UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Amendment No.1)
Under the Securities Exchange Act of 1934
musicmaker.com, Inc.
(Name of Issuer)
Common Stock, $.01 par value
(Title of Class of Securities)
62757C108
(CUSIP Number)
James Mitarotonda
BCG Strategic Investors, LLC
888 Seventh Avenue
17th Floor
New York, New York 10019
(Name, Address and Telephone Number of
Person Authorized to Receive Notices
and Communications)
December 6, 2000
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss. 240.13d-1(e), 240.13d-1(f), or 240.13d-1(g), check
the following box: |_|
<PAGE>
SCHEDULE 13D
CUSIP No.62757C108
-------------------------------------------------------------------------------
1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
BCG Strategic Investors, LLC
-------------------------------------------------------------------------------
2) CHECK THE APPROPRIATE BOX
IF A MEMBER OF A GROUP (a) [X]
(b) [ ]
-------------------------------------------------------------------------------
3) SEC USE ONLY
-------------------------------------------------------------------------------
4) SOURCE OF FUNDS
WC
-------------------------------------------------------------------------------
5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) |_|
-------------------------------------------------------------------------------
6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
-------------------------------------------------------------------------------
7) SOLE VOTING POWER
NUMBER OF 1,209,866
SHARES ----------------------------------------------------
BENEFICIALLY 8) SHARED VOTING POWER
OWNED BY none
EACH ----------------------------------------------------
REPORTING 9) SOLE DISPOSITIVE POWER
PERSON 1,209,866
WITH ----------------------------------------------------
10) SHARED DISPOSITIVE POWER
none
-------------------------------------------------------------------------------
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,209,866
-------------------------------------------------------------------------------
12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
|_|
-------------------------------------------------------------------------------
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
36.51%
-------------------------------------------------------------------------------
14) TYPE OF REPORTING PERSON
OO
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<PAGE>
SCHEDULE 13D
CUSIP No. 62757C108
-------------------------------------------------------------------------------
1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Barington Capital Group, L.P.
-------------------------------------------------------------------------------
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |X|
(b) | |
-------------------------------------------------------------------------------
3) SEC USE ONLY
-------------------------------------------------------------------------------
4) SOURCE OF FUNDS
WC
-------------------------------------------------------------------------------
5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) |_|
-------------------------------------------------------------------------------
6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
-------------------------------------------------------------------------------
7) SOLE VOTING POWER
NUMBER OF 18,500
SHARES -----------------------------------------------------
BENEFICIALLY 8) SHARED VOTING POWER
OWNED BY none
EACH -----------------------------------------------------
REPORTING 9) SOLE DISPOSITIVE POWER
PERSON 18,500
WITH -----------------------------------------------------
10) SHARED DISPOSITIVE POWER
none
-------------------------------------------------------------------------------
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
18,500
-------------------------------------------------------------------------------
12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
|_|
-------------------------------------------------------------------------------
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Less than 1%
-------------------------------------------------------------------------------
14) TYPE OF REPORTING PERSON
PN
-------------------------------------------------------------------------------
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<PAGE>
SCHEDULE 13D
CUSIP No. 69912K206
-------------------------------------------------------------------------------
1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Barington Companies Equity Partners, L.P.
