Exhibit 10.1(b)
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") made on September
25, 1996 (the "Agreement") by and between The ▇▇▇▇▇▇ Group, Inc., a Delaware
corporation (the "Company") and 21st Century Communications Partners, L.P, a
Delaware limited partnership, 21st Century Communications T-E Partners, L.P., a
Delaware limited partnership, 21st Century Communications Foreign Partners,
L.P., a Delaware limited partnership (collectively, the "Investors").
WHEREAS, the Company desires to sell and deliver to the Investors
and the Investors desire to purchase and receive from the Company, upon the
terms and conditions herein set forth, 64,935 shares (the "Investors' Shares")
of the Series B Senior Cumulative Compounding Convertible Redeemable Preferred
Stock, $1.00 par value per share of the Company (the "Series B Preferred
Stock");
NOW, THEREFORE, the parties hereto in consideration of the mutual
covenants herein contained and intending to be legally bound hereby, agree as
follows:
SECTION 1. DEFINITIONS.
1.1. Definitions. As used in this Agreement, and unless the context
requires a different meaning, the following terms have the meanings indicated
and include the plural as well as the singular:
"Affiliate" means with respect to any Person, any other Person that,
directly or indirectly, controls, is controlled by or is under common control
with, such Person. For the purposes of this definition, "control" (including the
terms "controlled by" and "under common control with"), as used with respect to
any Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise.
"Agreement" means this Stock Purchase Agreement, as the same may be
amended, supplemented or modified in accordance with the terms hereof.
"Business Day" means any day other than a Saturday, a Sunday or a
day on which banking institutions in either New York, New York, or the city and
state in which the principal executive offices of the Company within the United
States are located are not open for business.
"Certificate of Amendment" means the Certificate of Amendment to the
Company's Certificate of Incorporation substantially in the form attached hereto
as Exhibit A.
"Closing" shall have the meaning set forth in Section 2.3.
"Closing Date" shall have meaning set forth in Section 2.3.
"Code" means the Internal Revenue Code of 1986.
"Company" means The ▇▇▇▇▇▇ Group, Inc., a Delaware corporation and
its successors.
"Company Parties" shall have the meaning set forth in Section 6.1.
"Company Plans" shall have the meaning set forth in Section 2.20.
"Common Stock" shall have the meaning set forth in Section 3.4.
"Concurrent Transactions" shall have the meaning set forth in
Section 2.5.
"Contract" means any agreement, contract, commitment, indenture,
lease, license, instrument, note, bond, security, agreement in principle, letter
of intent, undertaking, promise, covenant, arrangement or understanding, whether
written or oral.
"Debt" means, with respect to any Person, at any time, without
duplication, (i) all obligations of such Person for borrowed money, (ii) all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments, (iii) all obligations of such Person to pay the deferred
purchase price of property or services, except trade accounts payable that arise
in the ordinary course of business, or professional fees and similar accounts
payable that arise in connection with any transaction not prohibited by this
Agreement, but only if and so long as the same are payable on customary terms,
(iv) all obligations of such Person as lessee under capital leases, (v) all Debt
secured by a lien on any asset of such Person, whether or not such Debt is
assumed by such Person and (vi) all Debt of others guaranteed by such Person.
"ERISA" shall have the meaning set forth in Section 2.20.
"Fair Market Value" means, as to any property, the price at which a
willing seller would sell and willing buyer would buy such property having full
knowledge of the facts, in an arms-length auction transaction without time
constraints, and without being under any compulsion to buy or sell. In
determining the Fair Market Value of any shares of capital stock, there shall be
no discount due to lack of liquidity of such shares because of the absence of a
significant public market or due to the minority ownership position in the
issuer represented by such shares, nor any premium due to the majority or
control ownership position in the issuer represented by such shares.
"Governmental Authority" means any nation or government, any state
or other political subdivision thereof and any court, panel, judge, board,
bureau, commission, agency or other entity, body or other Person exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
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"Intangible Property" has the meaning set forth in Section 3.13.
"Investors" means the Initial Investors and each other Person, other
than the Company or an Affiliate of the Company who at any time acquires any
shares of capital stock of the Company directly or indirectly from any Initial
Investor in a transaction or chain of transactions not involving a public
offering within the meaning of and registered under the Securities Act, for so
long as such Person continues to hold such securities.
"Investors' Shares" has the meaning set forth in the introductory
paragraphs.
"Issue Date" means September 25, 1996.
"IRS" has the meaning set forth in Section 3.18.
"Judgment" means any order, judgment, writ, decree, award or other
determination, decision or ruling of any court, judge, justice or magistrate,
any other governmental authority or any arbitrator.
"Licenses" has the meaning set forth in Section 3.16.
"Majority Investors"shall be as defined in the Registration Rights
Agreement.
"Material Adverse Effect" means any event, fact, circumstance or
occurrence which results or would result in a material adverse change in or a
material adverse effect on any of (i) the condition (financial or otherwise),
business, performance, operations or properties of the Company and its
Subsidiaries taken as one enterprise, (ii) the legality, validity or
enforceability of any Transaction Document or (iii) the ability of the Company
or any of its Subsidiaries to perform its material obligations hereunder or
under any other Transaction Document.
"Option" shall be as defined in the Option Agreement.
"Option Agreement" means the Option Agreement, dated the date
hereof, among the Company and the Investors, as the same may be amended from
time to time in accordance with its terms.
"Option Purchase Price" has the meaning set forth in Section 2.2.
"Other Stock Purchase Agreements" means the Stock Purchase
Agreements, dated the date hereof, among the Company and certain other
purchasers of Series B Preferred Stock as the same may be amended from time to
time in accordance with their respective terms.
"PBGC" shall have the meaning set forth in Section 3.20.
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"Pension Plans" shall have the meaning set forth in Section 2.20.
"Permitted Liens" shall have the meaning set forth in Section 3.12.
"Permitted Transferees" shall have the meaning as set forth in the
Stockholders' Agreement.
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
or other entity of any kind or any Governmental Authority.
"Preemptive Rights Agreement" means the Preemptive Rights Agreement,
dated the date hereof and substantially in the form of Exhibit B hereto, among
the Company and certain stockholders of the Company.
"Purchase Price" has the meaning set forth in Section 2.1.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated the date hereof and substantially in the form of Exhibit C
hereto, among the Company and certain stockholders of the Company.
"Requirement of Law" means, as to any Person, the charter and bylaws
or other organizational or governing documents of such Person, and all federal,
state and local laws, rules, regulations, orders, judgments, decrees or other
determinations of an arbitrator, court or other Governmental Authority,
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject.
"Rights" means, with respect to any Person, any subscription,
option, warrant, right, convertible security or other agreement, instrument or
commitment of any character obligating (contingently or absolutely) such Person
to issue or sell any capital stock or other securities.
"Senior Loan Amendment and Agreement" means the Agreement dated the
date hereof, among ▇▇▇▇▇▇ ▇▇▇▇▇ and the Investors, the Promissory Note dated the
date hereof among the Company and ▇▇▇▇▇▇ ▇▇▇▇▇ and substantially in the forms
attached to Exhibit D hereto and the other agreements, documents and instruments
executed in connection therewith, as the same may be amended from time to time
in accordance with their respective terms.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, or any successor statute, and (unless the context otherwise
requires) the rules and regulations promulgated thereunder.
"Series A Preferred Stock" means the Series of Preferred Stock of
the Company designated prior to Closing as 8.25% Convertible Exchangeable
Preferred Stock.
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"Series A Certificate of Amendment" has the meaning set forth in
Section 2.5.
"Series B Preferred Stock" has the meaning set forth in the
introductory paragraphs.
"Series B Certificate of Designation" means the Certificate setting
forth a copy of the resolution adopted by the Board of Directors of the Company,
pursuant to authority expressly vested in it by the provisions of the
Certificate of Incorporation of the Company, as amended, which resolution
provides for the designation, powers and rights of the series designated thereby
as the Series B Senior Cumulative Compounding Convertible Redeemable Preferred
Stock of the Company, as filed with the Secretary of State of the State of
Delaware on or prior to the date hereof, in the form attached hereto as Exhibit
E.
"Stockholders' Agreement" means the Stockholders' Agreement, in the
form of Exhibit F hereto, by and among the Company, the Investors and certain
other stockholders of the Company dated the date hereof.
