the Closing, the
Company shall have authorized and reserved for issuance 8,003,712 shares of
Common Stock issuable
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upon conversion of all of the Notes and Warrants, of which up to 100,000 shall
be specifically reserved for conversion of Warrants held by Broadband or Buyers
affiliated with Broadband for the purpose of, and only to the extent necessary
to, securing Stockholder Approval. Immediately following receipt of the
Stockholder Approval, the Company shall take all action necessary to at all
times have authorized, and reserved for the purpose of issuance 130% of the sum
of the number of Interest Shares issuable pursuant to the terms of the Notes,
shares of Common Stock issuable upon conversion of all of the Notes and shares
of Common Stock issuable upon exercise of the Warrants.
(n) Conduct of Business. The business of the Company and its
Subsidiaries shall not be conducted in violation of any law, ordinance or
regulation of any governmental entity, except where such violations would not
result, either individually or in the aggregate, in a Material Adverse Effect.
(o) Additional Issuances of Securities.
(i) For purposes of this Section 4(o), the following
definitions shall apply.
(1) "CONVERTIBLE SECURITIES" means any stock or
securities (other than Options) convertible into or exercisable or
exchangeable for shares of Common Stock.
(2) "OPTIONS" means any rights, warrants or options to
subscribe for or purchase shares of Common Stock or Convertible
Securities.
(3) "COMMON STOCK EQUIVALENTS" means, collectively,
Options and Convertible Securities.
(ii) From the date hereof until the date that is 30 Trading
Days (as defined in the Notes) following the Effective Date (as defined in the
Registration Rights Agreement) (the "TRIGGER DATE"), the Company will not,
directly or indirectly, offer, sell, grant any option to purchase, or otherwise
dispose of (or announce any offer, sale, grant or any option to purchase or
other disposition of) any of its or its Subsidiaries' equity or equity
equivalent securities, including without limitation any debt, preferred stock or
other instrument or security that is, at any time during its life and under any
circumstances, convertible into or exchangeable or exercisable for shares of
Common Stock or Common Stock Equivalents (any such offer, sale, grant,
disposition or announcement being referred to as a "SUBSEQUENT PLACEMENT").
(iii) From the Trigger Date until the two (2) year anniversary
of the Trigger Date, the Company will not, directly or indirectly, effect any
Subsequent Placement unless the Company shall have first complied with this
Section 4(o)(iii).
(1) The Company shall deliver to each Buyer a written
notice (the "OFFER NOTICE") of any proposed or intended issuance or sale
or exchange (the "OFFER") of the securities being offered (the "OFFERED
SECURITIES") in a Subsequent Placement, which Offer Notice shall (w)
identify and describe the Offered Securities, (x) describe the price and
other terms upon which they are to be issued, sold or
-19-
exchanged, and the number or amount of the Offered Securities to be
issued, sold or exchanged, (y) identify the persons or entities (if known)
to which or with which the Offered Securities are to be offered, issued,
sold or exchanged and (z) offer to issue and sell to or exchange with such
Buyers a pro rata portion of the Offered Securities allocated among such
Buyers (a) based on such Buyer's pro rata portion of the aggregate
principal amount of Notes purchased hereunder (the "BASIC AMOUNT"), and
(b) with respect to each Buyer that elects to purchase its Basic Amount,
any additional portion of the Offered Securities attributable to the Basic
Amounts of other Buyers as such Buyer shall indicate it will purchase or
acquire should the other Buyers subscribe for less than their Basic
Amounts (the "UNDERSUBSCRIPTION AMOUNT").
(2) To accept an Offer, in whole or in part, such Buyer
must deliver a written notice to the Company prior to the end of the tenth
(10th) Business Day after such Buyer's receipt of the Offer Notice (the
"OFFER PERIOD"), setting forth the portion of such Buyer's Basic Amount
that such Buyer elects to purchase and, if such Buyer shall elect to
purchase all of its Basic Amount, the Undersubscription Amount, if any,
that such Buyer elects to purchase (in either case, the "NOTICE OF
ACCEPTANCE"). If the Basic Amounts subscribed for by all Buyers are less
than the total of all of the Basic Amounts, then each Buyer who has set
forth an Undersubscription Amount in its Notice of Acceptance shall be
entitled to purchase, in addition to the Basic Amounts subscribed for, the
Undersubscription Amount it has subscribed for; provided, however, that if
the Undersubscription Amounts subscribed for exceed the difference between
the total of all the Basic Amounts and the Basic Amounts subscribed for
(the "AVAILABLE UNDERSUBSCRIPTION AMOUNT"), each Buyer who has subscribed
for any Undersubscription Amount shall be entitled to purchase only that
portion of the Available Undersubscription Amount as the Basic Amount of
such Buyer bears to the total Basic Amounts of all Buyers that have
subscribed for Undersubscription Amounts, subject to rounding by the
Company to the extent its deems reasonably necessary.