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |X|
(b) | |
-------------------------------------------------------------------------------
3) SEC USE ONLY
-------------------------------------------------------------------------------
4) SOURCE OF FUNDS
WC
-------------------------------------------------------------------------------
5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) |_|
6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
-------------------------------------------------------------------------------
7) SOLE VOTING POWER
NUMBER OF 16,900
SHARES -----------------------------------------------------
BENEFICIALLY 8) SHARED VOTING POWER
OWNED BY none
EACH -----------------------------------------------------
REPORTING 9) SOLE DISPOSITIVE POWER
PERSON 16,900
WITH -----------------------------------------------------
10) SHARED DISPOSITIVE POWER
none
-------------------------------------------------------------------------------
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
16,900
-------------------------------------------------------------------------------
12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
|_|
-------------------------------------------------------------------------------
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Less than 1%
-------------------------------------------------------------------------------
14) TYPE OF REPORTING PERSON
PN
-------------------------------------------------------------------------------
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<PAGE>
SCHEDULE 13D
CUSIP No. 69912K206
-------------------------------------------------------------------------------
1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
dot com Investment Corporation
-------------------------------------------------------------------------------
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |X|
(b) | |
-------------------------------------------------------------------------------
3) SEC USE ONLY
-------------------------------------------------------------------------------
4) SOURCE OF FUNDS
WC
-------------------------------------------------------------------------------
5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) |_|
-------------------------------------------------------------------------------
6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
-------------------------------------------------------------------------------
7) SOLE VOTING POWER
NUMBER OF 26,200
SHARES -------------------------------------------------------
BENEFICIALLY 8) SHARED VOTING POWER
OWNED BY none
EACH -------------------------------------------------------
REPORTING 9) SOLE DISPOSITIVE POWER
PERSON 26,200
WITH -------------------------------------------------------
10) SHARED DISPOSITIVE POWER
none
-------------------------------------------------------------------------------
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
26,200
-------------------------------------------------------------------------------
12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
|_|
-------------------------------------------------------------------------------
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Less than 1%
-------------------------------------------------------------------------------
14) TYPE OF REPORTING PERSON
CO
-------------------------------------------------------------------------------
-6-
<PAGE>
Item 1. Security and Issuer.
This Statement on Schedule 13D (the "Statement") relates to the
Common Stock, $.01 par value (the "Common Stock"), of musicmaker.com, Inc., a
Delaware corporation ("musicmaker.com"). The principal executive offices of
musicmaker.com are located at 1740 Broadway, 23rd Floor, New York, New York
10019.
Item 2. Identity and Background.
(a) - (c) This statement is being filed by BCG Strategic
Investors, LLC ("BCG"), Barington Capital Group, L.P., Barington Companies
Equity Partners, L.P. and dot com Investment Corporation (collectively, the
"Reporting Entities").
BCG is a Delaware limited liability company formed to acquire, hold
and dispose of the Common Stock. The address of the principal business and
principal offices of BCG is 888 Seventh Avenue, 17th Floor, New York, New York
10019.
Each of James Mitarotonda and Seymour Holtzman is a Manager of
BCG. The business address of James Mitarotonda is c/o Barington Capital
Group, L.P., 888 Seventh Avenue, 17th Floor, New York, New York 10019. The
business address of Seymour Holtzman is c/o dot com Investment Corporation,
100 North Wilkes Barre Blvd., 4th Floor, Wilkes Barre, PA 18702. Each of
Barington Capital Group, L.P., Barington Companies Equity Partners, L.P. and
dot com Investment Corporation is a member of BCG.
Barington Capital Group, L.P. is a Delaware limited partnership
formed to engage in the business of acquiring, holding and disposing of
investments in various companies. The address of the principal business and
principal offices of Barington Capital Group, L.P. is 888 Seventh Avenue,
17th Floor, New York, New York 10019.
The general partner of Barington Capital Group, L.P. is LNA
Capital Corp. LNA Capital Corp. is a Delaware corporation formed to be the
general partner of Barington Capital Group, L.P. The address of the
principal business and principal offices of LNA Capital Corp. is: c/o
Barington Capital Group, L.P., 888 Seventh Avenue, 17th Floor, New York, New
York 10019. James Mitarotonda is the Chairman, President and Chief Executive
Officer of LNA Capital Corp.
Barington Companies Equity Partners, L.P. is a Delaware limited
partnership formed to engage in the business of acquiring, holding and
disposing of investments in various companies. The address of the principal
business and principal offices of Barington Companies Equity Partners, L.P.
is 888 Seventh Avenue, 17th Floor, New York, New York 10019.
The general partner of Barington Companies Equity Partners, L.P. is
Barington Companies Investors, LLC. Barington Companies Investors, LLC is a
Delaware limited liability company formed to be the general partner of Barington
Companies Equity Partners, L.P. The address of the principal business and
principal offices of Barington Companies Investors, LLC is 888 Seventh Avenue,
17th Floor, New York, New York 10019. James Mitarotonda is the Managing Member
of Barington Companies Investors, LLC.