"Subsidiary" means with respect to any Person as of any time, each
Entity as to which any of the following statements is true as of such time:
(a) such Entity is an Affiliate of such Person which is
controlled by such Person, or
(b) such Person owns or controls, directly or indirectly
through one or more intermediaries, 50% or more of the outstanding
equity interests in such Entity having ordinary voting power to
elect a majority of the members of the board of directors or joint
venture, partnership or other management committee, trustees,
managers or other Persons ordinarily having the power, authority or
responsibility for managing or directing the management of such
Entity, or
(c) such Person, directly or indirectly through one or more
intermediaries, is entitled under ordinary circumstances to 50% or
more of the profits or losses of such Entity or to receive upon
dissolution and liquidation of such Entity 50% or more of the assets
available for distribution to the holders of equity interests in
such Entity,
and in the case of any of clauses (i), (ii) and (iii), disregarding any voting
power, equity interests or other rights or interests which any Person other than
such Person or another Subsidiary of such Person would or might have upon the
happening of any contingency, the satisfaction of any condition or the
occurrence of any event which has not happened, been satisfied or occurred as of
such time.
"Tax" means any federal, state, local and foreign income, profits,
franchise, gross receipts, payroll, sales, employment, use, property,
withholding, excise and other tax, duty or
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assessment of any nature whatsoever, together with all interest, penalties and
additions imposed with respect thereto.
"Transactions" means the transactions contemplated by the
Transaction Documents and all other transactions consummated in connection
therewith.
"Transaction Documents" means this Agreement, the Stockholders'
Agreement, the Series B Certificate of Designation, the Senior Loan Amendment
and Agreement, the Registration Rights Agreement, the Preemptive Rights
Agreement, the Series A Certificate of Amendment, the Certificate of Amendment,
the Option Agreement and the Other Stock Purchase Agreement.
Section 2. Purchase and Sale; Closing.
2.1. Sale and Purchase of Investor's Shares; Purchase Price.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, the Company shall sell, assign, transfer, convey and
deliver to the Investors the Investors' Shares, and the Investors
shall purchase the Investors' Shares from Company on the date hereof
for a purchase price as set forth below.
(b) Purchase Price. Upon the terms and subject to the
conditions set forth in this Agreement, and simultaneously with
receipt of the Investors' Shares on the date hereof, the Investors
shall deliver to the Company the sum of $4,999,995 (which is a
purchase price of $77.00 per share of Series B Preferred Stock) (the
"Purchase Price") in cash by wire transfer to an account as
designated by the Company prior to the Closing (as defined below).
2.2. Sale and Purchase of Option; Purchase Price.
(a) Upon the terms and subject to the conditions set forth in
this Agreement and the Option Agreement, the Company shall sell,
assign, transfer, convey and deliver to the Investors the Option,
and the Investors shall purchase the Option on the date hereof for a
purchase price as set forth below;
(b) Upon the terms and subject to the conditions set forth in
this Agreement and in the Option Agreement, and simultaneously with
the execution and delivery by the Company of the Option Agreement,
the Investors shall deliver to the Company the sum of $100 (the
"Option Purchase Price") in cash by wire transfer to an account as
designated by the Company prior to the Closing.
2.3. Closing. The closing ("Closing") of the Transactions shall be
held at the office of ▇▇▇▇▇ & ▇▇▇▇▇, L.L.P., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ or at such
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other place and time as may be agreed upon by the Company and the Investors. The
date of the Closing is referred to herein as the "Closing Date."
2.4. Deliveries. At the Closing, the parties shall make the
following deliveries:
2.4.1. The Company shall deliver to the Investors free and
clear of all liens, claims or other encumbrances, certificates representing the
Investors' Shares in the names and for the amount of shares of Series B
Preferred Stock as set forth on Schedule 1 hereto; and
2.4.2. The Investors shall deliver to the Company the Purchase
Price, in cash.
2.5. Concurrent Transactions. Contemporaneously with Closing, the
following further transactions the ("Concurrent Transactions") have occurred or
are occurring:
(a) Simultaneously with the Closing, the Stockholders'
Agreement, the Registration Rights Agreement and the Preemptive
Rights Agreement have been executed and delivered by each of the
parties thereto;
(b) Simultaneously with the Closing, the individuals named in
Schedule 2.5(b) have been duly elected to the Company's Board of
Directors;
(c) Simultaneously with the Closing, the Senior Loan Amendment
and Agreement been executed and delivered by each of the parties
thereto.
(d) Prior to or simultaneously with the Closing, the
contribution by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇ of their right to
receive all amounts of deferred compensation since January 1, 1992,
to the Company.
(e) Simultaneously with the Closing, the closing of the
purchase by certain other investors of approximately 26,121 shares
of Series B Preferred Stock for a purchase price of $77.00 per share
in accordance with the terms and conditions of the Other Stock
Purchase Agreement;
(f) Prior to or simultaneously with the Closing, the Series B
Certificate of Designation, the Series A Certificate of Amendment
and the Certificate of Amendment shall have been filed and become
effective with the Secretary of State of the State of Delaware;
(g) Simultaneously with the Closing, the Certificate of
Amendment relating to the Certificate of Designation with respect to
the Series A Preferred Stock (the "Series A Certificate of
Amendment") shall have been filed and have become effective with the
Secretary of State of the State of Delaware;
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(h) Simultaneously with the Closing, the Amendments to the
Employment Agreements with the Company of each of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
and ▇▇▇▇▇▇ ▇▇▇▇▇ substantially in the forms attached hereto as
Exhibit G and Exhibit H respectively have been executed and
delivered by each of the respective parties thereto.
2.6. Failure to Consummate Any Transaction. If any of the
transactions contemplated by the Transaction Documents to which any Investor is
intended to be a party is consummated, but any of the Concurrent Transactions
contemplated by Section 2.5. to be consummated concurrently with or after such
transaction or any of the transactions contemplated by the other Transaction
Documents is not so consummated for any reason on the same date in a manner
reasonably satisfactory to the Investors and their counsel, then,
notwithstanding any provision of any Transaction Document apparently to the
contrary (i) the Investors shall have no further obligations under this
Agreement or any other Transaction Document and (ii) in addition to any other
rights or remedies which the Investors may have pursuant hereto or at law or in
equity, the Investors shall have the absolute and unconditional right to rescind
each consummated Concurrent Transaction or any transaction contemplated by the
Transaction Documents to which any Investor was a party, in which event the
Company shall take all such actions as may be necessary to make such rescission
fully effective, including but not limited to repaying to the Investors the
amount of all cash payments made by them pursuant to Section 2.1., Section 2.2.
and Section 2.3. hereof.
Section 3. Representations, Warranties and Covenants of the Company.
The Company hereby represents, warrants and covenants with and to the Investors
as follows as of the Closing Date:
3.1. Organization. The Company is a corporation duly and validly
organized, existing and in good standing under the laws of the State of
Delaware. The Company is duly qualified to do business in and is in good
standing under the laws of each jurisdiction in which the character of its
business or the ownership of its assets so requires. The Company has all
requisite power and authority to own or hold under lease its assets and operate
its business at the places where such assets are presently located and at the
places and in the manner in which such business is presently conducted. The
Company does not have any subsidiaries, nor is the Company a party to any joint
venture.
3.2. Authority. The execution and carrying out of this Agreement and
the compliance with the provisions hereof by the Company has been duly and
validly authorized by all necessary corporate action of the Company and its
stockholders, and this Agreement is the valid and binding agreement of the
Company enforceable in accordance with its terms, except insofar as enforcement
may be affected by bankruptcy, reorganization or similar laws relating to
creditors' rights in general, and general principles of equity, and no consent,
authorization or approval of any person to the Company's consummation of the
transaction contemplated hereby is required.
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3.3. Corporate Records. The copies of the Certificate of
Incorporation, as amended, and the By-laws of the Company attached hereto as
Schedule 3.3. are true and complete copies of such instruments and include all
amendments and modifications up to but not including the Closing Date. The
minute books of the Company, as made available to the Investors and their
representatives, contains the complete records of all meetings of and corporate
actions or written consents by the respective stockholders and the Board of
Directors of the Company and the same are accurate in all material respects.
3.4. Capitalization.
3.4.1.Immediately prior to the sale of the Investors' Shares
to the Investors, (i) the total authorized capital stock of the Company shall
consist of 1,000,000 shares of common stock, par value $.01 per share (the
"Common Stock"), 20,000 shares of Series A Preferred Stock and 95,000 shares of
Series B Preferred Stock, (ii) the total issued and outstanding capital stock of
the Company shall consist of 252,454 shares of Common Stock 6,000 shares of
Series A Preferred Stock and 0 shares of Series B Preferred Stock which shares
of Common Stock, Series A Preferred Stock and Series B Preferred Stock are owned
by the persons and in the amounts set forth on Schedule 3.4.1. hereof and (iii)
there are no treasury shares of capital stock.
3.4.2. Upon the sale of the Investors' Shares to the
Investors, the total issued and outstanding Common Stock, Series A Preferred
Stock and Series B Preferred Stock of the Company shall be as set forth on
Schedule 3.4.2.
