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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of earliest event reported: May 1, 2000
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THE BIGHUB.COM, INC.
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(Exact Name of Registrant as Specified in Its Charter)
Florida 0-27107 65-050634
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
2939 Mossrock, Suite 100, San Antonio, Texas 78230
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (210) 979-9228
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N/A
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(Former name or former address, if changed since last report.)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Acquisition of Approximately 52% of Next Generation Media Corporation
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Outstanding Stock
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On May 1, 2000, The BigHub.com, Inc. ("BigHub") purchased approximately 52% of
the issued and outstanding capital stock of Next Generation Media Corporation
("NexGen"), from Gerard Bernier, Joel Sens, John Banas, and an aggregate of 25
other shareholders of NexGen.
BigHub purchased the shares of NexGen common stock using shares of BigHub common
stock as consideration. The NexGen common stock was valued at $1.70 per share,
while BigHub's common stock was valued at $5.00 per share, both based on market
prices of the stock. The securities purchased from NexGen consisted of (i)
661,404 shares of NexGen common stock which were converted from 247,365 shares
of NexGen's Series A Preferred Stock held by 25 shareholders (the "Series A
Preferred Stockholders"); (ii) 94,581 shares of NexGen common stock paid to the
Series A Preferred Stockholders as dividends; (iii) options to purchase 164,915
shares of NexGen common stock, with an exercise price of $.16 per share,
assigned to BigHub by the Series A Preferred Stockholders; (iv) options to
purchase 300,000 shares of NexGen common stock, with an exercise price of $.50,
from Gerard R. Bernier and Joel Sens; and (v) 2,419,115 shares of common stock
held by Gerard Bernier, Joel Sens and John Banas.
The total number of BigHub shares paid as consideration for the NexGen
securities was 1,079,545, which were valued under the transaction at an
aggregate price of $5,397,725. Gerard Bernier, Joel Sens, and John Banas,
received an aggregate of 822,499 shares of BigHub common stock, while the
remaining shareholders of NexGen received an aggregate of 257,046 shares of
BigHub common stock. In addition, Mr. Bernier and Mr. Sens received options to
purchase 300,000 shares of BigHub's common stock at an exercise price of $1.25
per share and options to purchase an aggregate of 400,000 shares of BigHub's
common stock at an exercise price of $5.50 per share.
The terms of the purchase were the result of arms-length negotiations. None of
the shareholders of NexGen were previously affiliated with BigHub.
NexGen is a holding company consisting of two wholly owned subsidiaries, United
Marketing Solutions, Inc. ("United") and Independent News, Inc. ("Independent
News"). United, headquartered in Springfield, Virginia, is a leading provider of
direct mail coupons with a distribution of over 20 million households annually
in the United States. Through its franchise business model, United offers small
businesses, major retailers and national advertisers a comprehensive array of
marketing and advertising solutions. BigHub and NexGen will commence the
redesign and expansion of United's current Internet site, iSHOPol.com, creating
an affiliate web site that will be accessible throughout BigHub's extensive
network. The new site will have the ability to provide users with online coupons
from local and national retailers and service providers
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throughout the United States. The consumers will be able to enter their zip
codes and a search category (such as restaurants, drycleaners, hair salons,
supermarkets, etc.) to access local coupon offerings. The consumers will then be
able to print the coupons and bring them to the applicable local establishments
for redemption. BigHub will also provide additional content, community and
commerce to the iSHOPol.com web site and advertising will be placed in the
locally distributed newspapers.
Independent News produces weekly and monthly newspapers in the New Jersey area
with an annual circulation of approximately 4 million households.
Aside from the additional business plans described in this Item, BigHub
generally intends to support NexGen and its subsidiaries in continuing in their
regular course of business.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired.
The financial statements required by this item are impracticable to present
at the time, but will be filed within sixty days after the filing date of this
initial report on Form 8-K/A.
(b) Pro Forma Financial Information.
The financial statements required by this item are impracticable to present
at the time, but will be filed within sixty days after the filing date of this
initial report on Form 8-K/A.
(c) Exhibits.
EXHIBIT
NUMBER DESCRIPTION
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2.1 Stock Purchase Agreement, dated March 16, 2000, by and among The
BigHub.com, Inc., Next Generation Media Corporation, the "Preferred
Shareholders" and the "Common Shareholders."
2.2 Stock Purchase Agreement, dated March 16, 2000, by and among The
BigHub.com, Inc., Next Generation Media Corporation, Gerard R.
Bernier, and Joel Sens.
10.1 Registration Rights Agreement, dated March 16, 2000, by and among
BigHub.com, Inc. and Investors.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE BIGHUB.COM, INC.
Date: May 15, 2000 By: /s/ Chet Howard
_______________________________
Name: Chet Howard
Title: Chief Financial Officer
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INDEX TO EXHIBITS
Exhibit Number Description of Document
2.1 Stock Purchase Agreement, dated March 16, 2000, by and among
The BigHub.com, Inc., Next Generation Media Corporation, the
"Preferred Shareholders" and the "Common Shareholders."
2.2 Stock Purchase Agreement, dated March 16, 2000, by and among
The BigHub.com, Inc., Next Generation Media Corporation,
Gerard R. Bernier, and Joel Sens.
10.1 Registration Rights Agreement, dated March 16, 2000, by and
among BigHub.com, Inc. and Investors.
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EXHIBIT 2.1
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered into as
of the 16/th/ day of March, 2000, by and among The BigHub.com, Inc., a Florida
corporation ("BigHub"), the parties listed on Exhibit A hereto (the "Common
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Shareholders"), the parties listed on Exhibit B hereto (the "Preferred
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Shareholders," and together with the Common Shareholders the "Sellers"), and
Next Generation Media Corporation, a Nevada corporation (the "Company").
Recitals
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The Common Shareholders desire to sell to BigHub and BigHub desires to
purchase from the Common Shareholders the number of shares of the Company's
common stock, par value $.01 per share ("Company Common Stock"), set forth
opposite each Common Shareholder's name on Exhibit A hereto.
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The Preferred Shareholders desire to sell to BigHub and BigHub desires to
purchase from the Preferred Shareholders (i) the number of shares of the
Company's Series A Convertible Preferred Stock, par value $.001 per share
("Company Preferred Stock") as set forth opposite each Preferred Shareholder's
name on Exhibit A hereto; (ii) the number of shares of the Company Common Stock
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held by the Preferred Shareholders which has been issued to the Preferred
Shareholders in payment of dividends on the Company Preferred Stock ("Dividend
Stock," and together with the Company Common Stock and Company Preferred Stock,
the "Shares") as set forth opposite each Preferred Shareholder's name on Exhibit
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A hereto; and (iii) the number of Company warrants with an exercise price of
- -
$0.16, which were issued in connection with the issuance of the Company
Preferred Stock held by the Preferred Shareholders (the "Warrants") as set
forth opposite each Preferred Shareholder's name on Exhibit A hereto.
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Joel Sens ("Sens") and Gerard R. Bernier ("Bernier"), two of the Common
Shareholders, desire to sell to BigHub and BigHub desires to purchase from Sens
and Bernier, the number of Company Common Stock purchase options, exercise price
$.50 (the "Company Options") set forth opposite each of Sens' and Bernier's name
on Exhibit C hereto.
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BigHub shall grant to Sellers registration rights with respect to shares of
BigHub common stock to be issued as consideration for the Shares, Warrants and
Company Options purchased by BigHub from the Sellers pursuant to a Registration
Rights Agreement entered into on the same day hereof (the "Registration Rights
Agreement").
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NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties to this Agreement
hereby agree as follows:
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Statement of Agreement
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1. Sale and Purchase.
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a. Securities to be Transferred. On the Closing Date, as defined in
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Section 9, Sellers shall sell and transfer the Shares to BigHub and BigHub
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shall purchase the Shares from Sellers.
b. Purchase Price for Company Common Stock. At the Closing, as
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defined in Section 9, BigHub shall deliver to the Common Shareholders, as
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the purchase price of the Company Common Stock, consideration of 819,164
shares of BigHub common stock, par value $0.001 per share ("BigHub Common
Stock").
c. Purchase Price for Company Preferred Stock, Dividend Shares and
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Warrants. At the Closing, BigHub shall deliver to the Preferred
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Shareholders, as the purchase price of the Company Preferred Stock and
Warrants, consideration of 227,273 shares of BigHub Common Stock. In
addition, BigHub will deliver to the Preferred Shareholders, as the
purchase price of the Dividend Stock, consideration of 32,500 shares of
BigHub Common Stock.
d. Purchase Price of the Sens/Bernier Options. At the closing,
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BigHub shall deliver to Sens and Bernier, as the purchase price for the
Company Options, common stock purchase options for 300,000 shares of BigHub
Common Stock at an exercise price of equal to the fair market value of
BigHub Common Stock on the date of Closing or $5.00, whichever is less.
e. Instruments of Conveyance and Transfer. At the Closing, Sellers
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shall deliver to BigHub a certificate or certificates representing the
Shares, or agreement or agreements representing the Company Options and
Warrants, registered in Sellers' names, together with duly executed stock
powers endorsed to BigHub with signatures guaranteed by a national bank or
trust company or such other assignments or instruments of conveyance and
transfer, in form and substance satisfactory to BigHub and its counsel, as
shall be effective to vest in BigHub all of Sellers' right, title and
interest in and to all of the Shares, free and clear of any agreements,
restrictions, liens, adverse claims or encumbrances whatsoever.
2. Representations and Warranties by Sellers. Each Seller, on its own
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behalf and as pertains only to such Seller and such Seller's respective
interests being transferred hereunder, represents and warrants to BigHub that:
a. Seller is, and at the Closing will be, the sole record and
beneficial owner of the Shares, Company Options and/or Warrants, as the
case may be, set forth opposite such Seller's name on Exhibit A, Exhibit B
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or Exhibit C hereto, as applicable; at the Closing, other than BigHub, no
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person will have a right to acquire or direct the disposition, or hold a
proxy or other right to vote or direct the vote, of such Shares, Company
Options and/or Warrants; and Seller has, and at the Closing will have, good
title to such Shares, Company Options and Warrants, free and clear of any
agreements, restrictions, liens, adverse claims or encumbrances whatsoever.
Other than this
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Agreement and the Company's redemption right with respect to the Company
Preferred Stock there are, and at the Closing there will be, no option,
warrant, right, call, proxy, agreement, commitment or understanding of any
nature whatsoever, fixed or contingent, that directly or indirectly (i)
calls for the sale, pledge or other transfer or disposition of any of such
Shares, Company Options and Warrants, any interest therein or any rights
with respect thereto, or relates to the voting, disposition, exercise,
conversion or control of such Shares, Company Options and Warrants, or (ii)
obligates Seller to grant, offer or enter into any of the foregoing.
b. The sale by Seller of such Shares, Company Options and Warrants
and the delivery of the certificates representing such Shares, Company
Options and Warrants to BigHub against receipt of payment therefor pursuant
hereto will transfer to BigHub indefeasible title to such Shares, Company
Options and Warrants, free and clear of all agreements, trusts, liens,
adverse claims and encumbrances whatsoever.
c. Seller has the full right, power, authority and legal capacity to
enter into this Agreement.
d. Seller does not require any consent, approval, authorization or
order of any court or governmental agency or body in order to consummate
the transaction contemplated herein
e. Neither the sale of the Shares, Company Options and Warrants
being sold by the Seller nor the fulfillment of the terms hereof by Seller
will conflict with, result in a breach or violation of, or constitute a
default under any law or agreement or instrument to which Seller is a party
or bound, or any judgment, order or decree applicable to Seller of any
court, regulatory body, administrative agency, governmental body or
arbitrator having the jurisdiction over the Seller.
f. No rights of first refusal exist with respect to any of the
Shares, Warrants or Company Options or the issue and sale thereof, other
than those which have been waived or satisfied.
g. This Agreement is a legal, valid and binding obligation of the
Seller enforceable against the Seller in accordance with its terms
h. The Seller is familiar with the business and financial condition,
properties, operations and prospects of the Company, and, at a reasonable
time prior to the Closing, has been afforded the opportunity to ask
questions of and receive satisfactory answers from the Company's officers
and directors, or other persons acting on the Company's behalf, concerning
the business and financial condition, properties, operations and prospects
of the Company and has asked such questions as he desires to ask and all
such questions have been answered to the full satisfaction of the Seller.
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i. All documents, records and books pertaining to the business and
financial condition, properties, operations and prospects of the Company
which the Seller has requested have been made available to the Seller.
j. The Seller understands that, unless the Seller notifies BigHub in
writing to the contrary before the Closing, all the representations and
warranties of the Seller contained in this Agreement will be deemed to have
been reaffirmed and confirmed as of the Closing, taking into account all
information received by the Seller.
3. Representations and Warranties by Company. Company represents and
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warrants to BigHub that:
a. Organization, Qualification, Etc. The Company is a corporation
--------------------------------
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization and has the corporate power and authority to
own its properties and assets and to carry on its business as it is now
being conducted and is duly qualified to do business and is in good
standing in each jurisdiction in which the ownership of its properties or
the conduct of its business requires such qualification except that, only
as of the date hereof and not as of the Closing, the Company is not
presently qualified to do business in Virginia. The copies of the Company's
charter and by-laws which have been made available to BigHub are complete
and correct and in full force and effect on the date hereof. Each of the
Company's subsidiaries is a corporation, limited partnership or limited
liability company duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation or organization, has
the corporate, limited partnership or limited liability company power and
authority to own its properties and to carry on its business as it is now
being conducted, and is duly qualified to do business and is in good
standing in each jurisdiction in which the ownership of its property or the
conduct of its business requires such qualification. All the outstanding
shares of capital stock of, or other ownership interests in, the Company's
subsidiaries are validly issued, fully paid and non-assessable and are
owned by the Company, directly or indirectly, free and clear of all
mortgages, liens, loans and encumbrances other than the security interest
of Banc First, an Oklahoma banking corporation. There are no existing
options, rights of first refusal, preemptive rights, calls or commitments
of any character relating to the issued or unissued capital stock or other
securities of, or other ownership interests in, any subsidiary of the
Company other than the right of first refusal with respect to the capital
stock of the Company's subsidiary, Independent News, Inc., a Delaware
corporation ("INI"), granted to Unico, Inc., a Delaware corporation.
b. Capital Stock. The authorized capital stock of the Company
-------------
consists of 50,000,000 shares of the Company Common Stock, par value $.01
per share; 1,000,000 shares of the Company's preferred stock, par value
$.001 per share, of which 500,000 shares have been designated as Series A
Convertible Preferred Stock and 500,000 shares have been designated Series
B Convertible Preferred Stock (the "Series B Convertible Preferred Stock").
As of the date hereof, 4,516,818 shares of the Company Common Stock,
250,000 shares of the Series A Convertible Preferred Stock, and 65,000
shares of Series B Convertible Preferred Stock were issued and outstanding.
