EXHIBIT 5.1
AMENDED AND RESTATED
PURCHASE AGREEMENT
DATED AS OF
OCTOBER 18, 1999
BY AND BETWEEN
COLLEGE TELEVISION NETWORK, INC.
AND
U-C HOLDINGS, L.L.C.
TABLE OF CONTENTS
ARTICLE I DEFINITIONS.......................................................................................-1-
ARTICLE II INITIAL CLOSING..................................................................................-10-
Section 2.1 Authorization of Initial Purchased Securities.............................................-10-
Section 2.2 Purchase of Initial Purchased Securities..................................................-10-
Section 2.3 Initial Closing...........................................................................-10-
ARTICLE III SUBSEQUENT CLOSINGS.............................................................................-10-
Section 3.1 Authorization of Additional Purchased Securities..........................................-10-
Section 3.2 Purchase of Additional Purchased Securities...............................................-10-
Section 3.3 Subsequent Closings.......................................................................-11-
Section 3.4 October 8, 1999 Subsequent Closing........................................................-11-
Section 3.5 October 18, 1999 Subsequent Closing.......................................................-12-
ARTICLE IV PURCHASER'S REPRESENTATIONS......................................................................-12-
Section 4.1 Investment Intention......................................................................-12-
Section 4.2 Accredited Investor.......................................................................-12-
Section 4.3 Corporate Existence.......................................................................-12-
Section 4.4 Corporate Power: Authorization: Enforceable Obligations...................................-12-
ARTICLE V COMPANY'S REPRESENTATIONS, WARRANTIES AND COVENANTS...............................................-13-
Section 5.1 Capitalization............................................................................-13-
Section 5.2 Authorization and Issuance of the Initial Purchased Securities and the Additional ........
Purchased Securities......................................................................-14-
Section 5.3 Securities Laws...........................................................................-15-
Section 5.4 Corporate Existence: Compliance with Law..................................................-15-
Section 5.5 Subsidiaries..............................................................................-15-
Section 5.6 Corporate Power: Authorization: Enforceable Obligations...................................-15-
Section 5.7 Financial Statements......................................................................-16-
Section 5.8 Ownership of Property.....................................................................-17-
Section 5.9 Material Contracts: Indebtedness..........................................................-17-
Section 5.10 Environmental Protection..................................................................-18-
Section 5.11 Labor Matters.............................................................................-18-
Section 5.12 Taxes.....................................................................................-19-
Section 5.13 No Litigation.............................................................................-20-
Section 5.14 Brokers...................................................................................-20-
Section 5.15 Management and Labor Agreements...........................................................-20-
Section 5.16 Patents, Trademarks, Copyrights and Licenses..............................................-20-
Section 5.17 No Material Adverse Effect................................................................-21-
Section 5.18 ERISA.....................................................................................-21-
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Section 5.19 Registration Rights.......................................................................-23-
Section 5.20 Required Filings..........................................................................-23-
Section 5.21 Full Disclosure...........................................................................-23-
Section 5.22 Schedule 14C; Shareholder Approval........................................................-23-
Section 5.23 Schedule 14C; Reclassification............................................................-23-
Section 5.24 Schedule 14C; Increase of Authorized Shares...............................................-23-
Section 5.25 CIBC Credit Agreement.....................................................................-24-
Section 5.26 Use of Proceeds...........................................................................-24-
ARTICLE VI CONDITIONS PRECEDENT TO INITIAL CLOSING..........................................................-24-
Section 6.1 Conditions Precedent......................................................................-24-
ARTICLE VII CONDITIONS PRECEDENT TO SUBSEQUENT CLOSING......................................................-26-
Section 7.1 Conditions Precedent......................................................................-26-
ARTICLE VIII SECURITIES LAW MATTERS.........................................................................-30-
Section 8.1 Legends...................................................................................-30-
Section 8.2 Transfer of Restricted Securities.........................................................-30-
ARTICLE IX EXPENSES.........................................................................................-31-
ARTICLE X LIMITATION ON CLAIMS OF THE PURCHASER.............................................................-31-
Section 10.1 Limitation................................................................................-31-
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ARTICLE XI MISCELLANEOUS....................................................................................-32-
Section 11.1 Notices...................................................................................-32-
Section 11.2 Binding Effect: Benefits..................................................................-33-
Section 11.3 Amendment.................................................................................-33-
Section 11.4 Successors and Assigns: Assignability.....................................................-33-
Section 11.5 Remedies..................................................................................-34-
Section 11.6 Section and Other Headings................................................................-34-
Section 11.7 Severability..............................................................................-34-
Section 11.8 Entire Agreement..........................................................................-34-
Section 11.9 Counterparts..............................................................................-34-
Section 11.10 Publicity.................................................................................-34-
Section 11.11 Governing Law.............................................................................-34-
Section 11.12 No Strict Construction....................................................................-35-
SCHEDULES AND EXHIBITS
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Schedule 5.1 Stock, Preferred Stock, Options and Warrants
Schedule 5.4 Foreign Qualification
Schedule 5.5 Subsidiaries
Schedule 5.7 Financial Statements; Other Obligations
Schedule 5.8 Ownership of Property
Schedule 5.9 Material Contracts
Schedule 5.11 Labor Matters
Schedule 5.12 Taxes
Schedule 5.13 Litigation
Schedule 5.15 Management and Labor Agreements
Schedule 5.19 Registration Rights Schedule
Exhibit A Second Certificate of Designation
Exhibit B Opinion of Company Counsel
Exhibit C Capitalization Chart
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AMENDED AND RESTATED
PURCHASE AGREEMENT
------------------
THIS AMENDED AND RESTATED PURCHASE AGREEMENT, dated as of October 18,
1999, amends, modifies and restates in its entirety that certain Purchase
Agreement, dated as of August 31, 1999 (the "Original Agreement,"), by and
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between College Television Network, Inc., a Delaware corporation having an
office at 5784 Lake Forrest Drive, Suite 275, Atlanta, GA 30328 (the "Company"),
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and U-C Holdings, L.L.C., a Delaware limited liability company
(the "Purchaser").
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WHEREAS, pursuant to the Original Agreement on August 31, 1999, at the
Initial Closing (as defined in Article I): (i) the Purchaser purchased from the
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Company 1,000,000 shares of the Company's series A convertible preferred stock,
par value $.001 per share (the "Series A Convertible Preferred") for an
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aggregate purchase price of $15,000,000 and (ii) the Purchaser agreed to
purchase, and the Company agreed to sell, from time to time after August 31,
1999, additional shares of Series A Convertible Preferred for an aggregate
purchase price of up to $10,000,000 less the Guaranty Amount (as defined below).
WHEREAS, on October 8, 1999 at the October 8, 1999 Subsequent Closing
(as defined in Article I), the Purchaser purchased from the Company 33,333
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shares of Series A Convertible Preferred for an aggregate purchase price of
$500,000.
WHEREAS, the Purchaser and the Company now desire to (i) purchase, as
of the date of this Agreement, additional shares of Series A Convertible
Preferred, (ii) increase the aggregate amount of additional shares of Series A
Convertible Preferred which Purchaser may purchase from time to time subsequent
to the Initial Closing to up to $18,000,000 (inclusive of the shares purchased
on October 8, 1999 and the shares purchased on the date hereof), less the
Guaranty Amount, and (iii) amends and restates the Original Purchase Agreement
in its entirety as set forth herein.
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, it is agreed as follows:
ARTICLE I
DEFINITIONS
"Additional Purchased Securities" shall mean shares of Series A
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Convertible Preferred purchased by the Purchaser at each Subsequent Closing from
time to time pursuant to Article III.
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"Affiliated Group" shall mean an affiliated group as defined in
----------------
Section 1504 of the IRC (or any analogous combined, consolidated or unitary
group defined under state, local or foreign income tax law) of which Company is
or has been a member.
"Annual Report" shall mean the annual report of the Company on Form
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10-KSB for the fiscal year ended December 31, 1998, which has been filed with
the SEC.
"Board" shall mean the board of directors of the Company.
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"Business Day" shall mean any day that is not a Saturday, a Sunday or
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a day on which banks are required or permitted to be closed in the State of
Illinois or the State of Georgia.
"Capitalization Chart" shall have the meaning set forth in Section
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5.1.
"Certificate of Incorporation" shall mean the Restated Certificate of
----------------------------
Incorporation of the Company filed on November 10, 1997 with the Secretary of
State of the State of Delaware, and amended by the Articles of Amendment to the
Restated Certificate of Incorporation, filed on May 29, 1998 with the Secretary
of State of the State of Delaware, and as modified by the Original Certificate
of Designation, filed on July 22, 1999, and by the Second Certificate of
Designation, filed on August 31, 1999, and as the same may be further amended
from time to time.
"Charges" shall mean (A) all federal, state, county, city, municipal,
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local, foreign or other governmental (including, without limitation, PBGC taxes
at the time due and payable, levies, assessments, charges, liens, claims or
encumbrances upon or relating to (i) the Company's employees, payroll, income or
gross receipts, (ii) the Company's ownership or use of any of its assets, or
(iii) any other aspect of the Company's business, or (B) any liability of the
Company for the payment of any amounts of the type described in clause (A)
arising as a result of being (or ceasing to be) a member of any Affiliated Group
(or being included (or required to be included) in any tax return relating
thereto).
"CIBC" shall mean the Canadian Imperial Bank of Commerce.
----
"CIBC Credit Agreement" shall mean the Credit Agreement, dated as of
---------------------
August 31, 1999, by and between MPM, CIBC, as Agent, CIBC World Markets Corp.,
and the several banks and lending institutions made party thereto from time to
time.
"Class C Warrant" shall mean the Company's Class C Warrants listed on
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the Capitalization Chart attached hereto as Exhibit C.
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"Closing" shall mean each of the Initial Closing and each Subsequent
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Closing, and "Closing Date" shall mean each of the Initial Closing Date and each
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Subsequent Closing Date.
"COBRA" shall have the meaning set forth in Section 5.19(l) hereof.
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"Common Stock" shall mean the common stock of the Company, par value
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$.005 per share.
"Controlled Group" shall mean all members of a controlled group of
----------------
corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control which, together with the
Company, are treated as a single employer under Section 414 of the Code or
Section 4001 of ERISA.
"Convertible Preferred" shall mean the convertible preferred stock of
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the Company, par value $.001 per share, having the rights and preferences set
forth in the Original Certificate of Designation.
"Environmental Laws" shall mean all federal, state and local laws,
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statutes, ordinances and regulations, now or hereafter in effect, and in each
case as amended or supplemented from time to time, and any judicial or
administrative interpretation thereof, including, without limitation, any
applicable judicial or administrative order, consent decree or judgment,
relative to the applicable Real Estate, relating to the regulation and
protection of human health, safety, the environment and natural resources
(including, without limitation, ambient air, surface water, groundwater,
wetlands, land surface or subsurface strata, wildlife, aquatic species and
vegetation). Environmental Laws include but are not limited to the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended (42 U.S.C. (S) 9601 et seq.) ("CERCLA"); the Hazardous Material
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Transportation Act, as amended (49 U.S.C. (S) 1801 et seq.); the Federal
Insecticide, Fungicide, and Rodenticide Act, as amended (7 U.S.C. (S) 136 et
seq. ); the Resource Conservation and Recovery Act, as amended (42 U.S.C. (S)
6901 et seq.) ("RCRA"); the Toxic Substance Control Act, as amended (15 U. S.C.
