Exhibit 10.2
AGREEMENT
AGREEMENT dated as of July 18, 2001, by and between CROSS MEDIA
MARKETING CORPORATION (formerly known as Symposium Corporation), a Delaware
corporation, with principal executive offices located at 000 Xxxxx Xxxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Company"), and THE SHAAR FUND LTD., c/x
Xxxxxxxx Capital Management, Inc., 0 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx,
Xxx Xxxx 00000 ("Shaar").
W I T N E S S E T H:
WHEREAS, the Company and the Shaar are parties to a Securities
Purchase Agreement dated as of June 9, 2000 (the "June Agreement"), pursuant to
which, among other things, the Company issued and sold to Shaar, and Shaar
purchased from the Company, Thirty Thousand Three Hundred Seventy Five (30,375)
shares of the Company's Series A Convertible Preferred Stock, par value $.001
per share (the "June Preferred Shares"), and a warrant (the "June Warrant") to
purchase up to Two Hundred Twenty Five Thousand (225,000) shares of the
Company's Common Stock, par value $.001 per share ("Common Stock");
WHEREAS, the Company and the Shaar are parties to a Securities
Purchase Agreement dated as of August 1, 2000 (the "August Agreement"), pursuant
to which, among other things, the Company issued and sold to Shaar, and Shaar
purchased from the Company, Twenty Thousand Two Hundred Fifty (20,250) shares of
the Company's Series A Convertible Preferred Stock, par value $.001 per share
(the "August Preferred Shares", and together with the June Preferred Shares, the
"Preferred Shares") and a warrant (the "August Warrant", and together with the
June Warrant, the "375,000 Share Warrant") to purchase up to One Hundred Fifty
Thousand (150,000) shares of the Company's Common Stock;
WHEREAS, the Company and Shaar entered into Letter Agreements dated
December 28, 2000, February 27, 2001 and June 8, 2001, pursuant to which the
Company and Shaar amended certain terms and provisions relative to the rights of
the holder of the Preferred Shares and the Company;
WHEREAS, the Company has entered into a merger agreement with
LifeMinders, Inc., a Delaware corporation ("LifeMinders"), in the form of
Exhibit A attached hereto (as the same may be amended from time to time and
subject to Section I.C. hereof, the "Merger Agreement"), pursuant to which the
Company will enter into a merger transaction with LifeMinders (the "Merger
Transaction"); and
WHEREAS, the Company and Shaar desire to enter into this Agreement
which provides, among other things and subject to the terms herein, that (i)
upon the closing of the Merger Transaction, the Company will redeem, at Shaar's
election, certain of the Preferred Shares; Shaar will convert certain of the
Preferred Shares into Common Stock; certain terms of the 375,000 Share Warrant
will be amended; and the Company will issue to Shaar a warrant to purchase up to
Two Hundred Fifty Thousand (250,000) shares of the Company's Common Stock, and
(ii) upon the termination of the Merger Transaction or the failure of the Merger
Transaction to close on or prior to the first anniversary date hereof, Shaar
will elect from the alternatives set forth in this Agreement with respect to,
among other things, the modification of certain terms of the Preferred Shares.
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto, intending to be legally bound,
hereby agree as follows:
I. THE TRANSACTIONS.
A. Transaction Upon Closing of Merger Transaction. Subject to the terms
and conditions contained herein, simultaneously with the closing of
Merger Transaction (the "Merger Closing"):
1. Shaar will convert a minimum of Twenty Five Thousand Three
Hundred Twelve and One Half (25,312.5) Preferred Shares into
Common Stock at a conversion price of $1.48 per share, which
equates to One Million Seven Hundred Ten Thousand Three
Hundred Four (1,710,304) shares of Common Stock (the
"Mandatory Conversion Shares").
2. The Company will redeem, for cash, Twenty Five Thousand Three
Hundred Twelve and One Half (25,312.5) Preferred Shares (the
"Optional Redemption Shares") for a redemption price of Two
Million Five Hundred Thirty-One Thousand Two Hundred Fifty
Dollars ($2,531,250), which equates to $100 per Optional
Redemption Share (the "Redemption Price").
