EXHIBIT 2.2
STOCK PURCHASE AGREEMENT
by and between
COLLEGE MEDIA, INC.,
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
and
RARE MEDIUM GROUP, INC.
Dated as of November 12, 1999
TABLE OF CONTENTS
Page
SECTION 1. Sale and Purchase of Company Common Stock . . . . . . . . 1
SECTION 2. Payment of Purchase Price; Adjustments . . . . . . . . . . 1
2.1 Cash and Stock Consideration. . . . . . . . . . . . . 1
2.2 Adjustments to Consideration . . . . . . . . . . . . . 2
2.3 Closing Date Balance Sheet . . . . . . . . . . . . . . 2
2.4 Attorney-In-Fact; Return of Consideration. . . . . . . 4
2.5 Fractional Shares. . . . . . . . . . . . . . . . . . . 4
SECTION 3. Closing; Payment of Consideration . . . . . . . . . . . . . 4
3.1 Closing Date . . . . . . . . . . . . . . . . . . . . . 4
3.2 Deliveries at Closing; Stockholders' Obligations. . . 4
3.3 Deliveries at Closing; Purchaser's Obligations;
Post-Closing Delivery. . . . . . . . . . . . . . . . . 5
SECTION 4. Conditions to Obligations of Purchaser and the Stockholders 6
4.1 Conditions to the Obligations of the Purchaser . . . . 6
4.2 Conditions to Obligations of the Stockholders . . . . 7
SECTION 5. Representations and Warranties of the Company and the
Stockholders. . . . . . . . . . . . . . . . . . . . . . . . 8
5.1 Corporate Existence and Power . . . . . . . . . . . . 8
5.2 Corporate Authorization . . . . . . . . . . . . . . . 9
5.3 Governmental Authorization . . . . . . . . . . . . . . 9
5.4 Non-Contravention . . . . . . . . . . . . . . . . . . 9
5.5 Capitalization . . . . . . . . . . . . . . . . . . . . 10
5.6 Subsidiaries . . . . . . . . . . . . . . . . . . . . . 11
5.7 Financial Statements . . . . . . . . . . . . . . . . . 12
5.8 Absence of Certain Changes . . . . . . . . . . . . . . 12
5.9 No Undisclosed Material Liabilities . . . . . . . . . 13
5.10 Litigation . . . . . . . . . . . . . . . . . . . . . . 14
5.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . 14
5.12 Employee Benefit Plans . . . . . . . . . . . . . . . . 17
5.13 Compliance with Laws . . . . . . . . . . . . . . . . . 20
5.14 Finders' or Advisors' Fees . . . . . . . . . . . . . . 20
5.15 Environmental Matters . . . . . . . . . . . . . . . . 20
5.16 Intellectual Property Matters . . . . . . . . . . . . 21
5.17 Year 2000 Compliance Matters . . . . . . . . . . . . . 24
5.18 Related-Party Transactions . . . . . . . . . . . . . . 24
5.19 Title to Property and Assets . . . . . . . . . . . . . 25
5.20 Insurance . . . . . . . . . . . . . . . . . . . . . . 25
5.21 Ownership of Company Common Stock. . . . . . . . . . 25
SECTION 6. Several Representations and Warranties of the Stockholders 26
6.1 Validity, Power and Authority . . . . . . . . . . . . 26
6.2 Absence of Conflicts . . . . . . . . . . . . . . . . . 26
6.3 Valid Title . . . . . . . . . . . . . . . . . . . . . 27
6.4 Investment Representations . . . . . . . . . . . . . . 27
6.5 Acquisition for Own Account . . . . . . . . . . . . . 27
6.6 Ability to Protect Its Own Interests and Bear
Economic Risks . . . . . . . . . . . . . . . . . . . . 27
6.7 Access to Information . . . . . . . . . . . . . . . . 28
6.8 Expenses; No Brokers . . . . . . . . . . . . . . . . . 28
6.9 Offering of Securities. . . . . . . . . . . . . . . 28
SECTION 7. Representations and Warranties of the Purchaser ... . . . . 28
7.1 Power and Authority . . . . . . . . . . . . . . . . . 29
7.2 Organization and Standing . . . . . . . . . . . . . . 29
7.3 Authorization and Binding Obligation . . . . . . . . . 29
7.4 SEC Documents; Undisclosed Liabilities . . . . . . . . 29
7.5 Investment Representations . . . . . . . . . . . . . . 30
7.6 Acquisition for Own Account . . . . . . . . . . . . . 30
7.7 Ability to Protect Its Own Interests and Bear
Economic Risks . . . . . . . . . . . . . . . . . . . . 30
7.8 Accredited Investor . . . . . . . . . . . . . . . . . 31
7.9 Access to Information . . . . . . . . . . . . . . . . 31
SECTION 8. Covenants of The Company, The Stockholders and The
Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.1 Best Efforts . . . . . . . . . . . . . . . . . . . . . 31
8.2 Access to Information . . . . . . . . . . . . . . . . 32
8.3 Public Announcements . . . . . . . . . . . . . . . . . 32
8.4 Notices of Certain Events . . . . . . . . . . . . . . 33
SECTION 9. Covenants of the Company. . . . . . . . . . . . . . . . . . 33
9.1 Conduct of the Company . . . . . . . . . . . . . . . . 33
SECTION 10. Covenants of the Stockholders . . . . . . . . . . . . . . . 36
10.1 Compliance with Laws . . . . . . . . . . . . . . . . . 36
10.2 Third Party Transfers; Restrictive Legends . . . . . . 36
10.3 Blackout Period . . . . . . . . . . . . . . . . . . . 36
10.4 Conduct of Company. . . . . . . . . . . . . . . . . 36
SECTION 11. Covenants of the Purchaser. . . . . . . . . . . . . . . . . 37
11.1 Compliance with Laws . . . . . . . . . . . . . . . . . 37
11.2 Third Party Transfers; Restrictive Legends . . . . . . 37
11.3 Reports Under Securities Exchange Act of 1934. . . . . 37
SECTION 12. Registration, Transfer and Substitution of Certificates
for Shares. . . . . . . . . . . . . . . . . . . . . . . . . 38
12.1 Stock Register; Ownership of Shares . . . . . . . . . 38
12.2 Replacement of Certificates . . . . . . . . . . . . . 38
12.3 Notice of Proposed Transfer; Opinions of Counsel . . . 38
SECTION 13. Registration, Transfer and Substitution of Certificates
for Stock Consideration. . . . . . . . . . . . . . . . . . 39
13.1 Stock Register; Ownership of Stock Consideration . . . 39
13.2 Replacement of Certificates . . . . . . . . . . . . . 39
13.3 Notice of Proposed Transfer; Opinions of Counsel . . . 39
SECTION 14. Indemnification . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 15. Termination . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 16. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 42
16.1 Notices . . . . . . . . . . . . . . . . . . . . . . . 42
16.2 Survival of Representations and Warranties . . . . . . 44
16.3 Amendments; No Waivers . . . . . . . . . . . . . . . . 44
16.4 Expenses. . . . . . . . . . . . . . . . . . . . . . . 45
16.5 Successors and Assigns . . . . . . . . . . . . . . . . 45
16.6 Governing Law . . . . . . . . . . . . . . . . . . . . 45
16.7 Jurisdiction . . . . . . . . . . . . . . . . . . . . . 45
16.8 Waiver of Jury Trial . . . . . . . . . . . . . . . . . 46
16.9 Counterparts; Effectiveness . . . . . . . . . . . . . 46
16.10 Entire Agreement. . . . . . . . . . . . . . . . . . . 46
16.11 Captions. . . . . . . . . . . . . . . . . . . . . . . 46
16.12 Severability. . . . . . . . . . . . . . . . . . . . . 46
DEFINITIONS
Section
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AAA Section 2.3
Affiliate Section 5.11(t)
Agreement Recitals
Arbitrator Section 2.3
Attorney-in-Fact Section 2.4
Average Purchaser Stock Price Section 2.1(a)
Audits Section 5.11(e)
Blackout Period Section 10.3
Cash Consideration Section 2.1(b)
Cash Consideration Reduction Section 2.2
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Section 4.1(d)
Closing Section 2.2
Closing Date Section 3.1
Closing Date Balance Sheet Section 2.3
▇▇▇.▇▇▇ Section 4.1(d)
Company Preamble
Company Balance sheet Section 5.7
Company Common Stock Recitals
Company Content Section 5.16(a)
Company Convertible Security Section 5.5
Company Employee Plans Section 5.12(a)
Company Intellectual Property Section 5.16(b)
Company License Agreements Section 5.16(b)
Company Net Liabilities Section 2.2
Company Subsidiary Convertible Security Section 5.6(b)
Consideration Section 2.1(b)
Consideration Reduction Section 2.2
Content Section 5.16(a)
Copyrights Section 5.16(a)
Date Data Section 5.17(a)
Date Sensitive System Section 5.17(a)
Disclosure Schedules Section 5 Preamble
Disputed Item Section 2.3
Disputed Items Section 2.3
Environmental Laws Section 5.15(b)
ERISA Section 5.12(a)
Exchange Act Section 5.6(b)
GAAP Section 2.2
Hazardous Material Section 5.15(b)
Intellectual Property Section 5.16(a)
Lien Section 5.4
Loss Section 14(a)
LTC Section 5.14
Material Adverse Effect Section 5.1
Material Company Marks Section 5.16(m)
Merger Section 4.1(d)
Merger Agreement Section 4.1(d)
Notice of Dispute Section 2.3
Non-Transferable Stock Consideration Section 10.3
Patents Section 5.16(a)
Person Section 5.4
Press Release Section 7.4(b)
Power of Attorney Section 2.4
Preferred Stock Purchase Section 4.1(e)
Preferred Stock Purchase Agreement Section 4.1(e)
Purchase Price Section 1
Purchaser Preamble
Purchaser Common Stock Section 2.1
Requirements of Law Section 10.1
SEC Section 7.4
SEC Reports Section 7.4
Securities Purchase Agreement Section 4.1(g)
Series A Preferred Stock Section 4.1(g)
Shares Section 1
Software Section 5.16(a)
Stock Consideration Reduction Section 2.2
Stockholder Preamble
Stockholders Preamble
Stock Consideration Section 2.1(a)
Stock Purchase Section 1
Subsidiary Section 5.6(a)
Tax Indemnification Agreements Section 5.11(n)
Taxes Section 5.11(s)
Tax Law Section 5.11(s)
Tax Period Section 5.11(s)
Tax Return Section 5.11(s)
Trade Secrets Section 5.16(a)
Trademarks Section 5.16(a)
Year 2000 Compliant Section 5.17(a)
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered
into this 12th day of November, 1999 by and between COLLEGE MEDIA, INC., a
New York corporation (the "Company"), ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, stockholders (each a "Stockholder" and together the
"Stockholders") of the Company and RARE MEDIUM GROUP, INC., a Delaware
corporation (the "Purchaser").
W I T N E S S E T H
WHEREAS, the Stockholders desire to sell to the Purchaser, and the
Purchaser desires to purchase from the Stockholders, shares of common
stock, no par value per share of the Company ("Company Common Stock"), all
in accordance with the terms and provisions of this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained in this Agreement and intending to be legally bound,
the Company and the Stockholders hereby agree with the Purchaser, as
follows:
SECTION 1. Sale and Purchase of Company Common Stock.
On the basis of the representations and warranties and subject to
the terms and conditions set forth herein the Purchaser agrees to purchase
from the Stockholders and the Stockholders severally agree to sell to the
Purchaser (according to the allocation schedule set forth in Annex A
hereto), an aggregate of 30.3025 shares (the "Shares") of Company Common
Stock, representing 25% of the outstanding Company Common Stock on a fully
diluted basis, assuming the exercise of all outstanding options to purchase
Company Common Stock (the "Stock Purchase"), for a purchase price of
$132,002.31 per share, or an aggregate purchase price of $4 million (the
"Purchase Price").
SECTION 2. Payment of Purchase Price; Adjustments.
2.1 Cash and Stock Consideration. In consideration of the sale of
the Shares, the Stockholders shall be entitled to receive, for each share
sold hereunder:
(a) a number of shares of common stock, par value $0.01 per share,
of the Purchaser ("Purchaser Common Stock"), equal to the quotient obtained
by dividing $99,001.7325 by the average of the closing bid prices per share
(the "Average Purchaser Stock Price") of Purchaser Common Stock for the ten
(10) trading days prior to the Closing Date (as defined below) (the "Stock
Consideration"), representing an aggregate of $3 million of Stock
Consideration for all of the Shares (the Average Purchaser Stock Price
shall be appropriately adjusted in the event of any stock dividend,
subdivision, stock split or combination of the Purchaser Common Stock
during such ten trading day period); and
(b) $33,000.5775 in cash (the "Cash Consideration", and, together
with the Stock Consideration, the "Consideration"), representing an
aggregate of $1 million of Cash Consideration for all of the Shares.
