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AMENDED AND RESTATED
SECURITIES PURCHASE AGREEMENT
BY AND AMONG
NETVOICE TECHNOLOGIES CORPORATION,
BG MEDIA INTERMEDIATE FUND L.P.,
NV INVESTMENTS, L.P.,
PARIBAS NORTH AMERICA, INC.
AND THE OTHER INVESTORS LISTED ON THE SCHEDULES HERETO
Dated as of July 28, 2000
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SECURITIES PURCHASE AGREEMENT
TABLE OF CONTENTS
Page
SECTION 1. Definitions.....................................................................................1
SECTION 2. Authorization of the Series A Preferred Shares and Warrants and Reservation of Reserved Shares..7
SECTION 3. Issuance of the Series A Preferred Shares and Warrants..........................................7
SECTION 4. Closing; Delivery...............................................................................8
4.1. Time and Place..................................................................................8
4.2. Delivery........................................................................................8
SECTION 5. Representations and Warranties of the Corporation...............................................8
5.1. Organization....................................................................................9
5.2. Capitalization; Ownership of Shares of Common Stock; Rights of Others...........................9
5.3. Equity Investments.............................................................................11
5.4. Financial Information and SEC Reports..........................................................11
5.5. Absence of Undisclosed Liabilities.............................................................12
5.6. Absence of Changes.............................................................................12
5.7. Tax Matters....................................................................................13
5.8. Property.......................................................................................14
5.9. Intellectual Property Rights...................................................................14
5.10. Litigation.....................................................................................17
5.11. No Defaults....................................................................................17
5.12. Labor Agreements and Actions...................................................................17
5.13. Compliance.....................................................................................18
5.14. Insurance......................................................................................18
5.15. Authorization; No Breach.......................................................................18
5.16. Authorization of Series A Preferred Shares and Reserved Shares.................................19
5.17. Offering Exemption.............................................................................19
5.18. No Governmental Consent or Approval Required...................................................19
5.19. Agreements.....................................................................................20
5.20. Offering of the Series A Preferred Shares......................................................20
5.21. Brokers........................................................................................20
5.22. Employee Benefits; ERISA.......................................................................21
5.23. Environmental Matters..........................................................................22
5.24. Disclosure.....................................................................................22
5.25. Registration Requirements......................................................................22
5.26. No Solicitation................................................................................22
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5.27. Integration....................................................................................22
SECTION 6. Representations, Warranties and Covenants of the Investors.....................................23
6.1. General........................................................................................23
6.2. Additional Representation by Accredited Investors..............................................24
SECTION 7. Conditions to Initial Closing..................................................................24
7.1. Conditions Precedent to Initial Investors' Obligations.........................................24
7.2. Conditions Precedent to Subsequent Investors' Obligations......................................26
7.3. Conditions Precedent to the Corporation's Obligations..........................................27
SECTION 8. Covenants......................................................................................28
8.1. Access to Information..........................................................................28
8.2. Financial Reports..............................................................................28
8.3. Conduct of Business............................................................................29
8.4. Insurance......................................................................................29
8.5. Use of Proceeds................................................................................30
8.6. Reserve for Reserved Shares....................................................................30
8.7. Maintenance of Reporting Status; Supplemental Information......................................30
8.8. Rule 144.......................................................................................31
8.9. Notice of Events of Default; Litigation........................................................31
8.10. Maintenance of Existence; Properties and Franchises; Compliance with Law; Taxes; Insurance.....31
8.11. Compliance with Agreements.....................................................................32
8.12. Further Assurances.............................................................................32
8.13. Best Efforts...................................................................................32
8.14. Public Announcements...........................................................................33
8.15. Preemptive Rights..............................................................................33
8.16. Election of the BG Media Director..............................................................33
8.17. Committee and Subsidiary Representation........................................................34
8.18. Covenant to Vote...............................................................................34
8.19. Inconsistency with Articles of Incorporation or Bylaws; Termination of Provisions..............34
8.20. NASDAQ Listing; Directors and Officers Insurance...............................................35
8.21. Completion of the IPO..........................................................................35
8.22. Intellectual Property..........................................................................35
8.23. Share Certificates.............................................................................36
SECTION 9. Fees...........................................................................................37
SECTION 10. Exchanges; Lost, Stolen or Mutilated Certificates or Instruments...............................37
SECTION 11. Survival of Representations, Warranties and Agreements, Etc....................................37
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SECTION 12. Indemnification................................................................................38
12.1. The Corporation's Obligations to Indemnify.....................................................38
12.2. Notice and Opportunity to Defend...............................................................38
12.3. Procedures for Claims by Parties...............................................................39
SECTION 13. Appointment of Representative..................................................................40
SECTION 14. Successors and Assigns; Parties in Interest....................................................42
SECTION 15. Entire Agreement...............................................................................42
SECTION 16. Notices........................................................................................42
SECTION 17. Remedies.......................................................................................44
SECTION 18. Changes........................................................................................44
SECTION 19. Counterparts...................................................................................44
SECTION 20. Headings.......................................................................................44
SECTION 21. Nouns and Pronouns.............................................................................44
SECTION 22. Governing Law..................................................................................44
SECTION 23. Severability...................................................................................44
SECTION 24. Jurisdiction...................................................................................44
SECTION 25. Waiver of Trial by Jury........................................................................45
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Exhibits:
EXHIBIT A Certificate of Designation
EXHIBIT B Form of EBITDA Warrant
EXHIBIT C Form of NASDAQ Warrant
EXHIBIT D Registration Rights Agreement
EXHIBIT E Regulated Investor Letter Agreement
EXHIBIT F Form of Opinion of ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇, counsel for the Corporation
Schedules:
SCHEDULE 1 Names and Addresses of BG Media Related Investors
SCHEDULE 2 Names of Investors/Purchase Price
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AMENDED AND RESTATED
SECURITIES PURCHASE AGREEMENT
THIS AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT (the
"Agreement") is made as of this 28th day of July, 2000, by and among NETVOICE
TECHNOLOGIES CORPORATION, a Nevada corporation (the "Corporation"), BG MEDIA
INTERMEDIATE FUND L.P., a Delaware limited partnership ("BG Media"), the
investors listed on Schedule I hereto as the Initial BG Media Related Investors
(the "Initial BG Media Related Investors"), the Investors listed on Schedule I
hereto as the Subsequent BG Media Related Investors (the "Subsequent BG Media
Related Investors", and together with the Initial BG Media Related Investors ,
the "BG Media Related Investors"), NV INVESTMENTS, L.P., a Texas limited
partnership ("NV Investments"), and PARIBAS NORTH AMERICA, INC., a Delaware
corporation ("Paribas" and, together with BG Media, the BG Media Related
Investors and NV Investments, and their respective transferees, the
"Investors").
WITNESSETH:
WHEREAS, the Corporation has issued to BG Media, the Initial
BG Media Related Investors and NV Investments (the "Initial Investors"), and the
Initial Investors have purchased, the Initial Series A Preferred Shares (as
hereinafter defined), subject to the terms and conditions of the Securities
Purchase Agreement dated as of June 30, 2000 (the "Original Agreement") among
the Corporation and the Initial Investors;
WHEREAS, the Corporation intends to issue to Paribas and the
Subsequent BG Media Related Investors (the "Subsequent Investors"), and the
Subsequent Investors desire to purchase, the Subsequent Shares (as hereinafter
defined), subject to the terms and conditions contained herein; and
WHEREAS, the Corporation and the Initial Investors desire to
amend and restate the Original Agreement.
NOW, THEREFORE, in consideration of the premises contained
herein and other good and valuable consideration, receipt of which is mutually
acknowledged, the parties hereto agree as follows:
SECTION 1. Definitions. All capitalized terms used in this
Agreement shall have the meanings assigned to them elsewhere in this Agreement
or as specified below:
"Action" shall have the meaning set forth in Section 5.10
hereof.
"Amendment" shall mean the Amendment to the Certificate of
Designation filed July 26, 2000 with the Secretary of State of the State of
Nevada.
"Amended Certificate of Designation" shall mean the
Certificate of Designation, as amended by the Amendment.
"Asserted Liability" shall have the meaning set forth in
Section 12.2(a) hereof.
"Audited Balance Sheet" shall have the meaning set forth in
Section 5.5 hereof.
"BG Media Investors" shall mean BG Media, the BG Media Related
Investors and any Person or Persons (including subsequent transferees of such
Person or Persons) to whom BG Media or the BG Media Related Investors
subsequently transfer any of their respective Shares.
"Certificate of Designation" shall mean the Certificate of
Designation and Preferences of the Corporation establishing the terms and
relative rights and preferences of the Series A Preferred Stock in the form
attached hereto as Exhibit A and filed with the Secretary of State of the State
of Nevada on June 29, 2000 as in effect prior to the filing and effectiveness of
the Amendment.
"Claim Response" shall have the meaning set forth in Section
12.3 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Commission" shall mean the United States Securities and
Exchange Commission.
"Common Stock" shall mean (a) the Corporation's Common Stock,
par value $0.001 per share, as authorized under the Corporation's Articles of
Incorporation, (b) any other capital stock of any class or classes (however
designated) of the Corporation, authorized on or after the date of the Initial
Closing, the holders of which shall have the right, without limitation as to
amount, either to all or to a share of the balance of current dividends and
liquidating distributions after the payment of dividends and distributions on
any shares entitled to preference under the Articles of Incorporation (as the
same may be further amended from time to time after the Initial Closing), and
(c) any other securities into which or for which any of the securities described
in clause (a) or (b) of this definition may be converted or exchanged pursuant
to a plan of recapitalization, reorganization, merger, sale of assets or
otherwise.
"Convertible Securities" shall mean any option (other than any
option issued pursuant to the Corporation's stock option plans), warrant or
share in the capital of the Corporation or any other security, including debt
securities, which is convertible into, or exercisable or exchangeable for,
shares of Common Stock, including the Series A Preferred Shares.
"Designated Persons" shall mean the former and present
directors, officers and employees of, and consultants to, the Corporation.
"EBITDA Warrants" shall mean the Corporation's contingent
warrants issued hereunder for Series A Preferred Stock or Common Stock in
connection with the Initial Investment and the Subsequent Investment,
substantially in the form attached hereto as Exhibit B.
"Employee Benefit Plan" shall have the meaning set forth in
Section 5.22(a) hereof.
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"Encom Acquisition" shall have the meaning set forth in
Section 7.1(p) hereof.
"Environmental Laws" shall have the meaning set forth in
Section 5.13 hereof.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"ERISA Affiliate" shall mean (i) any corporation included with
the Corporation in a controlled group of corporations within the meaning of
Section 414(b) of the Code; (ii) any trade or business (whether or not
incorporated) which is under common control with the Corporation within the
meaning of Section 414(c) of the Code; (iii) any member of an affiliated service
group of which the Corporation is a member within the meaning of Section 414(m)
of the Code; or (iv) any other person or entity treated as an affiliate of the
Corporation under Section 414(o) of the Code.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission promulgated
thereunder, all as the same shall be in effect at the time.
"Exercised Options" shall have the meaning set forth in
Section 7.1(q) hereof.
"Exercising Option Holders" shall mean ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇▇.
"Executive Compensation Plan" shall have the meaning set forth
in Section 5.22(b) hereof.
"GAAP" shall mean generally accepted accounting principles in
the United States, consistently applied.
"Hazardous Substances" shall mean any substance regulated
under any federal, state or local environmental law or regulation.
"Indebtedness" means at a particular time, without
duplication, (i) any indebtedness for borrowed money or issued in substitution
for or exchange of indebtedness for borrowed money, (ii) any indebtedness
evidenced by any note, bond, debenture or other debt security, (iii) any
indebtedness for the deferred purchase price of property or services with
respect to which a Person is liable, contingently or otherwise, as obligor or
otherwise (other than trade payables and other current liabilities incurred in
the ordinary course of business), (iv) any commitment by which a Person assures
a creditor against loss (including, without limitation, contingent reimbursement
obligations with respect to letters of credit), (v) any indebtedness guaranteed
in any manner by a Person (including, without limitation, guarantees in the form
of an agreement to repurchase or reimburse), (vi) any obligations under
capitalized leases with respect to which a Person is liable, contingently or
otherwise, as obligor, guarantor or otherwise, or with respect to which
obligations a Person assures a creditor against loss, (vii) any indebtedness
secured by a Lien on a Person's assets and (viii) any unsatisfied obligation for
"withdrawal liability" to a "multiemployer plan" as such terms are defined under
ERISA.
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"Indemnified Party" shall have the meaning set forth in
Section 12.1 hereof.
"Initial Closing" shall have the meaning set forth in Section
4.1 hereof.
"Initial Investment" shall have the meaning set forth in
Section 3 hereof.
"Initial Shares" shall mean the shares of Series A Preferred
Stock issued in connection with the Initial Investment.
"Intellectual Property" shall mean all industrial and
intellectual property, including without limitation, Proprietary Information,
patents, patent applications, patent rights, mask works, mask work applications,
trademarks, trademark applications, trade names, trade dress, domain names,
service marks, service ▇▇▇▇ applications, copyrights, copyright applications,
industrial design rights and registrations and applications for registration of
industrial designs, know-how, certificates of public convenience and necessity,
franchises, licenses, trade secrets, proprietary processes and formulae.
"Investment" as applied to any Person means (i) any direct or
indirect purchase or other acquisition by such Person of any notes, obligations,
instruments, stock, securities or ownership interest (including partnership
interests and joint venture interests) of any other Person and (ii) any capital
contribution by such Person to any other Person.
"IPO" shall mean an initial public offering by the Corporation
of its shares of Common Stock after the date of the Original Agreement yielding
net proceeds to the Corporation of at least $25,000,000
"Key Employee" shall mean individuals with whom the
Corporation maintains, on the specified date, an employer-employee relationship
and who are employed by the Corporation in any of the following capacities: the
chairman of the board of directors, president, vice president, chief financial
officer, treasurer, controller, secretary, any other executive officer of the
Corporation, any position in which such an individual develops any intellectual
property or has access to Proprietary Information or any other key employee of
the Corporation, as designated by the Board of Directors.
"Leased Real Property" shall have the meaning set forth in
Section 5.8(a) hereof.
"Leases" shall have the meaning set forth in Section 5.8(a)
hereof.
"Liens" shall mean any claim, lien, security interest, pledge,
charge, conditional sale or other title retention agreement, lease, preemptive
right, right of first refusal, option, restriction, license or other encumbrance
of any kind.
"Litigation Conditions" shall have the meaning set forth in
Section 12.2(b) hereof.
"Losses" shall have the meaning set forth Section 12.1 hereof.
"Material Adverse Effect" shall mean any change, effect or
circumstance that, individually or when taken together with all other such
changes, effects or circumstances that
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have occurred prior to the date of determination of the occurrence of a Material
Adverse Effect, has or is reasonably likely to have, any material adverse effect
on (i) the assets, liabilities, operations, business, prospects, results of
operations, or condition (financial or otherwise) of the Corporation and its
Subsidiaries taken as a whole, (ii) the ability of the Corporation to consummate
the transactions contemplated hereby or (iii) the ability of the Corporation or
any subsidiary to continue to operate its business immediately after the Initial
Closing or the Subsequent Closing in substantially the same manner as such
business is conducted prior to the Initial Closing or the Subsequent Closing, as
the case may be.
"NASDAQ Warrants" shall mean the Corporation's contingent
warrants issued hereunder for Series A Preferred Stock or Common Stock in
connection with the Initial Investment and the Subsequent Investment,
substantially in the form attached hereto as Exhibit C.
"New Securities" means (i) any capital stock of the
Corporation or its Subsidiaries issued after the date of the Original Agreement,
including shares of Common Stock and Convertible Securities, or any other
securities or other obligations of the Corporation or its Subsidiaries,
including any equity or profit participation rights, whether now authorized or
not, (ii) any rights, options, or warrants to purchase any such capital stock or
rights, or to purchase any securities of any type whatsoever that are, or may
become, convertible into any such capital stock, and (iii) any securities of any
type whatsoever that are, or may become convertible into any such capital stock;
provided, however, that "New Securities" will not include (A) securities offered
to the public pursuant to a registration statement under the Securities Act, (B)
shares of Common Stock and options to purchase such shares in an aggregate
amount up to the greater of (1) 2,000,000 or (2) 10% of the outstanding shares
of Common Stock of the Corporation, issued to officers, directors, employees or
former employees of the Corporation or any of its Subsidiaries pursuant to any
equity incentive plan, agreement or other arrangement, such number and amount to
be appropriately adjusted in the event the Common Stock is subdivided into a
greater number or combined into a lesser number, (C) the Series A Preferred
Shares, (D) the Reserved Shares, (E) the EBITDA Warrants and the NASDAQ
Warrants, and (F) securities issued for fair value and in connection with the
acquisition of another entity by the Corporation or its Subsidiaries by merger,
purchase of all or substantially all of such other entity's assets (or its
division's) or by other similar reorganization.