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However, notwithstanding the foregoing, Shaar may elect, at
its option, by delivery of written notice to the Company at
least ten (10) days prior to the Merger Closing, to convert
all of its Optional Redemption Shares into Common Stock (the
"Optional Conversion Shares"), in which event, if Shaar
converted all the Optional Redemption Shares and the Mandatory
Conversion Shares, it would receive a total of 3,420,608
shares of Common Stock ($5,062,500 stated value/$1.48). In
addition, Shaar may, at its option, convert a portion of the
Optional Redemption Shares at $1.48 per share and have the
remaining unconverted Optional Redemption Shares redeemed at
the Redemption Price. The Company shall give Shaar written
notice of the date of the intended Merger Closing at least
twenty (20) days prior to such date. Shaar hereby waives all
notice provisions with respect to such redemption set forth in
the Corrected Certificate of Designation covering the
Preferred Shares (the "Series A Preferred Certificate of
Designation") to the extent such provisions differ from the
provisions set forth herein.
3. In order to induce Shaar to execute and deliver this Agreement
and in consideration of Shaar's agreement to convert at least
25,312.5 Preferred Shares into Common Stock, the Company will
pay Shaar the sum of $968,750 (as such sum may be reduced
pursuant to Section I.A.4 below, the "Conversion Payment"). At
Shaar's election, to be made by delivery of written notice to
the Company at least ten (10) days prior to the Merger
Closing, the Conversion Payment will be made: (a) wholly in
cash, (b) in cash and additional shares of Common Stock, or
(c) wholly in additional shares of Common Stock. For each
additional share of Common Stock Shaar elects to receive
pursuant to this Section I.A.3 (each, an "Additional
Conversion Share"), the cash portion of the Conversion Payment
shall be reduced by $1.48.
4. To the extent that Shaar converts any Preferred Shares into
Common Stock during the period commencing on the date hereof
and ending on the date of the Merger Closing, the number of
Preferred Shares so converted shall reduce, on a one for one
basis, First, the number of Optional Redemption Shares set
forth in Section I.A.2. until completely exhausted and next,
the number of Mandatory Conversion Shares set forth in Section
I.A.1. The Conversion Payment will be reduced by $1.48 for
each share of Common Stock issued upon the conversion of the
Preferred Shares pursuant to this Section I.A.4. until reduced
to zero
5. All accrued and unpaid dividends on the Preferred Shares (both
the shares converted and those redeemed) through and including
the date of the Merger Closing will be paid through the
issuance of additional shares of Common Stock, based upon a
per share price $1.48.
6. The Company will issue to Shaar, in exchange for the 375,000
Share Warrant (i) a new warrant to purchase up to Three
Hundred Seventy Five
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Thousand (375,000) shares of Common Stock (the "New 375,000
Share Warrant") in the form of Exhibit B, and (ii) a five year
warrant to purchase up to Two Hundred Fifty Thousand (250,000)
shares of Common Stock (the "250,000 Share Warrant"; and
together with the New 375,000 Share Warrant, the "New
Warrants") in the form of Exhibit C annexed hereto, at an
exercise price, in the case of the 250,000 Share Warrant,
equal to the per share value ascribed to the Company's share
price in connection with the Merger Transaction which, as of
the date hereof, is anticipated to be a approximately $1.98
per share.
7. The Mandatory Conversion Shares, the Optional Conversion
Shares, the Additional Conversion Shares, if any, and the
Common Stock issuable upon exercise of the New 375,000 Share
Warrant shall be "Registrable Securities" (as defined in that
certain Registration Rights Agreement dated June 9, 2000
between the Company and Shaar (the "Registration Rights
Agreement")) and the Company shall promptly prepare and file
with the Securities and Exchange Commission (the "Commission")
such amendments (including post-effective amendments to
registration statement) and supplements to the registration
statement previously filed by the Company and the prospectus
in connection therewith, as are necessary so as to keep the
registration statement continuously effective and in
compliance with the provisions of the Securities Act of 1933,
as amended (the "Securities Act"), so as to permit the
prospectus forming part thereof to be current and usable for
resales of Registrable Securities for a period of two (2)
years from the date the registration statement covering such
Registrable Securities was first effective. The provisions of
this Section I.A.7. shall supplement the provisions of clause
(i) of Section 3(a) of the Registration Rights Agreement.
8. During the period commencing on the date of the Merger Closing
and ending on the one year anniversary thereof, Shaar will not
sell more new shares of Common Stock acquired upon conversion
of the Preferred Shares (including, without limitation
Mandatory Conversion Shares, Optional Conversion Shares and
Additional Conversion Shares, and Common Stock issuable upon
exercise of the New 375,000 Share Warrant, than it would
otherwise be able to sell if such sales were limited by the
dribble out provisions of Rule 144 (e)(1) of the Securities
Act.