(3) The Company shall have five (5) Business Days from
the expiration of the Offer Period above to offer, issue, sell or exchange
all or any part of such Offered Securities as to which a Notice of
Acceptance has not been given by the Buyers (the "REFUSED SECURITIES"),
but only to the offerees described in the Offer Notice (if so described
therein) and only upon terms and conditions (including, without
limitation, unit prices and interest rates) that are not more favorable to
the acquiring person or persons or less favorable to the Company than
those set forth in the Offer Notice.
(4) In the event the Company shall propose to sell less
than all the Refused Securities (any such sale to be in the manner and on
the terms specified in Section 4(o)(iii)(3) above), then each Buyer may,
at its sole option and in its sole discretion, reduce the number or amount
of the Offered Securities specified in its Notice of Acceptance to an
amount that shall be not less than the number or amount of the Offered
Securities that such Buyer elected to purchase pursuant to Section
4(o)(iii)(2) above multiplied by a fraction, (i) the numerator of which
shall be the number or amount of Offered Securities the Company actually
proposes to issue, sell or exchange (including Offered Securities to be
issued or sold to Buyers pursuant to Section 4(o)(iii)(3) above
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prior to such reduction) and (ii) the denominator of which shall be the
original amount of the Offered Securities. In the event that any Buyer so
elects to reduce the number or amount of Offered Securities specified in
its Notice of Acceptance, the Company may not issue, sell or exchange more
than the reduced number or amount of the Offered Securities unless and
until such securities have again been offered to the Buyers in accordance
with Section 4(o)(iii)(1) above.
(5) Upon the closing of the issuance, sale or exchange
of all or less than all of the Refused Securities, the Buyers shall
acquire from the Company, and the Company shall issue to the Buyers, the
number or amount of Offered Securities specified in the Notices of
Acceptance, as reduced pursuant to Section 4(o)(iii)(3) above if the
Buyers have so elected, upon the terms and conditions specified in the
Offer. The purchase by the Buyers of any Offered Securities is subject in
all cases to the preparation, execution and delivery by the Company and
the Buyers of a purchase agreement relating to such Offered Securities
reasonably satisfactory in form and substance to the Buyers and their
respective counsel.
(6) Any Offered Securities not acquired by the Buyers or
other persons in accordance with Section 4(o)(iii)(3) above may not be
issued, sold or exchanged until they are again offered to the Buyers under
the procedures specified in this Agreement.
(iv) The restrictions contained in subsections (ii) and (iii)
of this Section 4(o) shall not apply in connection with the issuance of any
Excluded Securities (as defined in the Notes) or issuances of securities
(including convertible instruments) in connection with a Strategic Acquisition.
For purposes of the foregoing, "STRATEGIC ACQUISITION" shall mean an acquisition
by the Company, whether through an acquisition for stock or a merger, of any
business, assets or technologies the primary purpose of which is not to raise
equity capital, which (i) has been approved by the holders of a majority of the
outstanding principal amount of the Notes, which approval shall not be
unreasonably withheld, conditioned or delayed and (ii) does not, in any 365 day
period, result in the issuance of a number of securities which exceeds, in the
aggregate, 10% or more of the Company's outstanding shares of Common Stock on a
fully diluted basis (excluding warrants or options having an exercise price
greater than $2.25, as adjusted for any stock split, stock dividend, stock
combination or other similar transaction) at the beginning of such 365 day
period.
(p) Integration. None of the Company, its Subsidiaries, their
affiliates and any Person acting on their behalf will take any action or steps
referred to in Section 3(h) that would require registration of any of the
Securities under the 1933 Act or cause the offering of the Securities to be
integrated with other offerings.
(q) Holding Period. For the purposes of Rule 144, the Company
acknowledges that the holding period of the Conversion Shares may be tacked onto
the holding period of the Notes and the holding period of the Warrant Shares may
be tacked onto the holding period of the Warrants (in the case of Cashless
Exercise (as defined in the Warrants)) and the Company agrees not to take a
position contrary to this Section 4(s).
-21-
(r) Stockholder Approval. The Company shall prepare and file with
the SEC, as promptly as practicable after the date hereof but in no event later
than twenty (20) days after the date hereof, an information statement (the
"INFORMATION STATEMENT"), substantially in the form that has been previously
reviewed and reasonably approved by the Buyers and a counsel of their choice,
informing the stockholders of the Company of the receipt of the consents of the
requisite stockholders (the "STOCKHOLDER CONSENT") approving resolutions
increasing the authorized number of shares of common stock from 15,000,000
shares to 60,000,000 shares (the "SHARE INCREASE"). The Company shall prepare
and file with the SEC a preliminary proxy statement with respect to a special or
annual meeting of the stockholders of the Company (the "STOCKHOLDER MEETING"),
which shall be promptly called and held not later than June 30, 2006 (the
"STOCKHOLDER MEETING DEADLINE") soliciting each such stockholder's affirmative
vote for approval of, to the extent not previously adopted, the amended forms of
Certificate of Incorporation and By-Laws of the Company in substantially the
forms attached as Exhibit K and Exhibit L hereto, respectively (such affirmative
approval being referred to herein as the "STOCKHOLDER APPROVAL"), and the
Company shall use its best efforts to solicit its stockholders' approval of such
resolutions and to cause the Board of Directors of the Company to recommend to
the stockholders that they approve such resolutions. The Company shall be
obligated to seek to obtain the Stockholder Approval by the Stockholder Meeting
Deadline. If, despite the Company's best efforts the Stockholder Approval is not
obtained on or prior to the Stockholder Meeting Deadline, the Company shall
cause an additional Stockholder Meeting to be held each calendar quarter
thereafter until such Stockholder Approval is obtained.
