\nSecurities Act ss. 2.20
\nSeries B Shares ss. 1.1
\nShareholders’ Agreement ss. 2.2
\nShares ss. 1.1
\nStock Incentive Plan ss. 6.22(b)
\nStock Incentives ss. 2.2
\nSubsidiary ss. 2.1
\nTaxes ss. 2.16
\nVCOC ss. 6.17
\nWarrants ss. 1.1
\n<\/c><\/s><\/caption>\n<\/table>\n vi<\/p>\n
EXECUTION COPY<\/p>\n
SECURITIES PURCHASE AGREEMENT<\/p>\n
This Securities Purchase Agreement (this “Agreement”) is made as of this
\n25th day of February, 1998 by and between Interactive Imaginations, Inc., a New
\nYork corporation (the “Company”), and each of the persons identified on the
\nsignature pages hereto as an “Investor” (such persons collectively, the
\n“Investors”).<\/p>\n
THE PARTIES HEREBY AGREE AS FOLLOWS:<\/p>\n
1. Purchase and Sale of Preferred Shares and Warrants.<\/p>\n
1.1 Sale and Issuance. Subject to the terms and conditions of
\nthis Agreement, each Investor, severally and not jointly, agrees to purchase at
\nthe Closing (as hereinafter defined), and the Company agrees to sell and issue
\nto each Investor, severally and not jointly, the number of Series B Convertible
\nVoting Preferred Shares, par value $.01 per share (the “Series B Shares”), of
\nthe Company and the number of Class A Warrants and Class B Warrants set forth on
\nthe signature page hereto of such Investor, all at the aggregate purchase price
\nset forth on such signature page.<\/p>\n
The Series B Shares shall have the powers, rights, preferences
\nand privileges set forth in the Restated Certificate of Incorporation of the
\nCompany attached hereto as Exhibit A (the “Restated Certificate”). The Class A
\nand Class B Warrants shall be in the forms of warrant attached hereto as Exhibit
\nB-1 and B-2, respectively.<\/p>\n
The Series B Shares sold to the Investors pursuant to this
\nAgreement are sometimes hereinafter referred to as the “Shares”; the Class A
\nWarrants and Class B Warrants sold to the Investors pursuant to this Agreement
\nare sometimes hereinafter referred to as the “Warrants”; the common shares, par
\nvalue $0.01 per share, of the Company (the “Common Shares”) issuable upon
\nconversion of the Shares or exercise of the Warrants are sometimes hereinafter
\nreferred to as the “Conversion Shares”. The Shares, the Warrants and the
\nConversion Shares are sometimes hereinafter collectively referred to as the
\n“Securities”.<\/p>\n
1.2 Use of Proceeds From Investment. The proceeds from the sale
\nof the Shares and the Warrants will be used to conduct the business of the
\nCompany in accordance with the approved business plan (the “Business Plan”)
\nattached hereto as Exhibit C.<\/p>\n
1.3 Closing. The purchase and sale of the Securities shall take
\nplace at the offices of Proskauer Rose LLP, 1585 Broadway, New York, New York
\n10036, at 9:00 a.m., on February 25, 1998, or at such other time and place as
\nthe Company and the Investors purchasing a majority of the Securities mutually
\nagree (which time and place are designated as the “Closing”). At the Closing,
\nthe Company shall deliver to each Investor a certificate representing the Shares
\nto be purchased by such Investor, together with the Warrants to be purchased by
\nsuch Investor, in each case registered<\/p>\n
in the name of such Investor as it appears on the signature pages hereto against
\ndelivery to the Company by such Investor of a wire transfer in the amount of the
\naggregate purchase price therefor.<\/p>\n
2. Representations and Warranties of the Company. The Company (which,
\nfor purposes of this Article 2, includes 24\/7 Media, Inc., a Delaware
\ncorporation (the “Subsidiary”), except where the context clearly indicates
\notherwise) and the Subsidiary (which, for the purposes of this Article 2,
\nincludes 24\/7 Media, Inc., Petry Interactive, Inc., a Delaware corporation, and
\nAdvercomm, Inc., a Delaware corporation, including all of their respective
\nassets and liabilities, except where the context clearly indicates otherwise)
\njointly and severally hereby represent and warrant to, and agree with the
\nInvestors except as set forth on the Schedule of Exceptions furnished to the
\nInvestors and attached hereto as Schedule 1, specifically identifying the
\nrelevant subsection hereof with respect to which an exception is being made,
\nwhich exceptions shall be deemed to be representations and warranties as if made
\nhereunder, as follows:<\/p>\n
2.1 Organization, Good Standing and Qualification. The Company is
\na corporation duly organized, validly existing and in good standing under the
\nlaws of the State of New York. The Subsidiary is a corporation duly organized,
\nvalidly existing and in good standing under the laws of the State of Delaware.
\nThe Company and the Subsidiary each have all requisite power and authority to
\ncarry on their respective businesses as now conducted and as proposed to be
\nconducted. The Company and the Subsidiary each are duly qualified to transact
\nbusiness and are in good standing in each jurisdiction in which the failure so
\nto qualify can in the aggregate be eliminated without material cost or expense
\nby the Company or the Subsidiary. The Subsidiary is a newly formed corporation
\nwhich has not engaged in any business other than in connection with its
\norganization and the transactions contemplated by the Agreement and Plan of
\nMerger in connection with the Merger (as defined in Section 2.24). Annexed
\nhereto as Exhibit D, Exhibit E and Exhibit F, respectively, are true and
\ncomplete copies of the By-Laws of the Company, the Certificate of Incorporation
\nof the Subsidiary, and the By-Laws of the Subsidiary, each as amended through
\nthe date hereof.<\/p>\n
2.2 Capitalization. After giving effect to the transactions
\ncontemplated by this Agreement, including the Merger (as defined in Section
\n2.24), and immediately after the Closing, the capital stock of the Company, as
\nauthorized by the Restated Certificate, will consist of: (i) 100,000,000 Common
\nShares, of which 27,481,201 shares will be issued and outstanding, 10,060,002
\nshares will be reserved for issuance upon conversion of issued and outstanding
\nShares, 5,000,000 shares will be reserved for issuance upon exercise of issued
\nand outstanding Class A Warrants, 5,000,000 shares will be reserved for issuance
\nupon exercise of issued and outstanding Class B Warrants, 2,575,000 will be
\nreserved for issuance upon exercise of issued and outstanding Class C Warrants,
\n142,421 will be reserved for issuance upon exercise of issued and outstanding
\nunclassified warrants, 251,028 (subject to adjustment) will be reserved for
\nissuance upon exercise of issued and outstanding convertible debentures, and
\n5,750,000 shares will be reserved for issuance to key employees, officers and
\ndirectors of, and consultants to, the Company under stock incentives that have
\nbeen granted or are available for grant by the Company pursuant to the Stock
\nIncentive Plan (as defined in Section 6.22(b)) (collectively, the “Stock
\nIncentives”); and (ii) 30,000,000 preferred shares, of which none are
\noutstanding and of which 10,060,002 shares have been designated as Series B
\nShares, all of which are being issued to the Investors hereunder. The rights,<\/p>\n
2<\/p>\n
privileges and preferences of the Common Shares and Series B Shares are as
\nstated in the Restated Certificate. Except for the Stock Incentives specified
\nabove, the conversion rights of issued and outstanding Series B Shares, the
\nconversion rights of outstanding convertible debentures specified above, and the
\nexercise rights of issued and outstanding Class A, Class B, Class C Warrants and
\nunclassified warrants specified above, as of the Closing, the Company will not
\n(i) have outstanding any capital stock or other securities convertible into or
\nexchangeable for any shares of its capital stock and, except for the preemptive
\nrights contained in this Agreement, no Person will have any right to subscribe
\nfor or to purchase (including conversion or preemptive rights), or any Options
\nfor the purchase of, or any agreements providing for the issuance (contingent or
\notherwise) of, any calls, commitments or other claims of any character relating
\nto, any capital stock or any stock or securities convertible into or
\nexchangeable for any capital stock of the Company; (ii) have any capital stock,
\nequity interests or other securities reserved for issuance for any purpose; or
\n(iii) be subject to any obligation (contingent or otherwise) to repurchase or
\notherwise acquire or retire any shares of its capital stock or any convertible
\nsecurities, rights or options of the type described in the preceding clause (i).
\n“Option” with respect to any Person means any security, right, subscription,
\nwarrant, option, “phantom” stock right or other Contract that gives the right
\ndirectly or indirectly to (i) purchase or otherwise receive or be issued any
\nshares of capital stock of such Person or any security of any kind convertible
\ninto or exchangeable or exercisable for any shares of capital stock of such
\nPerson or (ii) receive or exercise any benefits or rights similar to any rights
\nenjoyed by or accruing to the holder of shares of capital stock of such Person,
\nincluding any rights to participate in the equity or income of such Person or to
\nparticipate in or direct the election of any directors or officers of such
\nPerson or the manner in which any shares of capital stock of such Person are
\nvoted. Neither this Agreement nor the transactions contemplated hereby or by the
\nMerger will cause any anti-dilution adjustment or accelerated vesting of any
\nOptions. All issued and outstanding Common Shares have been duly and validly
\nissued and subject to Section 630 of the New York Business Corporation Law, are
\nfully paid and nonassessable and were issued in accordance with the registration
\nor qualification provisions of the Securities Act and any applicable state
\nsecurities laws or pursuant to valid exemptions therefrom. All of the Series B
\nShares and Conversion Shares, when issued as contemplated hereby, will be
\nvalidly issued and, subject to Section 630 of the New York Business Corporation
\nLaw, fully paid and nonassessable and will be issued in accordance with the
\nregistration or qualification provisions of the Securities Act and any
\napplicable state securities laws or pursuant to valid exemptions therefrom. The
\ndelivery of a certificate or certificates at the Closing representing the Shares
\nand the Warrants in the manner provided in Section 1.3 will transfer to each
\nInvestor good and valid title to the Shares and the Warrants, respectively, free
\nand clear of all liens, pledges, assessments, leases, security interests,
\nclaims, encumbrances, or other restrictions of any kind (collectively, “Liens”).
\nTo the best knowledge of the Company, there are no agreements among the
\nCompany’s shareholders with respect to the voting or transfer of the Company’s
\ncapital stock, other than the agreements relating to transfer contained in the
\nShareholders’ Agreement in the form of Exhibit G attached hereto (the
\n“Shareholders’ Agreement”), and the Registration Rights Agreement in the form of
\nExhibit H attached hereto (the “Registration Rights Agreement”). Schedule 2
\nincludes a complete and correct list of the name of each of the Company’s
\ninvestors and shareholders and the number of shares of capital stock (and class
\nor series) owned by such Person, and the name of each holder of an outstanding
\nOption and the number of Options to purchase capital stock owned by such holder
\nand the exercise price at which, and the period during which, such Option(s) may
\nbe exercised and the vesting schedule thereof, if any. The authorized capital
\nstock<\/p>\n
3<\/p>\n
of the Subsidiary consists of 1,000 common shares, par value $.01 per share, of
\nwhich 100 are outstanding as of the date hereof. The Company owns, beneficially
\nand of record, all of the issued and outstanding shares of capital stock of the
\nSubsidiary, free and clear of all Liens. All of the issued and outstanding
\nshares of capital stock of the Subsidiary have been duly and validly issued and
\nare fully paid and nonassessable and were issued in accordance with the
\nregistration or qualification provisions of the Securities Act and any relevant
\nstate securities laws or pursuant to valid exemptions therefrom. There are no
\noutstanding Options with respect to the Subsidiary.<\/p>\n
2.3 Authority; Execution and Delivery; Requisite Consents,
\nNonviolation. The Company has, and as of the Closing will have, all requisite
\npower and authority to execute, deliver and perform this Agreement, the
\nShareholders’ Agreement, the Registration Rights Agreement, Restated
\nCertificate, Warrants, Securities and each other document or instrument executed
\nby it, or any of its officers, in connection herewith or therewith or pursuant
\nhereto or thereto (this Agreement, together with all of the foregoing documents
\nand instruments, are sometimes collectively referred to herein as the “Company
\nDocuments”), and to consummate the transactions contemplated hereby and thereby.
\nThe name of each officer and director of the Company and of the Subsidiary on
\nthe date hereof, and the position with the Company held by each, are listed on
\nPart 2.3 of Schedule 1 hereto. The execution, delivery and performance of this
\nAgreement and the other Company Documents and the consummation of the
\ntransactions contemplated hereby and thereby have been duly and validly
\nauthorized by all necessary action on the part of the Company and its
\nshareholders. This Agreement and each of the other Company Documents that has
\nbeen executed as of the date hereof is, and each of the Company Documents will
\nbe as of the Closing, duly and validly executed and delivered by the Company and
\nconstitute the legal, valid and binding obligation of the Company, enforceable
\nagainst the Company in accordance with its terms, except as the enforceability
\nthereof may be limited by bankruptcy, insolvency or other similar laws affecting
\nthe enforceability of creditors’ rights in general or by general principles of
\nequity. The execution, delivery and performance of this Agreement and the other
\nCompany Documents (including, without limitation, the Shareholders’ Agreement,
\nthe Registration Rights Agreement, the Restated Certificate and the Warrants),
\nthe consummation by the Company of the transactions contemplated hereby and
\nthereby (including, without limitation, the offer, sale and delivery by the
\nCompany of the Securities) will not (a) require the consent, license, permit,
\nwaiver, approval, authorization or other action of, by or with respect to, or
\nregistration, declaration or filing with, any court or governmental authority,
\ndepartment, commission, board, arbitrator, bureau, agency or instrumentality, or
\nother political subdivision, domestic or foreign (“Governmental Authority”) or
\nany other individual, partnership, corporation, unincorporated organization or
\nassociation, limited liability company, trust or other entity (collectively, a
\n“Person”); (b) violate or conflict with any provision of the Restated
\nCertificate, the Certificate of Incorporation or of the By-Laws of the Company
\nor Subsidiary as in effect immediately prior to and immediately after the
\nexecution and delivery of this Agreement; or (c) constitute a default under
\n(with or without notice or lapse of time or both), violate or conflict with,
\ngive rise to a right of termination, cancellation, acceleration or modification
\nunder or result in a loss of a material benefit under, any Law (as defined in
\nSection 2.15 below), Scheduled Contract (as defined in Section 2.9 below),
\nrights relating to Intellectual Property (as defined in Section 2.10 below),
\nPermit (as defined in Section 2.15 below) or Order (as defined in Section 2.14
\nbelow) to which the Company or the Subsidiary is a party or by which the Company
\nor its properties or the Subsidiary or its properties are bound or give to any
\nPerson any additional rights or entitlements to increased,<\/p>\n
4<\/p>\n
additional, accelerated or guaranteed payments under or result in creation or
\nimposition of any Lien upon the Company or the Subsidiary or any of its
\nrespective assets and properties.<\/p>\n
2.4 Subsidiaries.<\/p>\n
The Company does not, and prior to the Closing will not, own or
\ncontrol, directly or indirectly, any partnership interests, stock or other
\nequity interests in any partnership, corporation or other entity or Person or
\nany voting rights or right to control the policies and direction of any
\npartnership, corporation or other entity, other than the Subsidiary.<\/p>\n
2.5 Financial Information.<\/p>\n
(a) The Company has previously delivered to the Investors its
\nhistorical audited balance sheets as at December 31, 1996, and the historical
\naudited statements of income, shareholders’ equity and cash flows for the year
\nthen ended (collectively, the “Financial Statements”). Such Financial Statements
\nhave been prepared from the books and records of the Company and present fairly
\nthe financial position and the results of operations and cash flows of the
\nCompany as at and for the periods indicated, in each case in conformity with
\ngenerally accepted accounting principles (“GAAP”) consistently applied (except
\nas described in such statements or the notes thereto).<\/p>\n
(b) The Company has previously delivered to the Investors an
\nhistorical unaudited balance sheet of the Company as at December 31, 1997 and an
\nhistorical unaudited statement of income, shareholders’ equity and cash flows
\nfor the twelve-month period then ended (the “Interim Financial Statements”).
