AGREEMENT
AGREEMENT (this "Agreement") dated as of May 25, 1999, between
Rare Medium Group, Inc., a Delaware corporation (the "Company") and Capital
Ventures International ("CVI").
RECITALS
A. Pursuant to a Securities Purchase Agreement dated as of January 28, 1999
(the "SPA"), CVI purchased from the Company $3,500,000 principal amount of 8%
Convertible Debentures (the "Initial Debentures"), and a Stock Purchase
Warrant (the "Initial Warrant") to acquire 404,625 shares of the Company's
common stock, par value $0.01 per share (the "Common Stock").
B. The SPA gives CVI the right to acquire, and CVI desires to acquire, an
additional $2,500,000 principal amount of 8% Convertible Debentures (the
"Additional Debentures") and additional Warrants (the "Additional Warrants") to
acquire 289,017 shares of Common Stock. The Initial Debentures and the
Additional Debentures are referred to herein collectively as the "Debentures";
and the Initial Warrants and the Additional Warrants are referred to herein
collectively as the "Warrants" and the Debentures and Warrants are referred to
herein collectively as the "CVI Securities."
C. The Company has entered into a Securities Purchase Agreement dated as of
May 7, 1999, as amended and restated, with Apollo Investment Fund IV, L.P. and
certain other parties (the "Apollo Agreement"), which will provide the Company
with $87,000,000 of capital.
D. The parties hereto desire to enter into a transaction pursuant to which
the Debentures and Warrants (following the acquisition by CVI of the Additional
Debentures and the Additional Warrants) will be converted and exercised,
respectively, into shares of Common Stock as specified herein.
E. The Common Stock to be issued to CVI upon conversion and exercise of
the CVI Securities will be registered for resale under the Securities Act of
1933, as amended (the "Securities Act") pursuant to a Registration Statement on
Form S-3, and otherwise have the rights set forth in the Registration Rights
Agreement, dated as of January 28, 1999 between the Company and CVI, as amended
through the date hereof (as so amended, the "Registration Rights Agreement").
NOW THEREFORE, the parties hereto, intending to be bound, hereby agree as
follows:
SECTION 1. Conversion and Exercise; Closing
(a) Subject to the terms and conditions set forth below, CVI agrees to
deliver the CVI Securities to the Company free of any lien or encumbrance,
created by CVI, and the Company agrees to accept such delivery and, in
consideration thereof, issue to CVI 1,588,462 fully-paid and non-assessable
shares of Common Stock upon conversion and exercise of the CVI Securities, equal
to the number of shares of Common Stock then issuable upon conversion of the
Debentures, plus the number of shares then issuable pursuant to a cashless
exercise of the Warrants (the "CVI Shares"). The conversion, exercise, delivery
and cancellation of the CVI Securities in consideration of the issuance of the
CVI Shares is referred to herein as the "Transaction."
(b) The closing (the "Closing") of the transactions constituting the
Transaction shall take place at the offices of Sidley & Austin, 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 on the date (the "Closing Date") of, and
simultaneously with, the closing of the purchase and sale under the Apollo
Agreement. The Company shall provide CVI not less than three (3) days prior
written notice of the Closing Date.
(c) At the Closing, CVI shall convert, exercise and deliver the CVI
Securities, which shall thereupon be cancelled by the Company, against the
issuance by the Company of the CVI Shares in such denominations as CVI shall
specify in writing not more than two (2) days prior to the Closing. Upon the
foregoing deliveries, all remaining rights and obligations of the parties under
the SPA, the Debentures and the Warrants shall be terminated and of no further
force and effect.
SECTION 2. Closing Conditions
2.1. Conditions to Obligations of Both Parties
The obligation of each of the parties to consummate the Transaction
pursuant to Section 1 is subject to the satisfaction of each of the following
conditions:
(a) The closing of the purchase and sale under the Apollo Agreement shall
occur simultaneously with the Closing hereunder.
(b) No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered or promulgated by any court or
governmental authority of competent jurisdiction or any self-regulatory
organization having authority over matters contemplated hereby which prohibits
the consummation of any of the transactions contemplated by this Agreement.
2.2. Conditions to Obligations of CVI
The obligation of CVI to consummate the Transaction pursuant to Section 1
is subject to the satisfaction of each of the following conditions:
(a) the Company's representations and warranties set forth in Section 3(a)
shall be true and correct in all material respects as of the date hereof and as
of the Closing Date;
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(b) the Company shall have performed its obligations set forth in Section
4(a) hereof on or prior to the Closing Date;
(c) the CVI Shares shall have been duly authorized and, when issued in
the Transaction, shall be validly issued, fully-paid and non-assessable, and
shall be authorized for trading on the NASDAQ National Market, and
(d) the Registration Rights Agreement shall have been amended, if
necessary, to cover the CVI Shares.