----
(S) 2601 et seq.); the Clean Air Act, as amended (42 U. S.C. (S) 740 et seq.);
the Federal Water Pollution Control Act, as amended (33 U.S.C. (S) 1251 et
seq.); the Occupational Safety and Health Act, as amended (29 U.S.C. (S) 651 et
sec.) ("OSHA"); and the Safe Drinking Water Act, as amended (42 U.S.C. (S) 300f
----
et seq.), and any and all regulations promulgated thereunder, and all analogous
state and local counterparts or equivalents and any transfer of ownership
notification or approval statutes.
"Environmental Liabilities and Costs" shall mean all liabilities,
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obligations, responsibilities, remedial actions, losses, damages, punitive
damages, consequential damages, treble damages, costs and expenses (including,
without limitation, all fees, disbursements and expenses of counsel, experts and
consultants and costs of investigation and feasibility studies), fines,
penalties, sanctions and interest incurred as a result of any claim, suit,
action or demand by any Person, whether based in contract, tort, implied or
express warranty, strict liability, criminal or civil statute or common law
(including, without limitation, any thereof arising under any Environmental Law,
permit, order or agreement with any Governmental Authority) and which relate to
any health or safety condition regulated under any Environmental Law or in
connection with any other environmental matter or Spill or the presence of a
hazardous substance or threatened Spill of any Hazardous Substance.
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"ERISA" shall mean the Employee Retirement Income Security Act of 1974
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(or any successor legislation thereto), as amended from time to time and any
regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to the Company, any trade
---------------
or business (whether or not incorporated) under common control with the Company
and which, together with the Company, are treated as a single employer within
the meaning of Section 414(b), (c), (m) or (o) of the IRC, excluding the
Purchaser and each other Person which would not be an ERISA Affiliate if the
Purchaser did not own any issued and outstanding shares of Stock of the Company.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended, and all rules and regulations promulgated thereunder.
"Financials" shall mean the financial statements referred to in
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Section 5.7 hereof.
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"Fiscal Year" shall mean the twelve month period ending December 31.
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Subsequent changes of the fiscal year of the Company shall not change the term
"Fiscal Year," unless the Purchaser shall consent in writing to such change.
"GAAP" shall mean generally accepted accounting principles in the
----
United States of America as in effect from time to time.
"Governmental Authority" shall mean any nation or government, any
----------------------
state or other political subdivision thereof, and any agency, department or
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Guaranteed Indebtedness" shall mean, as to any Person, any obligation
-----------------------
of such Person guaranteeing any Indebtedness, lease, dividend, or other
obligation ("primary obligations") of any other Person (the "primary obligor")
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in any manner including, without limitation, any obligation or arrangement of
such Person (a) to purchase or repurchase any such primary obligation, (b) to
advance or supply funds (i) for the purchase or payment of any such primary
obligation or (ii) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency or any balance sheet
condition of the primary obligor, (c) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation, or (d) to indemnify the owner of such primary obligation against
loss in respect thereof.
"Guaranty Amount" shall mean at any given time the sum of (i) the
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maximum amount which could be payable at such time by the Purchaser pursuant to
the Guaranty, plus (ii) the aggregate amount of payments actually made by the
Purchaser from time to time pursuant to the Guaranty, plus (iii) (without
duplication of the amount referenced in subparagraphs (i) and (ii) above) the
maximum amounts which could be payable at such time by Willis Stein & Partners
II,
-4-
L.P., a Delaware limited partnership ("Fund II"), and by Willis Stein &
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Partners Dutch, L.P., a Delaware limited partnership ("Dutch" and together with
-----
Fund II, the "Funds"), pursuant to the Guaranty, dated as of August 31, 1999, by
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each of Fund II and Dutch in favor of CIBC and/or its affiliates or co-lenders
(the "Fund Guaranty"), plus (iv) (without duplication of the amounts referenced
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in subparagraphs (i) and (ii) above) the aggregate amount of any payments
actually made by each of the Funds from time to time pursuant to the Fund
Guaranty. As of the date hereof, the Guaranty Amount is equal to $6,000,000.
"Guaranty" means that certain Guaranty, dated as of August 31, 1999,
--------
by the Purchaser in favor of CIBC and/or its affiliates or co-lenders.
"Hazardous Substances" shall have the meaning set forth in Section
-------------------- -------
5.10(a) hereof.
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"Indebtedness" of any Person shall mean (i) all indebtedness of such
------------
Person for borrowed money or for the deferred purchase price of property or
services (including, without limitation, reimbursement and all other obligations
with respect to surety bonds, letters of credit and bankers acceptances, whether
or not matured, but not including obligations to trade creditors incurred in the
ordinary course of business), (ii) all obligations evidenced by notes, bonds,
debentures or similar instruments, (iii) all indebtedness created or arising
under any conditional sale or other title retention agreements with respect to
property acquired by such Person (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), (iv) all capital lease obligations
required to be capitalized in accordance with GAAP, (v) all Guaranteed
Indebtedness, (vi) all Indebtedness referred to in clause (i), (ii), (iii), (iv)
or (v) above secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien upon or in
property (including, without limitation, accounts and contract rights) owned by
such Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness and (vii) all liabilities under Title IV of ERISA.
"Initial Closing" shall have the meaning set forth in Section 2.3
--------------- -----------
hereof and "Initial Closing Date" shall have the meaning set forth in Section
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2.3 hereof.
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"Initial Purchased Securities" shall mean the Series A Convertible
----------------------------
Preferred purchased by the Purchaser at the Initial Closing pursuant to Section
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2.2 of this Agreement.
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"IRC" shall mean the Internal Revenue Code of 1986, as amended, and
---
any successor thereto.
"IRS" shall mean the Internal Revenue Service, or any successor
---
thereto.
"LaSalle Credit Agreement" shall mean the Credit Agreement, dated as
------------------------
of July 26, 1999, by and between the Company and LaSalle Bank National
Association, as amended, restated and modified from time to time.
-5-
"Lien" shall mean any mortgage or deed of trust, pledge,
----
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, easement or encumbrance, or preference, priority, or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including without limitation, any title retention agreement, any financing
lease having substantially the same economic effect as any of the foregoing, and
the filing of, or agreement to give, any financing statement perfecting a
security interest as to assets owned by the relevant Person under the Uniform
Commercial Code or comparable law of any jurisdiction).
"Material Adverse Effect" shall mean material adverse effect on the
-----------------------
business, assets, operations, prospects or financial or other condition of the
Company.
"Material Contracts" shall mean (i) all of the Company's contracts,
------------------
agreements, leases or other instruments to which the Company is a party or by
which the Company or its properties are bound, which in the Company's good faith
judgment are required to be disclosed as exhibits to the Company's annual report
on Form 10-KSB, (ii) all of the Company's loan agreements, bank lines of credit
agreements, indentures, mortgages, deeds of trust, pledge and security
agreements, factoring agreements, conditional sales contracts, letters of credit
or other debt instruments, (iii) all material operating or capital leases for
equipment to which the Company is a party, (iv) all non-competition and similar
agreements other than as contained in employment agreements to which the Company
is a party, (v) all contracts for the employment of any officer or employee,
(vi) all consulting agreements, (vii) any guarantees by the Company, (viii) all
distributor and sales agency agreements, (ix) all other material contracts not
made in the ordinary course of business, and (x) all material contracts relating
to the operation of the Company or, the production of or programming for the
Company or related to the technology utilized by the Company.
"MPM" shall mean Armed Forces Communications, Inc., a New York
---
corporation doing business as Market Place Media.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
------------------
Section 4001 (a)(3) of ERISA, and to which Company or any ERISA Affiliate is
making, is obligated to make, has made or been obligated to make, contributions
on behalf of participants who are or were employed by any of them.
"October 8, 1999 Subsequent Closing" shall have the meaning set forth
----------------------------------
in Section 3.4.
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"October 18, 1999 Subsequent Closing" shall have the meaning set forth
-----------------------------------
in Section 3.5.
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"Options" shall mean the options listed on the Capitalization Chart
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attached hereto as Exhibit C.
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-6-
"Original Certificate of Designation" shall mean the Certificate of
-----------------------------------
Designation filed with the Secretary of State of the State of Delaware on July
22, 1999, containing the terms and preferences of the Company's Convertible
Preferred.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
----
successor thereto.
"Pension Plan" shall mean all "employee benefit plans", as defined in
------------
Section 3(3) of ERISA, and any other employee benefit arrangements or payroll
practices, including, without limitation, severance pay, sick leave, vacation
pay, salary continuation for disability, consulting or other compensation
agreements, retirement, deferred compensation, bonus, stock purchase,
hospitalization, medical insurance, life insurance and scholarship programs (the
"Plans") maintained by the Company or to which the Company contributed,
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contributes or is obligated to contribute thereunder, and (ii) all "employee
pension plans", as defined in Section 3(2) of ERISA, maintained by the Company
or any of its ERISA Affiliates to which the Company or any of its ERISA
Affiliates contributed, contributes or is obligated to contribute thereunder.
"Permitted Indebtedness" shall mean, with respect to the Company, (i)
----------------------
taxes or assessments or other governmental charges or levies, either not yet due
and payable or to the extent that nonpayment thereof is permitted by the terms
of this Agreement; (ii) obligations under workmen's compensation, unemployment
insurance, social security or public liability laws or similar legislation;
(iii) bids, tenders, contracts (other than contracts for the payment of money)
or leases to which the Company is a party as lessee made in the ordinary course
of business, (iv) public or statutory obligations of the Company; (v) all
deferred taxes and (vi) all unfunded pension fund and other employee benefit
plan obligations and liabilities but only to the extent permitted to remain
unfunded under applicable law.
"Person" shall mean any individual, sole proprietorship, partnership,
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limited liability company, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, entity or
government (whether federal, state, county, city, municipal or otherwise,
including, without limitation, any instrumentality, division, agency, body or
department thereof).
"Plan of Reclassification" shall mean the Company's Plan of
------------------------
Reclassification, dated as of August 31, 1999 and approved by the Board and a
majority of the shareholders of the Company in accordance with Delaware General
Corporation Law, to reclassify 309,998 shares of Convertible Preferred into
309,998 shares of Series A Convertible Preferred. On September 28, 1999 a
Schedule 14C Information Statement was filed with the SEC in connection with
such Plan of Reclassification and shall become effective on October 18, 1999.
"Private Placement Warrants" shall mean the Company's private
--------------------------
placement warrants listed on the Capitalization Chart attached hereto as Exhibit
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C.
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-7-
"Registration Rights Agreement" shall mean the Registration Rights
-----------------------------
Agreement between the Company and the Purchaser, dated as of April 25, 1997, as
such agreement may be amended, supplemented or otherwise modified from time to
time in accordance with the terms thereof.