2.2 Adjustments to Consideration. If the aggregate amount of
Company Net Liabilities (as defined below) immediately prior to the closing
of the Stock Purchase (the "Closing") exceeds $1,800,000, the Stock
Consideration shall be reduced by an amount equal to twenty-five percent
(25%) of such excess (utilizing the Average Purchaser Stock Price) (the
"Stock Consideration Reduction"); provided, however, that if the amount of
such excess exceeds $3 million, the Cash Consideration shall then be
reduced by the remaining amount of such excess (the "Cash Consideration
Reduction" and together with the Stock Consideration Reduction, the
"Consideration Reduction"). "Company Net Liabilities" means the sum of (a)
total liabilities of the Company as they would appear on a consolidated
balance sheet prepared in accordance with U.S. generally accepted
accounting principles ("GAAP") plus (b) the amount of liabilities of any
third person that are guaranteed by the Company or any of its subsidiaries
whether or not such liabilities would appear on a consolidated balance
sheet of the Company prepared in accordance with GAAP less cash and
accounts receivable (other than Disqualified Receivables) of the Company
that would appear (net of proper reserves and allowances) on a consolidated
balance sheet prepared in accordance with GAAP. "Disqualified Receivables"
means any accounts receivable reflected in the Company Closing Date Balance
Sheet that shall not have been collected within 180 days following the
Closing Date.
2.3 Closing Date Balance Sheet. Promptly following the Closing,
there shall be prepared and delivered to the Purchaser a consolidated
balance sheet reflecting the Company's Net Liabilities (the "Closing Date
Balance Sheet") as of the Closing Date. Such Closing Date Balance Sheet
shall present fairly, in all material respects, the Net Liabilities of the
Company and its Subsidiaries and shall be prepared in accordance with GAAP
and shall be accompanied by a report of the Company's independent auditors
that it has performed such review procedures with respect to such Closing
Date Balance Sheet that has enabled it to state that based on such
procedures, nothing has come to their attention that has led them to
believe that any adjustments thereto are required in order for such Closing
Date Balance Sheet to be prepared in accordance with GAAP. The Closing
Date Balance Sheet shall be delivered to the Purchaser not later than 45
days after the Closing Date in order to determine what adjustments, if any,
must be made to the Consideration pursuant to Section 2.2 hereof. The
Purchaser shall have 30 days from the date that the Purchaser receives the
Closing Date Balance Sheet to notify the Stockholders in writing if the
Purchaser objects to any item in the Closing Date Balance Sheet. Any such
notice (a "Notice of Dispute") shall specify in detail the item or items in
dispute (a "Disputed Item" or "Disputed Items"). In the event that the
Purchaser and the Stockholders are unable to resolve the Disputed Item or
Disputed Items within 60 days after delivery of a Notice of Dispute, the
Purchaser and the Stockholders shall together appoint a representative from
the New York office of an independent nationally recognized accounting firm
(the "Arbitrator") to arbitrate the dispute and, if the Purchaser and the
Stockholders are unable to agree on an Arbitrator, at the request of either
such party made within 10 days after the end of such 60-day period, the
Arbitrator shall be chosen by the American Arbitration Association (the
"AAA") in New York City. The Purchaser and the Stockholders shall present
their positions with respect to the Disputed Item or Disputed Items to the
Arbitrator, together with such other materials as the Arbitrator deems
appropriate, within 20 days after the appointment of the Arbitrator. The
Purchaser and the Stockholders shall provide written instructions to the
Arbitrator to submit a written decision on each Disputed Item to the
Purchaser and the Stockholders as soon as practicable after its receipt of
such materials. Any determination with respect to any Disputed Item shall
be final and binding on all parties to this Agreement and shall have the
legal effect of an arbitral award. The Arbitrator shall comply with, and
the arbitration shall be conducted in New York City in accordance with, the
commercial arbitration rules of the AAA as in effect for commercial
arbitrations conducted in New York City by the AAA. The fees and
disbursements of the Arbitrator shall be paid 50% by the Stockholders and
50% by the Purchaser. Notwithstanding anything to the contrary in this
Section 2.3, no objection need be made with respect to any amount
receivable that ultimately proves to be a Disqualified Receivable.
2.4 Attorney-In-Fact; Return of Consideration. The Stockholders
have duly executed and delivered a Power of Attorney, in the form
heretofore furnished to the Purchaser (the "Power of Attorney"), appointing
the person indicated in Annex A hereto as the Stockholders' attorney-in-
fact (the "Attorney-in-Fact"), with authority to execute and deliver this
Agreement, to authorize the delivery of the Shares to be sold by the
Stockholders hereunder and otherwise to act on behalf of the Stockholders
in connection with the transactions contemplated by this Agreement and the
Merger Agreement, including the resolution of all disputes, including any
Notice of Dispute, and the performance of all determinations to be made in
connection with this Agreement. The Stockholders hereby agree to return to
the Purchaser the Stock Consideration Reduction and/or the Cash
Consideration Reduction, as may be required by the provisions of Section
2.2 above, and the Stockholders grant to the Attorney-in-Fact full power
and authority to deliver to the Purchaser such Consideration Reduction as
may be required pursuant to the terms of this Agreement.
2.5 Fractional Shares. No fractional shares of Stock
Consideration shall be issued in the Stock Purchase, but in lieu thereof,
each Stockholder otherwise entitled to a fractional share of Purchaser
Common Stock will be entitled to receive, from the Purchaser, in accordance
with the provisions of this Section 2.5, an amount of cash, without
interest thereon (rounded to the nearest whole cent), equal to the product
of (i) such number of fractional shares, and (ii) the Average Purchaser
Stock Price. Fractional Shares of Company Common Stock may be transferred
to the Purchaser hereunder, such fraction (if any) to be carried out to six
decimal places.
SECTION 3. Closing; Payment of Consideration.
3.1 Closing Date. The Closing of the Stock Purchase shall take
place (i) at the offices of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, as soon as practicable, but in any event
within three business days after the day on which the last to be fulfilled
or waived of the conditions set forth in Sections 4 and 5 (other than those
conditions that by their nature are to be fulfilled at the Closing, but
subject to the fulfillment or waiver of such conditions) shall be fulfilled
or waived in accordance with this Agreement or (ii) at such other place and
time or on such other date as the parties may agree in writing (the
"Closing Date").
3.2 Deliveries at Closing; Stockholders' Obligations. At the
Closing, each of the Stockholders shall deliver to the Purchaser
certificates evidencing the Shares being sold by such Stockholder duly
endorsed for transfer to the Purchaser and/or accompanied by such
instruments of assignment reasonably requested by the Purchaser necessary
to vest in the Purchaser all right, title and interest in and to the
Shares. At or following the Closing, at the election of the Purchaser, the
Company shall reissue such certificates in the form of a single certificate
(or such greater number of certificates representing such Shares as the
Purchaser may reasonably request) dated the date of the Closing Date and
registered in the name of the Purchaser. If at the Closing any of the
Stockholders shall fail to tender to the Purchaser duly executed
certificates evidencing the Shares (accompanied by any such requested
instruments of assignment), as provided in this Section 3.2, or any of the
conditions specified in Section 4.1 shall not have been fulfilled to the
Purchaser's reasonable satisfaction, the Purchaser shall, at its election,
be relieved of all further obligations under this Agreement, without
thereby waiving any other rights the Purchaser may have by reason of such
failure or such nonfulfillment.
3.3 Deliveries at Closing; Purchaser's Obligations; Post-Closing
Delivery.
(a) At the Closing, the Purchaser shall deliver to the
Stockholders the Consideration as follows:
(i) The Cash Consideration to which such Stockholder is
entitled, by wire transfer of immediately available funds, to the accounts
so designated in writing by the Stockholders;
(ii) Certificates, dated as of the Closing Date,
representing the Stock Consideration payable to each of ▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇
▇▇▇▇▇▇▇▇, registered in the respective names of such Stockholders; and
(iii) Certificates, dated as of the Closing Date,
representing 50% of the Stock Consideration payable to each of ▇▇▇▇▇▇ ▇▇▇▇▇
and ▇▇▇▇▇▇ ▇▇▇▇▇ pursuant to Section 2.1 of the Agreement, registered in
the respective names of such Stockholders.
(b) On January 3, 2000, the Purchaser shall deliver to ▇▇▇▇▇▇
▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇ certificates, dated as of the Closing Date,
representing the remaining 50% of the Stock Consideration payable to each
▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇ pursuant to Section 2.1 of this Agreement
("the Remaining Consideration"), registered in the respective names of such
Stockholders. The number of shares represented by the Remaining
Consideration shall be appropriately adjusted to reflect any stock
dividend, subdivision, stock split or combination of the Purchaser Common
Stock after the Closing Date.
If on the Closing Date or on January 3, 2000, the Purchaser shall fail to
deliver to the Stockholders the Consideration, as provided above in this
Section 3.3, or any of the conditions specified in Section 4.2 shall not
have been fulfilled to the Stockholders' reasonable satisfaction, the
Stockholders' shall, at their election, be relieved of all further
obligations under this Agreement, without thereby waiving any other rights
the Stockholders may have by reason of such failure. If the Closing
occurs, the obligation of the Purchaser to deliver the Remaining
Consideration shall be unconditional and not subject to any set-off or
counterclaim; provided, however, that nothing set forth in this sentence
will limit or preclude the right of the Purchaser to claim and enforce any
of its rights to a Consideration Reduction pursuant to Section 2.2 or any
of its rights to indemnification pursuant to Section 14.
SECTION 4. Conditions to Obligations of Purchaser and the
Stockholders.
4.1 Conditions to the Obligations of the Purchaser.
The obligations of the Purchaser to consummate the Stock Purchase
at the Closing are subject to the satisfaction (or, to the extent legally
permissible, waiver), of the following conditions:
(a) (i) The Company and the Stockholders shall have performed in
all material respects all of the obligations hereunder required to be
performed by them at or prior to the Closing Date, (ii) the representations
and warranties made by the Company and the Stockholders in this Agreement
shall be true and correct (without giving effect to any limitation as to
"materiality" or "Material Adverse Effect" set forth herein) at and as of
the Closing Date as if made at and as of such time (except to the extent
expressly made as of an earlier date, in which case as of such earlier
date), except where the failure of such representations to be true and
correct (without giving effect to any limitation as to "materiality" or
"Material Adverse Effect" set forth herein) would not, individually or in
the aggregate, have a Material Adverse Effect on the Company and (iii) the
Purchaser shall have received a certificate signed by an executive officer
of the Company (with respect to the obligations, representations and
warranties of the Company) and a certificate signed by each of the
Stockholders (with respect to the obligations, representations and
warranties of such Stockholder) to the foregoing effect;
(b) There shall not be any statute, rule, regulation, injunction,
order or decree, enacted, enforced, promulgated, entered, issued or deemed
applicable to the Stock Purchase and the other transactions contemplated
hereby (or in the case of any statute, rule or regulation, awaiting
signature or reasonably expected to become law), by any court, government
or governmental authority or agency or legislative body, domestic, foreign
or supranational, that would, or would reasonably be expected to, have a
Material Adverse Effect on the Company at or after the Closing Date;
(c) The offering and sale by the Stockholders of the Shares
pursuant to this Agreement shall have been made in compliance with all
applicable requirements of federal and state securities laws;
(d) The consummation of the merger (the "Merger") of the Company
and ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc., a Delaware corporation ("▇▇▇▇▇▇▇▇▇▇▇.▇▇▇"), with
and into ▇▇▇.▇▇▇, Inc., a Delaware corporation ("▇▇▇.▇▇▇"), as contemplated
by the Agreement and Plan of Merger dated as of November 12, 1999 among
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, the Company and ▇▇▇.▇▇▇ (the "Merger Agreement") is to
occur immediately following the Closing;
(e) The closing of the purchase of $7 million aggregate
liquidation preference of shares of Series A convertible preferred stock,
par value $.01 per share, of ▇▇▇.▇▇▇ ("Series A Preferred Stock") by the
Purchaser (the "Preferred Stock Purchase") pursuant to the Securities
Purchase Agreement dated as of November 12, 1999 among the Purchaser and
▇▇▇.▇▇▇ (the "Preferred Stock Purchase Agreement") is to occur immediately
following the Closing.