(s) Audit of MD Financial Statements. The Company shall promptly
after the Closing Date have a qualified accounting firm registered with the
Public Company Accounting Oversight Board audit the financial statements of
MediaDefender, Inc. and its subsidiaries, which audit shall be conducted in
accordance with generally accepted accounting principals and completed on or
prior to seventy-five (75) days after the Closing Date.
(t) Issuances Pursuant to Approved Stock Plans.
(i) From and after the date hereof until the date that is one
year anniversary of the Issuance Date (as defined in the Notes), the Company
shall not issue pursuant to an Approved Stock Plan (as defined in the Notes)
shares of Common Stock, Options or Convertible Securities in an amount which
exceeds, in the aggregate, 15% of the outstanding shares of Common Stock of the
Company on a fully diluted basis (excluding warrants or options having an
exercise price greater than $2.25.
(ii) From and after the one (1) year anniversary of the
Issuance Date, the Company shall not in any 365-day period, at any time while
any of the Notes remain outstanding, issue shares of Common Stock, Options or
Convertible Securities pursuant to an Approved Stock Plan in an amount which
exceeds, in the aggregate, 4% of the outstanding shares of Common Stock of the
Company on a fully diluted basis (excluding warrants or options having an
exercise price greater than $2.25, as adjusted for any stock split, stock
dividend, stock combination or other similar transaction) at the beginning of
such 365-day period.
-22-
(u) Voting Agreement. The Company agrees to use its best efforts to
ensure that the provisions of the Voting Agreement (as defined below) are
complied with in all material respects.
(v) Amendment to Certificate of Incorporation. The Company shall
obtain the Shareholder Consent authorizing the Share Increase as soon as
possible but in any event not later than 15 days after the Closing Date. Not
later than 21 days after the mailing of the Information Statement in accordance
with Section 4(r) hereof, the Company shall file with the Secretary of State of
the State of Delaware, a Certificate of Amendment to its Certificate of
Incorporation effecting the Share Increase.
5. REGISTER; TRANSFER AGENT INSTRUCTIONS.
(a) Register. The Company shall maintain at its principal executive
offices (or such other office or agency of the Company as it may designate by
notice to each holder of Securities), a register for the Notes and the Warrants,
in which the Company shall record the name and address of the Person in whose
name the Notes and the Warrants have been issued (including the name and address
of each transferee), the principal amount of Notes held by such Person, the
number of Conversion Shares issuable upon conversion of the Notes and Warrant
Shares issuable upon exercise of the Warrants held by such Person. The Company
shall keep the register open and available at all times during business hours
for inspection of any Buyer or its legal representatives.
(b) Transfer Agent Instructions. The Company shall issue irrevocable
instructions to its transfer agent, and any subsequent transfer agent, to issue
certificates or credit shares to the applicable balance accounts at The
Depository Trust Company ("DTC"), registered in the name of each Buyer or its
respective nominee(s), for the Conversion Shares, the Interest Shares, if any,
and the Warrant Shares in such amounts as specified from time to time by each
Buyer to the Company upon conversion of the Notes or exercise of the Warrants in
the form of Exhibit D attached hereto (the "IRREVOCABLE TRANSFER AGENT
INSTRUCTION"). The Company warrants that no instruction other than the
Irrevocable Transfer Agent Instructions referred to in this Section 5(b), and
stop transfer instructions to give effect to Section 2(g) hereof, will be given
by the Company to its transfer agent with respect to the Securities, and that
the Securities shall otherwise be freely transferable on the books and records
of the Company, as applicable, and to the extent provided in this Agreement and
the other Transaction Documents and applicable law. If a Buyer effects a sale,
assignment or transfer of the Securities in accordance with Section 2(g), the
Company shall permit the transfer and shall promptly instruct its transfer agent
to issue one or more certificates or credit shares to the applicable balance
accounts at DTC in such name and in such denominations as specified by such
Buyer to effect such sale, transfer or assignment. In the event that such sale,
assignment or transfer involves Conversion Shares, Interest Shares or Warrant
Shares sold, assigned or transferred pursuant to an effective registration
statement or pursuant to Rule 144, the transfer agent shall issue such
Securities to the Buyer, assignee or transferee, as the case may be, without any
restrictive legend. The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to a Buyer. Accordingly, the
Company acknowledges that the remedy at law for a breach of its obligations
under this Section 5(b) will be inadequate and agrees, in the event of a breach
or threatened breach by the Company of the provisions of this Section 5(b), that
a Buyer shall be entitled, in addition to all
-23-
other available remedies, to an order and/or injunction restraining any breach
and requiring immediate issuance and transfer, without the necessity of showing
economic loss and without any bond or other security being required.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
(a) Closing Date. The obligation of the Company hereunder to issue
and sell the Notes and the related Warrants to each Buyer at the Closing is
subject to the satisfaction, at or before the Closing Date, of each of the
following conditions, provided that these conditions are for the Company's sole
benefit and may be waived by the Company at any time in its sole discretion by
providing each Buyer with prior written notice thereof:
(i) Such Buyer shall have executed each of the Transaction
Documents to which it is a party and delivered the same to the Company.