"Restricted Securities" shall mean (i) the Initial Purchased
---------------------
Securities and the Additional Purchased Securities issued hereunder, and (ii)
any securities issued and exchanged with respect to the securities referred to
in clause (i) by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, reclassification, merger, consolidation
or other reorganization. As to any particular Restricted Securities, such
securities shall cease to be Restricted Securities when they have been (a)
effectively registered under the Securities Act and disposed of in accordance
with the registration statement covering them, (b) been distributed to the
public through a broker, dealer or market maker pursuant to Rule 144 (or any
similar provision then in force) under the Securities Act or become eligible for
sale pursuant to Rule 144(k) (or any similar provision then in force) under the
Securities Act or (c) been otherwise transferred and new certificates for them
not bearing the Securities Act legend set forth in Section 8.1 have been
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delivered by the Company in accordance with Section 8.2. Whenever any
-----------
particular securities cease to be Restricted Securities, the holder thereof
shall be entitled to receive from the Company, without expense, new securities
of like tenor but without bearing a Securities Act legend of the character set
forth in Section 8.1.
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"SEC" shall mean the U.S. Securities and Exchange Commission, or any
---
successor thereto.
"Second Certificate of Designation" shall mean the Company's Second
---------------------------------
Certificate of Designation, attached hereto as Exhibit A, filed with the
---------
Secretary of State of the State of Delaware on August 31, 1999, as amended,
modified or restated from time to time after the date hereof, setting forth the
rights and preferences of the Series A Convertible Preferred.
"Securities Act" shall mean the Securities Act of 1933, as amended,
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and all rules and regulations promulgated thereunder.
"Series A Convertible Preferred" shall mean the Series A Convertible
------------------------------
Preferred stock of the Company defined in the recitals and having the rights and
preferences set forth in the Second Certificate of Designation.
"Shareholder Approval" shall have its meaning set forth in the Second
--------------------
Certificate of Designation.
"Spill" shall have the meaning set forth in Section 5.10.
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"Stock" shall mean all shares, options, warrants, general or limited
-----
partnership interests, limited liability company membership interest,
participations or other equivalents
-8-
(regardless of how designated) of or in a corporation, partnership, limited
liability company or equivalent entity whether voting or nonvoting, including,
without limitation, common stock, preferred stock, or any other equity security
(as such term is defined in Rule 3a11-1 of the General Rules and Regulations
promulgated by the SEC under the Exchange Act).
"Subsequent Closing" shall have the meaning set forth in Section 3.3
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hereof and "Subsequent Closing Date" shall have the meaning set forth in Section
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3.3 hereof.
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"Subsidiary" shall mean, with respect to any Person, (a) any
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corporation of which an aggregate of more than 50% of the outstanding Stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, Stock of any other class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time, directly or indirectly,
owned legally or beneficially by such Person and/or one or more Subsidiaries of
such Person, and (b) any partnership or other entity in which such Person and/or
one or more Subsidiaries of such Person shall have an interest (whether in the
form of voting or participation in profits or capital contribution) of more than
50%.
"Transaction Documents" shall mean this Agreement, the Registration
---------------------
Rights Agreement, the Second Certificate of Designation, the Guaranty, the Fund
Guaranty, the Plan of Reclassification, the CIBC Credit Agreement and all
certificates and other documents related to the transactions contemplated hereby
and thereby.
"Warrants" shall mean the Company's Private Placement Warrants and
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Class C Warrants.
References to this "Agreement" shall mean this Amended and Restated
---------
Purchase Agreement, including all amendments, modifications and supplements and
any exhibits or schedule to any of the foregoing, and shall refer to the
Agreement as the same may be in effect at the time such reference becomes
operative.
Any accounting term used in this Agreement shall have, unless
otherwise specifically provided herein, the meaning customarily given such term
in accordance with GAAP, and all financial computations hereunder shall be
computed, unless otherwise specifically provided herein, in accordance with GAAP
consistently applied. That certain terms or computations are explicitly
modified by the phrase "in accordance with GAAP" shall in no way be construed to
limit the foregoing. The words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Agreement, as a whole, including the
exhibits and schedules hereto, as the same may from time to time be amended,
modified or supplemented, and not to any particular section, subsection or
clause contained in this Agreement. Wherever from the context it appears
appropriate, each term stated in either the singular or plural shall include the
singular and the plural, and pronouns stated in the masculine, feminine or
neuter gender shall include the masculine, the feminine and the neuter.
-9-
ARTICLE II
INITIAL CLOSING
Section 2.1 Authorization of Initial Purchased Securities. At or
---------------------------------------------
prior to the Initial Closing, the Company duly authorized the issuance and sale
of the Initial Purchased Securities.
Section 2.2 Purchase of Initial Purchased Securities. Subject to the
----------------------------------------
terms and conditions set forth in this Agreement, on the Initial Closing Date
(as defined below), the Purchaser purchased from the Company, and the Company
sold to the Purchaser, an aggregate of 1,000,000 shares of Series A Convertible
Preferred for a purchase price of $15 per share (the "Per Share Price") for an
---------------
aggregate purchase price of $15,000,000 (the "Initial Purchase Price"). The
----------------------
Initial Purchase Price was paid in full by the Purchaser on the Initial Closing
Date in cash by wire transfer of immediately available funds to an account
designated by the Company.
Section 2.3 Initial Closing. The closing of the purchase and sale of
---------------
the Initial Purchased Securities (the "Initial Closing") took place on August
---------------
31, 1999 (the "Initial Closing Date") at the New York office of Kirkland & Ellis
--------------------
located at 153 East 53rd Street, New York, New York. On the Initial Closing
Date, the Company delivered to the Purchaser a certificate representing the
shares of Series A Convertible Preferred representing the Initial Purchased
Securities purchased by the Purchaser registered in the name of the Purchaser
against delivery by the Purchaser of the Initial Purchase Price by payment of
cash by wire transfer of immediately available funds to the Company in
accordance with Section 2.2 hereof.
-----------
ARTICLE III
SUBSEQUENT CLOSINGS
Section 3.1 Authorization of Additional Purchased Securities. At or
------------------------------------------------
prior to any Subsequent Closing, the Company shall have duly authorized the
issuance and sale of the Additional Purchased Securities to be purchased at such
Subsequent Closing.
Section 3.2 Purchase of Additional Purchased Securities. Subject to
-------------------------------------------
the terms and conditions set forth in this Agreement, from time to time after
the Initial Closing and until:
(a) the first anniversary of the Initial Closing, with respect to the
purchase of Additional Purchased Securities in accordance with Section 3.3(a)
--------------
below, upon the Company's written notice, the Purchaser shall purchase from the
Company at any Subsequent Closing a cumulative total amount (assuming a Guaranty
Amount equal to zero) of up to 1,200,000 shares of Series A Convertible
Preferred, at price per share equal to the Per Share Price and an aggregate
purchase price of up to $18,000,000 less the Guaranty Amount; and
(b) so long as either the Guaranty or the Fund Guaranty remains
outstanding, or so long as the Purchaser or the Funds have any outstanding
obligations thereunder,
-10-
the Purchaser shall have the right to purchase from the Company at any
Subsequent Closing, in accordance with Section 3.3(b) below, up to an aggregate
--------------
number of shares of Additional Purchased Securities equal to the quotient
obtained by dividing the initial Guaranty Amount by the Per Share Price, for a
price per share equal to the Per Share Price and for an aggregate purchase price
of up to the initial Guaranty Amount.
With respect to either Section 3.2(a) and Section 3.2(b), the
-------------- --------------
aggregate purchase price for the Additional Purchased Securities purchased at
any Subsequent Closing shall be equal to the Per Share Price multiplied by the
number of shares of Series A Convertible Preferred purchased at such Subsequent
Closing.
Section 3.3 Subsequent Closings. Subject to the terms and conditions
-------------------
contained herein (including the satisfaction of the conditions set forth in
Article VII), upon either:
- -----------
(a) the Company's written notice (which such notice may be
waived by the parties to this Agreement) specifying (i) the proposed Subsequent
Closing Date (which shall not be less than 20 nor more than 60 Business Days
after delivery of such notice), (ii) the amount of Additional Purchased
Securities to be purchased and (iii) such other information as may be requested
by the Purchaser; or
(b) a payment by the Purchaser with respect to the Guaranty, or a
payment by either Fund II or Dutch with respect to either Fund Guaranty, in each
case whether as a result of (x) a call on the Guaranty or the Fund Guaranty by
CIBC or (y) either the Purchaser or the Funds electing to make an investment
which has the effect of reducing the amount outstanding under the Guaranty or
the Fund Guaranty (as applicable) (in which event the Purchaser may elect to
purchase a number of Additional Purchased Securities equal to the quotient
obtained by dividing the amount of such payment by the Per Share Price for an
aggregate purchase price equal to the amount of such reduction).
the closing of a purchase and sale of the Additional Purchased Securities in
accordance to either (a) or (b) above (each, a "Subsequent Closing") shall take
------------------
place on such proposed Subsequent Closing Date, or other date mutually agreed to
by the parties hereto (the "Subsequent Closing Date"), at the offices of
-----------------------
Kirkland & Ellis at 200 East Randolph Street, Chicago, Illinois or at 153 East
53rd Street, New York, New York, or such other place as shall be mutually agreed
to by the parties hereto. On each Subsequent Closing Date, the Company will
deliver to the Purchaser a certificate representing the number of shares of
Series A Convertible Preferred purchased at such Subsequent Closing which
represents the Additional Purchased Securities purchased by the Purchaser at
such Subsequent Closing to be registered in the name of the Purchaser against
delivery by the Purchaser of the purchase price therefor by payment of cash to
the Company in accordance with Section 3.2.
-----------
Section 3.4 October 8, 1999 Subsequent Closing. The first Subsequent
----------------------------------
Closing took place on October 8, 1999 (the "October 8, 1999 Subsequent Closing")
----------------------------------
in accordance with Section 3.3(a) (except that the parties waived the prior
--------------
written notice requirement set forth in
-11-
subclause (i) thereof). At the October 8, 1999 Subsequent Closing, the Purchaser
purchased from the Company 33,333 shares of Series A Convertible Preferred at
the Per Share Price for an aggregate purchase price equal to $500,000 in cash by
wire transfer of immediately available funds to an account designated by the
Company.
Section 3.5 October 18, 1999 Subsequent Closing. The first
-----------------------------------
Subsequent Closing to occur after the October 8, 1999 Subsequent Closing shall
take place on October 18, 1999 (the "October 18, 1999 Subsequent Closing") in
-----------------------------------
accordance with Section 3.3(a) (except that the parties hereby waive the prior
--------------
written notice requirement set forth in subclause (i) thereof). At the October
18, 1999 Subsequent Closing, the Purchaser shall purchase from the Company, and
the Company shall sell to the Purchaser, on and subject to the terms and
conditions set forth in this Agreement, 153,334 shares of Additional Purchased
Securities at the Per Share Price for an aggregate purchase price equal to
$2,300,000.
