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EXHIBIT 4.28
SECURITIES PURCHASE AGREEMENT
AMONG
TEAM COMMUNICATIONS GROUP, INC.,
AND
VMR LUXEMBOURG S.A.
DATED AS OF JULY 26, 1999
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TABLE OF CONTENTS
PAGE
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ARTICLE I PURCHASE AND SALE OF THE SECURITIES...........................................................................1
1.1 Purchase and Sale.......................................................................................................1
ARTICLE II REPRESENTATIONS AND WARRANTIES................................................................................2
2.1 Representations, Warranties and Agreements of the Company...............................................................2
2.2 Representations and Warranties of the Purchaser.........................................................................8
ARTICLE III OTHER AGREEMENTS OF THE PARTIES...............................................................................9
3.1 Transfer Restrictions...................................................................................................9
3.2 Stop Transfer Orders; Suspension of Qualification......................................................................10
3.3 Furnishing of Information..............................................................................................10
3.4 Blue Sky Laws..........................................................................................................11
3.5 Integration............................................................................................................11
3.6 Certain Agreements.....................................................................................................11
3.7 Listing and Reservation of Underlying Shares; Compliance with Law......................................................11
3.8 Notice of Breaches.....................................................................................................12
3.9 Conversion Obligations of the Company..................................................................................12
3.10 Use of Proceeds........................................................................................................12
3.11 Indemnification........................................................................................................12
3.12 Subsequent Sales and Registrations.....................................................................................14
3.13 Incorporation of the Debentures By Reference...........................................................................14
3.14 Prohibition Against Certain Securities Issuances.......................................................................14
ARTICLE IV CONDITIONS...................................................................................................15
4.1 Conditions Precedent to Sale of the Securities.........................................................................15
ARTICLE V MISCELLANEOUS................................................................................................17
5.1 Fees and Expenses......................................................................................................17
5.2 Entire Agreement; Amendments...........................................................................................17
5.3 Notices................................................................................................................18
5.4 Amendments; Waivers....................................................................................................18
5.5 Headings...............................................................................................................18
5.6 Successors and Assigns.................................................................................................18
5.7 No Third Party Beneficiaries...........................................................................................19
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5.8 Governing Law..........................................................................................................19
5.9 Survival...............................................................................................................19
5.10 Execution..............................................................................................................19
5.11 Publicity..............................................................................................................19
5.12 Consent to Jurisdiction; Attorneys' Fees...............................................................................19
5.13 Waiver of Jury Trial...................................................................................................20
5.14 Severability...........................................................................................................20
5.15 Remedies...............................................................................................................21
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SCHEDULES AND EXHIBITS
Schedule 1 - Purchaser of Securities
Schedule 2.1(a) - Organization and Qualification; Subsidiaries
Schedule 2.1(c)(i) - Capitalization; Rights to Acquire Capital Stock
Schedule 2.1(c)(ii) - Notice with Respect to Listing
Schedule 2.1(f) - Consents and Approvals
Schedule 2.1(g) - Litigation; Proceedings
Schedule 2.1(r) - Registration Rights; Rights of Participation
Schedule 2.1(s) - Title
Schedule 2.1(y) - Year 2000 Compliance
Schedule 3.10 - Use of Proceeds
Exhibit A - Debentures
Exhibit B - Registration Rights Agreement
Exhibit C - Transfer Agents Instructions
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SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of
July 26, 1999, among Team Communications Group, Inc., a California corporation
(the "Company"), and VMR Luxembourg S.A., Chateau Woltz, 34 Rue Neuve, Remich,
L5560 Luxembourg, referred to herein as the "Purchaser."
WHEREAS, subject to the terms and conditions set forth in this
Agreement, the Company desires to issue and sell to the Purchaser, and the
Purchaser desires to acquire from the Company, up to $1,200,000 aggregate
principal amount of 12% Convertible Debentures due November 30, 1999 of the
Company (the "Debentures") convertible into shares (the "Underlying Shares") of
common stock, no par value per share, of the Company (the "Common Stock"). The
Debentures and the Underlying Shares are referred to herein as the "Securities."
NOW THEREFORE, in consideration of the mutual covenants contained
in this Agreement, the Company and the Purchaser agree as follows:
ARTICLE I
PURCHASE AND SALE OF THE SECURITIES
1.1 Purchase and Sale.
(a) Subject to the terms and conditions hereof and in
reliance on the representations and warranties contained herein, the Company
shall issue and sell to the Purchaser, and the Purchaser shall purchase from the
Company (i) up to an aggregate principal amount of $1,200,000 of Debentures.
(b) The Debentures shall be substantially in the form
annexed hereto as Exhibit A.
1.2 The Closing.
(i) The closing of the purchase and sale of the
Securities (as defined below) (the "Closing") shall take place at the
offices of Freshman, Marantz, Orlanski, Cooper & Klein, 9100 Wilshire
Boulevard, 8th Floor, East Tower, Beverly Hills, CA 90212, immediately
following the execution hereof or such later date or different location
as the parties shall agree in writing, but not prior to the date that
the conditions set forth in Section 4.1 have been satisfied or waived by
the appropriate party. The date of the Closing is hereinafter referred
to as the "Closing Date." At the Closing, the Company shall sell and
issue to the Purchaser, and the Purchaser shall purchase from the
Company, an aggregate principal amount of $1,200,000 of Debentures for
an aggregate purchase price of $1,200,000 (the "Purchase Price").
(ii) At the Closing (a) the Company shall deliver
to the Purchaser (1) Debentures (in definitive form) in the
denominations specified on Schedule 1 attached hereto, each registered
in the name of such Purchaser, and (2) all other documents,
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instruments and writings required to have been delivered at or prior to
the Closing by the Company pursuant to this Agreement and the
Registration Rights Agreement, dated the date hereof, by and among the
Company and the Purchaser, in the form of Exhibit B annexed hereto (the
"Registration Rights Agreement"), and (b) the Purchaser shall deliver to
the Company the Purchase Price set forth next to its name on Schedule 1,
in United States dollars in immediately available funds by wire transfer
to an account designated in writing by the Company for such purpose on
or prior to the Closing Date, and all documents, instruments and
writings required to have been delivered at or prior to the Closing by
the Purchaser pursuant to this Agreement and the Registration Rights
Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations, Warranties and Agreements of the Company.
The Company hereby makes the following representations and warranties to the
Purchaser:
(a) Organization and Qualification; Subsidiaries. The
Company is a corporation, duly organized, validly existing and in good standing
under the laws of the State of California, with the requisite corporate power
and authority to own and use its properties and assets and to carry on its
business as currently conducted. The Company has no subsidiaries other than as
set forth in Schedule 2.1(a) (collectively, the "Subsidiaries"). Each of the
Subsidiaries is a corporation, duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
(as applicable), with the full corporate power and authority to own and use its
properties and assets and to carry on its business as currently conducted. Each
of the Company and the Subsidiaries is duly qualified to do business and is in
good standing as a foreign corporation in each jurisdiction in which the nature
of the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as
the case may be, would not, individually or in the aggregate, (x) adversely
affect the legality, validity or enforceability of the Debentures or any of the
other Transaction Documents (as defined below), (y) have or result in a material
adverse effect on the results of operations, assets, prospects (insofar as such
prospects may reasonably be foreseen) or financial condition of the Company and
the Subsidiaries, taken as a whole or (z) adversely impair the Company's ability
to perform fully on a timely basis its obligations under any Transaction
Document, including, without limitation, the Company's obligations under Section
3.7 hereof (any of (x), (y) or (z), being a "Material Adverse Effect").
