THE MARQUEE GROUP, INC.
SUBSCRIPTION AGREEMENT made as of this 15th day of August,
1996 between The Marquee Group, Inc., a Delaware corporation with its principal
offices at 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Company") and
the undersigned (the "Subscriber").
WHEREAS, the Company desires to issue a minimum of
twenty-five (25) and a maximum of forty (40) units ("Units") in a private
placement, each Unit consisting of $50,000 principal amount 6% convertible
debentures of the Company due and payable on June 30, 1999, subject to earlier
conversion in certain circumstances (the "Debentures") in the form attached
hereto as Exhibit A, on the terms and conditions hereinafter set forth and the
Subscriber desires to acquire the number of Units set forth on the signature
page hereof;
NOW, THEREFORE, for and in consideration of the premises and
the mutual covenants hereinafter set forth, the parties hereto do hereby agree
as follows:
I. SUBSCRIPTION FOR UNITS AND REPRESENTATIONS BY AND
COVENANTS OF SUBSCRIBER
1.1 Subject to the terms and conditions set forth
herein and in the Confidential Term Sheet dated July 30, 1996 (the "Term
Sheet"), the Subscriber hereby subscribes for and agrees to purchase from the
Company such number of Units as is set forth upon the signature page hereof at
a price equal to $50,000 per Unit, and the Company agrees to sell such Units to
the Subscriber for said purchase price subject to the Company's right to sell
to the Subscriber such lesser number of Units as it may, in its sole
discretion, deem necessary or desirable. The purchase price is payable by
certified or bank check made payable to Continental Stock Transfer & Trust
Company, as Escrow Agent, contemporaneously with the execution and delivery of
this Subscription Agreement. The Debentures will be delivered by the Company
within ten (10) days following the consummation of this offering as set forth
in Article III hereof. The Subscriber understands however, that this purchase
of Units is contingent upon the Company making sales of a minimum of
twenty-five (25) Units ($1,250,000 principal amount of Debentures) (the
"Minimum Offering") prior to the Termination Date as defined in Article III
hereof.
1.2 The Subscriber recognizes that the purchase of
Units involves a high degree of risk in that (i) the Company has commenced only
minimal operations and its planned business requires the consummation of
acquisitions which are subject to the Company's receipt of financing in
addition to the proceeds of this private placement and other conditions and
there can be no assurance such financing or acquisitions will be consummated;
(ii) the Company requires substantial funds in addition to the proceeds of this
private placement; (iii) an investment in the Company is highly speculative and
only investors who can afford the loss of their entire investment should
consider investing in the Company and the Units; (iv) he may not be able
to liquidate his investment; (v) transferability of the securities comprising
the Units is extremely limited; and (vi) in the event of a disposition, an
investor could sustain the loss of his entire investment, as well as other risk
factors as more fully set forth in the Term Sheet.
1.3 The Subscriber represents that he is an
"accredited investor" as such term in defined in Rule 501 of Regulation D
promulgated under the United States Securities Act of 1933, as amended (the
"Act"), as indicated by his responses to the Confidential Purchaser
Questionnaire, and that he is able to bear the economic risk of an investment
in the Units.
1.4 The Subscriber acknowledges that he has prior
investment experience, including investment in non-listed and non-registered
securities, or he has employed the services of an investment advisor, attorney
or accountant to read all of the documents furnished or made available by the
Company both to him and to all other prospective investors in the Units and to
evaluate the merits and risks of such an investment on his behalf, and that he
recognizes the highly speculative nature of this investment.
1.5 The Subscriber acknowledges receipt and careful
review of the Term Sheet and the attachments thereto (the "Offering Documents")
and hereby represents that he has been furnished by the Company during the
course of this transaction with all information regarding the Company which he
had requested or desired to know; that all documents which could be reasonably
provided have been made available for his inspection and review; and that such
information and documents have, in his opinion, afforded the Subscriber with
all of the same information that would be provided him in a registration
statement filed under the Act; that he has been afforded the opportunity to ask
questions of and receive answers from duly authorized officers or other
representatives of the Company concerning the terms and conditions of the
offering, and any additional information which he had requested.
1.6 The Subscriber acknowledges that this offering
of Units may involve tax consequences, including but not limited to the
possible need to recognize interest income and that the contents of the
Offering Documents do not contain tax advice or information. The Subscriber
acknowledges that he must retain his own professional advisors to evaluate the
tax and other consequences of an investment in the Units.