ARTICLE IV
PURCHASER'S REPRESENTATIONS
As of the Initial Closing and as of each Subsequent Closing, the
Purchaser makes the following representations and warranties to the Company,
each and all of which shall survive the execution and delivery of this Agreement
and each Closing hereunder:
Section 4.1 Investment Intention. The Purchaser is purchasing the
--------------------
Initial Purchased Securities and the Additional Purchased Securities for its own
account, for investment purposes and not with a view to the distribution
thereof. The Purchaser will not, directly or indirectly, offer, transfer, sell,
assign, pledge, hypothecate or otherwise dispose of any of the Initial Purchased
Securities or the Additional Purchased Securities (or solicit any offers to buy,
purchase, or otherwise acquire any of the Initial Purchased Securities or the
Additional Purchased Securities), except in compliance with the Securities Act.
Section 4.2 Accredited Investor. The Purchaser is an "accredited
-------------------
investor" (as that term is defined in Rule 501 of Regulation D under the
Securities Act) and by reason of its business and financial experience, it has
such knowledge, sophistication and experience in business and financial matters
as to be capable of evaluating the merits and risks of the prospective
investment, is able to bear the economic risk of such investment and it is able
to afford a complete loss of such investment.
Section 4.3 Corporate Existence. The Purchaser is a limited
-------------------
liability company duly organized, validly existing and in good standing under
the laws of its jurisdiction of formation.
Section 4.4 Corporate Power: Authorization: Enforceable Obligations.
-------------------------------------------------------
The execution, delivery and performance by the Purchaser of the Transaction
Documents to be executed
-12-
by it: (i) are within Purchaser's power, as applicable; (ii) have been duly
authorized by all necessary action, as applicable; (iii) are not in
contravention of any provision of the Purchaser's governing documents, as
applicable; and (iv) will not violate any law or regulation, or any order or
decree of any court or governmental instrumentality binding on the Purchaser.
The Purchaser has full power and authority to perform its obligations under the
Transaction Documents. The Transaction Documents to which the Purchaser is a
party have each been duly executed and delivered by Purchaser and constitute the
legal, valid and binding obligations of the Purchaser, enforceable against it in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
ARTICLE V
COMPANY'S REPRESENTATIONS, WARRANTIES AND COVENANTS
As of the Initial Closing and as of each Subsequent Closing, the
Company makes the following representations, warranties and covenants to the
Purchaser, each and all of which shall survive the execution and delivery of
this Agreement and the Initial Closing and each Subsequent Closing hereunder:
Section 5.1 Capitalization.
--------------
(a) The "Capitalization Chart" attached hereto as Exhibit C sets forth
-------------------- ---------
a true and complete description of all authorized, issued and outstanding shares
of Common Stock, Convertible Preferred and Series A Convertible Preferred of the
Company by including a description of (i) the number of shares of each class of
Stock of the Company issued and outstanding and (ii) the number and class of all
outstanding warrants, options and other securities convertible into, or
exchangeable for, shares of Common Stock or other securities of the Company.
After giving effect to the purchase of the Initial Purchased Securities at the
Initial Closing: (i) 1,153,726 shares (subject to antidilution adjustment with
respect to the purchase of the Initial Purchased Securities and the Additional
Purchased Securities on or prior to October 18, 1999) of Common Stock are
reserved for issuance upon exercise of the Private Placement Warrants, (ii)
924,832 shares of Common Stock are reserved for issuance upon exercise of the
Class C Warrants (subject to antidilution adjustment with respect to the
purchase of the Initial Purchased Securities and the Additional Purchased
Securities on or prior to October 18, 1999), (iii) 678,432 shares of Common
Stock are reserved for issuance upon conversion of the Convertible Preferred,
(iv) 3,333,333 shares of Common Stock are reserved for issuance upon conversion
of the Series A Convertible Preferred (including the Series A Convertible
Preferred purchased at the Initial Closing), and (v) 2,914,933 shares of Common
Stock are reserved for issuance upon exercise of the Options.
-13-
(b) After giving effect to the purchase of the Additional Purchased
Securities at the October 18 Subsequent Closing: (i) 1,153,726 shares (subject
to antidilution adjustment with respect to the purchase of the Initial Purchased
Securities and the Additional Purchased Securities on or prior to October 18,
1999) of Common Stock are reserved for issuance upon exercise of the Private
Placement Warrants, (ii) 924,832 shares of Common Stock are reserved for
issuance upon exercise of the Class C Warrants (subject to antidilution
adjustment with respect to the purchase of the Initial Purchased Securities and
the Additional Purchased Securities on or prior to October 18, 1999), (iii) no
shares of Common Stock are reserved for issuance upon conversion of the
Convertible Preferred, (iv) 4,988,884 shares of Common Stock are reserved for
issuance upon conversion of the Series A Convertible Preferred (including the
Series A Convertible Preferred purchased at the Initial Closing), and (v)
2,914,933 shares of Common Stock are reserved for issuance upon exercise of the
Options.
(c) All issued and outstanding Stock of the Company listed on the
Capitalization Chart is duly authorized, validly issued, fully paid and non-
assessable. Schedule 5.1 hereto or the Annual Report contains a complete and
------------
correct list of all stockholders of the Company owning, to the knowledge of the
Company, more than 5% of the outstanding Stock of the Company and the number of
shares or warrants owned by each. Except as set forth on Schedule 5.1 or the
------------
Annual Report and except as to the outstanding shares of Convertible Preferred,
shares of Series A Convertible Preferred, Options and Warrants, (i) there is no
existing option, warrant, call, commitment or other agreement to which the
Company is a party requiring, and there are no convertible securities of the
Company outstanding which upon conversion would require, the issuance of any
additional shares of Stock of the Company or other securities convertible into
shares of equity securities of the Company, (ii) there are no agreements or
obligations (contingent or otherwise) requiring the Company to repurchase or
otherwise acquire or retire any shares of its capital stock or any warrants,
options or other rights to acquire its capital stock, and (iii) there are no
agreements to which the Company is a party or, to the knowledge of the Company,
to which any stockholder or warrant holder of the Company is a party, with
respect to the voting or transfer of the Stock of the Company. Except as set
forth on Schedule 5.1 or the Annual Report, there are no stockholders'
------------
preemptive rights or rights of first refusal or other similar rights with
respect to the issuance of the Initial Purchased Securities or the Additional
Purchased Securities by the Company. True and correct copies of the
Certificate of Incorporation and by-laws of the Company have been delivered to
the Purchaser.
Section 5.2 Authorization and Issuance of the Initial Purchased
---------------------------------------------------
Securities and the Additional Purchased Securities. The issuances of the
- --------------------------------------------------
Initial Purchased Securities, the Additional Purchased Securities purchased
pursuant to the Guaranty or the Fund Guaranty and the Additional Purchased
Securities Purchased at the October 8, 1999 Subsequent Closing and the
October18, 1999 Subsequent Closing, have been duly authorized by all necessary
corporate action on the part of the Company and, upon delivery to the Purchaser
of certificates therefor against payment in accordance with the terms hereof,
the Initial Purchased Securities and the Additional Purchased Securities will
have been validly issued and fully paid and nonassessable, free and clear of all
pledges, liens, encumbrances and preemptive rights. The issuance of shares upon
the conversion of the Series A
-14-
Convertible Preferred has been duly authorized by all necessary corporate action
on the part of the Company and, when issued upon conversion of the Series A
Convertible Preferred, such Common Stock will have been validly issued and fully
paid and non-assessable.
Section 5.3 Securities Laws. In reliance on the representations of
---------------
the Purchaser contained in Section 4.1 and 4.2, the offer, issuance, sale and
----------- ---
delivery of the Initial Purchased Securities and the Additional Purchased
Securities, as provided in this Agreement, are exempt from the registration
requirements of the Securities Act and all applicable state securities laws, and
are otherwise in compliance with such laws. Neither the Company nor any Person
acting on its behalf has taken or will take any action (including, without
limitation, any offering of any securities of the Company under circumstances
which would require the integration of such offering with the offering of the
Initial Purchased Securities or the Additional Purchased Securities under the
Securities Act and the rules and regulations of the SEC thereunder) which might
subject the offering, issuance or sale of the Initial Purchased Securities or
the Additional Purchased Securities to the registration requirements of Section
5 of the Securities Act. No information contained in the documents filed with
the SEC contains any untrue statement of a material fact, or omits to state a
material fact necessary to make the statements contained therein not misleading
in light of the circumstances under which made.
Section 5.4 Corporate Existence: Compliance with Law. The Company
----------------------------------------
(i) is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware; (ii) except as indicated on Schedule 5.4, is
------------
duly qualified as a foreign corporation and in good standing under the laws of
Alabama, Arizona, California, Delaware, Georgia, Illinois, Massachusetts, New
York, and Vermont and each jurisdiction where its ownership or lease of property
or the conduct of its business requires such qualification (except for
jurisdictions in which such failure to so qualify or to be in good standing
would not have a Material Adverse Effect); (iii) has the requisite corporate
power and authority and the legal right to own, pledge, mortgage or otherwise
encumber and operate its properties, to lease the property it operates under
lease, and to conduct its business as now being conducted in all material
respects; (iv) has, or has applied for, all material licenses, permits, consents
or approvals from or by, and has made all material filings with, and has given
all material notices to, all Governmental Authorities having jurisdiction, to
the extent required for such ownership, operation and conduct; (v) is in
compliance with its Certificate of Incorporation and by-laws in all material
respects; and (vi) is in compliance with all applicable provisions of applicable
laws, including, but not limited to, the Securities Act and the Exchange Act,
except for such non-compliance which would not have a Material Adverse Effect.
The Company has timely filed all reports with the SEC required by the Securities
Act and Exchange Act and a Rule 144 exemption is available to qualified holders
of Stock of the Company.
Section 5.5 Subsidiaries. Except for MPM and those entities listed
------------
on the Schedule 5.5, there currently exist no Subsidiaries of the Company and
------------
the Company has no equity interest in any other Person. Each entity listed on
Schedule 5.5 is wholly-owned by the Company, except as otherwise expressly
- ------------
disclosed therein.
-15-
Section 5.6 Corporate Power: Authorization: Enforceable Obligations.