(b) Authorization; Enforcement. The Company has the
requisite corporate power and authority to enter into and to consummate the
transactions contemplated by this Agreement and the other Transaction Documents,
and otherwise to carry out its obligations hereunder and thereunder. This
Agreement, the Registration Rights Agreement and the Debentures and the Security
Agreement (as defined below) are collectively referred to as the "Transaction
Documents." The execution and delivery of each of the Transaction Documents by
the Company and the consummation by it of the transactions contemplated hereby
and thereby have been duly authorized by all necessary action on the part of the
Company and no further action is required by the Company. Each of the
Transaction Documents has been duly executed by the Company and when delivered
in accordance with the terms hereof will constitute the legal, valid and binding
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obligation of the Company, enforceable against the Company in accordance with
its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally the enforcement of, creditors' rights and
remedies or by other equitable principles of general application. Neither the
Company nor any Subsidiary is in violation of any of the provisions of its
respective articles of incorporation, bylaws or other organizational documents.
(c) Capitalization; Rights to Acquire Capital Stock. On
the date hereof, the authorized capital of the Company consists of (i)
18,000,000 shares of Common Stock, no par value, of which [________] are issued
and outstanding and (ii) 2,000,000 shares of preferred stock, no par value, none
of which have been issued. Schedule 2.1(c)(i) hereto sets forth the options,
warrants and convertible securities of the Company (the "Derivative Securities")
which are outstanding on the date hereof, including in each case (i) the name
and class of such Derivative Securities, (ii) the issue date of such Derivative
Securities, (iii) the number of shares of Common Stock of the Company into which
such Derivative Securities are convertible as of the date hereof, (iv) the
conversion or exercise price or prices of such Derivative Securities as of the
date hereof and (v) the expiration date of any conversion or exercise rights
held by the owners of such Derivative Securities. All issued and outstanding
shares of capital stock of the Company and each Subsidiary have been duly
authorized and validly issued and are fully paid and non-assessable. No shares
of the capital stock of the Company are entitled to preemptive or similar
rights, nor is any holder of the capital stock of the Company entitled to
preemptive or similar rights arising out of any agreement or understanding with
the Company by virtue of any of the Transaction Documents. To the best knowledge
of the Company, no Person or group of related Persons beneficially owns (as
determined pursuant to Rule 13d-3 promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) or has the right to acquire by
agreement with or by obligation binding upon the Company beneficial ownership of
in excess of 5% of the Common Stock. A "Person" means an individual or
corporation, partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company, government (or an
agency or subdivision thereof) or other entity of any kind. The Common Stock is
quoted and is listed for trading on The Nasdaq Small-Cap Market. Except as
described on Schedule 2.1(c)(ii), the Company has received no notice, either
oral or written, with respect to the continued eligibility of the Common Stock
for such listing, and the Company has maintained all requirements for the
continuation of such listing. After giving effect to the transactions
contemplated in this Agreement, the Company believes that it is in compliance
with all such maintenance requirements.
(d) Issuance of Securities. The Debentures have been duly
authorized for issuance, and when duly executed and delivered by the Company in
accordance with this Agreement, shall constitute legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally the enforcement of, creditors' rights and
remedies or by other equitable principles of general application. The Company
has and, at the Closing Date will have and at all times while the Debentures are
outstanding will maintain an adequate reserve of duly authorized shares of
Common Stock as may be necessary to effect conversion of the Debentures. The
shares of Common Stock issuable upon conversion of the Debentures are referred
to herein as the "Underlying Shares." When issued in accordance with the
Debentures, the Underlying Shares will be duly authorized, validly issued, fully
paid and nonassessable, free and clear of all liens.
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(e) No Conflicts. The execution, delivery and performance
of this Agreement and the other Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby
do not and will not (i) conflict with or violate any provision of its articles
of incorporation, bylaws or other organizational documents (each as amended
through the date hereof) or (ii) subject to obtaining the consents referred to
in Section 2.1(e), conflict with, or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
any agreement, indenture or instrument (evidencing a Company debt or otherwise)
to which the Company is a party or by which any property or asset of the Company
is bound or affected, (iii) result in a violation of any law, rule, regulation,
order, judgment, injunction, decree or other restriction of any court or
governmental authority to which the Company is subject (including Federal and
state securities laws and regulations), or by which any material property or
asset of the Company is bound or affected, or (iv) except as set forth in the
Security Agreement, result in the creation of imposition of a Lien upon any of
the Securities or any of the assets of the Company, or any of its Affiliates (as
such term is defined under Rule 405 promulgated under the Securities Act of
1933, as amended (the "Securities Act")), except in the case of each of clauses
(ii) and (iii), such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not, individually or in the
aggregate, have or result in a Material Adverse Effect. The business of the
Company is not being conducted in violation of any law, ordinance or regulation
of any governmental authority except for any such violation as would not,
individually or in the aggregate, have or result in a Material Adverse Effect.
(f) Consents and Approvals. Except as specifically set
forth in Schedule 2.1(f), neither the Company nor any Subsidiary is required to
obtain any consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal, state, local
or other governmental authority or other Person in connection with the
execution, delivery and performance by the Company of the Transaction Documents,
other than (i) the filing of the Registration Statement with the Commission,
which shall be filed in accordance with and in the time periods set forth in the
Registration Rights Agreement, (ii) the application(s) or any letter(s)
acceptable to The Nasdaq Small-Cap Market for the listing of the Underlying
Shares with The Nasdaq Small-Cap Market (and with any other national securities
exchange or market on which the Common Stock is then listed), (iv) any filings,
notices or registrations under applicable federal and state securities laws
(together with the consents, waivers, authorizations, orders, notices and
filings referred to in Schedule 2.1(f), the "Required Approvals"), and (v) any
filings required pursuant to the Security Agreement.
(g) Litigation; Proceedings. Except as specifically set
forth in Schedule 2.1(g), there is no action, suit, notice of violation,
proceeding or investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of the Subsidiaries
or Affiliates or any of their respective properties before or by any court,
governmental or administrative agency or regulatory authority (federal, state,
county, local or foreign) which (i) adversely affects or challenges the
legality, validity or enforceability of any of the Transaction Documents or the
Securities or (ii) could reasonably be expected to, individually or in the
aggregate, have a Material Adverse Effect.
(h) No Default or Violation. Except as set forth in
Schedule 2.1(h), neither the Company nor any Subsidiary (i) is in default under
or in violation of any indenture, loan or credit agreement or any other
agreement or instrument to which it is a party or by which it or any
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of its properties is bound which could reasonably be expected to, individually
or in the aggregate, have a Material Adverse Effect, (ii) is in violation of any
order of any court, arbitrator or governmental body applicable to it, or (iii)
is in violation of any statute, rule or regulation of any governmental authority
to which it is subject, which violation could reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect.