\nSuch Interim Financial Statements have been prepared from the books and records
\nof the Company and present fairly the financial position and the results of
\noperations of the Company as at and for the period indicated, in each case in
\nconformity with GAAP, subject to customary year or period end audit adjustments
\nand accruals and the absence of notes thereto, (except as previously noted)
\nconsistently applied.<\/p>\n
(c) The Company has previously delivered to the Investors
\nunaudited balance sheets as of December 31, 1997 and certain historical
\nstatements of operations regarding Petry Interactive, Inc. (“Petry”) and
\nAdvercomm, Inc. (“Advercomm”) (the “Other Financial Information”), attached
\nhereto as Exhibit N. Such Other Financial Information has been prepared from the
\nbooks and records of Petry and Advercomm, respectively, and present fairly the
\nfinancial position and the results of operations of Petry and Advercomm in each
\ncase in accordance with GAAP, subject to customary year or period end
\nadjustments and accruals and the absence of notes thereto, as at and for the
\nperiods indicated.<\/p>\n
(d) Except as disclosed in the Interim Financial Statements
\nor Other Financial Information, neither the Company nor the Subsidiary has any
\nliabilities or obligations, absolute or contingent, except (i) obligations and
\nliabilities incurred in the ordinary course of business, consistent with past
\npractice, since the date of the Interim Financial Statements or Other Financial
\nInformation, (ii) obligations which are not required to be reflected in the
\nFinancial Statements or such Interim Financial Statements and which would not be
\nrequired under GAAP to<\/p>\n
5<\/p>\n
be included in the notes to such Financial Statements, which individually and in
\nthe aggregate are not material to the financial condition or operating results
\nof the Company or the Subsidiary. Except as disclosed in the Interim Financial
\nStatements or Other Financial Information, the Company is not a guarantor or
\nindemnitor of any obligations of any Person (i) for borrowed money, (ii)
\nevidenced by notes, bonds, debentures or similar instruments, (iii) for the
\ndeferred purchase price of goods or services (other than trade payables or
\naccruals incurred in the ordinary course of business), (iv) under capital leases
\nand (v) in the nature of guarantees of the obligations described in clauses (i)
\nthrough (iv) (“Indebtedness”) of any other Person. The Company and the
\nSubsidiary maintain and will continue to maintain a standard system of
\naccounting established and administered in accordance with GAAP.<\/p>\n
(e) No representation is made hereunder with respect to any
\nforecasts, projections or forward looking information provided to the Investors
\nin connection with the Financial Statements, the Interim Financial Statements,
\nOther Financial Information or otherwise, except that the Company represents
\nthat any such forecasts, projections and forward looking information were
\nprepared in good faith and that the Company reasonably believes there is a
\nreasonable basis for such forecasts, projections and forward looking
\ninformation.<\/p>\n
2.6 Certain Changes or Events. Other than transactions entered
\ninto in connection with the Merger (as defined in Section 2.24), since December
\n31, 1996 the business of the Company has been operated only in the ordinary
\ncourse, consistent with past practice, and in addition to, and not in limitation
\nof the foregoing: (i) there has been no change in the Condition of the Company,
\nexcept for changes in the ordinary course of business consistent with past
\npractice which have not been, in the aggregate, materially adverse to the
\nCompany; (ii) there has been no revocation or change in any Contract or Permit
\nor right to do business, and, to the best knowledge of the Company, no change of
\nLaws which has resulted, or could reasonably be expected to result, in a
\nmaterial adverse change in the Condition of the Company; (iii) the Company has
\nnot authorized or made any distributions of, or declared or paid any dividends,
\nupon or with respect to any of the capital stock of the Company or the
\nSubsidiary, or other equity interests, nor has the Company redeemed, purchased
\nor otherwise acquired, or issued or sold, any of its capital stock or other
\nequity interests; (iv) the Company has not entered into any transaction with a
\nvalue in excess of $50,000 or other material transaction, other than in the
\nordinary course of business and consistent with past practice; (v) the Company
\nhas not incurred any Indebtedness for borrowed money or made any loans or
\nadvances to any Person except for convertible debentures incurred and
\nsubsequently converted to Common Shares of the Company on or prior to the date
\nhereof; (vi) there has been no waiver by the Company of a valuable right or of a
\nmaterial debt owed to it, including any right or Indebtedness with a value in
\nexcess of $50,000; (vii) the Company has not failed to satisfy or discharge any
\nLien (as defined in Section 2.7 below); (viii) there has not been any damage,
\ndestruction or loss, whether or not covered by insurance, materially and
\nadversely affecting the assets, properties, financial condition, operating
\nresults, prospects or business of the Company (as such business is presently
\nconducted and as it is proposed to be conducted); (ix) there has not been any
\nmaterial change in any compensation arrangement (including, without limitation,
\nbenefits) or agreement with any employee or consultant of the Company; (x) there
\nhas not been any sale, assignment or transfer of any patents, trademarks,
\ncopyrights, trade secrets or other intangible assets of the Company; (xi) there
\nhas not been any resignation or termination of employment of any key officer or
\nemployee or consultant of<\/p>\n
6<\/p>\n
the Company and the Company, to the best of its knowledge, does not know of the
\nimpending resignation or termination of employment of any such officer, employee
\nor consultant; (xii) there has been no receipt of notice that there has been a
\nloss of, or material order cancellation by, any major customer of the Company;
\n(xiii) there has been no mortgage, pledge or transfer of a security interest in,
\nor lien, created or suffered to exist by the Company with respect to any of its
\nmaterial properties or assets, except Liens for taxes not yet due or payable;
\n(xiv) there have been no loans or guarantees made by the Company to or for the
\nbenefit of its employees, officers or directors, or any members of their
\nimmediate families, other than travel advances and other advances made in the
\nordinary course of its business consistent with past practice; (xv) any change
\nin the accounting, pricing, inventory, credit, financial reporting or tax
\nmethods or procedures of the Company or Subsidiary or any other transaction
\ninvolving or development affecting the Company or Subsidiary outside the
\nordinary course of business consistent with past practice; and (xvi) there has
\nbeen no agreement or commitment by the Company to do or perform any of the acts
\ndescribed in this Section 2.6.<\/p>\n
2.7 Tangible Personal Property. The Company and the Subsidiary,
\nrespectively, are in possession of and have good and marketable title to or has
\nvalid leasehold interests in or valid rights under Contract to use, all tangible
\npersonal property used in the conduct of its business, including all tangible
\npersonal property reflected on the Financial Statements for the period ended
\nDecember 31, 1996, the Interim Financial Statements for the period ended
\nDecember 31, 1997 and Other Financial Information for the period ended December
\n31, 1997 and tangible personal property acquired since each such date other than
\nproperty disposed of since such date in the ordinary course of business
\nconsistent with past practice and the terms of this Agreement and the Company
\nDocuments. All such tangible personal property is free and clear of all Liens,
\nand is adequate and suitable for the conduct by the Company and the Subsidiary,
\nrespectively, of the business presently conducted and presently proposed to be
\nconducted by it, and is in good working order and condition, ordinary wear and
\ntear excepted, and its use complies in all material respects with all applicable
\nLaws.<\/p>\n
2.8 Real Property. (a) Part 2.8 of Schedule 1 contains a true and
\ncorrect list of (i) each parcel of real property leased by the Company or the
\nSubsidiary (as lessor or lessee) and (ii) all Liens relating to or affecting any
\nparcel of real property referred to in clause (i).<\/p>\n
(b) Neither the Company nor the Subsidiary owns any real
\n property.<\/p>\n
(c) The Company and the Subsidiary have a valid and subsisting
\n leasehold estate in and the right to quiet enjoyment of the real
\n properties leased by them, respectively, for the full term of the
\n lease thereof. Each lease referred to in clause (i) of paragraph (a)
\n above is a legal, valid and binding agreement, enforceable in
\n accordance with its terms, of the Company, of the Subsidiary and of
\n each other Person that is a party thereto, and except as set forth
\n in Part 2.8 of Schedule I hereto, there is no, and neither the
\n Company nor the Subsidiary has received notice of any, default (or
\n any condition or event which, after notice or lapse of time or both,
\n would constitute a default) thereunder. Neither the Company nor the
\n Subsidiary owes any brokerage commissions or finders fees with
\n respect to any such leased space.<\/p>\n
7<\/p>\n
(d) The Company and the Subsidiary have delivered to the
\n Investors prior to the execution of this Agreement true and complete
\n copies of all leases (including any amendments and renewal letters).<\/p>\n
(e) Except as disclosed in Part 2.8 of Schedule 1 hereto, the
\n improvements on the real property identified in Part 2.8 of Schedule
\n 1 hereto are in good operating condition and in a state of good
\n maintenance and repair, ordinary wear and tear excepted, are
\n adequate and suitable for the purposes for which they are presently
\n being used and, to the knowledge of the Company and the Subsidiary,
\n there are no condemnation or appropriation proceedings pending or
\n threatened against any of such real property or the improvements
\n thereon.<\/p>\n
2.9 Contracts. The Company and the Subsidiary are not a party to,
\nnor is the Company or the Subsidiary or any of their respective assets or
\nproperties bound by, or subject to, any contracts, agreements, notes,
\ninstruments, franchises, leases, licenses, commitments, arrangements or
\nunderstandings, written or oral (collectively, “Contracts”) of the following
\ntypes, except for those (the “Scheduled Contracts”) listed in Part 2.9 of
\nSchedule 1 hereto:<\/p>\n
(a) any Contracts pursuant to which the Company, the
\n Subsidiary, or another party thereto, is obligated to pay in excess of
\n fifty thousand dollars ($50,000);<\/p>\n
(b) any Contracts pursuant to which the Company or any
\n Subsidiary acquired the right to use any Intellectual Property or
\n information that is material to or necessary in the business of the
\n Company, or pursuant to which the Company has granted to others the
\n right to use, or which otherwise relates to, its Intellectual Property;<\/p>\n
(c) any Contracts (other than advances of expenses to
\n employees in the ordinary course of business) involving Indebtedness,
\n loans, loan agreements, debt securities, mortgages, deeds of trust,
\n security agreements, suretyships or guarantees;<\/p>\n
(d) any Contracts between the Company or any Subsidiary,
\n on the one hand, and any of its officers, directors, employees,
\n stockholders or any direct or indirect Affiliates or Associates thereof
\n (each, a “Principal Owner”), on the other;<\/p>\n
(e) any deferred compensation agreements, bonus, pension,
\n profit sharing, stock option and incentive plans or arrangements,
\n hospitalization, medical and insurance plans, agreements and policies,
\n retirement and severance plans and other employee compensation policies
\n and agreements affecting employees or consultants of the Company;<\/p>\n
(f) any Contracts with any labor union;<\/p>\n
(g) all partnership, joint venture, shareholders’ or
\n similar Contracts with any Person;<\/p>\n
8<\/p>\n
(h) all Contracts that limit or contain restrictions on
\n the ability of the Company or any Subsidiary to declare or pay
\n dividends, to make distributions in respect of or to issue or purchase,
\n redeem or otherwise acquire any of its capital stock or require the
\n Company or any Subsidiary to maintain specified financial ratios or
\n levels of net worth or other indicia of financial condition;<\/p>\n
(i) any Contracts which restrict the Company or any
\n Subsidiary from freely engaging in business, disclosing confidential or
\n proprietary information, or competing anywhere;<\/p>\n
(j) any Contracts which otherwise are material to the
\n Condition of the Company or any Subsidiary;<\/p>\n
(k) all Contracts related to (A) the future disposition or
\n acquisition of any assets or properties other than dispositions or
\n acquisitions in the ordinary course of business consistent with past
\n practice and the provisions of this Agreement and the Company Documents,
\n and (B) any (i) merger, consolidation or combination to which such
\n Person is a party, (ii) any sale, dividend, split or other disposition
\n of any capital stock or other equity interests of such Person, (iii) any
\n tender offer (including without limitation a self-tender), exchange
\n offer, recapitalization, liquidation, dissolution or similar
\n transaction, (iv) any sale, dividend or other disposition of all or a
\n material portion of the assets and properties of such Person, (v) any
\n sale, transfer or other disposition of any securities of the Company by
\n any Stockholder or (vi) the entering into of any agreement or
\n understanding, or the granting of any rights or options, with respect to
\n any of the foregoing (“Business Combination”).<\/p>\n
True, correct and complete copies of all Scheduled Contracts have
\nbeen made available to the Investors. All of the Scheduled Contracts are in full
\nforce and effect and constitute legal, valid and binding obligations of the
\nCompany or the Subsidiary and, to the best knowledge of the Company or the
\nSubsidiary, the other parties thereto; to the best of the knowledge of the
\nCompany and the Subsidiary, no circumstances exist which would give rise to an
\nAction (as defined in Section 2.14) against or by the Company or the Subsidiary
\nin connection with any Scheduled Contract or any default thereunder; and the
\nvalidity, effectiveness and continuation of all Scheduled Contracts will not be
\nadversely affected by the transactions contemplated by this Agreement or require
\nthird party consents or notices.<\/p>\n
2.10 Intellectual Property.<\/p>\n
(i) Set forth on Part 2.10 of Schedule 1 hereto is a true,
\n correct and complete list of all patents, patent applications,
\n trademarks, service marks, tradenames, trademark registrations,
\n service mark registrations, copyrights and licenses trade names, and
\n any applications or registrations for any of the foregoing
\n (collectively, the “Intellectual Property”) of any kind in which the
\n Company has an interest or which is otherwise used in, or relates to
\n the business of, the Company. Part 2.10 of Schedule 1 hereto contains
\n a true, correct and complete list of all material licenses or
\n agreements (other than the Company’s standard form of web site
\n affiliate agreements) relating to the rights of the Company to any<\/p>\n
9<\/p>\n
of the Operating IP (defined below) or any trade secret material of
\n the Company (the “Intellectual Property Licenses”).<\/p>\n
(ii) With respect to any Intellectual Property, brand name,
\n computer software or program, technology, know-how or process or
\n copyright (collectively (including without limitation the Intellectual
\n Property), the “Operating IP”) or trade secret that is used in or that
\n relates to its business, the Company owns or has the exclusive right
\n to use such Operating IP or trade secret in its business free and
\n clear of all Liens. The Company owns or has the exclusive right to use
\n all Operating IP and trade secrets that are necessary to its business
\n as now conducted or proposed to be conducted.<\/p>\n
(iii) Each of the Intellectual Property Licenses constitutes
\n a legal, valid, binding and enforceable obligation in accordance with
\n its terms against the Company, and, to the best knowledge of the
\n Company, each other Person party thereto, and to the best knowledge of
\n the Company is in full force and effect. The Company has performed all
\n obligations required to have been performed by it under each of the
\n Intellectual Property Licenses to which it is a party. Neither the
\n Company nor, to the best knowledge of the Company, any other party
\n thereto is in default thereunder, nor, to the best knowledge of the
\n Company, is there any event that with notice or lapse of time, or
\n both, would constitute a default thereunder. The Company has not
\n received any notice that any other party to any of the Intellectual
\n Property Licenses intends to cancel, terminate or refuse to renew the
\n same or to exercise or decline to exercise any option or other right
\n thereunder (other than in the ordinary course of business). No
\n licenses, sublicenses, covenants or agreements have been granted or
\n entered into by the Company in respect of any of the Operating IP or
\n any trade secret of the Company, except the Intellectual Property
\n Licenses. No director, officer, shareholder, employee or other
\n Affiliate of the Company owns, directly or indirectly, in whole or in
\n part, any of the Operating IP or any trade secret used by or relating
\n to the Company. None of the officers, employees, consultants,
\n distributors, agents, representatives or advisors of the Company have
\n entered into any agreement relating to the Company’s business
\n regarding know-how, trade secrets, assignment of rights in inventions,
\n or prohibition or restriction of competition or solicitation of
\n customers, or any other similar restrictive agreement or covenant,
\n whether written or oral, with any Person other than the Company. There
\n are no restrictions on the direct or indirect transfer of any
\n Intellectual Property or license to use the Intellectual Property, or
\n any interest therein, held by the Company or the Subsidiary of such
\n Intellectual Property.<\/p>\n
(iv) The consummation of the transactions contemplated
\n hereby will not alter or impair the rights of the Company to any of
\n the Operating IP, to any trade secret material to the Company, or
\n under any of the Intellectual Property Licenses.<\/p>\n
(v) No claim with respect to the Operating IP, any trade
\n secret or any Intellectual Property License is currently pending or
\n has been asserted or overtly threatened by any Person, nor does the
\n Company know of any grounds for any claim, (A) to the effect that any
\n operation or activity of the Company presently occurring or
\n contemplated infringes or misappropriates any United States or foreign
\n copyright, patent, trademark, service mark<\/p>\n
10<\/p>\n
or trade secret; (B) to the effect that any other Person infringes on
\n the Operating IP or misappropriates any trade secret or know-how or
\n other proprietary rights of the Company; (C) challenging the
\n ownership, validity or effectiveness of any of the Operating IP or any
\n trade secret of the Company; or (D) challenging the license of the
\n Company to, or other legally enforceable right under, any Operating IP
\n or the Intellectual Property Licenses.<\/p>\n
(vi) The Company is not aware of any presently existing
\n United States or foreign patents or any patent applications which, if
\n issued as patents, would be infringed by any activity contemplated by
\n the Company.<\/p>\n
2.11 Insurance. The Company has in full force and effect fire and
\ncasualty insurance policies, with extended coverage, products liability
\ninsurance, general liability insurance, errors and omissions insurance, and
\ndirectors’ and officers’ insurance in amounts customary for companies similarly
\nsituated. None of such insurance coverage will terminate or lapse by reason of
\nthis Agreement or the transactions contemplated hereby. Each insurance policy is
\nvalid and binding and in full force and effect, no premiums due thereunder have
\nnot been paid and neither the Company, any Subsidiary nor the Person to whom
\nsuch policy has been issued has received any notice of cancellation or
\ntermination in respect of any such policy or is in default thereunder. Such
\ninsurance policies are placed with financially sound and reputable insurers and,
\nin light of the respective business, operations and assets and properties of the
\nCompany and the Subsidiary, are in amounts and have coverages that are
\nreasonable and customary for Persons engaged in such businesses and operations
\nand having such assets and properties. Neither the Company nor the Person to
\nwhom such policy has been issued has received notice that any insurer under any
\npolicy referred to in this Section is denying liability with respect to a claim
\nthereunder or defending under a reservation of rights clause.<\/p>\n
2.12 Labor Union Activities; Employee Relations. No employee of
\nthe Company is represented by any labor union or covered by any collective
\nbargaining agreement with the Company; nor, to the best knowledge of the
\nCompany, has any labor union sought to represent any employee of the Company.
