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EXHIBIT 4.1(a)
NEXT GENERATION NETWORK, INC.
PREFERRED STOCK PURCHASE AGREEMENT
DATED AS OF NOVEMBER 6, 2000
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TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS..................................................1
1.1 Definitions; Interpretation..................................1
ARTICLE II
ISSUANCE AND SALE OF THE PREFERRED SHARES....................7
2.1 Authorization of the Preferred Shares........................7
2.2 Issuance and Sale of the Preferred Shares....................7
2.3 Issuance of Return Warrants and IPO Warrants.................7
ARTICLE III
CLOSINGS; CLOSING DELIVERIES.................................8
3.1 Initial Closing..............................................8
3.2 Payment for and Delivery of Preferred Shares.................8
3.3 Subsequent Closings..........................................9
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY...............10
4.1 Existence; Qualification; Subsidiaries......................10
4.2 Authorization and Enforceability; Issuance of Shares........10
4.3 Capitalization..............................................11
4.4 Private Sale................................................11
4.5 Financial Statements; Disclosure............................11
4.6 Absence of Certain Changes..................................12
4.7 Litigation..................................................14
4.8 Licenses, Compliance with Law, Other Agreements, Etc........14
4.9 Third-Party Approvals.......................................14
4.10 No Undisclosed Liabilities..................................14
4.11 Tangible Assets.............................................14
4.12 Inventory...................................................14
4.13 Owned Real Property.........................................15
4.14 Real Property Leases........................................15
4.15 Material Agreements.........................................15
4.16 Intellectual Property.......................................15
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4.17 Employees...................................................17
4.18 ERISA; Employee Benefits....................................17
4.19 Environment, Health and Safety..............................18
4.20 Transactions With Affiliates................................18
4.21 Taxes.......................................................18
4.22 Shareholders................................................18
4.23 Investment Company..........................................19
4.24 Certain Fees................................................19
4.25 Solicitation Materials......................................19
4.26 Registration Rights; Rights of Participation................19
4.27 Insurance...................................................19
4.28 SEC Filings.................................................19
4.29 Related Documents...........................................20
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF EACH PURCHASER............20
5.1 Authorization and Enforceability............................20
5.2 Government Approvals........................................20
5.3 Investment Intent of Purchaser..............................20
5.4 No Breach or Default........................................20
5.5 Status of Preferred Shares. ...............................20
5.6 Sophistication and Financial Condition of Purchaser.........21
ARTICLE VI
SECURITIES LAWS MATTERS.....................................21
6.1 Transfer of Preferred Shares and Conversion Shares..........21
ARTICLE VII
CONDITIONS PRECEDENT........................................22
7.1 Initial Closing Conditions of CDPQ..........................22
7.2 Initial Closing Conditions of the Company...................24
7.3 Subsequent Closing Conditions of each Additional Purchaser..24
7.4 Subsequent Closing Conditions of the Company................26
ARTICLE VIII
COVENANTS OF THE COMPANY....................................26
8.1 Reservation of Common Stock.................................26
8.2 Use of Proceeds.............................................27
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TABLE OF CONTENTS
(continued)
ARTICLE IX
SURVIVAL....................................................27
9.1 Survival....................................................27
ARTICLE X
INDEMNIFICATION.............................................27
10.1 Indemnification.............................................27
ARTICLE XI
GENERAL PROVISIONS..........................................29
11.1 Successors and Assigns......................................29
11.2 Entire Agreement............................................29
11.3 Notices.....................................................30
11.4 Purchaser Fees and Expenses.................................31
11.5 Amendment and Waiver........................................31
11.6 Counterparts................................................31
11.7 Headings....................................................31
11.8 Specific Performance........................................32
11.9 Remedies Cumulative.........................................32
11.10 GOVERNING LAW...............................................32
11.11 No Third Party Beneficiaries................................32
11.12 Severability................................................32
SCHEDULE I -- SCHEDULE OF PURCHASERS
SCHEDULE 4.1 -- SUBSIDIARIES
SCHEDULE 4.3 -- CAPITALIZATION
SCHEDULE 4.6 -- ABSENCE OF CERTAIN CHANGES
SCHEDULE 4.12 -- INVENTORY
SCHEDULE 4.15 -- MATERIAL AGREEMENTS
SCHEDULE 4.16 -- COMPANY INTELLECTUAL PROPERTY
SCHEDULE 4.17 -- EMPLOYEES
SCHEDULE 4.19 -- ENVIRONMENTAL
SCHEDULE 4.20 -- TRANSACTIONS WITH AFFILIATES
SCHEDULE 4.22 -- OWNERSHIP
SCHEDULE 4.24 -- CERTAIN FEES
SCHEDULE 4.26 -- REGISTRATION RIGHTS
SCHEDULE 4.27 -- INSURANCE
EXHIBIT A -- REGISTRATION RIGHTS AGREEMENT
EXHIBIT B -- SERIES A CERTIFICATE OF DESIGNATIONS
EXHIBIT C -- SERIES D CERTIFICATE OF DESIGNATIONS
EXHIBIT D -- STOCKHOLDERS AGREEMENT
EXHIBIT E -- FORM OF WARRANT
EXHIBIT F -- FINANCIAL STATEMENTS
EXHIBIT G -- OPINION OF COUNSEL
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PREFERRED STOCK PURCHASE AGREEMENT
PREFERRED STOCK PURCHASE AGREEMENT (this "AGREEMENT"), dated as of
November 6, 2000, by and among Next Generation Network, Inc., a Delaware
corporation (the "COMPANY"), the Persons listed on the Schedule of Purchasers
attached hereto as SCHEDULE I (collectively referred to herein as the
"PURCHASERS" and individually as the "PURCHASER"), and for purposes of Section
11.2 below only, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (collectively referred
to herein as the "FOUNDERS" and individually as a "FOUNDER").
The Purchasers desire to, severally and not jointly, purchase from the
Company, and the Company desires to issue to the Purchasers, upon the terms and
subject to the conditions set forth herein, shares of Preferred Stock.
In consideration of the mutual promises, representations, warranties,
covenants and conditions set forth in this Agreement, the parties hereto agree
as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS; INTERPRETATION.
(a) For purposes of this Agreement, the following terms have
the indicated meanings:
"ADDITIONAL PURCHASERS" has the meaning set forth in Section
3.3(a).
"ADDITIONAL SHARES" has the meaning set forth in Section 3.3(a).
"AFFILIATE" of a Person means any other Person that directly, or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with such Person. As used in this definition, "control"
(including, with its correlative meanings, "controlled by" and "under common
control with") shall mean possession, directly or indirectly, of power to direct
or cause the direction of management or policies (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise).
"ANNUAL BUDGET" has the meaning set forth in Section 8.3(a).
"BOARD OF DIRECTORS" means the board of directors of the Company.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a
day on which banks in New York City are authorized or obligated by law or
executive order to close.
"CDPQ" means Capital Communications CDPQ Inc., a Quebec
corporation.
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"CERCLA" shall mean the federal Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended.
"COMMON STOCK PURCHASE AGREEMENT" means the Stock Purchase
Agreement, dated as of January 28, 2000, by and among the Company and Nevada
Bond Investment Corp. II, a Nevada corporation, as amended, restated or modified
from time to time.
"CLOSING" has the meaning set forth in Section 3.3(a).
"CLOSING DATE" has the meaning set forth in Section 3.3(a).
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMON STOCK" means the common stock of the Company, $.01 par
value per share.
"COMPANY" has the meaning set forth in the recitals hereof.
"COMPANY INTELLECTUAL PROPERTY" has the meaning set forth in
Section 4.16.
"COMPANY SEC REPORTS" has the meaning set forth in Section 4.29.
"CONFIDENTIAL INFORMATION" means any information concerning the
Company's business other than information that (a) was already known to the
Person having a duty to keep confidential such information on a nonconfidential
basis prior to the time of disclosure, (b) is or becomes generally available to
the public through no act or omission of such Person or (c) becomes available to
such Person on a nonconfidential basis from a source other than any party hereto
(or any agent or representative thereof) if such source was not under a
prohibition against disclosing the information to such Person.
"CONVERSION SHARES" means shares of Common Stock issued or
issuable upon conversion of Preferred Shares as set forth in the Series D
Certificate of Designations.
"CURRENT BALANCE SHEET" means the unaudited balance sheet of the
Company reviewed as of June 30, 2000.
"ENVIRONMENTAL AND SAFETY REQUIREMENTS" means all federal, state,
local and foreign statutes, regulations, ordinances and other provisions having
the force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and all common law concerning public
health and safety, worker health and safety, and pollution or protection of the
environment, including without limitation all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous materials, substances
or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum
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products or byproducts, asbestos, polychlorinated biphenyls, noise, odor or
radiation, each as amended and as now or hereafter in effect.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"FAIR MARKET VALUE" of any security means the average of the
closing prices of such security's sales on all securities exchanges on which
such security may at the time be listed, or, if there has been no sales on any
such exchange on any day, the average of the highest bid and lowest asked prices
on all such exchanges at the end of such day, or, if on any day such security is
not so listed, the average of the representative bid and asked prices quoted in
the Nasdaq Stock Market System as of 4:00 P.M., New York time, or, if on any day
such security is not quoted in the Nasdaq Stock Market System, the average of
the highest bid and lowest asked prices on such day in the domestic
over-the-counter market as reported by the National Quotation Bureau,
Incorporated, or any similar successor organization, in each such case averaged
over a period of thirty (30) days consisting of the Business Day as of which
"Fair Market Value" is being determined and the twenty-nine (29) consecutive
Business Days prior to such day. If at any time such security is not listed on
any securities exchange or quoted in the Nasdaq Stock Market System or the
over-the-counter market, the "Fair Market Value" shall be the fair value thereof
determined jointly by the Board of Directors and the holders of a majority of
the Conversion Shares. If such parties are unable to reach agreement within a
reasonable period of time, such fair value shall be determined by an independent
appraiser experienced in valuing securities jointly selected by the Board of
Directors and the holders of a majority of the Conversion Shares. The
determination of such appraiser shall be final and binding upon the parties, and
the Company shall pay the fees and expenses of such appraiser.