2.3. Conditions to Obligations of the Company
The obligation of the Company to consummate the Transaction pursuant to
Section 1 is subject to the satisfaction of each of the following conditions:
(a) CVI's representations and warranties set forth in Section 3(b) shall be
true and correct in all material respects as of the date hereof and as of the
Closing Date; and
(b) CVI shall have performed each of its obligations set forth in Section
4(b) hereof on or prior to the Closing Date.
SECTION 3. Representations and Warranties
(a) The Company represents and warrants to CVI that:
(i) the Company is a corporation validly existing and in good standing
under the laws of the State of Delaware;
(ii) the Company has all corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder. The execution,
delivery and performance of this Agreement by the Company, and the consummation
by the Company of the transactions contemplated hereby, have been duly
authorized by all necessary corporate action on the part of the Company. This
Agreement has been duly and validly executed and delivered by the Company and
(assuming the due authorization, execution and delivery hereof by CVI)
constitutes a legal, valid and binding obligation of the Company, enforceable
against it in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity);
(iii) the execution and delivery by the Company of this Agreement, the
consummation of the transactions contemplated hereby, and compliance by the
Company with the provisions hereof will not conflict with, constitute a default
under or violate (x) any of the
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terms, conditions or provisions of its certificate of incorporation or by-laws,
(y) any of the terms, conditions or provisions of any document, agreement or
other instrument to which the Company is a party or by which its property is
bound, or (z) any judgment, writ, injunction, decree, order or ruling of any
court or governmental authority binding on it or its property;
(iv) no consent, approval, waiver, license or authorization or other
action by, or filing with, any court or governmental agency, commission,
authority or other person or entity is required in connection with the
execution and delivery by the Company of this Agreement, the consummation by
the Company of the transactions contemplated hereby and compliance by the
Company with any of the provisions hereof;
(v) the CVI Shares have been duly authorized and, when issued in
the Transaction in consideration of the conversion, exercise, delivery and
cancellation of the CVI Securities, will be validly issued, fully-paid and
non-assessable shares of Common Stock free of any liens or encumbrances created
by the Company, and will be authorized for trading on the NASDAQ National
Market; and
(vi) The Company has amended its Registration Statement on Form S-3
filed with the Securities and Exchange Commission pursuant to the Registration
Rights Agreement to cover resales of the CVI Shares.
(b) CVI represents and warrants to the Company that:
(i) CVI is validly existing and in good standing under the laws of its
jurisdiction of formation;
(ii) CVI has all requisite power and authority to execute and deliver
this Agreement and to perform its obligations hereunder. The execution, delivery
and performance of this Agreement by CVI, and the consummation by CVI of the
transactions contemplated hereby, have been duly authorized by all necessary
corporate or partnership action on the part of CVI. This Agreement has been duly
and validly executed and delivered by CVI and (assuming the due authorization,
execution and delivery hereof by the Company) constitutes a legal, valid and
binding obligation of CVI enforceable against it in accordance with its terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and subject as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity);
(iii) the execution and delivery by CVI of this Agreement, the
consummation of the transactions contemplated hereby, and compliance by CVI with
the provisions hereof will not conflict with, constitute a default under or
violate (x) any of the terms, conditions or provisions of its constituent
documents, (y) any of the terms, conditions or provisions of any document,
agreement or other instrument to which CVI is a party or by which its property
is bound, or (z) any judgment, writ, injunction, decree, order or ruling of any
court or governmental authority binding on it or its property;
(iv) no consent, approval, waiver, license or authorization or other
action by, or filing with, any court or governmental agency, commission,
authority or other person or entity is required in connection with the execution
and delivery by CVI of this Agreement, or the consummation
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by CVI of the transactions contemplated hereby and compliance by CVI with any of
the provisions hereof;
(v) as of the date hereof, CVI has, with respect to $3,500,000
principal amount of the Initial Debentures and the Initial Warrants (exercisable
with respect to 404,625 shares of Common Stock), and as of the Closing Date, CVI
will have with respect to both the foregoing and $2,500,000 principal amount of
Additional Debentures and the Additional Warrants (exercisable with respect to
289,017 shares of Common Stock) title, free and clear of all claims, liens,
charges, encumbrances, options and security interests created by CVI; and
(vi) as of the date hereof and the Closing Date, each of the
statements set forth in Section 2 of the SPA is true and correct with respect to
the CVI Shares.