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<PAGE>
dot com Investment Corporation is a Delaware corporation formed to
engage in the business of acquiring, holding and disposing of investments in
various companies. The address of the principal business and principal offices
of dot com Investment Corporation is 100 North Wilkes Barre Blvd., 4th Floor,
Wilkes Barre, PA 18702.
Seymour Holtzman is the President and sole director, and Barry J.
Booth is the Secretary and Treasurer, of dot com Investment Corporation. The
business address of each of Seymour Holtzman and Barry J. Booth is c/o dot com
Investment Corporation, 100 North Wilkes Barre Blvd., 4th Floor, Wilkes Barre,
PA 18702.
The principal occupation of James Mitarotonda is Chairman of
Barington Capital Group, L.P. The principal occupations of Seymour Holtzman are
the retail and wholesale jewelry business and investing.
(d) - (e) During the last five years, none of the Reporting Entities
or any other person identified in response to this Item 2 was convicted in a
criminal proceeding (excluding traffic violations and similar misdemeanors) or
was a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction nor as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, Federal or state securities laws or finding
any violation with respect to such laws.
(f) Each natural person identified in Item 2 is a citizen of
the United States.
Item 3. Source and Amount of Funds or Other Consideration.
On December 6, 2000, BCG purchased from Virgin Holdings, Inc.
1,209,866 shares of Common Stock for an aggregate purchase price of $3,024,665,
pursuant to a Stock Purchase Agreement dated as of December 6, 2000 (the "Stock
Purchase Agreement") between BCG and Virgin Holdings, Inc. The Stock Purchase
Agreement is filed as Exhibit 1 to this Statement and is incorporated herein by
reference. All of the funds used by BCG to acquire the 1,209,866 shares of
Common Stock were contributed to BCG by the members of BCG and the purchases
were funded out of working capital.
On various dates from November 28, 2000 through December 7, 2000,
Barington Capital Group, L.P. purchased an aggregate of 18,500 shares of Common
Stock in the open market for an aggregate purchase price of $46,250. On various
dates from November 28, 2000 through December 6, 2000, Barington Companies
Equity Partners, L.P. purchased an aggregate of 16,900 shares of Common Stock in
the open market for an aggregate purchase price of $42,250. On various dates
from November 24, 2000 through December 7, 2000, dot com Investment Corporation
purchased an aggregate of 26,200 shares of Common Stock for an aggregate
purchase price of $65,937.50. All of the purchases made in the open market by
the various Reporting Entities were funded by working capital, which may, at any
given time, include margin loans made by brokerage firms in the ordinary course
of business.
-8-
<PAGE>
Item 4. Purpose of Transaction.
Each of the Reporting Entities acquired beneficial ownership of the
shares of Common Stock to which this Statement relates for investment purposes
and to obtain a significant equity interest in musicmaker.com.
On December 11, 2000, representatives of BCG met with the management
of musicmaker.com and its directors, attorneys and investment bankers. During
such meeting, BCG requested representation on musicmaker.com's board of
directors. BCG also discussed possible ways to improve stockholder value
including the immediate reduction of expenses, the termination of
musicmaker.com's operations, alternative uses or the sale of the manufacturing
facility operated by musicmaker.com, the buyback of the Common Stock and
combinations with other companies.
On December 13, 2000, James Mitarotonda, as a representative of BCG,
met with the chief executive officer of musicmaker.com. BCG requested that
musicmaker.com's three vacant seats on its board of directors be filled by BCG
appointees. In addition, BCG expressed its view that all current business
operations of musicmaker.com should be shut down immediately and that the
capital of musicmaker.com should be redeployed in a manner that will preserve
and enhance stockholder value. BCG has requested from musicmaker.com, but not
yet received, a copy of musicmaker.com's stockholder rights plan which was
publicly announced on December 7, 2000.