1.7 The Subscriber acknowledges that this offering
of Units has not been reviewed by the United States Securities and Exchange
Commission ("SEC") because of the Company's representations that this is
intended to be a nonpublic offering pursuant to Sections 4(2) or 3(b) of the
Act. The Subscriber represents that the Debentures comprising his Units, and
the securities issuable upon conversion of the Debentures, are being purchased
for his own account, for investment and not for distribution or resale to
others. The Subscriber agrees that he will not sell or otherwise transfer such
securities unless they are registered under the Act or unless an exemption from
such registration is available.
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1.8 The Subscriber understands that the Debentures
comprising the Units, and the securities issuable upon conversion of the
Debentures, have not been registered under the Act by reason of a claimed
exemption under the provisions of the Act which depends, in part, upon his
investment intention. In this connection, the Subscriber understands that it is
the position of the SEC that the statutory basis for such exemption would not
be present if his representation merely meant that his present intention was to
hold such securities for a short period, such as the capital gains period of
tax statutes, for a deferred sale, for a market rise, assuming that a market
develops, or for any other fixed period. The Subscriber realizes that, in the
view of the SEC, a purchase now with an intent to resell would represent a
purchase with an intent inconsistent with his representation to the Company,
and the SEC might regard such a sale or disposition as a deferred sale to which
such exemptions are not available.
1.9 The Subscriber understands that there is no
public market for the securities comprising the Units. The Debentures provide
that, in the event the Company completes an initial public offering ("IPO") of
its securities, the Debentures will automatically convert into units (the
"Debenture Units") of the Company, on the terms and conditions set forth in the
form of Debenture attached hereto as Exhibit A, identical in all respects to
the units offered in the IPO, subject to the provisions of Section 1.10 hereof,
and expected to be comprised of one share of the Company's common stock, $.01
par value (the "Common Stock") and one warrant (the "Public Warrants"). The
Subscriber understands that, if the Debentures have not been converted pursuant
to the preceding sentence, commencing nine months from the initial closing of
the private placement contemplated herein, on the terms and conditions set
forth in the Debentures, the Subscriber may elect to convert the Debentures
into shares of Common Stock and warrants (the "Bridge Warrants"). The
Subscriber understands that even if a public market develops for the Common
Stock, the Public Warrants or the Bridge Warrants, Rule 144 (the "Rule")
promulgated under the Act requires, among other conditions, a two year holding
period prior to the resale (in limited amounts) of securities acquired in a
non-public offering without having to satisfy the registration requirements
under the Act. The Subscriber understands that the Company makes no
representation or warranty regarding its fulfillment in the future of any
reporting requirements under the Securities Exchange Act of 1934, as amended,
or its dissemination to the public of any current financial or other
information concerning the Company, as is required by the Rule as one of the
conditions of its availability. The Subscriber understands and hereby
acknowledges that the Company is under no obligation to register the securities
comprising the Units under the Act, except as set forth in Article IV herein.
The Subscriber consents that the Company may, if it desires, permit the
transfer of the securities comprising the Units or issuable upon conversion
thereof out of his name only when his request for transfer is accompanied by an
opinion of counsel reasonably satisfactory to the Company that neither the sale
nor the proposed transfer results in a violation of the Act or any applicable
state "blue sky" laws (collectively "Securities Laws") and subject to the
provisions of Section 1.10 hereof. The Subscriber agrees to hold the Company
and its directors, officers and controlling persons and their respective heirs,
representatives, successors and assigns harmless and to indemnify them against
all liabilities, costs and expenses incurred by them as a result of any
misrepresentation made by
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him contained herein or in the Confidential Purchaser Questionnaire or any sale
or distribution by the undersigned Subscriber in violation of any Securities
Laws.
1.10 In the event that the Subscriber is a Company
Designee (as defined herein), or is (or, following the Acquisitions, as defined
herein, will be) an officer or director of the Company, the Subscriber agrees
not to publicly sell, assign, transfer or otherwise dispose the Debentures or
the securities issuable upon conversion of the Debentures, without the prior
written consent of Royce Investment Group, Inc. (the "Placement Agent"), for a
period of two years from the effective date ("Effective Date") of the
registration statement relating to the Company's IPO. In the event that the
Subscriber is neither an officer or director of the Company, or a Company
Designee, the Subscriber agrees, if so requested by the Company after the
Company and the Placement Agent shall have determined it necessary for
regulatory reasons, not to sell, transfer or otherwise dispose publicly the
securities issuable upon conversion of the Debentures for a period of one year
after the Effective Date. Each Subscriber also agrees not to exercise the
Public Warrants for a period of one year after the Effective Date.