(i) Schedules. The Schedules to this Agreement furnished
by or on behalf of the Company do not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements made therein not misleading.
(j) Private Offering. The Company and to the best of the
Company's knowledge, all Persons acting on its behalf have not made, and will
not make, offers or sales of the Debentures and any securities that might be
integrated with offers and sales of the Debentures and the Warrants, except to
"accredited investors" (as defined in Regulation D ("Regulation D") under the
Securities Act) without any general solicitation or advertising and otherwise in
compliance with the conditions of Regulation D. The offer and sale by the
Company to the Purchasers of the Debentures and the Underlying Shares, as the
case may be, is exempt from the registration requirements of the Securities Act.
(k) SEC Documents; Financial Statements; No Adverse
Change. The Company has filed all reports required to be filed by it under the
Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, (the
foregoing materials being collectively referred to herein as the "SEC
Documents") on a timely basis or received a valid extension of such time of
filing and has filed any such SEC Documents prior to the expiration of any such
extension. As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Exchange Act and the rules and
regulations of the Commission promulgated thereunder, and none of the SEC
Documents, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading. All material agreements to
which the Company is a party or to which the property or assets of the Company
are subject have been filed as exhibits to the SEC Documents as required;
neither the Company nor any of the Subsidiaries is in breach of any agreement
where such breach could reasonably be expected to, individually or in the
aggregate, have a Material Adverse Effect. The financial statements of the
Company included in the SEC Documents comply in all material respects with
applicable accounting requirements and the rules and regulations of the
Commission with respect thereto as in effect at the time of filing. Such
financial statements have been prepared in accordance with United States
generally accepted accounting principles applied on a consistent basis during
the periods involved, except as may be otherwise specified in such financial
statements or the notes thereto, and fairly present in all material respects the
financial position of the Company as of and for the dates thereof and the
results of operations and cash flows for the periods then ended, subject, in the
case of unaudited statements, to normal year-end audit adjustments. Since the
date of the financial statements included in the Company's last filed Quarterly
Report on Form 10-Q for the period ended March 31, 1999, there has been no
event, occurrence or development that has had a or could reasonably be expected
to have a Material Adverse Effect which has not been specifically disclosed to
the Purchaser by the Company.
(l) Investment Company. The Company is not, and is not
controlled by or under common control with an affiliate of, an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
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(m) Certain Fees. No fees or commissions will be payable
by the Company to any broker, financial advisor, finder, investment banker, or
bank with respect to the transactions contemplated by this Agreement. The
Purchaser shall have no obligation with respect to any fees or with respect to
any claims made by or on behalf of other Persons for fees of a type contemplated
in this Section 2.1(m) that may be due in connection with the transactions
contemplated by this Agreement. The Company shall indemnify and hold harmless
each of the Purchaser, its employees, officers, directors, agents, and partners,
and its Affiliates, from and against all claims, losses, damages, costs
(including the costs of preparation and attorney's fees) and expenses suffered
in respect of any such claimed or existing fees.
(n) Solicitation Materials. The Company has not
distributed any offering materials in connection with the offering and sale of
the Securities. The Company confirms that it has not provided the Purchaser or
its agents or counsel with any information that constitutes or might constitute
material non-public information. The Company understands and confirms that the
Purchaser shall be relying on the foregoing representations in effecting
transactions in securities of the Company.
(o) Exclusivity. Other than as provided in Section 3.4
herein, the Company shall not issue and sell Debentures to any Person other than
the Purchaser pursuant to this Agreement other than with the prior written
consent of the Purchaser.
(p) Patents and Trademarks. The Company has sufficient
title and ownership of all patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, licenses and rights that
are necessary for use in connection with its business, as currently conducted
and as described in the SEC Documents, and such business does not and would not
conflict with or constitute an infringement on such rights of others.
(q) Acknowledgment of Dilution. The Company acknowledges
that the issuance of the Underlying Shares upon conversion of the Debentures may
result in dilution of the outstanding shares of Common Stock; which dilution may
be substantial under certain market conditions. The Company further acknowledges
that its obligation to issue the Underlying Shares upon conversion of the
Debentures is unconditional and absolute regardless of the effect of any such
dilution.
(r) Registration Rights; Rights of Participation. Except
as described on Schedule 2.1(r) hereto, (A) the Company has not granted or
agreed to grant to any Person any rights (including "piggyback" registration
rights) to have any securities of the Company registered with the Commission or
any other governmental authority which has not been satisfied and (B) no Person,
including, but not limited to, current or former shareholders of the Company,
underwriters, brokers or agents, has any right of first refusal, preemptive
right, right of participation, or any similar right to participate in the
transactions contemplated by this Agreement or any other Transaction Document.
(s) Title. Except as disclosed in Schedule 2.1(s), the
Company and the Subsidiaries have good and marketable title in fee simple to all
real property and personal property owned by them which is material to the
business of the Company or the Subsidiaries, in each case free and clear of all
liens, except for liens, claims or encumbrances that do not materially affect
the
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value of such property and do not interfere with the use made and proposed to be
made of such property by the Company or the Subsidiaries. Any real property and
facilities held under lease by the Company or the Subsidiaries are held by them
under valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of such
property and buildings by the Company or the Subsidiaries.
(t) Security. The Security Agreement of even date
hereunder between Company and Purchaser (the "Security Agreement") has been
executed by Company and all filings, recordings and other actions which are
necessary to establish, preserve and perfect a first priority security interest
on all of the existing and future assets of Company (except as expressly set
forth therein) shall have occurred and evidence, satisfactory in form and
substance to Purchaser's special counsel, that all required filings and
recordings have been made and liens have been created in favor of Purchaser,
shall have been delivered to Purchaser, including UCC-1 Financing Statements for
filing in California.
(u) Solvency. As of the date hereof and giving effect to
the making of the loan referenced herein, Company (i) has capital sufficient to
carry on its business and transactions and all business and transactions in
which it is about to engage and is able to pay its debts as they mature, (ii)
owns property having a value, both at fair valuation and at present fair
saleable value, greater than the amount required to pay its probable liabilities
(including contingencies), and (iii) does not believe that it will incur debts
or liabilities beyond its ability to pay such debts or liabilities as they
mature.
(v) Permits. The Company and the Subsidiaries possess all
franchises, certificates, licenses, authorizations and permits or similar
authority necessary to conduct their respective businesses as described in the
SEC Documents except where the failure to possess such permits would not,
individually or in the aggregate, have a Material Adverse Effect ("Material
Permits"), and neither the Company nor any such Subsidiary has received any
notice of proceedings relating to the revocation or modification of any Material
Permit.
(w) Employment Matters. The Company and each Subsidiary
is in compliance in all material respects with all presently applicable
provisions of the Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations thereunder ("ERISA"); no
"reportable event" (as defined in ERISA) has occurred with respect to any
"pension plan" (as defined in ERISA) for which the Company or any Subsidiary
would have any liability; neither the Company nor any Subsidiary has incurred
and expects to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (ii) Sections 412 or
4971 of the Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder (the "Code"); and each "pension plan"
for which the Company or any Subsidiary would have any liability that is
intended to be qualified under Section 401(a) of the Code is so qualified in all
material respects and nothing has occurred, whether by action or by failure to
act, which would cause the loss of such qualification.