All the outstanding
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shares of the Company Common Stock, the Series A Convertible Preferred
Stock and the Series B Convertible Preferred Stock have been validly issued
and are fully paid and non-assessable. As of the date hereof, there were no
outstanding subscriptions, options, warrants, rights or other arrangements
or commitments obligating the Company to issue any shares of its stock
other than options, warrants and other rights to receive or acquire an
aggregate of 1,995,167 shares of the Company Common Stock pursuant to
various option and warrant agreements.
c. Validity of Shares. The Shares are duly authorized and validly
------------------
issued and are fully paid and non-assessable; no preemptive rights or, to
the Company's knowledge, rights of first refusal of stockholders exist with
respect to any of the Shares or the issue and sale thereof, other than
those which have been waived or satisfied. In addition, the shares of
Company Common Stock issuable upon exercise of the Warrants and Company
Options have been duly authorized and upon issuance in accordance with the
terms of such Warrants or Company Options, shall be validly issued, fully
paid and non-assessable.
d. Corporate Authority Relative to this Agreement; No Violation. The
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Company has the corporate power and authority to enter into this Agreement
and to carry out its obligations hereunder. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by the Board of Directors of the
Company and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement and the transactions contemplated
hereby. No authorization, consent or approval of, or filing with, any
governmental body or authority is necessary for the consummation by the
Company of the transactions contemplated by this Agreement. The Company is
not subject to or obligated under any charter, bylaw or contract provision
or any governmental license, franchise or permit, or subject to any order
or decree, which would be breached or violated by its executing or, subject
to the approval of its stockholders, carrying out this Agreement.
e. Reports and Financial Statements. The Company has delivered to
--------------------------------
BigHub its audited financial statements for the year ended December 31,
1998 and its unaudited financial statements for the year ended December 31,
1999 (collectively, the "Financial Statements"). The Financial Statements,
together with the notes thereto, are complete and correct in all material
respects, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis, and present fairly the
financial condition and position of the Company as of the dates and for the
periods indicated, subject to normal recurring year-end audit adjustments
(which are not expected to be material) and except that the unaudited
financial statements do not contain all footnotes required under generally
accepted accounting principles.
f. No Undisclosed Liabilities. As of the date hereof, neither the
--------------------------
Company nor any of its subsidiaries has any liabilities or obligations of
any nature, whether or not accrued, contingent or otherwise, of a type
required by GAAP to be reflected on a
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consolidated balance sheet, except liabilities or obligations reflected in
any of the Financial Statements.
g. No Violation of Law. The businesses of the Company and its
-------------------
subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any governmental body or authority, except where such conduct
has no material adverse effect on the businesses of the Company and its
subsidiaries. Except as otherwise disclosed herein, the Company and its
subsidiaries have all permits, licenses and governmental authorizations
material to ownership or occupancy of their respective properties and
assets and the carrying on of their respective businesses.
h. Environmental Laws and Regulations. The Company and each of its
----------------------------------
subsidiaries is in material compliance with all applicable federal, state,
local and foreign laws and regulations relating to pollution or protection
of human health or the environment (including, without limitation, ambient
air, surface water, ground water, land surface or subsurface strata)
(collectively, "Environmental Laws"). Neither the Company nor any of its
subsidiaries has received written notice of, or, to the knowledge of the
Company, is the subject of, any actions, causes of action, claims,
investigations, demands or notices by any person alleging liability under
or non-compliance with any Environmental Law or that the Company or any
subsidiary is a potentially responsible party at any Superfund site or
state equivalent site ("Environmental Claims").
i. Change of Control Payments. The consummation of the transactions
--------------------------
contemplated by this Agreement will not, solely as a result of such
consummation, (i) entitle any employees of the Company or any of the
subsidiaries to severance pay, (ii) accelerate the time of payment or
vesting or trigger any payment or funding (through a grantor trust or
otherwise) of compensation or benefits under, increase the amount payable
or trigger any other material obligation pursuant to, any of the benefit
plans or (iii) result in any breach or violation of, or a default under,
any of the benefit plans.
j. Absence of Certain Changes or Events. Other than as disclosed
------------------------------------
in the Financial Statements or previously disclosed in writing to BigHub,
since December 31, 1999 to the date hereof, the businesses of the Company
and its subsidiaries have been conducted in all material respects in the
ordinary course. Since December 31, 1999 to the date hereof, no dividends
or distributions have been declared or paid on or made with respect to the
shares of capital stock or other equity interests of the Company or its
subsidiaries nor have any such shares been repurchased or redeemed, other
than dividends or distributions paid to the Company or a wholly-owned
subsidiary and the dividends paid to the holders of the Company Preferred
Stock in the form of 95,588 shares of Company Common Stock.
k. Litigation. There is no action, suit, proceeding or investigation
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pending or currently threatened against the Company that questions the
validity of this Agreement or the right of the Company to enter into this
Agreement, or to consummate the transactions contemplated hereby, or that
might result, either individually or in the aggregate, in any material
adverse effect in the assets, condition, affairs or prospects of the
Company,
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financially or otherwise, or any change in the current equity ownership of
the Company, nor is the Company aware that there is any basis for any of
the foregoing.
l. Tax Matters. Except for federal and Virginia tax returns for the
-----------
Company and federal and New Jersey tax returns for INI, each for the year
1998 and for each of which no tax liability exists and no penalty will be
assessed, the Company has filed all requisite federal, state, local and
foreign tax returns. All such returns are accurate in all material
respects. The Company has paid all taxes pursuant to such returns, pursuant
to any assessments received by it, or which it is obligated to withhold
from amounts owing to any employee, creditor or third party. The income tax
returns of the Company have never been audited by local, state or federal
authorities. The Company has not waived any statute of limitations with
respect to taxes or agreed to any extension of time with respect to any tax
assessment or deficiency. No deficiency assessment with respect to or
proposed adjustment of the Company's federal, state, county or local taxes
is pending or, to the Company's knowledge, threatened. There is no tax
lien, whether imposed by any federal, state, county or local taxing
authority, outstanding against the assets, properties or business of the
Company, except for taxes not yet due and payable.
m. Insurance. The Company is insured by insurers of recognized
---------
financial responsibility against such losses and risks and in such amounts
as management of the Company believes to be prudent and customary in the
business in which the Company is engaged. The Company has not been refused
any insurance coverage sought or applied for and the Company has no reason
to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage
from similar insurers as may be necessary to continue its business at a
cost that would not materially and adversely affect the condition,
financial or otherwise, or the earnings, business or operations of the
Company.
n. Title. Except as otherwise disclosed herein, the Company owns its
-----
property and assets free and clear of all mortgages, liens, loans and
encumbrances, except such encumbrances and liens that arise in the ordinary
course of business and do not materially impair the Company's ownership or
use of such property or assets. With respect to the property and assets it
leases, the Company is in compliance with such leases.
o. Intellectual Property. The Company owns, is licensed or otherwise
---------------------
possesses legally enforceable rights to use, all patents, trademarks, trade
names, service marks, copyrights and mask works, all applications for and
registrations of such patents, trademarks, trade names, service marks,
copyrights and mask works, and all processes, formulae, methods,
schematics, technology, know-how, computer software programs or
applications, and tangible or intangible proprietary information or
material that are necessary to conduct the business of the Company as
currently conducted or planned to be conducted ("Intellectual Property").
The Company is not and will not be as a result of the execution and
delivery of this Agreement or the performance of its obligations hereunder
in breach of any license, sublicense or other agreement relating to the
Intellectual Property or any license, sublicense or other agreement
pursuant to which the
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Company is authorized to use any third party patents, trademarks or
copyrights. All patents, registered trademarks, service marks and
copyrights held by the Company are valid and enforceable. The Company (i)
has not been sued in any suit, action or proceeding which involves a claim
of infringement of any patent, trademark, service mark or copyright or the
violation of any trade secret or other proprietary right of any third
party; or (ii) has any knowledge that the manufacturing, importation,
marketing, licensing, sale, offer for sale, or use of any of its products
infringes any patent, trademark, service mark, copyright, trade secret or
other proprietary right of any third party.
p. Internal Accounting Controls. The Company maintains a system of
----------------------------
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's general
or specific authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management's general
or specific authorization and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
4. Representations and Warranties by BigHub. BigHub hereby represents
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and warrants to Seller that:
a. Investment Representations.
--------------------------
i. BigHub is acquiring the Shares for investment purposes only
and not with a view to distribution or resale.
ii. BigHub has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks
of an investment in the Company.
iii. BigHub has the ability to bear the economic risks of
BigHub's prospective investment, and is able, without materially
impairing its financial condition, to hold the Shares for an
indefinite period of time and to suffer complete loss on its
investment.
iv. BigHub is an "accredited investor" as such term is defined
in Rule 501 under the Securities Act of 1933, as amended.
b. Organization, Qualification, Etc. BigHub is a corporation duly
--------------------------------
organized, validly existing and in good standing under the laws of its
jurisdiction of organization and has the corporate power and authority to
own its properties and assets and to carry on its business as it is now
being conducted and is duly qualified to do business and is in good
standing in each jurisdiction in which the ownership of its properties or
the conduct of its business requires such qualification, except for
jurisdictions in which such failure to be so qualified or to be in good
standing would not in the aggregate have a material adverse effect on
BigHub. The copies of BigHub's
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Articles of Incorporation, as amended, and By-laws which have been made
available to the Sellers are complete and correct and in full force and
effect on the date hereof.
c. Capital Stock. The authorized capital stock of BigHub consists of
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50,000,000 shares of BigHub Common Stock, and 25,000,000 shares of
preferred stock, par value $0.001 per share ("BigHub Preferred Stock"). The
shares of BigHub Common Stock to be issued pursuant to this Agreement will,
when issued, be validly issued fully paid and non-assessable. As of the
date hereof, 18,605,976 shares of BigHub Common Stock and no shares of
BigHub Preferred Stock were issued and outstanding. All the outstanding
shares of BigHub Common Stock have been validly issued and are fully paid
and non-assessable. As of the date hereof, there were no outstanding
subscriptions, options, warrants, rights or other arrangements or
commitments obligating BigHub to issue any shares of its capital stock
other than options and other rights to receive or acquire an aggregate of
1,252,500 shares of BigHub Common Stock.
d. Corporate Authority Relative to this Agreement. BigHub has the
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corporate power and authority to enter into this Agreement and to carry out
its obligations hereunder. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of BigHub and no other
corporate or stockholder proceedings on the part of BigHub are necessary to
authorize this Agreement, the issuance of the BigHub Common Stock and the
other transactions contemplated hereby. No authorization, consent or
approval of, or filing with, any governmental body or authority is
necessary for the consummation by BigHub of the transactions contemplated
by this Agreement. This Agreement is a legal, valid and binding obligation
of BigHub, enforceable against BigHub in accordance with its terms.
5. Indemnification of Buyer by Sellers. Each Seller, on its own behalf
-----------------------------------
and as pertains only to such Seller's representations and warranties made
hereunder and not jointly or severally with any other Seller, agrees to
indemnify, defend and hold harmless BigHub and its respective officers,
directors, employees, attorneys, stockholders, controlling persons and
affiliates (collectively, the "BigHub Indemnitees"), from, and will pay to the
BigHub Indemnitees the amount of any damages arising from the breach or
inaccuracy of any representation or warranty made by such Seller in this
Agreement or any other certificate or document delivered by or on behalf of such
Seller pursuant to this Agreement as a condition to Closing.
6. Indemnification of Buyer by Company. Company agrees to indemnify,
-----------------------------------
defend and hold harmless the BigHub Indemnitees from, and will pay to the BigHub
Indemnitees the amount of damages arising from the breach or inaccuracy of any
representation or warranty made by Company in this Agreement or any other
certificate or document delivered by or on behalf of Company pursuant to this
Agreement as a condition to Closing; provided, however, that Company shall not
be responsible for damages indemnifiable under this Section 6 unless and until
---------
such damages in the aggregate exceed an amount equal to $100,000 (the "Basket
Amount"). In the event that the aggregate of such damages exceeds the Basket
Amount, Company shall indemnify the BigHub Indemnitees for all such damages,
including the Basket Amount.
10
<PAGE>
7. Covenants of Company.
--------------------
a. At the time of Closing, the Company hereby covenants to convert
the 250,000 shares of Company Preferred Stock acquired by BigHub from the
Preferred Shareholders hereunder into 668,449 shares of Company Common
Stock.
b. Except as may be consented to by BigHub, which consent shall not
be unreasonably withheld, following the Closing, the Company:
(i) shall, and shall cause each of its subsidiaries to, conduct
its operations according to their ordinary and usual course of
business;
(ii) shall notify BigHub of any emergency or other change in the
normal course of its or its subsidiaries' respective businesses or in
the operation of its or its subsidiaries' respective properties and of
any complaints, investigations or hearings (or communications
indicating that the same may be contemplated) of any governmental body
or authority;
(iii) shall not authorize or pay any dividends on or make any
distribution with respect to its outstanding shares of stock other
than the payment of dividends, in the form of 95,588 shares of Company
Common Stock, to the holders of the Company Preferred Stock;
(iv) shall not, and shall not permit any of its subsidiaries to,
authorize, propose or announce an intention to authorize or propose,
or enter into an agreement with respect to, (x) any merger,
consolidation or business combination, (y) any acquisition of assets
or securities or any disposition of assets or securities not in the
ordinary course of business, or (z) any release or relinquishment of
any material contract rights;
(v) shall not, and shall not permit any of its subsidiaries to,
except in the ordinary course of business in connection with employee
incentive and benefit plans, programs or arrangements in existence on
the date hereof, or as contemplated herein, purchase, exchange,
convert or redeem any shares of its stock; and
(vi) shall not, and shall not permit any of its subsidiaries to
enter into any material agreement with aggregate consideration of
$100,000 per year.
c. The Company shall, as soon as practicable, upon the earlier of
and with the proceeds from (i) a successful capital raising transaction
contemplated by Section 8 hereof or (ii) the sale of INI, cause the
---------
redemption of the Series B Convertible Preferred Stock.
d. The Company shall take all necessary action to cause Frank Denny
and Chet Howard to be appointed to the Board of Directors of the Company as
of the Closing Date and to serve until the next annual election of
directors of the Company. In
11
<PAGE>
connection with such election, the Company shall take all necessary action
to include Frank Denny and Chet Howard as nominees for the Board of
Directors of the Company recommended by such Board of Directors of Company
for election by Company's stockholders to such Board of Directors.
8. Covenants of BigHub. BigHub agrees to use its best efforts to assist
-------------------
the Company in a debt and/or equity offering in which the Company will seek to
raise up to $2,000,000. The offering will take place within six months of
closing and neither BigHub nor the Company will have any liability or obligation
relating to the success or instigation of any such offering.
9. Closing; Conditions to Closing. The closing of the sale to and
------------------------------
purchase by BigHub of the Shares, Warrants and Company Options (the "Closing")
shall occur at such place and time agreed to by the parties hereto (the "Closing
Date"); provided, however, if the Closing does not occur by March 31, 2000, this
Agreement shall terminate without penalty to BigHub or Sellers unless such
failure to close results from a breach of this Agreement by BigHub or Sellers.
The obligation of BigHub to purchase the Shares, Warrants, and Company Options,
and the obligation of the Sellers to sell the Shares, Warrants, and Company
Options, shall be subject to the following conditions:
a. Each of the representations and warranties made by Sellers in
this Agreement being true and correct in all material respects at and as of
the time of Closing.
b. Sellers having performed in all material respects each and every
covenant and agreement contained in this Agreement required to be performed
by it by the time of Closing;
c. Each Seller having furnished to BigHub an investment letter in a
form which is acceptable to BigHub in its sole discretion;
d. BigHub's funding of a loan in the principal amount of $500,000
pursuant to a promissory note from Company in substantially the form set
forth on Exhibit D hereto;
---------
e. All necessary consents and/or agreements having been obtained by
the Company allowing the Company Options and Warrants to be transferred to
BigHub, including any consent which may be necessary from the holders of
the Series B Preferred Stock;
f. BigHub having issued to Sens and Bernier options to purchase
200,000 shares each of BigHub Common Stock at an exercise price of $5.50
per share and vesting 1/3 at Closing, 1/3 on the first anniversary of
Closing and 1/3 on the second anniversary of Closing; and
g. The execution of a licensing agreement in substantially the form
set forth on Exhibit E hereto between BigHub and Company.