SECTION 4. Other Agreements
(a) CVI agrees to exercise its right to acquire the Additional Debentures
and the Additional Warrants for $2,500,000, pursuant to the SPA, on or prior to
the Closing Date; and will not sell, assign, pledge, encumber, transfer or
otherwise dispose of any of the CVI Securities prior to the earlier of
termination of this Agreement or the Apollo Agreement.
(b) Each party hereto agrees to use reasonable efforts to obtain all
consents and approvals, and to do all other things, necessary to effect the
transactions contemplated by this Agreement on or prior to the Closing Date. The
parties agree to take such further action and to deliver or cause to be
delivered to each other at the Closing and at such other times thereafter such
additional agreements or instruments as either of them may reasonably request
for the purpose of carrying out this Agreement and the agreements and
transactions contemplated hereby.
(c) CVI agrees, in connection with any proxy solicited by the Company, to
vote the CVI Shares in the manner recommended by the Board of Directors of the
Company.
SECTION 5. Miscellaneous
5.1. Termination
This Agreement may be terminated and the Transaction may be abandoned at
any time prior to the Closing Date (provided that any such termination shall not
relieve any party from liability for a breach of any provision hereof prior to
such termination):
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(a) by the mutual written consent of the parties;
(b) by either party if the closing under the Apollo Agreement shall not
have occurred on or prior to June 30, 1999;
(c) by CVI if any representation, warranty, covenant or agreement of the
Company contained in this Agreement shall have been breached in any material
respect, or if any of the conditions set forth in Section 2.1 or 2.2 shall not
have been satisfied (or waived in writing by CVI) on or prior to the Closing
Date; and
(d) by the Company if any representation, warranty, covenant or agreement
of CVI contained in this Agreement shall have been breached in any material
respect, or if any of the conditions set forth in Section 2.1 or 2.3 shall not
have been satisfied (or waived in writing by the Company) on or prior to the
Closing Date.
5.2. Amendment and Waiver
This Agreement shall be binding upon and shall inure to the benefit of any
and all successors and assigns of the parties hereto. This Agreement may not be
assigned by any party by operation of law or otherwise, without the express
prior written consent of each of the other parties, which consent may be granted
or withheld in each such party's sole discretion.
5.3. Amendment and Waiver
This Agreement may be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may be given, provided that
the same are in writing and signed by the parties hereto.
5.4. Counterparts
This Agreement may be executed in any number of counterparts and by the
parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same.
5.5. Headings
The headings in this Agreement are for convenience of reference only and
shall not limit or otherwise affect the meaning thereof.
5.6. Governing Law
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK AS APPLIED TO CONTRACTS MADE AND PERFORMED WITH
THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
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5.7. Entire Agreement
This Agreement is intended by the parties as a final expression of their
agreement and intended to be a complete and exclusive statement of the agreement
and understanding of the parties hereto in respect of the subject matter
contained herein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein.
5.8. Notices
Any notice to be delivered hereunder shall be in writing and shall be sent
by facsimile or prepaid overnight courier to the respective party at its
address set forth on the signature page hereof.
5.9. Severability
If any term, Provision, covenant Or restriction of this Agreement is held
by a court of competent jurisdiction to be invalid, illegal, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their best efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such which may
be hereafter declared invalid, void or unenforceable.
5.10. Specific Performance
The parties agree that the CVI Securities and the CVI Shares are unique
and each party will be irreparably harmed in the event this Agreement is not
specifically enforced. The parties further agree that it is impossible to
measure solely in monetary damages the damages that will accrue by reason of a
refusal by a party to perform its obligations under this Agreement. Therefore,
in the event that a party shall institute any action to enforce the provisions
of this Agreement, each party hereby agrees that the instituting party does not
have an adequate remedy at law and that injunctive or other equitable relief
will not constitute any hardship upon
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the other party. Nothing in this Section 5.10 shall be construed as prohibiting
the parties from pursuing any other remedies for a breach or threatened breach
of this Agreement by the other party.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.
RARE MEDIUM GROUP, INC.
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By: Xxxxx X. Xxxxxx
Title: Chairman, CEO and President
Address: 00 Xxxx 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
CAPITAL VENTURES INTERNATIONAL
By: Heights Management, Inc.,
its authorized agent
------------------------------------------
By:
Title
Address: 40 Heights Capital Management Inc.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxx or
Xxxxxxx Xxxxxx
Telephone:
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