"FINANCIAL STATEMENTS" has the meaning set forth in Section 4.5.
"GAAP" means United States generally accepted accounting
principles as in effect from time to time, consistently applied.
"GOVERNMENTAL AGENCY" means any federal, state, local, foreign or
other governmental agency, instrumentality, commission, authority, board or body
and the Nasdaq National Market.
"HSR ACT" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976, as amended.
"INCLUDES" and "INCLUDING" mean includes and including, without
limitation.
"INITIAL CLOSING" has the meaning set forth in Section 3.1.
"INITIAL CLOSING DATE" has the meaning set forth in Section
3.3(a).
"INTELLECTUAL PROPERTY" means all patents, patent applications
and inventions; all trademarks, service marks, trade dress, trade names and
corporate names and all goodwill associated
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therewith; all copyrights; all registrations, applications and renewals for any
of the foregoing; all trade secrets, Confidential Information, know-how,
technical and computer data, documentation and software, financial, business and
marketing plans, customer and supplier lists and all other intellectual property
rights; and all copies and tangible embodiments of the foregoing.
"IPO" means the sale in an initial firmly underwritten public
offering registered under the Securities Act and underwritten by a nationally
recognized investment bank selected by the Company of any shares of Common Stock
which are listed on any securities exchange or quoted on the NASDAQ Stock Market
System or the over-the-counter market following such offering.
"IPO PREFERRED SHARES" has the meaning assigned thereto in
Section 2.3(b).
"IPO WARRANTS" has the meaning assigned thereto in Section
2.3(b).
"IRS" means the Internal Revenue Service.
"KNOWLEDGE" or "KNOW" when used with respect to the Company means
the knowledge of the Senior Management of the Company, or any other management
personnel whom the Purchasers can show had, prior to the date hereof,
significant involvement in the business and affairs of the Company.
"LIABILITY" means any liability or obligation (whether absolute
or contingent, liquidated or unliquidated, known or unknown, or due or to become
due).
"LIEN" means any lien, mortgage, pledge, security interest,
restriction, charge or other encumbrance.
"MATERIAL ADVERSE CHANGE" means any material adverse change in
the business, condition (financial or otherwise), prospects or results of
operations of the Company and its Subsidiaries taken as a whole.
"MATERIAL ADVERSE EFFECT" means any material adverse effect on
(a) the business, condition (financial or otherwise), prospects or results of
operations of the Company and its Subsidiaries taken as a whole, or (b) the
transactions contemplated hereby or by the Related Documents.
"MATERIAL AGREEMENT" has the meaning set forth in Section 4.15.
"OPTION PLAN" means the Next Generation Network Inc. 2000 Stock
Incentive Plan, approved on February 23, 2000, of the Company.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of
business consistent with past practice (including with respect to quantity,
quality and frequency).
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"PERMITTED LIENS" means (a) liens for taxes not yet due and taxes
for which adequate provision is made in the Current Balance Sheet, (b) purchase
money security interests in supplies and equipment, (c) precautionary liens
filed by lessors with respect to leased equipment; (d) encumbrances which are
not substantial in amount, do not materially detract from the value of the
property subject thereto and do not materially impair the use of the property
subject thereto or the operation of the Company's business; (e) liens
contemplated by the Company's Indenture, dated February 1, 1998, as amended, and
(f) liens contemplated by the Company's Asset Purchase Agreement, dated as of
January 1, 1997 between ▇▇▇▇▇-In-Store Advertising, LLC and the Company and the
Asset Purchase and Network Owner/Operator Termination Agreement dated as of
August 18, 1997 between ▇▇▇▇▇▇ Communications, Inc. and the Company.
"PERSON" means any individual, partnership, limited liability
company, joint venture, corporation, trust, unincorporated organization or other
entity.
"PLAN" means any employee benefit plan (as defined in Section
3(3) of ERISA), subject to Title IV of ERISA or the minimum funding requirements
of Section 412 of the Code, maintained or contributed to by the Company, or any
predecessor or Subsidiary at any time during the 5-calendar years immediately
preceding the date of this Agreement.
"PREFERRED SHARES" has the meaning set forth in Section 2.1.
"PREFERRED STOCK" means the Series D Preferred Stock, $1.00 par
value per share, of the Company, having the rights and preferences set forth in
the Series D Certificate of Designations.
"PURCHASE PRICE" shall have the meaning assigned thereto in
Section 3.2
"RCRA" shall mean the federal Resource Conservation and Recovery
Act, as amended.
"REGISTRATION RIGHTS AGREEMENT" means the Second Amended and
Restated Registration Rights Agreement, dated as of the Initial Closing Date, by
and among the Company, the Purchasers and other parties named therein in the
form of EXHIBIT A hereto, as amended, restated or modified from time to time.
"RELATED DOCUMENTS" means all documents and instruments to be
executed or adopted by the Company in connection herewith, including the Series
D Certificate of Designation, the Stockholders Agreement and the Registration
Rights Agreement.
"RELEASE" shall have the meaning provided in CERCLA.
"RETURN PREFERRED SHARES" has the meaning assigned thereto in
Section 2.3(a).
"RETURN WARRANTS" has the meaning assigned thereto in Section
2.3(a).
"SEC" means the Securities and Exchange Commission.
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"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SENIOR MANAGEMENT" means each Founder and the Executive Vice
President of Sales and Marketing, Executive Vice President of Corporate
Development, Executive Vice President and Chief Financial Officer and Vice
President and Treasurer of the Company.
"SERIES A CERTIFICATE OF DESIGNATIONS" means the Certificate of
Designations designating the rights and preferences of the Series A Preferred
Stock adopted by the Board of Directors and set forth as EXHIBIT B hereto.
"SERIES A PREFERRED STOCK" means the Series A Convertible
Preferred Stock, $1.00 par value per share, having the rights and preferences
set forth in the Series A Certificate of Designations.
"SERIES D CERTIFICATE OF DESIGNATIONS" means the Certificate of
Designations designating the rights and preferences of the Preferred Stock
adopted by the Board of Directors and set forth as EXHIBIT C hereto.
"STOCKHOLDERS AGREEMENT" means the Second Amended and Restated
Stockholders Agreement, dated as of the Initial Closing Date, by and among the
Company, Purchasers, and the stockholders of the Company named therein in the
form of EXHIBIT D hereto, as amended, restated or modified from time to time.
"SUBSEQUENT CLOSING" has the meaning set forth in Section 3.3(a).
"SUBSEQUENT CLOSING DATE" has the meaning set forth in Section
3.3(a).
"SUBSIDIARY" means any corporation, partnership, limited
liability company, association or other business entity of which (a) 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, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by the Company or (b) 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
the Company. For purposes hereof, the Company shall be deemed to have a majority
ownership interest in a partnership, association or other business entity if the
Company, directly or indirectly, is allocated a majority of partnership,
association or other business entity gains or losses, or is or controls the
managing director or general partner of such partnership, association or other
business entity.
"TAX" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section
59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.
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"TAX RETURNS" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"WARRANTS" means the Return Warrants and the IPO Warrants in the
form of EXHIBIT E hereto.
ARTICLE II
ISSUANCE AND SALE OF THE PREFERRED SHARES
2.1 AUTHORIZATION OF THE PREFERRED SHARES. The Company has
authorized the issuance and sale to the Purchasers of up to 4,733,728 shares of
Preferred Stock (the "PREFERRED SHARES"). The Preferred Shares are convertible
into shares of Common Stock.
2.2 ISSUANCE AND SALE OF THE PREFERRED SHARES.
(a) ISSUANCE AND SALE OF PREFERRED SHARES AT THE INITIAL CLOSING.
At the Initial Closing, on the terms and subject to the conditions of this
Agreement, the Company shall sell to CDPQ and CDPQ shall purchase from the
Company such number of the Preferred Shares set forth opposite CDPQ's name on
SCHEDULE I hereto.
(b) ISSUANCE AND SALE OF PREFERRED SHARES AT SUBSEQUENT CLOSINGS.
At each Subsequent Closing, on the terms and subject to the conditions of this
Agreement, the Company shall sell to each Additional Purchaser and each
Additional Purchaser shall purchase from the Company such number of the
Preferred Shares set forth opposite such Additional Purchaser's name on SCHEDULE
I hereto for the aggregate purchase price set forth opposite such Additional
Purchaser's name on SCHEDULE I hereto.
2.3 ISSUANCE OF RETURN WARRANTS AND IPO WARRANTS.
(a) If on or before December 31, 2001, the Company consummates an
IPO, then unless (either (i) upon the consummation of such IPO based upon the
aggregate net proceeds received by the Company in such offering, after
applicable underwriting discounts and commissions or (ii) on the thirtieth
Business Day following such IPO based upon the Fair Market Value of the Common
Stock) the price per share represents a value that would yield (on an as
converted basis) each holder of Preferred Stock at least a 100% annualized
internal rate of return (based upon the initial purchase price per Preferred
Share and excluding any dividend payments made on the Preferred Stock) on such
holder's Preferred Shares, the Company shall (on the thirtieth Business Day
following such IPO) issue to each holder of Preferred Shares warrants (the
"RETURN WARRANTS") to purchase an aggregate number of additional shares of
Preferred Stock (the "RETURN PREFERRED SHARES") at a nominal exercise price of
$0.001 per share (as adjusted pursuant to the terms of the Return Warrants),
such that the Preferred Shares and the Return Preferred Shares of such holder
would collectively yield (on
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an as exercised and as converted basis) an annualized internal rate of return of
100% on such holder's Preferred Shares. The Return Warrants shall be in the form
of EXHIBIT E hereto.