\nThere is no strike or other labor dispute involving the Company pending, or to
\nthe best knowledge of the Company, threatened. To the best knowledge of the
\nCompany, no officer or key employee intends to terminate his employment with the
\nCompany. To the best knowledge of the Company, no officer or key employee of the
\nCompany is a party to or bound by any Contract, or subject to any restrictions
\n(including, without limitation, any non-competition restriction), which would
\nrestrict the right of such person to participate in the affairs of the Company.
\nThe Company has complied in all material respects with all applicable Laws
\nrelating to the employment of labor, including without limitation, those
\nrelating to wages, hours and collective bargaining. No unfair labor practice
\ncomplaint or sex or age discrimination claim had been brought against the
\nCompany before the National Labor Relations Board or any other Governmental
\nAuthority.<\/p>\n
2.13 ERISA. There are no employee benefit plans (as defined in
\nSection 3(3) of the Employee Retirement Income Security Act of 1974 (“ERISA”))
\ncovering former or current employees of the Company, or under which the Company
\nhas any obligation or liability. The Company has not incurred any liability
\nunder Title IV of ERISA, including any liability to the<\/p>\n
11<\/p>\n
Pension Benefit Guaranty Corporation. Part 2.13 of Schedule 1 lists all material
\nplans, contracts, bonus and commission arrangements, profit-sharing, savings,
\nstock option plans, insurance, deferred compensation, or other similar fringe or
\nemployee benefits covering former or current employees of the Company or under
\nwhich the Company has any obligation or liability (each, a “Benefit
\nArrangement”). The Benefit Arrangements are and have been administered in
\nsubstantial compliance with their terms and with the requirements of applicable
\nlaw.<\/p>\n
2.14 Litigation. There is no action, suit, proceeding,
\ninvestigation, audit, arbitration or governmental approval process
\n(collectively, “Action”) pending or, to the best knowledge of the Company,
\nthreatened against, relating to or affecting the Company or any of the
\nproperties or assets of the Company (including, without limitation, any of its
\nPermits), nor, to the best knowledge of the Company, is there any basis for any
\nsuch Action. Neither the Company nor any of its assets or properties is subject
\nto any order, judgment, writ, injunction, decree, ruling or decision
\n(collectively, an “Order”) of any Governmental Authority. There is no Action by
\nthe Company currently pending or which the Company intends to initiate.<\/p>\n
2.15 Compliance with Laws; Permits. The Company has not violated
\nor failed to comply with, in any material respect, any statute, law, ordinance,
\nrule, regulation or policy of any Governmental Authority (collectively, “Laws”)
\nto which it or any of its properties or assets is subject. The Company has all
\npermits, licenses, orders, certificates, authorizations, registrations,
\nfranchises, and approvals of any Governmental Authority (collectively, the
\n“Permits”) that are material to the conduct of its business as presently
\nconducted and as proposed to be conducted, including without limitation, those
\nrequired by Environmental Laws; all such Permits are, and as of the Closing will
\nbe, valid, binding and in full force and effect; no violations or notices of
\nfailure to comply have been issued or recorded in respect of any such Permits.
\nThe Company is in compliance in all material respects with the terms and
\nconditions of all such Permits. All applications, reports, notices and other
\ndocuments required to be filed by the Company with all Governmental Authorities
\nhave been timely filed and are complete and correct in all material respects as
\nfiled or as amended prior to the date hereof. The Company and the Subsidiary
\nhave not violated or failed to comply with their certificates of incorporation
\nor by-laws.<\/p>\n
2.16 Taxes. All federal, state, city, county, local and foreign
\nincome, franchise, sales, use and value added tax returns and reports, and all
\nother material tax returns and reports required to be filed by the Company in
\nthose or in any other jurisdiction (collectively, “Returns”)
\nhave been timely filed. All such Returns are true, correct and complete in all
\nmaterial respects. All taxes, assessments, fees, interest, penalties and other
\ncharges with respect thereto (collectively, “Taxes”) due or claimed to be due
\nfrom the Company have been paid except to the extent reserved against on the
\nInterim Financial Statements or the Other Financial Information. No income tax
\nreturn of the Company has been audited by the applicable Governmental Authority,
\nand there are in effect no waivers of the applicable statute of limitations for
\nTaxes in any jurisdiction for the Company for any period. The provision for
\ntaxes of the Company as shown in the Interim Financial Statements and the
\nprovision for taxes for Petry and Advercomm as shown in the Other Financial
\nInformation are adequate for taxes due or accrued as of the date thereof. Each
\nof the Company, Petry, Advercomm and the Subsidiary has not elected pursuant to
\nthe Internal Revenue Code of 1986, as amended (the “Code”), to be treated as a
\nSubchapter S corporation or a collapsible<\/p>\n
12<\/p>\n
corporation pursuant to Section 1362(a) or Section 341(f) of the Code, nor have
\nthey made any other elections pursuant to the Code (other than elections that
\nrelate solely to methods of accounting, depreciation or amortization) that would
\nhave a material effect on the Company, Petry, Advercomm or the Subsidiary, their
\nfinancial condition, their business as presently conducted or proposed to be
\nconducted or any of their properties or material assets. The Company, Petry,
\nAdvercomm and the Subsidiary have never had any tax deficiency proposed or
\nassessed against it and has not executed any waiver of any statute of
\nlimitations on the assessment or collection of any tax or governmental charge.
\nSince the date of the Interim Statements, the Company has made adequate
\nprovisions on its books of account for, and since the date of the Other
\nFinancial Information, Petry, Advercomm and the Subsidiary have made adequate
\nprovisions on their books of account for, all taxes, assessments and
\ngovernmental charges with respect to its business, properties and operations for
\nsuch period. The Company, Petry, Advercomm and the Subsidiary have withheld or
\ncollected from each payment made to each of its employees, the amount of all
\ntaxes (including, but not limited to, federal income taxes, Federal Insurance
\nContribution Act taxes and Federal Unemployment Tax Act taxes) required to be
\nwithheld or collected therefrom, and has paid the same to the proper tax
\nreceiving officers or authorized depositories.<\/p>\n
2.17 Books and Records. The books of account, ledgers and records
\nof the Company as made available to the Investors prior to the execution of this
\nAgreement are maintained in accordance with sound business practices and
\naccurately and completely reflect in all material respects all information
\nrelating to its business; the nature, acquisition, maintenance, location and
\ncollection of its assets; and the nature of all transactions giving rise to its
\nobligations or accounts receivable. The minutes and minute books of the Company
\nprovided to the Investors prior to the date hereof constitute a true, complete
\nand correct copy of the entire minutes and minute books of the Company and
\ncontain a true and complete record of all actions taken at all meetings and by
\nall written consents in lieu of meetings of stockholders, the boards of
\ndirectors and committees of the board of directors of the Company and the
\nSubsidiary. Neither the Company nor any Subsidiary has any of its books and
\nrecords recorded, stored, maintained or operated or otherwise wholly or partly
\ndependent upon or held by any means which are not under the exclusive ownership
\nand direct control of the Company or the Subsidiary.<\/p>\n
2.18 Environmental Matters. The business, assets and properties
\nof the Company are and have been operated and maintained in compliance with all
\napplicable federal, state, city, county and local environmental protection laws
\nand regulations and occupational health and safety laws and regulations
\n(collectively, the “Environmental Laws”). No event has occurred which, with or
\nwithout the passage of time or the giving of notice, or both, would constitute a
\nnon-compliance by the Company with, or a violation by the Company of, the
\nEnvironmental Laws. Neither the Company nor any of its predecessor companies has
\ncaused or permitted to exist, as a result of an intentional or unintentional act
\nor omission, a disposal, discharge or release of solid wastes, pollutants or
\nhazardous substances, on or from any site which currently is or formerly was
\nowned, leased, occupied or used by the Company or any predecessor company,
\nexcept where such disposal, discharge or release was in compliance with the
\nEnvironmental Laws. No material expenditures are or will be necessary for the
\nCompany to comply with any such existing Environmental Laws. No Order has been
\nissued, no claim of any kind under any Environmental Law has been filed, no
\npenalty has been assessed and no investigation or review is pending or, to the
\nknowledge of the Company<\/p>\n
13<\/p>\n
or the Subsidiary, threatened by any Governmental Authority with respect to any
\ngeneration, treatment, storage, recycling, transportation, discharge, disposal
\nor release of any hazardous material (as the same is or may be defined under any
\nEnvironmental Law) generated by the Company or any Subsidiary, and to the
\nknowledge of the Company or the Subsidiary, there are no facts or circumstances
\nin existence which could reasonably be expected to form the basis for any such
\nOrder, or claim of any kind under any Environmental Law, penalty or
\ninvestigation. Neither the Company nor any Subsidiary nor any prior owner or
\nlessee of any property now or previously owned or leased by either the Company
\nor any Subsidiary has transported or arranged for the transportation of any
\nhazardous material (as the same is or may be defined under any Environmental
\nLaw) to any location that is (i) listed on the NPL under CERCLA, (ii) listed for
\npossible inclusion on the NPL by the Environmental Protection Agency in CERCLIS
\nor on any similar state or local list or (iii) the subject of enforcement
\nactions by federal, state or local Governmental Authorities that may lead to
\nclaims of any kind under any Environmental Law against the Company or any
\nSubsidiary. No hazardous material (as the same is or may be defined under any
\nEnvironmental Law) generated by the Company or any Subsidiary or any prior owner
\nor lessee of any property now or previously owned or leased by either the
\nCompany or any Subsidiary has been recycled, treated, stored, disposed of or
\nreleased by the Company or any Subsidiary at any location. There have been no
\nenvironmental investigations, studies, audits, tests, reviews or other analyses
\nconducted by, or that are in the possession of, the Company or any Subsidiary in
\nrelation to any site or facility now or previously owned, operated or leased by
\nthe Company or any Subsidiary which have not been delivered to the Investors
\nprior to the execution of this Agreement. The Company and the Subsidiary have
\nobtained all Licenses which are required of its respective business, operations
\nor assets and properties under applicable Environmental Laws.<\/p>\n
2.19 Transactions with Affiliates. The Company has not had any
\ndirect or indirect dealings with any Principal Owner of the Company or with any
\nof his Affiliates, associates (as such term is defined in Rule 12b-2 under the
\nSecurities Exchange Act of 1934, as amended) or relatives (or Affiliates
\nthereof) nor does either the Company nor the Subsidiary beneficially own,
\ndirectly or indirectly, any investment assets of any such current or former
\nPrincipal Owner of either the Company or the Subsidiary or any of their
\nrespective Affiliates, associates or relatives (or Affiliates thereof). The
\nCompany does not have any obligation to or claim against any Principal Owner of
\nthe Company, or any of his or its Affiliates, associates or relatives, and no
\nsuch Person has any obligation to or claim against the Company. All products,
\nservices or benefits provided to the Company by any such Person, or provided by
\nthe Company to any such Person, are set forth on Part 2.19 of Schedule 1 and are
\nprovided at a charge equal to the fair market value of such products, services
\nor benefits. To the best knowledge of the Company, no Principal Owner of the
\nCompany, nor any of its Affiliates, associates or relatives, has any direct or
\nindirect interest of any kind in any business or entity which is competitive
\nwith the Company or with which the Company has a business relationship.<\/p>\n
2.20 Registration Rights. Except as provided in the Registration
\nRights Agree ment, no Person has, and as of the Closing no Person shall have,
\ndemand, “piggy-back,” or other rights to cause the Company to file any
\nregistration statement under the Securities Act of 1933, as amended (the
\n“Securities Act”) relating to any securities of the Company.<\/p>\n
14<\/p>\n
2.21 No Brokers or Finders. Neither the Company nor the
\nSubsidiary nor any of their respective Affiliates (nor any investment banker,
\nfinancial advisor, attorney, accountant or other Person retained by or acting
\nfor or on behalf of the Company or the Subsidiary or any such Affiliate)
\n(i) has entered into any agreement that conflicts with any of the transactions
\ncontemplated by this Agreement or any of the Company Documents, or (ii) has
\nentered into any agreement or had any discussions with any third party regarding
\nany transaction involving the Company or the Subsidiary which could result in
\nany Investor or its general partner or any limited partner or any officer,
\ndirector, manager, employee, agent or Affiliate of any of them being subject to
\nany claim for liability to said third party as a result of entering into this
\nAgreement or the Company Documents or consummating the transactions contemplated
\nhereby or thereby. No agent, broker, finder, investment banker, financial
\nadvisor or other similar Person will be entitled to any fee, commission or other
\ncompensation in connection with any of the transactions contemplated by this
\nAgreement or the Company Documents on the basis of any act or statement made or
\nalleged to have been made by the Company or the Subsidiary, any of their
\nrespective Affiliates, or any investment banker, financial advisor, attorney,
\naccountant or other Person retained by or acting for or on behalf of the Company
\nor the Subsidiary or any such Affiliate.<\/p>\n
2.22 Investment Company Act. The Company is not an “investment
\ncompany” nor is the Company directly or indirectly controlled by or acting on
\nbehalf of any Person which is an “investment company” within the meaning of the
\nInvestment Company Act of 1940, as amended.<\/p>\n
2.23 Disclosure. In connection with the purchase of the
\nSecurities by the Investors as contemplated hereby, the Company has disclosed to
\nthe Investors all material facts and information known to the Company concerning
\nthe Company, its Condition and the Securities, and in this Agreement or
\notherwise has not made any untrue statement of a material fact or omitted to
\nstate any material fact necessary in order to make the statements contained
\nherein or in any other Company Documents not misleading.<\/p>\n
2.24 Simultaneous Merger. Immediately prior to the Closing each
\nof Petry and Advercomm were merged with and into the Subsidiary (the “Merger”).