Each of the Reporting Entities reserves the right to increase or
decrease the size of its investment in musicmaker.com subject to the
restrictions under musicmaker.com's stockholder rights plan. Each of the
Reporting Entities reserves the right to take stockholder action pursuant to a
public proxy or consent solicitation made pursuant to, and in accordance with,
the Securities Exchange Act of 1934, as amended, and applicable rules and
regulations thereunder, and the organizational documents of musicmaker.com.
Except as set forth in this Item 4, none of the Reporting Entities
have any present plans or proposals that relate to or would result in any of the
actions specified in clauses (a) through (j) of Item 4 of this Statement.
Item 5. Interest in Securities of the Issuer.
(a) As of the date hereof, the Reporting Entities own an aggregate
of 1,271,466 shares of Common Stock, representing approximately 38.36% of the
outstanding shares of Common Stock based upon the 3,314,042 shares of Common
Stock reported by musicmaker.com to be issued and outstanding as of November 6,
2000 in its Quarterly Report on Form 10-Q for the quarter ended September 30,
2000.
As of the date hereof, BCG beneficially owns an aggregate of
1,209,866 shares of Common Stock, representing approximately 36.51% of the
outstanding shares of Common Stock.
-9-
<PAGE>
As of the date hereof, Barington Capital Group, L.P. beneficially
owns an aggregate of 18,500 shares of Common Stock, representing less than 1% of
the outstanding shares of Common Stock.
As of the date hereof, Barington Companies Equity Partners, L.P.
beneficially owns an aggregate of 16,900 shares of Common Stock, representing
less than 1% of the outstanding shares of Common Stock.
As of the date hereof, dot com Investment Corporation beneficially
owns an aggregate of 26,200 shares of Common Stock, representing less than 1% of
the outstanding shares of Common Stock.
(b) As of the date hereof, each of the Reporting Entities has sole
voting and dispositive power over the shares of Common Stock beneficially owned
by such Reporting Entity.
(c) Except as set forth above or in the attached Schedule 1, no
person identified in Item 2 hereof has effected any transaction in shares of
such Common Stock during the 60 days preceding the date hereof.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships
with Respect to Securities of the Issuer.
dot com Investment Corporation has granted to Barington Capital
Group, L.P. the right to receive, after BCG after BCG has distributed to dot com
Investment Corporation an amount equal to the total capital contribution of dot
com Investment Corporation to BCG, an amount equal to 10% of the distributions
received from time to time by dot com Investment Corporation from BCG, whether
the distributions are in cash or stock. In the event the distribution is in the
stock of any entity, dot com Investment Corporation has the option to pay the
foregoing 10% interest to Barington Capital Group, L.P. in cash or the stock of
such entity.
Except as described elsewhere in this Statement, to the best
knowledge of each of the Reporting Entities, there exist no contracts,
arrangements, understandings or relationships (legal or otherwise) among the
persons named in Item 2 and between such persons and any person with respect to
any securities of musicmaker.com, finder's fees, joint ventures, loan or option
arrangements, puts or calls, guarantees of profits or division of profits or
loss.
Item 7. Material to be Filed as Exhibits.
1. Agreement of Joint Filing among BCG, Barington Capital Group, L.P.,
Barington Companies Equity Partners, L.P. and dot com Investment
Corporation dated December 18, 2000.
-10-
<PAGE>
2. Stock Purchase Agreement dated as of December 6, 2000, by and between BCG
and Virgin Holdings, Inc.
-11-
<PAGE>
SIGNATURES
After reasonable inquiry and to the best knowledge and belief of the
undersigned, the undersigned certify that the information set forth in this
Statement is true, complete and correct.
Dated: December 18, 2000
BCG STRATEGIC INVESTORS, LLC
By /s/ James Mitarotonda
------------------------------------
Name: James Mitarotonda
Title: Manager
BARINGTON CAPITAL GROUP, L.P.
By: LNA Capital Corp., its general
partner
By /s/ James Mitarotonda
------------------------------------
Name: James Mitarotonda
Title: Chairman, President and C.E.O.