---------
12
<PAGE>
10. Restrictive Legend. Each certificate representing (i) the shares of
------------------
BigHub Common Stock to be issued hereunder, or (ii) any other securities issued
in respect of such shares upon any stock split, stock dividend,
recapitalization, merger consolidation or similar event, shall be stamped or
otherwise imprinted with a legend in the following form (in addition to any
legend required under applicable state securities laws):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH
SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED. COPIES OF THE
AGREEMENT COVERING THE PURCHASE OF THESE SHARES MAY BE OBTAINED AT NO
COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS
CERTIFICATE TO THE SECRETARY OF THE CORPORATION AT THE PRINCIPAL
EXECUTIVE OFFICES OF THE CORPORATION.
11. Sellers consent to BigHub making a notation on its records and giving
instructions to any transfer agent of the BigHub Common Stock in order to
implement the restrictions on transfer established in this Section 10.
----------
11. Severability. Any term or provision of this Agreement that is invalid
------------
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.
12. Applicable Law. THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS,
--------------
INCLUDING VALIDITY, INTERPRETATION AND EFFECT, BY THE LAWS OF THE STATE OF TEXAS
REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES
OF CONFLICTS OF LAWS THEREOF.
13. Expenses. Whether or not the transactions contemplated by this
--------
Agreement are consummated, each of the parties hereto shall pay its respective
fees and expenses incurred in connection herewith.
14. Entire Agreement. This Agreement constitutes the entire agreement and
----------------
supersedes all other prior agreements and understandings, both written and oral,
between the parties hereto with respect to the subject matter hereof.
13
<PAGE>
15. Amendments. This Agreement may not be amended or modified except by a
----------
written instrument signed on behalf of each of the parties hereto.
16. Binding Effect. This Agreement shall be binding upon and inure to the
--------------
benefit of the parties hereto and their respective successors and assigns.
17. Notices. Any notice or other communication required or permitted
-------
hereunder shall be in writing and either delivered personally, by facsimile
transmission or by registered or certified mail (postage prepaid and return
receipt requested) and shall be deemed given when received (or, if mailed, five
business days after the date of mailing) at the following addresses or FACSIMILE
transmission numbers (or at such other address or facsimile transmission number
for a party as shall be specified by like notice):
a. If to BigHub: The BigHub.com, Inc.
Attn: Frank Denny
2939 Mossrock, Suite 100
San Antonio, TX 78230
with a copy (which shall not constitute notice) to Akin, Gump, Strauss, Hauer &
Feld, L.L.P., 1500 Bank of America Plaza, 300 Convent Street, San Antonio, TX
78205, Attention: Alan Schoenbaum (facsimile transmission number: 210-224-2035).
b. If to a Seller: at the address set forth opposite such Seller's
name on Exhibit A or Exhibit B hereto, as applicable.
--------- ---------
c. If to the Company: Next Generation Media Corp.
Attn: President
8380 Alban Road
Springfield, Virginia
with a copy (which shall not constitute notice) to Williams & Connolly LLP, 725
12th Street, N.W. Washington, D.C. 20005, Attention: Jonathan Graham (facsimile
transmission number : 202-434-5094).
18. Counterparts. This Agreement may be executed in one or more
------------
counterparts, and by the parties hereto in separate counterparts, each of which
when executed shall be deemed to be an original but all of which shall
constitute one and the same agreement.
19. Termination. Upon the failure of Sellers to obtain all releases of
-----------
liens on their Shares prior to the Closing, this Agreement shall immediately
become void and there shall be no further obligation hereunder on the part of
any party hereto.
[signature page follows]
14
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by themselves or their duly authorized representatives, on the date first
written above.
THE BIGHUB.com, INC.
By: ____________________________________
Chet Howard, Chief Financial Officer
NEXT GENERATION MEDIA CORPORATION
By: ____________________________________
Gerard R. Bernier, President
SELLERS:
Common Shareholders:
________________________________________
GERARD R. BERNIER
________________________________________
JOEL SENS
________________________________________
JOHN BANAS
Preferred Shareholders:
________________________________________
COMER M. ALDEN
________________________________________
BEVERLY ARNOLD
15
<PAGE>
________________________________________
DAN E. BUTT
________________________________________
M. A. DIZDAR
________________________________________
A. BAKER DUNCAN
________________________________________
SALLY W. DUNCAN
________________________________________
LUELLA HARDIE
________________________________________
JANE JACOBS
________________________________________
JOHNNIE JEAN LOVETT
________________________________________
THOMAS LOVETT
________________________________________
MARY MALONE
________________________________________
ELEANOR MORRISON
________________________________________
RICHARD OLDFATHER
16
<PAGE>
________________________________________
DEBORAH QUEBE
________________________________________
JORDAN REESE III
________________________________________
EDDIE W. SPALTON
TRES HOMBRES
By: ____________________________________
Name/Title: ____________________________
________________________________________
FRED GRINSTEAD
CLIFTON-NEMEC INVESTMENT FUND, L.P.
By: ____________________________________
Name/Title: ____________________________
________________________________________
BARBARA T. GRINNAN
RHOJCOAMT PARTNERSHIP, LTD.
By: ____________________________________
Name/Title: ____________________________
________________________________________
PHILIP M. STEVENSON, JR.
17
<PAGE>
CITCAM STOCK
By: ____________________________________
Name/Title: ____________________________
HARLON MORSE FENTRESS TRUST
By: ____________________________________
Name/Title: ____________________________
DUNCAN-SMITH INVESTMENTS, INC.
By: ____________________________________
Name/Title: ____________________________
RENAISSANCE CAPITAL PARTNERS I
BY: RENAISSANCE CAPITAL GROUP
By: ____________________________________
Name/Title: ____________________________
18
<PAGE>
EXHIBIT A
TO STOCK PURCHASE AGREEMENT
COMMON SHAREHOLDERS
-------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Number of Shares of
Company Common Stock
Name Address to be Sold to BigHub
---- ------- --------------------
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Gerard R. Bernier [This column intentionally left blank] 1,088,581
- -------------------------------------------------------------------------------------------------
Joel Sens 910,725
- -------------------------------------------------------------------------------------------------
John Banas 410,000
- -------------------------------------------------------------------------------------------------
Total 2,409,306
- -------------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
EXHIBIT B
TO STOCK PURCHASE AGREEMENT
PREFERRED SHAREHOLDERS
----------------------
<TABLE>
<CAPTION>
Number of
Shares of Number of Number of Shares
Company Shares of of BigHub to be
Preferred Number of Dividend Stock issued to
Stock to be Warrants to be to be Sold to Preferred
Name Address Sold to BigHub Sold to BigHub BigHub Shareholder
---- ------- -------------- -------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
Comer Alden [This column intentionally 1,054 703 404 1,093
left blank]
- -------------------------------------------------------------------------------------------------------------------------------
Beverly Arnold 2,635 1,757 1,007 2,727
- -------------------------------------------------------------------------------------------------------------------------------
Dan E. Butt 2,635 1,757 1,007 2,727
- -------------------------------------------------------------------------------------------------------------------------------
M. A. Dizdar 2,635 1,757 1,007 2,727
- -------------------------------------------------------------------------------------------------------------------------------
A. Baker Duncan 2,635 1,757 1,007 2,727
- -------------------------------------------------------------------------------------------------------------------------------
Sally W. Duncan 2,635 1,757 1,007 2,727
- -------------------------------------------------------------------------------------------------------------------------------
Luella Hardie 2,635 1,757 1,007 2,727
- -------------------------------------------------------------------------------------------------------------------------------
Jane Jacobs 2,635 1,757 1,007 2,727
- -------------------------------------------------------------------------------------------------------------------------------
Johnnie Jean. 2,635 1,757 1,007 2,727
Lovett
- -------------------------------------------------------------------------------------------------------------------------------
Thomas P. Lovett 2,635 1,757 1,007 2,727
- -------------------------------------------------------------------------------------------------------------------------------
Mary Malone 2,635 1,757 1,007 2,727
- -------------------------------------------------------------------------------------------------------------------------------
Eleanor Morrison 2,635 1,757 1,007 2,727
- -------------------------------------------------------------------------------------------------------------------------------
Richard Oldfather 2,635 1,757 1,007 2,727
- -------------------------------------------------------------------------------------------------------------------------------
Deborah Quebe 2,635 1,757 1,007 2,727
- -------------------------------------------------------------------------------------------------------------------------------
Jordon Reese, III 2,635 1,757 1,007 2,727
- -------------------------------------------------------------------------------------------------------------------------------
Eddie Spalten 5,270 3,513 2,015 5,509
- -------------------------------------------------------------------------------------------------------------------------------
Tres Hombres 2,635 1,757 1,007 2,727
- -------------------------------------------------------------------------------------------------------------------------------
Fred Grinstead 2,635 1,757 1,007 2,727
- -------------------------------------------------------------------------------------------------------------------------------
Clifton-Nemec 2,721 1,814 1,041 2,813
Investment
Fund, L.P.
- -------------------------------------------------------------------------------------------------------------------------------
Barbara T. 2,721 1,814 1,041 2,833
Grinnan
- -------------------------------------------------------------------------------------------------------------------------------
Rhojcoamt 2,721 1,814 1,041 2,833
Partnership
- -------------------------------------------------------------------------------------------------------------------------------
Philip Stevenson 2,721 1,814 1,041 2,833
- -------------------------------------------------------------------------------------------------------------------------------
Citcam Stock Co. 5,442 3,628 2,082 5,700
- -------------------------------------------------------------------------------------------------------------------------------
Harlon Morse 16,325 10,883 6,243 16,993
Fentress Trust
- -------------------------------------------------------------------------------------------------------------------------------
Duncan-Smith 13,769 9,179 5,266 14,316
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Number of
Shares of Number of Number of Shares
Company Shares of of BigHub to be
Preferred Number of Dividend Stock issued to
Stock to be Warrants to be to be Sold to Preferred
Name Address Sold to BigHub Sold to BigHub BigHub Shareholder
---- ------- -------------- -------------- ------------- -----------
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
Co.
- -------------------------------------------------------------------------------------------------------------------------------
Renaissance 155,096 103,398 59,302 161,218
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Total 250,000 166,672 95,588 259,773
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
21
<PAGE>
EXHIBIT C
TO STOCK PURCHASE AGREEMENT
COMPANY OPTION HOLDERS
----------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Number of Company Options to be
Name Sold to BigHub
---- --------------
- ----------------------------------------------------------------------------------------------------------------------
<S> <C>
- ----------------------------------------------------------------------------------------------------------------------
Gerard R. Bernier 150,000
- ----------------------------------------------------------------------------------------------------------------------
Joel Sens 150,000
- ----------------------------------------------------------------------------------------------------------------------
Total 300,000
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE>
EXHIBIT D
TO STOCK PURCHASE AGREEMENT
FORM OF PROMISSORY NOTE
-----------------------
PROMISSORY NOTE
Date: March 16, 2000
Maker: Next Generation Media Corporation
Maker's Mailing Address: 8380 Alban Road
Springfield, Virginia [ZIP]
Payee: The BigHub.com, Inc.
2939 Mossrock, Suite 100
San Antonio, TX 78230
Place for Payment: The BigHub.com, Inc.
2939 Mossrock, Suite 100
San Antonio, TX 78230
Principal Amount: FIVE HUNDRED THOUSAND DOLLARS ($500,000)
Annual Interest Rate on
Unpaid Principal until
Maturity Date: Nine and Three-Quarters Percent (9.75%) per annum.
Annual Interest Rate on
Matured, Unpaid Amounts: Ten and Three-Quarters Percent (10.75%) per annum.
Terms of Payment
(principal and interest): Principal and interest is payable in one
installment on or before the first anniversary of
the date hereof; provided, however, that the
entire principal balance and any accrued interest
shall be payable immediately upon completion by
Maker of an equity or debt financing whereby Maker
receives gross proceeds from such financing equal
to or greater than One Million Five Hundred
Thousand Dollars ($1,500,000).
For value received, Maker promises to pay to the order of Payee at the
place for payment and according to the terms of payment (in funds available for
immediate use) the principal amount plus interest at the rates stated above.
All unpaid amounts shall be due and payable by the final scheduled payment date.
23
<PAGE>
Maker shall have the right at any time to prepay, prior to maturity, all or
any part of the unpaid principal balance of this Promissory Note without penalty
and interest shall immediately cease on any amount so prepaid. Prepayments
shall be credited first to the payment of accrued interest and then to the
reduction of the last maturing principal payments of this Promissory Note.
Payee may, at its sole option, cause this Promissory Note to convert (in
whole or in part) automatically on or before the Maturity Date into that number
of shares of Maker's common stock, par value $.01 per share ("Maker Common
Stock"), equal to: the amount designated by Payee to be converted (not to be in
excess of the remaining outstanding principal and accrued interest as of the
date of conversion), divided by Two Dollars ($2.00). Payee shall have the right
to convert the Promissory Note into Maker Common Stock notwithstanding Maker's
notice of prepayment pursuant to the preceding paragraph.
Upon the surrender hereof accompanied by Payee's written request for
conversion substantially in the form of Exhibit "A" attached hereto at Maker's
Mailing Address (or any other place Maker may designate in writing), Maker
shall, within ten (10) days from the date of conversion, deliver to Payee one or
more certificates representing the number of shares of Maker Common Stock into
which this Promissory Note has been converted and a new Promissory Note, in the
form hereof for the balance of the amount not converted. Maker shall also
furnish certified copies of corporate authorizations and charter documents
which, in the reasonable opinion of Payee's counsel, evidences the authority of
the Maker to issue such shares of Maker Common Stock upon the conversion of this
Promissory Note. In the event of a conversion of the entire Promissory Note,
Maker shall also remit to Payee a check representing any fractional share of
Maker Common Stock. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date on which Maker shall have
received a valid request to convert.
If Maker defaults in the payment of this Promissory Note, and the default
continues after Payee gives Maker notice of the default and the time within
which it must be cured, as may be required by law or by written agreement, then
Payee may declare the unpaid principal balance and earned interest on this
Promissory Note immediately due. Maker and each surety, endorser and guarantor
waive all demands for payment, presentations for payment, notices of intention
to accelerate maturity, notices of acceleration of maturity, protests and
notices of protest, to the extent permitted by law. For purposes of this
Promissory Note, Maker shall be deemed to have received notice of a default upon
the earlier of (i) actual receipt or (ii) five (5) days after said notice has
been sent by certified mail, return receipt requested (postage prepaid).
If this Promissory Note given to an attorney for collection or enforcement,
or if suit is brought for collection, or if it is collected through bankruptcy
or other judicial proceeding, then Maker shall pay Payee all costs of collection
or enforcement, including reasonable attorney's fees and court costs, in
addition to other amounts due. Reasonable attorney's fees shall be 10% of all
amounts due unless either party pleads otherwise.
Neither a delay on the part of Payee in the exercise of any power or right
under this Promissory Note, nor a single or partial exercise of any such power
or right, shall operate as a
24
<PAGE>
waiver thereof. Enforcement by Payee of any of its rights hereunder shall not
constitute an election by it of remedies so as to preclude the exercise of any
other remedy available to it.
Regardless of any provision contained herein concerning the debt evidenced
by this Promissory Note, interest on such debt shall not exceed the maximum
amount of nonusurious interest that may be contracted for, taken, reserved,
charged or received under law; any interest in excess of that maximum amount
shall be credited on the principal of the debt or, if that has been paid,
refunded. On any acceleration or required or permitted prepayment, any such
excess shall be canceled automatically as of the acceleration or prepayment or,
if already paid, credited on the principal of the debt or, if the principal of
the debt has been paid, refunded. In determining whether or not the interest
paid or payable, under any specific contingency, exceeds the maximum amount of
nonusurious interest, Maker and Payee shall, to the maximum extent permitted
under applicable law, (a) characterize any nonprincipal payment as an expense,
fee or premium rather than as interest, (b) exclude voluntary prepayments and
the effects thereof, and (c) spread the total amount of interest throughout the
entire contemplated term hereof.
