EXHIBIT 4.2
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PURCHASE AGREEMENT
DATED AS OF
APRIL 25, 1997
BY AND BETWEEN
UC TELEVISION NETWORK CORP.
AND
U-C HOLDINGS, L.L.C.
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TABLE OF CONTENTS
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I. DEFINITIONS.............................................. 1
II. THE PURCHASE OF PURCHASED SECURITIES..................... 8
2.1 Authorization of Issue................................... 8
2.2 Purchase of Purchased Securities......................... 8
2.3 Closing.................................................. 8
2.4 Escrow................................................... 9
III. PURCHASER'S REPRESENTATIONS.............................. 9
3.1 Investment Intention..................................... 9
3.2 Accredited Investor...................................... 9
3.3 Corporate Existence...................................... 9
3.4 Corporate Power: Authorization: Enforceable Obligations.. 9
3.5 Information in Purchaser Proposal........................ 10
3.6 Use of Proceeds.......................................... 10
3.7 Declaration of Dividends................................. 10
IV. COMPANY'S REPRESENTATIONS AND WARRANTIES................. 10
4.1 Authorized and Outstanding Shares of Capital Stock....... 10
4.2 Authorization and Issuance of Purchased Securities....... 12
4.4 Corporate Existence: Compliance with Law................. 12
4.5 Subsidiaries............................................. 13
4.6 Corporate Power: Authorization: Enforceable Obligations.. 13
4.7 Financial Statements..................................... 14
4.8 Ownership of Property.................................... 14
4.9 Material Contracts: Indebtedness......................... 15
4.10 Environmental Protection................................. 15
4.11 Labor Matters............................................ 16
4.12 Other Ventures........................................... 16
4.13 Taxes.................................................... 16
4.14 No Litigation............................................ 17
4.15 Brokers.................................................. 18
4.16 Employment and Labor Agreements.......................... 18
4.17 Patents. Trademarks, Copyrights and Licenses............. 18
4.18 No Material Adverse Effect............................... 18
4.19 ERISA.................................................... 18
4.20 Registration Rights...................................... 20
4.21 Ordinary Course of Business.............................. 21
4.22 Full Disclosure.......................................... 21
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V. COVENANTS................................................ 21
5.1 Director and Officer Liability Insurance................. 21
5.2 Indemnification of Officer and Directors................. 21
5.3 Amendment to Certificate of Incorporation................ 21
5.4 Schedule 14F-1 Information Statement..................... 21
VI. CONDITIONS PRECEDENT..................................... 21
6.1 Conditions Precedent..................................... 21
VII. SECURITIES LAW MATTERS................................... 23
7.1 Legends.................................................. 23
7.2 Transfer of Restricted Securities........................ 24
VIII. EXPENSES................................................. 25
IX. LIMITATION ON CLAIMS OF PURCHASER........................ 25
9.1 Limitation............................................... 25
X. MISCELLANEOUS............................................ 26
10.1 Notices.................................................. 26
10.2 Binding Effect: Benefits................................. 27
10.3 Amendment................................................ 27
10.4 Successors and Assigns: Assignability.................... 27
10.5 Remedies................................................. 27
10.6 Section and Other Headings............................... 28
10.7 Severability............................................. 28
10.8 Entire Agreement......................................... 28
10.9 Counterparts............................................. 28
10.10 Publicity................................................ 28
10.11 Governing Law............................................ 28
10.12 Expenses................................................. 28
10.13 Negotiations............................................. 29
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Schedules
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Schedule 1.0 Annual Report
Schedule 1.1 Copies of Form Warrants
Schedule 4.1 Stock, Preferred Stock, Options and Warrants
Schedule 4.7 Financial Statements; Other Obligations
Schedule 4.8 Ownership of Property
Schedule 4.9 Material Contracts
Schedule 4.10 Environmental Matters
Schedule 4.14 Litigation
Schedule 4.16 Employment Contracts
Schedule 4.17 Patents, Trademarks, Etc.
Schedule 4.18 Material Adverse Effect
Schedule 4.19 ERISA
Schedule 4.20 Registration Rights
Exhibit A Form of Class C Warrant
Exhibit B-1 Equity Protection Agreement
Exhibit B-2 Equity Protection Agreement
Exhibit B-3 Equity Protection Agreement
Exhibit B-4 Equity Protection Agreement
Exhibit C Escrow Agreement
Exhibit D Registration Rights Agreement
Exhibit E Opinion of Company Counsel
Exhibit F ▇▇▇▇▇ Employment Agreement
Exhibit G ▇▇▇▇▇ Employment Agreement
Exhibit H ▇▇▇▇▇ Employment Agreement
Exhibit I ▇▇▇▇▇▇ Employment Agreement
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PURCHASE AGREEMENT
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THIS PURCHASE AGREEMENT, dated as of April 25, 1997, by and among UC
Television Network Corp., a Delaware corporation having an office at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("Company"), and U-C Holdings,
L.L.C., a Delaware limited liability company ("Purchaser").
W I T N E S S E T H
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WHEREAS, Company has agreed to issue and sell to Purchaser, and Purchaser
has agreed to purchase from Company, upon the terms and conditions hereinafter
provided, 29,090,909 shares of Company's Common Stock, $0.001 par value per
share, a Class C Warrant to purchase 3,863,662 shares of Common Stock and the
Equity Protection Agreements (as defined below) (collectively, the "Purchased
Securities");
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, it is agreed as follows:
I. DEFINITIONS
"Affiliate" shall mean, with respect to any Person, (i) each Person that,
directly or indirectly, owns or controls, whether beneficially, or as a trustee,
guardian or other fiduciary, 5% or more of the Stock having ordinary voting
power in the election of directors of such Person, (ii) each Person that
controls, is controlled by or is under common control with such Person or any
Affiliate of such Person, (iii) each of such Person's officers, directors, joint
venturers and partners, (iv) any trust or beneficiary of a trust of which such
Person is the sole trustee or (v) any lineal descendants, ancestors, spouse or
former spouses (as part of a marital dissolution) of such Person (or any trust
for the benefit of such Person). For the purpose of this definition, "control"
of a Person shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of its management or policies, whether through the
ownership of voting securities, by contract or otherwise.
"Affiliated Group" means an affiliated group as defined in Section 1504 of
the Code (or any analogous combined, consolidated or unitary group defined under
state, local or foreign income tax law) of which Company is or has been a
member.
"Annual Report" shall mean the Annual Report of the Company on Form 10-KSB
for the fiscal year ended October 31, 1996, which has been filed with the SEC, a
copy of which is attached hereto as Schedule 1.0.
"Business Day" shall mean any day that is not a Saturday, a Sunday or a day
on which banks are required or permitted to be closed in the State of New York.
"Charges" shall mean (A) all federal, state, county, city, municipal,
local, foreign or other governmental (including, without limitation, PBGC) taxes
at the time due and payable, levies, assessments, charges, liens, claims or
encumbrances upon or relating to (i) Company's employees, payroll, income or
gross receipts, (ii) Company's ownership or use of any of its assets, or (iii)
any other aspect of Company's business; or (B) any liability of Company for the
payment of any amounts of the type described in clause (A) arising as a result
of being (or ceasing to be) a member of any Affiliated Group (or being included
(or required to be included) in any tax return relating thereto).
"Class C Warrant" shall mean the Class C Warrant to be issued to Purchaser
to purchase 3,863,662 shares of Common Stock, subject to adjustment, in the form
of Exhibit "A" attached hereto.
"Closing" shall have the meaning set forth in Section 2.3 hereof.
"Closing Date" shall have the meaning set forth in Section 2.3 hereof.
"COBRA" shall have the meaning set forth in Section 4.19(m) hereof.
"Common Stock" shall mean the common stock, $0.001 par value per share, of
Company.
"Company Certificate of Incorporation" shall mean the Certificate of
Incorporation of Company, as amended.
"Environmental Laws" shall mean all federal, state and local laws,
statutes, ordinances and regulations, now or hereafter in effect, and in each
case as amended or supplemented from time to time, and any judicial or
administrative interpretation thereof, including, without limitation, any
applicable judicial or administrative order, consent decree or judgment,
relative to the applicable Real Estate, relating to the regulation and
protection of human health, safety, the environment and natural resources
(including, without limitation, ambient air, surface water, groundwater,
wetlands, land surface or subsurface strata, wildlife, aquatic species and
vegetation). Environmental Laws include but are not limited to the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended (42
U.S.C. (S) 9601 et seq.) ("CERCLA"); the Hazardous Material Transportation Act,
as amended (49 U.S.C. (S) 1801 et seq.); the Federal Insecticide, Fungicide, and
Rodenticide Act, as amended (7 U.S.C. (S) 136 et seq. ); the Resource
Conservation and Recovery Act, as amended (42 U.S.C. (S) 6901 et seq.) ("RCRA");
the Toxic Substance Control Act, as amended (15 U.S.C. (S) 2601 et seq.); the
Clean Air Act, as amended (42 U.S.C. (S) 740 et seq.); the Federal Water
Pollution Control Act, as amended (33 U.S.C. (S) 1251 et seq.); the Occupational
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Safety and Health Act, as amended (29 U.S.C. (S) 651 et sec.) ("OSHA"); and the
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Safe Drinking Water Act, as amended (42 U.S.C. (S) 300f et seq.), and any and
all regulations promulgated thereunder, and all analogous state and local
counterparts or equivalents and any transfer of ownership notification or
approval statutes.