(b) Additionally, if on or before December 31, 2001, the Company
fails to consummate an IPO resulting in aggregate net proceeds (after applicable
underwriting discounts and commissions) to the Company of at least $50 million,
the Company shall (on the end of business on December 31, 2001) issue to the
holders of the Preferred Shares, on a pro rata basis, based on each holder's
ownership of Preferred Shares, warrants (the "IPO WARRANTS") to purchase an
aggregate number of additional shares of Preferred Stock (the "IPO PREFERRED
SHARES") at a nominal exercise price of $0.001 per share (as adjusted pursuant
to the terms of the IPO Warrants), calculated based upon the following formula:
A = (B / C) - D
where: A = the number of IPO Preferred Shares;
B = the number equal to the aggregate Purchase Price set
forth on SCHEDULE I hereto;
C = the greater of (a) 7.60 and (b) the quotient
obtained by dividing (i) the product of (x) 5,895 and
(y) the number of installed E* Billboard sites of the
Company as of December 31, 2001, by (ii) 8,919,641;
provided, that "C" cannot exceed 8.45; and
D = the number equal to the aggregate number of Preferred
Shares set forth on SCHEDULE I hereto
; provided, that the expressions used to derive each of B, C and D in the
formula above shall be adjusted where appropriate for stock splits, stock
dividends, reorganizations, recapitalizations and the like of the Company as
determined in good faith by the Board of Directors and the holders of a majority
of the Conversion Shares. The IPO Warrants shall be in the form of EXHIBIT E
hereto.
ARTICLE III
CLOSINGS; CLOSING DELIVERIES
3.1 INITIAL CLOSING. Subject to the terms and conditions
contained herein, the closing of the transactions contemplated hereby (the
"INITIAL CLOSING") shall take place at 10:00 a.m. on November 6, 2000, at the
offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, New York, New York or at such other time, place
and/or date as shall be agreed upon by the parties hereto.
3.2 PAYMENT FOR AND DELIVERY OF PREFERRED SHARES. At the
Initial Closing, the Company shall issue and deliver to CDPQ, stock certificates
for the Preferred Shares free and clear of all Liens and duly registered in the
name of CDPQ, against payment by CDPQ Purchasers, by wire transfer of
immediately-available funds to the account designated by the Company, of the
purchase
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price therefor set forth on SCHEDULE I (the sum of such purchase price paid by
CDPQ together with the purchase prices, if any, paid by Additional Purchasers
for any Additional Shares, the "PURCHASE PRICE").
3.3 SUBSEQUENT CLOSINGS.
(a) At any time and from time to time, on or prior to thirty
(30) days after the Initial Closing, the Company may sell up to
1,183,432 Preferred Shares (such shares being referred to as the
"ADDITIONAL SHARES") to such Persons as may be approved by the Board of
Directors (the "ADDITIONAL PURCHASERS"), at a purchase price per
Additional Share of $8.45. All such sales shall be made subject to the
terms and conditions set forth in this Agreement, in reliance on the
representations and warranties set forth in this Agreement. The closing
or closings of the purchase and sale of Additional Shares (a
"SUBSEQUENT CLOSING"), if any, shall take place at 10:00 a.m. at the
offices of Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P., New York, New
York, or at such other time, place and/or date as shall be agreed upon
by the Company and the Additional Purchasers. At each Subsequent
Closing, the Company shall issue and sell to each such Additional
Purchasers, and each such Additional Purchaser, severally and not
jointly, shall purchase from the Company that number of Additional
Shares being purchased by such Additional Purchaser. At each Subsequent
Closing, the Company shall issue and deliver to each Additional
Purchaser, stock certificates for the Additional Shares, free and clear
of all Liens and duly registered in the name of each Additional
Purchaser, against payment by the Additional Purchasers, by wire
transfer of immediately-available funds to the account designated by
the Company, of the purchase price for such Additional Shares as set
forth on SCHEDULE I hereto pursuant to the paragraph below. The Initial
Closing and the Subsequent Closings, if any, shall hereinafter be
referred to individually as a "CLOSING" and collectively as the
"CLOSINGS". For purposes of this Agreement, the date of the Initial
Closing (the "INITIAL CLOSING DATE") and the date of each Subsequent
Closing (each, a "SUBSEQUENT CLOSING DATE") shall be the "CLOSING DATE"
as such term is used in this Agreement.
(b) In connection with the sale of Additional Shares to
Additional Purchasers, each such Additional Purchaser shall execute and
deliver a counterpart signature page hereto. In addition, each such
Additional Purchaser shall execute a Form of Joinder to the
Stockholders Agreement and Registration Rights Agreement, pursuant to
which such Additional Purchasers agree to become a party to and be
bound by the provisions of the Stockholders Agreement and the
Registration Rights Agreement. Thereupon, SCHEDULE I hereto shall be
automatically amended without further action on the part of any of the
parties hereto to reflect the sale of the Additional Shares to each
such Additional Purchaser. Upon each such Subsequent Closing, the
Company shall provide to each Purchaser (including, without limitation,
CDPQ) a copy of SCHEDULE I as so amended. Upon the sale of Additional
Shares, any Additional Purchaser shall be deemed a Purchaser for all
purposes hereunder.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each Purchaser
as follows as of the date hereof:
4.1 EXISTENCE; QUALIFICATION; SUBSIDIARIES. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has full corporate power and authority to conduct
its business and own and operate its properties as now conducted, owned and
operated. The copies of the Certificate of Incorporation and By-Laws of the
Company and all amendments thereto previously delivered to the Purchaser are
true, correct and complete copies of such documents. The Company is licensed or
qualified as a foreign corporation and is in good standing in all jurisdictions
where it is required to be so licensed or qualified, except where the failure to
be so licensed, qualified or in good standing would not have a Material Adverse
Effect. Except as set forth on SCHEDULE 4.1, the Company has no Subsidiaries and
owns no capital stock or other securities of, and has not made any other
investment in, any other entity.
4.2 AUTHORIZATION AND ENFORCEABILITY; ISSUANCE OF SHARES.
(a) The Company has full power and authority and has taken all
required corporate and other action necessary to permit it to execute
and deliver this Agreement and the Related Documents and to carry out
the terms hereof and thereof and to issue, sell and deliver each of the
Preferred Shares and the Conversion Shares (including adoption of the
Certificate of Designations) and the Warrants and the shares of Common
Stock issuable upon exercise of the Warrants, and none of such actions
will violate any provision of the Certificate of Incorporation of the
Company, the By-Laws of the Company or of any applicable law,
regulation, order, judgment or decree, or result in the breach of or
constitute a default (or an event which, with notice or lapse of time
or both would constitute a default) under any material agreement,
instrument or understanding to which the Company is a party or by which
it is bound or by which it will become bound as a result of the
transaction contemplated by this Agreement. This Agreement and each of
the Related Documents constitutes a legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its
terms, except to the extent limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws of general
application related to the enforcement of creditor's rights generally
and (ii) general principles of equity.
(b) The Preferred Shares have been duly authorized and, when
issued, sold and delivered in accordance with this Agreement, will be
validly issued and outstanding, fully paid and nonassessable. The
Conversion Shares have been duly reserved for issuance upon conversion
of the Preferred Shares and, when so issued, will be duly authorized,
validly issued and outstanding, fully paid and nonassessable shares of
Common Stock. Neither the issuance and delivery of the Preferred Shares
nor the issuance and delivery of any Conversion Shares upon conversion
of any Preferred Shares is subject to any preemptive right of any
stockholder
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of the Company or to any right of first refusal or other similar right
in favor of any Person which has not been waived.
4.3 CAPITALIZATION. As of the Initial Closing Date, the
authorized capital stock of the Company shall consist of (a) 25,000,000 shares
of Common Stock, $.01 par value per share, of which 8,919,641 shares are
outstanding, 1,275,304 shares are reserved for issuance upon exercise of
warrants issued as of the Closing Date by the Company (excluding the Warrants),
1,895,940 shares are reserved for issuance upon the exercise of stock options of
the Company, 186,135 shares are reserved for issuance upon conversion of the
Series A Preferred Stock and 4,733,728 shares are reserved for issuance upon
conversion of Preferred Shares, (b) 20,000 shares of Series A Preferred Stock,
$1.00 par value per share, of which 2,960 shares are issued and outstanding, and
(c) 8,000,000 shares of Preferred Stock, $1.00 par value per share, of which as
of the Initial Closing 3,550,296 shares are issued and outstanding. At the time
of the Closing of such Purchaser's purchase of Preferred Shares (i) all of the
outstanding capital stock will be validly issued, fully paid and nonassessable
and will have been issued in compliance with all applicable securities laws
(including the provisions of the Securities Act and the rules and regulations
promulgated thereunder) and (ii) no outstanding capital stock or other equity
securities of the Company will rank pari passu or senior in right of payment,
whether upon liquidation, dissolution or otherwise, of dividends or redemption
to the Preferred Stock. Except as set forth on SCHEDULE 4.3, as of the Closing
of such Purchaser's purchase of Preferred Shares, the Company has not granted or
issued any options, convertible securities, warrants, phantom stock, stock
appreciation rights, calls, pledges, transfer restrictions (except restrictions
imposed by federal and state securities laws), Liens, rights of first offer,
rights of first refusal, antidilution provisions or commitments of any character
relating to any issued or unissued shares of capital stock of the Company other
than as contemplated in the Related Documents. Except as contemplated by this
Agreement and the Related Documents or as set forth in SCHEDULE 4.3, there are
no currently existing (i) preemptive or other preferential rights applicable to
the issuance and sale of securities of the Company, including the Preferred
Shares and (ii) voting trusts, proxies, or other agreements or understandings
with respect to the voting of capital stock of the Company to which the Company
is a party and, to the Company's knowledge, to which it is not a party.