1.11 The Subscriber consents to the placement of a
legend on any certificate or other document evidencing the Debentures
comprising his Units and the securities issuable upon conversion of the
Debentures stating that they have not been registered under the Act and setting
forth or referring to the restrictions on transferability and sale thereof.
1.12 The Subscriber understands that the Company
will review this Subscription Agreement and the Confidential Purchaser
Questionnaire and the Company is hereby given authority by the undersigned to
call his bank or place of employment or otherwise review the financial standing
of the Subscriber; and it is further agreed that the Company reserves the
unrestricted right to reject or limit any subscription and to close the offer
at any time.
1.13 The Subscriber hereby represents that the
address of Subscriber furnished by him at the end of this Subscription
Agreement is the undersigned's principal residence if he is an individual or
its principal business address if it is a corporation or other entity.
1.14 The Subscriber acknowledges that if he is a
Registered Representative of an NASD member firm, he must give such firm the
notice required by the NASD's Rules of Fair Practice, receipt of which must be
acknowledged by such firm on the signature page hereof.
1.15 The Subscriber hereby represents that, except
as set forth in the Offering Documents, no representations or warranties have
been made to the Subscriber by the Company or any agent, employee or affiliate
of the Company and in entering into this transaction, the Subscriber is not
relying on any information, other than that contained in the Offering Documents
and the results of independent investigation by the Subscriber.
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1.16 The Subscriber acknowledges that at such time,
if ever, as the securities issuable upon conversion of the Debentures are
registered, sales of such securities will be subject to state securities laws,
including those of New Jersey which require any securities sold in New Jersey
to be sold through a registered broker-dealer or in reliance upon an exemption
from registration.
II. REPRESENTATIONS BY THE COMPANY
The Company represents and warrants to the
Subscriber that prior to the consummation of this offering and at the closing
date, except with regard to the provisions of paragraph II(d) herein for which
the Company represents and warrants to the Subscriber that at the closing date:
(a) The Company is a corporation duly organized,
existing and in good standing under the laws of the State of Delaware and has
the corporate power to conduct the business which it conducts and proposes to
conduct and is qualified to do business in New York.
(b) The execution, delivery and performance of this
Subscription Agreement by the Company will have been duly approved by the Board
of Directors of the Company and all other actions required to authorize and
effect the offer and sale of the Units and the securities contained therein
will have been duly taken and approved.
(c) The Debentures comprising the Units have been
duly and validly authorized and when issued and paid for in accordance with the
terms hereof, will be valid and binding obligations of the Company enforceable
in accordance with their terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application relating to or affecting enforcement of creditors' rights,
that the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefore may be brought.
(d) The Company will at all times during the term of
the Debentures (including the debentures issuable upon exercise of the Agent's
Warrants, as defined herein) have authorized and reserved a sufficient number
of shares of Common Stock to provide for conversion of the Debentures as well
as exercise of the warrants issuable upon such conversion. The warrants have
been duly authorized and, when issued and delivered upon conversion of the
Debentures (including the debentures issuable upon exercise of the Agent's
Warrants), will have been duly executed, issued and delivered and will
constitute valid and legally binding obligations of the Company enforceable in
accordance with their terms. The shares of Common Stock issuable upon exercise
of the warrants issuable upon conversion of the Debentures (including the
debentures issuable upon exercise of the Agent's Warrants) have been reserved
for issuance upon the exercise of the Warrants and when issued in accordance
with the terms of the Warrants will
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be duly and validly authorized, validly issued, fully paid and non-assessable
and free of preemptive rights and no personal liability will attach to the
ownership thereof.
(e) The Company has obtained, or is in the process
of obtaining, all material licenses, permits and other governmental
authorizations necessary to the conduct of its business; such licenses, permits
and other governmental authorizations obtained are in full force and effect;
and the Company is in all material respects complying therewith.