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"Environmental Liabilities and Costs" shall mean all liabilities,
obligations, responsibilities, remedial actions, losses, damages, punitive
damages, consequential damages, treble damages, costs and expenses (including,
without limitation, all fees, disbursements and expenses of counsel, experts and
consultants and costs of investigation and feasibility studies), fines,
penalties, sanctions and interest incurred as a result of any claim, suit,
action or demand by any Person, whether based in contract, tort, implied or
express warranty, strict liability, criminal or civil statute or common law
(including, without limitation, any thereof arising under any Environmental Law,
permit, order or agreement with any Governmental Authority) and which relate to
any health or safety condition regulated under any Environmental Law or in
connection with any other environmental matter or Spill or the presence of a
hazardous substance or threatened Spill of any Hazardous Substance.
"Equity Protection Agreements" shall mean the Equity Protection Agreements
of even date between Company and Purchaser, in the form of Exhibits "B-1", "B-
2", "B-3" and "B-4" attached hereto.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974 (or
any successor legislation thereto), as amended from time to time and any
regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to Company, any trade or
business (whether or not incorporated) under common control with Company and
which, together with Company, are treated as a single employer within the
meaning of Section 414(b), (c), (m) or (o) of the IRC, excluding Purchaser and
each other person which would not be an ERISA Affiliate if Purchaser did not own
any issued and outstanding shares of Stock of Company.
"Escrow Agreement" shall mean the Escrow Agreement dated April 25, 1997
between Purchaser, Company and LaSalle National Bank, escrow agent, in the form
of Exhibit "C" attached hereto.
"Escrow Release Date" shall be the date the Purchased Securities are
released from escrow to Purchaser in accordance with the Escrow Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and all rules and regulations promulgated thereunder.
"Financials" shall mean the financial statements referred to in Section 4.7
hereof.
"Fiscal Year" shall mean the twelve month period ending October 31.
Subsequent changes of the fiscal year of Company shall not change the term
"Fiscal Year," unless the Purchaser shall consent in writing to such change.
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"GAAP" shall mean generally accepted accounting principles in the United
States of America as in effect from time to time.
"Governmental Authority" shall mean any nation or government, any state or
other political subdivision thereof, and any agency, department or other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guaranteed Indebtedness" shall mean, as to any Person, any obligation of
such Person guaranteeing any Indebtedness, lease, dividend, or other obligation
("primary obligations") of any other Person (the "primary obligor'') in any
manner including, without limitation, any obligation or arrangement of such
Person (a) to purchase or repurchase any such primary obligation, (b) to advance
or supply funds (i) for the purchase or payment of any such primary obligation
or (ii) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency or any balance sheet condition
of the primary obligor, (c) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation, or (d) to indemnify the owner of such primary obligation against
loss in respect thereof.
"Guaranty" shall mean the guaranty of the obligations of the Purchaser
under the Note, executed by ▇▇▇▇▇▇ ▇▇▇▇▇ & Partners, L.P., ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
▇. ▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇ III on the date hereof.
"Hazardous Substances" shall have the meaning set forth in Section 4.10
hereof.
"Indebtedness" of any Person shall mean (i) all indebtedness of such Person
for borrowed money or for the deferred purchase price of property or services
(including, without limitation, reimbursement and all other obligations with
respect to surety bonds, letters of credit and bankers acceptances, whether or
not matured, but not including obligations to trade creditors incurred in the
ordinary course of business), (ii) all obligations evidenced by notes, bonds,
debentures or similar instruments, (iii) all indebtedness created or arising
under any conditional sale or other title retention agreements with respect to
property acquired by such Person (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), (iv) all capital lease obligations
required to be capitalized in accordance with GAAP, (v) all Guaranteed
Indebtedness, (vi) all Indebtedness referred to in clause (i), (ii), (iii), (iv)
or (v) above secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien upon or in
property (including, without limitation, accounts and contract rights) owned by
such Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness and (vii) all liabilities under Title IV of ERISA.
"IRC" shall mean the Internal Revenue Code of 1986, as amended, and any
successor thereto.
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"IRS" shall mean the Internal Revenue Service, or any successor thereto.
"Lien" shall mean any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, security interest,
easement or encumbrance, or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement perfecting a security interest
as to assets owned by the relevant Person under the Uniform Commercial Code or
comparable law of any jurisdiction).
"Material Adverse Effect" shall mean material adverse effect on the
business, assets, operations, prospects or financial or other condition of
Company.
"Material Contracts" means (i) all of Company's contracts, agreements,
leases or other instruments to which Company is a party or by which Company or
its properties are bound, which in Company's good faith judgment are required to
be disclosed as exhibits to the Company's annual report on Form 10-KSB, (ii) all
of Company's loan agreements, bank lines of credit agreements, indentures,
mortgages, deeds of trust, pledge and security agreements, factoring agreements,
conditional sales contracts, letters of credit or other debt instruments, (iii)
all material operating or capital leases for equipment to which Company is a
party, (iv) all non-competition and similar agreements other than as contained
in employment agreements to which Company is a party, (v) all contracts for the
employment of any officer or employee, (vi) all consulting agreements, (vii) any
guarantees by the Company, (viii) all distributor and sales agency agreements,
(ix) all other material contracts not made in the ordinary course of business,
and (x) all material contracts relating to the operation of Company or, the
production of or programming for Company or related to the technology utilized
by Company.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA, and to which Company or any ERISA Affiliate is
making, is obligated to make, has made or been obligated to make, contributions
on behalf of participants who are or were employed by any of them.
"Note" shall have the meaning set forth in Section 2.4 hereof.
"Options" shall mean the options granted pursuant to Company's 1990
Performance Equity Plan, 1996 Stock Incentive Plan; Outside Directors Stock
Option Plan and the nonqualified options for 1,350,000 shares granted to ▇▇▇▇▇
▇▇▇▇▇.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any successor
thereto.
"Pension Plan" shall have the meaning set forth in Section 4.19 hereof.
5
"Permitted Indebtedness" means, with respect to Company, (i) taxes or
assessments or other governmental charges or levies, either not yet due and
payable or to the extent that nonpayment thereof is permitted by the terms of
this Agreement; (ii) obligations under workmen's compensation, unemployment
insurance, social security or public liability laws or similar legislation;
(iii) bids, tenders, contracts (other than contracts for the payment of money)
or leases to which Company is a party as lessee made in the ordinary course of
business; (iv) public or statutory obligations of Company; (v) all deferred
taxes and (vi) all unfunded pension fund and other employee benefit plan
obligations and liabilities but only to the extent permitted to remain unfunded
under applicable law.
"Person" shall mean any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, entity or
government (whether federal, state, county, city, municipal or otherwise,
including, without limitation, any instrumentality, division, agency, body or
department thereof).
"Plan" shall have the meaning set forth in Section 4.19 hereof.
"Purchased Securities" shall have the meaning set forth in the first
"Whereas" clause hereof.
"Preferred Stock" shall mean the preferred stock, $0.001 par value per
share of the Company.
"Registration Rights Agreement" shall mean the Registration Rights
Agreement between Company and Purchaser, substantially in the form attached
hereto as Exhibit "D," as such agreement may be amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof.
"Restricted Securities" means (i) the Purchased Securities issued
hereunder, and (ii) any securities issued and exchanged with respect to the
securities referred to in clause (i) by way of a stock dividend or stock split
or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization. As to any particular Restricted
Securities, such securities shall cease to be Restricted Securities when they
have been (a) effectively registered under the Securities Act and disposed of in
accordance with the registration statement covering them, (b) been distributed
to the public through a broker, dealer or market maker pursuant to Rule 144 (or
any similar provision then in force) under the Securities Act or become eligible
for sale pursuant to Rule 144(k) (or any similar provision then in force) under
the Securities Act or (c) been otherwise transferred and new certificates for
them not bearing the Securities Act legend set forth in Section 7.1 have been
delivered by Company in accordance with Section 7.2. Whenever any particular
securities cease to be Restricted Securities, the holder thereof shall be
entitled to receive from Company, without expense, new securities of like tenor
nor bearing a Securities Act legend of the character set forth in Section 7.1.