4.4 PRIVATE SALE. Assuming the accuracy of the representations
and warranties made by recipients of the Company's capital stock made in
connection with the acquisition of such capital stock, the Company has not
violated any applicable federal or state securities laws in connection with the
offer, sale and issuance of any of its capital stock. Subject to the accuracy of
each Purchaser's representations contained herein, neither the offer, sale and
issuance of the Preferred Shares hereunder nor the issuance and delivery of any
Conversion Shares upon conversion of any Preferred Shares requires registration
under the Securities Act or any state securities laws.
4.5 FINANCIAL STATEMENTS; DISCLOSURE.
(a) The Company has furnished each Purchaser with (i) an
audited balance sheet and related statement of operations,
shareholders' equity and cash flows for the fiscal year ended December
31, 1999 and (ii) the Current Balance Sheet and related statement of
operations, shareholders' equity and cash flows for the six months
ended June 30, 2000, all
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of which are attached as EXHIBIT F hereto (collectively, the "FINANCIAL
STATEMENTS"). The Financial Statements (together with the notes
thereto, as applicable), (A) are true, correct and complete in all
material respects, (B) are in accordance with the books and records of
the Company and (C) fairly present the financial condition and results
of operations of the Company as of the dates and for the periods
indicated, in accordance with GAAP, except that the unaudited balance
sheet and related financial statements do not contain an auditors'
opinion and do not contain footnotes and are subject to normal year-end
audit adjustments.
(b) The Company's financial projections dated July 20, 2000
furnished to each Purchaser were prepared in good faith based on
reasonable assumptions that the Company's management believed and
continue to believe, other than as disclosed to the Purchasers, to be
reasonable. Such financial projections reflect the Company's current
views with respect to future events and are subject to risks and
uncertainties which may cause the Company's actual results,
performances or achievements to vary materially from those expected,
estimated or projected.
(c) This Agreement together with the schedules, attachments,
exhibits, written statements and certificates supplied to each
Purchaser by or on behalf of the Company with respect to the
transactions contemplated hereby does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make
the statements contained herein or therein, in light of the
circumstances in which they were made, not misleading. There is no fact
which has not been disclosed to each Purchaser which the Company has
knowledge, and which has had or would reasonably be anticipated to have
a Material Adverse Effect.
4.6 ABSENCE OF CERTAIN CHANGES.
(a) Except as set forth on SCHEDULE 4.6 since the date of the
Current Balance Sheet, the Company has not:
(i) incurred any Liabilities other than in the Ordinary
Course of Business (none of which is the result of tort, breach
of contract or negligence and none of which individually or in
the aggregate is material);
(ii) paid, discharged or satisfied any claim, Lien or
Liability, other than any claim, Lien or Liability (A) reflected
or reserved against on the Current Balance Sheet and paid,
discharged or satisfied in the Ordinary Course of Business since
the date of the Current Balance Sheet, (B) incurred and paid,
discharged or satisfied since the date of the Current Balance
Sheet, in each case in the Ordinary Course of Business and for
individual amounts greater than $25,000;
(iii) sold, leased, assigned or otherwise transferred any
of its assets, tangible or intangible (other than sales in the
Ordinary Course of Business and use of supplies in the Ordinary
Course of Business and sales for individual amounts not greater
than $25,000);
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(iv) permitted any of its assets, tangible or
intangible, to become subject to any Lien (other than any
Permitted Lien);
(v) written off as uncollectible any accounts
receivable other than (A) in the Ordinary Course of Business or
(B) for amounts not reserved as of the date of the Current
Balance Sheet;
(vi) terminated or amended or suffered the termination
or amendment of, other than in the Ordinary Course of Business,
failed to perform in all material respects all of its obligations
or suffered or permitted any material default to exist under, any
material agreement, license or permit;
(vii) suffered any damage, destruction or loss of
tangible property (whether or not covered by insurance) which in
the aggregate exceeds $100,000;
(viii) made any loan to any other Person;
(ix) canceled, waived or released any debt, claim or
right in an amount or having a value exceeding $100,000;
(x) paid any amount to or entered into any agreement,
arrangement or transaction with any Affiliate (including its
officers, directors and employees) outside the Ordinary Course of
Business and which was not approved by a majority of the
Company's disinterested directors;
(xi) declared, set aside, or paid any dividend or
distribution with respect to its capital stock or redeemed,
purchased or otherwise acquired any of its capital stock;
(xii) other than in the Ordinary Course of Business,
granted any increase in the compensation of any officer or
employee or made any other change in employment terms of any
officer or employee;
(xiii) made any change in accounting or cash management
practices;
(xiv) suffered or caused any other occurrence, event or
transaction outside the Ordinary Course of Business which could
have a Material Adverse Effect; or
(xv) agreed, in writing or otherwise, to any of the
foregoing.
(b) Since the date of the Current Balance Sheet, there has
been no Material Adverse Change other than continuing operating losses
and use of cash.
4.7 LITIGATION. As of the date hereof (a) no claim, suit,
proceeding or investigation is pending or, to the knowledge of the Company,
threatened against or affecting the Company or any officer or director thereof
or the Company's business which if decided adversely to any such Person
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could have a Material Adverse Effect, and (b) the Company is not subject to any
outstanding injunction, judgment, order, decree, ruling, or charge which could
have a Material Adverse Effect.
4.8 LICENSES, COMPLIANCE WITH LAW, OTHER AGREEMENTS, ETC. The
Company has all material franchises, permits, licenses and other rights to allow
it to conduct its business and is not in violation, in any material respects of
any order or decree of any court, or of any law, order or regulation of any
Governmental Agency or of the provisions of any material contract or agreement
to which it is a party or by which it is bound, and neither this Agreement nor
the Related Documents nor the transactions contemplated hereby or thereby will
result in any such violation except where the failure to have any such
franchise, permit or license or any such violation could not be expected to have
a Material Adverse Effect. The Company's business has been conducted in all
material respects in compliance with all federal, state and local laws,
ordinances, rules and regulations, except where such violations, defaults or
noncompliance would not have a Material Adverse Effect.
4.9 THIRD-PARTY APPROVALS. Assuming the accuracy of the
representations and warranties of the Purchaser contained in this Agreement, the
Company is not required to obtain any order, consent, approval or authorization
of, or to make any declaration or filing with, any Governmental Agency or other
third party (including under any state securities or "blue sky" laws) in
connection with the execution and delivery of this Agreement or the Related
Documents (other than any applicable filings under the HSR Act), or the
consummation of the transactions contemplated hereby or thereby to occur on the
Closing Date of such Purchaser's purchase of Preferred Shares, except for any
consents, approvals or authorizations the failure to obtain which could not have
a Material Adverse Effect.
4.10 NO UNDISCLOSED LIABILITIES. Except as set forth on SCHEDULE
4.6, the Company has no Liabilities except (a) as and to the extent of the
amounts reflected or reserved against on the Current Balance Sheet (excluding
the footnotes thereto), (b) Liabilities and obligations incurred in the Ordinary
Course of Business since the date thereof (none of which is the result of tort,
breach of contract or negligence and none of which individually or in the
aggregate is material) or (c) such other liabilities that in the aggregate will
not result in a Material Adverse Effect.
4.11 TANGIBLE ASSETS. The Company owns or leases all tangible
assets used or reasonably necessary in connection with the conduct of its
business. All material tangible assets are free from any Liens (other than
Permitted Liens), are free from any material defects, have been maintained in
accordance with normal industry practice and any regulatory standard or
procedure to which such assets are subject, are in good operating condition and
repair (subject to normal wear and tear) and are suitable for the purposes for
which such assets are used or proposed to be used, other than Liens, defects and
wear and tear which in the aggregate could not be expected to have a Material
Adverse Effect.
4.12 INVENTORY. The Company has no inventory held for sale.
4.13 OWNED REAL PROPERTY. The Company owns no real property.
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4.14 REAL PROPERTY LEASES. There exists no event of default (nor
any event which with notice or lapse of time would constitute an event of
default), including any liability for past due rent, with respect to the
Company, and, to the Company's knowledge, with respect to any other party
thereto under any agreement pursuant to which the Company is the lessee or
lessor of any real property, except for such defaults and defects in
enforceability as could not in the aggregate be expected to have a Material
Adverse Effect, and all such agreements are in full force and effect and
enforceable against the lessor or lessee in accordance with their terms except
for such defaults and defects in enforceability as could not in the aggregate be
expected to have a Material Adverse Effect.
4.15 MATERIAL AGREEMENTS. SCHEDULE 4.15 sets forth a list of each
agreement, arrangement or understanding to which the Company is a party that is
material to the Company's business or operations (each, a "MATERIAL AGREEMENT").
The Company has delivered to each Purchaser a correct and complete copy of each
Material Agreement. Each Material Agreement is, and will continue to be
following the Closing of such Purchaser's purchase of Preferred Shares, a legal,
valid and binding obligation of the Company, enforceable against the Company and
in full force and effect. The Company is not in default, nor to the knowledge of
the Company, is there any reasonable basis for a valid claim of default, and to
the Company's knowledge, no event has occurred which, with notice or lapse of
time, would constitute a default, under any agreement, arrangement or
understanding to which the Company is a party (including the indenture governing
the Company's $45,000,000 aggregate principal amount of 12% Series A Senior
Secured PIK Notes issued February 18, 1998), and to the knowledge of the
Company, no other Person who is a party to any such Agreement is in default
under any such agreement, in each case other than defaults which in the
aggregate could not be expected to have a Material Adverse Effect. Additionally,
the Company is not party to any agreement the performance of which in accordance
with its terms (including any termination provision thereof) could be expected
to have a Material Adverse Effect.