B. Transaction Upon Termination of Merger Transaction. Within three (3)
days after the date which is the earlier of (i) the date of
termination or abandonment of the Merger Transaction, or (ii) the
eleven (11) month anniversary of the date hereof (the "Termination
Date"), Company shall give Shaar written notice (the "Termination
Notice") that the Termination Date has occurred. Within ten (10)
days of receiving the Termination Notice, Shaar shall give written
notice to the Company electing one of the alternative transactions
set forth in Sections I.B.1 or I.B.2. hereinbelow, which transaction
the parties shall use reasonable best efforts
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to close (the "Exchange Closing") within ten (10) days after notice
of such election is given by Shaar.
1. The Company will issue to Shaar (i) in exchange for the all of
the Preferred Shares owned by Shaar, an equal number of shares
of the Company's Series A-1 Convertible Preferred Stock, par
value $.001 per share (the "Series A-1 Preferred Shares"), the
terms of which are set forth in the form of the Company's
Certificate of Designation attached hereto as Exhibit D (the
"Series A-1 Certificate of Designation") and (ii) in exchange
for the 375,000 Share Warrant, the New 375,000 Share Warrant;
or
2. The Company will issue to Shaar, in exchange for the all of
the Preferred Shares owned by Shaar, an equal number of shares
of the Company's Series A-1-A Convertible Preferred Stock, par
value $.001 per share, (the "Series A-1-A Preferred Shares")
the terms of which are set forth in the form of the Company's
Certificate of Designation attached hereto as Exhibit E (the
"Series A-1-A Certificate of Designation").
The Series A-1 Preferred Shares or the Series A-1-A Preferred Shares issued
pursuant to this Section X.X.XX are hereinafter sometimes referred to as the
"Exchange Preferred Shares." The shares of Common Stock issuable upon conversion
of the Exchange Preferred Shares shall at all times be deemed to be Registrable
Securities and promptly following the Exchange Closing the Company shall file
all necessary or appropriate supplements, amendments and other documents in
order for all Registrable Securities to be registered for resale under the
Company's Registration Statement on form S-3 (Reg No. 333-53654) or such other
registration statement, in accordance with the Registration Rights Agreement.
At the Exchange Closing, the Company will pay to Shaar, through the issuance of
Common Stock all accrued and unpaid dividends on the Preferred Shares through
and including the date of the Exchange Closing, the number of shares of Common
Stock so issuable in respect of any period from and after the most recent
dividend payment due date to be determined by using a denominator of $1.48 and
if applicable, the number of shares of Common Stock in respect of any period
prior to the recent dividend payment due date to be determined by using a
denominator equal to the lesser of (i) the Conversion Price (as defined the
Series A Preferred Certificate of Designation) and (ii) $1.48.
C. Transaction in the Event of a Change to the Merger Agreement.
Anything herein to the contrary notwithstanding, in the event that
there is a change to any term or provision of the Merger Agreement
as in effect on the date hereof that Shaar determines, in good
faith, materially, adversely affects its interests, Shaar may elect,
upon written notice to the Company at least ten (10) days prior to
the Merger Closing (i) to accept such change, in which event such
change shall have no effect on the rights or obligations of the
parties hereunder and the Merger Agreement, as changed, shall be
deemed the "Merger Agreement" in effect on the date hereof, or (ii)
proceed under Section I.B. as if such change was a termination of
the Merger Agreement. If Shaar elects the alternative set forth in
clause (ii)
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above, then the Company shall have the right to redeem the Preferred
Shares (notwithstanding the Series A Certificate of Designation or
the Letter Agreement (as hereinafter defined) to the contrary), upon
written notice to Shaar within five (5) days of Shaar's election, at
a redemption price equal to $100 per share plus accrued and unpaid
dividends thereon as of the date of the redemption, subject to and
simultaneously with the closing under the Merger Agreement and
Shaar's right to convert the Preferred Shares at any time prior to
the redemption price being paid to Shaar pursuant to paragraph 2 of
the Letter Agreement. If the Company does not so elect to redeem the
Preferred Shares, then the provisions of Section I.B shall apply and
Shaar shall give written notice to the Company electing one of the
alternative transactions set forth in Sections I.B.1 or I.B.2,
subject to Shaar's right to convert the Preferred Shares at any time
prior to the redemption price being paid to Shaar pursuant to
paragraph 2 of the Letter Agreement. If Shaar accepts any material
change to the Merger Agreement pursuant to clause (i) of the first
sentence of this Section I.C, the provisions of this Section shall
continue to apply to any additional change made to the Merger
Agreement after Shaar's election hereunder. The Company shall give
Shaar written notice, and provide it with a copy, of all changes to
the Merger Agreement within three (3) days of the execution of such
amendments.