(ii) Such Buyer and each other Buyer shall have delivered to
the Company the Purchase Price (less, in the case of Oasis, the amounts withheld
pursuant to Section 4(g)) for the Notes and the related Warrants being purchased
by such Buyer at the Closing by wire transfer of immediately available funds
pursuant to the wire instructions provided by the Company.
(iii) The representations and warranties of such Buyer shall
be true and correct in all material respects as of the date when made and as of
the Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date), and such Buyer shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by such Buyer at or prior to the Closing Date.
(iv) Such Buyer shall have delivered to the Company an
"accredited investor" questionnaire in the form attached hereto as Exhibit J.
7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.
(a) Closing Date. The obligation of each Buyer hereunder to purchase
the Notes and the related Warrants at the Closing is subject to the
satisfaction, at or before the Closing Date, of each of the following
conditions, provided that these conditions are for each Buyer's sole benefit and
may be waived by such Buyer at any time in its sole discretion by providing the
Company with prior written notice thereof:
(i) The Company and, to the extent it is a party thereto, each
of it Subsidiaries, shall have executed and delivered to such Buyer (i) each of
the Transaction Documents, (ii) the Notes (in such principal amounts as such
Buyer shall request) being purchased by such Buyer at the Closing pursuant to
this Agreement and (iii) the Warrants (in such amounts as such Buyer shall
request) being purchased by such Buyer at the Closing pursuant to this
Agreement.
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(ii) Such Buyer shall have received the opinions of Xxxxxxxx
Xxxxxx Xxxxxxx & Xxxxxxx LLP and/or Xxxxxxxxxx & Xxxxx LLP, the Company's
outside counsel, dated as of the Closing Date, in substantially the forms of
Exhibits E-1 and E-2 attached hereto.
(iii) The Company shall have delivered to such Buyer a copy of
the Irrevocable Transfer Agent Instructions, in the form of Exhibit D attached
hereto, which instructions shall have been delivered to and acknowledged in
writing by the Company's transfer agent.
(iv) The Company shall have delivered to such Buyer a
certificate evidencing the formation and good standing of the Company and each
of its Subsidiaries in such entity's jurisdiction of formation issued by the
Secretary of State (or comparable office) of such jurisdiction, as of a date
within ten (10) days of the Closing Date.
(v) The Company shall have delivered to such Buyer a
certificate evidencing the Company's qualification as a foreign corporation and
good standing issued by the Secretary of State (or comparable office) of the
State of California, as of a date within ten (10) days of the Closing Date.
(vi) The Company shall have delivered to such Buyer a
certified copy of the Certificate of Incorporation as certified by the Secretary
of State of the State of Delaware within ten (10) days of the Closing Date.
(vii) The Company shall have delivered to such Buyer a
certificate, executed by the Secretary of the Company and dated as of the
Closing Date, as to (i) the resolutions consistent with Section 3(b) as adopted
by the Company's Board of Directors in a form reasonably acceptable to such
Buyer, (ii) the Certificate of Incorporation and (iii) the Bylaws, each as in
effect at the Closing, in the form attached hereto as Exhibit F.
(viii) The representations and warranties of the Company shall
be true and correct as of the date when made and as of the Closing Date as
though made at that time (except for representations and warranties that speak
as of a specific date) and the Company shall have performed, satisfied and
complied in all respects with the covenants, agreements and conditions required
by the Transaction Documents to be performed, satisfied or complied with by the
Company at or prior to the Closing Date. Such Buyer shall have received a
certificate, executed by the Chief Executive Officer of the Company, dated as of
the Closing Date, to the foregoing effect and as to such other matters as may be
reasonably requested by such Buyer in the form attached hereto as Exhibit G.
(ix) The Company shall have delivered to such Buyer a letter
from the Company's transfer agent certifying the number of shares of Common
Stock outstanding as of a date within five days of the Closing Date.
(x) The Common Stock (I) shall be designated for quotation or
listed on the Principal Market and (II) shall not have been suspended, as of the
Closing Date, by the SEC or the Principal Market from trading on the Principal
Market nor shall suspension by the SEC or the Principal Market have been
threatened, as of the Closing Date, either (A) in writing
-25-
by the SEC or the Principal Market or (B) by falling below the minimum listing
maintenance requirements of the Principal Market.