4.16 INTELLECTUAL PROPERTY.
(a) Except as set forth on SCHEDULE 4.16, no third party has a
pending claim or, to the Company's knowledge, has reason to claim that
any Person employed by or affiliated with the Company has (i) violated
or may be violating any of the terms or conditions of his employment,
non-competition or non-disclosure agreement with such third party, (ii)
disclosed or may be disclosing or utilized or may be utilizing any trade
secret or proprietary information or documentation of such third party
or (iii) interfered or may be interfering in the employment relationship
between such third party and any of its present or former employees. To
the Company's knowledge, no Person employed by or affiliated with the
Company has employed or proposes to employ any trade secret or any
information or documentation proprietary to any former employer, and no
Person employed by or affiliated with the Company has violated any
confidential relationship which such Person may have had with any third
party, in connection with the development, manufacture, license, or sale
of any product or proposed product or the development, offering, or sale
of any service or proposed service of the Company. To the Company's
knowledge, none of the execution or delivery of this Agreement, or the
carrying on of the business of the Company as officers, employees or
agents by any officer, director or key employee of the Company, or the
conduct or proposed conduct of the business of the Company, will
conflict with or result in a breach of the terms, conditions or
provisions of or
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constitute a default under any contract, covenant or instrument under
which any such Person is obligated.
(b) It is the Company's policy to have all of its employees,
consultants and contractors execute nondisclosure agreements. With
respect to any item of Intellectual Property that is (i) owned, by the
Company, (ii) used, incorporated, or relied upon by the Company in any
manner (other than third party Intellectual Property that is licensed by
the Company), (iii) used, incorporated, embodied within, pertaining to,
or concerning any of the products or proposed products or services or
proposed services of the Company (other than third party Intellectual
Property that is licensed by the Company), or (iv) necessary, desirable,
or used in the operations of the Company (other than third party
Intellectual Property that is licensed by the Company) (hereinafter,
"COMPANY INTELLECTUAL PROPERTY"), the Company has no written or oral
agreements with any employee or consultant of the Company with respect
to the ownership of Intellectual Property created by them as a result of
which any such employee or consultant has rights to any Company
Intellectual Property. Except as set forth on SCHEDULE 4.16, to the
Company's knowledge, no employee or consultant of the Company has used
in any unauthorized manner any Intellectual Property of any Person in
the course of their work for the Company, and the Company has not been
sued, charged or threatened with any such claim. Except to site owners
and as set forth on SCHEDULE 4.16, the Company has not granted any
outstanding licenses or other rights that are currently in effect, or
obligated itself to grant licenses or other rights in or to any of the
intangible property owned, used by or licensed to it. Except as set
forth on SCHEDULE 4.16, the Company owns or has valid, binding and
enforceable rights to use any and all Intellectual Property material to
the current operation of the Company's business. Except as set forth on
SCHEDULE 4.16, all Company Intellectual Property, all current products
of the Company, and all current services of the Company are free and
clear of all liens, claims, encumbrances or demands of third parties of
any kind.
(c) Set forth on SCHEDULE 4.16 is a list of all domestic and
foreign patents, patent rights, patent applications, trademarks,
trademark applications, service marks, service ▇▇▇▇ applications, trade
names and copyrights, and all applications for such which are in the
process of being prepared, owned by or registered in the name of the
Company. Except to rights relating to advertising and the content
thereof, set forth on SCHEDULE 4.16 is a list of all material licenses
of which the Company is a licensee or in which the Company has any
right, in each case identifying the grantor thereof. The Company owns or
possesses adequate licenses or other rights to use all Intellectual
Property necessary, desirable, or used in the conduct of its businesses
as conducted, and no claim is pending or, except as set forth on
SCHEDULE 4.16, threatened to the effect that the operations, products,
or services of the Company, or any Company Intellectual Property,
infringe upon or conflict with the asserted rights of any other Person
under any Intellectual Property. No claim is pending or, to the
Company's knowledge, except as set forth on SCHEDULE 4.16, is threatened
to the effect that Company Intellectual Property, or Intellectual
Property which the Company otherwise has the right to use, is invalid or
unenforceable by the Company. To the Company's knowledge, all technical
information developed by and belonging to the Company which has not been
patented has been kept confidential. Set forth on SCHEDULE 4.16 is a
complete list of all Persons or entities that manufacture, assemble,
distribute or install any equipment or proposed equipment for the
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Company. Set forth on SCHEDULE 4.16 is a complete list of all third
party advertising sales agents that the Company has granted the right to
license or sell advertising on the Company's network.
4.17 EMPLOYEES. Except as set forth on SCHEDULE 4.17, since the
date of the Current Balance Sheet, no key employees and no group of employees
has terminated, or to the knowledge of the Company plans to terminate,
employment with the Company. Except as set forth on SCHEDULE 4.17, the Company
is not a party to or bound by any collective bargaining agreement, nor has it
experienced any strike, material grievance, material claim of unfair labor
practice or other collective bargaining dispute. Except as set forth on SCHEDULE
4.17, to the knowledge of the Company, there is no organizational effort being
made or threatened by or on behalf of any labor union with respect to its
employees. The Company has not committed any unfair labor practice or materially
violated any federal, state or local law or regulation regulating employers or
the terms and conditions of its employees' employment, including laws regulating
employee wages and hours, employment discrimination, employee civil rights,
equal employment opportunity and employment of foreign nationals, except for
such violations as could not be expected to have a Material Adverse Effect.
4.18 ERISA; EMPLOYEE BENEFITS. Each Plan (other than a Plan which
is a "multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA)
that is intended to be qualified under Section 401(a) of the Code has received a
favorable determination letter from the Internal Revenue Service or has timely
filed for a favorable determination letter from the Internal Revenue Service and
no event has occurred since the date of the last determination letter that could
reasonably be expected to materially adversely affect the qualified status of
such Plan. Each Plan (other than a Plan which is a "multiemployer plan" within
the meaning of Section 4001(a)(3) of ERISA) is in full force and effect and has
been administered in all material respects in accordance with its terms and is
and has been, and each plan administrator and fiduciary of a Plan is acting and
has been acting, in compliance in all material respects with all applicable
requirements of the Code and ERISA (including the funding, reporting and
disclosure and prohibited transaction provisions thereof) and other applicable
laws, regulations and rulings in connection with each such Plan. No Plan has
been terminated or partially terminated. With respect to each Plan which is a
"multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA, no
complete or partial withdrawal (within the meaning of Sections 4203 and 4205 of
ERISA) has occurred, no such Plan is in reorganization or insolvency (within the
meaning of Title IV of ERISA) and no material withdrawal liability has been
assessed against the Company. The Company has made, accrued or provided for all
contributions required under each Plan. To the knowledge of the Company, no
event has occurred or is reasonably expected to occur with respect to any
employee pension benefit plan of the Company or any member of the Company's
controlled group (within the meaning of Section 414 of the Code), which could
reasonably be expected to directly or indirectly result in any material
liability (other than liability arising in the ordinary course) to the Company
or any member of its controlled group pursuant to Title IV of ERISA or Section
412 of the Code. No Plan (other than a Plan which is a "multiemployer plan"
within the meaning of Section 4001(a)(3) of ERISA) has incurred an "accumulated
funding deficiency" within the meaning of Section 412 of the Code or Section 302
of ERISA.
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4.19 ENVIRONMENT, HEALTH AND SAFETY.
(a) The Company (as used in this SECTION 4.19, Company shall
include any predecessor) has complied and is in compliance in all
material respects with all Environmental Health, and Safety Requirements
that are applicable to the Company's business.
(b) The Company has obtained and complied with, and is in
compliance with in all material respects, all permits, licenses and
other authorizations that are required pursuant to Environmental, Health
and Safety Requirements for the occupation of its facilities and the
operation of its businesses.
(c) The Company has not received any written or oral notice,
report or other information regarding any actual or alleged violation of
Environmental, Health, and Safety Requirements, or any liabilities or
potential liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise), including any investigatory, remedial or
corrective obligations, relating to it or its operations arising under
Environmental, Health and Safety Requirements.
4.20 TRANSACTIONS WITH AFFILIATES. Except as set forth on
SCHEDULE 4.20, the Company is not party to any agreement, arrangement or
transaction with any Affiliate which is material to the Company's business,
taken as a whole.
4.21 TAXES.
(a) The Company has filed all Tax Returns that it was required
to file, and has paid all Taxes shown thereon as owing, except where the
failure to file Tax Returns or to pay Taxes would not have a Material
Adverse Effect on the financial condition of the Company.
(b) The Company (i) has not been a member of an affiliated group
filing a consolidated federal Tax Return (other than a group the common
parent of which was the Company) and (ii) has no Liability for the Taxes
of any Person (other than any of the Company and its Subsidiaries) under
Treas. Reg. Section 1.1502-6 (or any similar provision of state, local,
or foreign law), as a transferee or successor, by contract, or
otherwise.
(c) The Company has withheld and paid all taxes required to have
been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other third
party.
(d) There is no dispute or claim concerning any Tax Liability of
the Company either (i) claimed or raised by any authority in writing or
(ii) as to which any of the directors and officers (and employees
responsible for Tax matters) of the Company has knowledge based upon
personal contact with any agent of such authority and which is material
to the Company.
4.22 SHAREHOLDERS. Set forth on SCHEDULE 4.22 is a list of all
shareholders of the Company who as of the date hereof after giving effect to the
terms hereof, own common equity of the Company and sets forth such percentage
ownership.
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4.23 INVESTMENT COMPANY. The Company is not, and is not
controlled by or under common control with an affiliate of, an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
4.24 CERTAIN FEES. Other than fees and expenses due and payable
to the Purchasers pursuant to Section 8.2(a) and as set forth on SCHEDULE 4.24,
no fees or commissions will be payable by the Company to any broker, financial
advisor, finder, investment banker, or bank with respect to the transactions
contemplated by this Agreement. The Purchasers shall have no obligation with
respect to any fees or with respect to any claims made by or on behalf of any
Person for fees of a type contemplated in this section that may be due in
connection with the transactions contemplated by this Agreement. The Company
shall indemnify and hold harmless the Purchasers, their employees, officers,
directors, agents and partners, and their respective affiliates (as such term is
defined under Rule 405 promulgated under the Securities Act), from and against
all claims, losses, damages, costs (including the costs of preparation and
attorney's fees) and expenses suffered in respect to any such claimed or
existing fees.