D. Delivery of Opinion and Certificate at the Closing. At the Merger
Closing or the Exchange Closing, as the case may be, the Company
shall deliver to Shaar (i) an opinion of counsel to the Company,
dated such closing date, in form and substance satisfactory to Shaar
(it being understood that such opinion shall be similar in all
respect to the opinion delivered to Shaar at the closing of the June
Agreement the "June Opinion", except that such opinion shall not
cover the matters addresses in the last sentence of paragraph 3, the
first sentence of paragraph 6, or paragraph 7 of the June Opinion);
and (ii) a certificate of an officer of the Company containing usual
and customary certifications as of such closing date.
E. Status Pending the Merger Closing and Exchange Closing.
1. Simultaneously with the execution of this Agreement, the
Company and Shaar shall execute and deliver to each other the
Letter Agreement (the "Letter Agreement") attached hereto as
Exhibit F.
2. Within ten (10) days following the execution of this
Agreement, the Company will issue to Shaar 220,521 shares of
Common Stock in respect of accrued and unpaid dividends on the
Preferred Shares through January 1, 2001 and an additional
186,799 shares of Common Stock in respect of accrued and
unpaid dividends on the Preferred Shares through July 1, 2001.
Shaar acknowledges and confirms that the such divided
payments, when made, will have been made in accordance with
agreements between Shaar and the Company, and that the Company
is not and has not been in default with respect to its
dividend payment obligations under the Preferred Shares. Shaar
waives the provisions of Section V.D. of the June
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Agreement and the August Agreement with respect to the timely
payment of dividends pursuant to this Section I.E.
3. Effective as of the date hereof and continuing through and
after the Merger Closing or the Exchange Closing, as
applicable, the five percent (5%) limitation set forth in
Section 6.1(b) of the Series A Preferred Certificate of
Designation which limits the right of the holder to convert
the Preferred Shares into Common Stock shall be deemed to be a
ten percent (10%) limitation.
II. SHAAR'S REPRESENTATIONS.
X. Xxxxx represents and warrants to the Company that this Agreement and
the Letter Agreement have been duly and validly authorized, executed
and delivered by Shaar and is valid and binding agreements of Shaar
enforceable against it in accordance with their respective terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally.
X. Xxxxx hereby confirms that the representations and warranties set
forth in Sections II.A.(with respect to the shares of Common Stock
to be issued upon conversion of all shares of Preferred Stock
pursuant to Section I.A hereof and the New Warrants or if
applicable, the Exchange Preferred Shares) through G, Section II.I
(with respect to the Preferred Shares, the Exchange Preferred
Shares, the existing 375,000 Share Warrant and the New Warrants, as
applicable), and Section II. J (with respect to this Agreement and
the Letter Agreement) of the June Agreement are true and correct as
of the date hereof and will be true and correct in all material
respects as of the date of the Merger Closing or the Exchange
Closing, as the case may be.
X. Xxxxx has taken no action which would give rise to any claim by any
person for brokerage commissions, finder's fees or similar payments
relating to this Agreement, the Letter Agreement or the transactions
contemplated hereby or thereby.
III. COMPANY'S REPRESENTATIONS.
The Company represents and warrants to Shaar that:
A. Capitalization.
All of the issued and outstanding shares of the Company's capital stock
have been duly authorized and validly issued and are fully paid and
non-assessable. The shares of Common Stock issuable upon conversion of the
Preferred Shares have been, and upon issuance thereof to Shaar on the Exchange
Date, the shares of Common Stock issuable upon conversion of the Series A-1
Preferred Shares or the Series A-1-A Preferred Shares, as the case may be,
without duplication (collectively, the "New Conversion Shares"), and the shares
of Common Stock issuable upon exercise of the 375,000 Share Warrant have been,
and upon issuance thereof at the
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Merger Closing, the New 375,000 Share Warrant and the 250,000 Share Warrant,
without duplication (collectively, the "Warrant Shares"), will have been duly
and validly authorized and reserved for issuance by the Company, and when issued
by the Company upon conversion of or in lieu of accrued dividends on the
applicable preferred shares, or on exercise of the warrants, as applicable, will
be duly and validly issued, fully paid and non-assessable and will not subject
the holder thereof to personal liability by reason of being such holder.
B. Organization; Reporting Company Status.
1. Each of the Company and its subsidiaries is a corporation duly
organized, validly existing and in good standing under the
laws of the jurisdiction in which it is incorporated and is
duly qualified as a foreign corporation in all jurisdictions
in which the failure to so qualify would have a material
adverse effect on the business, properties, prospects,
condition (financial or otherwise) or results of operations of
the Company and the subsidiaries or on the consummation of any
of the transactions contemplated by this Agreement (a
"Material Adverse Effect").