\nUpon consummation of the Merger, each shareholder of Petry and Advercomm
\nreceived Common Shares upon surrender of all shares of Petry and Advercomm
\ncapital stock held by such shareholder. All agreements between Petry and
\nAdvercomm and\/or any of the shareholders of Petry and Advercomm have been
\nterminated and are of no further force or effect. All representations and
\nwarranties in this Article 2 give effect to the consummation of the Merger. All
\nthird party and Governmental Authority consents, notices and filings needed to
\neffectuate the Merger or prevent any breach (with or without notice, lapse of
\ntime or both) have been obtained or made and are in full force and effect. The
\nrepresentations and warranties of the Company, the Subsidiary, Petry and
\nAdvercomm set forth in the Agreement and Plan of Merger dated February 2, 1998,
\ntogether with the Schedules of Exceptions thereto, are incorporated herein by
\nreference, shall be deemed to be representations and warranties to the Investors
\nhereunder and shall survive the Merger and Closing hereunder, without giving
\neffect to any provisions limiting or terminating survival thereunder.<\/p>\n
15<\/p>\n
2.25 Public Announcements. Except as otherwise required by law or
\nby the rules of (or any agreement of the parties or their affiliates with) any
\nstock exchange, the Company agrees that there will prior to the Closing be no
\npress releases or other statements with respect to this Agreement or the
\ntransactions contemplated hereby and that it will consult with the Investors
\nbefore issuing any press release or otherwise making any public statement with
\nrespect to this Agreement and the transactions contemplated hereby and that
\nneither the Company nor the Investors shall issue any such press release or make
\nany such public statement prior to such consultation.<\/p>\n
2.26 Proprietary Information and Employee Issues. The Company,
\nafter reasonable investigation, is not aware that any of its employees, officers
\nor consultants are in violation of the form of Non-Disclosure and Developments
\nAgreement in the form attached hereto as Exhibit K, and the Company will use its
\nbest efforts to prevent any such violation. The Company is not aware that any of
\nits employees is obligated under any Contract (including licenses, covenants or
\ncommitments of any nature) or other agreement, or subject to any judgment,
\ndecree or Order of any court or Governmental Authority, that would interfere
\nwith the use of his or her best efforts to promote the interests of the Company
\nor that would conflict with the Company’s business as proposed to be conducted.
\nNeither the execution nor delivery of the Company Documents, nor the carrying on
\nof the Company business by the employees or consultants to the Company or the
\nSubsidiary, nor the conduct of the Company’s or the Subsidiary’s business as
\nproposed, will, to the best of the Company’s knowledge, conflict with or result
\nin a breach of the terms, conditions or provisions of, or constitute a default
\nunder, any Contract, covenant or instrument under which any of such employees or
\nconsultants is now obligated. The Company does not believe it is or will be
\nnecessary for it or the Subsidiary to utilize any inventions of any of its or
\nthe Subsidiary’s employees or consultants (or people it or the Subsidiary
\ncurrently intends to hire or engage) made prior to their employment by the
\nCompany or the Subsidiary.<\/p>\n
2.27 Business Plan. The Business Plan has been prepared in good
\nfaith by the Company and does not contain any untrue statement of a material
\nfact nor does it omit to state a material fact necessary to make the statements
\nmade therein not misleading, except that with respect to projections contained
\nin the Business Plan, the Company represents only that such projections were
\nprepared in good faith and that the Company reasonably believes there is a
\nreasonable basis for such projections.<\/p>\n
2.28 Real Property Holding Company. The Company and the
\nSubsidiary are not real property holding companies within the meaning of Section
\n897 of the Code.<\/p>\n
2.29 Substantial Customers. Part 2.29(a) of Schedule 1 lists the
\nfifteen (15) largest customers of the Company and the Subsidiary on the basis of
\nrevenues for goods sold or services provided for the most recent fiscal year.
\nExcept as disclosed in Part 2.29(b) of Schedule 1, no such customer or supplier
\nhas ceased or materially reduced its purchases from or sales or provision of
\nservices to the Company and the Subsidiary since October 1, 1997 or, to the
\nknowledge of the Company and the Subsidiary, has threatened to cease or
\nmaterially reduce such purchases or sales or provision of services after the
\ndate hereof. Except as disclosed in Part 2.29(c) of Schedule 1 to the knowledge
\nof the Company and the Subsidiary, no such customer or supplier is threatened
\nwith bankruptcy or insolvency.<\/p>\n
16<\/p>\n
2.30 Accounts Receivable. Except as set forth in Part 2.30 of
\nSchedule 1, the accounts and notes receivable of the Company and the Subsidiary
\nreflected on the balance sheet included in the Financial Statements for the
\nperiod ended December 31, 1996, the Interim Financial Statements, and the Other
\nFinancial Information, and all accounts and notes receivable arising subsequent
\nto December 31, 1996, (i) arose from bona fide sales transactions in the
\nordinary course of business consistent with past practice and are payable on
\nordinary trade terms, (ii) are legal, valid and binding obligations of the
\nrespective debtors enforceable in accordance with their respective terms, (iii)
\nare not subject to any valid set-off or counterclaim, (iv) do not represent
\nobligations for goods sold on consignment, on approval or on a sale-or-return
\nbasis or subject to any other repurchase or return arrangement, (v) are
\ncollectible in the ordinary course of business consistent with past practice in
\nthe aggregate recorded amounts thereof, net of any applicable reserve reflected
\nin the balance sheet included in Financial Statements for the period ended
\nDecember 31, 1996, the Interim Financial Statements and the Other Financial
\nInformation, and (vi) are not the subject of any Actions or Proceedings brought
\nby or on behalf of the Company or the Subsidiary. Part 2.30 of Schedule 1 sets
\nforth a description of any security arrangements and collateral securing the
\nrepayment or other satisfaction of receivables of the Company and the
\nSubsidiary. All steps necessary to render all such security arrangements legal,
\nvalid, binding and enforceable, and to give and maintain for the Company and the
\nSubsidiary a perfected security interest in the related collateral, have been
\ntaken.<\/p>\n
2.31 Small Business Matters. The Company and the Subsidiary
\nacknowledge that they are aware that Prospect Street NYC Discovery Fund, L.P. is
\na Federal Licensee under the Small Business Act of 1953, as amended, and the
\nSmall Business Investment Act of 1958, as amended (collectively, the “SBA Act”).
\nThe Company, together with their respective “affiliates” (as that term is
\ndefined in 13 CFR, ss.121.103, such term to have such meaning throughout this
\nsection), is a “Small Business” within the meaning of the rules and regulations
\nof the U.S. Small Business Administration (the “SBA”) promulgated under the SBA
\nAct (13 CFR 107 et seq.; and 13 CFR 121 et seq., collectively the “SBA
\nRegulations”), including 13 CFR ss.121.301. The information regarding the
\nCompany and their respective affiliates set forth in SBA Form 480, Form 652 and
\nSection A of Form 1031 is accurate and complete. Copies of such forms shall have
\nbeen completed by the Company and delivered to Prospect Street NYC Discovery
\nFund, L.P. at the Closing. The Company and the Subsidiary do not presently
\nengage in, and shall not hereafter engage in, any activities for which a Small
\nBusiness Investment Company licensed by the SBA under Section 301(c) of the
\nSmall Business Investment Act of 1958, as amended (an “SBIC”) is prohibited from
\nproviding funds by SBA Regulations, including 13 CFR ss.107.720. The Company and
\nthe Subsidiary have not received any “Financing” (as defined in the SBA
\nRegulations) from any SBIC.<\/p>\n
2.32 Exemption from Registration; Restrictions on Offer and Sale
\nof Same or Similar Securities. Assuming the representations and warranties of
\nthe Investors set forth in Sections 3.3, 3.4, and 3.6 hereof are true and
\ncorrect in all material respects, the offer and sale to the Investors of the
\nSecurities is exempt from the registration requirements of the Securities Act.
\nNeither the Company nor the Subsidiary nor any Person authorized to act on
\nbehalf of the Company or the Subsidiary has, in connection with the offer and
\nsale of the Securities engaged in (A) any form of general solicitation or
\ngeneral advertising (as those terms are used within the meaning of Rule 501(c)
\nunder the Securities Act), (B) any action involving a public offering within the
\nmeaning<\/p>\n
17<\/p>\n
of section 4(2) of the Securities Act, or (C) any action that would require the
\nregistration under the Securities Act of the offering and sale of the Securities
\npursuant to this Agreement and the Company Documents or that would violate
\napplicable state securities or “blue sky” laws. Neither the Company nor the
\nSubsidiary has made and will not prior to the Closing make, directly or
\nindirectly, any offer or sale of the Securities or of securities of the same or
\na similar class as the Securities if as a result thereof the Securities could
\nfail to be entitled to exemption from the registration requirements of the
\nSecurities Act. As used herein, the terms “offer” and “sale” have the meanings
\nspecified in Section 2(3) of the Securities Act.<\/p>\n
2.33 Series B Shares. The Series B Shares shall have the powers,
\nrights, preferences and privileges set forth in the Restated Certificate.<\/p>\n
3. Representations, Warranties, and Covenants of the Investors. Each
\nInvestor, severally and not jointly, hereby represents and warrants, in each
\ncase with respect to itself and not with respect to any other Investor, to the
\nCompany as follows:<\/p>\n
3.1 Organization. If such Investor is a legal entity, such
\nInvestor is, and as of the Closing will be, duly organized, validly existing and
\nin good standing under the laws of its jurisdiction of organization.<\/p>\n
3.2 Authorization. Such Investor has, and as of the Closing will
\nhave, all requisite power and authority to execute, deliver and perform this
\nAgreement, the Shareholders’ Agreement and the Registration Rights Agreement and
\nto consummate the transactions of such Investor contemplated hereby and thereby.
\nThe execution, delivery and performance of this Agreement, the Shareholders’
\nAgreement and the Registration Rights Agreement, and the consummation by such
\nInvestor of the transactions contemplated hereby and thereby, have been duly and
\nvalidly authorized by all necessary action on the part of such Investor. This
\nAgreement, the Shareholders’ Agreement and the Registration Rights Agreement
\nhave been duly executed and delivered by such Investor and constitutes its
\nlegal, valid and binding obligation, enforceable against such Investor in
\naccordance with its terms, except as the enforceability thereof may be limited
\nby bankruptcy, insolvency or other similar laws affecting the enforceability of
\ncreditors’ rights in general or by general principles of equity.<\/p>\n
3.3 Offering Exemption. Such Investor understands that the
\nSecurities of the Company being purchased hereunder have not been registered
\nunder the Securities Act, nor qualified under any foreign or state securities
\nlaws, and that they are being offered and sold pursuant to an exemption from
\nsuch registration and qualification based in part upon the representations of
\nsuch Investor contained herein.<\/p>\n
3.4 Knowledge and Experience; Ability to Bear Economic Risks.
\nSuch Investor has such knowledge and experience in financial and business
\nmatters such that it is capable of evaluating the merits and risks of the
\ninvestment contemplated by this Agreement and such Investor is able to bear the
\neconomic risk of its investment in the Company (including a complete loss of its
\ninvestment). Such Investor represents it is an “accredited investor” as that
\nterm is defined in Regulation D promulgated under the Securities Act. During
\nnegotiation of the transactions<\/p>\n
18<\/p>\n
contemplated herein, such Investor and its representative have been afforded
\nfull and free access to corporate books, financial statements, records,
\ncontracts, documents and other information concerning the Company and have been
\nafforded the opportunity to ask questions of the Company’s officers and
\ndirectors concerning the Company’s business, operations, financial condition,
\nassets and liabilities and other relevant matters as they have deemed necessary
\nor desirable and each Investor believes that it has been provided with all such
\ninformation as has been requested. The foregoing does not limit or modify the
\nrepresentations or warranties made by the Company in Article 2 hereof or the
\nright of the Investors to rely thereon.<\/p>\n
3.5 Limitations on Disposition. Such Investor recognizes that no
\npublic market exists for the Securities of the Company to be sold hereunder, and
\nno representation has been made to such Investor that any such public market
\nwill exist in the future. Such Investor understands that it must bear the
\neconomic risk of this investment indefinitely unless the Company’s Securities
\nare registered pursuant to the Securities Act or an exemption from such
\nregistration is available, and unless the disposition of such Securities is
\nqualified under applicable state or foreign securities laws or an exemption from
\nsuch qualification is available, and that, except as provided in this Agreement
\nor the Registration Rights Agreement, the Company has no obligation or present
\nintention of so registering the Securities. Such Investor understands that there
\nis no assurance that any exemption from the Securities Act will be available,
\nor, if available, that such exemption will allow it to dispose of or otherwise
\ntransfer any or all of its Securities, in the amounts or at the times any such
\nInvestor might desire. Such Investor understands that at the present time Rule
\n144 (other than Rule 144(k)) promulgated under the Securities Act by the
\nSecurities and Exchange Commission (“Rule 144”) is not applicable to sales of
\nany such Securities because such Securities are not registered under Section 12
\nof the Exchange Act, and there is not publicly available the information
\nconcerning the Company specified in Rule 144. Such Investor acknowledges that
\nthe Company is not presently under any obligation to register under Section 12
\nof the Exchange Act or to make publicly available the information specified in
\nRule 144 and that it may never be required to do so, except in each case to the
\nextent provided herein or in the Registration Rights Agreement.<\/p>\n
3.6 No Intended Resale. Such Investor is acquiring the Securities
\nof the Company purchased hereunder for its own account for investment and not
\nwith a view towards the resale, transfer or distribution thereof, nor with any
\npresent intention of distributing such Securities, in each case in violation of
\nthe Securities Act. Such Investor has not agreed to give any Person any interest
\nor right in the Securities. The Securities are being acquired by such Investor
\nfor investment for its own account and not with a view to the resale or
\ndistribution thereof in violation of applicable securities laws.<\/p>\n
3.7 Legends.<\/p>\n
(a) Such Investor understands that the certificates evidencing
\nthe Securities will bear the following legends:<\/p>\n
“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
\n REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
\n “ACT”), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH <\/p>\n
19<\/p>\n
SECURITIES NOR ANY INTEREST THEREIN MAY BE TRANSFERRED IN
\n THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
\n SUCH ACT OR SUCH LAWS AND THE RULES AND REGULATIONS THEREUNDER.”<\/p>\n
“TRANSFER OF THE SECURITIES REPRESENTED BY THIS
\n CERTIFICATE IS RESTRICTED BY AN AGREEMENT, DATED FEBRUARY 25,
\n 1998, A COPY OF WHICH IS ON FILE AT THE OFFICE OF THE
\n CORPORATION. ANY PURPORTED TRANSFER IN VIOLATION OF THIS
\n AGREEMENT IS VOID AND WILL NOT BE RECOGNIZED BY THE CORPORATION
\n OR ITS TRANSFER AGENT.”<\/p>\n
(b) The Securities shall not be required to bear such legends if
\nan opinion of counsel reasonably satisfactory to the Company is delivered to the
\nCompany to the effect that neither the legends nor the restrictions on transfer
\ncontained in this Agreement are required to insure compliance with the Act.