4.25 SOLICITATION MATERIALS. The Company has not (a) distributed
any offering materials in connection with the offering and sale of the Preferred
Shares other than the disclosure materials delivered to Purchaser that are
listed on SCHEDULE 4.25 (the "DISCLOSURE MATERIALS") or (b) solicited any offer
to buy or sell the Preferred Shares by means of any form of general solicitation
or advertising.
4.26 REGISTRATION RIGHTS; RIGHTS OF PARTICIPATION. Except as
described on SCHEDULE 4.26 hereto, (a) the Company has not granted or agreed to
grant to any Person any rights (including "piggy-back" registration rights) to
have any securities of the Company registered with the SEC or any other
governmental authority which has not been satisfied and (b) no Person,
including, but not limited to, current or former shareholders of the Company,
underwriters, brokers or agents, has any right of first refusal, preemptive
right, right of participation, or any similar right to participate in the
transactions contemplated by this Agreement or any other related document which
has not been waived.
4.27 INSURANCE. SCHEDULE 4.27 contains a description of each
material insurance policy maintained by the Company with respect to its
properties, assets and businesses, and each such policy is in full force and
effect as of the Closing of such Purchaser's purchase of Preferred Shares. The
Company is not in material default with respect to its obligations under any
insurance policy maintained by it and the Company has not been denied insurance
coverage. The insurance coverage of the Company is customary for corporations of
similar size engaged in similar lines of business. Except as set forth on
SCHEDULE 4.27, the Company does not have any self-insurance or co-insurance
programs, and the reserves set forth on the Current Balance Sheet are adequate
to cover all anticipated material liabilities with respect to any such
self-insurance or co-insurance programs.
4.28 SEC FILINGS. The Company has filed all forms, reports and
documents (the "COMPANY SEC REPORTS") required to be filed by the Company with
the SEC. Each such Company SEC Report, when filed, complied in all material
respects with the requirements of the Exchange Act, and the applicable rules and
regulations thereunder and, as of their respective dates, none of the
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Company SEC Reports contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
4.29 RELATED DOCUMENTS. Each of the representations and
warranties of the Company set forth in any Related Document is true and correct
in all material respects.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF EACH PURCHASER
Each Purchaser, severally and not jointly, hereby represents and
warrants to the Company as follows as of the date such Purchaser executed this
Agreement or a counterpart signature page hereto, as the case may be:
5.1 AUTHORIZATION AND ENFORCEABILITY. The Purchaser has taken all
action necessary to permit it to execute and deliver this Agreement, each of the
Related Documents to which it is a party and the other documents and instruments
to be executed by it pursuant hereto and to carry out the terms hereof and
thereof. This Agreement and each such other document and instrument, when duly
executed and delivered by the Purchaser, will constitute a valid, legal and
binding obligation of the Purchaser, enforceable against the Purchaser in
accordance with its terms.
5.2 GOVERNMENT APPROVALS. The Purchaser is not required to obtain
any order, consent, approval or authorization of, or to make any declaration or
filing with, any Governmental Agency in connection with the execution and
delivery of this Agreement and the other documents and instruments to be
executed by it pursuant hereto (other than applicable filings under the HSR Act)
or the consummation of the transactions contemplated hereby and thereby, except
for such order, consent, approval, authorization, declaration or filing as which
has been or will be obtained or made.
5.3 INVESTMENT INTENT OF PURCHASER. The Purchaser is acquiring
the Preferred Shares solely for its own account, with no present intention of
selling or otherwise distributing the same to the public.
5.4 NO BREACH OR DEFAULT. The execution, delivery and performance
of this Agreement by the Purchaser, and the consummation of the transactions
contemplated hereby will not (i) violate its organizational documents, (ii)
materially breach or result in a material default under any agreement, document
or instrument by which the Purchaser is bound, or (iii) materially breach or
otherwise materially violate any instrument, judgment, agreement, decree, order,
statute, rule or regulation by which the Purchaser is bound, which breach,
default or violation would prevent the consummation of the transactions
contemplated hereby.
5.5 STATUS OF PREFERRED SHARES. The Purchaser has been informed
by the Company that the Preferred Shares have not been and will not be
registered under the Securities Act or under
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any state securities laws and are being offered and sold in reliance upon
federal and state exemptions for transactions not involving any public offering.
5.6 SOPHISTICATION AND FINANCIAL CONDITION OF PURCHASER. It is an
"Accredited Investor" as defined in Regulation D under the Securities Act and
considers itself to be an experienced and sophisticated investor and to have
such knowledge and experience in financial and business matters as are necessary
to evaluate the merits and risks of an investment in the Preferred Shares and
has received certain information concerning the Company and has had the
opportunity to obtain additional information as desired to evaluate the merits
and risks inherent in holding capital stock of the Company; provided, that no
representation or warranty in this Section 5.6 shall affect the Purchaser's
rights to indemnification as set forth in Section 10.1 hereto.
ARTICLE VI
SECURITIES LAWS MATTERS
6.1 TRANSFER OF PREFERRED SHARES AND CONVERSION SHARES.
(a) The Preferred Shares and Conversion Shares may be transferred
pursuant to (i) public offerings registered under the Securities Act,
(ii) Rule 144 of the SEC (or any similar rule then in force), (iii) to
an Affiliate or partner of the transferor, or (iv) subject to the
conditions set forth in Section 6.1(b), any other legally-available
means of transfer.
(b) In connection with any transfer of any Preferred Shares or
Conversion Shares (other than a transfer described in Section 6.1(a)),
the holder of such shares shall deliver written notice to the Company
describing in reasonable detail the proposed transfer, together with an
opinion of counsel to the effect that such transfer may be effected
without registration of such shares under the Securities Act. The holder
of the shares being transferred shall not consummate the transfer until
(i) the prospective transferee has confirmed to the Company in writing
its agreement to be bound by the provisions of this Section 6.1 or (ii)
such holder shall have delivered to the Company an opinion of such
counsel that no subsequent transfer of such Preferred Shares or
Conversion Shares shall require registration under the Securities Act.
Promptly upon receipt of any opinion described in the first sentence of
this paragraph 6.1(b), the Company shall prepare and deliver in
connection with the consummation of the proposed transfer, new
certificates for the Preferred Shares or Conversion Shares being
transferred that do not bear the legend set forth in Section 6.1(c).
(c) Except as provided in Section 6.1(b), until transferred
pursuant to clauses (a)(i) or (ii) above, each certificate for Preferred
Shares or Conversion Shares shall be imprinted with a legend
substantially in the following form:
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THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY
ISSUED ON NOVEMBER 6, 2000 AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE
SECURITIES LAW. THE TRANSFER OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE IS SUBJECT TO THE CONDITIONS SET FORTH IN (i)
THE PREFERRED STOCK PURCHASE AGREEMENT, DATED AS OF NOVEMBER 6,
2000 (AS AMENDED AND MODIFIED FROM TIME TO TIME), AMONG NEXT
GENERATION NETWORK, INC. (THE "COMPANY") AND THE PURCHASERS NAMED
THEREIN AND (ii) THE SECOND AMENDED AND RESTATED STOCKHOLDERS
AGREEMENT, DATED AS OF NOVEMBER 6, 2000 (AS AMENDED AND MODIFIED
FROM TIME TO TIME), AMONG THE COMPANY AND THE STOCKHOLDERS NAMED
THEREIN. THE COMPANY RESERVES THE RIGHT TO REFUSE ANY
TRANSFER OF SUCH SECURITIES UNTIL SUCH CONDITIONS HAVE BEEN
FULFILLED WITH RESPECT TO SUCH TRANSFER. A COPY OF SUCH
CONDITIONS SHALL BE FURNISHED WITHOUT CHARGE TO THE HOLDER HEREOF
UPON WRITTEN REQUEST TO THE COMPANY.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 INITIAL CLOSING CONDITIONS OF CDPQ. The obligations of CDPQ
to the Company under this Agreement are subject to the fulfillment by the
Company, at or before the Initial Closing, of the following conditions, unless
otherwise waived in writing by CDPQ:
(a) CDPQ shall have received:
(i) a copy of the resolutions of each of the Board of
Directors and holders of Common Stock of the Company approving
this Agreement and the Related Documents (including the Series D
Certificate of Designations) and the consummation of the
transactions contemplated hereby and thereby;
(ii) a copy of the Certificate of Incorporation of the
Company (including the Series D Certificate of Designations),
certified by the Secretary of State of the State of Delaware;
(iii) a duly executed and delivered counterpart of each of
this Agreement, the Registration Rights Agreement and the
Stockholders Agreement of the Company, and with respect to each
of the Registration Rights Agreement and Stockholders Agreement,
executed and delivered counterparts of the requisite number of
other parties thereto
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(other than CDPQ) necessary to amend the Amended and Restated
Registration Agreement, each dated January 28, 2000 and by and
between the Company and certain of its securityholders;
(iv) the written opinion of Akin, Gump, Strauss, ▇▇▇▇▇ &
▇▇▇▇, L.L.P., counsel for the Company, in the form of EXHIBIT G
hereto;
(v) a certificate of a duly authorized officer of the
Company dated as of the Initial Closing Date;
(A) stating that the conditions set forth in clauses
(b), (c), (d), (e) and (f) of this Section 7.1 have been
satisfied as of the Initial Closing Date; and
(B) setting forth the resolutions of the Board of
Directors authorizing (1) the execution and delivery of this
Agreement and the Related Documents (including the Series D
Certificate of Designations) and the consummation of the
transactions contemplated hereby and thereby, (2) the
creation, authorization and issuance of the Series D
Preferred Stock, and (3) the appointment of two (2)
individuals designated by the Purchasers to the Board of
Directors, one (1) of whom initially shall be J. ▇▇▇▇▇▇▇
▇▇▇▇▇▇, and certifying that such resolutions were duly
adopted and have not been rescinded or amended;
(vi) copies of all third party and governmental consents,
waivers, approvals, and filings required in connection with the
consummation of the transactions contemplated hereby (including
the consent of a majority of the holders of the outstanding
shares of Series A Preferred Stock that the Series D Preferred
Stock will be deemed "Senior Stock" under the Series A
Certificate of Designations); and
(vii) such other documents or evidence relating to the
transactions contemplated hereby or the conditions set forth in
this Section 7.1 as CDPQ may reasonably request.