(f) The Company knows of no pending or threatened
legal or governmental proceedings to which the Company is a party which could
materially adversely affect the business, property, financial condition or
operations of the Company.
(g) The Company is not in violation of or default
under, nor will the execution and delivery of this Subscription Agreement, the
issuance of the Debentures, and the incurrence of the obligations herein and
therein set forth and the consummation of the transactions herein or therein
contemplated, result in a violation of, or constitute a default under, the
certificate of incorporation or by-laws, any material obligations, agreement,
covenant or condition contained in any bond, debenture, note or other evidence
of indebtedness or in any material contract, indenture, mortgage, loan
agreement, lease, joint venture or other agreement or instrument to which the
Company is a party or by which it or any of its properties may be bound or in
violation of any material order, rule, regulation, writ, injunction, or decree
of any government, governmental instrumentality or court, domestic or foreign.
(h) The Company has entered into acquisition
agreements, each of which are in full force and effect, with each of Athletes
and Artists, Inc. and Sports Management & Television International, Inc.
pursuant to which, among other things, simultaneously with the closing of
financings aggregating at least $13,800,000 in gross proceeds to the Company,
each of such entities has agreed to merge with a separate wholly-owned
subsidiary to be formed by the Company (the "Acquisitions"), subject to the
fulfillment or satisfaction of closing conditions contained in the agreements
for such acquisitions.
III. TERMS OF SUBSCRIPTION
3.1 The subscription period will begin as of July
30, 1996 and will terminate at 11:59 PM Eastern time on August 30,1996, unless
extended by the Company and the Placement Agent for up to an additional sixty
(60) days (the "Termination Date"). Of the Xxxxx, 00 will be offered on a "best
efforts-all-or-none" basis, and the remaining 15 Units will be offered on a
"best-efforts" basis, as more particularly set forth in the Term Sheet. The
minimum subscription per Subscriber shall be one Unit ($50,000), provided,
however, that smaller investments may be accepted at the discretion of the
Placement Agent and the Company. A maximum of 15 Units may be subscribed to by
designees of the Company, provided that such Subscribers (the "Company
Designees") are accredited investors and otherwise meet applicable regulatory
requirements and are reasonably satisfactory to the Placement Agent, and
provided the
6
Company notifies the Placement Agent in writing as to those subscribers who are
Company Designees prior to the Initial Closing.
3.2 Placement of the Units will be made by the
Placement Agent, which will receive (i) a placement fee in the amount of 10% of
the purchase price of the Units placed (4% with respect to Units sold to
Company Designees); (ii) a non-accountable expense allowance of 3% of the
purchase price of the Units (except Units sold to Company Designees); (iii)
warrants (the "Agent's Warrants) to purchase 10% of the Debentures sold in the
private placement; and (iv) other compensation as summarized in the Term Sheet.
3.3 Pending the sale of the Minimum Offering, all
funds paid hereunder shall be deposited by the Company in escrow with
Continental Stock Transfer & Trust Company, Xxx Xxxxxxxx, Xxx Xxxx, XX 00000.
If the Company shall not have obtained subscriptions (including this
subscription) for purchases of twenty-five (25) Units ($1,250,000 principal
amount of Debentures) for an aggregate purchase price of $1,250,000 on or
before the Termination Date, then this subscription shall be void and all funds
paid hereunder by the Subscriber, without interest, shall be promptly returned
to the Subscriber, subject to paragraph 3.5 hereof. If twenty-five (25) Units
are sold at or prior to the Termination Date, then all subscription proceeds
shall be paid over to the Company at a closing ( the "Initial Closing") to be
held within ten days thereafter. In such event, placements of additional Units
may continue until the Termination Date, with subsequent releases of funds to
be at the mutual consent of the Company and the Placement Agent. The date of
the final release of funds is referred to herein as the "Final Closing Date".
3.4 The Subscriber hereby authorizes and directs the
Company to deliver the securities to be issued to such Subscriber pursuant to
this Subscription Agreement either (a) to the residential or business address
indicated in the Confidential Purchaser Questionnaire or (b) directly to the
Subscriber's account maintained by the Placement Agent, if any. (If the
Subscriber does not desire the securities to be delivered to such account, the
Subscriber should delete subsection (b) of this Section 3.4.)