This Promissory Note is delivered and is intended to be paid and performed
in the State of Texas without regard to any otherwise applicable principles of
conflicts of laws, and the laws of such state shall govern the construction,
validity, enforcement, and interpretation hereof.
Maker represents and warrants that it is not subject to any bankruptcy
court, and has not filed any bankruptcy petition which has not been discharged
or dismissed.
Maker is responsible for all obligations represented by this Promissory
Note.
When the context requires, the terms Maker and Payee, and other singular
nouns and pronouns include the plural.
MAKER: NEXT GENERATION MEDIA CORPORATION
By: _______________________________________
Gerard R. Bernier, President
25
<PAGE>
EXHIBIT A
TO PROMISSORY NOTE
[Form of Conversion Notice]
To Next Generation Media Corporation:
The undersigned owner of this Promissory Note hereby irrevocably exercises
the option to convert this Promissory Note, or portion hereof below designated,
into shares of common stock, par value $.01 per share, of Next Generation Media
Corporation issuable and deliverable upon the conversion and any Promissory Note
representing any unconverted amount hereof, be issued and delivered to The
BigHub.com, Inc. If shares are to be issued in the name of a person other than
the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto.
Dated: ________________________ The BigHub.com, Inc.
By: __________________________
Name:
Title:
Amount to be Converted: $_____________________
Fill in for registration of the shares of common stock and Promissory Note if to
be issued otherwise than to the registered holder.
_____________________________
Name
_____________________________
Social Security or other
Taxpayer Identification
Number
_____________________________
_____________________________
_____________________________
Please print name and address
(including zip code number)
26
<PAGE>
EXHIBIT E
TO STOCK PURCHASE AGREEMENT
FORM OF LICENSING AGREEMENT
---------------------------
LICENSING and STRATEGIC ALLIANCE AGREEMENT
This Licensing and Strategic Alliance agreement ("Agreement") is made this 16th
day of March, 2000, between The BigHub.com, a Florida corporation located at
3388 Via Lido, Newport Beach, California, 92663 ("BigHub") and Next Generation
Media Corp., a Nevada corporation located at 8380 Alban Road, Springfield,
Virginia, 22150 ("NexGen").
I. Recitals
A. NexGen has significant expertise in the business of direct-mail marketing
in the local and national marketplace, and intends to expand its business to the
developing market on the Internet.
B. BigHub has significant experience in the development of commercial websites
on the Internet, and in providing secure e-commerce functions to its clients.
BigHub intends to expand its business through increased advertising in non-
electronic mediums.
C. NexGen and BigHub wish to enter into a strategic alliance whereby BigHub
will establish a commercial presence on the Internet for NexGen, and NexGen will
assist BigHub in advertising its e-commerce capabilities in NexGen advertising
mediums.
NOW, THEREFORE, in consideration of the premises and mutual covenants set forth
herein, the parties hereby agree as follows:
ARTICLE I
TERM
The term of this agreement shall commence as of the date of this Agreement, and
shall continue for a period of three (3) year. Thereafter, this agreement shall
automatically extend for successive one (1) year periods, unless otherwise
cancelled in writing, sixty (60) days prior to the anniversary date of this
agreement or any one-year extension thereof.
ARTICLE II
DUTIES OF BIGHUB
Hosting and Maintenance. BigHub shall host and maintain the NexGen website, and
- -----------------------
shall post yellow page listings, coupons, and webpages provided by NexGen in
formats established by
27
<PAGE>
NexGen and BigHub. BigHub shall coordinate with NexGen to develop a process for
updating and changing coupons and webpages.
Internet Strategic Planning. BigHub shall share with NexGen its Internet
- ----------------------------
development strategies to enhance the mutual development of both NexGen and
BigHub.
Marketing. BigHub shall identify and pursue national marketing opportunities
- ----------
for the mutual benefit of both NexGen and BigHub.
ARTICLE III
DUTIES OF NEXGEN
Local Marketing Expertise. NexGen shall share with BigHub its knowledge of
- --------------------------
marketing and advertising techniques to be applied to local communities.
Marketing. NexGen shall provide marketing support to BigHub in the following
- ----------
manner:
a) NexGen shall promote BigHub on the exterior of NexGen cooperative
Coupon mailing envelopes;
b) Where appropriate, NexGen will promote BigHub within its other product
lines;
c) NexGen will identify and utilize media trades (including radio, cable
television, and search engines) that will provide additional
promotional opportunities for BigHub;
d) NexGen shall place advertisements in Independent News and certain
affiliated free community newspapers.
Advertising Services. NexGen will make available to BigHub its designs,
- ---------------------
printing and advertising services on a project-by-project cost-plus basis.
ARTICLE IV
MUTUAL DUTIES
NexGen and BigHub shall, for their mutual benefit, make all reasonable efforts
to identify and utilize cross-selling opportunities for all product lines made
available on the Internet and other Internet activities.
ARTICLE V
INTELLECTUAL PROPERTY RIGHTS
Trademark, Service Mark, and Other Intellectual Property. NexGen agrees and
- ---------------------------------------------------------
acknowledges that it acquires no right, title or interest in any copyright,
trademark, service mark, trade name, or patent (collectively, "Intellectual
Property Rights") of BigHub by virtue of this
28
<PAGE>
Agreement and that all uses of BigHub's Intellectual Property Rights pursuant to
this Agreement shall remain solely with BigHub.
Software Licensing. BigHub shall grant to NexGen a nonexclusive,
- ------------------
nontransferable, worldwide, paid-up, royalty-free license for its internal use,
including the right to copy or reproduce such software for use in as many sites
and locations as desired by NexGen for any and all business purposes, of all
software owned or developed by BigHub used in connection with or related to
NexGen.
Software Development. Any software developed by BigHub (alone or jointly with
- ---------------------
NexGen) for the exclusive use of NexGen and/or the commercial website, shall be
the exclusive property of NexGen, and BigHub shall be deemed a "work for hire"
with respect to all such software it develops for NexGen. NexGen shall grant
non-exclusive, non-transferable, worldwide, royalty-free license to BigHub to
use any such software to the extent necessary to operate the website and
facilitate links and transactions between NexGen and BigHub.
ARTICLE VI
TERMINATION
Mutual Consent to Terminate. This agreement may be terminated at any time upon
- ----------------------------
the mutual consent of both parties.
Termination - Notice Required. If either party is in breach or default of a
- ------------------------------
material provision of this Agreement and such material breach or default is not
cured within thirty (30) days after written notice thereof from the non-
defaulting party under this Agreement, or reasonable action to cure has not been
diligently initiated and pursued if a cure cannot be effected within thirty (30)
days, then this Agreement may be terminated at the election of the non-
defaulting party.
Termination - Notice Not Required. Unless otherwise prohibited by law, this
- ----------------------------------
Agreement may be terminated at the option of either party with no requirement of
notice, if any of the following occurs:
a) Either party becomes insolvent, or voluntary or involuntary
proceedings are instituted against either party under any
federal, state, or other bankruptcy or insolvency law, or a
receiver is appointed for either party;
b) Either party's business is placed under attachment, garnishment
or other restrictive process involving a significant portion of
the business of either party; or
c) Either party ceases to function as a going concern or ceases to
conduct its business operations.
Remedies Not Exclusive: Specific Performance. The provisions of this Article
- ---------------------------------------------
shall be deemed in addition to and not in substitution of any and all other
rights or remedies which the parties may have against each other, including, but
not limited to, the initiation of any proceeding in the nature of specific
performance, injunction or any other equitable remedy, it being specifically
acknowledged by each party that damages at law may be an inadequate remedy.
29
<PAGE>
ARTICLE VII
CONSIDERATION
In consideration for this Agreement NexGen will issue to BigHub 250,000 shares
of NexGen restricted common stock. Any future consideration will be based on
the benefit and expenses realized by the parties in fulfillment of their
obligations under this Agreement.
ARTICLE VIII
CONFIDENTIALITY
Neither party may, at any time during the term of this Agreement or thereafter,
without the written consent of the other party, disclose to any person or
entity, other than an employee of the disclosing party, any confidential
information the party may obtain during the term of this Agreement relating to
the business, financial condition, results of operations, lists of existing and
potential customers, assets, liabilities, trade secrets, products, processes,
methods, techniques, formulas, projects, developments, research data, plans or
future prospects of the party, except when necessary (i) to respond to lawful
process or appropriate government inquiry; (ii) to comply with applicable law;
(iii) to establish a lawful claim or defense, or (iv) to obtain reasonably
necessary advice of counsel. Notwithstanding the foregoing provisions of this
Article, confidential information shall not include any information known
generally to the public or persons engaged in the same business or business
similar to that conducted by the disclosing party (other than as a result of
unauthorized disclosure in violation of this Article). If any arbitrator
referred to in Section X of this Agreement finds a violation of this Article, he
shall have the power to issue an order enjoining any party from further
disclosures of confidential information, in addition to any award of
compensatory damages for a breach of this Article.
ARTICLE IX
INDEMNIFICATION AND EXCUSE
Indemnification. Except as otherwise provided herein, if there is a breach of
- ---------------
any covenant, representation or warranty by either party, said party (the
"Indemnifying Party") shall protect, defend, indemnify, and hold the other party
(the "Indemnified Party") and its directors, employees, officers, agents and
shareholders, harmless, from and against any and all claims, actions,
proceedings, damages, costs, expenses, and other losses and liabilities
(including without limitation attorney's and accountant's fees) directly or
indirectly incurred or suffered by the Indemnified Party as a result of, arising
out of, or in connection with said breach by the Indemnifying Party. This
provision shall remain in full force despite the termination of this Agreement.
30
<PAGE>
Limitation of Liability. Under no circumstances shall either party be liable to
- ------------------------
the other under this Agreement for punitive damages.
Excuse/Force Majeure. No party shall have any obligation or responsibility to
- ---------------------
another if the performance of an obligation is delayed or becomes impossible as
a result of any "Excusable Event" or force majeure, provided that the party
incurring delay notifies the other party of the cause and expected duration of
the delay. Such notice shall be provided as soon as practicable and no later
than five (5) business days of discovery of the Excusable Event or force majeure
condition. Thereupon, the time within which the party experiencing such
occurrence shall have to perform its obligations hereunder shall, to the extent
necessitated by such occurrence and for the duration of such occurrence, be
appropriately delayed. For purposes hereof, an "Excusable Event" shall consist
of any occurrence beyond the reasonable control of the party claiming the
Excusable Event including, but not limited to, acts of nature, acts of any
governmental authority, inability to procure materials or to manufacture or ship
ordered goods because of governmental priority orders or allocations or
restrictions upon the use of materials or manpower, strikes, labor disputes,
embargoes, fires, floods, epidemics, quarantine restrictions and unusually
severe weather.
ARTICLE X
MISCELLANEOUS
Non-Assignability. This Agreement, or any part hereof, may not be assigned by
- -----------------
either party without the express written consent of the other party.
Confidentiality. Each of the parties undertakes and agrees to maintain in
- ----------------
confidence, and to require its directors, officers, employees, and agents to
maintain confidence, and to refrain from disclosing to others, or to permit the
use or disclosure to others, of any and all information belonging or relating to
the Agreement, except to the extent that such a disclosure is otherwise required
by law or court order, or to the extent that such disclosure is agreed in
advance by the parties.
Modification. This Agreement contains all of the agreements between the parties
- -------------
with respect to the subject matter hereof. Any modification or change in this
Agreement shall be in writing and signed by all parties.
Severability. If any provision, sentence, phrase or word of this Agreement or
- -------------
the application thereof to any person or circumstance shall be held invalid, the
remainder of this Agreement or the application of such provision, sentence,
phrase or word to persons or circumstances, other than those as to which it is
held invalid, shall not be affected thereby.
Counterparts. This Agreement may be executed in counterparts, each of which
- -------------
shall be deemed an original, but all of which shall constitute one of the same
instrument. In addition, this Agreement may contain more than one counterpart
of the same signature page and this Agreement may be executed by the affixing of
the signatures of each of the parties to one of such
31
<PAGE>
counterpart signature pages; all of such signature pages shall be read as though
one, and they shall have the same force and effect as though all of the signers
had signed a single signature page.
Notices. Any notice to any party shall be timely furnished if sent by prepaid,
- --------
certified, or registered mail return receipt requested, or by courier service,
with return receipt requested, to the following representatives at the addresses
listed below or at such changed addresses as any party shall designate from time
to time by giving written notice to the other party in accordance herewith.
Such notice shall be deemed given four (4) days after its deposit in the United
States mail as evidenced by its postmark, or time-stamped receipt of delivery
from a courier service as evidence by a time-stamped receipt, as applicable.
All notices relative to the parties hereto will be forwarded to the contacts and
addresses below:
To NexGen:
ATTN: Gerard Bernier
8380 Alban Road
Springfield, VA 22150
To The BigHub.com:
ATTN: Chet Howard
3388 Via Lido
Newport Beach, CA 92663
Interpretation and Governing Law. When the context in which the words are used
- --------------------------------
in this Agreement indicates that such is the intent, words in the singular shall
include the plural and vice versa. This Agreement shall be governed and
construed with the laws of the State of Texas. The parties hereto consent to
jurisdiction and venue in the State of Texas.
Arbitration. If any dispute arises between the parties concerning the conduct
- ------------
of business, either party may submit to the other written notice of intent to
arbitrate. The parties shall negotiate in good faith for a period of thirty
(30) days (the "Negotiation Period") following the issuance of such written
notice to resolve such dispute between themselves, giving due regard to the
purposes and intent of this Agreement. If the parties hereto are unable to
agree to a mutually satisfactory resolution of a dispute during the Negotiation
Period, the matter shall be submitted to legally binding arbitration in the
State of Texas in accordance with the rules of the American Arbitration
Association.
Headings. Paragraph headings contained herein are solely for the purpose of
- ---------
aiding the speedy location of such matter and are not in any sense to be given
weight in the construction of this Agreement. Accordingly, in cases of any
question with respect to the construction of this Agreement, it is to be
construed as though the paragraph headings have been omitted.
32
<PAGE>
Authority. The parties acknowledge that the persons who are signing this
- ----------
Agreement on behalf of each party have the authority to sign this Agreement and
bind their respective parties to the terms hereof.
Entire Agreement. This Agreement represents the entire agreement between the
- ----------------
parties with respect to the subject matter hereof, and no representations,
warranties, inducements or oral agreements have been made by either party except
as expressly set forth herein.
Waiver. The observance of any term of this Agreement may be waived only by
- -------
writing signed by the party to be bound thereby. The waiver by a party of any
right, remedy, breach or default shall not be deemed to constitute a waiver of
any other right, remedy, breach or default. The failure of any party to enforce
any provision shall not be construed as or constitute a waiver of the right of
such party to enforce such provision.
IN WITNESS WHEREOF, the parties hereof execute this Agreement as the day and
year first written above.
The BigHub.com
______________________________
By:
Title:
Next Generation Media Corp.
33
<PAGE>
EXHIBIT 2.2
-----------
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered into as
of the 16th day of March, 2000, by and among The BigHub.com, Inc., a Florida
corporation ("BigHub"), Gerard R. Bernier and Joel Sens (the "Shareholders"),
and Next Generation Media Corporation, a Nevada corporation (the "Company").