(xi) The Company shall have obtained all governmental,
regulatory or third party consents and approvals, if any, necessary for the sale
of the Securities.
(xii) As of the Closing Date, the Buyers shall have completed
their due diligence review of MediaDefender, Inc. to their sole satisfaction.
(xiii) As of the Closing Date, the Buyers shall have received
final executed documents of the MD Documents and any amendments, waivers,
consents, schedules, exhibits, certificates and legal opinions related thereto,
which shall be in form and substance satisfactory to the Buyers. The tax and
legal structure of the MD Transaction shall be satisfactory to the Buyers. The
MD Documents shall remain in full force and effect.
(xiv) As of the Closing Date, the MD Transaction shall comply
with all applicable securities and tax laws and regulations. MediaDefender, Inc.
and the Company shall have obtained all governmental, regulatory or third party
consents and approvals, if any, necessary for MD Transaction.
(xv) The Company shall have obtained the consent of its
directors and stockholders (if required) and the directors and the required
number of stockholders of MediaDefender, Inc. to the MD Acquisition.
(xvi) The Company shall have delivered to the Buyers the
voting agreements in the form of Exhibit H hereof (the "VOTING AGREEMENTS"),
executed by the Persons listed on Schedule 7(a)(xvii) hereto.
(xvii) The Company shall have delivered to the Buyers the
lock-up agreements in the forms of Exhibit I-1, and Exhibit I-2 and Exhibit I-3
hereof (collectively, the "LOCK-UP AGREEMENTS"), executed by the Persons listed
on Schedule 7(a)(xviii) hereto.
(xviii) The Buyers shall have received executed copies of the
senior loan documents of the Company and the other transaction documents related
thereto and any amendments, waivers, consents, schedules, exhibits, certificates
and legal opinions related thereto, which shall be in form and substance
satisfactory to the Buyers (collectively, the "SENIOR LOAN DOCUMENTS"). The
Senior Loan Documents shall remain in full force and effect.
(xix) The Buyers shall have received executed copies of the
employment agreements of Xxx Xxxxxxx and Xxxxxx Xxxxxxxxxx, which shall be in
form and substance reasonably satisfactory to the Buyers (the "EMPLOYMENT
AGREEMENTS"). The Employment Agreements shall remain in full force and effect.
-26-
8. TERMINATION. In the event that the Closing shall not have occurred
with respect to a Buyer on or before seven (7) Business Days from the date
hereof due to the Company's or such Buyer's failure to satisfy the conditions
set forth in Sections 6 and 7 above (and the nonbreaching party's failure to
waive such unsatisfied condition(s)), the nonbreaching party shall have the
option to terminate this Agreement with respect to such breaching party at the
close of business on such date without liability of any party to any other
party; provided, however, if this Agreement is terminated pursuant to this
Section 8, the Company shall remain obligated to reimburse the non-breaching
Buyers for the expenses described in Section 4(g) above.
9. MISCELLANEOUS.
(a) Governing Law; Jurisdiction; Jury Trial. All questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other jurisdictions) that would cause
the application of the laws of any jurisdictions other than the State of New
York. Each party hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in The City of New York, Borough of Manhattan,
for the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF
THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
(b) Counterparts. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.
(c) Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
-27-
(d) Severability. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
(e) Entire Agreement; Amendments. This Agreement supersedes all
other prior oral or written agreements between the Buyers, the Company, their
affiliates and Persons acting on their behalf with respect to the matters
discussed herein, and this Agreement and the instruments referenced herein
contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or
therein, neither the Company nor any Buyer makes any representation, warranty,
covenant or undertaking with respect to such matters. No provision of this
Agreement may be amended other than by an instrument in writing signed by the
Company and the holders of at least a majority of the aggregate number of
Registrable Securities issued and issuable hereunder, and any amendment to this
Agreement made in conformity with the provisions of this Section 9(e) shall be
binding on all Buyers and holders of Securities, as applicable; provided,
however, that no such amendment shall (i) extend the maturity of the Note,
reduce the interest rate extend the time of payment of interest thereon, or
reduce the principal amount thereof or premium, if any, thereon, change the
conversion price or reduce any amount payable on redemption or repurchase
thereof or affect any amounts due to any holder under any of the Transaction
Documents without the consent of such holder or (ii) reduce the aforesaid
percentage of Notes, the holders of which are required to consent to any such
amendment, without the consent of the holders of all Notes then outstanding. No
provision hereof may be waived other than by an instrument in writing signed by
the party against whom enforcement is sought. No provision hereof may be waived
other than by an instrument in writing signed by the party against whom
enforcement is sought. No such amendment shall be effective to the extent that
it applies to less than all of the holders of the applicable Securities then
outstanding. No consideration shall be offered or paid to any Person to amend or
consent to a waiver or modification of any provision of any of the Transaction
Documents unless the same consideration also is offered to all of the parties to
the Transaction Documents, holders of Notes, or holders of the Warrants, as the
case may be. The Company has not, directly or indirectly, made any agreements
with any Buyers relating to the terms or conditions of the transactions
contemplated by the Transaction Documents except as set forth in the Transaction
Documents.