2. The Company has registered its Common Stock pursuant to
Section 12(b) of the Exchange Act and has timely filed with
the Commission all reports and information required to be
filed by it pursuant to all reporting obligations under
Section 13(a) or 15(d), as applicable, of the Exchange Act for
the 24-month period immediately preceding the date hereof or
such shorter period as the Company was required to file such
reports and information (collectively, the "Commission
Filings"). The Common Stock is listed on the American Stock
Exchange under the symbol "XMM" and the Company has not
received any notice regarding, and to its knowledge there is
no threat, of the termination or discontinuance of the
eligibility of the Common Stock for such listing.
C. Authorized Shares. The Company has duly and validly authorized and
reserved for issuance shares of Common Stock, sufficient in number
for the conversion of the Preferred Shares, the Series A-1 Preferred
Shares and the Series A-1-A Preferred Shares, without duplication,
and the exercise of the 375,000 Share Warrant, the New 375,000 Share
Warrant and the 250,000 Share Warrant, without duplication,
(assuming for purposes of this Section a conversion price and
exercise price of $.25, it being understood, however, that, if Shaar
elects to exchange the Preferred Shares for the Series A-1 Preferred
Shares, then following such exchange the Company shall be required
to reserve only such number of shares of Common Stock in respect of
the Series A-1 Preferred Shares as may, from time to time, actually
be issuable upon conversion of the Series A-1 Preferred Share). The
Company acknowledges that its obligation to issue New Conversion
Shares and Warrant Shares in accordance with this Agreement, the
applicable certificate of designation and the applicable warrant is
absolute and unconditional regardless of the dilutive effect that
such issuance may have on the ownership interests of other
stockholders of the Company.
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D. Authority; Validity and Enforceability. The Company has the
requisite corporate power and authority to file and perform its
obligations under the Series A Preferred Certificate of Designation,
and either the Series A-1 Certificate of Designation and the Series
A-1-A Certificate of Designation and to enter into this Agreement,
the Letter Agreement, the New 375,000 Share Warrant and the 250,000
Share Warrant (collectively, the "Documents"), and to perform all of
its obligations hereunder and thereunder. The execution, delivery
and performance by the Company of the Documents, and the
consummation by the Company of the transactions contemplated hereby
and thereby (including, without limitation, the filing of the
applicable certificate of designation with the Office of the
Secretary of State of the State of Delaware and the issuance of the
securities pursuant to the terms of the Documents), have been duly
authorized by all necessary corporate action on the part of the
Company. Each of this Agreement and the Letter Agreement has been
duly and validly executed and delivered by the Company and, at or
prior to the Merger Closing or the Exchange Closing, as the case may
be, the applicable certificate of designation will have been duly
executed by the Company and filed with the Office of the Secretary
of State of the State of Delaware by the Company. Each of this
Agreement, the Letter Agreement and the Series A Certificate of
Designation constitutes, and upon execution and delivery and filing
thereof with the Secretary of State of the State of Delaware the
Series A-1 Certificate of Designation or the Series A-1-A
Certificate of Designation, as the case may be, will constitute,
valid and binding obligation of the Company enforceable against it
in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally. The
securities to be issued pursuant to the Documents (the "Securities")
have been duly and validly authorized for issuance by the Company
and, when executed and delivered by the Company, will be valid and
binding obligations of the Company enforceable against it in
accordance with their terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally.
E. Authorization of the Securities. As of the Merger Closing or the
Exchange Closing, as the case may be, the Series A-1 Preferred
Shares and the Series A-1-A Preferred Shares will be, and upon
payment of the consideration provided therefor and the issuance
thereof in accordance with the applicable certificate of designation
and warrant, respectively, the New Conversion Shares and the Warrant
Shares (collectively, the "Securities") will be, validly issued and
outstanding, fully paid and nonassessable, and not subject to any
preemptive rights, rights of first refusal or other similar rights.