(x) Insurance. The Company and each Subsidiary maintains
property and casualty, general liability, workers' compensation, environmental
hazard, personal injury and other similar types of insurance with financially
sound and reputable insurers that is adequate, consistent with industry
standards. Neither the Company nor any Subsidiary has received notice from, and
has any knowledge of any threat by, any insurer (that has issued any insurance
policy to the Company
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or any Subsidiary) that such insurer intends to deny coverage under or cancel,
discontinue or not renew any insurance policy presently in force.
(y) Taxes. All applicable tax returns required to be
filed by the Company and each of the Subsidiaries have been filed, or if not yet
filed have been granted extensions of the filing dates which extensions have not
expired, and all taxes, assessments, fees and other governmental charges upon
the Company, the Subsidiaries, or upon any of their respective properties,
income or franchises, shown in such returns and on assessments received by the
Company or the Subsidiaries to be due and payable have been paid, or adequate
reserves therefor have been set up if any of such taxes are being contested in
good faith; or if any of such tax returns have not been filed or if any such
taxes have not been paid or so reserved for, the failure to so file or to pay
would not in the aggregate or individually have a Material Adverse Effect.
(z) No Integrated Offering. Neither the Company, nor any
of its Affiliates, nor any Person acting on its or their behalf, has directly or
indirectly made any offers or sales in any security or solicited any offers to
buy any securities under circumstances that would cause the offering of the
Securities pursuant to this Agreement to be integrated with prior offerings by
the Company for purposes of the Securities Act or any applicable shareholder
approval provisions, including, without limitation, under the rules and
regulations of The Nasdaq Stock Market, as applicable. The Company has not
conducted any offering that will be integrated with the issuance of the
Securities solely for purpose of Rule 4460(i) of The Nasdaq Stock Market, Inc.'s
Marketplace Rules.
(aa) Year 2000 Compliance. The Company has initiated a
review and assessment of all areas within its and each Subsidiaries' business
and operations that could be adversely affected by the "Year 2000 Problem" (that
is, the risk that computer applications used by the Company or any of the
Subsidiaries may be unable to recognize and perform properly date-sensitive
functions involving certain dates prior to and any date after December 31,
1999). Based on the foregoing, except as set forth on Schedule 2.1(aa), the
Company believes that the computer applications that are currently material to
its or any Subsidiaries' business and operations are reasonably expected to be
able to perform properly date-sensitive functions for all dates before and after
January 1, 2000, except to the extent that a failure to do so would not
reasonably be expected to have a Material Adverse Effect. For the avoidance of
doubt, this Section 2.1(aa) applies only to the Company and the Subsidiaries.
(bb) Full Disclosure. The representations and warranties
of the Company set forth in this Agreement do not contain any untrue statement
of a material fact or omit any material fact necessary to make the statements
contained herein, in light of the circumstances under which they were made, not
misleading.
2.2 Representations and Warranties of the Purchaser. The
Purchaser hereby represents and warrants to the Company as follows:
(a) Investment Intent. The Purchaser is acquiring the
Securities for its own account for investment purposes only and not with a view
to or for distributing or reselling such Securities or any part thereof or
interest therein, without prejudice, however, to the Purchaser's right, at all
times to sell or otherwise dispose of all or any part of such Securities
pursuant to an effective registration statement under the Securities Act and in
compliance with applicable State securities
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laws or under an exemption from such registration subject to the provisions of
this Agreement and the Registration Rights Agreement.
(b) Purchaser Status. At the time the Purchaser was
offered the Securities, and at the Closing Date, (i) it was and will be, an
"accredited investor" (as defined in Regulation D), or (ii) the Purchaser either
alone or together with its representatives, had and will have such knowledge,
sophistication and experience in business and financial matters so as to be
capable of evaluating the merits and risks of the prospective investment in the
Securities, and had and will have so evaluated the merits and risks of such
investment. The Purchaser has the authority and is duly and legally qualified to
purchase and own the Securities.
(c) Ability of Purchaser to Bear Risk of Investment. The
Purchaser is able to bear the economic risk of an investment in the Securities
and, at the present time, is able to afford a complete loss of such investment.
(d) Reliance. The Purchaser understands and acknowledges
that (i) the Securities are being offered and sold to the Purchaser without
registration under the Securities Act in a private placement that is exempt from
the registration provisions of the Securities Act under Section 4(2) of the
Securities Act or Regulation D promulgated thereunder and (ii) the availability
of such exemption, depends in part on, and the Company will rely upon the
accuracy and truthfulness of, the foregoing representations and the Purchaser
hereby consents to such reliance.
The Company acknowledges and agrees that the Purchasers
make no representations or warranties with respect to the transactions
contemplated hereby or the other Transaction Documents other than those
specifically set forth in this Section 2.2.
ARTICLE III
OTHER AGREEMENTS OF THE PARTIES
3.1 Transfer Restrictions.
(a) If the Purchaser should decide to dispose of any
Debentures (and upon conversion thereof any of the Underlying Shares) held by
it, the Purchaser understands and agrees that it may do so only pursuant to an
effective registration statement under the Securities Act, to the Company or
pursuant to an available exemption from the registration requirements of the
Securities Act. In connection with any transfer of any Securities other than
pursuant to an effective registration statement or to the Company, the Company
may require the transferor thereof to provide to the Company a written opinion
of counsel, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require
registration of such transferred securities under the Securities Act.
Notwithstanding the foregoing, the Company hereby consents to and agrees to
register any transfer by the Purchaser to an Affiliate of the Purchaser or any
transfer among any such Affiliates, provided that transferee certifies in
writing to the Company that it is an "accredited investor" (as defined in
Regulation D). Any such transferee shall agree in writing to be bound by the
terms of this Agreement and shall have the rights of the Purchaser under this
Agreement and the Registration Rights Agreement.
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(b) The Purchaser agrees to the imprinting, so long as is
required by this Section 3.1(b), of the following legend on the Securities:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED WITH
THE SECURITIES AND EXCHANGE COMMISSION IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT.
The Underlying Shares issuable upon conversion of the Debentures
shall not contain the legend set forth above if such conversion or exercise
occurs at any time while the Registration Statement is effective under the
Securities Act or in the event there is not an effective Registration Statement
at such time, if in the written opinion of counsel to the Company (such opinion
to be furnished at the sole expenses of the Company at the request of the
Purchaser) such legend is not required under applicable requirements of the
Securities Act (including judicial interpretations and pronouncements issued by
the staff of the Commission). The Company agrees that it will provide the
Purchaser, upon request, with a certificate or certificates representing
Underlying Shares free from such legend at such time as such legend is no longer
required hereunder.
3.2 Stop Transfer Orders; Suspension of Qualification. The
Company may not make any notation on its records or give instructions to any
transfer agent of the Company which enlarge the restrictions of transfer set
forth in Section 3.1. The Company will advise the Purchaser, promptly after it
receives notice of issuance by the Commission, any state securities commission
or any other regulatory authority of any stop order or of any order preventing
or suspending the use of any offering of any securities of the Company, or of
the suspension of the qualification of the Common Stock for offering or sale in
any jurisdiction, or the initiation of any proceeding for any such purpose.