3.4.3. When issued to the Investors in accordance with the
terms and conditions hereof, the Investors' Shares will be duly and validly
issued, will be fully paid and non-assessable and will be free and clear of all
liens, claims, pledges, encumbrances and restrictions of any kind, nature and
description (other than restrictions on the subsequent transfer of securities
imposed generally on sales of securities in non-registered transactions under
federal and state securities laws and the restrictions imposed by the
Transaction Documents as amended), and the Investors will have good, valid and
marketable title to the Investors' Shares. Except as set forth on Schedule
3.4.3. and except as set forth in the Transaction Documents, immediately prior
to the sale of the Investors' Shares to the Investors, there shall be (i) no
outstanding subscriptions, script, warrants, commitments, conversion rights,
calls, options or agreements to issue or sell additional securities of the
Company (ii) no obligations whatsoever requiring, or which might require, the
Company to issue any securities, and (iii) no agreements, commitments, or
understandings with respect to the internal management, control or affairs of
the Company including, without limitation, voting trusts and proxies, other than
as set forth in its Certificate of Incorporation, as amended, and By-Laws and in
the Transaction Documents.
3.5. Financial Condition. Except as otherwise set forth on Schedule
3.5. hereto, the financial statements of the Company for the year ended December
31, 1995, and the notes and any schedules to any such financial statements, all
as previously delivered to the Investors have been prepared in accordance with
generally accepted accounting principles, consistently applied, and
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fairly present the financial position, results of operations, assets and
liabilities of the Company as of the dates and for the fiscal periods covered
thereby. There are no material liabilities or obligations of any nature, whether
known or unknown, accrued or not accrued, absolute, contingent or otherwise,
which are not disclosed as such on the aforementioned financial statements or in
the notes thereto. Since December 31, 1995, the Company has not incurred any
material liability or obligation, accrued, absolute, contingent or otherwise,
except in the normal course of the Company's business. Since December 31, 1995,
there has been no material adverse change in the assets or liabilities, or in
the business or condition, financial or otherwise, or in the results of
operations or prospects, of the Company, whether as a result of any legislative
or regulatory change, revocation of any license or rights to do business, fire,
explosion, accident, casualty, labor trouble, flood, drought, riot, storm,
condemnation or act of God, or other public force or otherwise; and to the best
knowledge, information and belief of the Company, no fact or condition exists or
is contemplated or threatened which might cause such a change in the future.
3.6. No Consents Required No consent, authorization , approval,
permit or order of, waiver by, or notice or declaration to or registration,
qualification or filing with, any Governmental Authority or other Person
pursuant to any applicable Requirement of Law or any Contract is required in
connection with the Company's execution, delivery or performance of any
Transaction Document or the consummation of any of the Transactions which has
not been obtained.
3.7. Title to and Useability of Assets. Other than cash raised
through equity investments in the Company and the exercise of stock options to
purchase the Company's Common Stock , all of the material assets and properties
of the Company are reflected in the balance sheet for December 31, 1995 and all
such assets so reflected or existing (i) are owned beneficially and of record by
the Company, free and clear of any liens, claims, encumbrances and restrictions,
(ii) are all of the assets and properties which are necessary to conduct the
business of the Company as it is currently conducted and (iii) are used or held
in compliance with all applicable laws, rules and regulations and are suitable
for the purposes intended. Except as set forth on Schedule 3.7, since December
31, 1995 the Company has not disposed of or acquired any assets or properties
otherwise than in the ordinary course of its business and for individual amounts
not in excess of $5,000.
3.8. Litigation. Except as set forth on Schedule 3.8, there is no
action, suit, claim, complaint, notice of violation, proceeding at law or in
equity, arbitration, administrative or other proceeding or investigation by or
before any governmental or other instrumentality or agency, or, to the Company's
knowledge, threatened, against the Company or any of its properties or rights,
and the Company does not know of any valid basis for any of the same. The
Company is not subject to any judgment, order or decree entered in any lawsuit
or proceeding which affects (i) the Company or any part of the business,
properties or assets of the Company or (ii) any part of the transaction
contemplated hereby, or which seeks to impose conditions upon the degree of the
Investors' control over, or the manner in which Investors shall be permitted to
manage its investment in the Company subsequent to the consummation of the
Transactions.
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3.9. Compliance with Laws. To the best of knowledge of the Company,
the Company is in compliance with all federal, state and local laws, ordinances,
regulations and orders applicable to it and its business which could have a
material adverse effect on the Company, its assets or its business. To the best
of knowledge of the Company, the Company has all required federal, state and
local governmental licenses and permits necessary in the conduct of its
business; such licenses and permits are in full force and effect; the Company
has not violated any thereof; and no proceeding is pending or, to the Company's
knowledge, threatened to revoke or limit any thereof.
3.10. Disclosure of Information. No representation, warranty or
covenant made by the Company to the Investors in this Agreement, any schedule or
exhibit to this Agreement or any document, certificate, schedule or exhibit
given to the Investors in connection with this Agreement and the transaction
contemplated hereby, contains any untrue statement of material fact or omits to
state a material fact necessary in order to make the statements set forth in
this Agreement or the matters disclosed in such exhibit, document, schedule or
certificate, in light of the circumstances under which such statements or
disclosures were made, not misleading. There is no fact known to Company which
may materially and adversely affect the business, prospects or financial
condition of the Company or its properties or assets, which has not been set
forth in the Agreement or in the exhibits, certificates, schedules or statements
in writing furnished in connection with the Transactions.
3.11. Real Property.
3.11.1. Except as set forth on Schedule 3.11.1. hereto, the
Company owns no other real property.
3.11.2. Attached hereto as Schedule 3.11.2. is a complete copy
of each lease of real property (including amendments thereto) to which the
Company is a party. Except as set forth on Schedule 3.11.2. hereto, there are no
contractual obligations or commitments for the Company to enter into new leases
of real property or to renew or amend existing leases of real property prior to
the Closing Date.
3.12. Personal Property.
3.12.1. Except as set forth in Schedule 3.12.1. hereto, the
Company has the right to use all tangible personal properties and assets that
are material to the conduct of its business, subject to (i) limitations imposed
by the terms of the applicable lease, in the case of leased property, (ii)
defects in title, mortgages, liens, security interests, charges and encumbrances
disclosed in Schedule 3.12.1. and (iii) such restrictions on use as do not
materially impair the use of such properties and assets or the business of the
Company (clauses (i), (ii) and (iii) collectively referred to herein as the
"Permitted Liens"). The Company has good and marketable title to all of the
tangible personal properties, assets and rights owned by it, free and clear of
all mortgages, liens, security interests, charges and encumbrances, except for
Permitted Liens.
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3.12.2. All leases, subleases and other agreements under which
the Company is lessee or lessor of any property, real or personal, are in full
force and effect and constitute legal, valid and binding obligations of the
respective parties thereto enforceable in accordance with their respective terms
(except as such enforcement may be limited by bankruptcy, reorganization,
insolvency or other laws and court decisions relating to or affecting the
enforcement of creditors' rights generally, including but not limited to
statutory or other law regarding fraudulent transfers, and except as to the
availability of specific performance or other equitable remedies). To the best
knowledge of the Company, there is not under any of such instruments, any
claimed default or any event which with notice or lapse of time or both would
constitute such an event of default on the part of the Company which would have
a Material Adverse Effect on the Company.
3.12.3. Except as disclosed on Schedule 3.12.3., all
machinery, equipment and other tangible personal property that is material to
the conduct of the business of the Company, as the case may be, and that is
owned or used by the Company is free from any material defect and is capable of
being used in the ordinary and usual course of business as presently conducted
by the Company.
3.13. Intangible Property. Except as set forth on Schedule 3.13.
attached hereto, the Company owns, or has valid, binding and enforceable rights
to use, any and all material patents, trademarks, trade names, service marks,
service names, copyrights, applications therefor and other intellectual property
rights ("Intangible Property") used or held for use in connection with its
business, in each case free and clear of any lien, security interest, charge or
encumbrance. Schedule 3.13. sets forth a complete list of all material
Intangible Property used or held for use in connection with the Company's
business owned or licensed to the Company and any licenses or other agreements
relating thereto, and Schedule 3.13. indicates whether and where any such
Intangible Property has been registered or filed with the United States Patent
and Trademark Office, the Library of Congress Copyright Office or the
corresponding office of any other jurisdiction. Except as set forth on Schedule
3.13., to the best of the knowledge of the Company, the Company has not
infringed, misappropriated, misused or been charged with (or, to the best of the
Company's knowledge, been threatened to be charged with), respect to
infringement, misappropriation or misuse of any Intangible Property owned or
claimed by another. The Company has not received any notice with respect to
infringement, misappropriation or misuse of any Intangible Property owned or
claimed by another. Except as disclosed on Schedule 3.13. the Company has not
granted any outstanding licenses or other rights, or obligated itself to grant
licenses or other rights in or to any of the Intangible Property owned, used by
or licensed to them.