(b) the Company shall have taken all action necessary to issue to
Senior Management and other employees of the Company options to purchase
181,000 shares of Common Stock pursuant to the terms and conditions of
and at the subscription price currently specified in the Option Plan
without increasing the number of options authorized under the Option
Plan;
(c) The representations and warranties of the Company contained
herein shall be true and correct in all material respects when made and
at and as of the time of the Initial Closing;
(d) No action, suit, investigation or proceeding is pending or,
to the knowledge of the Company, threatened before any court or
Governmental Agency to restrain, prohibit, collect damages as a result
of or otherwise challenge this Agreement or any Related Document or any
transaction contemplated hereby or thereby or that could have a Material
Adverse Effect on the Company's financial situation;
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(e) All acts or covenants required hereunder to be performed by
the Company prior to the Initial Closing shall have been fully performed
by it;
(f) No Material Adverse Change has occurred between the date of
the Current Balance Sheet and the Initial Closing Date;
(g) All applicable waiting periods (and any extension thereof)
under the HSR Act shall have expired or otherwise been terminated; and
(h) No claim, suit, proceeding or investigation is pending or
threatened against or affecting the Company or any officer or director
thereof or the Company's business which if decided adversely to any such
Person could have a Material Adverse Effect.
7.2 INITIAL CLOSING CONDITIONS OF THE COMPANY. The obligations of
the Company to CDPQ under this Agreement are subject to the fulfillment by CDPQ,
at or before the Initial Closing, of the following conditions, unless otherwise
waived in writing by the Company.
(a) The Company shall have received a duly executed and delivered
counterpart of each of this Agreement, the Stockholders Agreement and
Registration Rights Agreement from CDPQ; and
(b) CDPQ shall have delivered to the Company its respective
portion of the Purchase Price for the Preferred Shares.
7.3 SUBSEQUENT CLOSING CONDITIONS OF EACH ADDITIONAL PURCHASER.
The obligations of each Additional Purchaser to the Company under this Agreement
are subject to the fulfillment by the Company, at or before a Subsequent
Closing, of the following conditions, unless otherwise waived in writing by each
Additional Purchaser:
(a) Each Additional Purchaser shall have received:
(i) a copy of the resolutions of each of the Board of
Directors and holders of Common Stock of the Company approving
this Agreement and the Related Documents (including the Series D
Certificate of Designations) and the consummation of the
transactions contemplated hereby and thereby;
(ii) a copy of the Certificate of Incorporation of the
Company (including the Series D Certificate of Designations),
certified by the Secretary of State of the State of Delaware;
(iii) a duly executed and delivered counterpart of each of
this Agreement, the Registration Rights Agreement and the
Stockholders Agreement of the Company, and with respect to each
of the Registration Rights Agreement and Stockholders Agreement,
executed and delivered counterparts of the requisite number of
other parties thereto (other than each Additional Purchaser)
necessary to amend the Amended and Restated
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Registration Agreement, each dated January 28, 2000 and by and
between the Company and certain of its securityholders;
(iv) the written opinion of Akin, Gump, Strauss, ▇▇▇▇▇ &
▇▇▇▇, L.L.P., counsel for the Company, in the form of EXHIBIT G
hereto;
(v) a certificate of a duly authorized officer of the
Company dated as of the Subsequent Closing Date;
(A) stating that the conditions set forth in clauses
(b), (c), (d), (e) and (f) of this Section 7.1 have been
satisfied as of the Subsequent Closing Date; and
(B) setting forth the resolutions of the Board of
Directors authorizing (1) the execution and delivery of this
Agreement and the Related Documents (including the Series D
Certificate of Designations) and the consummation of the
transactions contemplated hereby and thereby, (2) the
creation, authorization and issuance of the Series D
Preferred Stock, and (3) the appointment of two (2)
individuals designated by the Purchasers to the Board of
Directors, one (1) of whom initially shall be J. ▇▇▇▇▇▇▇
▇▇▇▇▇▇, and certifying that such resolutions were duly
adopted and have not been rescinded or amended;
(vi) copies of all third party and governmental consents,
waivers, approvals, and filings required in connection with the
consummation of the transactions contemplated hereby (including
the consent of a majority of the holders of the outstanding
shares of Series A Preferred Stock that the Series D Preferred
Stock will be deemed "Senior Stock" under the Series A
Certificate of Designations); and
(vii) such other documents or evidence relating to the
transactions contemplated hereby or the conditions set forth in
this Section 7.3 as each Additional Purchaser may reasonably
request.
(b) The representations and warranties of each Additional
Purchaser contained herein shall be true and correct in all material
respects when made and at and as of the time of the Subsequent Closing;
(c) No action, suit, investigation or proceeding is pending or,
to the knowledge of each Additional Purchaser, threatened before any
court or Governmental Agency to restrain, prohibit, collect damages as a
result of or otherwise challenge this Agreement or any Related Document
or any transaction contemplated hereby or thereby or that could have a
Material Adverse Effect on each Additional Purchaser's financial
situation;
(d) All acts or covenants required hereunder to be performed by
each Additional Purchaser prior to the Subsequent Closing shall have
been fully performed by it;
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(e) No Material Adverse Change has occurred between the date of
the Current Balance Sheet and the Subsequent Closing Date;
(f) All applicable waiting periods (and any extension thereof)
under the HSR Act shall have expired or otherwise been terminated; and
(g) No claim, suit, proceeding or investigation is pending or
threatened against or affecting each Additional Purchaser or any officer
or director thereof or each Additional Purchaser's business which if
decided adversely to any such Person could have a Material Adverse
Effect.
7.4 SUBSEQUENT CLOSING CONDITIONS OF THE COMPANY. The obligations
of the Company to each Additional Purchaser under this Agreement are subject to
the fulfillment by each Additional Purchaser, at or before the Subsequent
Closing, of the following conditions, unless otherwise waived in writing by the
Company.
(a) The Company shall have received a duly executed and delivered
counterpart of each of this Agreement, the Stockholders Agreement and
Registration Rights Agreement from each Additional Purchaser; and
(b) Each Additional Purchaser shall have delivered to the Company
its respective portion of the Purchase Price for the Preferred Shares.
ARTICLE VIII
COVENANTS OF THE COMPANY
8.1 RESERVATION OF COMMON STOCK. The Company shall at all
times reserve and keep available out of its authorized but unissued shares of
Common Stock, solely for the purposes of issuance upon conversion of the
Preferred Shares, such number of shares of Common Stock as are issuable upon the
conversion of all outstanding shares of the Preferred Shares. All shares of
Common Stock 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 Company shall take all such actions as may be necessary to assure that all
such shares of Common Stock 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 may be listed (except for official
notice of issuance which shall be immediately transmitted by the Company upon
issuance).
8.2 USE OF PROCEEDS. Of the first Thirty Million Dollars
($30,000,000) of the Purchase Price received by the Company, the Company shall
use Ten Million Dollars ($10,000,000) of the proceeds from the sale of the
Preferred Shares for the purposes of further rolling out the Company's products
and the remaining Twenty Million Dollars ($20,000,000) of such proceeds for
development of the Company's business and for the working capital needs of the
Company; provided that such proceeds shall not be used to pay (i) any accrued
wages or bonuses to
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the employees of the Company, (ii) existing debtholders or shareholders or (iii)
accounts payable which are extended beyond ninety (90) days of the Initial
Closing Date, in each case outside the Ordinary Course of Business. If the
Company receives additional proceeds from the sale of Preferred Shares after the
Initial Closing Date, such proceeds shall be used for the purpose of further
rolling out the Company's products.
ARTICLE IX
SURVIVAL
9.1 SURVIVAL. The representations and warranties of the
parties hereto contained herein, or in any writing delivered pursuant hereto,
shall survive the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby, regardless of any investigation made by
any Purchaser or on its behalf.
ARTICLE X
INDEMNIFICATION
10.1 INDEMNIFICATION. (a) In consideration of each Purchaser's
execution and delivery of this Agreement and acquiring the Preferred Shares
hereunder and in addition to all of the Company's other obligations under this
Agreement, the Company shall defend, protect, indemnify and hold harmless each
Purchaser and each other holder of Preferred Shares, Conversion Stock and all of
their respective Affiliates, officers, directors, employees and agents
(including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the "INDEMNITEES")
from and against any and all actions, causes of action, suits, claims, losses,
costs, penalties, fees, liabilities and damages, and expenses (including,
without limitation, costs of suit and attorneys' fees and expenses)
(collectively, "LOSSES") in connection therewith (irrespective of whether any
such Indemnitee is a party to the action for which indemnification hereunder is
sought) (the "INDEMNIFIED LIABILITIES"), incurred by the Indemnitees or any of
them as a result of, or arising out of, or relating to (a) the breach of any
representation or warranty contained in any agreement relating to any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Preferred Shares, (b) the
execution, delivery, performance or enforcement of this Agreement and any other
instrument, document or agreement executed pursuant hereto by any of the
Indemnitees or (c) resulting from any breach of any representation, warranty,
covenant or agreement made by the Company, to it or for its benefit herein or in
any Related Document. The Company shall reimburse the Indemnitees for the
Indemnified Liabilities as such Indemnified Liabilities are incurred. To the
extent that the foregoing undertaking by the Company may be unenforceable for
any reason, the Company shall make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law.