-------------------------------------------------------
The execution, delivery, and performance by the Company of this Agreement, the
other Transaction Documents to which it is a party and all instruments and
documents to be delivered by the Company, the issuance and sale of (i) the
Initial Purchased Securities, (ii) any Additional Purchased Securities purchased
pursuant to the Guaranty or the Fund Guaranty and (iii) the Additional Purchased
Securities purchased at each Subsequent Closing, and the consummation of the
other transactions contemplated by any of the foregoing (subject to the
reclassification of the Convertible Preferred into the Series A Convertible
Preferred in accordance with Section 6.1(d) and the increase in the number of
--------------
authorized shares of Series A Convertible Preferred in accordance with Section
-------
7.1(s)): (i) are within the Company's corporate power and authority; (ii) have
- ------
been duly authorized by all necessary or proper corporate action; (iii) are not
in contravention of any provision of the Company's Certificate of Incorporation
or by-laws; (iv) will not violate any law or regulation, or any order or decree
of any court or governmental instrumentality; (v) will not conflict with or
result in the breach or termination of, constitute a default under or accelerate
any performance required by, any indenture, mortgage, deed of trust, lease,
agreement or other instrument to which the Company is a party or by which the
Company or any of their property is bound; (vi) will not result in the creation
or imposition of any Lien upon the capital stock or any of the property of the
Company and (vii) do not require the consent or approval of, or any filing with,
any Governmental Authority or any other Person (except to the extent previously
obtained or made). Except for Shareholder Approval and the approval of the
majority shareholder of Common Stock with respect to the increase in the number
of authorized shares of Series A Convertible Preferred in accordance with
Section 7.1(s) (which majority shareholder approval has been duly obtained), the
- --------------
execution, delivery and performance of this Agreement and the transactions
contemplated herein do not require approval or consent of the shareholders or
other holders of Stock of the Company or the approval or authorization of any
Governmental Authority, NASDAQ (except for the listing of additional shares
pursuant to NASD Rule 4310(c)(17) regarding notice of issuance of additional
securities), other securities exchange or any other Person. Each of this
Agreement and the other Transaction Documents shall have been duly executed and
delivered by the Company and each shall then constitute a legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
Section 5.7 Financial Statements.
--------------------
(a) The audited financial statements of the Company dated as of
December 31, 1998 (the "Financials") have been prepared in accordance with the
----------
books and records of the Company, present fairly the financial condition of the
Company as of the respective dates indicated therein and the results of
operations for the respective periods indicated therein, and have been prepared
in accordance with GAAP applied on a consistent basis.
-16-
(b) Except as set forth on Schedule 5.7 or the Annual Report, the
------------
Company has no material obligations, contingent or otherwise, including, without
limitation, liabilities for Charges, long-term leases or long-term commitments
which are not reflected in the Financials, other than those incurred since
December 31, 1998 in the ordinary course of business (none of which is a
liability resulting from breach of contract, breach of warranty, tort,
infringement, or any claim or lawsuit).
(c) No dividends or other distributions have been declared, paid or
made upon any Stock of the Company, nor has any Stock of the Company been
redeemed, retired, purchased or otherwise acquired for value by the Company
since December 31, 1998.
Section 5.8 Ownership of Property.
---------------------
(a) The Company does not own any real estate. Except as set forth on
Schedule 5.8 or the Annual Report, the Company owns, has a valid leasehold
- ------------
interest in, or has a valid license to use, all material assets, properties and
rights, whether tangible or intangible, necessary for the conduct of its
business as presently conducted and as presently proposed to be conducted.
(b) All real property leased by the Company is set forth on Schedule
--------
5.8 or the Annual Report. Each of such leases is valid and enforceable in
- ---
accordance with its terms (subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity)) and is in full force and effect. Except as set
forth on Schedule 5.8 or the Annual Report, the Company is not in default of
------------
its obligations under any material lease or has it delivered or received any
notice of default under any such lease, nor to the knowledge of the Company has
any event occurred which, with the giving of notice, the passage of time or
both, would constitute a default under any such lease.
Section 5.9 Material Contracts: Indebtedness. Each Material Contract
--------------------------------
is a valid and binding agreement of the Company enforceable against the Company
in accordance with its terms (subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity)), and the Company has no knowledge that any
Material Contract is not a valid and binding agreement against the other parties
thereto. Except as set forth in Schedule 5.9 or the Annual Report, the Company
------------
is not in material default or breach (whether with or without the passage of
time, the giving of notice or both) or in receipt of any claims of default or
breach in either case that could reasonably be expected to have a Material
Adverse Effect, nor to the Company's knowledge is any third party in default or
breach, under or with respect to any Material Contract. Except as set
-17-
forth on Schedule 5.9 or the Annual Report, the Company has no Indebtedness
------------
except for indebtedness under the LaSalle Credit Agreement and except for
Permitted Indebtedness.
Section 5.10 Environmental Protection.
------------------------
(a) To the Company's actual knowledge without independent
investigation, all real property owned, leased or otherwise operated by the
Company and each Subsidiary (a "Facility") is free of contamination from any
--------
substance, waste or material (i) currently identified to be toxic or hazardous
pursuant to, or which may result in liability under, any Environmental Law or
(ii) within the definition of a substance which is toxic or hazardous under any
Environmental Law, including, without limitation, any asbestos, PCB, radioactive
substance, methane, volatile hydrocarbons, industrial solvents, oil or petroleum
or chemical liquids or solids, liquid or gaseous products, or any other material
or substance which has in the past or could at any time in the future cause or
constitute a health, safety, or environmental hazard to any Person or property
or result in any Environmental Liabilities and Costs ("Hazardous Substance") of
-------------------
more than $25,000 or which, in either case, could have a Material Adverse
Effect. Nor has the Company caused or suffered to occur any release, Spill,
migration, leakage, discharge, spillage, uncontrolled loss, seepage, or
filtration of Hazard Substances at or from the Facility (a "Spill") which could
-----
result in Environmental Liabilities and Costs in excess of $25,000.
(b) The Company and each Subsidiary has generated, treated, stored and
disposed of any Hazardous Substances in full compliance with applicable
Environmental Laws, except for such non-compliances which would not have a
Material Adverse Effect.
(c) The Company and each Subsidiary has obtained, or has applied for,
and is in full compliance with and in good standing under all permit required
under Environmental Laws (except for such failures which would not have a
Material Adverse Effect). The Company does not have any knowledge of any
proceedings to substantially modify or to revoke any such permit.
(d) There are no investigations, proceedings or litigation pending or,
to the Company's knowledge, threatened, affecting or against the Company or the
Facilities relating to Environmental Laws or Hazardous Substances.
(e) Since April 25, 1997, the Company has not received any
communication or notice (including, without limitation, requests for
information) indicating the potential of Environmental Liabilities and Costs
against the Company.
Section 5.11 Labor Matters.
-------------
(a) There are no strikes or other labor disputes against the Company
pending or to the Company's knowledge threatened. Hours worked by and payment
made to employees of the Company have not been in violation of the Fair Labor
Standards Act or any other
-18-
applicable law dealing with such matters. All payments due from the Company on
account of employee health and welfare insurance have been paid or accrued as a
liability on the books of the Company. There is no organizing activity involving
the Company pending or, to the Company's knowledge, threatened by any labor
union or group of employees that individually or in the aggregate could
reasonably be expected to have a Material Adverse Effect. There are no
representation proceedings pending or, to the Company's knowledge, threatened
with the National Labor Relations Board, and no labor organization or group of
employees of the Company has made a pending demand for recognition. Except as
set forth on Schedule 5.11, there are no complaints or charges against the
-------------
Company pending or, to the Company's knowledge, threatened to be filed with any
federal, state, local or foreign court, governmental agency or arbitrator based
on, arising out of, in connection with, or otherwise relating to the employment
or termination of employment by the Company of any individual.
(b) The Company is not, and during the five years preceding the date
hereof was not, a party to any labor or collective bargaining agreement and
there are no labor or collective bargaining agreements which pertain to
employees of the Company.
Section 5.12 Taxes. Except as otherwise disclosed on Schedule 5.12,
----- -------------
all federal, state, local and foreign tax returns, reports and statements
required to be filed by the Company and each Affiliated Group have been timely
filed with the appropriate Governmental Authority except where the failure to
file such report or statement would not have a Material Adverse Effect and all
such returns, reports and statements are true, correct and complete in all
material respects. Except as otherwise disclosed on Schedule 5.12, all Charges
-------------
and other impositions due and payable for the periods covered by such returns,
reports and statements have been paid prior to the date on which any fine,
penalty, interest or late charge may be added thereto for nonpayment thereof or
any such fine, penalty, interest or late charge has been paid. Except as
otherwise disclosed on Schedule 5.12, proper and accurate amounts have been
-------------
withheld by the Company from its employees, independent contractors, or other
third parties for all periods in full and complete compliance with the tax,
social security and unemployment withholding provisions of applicable federal,
state, local and foreign law and such withholdings have been timely paid to the
respective governmental agencies. The Company has not executed or filed with
the IRS or any other Governmental Authority any agreement or other document
extending, or having the effect of extending, the period for assessment or
collection of any Charges. Except as otherwise disclosed on Schedule 5.12, no
-------------
tax audits or other administrative or judicial proceedings are pending or
threatened with regard to any Charges for which the Company may be liable and
which would reasonably be expected to have a Material Adverse Effect and no
assessment of Charges is proposed against the Company. The Company has not
filed a consent pursuant to IRC Section 341(f) or agreed to have IRC Section
341(f)(2) apply to any dispositions of subsection (f) assets (as such term is
defined in IRC Section 341(f)(4)). None of the property owned by the Company is
property which such the Company is required to treat as being owned by any other
Person pursuant to the provisions of Section 168(f)(8) of the Internal Revenue
Code of 1954, as amended, and in effect immediately prior to the enactment of
the Tax Reform Act of 1986 or is "tax-exempt" use property, within the meaning
of IRC Section 168(h). The Company has not agreed or has been requested to make
any adjustment under IRC Section 481(a)
-19-
by reason of a change in accounting method or otherwise. The Company has no
obligation under any written tax sharing agreement. The Company is not a party
to or bound by any tax allocation or tax sharing agreement and has no current or
potential contractual obligation to indemnify any other person with respect to
any Charges. The Company has not made any payments, and is not and will not
become obligated (under any contract entered into on or before the Initial
Closing Date) to make any payments, that will be non-deductible under Section
280G of the IRC (or any corresponding provision of state, local or foreign
income tax law). The Company will not be required (A) as a result of a change in
method of accounting for a taxable period ending on or prior to the Initial
Closing Date, to include any adjustment in taxable income for any taxable period
(or portion thereof) ending after the Initial Closing Date or (B) as a result of
any deferred intercompany gain described in Treasury Regulation Sections 1.
1502-13 of former Treasury Regulations Section 1. 1502-14 or any excess loss
account described in Treasury Regulation Section 1. 1502-19 (or any
corresponding or similar provision or administrative rule of federal, state,
local or foreign income tax law), to include any item of income in taxable
income for any taxable period (or portion thereof) ending after the Initial
Closing Date, in each case, which would reasonably be expected to have a
Material Adverse Effect. The Company has not been a member of an Affiliated
Group other than one of which the Company was the common parent, or filed or
been included in a combined, consolidated or unitary income tax return, other
than one filed by the Company.
Section 5.13 No Litigation. Except as set forth on Schedule 5.13, no
------------- -------------
action, claim or proceeding is now pending or, to the knowledge of the Company,
threatened against the Company (or to the Company's knowledge, pending or
threatened against or affecting any of the officers, directors or employees of
the Company with respect to its business or proposed business activities), or
pending or threatened by the Company against any third party, at law, in equity
or otherwise, before any court, board, commission, agency or instrumentality of
any federal, state, or local government or of any agency or subdivision thereof,
or before any arbitrator or panel of arbitrators.