3.5 The Subscriber hereby authorizes and directs the
Company to return any funds for unaccepted subscriptions to the same account
from which the funds were drawn, including any customer account maintained with
the Placement Agent.
3.6 The Subscriber hereby authorizes and directs the
Company to deliver the securities issuable upon conversion of the Debentures by
delivering such securities directly to the Subscriber's account maintained by
the Placement Agent, if any, or to the Subscriber's residential or business
address indicated in the Confidential Purchaser Questionnaire, if no account is
maintained by the Subscriber with the Placement Agent.
IV. REGISTRATION RIGHTS
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4.1 The Company hereby agrees with the holders of
the Units or their transferees (collectively, the "Holders") to use its best
efforts to ensure that the securities comprising the Debenture Units, including
the shares of Common Stock issuable upon exercise of the Public Warrants (the
"Registrable Securities"), shall be registered for resale under the Act,
subject to the lock-up provisions of Section 1.10 hereof, as part of the
Company's registration of securities in the IPO. In the event that Holders
holding 51% of the principal amount of Debentures sold in the private placement
contemplated hereby shall exercise their Alternative Conversion Rights (as
defined in the Debenture), pursuant to the terms set forth in the Debenture,
the Company hereby agrees with such Holders to use its best efforts to ensure
that the securities then issuable upon conversion of the Debentures (the
"Debenture Securities"), shall be registered for resale under the Act (the
"Alternative Registration") as set forth below.
4.2 Alternative Registration Rights. In the event
the IPO is not consummated within one year from the Final Closing Date, if the
Company shall determine to proceed with the actual preparation and filing of a
registration statement under the Act in connection with the proposed offer and
sale of any of its securities by it or any of its security holders (other than
a registration statement on Form X-0, X-0 or other limited purpose form), the
Company will give written notice of its determination to all record holders of
the Debenture Securities. Upon the written request from any record holder or
holders of an aggregate of more than 50% of the Units (the "Requesting
Holders"), within twenty (20) days after receipt of any such notice from the
Company, the Company will, except as herein provided, cause all such Debenture
Securities to be included in such registration statement, all to the extent
requisite to permit the sale or other disposition by the prospective seller or
sellers of the Debenture Securities to be so registered; provided, further,
that nothing herein shall prevent the Company from, at any time, abandoning or
delaying any registration. If any registration pursuant to this Section 4.2
shall be underwritten in whole or in part, the Company may require that the
Debenture Securities requested for inclusion pursuant to this Section 4.2 be
included in the underwriting on the same terms and conditions as the securities
otherwise being sold through the underwriters. In the event that the Debenture
Securities requested for inclusion pursuant to this Section 4.2 together with
any other shares which have similar piggyback registration rights (such shares
and the Debenture Securities being collectively referred to as the "Requested
Stock") would constitute more than 15% of the total number of shares to be
included in a proposed underwritten public offering, and if in the good faith
judgment of the managing underwriter of such public offering the inclusion of
all of the Requested Stock originally covered by a request for registration
would reduce the number of shares to be offered by the Company or interfere
with the successful marketing of the shares of stock offered by the Company,
the number of shares of Requested Stock otherwise to be included in the
underwritten public offering may be reduced pro rata (by number of shares)
among the holders thereof requesting such registration or excluded in their
entirety if so required by the underwriter. To the extent only a portion of the
Requested Stock is included in the underwritten public offering, those shares
of Requested Stock which are thus excluded from the underwritten public
offering shall be withheld from the market by the holders thereof for a period,
not to exceed 120 days, which the managing underwriter reasonably determines is
necessary in order to effect the underwritten public offering.
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The obligation of the Company under this Section 4.2
shall be limited to two registration statements.