"Non-Accredited Investors" shall mean those Investors who are
not "accredited investors" within the meaning of Rule 501(a) under the
Securities Act and who are designated on Schedule I as "Non-Accredited
Investors."
"Person" shall mean and include an individual, a corporation,
a partnership, a limited liability company, a trust, an unincorporated
organization, a government or any department, agency or political subdivision
thereof and any other entity.
"Principal Investor" shall mean any Investor holding at the
time of determination Shares with an initial purchase price hereunder of at
least $1,000,000.
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"Proprietary Information" shall mean all customer lists,
source and object code, other software, databases and other collections and
compilations of data, algorithms, architecture, structure, display screens,
layouts, processes, inventions and technology (whether or not patentable), trade
secrets, know-how, development tools and other proprietary rights owned by the
Corporation and/or its Subsidiaries pertaining to any product or service
manufactured, marketed or sold, or proposed to be manufactured, marketed or sold
(as the case may be), by the Corporation or any of its Subsidiaries or used,
employed or exploited in the development, license, sale, marketing or
distribution or maintenance thereof, any other confidential and/or proprietary
information, and all documentation and media constituting, describing or
relating to the above, including without limitation, manuals, memoranda,
know-how, notebooks, records and disclosures.
"Register", "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of
effectiveness of such registration statement.
"Registration Rights Agreement" shall mean the Amended and
Restated Registration Rights Agreement among the Corporation and the other
parties named therein, substantially in the form attached hereto as Exhibit D.
"Regulated Investor" shall mean Paribas and any other Investor
which is subject to the provisions of Regulation Y promulgated by the Board of
Governors of the Federal Reserve, or any successor thereto.
"Regulated Investor Letter Agreement" shall mean the Letter
Agreement among the Corporation and the other parties named therein in the form
attached hereto as Exhibit E.
"Reserved Shares" shall mean the shares of Common Stock or
Series A Preferred Stock, as the case may be, reserved for issuance upon
conversion of the Series A Preferred Shares or exercise of the Warrants.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations of the Commission promulgated thereunder,
all as the same shall be in effect at the time.
"Series A Preferred Shares" shall mean the 4,398,658 shares of
Series A Preferred Stock to be issued hereunder, as either Initial Shares or
Subsequent Shares.
"Series A Preferred Stock" shall mean the Corporation's Series
A Convertible Preferred Stock, par value $0.001 per share, having the
designations, rights, preferences and privileges and qualifications, limitations
and restrictions of preferred stock set forth in the Certificate of Designation
prior to July 26, 2000 and in the Amended Certificate of Designation on and
after July 26, 2000.
"Shares" shall mean (i) shares of Common Stock and Series A
Preferred Stock issued to the Investors hereunder and (ii) any other shares in
the capital of the Corporation hereafter acquired by an Investor, including
shares issued upon conversion or exercise of any Convertible Security including
the Series A Preferred Shares.
"Subsequent Closing" shall have the meaning set forth in
Section 4.1 hereof.
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"Subsequent Investment" shall have the meaning set forth in
Section 3 hereof.
"Subsequent Shares" shall mean the shares of Series A
Preferred Stock issued in connection with the Subsequent Investment.
"Subsidiary" shall mean with respect to any entity, any
corporation, partnership, association or other business entity of which (i) if a
corporation, a majority of the total voting power of shares of stock entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors thereof is at the time owned or controlled, directly or indirectly, by
that entity or one or more of the other Subsidiaries of that entity or a
combination thereof, or (ii) if a partnership, association or other business
entity, a majority of the partnership or other similar ownership interest
thereof is at the time owned or controlled, directly or indirectly, by that
entity or one or more Subsidiaries of that entity or a combination thereof. For
purposes hereof, an entity or entities shall be deemed to have a majority
ownership interest in a partnership, association or other business entity if
such entity or entities shall be allocated a majority of partnership,
association or other business entity gains or losses or shall be or control the
managing director or a general partner of such partnership, association or other
business entity.
"Taxes" shall mean all taxes, charges, imposts, tariffs, fees,
levies or other similar assessments or liabilities, including without limitation
income taxes, ad valorem taxes, excise taxes, withholding taxes or other taxes
of or with respect to gross receipts, premiums, real property, personal
property, windfall profits, sales, use, transfers, licensing, employment,
payroll and franchises imposed by or under any law or other taxes, fees,
assessments or charges of any kind whatsoever; and such terms shall include any
interest, fines, penalties, assessments or additions to tax.
"Warrants" shall mean the Corporation's EBITDA Warrants and
NASDAQ Warrants.
SECTION 2. Authorization of the Series A Preferred Shares and
Warrants and Reservation of Reserved Shares. Subject to the terms and conditions
hereof, the Corporation has authorized the issuance of the Series A Preferred
Shares and the Warrants. The Corporation has also authorized the reservation of
the Reserved Shares, for issuance upon conversion of the Series A Preferred
Shares and exercise of the Warrants.
SECTION 3. Issuance of the Series A Preferred Shares and
Warrants.
Subject to the terms and conditions hereof and in reliance
upon the representations, warranties and agreements contained herein, (i) at the
Initial Closing, the Corporation issued and sold to the Initial Investors in the
aggregate 3,578,349 Series A Preferred Shares, 237,569 EBITDA Warrants and
201,020 NASDAQ Warrants upon payment of the aggregate purchase price therefor in
the amount of $10,690,626.25 (the "Initial Investment") and (ii) at the
Subsequent Closing, the Corporation shall issue and sell to the Subsequent
Investors in the aggregate 820,309 Series A Preferred Shares, 46,106 EBITDA
Warrants and 39,012 NASDAQ Warrants upon payment of the aggregate purchase price
therefor in the amount of $2,606,001.50 (the "Subsequent Investment"), in each
case as set forth on Schedule 2. Such 4,398,658 shares of Series A Preferred
Stock issued in connection with the Initial Investment and
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the Subsequent Investment represent, in the aggregate, 21.3% (the "Series A
Percentage") of the voting stock of the Corporation on a fully-diluted
as-if-converted basis (i.e., 21.3% of all shares of Common Stock outstanding
immediately after the Subsequent Closing and all shares of Common Stock
underlying options, warrants (other than the Warrants), preferred shares or
other interests outstanding immediately after the Subsequent Closing which are
exercisable, convertible or exchangeable for shares of Common Stock or
securities convertible into Common Stock). In the event that such 4,398,658
shares do not equal the Series A Percentage immediately after the Subsequent
Closing as a result of the existence of any shares of Common Stock (or options
or other interests exercisable, convertible or exchangeable for shares of Common
Stock) prior to the Subsequent Closing which are not disclosed on Schedule 5.2,
the Series A Preferred Shares issued and to be issued pursuant to this Section 3
shall be automatically increased (pro rata to each Investor and without any
further action by the Investors) by that number of Series A Preferred Shares
that when added to the Series A Preferred Shares which would otherwise be issued
to the Investors pursuant to this Section 3 shall equal an amount of Series A
Preferred Shares which represents the Series A Percentage immediately after the
Subsequent Closing. Any such adjustment shall be made promptly upon
determination of the discrepancy with the Series A Percentage, whether such
determination is made before or after the Initial Closing or the Subsequent
Closing.
SECTION 4. Closing; Delivery.
4.1. Time and Place. The initial closing of the transactions
contemplated under this Agreement, at which the Initial Investment was made (the
"Initial Closing"), took place at the offices of ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m. on June 30, 2000. The
subsequent closing of the transactions contemplated under this Agreement, at
which the Subsequent Investment shall be made (the "Subsequent Closing" and,
together with the Initial Closing, the "Closings") shall take place at such
offices of ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP at 10:00 a.m. a date mutually agreed to by
the parties hereto, but in any event not later than July 31, 2000, unless
otherwise mutually agreed to by the parties hereto.
4.2. Delivery. At the Closings, the Corporation delivered and
shall deliver, as the case may be, to each Investor (a) certificates registered
in its name and for the number of Series A Preferred Shares set forth opposite
such Investor's name on Schedule 2 hereto and (b) certificates registered in its
name for the number of EBITDA Warrants and NASDAQ Warrants, if any, in each case
as set forth opposite such Investor's name on Schedule 2, against payment of the
aggregate purchase price, net of fees and expenses as set forth in Section 9
hereof, by wire transfer in immediately available funds to a single account
designated by the Corporation, in each case as set forth on Schedule 1.
Notwithstanding the foregoing, all EBITDA Warrants and NASDAQ Warrants issued
and issuable to those BG Media Investors receiving Warrants hereunder were and
shall be issued in global certificates in the name of BG Media on behalf of such
BG Media Investors. In the event that any such Warrants become exercisable, the
Corporation shall, at the request of any individual BG Media Related Investor,
issue an individual warrant certificate to such BG Media Related Investor for
the number of EBITDA Warrants or NASDAQ Warrants, as the case may be, if any,
set forth opposite such BG Media Related Investor's name on Schedule 2.
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SECTION 5. Representations and Warranties of the Corporation.
The Corporation hereby represents and warrants to the Investors as follows (with
all references below to "the Corporation" being deemed to also be references to
the Subsidiaries of the Corporation, except in Sections 5.1, 5.2, 5.3, 5.4,
5.15, 5.16, 5.17 or 5.18):
5.1. Organization. The Corporation (a) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada, (b) has all requisite corporate power and authority and all material
licenses, permits and authorizations necessary to own, lease and operate its
properties and to carry on its business as presently conducted and (c) is duly
qualified as a foreign corporation and in good standing to do business in all
such jurisdictions, if any, in which the conduct of its business or its
ownership, leasing or operation of property requires such qualification, except
for those jurisdictions in which failure to so qualify would not have a Material
Adverse Effect. Each subsidiary of the Corporation (a) is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, (b) has all requisite corporate power and
authority and all material licenses, permits and authorizations necessary to
own, lease and operate its properties and to carry on its business as presently
conducted and (c) is duly qualified as a foreign corporation and in good
standing to do business in all such jurisdictions, if any, in which the conduct
of its business or its ownership, leasing or operation of property requires such
qualification, except for those jurisdictions in which failure to so qualify
would not reasonably be expected to have a Material Adverse Effect.
5.2. Capitalization; Ownership of Shares of Common Stock;
Rights of Others. (a) The authorized, issued and outstanding capital stock of
the Corporation as of the date of the Initial Closing, before giving effect to
the transactions contemplated hereby (including the Initial Investment), but
after filing the Certificate of Designation, consisted of:
(i) 50,000,000 shares of preferred stock, of which 5,250,000
shares were designated Series A Preferred Stock and no shares were issued; and
(ii) 100,000,000 shares of Common Stock, of which (x)
13,285,558 shares were duly authorized, validly issued and outstanding (prior to
taking into account the exercise of the Exercised Options), and fully paid and
nonassessable, and (y) 2,997,542 shares were duly reserved for issuance in
connection with the exercise of outstanding warrants, options and other
convertible instruments, including the Exercised Options but excluding the
convertible note issued in connection with the Encom Acquisition.
(b) The authorized capital stock of the Corporation,
immediately upon the consummation of the transactions contemplated hereby at the
Initial Closing, and giving effect thereto, consisted of:
(i) 50,000,000 shares of Preferred Stock, of which 5,250,000
shares were designated Series A Preferred Stock, consisting of (x) 3,578,349
shares which were duly authorized and validly issued to the Investors at the
Initial Closing and were outstanding, fully paid and nonassessable and (y)
438,589 shares which were duly reserved for issuance in connection with the
exercise of the Warrants; and
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(ii) 100,000,000 shares of Common Stock, of which (w)
14,785,558 were duly authorized and validly issued and were outstanding (after
taking into account the exercise of the Exercised Options), fully paid and
nonassessable, (x) 4,904,309 shares were duly reserved for issuance in
connection with the conversion of the Series A Preferred Shares, (y) 615,384
shares were duly reserved for issuance in connection with the exercise of the
Warrants, and (z) 1,407,542 shares were duly reserved for issuance in connection
with the exercise of outstanding warrants, options and convertible instruments
(after taking into account the exercise of the Exercised Options and the
issuance of the convertible note in connection with the Encom Acquisition) other
than Series A Preferred Stock and the Warrants.
(c) The authorized capital stock of the Corporation,
immediately upon the consummation of the transactions contemplated hereby at the
Subsequent Closing, and giving effect thereto, shall consist of:
(i) 50,000,000 shares of Preferred Stock, of which 5,250,000
shares have been designated Series A Preferred Stock, consisting of (x)
4,398,658 shares which shall have been duly authorized and validly issued to the
Investors and shall be outstanding, fully paid upon receipt of the purchase
price pursuant to Section 4 hereof and nonassessable and (y) 523,707 shares
which shall have been duly reserved for issuance in connection with the exercise
of the Warrants; and
(ii) 100,000,000 shares of Common Stock, of which (w)
14,785,558 shares shall have been duly authorized and validly issued and will be
outstanding, fully paid and nonassessable, (x) 4,398,658 shares shall have been
duly reserved for issuance in connection with the conversion of the Series A
Preferred Shares, (y) 523,707 shares shall have been duly reserved for issuance
in connection with the exercise of the Warrants, and (z) 1,245,166 shares shall
have been duly reserved for issuance in connection with the exercise of
outstanding warrants, options and convertible instruments other than Series A
Preferred Stock and the Warrants.
Other than as set forth above, there are no other shares of capital stock of the
Corporation authorized or issued. None of the outstanding shares of the
Corporation's capital stock have been issued in violation of any preemptive
rights of stockholders and all such shares have been offered and sold pursuant
to a valid exemption from registration under the Securities Act and otherwise in
compliance with the Securities Act. Schedule 5.2 attached hereto contains a list
of all outstanding warrants, options, agreements, convertible securities or
other commitments (contingent or otherwise) pursuant to which the Corporation is
or may become obligated to issue any shares of its capital stock or other
securities of the Corporation or any securities with profit participation
features or any stock appreciation rights or phantom stock plans, which names
all persons entitled to receive such shares or other securities and the shares
of capital stock or other securities required to be issued thereunder. Except as
set forth on Schedule 5.2 attached hereto, (x) there are no preemptive or
similar rights to purchase or otherwise acquire shares of capital stock of the
Corporation pursuant to any provision of law, the Articles of Incorporation or
Bylaws or any agreement or instrument to which the Corporation is a party, or
otherwise, except as provided for by this Agreement, and (y) there is no
agreement, restriction or encumbrance (such as a right of first refusal, right
of first offer, proxy, voting agreement, etc.) with respect to the sale or
voting of any shares of capital stock of the Corporation (whether outstanding or
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issuable upon conversion or exercise of outstanding securities) to which the
Corporation is a party, or, to the Corporation's knowledge, to which any other
Person is a party except as provided for by this Agreement or the Registration
Rights Agreement. Except as provided for by this Agreement and the Registration
Rights Agreement, no Person has any right to cause the Corporation to effect the
registration under the Securities Act of any shares of Common Stock or any other
securities (including without limitation, debt securities) of the Corporation.
(d) Except pursuant to this Agreement, the Registration Rights
Agreement or as set forth on Schedule 5.2 hereto, neither the Corporation, nor,
to the knowledge of the Corporation, any stockholder of the Corporation nor any
of his or her affiliates is a party to, or bound by, any arrangement, agreement,
instrument or order (i) relating to the transfer of any capital stock or equity
securities of the Corporation, (ii) relating to the dividend or voting rights of
any capital stock or equity securities of the Corporation or (iii) relating to
rights to registration under the Securities Act of any capital stock or equity
securities of the Corporation.
(e) No stockholder of the Corporation enjoys rights with
respect to his or its securities of the Corporation in the nature of rights of
first refusal, pre-emptive rights, tag-along rights, drag-along rights, rights
to elect directors or other rights customarily contained in a stockholders
agreement that are more favorable than those provided to the Investors
hereunder, other than rights of transferability enjoyed by holders of
non-restricted securities.