6
"Retiree Welfare Plan" shall refer to any Welfare Plan providing for
continuing coverage or benefits for any participant or any beneficiary of a
participant after such participant's termination of employment, other than
continuation coverage provided pursuant to Section 4980B of the IRC and at the
sole expense of the participant or the beneficiary of the participant.
"SEC" shall mean the U.S. Securities and Exchange Commission, or any
successor thereto.
"Securities Act" shall mean the Securities Act of 1933, as amended, and all
rules and regulations promulgated thereunder.
"Spill" shall have the meaning set forth in Section 4.10.
"Stock" shall mean all shares, options, warrants, general or limited
partnership interests, limited liability company membership interest,
participations or other equivalents (regardless of how designated) of or in a
corporation, partnership, limited liability company or equivalent entity whether
voting or nonvoting, including, without limitation, common stock, preferred
stock, or any other equity security (as such term is defined in Rule 3a11-1 of
the General Rules and Regulations promulgated by the SEC under the Exchange
Act).
"Subsidiary" shall mean, with respect to any Person, (a) any corporation of
which an aggregate of more than 50% of the outstanding Stock having ordinary
voting power to elect a majority of the board of directors of such corporation
(irrespective of whether, at the time, Stock of any other class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time, directly or indirectly, owned
legally or beneficially by such Person and/or one or more Subsidiaries of such
Person, and (b) any partnership or other entity in which such Person and/or one
or more Subsidiaries of such Person shall have an interest (whether in the form
of voting or participation in profits or capital contribution) of more than 50%.
"Transaction Documents" shall mean this Agreement, the Registration Rights
Agreement, the Class C Warrant, the Equity Protection Agreements, the Escrow
Agreement, the Employment Agreements, the Guaranty, the Note and all
certificates and other documents related to the transactions contemplated by
this Agreement.
"Unit Purchase Option" shall mean the option, dated April 26/May 28, 1996,
issued to Barington Capital Group, L.P. for the purchase of the aggregate of
3.44 units at an exercise price of $100,000 per unit, each unit consisting of
142,857 shares of Common Stock and one warrant to purchase 142,857 shares of
Common Stock at an exercise price of $1.29.
"Warrants" shall mean Company's Class A Redeemable Warrants; Class B
Redeemable Warrants; and, to the extent presently unexercised, Units consisting
of two (2) shares of Common Stock, one (1) Class A Redeemable Warrant and one
(1) Class B Redeemable Warrant; and Private Placement Warrants, copies of which
forms are attached hereto as Schedule 1.1.
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"Welfare Plan" shall mean any welfare plan, as defined in Section 3(1) of
ERISA, which is maintained or contributed to by Company or any ERISA Affiliate.
References to this "Agreement" shall mean this Purchase Agreement,
including all amendments, modifications and supplements and any exhibits or
scheduler to any of the foregoing, and shall refer to the Agreement as the same
may be in effect at the time such reference becomes operative.
Any accounting term used in this Agreement shall have, unless otherwise
specifically provided herein, the meaning customarily given such term in
accordance with GAAP, and all financial computations hereunder shall be
computed, unless otherwise specifically provided herein, in accordance with GAAP
consistently applied. That certain terms or computations are explicitly modified
by the phrase "in accordance with GAAP" shall in no way be construed to limit
the foregoing. The words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement, as a whole, including the Exhibits and
Schedules hereto, as the same may from time to time be amended, modified or
supplemented, and not to any particular section, subsection or clause contained
in this Agreement. Wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular and the
plural, and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, the feminine and the neuter.
II. THE PURCHASE OF PURCHASED SECURITIES
2.1 Authorization of Issue. Prior to the Closing, Company shall have duly
----------------------
authorized the issuance and sale of the Purchased Securities.
2.2 Purchase of Purchased Securities. Subject to the terms and conditions
--------------------------------
set forth in this Agreement, Purchaser does hereby subscribe for and purchase
from Company, and Company agrees to issue and sell to Purchaser, on the Closing
Date an aggregate of 29,090,909 shares of Common Stock, the Class C Warrant and
the purchase rights granted pursuant to the Equity Protection Agreements.
The aggregate purchase price for the Common Stock subscribed for by
Purchaser is $16,000,000, payable in full on the Closing Date as follows:
$29,090.91 in cash at Closing and $15,970,909.09 pursuant to the Note; and the
aggregate purchase price for the Class C Warrant and the purchase rights granted
pursuant to the Equity Protection Agreements shall be $200,000 payable on the
Closing Date pursuant to the Note. The aggregate principal amount of the Note
shall be $16,170,909.09.
2.3 Closing. The closing of the purchase and sale of the Purchased
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Securities (the "Closing") shall take place simultaneously with the execution of
this Agreement (the "Closing Date") at the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ such other place as shall be mutually agreed
to by the parties hereto.
8
On the Closing Date, Company will deliver to the Purchaser a certificate
representing the Common Stock, the Class C Warrant and the executed Equity
Protection Agreements representing the Purchased Securities to be purchased by
the Purchaser registered in the name of Purchaser against delivery by Purchaser
of the purchase price therefor by payment of cash and delivery of the Note to
Company in accordance with Section 2.2 hereof.
2.4 Escrow. On the date hereof, Purchaser shall place in escrow pursuant
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to the terms of the Escrow Agreement the Purchased Securities and Company shall
place in escrow pursuant to the terms of the Escrow Agreement the cash and
Promissory Note payable to Company from Purchaser as partial payment of the
Purchase Price (the "Note") for the Purchased Securities and the rights and
benefits pursuant to the Equity Protection Agreements. The Purchased Securities
shall be released from escrow in accordance with the terms and provisions of the
Escrow Agreement. Purchaser shall also place into escrow resignations of the
officers and directors appointed pursuant to Section 6.1(i) hereof to be
effective if the purchase and sale is rescinded in accordance with the terms of
the Escrow Agreement.
III PURCHASER'S REPRESENTATIONS
Purchaser makes the following representations and warranties to Company,
each and all of which shall survive the execution and delivery of this Agreement
and the Closing hereunder:
3.1 Investment Intention. Purchaser is purchasing the Purchased
--------------------
Securities for its own account, for investment purposes and not with a view to
the distribution thereof. Purchaser will not, directly or indirectly, offer,
transfer, sell, assign, pledge, hypothecate or otherwise dispose of any of the
Purchased Securities (or solicit any offers to buy, purchase, or otherwise
acquire any of the Purchased Securities), except in compliance with the
Securities Act.
3.2 Accredited Investor. Purchaser is an "accredited investor" (as that
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term is defined in Rule 501 of Regulation D under the Securities Act) and by
reason of its business and financial experience, it has such knowledge,
sophistication and experience in business and financial matters as to be capable
of evaluating the merits and risks of the prospective investment, is able to
bear the economic risk of such investment and it is able to afford a complete
loss of such investment.
3.3 Corporate Existence. Purchaser is a limited liability company duly
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organized, validly existing and in good standing under the laws of its
jurisdiction of formation.
3.4 Corporate Power: Authorization: Enforceable Obligations. The
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execution, delivery and performance by Purchaser of the Transaction Documents to
be executed by it: (i) are within Purchaser's power, as applicable; (ii) have
been duly authorized by all necessary action, as applicable; (iii) are not in
contravention of any provision of Purchaser's governing documents, as
applicable; and (iv) will not violate any law or regulation, or any order or
decree of any court or governmental instrumentality binding on Purchaser.
Purchaser has full power and authority to
9
perform its obligations under the Transaction Documents. The Transaction
Documents to which Purchaser is a party have each been duly executed and
delivered by Purchaser and constitute the legal, valid and binding obligations
of Purchaser, enforceable against it in accordance with their respective terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity).
3.5 Information in Purchaser Proposal. The factual information pertaining
---------------------------------
to ▇▇▇▇▇▇ ▇▇▇▇▇ & Partners, L.P., ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇ and their
respective affiliates contained in the brochure prepared by ▇▇▇▇▇▇ ▇▇▇▇▇ &
Partners, L.P., dated March 20, 1997, is correct in all material respects.
3.6 Use of Proceeds. As of the Closing Date, the Purchaser intends to
---------------
cause Company to use the proceeds of the investment contemplated hereunder for
building and installing equipment at additional campus locations as and when
contracted; additional personnel; program development; and working capital
needs.
3.7 Declaration of Dividends. As of the Closing Date, the Purchaser has
------------------------
no present intention of causing Company to pay dividends or distribute funds to
it.