Recitals
--------
BigHub, the Shareholders and Company are, among others, parties to that
certain Stock Purchase Agreement dated on or about March ___, 2000 (the "Primary
Stock Purchase Agreement"), whereby BigHub is purchasing from Shareholders, and
other shareholders of Company, shares of the Company's common stock, par value
$.01 per share ("Company Common Stock"), shares of the Company's Series A
Convertible Preferred Stock, par value $.001 per share ("Company Preferred
Stock"), warrants to purchase Company Common Stock with an exercise price of
$0.16, held by the holders of the Company Preferred Stock which were issued in
connection with the issuance of the Company Preferred Stock (the "Warrants"),
and Company Common Stock purchase options (the "Company Options").
The Shareholders desire to sell to BigHub and BigHub desires to purchase
from the Shareholders the number of shares of the Company Common Stock, equal to
that number of shares of Company Common Stock that would otherwise have been
acquired, directly or indirectly, from the holders of the Company Preferred
Stock pursuant to the terms of the Primary Stock Purchase Agreement had such
holders been party to the Primary Stock Purchase Agreement (the "Non-Signing
Holders") computed as follows: the lesser of (a) 168,436 shares of Company
Common Stock, or (b) the sum of the number of shares of Company Common Stock (i)
issuable upon conversion of the shares of the Company Preferred Stock held by
the Non-Signing Holders in accordance with Section 7(a) of the Primary Stock
Purchase Agreement, (ii) issuable upon exercise of Warrants held by the Non-
Signing Holders, and (iii) issued as a dividend on the Company Preferred Stock
held by the Non-Signing Holders as contemplated in the Primary Stock Purchase
Agreement (the "Make-Whole Shares").
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties to this Agreement
hereby agree as follows:
Statement of Agreement
----------------------
3. Sale and Purchase.
-----------------
34
<PAGE>
a. Securities to be Transferred. On the Closing Date, as defined in
----------------------------
Section 9, Shareholders shall sell and transfer the Make-Whole Shares to
---------
BigHub and BigHub shall purchase the Make-Whole Shares from Shareholders.
b. Purchase Price for Company Common Stock. At the Closing, as
---------------------------------------
defined in Section 9, BigHub shall deliver to the Shareholders, as the
---------
purchase price for each share of Company Common Stock purchased hereunder,
consideration of 0.34 shares of BigHub common stock, par value $0.001 per
share ("BigHub Common Stock").
c. Instruments of Conveyance and Transfer. At the Closing,
--------------------------------------
Shareholders shall deliver to BigHub a certificate or certificates
representing the Make-Whole Shares (which may be included as part of, or in
addition to, the Escrow Shares delivered to BigHub on the date hereof
pursuant to Section 6 hereof) registered in either Shareholder's name,
---------
together with duly executed stock powers endorsed to BigHub with signatures
guaranteed by a national bank or trust company or such other assignments or
instruments of conveyance and transfer, in form and substance satisfactory
to BigHub and its counsel, as shall be effective to vest in BigHub all of
Shareholder's right, title and interest in and to all of the Make-Whole
Shares, free and clear of any agreements, restrictions, liens, adverse
claims or encumbrances whatsoever.
d. Allocation of Make-Whole Shares to be Delivered at Closing. The
----------------------------------------------------------
number of Make-Whole Shares delivered by each Shareholder for sale to
BigHub at Closing shall be allocated pro rata between the Shareholders
based on the number of shares of Company Common Stock delivered by each
Shareholder as Escrow Shares pursuant to Section 6 hereof, or by such other
method as agreed to between the Shareholders as circumstances permit.
4. Representations and Warranties by Shareholder. Each Shareholder, on
---------------------------------------------
his own behalf and as pertains only to such Shareholder and such Shareholder's
respective interests being transferred hereunder, represents and warrants to
BigHub that:
a. Shareholder is, and at the Closing will be, the sole record and
beneficial owner of the Make-Whole Shares; at the Closing, other than
BigHub, no person will have a right to acquire or direct the disposition,
or hold a proxy or other right to vote or direct the vote, of such Make-
Whole Shares; and Shareholder has, and at the Closing will have, good title
to such Make-Whole Shares free and clear of any agreements, restrictions,
liens, adverse claims or encumbrances whatsoever. Other than this Agreement
there are, and at the Closing there will be, no option, warrant, right,
call, proxy, agreement, commitment or understanding of any nature
whatsoever, fixed or contingent, that directly or indirectly (i) calls for
the sale, pledge or other transfer or disposition of any of such Make-Whole
Shares, any interest therein or any rights with respect thereto, or relates
to the voting, disposition, exercise, conversion or control of such Make-
Whole Shares, or (ii) obligates Shareholder to grant, offer or enter into
any of the foregoing.
35
<PAGE>
b. The sale by Shareholder of such Make-Whole Shares and the
delivery of the certificates representing such Make-Whole Shares to BigHub
against receipt of payment therefor pursuant hereto will transfer to BigHub
indefeasible title to such Make-Whole Shares, free and clear of all
agreements, trusts, liens, adverse claims and encumbrances whatsoever.
c. Shareholder has the full right, power, authority and legal
capacity to enter into this Agreement.
k. Shareholder does not require any consent, approval, authorization
or order of any court or governmental agency or body in order to consummate
the transaction contemplated herein
l. Neither the sale of the Make-Whole Shares being sold by the
Shareholder nor the fulfillment of the terms hereof by Shareholder will
conflict with, result in a breach or violation of, or constitute a default
under any law or agreement or instrument to which Shareholder is a party or
bound, or any judgment, order or decree applicable to Shareholder of any
court, regulatory body, administrative agency, governmental body or
arbitrator having the jurisdiction over the Shareholder.
m. No rights of first refusal exist with respect to any of the Make-
Whole Shares or the issue and sale thereof, other than those which have
been waived or satisfied.
n. This Agreement is a legal, valid and binding obligation of the
Shareholder enforceable against the Shareholder in accordance with its
terms
o. The Shareholder is familiar with the business and financial
condition, properties, operations and prospects of the Company, and, at a
reasonable time prior to the Closing, has been afforded the opportunity to
ask questions of and receive satisfactory answers from the Company's
officers and directors, or other persons acting on the Company's behalf,
concerning the business and financial condition, properties, operations and
prospects of the Company and has asked such questions as he desires to ask
and all such questions have been answered to the full satisfaction of the
Shareholder.
p. All documents, records and books pertaining to the business and
financial condition, properties, operations and prospects of the Company
which the Shareholder has requested have been made available to the
Shareholder.
q. The Shareholder understands that, unless the Shareholder notifies
BigHub in writing to the contrary before the Closing, all the
representations and warranties of the Shareholder contained in this
Agreement will be deemed to have been reaffirmed and confirmed as of the
Closing, taking into account all information received by the Shareholder.
3. Representations and Warranties by Company. Company represents and
-----------------------------------------
warrants to BigHub that:
36
<PAGE>
q. Organization, Qualification, Etc. The Company is a corporation
--------------------------------
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization and has the corporate power and authority to
own its properties and assets and to carry on its business as it is now
being conducted and is duly qualified to do business and is in good
standing in each jurisdiction in which the ownership of its properties or
the conduct of its business requires such qualification except that, only
as of the date hereof and not as of the Closing, the Company is not
presently qualified to do business in Virginia. The copies of the Company's
charter and by-laws which have been made available to BigHub are complete
and correct and in full force and effect on the date hereof. Each of the
Company's subsidiaries is a corporation, limited partnership or limited
liability company duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation or organization, has
the corporate, limited partnership or limited liability company power and
authority to own its properties and to carry on its business as it is now
being conducted, and is duly qualified to do business and is in good
standing in each jurisdiction in which the ownership of its property or the
conduct of its business requires such qualification. All the outstanding
shares of capital stock of, or other ownership interests in, the Company's
subsidiaries are validly issued, fully paid and non-assessable and are
owned by the Company, directly or indirectly, free and clear of all
mortgages, liens, loans and encumbrances other than the security interest
of Banc First, an Oklahoma banking corporation. There are no existing
options, rights of first refusal, preemptive rights, calls or commitments
of any character relating to the issued or unissued capital stock or other
securities of, or other ownership interests in, any subsidiary of the
Company other than the right of first refusal with respect to the capital
stock of the Company's subsidiary, Independent News, Inc., a Delaware
corporation ("INI"), granted to Unico, Inc., a Delaware corporation.
r. Capital Stock. The authorized capital stock of the Company
-------------
consists of 50,000,000 shares of the Company Common Stock, par value $.01
per share; 1,000,000 shares of the Company's preferred stock, par value
$.001 per share, of which 500,000 shares have been designated as Series A
Convertible Preferred Stock and 500,000 shares have been designated Series
B Convertible Preferred Stock (the "Series B Convertible Preferred Stock").
As of the date hereof, 4,516,818 shares of the Company Common Stock,
250,000 shares of the Series A Convertible Preferred Stock, and 65,000
shares of Series B Convertible Preferred Stock were issued and outstanding.
All the outstanding shares of the Company Common Stock, the Series A
Convertible Preferred Stock and the Series B Convertible Preferred Stock
have been validly issued and are fully paid and non-assessable. As of the
date hereof, there were no outstanding subscriptions, options, warrants,
rights or other arrangements or commitments obligating the Company to issue
any shares of its stock other than options, warrants and other rights to
receive or acquire an aggregate of 1,995,167 shares of the Company Common
Stock pursuant to various option and warrant agreements.
s. Validity of Make-Whole Shares. The Make-Whole Shares are duly
-----------------------------
authorized and validly issued and are fully paid and non-assessable; no
preemptive rights or, to the Company's knowledge, rights of first refusal
of stockholders exist with respect
37
<PAGE>
to any of the Make-Whole Shares or the issue and sale thereof, other than
those which have been waived or satisfied.
t. Corporate Authority Relative to this Agreement; No Violation. The
------------------------------------------------------------
Company has the corporate power and authority to enter into this Agreement
and to carry out its obligations hereunder. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by the Board of Directors of the
Company and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement and the transactions contemplated
hereby. No authorization, consent or approval of, or filing with, any
governmental body or authority is necessary for the consummation by the
Company of the transactions contemplated by this Agreement. The Company is
not subject to or obligated under any charter, bylaw or contract provision
or any governmental license, franchise or permit, or subject to any order
or decree, which would be breached or violated by its executing or, subject
to the approval of its stockholders, carrying out this Agreement.
u. Reports and Financial Statements. The Company has delivered to
--------------------------------
BigHub its audited financial statements for the year ended December 31,
1998 and its unaudited financial statements for the year ended December 31,
1999 (collectively, the "Financial Statements"). The Financial Statements,
together with the notes thereto, are complete and correct in all material
respects, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis, and present fairly the
financial condition and position of the Company as of the dates and for the
periods indicated, subject to normal recurring year-end audit adjustments
(which are not expected to be material) and except that the unaudited
financial statements do not contain all footnotes required under generally
accepted accounting principles.
v. No Undisclosed Liabilities. As of the date hereof, neither the
--------------------------
Company nor any of its subsidiaries has any liabilities or obligations of
any nature, whether or not accrued, contingent or otherwise, of a type
required by GAAP to be reflected on a consolidated balance sheet, except
liabilities or obligations reflected in any of the Financial Statements.
w. No Violation of Law. The businesses of the Company and its
-------------------
subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any governmental body or authority, except where such conduct
has no material adverse effect on the businesses of the Company and its
subsidiaries. Except as otherwise disclosed herein, the Company and its
subsidiaries have all permits, licenses and governmental authorizations
material to ownership or occupancy of their respective properties and
assets and the carrying on of their respective businesses.
x. Environmental Laws and Regulations. The Company and each of its
----------------------------------
subsidiaries is in material compliance with all applicable federal, state,
local and foreign laws and regulations relating to pollution or protection
of human health or the environment (including, without limitation, ambient
air, surface water, ground water,
38
<PAGE>
land surface or subsurface strata) (collectively, "Environmental Laws").
Neither the Company nor any of its subsidiaries has received written notice
of, or, to the knowledge of the Company, is the subject of, any actions,
causes of action, claims, investigations, demands or notices by any person
alleging liability under or non-compliance with any Environmental Law or
that the Company or any subsidiary is a potentially responsible party at
any Superfund site or state equivalent site ("Environmental Claims").
y. Change of Control Payments. The consummation of the transactions
--------------------------
contemplated by this Agreement will not, solely as a result of such
consummation, (i) entitle any employees of the Company or any of the
subsidiaries to severance pay, (ii) accelerate the time of payment or
vesting or trigger any payment or funding (through a grantor trust or
otherwise) of compensation or benefits under, increase the amount payable
or trigger any other material obligation pursuant to, any of the benefit
plans or (iii) result in any breach or violation of, or a default under,
any of the benefit plans.
z. Absence of Certain Changes or Events. Other than as disclosed in
------------------------------------
the Financial Statements or previously disclosed in writing to BigHub,
since December 31, 1999 to the date hereof, the businesses of the Company
and its subsidiaries have been conducted in all material respects in the
ordinary course. Since December 31, 1999 to the date hereof, no dividends
or distributions have been declared or paid on or made with respect to the
shares of capital stock or other equity interests of the Company or its
subsidiaries nor have any such shares been repurchased or redeemed, other
than dividends or distributions paid to the Company or a wholly-owned
subsidiary and the dividends paid to the holders of the Company Preferred
Stock in the form of 95,588 shares of Company Common Stock.
aa. Litigation. There is no action, suit, proceeding or investigation
----------
pending or currently threatened against the Company that questions the
validity of this Agreement or the right of the Company to enter into this
Agreement, or to consummate the transactions contemplated hereby, or that
might result, either individually or in the aggregate, in any material
adverse effect in the assets, condition, affairs or prospects of the
Company, financially or otherwise, or any change in the current equity
ownership of the Company, nor is the Company aware that there is any basis
for any of the foregoing.
bb. Tax Matters. Except for federal and Virginia tax returns for the
-----------
Company and federal and New Jersey tax returns for INI, each for the year
1998 and for each of which no tax liability exists and no penalty will be
assessed, the Company has filed all requisite federal, state, local and
foreign tax returns. All such returns are accurate in all material
respects. The Company has paid all taxes pursuant to such returns,
pursuant to any assessments received by it, or which it is obligated to
withhold from amounts owing to any employee, creditor or third party. The
income tax returns of the Company have never been audited by local, state
or federal authorities. The Company has not waived any statute of
limitations with respect to taxes or agreed to any extension of time with
respect to any tax assessment or deficiency. No deficiency assessment with
respect to or proposed adjustment of the Company's federal, state, county
or local taxes is pending or, to the Company's knowledge, threatened.
There is no tax lien, whether imposed by any
39
<PAGE>
federal, state, county or local taxing authority, outstanding against the
assets, properties or business of the Company, except for taxes not yet due
and payable.
cc. Insurance. The Company is insured by insurers of recognized
---------
financial responsibility against such losses and risks and in such amounts
as management of the Company believes to be prudent and customary in the
business in which the Company is engaged. The Company has not been refused
any insurance coverage sought or applied for and the Company has no reason
to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage
from similar insurers as may be necessary to continue its business at a
cost that would not materially and adversely affect the condition,
financial or otherwise, or the earnings, business or operations of the
Company.
dd. Title. Except as otherwise disclosed herein, the Company owns its
-----
property and assets free and clear of all mortgages, liens, loans and
encumbrances, except such encumbrances and liens that arise in the ordinary
course of business and do not materially impair the Company's ownership or
use of such property or assets. With respect to the property and assets it
leases, the Company is in compliance with such leases.
ee. Intellectual Property. The Company owns, is licensed or otherwise
---------------------
possesses legally enforceable rights to use, all patents, trademarks, trade
names, service marks, copyrights and mask works, all applications for and
registrations of such patents, trademarks, trade names, service marks,
copyrights and mask works, and all processes, formulae, methods,
schematics, technology, know-how, computer software programs or
applications, and tangible or intangible proprietary information or
material that are necessary to conduct the business of the Company as
currently conducted or planned to be conducted ("Intellectual Property").