\nWhenever, pursuant to the preceding sentence, any certificate for any of the
\nSecurities is no longer required to bear the foregoing legend, the Company may,
\nand if requested by the holder thereof, shall, issue to the holder, at the
\nCompany’s expense, a new certificate not bearing the foregoing legends.<\/p>\n
(c) Any and all Common Shares issued prior to January 31, 1999 or
\nwhich the Company is obligated to issue as a result of events occurring prior to
\nsuch date, in each case upon conversion of Series B Shares as a result of
\naccrued dividends with respect to such Series B Shares shall be cancelled and
\ncease to exist without further action by the Company or any other person upon
\nthe closing of a Qualified Public Offering (as defined in Section 6.4(f)) prior
\nto January 31, 1999, and shall bear a legend to such effect.<\/p>\n
3.8 Confidentiality. Such Investor agrees to maintain, and to
\ncause its agents and representatives to maintain, procedures reasonably designed
\nto preserve the confidentiality of the terms and conditions of this Agreement
\nand the Related Agreements (as defined in 4.10 below) and all documents or
\ninformation executed and\/or delivered in connection with the transactions
\ncontemplated by this Agreement and the Related Agreements (whether furnished
\nbefore, on or after the date hereof) and to use such information and documents
\nonly in connection with evaluating and\/or monitoring the Investors’ investment
\nin the Company. The provisions of this subsection shall not apply to information
\nor to particular conditions or terms of the above referenced documents (i) if
\nthe party seeking to make such disclosure shall have obtained the prior written
\nconsent of the other party to the disclosure of such information, conditions or
\nterms, (ii) that are required to be disclosed during the course of any
\nlitigation or arbitration which may be brought by any party related to the
\nprovisions of any of the above referenced documents, (iii) that are or become
\ngenerally available to the public other than as a result of actions taken by the
\nparty seeking to make such disclosure or its agents and representatives in
\nviolation of this Agreement, (iv) that are required to be disclosed pursuant to
\nand in accordance with any law, rule or regulation applicable to the party
\nseeking to make such disclosure, (v) if such information becomes available to
\nthe Investor from another source which the Investor reasonably believes is
\nentitled to disclose it, (vi) if such information was known by Investor on a
\nnon-confidential basis prior to disclosure by the Company or one of its<\/p>\n
20<\/p>\n
representatives, (vii) that are disclosed to the Investors’ directors, officers,
\nemployees and agents, and representatives of the Investors’ advisors who need to
\nknow the information for the purpose of evaluating a possible transaction and
\nwho agree to keep the information confidential, (viii) that are reasonably
\nnecessary to be disclosed in connection with any transfer of securities or (ix)
\nin connection with a disclosure to any shareholder or any direct or indirect
\nofficers, directors, employees, members, managers, partners, Affiliates or
\nassociates of such Investor.<\/p>\n
Notwithstanding the foregoing, if a party is requested or
\nrequired (by oral questions, interrogatories, requests for information or
\ndocument subpoena, arbitration, civil investigative demand or similar process)
\nto disclose any of the above-referenced information or documents, such party
\nwill promptly notify the other party of such request so that such other party
\nmay seek an appropriate protective order or waive compliance with the provisions
\nhereof. If, in the absence of a protective order or the receipt of a waiver
\nhereunder, a party is nonetheless, in the opinion of its counsel, legally
\nrequired to disclose any terms or conditions of the above-referenced information
\nor documents to any tribunal, such party may disclose such information to such
\ntribunal without liability hereunder.<\/p>\n
From and after the consummation of the Qualified Public Offering,
\nif any, of the Company’s securities, to the extent that any of the information
\nfurnished pursuant to Section 6.1 hereof would constitute material, nonpublic
\ninformation for purposes of the Securities Exchange Act of 1934, as amended,
\nsuch Investor covenants that it will not engage in any purchase or sale of the
\nSecurities while in possession of such information and prior to the time that
\nsuch information is made generally known to the public and that such Investor
\nshall inform its agents and representatives, who have been given access to such
\nmaterial, nonpublic information, of such requirements. The obligations in this
\nSection 3.8 shall survive termination of this Agreement.<\/p>\n
3.9 Public Announcements. Except as otherwise required by law or
\nby the applicable rules of (or any agreement of the parties or their affiliates
\nwith) the SEC, any stock exchange or the Nasdaq Stock Market, the Investors
\nagree that there will prior to the Closing be no press releases or other
\nstatements with respect to this Agreement or the transactions contemplated
\nhereby and that they will consult with the Company before issuing any press
\nrelease or otherwise making any public statement with respect to this Agreement
\nand the transactions contemplated hereby.<\/p>\n
4. Conditions of Investors’ Obligations at Closing. The obligation of
\neach Investor to purchase the Securities to be purchased by it at the Closing is
\nsubject to the fulfillment to each such Investor’s satisfaction, in its sole
\ndiscretion, prior to or at the Closing, of each of the following conditions
\n(each of which may be waived in whole or in part by each Investor in its sole
\ndiscretion):<\/p>\n
4.1 Representations and Warranties. Each of the representations
\nand warranties made by the Company and the Subsidiary in this Agreement shall be
\ntrue and correct in all material respects (if not qualified by materiality) and
\nin all respects (if qualified by materiality) on and as of the date of the
\nClosing as though such representation or warranty was made on and as of the date
\nof the Closing, and any representation or warranty made as of a specified date
\nearlier than the date of<\/p>\n
21<\/p>\n
the Closing shall also have been true and correct in all material respects on
\nand as of such earlier date.<\/p>\n
4.2 Performance. The Company and the Subsidiary shall have
\nperformed and complied with all agreements, covenants, and conditions required
\nby this Agreement and the other Company Documents to be performed or complied
\nwith by it prior to or at the Closing.<\/p>\n
4.3 Stock Certificates, Etc. At the Closing, the Company shall
\nhave tendered to each Investor certificates representing the Shares, in genuine
\nand unaltered form, duly endorsed in blank, with requisite stock transfer tax
\nstamps, if any, attached as well as the Warrants, in accordance with Sections
\n1.1 and 1.3 hereof, all in form and substance satisfactory to such Investor and
\nsufficient to transfer to and vest in such Investor good and valid title to the
\nShares and the Warrants, free and clear of any Lien.<\/p>\n
4.4 No Material Adverse Change. There shall not have occurred any
\nmaterial adverse change in the Condition of the Company or the Subsidiary.<\/p>\n
4.5 Consents. The Company shall have obtained all consents,
\napprovals or waivers from Governmental Authorities and third Persons (including,
\nwithout limitation, those with respect to Scheduled Contracts) necessary for the
\nexecution, delivery and performance of this Agreement and the other Company
\nDocuments and the transactions contemplated hereby and thereby, each of which
\nshall be in full force and effect, in form and substance satisfactory to each
\nInvestor and shall not impose any limitations or restrictions on any Investor.
\nWithout limiting the generality of the foregoing, each of the Company’s existing
\nshareholders shall have waived any preemptive right, right of first offer and
\nany similar rights any such shareholder may have to purchase any of the
\nSecurities.<\/p>\n
4.6 No Litigation. There shall not be any Action of or before any
\nGovernmental Authority or other Person pending or threatened with respect to
\nthis Agreement, the other Company Documents or the transactions contemplated
\nhereby or thereby or which might materially adversely affect the Condition of
\nthe Company or which could reasonably be expected to otherwise result in a
\nmaterial diminution of the benefits of the transactions contemplated by this
\nAgreement or any of the Related Agreements (as defined below) to such Investor.<\/p>\n
4.7 Opinion of Counsel. The Investors shall have received from
\nProskauer Rose LLP, an opinion dated as of the Closing, in the form attached
\nhereto as Exhibit I.<\/p>\n
4.8 Compliance Certificate. The Investors shall have received
\ncertificates dated as of the day of the Closing executed by the Chief Executive
\nOfficer of the Company certifying that the conditions specified in Sections 4.1,
\n4.2, 4.4 through 4.6, and 4.9 have been fulfilled.<\/p>\n
4.9 Directors. Those persons listed on Schedule 3 hereto shall
\nhave been duly elected and qualified as directors of the Company and at the
\nClosing shall constitute the entire Board of Directors of the Company.<\/p>\n
22<\/p>\n
4.10 Related Agreements. The Company Documents and the
\nNon-Competition Agreements in the form attached hereto as Exhibit J
\n(collectively, the “Related Agreements”) shall have been executed and delivered
\nby each of the parties thereto and shall be in full force and effect.<\/p>\n
4.11 Proceedings and Documents. All proceedings in connection
\nwith the transactions contemplated hereby and all documents and instruments
\nincident to such transactions shall be satisfactory in substance and form to the
\nInvestors and their counsel, and the Investors shall have received all such
\ncounterpart originals or certified or other copies of such documents as the
\nInvestors may reasonably request.<\/p>\n
4.12 Secretary’s Certificate. The Company shall have delivered to
\nthe Investors a certificate of the Secretary of each of the Company and the
\nSubsidiary certifying as to (i) the Restated Certificate and the By-laws of each
\nof the Company and the Subsidiary as in effect as of the Closing; (ii) the
\nresolutions of the Board of Directors and, to the extent required, the
\nshareholders of the Company, authorizing and approving all matters in connection
\nwith this Agreement, the Registration Rights Agreement, the Restated Certificate
\nand the Shareholders’ Agreement, and the transactions contemplated hereby and
\nthereby; (iii) the duly elected officers of the Company and the incumbency of
\nsuch officers, and attaching a certificate as to the legal existence and good
\nstanding of the Company issued by the Department of State of the State of New
\nYork, and as to the legal existence and good standing of the Subsidiary issued
\nby the Secretary of State of the State of Delaware; and (iv) a certificate from
\nthe Department of State or other appropriate official in each jurisdiction in
\nwhich each of the Company and the Subsidiary are qualified or admitted to do
\nbusiness to the effect that each of the Company and the Subsidiary are duly
\nqualified or admitted and in good standing in such jurisdiction.<\/p>\n
4.13 Qualification of Securities. The Company shall have caused
\nthe Securities to be registered or qualified under applicable blue sky laws of
\nsuch jurisdictions in the United States as shall be reasonably required to
\ncomply with all applicable laws in connection with the transactions contemplated
\nhereby.<\/p>\n
4.14 Filing of Restated Certificate. The Restated Certificate
\nshall have been filed with and accepted by the Department of State of the State
\nof New York.<\/p>\n
4.15 Purchase By Other Investors. Each Investor shall have
\npurchased and paid for the Securities to be purchased by it in accordance with
\nthis Agreement.<\/p>\n
4.16 Payment of Investor Expenses. The Company shall have paid
\nthe expenses of the Investors in accordance with Section 7.1 hereof.<\/p>\n
If at the Closing the Company fails to tender to the Investors
\nthe documents specified herein which are required to be delivered to the
\nInvestors at the Closing or if at the Closing any of the conditions specified in
\nthis Section 4 shall not have been fulfilled to each Investor’s satisfaction,
\nsuch Investor shall, at its election, be relieved of all further obligations
\nunder this Agreement except those set forth in Section 3.8.<\/p>\n
23<\/p>\n
5. Conditions of the Company’s Obligations at Closing. The obligations
\nof the Company to each Investor under this Agreement are subject to the
\nfulfillment, prior to or at the Closing, of each of the following conditions,
\neach of which may be waived in whole or in part by the Company in its sole
\ndiscretion:<\/p>\n
5.1 Representations and Warranties. The representations and
\nwarranties of such Investor contained in this Agreement shall be true and
\ncorrect in all material respects on and as of the date of the Closing as if made
\non and as of such date.<\/p>\n
5.2 Payment of Purchase Price. Such Investor shall have delivered
\nto the Company the purchase price specified in Section 1.1 hereof.<\/p>\n
5.3 No Litigation. There shall not be any Action of or before any
\nGovernmental Authority or other Person pending or threatened with respect to
\nthis Agreement or the transactions contemplated hereby.<\/p>\n
5.4 Proceedings and Documents. All proceedings in connection with
\nthe transactions contemplated hereby and all documents and instruments incident
\nto such transactions shall be reasonably satisfactory in substance and form to
\nthe Company and its counsel, and the Company shall have received all such
\ncounterpart originals or certified or other copies of such documents as it may
\nreasonably request.<\/p>\n
If at the Closing an Investor fails to tender to the Company the
\npayment or documents specified herein which are required to be delivered to the
\nCompany at the Closing by such Investor or if at the Closing any of the
\nconditions with respect to an Investor specified in this Section 5 shall not
\nhave been fulfilled to the Company’s satisfaction, provided the Company is not
\nin breach hereunder, the Company shall, at its election, be relieved of all
\nfurther obligations to such Investor under this Agreement.<\/p>\n
6. Certain Covenants.<\/p>\n
6.1 Financial and Business Information.<\/p>\n
(a) Monthly and Quarterly Statements. The Company shall
\ndeliver to each Investor, as soon as practicable, and in any event within 30
\ndays after the close of each month of each fiscal year of the Company in the
\ncase of monthly statements and 45 days after the close of each of the first
\nthree fiscal quarters of each fiscal year of the Company in the case of
\nquarterly statements, true and complete copies of the consolidated balance
\nsheets, and the related consolidated statements of income, stockholders’ equity
\nand cash flows of the Company and its Subsidiaries (which, for purposes of this
\nArticle 6, shall include all affiliates controlled by the Company directly or
\nindirectly through one or more intermediaries including, without limitation, any
\nPerson in which the Company, directly or indirectly, through a Subsidiary or
\notherwise, beneficially owns more than fifty percent (50%) of either the equity
\ninterest in, or the voting control of such Persons, whether or not existing on
\nthe date hereof) as at the close of such month or quarter and covering
\noperations for such month or quarter, as the case may be, and the portion of the
\nCompany’s fiscal year ending on the last day<\/p>\n
24<\/p>\n
of such month or quarter, setting forth in each case in comparative form the
\nfigures for the comparable period of the previous fiscal year and accompanied by
\na narrative description of the Company’s business and results of operations for
\nsuch month or quarter. All such financial statements shall be prepared in
\naccordance with GAAP (except for the omission of normal year-end adjustments and
\nfootnote disclosures) consistently applied throughout the periods involved,
\nshall be true and correct in all material respects and shall fairly present the
\nfinancial condition, income, changes in stockholders’ equity and cash flow of
\nthe Company on a consolidated basis, as applicable, as of the respective dates
\nthereof and for the respective periods covered thereby. Each financial statement
\ndelivered by the Company pursuant to this Section 6.1(a) shall be certified by
\nthe Company’s chief executive officer, president, treasurer or chief financial
\nofficer.<\/p>\n
(b) Annual Statements. The Company shall deliver to each
\nInvestor, as soon as practicable after the end of each fiscal year of the
\nCompany, and in any event within 90 days thereafter, true and complete copies of
\nthe consolidated and consolidating balance sheets of the Company and its
\nSubsidiary at the end of such year and the consolidated and consolidating
\nstatements of income, stockholders’ equity and cash flows of the Company and its
\nSubsidiary for such year, setting forth in each case in comparative form the
\nfigures for the previous fiscal year, all in reasonable detail and accompanied