F. Non-contravention. The execution and delivery by the Company of the
Documents, the issuance of the Securities, and the consummation by
the Company of the other transactions contemplated hereby and
thereby, including, without limitation, the filing of the applicable
certificate of designation with the Office of the Secretary of State
of the State of Delaware, do not, and will not, conflict with or
result in a breach by the Company or any subsidiary of any of the
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terms or provisions of, or constitute a default (or an event which,
with notice, lapse of time or both, would constitute a default)
under (i) the certificate of incorporation or by-laws of the Company
or any subsidiary or (ii) any indenture, mortgage, deed of trust or
other material agreement or instrument to which the Company or any
subsidiary is a party or by which its or their properties or assets
are bound, or any law, rule, regulation, decree, judgment or order
of any court or public or governmental authority having jurisdiction
over the Company or any subsidiary or any of their properties or
assets. The Company is not in violation of its Certificate of
Incorporation, Bylaws, the June Agreement, the August Agreement or
the Registration Rights Agreement or, except a set forth on Schedule
1 annexed hereto, any other agreement to which the Company is party
which, in the case of a violation of such other agreement, would
have a Material Adverse Effect.
G. Approvals. No authorization, approval or consent of any third party
or entity, including, without limitation, any court or public or
governmental authority is required to be obtained by the Company for
the issuance and sale of the Securities to Shaar as contemplated by
this Agreement, except such authorizations, approvals and consents
that have been obtained by the Company prior to the date hereof.
H. Commission Filings. None of the Commission Filings contained at the
time they were filed any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or
necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
I. Compliance with Laws; Permits. Each of the Company and its
subsidiaries is in compliance with all laws, rules, regulations,
codes, ordinances and statutes (collectively "Laws") applicable to
it or to the conduct of its business, except for such noncompliance
which would not have a Material Adverse Effect. The Company and the
subsidiaries possess all permits, approvals, authorizations,
licenses, certificates and consents from all public and governmental
authorities which are necessary to conduct their business, except
for those the absence of which would not have a Material Adverse
Effect.
J. Securities Law Matters. Based, in part, upon the continuing accuracy
of the representations and warranties of Shaar set forth in the June
Agreement and the August Agreement, the offer and sale by the
Company of the Securities is exempt from (i) the registration and
prospectus delivery requirements of the Securities Act and the rules
and regulations of the Commission thereunder and (ii) the
registration and/or qualification provisions of all applicable state
securities and "blue sky" laws. The Company shall not directly or
indirectly take, and shall not permit any of its directors, officers
or affiliates directly or indirectly to take, any action (including,
without limitation, any offering or sale to any person or entity of
the Preferred Shares or shares of Common Stock or any of the other
Securities), so as to make unavailable the exemption from Securities
Act
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registration being relied upon by the Company for the offer and sale
to Shaar of the Securities as contemplated by this Agreement. No
form of general solicitation or advertising has been used or
authorized by the Company or any of its officers, directors or
affiliates in connection with the offer or sale of the Securities as
contemplated by this Agreement or any other agreement to which the
Company is a party.
IV. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
A. Reserved New Conversion Shares. The Company at all times from and
after the date hereof shall have a sufficient number of shares of
Common Stock duly and validly authorized and reserved for issuance
to satisfy the conversion, in full, and full payment of dividends
on, the outstanding Preferred Shares, the Series A-1 Preferred
Shares and the Series A-1-A Preferred Shares, without duplication,
and the exercise in full of the 375,000 Share Warrant, the New
375,000 Share Warrant and the 250,000 Share Warrant, without
duplication (assuming for purposes of this Section a conversion
price of $.25, it being understood, however, that, if Shaar elects
to exchange the Preferred Shares for the Series A-1 Preferred
Shares, then following such exchange the Company shall be required
to reserve only such number of shares of Common Stock in respect of
the Series A-1 Preferred Shares as may, from time to time, actually
be issuable upon conversion of the Series A-1 Preferred Share).
After the Merger Closing or the Exchange Closing, the Company shall
be required to reserve only such number of shares of Common Stock in
respect of the New Warrants, as may, from time to time, actually be
issuable upon exercise of the New Warrants.
B. Prior Agreement and Covenants. Except as specifically provided
herein to the contrary, each and every agreement, obligation, right,
covenant and acknowledgment set forth in the Registration Rights
Agreement and Sections IV, V and XI through XV of the June Agreement
and the August Agreement, as such may have been amended to the date
hereof collectively (the "Prior Agreement"), shall remain in full
force and be applicable to the Series A-1 Preferred Shares and the
Series A-1-A Preferred shares as if those defined terms were
included in the defined term "Preferred Shares" in the Agreements.
C. Section 2 and Section 4 of the Letter Agreement shall terminate and
be of no force and effect upon the earlier of (i) the Merger
Closing, (ii) the Exchange Closing, or (iii) the one year
anniversary date of the date hereof.
V. TERMINATION.
A. Termination by Mutual Written Consent. This Agreement may be
terminated and the transactions contemplated hereby may be
abandoned, for any reason and at any time, by the mutual written
consent of the Company and Shaar.