5.3. Equity Investments. Except as set forth on Schedule 5.3
hereto, the Corporation has never had, nor does it presently have, any
Subsidiaries, nor has it owned, nor does it presently own or have any obligation
or right to acquire, any capital stock or other proprietary interest or other
voting control, directly or indirectly, in any corporation, association, trust,
partnership, limited liability company, joint venture or other entity. The
Subsidiaries are incorporated in the jurisdictions set forth on Schedule 5.3 and
are wholly-owned by the Corporation. Except as set forth on Schedule 5.3, there
are no outstanding warrants, options, agreements, convertible securities,
preemptive rights or other commitments pursuant to which any shares or other
securities of such Subsidiaries may be issued. All of the outstanding shares of
capital stock of each subsidiary are validly issued, fully paid and
nonassessable, and, except as set forth on Schedule 5.3, all such shares are
directly or indirectly owned by the Corporation free and clear of any Lien and
not subject to any option or right to purchase any such shares.
5.4. Financial Information and SEC Reports. The Corporation
has timely filed all forms, reports and documents with the Commission required
to be filed by it under the Exchange Act through the date hereof (all of the
foregoing filed prior to the date hereof and all exhibits included therein and
financial statements and schedules thereto and documents (other than exhibits)
incorporated by reference therein, being referred to herein collectively as the
"SEC Reports"). The Corporation has delivered to the Investors true and complete
copies of the SEC Reports, including the exhibits and incorporated documents.
Such SEC Reports, at the time filed, complied in all material respects with the
requirements of the Exchange Act and the rules and regulations of the Commission
thereunder applicable to such SEC Reports. None of the SEC Reports, including
without limitation, any financial statements or schedules included therein (the
"Financial Statements", contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements made, in
light of the circumstances under which they were made, not misleading. There has
been no Material Adverse Effect since the date of the
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Corporation's Report on Form 10-KSB for the fiscal year ended December 31, 1999,
which has not been disclosed in the Corporation's SEC Reports or to the
Investors in writing and, to the Corporation's knowledge, no fact or condition
exists which might reasonably be expected to result in a Material Adverse Effect
in the future. The audited and unaudited consolidated balance sheets of the
Corporation and its Subsidiaries contained in the SEC Reports, and the related
consolidated statements of operations, stockholders' equity (deficit) and cash
flows for the periods then ended, including the footnotes thereto, except as
indicated therein, (i) complied in all material respects with applicable
accounting requirements and the published rules and regulations of the
Commission with respect thereto, (ii) have been prepared in accordance with GAAP
consistently applied throughout the periods indicated, except that the unaudited
financial statements do not contain notes and may be subject to normal audit
adjustments and normal annual adjustments. Such financial statements are
complete and correct in all material respects and fairly present the financial
condition of the Corporation and its Subsidiaries at the dates indicated and the
consolidated results of their operations and cash flows for the periods then
ended and, except as indicated therein, reflect all claims against and all
Indebtedness and liabilities of the Corporation and its Subsidiaries, fixed or
contingent.
5.5. Absence of Undisclosed Liabilities. Except as disclosed
on the face (i.e., not in the notes) of the Financial Statements, (a) the
Corporation has no material liability of any nature (matured or unmatured, fixed
or contingent) and (b) all liability reserves established by the Corporation are
consistent with GAAP. There are no loss contingencies (as such term is used in
Statement of Financial Accounting Standards No. 5 issued by the Financial
Accounting Standards Board in March 1975) that have not been provided for
consistent with GAAP on the December 31, 1999 balance sheet ("Audited Balance
Sheet") contained in the Financial Statements.
5.6. Absence of Changes. Since December 31, 1999, there have
been no material changes in the Corporation's accounting practice, procedures or
policies. Except as and to the extent set forth on Schedule 5.6 or as
contemplated hereby, since December 31, 1999, there has not been (a) any
Material Adverse Effect or any change or occurrence which could reasonably be
expected to have a Material Adverse Effect, (b) any borrowing or agreement to
borrow any funds or any material liability or obligation of any nature
whatsoever (contingent or otherwise) incurred by the Corporation, other than
current liabilities or obligations incurred in the ordinary course of business,
(c) any asset or property of the Corporation made subject to a Lien, (d) any
waiver of any material right of the Corporation, or the cancellation of any
material debt or claim held by the Corporation, (e) any payment of dividends on,
or other distributions with respect to, or any direct or indirect redemption or
acquisition of, any shares of the capital stock (including, without limitation,
any warrants, options or other rights to acquire its capital stock or other
equity securities) of the Corporation, or any agreement or commitment therefor,
(f) any issuance of any stocks, bonds or other securities of the Corporation or
options, warrants or rights or agreements or commitments to purchase or issue
such securities or grant such options, warrants or rights, (g) any mortgage,
pledge, sale, assignment or transfer of any tangible or intangible assets of the
Corporation, except with respect to tangible assets in the ordinary course of
business, (h) any loan or advance by the Corporation to, or guarantee for the
benefit of, any Persons in excess of $25,000 in the aggregate, or any agreement
or commitment therefor or any other transaction entered into or payment made by
the Corporation with or to an officer, director, employee, stockholder (or any
of their affiliates or relatives) or other affiliate of the Corporation,
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whether directly or indirectly, (i) any damage, destruction or loss (whether or
not covered by insurance) materially adversely affecting the assets, property or
business of the Corporation, (j) any change in any assumptions underlying or
methods of calculating, any bad debt, contingency, tax or other reserves or any
change in the accounting methods or practices followed by the Corporation, (k)
any material change in the manner or timing of collecting accounts receivable or
satisfying accounts payable, (l) any writing down of the value of any assets
except in accordance with the Corporation's historical depreciation policy as
reflected in the Financial Statements, consistently applied in accordance with
past practice, (m) any acquisition of any material assets, securities or any
business of any Person, (n) any entry by the Corporation into a transaction
outside of the ordinary course of business of the Corporation, (o) any material
adverse change or threat of any material adverse change in its relations with,
or any loss or threat of loss of, any of its important suppliers, clients,
distributors, brokers, employees, customers or subscribers, (p) any termination,
cancellation or breach of any Contract (as defined in Section 5.18 hereof),
whether by the Corporation or any other party thereto (other than a breach which
could not reasonably be expected to materially impact the Corporation's rights
or obligations under such Contract), (q) any grant of any material discounts or
rebates or any lowering or reduction of the prices of any of its services, (r)
any discharge or satisfaction of any Lien or payment of any obligation or
liability, other than current liabilities paid in the ordinary course of
business; (s) any sale, assignment or transfer of any of its tangible assets,
except in the ordinary course of business, or any cancellation of any debts or
claims; (t) any sale, assignment or transfer of any patents or patent
applications, trademarks, service marks, trade names, corporate names,
copyrights or copyright registrations, trade secrets or other intangible assets,
or any disclosure of any proprietary confidential information to any Person
other than disclosure subject to customary non-disclosure agreements; (u) any
Investment in or any steps taken to incorporate any subsidiary; or (v) any
commitment (contingent or otherwise) to do any of the foregoing.
5.7. Tax Matters. The Corporation has filed all foreign,
federal, state, county and local reports and returns or extensions with respect
to Taxes required to be filed with the appropriate governmental agencies in all
jurisdictions in which such reports and returns are required to be filed and all
such reports and returns are true, correct and complete in all material respects
as filed. All Taxes required to have been paid or accrued by the Corporation for
any tax period ended on or before December 31, 1999 have been fully paid or are
adequately provided for on the Audited Balance Sheet as of December 31, 1999.
Since December 31, 1999, the Corporation has not incurred any liability for
Taxes other than as a result of the operation of its business in the ordinary
course, consistent with past practice. To the Corporation's knowledge, no issues
have been raised which are currently pending by the Internal Revenue Service or
any other taxing authority concerning the Corporation's liability for Taxes, or
the liability of any person whose liability for Taxes is determined by reference
to the taxable income of the Corporation, and no waivers of statutes of
limitations have been given or requested with respect to the Corporation or any
such person. There is no tax lien of any kind outstanding against the assets,
property, or business of the Corporation. All deficiencies asserted or
assessments made by the Internal Revenue Service or by any other taxing
authorities with respect to Taxes with respect to the Corporation have been
fully paid or are adequately provided for on the Audited Balance Sheet as of
December 31, 1999 and no proposed (but unassessed) additional Taxes have been
asserted and the Corporation does not know of any set of circumstances which
exists that could give rise to any claim for Taxes with respect to any period
ending on or before the Closing Date. Since January 1, 1997, there have been no
audits of the Corporation conducted by the
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Internal Revenue Service. The Corporation: (i) has not elected to be treated as
a collapsible corporation pursuant to Section 341(f) of the Code; and (ii) has
not made any other elections pursuant to the Code (other than elections that
relate solely to matters of accounting, depreciation, or amortization) that
would have a Material Adverse Effect. The Corporation has not made any material
payments, is not obligated to make any material payments and is not a party to
any agreement that under certain circumstances could obligate it to make any
material payments that will not be deductible under Section 280G of the Code.
The Corporation is not a party to any tax allocation or sharing agreement. The
Corporation (i) has not been a member of an affiliated group filing a
consolidated federal income tax return (other than a group the common parent of
which was the Corporation), and (ii) does not have any liability for the Taxes
of any entity (other than the Corporation) under Treasury Regulation 1.1502-6
(or any similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.
5.8. Property.
(a) The Corporation does not own any real property. The
Corporation has (and will continue to have immediately after the Subsequent
Closing) (i) good, valid and indefeasible: (A) title to the leasehold estates
conveyed under the leases (the "Leases") of real property described in the SEC
Reports (the "Leased Real Property") and (B) leasehold title to the Leased Real
Property, and (ii) good and valid title to the other material assets and
properties the Corporation purports to own, tangible and intangible, in each
case free and clear of any Liens except as listed on Schedule 5.8.
(b) All of the material assets, tangible and intangible, used
or necessary to be used in the operation of the business of the Corporation are
owned, licensed or leased by the Corporation and, as of the Initial Closing and
the Subsequent Closing, will continue to be owned, licensed or leased by the
Corporation. All of the material tangible assets used or necessary to be used in
the operation of the business of the Corporation as of the date hereof are and
as of the Subsequent Closing, will be in good condition and repair, have been
well maintained and comply with all applicable laws, ordinances and regulations.
(c) The Corporation is in actual, exclusive possession of all
the Leased Real Property. The basic rent and all additional rent payable under
the Leases have been paid to date and not more than one month in advance.
(d) All Leases to which the Corporation is a party are in full
force and effect, and the Corporation is not in default under any Lease, nor, to
the knowledge of the Corporation, is any other party thereto in default
thereunder. No event has occurred which with notice or lapse of time or both
could cause default under any of the Leases.
5.9. Intellectual Property Rights. (a) Attached hereto as
Schedule 5.9(a) is a complete and correct list of the Intellectual Property used
or held for use by the Corporation and/or any of its Subsidiaries in the conduct
of its business setting forth as to each, as applicable: (i) the owner of each
such item, (ii) the jurisdictions in which the item is issued or registered, or
in which any application for issuance or registration is filed, (iii) the
respective issuance, registration or application number of each such item; and
(iv) the date of application and issuance or registration of each such item. The
Corporation and/or the applicable Subsidiaries of
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the Corporation, as applicable, has adequate and sufficient rights, whether
registered or unregistered, to use all Intellectual Property as currently used
in its business and as proposed to be used in its business, free and clear of
any Lien or competing rights or interests of others which would preclude or
otherwise impair the use by the Corporation and/or applicable Subsidiary(ies).
(b) The Corporation or the applicable Subsidiary of the
Corporation, as applicable, own(s) or is licensed or otherwise has the exclusive
right to use, and has the right to bring actions for the infringement, dilution,
misappropriation, or other violation of all patents, industrial design rights,
trademarks, service marks, trade names, trade dress, copyrights, mask works,
inventions, technology, know-how, designs, formulae, trade secrets, confidential
and proprietary information, computer software programs (other than standard,
commercially available programs), domain names, and other Intellectual Property
necessary for the operation of business of the Corporation and any applicable
Subsidiary of the Corporation as it is currently conducted or currently proposed
to be conducted. To the extent that any works of authorship, materials,
products, technology or software have been developed or created independently or
jointly by any person other than the Corporation or any applicable Subsidiary of
Corporation for which the Corporation or any applicable Subsidiary of
Corporation has, directly or indirectly, paid, the Corporation or the applicable
Subsidiary has a written agreement with such person with respect thereto, and
the Corporation or the applicable Subsidiary of Corporation thereby has obtained
ownership of, and is the exclusive owner of, all Intellectual Property therein
or thereto by operation of law or by valid assignment. In each case in which
either the Corporation or any applicable Subsidiary of Corporation has acquired
any Intellectual Property from any person, the Corporation or the applicable
Subsidiary has obtained a valid and enforceable assignment sufficient to
irrevocably transfer all rights in such Intellectual Property (including the
right to seek past and future damages with respect thereto) to the Corporation
or the applicable Subsidiary and, to the maximum extent provided for by, and in
accordance with, any applicable laws and regulations, the Corporation or the
applicable Subsidiary has recorded each such assignment with the relevant
governmental authorities, including the U.S. Patent and Trademark Office, the
U.S. Copyright Office, or their respective equivalents in any relevant foreign
jurisdiction.
(c) Schedule 5.9(c) contains a complete and accurate list of
all material licenses, sublicenses, consents and other agreements (whether
written or otherwise) (i) pertaining to any patents, industrial design rights,
trademarks, service marks, trade names, trade dress, copyrights, mask works,
trade secrets, computer software programs (other than standard, commercially
available programs), or other Intellectual Property used by the Corporation or
any Subsidiary of the Corporation in the conduct of its business, and (ii) by
which the Corporation or the applicable Subsidiary licenses or otherwise
authorizes a third party to use such Intellectual Property. None of the
Corporation, any Subsidiary of the Corporation or, to the knowledge of the
Corporation, any other party is in breach of or default under any such license,
sublicense, consent or other agreement and each such license, sublicense,
consent or other agreement is now and immediately following the Closing shall be
valid and in full force and effect. Except as explicitly indicated in Schedule
5.9(c), no person who has licensed any Intellectual Property to the Corporation
or any Subsidiary of the Corporation has ownership rights or license rights to
improvements or modifications made by the Corporation or any Subsidiary of the
Corporation in or with respect to such Intellectual Property or any works of
authorship, materials, products, technology or software embodying such
Intellectual Property. Except as explicitly indicated in
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Schedule 5.9(c), there are no contracts, licenses or agreements between the
Corporation or any Subsidiary of the Corporation and any other person with
respect to Intellectual Property of the Corporation or any Subsidiary of the
Corporation under which there is any dispute known to the Corporation or any of
its Subsidiaries regarding the scope of such agreement, or performance under
such agreement including with respect to any payments to be made or received by
the Corporation or any Subsidiary of the Corporation thereunder.
(d) All of the patents, trademark and service ▇▇▇▇
registrations, and copyright registrations listed on Schedule 5.9(a) are valid
and in full force, are held of record in the name of the Corporation, and are
not the subject of any cancellation, reexamination opposition, extension of time
to oppose, interference, rejection, refusal to register or any other proceeding
challenging their extent or validity, and all necessary registration,
maintenance and renewal fees in connection with such patents and registrations
have been paid and all necessary documents and certificates in connection with
such patents and registrations have been filed with the relevant patent,
copyright, trademark or other authorities in the United States or foreign
jurisdictions, as the case may be, for the purposes of maintaining such patents
and registrations. With respect to the Intellectual Property of the Corporation
and its Subsidiaries, the Corporation or the applicable Subsidiary of the
Corporation is the assignee in all patent applications, and the Corporation or
the applicable Subsidiary is the applicant of record for all applications for
trademark, service ▇▇▇▇, and copyright registration. There are no actions that
must otherwise be taken by the Corporation or any of its Subsidiaries within
sixty (60) days of the Closing Date, including the payment of any registration,
maintenance or renewal fees or the filing of any documents, applications or
certificates for the purposes of maintaining, perfecting or preserving or
renewing any rights in any Intellectual Property owned or used by the
Corporation or any Subsidiary of the Corporation. No patents are held in the
names of individual inventors. No order, holding, decision or judgment has been
rendered by any governmental authority, and no agreement, consent or stipulation
exists, which would limit the Corporation's or any of the Subsidiaries' use of
any of its Intellectual Property rights or any advertising or promotional claim
or campaign.