The Company is not and will not be as a result of the execution and
delivery of this Agreement or the performance of its obligations hereunder
in breach of any license, sublicense or other agreement relating to the
Intellectual Property or any license, sublicense or other agreement
pursuant to which the Company is authorized to use any third party patents,
trademarks or copyrights. All patents, registered trademarks, service marks
and copyrights held by the Company are valid and enforceable. The Company
(i) has not been sued in any suit, action or proceeding which involves a
claim of infringement of any patent, trademark, service mark or copyright
or the violation of any trade secret or other proprietary right of any
third party; or (ii) has any knowledge that the manufacturing, importation,
marketing, licensing, sale, offer for sale, or use of any of its products
infringes any patent, trademark, service mark, copyright, trade secret or
other proprietary right of any third party.
ff. Internal Accounting Controls. The Company maintains a system of
----------------------------
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's general
or specific authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with
40
<PAGE>
management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
4. Representations and Warranties by BigHub. BigHub hereby represents
----------------------------------------
and warrants to Shareholder that:
e. Investment Representations.
--------------------------
v. BigHub is acquiring the Make-Whole Shares for investment
purposes only and not with a view to distribution or resale.
vi. BigHub has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks
of an investment in the Company.
vii. BigHub has the ability to bear the economic risks of
BigHub's prospective investment, and is able, without materially
impairing its financial condition, to hold the Make-Whole Shares for
an indefinite period of time and to suffer complete loss on its
investment.
viii. BigHub is an "accredited investor" as such term is defined
in Rule 501 under the Securities Act of 1933, as amended.
f. Organization, Qualification, Etc. BigHub is a corporation duly
--------------------------------
organized, validly existing and in good standing under the laws of its
jurisdiction of organization and has the corporate power and authority to
own its properties and assets and to carry on its business as it is now
being conducted and is duly qualified to do business and is in good
standing in each jurisdiction in which the ownership of its properties or
the conduct of its business requires such qualification, except for
jurisdictions in which such failure to be so qualified or to be in good
standing would not in the aggregate have a material adverse effect on
BigHub. The copies of BigHub's Articles of Incorporation, as amended, and
By-laws which have been made available to the Shareholder are complete and
correct and in full force and effect on the date hereof.
g. Capital Stock. The authorized capital stock of BigHub consists of
-------------
50,000,000 shares of BigHub Common Stock, and 25,000,000 shares of
preferred stock, par value $0.001 per share ("BigHub Preferred Stock"). The
shares of BigHub Common Stock to be issued pursuant to this Agreement will,
when issued, be validly issued fully paid and non-assessable. As of the
date hereof, 18,605,976 shares of BigHub Common Stock and no shares of
BigHub Preferred Stock were issued and outstanding. All the outstanding
shares of BigHub Common Stock have been validly issued and are fully paid
and non-assessable. As of the date hereof, there were no outstanding
subscriptions, options, warrants, rights or other arrangements or
commitments obligating BigHub to issue any shares of its capital stock
other than
41
<PAGE>
options and other rights to receive or acquire an aggregate of 1,252,500
shares of BigHub Common Stock.
h. Corporate Authority Relative to this Agreement. BigHub has the
----------------------------------------------
corporate power and authority to enter into this Agreement and to carry out
its obligations hereunder. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of BigHub and no other
corporate or stockholder proceedings on the part of BigHub are necessary to
authorize this Agreement, the issuance of the BigHub Common Stock and the
other transactions contemplated hereby. No authorization, consent or
approval of, or filing with, any governmental body or authority is
necessary for the consummation by BigHub of the transactions contemplated
by this Agreement. This Agreement is a legal, valid and binding obligation
of BigHub, enforceable against BigHub in accordance with its terms.
20. Covenants by Shareholders. Each Shareholder hereby covenants and
-------------------------
agrees that he will not enter into any transaction, take any action or by
inaction permit any event to occur that would result in any of his
representations or warranties herein contained not being true and correct at and
as of (i) the time immediately after the occurrence of such transaction, action
or event and (ii) the date of the Closing.
21. Delivery of Shares upon Execution. Mr. Bernier agrees to deliver
---------------------------------
certificates representing at least 93,478 shares of Company Common Stock and Mr.
Sens agrees to deliver certificates representing at least 74,958 shares of
Company Common Stock (together, the "Escrow Shares") to BigHub together with
duly executed stock powers endorsed to BigHub with signatures guaranteed by a
national bank or trust company or such other assignments or instruments of
conveyance and transfer, in form and substance satisfactory to BigHub and its
counsel, as shall be effective to vest in BigHub all of Shareholder's right,
title and interest in and to all such Escrow Shares, free and clear of any
agreements, restrictions, liens, adverse claims or encumbrances whatsoever.
Shareholders agree that BigHub shall hold the Escrow Shares in escrow pending
Closing or termination of this Agreement for any reason, including failure of
Closing to occur on or before April 15, 2000. BigHub shall return to the
Shareholders at Closing the excess of any Escrow Shares not purchased by BigHub
as Make-Whole Shares pursuant to the allocation of such Make-Whole Shares
between the Shareholders as specified in Section 1(d) hereof.
22. Indemnification of Buyer by Shareholder. Each Shareholder, on its own
---------------------------------------
behalf and as pertains only to such Shareholder's representations and warranties
made hereunder and not jointly or severally with the other Shareholder, agrees
to indemnify, defend and hold harmless BigHub and its respective officers,
directors, employees, attorneys, stockholders, controlling persons and
affiliates (collectively, the "BigHub Indemnitees"), from, and will pay to the
BigHub Indemnitees the amount of any damages arising from the breach or
inaccuracy of any representation or warranty made by Shareholder in this
Agreement or any other certificate or document delivered by or on behalf of
Shareholder pursuant to this Agreement as a condition to Closing.
23. Indemnification of Buyer by Company. Company agrees to indemnify,
-----------------------------------
defend and hold harmless the BigHub Indemnitees from, and will pay to the BigHub
Indemnitees the
42
<PAGE>
amount of damages arising from the breach or inaccuracy of any representation or
warranty made by Company in this Agreement or any other certificate or document
delivered by or on behalf of Company pursuant to this Agreement as a condition
to Closing; provided, however, that Company shall not be responsible for damages
indemnifiable under this Section 8 unless and until such damages in the
---------
aggregate exceed an amount equal to $100,000 (the "Basket Amount"). In the event
that the aggregate of such damages exceeds the Basket Amount, Company shall
indemnify the BigHub Indemnitees for all such damages, including the Basket
Amount.
24. Closing; Conditions to Closing. The closing of the sale to and
------------------------------
purchase by BigHub of the Make-Whole Shares (the "Closing") shall occur at the
same place and time as the closing of the sale and purchase pursuant to the
Primary Stock Purchase Agreement (the "Closing Date"); provided, however, if the
Closing does not occur by April 15, 2000, this Agreement shall terminate without
penalty to BigHub or Shareholders unless such failure to close results from a
breach of this Agreement by BigHub or Shareholders. The obligation of BigHub to
purchase the Make-Whole Shares shall be subject to the following conditions:
h. Each of the representations and warranties made by Shareholders
in this Agreement being true and correct in all material respects at and as
of the time of Closing.
i. Each Shareholder having performed in all material respects each
and every covenant and agreement contained in this Agreement required to be
performed by him by the time of Closing;
j. Each Shareholder having furnished to BigHub an investment letter
in a form which is acceptable to BigHub in its sole discretion;
25. Restrictive Legend. Each certificate representing (i) the shares of
------------------
BigHub Common Stock to be issued hereunder, or (ii) any other securities issued
in respect of such shares upon any stock split, stock dividend,
recapitalization, merger consolidation or similar event, shall be stamped or
otherwise imprinted with a legend in the following form (in addition to any
legend required under applicable state securities laws):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED. SUCH SECURITIES MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
AS TO THE SECURITIES UNDER SAID ACT OR AN OPINION
OF COUNSEL SATISFACTORY TO THE CORPORATION THAT
SUCH REGISTRATION IS NOT REQUIRED. COPIES OF THE
AGREEMENT COVERING THE PURCHASE OF THESE SHARES
MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE
BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE
SECRETARY OF THE CORPORATION AT THE PRINCIPAL
EXECUTIVE OFFICES OF THE CORPORATION.
43
<PAGE>
Shareholders consent to BigHub making a notation on its records and giving
instructions to any transfer agent of the BigHub Common Stock in order to
implement the restrictions on transfer established in this Section 10.
----------
26. Severability. Any term or provision of this Agreement that is invalid
------------
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.
27. Applicable Law. THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS,
--------------
INCLUDING VALIDITY, INTERPRETATION AND EFFECT, BY THE LAWS OF THE STATE OF TEXAS
REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES
OF CONFLICTS OF LAWS THEREOF.
28. Expenses. Whether or not the transactions contemplated by this
--------
Agreement are consummated, each of the parties hereto shall pay its respective
fees and expenses incurred in connection herewith.
29. Entire Agreement. This Agreement constitutes the entire agreement and
----------------
supersedes all other prior agreements and understandings, both written and oral,
between the parties hereto with respect to the subject matter hereof.
30. Amendments. This Agreement may not be amended or modified except by a
----------
written instrument signed on behalf of each of the parties hereto.
31. Binding Effect. This Agreement shall be binding upon and inure to the
--------------
benefit of the parties hereto and their respective successors and assigns.
32. Notices. Any notice or other communication required or permitted
-------
hereunder shall be in writing and either delivered personally, by facsimile
transmission or by registered or certified mail (postage prepaid and return
receipt requested) and shall be deemed given when received (or, if mailed, five
business days after the date of mailing) at the following addresses or FACSIMILE
transmission numbers (or at such other address or facsimile transmission number
for a party as shall be specified by like notice):
b. If to BigHub: The BigHub.com, Inc.
Attn: Frank Denny
2939 Mossrock, Suite 100
San Antonio, TX 78230
with a copy (which shall not constitute notice) to Akin, Gump, Strauss, Hauer &
Feld, L.L.P., 1500 Bank of America Plaza, 300 Convent Street, San Antonio, TX
78205, Attention: Alan Schoenbaum (facsimile transmission number: 210-224-2035).
44
<PAGE>
b. If to Mr. Bernier: Mr. Gerard R. Bernier
HC73 Box 831B
Locust Grove, VA 22508
with a copy (which shall not constitute notice) to Sullivan & Worcester LLP,
1025 Connecticut Ave., N.W., Suite 1000, Washington, DC, Attention: David
Mahaffey (facsimile transmission number: 202-293-2275).
c. If to Mr. Sens: Mr. Joel Sens
900 North Stafford, Suite 2003
Arlington, VA 22203
with a copy (which shall not constitute notice) to Sullivan & Worcester LLP,
1025 Connecticut Ave., N.W., Suite 1000, Washington, DC, Attention: David
Mahaffey (facsimile transmission number: 202-293-2275).
d. If to the Company: Next Generation Media Corp.
Attn: President
8380 Alban Road
Springfield, Virginia
with a copy (which shall not constitute notice) to Williams & Connolly LLP, 725
12th Street, N.W. Washington, D.C. 20005, Attention: Jonathan Graham (facsimile
transmission number : 202-434-5094).
33. Counterparts. This Agreement may be executed in one or more and by the
------------
parties hereto in separate counterparts, each of which when executed shall be
deemed to be an original but all of which shall constitute one and the same
agreement.
34. Termination. Upon the failure of Shareholders to obtain all releases
-----------
of liens on the Make-Whole Shares prior to the Closing, this Agreement shall
immediately become void and there shall be no further obligation hereunder on
the part of any party hereto.
[signature page follows]
45
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by themselves or their duly authorized representatives, on the date first
written above.
THE BIGHUB.com, INC.
By:_______________________________________
Chet Howard, Chief Financial Officer
NEXT GENERATION MEDIA CORPORATION
By:_______________________________________
Gerard R. Bernier, President
SHAREHOLDERS:
__________________________________________
GERARD R. BERNIER
__________________________________________
JOEL SENS
______________________________
By:
Title:
46
<PAGE>
EXHIBIT 10.1
------------
================================================================================
REGISTRATION RIGHTS AGREEMENT
among
BIGHUB.COM, INC
and
INVESTORS
Dated as of March 16, 2000
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
1. INCIDENTAL REGISTRATIONS............................................... 1
------------------------
2. MANDATORY REGISTRATION................................................. 2
----------------------
3. REGISTRATION PROCEDURES................................................ 2
-----------------------
4. UNDERWRITTEN OFFERINGS................................................. 6
----------------------
4.1. Underwriting Agreement........................................... 6
4.2. Selection of Underwriters........................................ 6
5. HOLDBACK AGREEMENTS.................................................... 6
-------------------
6. PREPARATION; REASONABLE INVESTIGATION.................................. 7
-------------------------------------
7. INDEMNIFICATION........................................................ 7
---------------
7.1. Indemnification by the Company................................... 7
7.2. Indemnification by the Sellers................................... 8
7.3. Notices of Claims, etc........................................... 9
7.4. Other Indemnification............................................ 9
7.5. Indemnification Payments......................................... 9
7.6. Other Remedies................................................... 10
8. DEFINITIONS............................................................ 10
-----------
9. MISCELLANEOUS.......................................................... 11
-------------
9.1. Rule 144 etc.................................................... 11
9.2. Successors, Assigns and Transferees............................. 12
9.3. Stock Splits, etc............................................... 12
9.4. Amendment and Modification...................................... 12
9.5. Governing Law................................................... 12
9.6. Invalidity of Provision......................................... 12
9.7. Notices......................................................... 12
9.8. Headings; Execution in Counterparts............................. 13
9.9. Injunctive Relief............................................... 13
9.10. Arbitration..................................................... 13
9.11. Entire Agreement................................................ 14
10. TERM................................................................... 14
----
i
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT is entered into as of March 16th, 2000,
by and among BIGHUB.COM, INC, a Florida corporation (the "Company"), with its
principal offices located at 2939 Mossrock, Suite 100, San Antonio, Texas 78230,
and other undersigned parties, for the purposes of granting registration rights
to the holders of Common Stock who exercise a counterpart of this Agreement (the
"Investors"). Capitalized terms used herein without definition are defined in
Section 8.
WHEREAS:
A. In connection with the Stock Purchase Agreement of even date herewith by and
between the Company and the Investors (the "Stock Purchase Agreement"), the
Company has agreed, upon the terms and subject to the conditions contained
therein, to issue and sell to the Investors (i) shares of its Common Stock (the
"Common Stock") and (ii) options (the "Options") to acquire shares of Common
Stock (the "Option Shares"); and
B. To induce the Investors to execute and deliver the Stock Purchase Agreement,
the Company has agreed to provide certain registration rights under the
Securities Act of 1933, as amended, and the rules and regulations thereunder, or
any similar successor statute (collectively, the "Securities Act"), and
applicable state securities laws;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Initial
Investors hereby agree as follows:
1. Incidental Registrations
------------------------
If the Company at any time proposes to register any of its equity
securities under the Securities Act (other than pursuant to a registration on
Form S-4 or S-8 or any successor form), and the registration form to be used may
be used for the registration of Registrable Securities, it will give written
notice to all holders of Registrable Securities of its intention to do so. Upon
the written request of any such holder received by the Company within 30 days
after the giving of such notice by the Company (which request shall specify the
number of Registrable Securities intended to be disposed of by such holder and
the intended method or methods of disposition thereof), the Company will use its
best efforts to effect the registration under the Securities Act of all such
Registrable Securities in accordance with such intended method or methods of
disposition, provided that:
(a) if such registration shall be in connection with an initial public
offering by the Company, the Company shall not include any Registrable
Securities in such proposed registration if the Board shall have determined,
after consultation with the managing underwriter for such offering (or, in the
case that it is not underwritten, an investment banker), that it is not in the
best interests of the Company to include any Registrable Securities in such
registration;
(b) if, at any time after giving written notice of its intention to
register any equity securities and prior to the effective date of the
registration statement filed in connection
<PAGE>
with such registration, the Company shall determine for any reason not to
register such equity securities, the Company may, at its election, give written
notice of such determination to each holder of Registrable Securities and,
thereupon, shall not be obligated to register any Registrable Securities in
connection with such registration (but shall nevertheless pay the Registration
Expenses in connection therewith); and
(c) if a registration pursuant to this Section 1 involves an
underwritten offering, and the managing underwriter (or, in the case of an
offering that is not underwritten, an investment banker) shall advise the
Company that, in its opinion, the number of securities requested and otherwise
proposed to be included in such registration exceeds the number which can be
sold in such offering, the Company will include in such registration to the
extent of the number which the Company is so advised can be sold in such
offering, first, the securities if any, being sold by the Company, second, the
holders of Registrable Securities requested to be included in such registration,
pro rata, among all such holders, on the basis of the number of Registrable
Securities requested to be included by such holders.