\nby an opinion thereon of a firm of independent certified public accountants of
\nrecognized national standing selected by the Company and reasonably acceptable
\nto the Investors, which opinion shall state that such financial statements
\nfairly present the financial condition, income, changes in stockholders’ equity
\nand cash flow of the Company and its Subsidiary on a consolidated basis, as
\napplicable, and have been prepared in accordance with GAAP and that the
\nexamination of such accountants in connection with such financial statements has
\nbeen made in accordance with generally accepted auditing standards, and
\naccordingly included such tests of the accounting records and such other
\nauditing procedures as were considered necessary in the circumstances. Each
\nfinancial statement delivered by the Company pursuant to this Section 6.1(b)
\nshall be certified by the Company’s chief executive officer, president,
\ntreasurer or chief financial officer.<\/p>\n
(c) Certificate of No Default. Simultaneously with the
\ndelivery of the Financial Statements referred to in Section 6.1(a) and (b), the
\nCompany shall deliver to each Investor a certificate of the Company’s Chief
\nExecutive and Chief Financial Officer certifying that no default,
\nmisrepresentation or breach or event which with notice or lapse of time or both
\nwould become a default, misrepresentation or breach under any Scheduled Contract
\nor other material Contract, including without limitation under this Agreement or
\nany Company Document, has occurred or is continuing or if any such event has
\noccurred and is continuing a full description thereof.<\/p>\n
(d) Audit Reports. The Company shall deliver to each
\nInvestor, promptly upon receipt thereof, one copy of each other financial report
\nand internal control letter submitted to the Company by independent accountants
\nin connection with any annual, interim or special audit made by them of the
\nbooks of the Company and its Subsidiary, as applicable, as well as any responses
\nof the Company thereto.<\/p>\n
(e) Other Reports. The Company shall deliver to each
\nInvestor, promptly upon their becoming available, one copy of each financial
\nstatement, report, notice or proxy<\/p>\n
25<\/p>\n
statement sent by the Company to stockholders generally, of each financial
\nstatement, report, notice or proxy statement sent by the Company or any of its
\nSubsidiaries to the SEC or any successor agency, if applicable, of each regular
\nor periodic report and any registration statement, prospectus or written
\ncommunication (other than transmittal letters) in respect thereof filed by the
\nCompany or any of its Subsidiaries with, or received by such Person in
\nconnection therewith from, any securities exchange or the SEC or any successor
\nagency, of any press release issued by the Company or any of its Subsidiaries,
\nand of any material of any nature whatsoever prepared by the SEC or any
\nsuccessor agency thereto or any state blue sky or securities law commission
\nwhich relates to or affects in any way the Company or any of its Subsidiaries.<\/p>\n
(f) Requested Information. The Company shall deliver to each
\nInvestor, with reasonable promptness, such other documents, reports, data and
\ninformation as from time to time may be reasonably requested by such Investor.<\/p>\n
(g) Economic Impact Information. As soon as practicable after
\nthe end of each fiscal year (but in any event prior to January 31 of each year)
\nthe Company shall deliver to Prospect Street NYC Discovery Fund, L.P. a written
\nassessment of the economic impact of Prospect Street NYC Discovery Fund, L.P.’s
\ninvestment in the Company, specifying the full-time equivalent jobs created or
\nretained in connection with the investment, the impact of such investment on the
\nbusiness of the Company in terms of revenue and profits of the Company’s
\nbusiness and on Taxes paid by the Company and its employees.<\/p>\n
(h) Update of Information. Within 120 days after the end of
\neach fiscal year, the Company will furnish Prospect Street NYC Discovery Fund,
\nL.P. with the following information certified by the Company’s chief executive
\nofficer, president, treasurer or chief financial officer: (i) information
\nreasonably requested by Prospect Street NYC Discovery Fund, L.P. to determine
\nthe Company’s continuing eligibility for “Financing” under and as defined in the
\nSBIC Regulations and (ii) a statement verifying the use of the proceeds received
\nby the Company from Prospect Street NYC Discovery Fund, L.P. hereunder
\n(including the intended use of any such unused proceeds as of the date of such
\ncertification), until all of the proceeds received by the Company from Prospect
\nStreet NYC Discovery Fund, L.P. hereunder have been used by the Company. The
\nCompany will also notify Fund I (a) at least 15 days prior to taking any action
\nwhich would result in a change in the number of record holders of the Company’s
\nvoting stock from fewer than 50 to 50 or more or from 50 or more to fewer than
\n50 and (b) of any other action or occurrence which increased or decreased or
\nwould increase or decrease the number of record holders of the Company’s voting
\nstock from fewer than 50 to 50 or more or from 50 or more to fewer than 50, as
\nsoon as practicable after the Company becomes aware that such other action or
\noccurrence has occurred or is proposed.<\/p>\n
(i) Access. The Company shall permit, and shall cause its
\nSubsidiaries to permit, representatives designated by an any Investor, upon
\nreasonable prior notice to the Company and at the such Investor’s expense, to
\nvisit and inspect each of the Company’s and its subsidiaries’ properties, to
\nexamine their respective corporate and financial records (and make copies
\nthereof or extracts therefrom), to discuss their respective affairs, finances
\nand accounts with the<\/p>\n
26<\/p>\n
Company’s and its subsidiaries’ directors, officers, key employees and
\naccountants, all at such reasonable times as may be requested by such Investor.<\/p>\n
(j) Other Information. The Company shall provide, from time
\nto time, such additional information regarding the Company or its Subsidiaries
\nas any Investor reasonably may request, including without limitation, any
\ninformation or reports required by reason of reporting or regulatory
\nrequirements to which an Investor, its general partner (if applicable), or any
\nPerson having an interest in such Investor is subject.<\/p>\n
6.2 Exemption from Investment Company Act. The Company shall
\nconduct its business so that neither the Company nor any of its Subsidiaries
\nshall become an “investment company” within the meaning of the Investment
\nCompany Act of 1940, as amended.<\/p>\n
6.3 Accounting and Reserves. The Company shall, and the Company
\nshall cause each of its Subsidiaries to, maintain a standard and uniform system
\nof accounting and shall keep proper books and records and accounts in which
\nfull, true and correct entries shall be made of its transactions, all in
\naccordance with generally accepted accounting principles applied on a consistent
\nbasis through all periods, and shall set aside on such books for each fiscal
\nyear all such proper reserves for depreciation, obsolescence, amortization, bad
\ndebts and other purposes in connection with its operations as are required by
\nsuch principles so applied.<\/p>\n
6.4 Rights to Purchase Additional Securities.<\/p>\n
(a) The Company hereby grants to each Investor a right to
\npurchase up to such Investor’s “pro rata share” (as hereinafter defined) of any
\nNew Securities (as hereinafter defined) which the Company may, from time to
\ntime, propose to sell and issue. A “pro rata share”, for purposes hereof, is the
\nratio that (x) the aggregate number of Common Shares held by such Investor and
\nits Affiliates as of such date (assuming the exercise, conversion or exchange of
\nall Options, Warrants or convertible securities held by such Investor upon
\nconversion of, including the Series B Shares and Warrants) bears to (y) the sum
\nof (i) the total number of Common Shares then outstanding as of such date and
\n(ii) the total number of such shares issuable upon exercise, conversion of
\nSeries B Shares or exchange of all Options, Warrants and convertible securities
\nheld by all Investors as of such date.<\/p>\n
(b) Except as set forth below, “New Securities” shall mean
\nany shares of capital stock of the Company, including Common Shares and
\npreferred shares, whether now authorized or not, and rights, options, warrants
\nor any other agreements to purchase such shares of capital stock, and securities
\nof any type whatsoever. Notwithstanding the foregoing, New Securities does not
\ninclude: (i) securities issuable upon exercise or conversion of rights, options,
\nwarrants or other securities which are outstanding as of the date hereof and set
\nforth on Schedule 1; (ii) securities offered to the public generally pursuant to
\nan underwritten public offering and an effective registration statement under
\nthe Act; (iii) securities issued pursuant to the acquisition of another Person
\nby the Company which is not an Affiliate of the Company by means of a merger,
\npurchase of shares, purchase of substantially all of the assets or other
\nreorganization; (iv) up to 5,750,000 Common Share securities issued to
\nemployees, officers and directors of, and consultants to, the<\/p>\n
27<\/p>\n
Company, with the approval of the Board of Directors of the Company pursuant to
\nthe Stock Incentive Plan; (v) stock issued pursuant to any rights or agreements
\nincluding, without limitation, convertible securities, options and warrants,
\nprovided that the preemptive rights established hereby apply with respect to the
\ninitial sale or grant by the Company of such rights or agreements; and (vi)
\nsecurities issued in connection with any strategic partnership or joint venture,
\nthe primary purpose of which is not to raise equity capital.<\/p>\n
(c) In the event the Company proposes to undertake an
\nissuance of New Securities, it shall give each Investor written notice of its
\nintention, describing the type of New Securities, and the price and general
\nterms upon which the Company proposes to issue the same. Each Investor shall
\nhave twenty (20) business days from the date any such notice is given (the
\n“Preemption Period”) to agree to purchase all or any part of its pro rata share
\nof such New Securities for the price and upon the general terms specified in the
\nnotice, by giving written notice to the Company and stating therein the quantity
\nof New Securities to be purchased.<\/p>\n
(d) If any Investor fails so to notify the Company, then all
\nrights of such Investor to purchase New Securities under the offer and notice in
\nquestion shall terminate. If any Investor elects not to purchase all of its pro
\nrata share of the New Securities or fails to notify the Company of its intent to
\npurchase such New Securities prior to the expiration of the Preemption Period,
\nthe Company shall promptly notify the remaining Investors that such New
\nSecurities are available for purchase by the remaining Investors, on a “pro rata
\nshare” basis, in accordance herewith. In such event, each of the remaining
\nInvestors shall have five (5) business days after receipt of such notice to
\ndetermine whether to purchase any of such New Securities.<\/p>\n
(e) In the event the Investors have not in the aggregate
\nelected to purchase all of such New Securities which are being offered, the
\nCompany shall have ninety (90) days from the date of expiration of the
\nPreemption Period to sell the New Securities not elected to be purchased by the
\nInvestors at the price and upon general terms not materially no more favorable
\nto the third party purchaser(s) of such New Securities than specified in the
\nnotice given by the Company. In the event the Company has not sold the New
\nSecurities within such ninety (90) day period, the Company shall not thereafter
\nissue or sell any New Securities, without first offering such securities in the
\nmanner provided above.<\/p>\n
(f) The preemptive right granted under this Agreement shall
\nexpire upon the consummation of Qualified Public Offering, which shall mean a
\nsale of Common Shares by the Company that satisfies each of the following
\nconditions: (i) the sale of the Common Shares is effected in an underwritten
\npublic offering pursuant to an effective registration statement under the
\nSecurities Act of 1933, as amended, other than a registration relating solely to
\na transaction under Rule 145 under such Act (or any successor thereto) or to an
\nemployee benefit plan of the Company; (ii) such Common Shares upon issuance are
\nlisted on the New York Stock Exchange or included for trading in the Nasdaq
\nNational Market System; (iii) the offering price to the public is not less than
\n$1.904 per Common Share, adjusted for stock splits, stock dividends, other stock
\ncombinations or other like events; and (iv) the sales of Common Shares results
\nin at least $20,000,000 of gross proceeds to the Company, or, when considered
\ntogether with all previous underwritten public<\/p>\n
28<\/p>\n
offerings of the Company satisfying clauses (i), (ii) and (iii) above, at least
\n$30,000,000 of aggregate gross proceeds to the Company.<\/p>\n
6.5 Confidentiality. The Company agrees to maintain, and to cause
\nits agents and representatives to maintain, the confidentiality of the terms and
\nconditions of this Agreement and the Related Agreements (as defined in 4.10) and
\nall documents or information executed and\/or delivered in connection with the
\ntransactions contemplated by this Agreement and the Related Agreements (whether
\nfurnished before, on or after the date hereof) and to use such information and
\ndocuments only in connection with evaluating and\/or monitoring the Investors’
\ninvestment in the Company. The provisions of this subsection shall not apply to
\ninformation or to particular conditions or terms of the above referenced
\ndocuments (i) if the party seeking to make such disclosure shall have obtained
\nthe prior written consent of the other party to the disclosure of such
\ninformation, conditions or terms, (ii) that are required to be disclosed during
\nthe course of any litigation or arbitration which may be brought by either party
\nrelated to the provisions of any of the above referenced documents, (iii) that
\nare or become generally available to the public other than as a result of
\nactions taken by the party seeking to make such disclosure or its agents and
\nrepresentatives, (iv) that are required to be disclosed pursuant to and in
\naccordance with any law, rule or regulation applicable to the party seeking to
\nmake such disclosure, or (v) that are disclosed to the Company’s directors,
\nofficers, employees and agents, and representatives of the Company’s advisors
\nwho need to know the information for the purpose of evaluating a possible
\ntransaction and who agree to keep the information confidential.<\/p>\n
Notwithstanding the foregoing, if a party is requested or
\nrequired (by oral questions, interrogatories, requests for information or
\ndocument subpoena, civil investigative demand or similar process) to disclose
\nany of the above-referenced information or documents, such party will promptly
\nnotify the other party of such request so that such other party may seek an
\nappropriate protective order or waive compliance with the provisions hereof. If,
\nin the absence of a protective order or the receipt of a waiver hereunder, a
\nparty is nonetheless, in the opinion of its counsel, compelled to disclose any
\nterms or conditions of the above-references information or documents to any
\ntribunal or else stand liable for contempt or suffer other censure or penalty,
\nsuch party may disclose such information to such tribunal without liability
\nhereunder.<\/p>\n
The obligations in this Section 6.5 shall survive termination of
\nthis Agreement.<\/p>\n
6.6 Ordinary Course Obligations. As long as any Series B Shares
\nis outstanding, the Company agrees, and agrees to cause its subsidiaries to<\/p>\n
(a) Promptly pay and discharge, or cause to be paid and
\ndischarged when due and payable, all lawful taxes, assessments, and governmental
\ncharges or levies imposed upon the income, profits, property or business of the
\nCompany or its subsidiaries; provided, however, that any such tax, assessment,
\ncharge or levy need not be paid if the validity thereof shall currently be
\ncontested in good faith by appropriate proceedings and if the Company shall have
\nset aside on its books adequate reserves with respect thereof and provided
\nfurther, that the Company will pay all such taxes, assessments, charges or
\nlevies forthwith upon the commencement of proceedings to foreclose any Lien that
\nmay have attached as security therefor. The Company and its subsidiaries<\/p>\n
29<\/p>\n
will promptly pay or cause to be paid when due, or in conformance with customary
\ntrade terms, all other Indebtedness, defined earlier, incident to the operations
\nof the Company or its subsidiaries;<\/p>\n
(b) Keep its properties in good repair, working order and
\ncondition, reasonable wear and tear excepted, and from time to time make all
\nneedful and proper repairs, renewals, replacements, and additions and
\nimprovements thereto; and the Company and its subsidiaries will at all times