(e) The business operations of the Corporation and any
Subsidiary of the Corporation do not infringe, dilute, misappropriate or
otherwise violate the patents, industrial design rights, trademarks, service
marks, trade names, trade dress, copyrights, mask works, trade secrets or other
Intellectual Property rights of any third party, or constitute unfair
competition or trade practices under the laws of any jurisdiction, and, except
as set forth on Schedule 5.9(e), to the knowledge of the Corporation and each
Subsidiary of the Corporation, no claim has been made, notice given, or dispute
arisen to that effect. Neither the Corporation nor any of its Subsidiaries have
any pending claims that a third party has infringed, diluted, misappropriated or
otherwise violated any Intellectual Property owned or used by the Corporation or
any or the Corporation's Subsidiaries, and neither the Corporation nor any of
its Subsidiaries are aware of any basis for such a claim. The Corporation has
not given any indemnification to any third party against infringement of such
Intellectual Property rights. Except as explicitly indicated in Schedule 5.9(e),
neither the Corporation nor any of its Subsidiaries has agreed to, or assumed,
any obligation or duty to indemnify, reimburse, hold harmless, guaranty or
otherwise assume or incur any obligation or liability or provide a right of
rescission to any third party with respect to the infringement, dilution,
misappropriation or other violation of the Intellectual Property of that or any
other third party. Except as explicitly indicated in Schedule 5.9(e), no
Intellectual
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Property owned or used by the Corporation or any of its Subsidiaries is subject
to any outstanding decree, order, judgment, settlement agreement or stipulation
that restricts in any manner the use, transfer or licensing thereof by the
Corporation or any of its Subsidiaries.
(f) The Corporation and each of its Subsidiaries have taken
all reasonable steps that are required to protect the rights of the Corporation
and its Subsidiaries in all material trade secrets, know-how or other
confidential or proprietary information (including, without limitation, source
code) of the Corporation and any Subsidiary or provided by any other person to
the Corporation or any of its Subsidiaries. To the knowledge of the Corporation
and its Subsidiaries, none of the material trade secrets, know-how or other
confidential or proprietary information of the Corporation or any of its
Subsidiaries has been disclosed to any person unless such disclosure was
necessary, and was made pursuant to an appropriate confidentiality agreement.
(g) The Corporation and each applicable Subsidiary of the
Corporation has sole and exclusive ownership free and clear of any liens,
encumbrances and other claims of all customer lists, customer contact
information, customer correspondence and customer licensing and purchasing
histories relating to its current and former customers (the "Customer
Information"). No person other than the Corporation or the applicable Subsidiary
of the Corporation possesses any claims or rights with respect to use of the
Customer Information.
5.10. Litigation. Except as set forth on Schedule 5.10 hereof,
there is no material action, suit, proceeding, claim, arbitration or
investigation ("Action") pending against (or, to the knowledge of the
Corporation, currently threatened against or affecting) the Corporation, its
activities, properties or assets or, to the knowledge of the Corporation,
against any Designated Person in connection with such Designated Person's
relationship with, or actions taken on behalf of, the Corporation that could
reasonably be expected to have a Material Adverse Effect. To the best of the
Corporation's knowledge, there is no factual or legal basis for any such Action
that might reasonably be expected to result, individually or in the aggregate,
in a Material Adverse Effect. The Corporation is not a party to or subject to
the provisions of any order, writ, injunction, judgment or decree of any court
or government agency or instrumentality and there is no material Action by the
Corporation currently pending or which the Corporation intends to initiate.
5.11. No Defaults. The Corporation is not in default (a) under
its Articles of Incorporation or Bylaws, or under any note, indenture, mortgage,
or any material lease, purchase or sales order, or any other material contract,
agreement or instrument to which it is a party or by which it or any of its
property is bound or affected or (b) with respect to any order, writ,
injunction, judgment or decree of any court or any federal, state, municipal or
other domestic or foreign governmental department, commission, board, bureau,
agency or instrumentality. To the knowledge of the Corporation, there exists no
condition, event or act which constitutes, or which after notice, lapse of time
or both, would constitute, a default under any of the foregoing.
5.12. Labor Agreements and Actions. The Corporation is not
bound by or subject to any contract, commitment or arrangement with any labor
union, and to the knowledge of the Corporation, no labor union has requested,
sought or attempted to represent any employees, representatives or agents of the
Corporation. There is no strike or other labor dispute involving the Corporation
pending nor, to the knowledge of the Corporation, threatened, nor is the
Corporation aware of any labor organization activity involving its employees.
The Corporation is not aware that any officer or key employee intends to
terminate his or her employment with the Corporation nor does the Corporation
have any present intention to terminate the employment of any of its officers or
key employees.
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5.13. Compliance. The Corporation (a) has complied in all
material respects with all federal, state, local and foreign laws, ordinances,
rules, regulations and orders applicable to its business or the ownership of its
assets (including, without limitation, those relating to the use, disposal or
release of Hazardous Substances or relating to the protection or restoration of
the environment or exposure to such substances ("Environmental Laws")), and the
Corporation has not received written notice of any claimed default with respect
to such laws, ordinances, rules, regulations and orders; and (b) has obtained
all federal, state, local and foreign governmental licenses and permits
necessary or required to enable it to carry on its business as now conducted,
except where the failure to obtain such license or permit would not reasonably
be expected to have a Material Adverse Effect. Such licenses and permits are in
full force and effect, no violations have been recorded in respect of any such
licenses or permits, and no proceeding is pending or, to the knowledge of the
Corporation, threatened to revoke or limit any thereof. None of the aforesaid
licenses and permits shall be affected in any material adverse respect by this
Agreement.
5.14. Insurance. The Corporation maintains, with financially
sound and reputable insurance companies, insurance in at least such amounts and
against such risks usually insured against by Persons operating similar
businesses and operating similar properties and such that any uninsured loss
would not have a Material Adverse Effect. All insurance coverages of the
Corporation are in full force and effect and there are no past due premiums in
respect of any such insurance.
5.15. Authorization; No Breach. The Corporation has full
corporate power and authority to execute and deliver this Agreement, the
Registration Rights Agreement and each other document or instrument contemplated
hereby and thereby, to perform its obligations hereunder and thereunder, and to
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance by the Corporation of this Agreement, the Registration
Rights Agreement and each other document or instrument contemplated hereby and
thereby, and the filing of the Certificate of Designation and the Amendment have
been duly authorized by all requisite corporate action by the Corporation. This
Agreement has been, and the Registration Rights Agreement and each other
document or instrument to be executed by the Corporation in connection herewith
or therewith will be, duly executed and delivered by the Corporation and
constitutes, or will constitute, a legal, valid and binding obligation of the
Corporation, enforceable in accordance with their terms. The execution and
delivery of this Agreement, the Registration Rights Agreement and each other
document or instrument contemplated hereby and thereby, the filing of the
Certificate of Designation and the Amendment, the consummation of the
transactions contemplated hereby and thereby and compliance with the provisions
hereof and thereof by the Corporation, and the issuance, sale and delivery of
the Series A Preferred Shares and the Reserved Shares by the Corporation, will
not (a) violate any provision of law, statute, rule or regulation, or any
ruling, writ, injunction, order, judgment or decree of, require any
authorization, consent, approval, exemption or other action by or notice of
declaration to, or
- 18 -
filing with, any court, administrative agency or other governmental body
applicable to the Corporation or any subsidiary of the Corporation, or (b)
conflict with or result in any breach of any of the terms, conditions or
provisions of, or constitute (with due notice or lapse of time, or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under, the Articles of Incorporation of the Corporation and the Amended
Certificate of Designation, or Bylaws, or under any note, indenture, mortgage,
lease, purchase or sales order or other contract, agreement or instrument to
which the Corporation or any subsidiary of the Corporation is a party or by
which it or any of its property is bound or affected, or (c) result in the
creation of any lien, security interest, charge or encumbrance upon any of the
properties or assets of the Corporation or any subsidiary of the Corporation.
None of the Subsidiaries are subject to any restrictions upon making loans or
advances or paying dividends to, transferring property to, or repaying any
Indebtedness owed to, the Corporation or another subsidiary.
5.16. Authorization of Series A Preferred Shares and Reserved
Shares. The Corporation has full corporate power and authority to designate,
issue, sell and deliver the Series A Preferred Shares, to issue, sell and
deliver the Warrants, to reserve the Reserved Shares for issuance and to issue
and deliver the Reserved Shares upon conversion of the Series A Preferred Shares
or exercise of the Warrants. The designation, issuance, sale and delivery of the
Series A Preferred Shares, the issuance, sale and delivery of the Warrants and
the reservation, issuance, sale and delivery of the Reserved Shares, have been
duly authorized by all requisite corporate action of the Corporation, and when
issued, sold and delivered in accordance with this Agreement, the Series A
Preferred Shares, the Warrants and Reserved Shares will be duly and validly
issued and outstanding, fully paid and nonassessable, and not subject to
preemptive or any other similar rights of the stockholders of the Corporation or
others. The designations, powers, preferences and rights and the qualifications,
limitations and restrictions of the Series A Preferred Shares are as stated in
the Certificate of Designation prior to July 26, 2000 and in the Amended
Certificate of Designation on and after July 26, 2000.
5.17. Offering Exemption. The Corporation has not violated any
applicable federal or state securities laws in connection with the offer, sale
or issuance of any of its capital stock, and the offering and sale of the Series
A Preferred Shares and the Warrants and the sale of the Reserved Shares upon
conversion of the Series A Preferred Shares or exercise of the Warrants, as the
case may be, are each exempt from registration under the Securities Act. The
Corporation has satisfied all requirements of Regulation D under the Securities
Act in connection with the offer and sale of the Series A Preferred Shares and
the Warrants, including without limitation furnishing to all Non-Accredited
Investors the financial and non-financial information required to be furnished
by the Corporation pursuant to Rule 502(b)(2)(ii) of the Securities Act. The
aforesaid offering and sale are also exempt from registration under applicable
state securities and "blue sky" laws or will be exempt upon the timely filing of
notices with the appropriate states, which notices have been or will be timely
filed by the Corporation.
5.18. No Governmental Consent or Approval Required. Except for
the filing of any notice subsequent to the Initial Closing or the Subsequent
Closing, as the case may be, that may be required under applicable federal
and/or state securities laws (which, if required, shall be filed on a timely
basis as may be so required), no consent, approval or authorization of, or
declaration to, or filing with, any Person (governmental or private) is required
for the valid authorization, execution, delivery and performance by the
Corporation of this Agreement or the
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Registration Rights Agreement or for the valid authorization, designation,
issuance, sale and delivery of the Series A Preferred Shares, the valid
authorization, issuance, sale and delivery of the Warrants or for the valid
authorization, reservation, issuance, sale and delivery of the Reserved Shares.
5.19. Agreements. Each of the contracts and agreements
included in Exhibit 10 of the Corporation's Report on Form 10-KSB for the year
ended December 31, 1999 or in Exhibit 10 of the Corporation's Registration
Statement on Form 10-SB/A4 or listed on Schedule 5.19 ("Contracts") is in full
force and effect and constitutes the legal, valid, binding and enforceable
obligation of the Corporation, and, to the knowledge of the Corporation, the
other parties thereto in accordance with its terms. The Contracts represent all
material contracts, commitments, obligations and agreements, oral or written, to
which the Corporation is a party. The Corporation is not in default under and
has not breached any of the Contracts or any other contracts of the Corporation
and no act or omission has occurred which, with notice or lapse of time or both,
would constitute a breach or default under any term or provision of any such
Contract (other than breaches and technical defaults that could reasonably be
expected not to adversely impact the Corporation's rights and obligations under
such Contract). To the knowledge of the Corporation, no other party is in breach
or default under any of such Contracts and no act or omission has occurred by
any other party thereto which, with notice or lapse of time or both, would
constitute such a breach or default under any term or provision thereof. The
Corporation does not have any present expectation or any intention of not fully
performing all such obligations, or any knowledge of any anticipated breach by
the other parties to any Contract. The Contracts will remain in full force and
effect (without any breach or default or modification thereunder, or event which
could give rise to a breach, default or modification) for the benefit of the
Corporation following the Closing.
5.20. Offering of the Series A Preferred Shares. Neither the
Corporation, nor any Person authorized or employed by the Corporation as agent,
broker, dealer or otherwise in connection with the offering or sale of the
Series A Preferred Shares or the Warrants or any security of the Corporation
similar to the Series A Preferred Shares or the Warrants has offered the Series
A Preferred Shares or the Warrants or any such similar security for sale to, or
solicited any offer to buy the Series A Preferred Shares or the Warrants or any
such similar security from, or otherwise approached or negotiated with respect
thereto with, any Person or Persons, and neither the Corporation nor any Person
acting on its behalf has taken or will take any other action (including, without
limitation, any offer, issuance or sale of any security of the Corporation under
circumstances which might require the integration of such security with the
Series A Preferred Shares under the Securities Act), in either case so as to
subject the offering, issuance or sale of the Series A Preferred Shares or the
Warrants to the registration provisions of the Securities Act.
5.21. Brokers. There are no claims for brokerage commissions,
finders' fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement binding
upon the Corporation or any subsidiary. The Corporation shall pay, and hold each
Investor harmless against, any liability, loss or expense (including, without
limitation, reasonable attorneys' fees and out-of-pocket expenses) arising in
connection with any such claim.
- 20 -
5.22. Employee Benefits; ERISA.
(a) Schedule 5.22(a) sets forth a true and complete list of
each Employee Benefit Plan covering employees of the Corporation. "Employee
Benefit Plan" means any employee pension benefit plan (as defined in Section
3(2) of ERISA), any employee welfare benefit plan (as defined in Section 3(1) of
ERISA) and any other employee benefit plan, program or arrangement, including,
without limitation, any bonus, stock, stock option, stock purchase, incentive,
deferred compensation, retirement, supplemental retirement, vacation, severance
and other similar fringe or employee benefit plan, program, contract, policy,
practice or arrangement (whether written or unwritten, qualified or unqualified,
funded or unfunded and including any that have been frozen or that have, within
the five-year period concluding on June 30, 2000, been terminated), in each case
that (i) is maintained, contributed to or required to be contributed to by the
Corporation, (ii) was formerly maintained, contributed to or required to be
contributed to by the Corporation, and under which the Corporation is reasonably
expected to incur a material liability, or (iii) is maintained, contributed to
or required to be contributed to, or was formerly maintained, contributed to or
required to be contributed to, by any ERISA Affiliate but only if the
Corporation is reasonably expected to incur a material liability with respect to
such a plan. "Employee Benefit Plan" specifically excludes any "Executive
Compensation Plan" as defined in Section 5.22(b) below.
(b) Set forth on Schedule 5.22(b) is a true and complete list
of each Executive Compensation Plan. "Executive Compensation Plan" means any (i)
employment or consulting agreement, arrangement or other understanding that is
currently in effect to which the Corporation is a party, by which the
Corporation is bound or pursuant to which the Corporation is an obligor or a
beneficiary, (ii) agreement, arrangement or other understanding that could
result in any severance payment or severance benefit payable by the Corporation
whether as a result of the Corporation's execution of, and performance of the
transactions contemplated by this Agreement or otherwise, to any employee,
former employee, director, or officer of the Corporation or (iii) any agreement,
arrangement or other understanding that could reasonably be expected to result
in a "parachute payment" as defined in section 280G of the Code, whether as a
result of the Corporation's execution of, and performance of the transactions
contemplated by this Agreement or otherwise. "Executive Compensation Plan"
specifically excludes any "Employee Benefit Plan" as defined in Section 5.22(a)
above.
(c) The Corporation has delivered to the Investors true and
complete copies of all Employee Benefit Plan and Executive Compensation Plan
documents (including all amendments and modifications thereof) or, in the case
of an unwritten Plan a written description thereof, and in either case all
material agreements related to each such plan.
(d) There are no: (i) currently pending audits or
investigations by any governmental agency involving any Employee Benefit Plan or
any Executive Compensation Plan; (ii) currently pending or, to the knowledge of
the Corporation, threatened, claims (except for individual claims for benefits
payable in the normal operation of any Employee Benefit Plan or any Executive
Compensation Plan), suits or proceedings involving any Employee Benefit Plan or
any Executive Compensation Plan, any fiduciary thereof or service provider
thereto; and (iii) to the knowledge of the Corporation, circumstances which
exist that could reasonably be expected to give rise to any such claim, suit or
proceeding.
- 21 -
(e) Each Employee Benefit Plan and each Executive Compensation
Plan has been maintained in substantial compliance with its terms and with the
material requirements prescribed by all applicable law, and all required
contributions or payments relating to any such plan for any period up to and
including the Closing date shall have been paid, or accrued and booked, on or
before the Closing date.