3.3 Furnishing of Information. As long as the Purchaser owns
Securities, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to Section
13(a) or 15(d) of the Exchange Act and to promptly furnish the Purchaser with
true and complete copies of all such filings. As long as the Purchaser owns
Securities, if the Company is not required to file reports pursuant to Section
13(a) or 15(d) of the Exchange Act, it will prepare and furnish to the Purchaser
and make publicly available in accordance with Rule 144(c) promulgated under the
Securities Act annual and quarterly financial statements, together with a
discussion and analysis of such financial statements in form and substance
substantially similar to those that would otherwise be required to be included
in reports required by Section 13(a) or 15(d) of the Exchange Act, as well as
any other information required thereby, in the time period that such filings
would have been required to have been made under the Exchange Act. The Company
further covenants that it will take such further action as any holder of
Securities may reasonably request, all to the extent required from time to time
to enable such Person to sell Underlying Shares without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144
promulgated under the Securities Act, including the legal opinion referenced
above in Section 3.1.
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Upon the request of any such Person, the Company shall deliver to such Person a
written certification of a duly authorized officer as to whether it has complied
with such requirements.
3.4 Blue Sky Laws. In accordance with the Registration Rights
Agreement, the Company shall qualify the Underlying Shares under the securities
or Blue Sky laws of such jurisdictions as the Purchaser may request and shall
continue such qualification at all times through the third anniversary of the
last Closing Date.
3.5 Integration. The Company shall not sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that would be integrated with the
offer or sale of the Securities in a manner that would require the registration
under the Securities Act of the sale of any or all of such securities to the
Purchaser.
3.6 Certain Agreements. As long as the Purchaser owns Debentures,
the Company shall not and shall cause the Subsidiaries not to, without the
consent of the holders of all of the Debentures then outstanding, (i) amend its
articles of incorporation, bylaws or other organizational documents so as to
adversely affect any rights of the Purchaser; (ii) declare, authorize, set aside
or pay any dividend or other distribution with respect to the Common Stock as
would adversely affect the rights of the Purchaser hereunder or under the
Debentures; (iii) repay, repurchase or offer to repay, repurchase or otherwise
acquire shares of its Common Stock in any manner; or (iv) enter into any
agreement with respect to any of the foregoing.
3.7 Listing and Reservation of Underlying Shares; Compliance
with Law.
(a) The Company shall (i) not later than the fifth
Business Day following the Closing Date prepare and file with The Nasdaq
Small-Cap Market (as well as any other national securities exchange or market on
which the Common Stock is then listed) an additional shares listing application
or a letter acceptable to The Nasdaq Small-Cap Market covering and listing a
sufficient number of shares of Common Stock to cover the maximum number of
Underlying Shares issuable, (ii) take all steps necessary to cause the
Underlying Shares to be approved for listing in The Nasdaq Small Cap Market (as
well as on any other national securities exchange or market on which the Common
Stock is then listed) as soon as possible thereafter, and (iii) provide to the
Purchaser evidence of such listing, and the Company shall maintain the listing
of its Common Stock on such market. As used herein, "Business Day" means any day
except Saturday, Sunday and any day which shall be a legal holiday or a day on
which banking institutions in the State of New York generally are authorized or
required by law or other government actions to close.
(b) The Company shall at all times have authorized and
reserved for issuance upon conversion of the Debentures a sufficient number of
shares of Common Stock to provided for the conversion of the Debentures.
(c) The Company shall notify the Commission and NASD, in
accordance with their requirements, of the transactions contemplated by this
Agreement, and shall take all other necessary action and proceedings as may be
required and permitted by applicable law, rule and regulation, for the legal and
valid issuance of the Securities to the Purchaser and promptly provide copies
thereof to the Purchaser.
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(d) Until at least two (2) years after the last of the
Debentures has been converted into Underlying Shares (i) the Company will cause
its Common Stock to continue to be registered under Sections 12(b) or 12(g) of
the Exchange Act, will comply in all respects with its reporting and filing
obligations under such Exchange Act, will comply with all requirements related
to any registration statement filed pursuant to this Agreement or the
Registration Rights Agreement and will not take any action or file any document
(whether or not permitted by the Securities Act or the Exchange Act or the rules
and regulations thereunder) to terminate or suspend such registration or to
terminate or suspend its reporting and filing obligations under the Securities
Act and Exchange Act, except as permitted herein and (ii) the Company will take
all action within its power to continue the listing or trading of its Common
Stock on The Nasdaq Small-Cap Market and will comply in all respects with the
Company's reporting, filing and other obligations under the bylaws or rules of
the NASD and The Nasdaq Stock Market.
3.8 Notice of Breaches.
(a) Each of the Company and the Purchaser shall give
prompt written notice to the other of any breach of any representation, warranty
or other agreement contained in this Agreement, the Debentures or the
Registration Rights Agreement, as well as any events or occurrences arising
after the date hereof and prior to any Closing Date, which would reasonably be
likely to cause any representation or warranty or other agreement of such party,
as the case may be, contained herein to be incorrect or breached as of such
Closing Date. However, no disclosure by any party pursuant to this Section 3.8
shall be deemed to cure any breach of any representation, warranty or other
agreement contained herein or in the Registration Rights Agreement.
(b) Notwithstanding the generality of Section 3.8(a), the
Company shall promptly notify the Purchaser of any notice or claim (written or
oral) that it receives from any lender of the Company to the effect that the
consummation of the transactions contemplated hereby, by the Debentures, and by
the Registration Rights Agreement violates or would violate any written
agreement or understanding between such lender and the Company, and the Company
shall promptly furnish by facsimile to the Purchaser a copy of any written
statement in support of or relating to such claim or notice.
3.9 Conversion Obligations of the Company. The Company covenants
to convert Debentures and to deliver the Underlying Shares in accordance with
the terms and conditions and within the time period set forth in the Debentures.
3.10 Use of Proceeds. The Company shall use the proceeds from the
sale of the Securities primarily to finance the Company's obligations to the
Discovery Channel (or its affiliates) with respect to the "Call of the Wild"
television series. Any remaining balance will be used for working capital and
general corporate purposes and not for the satisfaction of any portion of
Company borrowings outside the normal course of business, including, without
limitation, any obligation or liability of any kind whatsoever owed to a
shareholder, officer or director of the Company, or to redeem Company equity or
equity-equivalent securities. Pending application of the proceeds of this
placement in the manner permitted hereby, the Company will invest such proceeds
in interest bearing accounts and/or short-term, investment grade interest
bearing securities.