4.2 Conditions to Obligations of the Stockholders.
The obligations of the Stockholders to consummate the Stock
Purchase are subject to the satisfaction (or, to the extent legally
permissible, waiver) of the following conditions:
(a) (i) The Purchaser shall have performed in all material
respects all of its obligations hereunder required to be performed by it at
or prior to the Closing Date, (ii) the representations and warranties of
the Purchaser contained in this Agreement shall be true and correct
(without giving effect to any limitation as to "materiality" or "Material
Adverse Effect" set forth herein) at and as of the Closing Date as if made
at and as of such time (except to the extent expressly made as of an
earlier date), in which case as of such earlier date, except where the
failure of such representations to be true and correct (without giving
effect to any limitation as to "materiality" or "Material Adverse Effect"
set forth herein) would not, individually as in the aggregate, have a
Material Adverse Effect on the Purchaser and (iii) the Company and the
Stockholders shall have received a certificate signed by an executive
officer of the Purchaser to the foregoing effect;
(b) There shall not be any statute, rule, regulation, injunction,
order or decree, enacted, enforced, promulgated, entered, issued or deemed
applicable to the Stock Purchase or the other transactions contemplated
hereby (or in the case of any statute, rule or regulation, awaiting
signature or reasonably expected to become law), by any court, government
or governmental authority or agency or legislative body, domestic, foreign
or supranational, that would, or would reasonably be expected to, have a
Material Adverse Effect on the Purchaser at or after the Closing Date;
(c) The Offering and sale by the Purchaser of the Purchaser Common
Stock pursuant to this Agreement shall have been made in compliance with
all applicable requirements of federal and state securities laws;
(d) The consummation of the Merger of the Company and
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ with and into ▇▇▇.▇▇▇, as contemplated by Merger Agreement
is to occur immediately following the Closing;
(e) The closing of the Preferred Stock Purchase pursuant to the
Preferred Stock Purchase Agreement is to occur immediately following the
consummation of the Merger.
SECTION 5. Representations and Warranties of the Company and
the Stockholders.
The Company, ▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇ jointly and severally
represent and warrant to the Purchaser that (except as set forth in the
disclosure schedules delivered to the Purchaser simultaneously with the
execution of this Agreement and attached hereto (the "Disclosure
Schedules")):
5.1 Corporate Existence and Power. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of
the State of New York, and has all corporate power and authority and all
governmental licenses, authorizations, consents and approvals required to
carry on its business as now conducted, except for those the absence of
which would not, individually or in the aggregate, have a Material Adverse
Effect on the Company. The Company is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its
activities makes such qualification necessary, except for those
jurisdictions where the failure to be so qualified would not, individually
or in the aggregate, have a Material Adverse Effect on the Company. For
purposes of this Agreement, a "Material Adverse Effect" means a material
adverse effect on the financial condition, business, liabilities,
properties, assets or results of operations, taken as a whole, of the
Company and its Subsidiaries, taken as a whole. The Company has heretofore
made available to the Purchaser true and complete copies of the Company's
certificate of incorporation and by-laws as currently in effect.
5.2 Corporate Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation by the
Company of the transactions contemplated hereby are within the Company's
corporate powers and, have been duly authorized by all necessary corporate
action. Assuming due authorization, execution and delivery of this
Agreement by the Purchaser, this Agreement constitutes a valid and binding
agreement of the Company enforceable against the Company in accordance with
its terms.
5.3 Governmental Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation by the
Company of the transactions contemplated hereby require no action by or in
respect of, or filing with, any governmental body, agency, official or
authority other than actions or filings which if not taken or made would
not, individually or in the aggregate have a Material Adverse Effect on the
Company or prevent or materially delay the consummation of the Stock
Purchase in accordance with this agreement.
5.4 Non-Contravention. The execution, delivery and performance by
the Company and the Stockholders of this Agreement and the consummation by
the Company and the Stockholders of the transactions contemplated hereby do
not and will not (a) contravene or conflict with the certificate of
incorporation or by-laws of the Company, (b) assuming compliance with the
matters referred to in Section 5.3, contravene or conflict with or
constitute a violation of any provision of any law, regulation, judgment,
injunction, order or decree binding upon or applicable to the Company or
any of its Subsidiaries, (c) constitute a default under or give rise to any
right of termination, cancellation or acceleration of any right or
obligation of the Company or any of its Subsidiaries or a loss, in whole or
in part, of any benefit or right to which the Company or any of its
Subsidiaries is entitled under any provision of any agreement, contract or
other instrument binding upon the Company or any of its Subsidiaries or any
license, franchise, permit or other similar authorization held by the
Company or any of its Subsidiaries, or (d) result in the creation or
imposition of any Lien on any asset of the Company or any of its
Subsidiaries, except, in the case of clauses (b), (c) and (d), for such
contraventions, conflicts, violations, defaults, rights of termination,
cancellation or acceleration, or losses or Liens that would not,
individually or in the aggregate, have a Material Adverse Effect on the
Company. For purposes of this Agreement, "Lien" means, with respect to any
properties or assets, any mortgage, lien, pledge, charge, security interest
or encumbrance of any kind in respect of such asset other than any such
mortgage, lien, pledge, charge, security interest or encumbrance (i) for
Taxes not yet due or being contested in good faith and for which adequate
provision has been made or (ii) which is a carriers', warehousemen's,
mechanics', materialmen's, repairmen's or other like lien arising in the
ordinary course of business. Except as set forth on Schedule 5.4, neither
the Company nor any Subsidiary of the Company is a party to any agreement
that expressly limits the ability of the Company or any Subsidiary of the
Company to compete in or conduct any line of business or compete with any
Person or in any geographic area or during any period of time except to the
extent that any such limitation, individually or in the aggregate, would
not have a Material Adverse Effect on the Company or on ▇▇▇.▇▇▇ immediately
after the Closing. Schedule 5.4 sets forth a true, accurate and complete
list of all material contracts, instruments, agreements, judgments, orders
and decrees to which the Company or any of its Subsidiaries is a party or
by which any of them or their properties is bound or affected, copies of
all of which have been provided to the Purchaser. There has not occurred
any breach, violation or default or any event that, with the lapse of time,
the giving of notice or the election of any person, or any combination
thereof, would constitute a breach, violation or default by the Company
under any such contract or, to the knowledge of the Company, by any other
person to any such contract nor has there occurred any event giving others
(with notice or lapse of time or both) any rights of termination,
amendment, acceleration or cancellation of, any material agreement,
indenture or instrument to which the Company is a party. The Company has
not been notified that any party to any material contract intends to
cancel, terminate, not renew or exercise an option under any material
contract, whether in connection with the transactions contemplated hereby
or otherwise. For purposes of this Agreement, "Person" means an
individual, a corporation, a limited liability company, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or any agency or instrumentality
thereof.
5.5 Capitalization. The authorized capital stock of the Company
consists of two hundred (200) shares of Company Common Stock without par
value. As of the date hereof there are outstanding one hundred (100)
shares of Company Common Stock, and no other shares of capital stock or
other voting securities of the Company are outstanding. All outstanding
shares of capital stock of the Company have been duly authorized and
validly issued and are fully paid and nonassessable. Except as set forth
in Schedule 5.5, there are no outstanding options, warrants or other rights
to acquire from the Company, and no preemptive or similar rights,
subscription or other rights, convertible or exchangeable securities,
agreements, arrangements or commitments of any character, relating to the
capital stock of the Company, obligating the Company to issue, transfer or
sell, any capital stock, voting securities or securities convertible into
or exchangeable for capital stock or voting securities of the Company or
obligating the Company to grant, extend or enter into any such option,
warrant, subscription or other right, convertible or exchangeable security,
agreement, arrangement or commitment (each of the foregoing, a "Company
Convertible Security"). There are no outstanding obligations of the
Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any shares of capital stock of the Company or any Company
Convertible Securities.
5.6 Subsidiaries. (a) Each Subsidiary of the Company is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization, has all power and authority and all
governmental licenses, authorizations, consents and approvals required to
carry on its business as now conducted, except for those the absence of
which would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect on the Company. For purposes of this
Agreement, the word "Subsidiary" when used with respect to any Person means
any other Person, whether incorporated or unincorporated, of which (i) more
than fifty percent of the securities or other ownership interests or
(ii) securities or other interests having by their terms ordinary voting
power to elect more than fifty percent of the board of directors or others
performing similar functions with respect to such corporation or other
organization, is directly owned or controlled by such Person or by any one
or more of its Subsidiaries. Each Subsidiary of the Company is duly
qualified to do business and is in good standing in each jurisdiction where
the character of the property owned or leased by it or the nature of its
activities makes such qualification necessary, except for those
jurisdictions where failure to be so qualified would not, individually or
in the aggregate, have a Material Adverse Effect on the Company.
(b) Except as set forth in Schedule 5.6(b), all of the outstanding
capital stock of, or other ownership interests in, each Significant
Subsidiary (as such term is defined in rule 12b-2 under the Securities
Exchange Act of 1934 ("Exchange Act")) of the Company is owned, directly or
indirectly, by the Company. All shares of capital stock of, or other
ownership interests in, Subsidiaries of the Company, directly or
indirectly, owned by the Company are owned free and clear of any Lien and
free of any other limitation or restriction (including any restriction on
the right to vote, sell or otherwise dispose of such capital stock or other
ownership interests), except as would not, individually or in the
aggregate, have a Material Adverse Effect on the Company. There are no
outstanding options, warrants or other rights to acquire from the Company
or any of its Subsidiaries, and, except as may be required by applicable
foreign corporate laws, no preemptive or similar rights, subscriptions or
other rights, convertible or exchangeable securities, agreements,
arrangements or commitments of any character, relating to the capital stock
of any Subsidiary of the Company, obligating the Company or any of its
Subsidiaries to issue, transfer or sell, any capital stock, voting
securities or other ownership interests in, or any securities convertible
into or exchangeable for any capital stock, voting securities or ownership
interests in, any Subsidiary of the Company or obligating the Company or
any Subsidiary of the Company to grant, extend or enter into any such
option, warrant, subscription or other right, convertible or exchangeable
security, agreement, arrangement or commitment (each of the foregoing, a
"Company Subsidiary Convertible Security"). There are no outstanding
obligations of the Company or any of its Subsidiaries to repurchase, redeem
or otherwise acquire any outstanding shares of capital stock of any
Subsidiary of the Company or any Company Subsidiary Convertible Securities.
5.7 Financial Statements. The unaudited consolidated annual
financial statements for 1998 and 1997 and unaudited consolidated interim
financial statements for the first nine months of 1999 of the Company
(including any related notes and schedules) delivered to the Purchaser
present fairly, in all material respects, the financial position of the
Company and its Subsidiaries as of the dates thereof and their results of
operations and cash flows for the periods then ended (subject to normal
year-end adjustments and the absence of notes in the case of any unaudited
interim financial statements), in each case in conformity with GAAP applied
on a consistent basis (except as may be indicated in the notes thereto).
For purposes of this Agreement, "Company Balance Sheet" means the
consolidated balance sheet of the Company as of September 30, 1999 and
"Company Balance Sheet Date" means September 30, 1999.
5.8 Absence of Certain Changes. Since the Company Balance Sheet
Date and, prior to the date hereof, the Company and its Subsidiaries have
conducted their respective businesses in the ordinary course, consistent
with past practice, and there has not been:
(a) any event, occurrence or development which, individually or in
the aggregate, would have a Material Adverse Effect on the Company;
(b) any declaration, setting aside or payment of any dividend or
other distribution with respect to any shares of capital stock of the
Company or any repurchase, redemption or other acquisition by the Company
or any of its Subsidiaries of any outstanding shares of their capital stock
or any Company Convertible Securities or Company Subsidiary Convertible
Securities;
(c) any amendment of any term of any outstanding security of the
Company or any of its Subsidiaries;
(d) any transaction or commitment made, or any contract, agreement
or settlement entered into, by (or judgment, order or decree affecting) the
Company or any of its Subsidiaries relating to its assets or business
(including the acquisition or disposition of any material amount of assets)
or any relinquishment by the Company or any of its Subsidiaries of any
contract or other right, other than transactions, commitments, contracts,
agreements, settlements or relinquishments in the ordinary course of
business and those contemplated by this Agreement;
(e) any change in any method of accounting or accounting practice
by the Company or any of its Subsidiaries, except for any such change which
is not material or which is required by reason of a concurrent change in
GAAP;
(f) any (i) grant of any severance or termination pay to (or
amendment to any such existing arrangement with) any director, officer or
employee of the Company or any of its Subsidiaries, (ii) entering into of
any employment, deferred compensation, supplemental retirement or other
similar agreement (or any amendment to any such existing agreement) with
any director, officer or employee of the Company or any of its
Subsidiaries, (iii) increase in, or accelerated vesting and/or payment of,
benefits under any existing severance or termination pay policies or
employment agreements or (iv) increase in or enhancement of any rights or
features related to compensation, bonus or other benefits payable to
directors, officers or senior employees of the Company or any of its
Subsidiaries, in each case, other than in the ordinary course of business
consistent with past practice; or
(g) any material Tax election made or changed, any material audit
settled or any material amended Tax Returns filed.