IV. COMPANY'S REPRESENTATIONS AND WARRANTIES
Company makes the following representations and warranties to each
Purchaser, each and all of which shall survive the execution and delivery of
this Agreement and the Closing hereunder:
4.1 Authorized and Outstanding Shares of Capital Stock. After giving
--------------------------------------------------
effect to the Closing, the authorized capital stock of Company consists of
50,000,000 shares of Common Stock, $0.001 par value per share, of which
40,075,766 shares will be issued and outstanding on the Closing Date, including
the Purchased Securities, of which 376,945 shares are reserved for issuance upon
exercise of the Class A Warrants; 2,951,027 shares are reserved for issuance
upon exercise of the Class B Warrants; 4,914,283 shares are reserved for
issuance upon the exercise of the Private Placement Warrants; 2,076,591 shares
are reserved for issuance upon exercise of the Options and 982,856 shares are
reserved for issuance upon the exercise of the Unit Purchase Options. No shares
will be reserved for the Class C Warrant on the Closing Date. The following
table sets forth the capital structure as it relates to outstanding Warrants and
Options of the Company after giving effect to the issuance of the Purchased
Securities on April 25, 1997.
10
NUMBER STOCK STOCK EXERCISABLE EXERCISE PRICE EXERCISE PRICE
OUTSTANDING EXERCISABLE INTO INTO AFTER CLOSING PRIOR TO CLOSING AFTER CLOSING
PRIOR TO CLOSING
Class A Warrants 144,979 376,945 376,945 $ 11.5161/1/ $ 11.5161/1/
Class B Warrants 2,270,021 2,951,027 2,951,027 $ 6.9096 $ 6.9096
IPO Unit Purchase 133,929/2/ 790,181 790,181/1/ $ 25.4817/1/ $ 25.4817/1/
Options
Private Placement 4,914,293 4,914,293 4,914,293 $ 1.2900 $ 1.2900
Warrants
Unit Purchase 3.44 982,856 1,001,482 $ 284,285.4300 $ 280,661.9974/1/
Options -
Barington
Options prior 1,064,091
after 2,076,591
* For all of Stock, not per share.
1. Represents amount payable to exercise unit and underlying warrants.
2. Originally 105,000 and adjusted to 133,929 as a result of interim anti-
dilution adjustments (Expires 6/10/97). Each Unit Purchase Option represents
two Common Shares and one Class A and one Class B Warrant.
Before giving effect to this transaction, each Class A Warrant is
exercisable into 1.3 shares of Common Stock and 1 Class B Warrant. Each Class B
Warrant is exercisable into 1.3 shares of Common Stock. Each Private Placement
Warrant is exercisable for 1.0 shares of Common Stock. Each Unit Purchase Option
is exercisable for 142,857 shares of Common Stock and one (1) Warrant to
purchase 142,857 shares of Common Stock for each unit and there are 3.44 units
outstanding.
There are also 2,000,000 shares of Preferred Stock, $0.001 par value per
share authorized, of which 3,333 shares will be issued and outstanding on the
Closing Date. All of such issued and outstanding Stock of the Company,
including, without limitation, the 29,090,909 shares of Common Stock included as
part of the Purchased Securities, is validly issued, fully paid and non-
assessable. Schedule 4.1 hereto or the Annual Report contains a complete and
correct list of all stockholders of Company owning, to the knowledge of Company,
more than 5% of the outstanding Stock of Company and the number of shares or
warrants owned by each. All Options and the holders of each of the Options and
certain other information pertaining to the Options are listed on Schedule 4.1.
11
Except as set forth on Schedule 4.1 or the Annual Report or the outstanding
Warrants or the Unit Purchase Options referenced above or the Equity Protection
Agreements, (i) there is no existing option, warrant, call, commitment or other
agreement to which Company is a party requiring, and there are no convertible
securities of Company outstanding which upon conversion would require, the
issuance of any additional shares of Stock of Company or other securities
convertible into shares of equity securities of Company, (ii) there are no
agreements or obligations (contingent or otherwise) requiring Company to
repurchase or otherwise acquire or retire any shares of its capital stock or any
warrants, options or other rights to acquire its capital stock, and (iii) there
are no agreements to which Company is a party or, to the knowledge of Company,
to which any stockholder or warrant holder of Company is a party, with respect
to the voting or transfer of the Stock of Company. Except as set forth on
Schedule 4.1 or the Annual Report, there are no stockholders' preemptive rights
or rights of first refusal or other similar rights with respect to the issuance
of the Purchased Securities by Company. True and correct copies of the
certificate of incorporation and by-laws of Company have been delivered to
Purchaser.
4.2 Authorization and Issuance of Purchased Securities. The issuance of
--------------------------------------------------
the Purchased Securities has been duly authorized by all necessary corporate
action on the part of Company and, upon delivery to Purchaser of certificates
therefor against payment in accordance with the terms hereof, the Purchased
Securities and the purchase rights granted pursuant to the Equity Protection
Agreements will have been validly issued and fully paid and non-assessable, free
and clear of all pledges, liens, encumbrances and preemptive rights. Subject to
the amendment of the Certificate of Incorporation of the Company increasing the
number of authorized shares of Common Stock, the issuance of shares upon
exercise of the Class C Warrant and the purchase rights granted pursuant to the
Equity Protection Agreements has been duly authorized by all necessary corporate
action on the part of Company and, when issued upon exercise of the Class C
Warrant and the purchase rights granted pursuant to the Equity Protection
Agreements and payment of the exercise price, such Common Stock will have been
validly issued and fully paid and non-assessable. Subject to increase in
authorized Common Stock, the Company has duly reserved 3,863,662 shares of
Common Stock for issuance pursuant to the terms of the Class C Warrant.
4.3 Securities Laws. In reliance on the representations of Purchaser
---------------
contained in Section 3.1 and 3.2, the offer, issuance, sale and delivery of the
Purchased Securities, as provided in this Agreement, are exempt from the
registration requirements of the Securities Act and all applicable state
securities laws, and are otherwise in compliance with such laws. Neither Company
nor any Person acting on its behalf has taken or will take any action
(including, without limitation, any offering of any securities of Company under
circumstances which would require the integration of such offering with the
offering of the Purchased Securities under the Securities Act and the rules and
regulations of the SEC thereunder) which might subject the offering, issuance or
sale of the Purchased Securities including, but not limited to, the purchase
rights granted pursuant to the Equity Protection Agreements to the registration
requirements of Section 5 of the Securities Act. No information contained in
the documents filed with the SEC contains any untrue statement of a material
fact, or omits to state a material fact necessary to make the statements
contained therein not misleading in light of the circumstances under which made.
4.4 Corporate Existence: Compliance with Law. Company (i) is a
----------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware (ii) except as indicated on Schedule 4.4 is duly
qualified as a foreign corporation and in good standing under the laws of
Massachusetts and New York and each jurisdiction where its ownership or lease of
property or the conduct of its business requires such qualification (except for
jurisdictions in which such failure to so qualify or to be in good standing
would not have a Material Adverse Effect); (iii) has the requisite corporate
power and authority and the legal right to own, pledge, mortgage or otherwise
encumber and operate its properties, to lease the property it operates under
lease, and to
12
conduct its business as now being conducted in all material respects; (iv) has,
or has applied for, all material licenses, permits, consents or approvals from
or by, and has made all material filings with, and has given all material
notices to, all Governmental Authorities having jurisdiction, to the extent
required for such ownership, operation and conduct; (v) is in compliance with
its certificate of incorporation and by-laws in all material respects; and (vi)
is in compliance with all applicable provisions of applicable laws, including,
but not limited to, the Securities Act and the Exchange Act, except for such
non-compliance which would not have a Material Adverse Effect. The Company has
timely filed all reports with the SEC as is required by the Securities Act and
Exchange Act; and the Rule 144 exemption is available to qualified holders of
Stock of the Company.
4.5 Subsidiaries. There currently exist no Subsidiaries of Company and
------------
Company has no equity interest in any other Person.
4.6 Corporate Power: Authorization: Enforceable Obligations. The
-------------------------------------------------------
execution, delivery and performance by Company of this Agreement, the other
Transaction Documents to which it is a party and all instruments and documents
to be delivered by Company, the issuance and sale of the Purchased Securities
and the consummation of the other transactions contemplated by any of the
foregoing: (i) are within Company's corporate power and authority; (ii) have
been duly authorized by all necessary or proper corporate action; (iii) are not
in contravention of any provision of Company's Certificate of Incorporation or
by-laws; (iv) will not violate any law or regulation, or any order or decree of
any court or governmental instrumentality; (v) subject to the terms of that
certain Agreement with Barington Capital Group, L.P., dated April 26, 1996, and
the obligation of Company to reserve Common Stock for the exercise of the
Warrants and Options, will not conflict with or result in the breach or
termination of, constitute a default under or accelerate any performance
required by, any indenture, mortgage, deed of trust, lease, agreement or other
instrument to which Company is a party or by which Company or any of their
property is bound; (vi) will not result in the creation or imposition of any
Lien upon the capital stock or any of the property of Company; and (vii) do not
require the consent or approval of, or any filing with, any Governmental
Authority or any other Person (except to the extent previously obtained or
made). The execution, delivery and performance of this Agreement and the
transactions contemplated herein do not require approval or consent of the
shareholders or other holders of Stock of Company or the approval or
authorization of any Governmental Authority, NASDAQ, other securities exchange
or any other Person. At or prior to the Closing Date, each of this Agreement
and the other Transaction Documents shall have been duly executed and delivered
by Company and each shall then constitute a legal, valid and binding obligation
of Company, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).