3.14. Offerees; Regulation D. None of the Company, its directors and
officers, its Affiliates nor any Person acting as agent for or on behalf of any
of the Company has, directly or indirectly, sold, offered for sale, or solicited
offers to buy any of the Investors' Shares or other securities of the Company so
as to bring the offer, issuance or sale of the Investors' Shares as contemplated
by this Agreement within the registration requirements of Section 5 of the
Securities Act, or within the registration or qualification requirements of any
"blue sky" or securities laws of any state or other jurisdiction. Assuming the
Investors are "accredited investors" within the meaning
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of Regulation D of the Securities Act, the offering, issuance and sale of the
Investors' Shares pursuant to this Agreement is exempt from the registration
provisions of the Securities Act.
3.15. Capital Commitments. Other than in the ordinary course of
business, there are no unfulfilled promises or commitments for capital
expenditures of the Company which are not reflected in the December 31, 1995
financial statements.
3.16. Licenses; Requirements of Law. To the best of the knowledge of
the Company, Company possesses all authorizations, approvals, consents,
licenses, permits, easements, certificates and other rights and permissions
necessary to conduct its respective business and to own, lease and operate
properties as currently or anticipated to be conducted, owned, leased or
operated, including all of the foregoing necessary for the use by the Company of
all Intangible Property used or anticipated to be used in the conduct of its
business as currently or anticipated to be conducted without a conflict with the
rights of others (collectively, the "Licenses") for which the failure to possess
would have a Material Adverse Effect. To the knowledge of the Company, all of
the Licenses are in full force and effect. The Company has no reason to believe
that any of the Licenses will be revoked, canceled, rescinded, or not renewed in
the ordinary course and on the same or more favorable material terms, other than
any such revocation, cancellation, rescission, or non-renewal of any License
which is not individually or in the aggregate with one or more other License(s),
material to the business or operations of the Company. To the knowledge of the
Company, there is not now pending any material complaint nor any basis for any
such complaint, which might have any of the results referred to in the
immediately preceding sentence. The Company is operating in all material
respects in accordance with the terms of the Licenses. To the best of the
knowledge of the Company, the Company is, and has conducted its business and
affairs, in compliance with all applicable Requirements of Law, except where the
failure to comply has not had and, insofar as reasonably can be foreseen, will
not have a Material Adverse Effect.
3.17. Certain Fees. Except as set forth on Schedule 3.17., neither
the Company nor any of its Affiliates, officers, directors or employees has
employed any financial advisor, broker or finder or incurred any liability for
any financial advisory, brokerage or finder's fee or commission in connection
with any of the Transactions.
3.18. Tax Matters. There has been duly filed by or on behalf of the
Company, or a filing extension from the appropriate federal, state, foreign and
local governments or governmental agencies has been obtained with respect to,
all Tax returns and reports required to be filed on or prior to the date hereof,
and all of such Tax returns and reports are correct and complete in all material
respects. Except as provided in Schedule 3.18., payment in full or adequate
provision for the payment of all Taxes required to be paid in respect of the
periods covered by such Tax returns and reports has been made and a reserve
which the Company reasonably believes to be adequate has been set up for the
payment of all such Taxes anticipated to be payable in respect of periods
through the date hereof. The federal income tax returns required to be filed by
or on behalf of the Company under the Code or any predecessor statute have
either been examined by the Internal Revenue Service ("IRS") or the period
during which any assessments may be made by the IRS has expired
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for all years up to and including the taxable year ended December 31, 1992 and
any deficiencies or assessments asserted in writing by the IRS have either been
paid or are being contested in good faith by appropriate proceedings and are
adequately reserved against, it being understood that net operating loss
carryforwards attributable to such years remain subject to disallowance by the
IRS. All other Taxes due and payable by or on behalf of the Company have either
been paid or adequately reserved for or are being contested in good faith by
appropriate proceedings as set forth on Schedule 3.18. (except for such Taxes
which are in the aggregate immaterial in amount). Except as provided in Schedule
3.18., the Company has not given any waiver which has not yet expired of any
statute of limitations relating to the assessment or payment of Taxes. The
Company has not, with regard to any property held, acquired or to be acquired by
it, filed a consent pursuant to Section 341(f) of the Code or any predecessor
statute. The Company is not a party to any tax-sharing or similar agreement with
any Person.
3.19. Absence of Certain Interests of Affiliated Parties. Except as
set forth on Schedule 3.19, no present or former stockholder, partner, director,
officer or employee of the Company individually owns or has any proprietary,
financial or other interest, direct or indirect, in whole or in part, in any
Intangible Property, or in any application for a grant or registration of any
patent, trademark, trade name, service ▇▇▇▇, copyright or other Intangible
Property, which the Company owns, possesses or uses in its operations as
heretofore, now or proposed to be conducted. None of the present or former
stockholders, partners, joint venturers, directors or officers of the Company,
nor any related party of any of the foregoing, is indebted to the Company, and
the Company is not indebted or has any other liability to any such Person,
except (i) pursuant to the express terms of the Contracts listed on Schedule
3.22 or Schedule 3.18 and (ii) except as set forth on Schedule 3.19, liabilities
to directors or officers for compensation for services in such capacity rendered
since the end of the last calendar month.
3.20. Employee Matters.
3.20.1. The names of and the IRS identification numbers of (i)
all "employee pension benefit plans", as defined in Section 3(2) and
subject to Title IV of the Employee Retirement Income Security Act
of 1984, as amended ("ERISA"), which have been maintained or
contributed to by the Company during any of the last five years (the
"Pension Plans"), (ii) all other "employee pension benefit plans" as
defined in Section 3(2) of ERISA which have been maintained or
contributed to by the Company during any of the last five years, and
(iii) all other employee benefit plans (including all "employee
welfare benefit plans" as defined in Section 3(1) of ERISA and all
other "employee benefit plans" as defined in Section 3(3) of ERISA)
which have been maintained or contributed to by the Company and (a)
which currently exist or (b) for which any continuing liabilities
exist (all of which plans described in clauses (i), (ii) and (iii)
are referred to collectively as the "Company Plans"), are listed on
Schedule 3.20 hereto. Except as otherwise indicated on Schedule
3.20, none of the Pension Plans is a "multi-employer plan" as
defined in Section 4001(a)(3) of ERISA or single-employer plan
subject to Section 4063 of ERISA, and
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the Company has not incurred or is expected to incur any withdrawal
liability under ERISA with respect to any "multi-employer plan" or
any single-employer plan subject to Section 4063 of ERISA.
3.20.2. Favorable determination letters from the IRS with
respect to the status of each Pension Plan which is intended to
qualify under Section 401 of the Code have been received. The
Company is not aware of any facts which would adversely affect the
qualified status of any Pension Plan that is intended to so qualify.
3.20.3. The Company has not incurred in connection with the
termination of a Pension Plan, and the Company has no knowledge of
any event or condition which would be reasonably likely to cause,
any liability to the Pension Benefit Guaranty Corporation (the
"PBGC") or otherwise under ERISA. Except as set forth in Schedule
3.20., were any Pension Plan to terminate on the date hereof, the
Company would not incur any material liability to the PBGC or
otherwise under ERISA, nor be required to contribute any material
additional amounts to any Pension Plan in order to terminate such
Pension Plan.
3.20.4. There are no pending claims, lawsuits or
investigations that have been asserted or instituted against the
assets of any of the trusts under the Company Plans or against the
Company or any fiduciary of any of the Company Plans with respect to
the operation of the Company Plans.
3.20.5. The Company Plans have been maintained and
administered in all material respects in accordance with their terms
and with all provisions of ERISA and the Code or any predecessor
statute (including rules and regulations under ERISA, the Code and
any predecessor statute) applicable thereto and, to the knowledge of
the Company, neither the Company nor any "party in interest" or
"disqualified person" (within the meaning of Section 4975 of the
Code or Title I, Part 4 of ERISA) within the control of the Company
with respect to the Company Plans has engaged in a "prohibited
transaction" within the meaning of Section 4975 of the Code or Title
I, Part 4 of ERISA. Without limiting the generality of the
foregoing, none of the Pension Plans has incurred a material
"accumulated funding deficiency" within the meaning of Section 302
of ERISA or Section 412 of the Code whether or not waived; no
Pension Plan has been the subject of a "reportable event" as defined
in Section 4043 of ERISA, as to which notices would be required to
be filed with the PBGC and all required contributions under each
Pension Plan for all periods through and including the Issue Date
have been made.