5.23. Environmental Matters. No Hazardous Substances have been
used, handled, generated, processed, treated, stored, transported to or from,
released, discharged or disposed of by the Corporation or to the knowledge of
the Corporation any third party on, about or beneath any real property owned or
leased by the Corporation. The Corporation does not contract or arrange for the
removal of Hazardous Substances, including asbestos or lead paint, or for the
remediations of contamination on behalf of any of its clients. The Corporation
does not engage in any activities or provide any services to its clients which
have resulted in or are reasonably likely to result in any claims against the
Corporation alleging that the Corporation has arranged for the disposal or
release of any Hazardous Substances, and no such claims are, to the best of the
Corporation's knowledge, currently threatened. If any of the foregoing claims
are asserted or threatened, the Corporation has insurance which would cover such
claims.
5.24. Disclosure. Neither this Agreement nor any other written
document, certificate, instrument or statement or other item furnished or made
to the Investors by or on behalf of the Corporation in connection with the
transactions contemplated hereby contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make each statement
contained herein or therein not misleading in light of the circumstances under
which they were made.
5.25. Registration Requirements. Assuming the accuracy of the
Investors' representations contained herein and the Investor's compliance with
their agreements hereunder, the offer and sale of the Series A Preferred Shares
and the Warrants will be exempt from the registration requirements of the
Securities Act.
5.26. No Solicitation. No form of general solicitation or
general advertising was used by the Corporation or, to the best of its
knowledge, any other Person acting on behalf of the Corporation, in respect of
the Series A Preferred Shares and the Warrants or in connection with the offer
and sale of the Series A Preferred Shares and the Warrants. Neither the
Corporation nor, to its knowledge, any Person acting on behalf of the
Corporation has, either directly or indirectly, sold or offered for sale to any
Person any of the Series A Preferred Shares or the Warrants or, within the six
months prior to the date of the Initial Closing or the Subsequent Closing, any
other similar security of the Corporation, except as contemplated by this
Agreement, and the Corporation represents that neither the Corporation nor any
Person authorized to act on its behalf will sell or offer for sale any such
security to, or solicit any offers to buy any such security from, or otherwise
approach or negotiate in respect thereof with, any Person so as thereby to cause
the issuance or sale of any of the Series A Preferred Shares or the Warrants to
be in violation of any of the provisions of Section 5 of the Securities Act.
5.27. Integration. The Corporation has not sold, offered to
sell, solicited offers to buy or otherwise negotiated in respect of any
"security" (as defined in the Securities Act) that is or could reasonably be
expected to be integrated with the sale of the Series A Preferred Shares
- 22 -
or the Warrants in a manner that would require the registration of the Series A
Preferred Shares or the Warrants under the Securities Act.
SECTION 6. Representations, Warranties and Covenants of the
Investors.
6.1. General. Each of the Investors hereby represents and
warrants to the Corporation that:
(a) he or it has full corporate or partnership power and
authority (or, in the case of an individual Investor, legal capacity) to execute
and deliver this Agreement, the Registration Rights Agreement and each other
document or instrument contemplated hereby and thereby, to perform his or its
obligations hereunder and thereunder, and to consummate the transactions
contemplated hereby and thereby;
(b) the execution, delivery and performance of this Agreement,
the Registration Rights Agreement and each other document or instrument
contemplated hereby and thereby have been duly authorized by all requisite
action of such Investor;
(c) this Agreement has been, and the Registration Rights
Agreement and each other document or instrument to be executed by such Investor
in connection herewith or therewith will be, duly executed and delivered by such
Investor, and constitutes, or will constitute, a legal, valid and binding
obligation of such Investor, enforceable in accordance with their terms;
(d) he or it is acquiring the Series A Preferred Shares and
the Warrants and, in the event that he or it should acquire Reserved Shares upon
conversion of the Series A Preferred Shares or upon exercise of the Warrants, he
or it will be acquiring the Reserved Shares, for his or its own account, for
investment and not with a view to the distribution thereof within the meaning of
the Securities Act;
(e) he or it understands that the Series A Preferred Shares
and the Warrants have not been, and the Reserved Shares will not be, registered
under the Securities Act, by reason of their issuance by the Corporation in a
transaction exempt from the registration requirements of the Securities Act; and
that the Series A Preferred Shares, the Warrants and the Reserved Shares must be
held by him or it indefinitely unless a subsequent disposition thereof is
registered under the Securities Act or is exempt from registration;
(f) he or it or with his or its purchaser representative has
such knowledge and experience in financial and business matters that he or it is
capable of evaluating the merits and risks of his or its investment in the
Series A Preferred Shares and the Warrants;
(g) he or it has received, prior to the date of the Initial
Closing or the Subsequent Closing, as the case may be, the financial and
non-financial information required to be furnished by the Corporation pursuant
to Rule 502(b)(2)(iii) of the Securities Act;
(h) he or it has not employed any broker or finder in
connection with the transactions contemplated by this Agreement; and
- 23 -
(i) he or it has had an opportunity to ask questions of the
officers of the Corporation regarding the Corporation's business, management and
financial affairs and has received all information as he or it has deemed
necessary or appropriate as a prudent and knowledgeable investor in evaluating
the purchase of the Series A Preferred Shares and the Warrants.
6.2. Additional Representation by Accredited Investors. In
addition to the representations and warranties contained in Section 6.1, each of
the Investors other than the Non-Accredited Investors hereby represents and
warrants to the Corporation that he or it is an accredited investor as defined
in Rule 501(a) promulgated under the Securities Act.
SECTION 7. Conditions to Initial Closing.
7.1. Conditions Precedent to Initial Investors' Obligations.
Each Initial Investor's obligation to consummate the transactions contemplated
hereby shall be subject to the fulfillment of each of the following conditions,
any one or more of which may be waived in writing by any Initial Investor with
respect to that Initial Investor:
(a) The Corporation shall have performed in all material
respects its obligations under this Agreement required to be performed on or
prior to the Initial Closing pursuant to the terms hereof;
(b) The representations and warranties of the Corporation
contained in this Agreement that are not qualified by materiality shall be true
and correct in all material respects, and the representations and warranties of
the Corporation contained in this Agreement that are qualified by materiality
shall be true and correct in all respects, as of the date of the Initial Closing
(irrespective of any notice delivered to the Initial Investor after the date of
the Original Agreement), with the same force and effect as though such
representations and warranties had been made as of the date of the Initial
Closing;
(c) There shall not have been after the date of the Original
Agreement any Material Adverse Effect on the Corporation;
(d) The Initial Investors shall have received a certificate of
the Corporation (duly executed by the Secretary or an Assistant Secretary of the
Corporation), dated the date of the Initial Closing, certifying to the
fulfillment of the conditions set forth in clauses (a), (b) and (c) above and
(i), (j), (k),(l), (m), (n), (p), (q) and (r) below and, to the extent of its
execution and compliance with the terms and conditions of the agreements
referenced therein, (g) and (h) below;
(e) The Initial Investors shall have received a certificate of
the Corporation's organization, valid existence and good standing as a domestic
corporation in the state of its incorporation as of a date no more than three
(3) days prior to the date of the Initial Closing;
(f) The Investors shall have received from ▇▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇ LLP, counsel for the Corporation, an opinion dated the date of the Initial
Closing substantially in the form attached hereto as Exhibit F;
- 24 -
(g) The Registration Rights Agreement shall have been executed
and delivered by the Corporation and such other parties named therein, and the
Corporation and such parties shall have complied with all of the terms and
conditions of the Registration Rights Agreement and such agreement shall be in
full force and effect as of the Initial Closing;
(h) The Corporation shall have received (and furnished to the
Initial Investors evidence thereof reasonably satisfactory to the Initial
Investors) all necessary approvals and consents from third parties and
governmental authorities (and such approvals and consents shall not have expired
or been withdrawn as of the date of the Initial Closing);
(i) The Corporation shall have duly adopted, executed and
filed with the Secretary of State of the State of Nevada the Certificate of
Designation, and the Corporation shall not have adopted or filed any other
document designating terms, relative rights or preferences of its preferred
stock. The Certificate of Designation shall be in full force and effect as of
the Initial Closing under the laws of Nevada and shall not have been amended or
modified;
(j) No order, statute, rule, regulation, executive order,
stay, decree, judgment or injunction shall have been enacted, entered,
promulgated or enforced by any court, governmental authority or regulatory body
which restrains, prohibits or prevents the consummation of the transactions
contemplated hereby;
(k) Those directors, officers and 5% stockholders of the
Corporation designated by the Initial Investors shall have executed and
delivered to the Corporation a letter agreement agreeing to certain matters set
forth in Sections 8.16, 8.17, 8.18 and 8.19 hereof.
(l) The Corporation shall have delivered for simultaneous sale
to each Initial Investor the Series A Preferred Shares to be purchased by such
Initial Investor hereunder at the Initial Closing and each Initial Investor
shall have delivered therefor payment in full;
(m) The Corporation shall have made all filings under all
applicable federal and state securities laws necessary prior to Initial Closing
to consummate the issuance of the Initial Shares pursuant to this Agreement in
compliance with such laws;
(n) The Corporation shall have delivered to each Initial
Investor certified copies of the resolutions duly adopted by the Corporation's
board of directors authorizing the execution, delivery and performance of this
Agreement, the Registration Rights Agreement, the Warrants and each of the other
agreements contemplated hereby, the filing of the Certificate of Designation,
the issuance and sale of the Initial Shares, the reservation of the Reserved
Shares and the consummation of all other transactions contemplated by this
Agreement;
(o) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ shall have been appointed to the Board of
Directors of the Corporation;
(p) The Corporation shall have consummated the acquisition
from World Access Telecommunications Group, Inc. of its Encom Division pursuant
to the Asset Purchase Agreement dated June 30, 2000 among the Corporation,
NetVoice Encom LP and World Access Telecommunications Group, Inc. (the "Encom
Acquisition")
- 25 -
(q) The Exercising Option Holders shall have exercised options
to purchase an aggregate of 1,800,000 shares of Common Stock (the "Exercised
Options") and entered into "lock-up" agreements in form and substance reasonably
satisfactory to the Initial Investors; and
(r) All corporate and other proceedings taken or required to
be taken by the Corporation in connection with the transactions contemplated
hereby to be consummated at or prior to the Initial Closing and all documents
incident thereto shall be satisfactory in form and substance to each Initial
Investor and its special counsel.
7.2. Conditions Precedent to Subsequent Investors'
Obligations. Each Subsequent Investor's obligation to consummate the
transactions contemplated hereby shall be subject to the fulfillment of each of
the following conditions, any one or more of which may be waived in writing by
any Subsequent Investor with respect to that Subsequent Investor:
(a) The Corporation shall have performed in all material
respects its obligations under this Agreement required to be performed on or
prior to the Subsequent Closing pursuant to the terms hereof;
(b) The representations and warranties of the Corporation
contained in this Agreement that are not qualified by materiality shall be true
and correct in all material respects, and the representations and warranties of
the Corporation contained in this Agreement that are qualified by materiality
shall be true and correct in all respects, as of the date of the Subsequent
Closing (irrespective of any notice delivered to the Subsequent Investor after
the date hereof), with the same force and effect as though such representations
and warranties had been made as of the date of the Subsequent Closing;
(c) There shall not have been after the date hereof any
Material Adverse Effect on the Corporation;
(d) The Subsequent Investors shall have received a certificate
of the Corporation (duly executed by the Secretary or an Assistant Secretary of
the Corporation), dated the date of the Subsequent Closing, certifying to the
fulfillment of the conditions set forth in clauses (a), (b) and (c) above and
(i), (j), (k),(l), (m) and (n) below and, to the extent of its execution and
compliance with the terms and conditions of the agreements referenced therein,
(g) and (h) below;
(e) The Subsequent Investors shall have received a certificate
of the Corporation's organization, valid existence and good standing as a
domestic corporation in the state of its incorporation as of a date no more than
three (3) days prior to the date of the Subsequent Closing;
(f) The Investors shall have received from ▇▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇ LLP, counsel for the Corporation, an opinion dated the date of the
Subsequent Closing substantially in the form attached hereto as Exhibit F;
(g) The Registration Rights Agreement shall have been executed
and delivered by the Corporation and such other parties named therein, and the
Corporation and such
- 26 -
parties shall have complied with all of the terms and conditions of the
Registration Rights Agreement and such agreement shall be in full force and
effect as of the Subsequent Closing;
(h) The Corporation shall have received (and furnished to the
Subsequent Investors evidence thereof reasonably satisfactory to the Subsequent
Investors) all necessary approvals and consents from third parties and
governmental authorities (and such approvals and consents shall not have expired
or been withdrawn as of the date of the Subsequent Closing);
(i) The Corporation shall have duly adopted, executed and
filed with the Secretary of State of the State of Nevada the Amendment, and the
Corporation shall not have adopted or filed any other document designating
terms, relative rights or preferences of its preferred stock. The Amended
Certificate of Designation shall be in full force and effect as of the
Subsequent Closing under the laws of Nevada and shall not have been amended or
modified;
(j) No order, statute, rule, regulation, executive order,
stay, decree, judgment or injunction shall have been enacted, entered,
promulgated or enforced by any court, governmental authority or regulatory body
which restrains, prohibits or prevents the consummation of the transactions
contemplated hereby;
(k) The Corporation shall have delivered for simultaneous sale
to each Subsequent Investor the Series A Preferred Shares to be purchased by
such Subsequent Investor hereunder at the Subsequent Closing and each Subsequent
Investor shall have delivered therefor payment in full;
(l) The Corporation shall have made all filings under all
applicable federal and state securities laws necessary prior to Subsequent
Closing to consummate the issuance of the Subsequent Shares pursuant to this
Agreement in compliance with such laws;
(m) The Corporation shall have delivered to each Subsequent
Investor certified copies of the resolutions duly adopted by the Corporation's
board of directors authorizing the execution, delivery and performance of this
Agreement, the Registration Rights Agreement, the Warrants and each of the other
agreements contemplated hereby, the filing of the Amendment, the issuance and
sale of the Subsequent Shares, the reservation of the Reserved Shares and the
consummation of all other transactions contemplated by this Agreement;
(n) The Regulated Investor Letter Agreement shall have been
executed and delivered by the Corporation and such other parties named therein,
and such agreement shall be in full force and effect.
(o) All corporate and other proceedings taken or required to
be taken by the Corporation in connection with the transactions contemplated
hereby to be consummated at or prior to the Subsequent Closing and all documents
incident thereto shall be satisfactory in form and substance to each Subsequent
Investor and its special counsel.
7.3. Conditions Precedent to the Corporation's Obligations.
The Corporation's obligation to consummate the transactions contemplated hereby
shall be subject to the fulfillment of each of the following additional
conditions, any one or more of which may be waived in writing by the
Corporation:
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(a) Each of the Investors shall have performed in all material
respects its obligations under this Agreement required to be performed on or
prior to the Initial Closing or the Subsequent Closing, as the case may be,
pursuant to the terms hereof;
(b) The representations and warranties of the Investors
contained in this Agreement that are not qualified by materiality shall be true
and correct in all material respects, and the representations and warranties of
the Investors contained in this Agreement that are qualified by materiality
shall be true and correct, on and as of the date of the Initial Closing or the
Subsequent Closing, as the case may be (irrespective of any notice delivered to
the Corporation after the date hereof), with the same force and effect as though
such representations and warranties had been made on and as of the date of the
Initial Closing or the Subsequent Closing, as the case may be;
(c) No order, statute, rule, regulation, executive order,
stay, decree, judgment or injunction shall have been enacted, entered,
promulgated or enforced by any court, governmental authority or regulatory body
which restrains, prohibits or prevents the consummation of the transactions
contemplated hereby.
SECTION 8. Covenants.
8.1. Access to Information. Both prior to and subsequent to
the Initial Closing and the Subsequent Closing, the Corporation shall give the
Principal Investors and their authorized representatives (including without
limitation accountants, environmental auditors and legal counsel) free and full
access, during normal business hours, and with reasonable prior notice, to all
of the books, records (and to make copies thereof and extracts therefrom) and
properties of the Corporation and its Subsidiaries and to all officers,
employees and accountants or auditors of the Corporation for purposes of
conducting their due diligence review (or continued monitoring) of the
Corporation. The Investors shall maintain the confidentiality of any
confidential and Proprietary Information so obtained by them which is not
otherwise available from other sources that are free from similar restrictions;
provided, however, that the foregoing, shall in no way limit or otherwise
restrict the ability of the Investors or such authorized representatives to
disclose any such information concerning the Corporation and its Subsidiaries
which they may be required to disclose (a) to their partners, board members or
stockholders, to the extent required to satisfy their fiduciary obligations to
such persons, or (b) otherwise pursuant to or as required by law.