Section 5.14 Brokers. No broker or finder acting on behalf of the
-------
Company brought about the consummation of the transactions contemplated pursuant
to this Agreement and the Company has no obligation to any Person in respect of
any finder's or brokerage fees (or any similar obligation) in connection with
the transactions contemplated by this Agreement. The Company is solely
responsible for the payment of all such finder's or brokerage fees.
Section 5.15 Management and Labor Agreements. Except as set forth on
-------------------------------
Schedule 5.15 or the Annual Report, there are no management agreements covering
- -------------
officers of the Company.
Section 5.16 Patents, Trademarks, Copyrights and Licenses. The
--------------------------------------------
Company owns all licenses, patents, patent applications, copyrights, service
marks, trademarks and registrations and applications for registration thereof,
and trade names necessary to continue to conduct its business as heretofore
conducted by it and now being conducted by it. To the Company's knowledge, the
Company conducts its businesses without infringement or claim of infringement of
any license, patent, copyright, service mark, trademark, trade name, trade
secret or other intellectual property right of others and the Company has
received no notices claiming any such infringement. To the
-20-
Company's knowledge, there is no infringement by others of any license, patent,
copyright, service mark, trademark, trade name, trade secret or other
intellectual property right of the Company.
Section 5.17 No Material Adverse Effect. To the Company's knowledge,
--------------------------
no event has occurred since April 25, 1997 which has had or could be reasonably
expected to have a Material Adverse Effect; provided, however, the Purchaser
acknowledges that it has been advised that the Company has operated at a loss
and has had negative cash flow since October 31, 1998.
Section 5.18 ERISA.
-----
(a) During the twelve-consecutive-month period prior to the date of
the execution and delivery of this Agreement, (i) no steps have been taken to
terminate any Pension Plan and (ii) no contribution failure has occurred with
respect to any Pension Plan sufficient to give rise to a Lien under Section
302(f) of ERISA. No condition exists or event or transaction has occurred with
respect to any Pension Plan which could result in the incurrence by the Company
of any material liability, fine or penalty, other than the obligations of the
Company to fund the benefits provided under the Pension Plan.
(b) All contributions (if any) have been made to any Multiemployer
Plan that are required to be made by the Company or any other member of the
Controlled Group under the terms of the plan or of any collective bargaining
agreement or by applicable law; neither the Company nor any member of the
Controlled Group has withdrawn or partially withdrawn from any Multiemployer
Plan, incurred any withdrawal liability with respect to any such plan or
received notice of any claim or demand for withdrawal liability or partial
withdrawal liability from any such plan, and no condition has occurred which, if
continued, might result in a withdrawal or partial withdrawal from any such
plan; and neither the Company nor any member of the Controlled Group has
received any notice that any Multiemployer Pension Plan is in reorganization,
that increased contributions may be required to avoid a reduction in plan
benefits or the imposition of any excise tax, that any such plan is or has been
funded at a rate less than that required under Section 412 of the IRC, that any
such plan is or may be terminated, or that any such plan is or may become
insolvent.
(c) The Pension Plans and the trusts maintained pursuant thereto are
exempt from federal income taxation under Section 501 of the IRC, and nothing
has occurred with respect to the operation of the Pension Plans which could
cause the loss of such qualification or exemption or the imposition of any
liability, penalty, or tax under ERISA or the IRC.
(d) All contributions required by law or pursuant to the terms of the
Plans (without regard to any waivers granted under Section 412 of the IRC) to
any funds or trusts established thereunder or in connection therewith have been
made by the due date thereof (including any valid extension) and no accumulated
funding deficiencies exist in any of the Pension Plans subject to Section 412 of
the IRC.
-21-
(e) There is no "amount of unfunded benefit liabilities" as defined in
Section 4001 (a) (18) of ERISA in any of the respective Pension Plans, which are
subject to Title IV of ERISA. Each of the respective Pension Plans are fully
funded in accordance with the actuarial assumptions used by the PBGC to
determine the level of funding required in the event of the termination of the
Pension Plan and all benefit liabilities do not exceed the assets of such
Pension Plans.
(f) There have been no "reportable events" as that term is defined in
Section 404 of ERISA and the regulations thereunder with respect to the Pension
Plans subject to Title IV of ERISA which would require the giving of notice, or
any event requiring disclosure under Sections 4041(c)(3)(C), 4063(a) or 4068(f)
of ERISA.
(g) There is no material violation of ERISA with respect to the filing
of applicable reports, documents, and notice, regarding the Plans with the
Secretary of Labor and the Secretary of the Treasury or the furnishing of such
documents to the participants or beneficiaries of the Plans.
(h) To the knowledge of the Company, there are no pending actions,
claims or lawsuits which have been asserted or instituted against the Plans, the
assets of any of the trusts under such Plans or the plan sponsor or the plan
administrator, or against any fiduciary of the Plans with respect to the
operation of such Plans (other than routine benefit claims), nor does the
Company have knowledge of facts which could form the basis for any such claim or
lawsuit.
(i) All amendments and actions required to bring the Plans into
conformity in all material respects with all of the applicable provisions of
ERISA and other applicable laws have been made or taken except to the extent
that such amendments or actions are not required by law, regulation or order
pronounced by the IRS, to be made or taken until a date after the applicable
Closing Date.
(j) The Plans have been maintained, in all material respects, in
accordance with their terms and with all provisions of ERISA (including rules
and regulations thereunder) and other applicable Federal and state law, and the
Company or "party in interest" or "disqualified person" with respect to the
Plans has engaged in a "prohibited transaction" within the meaning of Section
4975 of the IRC or Section 406 of ERISA.
(k) Neither the Company nor any ERISA Affiliate has terminated any
Pension Plan subject to Title IV, or incurred any outstanding liability under
Section 4062 of ERISA to the PBGC, or to a trustee appointed under Section 4042
of ERISA.
(l) Neither the Company nor any ERISA Affiliate maintains retiree life
and retiree health insurance plans which are Welfare Plans and which provide for
continuing benefits or coverage for any participant or any beneficiary of a
participant except as may be required under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA"). The
-----
-22-
Company and each ERISA Affiliate which maintains a Welfare Plan has complied
with the notice and continuation requirements of COBRA and the regulations
thereunder in all material respects.
(m) Neither the Company nor any ERISA Affiliate has contributed or
been obligated to contribute to a Multiemployer Plan as of the applicable
Closing.
(n) Neither the Company nor any ERISA Affiliate has withdrawn in a
complete or partial withdrawal from any Multiemployer Plan prior to the
applicable Closing Date, nor has any of them incurred any liability due to the
termination or reorganization of a Multiemployer Plan.
Section 5.19 Registration Rights. Except as listed on Schedule 5.19
------------------- -------------
and except pursuant to the Registration Rights Agreement or as set forth in the
Annual Report, the Company is not under obligation to register any of its
securities pursuant to the Securities Act.
Section 5.20 Required Filings. As of the date hereof, the Company has
----------------
made all required filings under the Securities Act and Exchange Act and all
information contained in such filings are true and correct in all material
respects and do not contain any untrue information or omit to state a material
fact necessary to make any statements contained in such filings not misleading
in light of the circumstances under which they were made.
Section 5.21 Full Disclosure. No information contained in this
---------------
Agreement, any other Transaction Document (to the extent applicable), the
Financials or any written statement furnished by or on behalf of the Company
pursuant to the terms of this Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
contained herein or therein not misleading in light of the circumstances under
which they were made.
Section 5.22 Schedule 14C; Shareholder Approval. The Company shall
----------------------------------
upon receiving Shareholder Approval use its best efforts to prepare and file as
promptly as practicable with the SEC a Schedule 14C Information Statement (with
respect to Rule 4460(i) of the NASDAQ Stock Market, Inc.'s Marketplace Rules)
required under the Exchange Act and take all actions necessary to cause such
Schedule 14C Information Statement to become effective as promptly as
practicable (but in no event later than February 28, 2000).
Section 5.23 Schedule 14C; Reclassification. The Company has
------------------------------
prepared and filed with the SEC a Schedule 14C Information Statement with
respect to the Plan of Reclassification as required under the Securities
Exchange Act of 1934, and the Company shall take all actions necessary to cause
such Schedule 14C Information Statement to become effective as promptly as
practicable. Immediately upon such effectiveness, but in no event later than
October 18, 1999, the Company shall file the Plan of Reclassification and amend
its Second Certificate of Designation to redesignate the Convertible Preferred
into Series A Convertible Preferred.
-23-
Section 5.24 Schedule 14C; Increase of Authorized Shares. On or
-------------------------------------------
before the first Subsequent Closing to occur after the October 18, 1999
Subsequent Closing (the "Next Subsequent Closing"), the Company shall file with
-----------------------
the Secretary of State of the State of Delaware an amended Second Certificate of
Designation increasing the number of authorized shares of Series A Convertible
Preferred by an amount sufficient to allow for the purchase of the maximum
number of shares of Additional Purchased Securities that may be purchased at all
Subsequent Closings pursuant to Article III and such filing shall have become
-----------
effective. In connection with the foregoing, the Company shall prepare and file
with the SEC a Schedule 14C Information Statement, as required under the
Securities Exchange Act of 1934, with respect to such increase of authorized
shares of Series A Convertible Preferred. The Company shall take all actions
necessary to cause such Schedule 14C Information Statement to become effective
as promptly as practicable, but in no event later than the date of the first
Subsequent Closing after the October 18, 1999 Subsequent Closing.
Section 5.25 CIBC Credit Agreement. All of the representations and
---------------------
warranties contained in the CIBC Credit Agreement are true and correct as of the
date hereof and are hereby incorporated herein by reference.
Section 5.26 Use of Proceeds. The Company shall have made use of the
---------------
proceeds from the purchase of the Initial Purchased Securities for the limited
purpose of acquiring MPM pursuant to the Stock Purchase Agreement, dated as of
dated as of July 16, 1999, between the Company and MPM, and all representations
and warranties of the Company contained therein were true and correct as of the
date thereof and, to the knowledge of the Company, all other representations and
warranties contained therein are true and correct as of the date hereof, and all
such representations and warranties are hereby incorporated herein by reference.
ARTICLE VI
CONDITIONS PRECEDENT TO INITIAL CLOSING
Section 6.1 Conditions Precedent. The obligation of the Purchaser to
--------------------
purchase the Initial Purchased Securities pursuant to Section 2.2 hereof at the
-----------
Initial Closing was subject to the condition that the Purchaser shall receive
and the following shall have been delivered to the Purchaser on the Initial
Closing Date, each dated the Initial Closing Date unless otherwise indicated, in
form and substance satisfactory to the Purchaser, and the following actions
occurred on or before the Initial Closing Date, unless waived by the Purchaser:
(a) A favorable opinion of Morris, Manning & Martin, L.L.P. counsel to
the Company, substantially in the form attached hereto as Exhibit B.
---------
(b) Resolutions of the Board or an executive committee or special
finance committee of the Company, certified by the Secretary or Assistant
Secretary of the Company, as of the Initial Closing Date, to be duly adopted and
in full force and effect on such date, authorizing, in the case of the Board,
(i) the consummation of each of the transactions contemplated by this
-24-
Agreement and (ii) officers to execute and deliver this Agreement and each other
Transaction Document to which it is a party.