3.21. Insurance. The properties and operations of the Company are
insured under various policies of general liability and other forms of insurance
covering such risks as are usually insured against by prudent companies engaged
in the businesses and activities in which the Company is engaged, and as of the
Closing Date, premiums are past due. The Company has not
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been refused any insurance, no request for coverage has been limited, by an
insurance carrier to which it has applied for insurance or with which it has
carried insurance during the past five years.
3.22. Contracts and Commitments.
3.22.1. Except as set forth on Schedule 3.22.1. (without
duplication) and as contemplated by the Transaction Documents, the
Company is not a party to, otherwise subject to, bound by, obligated
or liable under or entitled to any rights or benefits under, and
none of the properties or businesses of the Company are subject to,
any of the following:
(i) written Contract with any present or former officer,
employee or consultant or for the employment of any Person,
including any consultant or any oral contract with any such
Person which is not terminable at will by the Company which is
a party thereto without any payment of any kind;
(ii) Contract for the future purchase of, or payment
for, supplies, products or services having a total value or
involving total payments or costs of $100,000 or more in any
one case or in the aggregate for all Contracts which are
related or which are with the same Person or group of
affiliated Persons;
(iii) Contract continuing over a period of more than six
months from the date hereof having a total value or involving
total payments or costs of $100,000 or more in any one case or
in the aggregate for all Contracts which are related or which
are with the same Person or a group of affiliated Persons;
(iv) distribution, dealer, representative or agency
Contract which, individually or together with one or more such
Contracts which are related or are with the same Person or
group of affiliated Persons, is material (except for the
Licenses);
(v) lease under which the Company is either lessor or
lessee of any real property or any material personal property
having annual lease payments in excess of $100,000;
(vi) note, debenture, bond or other security or evidence
of indebtedness, equipment trust agreement, letter of credit
agreement, loan agreement, pledge or security agreement,
mortgage or other Contract pursuant to which any material
contingent obligation or any other Debt of the Company to any
other Person or of any other Person to the Company was
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incurred or may be incurred in the future or otherwise
relating to any such contingent obligation or other Debt;
(vii) Contract for any capital expenditure or leasehold
improvement in excess of $100,000 per year in any single case
or $100,000 per year in the aggregate for all cases;
(viii) Contract limiting or restraining the Company from
engaging in any business or competing in any manner generally
or in any specific geographic area or obligating the Company
to present any business or other opportunity to any other
Person or grant or offer to grant any other Person any
participation or other interest in any business or other
opportunity;
(ix) Contract pursuant to which any Person has a right
of first refusal, a "tag-along" right or any similar right
with respect to any proposed disposition by the Company of any
equity interest in the Company or of any other property of the
Company;
(x) Contract which relates in whole or in part to any
License or Intangible Property;
(xi) Contract with any labor union;
(xii) bonus, pension, profit-sharing, retirement, stock
purchase, stock option, deferred compensation, stock bonus,
stock or equity appreciation plan, phantom stock or equity
interest plan, death benefit, disability, insurance, medical
reimbursement, fringe benefit plan, or similar plan, program
or Contract in effect with respect to its employees or the
employees of others, except for the Company Plans;
(xiii) Contract which provides for "golden parachute" or
similar benefits;
(xiv) Contract relating to the mortgaging, pledging or
other placing of a lien on any properties of the Company;
(xv) Contract with or for the benefit of any present or
former stockholder (other than the Investors or their
respective Affiliates), partner, director or officer of the
Company or any Affiliate of any such Person, except for the
Company Plans, and except for Contracts exclusively between
and for the benefit Company and disclosed on any Schedule;
(xvi) Material Contract not made in the ordinary course
of business.
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3.22.2. Schedule 3.22.2. hereto lists all material Licenses
material to the operation to the Company's business and identifies
the grantor of each thereof.
3.22.3. Except as set forth on Schedule 3.22.3., each of the
Licenses, Contracts, plans and other items identified on Schedule
3.22.1. or Schedule 3.22.2 is in full force and effect, valid and
enforceable in accordance with its terms; the Company is, and to the
Company's knowledge all other parties thereto are, in compliance
with the material provisions thereof; the Company is not, and to the
Company's knowledge no other party thereto is, in default in the
performance, observance or fulfillment of any agreement, covenant,
obligation, commitment or condition contained therein; and to the
knowledge of the Company no event has occurred which, with or
without the giving of notice or lapse of time or both, would
constitute a default or event of default thereunder, except for
defaults or events of default which are not, individually or in the
aggregate, material. Furthermore, no such License, Contract, plan or
other item contains, in the reasonable opinion of the Company, any
material requirement, commitment, condition or other provision with
which there is a reasonable likelihood the Company or, to the
knowledge of the Company, any other party thereto will be unable to
comply or with which there is a reasonable likelihood the Company or
to the knowledge of the Company, any other party thereto will be
able to comply only at an economic loss.
3.23. Labor Matters. The Company has not suffered any strike,
slowdown, picketing or work stoppage by any union or other group of employees
affecting the business of the Company, and to the Company's knowledge no such
event or action is threatened. There are no unfair labor practice charges or
grievances pending or in process or threatened by or on behalf of any employee
or group of employees of the Company, and no written complaints received by the
Company, or threatened, or, with respect to unresolved complaints, on file with
any federal, state or local governmental agency, alleging employment
discrimination or sexual harassment by the Company. The Company is not a party
to any collective bargaining agreement.
3.24. Restricted Payments and Agreements.
3.24.1. Except (i) as set forth on Schedule 3.11.2 and
Schedule 3.4, (ii) for transactions contemplated by the Transaction
Documents and (iii) for the Concurrent Transactions, since December
31, 1995 there has not been (i) any declarations or dividend payment
or other distribution of assets, properties, cash, rights,
obligations or securities on account of any capital stock of the
Company, (ii) except as set forth on the balance sheet of the
Company dated as of December 31, 1995, any payment or distribution
on account of any Debt for or in respect of borrowed money, (iii)
any purchase, redemption or acquisition for value or any payment in
respect of any shares of any class of its capital stock or any
warrants, rights or options to acquire any such shares, (iv) except
as set forth on Schedule 3.24, any purchase, redemption, prepayment,
defeasance or acquisition for value of any Debt for or in respect of
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borrowed money, (v) any material adverse change in the business of
the Company, (vi) any amendment, termination or waiver of any rights
of material value to the Company, (vii) any termination of
employment of any key employee, (viii) any capital expenditures or
commitments by the Company other than in the ordinary course of
business (including in connection with installation of monitors) and
(ix) any agreement or understanding, whether in writing or
otherwise, for the Company to take any of the actions specified in
items (i) through (viii).
3.24.2. Except for the Transactions the Company has not (i)
entered into any agreement with any Person which, in the absence of
a default thereunder, would legally restrict the Company from paying
dividends or making redemption payments on the Series B Preferred
Stock on each date contemplated by the Series B Certificate of
Designation or from fully performing on a timely basis any of its
obligations with respect to the Series B Preferred Stock, the Series
A Preferred Stock the common stock of the Company or would condition
or otherwise limit or restrict the ability of the Company to (a) pay
dividends or make any other distributions permitted by applicable
law to the Company; (b) pay any Debt owed to the Company; (c) make
loans or advances to the Company; or (d) transfer any of its
property or assets to the Company; or (ii) otherwise create or
suffer to become effective any consensual arrangement which would
have any effect referred to in subclause (i) of this Section 3.24.2.
3.25. Conduct of Business. The Company Parties are principally
engaged in only the business of electronic out-of-home media comprised of video
displays on remote public locations linked by a communications network. The
Company also has ownership interests in the businesses listed on Schedule 3.25.
3.26. Environmental Matters. The Company (i) has not received
written notice or otherwise learned of any claim, demand, action, event,
condition, report or investigation indicating or concerning any potential or
actual liability of any Company Party which individually or in the aggregate
could reasonably be expected to have a Material Adverse Effect arising in
connection with (a) any non-compliance with or violation of the requirements of
any applicable federal, state and local environmental health and safety laws and
regulations or (b) the release or threatened release of any toxic or hazardous
waste, substance or constituent into the environment, (ii) to the knowledge of
the Company, does not have any threatened or actual liability in connection with
the release or threatened release of any toxic or hazardous waste, substance or
constituent into the environment which individually or in the aggregate could
reasonably be expected to have a Material Adverse Effect, (iii) has not received
notice of any federal or state investigation evaluating whether any remedial
action is needed to respond to a release or threatened release of any toxic or
hazardous waste, substance or constituent or other substance into the
environment for which the Company is or may be liable, or (iv) has received
notice that the Company is or may be liable to any Person under the
Comprehensive Environmental Response Compensation and Liability Act, as amended,
42 U.S.C. Section 9601 et seq. or any analogous state law.
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3.27. [Intentionally Omitted].