4.3 Registration Procedures. If and whenever the
Company is required by the provisions of Section 4.1 or 4.2 to effect the
registration of Registrable Securities or Debenture Securities under the Act,
the Company will:
(a) prepare and file with the SEC a
registration statement with respect to such securities, and use its best
efforts to cause such registration statement to become and remain effective
until the earlier of the disposition of all of the Registrable Securities or
Debenture Securities, as applicable, in accordance with the intended method of
distribution set forth in such registration statement or until they are freely
salable without the volume limitations of Rule 144;
(b) prepare and file with the SEC such
amendments to such registration statement and supplements to the prospectus
contained therein as may be necessary to keep such registration statement
effective until the earlier of the disposition of all of the Registrable
Securities in accordance with the intended method of distribution set forth in
such amendments to such registration statement and supplements to the
prospectus contained therein or until they are freely salable without the
volume limitations of Rule 144;
(c) furnish to the security holders
participating in such registration and to the underwriters of the securities
being registered such reasonable number of copies of the registration
statement, preliminary prospectus, final prospectus and such other documents as
such underwriters may reasonably request in order to facilitate the public
offering of such securities;
(d) use its best efforts to register or
qualify the securities covered by such registration statement under such state
securities or blue sky laws of such jurisdictions as such participating holders
may reasonably request in writing within twenty (20) days following the
original filing of such registration statement, except that the Company shall
not for any purpose be required to execute a general consent to service of
process or to qualify to do business as a foreign corporation in any
jurisdiction wherein it is not so qualified;
(e) notify the security holders
participating in such registration, promptly after it shall receive notice
thereof, of the time when such registration statement has become effective or a
supplement to any prospectus forming a part of such registration statement has
been filed;
(f) notify such holders promptly of any
request by the SEC for the amending or supplementing of such registration
statement or prospectus or for additional information;
9
(g) prepare and file with the SEC, promptly
upon the request of any such holders, any amendments or supplements to such
registration statement or prospectus which, in the opinion of counsel for such
holders (and concurred in by counsel for the Company), is required under the
Act or the rules and regulations thereunder in connection with the distribution
of Common Stock by such holder;
(h) prepare and promptly file with the SEC
and promptly notify such holders of the filing of such amendment or supplement
to such registration statement or prospectus as may be necessary to correct any
statements or omissions if, at the time when a prospectus relating to such
securities is required to be delivered under the Act, any event shall have
occurred as the result of which any such prospectus or any other prospectus as
then in effect would include an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in the light
of the circumstances in which they were made, not misleading; and
(i) advise such holders, promptly after it
shall receive notice or obtain knowledge thereof, of the issuance of any stop
order by the SEC suspending the effectiveness of such registration statement or
the initiation or threatening of any proceeding for that purpose and promptly
use its best efforts to prevent the issuance of any stop order or to obtain its
withdrawal if such stop order should be issued.
4.4 Expenses.
(a) With respect to each registration
requested pursuant to Section 4.1 hereof, and with respect to each inclusion of
Registrable Securities or Debenture Securities in a registration statement
pursuant to Section 4.2 hereof, all fees, costs and expenses of and incidental
to such registration, inclusion and public offering (as specified in paragraph
(b) below) in connection therewith shall be borne by the Company, provided,
however, that any security holders participating in such registration shall
bear their pro rata share of the underwriting discount and commissions and
transfer taxes.
(b) The fees, costs and expenses of
registration to be borne by the Company as provided in paragraph (a) above
shall include, without limitation, all registration, filing, and NASD fees,
printing expenses, fees and disbursements of counsel and accountants for the
Company, and all legal fees and disbursements and other expenses of complying
with state securities or blue sky laws of any jurisdictions in which the
securities to be offered are to be registered and qualified (except as provided
in 4.4(a) above). Fees and disbursements of counsel and accountants for the
selling security holders and any other expenses incurred by the selling
security holders not expressly included above shall be borne by the selling
security holders.
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4.5 Indemnification.
(a) The Company will indemnify and hold
harmless each holder of Registrable Securities or Debenture Securities, as
applicable, which are included in a registration statement pursuant to the
provisions of Sections 4.1 or 4.2 hereof, its directors and officers, and any
underwriter (as defined in the Act) for such holder and each person, if any,
who controls such holder or such underwriter within the meaning of the Act,
from and against, and will reimburse such holder and each such underwriter and
controlling person with respect to, any and all loss, damage, liability, cost
and expense to which such holder or any such underwriter or controlling person
may become subject under the Act or otherwise, insofar as such losses, damages,
liabilities, costs or expenses are caused by any untrue statement or alleged
untrue statement of any material fact contained in such registration statement,
any prospectus contained therein or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading; provided, however, that the Company will not be liable in any such
case to the extent that any such loss, damage, liability, cost or expenses
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission so made in conformity with information
furnished by such holder, such underwriter or such controlling person in
writing specifically for use in the preparation thereof.