5.9 No Undisclosed Material Liabilities. There are no material
liabilities of the Company or any Subsidiary of the Company, whether
accrued, contingent, absolute, determined, determinable or otherwise, that
are required to be reflected in a consolidated balance sheet of the Company
prepared in accordance with GAAP or required to be disclosed on the face
thereof or in the notes thereto in accordance with Statement of Financial
Accounting Standards No. 5 of the Financial Accounting Standards Board,
other than:
(a) liabilities disclosed or provided for in the Company Balance
Sheet or in the notes thereto;
(b) liabilities incurred since such date in the ordinary course of
business; and
(c) liabilities under this Agreement.
5.10 Litigation. There is no action, suit, investigation or
proceeding pending against or affecting, or to the knowledge of the Company
threatened against or affecting, the Company or any of its Subsidiaries or
any of their respective properties or any of their respective officers or
directors before any court or arbitrator or any governmental body, agency
or official except as would not, individually or in the aggregate, have a
Material Adverse Effect on the Company or prevent or materially delay the
consummation of the Stock Purchase.
5.11 Taxes. Except as set forth in Schedule 5.11 of the Disclosure
Schedules:
(a) Each of the Company and its Subsidiaries has (x) duly and
timely filed (or there has been filed on its behalf) with the appropriate
governmental authorities all Tax Returns required to be filed by it, and
all such Tax Returns are true, correct and complete except to the extent
any failure to file or any inaccuracies in any filed Tax Return would not
be reasonably likely to have a Material Adverse Effect on the Company and
(y) timely paid (or properly accrued on the Company's books) or there has
been paid on its behalf all Taxes due from it or claimed to be due from it
by any tax authority (whether or not set forth on any Tax Return) except to
the extent that any failure to pay would not be reasonably likely to have a
Material Adverse Effect on the Company;
(b) The Company and each of its Subsidiaries have complied in all
material respects with all applicable Tax Laws relating to the payment and
withholding of Taxes (including, without limitation, withholding of Taxes
pursuant to sections 1441 and 1442 of the Code and employment withholding
Taxes) and have, within the time and manner prescribed by law, withheld and
paid over to the proper governmental entities all amounts required to be
withheld and paid over under all applicable Tax Laws except for amounts
that would not be reasonably likely to have a Material Adverse Effect on
the Company;
(c) There are no material Liens for Taxes upon the assets or
properties of the Company or any of its Subsidiaries except for statutory
Liens for current Taxes not yet due or that are being contested in good
faith in appropriate proceedings and for which adequate reserves have been
maintained in accordance with GAAP;
(d) None of the Company or any of its Subsidiaries has requested
any extension of time within which to file any Tax Return in respect of any
taxable year which has not since been filed, and no outstanding waivers or
comparable consents regarding the application of the statute of limitations
with respect to any Taxes or Tax Returns has been given by or on behalf of
the Company or any of its Subsidiaries except for such waiver or consent
that would not be reasonably likely to have a Material Adverse Effect on
the Company;
(e) None of the Company or any of its Subsidiaries has received
any written notice of any federal, state, local or foreign audits, review,
suits, investigations, actions, claims, or other administrative proceedings
or court proceedings ("Audits") with regard to any Taxes or Tax Returns of
the Company or any of its Subsidiaries and to the Company's and its
Subsidiaries' knowledge no such Audits are currently being conducted;
(f) All Tax deficiencies which have been claimed, proposed or
asserted against the Company or any of its Subsidiaries by any taxing
authority have been fully paid except for such deficiency that would not be
reasonably likely to have a Material Adverse Effect on the Company. No
issue has been raised by any taxing authority in any current or prior
examination which, by application of the same principles, would reasonably
be expected to result in a proposed deficiency for any subsequent Taxable
Period;
(g) None of the Company or any of its Subsidiaries is required to
include in income any adjustment pursuant to Section 481(a) of the Code, by
reason of any voluntary or involuntary change in accounting method (nor has
any tax authority notified the Company or any of its Subsidiaries in
writing of any such adjustment or change of accounting method);
(h) No power of attorney has been granted by or with respect to
the Company or any of its Subsidiaries with respect to any matter relating
to Taxes;
(i) None of the Company or any of its Subsidiaries has filed a
consent pursuant to Section 341(f) of the Code (or any predecessor
provision) or agreed to have Section 341(f)(2) of the Code apply to any
disposition of a subsection (f) asset (as such term is defined in Section
341(f)(4) of the Code);
(j) The reserves for Taxes (determined in accordance with
generally accepted accounting principles consistently applied) reflected in
the Company Balance Sheet are adequate for the payment of all Taxes payable
by the Company or any of its Subsidiaries through the date of the Company
Balance Sheet;
(k) None of the Company or any of its Subsidiaries is a party to
any agreement, contract or arrangement that could result, separately or in
the aggregate, in the payment of any payments that will not be deductible
by operation of Section 162(m) of the Code;
(l) None of the Company or any of its Subsidiaries has requested
or received a ruling or determination from any tax authority or signed a
closing or other agreement with any tax authority which would be reasonably
likely to have a Material Adverse Effect on the Company;
(m) The Federal income Tax Returns of the Company and its
Subsidiaries for the Tax Periods ending before January 1, 1995 have been
examined by the appropriate Governmental authority (or the applicable
statue of limitations for the assessment of such taxes has expired);
(n) None of the Company or any of its Subsidiaries is a party to,
is bound by, or has any obligation under, any Tax sharing agreement, Tax
indemnification agreement or similar contract or arrangement (collectively,
"Tax Indemnification Agreements"). Any such Tax Indemnification Agreement
set forth in the Disclosure Schedule will terminate as of the Closing Date
and be of no further force or effect for any Tax Period after the Closing
Date. As of the date of this Agreement, none of the Company or any of its
Subsidiaries is aware of any potential liability or obligation to any
person as a result of, or pursuant to, any such Tax Indemnification
Agreement;
(o) The Company and each of its Subsidiaries has previously
delivered or made available to the Purchaser complete and accurate copies
of each of (a) all audit reports, letter rulings, technical advice
memoranda and similar documents issued by a Governmental authority relating
to the United States federal, state, local or foreign Taxes due from or
with respect to the Company and its Subsidiaries, (b) the United States
federal income Tax Returns, and those state, local and foreign income Tax
Returns filed by the Company and its Subsidiaries (or on their behalf) and
(c) any closing agreements entered into by the Company or any of its
Subsidiaries with any tax authority. The Company will deliver to the
Purchaser all materials with respect to the foregoing for all matters
arising after the date hereof;
(p) None of the Company or any of its Subsidiaries has any or
could have any liability for Taxes of another person under Section 1.1502-6
of the Treasury Regulations (or any similar provision under state, local or
foreign law), by contract or otherwise;
(q) None of the Company or any of its Subsidiaries has any
deferred intercompany gain or loss arising as a result of a deferred
intercompany transaction within the meaning of Section 1.1502-13 of the
Treasury Regulations (or similar provision under state, local or foreign
law);
(r) No claim has been made by a taxing authority in a jurisdiction
where either the Company or any of its Subsidiaries does not file Tax
Returns to the effect that the Company or any of such Subsidiaries is or
may be subject to taxation by that jurisdiction;
(s) None of the Company or any of its Subsidiaries is a "United
States real property holding corporation" within the meaning of Section 897
of the Code;
For the purposes of this Agreement, the following terms shall have
the meanings set forth below: "Taxes" means all federal, state, local and
foreign taxes, levies, deficiencies or other assessments and other charges
of whatever nature, whether or not disputed (including income, gross
receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental, customs duties,
capital stock, franchise, profits, withholding, back-up withholding, social
security, unemployment, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum and
other taxes or escheat liability), imposed by any taxing authority,
including any interest, penalty (civil or criminal), or addition thereto.
"Tax Law" means the law (including any applicable regulations or any
administrative pronouncement) of any governmental authority relating to any
Tax. "Tax Period" means with respect to any Tax, the period for which the
Tax is reported as provided under the applicable Tax Law. "Tax Return"
means any federal, state, local or foreign return, declaration, report,
claim for refund, amended return, declaration of estimated Tax or
information return or statement relating to Taxes, and any schedule,
exhibit, attachment or other materials submitted with any of the foregoing,
and any amendment thereto.
5.12 Employee Benefit Plans. (a) For purposes of this Agreement,
the term "Company Employee Plans" shall mean and include: each management,
consulting, non-compete, employment, severance or similar contract, plan,
including, without limitation, all Company Stock Plans, arrangement or
policy applicable to any director, former director, employee or former
employee of the Company and each plan, program, policy, agreement or
arrangement (written or oral), providing for compensation, bonuses, profit-
sharing, stock option or other stock related rights or other forms of
incentive or deferred compensation, vacation benefits, insurance coverage
(including any self-insured arrangements), health or medical benefits,
disability benefits, workers' compensation, supplemental unemployment
benefits, severance benefits and post-employment or retirement benefits
(including compensation, pension, health, medical or life insurance
benefits) or other employee benefits of any kind, whether funded or
unfunded, which is maintained, administered or contributed to by the
Company or any Subsidiary and covers any employee or director or former
employee or director of the Company or any Subsidiary, or under which the
Company has any liability contingent or otherwise (including but not
limited to each material "employee benefit plan," as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), but excluding any such plan that is a "multiemployer plan," as
defined in Section 3(37) of ERISA). Neither the Company nor any of its
affiliates contributes to, or is required to contribute to, any
"multiemployer plan" as defined in Section 3(37) of ERISA. The Disclosure
Schedules set forth a true, accurate and complete list of all Company
Employee Plans.
(b) Each Company Employee Plan has been established and maintained
in compliance with its terms and with the requirements prescribed by any
and all statutes, orders, rules and regulations (including but not limited
to ERISA and the Code) which are applicable to such Plan, except where
failure to so comply would not, individually or in the aggregate, have a
Material Adverse Effect on the Company.
(c) Neither the Company nor any affiliate of the Company has
incurred a liability under Title IV of ERISA that has not been satisfied in
full, and no condition exists that presents a material risk to the Company
or any affiliate of the Company of incurring any such liability. All
contributions required to be made under the terms of any Company Employee
Plan have been made, and, where applicable to a Company Employee Plan, the
Company and its affiliates have complied with the minimum funding
requirements under Section 412 of the Code and Section 302 of ERISA with
respect to each such Company Employee Plan.
(d) Each Company Employee Plan which is intended to be qualified
under section 401(a) of the Code is so qualified and has been so qualified
during the period from its adoption to date, and each trust forming a part
thereof is exempt from federal income tax pursuant to section 501(a) of the
Code and, to the Company's knowledge, no circumstances exist which will
adversely affect such qualification or exemption.
(e) No director or officer or other employee of the Company or any
of its Subsidiaries will become entitled to any retirement, severance or
similar benefit or enhanced or accelerated benefit (including any
acceleration of vesting or lapse of repurchase rights or obligations with
respect to any Company Stock Plans or other benefit under any compensation
plan or arrangement of the Company) solely as a result of the transactions
contemplated hereby; and (ii) no payment made or to be made to any current
or former employee or director of the Company or any of its affiliates by
reason of the transactions contemplated hereby (whether alone or in
connection with any other event, including, but not limited to, a
termination of employment) will constitute an "excess parachute payment"
within the meaning of Section 280G of the Code.
(f) No Company Employee Plan provides material post-retirement
health and medical, life or other insurance benefits for retired employees
of the Company or any of its Subsidiaries nor has the Company or any
Subsidiary represented or promised to provide such benefits.
(g) There has been no amendment to, or change in employee
participation or coverage under, any Company Employee Plan which would
increase materially the expense of maintaining such Company Employee Plan
above the level of the expense incurred in respect thereof for the 12
months ended on the Company Balance Sheet Date.