8.2. Financial Reports. The Corporation covenants and agrees
that it shall furnish the Principal Investors with the following:
(a) SEC Filings. Promptly upon filing thereof, copies of all
registration statements, reports on Forms 10-KSB, 10-QSB and 8-K and all other
reports or other filings filed with the Commission by the Corporation.
(b) Auditor's Letters. Promptly following receipt by the
Corporation, each audit response letter, accountant's management letter and
other written report submitted to the Corporation by its independent public
accountants in connection with an annual or interim audit of the books of the
Corporation.
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(c) No Default Certificate. With the reports on Forms 10-KSB
and 10-QSB referred to in Section 8.2(a), the Corporation shall deliver to the
Principal Investors a certificate executed by the Chairman, President or Chief
Financial Officer of the Corporation to the effect that no knowledge has been
obtained of any violation or default by the Corporation or any of its
Subsidiaries in the performance of its agreements or covenants contained herein,
in the Articles of Incorporation, in the Amended Certificate of Designation, the
Registration Rights Agreement or in any other material agreement to which the
Corporation or any of its Subsidiaries is a party or of the occurrence of any
condition, event or act which, with or without notice or lapse of time, or both,
would constitute a violation or an event of default, or, if such officer shall
have obtained knowledge of any such violation, condition, event or act, he or
she shall specify in such certificate all such violations, conditions, events
and acts and the nature and status thereof.
(d) Other Information. Promptly, from time to time, such other
information regarding the business, prospects, financial condition, operations,
property or affairs of the Corporation as the Principal Investors reasonably may
request, and immediate notice of any projected shortfall in the Corporation's
cash flow below that necessary to meet its operating expenses and other
liabilities as they become due.
8.3. Conduct of Business. Except as contemplated by this
Agreement, during the period from the date of the Original Agreement to the date
of the Initial Closing, the Corporation shall, and shall cause its Subsidiaries
to, conduct the operations of the Corporation and its Subsidiaries in the
ordinary course of business and consistent with past practice, and shall use
best efforts to preserve intact its business organization, keep available the
services of their officers and key employees, and maintain satisfactory
relationships with material customers, suppliers, contractors, distributors,
licensors, licensees and others having business relationships with the
Corporation and its Subsidiaries. During the period from the date of the
Original Agreement to the date of the Initial Closing, the Corporation will not
take any action reasonably within its control, or omit to take any action
reasonably within its control, which would cause any of the representations and
warranties in Section 5 hereof to become untrue in any material respect.
8.4. Insurance. Both prior to and subsequent to the Initial
Closing and the Subsequent Closing, each of the Corporation and its Subsidiaries
shall be insured at all times to such extent and against such risks, including
fire, business interruption and other risks insured against by extended
coverage, as is customary with companies of comparable size and financial
condition in the same or similar businesses; maintain in full force and effect
product liability insurance and public liability insurance against claims for
personal injury or death or property damage occurring upon, in, about or in
connection with the use of any properties owned, occupied or controlled by the
Corporation and its Subsidiaries, in such amount as the Corporation shall
reasonably deem necessary; maintain in full force and effect liability insurance
against claims for personal injury or death or property insurance occurring in
connection with its clients' use of any contractors selected or referred by the
Corporation (or insure that such contractors maintain adequate insurance
therefor); and maintain workers' compensation insurance and such other insurance
as may be required by law. In addition, all of the foregoing insurance
maintained by the Corporation and its Subsidiaries shall be of types and in
amounts such that the Corporation and its Subsidiaries at all times will be in
compliance in all material
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respects with all federal, state, local and foreign laws, ordinances,
regulations and orders applicable to its business that govern such insurance.
8.5. Use of Proceeds. The net cash proceeds received by the
Corporation from the sale of the Series A Preferred Shares shall be used by the
Corporation for the following corporate purposes: consummating the Encom
Acquisition and related costs, working capital and general corporate purposes.
Pending such use thereof, such proceeds will be deposited in interest bearing
accounts.
8.6. Reserve for Reserved Shares. The Corporation shall at all
times reserve and keep available (i) out of its authorized but unissued shares
of Common Stock such number of shares of Common Stock as shall be sufficient to
effect the conversion of the Series A Preferred Shares and the exercise of the
Warrants or otherwise to comply with the terms of this Agreement and (ii) out of
its authorized but unissued shares of Series A Preferred Stock such number of
shares of Series A Preferred Stock as shall be sufficient to effect the exercise
of the Warrants. All shares of Common Stock or Series A Preferred Stock, as the
case may be, which are so issuable shall, when issued, be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens and charges.
The Corporation shall take all such actions as may be necessary to assure that
all such shares of Common Stock or Series A Preferred Stock, as the case may be,
may be so issued without violation of any applicable law or governmental
regulation or any requirements of any domestic securities exchange upon which
shares of Common Stock or Series A Preferred Stock, as the case may be, may be
listed (except for official notice of issuance which shall be immediately
transmitted by the Corporation upon issuance). If at any time the number of
authorized but unissued shares of Common Stock or Series A Preferred Stock, as
the case may be, shall not be sufficient to effect the conversion of the Series
A Preferred Shares or the exercise of the Warrants or otherwise to comply with
the terms of this Agreement, the Corporation forthwith will take such corporate
action as may be necessary to increase its authorized but unissued shares of
Common Stock or Series A Preferred Stock, as the case may be, to such number of
shares as shall be sufficient for such purposes. The Corporation will obtain any
authorization, consent, approval or other action by or make any filing with any
court or administrative body that may be required under applicable state
securities laws in connection with the issuance of shares of Common Stock or
Series A Preferred Stock, as the case may be, upon conversion of the Series A
Preferred Shares or the exercise of the Warrants.
8.7. Maintenance of Reporting Status; Supplemental
Information. So long as there are outstanding any Series A Preferred Shares, any
Warrants or any Reserved Shares, the Corporation shall timely file all reports
required to be filed with the Commission pursuant to the Exchange Act. The
Corporation shall not terminate its status as an issuer required to file reports
under the Exchange Act, even if the Exchange Act or the rules and regulations
thereunder would permit such termination. The Corporation shall, at all times
during which it is neither subject to the reporting requirements of Section 13
or 15(d) of the Exchange Act, nor exempt from reporting pursuant to Rule
12g3-2(b) under the Exchange Act, provide in writing, upon the written request
of an Investor or a prospective buyer of Series A Preferred Shares or the
Reserved Shares from an Investor all information required by Rule 144A(d)(4)(i)
of the General Regulations promulgated by the Commission under the Securities
Act ("Rule 144A Information"). The Corporation also shall, upon the written
request of any Principal Investor,
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cooperate with and assist the Investors or any member of the National
Association of Securities Dealers, Inc. PORTAL system in applying to designate
and thereafter maintain the eligibility of the Series A Preferred Shares or the
Reserved Shares, as the case may be, for trading through PORTAL.
8.8. Rule 144. The Corporation covenants that (i) at all times
while it is subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act, the Corporation will use its best efforts to comply with the
current public information requirements of Rule 144(c)(1) under the Securities
Act, (ii) at all times while it is not subject to such reporting requirements,
the Corporation will use its best efforts to make publicly available the
information required by Rule 144(c)(2), and (iii) at all such times as Rule 144
is available for use by the holders of the Series A Preferred Shares and the
Reserved Shares, the Corporation will furnish each such holder upon request with
all information within the possession of the Corporation required for the
preparation and filing of Form 144.
8.9. Notice of Events of Default; Litigation. Promptly, but in
any event within ten (10) days after notice thereof is received by the
Corporation, the Corporation will deliver to each holder of Series A Preferred
Shares any notice of (i) a default by the Corporation or any of its Subsidiaries
in the observance or performance of any material contract or agreement to which
the Corporation or any of it Subsidiaries is a party, including, but not limited
to, this Agreement and the Registration Agreement, and (ii) the commencement of
any investigation, action or proceeding at law or in equity or before any
federal or state court or governmental agency to which the Corporation or any of
its Subsidiaries is a party an adverse result of which could, either
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the business or financial condition of the Corporation and its
Subsidiaries, taken as a whole.
8.10. Maintenance of Existence; Properties and Franchises;
Compliance with Law; Taxes; Insurance. The Corporation will, and will cause each
Subsidiary to:
(a) maintain their respective corporate existences, rights,
all material licenses, authorizations and permits necessary for the conduct of
its business and other franchises in full force and effect; provided, that the
Corporation may terminate the corporate existence of any Subsidiary, or permit
the termination or abandonment of rights or other franchises, if in the opinion
of the Corporation it is no longer in the Corporation's best interests to
maintain such existence, rights or other franchises and such termination or
abandonment will not be prejudicial in any material respect to the holders of
the Series A Preferred Shares;
(b) maintain their respective tangible assets in good repair,
working order and condition, ordinary wear and tear excepted, so far as
necessary to the proper carrying on of their respective businesses;
(c) comply with each provision of all material leases to which
any of them occupies real or personal property if the breach of such provision
would reasonably be expected to have a Material Adverse Effect;
(d) comply with all applicable laws and with all applicable
orders, rules, rulings, certificates, licenses, regulations, demands, judgments,
writs, injunctions and decrees,
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the violation of which would reasonable be expected to have a Material Adverse
Effect, provided, that such compliance shall not be necessary so long as the
applicability or validity of any such law, order, rule, ruling, certificate,
license, regulation, demand, judgment, writ, injunction or decree shall be
contested in good faith by appropriate proceedings;
(e) pay when due all taxes, fees, assessments and other
government charges imposed upon their respective properties, assets or income
(in each case before the same becomes delinquent and before penalties accrue
thereon) and all claims or indebtedness (including, but not limited to,
materialmen's, vendor's, workmen's and like claims) prior to such claims
becoming a lien upon such properties or assets; provided, that payment of any
such tax, fee, assessment, charge, claim or indebtedness shall not be necessary
so long as (i) the applicability or validity thereof shall be contested in good
faith by appropriate proceedings and a reserve, if appropriate as determined
pursuant to GAAP, shall have been established with respect thereto and (ii)
failure to make such payment will not have a Material Adverse Effect;
(f) comply with all other obligations which it incurs pursuant
to any contract or agreement, whether oral or written, express or implied, as
such obligations become due, unless and to the extent that the same are being
contested in good faith and by appropriate proceedings and adequate reserves (as
determined in accordance with GAAP) have been established on its books with
respect thereto;
(g) maintain proper books of record and account which present
fairly in all material respects its financial condition and results of
operations and make provisions on its financial statements for all such proper
reserves as in each case are required in accordance with GAAP; and
(h) enforce any and all rights under the "lock-up" agreements
delivered pursuant to Section 7.1(q) hereof, and not waive any of such rights
without the consent of holders of at least a majority of the Series A Preferred
Shares.
8.11. Compliance with Agreements. The Corporation shall
perform and observe (i) all of its obligations to each holder of Series A
Preferred Shares set forth in the Articles of Incorporation, the Amended
Certificate of Designation and the Corporation's Bylaws, (ii) all of its
obligations to each holder of Registrable Shares (as defined and set forth in
the Registration Rights Agreement) and (iii) all of its obligations to each
Regulated Investor under the Regulated Investor Letter Agreement.
8.12. Further Assurances. The Corporation, on the one hand,
and the Investors, on the other hand, agree that at or subsequent to the Initial
Closing or the Subsequent Closing, at the request of the other party, they will
execute and deliver, or cause to be executed and delivered, to the other party
such further instruments and take such other action as may be necessary to carry
out the transactions contemplated by this Agreement.
8.13. Best Efforts. Each of the parties hereto will use its
reasonable best efforts to cause the conditions to Initial Closing and the
Subsequent Closing set forth herein to be satisfied as soon as reasonably
practicable.
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8.14. Public Announcements. The Corporation shall not issue
any press release nor make any public announcement with respect to this
Agreement or the transactions contemplated hereby, including without limitation,
naming the Investors or their affiliates, except as required by law or any
governmental authority or except as each Investor shall have expressly approved
in writing as to the use of such Investor's name.
8.15. Preemptive Rights.
(a) In the event that the Corporation shall at any time and
from time to time prior to December 1, 2000 propose to sell and issue any New
Securities (a "Proposed Issuance"), each Investor shall have the right to
purchase his or its proportionate number, or any lesser number, of any of such
New Securities which the Corporation is proposing to sell and issue. For
purposes of this Section 8.15, each such Investor's "proportionate number" means
the product obtained by multiplying the number of New Securities proposed to be
sold and issued by a fraction, the numerator of which will be the number of
shares of Common Stock issued or issuable to an Investor upon the conversion of
the Series A Preferred Shares or exercise of the Warrants (and subsequent
conversion to Common Stock in the case of a Warrant which is exercisable for
Series A Preferred Stock) and the denominator of which will be the total number
of fully-diluted shares of Common Stock of the Corporation (in each case
immediately prior to the issuance of New Securities).
(b) In the event that the Corporation proposes to undertake an
issuance of New Securities, it will give each Investor written notice of its
intention to do so, describing the New Securities and the price and terms upon
which the Corporation proposes to issue the same, and setting forth the number
of shares which such Investor is entitled to purchase and the aggregate purchase
price therefor. The Investors will have 15 days from the date of receipt of any
notice to agree to purchase the New Securities, for the price and upon the terms
specified in the notice by giving written notice to the Corporation (the
"Election Notice") and stating therein the quantity of New Securities to be
purchased. If more than one type of security is issued, each Investor shall, if
it exercises its rights pursuant to this Section 8.15, purchase such securities
in the same ratio as issued. If any of the Investors has elected to purchase any
New Securities pursuant to this Section 8.15, the sale of such shares shall be
consummated as soon as practical (but in any event within 20 business days,
subject to any additional time reasonably necessary to comply with any federal,
state, local or foreign regulatory requirements) after the delivery of the
Election Notice.
8.16. Election of the BG Media Director. For so long as at
least 25% of the Series A Preferred Shares remain outstanding, the Corporation
and the Investors agree that the BG Media Investors shall be entitled to
nominate and elect one (1) Director (the "BG Media Director") who shall be
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, or other designee of the BG Media Investors. The BG Media
Director shall be removed from the Board or any committee thereof (with or
without cause) only at the written request of the BG Media Investors or by the
Board for "cause" and under no other circumstances. In the event that the BG
Media Director (the "Withdrawing Director") designated in the manner provided
above is unable to serve, or once having commenced to serve, is removed by the
BG Media Investors or by the Board for "cause" or withdraws from the Board, such
Withdrawing Director's replacement (the "Substitute Director") on the Board will
be designated by the BG Media Investors; provided, however, that until a
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Substitute Director has been elected, the BG Media Investors shall have the
right to have a representative attend all meetings of the Board, but such
representative shall not be a Director and shall not have the right to vote at
any such meeting. In the event the BG Media Investors choose not to designate a
Director, such directorship shall remain vacant.
8.17. Committee and Subsidiary Representation. For so long as
the BG Media Investors have the right to elect a BG Media Director pursuant to
Section 8.16, the Corporation and the Investors agree that the BG Media
Investors shall be entitled to nominate and elect one member to each committee
of the Board and any board of directors or committee of the board of any
Subsidiary; provided that any member nominated by the BG Media Investors to
serve on any audit committee shall satisfy any applicable standards mandated by
the Commission or by the National Association of Securities Dealers, Inc.
Approval by the BG Media Director of a committee or subsidiary board whose
composition does not reflect the foregoing entitlements shall constitute a
one-time waiver thereof, although such entitlement shall remain enforceable.
8.18. Covenant to Vote. For so long as the BG Media Investors
have the right to elect a BG Media Director pursuant to Section 8.16, each
Investor shall vote (including, if applicable, pursuant to written consent) the
Shares owned or controlled by such Investor upon all matters submitted to a vote
of the stockholders of the Corporation and shall take all other necessary or
desirable actions within such Investor's control (whether in such Investor's
capacity as a stockholder, director, member of a board committee or officer of
the Corporation or otherwise, and including, without limitation, attendance at
meetings in person or by proxy for purposes of obtaining a quorum) in conformity
with the specified terms and provisions of this Agreement. Without limiting the
foregoing, each Investor shall vote the Shares owned or controlled by such
Investor (i) at each annual or special meeting of stockholders called for the
purpose of voting on the election or removal of directors and (ii) by consensual
action of stockholders with respect to the election or removal of directors, in
favor of the election or removal of the director designated in accordance with
Section 8.16.