(f) Notices. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one (1) Business Day after deposit
with an overnight courier service, in each case properly addressed to the party
to receive the same. The addresses and facsimile numbers for such communications
shall be:
If to the Company:
ARTISTdirect, Inc.
00000 Xxxxxxxx Xxxxxxxxx,
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxxx
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With a copy to:
Sheppard, Mullin, Xxxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxx, Esq.
With a copy (for informational purposes) to:
Xxxxxxxxxx & Xxxxx LLP
00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxxxx, Esq.
If to the Transfer Agent:
American Stock Transfer & Trust Company
00 Xxxxxx Xxxx - Xxxxx Xxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxx
If to a Buyer, to its address and facsimile number set forth on the Schedule of
Buyers, with copies to such Buyer's representatives as set forth on the Schedule
of Buyers,
with a copy (for informational purposes only) to:
Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
or to such other address and/or facsimile number and/or to the attention of such
other Person as the recipient party has specified by written notice given to
each other party five (5) days prior to
-29-
the effectiveness of such change. Written confirmation of receipt (A) given by
the recipient of such notice, consent, waiver or other communication, (B)
mechanically or electronically generated by the sender's facsimile machine
containing the time, date, recipient facsimile number and an image of the first
page of such transmission (C) provided by an overnight courier service shall be
rebuttable evidence of personal service, receipt by facsimile or receipt from an
overnight courier service in accordance with clause (i), (ii) or (iii) above,
respectively; provided however that the foregoing clause (B) shall only be valid
if such communication contained in the facsimile is delivered by an overnight
courier service within 24 hours of the transmission of facsimile.
(g) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns,
including any purchasers of the Notes or the Warrants. The Company shall not
assign this Agreement or any rights or obligations hereunder without the prior
written consent of the holders of at least a majority of the aggregate number of
Registrable Securities issued and issuable hereunder, including by way of a
Fundamental Transaction (unless the Company is in compliance with the applicable
provisions governing Fundamental Transactions set forth in the Notes and the
Warrants). A Buyer may assign some or all of its rights hereunder without the
consent of the Company, in which event such assignee shall be deemed to be a
Buyer hereunder with respect to such assigned rights.
(h) No Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.
(i) Survival. Unless this Agreement is terminated under Section 8,
the representations and warranties of the Company and the Buyers contained in
Sections 2 and 3 and the agreements and covenants set forth in Sections 4, 5 and
9 shall survive the Closing. Each Buyer shall be responsible only for its own
representations, warranties, agreements and covenants hereunder.
(j) Further Assurances. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
any other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
(k) Indemnification. In consideration of each Buyer's execution and
delivery of the Transaction Documents and acquiring the Securities thereunder
and in addition to all of the Company's other obligations under the Transaction
Documents, the Company shall defend, protect, indemnify and hold harmless each
Buyer and each other holder of the Securities and all of their stockholders,
partners, members, officers, directors, employees and direct or indirect
investors and any of the foregoing Persons' agents or other representatives
(including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the "INDEMNITEES")
from and against any and all actions, causes of action, suits, claims, losses,
costs, penalties, fees, liabilities and damages, and expenses in connection
therewith (irrespective of whether any such Indemnitee is a party to the action
for which indemnification hereunder is sought), and including reasonable
attorneys' fees and disbursements
-30-
(the "INDEMNIFIED LIABILITIES"), incurred by any Indemnitee as a result of, or
arising out of, or relating to (a) any misrepresentation or breach of any
representation or warranty made by the Company in any Transaction Documents, (b)
any breach of any covenant, agreement or obligation of the Company contained in
any Transaction Documents or (c) any cause of action, suit or claim brought or
made against such Indemnitee by a third party (including for these purposes a
derivative action brought on behalf of the Company) and arising out of or
resulting from (i) the execution, delivery, performance or enforcement of any
Transaction Documents, (ii) any transaction financed or to be financed in whole
or in part, directly or indirectly, with the proceeds of the issuance of the
Securities, (iii) any disclosure made by such Buyer pursuant to Section 4(i), or
(iv) the status of such Buyer or holder of the Securities as an investor in the
Company pursuant to the transactions contemplated by the Transaction Documents.
To the extent that the foregoing undertaking by the Company may be unenforceable
for any reason, the Company shall make the maximum contribution to the payment
and satisfaction of each of the Indemnified Liabilities which is permissible
under applicable law. Except as otherwise set forth herein, the mechanics and
procedures with respect to the rights and obligations under this Section 9(k)
shall be the same as those set forth in Section 6 of the Registration Rights
Agreement.
(l) No Strict Construction. The language used in this Agreement will
be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.