4.7 Financial Statements.
--------------------
13
(a) The audited financial statements of the Company dated as of
October 31, 1996 (the "Financials") have been prepared in accordance with the
books and records of the Company, present fairly the financial condition of
Company as of the respective dates indicated and the results of operations for
the respective periods indicated, and have been prepared in accordance with GAAP
applied on a consistent basis.
(b) Company has delivered to Purchaser copies of the Annual Report.
In addition, Company has delivered to Purchaser a copy of its Annual Report to
Shareholders with respect to the fiscal year ended October 31, 1996, proxy
statements relating to the 1997 annual meeting of shareholders and copies of its
quarterly reports filed with the SEC of Form 10-QSB for the periods ended
January 31, 1997, July 31, 1996, April 30, 1996 and January 31, 1996; and the
Annual Report on Form 10-KSB as filed with the SEC for the fiscal years ended
October 31, 1996 and October 31, 1995 and the related annual report to
shareholders with respect to said fiscal year ended and the proxy statement
related to the 1996 annual meeting of stockholders.
(c) Except as set forth on Schedule 4.7 or the Annual Report, Company
has no material obligations, contingent or otherwise, including, without
limitation, liabilities for Charges, long-term leases or long-term commitments
which are not reflected in the Financials, other than those incurred since
October 31, 1996, in the ordinary course of business (none of which is a
liability resulting from breach of contract, breach of warranty, tort,
infringement, or any claim or lawsuit).
(d) No dividends or other distributions have been declared, paid or
made upon any Stock of Company, nor has any Stock of Company been redeemed,
retired, purchased or otherwise acquired for value by Company since October 31,
1996.
4.8 Ownership of Property.
---------------------
(a) The Company does not own any real estate. Except as set forth on
Schedule 4.8, Company owns, has a valid leasehold interest in, or has a valid
license to use, all material assets, properties and rights, whether tangible or
intangible, necessary for the conduct of its business as presently conducted and
as presently proposed to be conducted.
(b) All real property leased by Company is set forth on Schedule 4.8
or the Annual Report. Each of such leases is valid and enforceable in accordance
with its terms (subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity)) and is in full force and effect. Company has
delivered to Purchaser true and complete copies of each of such leases set forth
on Schedule 4.8(b) or the Annual Report and all documents affecting the rights
or obligations of Company, including, without limitation, any non-disturbance
and recognition
14
agreements, subordination agreements, attornment agreements and agreements
regarding the term or rental of any of the leases. Except as set forth on
Schedule 4.8 or the Annual Report, the Company is not in default of its
obligations under any material lease or has it delivered or received any notice
of default under any such lease, nor to the knowledge of the Company has any
event occurred which, with the giving of notice, the passage of time or both,
would constitute a default under any such lease.
(c) Except as disclosed on Schedule 4.8 or the Annual Report, Company
is not obligated under or a party to, any option, right of first refusal or any
other contractual right to purchase, acquire, sell, assign or dispose of any
real property leased by Company.
4.9 Material Contracts: Indebtedness. Schedule 4.9 or the Annual Report
--------------------------------
contains a true, correct and complete list and description of all Material
Contracts. Each Material Contract is a valid and binding agreement of Company
enforceable against Company in accordance with its terms (subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and subject, as
to enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity)), and Company has no
knowledge that any Material Contract is not a valid and binding agreement
against the other parties thereto. Except as set forth in Schedule 4.9 or the
Annual Report, Company is not in material default or breach (whether with or
without the passage of time, the giving of notice or both) or in receipt of any
claims of default or breach, nor to Company's knowledge is any third party in
default or breach, under or with respect to any Material Contract. Except as set
forth on Schedule 4.9 or the Annual Report, Company has no Indebtedness, except
Permitted Indebtedness.
4.10 Environmental Protection.
------------------------
(a) To Company's actual knowledge (for purposes of this Section 4.10
the actual knowledge of the Company shall mean the actual knowledge of ▇▇▇▇▇
▇▇▇▇▇ or ▇▇▇▇ ▇▇▇▇▇ after due inquiry), all real property owned, leased or
otherwise operated by Company (a "Facility") is free of contamination from any
substance, waste or material (i) currently identified to be toxic or hazardous
pursuant to, or which may result in liability under, any Environmental Law or
(ii) within the definition of a substance which is toxic or hazardous under any
Environmental Law, including, without limitation, any asbestos, PCB, radioactive
substance, methane, volatile hydrocarbons, industrial solvents, oil or petroleum
or chemical liquids or solids, liquid or gaseous products, or any other material
or substance which has in the past or could at any time in the future cause or
constitute a health, safety, or environmental hazard to any Person or property
or result in any Environmental Liabilities and Costs ("Hazardous Substance") of
more than $10,000 or which, in either case, could have a Material Adverse
Effect. Neither Company has caused or suffered to occur any release, Spill,
migration, leakage, discharge, spillage, uncontrolled loss, seepage, or
filtration of Hazard Substances at or from the Facility (a "Spill") which could
result in Environmental Liabilities and Costs in excess of $10,000.
15
(b) Company and each Subsidiary has generated, treated, stored and
disposed of any Hazardous Substances in full compliance with applicable
Environmental Laws, except for such non-compliances which would not have a
Material Adverse Effect.
(c) Company and each Subsidiary has obtained, or has applied for, and
is in full compliance with and in good standing under all permit required under
Environmental Laws (except for such failures which would not have a Material
Adverse Effect) and neither Company has any knowledge of any proceedings to
substantially modify or to revoke any such permit.
(d) There are no investigations, proceedings or litigation pending or,
to Company's knowledge, threatened, affecting or against Company or the
Facilities relating to Environmental Laws or Hazardous Substances.
(e) Since January 1, 1996, the Company has not received any
communication or notice (including, without limitation, requests for
information) indicating the potential of Environmental Liabilities and Costs
against Company.
4.11 Labor Matters.
-------------
(a) There are no strikes or other labor disputes against Company
pending or, to Company's knowledge, threatened. Hours worked by and payment made
to employees of Company have not been in violation of the Fair Labor Standards
Act or any other applicable law dealing with such matters. All payments due from
Company on account of employee health and welfare insurance have been paid or
accrued as a liability on the books of Company. There is no organizing activity
involving Company pending or, to Company's knowledge, threatened by any labor
union or group of employees. There are no representation proceedings pending or,
to Company's knowledge, threatened with the National Labor Relations Board, and
no labor organization or group of employees of Company has made a pending demand
for recognition. There are no complaints or charges against Company pending or,
to Company's knowledge, threatened to be filed with any federal, state, local or
foreign court, governmental agency or arbitrator based on, arising out of, in
connection with, or otherwise relating to the employment or termination of
employment by Company of any individual.
(b) The Company is not, and during the five years preceding the date
hereof was not, a party to any labor or collective bargaining agreement and
there are no labor or collective bargaining agreements which pertain to
employees of Company.
4.12 Other Ventures. The Company is not engaged in any joint venture or
--------------
partnership with any other Person.
4.13 Taxes. All federal, state, local and foreign tax returns, reports
-----
and statements required to be filed by Company and each Affiliated Group have
been timely filed with the
16
appropriate Governmental Authority except where the failure to file such report
or statement would not have a Material Adverse Effect and all such returns,
reports and statements are true, correct and complete in all material respects.
All Charges and other impositions due and payable for the periods covered by
such returns, reports and statements have been paid prior to the date on which
any fine, penalty, interest or late charge may be added thereto for nonpayment
thereof, or any such fine, penalty, interest or late charge has been paid.
Proper and accurate amounts have been withheld by Company from its employees,
independent contractors, or other third parties for all periods in full and
complete compliance with the tax, social security and unemployment withholding
provisions of applicable federal, state, local and foreign law and such
withholdings have been timely paid to the respective governmental agencies.