(b) Each holder of Registrable Securities
or Debenture Securities, as applicable, included in a registration pursuant to
the provisions of Sections 4.1 or 4.2 hereof will indemnify and hold harmless
the Company, its directors and officers, any controlling person and any
underwriter from and against, and will reimburse the Company, its directors and
officers, any controlling person and any underwriter with respect to, any and
all loss, damage, liability, cost or expense to which the Company or any
controlling person and/or any underwriter may become subject under the Act or
otherwise, insofar as such losses, damages, liabilities, costs or expenses are
caused by any untrue statement or alleged untrue statement of any material fact
contained in such registration statement, any prospectus contained therein or
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was so made in reliance upon and in
strict conformity with written information furnished by or on behalf of such
holder specifically for use in the preparation thereof.
(c) Promptly after receipt by an
indemnified party pursuant to the provisions of paragraph (a) or (b) of this
Section 4.5 of notice of the commencement of any action involving the subject
matter of the foregoing indemnity provisions such indemnified party will, if a
claim thereof is to be made against the indemnifying party pursuant to the
provisions of said paragraph (a) or (b), promptly notify the indemnifying party
of the commencement thereof;
11
but the omission to so notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than
hereunder. In case such action is brought against any indemnified party and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party shall have the right to participate in, and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party,
provided, however, if the defendants in any action include both the indemnified
party and the indemnifying party and the indemnified party shall have
reasonably concluded that there may be legal defenses available to it and/or
other indemnified parties which are different from or in addition to those
available to the indemnified party, or if there is a conflict of interest which
would prevent counsel for the indemnifying party from also representing the
indemnified party, the indemnified party or parties have the right to select
separate counsel to participate in the defense of such action on behalf of such
indemnified party or parties. After notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party pursuant to the
provisions of said paragraph (a) or (b) for any legal or other expense
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation, unless (i) the
indemnified party shall have employed counsel in accordance with the provisions
of the preceding sentence, (ii) the indemnifying party shall not have employed
counsel satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after the notice of the commencement of the
action or (iii) the indemnifying party has authorized the employment of counsel
for the indemnified party at the expense of the indemnifying party.
V. MISCELLANEOUS
5.1 Any notice or other communication given
hereunder shall be deemed sufficient if in writing and sent by registered or
certified mail, return receipt requested, addressed to the Company, at its
registered office, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Xxxxxx X. Xxxxxxxxx, President and Chief Executive Officer and to the
Subscriber at his address indicated on the last page of this Subscription
Agreement. Notices shall be deemed to have been given on the date of mailing,
except notices of change of address, which shall be deemed to have been given
when received.
5.2 This Subscription Agreement shall not be
changed, modified or amended except by a writing signed by the parties to be
charged, and this Subscription Agreement may not be discharged except by
performance in accordance with its terms or by a writing signed by the party to
be charged.
5.3 This Subscription Agreement shall be binding
upon and inure to the benefit of the parties hereto and to their respective
heirs, legal representatives, successors and assigns. This Subscription
Agreement, together with the Term Sheet dated July 30, 1996, sets forth the
entire agreement and understanding between the parties as to the subject matter
thereof
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and merges and supersedes all prior discussions, agreements and understandings
of any and every nature among them.
5.4 Notwithstanding the place where this
Subscription Agreement may be executed by any of the parties hereto, the
parties expressly agree that all the terms and provisions hereof shall be
construed in accordance with and governed by the laws of the State of New York.
The parties hereby agree that any dispute which may arise between them arising
out of or in connection with this Subscription Agreement shall be adjudicated
before a court located in New York City and they hereby submit to the exclusive
jurisdiction of the courts of the State of New York located in New York, New
York and of the federal courts in the Southern District of New York with
respect to any action or legal proceeding commenced by any party, and
irrevocably waive any objection they now or hereafter may have respecting the
venue of any such action or proceeding brought in such a court or respecting
the fact that such court is an inconvenient forum, relating to or arising out
of this Subscription Agreement or any acts or omissions relating to the sale of
the securities hereunder, and consent to the service of process in any such
action or legal proceeding by means of registered or certified mail, return
receipt requested, in care of the address set forth below or such other address
as the undersigned shall furnish in writing to the other.