3.28. Key Employees; Deferred Compensation. None of the officers or
key employees of the Company set forth on Schedule 3.28. hereto, to the
Company's knowledge, presently intends to terminate his or her employment by the
Company. The Company does not have any cash deferred compensation obligations to
any director, officer or employee of the Company.
3.29. Other Agreements. All representations and warranties of the
Company contained in any of the Transaction Documents (other than this
Agreement) are true and accurate in all material respects. Each of the
Transaction Documents (other than this Agreement) is in full force and effect.
The Company has complied in all material respects with all of its covenants and
agreements contained in each of the Transaction Documents (other than this
Agreement). As of or immediately prior to the Closing, (i) all documents
relating to the Concurrent Transactions are in full force and effect and have
been executed and delivered in the respective forms furnished to the Investors,
(ii) no term, condition or provision of any of the documents relating to the
Concurrent Transactions has been amended, modified or waived, expressly or by
implication, (iii) all conditions to the consummation of the Concurrent
Transactions have been satisfied (or waived with the concurrence of the
Investors), (iv) each Investor has received a copy of each document required to
be delivered to the Investors pursuant to the Concurrent Transactions and (v)
there exists no default, event of default, breach or violation (or any event
which, with notice, lapse of time or otherwise, could result in a default, event
of default, breach or violation) under any of the documents relating to the
Concurrent Transactions.
3.30. Use of Proceeds. The Company shall use the proceeds of the
sale of the Investors' Shares to the Investors for the purposes specified in
Schedule 3.30.
3.31. Filing of Series B Certificate of Designation, Series A
Certificate of Amendment and Certificate of Amendment All actions necessary in
order to duly and validly authorize and designate the Preferred Stock,
including, without limitation, all necessary corporate action on the part of the
Company and the filing with the Delaware Secretary of State of the Series B
Certificate of Designation, the Series A Certificate of Amendment and the
Certificate of Amendment, has been taken and each of the Series B Certificate of
Designation and the Series A Certificate of Amendment and the Certificate of
Amendment is in full force and effect in the forms attached hereto as Exhibit E,
Exhibit I and Exhibit A, respectively and not been amended, modified or
supplemented.
3.32. Availability of Documents. The Company has made available to
the Investors copies of all documents, including all Contracts, insurance
policies, leases, plans, instruments, and Licenses listed in any Schedule or
otherwise referred to herein. Such copies are true and complete and include all
amendments, supplements and modifications thereto or waivers currently in effect
thereunder. The Company has delivered to the Investors, simultaneously with the
Closing, (i) a certificate, dated the Issue Date, of the Chief Executive
Officer/President and the Secretary of the Company (a) attaching copies,
certified by such officers as true and complete, of the resolutions of
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the Board of Directors and stockholders of the Company in connection with the
authorization and approval of the execution, delivery and performance of the
Transaction Documents and consummation of the Transactions and of all other
documents evidencing all necessary corporate action taken in connection
therewith, (b) attaching copies, certified by such officers as true and
complete, of the Certificate of Incorporation, as amended and By-Laws of the
Company, (c) which includes a representation by such officers that the copies of
the Certificate of Incorporation and ByLaws of the Company, as previously
provided to the Investors, are true and complete in all respects and, that the
copies of the Certificate of Incorporation, as amended conform to the original
documents filed with the Secretary of State (which representation shall
reference each document by name and date of execution and (d) setting forth the
incumbency of the officer or officers of the Company who have executed and
delivered this Agreement and each other Transaction Document, including therein
a signature specimen of each such officer or officers, (ii) copies, certified by
the Secretary of State of the State of Delaware, or other appropriate official
of the jurisdiction of incorporation of the Company of the Certificate of
Incorporation as of a date not more than two Business Days prior to the Closing
Date, (iii) a long form certificate of existence and good standing (including
tax good standing), dated the Closing Date of the Secretary of State or other
appropriate official of the jurisdiction of incorporation of such Company Party
and (iv) an opinion of counsel to the Company on the form substantially as set
forth in Exhibit J hereto.
Section 4. Representations and Warranties of the Investor. Each Investor,
severally and not jointly, represents and warrants to the Company as follows:
4.1. Authority. This Agreement is the valid and binding agreement of
such Investor, enforceable in accordance with its terms, except insofar as
enforcement may be affected by bankruptcy, reorganization or similar laws
relating to creditors' rights in general, and general principles of equity, and
no consent, authorization or approval of any other person to such consummation
of the transactions contemplated hereby is required. Such Investor has taken all
actions necessary to authorize the execution, delivery and performance of this
Agreement by such Investor and no other proceedings on the part of such Investor
are necessary to authorize the execution and delivery of this Agreement and the
transactions contemplated hereby.
4.2. Investment Intent. (i) Such Investor is an "accredited"
investor as defined in Regulation D promulgated under the Securities Act of
1933, as amended; (ii) such Investor has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
uses of its investment in the Company; (iii) such Investor understands and is
able to bear the economic risks associated with such investment; (iv) such
Investor has, on the date hereof, sufficient financial resources to carry out
the purchase of the shares purchased by it as contemplated in this Agreement;
(v) such Investor is purchasing the Investors' Shares it is purchasing for
investment, for its own account, and not with a view to the public distribution
or resale thereof in violation of the Securities Act or any applicable state
securities law.
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4.3. Access to Information. Such Investor has been furnished with or
given access to all information that it has requested regarding the Company's
current operations, business plans and prospects, in addition to the information
contained herein.
Section 5. No Joint Obligations.
5.1. Obligations Several, Not Joint. Each Investor shall be (i)
obligated hereunder only with respect to the purchase of the number and kind of
Investors' Shares set forth in Schedule 1 and no Investor shall have any
liability with respect to any other Investors' obligations hereunder and (ii)
separately and independently entitled to rely on the representations and
warranties of each other party made to such Investor in this Agreement and to
the benefit of all covenants and agreements of each other party made with such
Investor herein.
Section 6. Indemnification.
6.1. Agreement of Company to Indemnify.
6.1.1.The Company agrees to defend, protect, indemnify and
hold harmless each Indemnified Party (as defined below) from and
against any and all liabilities, obligations, losses, deficiencies,
claims, investigations, suits, actions, proceedings, damages,
assessments, penalties, judgments, costs, disbursements and expenses
of any kind or nature (including reasonable fees and disbursements
of counsel in connection with preparing for, defending against or
prosecuting), and amounts paid or agreed to be paid in settlement
of, any claim, action, suit, hearing, proceeding or investigation
against such Indemnified Party or any action, suit or proceeding
initiated by such Indemnified Party in connection with securing,
exercising, enjoying and enforcing such Indemnified Party's rights,
benefits and privileges or enforcing any Company Party's obligations
and liabilities under any Transaction Document, in each case
including appeals, whether direct, indirect or consequential, in any
manner resulting from, arising out of, based upon or related or
attributable to: (i) any breach or inaccuracy of any representation
or warranty of, or any breach or failure to perform any covenant,
agreement or obligation, of the Company contained in this Agreement
or any other Transaction Document; (ii) the invalidity or
unenforceability, or alleged invalidity or unenforceability, of any
provision of any Transaction Document; (iii) any liability or
obligation, or alleged liability or obligation, of any Company Party
to, or claim by, any holder or former holder of capital stock,
equity interests or other securities of any Company Party or any
Affiliate of any Company Party, relating to any event, fact or
circumstances occurring or existing at any time at or prior to the
time of the Closing under this Agreement or by reason of
consummation of any of the transactions contemplated by the
Transaction Documents; or (iv) any liability or obligation, or
alleged liability or obligation, of any Investor to, or claim by,
any holder or former holder of capital stock, equity interests or
other securities, or any creditor of or claimant against the
-22-
Company or any predecessor corporation of any thereof, relating to
any event, fact or circumstances occurring or existing at any time
at or prior to the time of the Closing under this Agreement or by
reason of consummation of any of the transactions contemplated by
the Transaction Documents.