Company is not a member of an Affiliated Group. Company has not executed or
filed with the IRS or any other Governmental Authority any agreement or other
document extending, or having the effect of extending, the period for assessment
or collection of any Charges. No tax audits or other administrative or judicial
proceedings are pending or threatened with regard to any Charges for which
Company may be liable and no assessment of Charges is proposed against the
Company. Company has not filed a consent pursuant to IRC Section 341(f) or
agreed to have IRC Section 341(f)(2) apply to any dispositions of subsection (f)
assets (as such term is defined in IRC Section 341(f)(4)). None of the property
owned by Company is property which such company is required to treat as being
owned by any other Person pursuant to the provisions of Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended, and in effect immediately prior to
the enactment of the Tax Reform Act of 1986 or is "tax-exempt" use property,
within the meaning of IRC Section 168(h). Company has not agreed or has been
requested to make any adjustment under IRC Section 481(a) by reason of a change
in accounting method or otherwise. Company has no obligation under any written
tax sharing agreement. Company is not a party to or bound by any tax allocation
or tax sharing agreement and has no current or potential contractual obligation
to indemnify any other person with respect to any Charges. Company has not made
any payments, and is not and will not become obligated (under any contract
entered into on or before the Closing Date) to make any payments, that will be
non-deductible under Section 280G of the IRC (or any corresponding provision of
state, local or foreign income tax law). Company will not be required (A) as a
result of a change in method of accounting for a taxable period ending on or
prior to the Closing Date, to include any adjustment in taxable income for any
taxable period (or portion thereof) ending after the Closing Date or (B) as a
result of any deferred intercompany gain described in Treasury Regulation
Sections 1.1502-13 of former Treasury Regulations Section 1.1502-14 or any
excess loss account described in Treasury Regulation Section 1.1502-19 (or any
corresponding or similar provision or administrative rule of federal, state,
local or foreign income tax law), to include any item of income in taxable
income for any taxable period (or portion thereof) ending after the Closing
Date. Company has not been a member of an Affiliated Group other than one of
which Company was the common parent, or filed or been included in a combined,
consolidated or unitary income tax return, other than one filed by Company.
4.14 No Litigation. Except as set forth on Schedule 4.14, no action,
-------------
claim or proceeding is now pending or, to the knowledge of Company, threatened
against Company (or to Company's knowledge, pending or threatened against or
affecting any of the officers, directors or employees
17
of Company with respect to its business or proposed business activities), or
pending or threatened by Company against any third party, at law, in equity or
otherwise, before any court, board, commission, agency or instrumentality of any
federal, state, or local government or of any agency or subdivision thereof, or
before any arbitrator or panel of arbitrators.
4.15 Brokers. No broker or finder acting on behalf of Company brought
-------
about the consummation of the transactions contemplated pursuant to this
Agreement and Company has no obligation to any Person in respect of any finder's
or brokerage fees (or any similar obligation) in connection with the
transactions contemplated by this Agreement. Company is solely responsible for
the payment of all such finder's or brokerage fees.
4.16 Employment and Labor Agreements. Except as set forth on Schedule
-------------------------------
4.16 or the Annual Report, there are no employment, consulting or management
agreements covering management of Company.
4.17 Patents. Trademarks, Copyrights and Licenses. Company owns all
--------------------------------------------
licenses, patents, patent applications, copyrights, service marks, trademarks
and registrations and applications for registration thereof, and trade names
necessary to continue to conduct its business as heretofore conducted by it and
now being conducted by it, each of which is listed, together with Patent and
Trademark Office or Copyright Office application or registration numbers, where
applicable, on Schedule 4.17 hereto or the Annual Report. To Company's
knowledge, Company conducts its businesses without infringement or claim of
infringement of any license, patent, copyright, service ▇▇▇▇, trademark, trade
name, trade secret or other intellectual property right of others and Company
has received no notices claiming any such infringement. To Company's knowledge,
there is no infringement by others of any license, patent, copyright, service
▇▇▇▇, trademark, trade name, trade secret or other intellectual property right
of Company.
4.18 No Material Adverse Effect. To the Company's knowledge, no event has
--------------------------
occurred since October 31, 1996 which has had or could be reasonably expected to
have a Material Adverse Effect; provided, however, Purchaser acknowledges that
it has been advised that the Company has operated at a loss and has had negative
cash flow since October 31, 1996.
4.19 ERISA.
-----
(a) Schedule 4.19 sets forth: (i) all "employee benefit plans", as
defined in Section 3(3) of ERISA, and any other employee benefit arrangements or
payroll practices, including, without limitation, severance pay, sick leave,
vacation pay, salary continuation for disability, consulting or other
compensation agreements, retirement, deferred compensation, bonus, stock
purchase, hospitalization, medical insurance, life insurance and scholarship
programs (the "Plans") maintained by Company or to which Company contributed,
contributes or is obligated to contribute thereunder, and (ii) all "employee
pension plans ", as defined in Section 3(2) of ERISA (the
18
"Pension Plans"), maintained by Company or any of its ERISA Affiliates to which
Company or any of its ERISA Affiliates contributed, contributes or is obligated
to contribute thereunder.
(b) Purchaser will not have (i) any obligation to make any
contribution to any Multiemployer Plan or (ii) any withdrawal liability from any
such Multiemployer Plan under Section 4201 of ERISA which it would not have had
it not purchased the Purchased Securities from Company at the Closing in
accordance with the terms of this Agreement.
(c) The Pension Plans and the trusts maintained pursuant thereto are
exempt from federal income taxation under Section 501 of the IRC, and nothing
has occurred with respect to the operation of the Pension Plans which could
cause the loss of such qualification or exemption or the imposition of any
liability, penalty, or tax under ERISA or the IRC.
(d) All contributions required by law or pursuant to the terms of the
Plans (without regard to any waivers granted under Section 412 of the IRC) to
any funds or trusts established thereunder or in connection therewith have been
made by the due date thereof (including any valid extension) and no accumulated
funding deficiencies exist in any of the Pension Plans subject to Section 412 of
the IRC.
(e) There is no "amount of unfunded benefit liabilities" as defined in
Section 4001(a) (18) of ERISA in any of the respective Pension Plans, which are
subject to Title IV of ERISA. Each of the respective Pension Plans are fully
funded in accordance with the actuarial assumptions used by the PBGC to
determine the level of funding required in the event of the termination of the
Pension Plan and all benefit liabilities do not exceed the assets of such
Pension Plans.
(f) There have been no "reportable events" as that term is defined in
Section 4043 of ERISA and the regulations thereunder with respect to the Pension
Plans subject to Title IV of ERISA which would require the giving of notice, or
any event requiring disclosure under Sections 4041(c)(3)(C), 4063(a) or 4068(f)
of ERISA.
(g) There is no material violation of ERISA with respect to the filing
of applicable reports, documents, and notice. regarding the Plans with the
Secretary of Labor and the Secretary of the Treasury or the furnishing of such
documents to the participants or beneficiaries of the Plans.
(h) True, correct and complete copies of the following documents, with
respect to each of the Plans, have been made available or delivered to Purchaser
by Company: (A) any plans and related trust documents, and amendments thereto,
(B) the most recent Forms 5500, (C) the last IRS determination letter, (D)
summary plan descriptions, (E) written communications to employees relating to
the Plans and (F) written descriptions of all non-written agreements relating to
the Plans.
19
(i) There are no pending actions, claims or lawsuits which have been
asserted or instituted against the Plans, the assets of any of the trusts under
such Plans or the plan sponsor or the plan administrator, or against any
fiduciary of the Plans with respect to the operation of such Plans (other than
routine benefit claims), nor does Company have knowledge of facts which could
form the basis for any such claim or lawsuit.
(j) All amendments and actions required to bring the Plans into
conformity in all material respects with all of the applicable provisions of
ERISA and other applicable laws have been made or taken except to the extent
that such amendments or actions are not required by law to be made or taken
until a date after the Closing Date.
(k) The Plans have been maintained, in all material respects, in
accordance with their terms and with all provisions of ERISA (including rules
and regulations thereunder) and other applicable Federal and state law, and
Company or "party in interest" or "disqualified person" with respect to the
Plans has engaged in a "prohibited transaction" within the meaning of Section
4975 of the IRC or Section 406 of ERISA.
(l) Neither Company nor any ERISA Affiliate has terminated any Pension
Plan subject to Title IV, or incurred any outstanding liability under Section
4062 of ERISA to the PBGC, or to a trustee appointed under Section 4042 of
ERISA.
(m) Neither Company nor any ERISA Affiliate maintains retiree life and
retiree health insurance plans which are Welfare Plans and which provide for
continuing benefits or coverage for any participant or any beneficiary of a
participant except as may be required under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA") and at the expense of the
participant or the participant's beneficiary. Company and each ERISA Affiliate
which maintains a Welfare Plan has complied with the notice and continuation
requirements of COBRA and the regulations thereunder.
(n) Neither Company nor any ERISA Affiliate has contributed or been
obligated to contribute to a Multiemployer Plan as of the Closing.
(o) Neither Company nor any ERISA Affiliate has withdrawn in a
complete or partial withdrawal from any Multiemployer Plan prior to the Closing
Date, nor has any of them incurred any liability due to the termination or
reorganization of a Multiemployer Plan.
(p) Neither Company, any ERISA Affiliate or any organization to which
Company is a successor or parent corporation, within the meaning of Section
4069(b) of ERISA, has engaged in any transaction, within the meaning of Section
4069 of ERISA.
20
4.20 Registration Rights. Except as set forth on Schedule 4.20, pursuant
-------------------
to the Registration Rights Agreement or as set forth in the Annual Report,
Company is not under obligation to register any of its securities pursuant to
the Securities Act.