3.11 Indemnification. The Company also will indemnify and hold
the Purchaser harmless against any and all losses, claims, damages or
liabilities to any such Person (including,
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without limitation, in connection with any action, proceeding or investigation
brought by or against any such Person, including by shareholders of the Company)
in connection with or as a result of any matter referred to in this Transaction
Documents, including, without limitation, for any misrepresentation by the
Company, for breaches of representations and warranties contained in any of the
Transaction Documents, and for any breach, non-compliance or nonfulfillment by
the Company of any covenant, agreement or undertaking to be complied with or
performed by it contained in or pursuant to the Transaction Documents. If for
any reason the foregoing indemnification is unavailable to the Purchaser or is
insufficient to hold such Person harmless, then the Company shall contribute to
the amount paid or payable by the Purchaser as a result of such loss, claim,
damage or liability in such proportion as is appropriate to reflect the relative
economic interests of the Company and its shareholders on the one hand and the
Purchaser on the other hand in the matters contemplated by the Transaction
Documents as well as the relative fault of the Company and the Purchaser with
respect to such loss, claim, damage or liability and any other relevant
equitable considerations. The reimbursement, indemnity and contribution
obligations of the Company under this paragraph shall be in addition to any
liability which the Company may otherwise have, shall extend upon the same terms
and conditions to any affiliate of the Purchaser and the partners, directors,
agents, employees and controlling persons (if any), as the case may be, of the
Purchaser and any such affiliate, and shall be binding upon and inure to the
benefit of any successors, assigns, heirs and personal representatives of the
Company, the Purchaser, any such affiliate and any such Person. The Company also
agrees that neither the Purchaser nor any of such Affiliates, partners,
directors, agents, employees or controlling persons shall have any liability to
the Company or any Person asserting claims on behalf of or in right of the
Company in connection with or as a result of any matter referred to in this
Agreement except to the extent that any losses, claims, damages, liabilities or
expenses incurred by the Company result from the gross negligence or bad faith
of, or knowing breach of this Agreement by, the Purchaser. Promptly after
receipt by the Purchaser or any affiliate, partners, directors, agents,
employees and controlling persons, as the case may be, of notice of any claim or
other commencement of any action in respect of which indemnity may be sought,
such party will notify the Company in writing of the receipt or commencement
thereof and the Company shall have the right to assume the defense of such claim
or action (including the employment of counsel reasonably satisfactory to the
indemnified parties and the payment of fees and expenses of such counsel). The
indemnified party shall cooperate with the Company and the Company's counsel in
the defense of such claim or action. The Purchaser understands that the Company
shall not in connection with any one such claim or action or separate but
substantially similar related claims or actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys for all
of the indemnified parties unless the defense of one indemnified party is unique
or separate from that of another indemnified party or one or more legal defenses
are available to an indemnified party but not to other indemnified parties
subject to the same claim or action. In the event the Company does not promptly
assume the defense of a claim or action, the indemnified parties shall have the
right to employ counsel reasonably satisfactory to the Company, at the Company's
expense, to defend such claim or action. The indemnified party shall not admit
any liability with respect to the claim or action or settle, compromise, pay or
discharge the same without the prior written consent of the Company so long as
the Company is reasonably contesting or defending the same in good faith. The
Company shall not compromise, settle or discharge any claim or action without
the Purchaser's consent, as applicable, which consent will not be unreasonably
withheld, unless there is no finding or admission of any violation of any law
against the indemnified party and the sole relief is monetary damages paid in
full by the Company. The
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provisions of this Section 3.11 shall survive any termination or completion of
the Transaction Documents.
3.12 Subsequent Sales and Registrations.
(a) Until the later of (i) 180 days after the Closing
Date and (ii) 60 days after all Underlying Shares have been registered under the
Securities Act pursuant to an effective registration statement, the Company
shall not, directly or indirectly, without the prior written consent of the
Purchaser, offer, sell, grant any option to purchase, or otherwise dispose of
(or announce any offer, sale, grant of any option to purchase or other
disposition) any of its or its Affiliates' equity or equity-equivalent
securities or any instrument that permits the holder thereof to acquire Common
Stock at a price that is less than the market price of the Common Stock at the
time of issuance of such security or instrument and, if such security or
instrument contains a conversion feature, at a conversion price that is less
than the market price of the Common Stock at the time of issuance of such
security or instrument, except (i) the granting of options or warrants to
employees, officers and directors, and the issuance of shares upon exercise of
options granted, under any stock option plan heretofore or hereinafter duly
adopted by the Company (including any stock options plans which are restated
after the date hereof), (ii) shares issued upon exercise of any currently
outstanding warrants disclosed in Schedule 2.1(c)(i), and (iii) shares of Common
Stock issued upon conversion of Debentures.
(b) Other than Underlying Shares and other "Registrable
Securities" (as defined in the Registration Rights Agreement) to be registered
in accordance with the Registration Rights Agreement, the Company shall not, for
a period of not less than 90 Trading Days (as defined in the Debentures) after
the dates that any registration statement relating to the Securities is declared
effective by the Commission, without the prior written consent of the Purchaser,
register for resale any of its Affiliates' equity or equity-equivalent
securities, except for securities sold pursuant to the Company's employee
benefit plans. Any days that the Purchaser is unable to sell Underlying Shares
under the Registration Statement shall be added to such 90 Trading Day period
for the purposes of (i) and (ii) above.
3.13 Incorporation of the Debentures By Reference. The Debentures
are hereby incorporated herein by reference and made a part hereof.
3.14 Prohibition Against Certain Securities Issuances. Without
prior written consent of the Purchaser, which consent may not be unreasonably
withheld, the Company will not incur any additional indebtedness or issue any
shares of its common stock prior to the conversion of the Debentures; provided
however (i) with respect to stock issuances, the foregoing shall not affect (a)
the contemplated offering on the Neuer Market in Germany, (b) the issuance of
shares pursuant to the Company's stock option plan or other outstanding options
and warrants; and (c) the conversion of any existing debt into shares of common
stock at a price per share not less than average of the closing bid price of the
Company's Common Stock as quoted on the Nasdaq Small Cap Market for the five (5)
trading days prior to the date of issuance (and in connection therewith such
holders shall have the one-time right to have their shares registered in a
demand offering that does not interfere with this offering, (c) any production
financing indebtedness incurred in the ordinary course. All proceeds from any
issue of any debt or equity, other production financing or equity which is being
issued as a result of a previously-issued convertible security, shall be first
used to repay the principal amount of the Debentures, plus any accrued and
unpaid interest.
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ARTICLE IV
CONDITIONS
4.1 Conditions Precedent to Sale of the Securities.
(a) Conditions Precedent to the Obligation of the Company
to Sell the Securities. The obligation of the Company to sell the Securities
hereunder is subject to the satisfaction or waiver by the Company, at or before
the Closing, of each of the following conditions:
(i) Accuracy of the Purchaser's Representations
and Warranties. The representations and warranties of the Purchaser
shall be true and correct in all material respects as of the date when
made and as of the Closing Date, as though made on and as of such date;
(ii) Performance by the Purchaser. The Purchaser
shall have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by this Agreement
to be performed, satisfied or complied with by such Purchaser at or
prior to the Closing; and
(iii) No Injunction. No statute, rule, regulation,
executive order, decree, ruling or injunction shall have been enacted,
entered, promulgated or endorsed by any court or governmental authority
of competent jurisdiction which prohibits the consummation of any of the
transactions contemplated by this Agreement or the Registration Rights
Agreement.