\ncomply with the provisions of all material leases and Scheduled Contracts and
\nother material Contracts to which any of them is a party or under which any of
\nthem occupies property so as to prevent any loss or forfeiture thereof or
\nthereunder;<\/p>\n
(c) Duly observe and conform to all valid requirements of
\ngovernmental authorities Governmental Authorities relating to the conduct of
\ntheir business or to their property or assets;<\/p>\n
(d) Maintain in full force and effect its corporate
\nexistence, rights and franchises and all licenses and other rights to use
\npatents, processes, licenses, trademarks, trade names, or copyrights owned or
\npossessed by it and deemed by the Company to be necessary material to the
\nconduct of its business;<\/p>\n
(e) Cause each employee, officer or consultant to enter into
\na Non-Disclosure and Developments Agreement;<\/p>\n
(f) Keep true records and books of accounts in which full,
\ntrue and correct entries will be made of all dealings or transactions in
\nrelation to its business and affairs in accordance with generally accepted
\naccounting principles applied on a consistent basis.<\/p>\n
6.7 Taxes Relating to this Agreement. The Company will pay all
\nTaxes (other than Federal, State or local income taxes) which may be payable in
\nconnection with the execution and delivery of this Agreement or the issuance of
\nthe Securities and the initial sale of the Securities hereunder or in connection
\nwith any modification of the Securities and will save the Investors harmless
\nwithout limitation as to time against any and all liabilities with respect to
\nall such Taxes. The obligations of the Company under this paragraph shall
\nsurvive any redemption, repurchase or acquisition of Securities by the Company
\nand the termination of this Agreement.<\/p>\n
6.8 Replacement of Instruments. Upon receipt by the Company of
\nevidence reasonably satisfactory to it of the ownership of and the loss, theft,
\ndestruction or mutilation of any certificate or instrument evidencing any of the
\nSecurities, and (a) in the case of loss, theft or destruction, of indemnity
\nreasonably satisfactory to it (provided that, if the owner of the same is an
\ninstitutional investor, its own agreement of indemnity shall be deemed to be
\nsatisfactory), or (b) in the case of mutilation, upon surrender and cancellation
\nthereof, the Company, at its expense, will execute, register and deliver, in
\nlieu thereof, a new certificate or instrument for an equal number of Securities.<\/p>\n
30<\/p>\n
6.9 Reincorporation in Delaware. As soon as practicable after the
\ndate hereof, the Company shall take all such steps as may be required to
\nreincorporate in the State of Delaware.<\/p>\n
6.10 SBA Forms; Inspection. Prior to the Closing, the Company
\nshall deliver to Prospect Street NYC Discovery Fund, L.P. any documentation
\nrequired pursuant to the SBA Act or the SBA Regulations, including, but not
\nlimited to: SBA Forms 480, 652 and 1031 and the SBA Certificate dated as of the
\nClosing and executed by the chief executive officer or president of the Company,
\nsubstantially in the form and to the effect of Exhibit L hereto. At the request
\nof Prospect Street NYC Discovery Fund, L.P., the Company shall permit Prospect
\nStreet NYC Discovery Fund, L.P. and\/or the SBA and\/or any Person designated by
\nProspect Street NYC Discovery Fund, L.P. to inspect any of the properties,
\ncorporate books and financial records of the Company, if any, to discuss their
\nrespective affairs and finances with the officers and employees of the Company
\nand to make extracts from the copies of such books and records, all at such time
\nas Prospect Street NYC Discovery Fund, L.P. may reasonably request, including,
\nbut not limited to, for purposes of verifying information provided to Prospect
\nStreet NYC Discovery Fund, L.P. and required by the SBA.<\/p>\n
6.11 Corporate Existence; Approvals. The Company and the
\nSubsidiary shall cause to be done all things necessary to preserve and keep in
\nfull force and effect the corporate existence of the Company and the Subsidiary
\nand any of their respective subsidiaries and all necessary approvals and
\nlicenses of any Governmental Authority and comply with all Laws applicable to
\nthe Company or any such subsidiary and comply with all agreements to which the
\nCompany or any such Subsidiary is a party, the violation of which could
\nreasonably be expected to result in a material adverse change in the business or
\nCondition, the Subsidiary or any of their respective subsidiaries.<\/p>\n
6.12 Taxes. The Company shall cause to be paid and discharged all
\nobligations when due and all Taxes imposed upon the Company, the Subsidiary or
\nany of their respective subsidiaries or upon their respective assets and
\nproperties or upon any part thereof, before the same shall become in default and
\nbefore late or default charges accrue, as well as all lawful claims for labor,
\nmaterials and supplies which, if unpaid, might become a Lien upon such property
\nor any part thereof, provided, however, that neither the Company nor such
\nSubsidiary shall be required to cause to be paid and discharged any such
\nobligation, Tax or claim so long as the validity thereof shall be contested in
\ngood faith by appropriate proceedings and the Company or such subsidiary, as the
\ncase may be, shall set aside on its books adequate reserves, in accordance with
\nGAAP, with respect to such obligation, Tax or claim so contested and provides
\nthat the applicable property is not at risk of being forfeited or foreclosed.<\/p>\n
6.13 Insurance. The Company shall keep adequately insured by duly
\nlicensed insurers all assets and properties of the Company and any Subsidiary of
\nthe Company, and also keep the Company and each such Subsidiary adequately
\ninsured at all times with responsible insurance carriers against liability on
\naccount of damage to persons or property and under all applicable workers’
\ncompensation laws. All such insurance shall be in such amounts and with such
\ncoverage as is consistent with coverage usually carried by corporations of a
\nsimilar size engaged in the same or similar business similarly situated and as
\nis satisfactory to each Investor.<\/p>\n
31<\/p>\n
6.14 Notice of Certain Events. The Company shall promptly notify
\neach Investor in writing of the commencement of any action or proceeding to
\nwhich the Company, the Subsidiary or any of their respective subsidiaries is a
\nparty where the amount in controversy is in excess of $50,000, singularly or
\ncumulatively, for all claims arising from a single incident, to which the
\nCompany or any such Subsidiary may be a party and (ii) of any default under any
\nIndebtedness with a principal amount of at least $50,000 or event or condition
\nwhich, with notice or lapse of time or both, would constitute such a Default
\nunder any such Indebtedness, specifying the nature and extent thereof and the
\naction (if any) which is proposed to be taken with respect thereto.<\/p>\n
6.15 Maintenance of Properties. The Company shall maintain and
\npreserve all of the assets and properties of the Company and any Subsidiary of
\nthe Company necessary or useful in the proper conduct of its business in good
\nworking order and condition, ordinary wear and tear excepted.<\/p>\n
6.16 Reservation of Shares. The Company will, for so long as any
\nInvestor has any rights to exercise the Warrants keep reserved the full number
\nof shares of Common Shares issuable upon exercise of the Warrants.<\/p>\n
6.17 Venture Capital Operating Company Status. Each Investor
\nshall have the right to consult with and advise the management of the Company
\nand to receive all materials provided to members of the board of directors of
\nthe Company so long as may be required to enable each Investor to qualify as a
\n“venture capital operating company” within the meaning of Section 2510.3-101 of
\nthe plan asset regulations promulgated by the United States Department of Labor
\n(“VCOC”). In addition, in the event that (i) any Investor is not entitled to
\ndesignate at least one (1) member for election to the Board of Directors of the
\nCompany, or (ii) the United States Department of Labor through formal or
\ninformal rules, regulations or interpretations provides, or it is otherwise
\nestablished through governmental or court action, that such representation does
\nnot constitute the exercise of management rights of the kind necessary to enable
\nsuch Investor to continue to qualify as a VCOC, then the Company and such
\nInvestor shall in good faith negotiate provisions to enable such Investor, at
\nall times that such Investor holds securities of the Company, exercise the
\nminimum amount of such management rights in order to continue to qualify as a
\nVCOC.<\/p>\n
6.18 Director and Officer Insurance. The Company shall keep in
\neffect all provisions in its certificate of incorporation and by-laws providing
\nfor exculpation of director and officer liability and indemnification of
\ndirectors and officers of the Company to the fullest extent permitted by
\napplicable Law, which provisions shall not be amended except as required by
\napplicable law or except as approved by the Board of Directors of the Company.
\nAt all times that the Stockholders Agreement is in effect, the Company shall
\ncause to be maintained director’s and officer’s liability insurance covering the
\ndirectors and officers of the Company on terms substantially no less
\nadvantageous to the directors and officers of the Company than such insurance in
\neffect on the date hereof.<\/p>\n
6.19 Further Assurances. The Company shall take such further
\nactions and otherwise assist and cooperate with the Investors required to make
\nany filings or obtain any<\/p>\n
32<\/p>\n
approvals with or from any Governmental Authority, including obtaining any
\napproval as may be necessary in order to effect the exercise of the Warrants.<\/p>\n
6.20 Use of Proceeds. The Company shall not, directly or
\nindirectly, use any of the proceeds received from the Investors hereunder to
\nengage in any activities with respect to which an SBIC is prohibited from
\nproviding funds by SBA Regulations, including without limitation 13 CFR ss.
\n107.720.<\/p>\n
6.21 Reports Under the Exchange Act. With a view to making
\navailable to the Investors the benefits of Rule 144 under the Securities Act and
\nany other rule or regulation of the Securities and Exchange Commission that may
\nat any time permit an Investor to sell securities of the Company to the public
\nwithout registration or pursuant to a registration on Form S-3, the Company
\nagrees to:<\/p>\n
(a) make and keep public information available, as those
\nterms are understood and defined in Rule 144 under the Securities Act, at all
\ntimes after the effective date of the first registration statement filed by the
\nCompany for the offering of its securities to the general public;<\/p>\n
(b) take such action as is necessary to enable the Investors
\nto utilize Form S-3 for the sale of their Registrable Securities;<\/p>\n
(c) file with the SEC in a timely manner all reports and
\nother documents required of the Company under the Securities Act and the
\nExchange Act; and<\/p>\n
(d) furnish to any Investor, so long as the Investor owns any
\nRegistrable Securities, forthwith upon request (i) a written statement by the
\nCompany that it has complied with the reporting requirements of Rule 144 under
\nthe Securities Act (at any time after the effective date of the first
\nregistration statement filed by the Company) and the Securities Act and Exchange
\nAct (at any time after it has become subject to such reporting requirements) or
\nthat it qualifies as a registrant whose securities may be resold pursuant to
\nForm S-3 (at any time it so qualifies), (ii) a copy of the most recent annual or
\nquarterly report of the Company and such other reports and documents so filed by
\nthe Company, and (iii) such other information as may be reasonably requested in
\navailing any Investor of any rule or regulation of the SEC which permits the
\nselling of any such securities without registration or pursuant to such form.<\/p>\n
6.22 Actions Requiring Written Consent of Investors. Until the
\nconsummation of a Qualified Public Offering, the Company shall not effect any of
\nthe following actions set forth in this Section 6.22 without prior written
\nconsent of, at any time of determination thereof, the holders of Securities
\nrepresenting at least 60% of the aggregate number of Conversion Shares then
\noutstanding or issuable upon conversion of the Shares or exercise of the
\nWarrants (the “Required Holders”):<\/p>\n
(a) Capital Expenditures. The Company shall not invest in
\nfixed assets and leasehold improvements or other capital expenditures
\n(including, without limitation, capital<\/p>\n
33<\/p>\n
leases) during (i) any calendar quarter (including any capital expenditures
\nincurred in 1998 prior to the date of the Closing) in excess of the lower of (i)
\n$250,000 or (ii) 5% of shareholders’ equity (subject to a minimum permissible
\namount of $100,000) in the aggregate or (ii) during a 12 month period (including
\ncapital expenditures incurred in 1998 prior to the date of the Closing) in
\nexcess of $1,000,000, in the aggregate, in each case with respect to the Company
\nand any Subsidiary.<\/p>\n
(b) Issuance of Capital Stock and Options. Other than
\npursuant to the Interactive Imaginations, Inc. 1998 Stock Incentive Plan (as
\namended from time to time thereafter in accordance therewith, the “Stock
\nIncentive Plan”), attached hereto as Exhibit M, or the issuance of securities to
\nthose holding any warrants, options, or convertible securities issued and
\noutstanding as of the date hereof and set forth on Schedule 1 hereto, the
\nCompany shall not issue, or enter into any agreement to issue, to any third
\nparty, employee, officer or director of, or consultant to, the Company, any
\ncapital stock or any options, warrants or other rights (contingent or otherwise)
\nto acquire capital stock (or securities directly or indirectly convertible into
\nor exchangeable for capital stock) of the Company.<\/p>\n
(c) Indebtedness. The Company shall not, nor shall it permit
\nany Subsidiary to, incur, create, permit to exist or assume directly or
\nindirectly any Indebtedness, other than (i) as set forth in Part 6.22(c) of
\nSchedule 1 and other than Indebtedness constituting capital lease obligations
\npermitted under Section 6.22(a) above and (ii) as an endorser of negotiable
\ninstruments for the payment of money deposited with the Company or any such
\nSubsidiary’s bank account for collection in the ordinary course of business.<\/p>\n
(d) Liens, Etc. The Company shall not, nor shall it permit
\nany Subsidiary to, mortgage, pledge, assign or otherwise encumber or permit to
\nbe encumbered any of the Company’s or any of such Subsidiary’s assets and
\nproperties, whether now owned or hereafter acquired, or acquire or agree to
\nacquire any property or assets upon conditional sale or other title retention
\nagreement, except for purchase money liens or otherwise in the ordinary course
\nof business and liens with respect to Indebtedness permitted under Section
\n6.22(c).<\/p>\n
(e) Change in Nature of Business. The Company shall not, nor
\nshall it permit any Subsidiary to, engage in any business described in the
\napproved Business Plan.<\/p>\n
(f) Dividends, Etc. The Company shall not declare or pay any
\ncash or asset dividend on any of its shares or make any other distribution or
\ndisposition of assets to stockholders in respect of its shares (or otherwise),
\nor make, or commit to make, any payment on account of the purchase, redemption
\nor other retirement of any of its shares or warrants or options therefor (except
\nfor the repurchase of shares held by employees of the Company upon termination
\nof such employment as provided in the Stockholders Agreement in an amount not to
\nexceed $100,000 in the aggregate with respect to the Company and any Subsidiary
\nof the Company).<\/p>\n
(g) Charter Documents, Directors. The Company shall not amend
\nthe certificate of incorporation or by-laws of the Company as in effect on the
\ndate of Closing or permit the Company’s Board of Directors to be increased to
\nmore or decreased to fewer than seven directors.<\/p>\n
34<\/p>\n
(h) Transactions with Affiliates. The Company shall not, nor
\nshall it permit any Subsidiary to, except for employment arrangements with
\nfull-time employees and transactions in effect on the date hereof and listed on
\nPart 2.9 of Schedule 1, directly or indirectly purchase, acquire or lease any
\nproperty from, or sell, transfer or lease any property to, or otherwise deal
\nwith, any current or former officer, director, stockholder, Affiliate or
\nAssociate of the Company or such Subsidiary or any Associate of any such
\nofficer, director, stockholder or Affiliate on terms less favorable to the
\nCompany than the terms which would apply in a similar transaction with a Person
\nwho is not enumerated above.<\/p>\n
(i) Conflicting Agreements. The Company shall not, nor shall
\nit permit any Subsidiary to, enter into any agreements or arrangements which by
\ntheir terms or reasonably foreseeable effect restricts or adversely affects the
\nCompany’s or such Subsidiary’s right and ability to meet its obligations to any
\nInvestor hereunder or under any of the Company Documents to which it is a party.<\/p>\n