(h) The Company and its Subsidiaries are in compliance with all
applicable federal, state, local and foreign statutes, laws (including
without limitation, common law), judicial decisions, regulations,
ordinances, rules, judgments, orders and codes respecting employment,
employment practices, labor, terms and conditions of employment and wages
and hours, and no work stoppage or labor strike against the Company and its
Subsidiaries are pending or threatened, nor are the Company and its
Subsidiaries involved in or threatened with any labor dispute, grievance,
or litigation relating to labor matters involving any employees, in each
case except as would not, individually or in the aggregate, have a Material
Adverse Effect on the Company. There are no suits, actions, disputes,
claims (other than routine claims for benefits), investigations or audits
pending or, to the knowledge of the Company, threatened in connection with
any Company Employee Plan, but excluding any of the foregoing which would
not have a Material Adverse Effect on the Company.
5.13 Compliance with Laws. Neither the Company nor any of its
Subsidiaries has violated or is in violation of any applicable provisions
of any laws, statutes, ordinances or regulations except for any violations
that, individually or in the aggregate, have not and would not have a
Material Adverse Effect on the Company.
5.14 Finders' or Advisors' Fees. Except for Ladenburg, ▇▇▇▇▇▇▇▇ &
Co. Inc. ("LTC") a copy of whose engagement agreement has been provided to
the Purchaser, there is no investment banker, broker, finder or other
intermediary which has been retained by or is authorized to act on behalf
of the Company or any of its Subsidiaries or the Stockholders who might be
entitled to any compensation, fee or commission in connection with the
transactions contemplated by this Agreement. The Company or the
Stockholders shall be responsible for the compensation, fees and expenses
of LTC in connection with such engagement letter; they shall discharge any
and all such obligations to LTC prior to the Stock Purchase, and neither
▇▇▇.▇▇▇ or the Purchaser shall have any responsibility therefor.
5.15 Environmental Matters. (a) Except for matters which,
individually or in the aggregate, would not have a Material Adverse Effect
on the Company, (i) no written notice, notification, demand, request for
information, citation, summons, complaint or order has been received by,
and no investigation, action, claim, suit, proceeding or review is pending
or, to the knowledge of the Company or any of its Subsidiaries, threatened
by any Person against, the Company or any of its Subsidiaries, and no
penalty has been assessed against the Company or any of its Subsidiaries,
in each case, with respect to any matters relating to or arising out of any
Environmental Law; (ii) the Company and its Subsidiaries are in compliance
with all Environmental Laws; and (iii) to the knowledge of the Company,
there are no liabilities of or relating to the Company or any of its
Subsidiaries relating to or arising out of any Environmental Law and there
is no existing condition, situation or set of circumstances which could
reasonably be expected to result in such a liability.
(b) For purposes of this Agreement, the term "Environmental Laws"
means federal, state, local and foreign statutes, laws, judicial decisions,
regulations, ordinances, rules, judgments, orders, codes, injunctions,
permits and governmental agreements relating to human health and the
environment, including, but not limited to, Hazardous Materials; and the
term "Hazardous Material" means all substances or materials regulated as
hazardous, toxic, explosive, dangerous, flammable or radioactive under any
Environmental Law including, but not limited to: (i) petroleum, asbestos,
or polychlorinated biphenyls and (ii) in the United States, all substances
defined as Hazardous Substances, Oils, Pollutants or Contaminants in the
National Oil and Hazardous Substances Pollution Contingency Plan.
5.16 Intellectual Property Matters. (a) For purposes of this
Agreement, "Intellectual Property" means any United States, foreign,
international and state: patents and patent applications, industrial design
registrations, certificates of invention and utility models (collectively,
"Patents"); trademarks, service marks, and trademark or service ▇▇▇▇
registrations and applications, trade names, logos, designs, slogans, and
general intangibles of like nature, together with all goodwill related to
the foregoing (collectively, "Trademarks"); Internet domain names;
copyrights, copyright registrations, renewals and applications for
copyrights, including without limitation for the Content and the Software
(each as defined below in this Section 5.16) (collectively, "Copyrights");
Content; Software, technology, trade secrets and other confidential
information, know-how, proprietary processes, formulae, algorithms, models
and methodologies (collectively, "Trade Secrets"), rights of privacy and
publicity, including but not limited to, the names, likenesses, voices and
biographical information of real persons, and all license agreements and
other agreements granting rights relating to any of the foregoing.
"Software" means any and all (i) computer programs, including any and all
software implementations of algorithms, models and methodologies, whether
in source code or object code form, (ii) databases, compilations, and any
other electronic data files, including any and all collections of data,
whether machine readable or otherwise, (iii) descriptions, flow-charts,
technical and functional specifications, and other work product used to
design, plan, organize, develop, test, troubleshoot and maintain any of the
foregoing, (iv) without limitation to the foregoing, the software
technology supporting any functionality contained on Internet site(s), and
(v) all documentation, including technical, end-user, training and
troubleshooting manuals and materials, relating to any of the foregoing.
"Content" means any and all information, pictures, images, graphics, video,
audio, text and any other content or information, in whatever form and on
any media. "Company Content" means any and all Content published or
displayed in any form, including electronically, by or on behalf of the
Company, including but not limited to all Content contained in the
Company's publications and events (such as, but not limited to, the CMJ New
Music Monthly, the CMJ New Music Report and the CMJ Music Marathon
MusicFest and FilmFest).
(b) The Company owns or has the valid right to use all material
Intellectual Property, as currently used in connection with the business of
the Company, including without limitation all license agreements and other
agreements granting rights relating to any such Intellectual Property
("Company License Agreements") to which the Company is a party or is
otherwise bound (such Intellectual Property, together with the Company
License Agreements the "Company Intellectual Property").
(c) Schedule 5.16(c) sets forth, for the material Intellectual
Property owned by the Company, a complete and accurate list of all United
States, foreign, international and state (i) patents and patent
applications, (ii) Trademark registrations and applications and material
unregistered Trademarks, (iii) Internet domain names, and (iv) Copyright
registrations and applications and material unregistered Copyrights,
including Content and Software, indicating for each, the applicable
jurisdiction, registration number (or application number), and date issued
(or date filed).
(d) Except as set forth on Schedule 5.16(d), the Company
Intellectual Property owned by the Company is solely and exclusively owned
by the Company free and clear of all Liens, and the Company is listed in
the records of the appropriate United States, state or foreign agency as
the sole owner of record for each registration and application for any
Patent, Trademark, Internet domain name and Copyright that it owns. Except
as set forth on Schedule 5.16(d), all of the items set forth on Schedule
5.16(c) are valid and subsisting, in full force and effect, and have not
been cancelled, expired, or abandoned. There is no pending or, to the
Company's knowledge, threatened opposition, interference or cancellation
proceeding before any court or registration authority in any jurisdiction
against the items set forth on Schedule 5.16(c) or any other Company
Intellectual Property owned by the Company or, to the Company's knowledge,
against any Company Intellectual Property not owned by the Company.
(e) Except as set forth on Schedule 5.16(e), there are no
settlements, forebearances to ▇▇▇, consents, judgments, or orders or
similar obligations to which the Company is a party or is otherwise bound,
which (i) materially restrict the Company's rights to use any Company
Intellectual Property, (ii) materially restrict the Company's business in
order to accommodate a third party's Intellectual Property rights or
(iii) permit third parties to use any Intellectual Property which would
otherwise materially infringe any Company Intellectual Property. The
Company has not materially licensed or sublicensed its rights in any
Intellectual Property other than pursuant to the Company License Agreements
set forth on Schedule 5.16(e) and no royalties, honoraria or other fees are
payable by for the use of or right to use any Company Intellectual Property
in connection with the Company's business as currently conducted except
pursuant to the Company License Agreements set forth on Schedule 5.16(e).
(f) The Company License Agreements are valid and binding
obligations of the Company and, to the Company's knowledge, any other
parties thereto, enforceable in accordance with their terms, and there
exists no event or condition which will result in a violation or breach of,
or constitute (with or without due notice or lapse of time or both) a
default by the Company under any such Company License Agreement.
(g) To the Company's knowledge, no Trade Secret material to the
business of the Company as currently operated has been disclosed or
authorized to be disclosed to any third party, including any employee,
agent, contractor or other entity, other than pursuant to a non-disclosure
agreement that adequately protects the Company's proprietary interests in
and to such Trade Secrets. To the Company's knowledge, no party to any
non-disclosure agreement relating to such Trade Secrets is in breach
thereof.
(h) To the Company's knowledge, the conduct of the Company's
business as currently conducted and the Company Content do not materially
infringe upon any Intellectual Property owned or controlled by any third
party (either directly or indirectly such as through contributory
infringement or inducement to infringe) and is not materially libelous,
slanderous, defamatory, violative in any way of publicity or privacy
rights, or obscene. Except as set forth on Schedule 5.16(h), there are no
claims or suits pending or, to the Company's knowledge, threatened, and the
Company has not received any notice of a third party claim or suit, (i)
alleging that the Company's activities or the conduct of its businesses
infringes upon or constitutes the unauthorized use of the Intellectual
Property rights of any third party, nor alleging libel, slander,
defamation, or other violation of a personal right, or (ii) challenging the
ownership, use, validity or enforceability of any Company Intellectual
Property.
(i) To the Company's knowledge, no third party is materially
misappropriating, infringing, diluting, or otherwise violating any Company
Intellectual Property, and, except as set forth on Schedule 5.16(i), no
such claims are pending against a third party by the Company.
(j) Without limitation to the representations and warranties set
forth above in this Section 5.16, the Company represents and warrants that
there are no material restrictions on the Company Content owned by the
Company.
(k) The Company represents and warrants that (i) the Company has,
and ▇▇▇.▇▇▇ will have as of the Effective Time (as defined in the Merger
Agreement), (other than as set forth in the following clause (ii)) the
unrestricted right to use, copy, distribute, create derivative works from,
perform, display, transmit and otherwise exploit the Company Content,
including, but not limited to, all past, current and future music reviews
published by or on behalf of the Company on whatever media (the "CMJ Music
Reviews") and (ii) no other person or entity will have any rights
whatsoever in or to any Company Content, except for (A) rights set forth in
the contracts (other than the Linking Agreement, dated as of April 20,
1998, between the Company and CDnow, Inc., a Pennsylvania corporation (the
"CDnow Agreement")) listed on Schedule 5.16(k) and (B) the right of CDnow,
Inc., pursuant to the CDnow Agreement, (x) to be the only online retail
seller of recorded music licensed to use, copy or display the CMJ Music
Reviews over the Internet and (y) to have the right of first refusal to
license any other CMJ Content appearing in either CMJ New Music Report or
CMJ New Music Monthly, except for any chart or chart related data appearing
in either CMJ New Music Report or CMJ New Music Monthly (the rights in the
foregoing clause (B) collectively referred to herein as the "CDnow
Agreement Rights"). Notwithstanding subsection (A) above and
notwithstanding the CDnow Agreement Rights, CMJ has, and as of the
Effective Time ▇▇▇.▇▇▇ will have, the right to place any and all CMJ
Content, including the CMJ Music Reviews, on its Internet sites, including
in connection with its online retail sale of recorded music. None of the
agreements listed on Schedule 5.16(e) hereto conflict with or violate any
provisions of any of the other agreements listed on Schedule 5.16(e).
5.17 Year 2000 Compliance Matters. (a) Except as set forth on
Schedule 5.17, to the Company's knowledge after reasonable investigation,
all material Date Data and Date-Sensitive Systems used by the Company in
connection with its business as currently conducted , or in development or
on order, are Year 2000 Compliant, or are reasonably expected to be Year
2000 Compliant in a timely manner. "Date Data" means any data of any type
that includes date information or which is otherwise derived from,
dependent on or related to date information. "Date-Sensitive System" means
any Software, microcode or hardware system or component, including any
electronic or electronically controlled system or component, that processes
any Date Data (other than those licensed from third party providers).
"Year 2000 Compliant" means (i) with respect to Date Data, that such data
is in proper format and accurate for all dates in, or spanning, the
twentieth and twenty-first centuries, and (ii) with respect to Date-
Sensitive Systems, that each such system accurately processes all Date
Data, including for the twentieth and twenty-first centuries, without loss
of any functionality, interoperability or performance, including but not
limited to calculating, comparing, sequencing, storing and displaying such
Date Data (including all leap year considerations), when used as a
stand-alone system, or in combination with other Software, hardware, or
Content that is Year 2000 Compliant and properly interfaces with that Date-
Sensitive System.