4.21 Ordinary Course of Business. Since October 31, 1996, Company has
---------------------------
conducted its operations only in the ordinary course of business consistent with
past practice.
4.22 Full Disclosure. No information contained in this Agreement, any
---------------
other Transaction Document, the Financial Statements or any written statement
furnished by or on behalf of Company pursuant to the terms of this Agreement
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained herein or therein not misleading
in light of the circumstances under which made.
V. COVENANTS
5.1 Director and Officer Liability Insurance. After the Closing Date and
----------------------------------------
until December 31, 2000, Purchaser shall use commercially reasonable best
efforts to cause the Company to keep in full force and effect the Company's
director and officer liability insurance policy in effect on the date hereof or
such other policy which provides as good or better coverage for the Company's
current and past directors.
5.2 Indemnification of Officer and Directors. After the Closing,
----------------------------------------
Purchaser shall take no action, and shall use its best efforts to prevent the
board of directors of Company from taking any action to amend the corporate
charter or by-laws in such a way as to impair the rights to indemnification that
such officers and directors of the Company have on the date hereof except as
otherwise required by law. Purchaser consents to the amendment of Article XIX
of the Company's By-laws effected April 8, 1997 by the Board of Directors, with
respect to advancement of legal fees and expenses.
5.3 Amendment to Certificate of Incorporation. After the Closing, Company
-----------------------------------------
shall use its commercially reasonable best efforts to amend its Certificate of
Incorporation within fifty (50) days after the Closing Date so as to increase
the authorized Common Stock of Company to 100,000,000 shares, $0.001 par value
per share.
5.4 Schedule 14F-1 Information Statement. Within seven days after the
------------------------------------
Closing, Company shall mail the Schedule 14F-1 Information Statement to all
shareholders of Company and file the Information Statement with the SEC and
NASDAQ to reflect the change in directors of the Company pursuant to Section
6.1(i) hereof.
VI. CONDITIONS PRECEDENT
21
6.1 Conditions Precedent. The obligation of Purchaser to purchase the
--------------------
Purchased Securities pursuant to Section 2.2 hereof, is subject to the condition
that Purchaser shall have received and the following shall be delivered to
Purchaser on the Closing Date, each dated the Closing Date unless otherwise
indicated, in form and substance satisfactory to Purchaser, and the following
actions shall occur on or before the Closing Date, unless waived by Purchaser:
(a) A favorable opinion of Kramer, Levin, Naftalis & ▇▇▇▇▇▇▇, counsel
to Company, substantially in the form attached hereto as Exhibit E, it being
understood that to the extent that such opinion of counsel to Company shall rely
upon any other opinion of counsel, each such other opinion shall be in form and
substance reasonably satisfactory to the Purchaser and shall provide that
Purchaser may rely thereon.
(b) Resolutions of the board of directors of Company, certified by the
Secretary or Assistant Secretary of Company, as of the Closing Date, to be duly
adopted and in full force and effect on such date, authorizing, in the case of
the board of directors, (i) the consummation of each of the transactions
contemplated by this Agreement and (ii) officers to execute and deliver this
Agreement and each other Transaction Document to which it is a party.
(c) A copy of governmental certificate, dated the most recent
practicable date prior to the Closing Date, with telegram updates where
available, showing that Company is organized and in good standing in the State
of Delaware and is qualified as a foreign corporation and in good standing in
all other jurisdictions in which it is qualified to transact business.
(d) A copy of the organizational charter and all amendments thereto of
Company, certified as of a recent date by the Secretary of State of the State of
Delaware, and copies of Company's by-laws, certified by the Secretary or
Assistant Secretary of Company as true and correct as of the Closing Date.
(e) Certificates of the Secretary or an Assistant Secretary of
Company, dated the Closing Date, as to the incumbency and signatures of the
officers of Company executing this Agreement, the Purchased Securities, each
other Transaction Document to which it is a party and any other certificate or
other document to be delivered pursuant hereto or thereto, together with
evidence of the incumbency of such Secretary or Assistant Secretary.
(f) A copy of all third party consents and approvals, if any, that are
necessary for the consummation of the transactions contemplated hereby or that
are required in order to prevent a breach of or default under, a termination or
modification of, or acceleration of the terms of, any contract, agreement or
document required to be listed on the attached Schedule 4.9 or the Annual
Report, in each case on terms and conditions reasonably satisfactory to
Purchaser, except for additional reservation of Common Stock for issuance of the
Warrants and Options.
22
(g) A copy of all governmental and regulatory consents and approvals
that are necessary for the consummation of the transactions contemplated hereby,
in each case on terms and conditions satisfactory to Purchaser.
(h) No suit, action or other proceeding shall be pending before any
court or governmental regulatory body or authority in which it is sought to
restrain or prohibit the transactions contemplated hereby, or that could have a
Material Adverse Effect, and no injunction, judgment, order, decree or ruling
with respect thereto shall be in effect.
(i) Company shall have taken such action so that (a) ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇, Avy ▇. ▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇ III and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ shall have
been appointed to the Board of Directors of the Company and (b) ▇▇▇▇▇ ▇▇▇▇▇
shall be appointed Chairman and CEO, ▇▇▇▇▇▇ ▇▇▇▇▇ shall be appointed Vice-
Chairman, ▇▇▇▇▇ ▇▇▇▇▇ shall be appointed COO and ▇▇▇▇ ▇▇▇▇▇▇ shall be appointed
President, such appointments to be effective ten (10) days after Company mails
the Schedule 14F-1 Information Statement to the shareholders of Company and
files such Information Statement with the SEC and NASDAQ (or such later date as
may be required by the SEC); all in accordance with the Certificate of
Incorporation and by-laws of the Company and in compliance with all applicable
laws, including, but not limited to, the Securities Act and the Exchange Act.
(j) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ shall have resigned as
directors of the Company effective as of the Closing Date.
(k) Company shall have delivered to Purchaser a copy of the fairness
opinion relating to the transaction contemplated herein from ▇▇ ▇▇▇▇▇▇▇, Inc. to
Purchaser, which fairness opinion shall indicate that the price for the Common
Stock including the Class C Warrant and Equity Protection Agreements, is fair to
Company and which report shall set forth the value of the Common Stock, and of
the Class C Warrant and Equity Protection Agreements.
(l) The Purchased Securities shall be delivered to Purchaser.
(m) ▇▇▇▇▇ ▇▇▇▇▇ shall have entered into a new Employment Agreement in
the form of Exhibit "F" attached hereto; terminating his existing employment
agreement with the Company and waiving any termination or change in control
payment thereunder on the terms stated therein and ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ and
▇▇▇▇ ▇. ▇▇▇▇▇▇ III shall have entered into Employment Agreements in the form of
Exhibits "G," "H" and "I," respectively (collectively, the "Employment
Agreements").
(n) The execution and delivery of the Escrow Agreement.
(o) A copy of the Director's and Officer's Insurance of Company in
effect on the Closing Date.
23
VII SECURITIES LAW MATTERS
7.1 Legends.
-------
(a) Each certificate representing the Purchased Securities shall bear
a legend substantially in the following form:
"THE STOCK REPRESENTED BY THIS CERTIFICATE HAS BEEN ACQUIRED BY THE
HOLDER FOR ITS OWN ACCOUNT, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW
TO THE DISTRIBUTION OF SUCH STOCK. THE SHARES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR AN EXEMPTION THEREFROM."
(b) The Class C Warrant shall bear a legend substantially in the
following form:
THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE SHARES ISSUABLE
UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS AND
NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD,
PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION
STATEMENTS WITH RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY
APPLICABLE STATE SECURITIES LAWS, OR (2) THE COMPANY RECEIVES AN
OPINION OF COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH COUNSEL AND
OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH
SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN
THE MANNER CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENTS
UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS.
7.2 Transfer of Restricted Securities.
---------------------------------
(a) Restricted Securities are transferable only pursuant to (i) public
offerings registered under the Securities Act, (ii) Rule 144 or Rule 144A of the
Securities and Exchange Commission (or any similar rule or rules then in force)
if such rule is available and (iii) subject to the conditions specified in
subparagraph (b) below, any other legally available means to transfer.
24
(b) In connection with the transfer of any Restricted Securities
(other than a transfer described in clause (i) or (ii) of subparagraph (a)
above), the holder thereof shall deliver written notice to Company describing in
reasonable detail the transfer or proposed transfer, together with an opinion of
counsel which (to Company's reasonable satisfaction) is knowledgeable in
securities law matters to the effect that such transfer of Restricted Securities
may be effected without registration of such Restricted Securities under the
Securities Act. In addition, if the holder of the Restricted Securities
delivers to Company an opinion of counsel that no subsequent transfer of such
Restricted Securities shall require registration under the Securities Act,
Company shall promptly upon such contemplated transfer deliver new certificates
or instruments, as the case may be, for such Restricted Securities which do not
bear the Securities Act legend set forth in Section 7.1 above. If Company is
not required to deliver new certificate or instruments, as the case may be, for
such Restricted Securities not bearing such legend, the holder thereof shall not
transfer the same until the prospective transferee has confirmed to Company in
writing its agreement to be bound by the conditioned contained in this Section
7.2.