(b) Conditions Precedent to the Obligation of the
Purchaser to Purchase the Securities. The obligation of each Purchaser hereunder
to acquire and pay for the Securities is subject to the satisfaction or waiver
by the Purchaser, at or before the Closing, of each of the following conditions:
(i) Accuracy of the Company's Representations and
Warranties. The representations and warranties of the Company set forth
in this Agreement and in the Registration Rights Agreement shall be true
and correct in all material respects as of the date when made and as of
the Closing Date as though made on and as of such date;
(ii) Performance by the Company. The Company shall
have performed, satisfied and complied with in all material respects all
covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Company at or prior to the
Closing;
(iii) No Injunction. No statute, rule,
regulation, executive order, decree, ruling or injunction shall have
been enacted, entered, promulgated or endorsed by any court or
governmental authority of competent jurisdiction which prohibits the
consummation of any of the transactions contemplated by this Agreement,
the Debentures or the Registration Rights Agreement;
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(iv) Adverse Changes. Since the date of the
financial statements included in the SEC Document last filed prior to
the date of this Agreement, no event which had a Material Adverse Effect
and no material adverse change in the financial condition of the Company
shall have occurred (for purposes hereof changes in the market price of
the Common Stock may be considered as a factor in determining whether
there has occurred an event which has had a Material Adverse Effect or
whether a material adverse change has occurred);
(v) No Suspensions of Trading in Common Stock. The
trading in the Common Stock shall not have been suspended by the
Commission or on The Nasdaq Small Cap Market which suspension shall
remain in effect;
(vi) Listing of Common Stock. The Company shall
have filed a listing application to list the Underlying Shares for
trading on The Nasdaq Small Cap Market;
(vii) Legal Opinion. The Company shall have
delivered to the Purchaser the opinion of Kelly Lytton Mintz & Vann LLP,
outside counsel to the Company, in substantially the form annexed hereto
as Exhibit C;
(viii) Required Approvals. All Required Approvals
shall have been obtained;
(ix) UCC-1. The Company shall deliver to Purchaser
an executed UCC-1 Financing Statement for filing with the Secretary of
State of California (and an additional executed UCC-1 Financing
Statement for filing with the County of Los Angeles, California, if
required), granting Purchaser with a first lien over all of the tangible
and intangible assets of the Company as security for repayment of the
Debenture. The Purchaser hereby consents to allow the Company to grant a
superior lien to future project finance lenders over those specific
properties which are the subject of that project finance, provided that
upon the satisfaction of such project finance lien, Purchaser's lien
will be extended to cover such properties.
(x) Shares of Common Stock. On or prior to the
Closing Date, the Company shall have duly reserved the number of
Underlying Shares required by the Transaction Documents to be reserved
for issuance upon conversion of the Debentures;
(xi) Delivery of Debentures. The Company shall
have delivered to the Purchaser or such Purchaser's designee, the
Debentures registered in the name of the Purchaser, each in form
satisfactory to the Purchaser;
(xii) Other Agreements. The Company shall have
executed and delivered the Registration Rights Agreement, the Debenture
and the Security Agreement, and shall have performed all obligations
required to be performed by it as of the Closing Date;
(xiii) Change of Control. No Change of Control
shall have occurred between the date hereof and the Closing Date.
"Change of Control" means the
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occurrence of any of (i) an acquisition after the date hereof by an
individual or legal entity or "group" (as described in Rule 13d5(b)(1)
promulgated under the Exchange Act) of in excess of 50% of the voting
securities of the Company, (ii) a replacement of more than one-half of
the members of the Board of Directors which is not approved by those
individuals who are members of the Board of Directors on the date hereof
in one or a series of related transactions, (iii) the merger of the
Company with or into another entity, consolidation or sale of all or
substantially all of the assets of the Company in one or a series of
related transactions or (iv) the execution by the Company of an
agreement to which the Company is a party or by which it is bound,
providing for any of the events set forth above in (i), (ii) or (iii);
(xiv) Transfer Agent Instructions. The Irrevocable
Transfer Agent Instructions, in the form of Exhibit D annexed hereto,
shall have been delivered to and acknowledged in writing by the
Company's transfer agent; and
(xv) Officer's Certificate. On the Closing Date
the Company shall deliver to the Purchaser an Officer's Certificate
dated the Closing Date and signed by an executive officer of the Company
confirming the accuracy of the Company's representations, warranties and
covenants as of such Closing Date and confirming the compliance by the
Company with the conditions precedent set forth in this Section 4.1 as
of the Closing Date.
ARTICLE V
MISCELLANEOUS
5.1 Fees and Expenses.
(a) Out of the proceeds hereto, the Company shall pay the
reasonable legal fees and expenses of Freshman, Marantz, Orlanski Cooper &
Klein, counsel for the Purchaser, incident to the negotiation, preparation,
execution, delivery and performance of this Agreement and the other Transaction
Documents, which legal fees shall not exceed $10,000 in connection with the
negotiation, preparation, execution and delivery of this Agreement and the other
Transaction Documents. The Company shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by the Company incident to the negotiation, preparation, execution,
delivery and performance of this Agreement and the other Transaction Documents.
The Company shall pay all stamp and other taxes and duties levied in connection
with the issuance of the Securities pursuant to the Transaction Documents.
(b) Out of the proceeds hereto, the Company shall pay
Value Management and Research, A.G. at the Closing a fee equal to 5.5% of the
aggregate principal amount of Debentures sold at such closing, of which 1.5%
shall be paid on behalf of Century City Securities, Inc. Value Management and
Research, A.G. is an intended third-party beneficiary of this Section 5.1(b).
5.2 Entire Agreement; Amendments. This Agreement, together with
the Exhibits and Schedules hereto and the other Transaction Documents, contain
the entire understanding of the
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parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, oral or written, with respect to such matters.
5.3 Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earlier of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified for notice prior to 5:00 p.m., Los Angeles
time, on a Business Day, (ii) the Business Day after the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile
telephone number specified for notice later than 5:00 p.m., Los Angeles time, on
any date and earlier than 11:59 p.m., Los Angeles time, on such date, (iii) the
Business Day following the date of mailing, if sent by nationally recognized
overnight courier service or (iv) actual receipt by the party to whom such
notice is required to be given. The addresses for such communications shall be
with respect to the Purchaser at its address set forth under its name on
Schedule 1 attached hereto, or with respect to the Company, addressed to:
Team Communications Group, Inc.
12300 Wilshire Boulevard, #400
Los Angeles, California 90025
Attention: Drew S. Levin
Telephone No.: (310) 442-3500
Facsimile No.: (310) 442-3501
or to such other address or addresses or facsimile number or numbers as any such
party may most recently have designated in writing to the other parties hereto
by such notice. Copies of notices to the Purchaser shall be sent to Freshman,
Marantz, Orlanski, Cooper & Klein, 9100 Wilshire Boulevard, 8th Floor, East
Tower, Beverly Hills, CA 90212, Attention: Thomas Poletti, Esq., Facsimile No.:
(310) 274-8357. Copies of notices to the Company shall be sent to Kelly Lytton
Mintz & Vann LLP, 1900 Avenue of the Stars, Suite 1450, Los Angeles, California
90067, Attention: Bruce Vann Esq., Facsimile No.: (310) 277-5953.