5.18 Related-Party Transactions. Except as set forth on Schedule
5.18, no employee, officer, or director of the Company or any of its
Subsidiaries or member of his or her immediate family is currently indebted
to the Company or any of its Subsidiaries, nor is the Company or any of its
Subsidiaries indebted (or committed to make loans or extend or guarantee
credit) to any of such individuals. Except as set forth on Schedule 5.18,
to the Company's knowledge, as of the date hereof none of such persons has
any direct or indirect ownership interest in any firm or corporation with
which the Company or any of its Subsidiaries is affiliated or any firm or
corporation that competes with the Company or any of its Subsidiaries,
except that employees, officers, or directors of the Company or any of its
Subsidiaries and members of their immediate families may own stock in an
amount not to exceed 5% of the outstanding capital stock of publicly traded
companies that may compete with the Company or any of its Subsidiaries or
the Purchaser. As of the date hereof, except as set forth on Schedule
5.18, and other than with respect to agreements for employment, copies of
which have been provided to the Purchaser, no employee, director, or
officer of the Company or any of its Subsidiaries and no member of the
immediate family of any employee, officer, or director of the Company or
any of its Subsidiaries is directly or indirectly interested in any
material contract with the Company or any of its Subsidiaries.
5.19 Title to Property and Assets. As of the date hereof, the
Company and its Subsidiaries own their property and assets free and clear
of all Liens, except such Liens that arise in the ordinary course of
business and do not materially impair the Company's or its Subsidiaries'
ownership or use of such property or assets. With respect to the property
and assets it leases, the Company and each of its Subsidiaries currently is
in compliance with such leases and, to the Company's knowledge, holds a
valid leasehold interest free of any Liens.
5.20 Insurance. The Company has, and its Subsidiaries have, in
full force and effect fire and casualty insurance policies, with extended
coverage, sufficient in amount (subject to reasonable deductibles) to allow
the Company and its Subsidiaries to replace any material assets or
properties of the Company and its Subsidiaries that might be damaged or
destroyed. Set forth on Schedule 5.20 is a list of all insurance policies
maintained by or for the benefit of the Company and its Subsidiaries and
their respective directors, officers, employees or agents.
5.21 Ownership of Company Common Stock. ▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇
▇▇▇▇▇ beneficially own 45 shares and 45 shares of Company Common Stock,
respectively, representing 37.126% and 37.126%, respectively, of the
outstanding Company Common Stock on a fully diluted basis (assuming
exercise of all outstanding rights to acquire Company Common Stock)
immediately prior to the Closing.
SECTION 6. Several Representations and Warranties of the
Stockholders.
Each of the Stockholders, severally as to such Stockholder itself
and not jointly, represents and warrants to, and agrees with, the Purchaser
that:
6.1 Validity, Power and Authority. All consents, approvals,
authorizations and orders necessary for the execution and delivery by such
Stockholder of this Agreement and the Power of Attorney and for the sale
and delivery of the Shares to be sold by such Stockholder hereunder, have
been obtained; and such Stockholder has the capacity to enter into this
Agreement and the Power of Attorney and to sell, assign, transfer and
deliver the Shares to be sold by such Stockholder hereunder. Assuming due
authorization, execution and delivery of this Agreement by the Purchaser,
this Agreement constitutes a valid and binding agreement of such
Stockholder enforceable against such Stockholder in accordance with its
terms. The execution, delivery and performance by such Stockholder of this
Agreement and the consummation by such Stockholder of the transactions
contemplated hereby require no action by or in respect of, or filing with,
any governmental body, agency, official or authority other than such
actions or filings which if not taken or made would not, individually or in
the aggregate have a Material Adverse Effect on such Stockholder or prevent
or materially delay the consummation of the Stock Purchase in accordance
with this agreement.
6.2 Absence of Conflicts. The sale of the Shares to be sold by
such Stockholder hereunder and the compliance by such Stockholder with all
of the provisions of this Agreement and the Power of Attorney and the
consummation by such Stockholder of the transactions herein and therein
contemplated will not conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, any
statute, indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which such Stockholder is a party or by which
such Stockholder is bound or to which any of the property or assets of such
Stockholder is subject, nor will such action result in any violation of the
provisions of or any statute or any order, rule or regulation of any court
or governmental agency or body having jurisdiction over such Stockholder or
the property of such Stockholder.
6.3 Valid Title. Such Stockholder has, and immediately prior to
the Closing such Stockholder will have, good and valid title to the Shares
to be sold by such Stockholder hereunder, free and clear of all liens,
encumbrances, equities or claims; and, upon delivery of such Shares and
payment therefor pursuant hereto, good and valid title to such Shares, free
and clear of all liens, encumbrances, equities or claims, will pass to the
Purchaser.
6.4 Investment Representations. Such Stockholder acknowledges and
agrees with the Purchaser that the Stock Consideration has not been
registered under the Securities Act and may not be offered or sold except
pursuant to registration or an exemption from the registration requirements
of the Securities Act. Such Stockholder further agrees that he has not
entered and will not enter into any transaction or arrangement with respect
to the sale, transfer or delivery of the Stock Consideration, other than
pursuant to any transaction that does not require registration under the
Securities Act.
6.5 Acquisition for Own Account. Such Stockholder is acquiring
the Stock Consideration for his own account for investment and not with a
view toward distribution in a manner which would violate the Securities
Act.
6.6 Ability to Protect Its Own Interests and Bear Economic Risks.
Such Stockholder represents that by reason of his business and financial
experience he has the capacity to protect his own interests in connection
with the transactions contemplated by this Agreement. Such Stockholder
further represents that he is able to bear the economic risk of an
investment in the Stock Consideration and has an adequate income
independent of any income produced from an investment in the Stock
Consideration, sufficient net worth to sustain a loss of all of his
investment in the Stock Consideration without economic hardship if such a
loss should occur.
6.7 Access to Information. Such Stockholder has been given access
to all Purchaser documents, records, and other information of the
Purchaser, has received physical delivery of all such documents, records
and information which such Stockholder has requested, and has had adequate
opportunity to ask questions of, and receive answers from, the Purchaser as
well as the Purchaser's officers, employees, agents, accountants, and
representatives concerning the Purchaser's business, operations, financial
condition, assets, liabilities, and all other matters relevant to his
investment in the Stock Consideration.
6.8 Expenses; No Brokers. Except as otherwise provided for herein
or otherwise agreed to in writing by the parties, all costs and expenses
incurred in connection with this Agreement and the transactions
contemplated by this Agreement shall be paid by the party incurring such
cost or expense, no broker's or finder's fees or commissions will be
payable by such Stockholder with respect to the transactions contemplated
by this Agreement, and such Stockholder hereby indemnifies and holds the
Purchaser harmless from any claim, demand or liability for broker's or
finder's fees alleged to have been incurred at the instance of such
Stockholder, its Affiliates or agents or any Person acting on behalf of or
at the request of such Stockholder, its Affiliates or agents.
6.9 Offering of Securities. Neither the Company, such Stockholder
nor any Person acting on their behalf has offered the Shares or any similar
securities of the Company to, or solicited any offers to buy any thereof
from, or otherwise approached or negotiated with respect thereto with, any
person or persons by any form of general solicitation or general
advertising or in any other manner as would subject the sale of any of the
Shares to the provisions of Section 5 of the Securities Act. Neither the
Company, such Stockholder nor any Person acting on their behalf has taken
or will take any action which would subject the sale of any of the Shares
to the provisions of Section 5 of the Securities Act. Neither the Company,
such Stockholder nor any of their Affiliates has, directly or through any
agent, sold, offered for sale, solicited offers to buy or otherwise
negotiated in respect of, any security (as defined in the Securities Act)
which is or will be integrated with the sale of the Shares in a manner that
would require the registration of the Shares under the Securities Act.
As used in this Agreement with reference to any Stockholder, any
gender word (such as "he" or "his") includes both the male and female
genders.
SECTION 7. Representations and Warranties of the Purchaser.
The Purchaser hereby represents and warrants to the Stockholders as
follows:
7.1 Power and Authority. The Purchaser has all necessary
corporate power and authority to execute and deliver this Agreement and the
documents contemplated hereby, to issue and deliver the Stock Consideration
to which the Stockholders are entitled pursuant to this Agreement and to
perform its other obligations in accordance with the terms of this
Agreement.
7.2 Organization and Standing. The Purchaser has delivered to the
Company and the Stockholders true and complete copies of the certificate of
incorporation and by-laws of the Purchaser. The Purchaser is a corporation
duly organized, validly existing, and in good standing under the laws of
the State of Delaware. The Purchaser has all necessary corporate power and
authority to own, hold or lease its properties and to carry on its business
as now conducted.
7.3 Authorization and Binding Obligation. The execution,
delivery, and performance of this Agreement by the Purchaser have been duly
authorized by all necessary corporate action on the part of the Purchaser.
This Agreement has been duly executed and delivered by the Purchaser and
constitutes the legal, valid, and binding obligation of the Purchaser
enforceable against the Purchaser in accordance with its terms. All of the
shares of Purchaser Common Stock will be, when issued, validly issued,
fully paid and nonassessable, free of any Liens arising out of any act of
the Purchaser, except for restrictions under applicable federal and state
securities laws.
7.4 SEC Documents; Undisclosed Liabilities. (a) The Purchaser has
filed all required registration statements, prospectuses, reports,
schedules, forms, statements and other documents (including exhibits and
all other information incorporated therein) with the Securities and
Exchange Commission (the "SEC") since December 31, 1997 (the "SEC
Reports"). As of their respective dates, the SEC Reports complied in all
material respects with the requirements of the Securities Act or the 1934
Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such SEC Reports, and none of the SEC
Reports when filed contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The financial statements of
the Purchaser included in the SEC Reports comply as to form, as of their
respective dates of filing with the SEC, in all material respects with
applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with GAAP
(except, in the case of unaudited statements, as permitted by Form 10-Q)
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present in all material respects
the consolidated financial position of the Purchaser and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case
of unaudited statements, to normal year-end audit adjustments)
(b) There are no material liabilities of the Purchaser of a type
required to be reflected on a balance sheet of the Purchaser prepared in
accordance with GAAP, whether accrued, contingent, absolute, determined,
determinable or otherwise, other than:
(i) liabilities disclosed or provided for in the SEC Reports;
(ii) liabilities incurred since the date of the most recent
SEC Reports in the ordinary course of business or
publicly announced by the Purchaser through press
releases (the "Press Releases"); and
(iii) liabilities under this Agreement.
7.5 Investment Representations. The Purchaser hereby acknowledges
and agrees with the Stockholder that the Shares have not been registered
under the Securities Act and may not be offered or sold except pursuant to
registration or an exemption from the registration requirements of the
Securities Act. The Purchaser further agrees that it has not entered and
will not enter into any transaction or arrangement with respect to the sale
and transfer or delivery of the Shares, other than pursuant to any
transaction that does not require registration under the Securities Act.
7.6 Acquisition for Own Account. The Purchaser is acquiring the
Shares for its own account for investment and not with a view toward
distribution in a manner which would violate the Securities Act.
7.7 Ability to Protect Its Own Interests and Bear Economic Risks.
The Purchaser represents that by reason of its business and financial
experience, and the business and financial experience of its management,
the Purchaser has the capacity to protect its own interests in connection
with the transactions contemplated by this Agreement. The Purchaser
further represents that the Purchaser is able to bear the economic risk of
an investment in the Shares and has an adequate income independent of any
income produced from an investment in the Shares and has sufficient net
worth to sustain a loss of all of its investment in the Shares without
economic hardship if such a loss should occur.
7.8 Accredited Investor. The Purchaser represents that it is an
"accredited investor" as that term is defined in Regulation D promulgated
under the Securities Act.
7.9 Access to Information. The Purchaser has been given access to
all Company documents, records, and other information, has received
physical delivery of all such documents, records and information which the
Purchaser has requested, and has had adequate opportunity to ask questions
of, and receive answers from, the Company and the Stockholders as well as
the Company's officers, employees, agents, accountants, and representatives
concerning the Company's business, operations, financial condition, assets,
liabilities, and all other matters relevant to its investment in the
Shares.