(m) Remedies. Each Buyer and each holder of the Securities shall
have all rights and remedies set forth in the Transaction Documents and all
rights and remedies which such holders have been granted at any time under any
other agreement or contract and all of the rights which such holders have under
any law. Any Person having any rights under any provision of this Agreement
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. Furthermore, the
Company recognizes that in the event that it fails to perform, observe, or
discharge any or all of its obligations under the Transaction Documents, any
remedy at law may prove to be inadequate relief to the Buyers. The Company
therefore agrees that the Buyers shall be entitled to seek temporary and
permanent injunctive relief in any such case without the necessity of proving
actual damages and without posting a bond or other security.
(n) Payment Set Aside. To the extent that the Company makes a
payment or payments to the Buyers hereunder or pursuant to any of the other
Transaction Documents or the Buyers enforce or exercise their rights hereunder
or thereunder, and such payment or payments or the proceeds of such enforcement
or exercise or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by or are
required to be refunded, repaid or otherwise restored to the Company, a trustee,
receiver or any other Person under any law (including, without limitation, any
bankruptcy law, foreign, state or federal law, common law or equitable cause of
action), then to the extent of any such restoration the obligation or part
thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such enforcement
or setoff had not occurred.
-31-
(o) Independent Nature of Buyers' Obligations and Rights. The
obligations of each Buyer under any Transaction Document are several and not
joint with the obligations of any other Buyer, and no Buyer shall be responsible
in any way for the performance of the obligations of any other Buyer under any
Transaction Document. Nothing contained herein or in any other Transaction
Document, and no action taken by any Buyer pursuant hereto or thereto, shall be
deemed to constitute the Buyers as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the Buyers are
in any way acting in concert or as a group with respect to such obligations or
the transactions contemplated by the Transaction Documents. Each Buyer confirms
that it has independently participated in the negotiation of the transaction
contemplated hereby with the advice of its own counsel and advisors. Each Buyer
shall be entitled to independently protect and enforce its rights, including,
without limitation, the rights arising out of this Agreement or out of any other
Transaction Documents, and it shall not be necessary for any other Buyer to be
joined as an additional party in any proceeding for such purpose.
(p) Business Day. In the event that any due date falls on a
Saturday, Sunday or any other day on which commercial banks in the City of New
York are authorized or required to remain closed, then the applicable due date
shall be the next Business Day thereafter.
[SIGNATURE PAGE FOLLOWS]
-32-
IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed as of the date first written above.
COMPANY:
ARTISTDIRECT, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: Chief Financial Officer
-33-
IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed as of the date first written above.
CCM MASTER QUALIFIED FUND LTD.
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxxx
Title: Director
IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed as of the date first written above.
BUYERS:
DKR SOUNDSHORE OASIS HOLDING FUND LTD.
By: /s/ Xxxx Xxxxxxx
-----------------------------
Name: Xxxx Xxxxxxx
Title: Director
-35-
IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed as of the date first written above.
JLF PARTNERS I, LP
By: /s/ Xxxx Xxxxxxxxx
-----------------------------
Name: Xxxx Xxxxxxxxx
Title: CFO
JLF PARTNERS II, LP
By: /s/ Xxxx Xxxxxxxxx
-----------------------------
Name: Xxxx Xxxxxxxxx
Title: CFO
JLF OFFSHORE FUND, LTD.
By: /s/ Xxxx Xxxxxxxxx
-----------------------------
Name: Xxxx Xxxxxxxxx
Title: CFO
IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed as of the date first written above.
XXXXX XXXX
By: /s/ Xxxxx Xxxx
-----------------------------
Name: Xxxxx Xxxx
Title:
-37-
IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed as of the date first written above.
XXXXXXX XXXXXXX
By: /s/ Xxxxxxx Xxxxxxx
-----------------------------
Name: Xxxxxxx Xxxxxxx
Title:
-38-
IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed as of the date first written above.
XXXXXXX XXXX
By: /s/ Xxxxxxx Xxxx
-----------------------------
Name: Xxxxxxx Xxxx
Title:
-39-
IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed as of the date first written above.
XXXXXX XXXXXXXXX
By: /s/ Xxxxxx Xxxxxxxxx
-----------------------------
Name: Xxxxxx Xxxxxxxxx
Title:
-40-
IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed as of the date first written above.
XXXX XXXXXX
By: /s/ Xxxx Xxxxxx
-----------------------------
Name: Xxxx Xxxxxx
Title:
-41-
IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed as of the date first written above.
XXXXXXX XXXXXX
By: /s/ Xxxxxxx Xxxxxx
-----------------------------
Name: Xxxxxxx Xxxxxx
Title:
-42-
IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed as of the date first written above.
BROADBAND CAPITAL MANAGEMENT LLC
By: /s/ Xxxxxxx Xxxx
-----------------------------
Name: Xxxxxxx Xxxx
Title: Chairman
-43-
IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed as of the date first written above.
LONGVIEW FUND, L.P.
By: /s/ Xxxxx X. Benz
-----------------------------
Name: Xxxxx X. Benz
Title: Chairman
LONGVIEW EQUITY FUND, L.P.
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxxx
Title: CEO
LONGVIEW INTERNATIONAL EQUITY FUND, L.P.