6.1.2. As used in this Agreement, the term "Indemnified
Parties" includes (i) each Investor, (ii) each partner of any
Investor who at any time may acquire any of the Investors' Shares by
reason of the dissolution of or any distribution by such Investor,
(iii) the respective Affiliates, partners (general and limited),
directors and officers of the foregoing Persons and their respective
shareholders, directors and officers and (iv) the respective
successors, heirs, executors and legal representatives of the
foregoing. For purposes of this Section 6.1., each reference to any
"Company Party" includes the Company and each and every Person
which, at any time prior to the date hereof, (i) was consolidated
with or merged with or into the Company, (ii) was consolidated with
one or more other entities in a transaction resulting in the
formation of the Company, (iii) was a party to a binding share
exchange with the Company, (iv) sold or otherwise transferred all or
substantially all of its properties to the Company or (v) was a
party to any transaction by virtue of which the Company succeeded
to, assumed or otherwise incurred whether by contract or agreement,
operation of law or otherwise, liability for any Debt, liabilities
and obligations of such Person, including liability for any taxes
payable by such Person, obligations or liabilities of such Person
with respect to any employee benefit plan or obligations or
liabilities of such Person under any Requirements of Law.
6.2. Defense of Third-Party Claims. Each Indemnified Party will give
the Company prompt notice of any third-party claim, investigation, action, suit,
hearing or proceeding with respect to which such Indemnified Party seeks
indemnification pursuant to Section 6.1., but the failure to give such notice
shall not impair any of the rights or benefits of such Indemnified Party under
Section 6.1. except to the extent such failure adversely affects the Company's
ability to defend such claim or increases the amount of such liability. In the
case of any third-party claims as to which indemnification is sought by any
Indemnified Party, such Indemnified Party shall be entitled, at the sole expense
and liability of the Company, to exercise full control of the defense,
compromise or settlement of any third-party claim, investigation, action, suit,
hearing or proceeding unless the Company within a reasonable time after the
giving of such notice by the Indemnified Party shall: (i) deliver a written
confirmation to such Indemnified Party that the indemnification provisions of
Section 6.1. are applicable to such claim, investigation, action, suit, hearing
or proceeding and that the Company will indemnify such Indemnified Party in
respect of such claim, investigation, action or proceeding pursuant to the terms
of such Section without asserting any challenge, defense, counterclaim or offset
against the Indemnified Party, (ii) notify such Indemnified Party in writing of
the intention of the Company to assume the defense thereof and (iii) retain
legal counsel reasonably satisfactory to such Indemnified Party to conduct the
defense of such claim, investigation, action, suit, hearing or proceeding. If
the Company so assumes the defense of any such claim, investigation, action,
suit, hearing or proceeding in accordance herewith, then such Indemnified
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Party shall cooperate with the Company in any manner reasonably requested in
connection with the defense, compromise or settlement thereof. If the Company so
assumes the defense of any such claim, investigation, action, suit, hearing or
proceeding, the Indemnified Party shall have the right to employ separate
counsel and to participate in (but not control) the defense, compromise, or
settlement thereof, but the fees and expenses of such counsel shall be the
expense of such Indemnified Party unless (i) the Company has agreed to pay such
fees and expenses, (ii) any relief other than the payment of money damages is
sought against such Indemnified Party or (iii) the named parties to any such
claim, investigation, action, suit, hearing or proceeding (including any
impleaded parties) include an Indemnified Party and the Company or one or more
other Indemnified Parties, and such Indemnified Party shall have been advised by
its counsel that there is a conflict of interest between such Indemnified Party
and the Company or any such other Indemnified Party in the conduct of the
defense thereof, and in any such case the reasonable fees and expenses of such
separate counsel shall be borne by the Company. Subject to the penultimate
sentence of this Section 6.2., if the Company elects to direct the defense of
any such claim, investigation, action, suit, hearing or proceeding, the
Indemnified Party shall not pay, or permit to be paid, any part of any claim or
demand arising from such asserted liability unless the Company withdraws from
the defense of such asserted liability, or unless a final judgment from which no
appeal may be taken by or on behalf of the Indemnified Party is entered against
the Indemnified Party for such liability. If the Company does not elect to
defend, or if, after commencing or undertaking any such defense, the Company
fails to prosecute or withdraws from such defense, the Indemnified Party shall
have the right to undertake the defense or settlement thereof, at the Company's
expense. If the Indemnified Party assumes the defense of any such claim,
investigation, action, suit, hearing or proceeding pursuant to this Section 6.2.
and proposes to settle the same prior to a final judgment thereon or to forgo
appeal with respect thereto, then the Indemnified Party shall give the Company
prompt written notice thereof and the Company shall have the right to
participate in the settlement, assume or reassume the defense thereof or
prosecute such appeal, in each case at the Company's expense. The Company shall
not, without written consent of such Indemnified Party, settle or compromise or
consent to entry of any judgment with respect to any such claim, investigation,
action, suit, hearing or proceeding (i) in which any relief other than the
payment of money damages is or may be sought against such Indemnified Party or
(ii) which does not include as an unconditional term thereof the giving by the
claimant, Person conducting such investigation or initiating such hearing,
plaintiff or petitioner to such Indemnified Party of a release from all
liability with respect to such claim, investigation, action, suit or proceeding
and all other claims or causes of action (known or unknown) arising or which
might arise out of the same facts.
6.3. Periodic Payments. Any indemnification required by Section 6.1.
for costs, disbursements or expenses of any Indemnified Party in connection with
investigating, preparing to defend or defending any claim, action, suit,
hearing, proceeding or investigation shall be made by periodic payments during
the course of the investigation or defense as and when bills are received or
costs, disbursements or expenses are incurred; provided, however, that such
Indemnified Party shall repay any such periodic payments made to it pursuant to
this Section 6.3. to the extent that it ultimately is determined that the amount
thereof exceeds that to which such Indemnified Party is entitled pursuant to
Section 6.1.
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6.4. Termination of Indemnification. The representations and
warranties of the Company made in or pursuant to this Agreement or any other
Transaction Document shall survive the Closing, for the following respective
periods (subject to the last sentence of this Section 6.4), in each case
regardless of any investigation that may have been or may be made by or on
behalf of any Investor: (i) in the case of the representations and warranties
made in Section 3.1, Section 3.2, Section 3.3, Section 3.4 or Section 3.10,
indefinitely; (ii) in the case of the representations and warranties made in
Section 3.18, Section 3.20 or Section 3.26, until the expiration of the
last-to-expire of all statute of limitations periods applicable to claims that
may be asserted against the Company or any Investor in respect of any matter
covered thereby and (iii) in all other cases, until the first anniversary of the
date of the Closing. The representations and warranties of the Investors made in
or pursuant to this Agreement shall survive until the first anniversary of the
date of the Closing. All covenants, agreements, obligations and commitments of
the Company made in or pursuant to this Agreement, in any other Transaction
Document shall survive indefinitely and without limitation (except as may
otherwise be expressly provided for by their terms). Any representation,
warranty, covenant, agreement, obligation or commitment which is the subject of
a claim or dispute asserted in writing prior to the expiration of the applicable
of the above-stated periods shall survive with respect to such claim or dispute
until the final resolution thereof.
Section 7. Legends.
7.1. Securities Act Legend. Except as otherwise provided in this
Section 7.1. or in the Stockholders' Agreement, each certificate or other
instrument evidencing the Investors' Shares shall bear a legend in substantially
the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
RESTRICTIONS STATED IN (AND ARE TRANSFERABLE ONLY UPON COMPLIANCE
WITH) THE STOCK PURCHASE AGREEMENT, DATED SEPTEMBER 25, 1996. THE
SHARES HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR OTHER SECURITIES LAWS. THEY ARE 'RESTRICTED
SECURITIES' WITHIN THE MEANING OF SEC RULE 144. THE SHARES MAY NOT
BE SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND SUCH LAWS OR PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE ACT AND SUCH LAWS, THE
AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF
THE COMPANY."
Any holder of any such certificate or instrument bearing the foregoing legend
shall be entitled to promptly receive from the Company, without expense, a new
certificate or instrument of identical tenor representing the same kind of
securities and the same number or other amount thereof not bearing such legend
if such securities shall have been effectively registered under the Securities
Act
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and are sold or otherwise disposed of in accordance with the intended method of
disposition by the seller thereof set forth in the registration statement, or
such securities may be freely transferred by such holder by reason of an
exemption from registration under the Securities Act, or such legend otherwise
is not required in order to ensure compliance with the Securities Act. The
opinion of ▇▇▇▇▇ & ▇▇▇▇▇, L.L.P., or other legal counsel selected by such holder
and reasonably satisfactory to the Company with respect to any of the foregoing
or with respect to any question concerning whether any proposed transfer of any
such securities would violate the Securities Act shall be sufficient to
determine the issue.
Section 8. Miscellaneous.
8.1. Survival of Provisions. The respective representations,
warranties, covenants and agreements of the parties made herein or pursuant
hereto shall remain operative and in full force and effect regardless of (i) any
investigation made at any time by or on behalf of any Investor or any other
Person and (ii) the Closing under this Agreement and acceptance of any of the
Investors' Shares and payment therefor.