(c) Upon the request of a holder of Restricted Securities, Company
shall promptly supply to such holder or such holder's prospective transferees
all information regarding Company required to be delivered in connection with a
transfer pursuant to Rule 144 or 144A of the Securities and Exchange Commission.
(d) If any Restricted Securities become eligible for sale pursuant to
Rule 144(k), Company shall, upon the request of the holder of such Restricted
Securities, remove the legend set forth in Section 7.1 from the certificates or
instruments, as the case may be, representing such Restricted Securities.
VIII EXPENSES
If and only if the purchase and sale of securities pursuant to this
Agreement is not rescinded pursuant to the Escrow Agreement, Company shall pay
all reasonable out-of-pocket expenses of (i) Purchaser in connection with the
preparation of the Transaction Documents and the transactions contemplated
thereby including all due diligence, legal and accounting expenses, (ii) stamp
and other taxes which may be payable in respect of the execution and delivery of
this Agreement, the issuance and delivery of the Purchased Securities, and the
issuance and delivery of any Common Stock upon the exercise of the Class C
Warrant and the rights granted pursuant to the Equity Protection Agreements, and
(iii) the Purchaser in connection with (A) any amendment, modification or
waiver, or consent with respect to, any of the Transaction Documents, and (B)
any attempt to enforce any rights of Purchaser against Company or any other
Person, that may be obligated to any Purchaser by virtue of any of the
Transaction Document (including the reasonable fees and expenses of all of its
counsel and consultants retained in connection with the Transaction Documents
and the transactions contemplated thereby).
IX. LIMITATION ON CLAIMS OF PURCHASER
25
9.1 Limitation.
----------
(a) Purchaser shall not bring any action or claim against the Company
for damages for a breach of any representation, warranty or covenant contained
herein by the Company until such damages exceed $100,000 at which time Purchaser
may bring an action for all claims.
(b) Company shall not bring any action or claims against Purchaser for
damages for a breach of any representation, warranty or covenant contained
herein by Purchaser until such damages exceed $100,000, at which time Company
may bring an action for all claims.
X. MISCELLANEOUS
10.1 Notices. Whenever it is provided herein that any notice, demand,
-------
request, consent, approval, declaration or other communication shall or may be
given to or served upon any of the parties by another, or whenever any of the
parties desires to give or serve upon another any such communication with
respect to this Agreement, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and either shall be
delivered in person with receipt acknowledged or by registered or certified
mail, return receipt requested, postage prepaid, or by telecopy and confirmed by
telecopy answerback addressed as follows:
If to Purchaser:
U-C Holdings, L.L.C.
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Avy ▇. ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇.▇.
1600 Atlanta Financial Center
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Company:
26
UC Television Network Corp.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
Kramer, Levin, Naftalis & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration or other communication hereunder shall be deemed
to have been duly given or served on the date on which personally delivered,
with receipt acknowledged, telecopied and confirmed by telecopy answerback, or
three (3) Business Days after the same shall have been deposited with the United
States mail.
10.2 Binding Effect: Benefits. Except as otherwise provided herein, this
------------------------
Agreement shall be binding upon and inure to the benefit of the parties to this
Agreement and their respective successors and permitted assigns. Nothing in this
Agreement, express or implied, is intended or shall be construed to give any
person other than the parties to this Agreement or their respective successors
or assigns any legal or equitable right, remedy or claim under or in respect of
any agreement or any provision contained herein.
10.3 Amendment. No amendment or waiver of any provision of this Agreement or
---------
any other Transaction Document nor consent to any departure by Company
therefrom, shall in any event be effective unless the same shall be in writing
and signed by Company and the Purchaser, and then such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given. No action taken pursuant to this Agreement, including, without
limitation, any investigation by or on behalf of any party, shall be deemed to
constitute a waiver by the party taking such action, of compliance with any
representations, warranties, covenants or agreements contained herein. The
waiver by any party hereto of a breach of any provision of this Agreement shall
not operate or be construed as a waiver of any preceding or succeeding breach
and no failure by either party to exercise any right or privilege hereunder
shall be deemed a waiver of such party's rights or privileges hereunder or shall
be deemed a waiver of such party's rights to exercise the same at any subsequent
time or times hereunder.
10.4 Successors and Assigns: Assignability. Neither this Agreement nor any
-------------------------------------
right, remedy, obligation or liability arising hereunder or by reason hereof
shall be assignable by Company without
27
the prior written consent of the Purchaser. All covenants contained herein shall
bind and inure to the benefit of the parties hereto and their respective
successors and assigns (including any subsequent holder of any of the Purchased
Securities or any Common Stock issuable upon exercise of the Purchased
Securities).
10.5 Remedies. Purchaser, in addition to being entitled to exercise all
--------
rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. Company agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach of the provisions of this Agreement and hereby agrees to
waive the defense in any action for specific performance that a remedy at law
would be adequate. In any action or proceeding brought to enforce any provision
of this Agreement or where any provision hereof is validly asserted as a
defense, the successful party shall be entitled to recover reasonable attorneys'
fees in addition to any other available remedy.
10.6 Section and Other Headings. The section and other headings contained in
--------------------------
this Agreement are for reference purposes only and shall not affect the meaning
or interpretation of this Agreement.
10.7 Severability. In the event that any one or more of the provisions
------------
contained in this Agreement shall be determined to be invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision or provisions in every other respect and
the remaining provisions of this Agreement shall not be in any way impaired.
10.8 Entire Agreement. This Agreement and the agreements and documents
----------------
referred to herein contain the entire agreement and understanding between the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, whether written or oral, relating to such subject
matter in any way.
10.9 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
10.10 Publicity. Neither Purchaser nor Company shall issue any press release
---------
or make any public disclosure regarding the transactions contemplated hereby
unless such press release or public disclosure is approved by the other party in
advance. Notwithstanding the foregoing, each of the parties hereto may, in
documents required to be filed by it with the SEC or other regulatory bodies,
make such statements with respect to the transactions contemplated hereby as
each may be advised by counsel is legally necessary or advisable, and may make
such disclosure as it is advised by its counsel is required by law.
10.11 Governing Law. This Agreement shall be governed by, construed and
-------------
enforced in accordance with, the laws of the Delaware without regard to the
principles thereof relating to
28
conflict of laws. Service of process on the parties in any action arising out of
or relating to this Agreement shall be effective if mailed to the parties in
accordance with Section 10.1 hereof. The parties hereto waive all right to trial
by jury in any action or proceeding to enforce or defend any rights under this
Agreement.
10.12 Expenses. If this transaction is rescinded pursuant to the Escrow
--------
Agreement, because Barington Capital Group, L.P. exercises its right of first
refusal, Company agrees to pay to Purchaser the amount of Purchaser's expenses
incurred in connection with this transaction, including, but not limited to,
legal and accounting fees and third party expenses and fees incurred in due
diligence, up to $250,000. If the transaction is rescinded pursuant to the
Escrow Agreement for any other reason, the Company and the Purchaser shall each
pay their own expenses. Nothing herein shall limit Company's obligations
pursuant to Article VIII hereof in the event the transactions contemplated
hereby are not rescinded pursuant to the Escrow Agreement. Upon presentation by
Purchaser of documentation for such expenses, reimbursement shall be payable by
wire transfer of immediately available funds within ten (10) Business Days.
10.13 Negotiations. The parties hereto do hereby acknowledge that the
------------
Agreement and the Transaction Documents have been negotiated extensively by the
parties and neither party shall be deemed to be the party which prepared or
drafted this Agreement.
29
IN WITNESS WHEREOF, Company and each Purchaser has executed this Agreement as
of the day and year first above written.
COMPANY:
UC TELEVISION NETWORK CORP.
By:
-----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇,
Chairman of the Board and Chief Executive
Officer
Attest:
-------------------------------------
By: ▇▇▇▇ ▇▇▇▇▇
-----------------------------------------
▇▇▇▇ ▇▇▇▇▇
Secretary
[Corporate Seal]
PURCHASER:
U-C HOLDINGS, L.L.C.
By: ▇▇▇▇▇▇ ▇▇▇▇▇ & PARTNERS, L.P.
-----------------------------------------
Its: Managing Member
By: ▇▇▇▇▇▇ ▇▇▇▇▇ & Partners, L.L.C.
-----------------------------------------
Its: General Partner
By: /s/ Avy ▇. ▇▇▇▇▇
--------------------------------------
Avy ▇. ▇▇▇▇▇
Its: Manager
30