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxxx
Title: CEO
-44-
SCHEDULE OF BUYERS
(1) (2) (3) (4) (5) (6)
AGGREGATE
PRINCIPAL NUMBER OF
ADDRESS AND AMOUNT OF WARRANT PURCHASE LEGAL REPRESENTATIVE'S ADDRESS
BUYER FACSIMILE NUMBER NOTES SHARES PRICE AND FACSIMILE NUMBER
------------------------- -------------------------------- ----------- --------- ----------- ------------------------------
DKR SoundShore Oasis 0000 Xxxx Xxxx Xxxxxx, 0xx Xxxxx $ 8,000,000 425,806 $ 8,000,000 Xxxxxxx Xxxx & Xxxxx LLP
Holding Fund Ltd. Xxxxxxxx, XX 00000-0000 000 Xxxxx Xxxxxx
Attention: Xxxxxxx Xxxxxx Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000 Attention: Xxxxxxx Xxxxx, Esq.
Telephone: (000) 000-0000 Facsimile: (000) 000-0000
Residence: Bermuda Telephone: (000) 000-0000
CCM Master Qualified Fund c/o Coghill Capital Management, $13,000,000 691,935 $13,000,000 Xxxxxx & Xxxxxx LLP
Ltd. LLC One Battery Park Plaza
Xxx Xxxxx Xxxxxx Xxxxx Xxx Xxxx, XX 00000
Suite 4350 Attention: Xxxxx Xxxxxxxxx, Esq.
Xxxxxxx, XX 00000 Facsimile: (000) 000-0000
Attention: Xxx Xxxxxxx Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
cc:
Achilles Partners, LLC
0000 0xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxx Xxxxxxxx
Facsimile: (000) 000-0000
Telephone:
JLF Partners I, LP c/o JLF Asset Management, LLC $ 593,000 31,563 $ 593,000 Xxxxxx & Xxxxxx LLP
JLF Partners II, LP 0000 Xxx xx xx Xxxxx $ 44,000 2,342 $ 44,000 One Battery Park Plaza
JLF Offshore Fund, Ltd. Suite 204 $ 863,000 45,934 $ 863,000 Xxx Xxxx, XX 00000
Xxx Xxx, XX 00000 Attention: Xxxxx Xxxx, Esq.
Attention: Xxxxxxx Xxxxxxxx Facsimile: (000) 000-0000
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Xxxxx Xxxx 00000 Xxxxxxx Xxx. $ 2,250,000 119,758 $ 2,250,000 O'Melveny & Xxxxx XXX
#000 Xxxxxx xxx Xxx, XX 00000 000 Xxxxx Xxxx Xxxxxx
tel. (000) 000-0000 Xxx Xxxxxxx, Xxxxxxxxxx 00000
fax. (000) 000-0000 Attention: Xxxx Xxxxxx, Esq.
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
-45-
Xxxxxxx Xxxxxxx 00000 Xxxxxxx Xxx. $ 2,250,000 119,758 $ 2,250,000 O'Melveny & Xxxxx XXX
#000 Xxxxxx xxx Xxx, XX 00000 000 Xxxxx Xxxx Xxxxxx
tel. (000) 000-0000 Xxx Xxxxxxx, Xxxxxxxxxx 00000
fax. (000) 000-0000 Attention: Xxxx Xxxxxx, Esq.
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Xxxxxxx Xxxx* 00 Xxxxx Xxxxxx Xxxx $ 1,071,000 1,061,855 $ 1,071,000
Xxx. 0X
Xxx Xxxx, XX 00000
Xxxxxx Xxxxxxxxx* 000 Xxxx 00xx Xxxxxx $ 153,000 151,693 $ 153,000
Xxx. 0X
Xxx Xxxx, XX 00000
Xxxx Xxxxxx* 00 Xxxxxx Xxxxxx $ 40,000 75,847 $ 40,000
Xxxxxxx, XX 00000
Xxxxxxx Xxxxxx* 000 Xxxx 00xx Xxxxxx $ 76,500 75,847 $ 76,500
Xxx. 000
Xxx Xxxx, XX 00000
Broadband Capital 000 Xxxxx Xxxxxx $ 120,000 151,693 $ 120,000
Management 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Longview Fund, L.P. Viking Asset Management, LLC $ 2,750,000 146,371 $ 2,750,000 Grushko & Xxxxxxx, P.C.
Longview Equity Fund, L.P. Longview Family of Funds $ 162,500 8,649 $ 162,500 000 Xxxxx Xxxxxx - Xxxxx 0000
Longview Int'l Equity 000 Xxxxxxxxxx Xxxxxx, 00xx Xx. $ 87,500 4,657 $ 87,500 Xxx Xxxx XX 00000
Fund, L.P. Transamerica Pyramid Attention: Xxxxxx X.
Xxx Xxxxxxxxx, XX 00000 Grushko, Esq.
Attention: Xxxxxxx Xxxxxxx, Facsimile: (000) 000-0000
President Telephone: (000) 000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
* Affiliated with Broadband Capital Management