8.2. Determinations Generally. Unless otherwise expressly provided
herein, all decisions and determinations required or permitted to be made by any
Investor hereunder (including any decision as to whether to give any consent or
approval) shall be made by such Investor in its sole discretion.
8.3. Communications. All notices and other communications required
or permitted by this Agreement shall be in writing, and (i) if to the Company,
to The ▇▇▇▇▇▇ Group, Inc., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
Attention: Chairman, or to such other address as the Company may designate in a
written notice to each Stockholder, or (ii) if to any Investor, to such Investor
at such Investor's address appearing on Schedule 1 hereto or supplied by such
Investor in writing to the Company for the purpose of such notice. All notices
and other communications required or permitted by this Agreement shall be deemed
to have been duly given if personally delivered to the intended recipient at the
proper address determined pursuant to this Section 8.3. or sent to such
recipient at such address by registered or certified mail, return receipt
requested, Express Mail, Federal Express or similar overnight delivery service
for next Business Day delivery or by telegram, telex or facsimile transmission
and will be deemed given, unless earlier received: (1) if sent by certified or
registered mail, return receipt requested, five calendar days after being
deposited in the United States mail, postage prepaid; (2) if sent by Express
Mail, Federal Express or similar overnight delivery service for next Business
Day delivery, the next Business Day after being entrusted to such service, with
delivery charges prepaid or charged to the sender's account; (3) if sent by
telegram or telex or facsimile transmission, on the date sent and (4) if
delivered by hand, on the date of delivery.
8.4. Fees, Costs, Expenses and Taxes.
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▇.▇.▇.▇▇ the Closing Date, the Company covenants and agrees to
pay all of the costs and expenses and the reasonable out-of-pocket
expenses incurred by the Investors in connection with the
negotiation, preparation, review, printing, typing, reproduction,
execution, delivery, collection and enforcement of this Agreement
and the other Transaction Documents and any amendment or supplement
to or modification of any of the foregoing and any and all other
agreements, instruments, certificates and other documents furnished
pursuant hereto or thereto or in connection herewith or therewith
and provided, however, that the Company's maximum aggregate
obligation under this Section 8.4.1. shall be limited to $75,000.
8.4.2.The Company agrees to pay any and all stamp, transfer
and other similar taxes payable or determined to be payable in
connection with the execution and delivery of this Agreement, or the
issuance and sale of the Securities, and shall save and hold each
Investor harmless from and against any and all liabilities with
respect to or resulting from any delay in paying, or omission to
pay, such taxes.
8.5. Brokerage. The Company represents and warrants that no broker,
finder or investment banker is or will be entitled to any brokerage, finder's or
similar fee or commission in connection with any of the transactions
contemplated by the Transaction Documents based upon arrangements made by and on
behalf of such party.
8.6. Incorporation by Reference. All schedules and exhibits to this
Agreement and all documents delivered pursuant to or referred to in this
Agreement are incorporated herein by reference and made a part hereof.
8.7. Binding Effect; Successors and Assigns; Entire Agreement.
Except as expressly provided in this Agreement, nothing in this Agreement,
express or implied, is intended or shall be construed to confer upon or give any
person (including creditors, stockholders and Affiliates of the Company), other
than the parties to this Agreement, any remedy or claim under or by reason of
this Agreement or any term, covenant or condition hereof, all of which shall be
for the sole and exclusive benefit of the parties to this Agreement. This
Agreement and all of the provisions hereof shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns and executors, administrators and heirs; provided that, except as
otherwise specifically permitted or contemplated pursuant to this Agreement, (i)
neither this Agreement nor any of the rights, interests or obligations of the
Company hereunder shall be assigned by the Company without the prior written
consent of each Investor and (ii) neither this Agreement (other than Section
2.2) nor any of the rights, interests or obligations of the Investors (other
than such rights, interests and obligations in connection with Section 2.2), of
the Investors hereunder may be assigned by the Investors without the prior
written consent of the Company other than to an Affiliate of any Investor. This
Agreement and the other Transaction Documents collectively set forth the entire
agreement and understanding between the parties as to the subject matter hereof
and merge and supersede all prior discussions, agreements (including the letter
agreement between the Company and the Investors dated August 6, 1996 and any
confidentiality agreement previously
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executed by the Investors or any of them) and understandings of any and every
nature among them with respect to such subject matter.
8.8. Amendments and Waivers. The provisions of this Agreement
(including the provisions of this sentence), may not be amended, modified or
supplemented, and waivers of or consents to departures from the provisions
hereof or thereof may not be given unless approved in writing by the Majority
Investors.
8.9. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York,
regardless of the laws that might be applicable under principles of conflicts of
law except to the extent that Delaware General Corporation Law mandatorily
applies.
8.10. Interpretation. The headings of the sections contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not affect the meaning or interpretation of this
Agreement.
8.11. No Implied Waivers. No action taken pursuant to this
Agreement, including, without limitation, any investigation by or on behalf of
any party, shall be deemed to constitute a waiver by the party taking such
action of compliance with any representations, warranties, covenants or
agreements contained herein or made pursuant hereto. The waiver by any party
thereto of a breach of any provision of this Agreement shall not operate or be
construed as a waiver of any preceding or succeeding breach and no failure by
any party to exercise any right or privilege hereunder shall be deemed a waiver
of such party's rights or privileges hereunder or shall be deemed a waiver of
such party's rights to exercise the same at any subsequent time or times
hereunder.
8.12. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to constitute one and the same agreement.
8.13. Attorney's Fees. In any action or proceeding brought to
enforce any provision of this Agreement, and in any action or proceeding arising
under or with respect to this Agreement where any provision hereof or thereof is
validly asserted as a defense, the successful party shall be entitled to recover
reasonable attorneys' fees in addition to any other available remedy.
8.14. Further Assurances. Each party shall cooperate and take such
actions as may be reasonably requested by another party in order to carry out
the provisions and purposes of this Agreement and the transactions contemplated
hereby.
8.15. Pronouns. Whenever the context may require, any pronouns used
herein shall be deemed also to include the corresponding neuter, masculine or
feminine forms.
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8.16. Use of Certain Words. The use of the words "hereof," "herein,"
"hereunder," and words of similar import shall refer to this entire Agreement,
and not to any particular article, section, subsection, clause, or paragraph of
this Agreement, unless the context clearly indicates otherwise.
8.17. Severability. If any provision of this Agreement or the
application thereof to any person or circumstance is held by a court of
competent jurisdiction to be invalid, void or enforceable, the remaining
provisions hereof, or the application of such provision to persons or
circumstances other than those as to which it has been held invalid or
unenforceable, shall remain in full force and effect and shall in no way be
affected, impaired or invalidated thereby, provided that, if any provision
hereof or the application thereof shall be so held to be invalid, void or
unenforceable by a court of competent jurisdiction, then such court may
substitute therefor a suitable and equitable provision in order to carry out, so
far as may be valid and enforceable, the intent and purpose of the invalid, void
or unenforceable provision. To the extent that any provision shall be judicially
unenforceable in any one or more states, such provision shall not be affected
with respect to any other state, each provision with respect to each state being
construed as several and independent.
8.18. Specific Performance. The parties agree that the provisions of
this Agreement shall be specifically enforceable, it being agreed by the parties
that the remedy at law, including monetary damages, for breach of such
provisions will be inadequate compensation for any loss and that any defense in
any action for specific performance that a remedy at law would be adequate is
waived.
8.19. Facsimile Signatures. This Agreement may be executed by
facsimile signatures.
[Signatures appear on next page]
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IN WITNESS WHEREOF, the parties hereto have executed this Stock
Purchase Agreement on the day and year first written above.
THE ▇▇▇▇▇▇ GROUP, INC.
By: __________________________________
Name:
Title:
21ST CENTURY COMMUNICATIONS T-E
PARTNERS, L.P.
By: SANDLER INVESTMENT
PARTNERS, L.P., General Partner
By: SANDLER CAPITAL
MANAGEMENT, General Partner
By: MJM MEDIA CORP., a
General Partner
By: __________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
21ST CENTURY COMMUNICATIONS
PARTNERS, L.P.
By: SANDLER INVESTMENT
PARTNERS, L.P., General Partner
By: SANDLER CAPITAL
MANAGEMENT, General Partner
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By: MJM MEDIA CORP., a
General Partner
By: __________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
21ST CENTURY COMMUNICATIONS
FOREIGN PARTNERS, L.P.
By: SANDLER INVESTMENT
PARTNERS, L.P., General Partner
By: SANDLER CAPITAL
MANAGEMENT, General Partner
By: MJM MEDIA CORP., a General Partner
By: __________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
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