BARINGTON COMPANIES EQUITY
PARTNERS, L.P.
By: BCG Strategic Investors LLC, its general
partner
By /s/ James Mitarotonda
------------------------------------
Name: James Mitarotonda
Title: Manager
DOT COM INVESTMENT CORPORATION
By: /s/ Seymour Holtzman
-----------------------------------
Name: Seymour Holtzman
Title: President
-12-
<PAGE>
SCHEDULE 1
Shares purchased by Barington Companies Equity Partners, L.P.
Date Number of Shares Price Per Share (1) Cost
---- ---------------- --------------- ----------
11/28/00 1,500 $2.50 $3,750.00
11/30/00 6,000 $2.50 $15,000.00
12/1/00 2,500 $2.50 $6,250.00
12/4/00 5,000 $2.50 $12,500.00
12/6/00 1,900 $2.50 $4,750.00
Shares purchased by Barington Capital Group, L.P.
Date Number of Shares Price Per Share Cost
---- ---------------- --------------- ----------
11/28/00 1,500 $2.50 $3,750.00
12/1/00 2,500 $2.50 $6,250.00
12/5/00 5,000 $2.50 $12,500.00
12/7/00 9,500 $2.50 $23,750.00
Shares purchased by dot com Investment Corporation
Date Number of Shares Price Per Share Cost
---- ---------------- --------------- ----------
11/24/00 2,000 $2.56 $5,125.00
11/27/00 3,700 $2.50 $9,250.00
11/28/00 3,000 $2.50 $7,500.00
12/1/00 4,500 $2.50 $11,250.00
12/4/00 8,000 $2.50 $20,000.00
12/7/00 5,000 $2.56 $12,812.50
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--------------------
(1) Excludes commissions and other execution-related costs.
<PAGE>
EXHIBIT 1
Agreement of Joint Filing
Pursuant to 13d-1(f) promulgated under the Securities Exchange Act
of 1934, as amended, the undersigned persons hereby agree to file with the
Securities and Exchange Commission the Statement on Schedule 13D (the
"Statement") to which this Agreement is attached as an exhibit, and agree that
such Statement, as so filed, is filed on behalf of each of them.
IN WITNESS WHEREOF, the undersigned have executed this Agreement.
Dated: December 18, 2000
BCG STRATEGIC INVESTORS, LLC
By /s/ James Mitarotonda
------------------------------------
Name: James Mitarotonda
Title: Manager
BARINGTON CAPITAL GROUP, L.P.
By: LNA Capital Corp., its general partner
By /s/ James Mitarotonda
------------------------------------
Name: James Mitarotonda
Title: Chairman, President and C.E.O.
BARINGTON COMPANIES EQUITY
PARTNERS, L.P.
By: BCG Strategic Investors LLC, its general
partner
By /s/ James Mitarotonda
------------------------------------
Name: James Mitarotonda
Title: Manager
DOT COM INVESTMENT CORPORATION
By: /s/ Seymour Holtzman
-----------------------------------
Name: Seymour Holtzman
Title: President
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<PAGE>
EXHIBIT 2
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is entered into as
of December 6, 2000, between Virgin Holdings, Inc., a Delaware corporation
("Seller"), and BCG Strategic Investors, LLC, a Delaware limited liability
company ("Buyer").
WHEREAS, Seller owns One Million Two Hundred Nine Thousand Eight
Hundred Sixty Six (1,209,866) shares of Common Stock (the "Stock"), of
musicmaker.com, Inc., a Delaware corporation (the "Company"), representing
approximately 36.9% of the Company's outstanding shares of Common Stock on the
date hereof.
WHEREAS, Seller desires to sell, and Buyer desires to acquire, all
of the Stock.
NOW, THEREFORE, in consideration of the mutual promises contained
herein and intending to be legally bound, the parties agree as follows:
Section 1. Purchase and Sale of Stock.