The Company will pay all Registration Expenses in connection with each
registration of Registrable Securities requested pursuant to this Section 1,
provided, that each seller of Registrable Securities shall pay all Registration
- --------
Expenses to the extent required to be paid directly by such seller under
applicable law and provided, further, that underwriting commissions shall be
-------- -------
paid pro rata by the sellers in such registration, based on the number of shares
of Registrable Securities being sold.
2. Mandatory Registration
----------------------
In the event that the Registrable Securities are excluded from the
registration pursuant to Section 1 hereto or the Registrable Securities are not
registered pursuant to Section 1 within 180 days following the date hereof, the
Company shall prepare, and, as soon as practical but in no event later than 210
days after the date hereof, file with the SEC a registration statement on Form
S-3 (or, if Form S-3 is not then available, on such form of registration
statement as is then available to effect a registration of the Registrable
Securities, subject to the consent of the Investors, which consent will not be
unreasonably withheld) covering the resale of the Registrable Securities. The
Company shall use its best efforts to have the registration statement declared
effective by the SEC as soon as practical, but in no event later than 270 days
after the date hereof.
3. Registration Procedures
-----------------------
If and whenever the Company is required to use its best efforts to effect
the registration of any Registrable Securities under the Securities Act as
provided in Section 1 or Section 2, the Company will promptly:
(a) in the case of a registration under Section 1, within 120 days
after giving the notice to holders of Registrable Securities of its intention to
register equity securities, prepare and file with the Commission, a registration
statement with respect to such Registrable Securities, make all required filings
with the NASD and use reasonable efforts to cause such registration statement to
become effective as soon as practicable;
2
<PAGE>
(b) prepare and promptly file with the Commission such amendments and
post-effective amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep such
registration statement effective for so long as is required to comply with the
provisions of the Securities Act and to complete the disposition of all
securities covered by such registration statement in accordance with the
intended method or methods of disposition thereof, but in no event for a period
of more than six (6) months after such registration statement becomes effective;
provided, however that if the filed registration statement is on a Form S-3 or a
- -------- -------
substantially similar form allowing for incorporation by reference, this period
will be extended to no more than one (1) year after such registration statement
becomes effective.
(c) furnish to each seller of Registrable Securities copies of all
documents proposed to be filed with the Commission in connection with such
registration, which documents will be subject to the review of such counsel and
each seller and the Company shall not file any amendment and post-effective
amendments or supplement to such registration statement or the prospectus used
in connection therewith which any such seller shall have reasonably objected in
writing on the grounds that such amendment or supplement does not comply
(explaining why) in all material respects with the requirements of the
Securities Act or of the rules or regulations thereunder;
(d) furnish to each seller of Registrable Securities, without charge,
such number of conformed copies of such registration statement and of each such
amendment and supplement thereto (in each case including all exhibits and
documents filed therewith) and such number of copies of the prospectus included
in such registration statement (including each preliminary prospectus and any
summary prospectus) and any other prospectus filed under Rule 424 under the
Securities Act, in conformity with the requirements of the Securities Act, and
such other documents, as such seller may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such seller in
accordance with the intended method or methods of disposition thereof;
(e) use its reasonable efforts to register or qualify such Registrable
Securities covered by such registration statement under the securities or blue
sky laws of such jurisdictions as each seller shall reasonably request, and do
any and all other acts and things which may be reasonably necessary or advisable
to enable such seller to consummate the disposition of such Registrable
Securities in such jurisdictions in accordance with the intended method or
methods of disposition thereof, provided, that the Company shall not for any
--------
such purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified, subject itself
to taxation in any jurisdiction wherein it is not so subject, or take any action
which would subject it to general service of process in any jurisdiction wherein
it is not so subject;
(f) use reasonable efforts to cause all Registrable Securities covered
by such registration statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary by virtue of the
business and operations of the Company to enable the seller or sellers thereof
to consummate the disposition of such Registrable Securities in accordance with
the intended method or methods of disposition thereof;
3
<PAGE>
(g) furnish to each seller of Registrable Securities a signed
counterpart of (i) an opinion of counsel for the Company experienced in
securities law matters, dated the effective date of the registration statement
(and, if such registration includes an underwritten public offering, the date of
the closing under the underwriting agreement), and (ii) a "comfort" letter
(unless such a letter is not otherwise being furnished to the Company), dated
the effective date of such registration statement (and if such registration
includes an underwritten public offering, dated the date of the closing under
the underwriting agreement), signed by the independent public accountants who
have issued an audit report on the Company's financial statements included in
the registration statement, covering such matters as are customarily covered in
opinions of issuer's counsel and in accountants' letters delivered to the
underwriters in underwritten public offerings of securities.
(h) notify each seller of any Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
or existence of any fact, of which the Company has knowledge, as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing, and, as promptly as
is practicable, prepare and furnish to such seller a reasonable number of copies
of a supplement to or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such securities, such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing;
(i) otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission, and make available to its security holders,
as soon as reasonably practicable, an earnings statement of the Company (in form
complying with the provisions of Rule 158 under the Securities Act) covering the
period of at least 12 months, but not more than 18 months, beginning with the
first month after the effective date of the registration statement;
(j) notify each seller of any Registrable Securities covered by such
registration statement (i) when the prospectus or any prospectus supplement or
post-effective amendment has been filed, and, with respect to such registration
statement or any post-effective amendment, when the same has become effective,
(ii) of any request by the Commission for amendments or supplements to such
registration statement or to amend or to supplement such prospectus or for
additional information, (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of such registration statement or the
initiation of any proceedings for that purpose and (iv) of the suspension of the
qualification of such securities for offering or sale in any jurisdiction, or of
the institution of any proceedings for any of such purposes;
(k) use every reasonable effort to obtain the lifting of any stop
order that might be issued suspending the effectiveness of such registration
statement at the earliest possible moment;
4
<PAGE>
(l) use reasonable efforts to list such Registrable Securities on
Nasdaq or any securities exchange on which the equity securities of the Company
are then listed or, if no such equity securities are then listed, on Nasdaq or
such securities exchange selected by the Company, if such listing is then
permitted under the rules of Nasdaq or such exchange;
(m) enter into such agreements and take such other actions as the
sellers of Registrable Securities or the underwriters reasonably request in
order to expedite or facilitate the disposition of such Registrable Securities,
including, without limitation, preparing for, and participating in, such number
of "road shows" and all such other customary selling efforts as the underwriters
reasonably request in order to expedite or facilitate such disposition; and
(n) use its reasonable efforts to take all other steps necessary to
effect the registration of such Registrable Securities contemplated hereby.
As a condition to its registration of Registrable Securities of any
prospective seller, the Company may require each seller of any Registrable
Securities as to which any registration is being effected to furnish to the
Company such information regarding such seller, its ownership of Registrable
Securities and the disposition of such Registrable Securities as the Company may
from time to time reasonably request in writing and as shall be required by law
in connection therewith. Each such holder agrees to furnish promptly to the
Company all information required to be disclosed in order to make the
information previously furnished to the Company by such holder true and
accurate.
The Company agrees not to file or make any amendment to any registration
statement with respect to any Registrable Securities, or any amendment of or
supplement to the prospectus used in connection therewith, which refers to any
seller of any Registrable Securities covered thereby by name, or otherwise
identifies such seller as the holder of any Registrable Securities, without the
consent of such seller, such consent not to be unreasonably withheld, unless
such disclosure is required by law.
By acquisition of Registrable Securities, each holder of such Registrable
Securities shall be deemed to have agreed that upon receipt of any notice from
the Company of the happening of any event of the kind described in Section 3(h),
such holder will promptly discontinue such holder's disposition of Registrable
Securities pursuant to the registration statement covering such Registrable
Securities until such holder's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3(h). If so directed by the Company,
each holder of Registrable Securities will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies, in such
holder's possession of the prospectus covering such Registrable Securities at
the time of receipt of such notice. In the event that the Company shall give any
such notice, the period mentioned in Section 3(b) shall be extended by the
number of days during the period from and including the date of the giving of
such notice to and including the date when each seller of any Registrable
Securities covered by such registration statement shall have received the copies
of the supplemented or amended prospectus contemplated by Section 3(h).
5
<PAGE>
4. Underwritten Offerings
----------------------
4.1 Underwriting Agreement
----------------------
If requested by the underwriters for any underwritten offering by holders
of Registrable Securities pursuant to a registration under Section 1, the
Company shall enter into an underwriting agreement with the underwriters for
such offering, which underwriting agreement shall contain such representations
and warranties by the Company and such other terms and provisions as are
customarily contained in agreements of this type, including, without limitation,
indemnities to the effect and to the extent provided in Section 7. The holders
of Registrable Securities to be distributed by such underwriters shall be
parties to such underwriting agreement and may, at their option, require that
any or all of the representations and warranties by, and the agreements on the
part of, the Company to and for the benefit of such underwriters be made to and
for the benefit of such holders of Registrable Securities and that any or all of
the conditions precedent to the obligations of such underwriters under such
underwriting agreement shall also be conditions precedent to the obligations of
such holders of Registrable Securities. No underwriting agreement (or other
agreement in connection with such offering) shall require any holder of
Registrable Securities to make any representations or warranties to or
agreements with the Company or the underwriters other than representations,
warranties or agreements regarding such holder, the ownership of such holder's
Registrable Securities and such holder's intended method or methods of
disposition and any other representation (x) required by law or (y) regarding
information which can only be obtained from such holder and is reasonably
required by the managing underwriter.
4.2 Selection of Underwriters
-------------------------
If the Company at any time proposes to register any of its securities under
the Securities Act for sale pursuant to an underwritten offering, the Company
will have the right to select the managing underwriter to administer the
offering.
5. Holdback Agreements
-------------------
(a) If and whenever the Company proposes to register any of its equity
securities under the Securities Act (other than on Form S-4 or S-8 or any
successor form), including, without limitation pursuant to Section 1 hereof,
each holder of Registrable Securities agrees by acquisition of such Registrable
Securities not to, within 10 days prior to the reasonably anticipated effective
date and 90 days (unless advised in writing by the managing underwriter that a
longer period, not to exceed 180 days, is required) after the effective date of
the registration statement relating to such registration, except as part of such
registration, directly or indirectly, (i) offer to sell, pledge, sell, contract
to sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant for the sale of, or
otherwise dispose of or transfer any Registrable Securities or any securities
convertible into or exchangeable or exercisable for Registrable Securities
(including, without limitation any Registrable Securities that such holder has
or hereafter acquires the power of disposition over) or (ii) enter into any swap
or any other agreement or any transaction that transfers, in whole or in part,
directly or indirectly, the economic consequence of ownership of the Registrable
Securities, whether any such swap transaction is to be settled by delivery of
the Registrable Securities or
6
<PAGE>
other securities, in cash or otherwise. In addition, each holder of Registrable
Securities agrees to execute and deliver to any managing underwriter (or, in the
case of any offering that is not underwritten, an investment banker) in
connection with a registration of the Company's equity securities under the
Securities Act (other than on Form S-4 or S-8 or any successor form), any lock-
up letter requested of such holder by such Person.
(b) The Company agrees not to effect any public sale or distribution
of its equity securities or securities convertible into or exchangeable or
exercisable for any of such securities within 10 days prior to and 90 days
(unless advised in writing by the managing underwriter that a longer period, not
to exceed 180 days, is required) after the effective date of such registration
statement (except as part of such registration or pursuant to a registration on
Form S-4 or S-8 or any successor form). In addition, the Company shall use its
reasonable efforts to cause each holder of its equity securities or any
securities convertible into or exchangeable or exercisable for any of such
securities, whether outstanding on the date of this Agreement or issued at any
time after the date of this Agreement (other than any such securities acquired
in a public offering), to agree not to effect any such public sale or
distribution of such securities during such period, except as part of any such
registration if permitted, and to use its reasonable efforts to cause each such
holder to enter into a similar agreement to such effect with the Company.
6. Preparation; Reasonable Investigation
-------------------------------------
In connection with the preparation and filing of each registration
statement registering Registrable Securities under the Securities Act, the
Company will give the holders of such Registrable Securities so to be registered
and their underwriters, if any, and their respective counsel and accountants the
opportunity to participate in the preparation of such registration statement,
each prospectus included therein or filed with the Commission, and each
amendment thereof or supplement thereto, and will give each of them such access
to the financial and other records, pertinent corporate documents and properties
of the Company and its subsidiaries and such opportunities to discuss the
business of the Company with its officers and the independent public accountants
who have issued audit reports on its financial statements as shall be reasonably
requested by such holders in connection with such registration statement.
7. Indemnification
---------------
7.1 Indemnification by the Company
------------------------------
In the event of any registration of any Registrable Securities pursuant to
this Agreement, the Company will indemnify and hold harmless (a) the seller of
such Registrable Securities, (b) the directors, officers, partners, employees,
advisors, representatives, agents and Affiliates of such seller, (c) each Person
who participates as an underwriter in the offering or sale of such securities
and (d) each person, if any, who controls (within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act) any such seller, partner
or underwriter against any and all losses, claims, damages or liabilities (or
actions or proceedings in respect thereof), joint or several, directly or
indirectly based upon or arising out of (i) any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such Registrable Securities were registered under the Securities
Act, any preliminary prospectus,
7
<PAGE>
final prospectus or summary prospectus contained therein or used in connection
with the offering of securities covered thereby, or any amendment or supplement
thereto, or (ii) any omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; and the Company will reimburse each such indemnified party for any
legal or any other expenses reasonably incurred by them in connection with
investigating, preparing, pursuing or defending any such loss, claim, damage,
liability, action or proceeding, except insofar as any such loss, claim, damage,
liability, action, proceeding or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement, any such preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by such seller, any
such underwriter or any such controlling person expressly for use in the
preparation thereof. Such indemnity shall remain in full force and effect,
regardless of any investigation made by such indemnified party and shall survive
the transfer of such Registrable Securities by such seller. The indemnity
agreement contained in this Section 7.1 shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, action or proceeding if
such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld).