5.4 Amendments; Waivers. No provision of this Agreement may be
waived or amended except in a written instrument signed, in the case of an
amendment, by both the Company and the Purchaser; or, in the case of a waiver,
by the party against whom enforcement of any such waiver is sought. No waiver of
any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any other provision, condition or requirement hereof, nor shall any delay or
omission of either party to exercise any right hereunder in any manner impair
the exercise of any such right accruing to it thereafter. Notwithstanding the
foregoing, no such amendment shall be effective to the extent that it applies to
less than all of the holders of the Securities outstanding. The Company shall
not offer or pay any consideration to a Purchaser for consenting to such an
amendment or waiver unless the same consideration is offered to each Purchaser
and the same consideration is paid to the Purchaser which consents to such
amendment or waiver.
5.5 Headings. The headings herein are for convenience only, do
not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.
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5.6 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and permitted
assigns. The Company may not assign this Agreement or any rights or obligations
hereunder without the prior written consent of the Purchaser. The Purchaser may
assign this Agreement or any rights or obligations hereunder without the prior
written consent of the Company, except that any assignee must make the
representations and warranties set forth in Section 2.2 and otherwise comply
with the terms of this Agreement otherwise applicable to its assignor. This
provision shall not limit the Purchaser's right to transfer securities or
transfer or assign rights under the Registration Rights Agreement.
5.7 No Third Party Beneficiaries. This Agreement is intended for
the benefit of the parties hereto and Value Management Research, A.G. and their
respective permitted successors and assigns and is not for the benefit of, nor
may any provision hereof be enforced by, any other Person.
5.8 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of California,
without regard to the principles of conflicts of law thereof.
5.9 Survival. The agreements, covenants, representations,
warranties and provisions contained in this Agreement shall survive the delivery
of the Securities pursuant to this Agreement and the Closing hereunder and any
conversion of the Debentures.
5.10 Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that all
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
5.11 Publicity. The Company and the Purchaser shall consult with
each other in issuing any press releases or otherwise making public statements
with respect to the transactions contemplated hereby and neither party shall
issue any such press release or otherwise make any such public statement without
the prior written consent of the other, which consent shall not be unreasonably
withheld or delayed, except that no prior consent shall be required if such
disclosure is required by law, in which such case the disclosing party shall
provide the other Party with prior notice of such public statement. The Company
shall not publicly or otherwise disclose the names of the Purchaser without the
Purchaser's prior written consent unless otherwise required by law, in which
case the Company shall inform the Purchaser of such disclosure in writing prior
to making such disclosure.
5.12 Consent to Jurisdiction; Attorneys' Fees.
(a) The Company (including, but not limited to, its
affiliates, subsidiaries, officers, directors and controlling persons) and the
Purchaser hereby (i) irrevocably submits to the exclusive jurisdiction of any
California State court or Federal court sitting in the County of Los Angeles,
The City of Los Angeles in any action related to, connected with or arising out
of, in whole or in part, the Transaction Documents, including, but not limited
to, transactions in the securities of
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the Company subsequent to the purchase by the Purchaser or Persons claimed to be
affiliated with the Purchaser, (ii) agrees that all claims in such action shall
be decided in such court, (iii) waives, to the fullest extent it may effectively
do so, the defense of inconvenient forum and (iv) consents to the service of
process by certified mail, return receipt requested. Nothing herein shall affect
the right of any party to serve legal process in any manner permitted by law or
affect its right to bring any action in any other court.
(b) In connection with any dispute between the Company
and the Purchaser, related to, connected with or arising out of, in whole or in
part, the Transaction Documents including, but not limited to, transactions in
the securities of the Company subsequent to the purchase, by the Purchaser or
Persons claimed to be affiliated to a Purchaser, the prevailing party shall be
awarded all reasonable attorneys' fees and expenses incurred by it. In that
connection fees and expenses actually paid by a party in connection with the
litigation of any dispute shall be deemed presumably reasonable.
(c) In the event that the Purchaser or any Person claimed
to be affiliated or associated with the Purchaser becomes involved in any
capacity in any action, proceeding or investigation brought by or against any
Person, including shareholders of the Company, in connection with or as a result
of any matter referred to in the Transaction Documents, the Company will
reimburse the Purchaser and/or those claimed to be affiliated or associated with
the Purchaser for its legal fees and expenses and other expenses (including the
cost of any investigation and preparation) incurred in connection therewith, as
those fees and expenses are incurred; provided, however, that if at the
conclusion of such action, proceeding or investigation it shall be finally
judicially determined by a court of competent jurisdiction that indemnity for
such fees and expenses is contrary to law, or that the Purchaser is not the
prevailing party then in that event, the Purchaser and/or any other Person
having received such advances of fees and expenses shall reimburse the Company
in full for the sums advanced.
(d) The provisions of this Section 5.12 shall survive any
termination or completion of the Transaction Documents.
5.13 Waiver of Jury Trial.
(a) The parties hereto each waive their respective rights
to a trial by jury of any claim or cause of action based upon or arising out of
or related to the Transaction Documents, or the transactions contemplated by the
Transaction Documents, in any action, proceeding or other litigation of any type
brought by any of the parties against any other party or parties, whether with
respect to contract claims, tort claims, or otherwise. The parties hereto each
agree that any such claim or cause of action shall be tried by a court trial
without a jury. Without limiting the foregoing, the parties further agree that
their respective right to a trial by jury is waived by operation of this Section
5.13 as to any action, counterclaim or other proceeding which seeks, in whole or
in part, to challenge the validity or enforceability of any of the Transaction
Documents or any provision hereof or thereof. The waiver shall apply to any
subsequent amendments, renewals, supplements or modifications to any of the
Transaction Documents.
(b) The provisions of this Section 5.13 shall survive any
termination or completion of the Transaction Documents.
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5.14 Severability. If any term, provision, covenant or
restriction of this Agreement is held to be invalid, illegal, void or
unenforceable in any respect, the remainder of the terms, provisions, covenants
and restrictions set forth herein shall remain in full force and effect and
shall in no way be affected, impaired or invalidated, and the parties hereto
shall use their reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
5.15 Remedies. In addition to being entitled to exercise all
rights provided herein or granted by law, including recovery of damages, the
Purchaser will be entitled to specific performance of the obligations of the
Company under the Transaction Documents and injunctive relief. Each of the
Company and the Purchaser (severally and not jointly) agree that monetary
damages would not be adequate compensation for any loss incurred by reason of
any breach of its obligations described in the foregoing sentence and hereby
agrees to waive in any action for specific performance of any such obligation or
injunctive relief the defense that a remedy at law would be adequate.
IN WITNESS WHEREOF, the parties hereto have caused this
Securities Purchase Agreement to be duly executed by their respective authorized
persons as of the date first indicated above.
TEAM COMMUNICATIONS GROUP, INC.
By /s/ DREW S. LEVIN
--------------------------------------
Name: Drew S. Levin
---------------------------------
Title: CEO
--------------------------------
VMR LUXEMBOURG S.A.
By /s/ FLORIAN HOMM
--------------------------------------
Name: Florian Homm
---------------------------------
Title:
--------------------------------
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SCHEDULE 1
PRINCIPAL AMOUNT OF
DEBENTURES PURCHASED
NAME OF INVESTOR IN INITIAL CLOSING
- --------------------------------- --------------------------------
VMR Luxembourg S.A. $ 1,200,000
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