1.1 Subject, to the terms and conditions of this Agreement, on the date hereof
and concurrently with the execution of this Agreement, Buyer shall purchase the
Stock from Seller and Seller shall sell the Stock to Buyer (the "Closing"). At
the Closing, which will occur at a place mutually agreed upon by the parties,
Seller shall deliver the certificates evidencing the Stock to Buyer, properly
endorsed for transfer to or accompanied by a duly executed stock power in favor
of Buyer or its nominee.
1.2 The total purchase price for the Stock (the "Purchase Price") to be paid
by Buyer at the Closing shall be Three Million Twenty Four Thousand Six Hundred
Sixty Five Dollars ($3,024,665.00). The Purchase Price shall be paid in cash by
wire transfer or other immediately available funds to such account as Seller has
designated prior to the date hereof.
Section 2. Representations and Warranties of Seller. Seller represents and
warrants to Buyer as follows:
2.1 Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware with all necessary corporate
power and authority to execute, deliver and perform this Agreement.
2.2 A. The execution, delivery and performance of this Agreement have been
duly and validly authorized by all necessary corporate action on the part of
Seller. This Agreement constitutes the legally valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws and equitable principles relating to or
limiting creditors' rights generally.
B. The execution, delivery and performance of this Agreement by Seller
will not violate or constitute a breach or default (whether upon lapse of time
or the occurrence of any act or event or otherwise) under (i) the Certificate of
Incorporation or Bylaws of Seller, (ii) any material law to which Seller is
subject and (iii) to the knowledge of Seller, without any
<PAGE>
independent investigation of its officers, any agreement to which Seller is a
party that is material to Seller and its affiliates taken as a whole.
2.3 In reliance upon the accuracy of the matters set forth in Section 3.3
hereof, the execution, delivery and performance of this Agreement by Seller will
not require filing or registration with, or the issuance of any permit by, or
receipt of any approval or other consent from, any other person or entity, other
than the filing of notices under federal and state securities laws.
2.4 Seller is the record and beneficial owner of the Stock and owns the Stock
free and clear of any claim, charge, encumbrance, security interest, lien,
option, pledge or restriction (collectively, "Encumbrances"), except for any
restrictions on transfer by affiliates arising under the federal and state
securities laws. At the Closing, after giving effect to the sale of the Stock as
provided in this Agreement, and assuming that Buyer purchased the Stock for
value in good faith and without notice of any adverse claim, Buyer will acquire
valid and marketable title to the Stock free and clear of all Encumbrances,
except for any defect in title or Encumbrance that is imposed by or results from
any act or omission of Buyer.
2.5 Except for this Agreement, Seller does not have any agreement, oral or
written, to sell the Stock to any person or entity and has not granted any
option to purchase the Stock to any person or entity.
Section 3. Representations and Warranties of Buyer. Buyer represents and
warrants to Seller as follows:
3.1 Buyer is a limited liability company duly formed, validly existing and in
good standing under the laws of the State of Delaware and has all necessary
power and authority to execute, deliver and perform this Agreement.
3.2 A. The execution, delivery and performance of this Agreement by Buyer have
been duly and validly authorized by all necessary actions on the part of Buyer.
This Agreement constitutes the legally valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws and equitable principles relating to or
limiting creditors' rights generally.
B. The execution, delivery and performance of this Agreement by Buyer will
not violate or constitute a breach or default (whether upon lapse of time or the
occurrence of any act or event or otherwise) under (i) Buyer's certificate of
formation or limited liability company agreement, (ii) any material law to which
Buyer is subject or (iii) any agreement to which Buyer is a party that is
material to Buyer and its affiliates taken as a whole.
C. The execution, delivery and performance of this Agreement by Buyer will
not require filing or registration with, or the issuance of any permit by, or
receipt of any approval or other consent from, any other person or entity, other
than the filing of a Schedule 13 with the Securities and Exchange Commission.
3.3 The Stock is being purchased by Buyer solely for its own account, for
investment purposes only and not with a view to the distribution thereof in
violation of the Securities Act of
-2-
<PAGE>
1933, as amended (the "Securities Act"), or any applicable state securities law.