7.2 Indemnification by the Sellers
------------------------------
The Company may require, as a condition to including any Registrable
Securities in any registration statement filed pursuant to Section 1 that the
Company shall have received an undertaking satisfactory to it from each of the
prospective sellers of such Registrable Securities to indemnify and hold
harmless, severally, not jointly, in the same manner and to the same extent as
set forth in Section 7.1, the Company, its directors and officers, any
underwriter and each person, if any, who controls (within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act) the foregoing
Persons with respect to any statement or alleged statement in or omission or
alleged omission from such registration statement, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, if such statement or alleged statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by such seller expressly for use in the
preparation of such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement. Such indemnity shall
remain in full force and effect, regardless of any investigation made by or on
behalf of the Company or any such director, officer, any underwriter or
controlling Person and shall survive the transfer of such Registrable Securities
by such seller. The indemnity agreement contained in this Section 7.2 shall not
apply to amounts paid in settlement of any such loss, claim, damage, liability,
action or proceeding if such settlement is effected without the consent of such
seller (which consent shall not be unreasonably withheld). The Company and the
holders of Registrable Securities hereby acknowledge and agree that for all
purposes of this Agreement the only information furnished or to be furnished to
the Company for use in any such registration statement, preliminary prospectus,
final prospectus, summary prospectus, amendment or supplement are statements
specifically relating to (a) transactions between such holder and its
Affiliates, on the one hand, and the Company, on the other hand, (b) the
beneficial ownership of shares of Common Stock by such holder and its Affiliates
and (c) the name and address of such holder. The indemnity provided by each
seller of Registrable Securities under this Section 7.2 shall be limited in
8
<PAGE>
amount to the net amount of proceeds actually received by such seller from the
sale of Registrable Securities pursuant to such registration statement.
7.3 Notices of Claims, etc.
-----------------------
Promptly after receipt by an indemnified party of notice of the
commencement of any action or proceeding involving a claim referred to in the
preceding paragraphs of this Section 7, such indemnified party will, if a claim
in respect thereof is to be made against an indemnifying party, give written
notice to the latter of the commencement of such action or proceeding, provided
that the failure of any indemnified party to give notice as provided herein
shall not relieve the indemnifying party of its obligations under the preceding
paragraphs of this Section 7, except to the extent that the indemnifying party
is materially prejudiced by such failure to give notice. In case any such action
is brought against an indemnified party and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party will be entitled to
participate therein and to assume the defense thereof, jointly with any other
indemnifying party similarly notified, to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and 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 for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof except for the reasonable fees and
expenses of any single counsel retained by such indemnified party to monitor
such action or proceeding. Notwithstanding the foregoing, if such indemnified
party and the indemnifying party reasonably determine, based upon advice of
their respective independent counsel, that a conflict of interest may exist
between the indemnified party and the indemnifying party with respect to such
action and that it is advisable for such indemnified party to be represented by
separate counsel, such indemnified party may retain other counsel, reasonably
satisfactory to the indemnifying party, to represent such indemnified party, and
the indemnifying party shall pay all reasonable fees and expenses of such
counsel. No indemnifying party, in the defense of any such claim or litigation,
shall, except with the consent of such indemnified party, which consent shall
not be unreasonably withheld, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release from all
liability in respect of such claim or litigation.
7.4 Other Indemnification
---------------------
Indemnification similar to that specified in the preceding paragraphs of
this Section 7 (with appropriate modifications) shall be given by the Company
and each seller of Registrable Securities with respect to any required
registration (other than under the Securities Act) or other qualification of
such Registrable Securities under any federal or state law or regulation of any
governmental authority.
7.5 Indemnification Payments
------------------------
Any indemnification required to be made by an indemnifying party pursuant
to this Section 7 shall be made by periodic payments to the indemnified party
during the course of the action or proceeding, as and when bills are received by
such indemnifying party with respect to an indemnifiable loss, claim, damage,
liability or expense incurred by such indemnified party.
9
<PAGE>
7.6 Other Remedies
--------------
If for any reason the foregoing indemnity is unavailable, or is
insufficient to hold harmless an indemnified party, other than by reason of the
exceptions provided therein, then the indemnifying party shall contribute to the
amount paid or payable by the indemnified party as a result of such losses,
claims, damages, liabilities, actions, proceedings or expenses in such
proportion as is appropriate to reflect the relative benefits to and faults of
the indemnifying party on the one hand and the indemnified party on the other in
connection with the offering of Registrable Securities (taking into account the
portion of the proceeds of the offering realized by each such party) and the
statements or omissions or alleged statements or omissions which resulted in
such loss, claim, damage, liability, action, proceeding or expense, as well as
any other relevant equitable considerations. The relative fault of the
indemnifying party and of the indemnified party shall be determined by reference
to, among other things, whether the untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statements or omissions. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. No party shall be liable for contribution under this Section
7.6 except to the extent and under such circumstances as such party would have
been liable to indemnify under this Section 7 if such indemnification were
enforceable under applicable law.
8. Definitions
-----------
For purposes of this Agreement, the following terms shall have the
following respective meanings:
"Affiliate" means a person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the Person specified.
"Board" means the Board of Directors of the Company.
"Common Stock" means the Company's Common Stock, par value $.001 per share.
"Commission" means the Securities and Exchange Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any successor federal statute, and the rules and regulations thereunder which
shall be in effect at the time.
"NASD" means National Association of Securities Dealers, Inc.
"Nasdaq" means the Nasdaq National Market.
"Person" means an individual, corporation, partnership, joint venture,
association, trust or other entity or organization, including a government or
political subdivision or an agency or instrumentality thereof.
10
<PAGE>
"Registrable Securities" means the Common Stock and the Option Shares
issued upon conversion of those Options which are vested and exercisable on the
date hereof and any shares of capital stock issued or issuable with respect to
such Option Shares or the Common Stock as a result of any stock split, stock
dividend, recapitalization, exchange or similar event or otherwise; provided
that nothing herein shall require the registration of the offer or sale of the
Options. As to any particular Registrable Securities, such securities shall
cease to be Registrable Securities when (i) a registration statement with
respect to the sale of such securities shall have become effective under the
Securities Act and such securities shall have been disposed of in accordance
with such registration statement, (ii) they shall have been sold to the public
pursuant to Rule 144 under the Securities Act, (iii) they may be sold to the
public by the holder thereof in a three month period in accordance with Rule 144
without violating Rule 144(e), (iv) they shall have been otherwise transferred
and subsequent disposition of them shall not require registration or
qualification of them under the Securities Act of or any similar state law then
in force or (v) they shall have ceased to be outstanding.
"Registration Expenses" means all reasonable expenses incident to the
Company's performance of or compliance with Section 1, including, without
limitation, (i) registration, filing and NASD fees, (ii) fees and expenses of
complying with securities or blue sky laws, (iii) fees and expenses associated
with listing securities on an exchange or Nasdaq, (iv) word processing,
duplicating and printing expenses, (v) messenger and delivery expenses, (vi)
fees and disbursements of counsel for the Company and of its independent public
accountants, including the expenses of any special audits or "cold comfort"
letters, and (vii) any fees and disbursements of underwriters customarily paid
by issuers or sellers of securities, but excluding underwriting discounts and
commissions and transfer taxes, if any.
"Securities Act" means the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations thereunder which shall
be in effect at the time.
9. Miscellaneous
-------------
9.1 Rule 144 etc.
-------------
If the Company shall have filed a registration statement pursuant to the
requirements of Section 12 of the Exchange Act or a registration statement
pursuant to the requirements of the Securities Act relating to any class of
equity securities, the Company will file the reports required to be filed by it
under the Securities Act and the Exchange Act and the rules and regulations
adopted by the Commission thereunder, and will take such further action as any
holder of Registrable Securities may reasonably request, all to the extent
required from time to time to enable such holder to sell Registrable Securities
without registration under the Securities Act within the limitation of the
exemptions provided by (a) Rule 144 under the Securities Act, as such rule may
be amended from time to time, or (b) any successor rule or regulation hereafter
the commission. Upon the request of any holder of Registrable Securities, the
Company will deliver promptly to such holder a written statement as to whether
it has complied with such requirements.
11
<PAGE>
9.2 Successors, Assigns and Transferees
-----------------------------------
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns. In addition, and
provided that an express assignment shall have been made, and a copy of which
shall have been delivered to the Company, the provisions of this Agreement which
are for the benefit of a holder of Registrable Securities shall be for the
benefit of and enforceable by any subsequent holder of any Registrable
Securities that holds at least 150,000 shares of Common Stock (as constituted on
the date hereof). Notwithstanding anything herein to the contrary, the assignors
of Registrable Securities shall continue to exercise all rights hereunder on
behalf of any transferees and the Company shall be entitled to deal exclusively
with the assignors and rely on the consent, waiver or any other action by the
assignors as the consent, waiver or other action, as the case may be, of any
such transferee.
9.3 Stock Splits, etc.
------------------
Each holder of Registrable Securities agrees that it will vote to effect a
stock split or combination with respect to any Registrable Securities in
connection with any registration of such Registrable Securities hereunder, or
otherwise, if the managing underwriter shall advise the Company in writing (or,
in connection with an offering that is not underwritten, if an investment banker
shall advise the Company in writing) that in its opinion such a stock split or
combination would facilitate or increase the likelihood of success of the
offering.
9.4 Amendment and Modification
--------------------------
This Agreement may be amended, modified or supplemented by the Company with
the written consent of the holders of a majority of the Registrable Securities.
9.5 Governing Law
-------------
This Agreement and the rights and obligations of the parties hereunder and
the persons subject hereto shall be governed by, and construed and interpreted
in accordance with, the law of the State of Texas, without giving effect to the
choice of law principles thereof.
9.6 Invalidity of Provision
-----------------------
The invalidity or unenforceability of any provision of this Agreement in
any jurisdiction shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of this Agreement, including that provision, in any other
jurisdiction.
9.7 Notices
-------
All notices, requests, demands, letters, waivers and other communications
required or permitted to be given under this Agreement shall be in writing and
shall be deemed to have been duly given if (a) delivered personally, (b) mailed,
certified or registered mail with postage prepaid, (c) sent by next-day or
overnight mail or delivery or (d) sent by fax as follows:
12
<PAGE>
(i) If to the Company:
BigHub.com, Inc.
2939 Mossrock, Suite 100
San Antonio, Texas 78230
Attention: Frank W. Denny
with a copy (which shall not constitute notice) to:
Alan Schoenbaum, Esq.
Akin, Gump, Strauss, Hauer & Feld, LLP
300 Convent, Suite 1500
San Antonio, Texas 78205
Fax: (210) 224-2035
(ii) If to Investors, to the address indicated on Schedule A, or at
such other address as such each Investor may, from time to time,
designate by providing written notice.
All such notices, requests, demands, letters, waivers and other communications
shall be deemed to have been received (w) if by personal delivery on the day
after such delivery, (x) if by certified or registered mail, on the fifth
business day after the mailing thereof, (y) if by next-day or overnight mail or
delivery, on the day delivered or (z) if by fax, on the next day following the
day on which such fax was sent, provided that a copy is also sent by certified
or registered mail.
9.8 Headings; Execution in Counterparts
-----------------------------------
The headings and captions contained herein are for convenience and shall
not control or affect the meaning or construction of any provision hereof. This
Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original and which together shall constitute one and the same
instrument.
9.9 Injunctive Relief
-----------------
Each of the parties recognizes and agrees that money damages may be
insufficient and, therefore, in the event of a breach of any provision of this
Agreement the aggrieved party may elect to institute and prosecute proceedings
in any court of competent jurisdiction to enforce specific performance or to
enjoin the continuing breach of this Agreement. Such remedies shall, however, be
cumulative and not exclusive, and shall be in addition to any other remedy which
such party may have.
9.10 Arbitration
-----------
(a) Any claim, controversy or dispute between the parties,
including, without limitation, any dispute involving any party hereto, or their
agents, employees, officers, directors and affiliated agents ("Dispute"),
whether at law, in equity or otherwise, shall be resolved by arbitration
conducted by a single arbitrator, who shall be engaged in the practice of law.
All
13
<PAGE>
arbitration proceedings arising from this Agreement shall be governed by the
then current rules of the Americ an Arbitration Association ("AAA"), subject to
the limitation that the arbitrator shall not have the authority to award
punitive damages. The arbitrators award shall be final and binding and may be
entered in any court having jurisdiction thereof. The prevailing party, as
determined by the arbitrator, shall be entitled to an award of reasonable
attorneys fees and costs. The Federal Arbitration Act, 9 U.S.C. Secs. 1-16, not
state law, shall govern the arbitrability of all Disputes. The laws of the State
of Texas shall govern the construction and interpretation of this Agreement,
subject to the foregoing provision regarding the Federal Arbitration Act. All
arbitration proceedings related to any Dispute shall occur in the City of San
Antonio in the State of Texas. It is expressly agreed that either party may seek
injunctive relief or specific performance of the obligations hereunder to
maintain the status quo during the pendency of any Dispute in an appropriate
court of law or equity pending an award in arbitration.
(b) Subject to the preceding paragraph, and solely for purposes
of injunctive relief or specific performance, the parties irrevocably submit to
the jurisdiction of any court of the State of Texas.
9.11 Entire Agreement
----------------
This Agreement is intended by the parties hereto as a final expression of
their agreement and intended to be a complete and exclusive statement of their
agreement and understanding in respect of the subject matter contained herein.
This Agreement supersedes all prior agreements and understandings between the
parties with respect to such subject matter.
10. Term
----
This Agreement shall be effective as of the date hereof and shall continue
in effect thereafter until the earlier of (a) its termination by the consent of
the Company and holders of a majority of the Registerable Securities; (b) the
date on which no Registrable Securities remain outstanding; and (c) ten (10)
years from the date of this Agreement.
[signature pages to follow]
14
<PAGE>
[INVESTOR SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
IN WITNESS WHEREOF, this Agreement has been signed and delivered by each of
the parties hereto, effective as of the date first written above.
THE COMPANY:
BIGHUB.COM, INC
By:
--------------------------------------
Chet Howard, Chief Financial Officer
[Investors signature pages to follow]
<PAGE>
[INVESTORS SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
THE INVESTORS:
---------------------------------------------------
GERARD R. BERNIER
---------------------------------------------------
JOEL SENS
---------------------------------------------------
JOHN BANAS
---------------------------------------------------
COMER M. ALDEN
---------------------------------------------------
BEVERLY ARNOLD
---------------------------------------------------
DAN E. BUTT
---------------------------------------------------
M. A. DIZDAR
---------------------------------------------------
A. BAKER DUNCAN
---------------------------------------------------
SALLY W. DUNCAN
---------------------------------------------------
LUELLA HARDIE
16
<PAGE>
---------------------------------------------------
JANE JACOBS
---------------------------------------------------
JOHNNIE JEAN LOVETT
---------------------------------------------------
THOMAS LOVETT
---------------------------------------------------
MARY MALONE
---------------------------------------------------
ELEANOR MORRISON
---------------------------------------------------
RICHARD OLDFATHER
---------------------------------------------------
DEBORAH QUEBE
---------------------------------------------------
JORDAN REESE III
---------------------------------------------------
EDDIE W. SPALTON
---------------------------------------------------
TRES HOMBRES
By:
------------------------------------------------
Name/Title:
-----------------------------------------
---------------------------------------------------
FRED GRINSTEAD
17
<PAGE>
CLIFTON-NEMEC INVESTMENT FUND, L.P.
By:
------------------------------------------------
Name/Title:
-----------------------------------------
---------------------------------------------------
BARBARA T. GRINNAN
RHOJCOAMT PARTNERSHIP, LTD.
By:
------------------------------------------------
Name/Title:
-----------------------------------------
---------------------------------------------------
PHILIP M. STEVENSON, JR.
CITCAM STOCK
By:
------------------------------------------------
Name/Title:
-----------------------------------------
HARLON MORSE FENTRESS TRUST
By:
------------------------------------------------
Name/Title:
-----------------------------------------
DUNCAN-SMITH INVESTMENTS, INC.
18
<PAGE>
By:
------------------------------------------------
Name/Title:
-----------------------------------------
RENAISSANCE CAPITAL PARTNERS I
BY: RENAISSANCE CAPITAL GROUP
By:
------------------------------------------------
Name/Title:
-----------------------------------------
19