5.5 This Subscription Agreement may be executed in
counterparts. Upon the execution and delivery of this Subscription Agreement by
the Subscriber, this Subscription Agreement shall become a binding obligation
of the Subscriber with respect to the purchase of Units as herein provided;
subject, however, to the right hereby reserved to the Company to enter into the
same agreements with other subscribers and to add and/or to delete other
persons as subscribers.
5.6 The holding of any provision of this
Subscription Agreement to be invalid or unenforceable by a court of competent
jurisdiction shall not affect any other provision of this Subscription
Agreement, which shall remain in full force and effect.
5.7 It is agreed that a waiver by either party of a
breach of any provision of this Subscription Agreement shall not operate, or be
construed, as a waiver of any subsequent breach by that same party.
5.8 The parties agree to execute and deliver all
such further documents, agreements and instruments and take such other and
further action as may be necessary or appropriate to carry out the purposes and
intent of this Subscription Agreement.
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VI. BLUE SKY LEGENDS
Connecticut
The undersigned acknowledges that the Securities
have not been registered under the Connecticut Uniform Securities Act, as
amended (the "Act") and are subject to restrictions on transferability and sale
of securities as set forth herein. The undersigned hereby agrees that such
Securities will not be transferred or sold without registration under the Act
or exemption therefrom.
Maine
These securities are being sold pursuant to an
exemption from registration with the bank superintendent of the State of Maine
under Section 10502(2)(r) of Title 32 of the Maine revised statutes. These
securities may be deemed restricted securities and as such the holder may not
be able to resell the securities unless pursuant to registration under state or
federal securities laws or unless an exemption under such laws exists.
Missouri
The undersigned acknowledges that the Securities
have not been registered under the Missouri Uniform Securities Act, as amended
(the "Act") and are subject to restrictions on transferability and sale of
securities as set forth herein. The undersigned hereby acknowledges that such
Securities may be disposed of only through a licensed broker-dealer. It is a
felony to sell securities in violation of the Missouri Securities Act.
Pennsylvania
The undersigned hereby acknowledges that the Issuer
is relying upon the exemption from registration of securities set forth in
Section 203(d) of the Pennsylvania Securities Act of 1972, as amended (the
"Pennsylvania Act") in connection with the sale of the Securities to the
undersigned.
In accordance with the requirements of Section
203(d) of the Pennsylvania Act, the undersigned hereby agrees not to sell his
Securities within twelve (12) months from the date of purchase except pursuant
to Section 204.01 of the Blue Sky Regulations of the Pennsylvania Securities
Act of 1972. Additionally, the undersigned is aware of the right of withdrawal
under Section 207(m) of the Act described in the cover pages of the Memorandum.
Texas
The undersigned hereby acknowledges that the
Securities cannot be sold unless they are subsequently registered under the
Securities Act of 1933, as amended, and the
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Texas Securities Act, or an exemption from registration is available. The
undersigned further acknowledges that because the Securities are not readily
transferable, he must bear the economic risk of his investment for an
indefinite period of time.
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IN WITNESS WHEREOF, the parties have executed this Subscription
Agreement as of the day and year first written above.
/s/ Xxxxxx Xxxxxxxxx
------------------------------- ---------------------------------
Signature of Subscriber(s)
Xxxxxx Xxxxxxxxx
------------------------------- ----------------------------------
Name of Subscriber(s)
[please print]
- ------------------------------ ----------------------------------
Address of Subscriber(s)
- ------------------------------ ----------------------------------
Social Security or Taxpayer
Identification Number of Subscriber(s)
- ------------------------------
Subscriber's Account Number
at Royce Investment Group, Inc., if any.
$115,385
- ------------------------------
Number of Units Subscribed For
*IF SUBSCRIBER IS A REGISTERED REPRESENTATIVE
WITH AN NASD MEMBER FIRM, HAVE THE FOLLOWING
ACKNOWLEDGEMENT SIGNED BY THE APPROPRIATE PARTY:
The undersigned NASD member firm
acknowledges receipt of the notice
required by Article 3, Sections 28(a) Subscription Accepted:
and (b) of the Rules of Fair Practice.
THE MARQUEE GROUP, INC.
- ------------------------------
Name of NASD Member Firm By: /s/ Xxxxxx Xxxxxxxxx
------------------------------
Xxxxxx X. Xxxxxxxxx, President and
Chief Executive Officer
By ______________________________
Authorized Officer Date: August 15, 1996
-------------------------
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