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(b) LIMITATION. Any claim for indemnification
asserted pursuant to this Article 10 shall be subject to the
following limitations:
(i) the Company shall not be obligated to indemnify
an Indemnitee with respect to a claim unless and until the
aggregate amount of all claims against the Company exceeds
$100,000, whereupon an Indemnitee may claim indemnification
for the amount of such claim in excess of $100,000.
(ii) The total aggregate liability of the Company
for any claim or claims arising under this Article 10 shall
not exceed the Purchase Price paid by a Purchaser.
(iii) The Company shall not have any obligation to
indemnify any Indemnitee for (A) any consequential, special or
indirect damages or (B) offset by tax savings actually
realized on account of such damages by the Indemnitee.
(c) INDEMNIFICATION PROCEDURES.
(i) If an Indemnitee has determined that it may be
entitled to indemnification under this Agreement, the
Indemnitee shall promptly give the Company written notice of
such claim, stating the amount of the loss, if known, and
method of computation thereof, all with reasonable
particularity and including documentary proof, if available,
and containing a reference to the provisions of this Agreement
in respect of which such right of indemnification is claimed
or arises; provided, that failure to so notify the Company
shall not relieve the Company from any liability which it may
have on account of the claim, except to the extent the Company
shall have been actually prejudiced by such failure.
(ii) If the Company is obligated hereunder to
indemnify the Indemnitee against all losses that may result
from such claim, then the Company shall be entitled, at its
option, to assume and control the defense of such claim by
counsel of its own choice and at its own expense; provided,
that the Company and its counsel shall (A) acknowledge in
writing its obligations hereunder and (B) proceed with
diligence and good faith with respect thereto. Notwithstanding
the foregoing, the Indemnitee shall have the right to employ
separate counsel in any such claim or proceeding and the fees
and expenses of such counsel shall be at the expense of the
Company if: (A) the Company has failed to promptly assume the
defense and employ counsel or (B) the named parties to any
such claim or proceeding (including any impleaded parties)
include such Indemnitee and the Company, and such Indemnitee
shall have been advised by its counsel that there may be one
or more legal defenses available to it which are different
from or in addition to those available to the Company;
provided, that the Company shall not in such event be
responsible hereunder for the fees and expenses of more than
one firm of separate counsel in each relevant jurisdiction in
connection with any claim or proceeding.
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(iii) In the event that the Company exercises its
right to undertake the defense of any claim by a third party,
the Indemnitee shall cooperate with the Company in such
defense and make available to the Company witnesses, pertinent
records, materials and information in its possession or under
its control relating thereto as are reasonably requested by
the Company. Similarly, in the event the Indemnitee is,
directly or indirectly, conducting the defense against any
claim by a third party, the Company shall cooperate with the
Indemnitee in such defense and make available to the
Indemnitee witnesses, pertinent records, materials and
information in its possession or under its control relating
thereto as are reasonably requested by the Indemnitee. No
claim by a third party may be settled by the Company without
the written consent of the Indemnitee; provided, that the
Company may settle such claim without the consent of the
Indemnitee so long as the settlement includes a full written
release of the Indemnitee, in form and substance satisfactory
to the Indemnitee, from the claim by the claimant thereunder
and is solely for monetary damages. No claim by a third party
which is being defended in good faith by the Indemnitee alone,
or jointly with the Company, shall be settled by the
Indemnitee without the written consent of the Company, which
consent shall not be unreasonably withheld; provided that the
Indemnitee may settle such claim without the consent of the
Company (A) if the Company had failed to promptly assume the
defense of such claim and employ counsel or (B) so long as the
settlement includes a written release of the Company, in form
and substance satisfactory to the Company, from the claim by
the Indemnitee and the claimant thereunder.
ARTICLE XI
GENERAL PROVISIONS
11.1 SUCCESSORS AND ASSIGNS. This Agreement shall
bind and inure to the benefit of the parties hereto and their respective
successors and assigns, including each subsequent holder of Preferred Shares or
Conversion Shares. Except as otherwise specifically provided herein, this
Agreement shall not be assignable by any party without the prior written consent
of the other parties hereto.
11.2 ENTIRE AGREEMENT. Subject to the proviso below,
this Agreement and the other writings referred to herein or delivered pursuant
hereto constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior arrangements or understandings
(including, without limitation, the letter executed by the Company and CDPQ
dated as of September 20, 2000); provided, that the Company, each of the
Purchasers and the Founders hereby agree that the covenants of each of the
Founders set forth in Sections 8.2, 8.3 and 8.5 of the Common Stock Purchase
Agreement are hereby incorporated into and made part of this Agreement and that
such covenants are made by the Founders as of the date hereof for the benefit of
CDPQ and, as of the date of the signing of a counterparty signature page to this
Agreement, for the benefit of any Additional Purchasers hereto and that such
covenants shall be enforceable by the Purchasers hereto as if part of this
Agreement.
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11.3 NOTICES. All notices, requests, consents and other
communications provided for herein shall be in writing and shall be (i)
delivered in person, (ii) transmitted by telecopy, (iii) sent by first-class,
registered or certified mail, postage prepaid, or (iv) sent by reputable
overnight courier service, fees prepaid, to the recipient at the address or
telecopy number set forth below, or such other address or telecopy number as may
hereafter be designated in writing by such recipient. Notices shall be deemed
given upon personal delivery, seven days following deposit in the mail as set
forth above, upon acknowledgment by the receiving telecopier or one day
following deposit with an overnight courier service.
(i) If to the Company:
Next Generation Network, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, CEO
with a copy to (which shall not constitute notice to the
Company):
Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
(ii) If to any Purchaser:
[C/O] Capital Communications CDPQ Inc.
Place Mercantile
2001, Avenue ▇▇▇▇▇▇ College
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ Ribotti
with a copy to (which shall not constitute notice to the
Purchaser):
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
or such other address or to the attention of such other Person as
the recipient party shall have specified by prior written notice to the sending
party.
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11.4 PURCHASER FEES AND EXPENSES.
(a) The Company shall reimburse each Purchasers for
reasonable legal, accounting and out-of-pocket fees and
expenses (including any expenses incurred for filings required
by the provisions of the HSR Act) incurred by it in connection
with the documentation, negotiation and consummation of the
transactions contemplated by this Agreement and the Related
Documents at the Closing of its purchase of Preferred Shares
and any other such fees and expenses of each Purchaser
incurred in connection with any future amendment or waiver to
this Agreement or any of the Related Documents.
(b) In addition, the Company shall pay a
subscription fee of Six Hundred Thousand Dollars ($600,000) to
CDPQ in consideration for the time, effort and expense of CDPQ
in assessing and making the investment contemplated by this
Agreement. Such fee shall be payable as soon as practicable
(but in any event within two (2) Business Days) following the
Initial Closing.
11.5 AMENDMENT AND WAIVER. No amendment of any
provision of this Agreement shall be effective, unless the same shall be in
writing and signed by the Company and the holders of at least a majority of the
Preferred Shares. Except as otherwise expressly set forth herein, any failure of
the Company to comply with any provision hereof may only be waived in writing by
the holders of at least a majority of the Preferred Shares, and any failure of
any holder of Preferred Shares or Conversion Shares to comply with any provision
hereof may only be waived in writing by the Company. No such waiver shall
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure. No failure by any party to take any action against any breach of this
Agreement or default by any other party shall constitute a waiver of such
party's right to enforce any provision hereof or to take any such action.
11.6 COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original, but
all of which together shall constitute one agreement.
11.7 HEADINGS. The headings of the various sections
of this Agreement have been inserted for reference only and shall not be deemed
to be a part of this Agreement.
11.8 SPECIFIC PERFORMANCE. The Company, on the one
hand, and the Purchasers, on the other hand, acknowledge that money damages
would not be a sufficient remedy for any breach of this Agreement. It is
accordingly agreed that the parties shall be entitled to specific performance
and injunctive relief as remedies for any such breach, these remedies being in
addition to any of the remedies to which they may be entitled at law or equity.
11.9 REMEDIES CUMULATIVE. Except as otherwise
provided herein, the remedies provided herein shall be cumulative and shall not
preclude the assertion by any party hereto of any other rights or the seeking of
any other remedies against any other party hereto.
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11.10 GOVERNING LAW. THE CORPORATE LAW OF DELAWARE
SHALL GOVERN ALL ISSUES CONCERNING THE RELATIVE RIGHTS OF THE COMPANY AND ITS
STOCKHOLDERS. ALL OTHER QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY AND
INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE
STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF
THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.
11.11 NO THIRD PARTY BENEFICIARIES. Except as
specifically set forth or referred to herein, nothing herein is intended or
shall be construed to confer upon any Person or entity other than the parties
hereto and their successors or assigns, any rights or remedies under or by
reason of this Agreement.
11.12 SEVERABILITY. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
* * * * *
[SIGNATURE PAGES FOLLOW]
32
37
IN WITNESS WHEREOF, the parties have caused their
duly authorized officers to execute this Agreement as of the date first above
written.
NEXT GENERATION NETWORK, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title:
CAPITAL COMMUNICATIONS CDPQ
INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
By: /s/ ▇▇▇▇▇▇ Ribotti
--------------------------------------
Name: ▇▇▇▇▇▇ Ribotti
Title: Manager
38
FOR PURPOSES OF SECTION 11.2 ONLY:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
39
SCHEDULE I
SCHEDULE OF PURCHASERS
NUMBER OF
PREFERRED
PURCHASER SHARES PURCHASER PRICE
--------------------------------------- ---------------- -------------------
Capital Communications CDPQ Inc. 3,550,296 $30,000,000.00
--------- --------------
TOTAL: 3,550,296(1) $30,000,000.00(2)
========= ==============
---------------------
(1) Equals the aggregate number of Preferred Shares for purposes of Section
2.3(b).
(2) Equals the aggregate Purchase Price for purposes of Section 2.3(b).
Schedule I, Page 1