(j) Merger, Consolidation, Sale of Assets. The Company will
\nnot, nor will it permit any of its Subsidiaries to, voluntarily liquidate or
\ndissolve, or consolidate or merge with or into any other Person, or permit any
\nother Person to consolidate with or merge with or into it or participate in a
\nshare exchange with or sell, lease, transfer, contribute or otherwise dispose of
\nany of its assets to any other Person (other than sales of inventory and worn
\nout and obsolete assets in the ordinary course of business as such business is
\nconducted in compliance with Section 6.22(e)), except that, subject in any event
\nto compliance with the last paragraph of this Section:<\/p>\n
(i) any Subsidiary of the Company may consolidate
\n with or merge into the Company or any wholly owned Subsidiary of
\n the Company if the Company or such wholly owned Subsidiary shall
\n be the continuing or surviving corporation.<\/p>\n
(ii) any Subsidiary of the Company may sell, lease,
\n transfer, contribute or otherwise dispose of its assets in whole
\n or in part to the Company or any wholly owned Subsidiary of the
\n Company, and may, following any such disposition in whole,
\n liquidate and dissolve.<\/p>\n
(k) Redemption. The Company shall not acquire any securities
\nof the Company except upon redemption of the Preferred Shares or from terminated
\nemployees pursuant to the terms of an agreement approved by the Board of
\nDirectors.<\/p>\n
(l) Employee Plans. The Company shall not adopt, or permit
\nany Subsidiary to adopt, any employee benefit, bonus, stock or option plan,
\nother than the Stock Incentive Plan, or materially modify the Stock Incentive
\nPlan.<\/p>\n
(m) Disposal of Assets. The Company shall not dispose of
\nassets of the Company, the Subsidiary or any of their respective subsidiaries
\nwith a value (a) in excess of the greater of (i) 5% of the Company’s capital
\n(subject to a minimum permissible amount of $100,000) or (ii) $250,000 or (b) in
\nexcess of, in the aggregate, $1,000,000 in any 12-month period.<\/p>\n
35<\/p>\n
(n) Auditors. The Company shall not appoint, reappoint or
\nchange the Company’s auditors.<\/p>\n
6.23 Non-Disclosure and Developments Agreements. The Company
\nshall cause each of its employees and consultants to enter into Non-Disclosure
\nand Developments Agreement in the form attached hereto as Exhibit K, and shall
\ncondition the participation of any employee or consultant in the Incentive Plan
\non such employee’s or consultant’s execution of such agreement.<\/p>\n
7. Miscellaneous.<\/p>\n
7.1 Expenses. The Company shall pay all stamp, documentary and
\nother taxes which may be payable in connection with the execution, delivery and
\nperformance of this Agreement, and the purchase and sale of the Securities. In
\naddition, at the Closing, the Company shall pay up to $100,000 towards
\nreasonable out-of-pocket fees and expenses incurred by the Investors in
\nconnection with this Agreement and the transactions contemplated hereby
\nincluding, without limitation, the reasonable fees and expenses of counsel for
\nthe Investors, including any legal fees and expenses relating to any future
\nwaiver, consent or amendment (whether or not any such future action is given or
\nconsummated). Upon the surrender by any Investor of any certificate for Series B
\nShares, Warrants or Conversion Shares to the Company or a transfer agent of the
\nCompany for exchange for instruments of other denominations or registered in
\nanother name or names, the Company will cause such new instruments to be issued
\nand will pay the cost of delivering to or from the office of such Investor from
\nor to the Company or its transfer agent, duly insured, the surrendered
\ninstrument and any new instruments issued in substitution or replacement for the
\nsurrendered instrument.<\/p>\n
7.2 Taxes. The Company will pay all taxes (other than Federal,
\nState or local income taxes) which may be payable in connection with the
\nexecution and delivery of this Agreement or the issuance of the Securities and
\nthe initial sale of the Securities hereunder or in connection with any
\nmodification of the Securities and will save you harmless without limitation as
\nto time against any and all liabilities with respect to all such taxes. The
\nobligations of the Company under this paragraph shall survive any redemption,
\nrepurchase or acquisition of Securities by the Company and the termination of
\nthis Agreement.<\/p>\n
7.3 Replacement of Instruments. Upon receipt by the Company of
\nevidence reasonably satisfactory to it of the ownership of and the loss, theft,
\ndestruction or mutilation of any certificate or instrument evidencing any Series
\nB Shares, Warrants or Conversion Shares, and<\/p>\n
(a) in the case of loss, theft or destruction, of indemnity
\nreasonably satisfactory to it (provided that, if the owner of the same is an
\ninstitutional lender or investor, its own agreement of indemnity shall be deemed
\nto be satisfactory), or<\/p>\n
(b) in the case of mutilation, upon surrender and
\ncancellation thereof, the Company, at its expense, will execute, register and
\ndeliver, in lieu thereof, a new certificate or instrument for (or covering the
\npurchase of) an equal number of Series B Shares, Warrants or Conversion Shares.<\/p>\n
36<\/p>\n
7.4 Use of Investors’ Names. The Company agrees and acknowledges
\nthat the Investors do not have responsibility for managing the business of the
\nCompany. The Company shall not, except as required by law, use the name of any
\nInvestor in any publicly available or otherwise widely disseminated document or
\ncommunication without the prior written consent of the Investor whose name is to
\nbe disclosed, which consent shall not be unreasonably withheld.<\/p>\n
7.5 Indemnification. The Company agrees to indemnify each
\nInvestor and each officer, director, employee, agent, partner, shareholder and
\nAffiliate of each Investor (collectively, the “Indemnified Parties”) for, and
\nhold each Indemnified Party harmless from and against, any and all damages,
\nfines, fees, penalties, diminution of value, deficiencies, losses and expenses,
\n(collectively, “Losses”) including, without limitation, interest, reasonable
\nexpenses of investigation, court costs, reasonable fees and expenses of
\nattorneys, accountants and other experts or other expenses of litigation or
\nother proceedings or of any claim, default or assessment (such fees and expenses
\nto include without limitation, all fees and expenses of attorneys, incurred in
\nconnection with (i) the investigation or defense of any claims by any Person who
\nis not party to this Agreement (a “Third Party”) or (ii) asserting or disputing
\nany rights under this Agreement against any party hereto or otherwise) arising
\nout of or suffered or incurred in connection with any of the following, whether
\ninvolving a claim by a Person that is a party hereto or a Third Party: (a) any
\nmisrepre sentation or any breach of any warranty made by the Company herein or
\nin any of the other Company Documents or by any constituent corporation in the
\nMerger Documents, (b) any breach or non-fulfillment of any covenant or agreement
\nmade by the Company herein or in any of the other Company Documents, (c) the
\nstatus of each Investor as a holder of securities of the Company, or (d) any
\nclaim relating to or arising out of a violation of applicable federal or state
\nsecurities laws by the Company in connection with the sale or issuance of the
\nSecurities by the Company to the Investors; provided, however, that the
\nindemnification shall not be required unless and until the total amount
\notherwise subject to indemnification hereunder exceeds thirty thousand dollars
\n($30,000) in the aggregate, in which event the Indemnified Parties will be
\nentitled to indemnification for the full amount of their Losses.<\/p>\n
7.6 Right to Rely. Notwithstanding any right of the Investors
\n(whether or not exercised) to investigate the affairs of the Company or any
\nright of any party (whether or not exercised) to investigate the accuracy of the
\nrepresentations and warranties of the other party contained in this Agreement or
\nthe waiver of any condition to Closing, the Company, on the one hand, and each
\nInvestor, on the other, have the right to rely fully upon the representations,
\nwarranties, covenants and agreements of the other contained in this Agreement.<\/p>\n
7.7 Survival. All representations, warranties, covenants and
\nagreements contained in or made pursuant to this Agreement or contained in any
\ncertificate delivered pursuant to this Agreement, shall remain operative and in
\nfull force and effect, regardless of any investigation made by or on behalf of
\nany party hereto, and shall survive the transfer and payment for the Securities
\nand the consummation of the transactions contemplated hereby.<\/p>\n
7.8 Successors and Assigns. This Agreement shall inure to the
\nbenefit of and be binding upon the successors and assigns of each of the parties
\nhereto.<\/p>\n
37<\/p>\n
7.9 Entire Agreement; Amendment and Waiver. This Agreement and
\nthe documents referred to herein, including, without limitation, the Company
\nDocuments, constitute the entire understanding of the parties hereto and
\nsupersedes all prior letters of intent, agreements or understandings among such
\nparties relating to the subject matter hereof.<\/p>\n
7.10 Applicable Law. The laws of the State of New York shall
\ngovern the interpretation, validity and performance of the terms of this
\nAgreement, regardless of the law that might be applied under its principles of
\nconflicts of law.<\/p>\n
7.11 Notices. All notices and other communications provided for
\nherein shall be dated and in writing and shall be deemed to have been duly given
\n(x) on the date of delivery, if delivered personally or by telecopier, receipt
\nconfirmed, (y) on the second following business day, if delivered by a
\nrecognized overnight courier service, or (z) seven days after mailing, if sent
\nby registered or certified mail, return receipt requested, postage prepaid, in
\neach case, to the party to whom it is directed at the following address (or at
\nsuch other address as any party hereto shall hereafter specify by notice in
\nwriting to the other parties hereto):<\/p>\n
(i) If to the Company, to it at the following address:<\/p>\n
Interactive Imaginations, Inc.
\n c\/o 24\/7 Media, Inc.
\n 1290 Avenue of the Americas
\n New York, NY 10104
\n Attn: Chief Executive Officer<\/p>\n
(ii) If to any Investor, to it at the address set forth
\n below its name on the signature page hereto.<\/p>\n
(iii) If to Prospect Street NYC Discovery Fund, L.P. or
\n Prospect Street NYC Co-Investment Fund, L.P., copies to the following
\n address:<\/p>\n
Morgan, Lewis & Bockius, LLP
\n 101 Park Avenue
\n New York, NY 10178
\n Attn: Ira White, Esq.<\/p>\n
7.12 Brokerage. Each party hereto will indemnify and hold
\nharmless each Investor and each officer, director, employee, agent, partner,
\nshareholder and Affiliate of each of the foregoing against and in respect of any
\nclaim for brokerage, finders’ fees or other commissions relative to this
\nAgreement or to the transactions contemplated hereby, based in any way on
\nagreements, arrangements or understandings made or claimed to have been made by
\nsuch party with any third party.<\/p>\n
38<\/p>\n
7.13 Severability. Each provision of this Agreement shall be
\ninterpreted in such manner as to be effective and valid under applicable law,
\nbut if any provision of this Agreement is held to be prohibited or invalid under
\napplicable law, such provision will be ineffective only to the extent of such
\nprohibition or invalidity, without invalidating the remainder of this Agreement.<\/p>\n
7.14 Descriptive Headings. The section and other headings
\ncontained in this Agreement are for convenience of reference only and shall not
\naffect the meaning or interpretation of this Agreement.<\/p>\n
7.15 Counterparts; Signatures by Facsimile. This Agreement may be
\nexecuted in two or more counterparts, each of which when so executed and
\ndelivered shall be deemed to be an original and all of which together shall be
\ndeemed to be considered one and the same agreement and shall become effective
\nwhen counterparts have been signed by each party and delivered to the other
\nparty. This Agreement, once executed by a party, may be delivered to the other
\nparties hereto by facsimile transmission of a copy of this Agreement bearing the
\nsignature of the parties so delivering this Agreement.<\/p>\n
7.16 Understanding Among Investors. The decision of each Investor
\nto purchase Securities pursuant to this Agreement has been made by such Investor
\nindependently of any other Investor and independently of any statements or
\nopinions as to the Condition of the Company which may have been made or given by
\nany other Investor or by any agent or employee of any other Investor. Each
\nInvestor acknowledges that no other Investor has acted as agent for such
\nInvestor in connection with making its investment hereunder and that no other
\nInvestor will be acting as agent of such Investor in connection with monitoring
\nits investment hereunder.<\/p>\n
7.17 Further Assurances. Each party shall do and perform, or
\ncause to be done and performed, all such further acts and things, and shall
\nexecute and deliver all such other agreements, certificates, instruments and
\ndocuments, as the other party may reasonably request both before and after the
\nClosing in order to carry out the intent and accomplish the purposes of this
\nAgreement and the consummation of the transactions contemplated hereby.<\/p>\n
7.18 Knowledge. When used herein, the phrase “to the knowledge
\nof” any Person, “to the best knowledge of” any Person, “known” to any Person or
\nany similar phrase, means (i) with respect to any Person who is an individual,
\nthe actual knowledge of such Person, and (ii) with respect to any other Person,
\nthe actual knowledge of any of the directors, officers, members, general
\npartners, stockholders or other similar Persons in a similar position or having
\nsimilar powers and duties; and, in the case of each of (i) and (ii), the
\nknowledge of facts that such individuals should have known after reasonable
\ninquiry.<\/p>\n
39<\/p>\n
IN WITNESS WHEREOF, the parties have executed this Agreement as
\nof the date first above written.<\/p>\n
THE COMPANY:<\/p>\n
INTERACTIVE IMAGINATIONS, INC.<\/p>\n
By: \/s\/ David J. Moore
\n ———————————-
\n David J. Moore
\n Chief Executive Officer<\/p>\n
40<\/p>\n
INVESTOR:<\/p>\n
The Travelers Insurance Company<\/p>\n
By: \/s\/ John W. Petchler
\n ——————————–
\n Name: John W. Petchler
\n Title: Senior Vice President<\/p>\n
Address: One Tower Square
\n Hartford, CT 06183-2030<\/p>\n
Number of Series B Shares: 3,333,334<\/p>\n
Number of Class A Warrants: 1,666,667<\/p>\n
Number of Class B Warrants: 1,666,667<\/p>\n
Aggregate Purchase Price: $3,333,334<\/p>\n
41<\/p>\n
INVESTOR:<\/p>\n
Prospect Street NYC Discovery Fund, L.P.
\n By: Prospect Street Discovery Fund, Inc.
\n its General Partner<\/p>\n
By: \/s\/ John Barry
\n —————————————
\n Name: John Barry<\/p>\n
Address: 250 Park Avenue, 17th Floor
\n New York, New York 10177<\/p>\n
Number of Series B Shares: 2,500,000<\/p>\n
Number of Class A Warrants: 1,250,000<\/p>\n
Number of Class B Warrants: 1,250,000<\/p>\n
Aggregate Purchase Price: $2,500,000<\/p>\n
43<\/p>\n
Prospect Street NYC Co-Investment Fund, L.P.
\n By: Prospect Street Co-Investment Fund, LLC,
\n its General Partner<\/p>\n
By: \/s\/ John Barry
\n ——————————–
\n Name: John Barry<\/p>\n
Address: 250 Park Avenue, 17th Floor
\n New York, New York 10177<\/p>\n
Number of Series B Shares: 833,334<\/p>\n
Number of Class A Warrants: 416,667<\/p>\n
Number of Class B Warrants: 416,667<\/p>\n
Aggregate Purchase Price: $833,334<\/p>\n
42<\/p>\n
INVESTOR:<\/p>\n
Big Flower Digital Services, Inc.<\/p>\n
By: \/s\/ Mark A. Angelson
\n —————————————
\n Name: Mark A. Angelson
\n Title: Executive Vice President<\/p>\n
Address: c\/o Big Flower Holdings, Inc.
\n 3 E. 54th Street
\n New York, New York 10022
\n Attn: Associate General Counsel <\/p>\n
Number of Series B Shares: 3,333,334<\/p>\n
Number of Class A Warrants: 1,666,667<\/p>\n
Number of Class B Warrants: 1,666,667<\/p>\n
Aggregate Purchase Price: $3,333,334<\/p>\n
44<\/p>\n
INVESTOR:<\/p>\n
\/s\/ David J. Moore
\n ———————————
\n David J. Moore<\/p>\n
Address: c\/o 24\/7 Media, Inc.
\n 1290 Avenue of the Americas
\n New York, New York 10104<\/p>\n
Number of Series B Shares: 60,000<\/p>\n
Number of Class A Warrants: 30,000<\/p>\n
Number of Class B Warrants: 30,000<\/p>\n
Aggregate Purchase Price: $60,000<\/p>\n
45<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[6536],"corporate_contracts_industries":[9503],"corporate_contracts_types":[9622,9627],"class_list":["post-43576","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-247-media-inc","corporate_contracts_industries-services__advertising","corporate_contracts_types-planning","corporate_contracts_types-planning__purchase"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/43576","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=43576"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43576"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43576"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43576"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}