(c) A copy of governmental certificate, dated the most recent
practicable date prior to the Initial Closing Date, with telegram updates where
available, showing that the Company is organized and in good standing in the
State of Delaware and is qualified as a foreign corporation and in good standing
in all other jurisdictions in which it is qualified to transact business.
(d) A copy of the organizational charter and all amendments thereto of
the Company, certified as of a recent date by the Secretary of State of the
State of Delaware, as amended to reflect (i) the reduction in the number of
shares of Convertible Preferred authorized in the Original Certificate of
Designation from 2,000,000 shares to 309,998 shares of Convertible Preferred and
(ii) the filing of the Second Certificate of Designation (with respect to the
designation of the Series A Convertible Preferred). A copy of the Plan of
Reclassification, as approved by the Board and the shareholders of the Company
in accordance with Delaware General Corporation Law, shall be filed with the
Secretary of State of the State of Delaware after the filing of the Schedule 14C
referenced in Section 5.23 on or before October 18, 1999. Copies of the
------------
Company's by-laws, both certified by the Secretary or Assistant Secretary of the
Company as true and correct as of the Initial Closing Date were delivered to the
Purchaser.
(e) Certificates of the Secretary or an Assistant Secretary of the
Company, dated the Initial Closing Date, as to the incumbency and signatures of
the officers of the Company executing this Agreement, the Initial Purchased
Securities, each other Transaction Document to which it is a party and any other
certificate or other document to be delivered pursuant hereto or thereto,
together with evidence of the incumbency of such Secretary or Assistant
Secretary.
(f) A copy of all third party consents and approvals (including,
without limitation, the consent of LaSalle Bank National Association, to the
extent required) that are necessary for the consummation of the transactions
contemplated hereby or that are required in order to prevent a breach of or
default under, a termination or modification of, or acceleration of the terms
of, any contract, agreement or document required to be listed on the attached
Schedule 5.9 or the Annual Report, in each case on terms and conditions
- ------------
reasonably satisfactory to the Purchaser.
(g) A copy of all governmental and regulatory consents and approvals
that are necessary for the consummation of the transactions contemplated hereby,
in each case on terms and conditions satisfactory to the Purchaser.
(h) No suit, action or other proceeding shall be pending before any
court or governmental regulatory body or authority in which it is sought to
restrain or prohibit the transactions contemplated hereby, or that could have a
Material Adverse Effect, and no injunction, judgment, order, decree or ruling
with respect thereto shall be in effect.
-25-
(i) Since the December 31, 1998, there shall have been no material
adverse change or material adverse development in the business, financial
condition, business prospects, operating results, assets, operations or
customer, supplier or employee relations of the Company.
(j) The Company shall have delivered to the Purchaser a copy of the
fairness opinion (the "Fairness Opinion") relating to the transaction
----------------
contemplated herein from Texada Capital Corporation, which fairness opinion
shall indicate that the price for the Series A Convertible Preferred purchased
pursuant to Section 2.2 is fair to the Company and its stockholders (other than
-----------
as to the Purchaser).
(k) The Initial Purchased Securities shall have been delivered to the
Purchaser.
(l) The number of shares of Convertible Preferred authorized in the
Original Certificate of Designation shall have been reduced by duly authorized
Board action from 2,000,000 shares to 309,998 shares of Convertible Preferred
and the Second Certificate of Designation containing the terms of the Series A
Convertible Preferred and the Plan of Reclassification including the
reclassification of the Convertible Preferred into Series A Convertible
Preferred, shall have been duly adopted by Board action and filed with the
Secretary of the State of Delaware.
(m) WSP shall receive a fairness opinion from CIBC relating to the
transaction contemplated herein, which fairness opinion shall indicate that the
transactions herein are fair to Willis Stein & Partners, L.P. and its
affiliates.
ARTICLE VII
CONDITIONS PRECEDENT TO SUBSEQUENT CLOSING
Section 7.1 Conditions Precedent. The obligation of the Purchaser to
--------------------
purchase the Additional Purchased Securities at any Subsequent Closing pursuant
to Article III is subject to the condition that the Purchaser shall have
-----------
received and the following shall have been delivered to the Purchaser on each
Subsequent Closing Date, each dated as of such Subsequent Closing Date unless
otherwise indicated, in form and substance satisfactory to the Purchaser, and
the following actions shall occur on or before each Subsequent Closing Date,
unless waived in writing by the Purchaser:
(a) The representations and warranties of the Company contained in
Article V shall be true and correct in all material respects as if made on such
- ---------
Subsequent Closing Date.
(b) There shall not have occurred or be continuing any "Event of
Noncompliance" or "Special Event of Noncompliance" with respect to the Series A
Convertible Preferred, as such terms are defined in the Second Certificate of
Designation.
-26-
(c) If the proposed use of the funds is to consummate an acquisition,
then the Purchaser shall have completed its business, legal, accounting and
other due diligence investigation and evaluation of the Company and its
affiliates and shall be satisfied in its sole discretion with the result thereof
and with the documentation relating to such acquisition.
(d) If the proposed use of the funds is for working capital purposes,
then the Purchaser shall be satisfied in its sole discretion with the intended
use of funds.
(e) The Purchaser shall have received a favorable opinion of Morris,
Manning & Martin L.L.P., counsel to the Company, substantially in the form
attached hereto as Exhibit B.
---------
(f) Resolutions of the board of directors, executive committee or
special finance committee of the Company, certified by the Secretary or
Assistant Secretary of the Company, as of each Subsequent Closing Date, to be
duly adopted and in full force and effect on such date, authorizing the
consummation of each purchase of Additional Purchased Securities.
(g) A copy of governmental certificate, dated the most recent
practicable date prior to each Subsequent Closing Date, with telegram updates
where available, showing that the Company is organized and in good standing in
the State of Delaware and is qualified as a foreign corporation and in good
standing in all other jurisdictions in which it is qualified to transact
business.
(h) A copy of the organizational charter and all amendments thereto
of the Company, certified as of a recent date by the Secretary of State of the
State of Delaware, and copies of the Company's by-laws, certified by the
Secretary or Assistant Secretary of the Company as true and correct as of each
Subsequent Closing Date.
(i) Certificates of the Secretary or an Assistant Secretary of the
Company, dated as of Subsequent Closing Date, as to the incumbency and
signatures of the officers of the Company executing the purchase of the
Additional Purchased Securities and any other certificate or other document to
be delivered pursuant hereto or thereto, together with evidence of the
incumbency of such Secretary or Assistant Secretary.
(j) A copy of all third party consents and approvals (including,
without limitation, the consent of LaSalle Bank National Association and/or
CIBC, in each case only to the extent required) that are necessary for the
consummation of the transactions contemplated hereby, including but not limited
to the October 18, 1999 Subsequent Closing, or that are required in order to
prevent a breach of or default under, a termination or modification of, or
acceleration of the terms of, any contract, agreement or document, in each case
on terms and conditions reasonably satisfactory to the Purchaser.
-27-
(k) A copy of all governmental and regulatory consents and approvals
that are necessary for the consummation of the transactions contemplated hereby,
in each case on terms and conditions satisfactory to the Purchaser.
(l) No suit, action or other proceeding shall be pending before any
court or governmental regulatory body or authority in which it is sought to
restrain or prohibit the transactions contemplated hereby, or that could have a
Material Adverse Effect, and no injunction, judgment, order, decree or ruling
with respect thereto shall be in effect.
(m) Since the Initial Closing Date, there shall have been no material
adverse change or material adverse development in the business, financial
condition, business prospects, operating results, assets, operations or
customer, supplier or employee relations of the Company.
(n) The Company shall have delivered to the Purchaser a copy of an
additional fairness opinion from Texada Capital Corporation (the "Additional
----------
Fairness Opinion") relating to the transactions contemplated herein which
- ----------------
fairness opinion shall indicate that the aggregate $11,500,000 purchase price
payable for the purchase of all 766,667 minus shares of Additional Purchased
Securities which may be purchased from time to time pursuant to Article III is
-----------
fair to the stockholders of the Company (other than as to the Purchaser) and, at
the request of the Purchaser, the Company shall have delivered to the Purchaser
an updated Additional Fairness Opinion relating to the transactions contemplated
herein which such fairness opinion shall indicate that the purchase price for
the Additional Purchased Securities purchased at each Subsequent Closing is fair
to the stockholders of the Company (other than as to the Purchaser).
(o) Neither the Fairness Opinion nor the Additional Fairness Opinion
shall not have been withdrawn, revised or amended in any way.
(p) The Additional Purchased Securities shall be delivered to the
Purchaser.
(q) Prior to the first Subsequent Closing after the October 18, 1999
Subsequent Closing, (i) the Company shall have duly authorized an aggregate of
2,510,000 shares of Series A Convertible Preferred, to allow for the purchase of
the maximum number of shares of Additional Purchased Securities that may be
purchased at all Subsequent Closings pursuant to Article III, (ii) the Second
-----------
Certificate of Designation shall have been amended to reflect the increase in
authorized shares of Series A Convertible Preferred contemplated by Section 5.24
------------
and such amendment shall have become effective, (iii) the related Schedule 14C
Information Statement shall have been filed and shall have become effective in
accordance with Section 5.24, and (iv) the Company shall have duly authorized a
------------
sufficient number of shares of Common Stock to allow for the conversion of the
Additional Purchased Securities referenced in subsection (i) of this Section
-------
7.1(s) pursuant to terms and provisions listed in the Second Certificate of
- ------
Designation, as amended, restated or modified from time to time.
-28-
(r) For any Subsequent Closing occurring after February 28, 2000, the
Shareholder Approval Effective Date (as defined in the Second Certificate of
Designation) shall have occurred on or prior to February 28, 2000 in accordance
with Section 5.22.
------------
(s) The Company shall have filed the Plan of Reclassification with
the Secretary of State of the State of Delaware, and such filing shall have
become effective on or before October 18, 1999 in accordance with Section 5.23,
------------
and the Company shall have reduced the number of authorized shares of
Convertible Preferred to zero.
(t) There shall have been no material change in the Market Price (as
defined in the Second Certificate of Designation) of, or in the public market
for, the Common Stock or the public markets generally.
(u) A certificate of an officer of the Company, in form and substance
reasonably satisfactory to the Purchaser, dated as of the applicable Subsequent
Closing Date, stating that the applicable conditions specified in this Article
--------
VII have been fully satisfied.
- ---
(v) The Purchaser shall be satisfied that LaSalle Bank National
Association will provide additional funding to the Company under the LaSalle
Credit Agreement in accordance with Section 7.1(x) substantially simultaneously
--------------
with the purchase of Additional Purchased Securities to be purchased at the
applicable Subsequent Closing.