8.19. Inconsistency with Articles of Incorporation or Bylaws;
Termination of Provisions.
(a) In the event that any provision of the Corporation's
bylaws or articles of incorporation is inconsistent with any provision of this
Agreement, including without limitation Section 8.16, 8.17 or 8.18, the
Corporation and the Investors shall take such action as may be necessary to
amend any such provision in the Corporation's bylaws or articles of
incorporation to remedy such inconsistency.
(b) The provisions of Sections 8.16, 8.17 and 8.18 and the
transactions contemplated pursuant thereto shall terminate in any of the
following ways:
(i) automatically with respect to any Investor upon transfer
by such Investor of all of its Shares; provided, however, that no such
termination shall relieve any Investor from any liability arising from any
breach of this Agreement by such Investor prior to such termination;
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(ii) upon the dissolution or liquidation (voluntary or in
bankruptcy) of the Corporation; or
(iii) upon the consent of the Investors holding a majority of
the Series A Preferred Shares.
8.20. NASDAQ Listing; Directors and Officers Insurance.
(a) The Corporation agrees to use its best efforts to effect
the listing of the Common Stock on the NASDAQ National Market System ("NMS").
Such efforts shall include, without limitation, diligently complying with all
requests of the National Association of Securities Dealers, Inc. In the event
that listing on the NMS is not achieved by October 1, 2000, the Corporation
shall comply with all lawful requests and suggestions that the Investors may
make with regard to effecting the NMS listing.
(b) The Corporation will obtain and maintain, at all times
while the Common Stock is listed on the NMS or any national securities exchange,
directors and officers insurance from a reputable insurance company in such
amount and with coverage customary in the industry.
8.21. Completion of the IPO. The Corporation agrees that the
Investors and their designees shall have the right, on a pro rata basis based on
the number of shares of Common Stock issued or issuable upon conversion of the
Series A Preferred Shares and subject to the approval of the Corporation's
underwriters, to purchase up to 5% of the shares of Common Stock offered in the
IPO at the price per share so offered, provided that the value of such Common
Stock purchased shall not exceed $10,000,000 in the aggregate. In the event the
Corporation proposes to undertake an IPO, it will give each Investor written
notice of its intention to do so, describing the IPO and the approximate price
upon which the Corporation proposes to issue shares of Common Stock in the IPO,
and setting forth the approximate number of shares which such Investor is
entitled to purchase and the aggregate purchase price therefor. Each Investor
will have 20 business days from the date of receipt of any notice to agree to
purchase the shares in the IPO by giving written notice to the Corporation and
stating therein the quantity of shares to be purchased, including any shares
that it desires to purchase in excess of its pro rata share. In the event one or
more Investors shall desire to purchase shares in excess of its pro rata share,
such excess shall be allocated pro rata among such Investors, and such
allocation shall continue until all the shares in the IPO that such Investors
desire to purchase in accordance with the provisions hereof have been allocated.
8.22. Intellectual Property. The Corporation agrees to use its
best efforts to execute, or cause the applicable Subsidiary of the Corporation
to execute, within 45 days after the date of the Initial Closing, agreements
with each of its Key Employees containing confidentiality provisions consistent
with industry standards and by which such employees shall agree that any works
created while employees of the Corporation or the applicable Subsidiary of the
Corporation and in furtherance of their responsibilities to the Corporation
and/or the applicable Subsidiary(ies) shall be deemed "works made for hire" for
the Corporation or the applicable Subsidiary of the Corporation, as applicable,
in which the Corporation or the applicable Subsidiary owns or will own all
right, title and interest. To the extent any such work
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is not a "work made for hire", the Corporation agrees to execute, or cause the
applicable Subsidiary of the Corporation to execute, not later than 45 days
after the date of the Initial Closing, agreements with each of its Key Employees
whereby such employees will irrevocably transfer and assign to the Corporation
or the applicable Subsidiary all rights in and to such works, including but not
limited to all rights of invention, patent, trade secret, copyright, know-how,
process or technology, and all renewals thereof, and whereby such employees will
agree to execute and deliver to the Corporation and/or the applicable
Subsidiary(ies) of the Corporation any further assignments of such rights as the
Corporation and/or the applicable Subsidiary(ies) may deem necessary or
convenient. The Corporation agrees to adopt, and cause each Subsidiary of the
Corporation to adopt, within 45 days of the date of the Initial Closing, and
thereafter enforce, a policy requiring each employee, consultant and contractor
to execute proprietary information, confidentiality and assignment agreements
substantially in the Corporation's standard forms with respect to the protection
of the rights of the Corporation and its Subsidiaries in the intellectual
property, including without limitation, material trade secrets, know-how or
other confidential or proprietary information (including, without limitation,
source code) of the Corporation and any Subsidiary or provided by any other
person to the Corporation or any of its subsidiaries.
8.23. Share Certificates. Each certificate representing the
Shares now or hereafter held by an Investor shall be stamped with a legend in
substantially the following form:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT
BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH
SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144 OR REGULATION
S UNDER SUCH ACT OR THE ISSUER RECEIVES AN OPINION OF COUNSEL FOR THE
HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE ISSUER,
STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT
FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
HEDGING TRANSACTIONS INCLUDING THE COMMON SHARES OF THE COMPANY MAY NOT
BE CONDUCTED EXCEPT IN COMPLIANCE WITH SUCH ACT. THE SHARES REPRESENTED
BY THIS CERTIFICATE MAY BE SUBJECT TO [A SECURITIES PURCHASE AGREEMENT
DATED AS OF JUNE 30, 2000/AN AMENDED AND RESTATED SECURITIES PURCHASE
AGREEMENT DATED AS OF JULY 28, 2000], A COPY OF WHICH IS ON FILE AT THE
OFFICE OF THE ISSUER AND WILL BE FURNISHED TO ANY PROSPECTIVE
PURCHASERS ON REQUEST. SUCH SECURITIES PURCHASE AGREEMENT MAY PROVIDE,
AMONG OTHER THINGS, FOR CERTAIN RESTRICTIONS ON THE SALE, TRANSFER,
PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE SHARES REPRESENTED BY
THIS CERTIFICATE."
Each Investor agrees to deliver all certificates for Shares owned by such
Investor to the Company for the purpose of affixing such legend thereto.
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SECTION 9. Fees. The Corporation shall bear its own expenses
and legal fees incurred on its behalf with respect to this Agreement, the
Registration Rights Agreement and the transactions contemplated hereby and
thereby, and the Corporation shall, whether or not the transactions contemplated
by this Agreement are consummated, promptly pay or reimburse up to $100,000
($85,000 of which was paid at the Initial Closing) of the documented fees,
charges and disbursements incurred by Investors (and their advisers, counsel,
accountants and other representatives) in connection with this Agreement, the
Registration Rights Agreement and the transactions contemplated hereby and
thereby.
The Corporation shall be responsible for paying any stamp
duty, transfer taxes or other similar duties, taxes or charges, if any, that are
payable in connection with the issuance and sale of the Series A Preferred
Shares to the Investors. All payments made by the Corporation pursuant to this
Section 9 shall be made free and clear of all deductions or withholdings unless
such deduction or withholding is required by law, in which event the Corporation
shall pay to each Investor such additional amount as shall be required to ensure
that the net amount received by such Investor will equal the full amount which
would have been received by it had no such deduction or withholding been made;
provided, however, that if the amount of any such deduction or withholding
(having been first paid by the Corporation to such Investor) is reimbursed to
such Investor by any taxation authority, such Investor shall inform the
Corporation of such reimbursed amount and pay to the Corporation such amount.
SECTION 10. Exchanges; Lost, Stolen or Mutilated Certificates
or Instruments. Upon surrender by an Investor to the Corporation of any
certificate representing the Series A Preferred Shares or the Reserved Shares,
the Corporation at its expense shall issue in exchange therefor, and deliver to
such Investor, a new certificate or certificates representing such shares, in
such denominations as may be requested by such Investor. Upon receipt of
evidence satisfactory to the Corporation of the loss, theft, destruction or
mutilation of any certificate representing any Series A Preferred Shares or
Reserved Shares, and in case of any such loss, theft or destruction, upon
delivery of any indemnity agreement satisfactory to the Corporation, or in case
of any such mutilation, upon surrender and cancellation of such certificate, the
Corporation at its expense shall issue and deliver to such Investor a new
certificate for such Series A Preferred Shares or Reserved Shares of like tenor,
in lieu of such lost, stolen or mutilated certificate.
SECTION 11. Survival of Representations, Warranties and
Agreements, Etc.. The provisions set forth in Section 9 of this Agreement shall
expressly survive the termination or abandonment of this Agreement. Except as
expressly provided to the contrary, all covenants and agreements contained in
this Agreement shall survive the Initial Closing and the Subsequent Closing in
perpetuity and shall remain in full force and effect. Notwithstanding the
foregoing, the covenants and agreements contained in Section 8 of this Agreement
(other than in Sections 8.6, 8.7, 8.8, 8.20, 8.21, 8.22 and 8.23) shall
terminate at such time that less than 10% of the Series A Preferred Shares
remain outstanding. The representations and warranties hereunder shall survive
the Initial Closing for a period of four years, except (a) the representations
and warranties in Sections 5.7, 5.22 and 5.23 shall survive until the date which
is 60 days after the expiration of the statute of limitations applicable to such
matters, (b) the representations and warranties in Sections 5.1, 5.2, 5.3, 5.11,
5.15 and 5.16 shall survive the Initial Closing and the Subsequent Closing in
perpetuity, and (c) the foregoing time limitations shall not apply to any claims
which have been the subject of a written notice prior to expiration of the
applicable time
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period. All statements contained in any certificate or other instrument
delivered by the Corporation or by an officer on behalf of the Corporation
through the date hereof pursuant to this Agreement or in connection with the
transactions contemplated by this Agreement shall constitute representations and
warranties by the Corporation under this Agreement. No right of indemnification
hereunder shall be limited by reason of any investigation or audit conducted
before or after the Initial Closing or the Subsequent Closing or the knowledge
of any party of any breach of a representation, warranty, covenant or agreement
by the other party at any time, or the decision of any party to complete the
Initial Closing or the Subsequent Closing.
SECTION 12. Indemnification.
12.1. The Corporation's Obligations to Indemnify. Subject to
the procedures contained in this Section 12, the Corporation shall indemnify,
defend and hold harmless each of the Investors, its affiliates and its partners,
directors, officers, employees and representatives (each, an "Indemnified
Party"), from and against any and all claims, losses, settlements, fines,
liabilities, damages, deficiencies, costs or expenses (including interest,
penalties and reasonable attorneys' fees and disbursements) (collectively,
"Losses") suffered, sustained, incurred or required to be paid by any such
Indemnified Party due to, based upon, arising out of or otherwise in respect of
(i) any inaccuracy in, or any breach of, any representation or warranty of the
Corporation contained in this Agreement (or any schedule hereto or any
certificate or other document delivered on behalf of the Corporation hereunder),
(ii) any breach of any covenant or agreement of the Corporation contained in
this Agreement and (iii) the enforcement by any Indemnified Party of its rights
under this Agreement. Notwithstanding any other provision herein to the
contrary, no claims for Losses under Section 12.1(i) may be asserted by an
Indemnified Party until the aggregate amount of all Losses by the Indemnified
Parties exceeds $50,000, at which time the party seeking indemnification shall
be entitled to recover all amounts in respect of Losses, not just those in
excess of $50,000; provided, however, that claims based upon Section 12.1(i)
with respect to Sections 5.1, 5.2, 5.3, 5.16, 5.17, 5.25, 5.26 and 5.27 shall
not be subject to the limitations contained in this sentence.
12.2. Notice and Opportunity to Defend. The obligations and
liabilities of any party hereto against which indemnification is sought
hereunder with respect to claims resulting from the assertion of liability by
third parties shall be subject to this Section 12.2.
(a) Promptly after receipt by any Indemnified Party of notice
of any demand or claim or the commencement (or threatened commencement) of any
action, proceeding or investigation (an "Asserted Liability") that could
reasonably be expected to result in a Loss, the Indemnified Party shall give
notice thereof (a "Claims Notice") to the Corporation. Each Claims Notice shall
describe the Asserted Liability in reasonable detail, and shall indicate the
amount (estimated, if necessary) of the Loss that has been or may be suffered by
the Indemnified Party. The rights of any Indemnified Party to be indemnified
hereunder shall not be adversely affected by its failure to give, or its failure
to timely give, a Claims Notice with respect thereto unless, and if so, only to
the extent that, the Corporation is materially prejudiced thereby.
(b) The Corporation may elect to compromise or defend, at its
own expense and by its own counsel, any Asserted Liability if (i) the claim
involves (and continues to involve) solely monetary damages and the
Corporation's assumption of the defense or settlement of such
- 38 -
claim will not have a material adverse effect on the Indemnified Party's
business, (ii) the Corporation expressly agrees in writing to the Indemnified
Party that, as between the two, the Corporation is solely obligated to satisfy
and discharge the claim, and (iii) the Corporation makes reasonably adequate
provision to satisfy the Indemnified Party of the Corporation's ability to
satisfy and discharge the claim (the foregoing collectively, the "Litigation
Conditions"); provided, however, that if the parties in any action shall include
both the Corporation and an Indemnified Party, and the Indemnified Party shall
have reasonably concluded that counsel selected by the Corporation has a
conflict of interest because of the availability of different or additional
defenses to the Indemnified Party, the Indemnified Party shall have the right to
select separate counsel to participate in the defense of such action on its
behalf, at the expense of the Corporation; and provided further, however, that
the Corporation shall forfeit the right to control the defense or settlement of
any such claim if, at any time after assuming the defense or settlement thereof,
the Corporation no longer satisfies the Litigation Conditions. Subject to the
foregoing, if the Corporation elects to compromise or defend such Asserted
Liability, it shall within thirty (30) days (or sooner, if the nature of the
Asserted Liability so requires) notify the Indemnified Party of its intent to do
so, and the Indemnified Party shall cooperate, at the expense of the
Corporation, in the compromise of, or defense against, such Asserted Liability.
If the Corporation elects not to compromise or defend the Asserted Liability,
fails to notify the Indemnified Party of its election as herein provided, or
fails to satisfy the Litigation Conditions, the Indemnified Party may pay,
compromise or defend such Asserted Liability. The Indemnified Party and the
Corporation may participate, at their own expense, in the defense of such
Asserted Liability. If the Corporation chooses to defend any claim, the
Indemnified Party shall, subject to receipt of a reasonable confidentiality
agreement, make available to the Corporation any books, records or other
documents within its control, and the reasonable assistance of its employees,
for which the Corporation shall be obliged to reimburse the Indemnified Party
the reasonable out-of-pocket expenses of making them available. Notwithstanding
anything to the contrary herein, the Corporation shall not settle or compromise
any Asserted Liability unless such settlement includes a release of each
Indemnified Party against which such liability is asserted. If there shall be
more than one Indemnified Party with respect to any Asserted Liability, the
Corporation shall be obligated to pay for only one counsel for all such
Indemnified Parties unless there shall be a conflict of interest among the
Indemnified Parties because of the availability of different or additional
defenses to such Indemnified Parties.