7.10 Expenses; No Brokers. Except as otherwise provided for herein
or otherwise agreed to in writing by the parties, all costs and expenses
incurred in connection with this Agreement and the transactions
contemplated by this Agreement shall be paid by the party incurring such
cost or expense, no broker's or finder's fees or commissions will be
payable by the Purchaser with respect to the transactions contemplated by
this Agreement, and the Purchaser hereby indemnifies and holds the Company
and the Stockholders harmless from any claim, demand or liability for
broker's or finder's fees alleged to have been incurred at the instance of
the Purchaser, its Affiliates or agents or any Person acting on behalf of
or at the request of the Purchasers, its Affiliates or agents.
7.11 Absence of Certain Changes. Since December 31, 1998 and,
prior to the date hereof, the Purchaser has conducted its business in the
ordinary course and there has not been any event, the occurrence or
development of which, individually or in the aggregate, would have a
Material Adverse Effect on the Purchaser that have not been disclosed in
the SEC Reports or the Press Releases.
SECTION 8. Covenants of The Company, The Stockholders and The
Purchaser.
The parties hereto agree that:
8.1 Best Efforts.
(a) The Company, the Stockholders and the Purchaser shall each
cooperate with the others and use (and shall cause their respective
Subsidiaries to use) their respective commercially reasonable best efforts
to promptly (i) take or cause to be taken all necessary actions, and do or
cause to be done all things, necessary, proper or advisable under this
Agreement and applicable laws to consummate and make effective the Stock
Purchase and the other transactions contemplated by this Agreement as soon
as practicable, including, without limitation, preparing and filing
promptly and fully all documentation to effect all necessary filings,
notices, petitions, statements, registrations, submissions of information,
applications and other documents and (ii) obtain all approvals, consents,
registrations, permits, authorizations and other confirmations required to
be obtained from any third party necessary, proper or advisable to
consummate the Stock Purchase and the other transactions contemplated by
this Agreement.
8.2 Access to Information.
Subject to the terms set forth in that certain Letter of Intent among
the Company, the Stockholders and the Purchaser, dated September 13, 1999
(the "Letter of Intent"), which is incorporated by reference herein,
respecting confidentiality and certain other matters, each of the parties
hereto shall afford each other's employees, auditors, legal counsel and
other authorized representatives, all reasonable opportunity and access
during normal business hours to inspect, investigate, audit and interview
the respective assets, liabilities, contracts, each of the other's
operations, business, employees and officers before the Closing. These
activities shall be conducted in a reasonable manner during regular
business hours using reasonable efforts to minimize interference with each
party's respective business operations. Each of the parties hereto shall
promptly and completely provide all disclosures requested by the other
parties or their agents.
8.3 Public Announcements.
At the proper time, as determined by the parties hereto in good faith
consultation with each other, the parties hereto shall issue a press
release or make a public statement concerning the Stock Purchase and the
related transactions containing disclosure which is mutually agreeable to
the parties; provided, that prior to the issuance of a press release, none
of the parties hereto shall make any announcement of such transaction or
disclose the existence of and/or particulars of any negotiations related
thereto, including, but not limited to, the terms, conditions,
consideration to be paid or other facts related to the Stock Purchase and
the related transactions, except to the extent permitted by the Letter of
Intent. Notwithstanding the foregoing, the Purchaser may make such
disclosures as may be required (based on the advice of counsel) due to its
status as a public company, after good faith consultation with the other
parties hereto.
8.4 Notices of Certain Events.
(a) Each of the parties hereto shall promptly notify the other
party of: (i) any notice or other communication from any Person alleging
that the consent of such Person is or may be required in connection with
the transactions contemplated by this Agreement if the failure of any of
the parties hereto, as the case may be, to obtain such consent would result
in a Material Adverse Effect on any of the parties hereto, as applicable;
and (ii) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions
contemplated by this Agreement.
(b) The parties hereto shall promptly notify the other party of
any actions, suits, claims, investigations or proceedings commenced or, to
the best of its knowledge threatened against, relating to or involving or
otherwise affecting such party or any of its Subsidiaries which relate to
the consummation of the transactions contemplated by this Agreement.
SECTION 9. Covenants of the Company.
The Company covenants that:
9.1 Conduct of the Company. From the date of this Agreement until
the Closing, the Company shall, and shall cause its Subsidiaries to,
subject to the last sentence of this Section 9, conduct their business in
the ordinary course consistent with past practice and shall use their
commercially reasonable best efforts to preserve intact their business
organizations and relationships with third parties. Without limiting the
generality of the foregoing and subject to the last sentence of this
Section 9, without the prior written consent of the Purchaser (which
consent shall not be unreasonably withheld), from the date of this
Agreement until the Closing:
(a) The Company will not, and will not permit any of its
Subsidiaries to, adopt or propose any change in its certificate of
incorporation or by-laws;
(b) The Company will not, and will not permit any Subsidiary of
the Company to, adopt a plan or agreement of complete or partial
liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of the Company or any of its
Subsidiaries;
(c) The Company will not, and will not permit any of its
Subsidiaries to, issue, sell, transfer, pledge, dispose of or encumber any
shares of, or securities convertible into or exchangeable for, or options,
warrants, calls, commitments or rights of any kind to acquire, any shares
of capital stock of any class or series of the Company or its any of its
Subsidiaries;
(d) The Company will not (i) split, combine, subdivide or
reclassify its outstanding shares of capital stock, or (ii) declare, set
aside or pay any dividend or other distribution payable in cash, stock or
property with respect to its capital stock;
(e) The Company will not, and will not permit any of its
Subsidiaries to, redeem, purchase or otherwise acquire directly or
indirectly any shares of capital stock of the Company or any Subsidiaries
of the Company (other than a wholly-owned Subsidiary);
(f) The Company will not amend the terms (including the terms
relating to accelerating the vesting or lapse of repurchase rights or
obligations) of any employee or director stock options or other stock based
awards;
(g) The Company will not, and will not permit any of its
Subsidiaries to, (i) grant any severance or termination pay to (or amend
any such existing arrangement with) any director, officer or employee of
the Company or any of its Subsidiaries, (ii) enter into any employment,
deferred compensation or other similar agreement (or any amendment to any
such existing agreement) with any director, officer or employee of the
Company or any of its Subsidiaries, (iii) increase any benefits payable
under any existing severance or termination pay policies or employment
agreements, (iv) increase (or amend the terms of) any compensation, bonus
or other benefits payable to directors, officers or employees of the
Company or any of its Subsidiaries or (v) permit any director, officer or
employee who is not already a party to an agreement or a participant in a
plan providing benefits upon or following a "change in control" to become a
party to any such agreement or a participant in any such plan;
(h) The Company will not, and will not permit any of its
Subsidiaries to, acquire any assets or property of any other Person except
in the ordinary course of business consistent with past practice;
(i) The Company will not, and will not permit any of its
Subsidiaries to, sell, lease, license or otherwise dispose of any assets or
property except pursuant to existing contracts or commitments and except in
the ordinary course of business consistent with past practice;
(j) except for any such change which is required by reason of a
concurrent change in GAAP, the Company will not, and will not permit any of
its Subsidiaries to, change any method of accounting or accounting practice
used by it;
(k) The Company will not, and will not permit any of its
Subsidiaries to, enter into any joint venture, partnership or other similar
arrangement;
(l) The Company will not, and will not permit any of its
Subsidiaries to, take any action that would make any representation or
warranty of the Company hereunder inaccurate in any material respect at, or
as of any time prior to, the Closing Date;
(m) The Company will not make or change any material Tax election,
settle any material audit or file any material amended Tax Returns, except
in the ordinary course of business consistent with past practice;
(n) The Company will not enter into, amend or waive any provisions
of any standstill agreement; and
(o) The Company will not, and will not permit any of its
Subsidiaries to, agree or commit to do any of the foregoing.
Notwithstanding the foregoing, from the date hereof until the
Closing Date, the Company and its Subsidiaries may (x) make acquisitions of
property, assets or any business, (y) sell, transfer or otherwise dispose
of assets or property of the Company or any of its Subsidiaries or (z)
enter into any joint venture, partnership or other similar arrangements so
long as the Company has obtained the prior written consent of the Purchaser
prior to the consummation of any transaction referred to in the foregoing
clauses (x), (y) or (z).
SECTION 10. Covenants of the Stockholders.
Each of the Stockholders severally as to such Stockholder, and not
jointly, covenants that:
10.1 Compliance with Laws. Such Stockholder and his or her
transferees shall comply with all filing and other reporting obligations
under all laws, rules and regulations ("Requirements of Law") which may be
applicable to such Stockholder with respect to the transactions
contemplated hereby.
10.2 Third Party Transfers; Restrictive Legends. Such Stockholder
acknowledges that each certificate evidencing the Purchaser Common Stock
delivered as Stock Consideration shall be stamped or otherwise imprinted
with a legend in substantially the following form:
"The shares represented by this Certificate have not been
registered under the Securities Act of 1933 and may not be transferred
in the absence of such registration or an exemption therefrom under such
Act. The shares represented by this certificate are subject to the
limitations and may be transferred only in compliance with the
conditions contained in Sections 10 and 13 of the Stock Purchase
Agreement, dated as of November __, 1999, between College Media, Inc.,
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and Rare Medium
Group, Inc."
10.3 Blackout Period. Such Stockholder hereby agrees with the
Purchaser that from the date hereof and prior to the six month anniversary
of the Closing Date (the "Blackout Period"), he shall not sell, assign,
exchange, transfer, encumber, pledge, distribute, appoint or otherwise
dispose of (A) fifty percent (50%) of the shares of Purchaser Common Stock
received by such Stockholders at the Closing as Stock Consideration (the
"Non-Transferable Stock Consideration") or (B) any interest (including,
without limitation, an option to buy or sell) in such Non-Transferable
Stock Consideration.
10.4 Conduct of Company. ▇▇▇▇▇▇ ▇▇▇▇▇ will not permit the Company
to breach any of its obligations set forth in Section 9.1 hereof.
SECTION 11. Covenants of the Purchaser.
The Purchaser covenants that:
11.1 Compliance with Laws. The Purchaser and its transferees
shall comply with all filing and other reporting obligations under all
Requirements of Law which may be applicable to the Purchaser with respect
to the transactions contemplated hereby.
11.2 Third Party Transfers; Restrictive Legends. The Purchaser
acknowledges that each certificate evidencing the Shares shall be stamped
or otherwise imprinted with a legend in substantially the following form:
"The shares represented by this Certificate have not been
registered under the Securities Act of 1933 and may not be
transferred in the absence of such registration or an exemption
therefrom under such Act. The shares represented by this
Certificate are subject to the limitations and may be transferred
only in compliance with the conditions contained in Sections 11 and
12 of the Stock Purchase Agreement, dated as of November 12, 1999,
between College Media, Inc., certain Stockholders of College Media,
Inc., ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and
Rare Medium Group, Inc."
11.3 Reports Under Securities Exchange Act of 1934. With a view to
making available to the Stockholders the benefits of Rule 144 promulgated
under the Securities Act and any other rule or regulation of the SEC that
may at any time permit a Stockholder to sell the Purchaser Common Stock to
the public without registration, for a period not to exceed two years from
the Closing Date, the Purchaser agrees to use its commercially reasonable
best efforts to:
(a) make and keep available public information, as those terms are
understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and other
documents required of the Purchaser under the 1934 Act; and
(c) upon the request of a Stockholder, deliver to such Stockholder
a written statement as to whether it has complied with such
information and requirements.
11.4 Approval of Merger. In the event that any vote by
stockholders of the Company in connection with the Merger occurs after the
consummation of the Stock Purchase, the Purchaser agrees to vote the Shares
in favor of the Merger or consent thereto in writing (as applicable).
SECTION 12. Registration, Transfer and Substitution of
Certificates for Shares.
12.1 Stock Register; Ownership of Shares. (a) The Company will
keep at its principal office a register in which the Company will provide
for the registration of transfers of the Shares. The Company may treat the
Person in whose name any of the Shares are registered on such register as
the owner thereof and the Company shall not be affected by any notice to
the contrary. All references in this Agreement to a "holder" of any Shares
shall mean the Person in whose name such Shares are at the time registered
on such register.
12.2 Replacement of Certificates. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of any certificate representing Shares, and, in the case of any
such loss, theft or destruction, upon delivery of indemnity reasonably
satisfactory to the Company in form and amount or, in the case of any such
mutilation, upon surrender of such certificate for cancellation at the
office of the Company maintained pursuant to subdivision (a) of Section
13.1 hereof, the Company at its expense will execute and deliver, in lieu
thereof, a new certificate representing Shares of like tenor.
12.3 Notice of Proposed Transfer; Opinions of Counsel. Prior to
any transfer of any Shares, the holder thereof will give written notice to
the Company of such holder's intention to effect such transfer and to
comply in all other respects with this Section 12.3 and Section 11 hereof.