(w) Neither the Company nor any material Subsidiary shall have made
an assignment for the benefit of creditors; nor shall there be any order,
judgment or decree adjudicating the Company or any material Subsidiary bankrupt
or insolvent; nor shall there be any order for relief with respect to the
Company or any material Subsidiary entered under the Federal Bankruptcy Code;
nor shall the Company or any material Subsidiary have made petition or applied
to any tribunal for the appointment of a custodian, trustee, receiver or
liquidator of the Company or any material Subsidiary, nor shall there be any
proceeding (other than a proceeding for the voluntary liquidation and
dissolution of a Subsidiary) relating to the Company or any material Subsidiary
under any bankruptcy, reorganization, arrangement, insolvency, readjustment of
debt, dissolution or liquidation law of any jurisdiction filed or commenced for
which such petition, application or proceeding is not dismissed within 60 days.
This Agreement shall terminate upon the occurrence of any events set forth in
this Section 7.1(z).
--------------
(aa) The first anniversary of the Initial Purchased Securities
shall not have occurred.
(bb) Such other documents as the Purchaser may reasonably
request.
-29-
ARTICLE VIII
SECURITIES LAW MATTERS
Section 8.1 Legends.
-------
(a) Each certificate representing the Initial Purchased
Securities or the Additional Purchased Securities shall bear a legend
substantially in the following form:
"THE STOCK REPRESENTED BY THIS CERTIFICATE HAS BEEN ACQUIRED BY THE
HOLDER FOR ITS OWN ACCOUNT, FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO THE DISTRIBUTION OF SUCH STOCK. THE SHARES HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE
SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION THEREFROM."
Section 8.2 Transfer of Restricted Securities.
---------------------------------
(a) Restricted Securities are transferable only pursuant to
(i) public offerings registered under the Securities Act, (ii) Rule 144 or Rule
144A of the Securities and Exchange Commission (or any similar rule or rules
then in force) if such rule is available and (iii) subject to the conditions
specified in subparagraph (b) below, any other legally available means to
transfer.
(b) In connection with the transfer of any Restricted
Securities (other than a transfer described in clause (i) or (ii) of
subparagraph (a) above), the holder thereof shall deliver written notice to the
Company describing in reasonable detail the transfer or proposed transfer,
together with an opinion of counsel which (to the Company's reasonable
satisfaction) is knowledgeable in securities law matters to the effect that such
transfer of Restricted Securities may be effected without registration of such
Restricted Securities under the Securities Act. In addition, if the holder of
the Restricted Securities delivers to the Company an opinion of counsel that no
subsequent transfer of such Restricted Securities shall require registration
under the Securities Act, the Company shall promptly upon such contemplated
transfer deliver new certificates or instruments, as the case may be, for such
Restricted Securities which do not bear the Securities Act legend set forth in
Section 8.1 above. If the Company is not required to deliver new certificate
- -----------
or instruments, as the case may be, for such Restricted Securities not bearing
such legend, the holder thereof shall not transfer the same until the
prospective transferee has confirmed to the Company in writing its agreement to
be bound by the conditioned contained in this Section 8.2.
-----------
(c) Upon the request of a holder of Restricted Securities,
the Company shall promptly supply to such holder or such holder's prospective
transferees all information
-30-
regarding the Company required to be delivered in connection with a transfer
pursuant to Rule 144 or 144A of the Securities and Exchange Commission.
(d) If any Restricted Securities become eligible for sale
pursuant to Rule 144(k), the Company shall, upon the request of the holder of
such Restricted Securities, remove the legend set forth in Section 7.1 from the
-----------
certificates or instruments, as the case may be, representing such Restricted
Securities.
ARTICLE IX
EXPENSES
The Company shall pay all reasonable out-of-pocket expenses of (i) the
Purchaser in connection with the preparation, review or negotiation of the
Transaction Documents and the transactions contemplated thereby, including cost
incurred in connection with the Initial Closing and each Subsequent Closing,
(ii) stamp and other taxes which may be payable in respect of the execution and
delivery of this Agreement, the issuance and delivery of the Initial Purchased
Securities or the Additional Purchased Securities, and the issuance and delivery
of any Common Stock upon the conversion of the Series A Convertible Preferred
and (iii) the Purchaser or its managing member in connection with (A) any
amendment, modification or waiver, or consent with respect to, any of the
Transaction Documents, and (B) any attempt by the Purchaser or its managing
member to enforce any of its rights against the Company or any other Person
under or pursuant to of any of the Transaction Documents (including the
reasonable fees and expenses of all of its counsel and consultants retained in
connection with the Transaction Documents and the transactions contemplated
thereby).
ARTICLE X
LIMITATION ON CLAIMS OF THE PURCHASER
Section 10.1 Limitation.
----------
(a) The Purchaser shall not bring any action or claim against
the Company for damages for a breach of any representation, warranty or covenant
contained herein by the Company until such damages exceed $100,000 at which time
the Purchaser may bring an action for all claims.
(b) The Company shall not bring any action or claims against
the Purchaser for damages for a breach of any representation, warranty or
covenant contained herein by the Purchaser until such damages exceed $100,000,
at which time the Company may bring an action for all claims.
-31-
ARTICLE XI
MISCELLANEOUS
Section 11.1 Notices. Whenever it is provided herein that any notice,
-------
demand, request, consent, approval, declaration or other communication shall or
may be given to or served upon any of the parties by another, or whenever any of
the parties desires to give or serve upon another any such communication with
respect to this Agreement, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and either shall be
delivered in person with receipt acknowledged or by registered or certified
mail, return receipt requested, postage prepaid, or by telecopy and confirmed by
telecopy answerback addressed as follows:
If to the Purchaser:
U-C Holdings, L.L.C.
227 W. Monroe Street, Suite 4300
Chicago, Illinois 60606
Attn: Avy H. Stein
Daniel M. Gill
Telecopy No.: (312) 422-2424
with a copy to:
Kirkland & Ellis
200 E. Randolph Street
Chicago, Illinois 60601
Attn: Margaret A. Gibson, Esq.
Telecopy No.: (312) 861-2200
If to the Company:
College Television Network, Inc.
5784 Lake Forrest Drive
Suite 275
Atlanta, GA 30328
Attn: Jason Elkin
Telecopy No.: (404) 256-9168
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with copies to:
Morris, Manning & Martin, L.L.P.
3343 Peachtree Road, N.E.
1600 Atlanta Financial Center
Atlanta, Georgia 30326
Attn: Neil H. Dickson, Esq.
Telecopy No.: (404) 365-9532
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration or other communication hereunder shall be deemed
to have been duly given or served on the date on which personally delivered,
with receipt acknowledged, telecopied and confirmed by telecopy answerback, or
three (3) Business Days after the same shall have been deposited with the United
States mail.
Section 11.2 Binding Effect: Benefits. Except as otherwise provided
------------------------
herein, this Agreement shall be binding upon and inure to the benefit of the
parties to this Agreement and their respective successors and permitted assigns.
Nothing in this Agreement, express or implied, is intended or shall be construed
to give any person other than the parties to this Agreement or their respective
successors or assigns any legal or equitable right, remedy or claim under or in
respect of any agreement or any provision contained herein.
Section 11.3 Amendment. No amendment or waiver of any provision of
---------
this Agreement or any other Transaction Document nor consent to any departure by
the Company therefrom, shall in any event be effective unless the same shall be
in writing and signed by the Company and the Purchaser, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given. No action taken pursuant to this Agreement, including,
without limitation, any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action, of compliance
with any representations, warranties, covenants or agreements contained herein.
The waiver by any party hereto of a breach of any provision of this Agreement
shall not operate or be construed as a waiver of any preceding or succeeding
breach and no failure by either party to exercise any right or privilege
hereunder shall be deemed a waiver of such party's rights or privileges
hereunder or shall be deemed a waiver of such party's rights to exercise the
same at any subsequent time or times hereunder.
Section 11.4 Successors and Assigns: Assignability. Neither this
-------------------------------------
Agreement nor any right, remedy, obligation or liability arising hereunder or by
reason hereof shall be assignable by the Company without the prior written
consent of the Purchaser. All covenants contained herein shall bind and inure
to the benefit of the parties hereto and their respective successors and assigns
(including any subsequent holder of any of the Initial Purchased Securities, the
Additional Purchased Securities or any Common Stock issuable upon exercise of
the Initial Purchased Securities or the Additional Purchased Securities).
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Section 11.5 Remedies. The Purchaser, in addition to being entitled
--------
to exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement. The Company
agrees that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach of the provisions of this Agreement and hereby
agrees to waive the defense in any action for specific performance that a remedy
at law would be adequate. In any action or proceeding brought to enforce any
provision of this Agreement or where any provision hereof is validly asserted as
a defense, the successful party shall be entitled to recover reasonable
attorneys' fees in addition to any other available remedy.
Section 11.6 Section and Other Headings. The section and other
--------------------------
headings contained in this Agreement are for reference purposes only and shall
not affect the meaning or interpretation of this Agreement.
Section 11.7 Severability. In the event that any one or more of the
------------
provisions contained in this Agreement shall be determined to be invalid,
illegal or unenforceable in any respect for any reason, the validity, legality
and enforceability of any such provision or provisions in every other respect
and the remaining provisions of this Agreement shall not be in any way impaired.
Section 11.8 Entire Agreement. This Agreement and the agreements and
----------------
documents referred to herein contain the entire agreement and understanding
between the parties with respect to the subject matter hereof and supersede all
prior agreements and understandings, whether written or oral, relating to such
subject matter in any way (including, without limitation, the Original Purchase
Agreement.
Section 11.9 Counterparts. This Agreement may be executed in any
------------
number of counterparts, each of which shall be deemed to be an original and all
of which together shall be deemed to be one and the same instrument.
Section 11.10 Publicity. Neither the Purchaser nor the Company shall
---------
issue any press release or make any public disclosure regarding the transactions
contemplated hereby unless such press release or public disclosure is approved
by the other party in advance. Notwithstanding the foregoing, each of the
parties hereto may, in documents required to be filed by it with the SEC or
other regulatory bodies, make such statements with respect to the transactions
contemplated hereby as each may be advised by counsel is legally necessary or
advisable, and may make such disclosure as it is advised by its counsel is
required by law.
Section 11.11 Governing Law. This Agreement shall be governed by,
-------------
construed and enforced in accordance with, the laws of the Delaware without
regard to the principles thereof relating to conflict of laws. Service of
process on the parties in any action arising out of or relating to this
Agreement shall be effective if mailed to the parties in accordance with Section
-------
11.1 hereof. The parties hereto waive all right to trial by jury in any action
- ----
or proceeding to enforce or defend any rights under this Agreement.
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Section 11.12 No Strict Construction. The language used in this
----------------------
Agreement shall be deemed to be the language chosen by the parties hereto to
express their mutual intent, and no rule of strict construction shall be applied
against any party.
* * * * *
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IN WITNESS WHEREOF, the Company and the Purchaser has executed this
Agreement as of the day and year first above written.
COLLEGE TELEVISION NETWORK, INC.
By: /s/ Jason Elkin
-----------------------
Its: Chief Executive Officer
-----------------------
U-C HOLDINGS, L.L.C.
By: WILLIS STEIN & PARTNERS, L.P.
Its: Managing Member
By: Willis Stein & Partners, L.L.C.
Its: General Partner
By: /s/ Daniel M. Gill
------------------
Daniel M. Gill
Its: Managing Director
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