12.3. Procedures for Claims by Parties. In the event that any
Indemnified Party incurs or suffers any Losses with respect to which
indemnification may be sought by such party pursuant to Section 12.1 (other than
in respect of third party claims), the Indemnified Party must assert the claim
by a Claims Notice to the Corporation. The Claims Notice must state the nature
and basis of the claim in reasonable detail based on the information available
to the Indemnified Party. The Corporation shall respond to any Indemnified Party
that has given a Claims Notice (a "Claim Response") within thirty (30) days (the
"Response Period") after the date that the Claims Notice is given. Any Claim
Response shall specify whether or not the Corporation disputes the claim
described in the Claims Notice. If the Corporation fails to give a Claim
Response within the Response Period, the Corporation shall be deemed not to
dispute the claim described in the related Claims Notice. If the Corporation
elects not to dispute a claim described in a Claims Notice, whether by failing
to give a timely Claim Response or otherwise, then the amount of such claim
shall be conclusively deemed to be an obligation of such Indemnifying Party. If
the Corporation shall be obligated to indemnify an Indemnified Party hereunder,
the Corporation shall
- 39 -
pay to such Indemnified Party within thirty (30) days after the last day of the
applicable Response Period the amount to which such Indemnified Party shall be
entitled. If there shall be a dispute as to the amount or manner of
indemnification under this Agreement, the Corporation and the Indemnified Party
shall seek to resolve such dispute through negotiations and, if such dispute is
not resolved within twenty (20) days, the Indemnified Party may pursue whatever
legal remedies may be available for the recovery of the Losses claimed from the
Corporation. If the Corporation fails to pay all or any part of any
indemnification obligation on or before the later to occur of (y) thirty (30)
days after the last day of the applicable Response Period, and (z) if the Claims
Notice relates to Losses that have not been liquidated as of the date of the
Claims Notice, the date on which all or any part of such Losses shall have
become liquidated and determined, then the Corporation shall also be obligated
to pay to the Indemnified Party interest on the unpaid amount for each day
during which the obligation remains unpaid at an annual rate equal to the rate
of interest from time to time announced by Citibank, N.A. as its base rate in
New York City in effect from time to time during which the obligation remains
unpaid. Such interest shall be payable at the same time as the payment to which
it relates and shall be calculated daily on the basis of a year of three hundred
sixty-five (365) days and the actual number of days elapsed.
SECTION 13. Appointment of Representative.
(a) Each of the BG Media Related Investors hereby irrevocably
constitutes and appoints BG Media as its representative (the "Representative")
and its lawful agent and attorney-in-fact for the purpose of performing and
consummating the transactions contemplated by this Agreement, the Registration
Rights Agreement, the Certificate of Designation, the Amended Certificate of
Designation, the Warrants or any other agreement, document or instrument entered
into in connection herewith or therewith (the "Transaction Documents") and the
taking of any and all actions and the making of any and all decisions hereunder
and thereunder. The appointment of BG Media as the Representative is coupled
with an interest and all authority hereby conferred shall be irrevocable and
shall not be terminated by any or all of the BG Media Related Investors without
the consent of the Representative, which consent may be withheld for any reason,
and the Representative is hereby authorized and directed to perform and
consummate all of the transactions contemplated by the Transaction Documents.
The Corporation shall be entitled to rely on the provisions of this Section 13
in dealing with the BG Media Investors. Notwithstanding anything to the contrary
contained herein, the BG Media Related Investors shall retain the right to sell,
transfer or otherwise dispose of any Shares which have been registered under the
Securities Act or which are freely transferable under Rule 144 of the Securities
Act. Not by way of limiting the authority of the Representative, each and all of
the BG Media Related Investors, for themselves and their respective heirs,
executors, administrators, successors and assign, hereby authorize the
Representative to:
(i) waive any provision of the Transaction Documents,
including conditions to the Initial Closing and the Subsequent Closing, which
the Representative deems necessary or desirable;
(ii) execute and deliver on their behalf any and all of the
Transaction Documents;
- 40 -
(iii) make and receive notices and other communications
pursuant to the Transaction Documents and service of process in any legal action
or other proceeding arising out of or related to the Transaction Documents or
any of the transactions hereunder or thereunder;
(iv) settle any dispute, claim, action, suit or proceeding
arising out of or related to the Transaction Documents or any of the
transactions hereunder or thereunder;
(v) enter into or consent to any modification, amendment or
termination of any Transaction Document;
(vi) take any action under the Transaction Documents,
including, without limitation, exercise of the Warrants or conversion of any
shares of Series A Preferred Stock;
(vii) appoint or provide for a successor Representative;
(viii) pay expenses incurred or which may be incurred by or on
behalf of the BG Media Related Investors in connection with the Transaction
Documents; and
(ix) take any other action necessary or appropriate in the
judgment of the Representative for the accomplishment of the foregoing.
(b) Any claim, action, suit or other proceeding, whether in
law or equity, to enforce any right, benefit or remedy granted to the BG Media
Related Investors under this Agreement may be asserted, brought, prosecuted or
maintained only by the Representative.
(c) The Representative shall not be liable to any BG Media
Related Investor for any acts or omissions of the Representative in connection
with its duties and obligations hereunder, except in the case of the
Representative's gross negligence or willful misconduct. The BG Media Related
Investors, jointly and severally, agree to indemnify and hold the Representative
harmless as to any liability incurred by it to any person by reason of its
having accepted the same or in carrying out any of the terms hereof, and to
reimburse the Representative for all of its costs and expenses, including, among
other things, reasonable attorneys' fees and costs, incurred by reason of any
matter as to which an indemnity is paid under this Section 13; provided,
however, that no indemnity need be paid in the case of the Representative's
gross negligence or willful misconduct.
(d) The Representative is authorized and empowered to construe
the Transaction Documents and its reasonable construction made in good faith
shall be conclusive and binding upon the BG Media Related Investors and upon all
parties thereto. The Representative shall always be protected and free from
liability in acting upon any notice, request, consent, certificate, declaration,
fax, telegram, telex, guarantee, affidavit or other paper or document or
signature believed by it to be genuine and to have been signed by the proper
party or parties or by the party or parties purporting to have signed the same.
The Representative shall not be liable for any error of judgment or for any act
done or omitted, or for any mistake of fact or law or for anything which it may
do or refrain from doing in good faith, nor shall the Representative have any
accountability hereunder, except for actual losses, if any, suffered by
- 41 -
the BG Media Related Investors that are proximately caused by the
Representative's own gross negligence or willful misconduct. The Representative
may consult with legal counsel and any action under this Agreement taken or
suffered in good faith by the Representative in accordance with the opinion of
such counsel shall be conclusive upon the parties hereto and the Representative
shall be fully protected and be subject to no liability with respect thereto.
NOTWITHSTANDING ANY PROVISIONS OF THIS AGREEMENT TO THE CONTRARY, IN NO EVENT
SHALL THE REPRESENTATIVE BE LIABLE FOR SPECIAL, INDIRECT, OR CONSEQUENTIAL, LOSS
OR DAMAGE OF ANY KIND WHATSOEVER (INCLUDING BUT NOT LIMITED TO LOST PROFITS)
EVEN IF THE REPRESENTATIVE HAS BEEN ADVISED OF THE LIKELIHOOD OF SUCH LOSS OR
DAMAGE AND REGARDLESS OF THE FORM OF ACTION. This section shall survive the
termination of this Agreement.
(e) The Representative shall have the right to resign at any
time by giving not less than 10 days' advance written notice to each of the BG
Media Related Investors.
SECTION 14. Successors and Assigns; Parties in Interest. This
Agreement shall bind and inure to the benefit of (a) the Corporation, the
Investors and each other Person who shall become a registered holder of any
Series A Preferred Shares or Reserved Shares and (b) the respective successors
and assigns of the Corporation, the Investors and each such other Person. The
rights of the Investors in this Agreement are assignable to any registered
holder of the Series A Preferred Stock or the Reserved Shares. The Corporation
shall not assign any of its rights or obligations hereunder without the written
consent of a majority in interest of all the Investors.
SECTION 15. Entire Agreement. This Agreement, the Registration
Rights Agreement, the Certificate of Designation (as amended from time to time
including by the Amendment) and the other writings referred to herein and
therein or delivered pursuant hereto or thereto which form a part hereof
(including the Schedules and Exhibits hereto) contain the entire agreement among
the parties with respect to the subject matter hereof and supersede all prior
and contemporaneous arrangement or understanding with respect thereto.
SECTION 16. Notices. All notices, requests, consents and other
communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person, transmitted by telecopier
(with confirmation of transmission having been received) or duly sent by first
class registered or certified mail, return receipt requested, postage prepaid,
addressed to such party at the address set forth below or such other address as
may hereafter be designated in writing by the addressee to the addresser listing
all parties:
If to the Corporation, to:
NetVoice Technologies Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇, President and
▇▇▇▇▇ ▇▇▇▇▇, Vice President
- 42 -
with a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
If to NV Investments:
NV Investments, L.P.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President
If to the BG Media Investors:
BG Media Intermediate Fund L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Dechert
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Paribas:
Paribas North America, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
White & Case
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
- 43 -
If to any other Investors, to the address set forth after such Investor's name
on Schedule 1 hereto.
All such notices, requests, consents and other communications shall be deemed to
have been received (a) in the case of personal delivery, or confirmed
transmittal by telecopy, on the date of such delivery or transmittal by telecopy
and (b) in the case of mailing, on the third day after the posting thereof.
SECTION 17. Remedies. Each holder of Series A Preferred Shares
and Reserved Shares shall have all rights and remedies set forth in this
Agreement, the Articles of Incorporation and the Amended Certificate of
Designation and all rights and remedies which such holders have been granted at
any time under any other agreement or contract and all of the rights which such
holders have under any law. Any Person having any rights under any provision of
this Agreement shall be entitled to enforce such rights specifically (without
posting a bond or other security), to recover damages by reason of any breach of
any provision of this Agreement and to exercise all other rights granted by law.
SECTION 18. Changes. The terms and provisions of this
Agreement may not be modified or amended, or any of the provisions hereof
waived, temporarily or permanently, except pursuant to the written consent of
all of the parties.
SECTION 19. Counterparts. This Agreement may be executed in
any number of counterparts, and each such counterpart hereof shall be deemed to
be an original instrument, but all such counterparts together shall constitute
but one agreement.
SECTION 20. Headings. The headings of the sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be a part of this Agreement.
SECTION 21. Nouns and Pronouns. Whenever the context may
require, any pronouns used herein shall include the corresponding masculine,
feminine or neuter forms, and the singular form of names and pronouns shall
include the plural and vice-versa.
SECTION 22. Governing Law. The corporate law of the State of
Nevada shall govern all issues and questions concerning the relative rights and
obligations of the Corporation and its stockholders. All other issues and
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by and construed in accordance with the laws
of the State of New York, without regard to conflict of laws.
SECTION 23. Severability. Any provision of this Agreement that
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 24. Jurisdiction. The parties hereto agree that any
suit, action or proceeding instituted against one or more of them with respect
to this Agreement (including any exhibits hereto) shall be brought in any
federal or state court located in the State of New York. The parties hereto, by
the execution and delivery of this Agreement, irrevocably waive any
- 44 -
objection or defense to the institution of any action in New York based on
improper venue, the convenience of the forum or the jurisdiction of such courts,
or from the execution of judgments resulting therefrom, and the parties hereto
irrevocably accept and submit to the jurisdiction of the aforesaid courts in any
suit, action or proceeding and consent to the service of process by certified
mail at the address set forth in Section 16 hereof.
SECTION 25. Waiver of Trial by Jury. Each party to this
Agreement waives all right to trial by jury of all claims, defenses,
counterclaims and suits of any kind directly or indirectly arising from or
relating to this Agreement, the Registration Rights Agreement and the
transactions contemplated hereby or thereby. Each party hereto agrees that all
such claims, defenses, counterclaims and suits shall be tried before a judge of
competent jurisdiction, without a jury.
- 45 -
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed on their behalf.
NETVOICE TECHNOLOGIES CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title:
BG MEDIA INTERMEDIATE FUND L.P.*
By: BG MEDIA INTERMEDIATE INVESTORS L.L.C.,
its General Partner
By: /s/ J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Member
NV INVESTMENTS, L.P.
By: NV GP, L.L.C., its General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Manager
PARIBAS NORTH AMERICA, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer
--------------------
* On behalf of itself and as the Representative of ▇▇▇▇ ▇▇▇▇▇, J. ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ Zipper, ▇▇▇▇ Zipper, ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, R. ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
[SIGNATURE PAGE TO AMENDED AND RESTATED
SECURITIES PURCHASE AGREEMENT]
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▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇
Laguna Frisco, Inc.
By:
------------------------------
▇▇▇▇ ▇▇▇▇▇▇, President
----------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇ ▇. ▇▇▇▇▇▇▇
[SIGNATURE PAGE TO AMENDED AND RESTATED
SECURITIES PURCHASE AGREEMENT]
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▇▇▇▇▇ Family Trust
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▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
----------------------------------
Charles Benaiah
----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
SCHEDULE I
Names and Addresses of Initial BG Media Related Investors
▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ BG Media Investors L.P., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ BG Media Investors L.P., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ BG Media Investors L.P., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇. ▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ Zipper ▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ Zipper ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇ ▇▇▇-▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ iMapdata, ▇▇▇▇ ▇ ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Mollen and ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ c/o Dechert, ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
R. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ c/o Best, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, Ltd., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ c/o Best, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, Ltd., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ c/o Best, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, Ltd., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇/▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Names and Addresses of Subsequent BG Media Related Investors
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Laguna Frisco, Inc. ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇* ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇* ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇* ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ Family Trust ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇* ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Charles Benaiah* ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇* ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇. ▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇* ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
--------------------
* Non-Accredited Investor
SCHEDULE 2
Names of Investors/Purchase Price
Number of Shares Number of Number of
of Series A EBITDA NASDAQ
Investors Consideration Preferred Stock Warrants Warrants
--------- ------------- ----------------- -------- ---------
BG Media $ 7,000,000.00 2,153,846 172,564(1) 146,015(2)
NV Investments 3,000,000.00 923,077 66,667 56,410
Paribas 2,000,000.00 615,385 44,444 37,607
▇▇▇▇ ▇▇▇▇▇ 100,000.00 30,770 -- --
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 50,001.25 15,385 -- --
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 3,250.00 1,000 -- --
▇▇▇▇▇ ▇▇▇▇▇▇▇ 19,500.00 6,000 -- --
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 65,000.00 20,000 -- --
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 65,000.00 20,000 -- --
▇▇▇▇▇▇▇ Zipper 60,125.00 18,500 -- --
▇▇▇▇ Zipper 35,750.00 11,000 -- --
▇▇ ▇▇▇▇▇▇ 3,250.00 1,000 -- --
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 25,000.00 7,692 -- --
▇▇▇▇ ▇▇▇▇▇ 32,500.00 10,000 -- --
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 50,000.00 15,385 -- --
▇▇▇▇▇ ▇▇▇▇▇▇▇ 50,000.00 15,385 -- --
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 8,125.00 2,500 -- --
R. ▇▇▇▇▇ ▇▇▇▇▇▇▇ 65,000.00 20,000 -- --
▇▇▇▇ ▇▇▇▇▇▇ 50,000.00 15,385 -- --
▇▇▇▇ ▇▇▇▇▇▇▇▇ (3) 102,462 None None
▇▇▇ ▇▇▇▇▇▇▇▇▇ (3) 102,462 None None
▇▇▇▇ ▇▇▇▇▇▇ (3) 102,462 None None
-----------------------
(1) Includes a proportionate number of EBITDA Warrants for each BG Media
Related Investor, other than those Investors for whom "None" is set forth
opposite their names on this table.
(2) Includes a proportionate number of NASDAQ Warrants for each BG Media
Related Investor, other than those Investors for whom "None" is set forth
opposite their names on this table.
(3) Shares received are in consideration of advisory services rendered or to be
rendered to the Corporation.
Number of Shares Number of Number of
of Series A EBITDA NASDAQ
Investors Consideration Preferred Stock Warrants Warrants
--------- ------------- ----------------- -------- ---------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ $ 8,125.00 2,500 -- --
▇▇▇▇▇ ▇▇▇▇▇ 100,002.50 30,770 None None
▇▇▇ ▇▇▇▇▇▇▇ 100,002.50 30,770 None None
▇▇▇▇ ▇▇▇▇▇▇▇▇ 20,000.50 6,154 None None
Laguna Frisco, Inc. 19,500.00 6,000 None None
▇▇▇▇ ▇▇▇▇▇▇▇▇ 65,000.00 20,000 None None
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 24,999.00 7,692 None None
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 4,998.50 1,538 None None
▇▇▇ ▇. ▇▇▇▇▇▇▇ 13,000.00 4,000 None None
▇▇▇▇▇ Family Trust 9,750.00 3,000 None None
▇▇▇▇▇▇ ▇▇▇▇▇ 84,500.00 26,000 None None
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ 19,500.00 6,000 None None
Charles Benaiah 48,750.00 15,000 -- --
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 26,000.00 8,000 -- --
▇▇▇▇ ▇▇▇▇▇▇ 69,998.50 21,538 None None
-------------- ---------- ---- ----
$13,296,627.75 4,398,658 283,675 240,032
EXHIBIT A
Certificate of Designation
EXHIBIT B
Form of EBITDA Warrant
EXHIBIT C
Form of NASDAQ Warrant
EXHIBIT D
Form of Registration Rights Agreement
EXHIBIT E
Form of Opinion of Counsel for the Corporation