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VI. SURVIVAL; INDEMNIFICATION.
A. The representations, warranties and covenants made by each of the
Company and Shaar in this Agreement, the annexes, schedules and
exhibits hereto and in each instrument, agreement and certificate
entered into and delivered by them pursuant to this Agreement, shall
survive for a period of three (3) years from and after the date of
this Agreement or such later date as when all of the Company's
preferred stock held by Shaar have been converted to Common Stock.
In the event of a breach or violation of any of such
representations, warranties or covenants, the party to whom such
representations, warranties or covenants have been made shall have
all rights and remedies for such breach or violation available to it
under the provisions of this Agreement or otherwise, whether at law
or in equity, irrespective of any investigation made by or on behalf
of such party on or prior to the date hereof.
B. The Company hereby agrees to indemnify and hold harmless the Shaar,
its Affiliates and their respective officers, directors, partners,
members and advisors (collectively, the "Shaar Indemnities"), from
and against any and all losses, claims, damages, judgments,
penalties, liabilities and deficiencies (collectively, "Losses"),
and agrees to reimburse the Shaar Indemnities for all out-of-pocket
expenses (including the reasonable fees and expenses of legal
counsel), in each case promptly as incurred by the Shaar Indemnities
and to the extent arising out of or in connection with:
1. any misrepresentation, omission of fact or breach of any of
the Company's representations or warranties contained in this
Agreement or the other Documents, or the annexes, schedules or
exhibits hereto or thereto or any instrument, agreement or
certificate entered into or delivered by the Company pursuant
to this Agreement or the other Documents; or
2. any failure by the Company to perform in any material respect
any of its covenants, agreements, undertakings or obligations
set forth in this Agreement or the other Documents, or the
annexes, schedules or exhibits hereto or thereto or any
instrument, agreement or certificate entered into or delivered
by the Company pursuant to this Agreement or the other
Documents.
X. Xxxxx hereby agrees to indemnify and hold harmless the Company, its
Affiliates and their respective officers, directors, partners,
members and advisors (collectively, the "Company Indemnitees"), from
and against any and all Losses, and agrees to reimburse the Company
Indemnitees for all out-of-pocket expenses (including the reasonable
fees and expenses of legal counsel), in each case promptly as
incurred by the Company Indemnitees and to the extent arising out of
or in connection with:
1. any misrepresentation, omission of fact, or breach of any of
Shaar's representations or warranties contained in this
Agreement or the other Documents, or the annexes, schedules or
exhibits hereto or thereto or any
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instrument, agreement or certificate entered into or delivered
by Shaar pursuant to this Agreement or the other Documents; or
2. any failure by Shaar to perform in any material respect any of
its covenants, agreements, undertakings or obligations set
forth in this Agreement or the other Documents or any
instrument, certificate or agreement entered into or delivered
by Shaar pursuant to this Agreement or the other Documents.
D. Promptly after receipt by any party seeking indemnification pursuant
to this Section (an "Indemnified Party") of written notice of any
investigation, claim, proceeding or other action in respect of which
indemnification is being sought (each, a "Claim"), the Indemnified
Party promptly shall notify the party against whom indemnification
pursuant to this Section is being sought (the "Indemnifying Party")
of the commencement thereof; but the omission to so notify the
Indemnifying Party shall not relieve it from any liability that it
otherwise may have to the Indemnified Party, except to the extent
that the Indemnifying Party is materially prejudiced and forfeits
substantive rights and defenses by reason of such failure. In
connection with any Claim as to which both the Indemnifying Party
and the Indemnified Party are parties, the Indemnifying Party shall
be entitled to assume the defense thereof. Notwithstanding the
assumption of the defense of any Claim by the Indemnifying Party,
the Indemnified Party shall have the right to employ separate legal
counsel and to participate in the defense of such Claim, and the
Indemnifying Party shall bear the reasonable fees, out-of-pocket
costs and expenses of such separate legal counsel to the Indemnified
Party if (and only if): (x) the Indemnifying Party shall have agreed
to pay such fees, out-of-pocket costs and expenses, (y) the
Indemnified Party and the Indemnifying Party reasonably shall have
concluded that representation of the Indemnified Party and the
Indemnifying Party by the same legal counsel would not be
appropriate due to actual or, as reasonably determined by legal
counsel to the Indemnified Party, potentially differing interests
between such parties in the conduct of the defense of such Claim, or
if there may be legal defenses available to the Indemnified Party
that are in addition to or disparate from those available to the
Indemnifying Party, or (z) the Indemnifying Party shall have failed
to employ legal counsel reasonably satisfactory to the Indemnified
Party within a reasonable period of time after notice of the
commencement of such Claim. If the Indemnified Party employs
separate legal counsel in circumstances other than as described in
clauses (x), (y) or (z) above, the fees, costs and expenses of such
legal counsel shall be borne exclusively by the Indemnified Party.