Each such notice shall describe the manner and circumstances of the
proposed transfer. If within 5 Business Days after receipt by the Company
of such notice, the Company requests an opinion of counsel for such holder
that the proposed transfer may be effected without registration of such
shares under the Securities Act, then the Company shall not be required to
register such transfer, and the holder thereof shall not be entitled to
effect such transfer, unless and until the Company receives such an opinion
(which counsel and opinion shall each be reasonably satisfactory to the
Company). Such holder shall thereupon be entitled to transfer such shares
in accordance with the terms of the notice delivered by such holder to the
Company. Each certificate representing such shares issued upon or in
connection with such transfer shall bear the restrictive legends required
by Section 11.2.
SECTION 13. Registration, Transfer and Substitution of
Certificates for Stock Consideration.
13.1 Stock Register; Ownership of Stock Consideration. (a) The
Purchaser will keep at its principal office a register in which the
Purchaser will provide for the registration of transfers of the Stock
Consideration. The Purchaser may treat the Person in whose name any of the
Stock Consideration is registered on such register as the owner thereof and
the Purchaser shall not be affected by any notice to the contrary. All
references in this Agreement to a "holder" of any Stock Consideration shall
mean the Person in whose name such Stock Consideration is at the time
registered on such register.
13.2 Replacement of Certificates. Upon receipt of evidence
reasonably satisfactory to the Purchaser of the loss, theft, destruction or
mutilation of any certificate representing Stock Consideration, and, in the
case of any such loss, theft or destruction, upon delivery of indemnity
reasonably satisfactory to the Purchaser in form and amount or, in the case
of any such mutilation, upon surrender of such certificate for cancellation
at the office of the Purchaser maintained pursuant to Section 13.1 hereof,
the Purchaser at its expense will execute and deliver, in lieu thereof, a
new certificate representing shares of Purchaser Common Stock of like
tenor.
13.3 Notice of Proposed Transfer; Opinions of Counsel. Prior to
any transfer of any shares of Purchaser Common Stock representing Stock
Consideration, the holder thereof will give written notice to the Purchaser
of such holder's intention to effect such transfer and to comply in all
other respects with this Section 13.3 and Section 10 hereof. Each such
notice shall describe the manner and circumstances of the proposed
transfer. If within 5 Business Days after receipt by the Purchaser of such
notice, the Purchaser requests an opinion of counsel for such holder that
the proposed transfer may be effected without registration of such Stock
Consideration under the Securities Act, then the Purchaser shall not be
required to register such transfer, and the Purchaser shall not be entitled
to effect such transfer, unless and until the Purchaser receives such an
opinion (which counsel and opinion shall each be reasonably satisfactory to
the Purchaser). Subject to complying with Section 10.3 hereof, such holder
shall thereupon be entitled to transfer such shares in accordance with the
terms of the notice delivered by such holder to the Purchaser.
Each certificate representing such shares issued upon or in connection with
such transfer shall bear the restrictive legends required by Section 10.2.
SECTION 14. Indemnification.
(a) ▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇ hereby jointly and severally agree to
indemnify the Purchaser against and agree to hold the Purchaser harmless
from any and all damage, loss, liability and expense (including, without
limitation, reasonable expenses of investigation and reasonable attorneys'
fees and expenses in connection with any action, suit or proceeding)
(collectively, "Loss") incurred or suffered by the Purchaser arising out of
any misrepresentation or breach of warranty, covenant or agreement made or
to be performed by the Company pursuant to this Agreement; provided that no
claim for indemnification against any Loss under this Section 14(a) shall
be asserted unless and until the cumulative total of the asserted Losses
under this Section 14(a) and Section 14(b) hereof exceeds $25,000; and
provided further, that the foregoing proviso shall not apply to any Loss
arising out of, resulting from or relating to any claim, action, suit or
proceeding by any person, entity or group which is not a party to this
Agreement or which is not an Indemnified Party (as hereinafter defined)
hereunder.
(b) Each Stockholder severally as to such Stockholder and not jointly
agrees to indemnify the Purchaser against and agrees to hold the Purchaser
harmless from any and all Loss incurred or suffered by the Purchaser
arising out of any misrepresentation or breach of warranty, covenant or
agreement made or to be performed by such Stockholder pursuant to this
Agreement; provided that no claim for indemnification against any Loss
under this Section 14(b) shall be asserted unless and until the cumulative
total of the asserted Losses under this Section 14(b) and Section 14(a)
exceeds $25,000, other than a claim for the failure by any Stockholder to
deliver the Shares as provided for under Section 3.2; and provided further,
that the foregoing proviso shall not apply to any Loss arising out of,
resulting from or relating to any claim, action, suit or proceeding by any
person, entity or group which is not a party to this Agreement or which is
not an Indemnified Party (as hereinafter defined) hereunder.
(c) The Purchaser agrees to indemnify the Stockholders against and
agrees to hold the Stockholders harmless from any and all Loss incurred or
suffered by the Stockholders arising out of any misrepresentation or breach
of warranty, covenant or agreement made or to be performed by the Purchaser
pursuant to this Agreement; provided, however, that no claim for
indemnification against any Losses under this Section 14(c) shall be
asserted unless and until the cumulative total of the asserted Losses under
this Section 14(c) exceeds $25,000, other than a claim for the failure by
the Purchaser to deliver the Consideration as provided for under Section
3.3; and provided further, that the foregoing proviso shall not apply to
any Loss arising out of, resulting from or relating to any claim, action,
suit or proceeding by any person, entity or group which is not a party to
this Agreement or which is not an Indemnified Party (as hereinafter
defined) hereunder.
(d) The party seeking indemnification under this Section 14 (the
"Indemnified Party") agrees to give prompt notice to the party against whom
indemnity is sought (the "Indemnifying Party") of the assertion of any
claim, or the commencement of any suit, action or proceeding in respect of
which indemnity may be sought under such Section. The Indemnifying Party
may, and at the request of the Indemnified Party shall, participate in and
control the defense of any such suit, action or proceeding at its own
expense. The Indemnifying Party shall not be liable under Section 14 for
any settlement effected without its consent of any claim, litigation or
proceeding in respect of which indemnity may be sought hereunder; provided
that such consent is not unreasonably withheld.
(e) The Indemnified Party shall cooperate fully in all aspects of any
matter for which indemnity is sought pursuant to this Section 14 with
respect to an action brought by a third party, including, in such case, by
providing reasonable access to employees and officers (as witnesses or
otherwise) and other information.
(f) Notwithstanding anything to the contrary above, the liability of
(i) the Stockholders in the aggregate or (ii) the Purchaser pursuant to
this Section 14 shall not exceed $4 million.
SECTION 15. Termination.
This Agreement may be terminated and the Stock Purchase may be abandoned
at any time prior to the Closing Date:
(a) by mutual written consent of the parties hereto;
(b) by the Purchaser or the Stockholders, if the Merger has not
been consummated prior to February 12, 2000; or
(c) upon termination of the Merger Agreement pursuant to Section
11.1 thereof.
If the Agreement is terminated pursuant to this Section 15, the
Agreement shall become void and of no effect with no liability on the part
of any party hereto, except that the agreements contained in this Section
15, and in Section 16.4, shall survive the termination hereof.
SECTION 16. Miscellaneous
16.1 Notices.
All notices, requests and other communications to any party hereunder
shall be in writing (including facsimile or similar writing) and shall be
given,
if to the Company, to:
College Media, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Rosenman & Colin LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Stockholders, to:
▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
if to the Purchaser, to:
Rare Medium Group, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
if to ▇▇▇.▇▇▇, to:
▇▇▇.▇▇▇, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
Rosenman & Colin LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address or facsimile number as such party may hereafter
specify for the purpose by notice to the other parties. Each such notice,
request or other communication shall be effective (a) if given by
facsimile, when such facsimile is transmitted to the facsimile number
specified in this Section and the appropriate facsimile confirmation is
received or (b) if given by any other means, when delivered at the address
specified in this Section.
16.2 Survival of Representations and Warranties.
The representations and warranties contained (i) in Sections 5.1 through
5.5, 5.16(k), 6.1 through 6.8, 6.10, 6.11, 7.1 through 7.3 and 7.5 through
7.9 hereof shall survive the execution and delivery of this Agreement for
the period of the statute of limitations applicable to a claim for breach
of such representations and warranties (ii) in Sections 5.8, 5.10, 5.13,
5.15, 5.17, 5.18, 5.20 shall survive through the first anniversary of the
execution and delivery of this Agreement and (iii) all other Sections of
this Agreement shall survive through the second anniversary of the
execution and delivery of this Agreement.
At the end of the applicable survival period set forth above, the
Purchaser, the Company and the Stockholders shall, without further action
as to such representations and warranties, be deemed to have fully released
each other from any and all responsibilities arising thereunder unless
during such period a party shall have notified another party in writing of
the nature and particulars of any claimed misrepresentation or breach by
the other party or that party's assertion of a Consideration Reduction.
16.3 Amendments; No Waivers.
(a) Any provision of this Agreement (including the annex and
Schedules hereto) may be amended or waived prior to the Closing Date, if,
and only if, such amendment or waiver is in writing and signed by all of
the parties hereto.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
16.4 Expenses.
Except as otherwise provided for herein or otherwise agreed to in
writing by the parties, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated by this Agreement shall be
paid by the party incurring such cost or expense.
16.5 Successors and Assigns.
The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
None of the parties hereto may assign any of their rights or obligations
hereunder without the consent of all of the other parties hereto except
that the Purchaser, without the consent of the other parties hereto, may
assign its rights to purchase the Shares under this Agreement to any
Affiliate of the Purchaser.
16.6 Governing Law.
This Agreement shall be construed in accordance with and governed by the
law of the State of New York, without regard to principles of conflicts of
law.
16.7 Jurisdiction.
Any suit, action or proceeding seeking to enforce any provision of, or
based on any matter arising out of or in connection with, this Agreement or
the transactions contemplated hereby may be brought in any federal or state
court located in the State of New York, and each of the parties hereby
consents to the jurisdiction of such courts (and of the appropriate
appellate courts therefrom) in any such suit, action or proceeding and
irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of any such
suit, action or proceeding in any such court or that any such suit, action
or proceeding which is brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be
served on any party anywhere in the world, whether within or without the
jurisdiction of any such court. Without limiting the foregoing, each party
agrees that service of process on such party as provided in Section 16.1
shall be deemed effective service of process on such party.
16.8 Waiver of Jury Trial.
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT
TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
16.9 Counterparts; Effectiveness.
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument. This Agreement shall
become effective when each party hereto shall have received counterparts
hereof signed by all of the other parties hereto.
16.10 Entire Agreement.
This Agreement (including the Annexes and Schedules) constitutes the
entire agreement between the parties with respect to the subject matter of
this Agreement and supersede all prior agreements and understandings, both
oral and written, between the parties with respect to the Stock Purchase.
No provision of this Agreement or any other agreement contemplated hereby
is intended to confer on any Person other than the parties hereto any
rights or remedies.
16.11 Captions.
The captions herein are included for convenience of reference only and
shall be ignored in the construction or interpretation hereof.
16.12 Severability.
If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or arbitrator having jurisdiction
to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or
invalidated so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such a determination, the parties shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby be consummated as originally contemplated
to the fullest extent possible.
IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase
Agreement to be duly executed as of the day and year first above written.
RARE MEDIUM GROUP, INC.
By:/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President, Secretary
and General Counsel
COLLEGE MEDIA, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: President
STOCKHOLDERS
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇
By: ▇▇▇▇▇▇ ▇▇▇▇▇, Attorney-in-Fact
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇ ▇▇▇▇▇
By: ▇▇▇▇▇▇ ▇▇▇▇▇, Attorney-in-Fact
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇
By: ▇▇▇▇▇▇ ▇▇▇▇▇, Attorney-in-Fact
ANNEX A
STOCK PURCHASE ALLOCATION SCHEDULE
Total Number of
Shares to be Sold
-----------------
Stockholders: 13.636125
▇▇▇▇▇▇ ▇▇▇▇▇ 13.636125
▇▇▇ ▇▇▇▇▇ 1.515125
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 1.515125
Total . . . . . . . . . . . . . 30.3025
Each of the Stockholders (other than ▇▇▇▇▇▇ ▇▇▇▇▇) has appointed
▇▇▇▇▇▇ ▇▇▇▇▇ as the Attorney-in-Fact.