Buyer is an "accredited investor" as such term is defined in Regulation D
promulgated under the Securities Act and has such knowledge and experience in
financial and business matters as to be capable of calculating the merits and
risks of its investment represented by its purchase of the Stock. Buyer
acknowledges that the Stock has not been registered under the Securities Act or
any other securities law and may not be sold, and Buyer hereby covenants that
the Stock will not be sold, in whole or in part, except pursuant to a
registration statement effective under the Securities Act or pursuant to an
exemption from registration under the Securities Act, and in compliance with all
other applicable securities laws.
3.4 Buyer acknowledges and agrees that, (i) except as otherwise expressly set
forth herein, Seller makes no representations or warranties whatsoever regarding
the Stock and (ii) Seller makes no representations or warranties whatsoever
rewarding the Company or regarding any matter relating to the Company or its
business, assets, liabilities, financial condition, results of operations and
prospects. Buyer further acknowledges and agrees that in determining to acquire
the Stock, it has made its own investigation, analysis and evaluation and, based
thereon, it has formed an independent judgment concerning the Company and its
business, assets, liabilities, financial condition, results of operations and
prospects and the inherent risk associated therewith.
Section 4. Conditions of Purchase.
4.1 The obligation of Seller to effect the Closing shall be subject to the
condition that the representations and warranties of Buyer made herein are true
in all material respects as of the Closing.
4.2 The obligation of Buyer to effect the Closing shall be subject to the
condition that the representations and warranties of Buyer made herein are true
in all material respects as of the Closing.
Section 5. General.
5.1 The representations and warranties contained in or made pursuant to this
Agreement shall terminate as of the Closing.
5.2 Seller hereby confirms to Buyer that the license agreement, dated as of June
8, 1999, between Seller and the Company shall remain in effect, upon the terms
and subject to the conditions thereof, following the Closing; provided, that the
Company is not in default thereunder on or before the date of the Closing.
5.3 This Agreement constitutes the entire agreement between the parties
pertaining to the subject matter hereof and supersedes all prior agreements and
understandings of the parties in connection therewith.
5.4 The terns and conditions of this Agreement are in all respects confidential,
and neither party shall disclose them, directly or indirectly, to any other
person (except to the extent such disclosure is required by law or pursuant to
the rules of any stock exchange), other than such party's legal and financial
advisors who shall agree to be bound by this confidentiality agreement. Neither
party shall, directly or indirectly, by any means, disclose, or participate in
or
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<PAGE>
contribute to any public discussion, notice or other publicity concerning,
the existence of this Agreement or the terms and conditions hereof.
5.5 This Agreement shall be governed by and construed in accordance with the
laws of the State of New York applicable to contracts made and performed in such
State and without regard to conflicts of law doctrines.
5.6 This Agreement may be executed in one or more counterparts and by different
parties in separate counterparts, all of which shall constitute one and the same
agreement and shall become effective when one or more counterparts have been
signed by each party and delivered to the other party.
5.7 Each of Seller and Buyer shall pay its own expenses incident to the
negotiation, preparation, and performance of this Agreement and the transactions
contemplated hereby. Seller shall pay any transfer taxes arising from the sale
of the Stock to Buyer, if any.
5.8 To the extent permitted by law, all rights and remedies existing under this
Agreement are cumulative to, and not exclusive of, any rights or remedies
otherwise available under applicable law.
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<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its duly authorized officers as of the day and year
first above written.
BCG STRATEGIC INVESTORS, LLC
By: /s/ James A Mitarotonda
------------------------------
Name: James A Mitarotonda
Title: Managing Member
VIRGIN HOLDINGS, INC.
By: /s/ Ken Berry
------------------------------
Name: Ken Berry
Title: President
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<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its duly authorized officers as of the day and year
first above written.
BCG STRATEGIC INVESTORS, LLC
By: /s/ James A Mitarotonda
------------------------------
Name: James A Mitarotonda
Title: Managing Member
VIRGIN HOLDINGS, INC.
By: /s/ Ken Berry
------------------------------
Name: Ken Berry
Title: President
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