Except as provided above, the Indemnifying Party shall not, in
connection with any Claim in the same jurisdiction, be liable for
the fees and expenses of more than one firm of legal counsel for the
Indemnified Party (together with appropriate local counsel). The
Indemnifying Party shall not, without the prior written consent of
the Indemnified Party (which consent shall not unreasonably be
withheld), settle or compromise any Claim or consent to the entry of
any judgment that does not include an unconditional release of the
Indemnified Party from all liabilities with respect to such Claim or
judgment.
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E. In the event one party hereunder should have a claim for
indemnification that does not involve a claim or demand being
asserted by a third party, the Indemnified Party promptly shall
deliver notice of such claim to the Indemnifying Party. If the
Indemnified Party disputes the claim, such dispute shall be resolved
by mutual agreement of the Indemnified Party and the Indemnifying
Party or by binding arbitration conducted in the City of New York in
accordance with the procedures and rules of the American Arbitration
Association. Judgment upon any award rendered by any arbitrators may
be entered in any court having competent jurisdiction thereof.
VII. GOVERNING LAW: MISCELLANEOUS.
This Agreement shall be governed by and interpreted in accordance with the
laws of the State of Delaware, without regard to the conflicts of law principles
of such state. Except as provided in Section VII.5 above, each of the parties
consents to the exclusive jurisdiction of the federal courts whose districts
encompass any part of the City of New York or the state courts of the State of
New York sitting in the City of New York in connection with any dispute arising
under this Agreement and hereby waives, to the maximum extent permitted by law,
any objection, including any objection based on forum non convenience, to the
bringing of any such proceeding in such jurisdictions. A facsimile transmission
of this signed Agreement shall be legal and binding on all parties hereto. This
Agreement may be signed in one or more counterparts, each of which shall be
deemed an original. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement. if any provision of this Agreement shall be invalid or unenforceable
in any jurisdiction, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this Agreement or the validity or
enforceability of this Agreement in any other jurisdiction. This Agreement may
be amended only by an instrument in writing signed by the party to be charged
with enforcement. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof.
VIII. NOTICES.
Except as may be otherwise provided herein, any notice or other
communication or delivery required or permitted hereunder shall be in writing
and shall be sent by facsimile with a copy delivered personally or sent by a
nationally recognized overnight courier service, and shall be deemed given when
so delivered personally or by overnight courier service, as follows:
(i) if to the Company, to:
CROSS MEDIA MARKETING CORPORATION
000 Xxxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxx
Chairman and Chief Executive Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
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XXXXXX XXXXX XXXXXXXX & XXXXXXX LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(ii) if to the Shaar, to
THE SHAAR FUND LTD.,
c/x Xxxxxxxx Capital Management, Inc.
2 World Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx Xxx Xxxx 00000
Attention: Xxx Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Xxxxxxx, Xxxxxxxxx LLP
0 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
The Company and Shaar may change the foregoing address by notice given
pursuant to this Section.
IX. CONFIDENTIALITY.
Each of the Company and Shaar agrees to keep confidential and not to
disclose to or use for the benefit of any third party the terms of this
Agreement or any other information which at any time is communicated by the
other party as being confidential without the prior written approval of the
other party; provided, however, that this provision shall not apply to the
disclosure by a party of information which, at the time of disclosure, is
already part of the public domain (except by breach of this Agreement) and
information which is required to be disclosed by the disclosing party by law
(including, without limitation, pursuant to Item 10 of Rule 601 of Regulation
S-K under the Securities Act and the Exchange Act) and comparable provisions of
Regulation S-B under such Acts.
X. FURTHER ASSURANCES.
Each of the parties hereto shall execute all such further instruments and
documents and take such further action as the other party may reasonably require
in order to effectuate the terms and purposes of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed
and delivered this Agreement on the date first written above.
THE COMPANY:
CROSS MEDIA MARKETING CORPORATION
By: /s/ Xxxxxx Xxxxxxx
---------------------------------
Xxxxxx Xxxxxxx
Chairman and Chief Executive
Officer
SHAAR:
THE SHAAR FUND LTD.
By: SHAAR ADVISORY SERVICES N.V.
By:/s/ Win Langeveld
----------------------------------
Win Langeveld
Managing Director
Jurisdiction for Blue Sky Purposes:
British Virgin Islands
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