UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): June 15, 1999
TRANSMEDIA EUROPE, INC.
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(Exact name of Registrant as specified in its charter)
DELAWARE 13-3760219
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(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Indentification No.)
11 St. James's Square, London SW1Y 4LB, England
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(Address of principal executive offices including zip code)
011-44-171-930-0706
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(Telephone number including area code)
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TRANSMEDIA EUROPE, INC. AND SUBSIDIARIES
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Item 2. Acquisition or Disposition of Assets
On June 15, 1999 Transmedia Europe, Inc. (the "Company") and
Transmedia Asia Pacific, Inc. ("TMAP") purchased from William D. Marks, Donna M.
Marks, Kevin R. Drewyer and Direct Investors, Inc. (collectively the "Sellers")
100% of the membership interests of DSS Direct Connect, L.L.C. ("DBS Direct").
TMAP is a Delaware corporation which has the same directors and officers as the
Company. The Company and TMAP have worked closely together for a number of years
and are joint owners of a number of member benefit businesses. The Company and
TMAP each acquired 50% of the outstanding membership interests of DBS Direct.
DBS Direct is head quartered in Seattle where it commenced
operations in July 1998. DBS Direct has the right, on a preferred basis, to
provide localized turn-key sales and installation services for DirecTV and USSB,
the leading providers of digital, "direct-to-the-home" multi-channel video
programming services. The DBS Direct contracts with DirecTV and its programming
partner will allow it to become the first nationwide telemarketing, door-to-door
sales, and full-service installer of DirecTV's Digital Broadcast Satellite in
the United States. DBS Direct has two contracts with DirecTV and USSB, one
covering Single Family Units ("SFU's") and the other covering Multi-Dwelling
Units ("MDU's"). The "SFU" contract grants DBS Direct the right to an initial
coverage area which includes 12 major metropolitan markets in the United States,
representing approximately 25 million television households, or 25% of the total
television households in the United States. DirecTV will add additional SFU
markets to the DBS Direct SFU coverage upon successful launch of its services in
currently contracted markets. The "MDU" contract grants DBS Direct the entire
continental United States as its territory, an addition 25 million television
households.
The transaction (the "Acquisition") was consummated pursuant to an
Equity Purchase Agreement dated May 10, 1999, as amended June 11, 1999 (the
"Acquisition Agreement") among the Company, DBS Direct, the Sellers and TMAP.
The consideration paid by the Company for its 50% interest in DBS Direct
comprised 4,589,732 shares of the Company's common stock. TMAP paid 4,831,057
shares of its common stock for the remaining 50% of DBS Direct. In addition, the
Company and TMAP each contributed $500,000 (five hundred thousand dollars) to
the capital of DBS Direct at the closing of the Acquisition. Such capital
contribution was used to repay existing indebtedness of DBS Direct.
Additionally, the Company and TMAP have agreed to each contribute a further
$875,000 (eight hundred seventy five thousand dollars) to the capital of DBS
Direct to fund the expansion of its network of sales offices nationally.
Pursuant to the terms of the Acquisition Agreement, William D. Marks
entered into an employment agreement with DBS Direct and joins the board of
directors of both the Company and TMAP. The employment agreement is for a period
of three years and provides for an annual salary of $175,000. Mr. Marks will
serve as President of DBS Direct. The employment agreement also provides for
participation in any incentive stock option plans which may be established in
the future by the Company and TMAP.
2
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Item 7. Financial Statements and Exhibits
(a) and (b) Financial Statements of the Business Acquired and Pro Forma
Financial Information
It is impractical for the Company to provide at this time the audited
financial statements and pro forma financial information required in
accordance with Rule 210.3-05(b) of Regulation S-X. The Company intends to
file such audited financial statements and pro forma financial information
as an amendment to this Current Report on Form 8-K as soon as practical,
but in any event no later than August 14, 1999.
(c) Exhibits
2.1 Equity Purchase Agreement dated May 10, 1999 by and among DSS Direct
Connect, L.L.C., William D. Marks, Donna M. Marks, Kevin R. Drewyer,
Direct Investors, Inc. Transmedia Europe, Inc. and Transmedia Asia
Pacific, Inc., as amended June 11, 1999.
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 thereunto duly authorized.
TRANSMEDIA EUROPE, INC.
By: /s/ Paul Harrison
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President and Principal Accounting Officer
3
EQUITY PURCHASE AGREEMENT
Dated May 10, 1999
by and among
DSS Direct Connect, L.L.C.,
Its Members,
Transmedia Europe, Inc.
and
Transmedia Asia Pacific, Inc.
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TABLE OF CONTENTS
ARTICLE I Certain Definitions.......................................... 1
1.1 Certain Definitions.......................................... 1
1.2 Interpretation............................................... 4
ARTICLE II Purchase and Sale of Equity; Additional Covenants............ 4
2.1 Purchase and Sale of Equity.................................. 4
2.2 Purchase Price............................................... 4
2.3 Closing...................................................... 4
ARTICLE III Representations and Warranties Regarding the
Company................................................... 5
3.1 Organization and Qualification of the Company................ 5
3.2 Authorization................................................ 5
3.3 Non-contravention............................................ 5
3.4 No Consents.................................................. 6
3.5 Capitalization............................................... 6
3.6 Personal Property............................................ 6
3.7 Leased Real Property......................................... 6
3.8 Financial Statements......................................... 7
3.9 Absence of Certain Developments.............................. 7
3.10 Governmental Authorizations; Licenses; Etc................... 8
3.11 Litigation................................................... 8
3.12 Undisclosed Liabilities...................................... 8
3.13 Taxes ...................................................... 9
3.14 Insurance.................................................... 9
3.15 Environmental Matters........................................ 9
3.16 Employee Matters............................................. 10
3.17 Employee Benefit Plans....................................... 10
3.18 Proprietary Rights........................................... 11
3.19 Accounts Receivable.......................................... 12
3.20 Contracts.................................................... 12
3.21 Suppliers.................................................... 13
3.22 Books and Records............................................ 13
3.23 Brokers...................................................... 14
3.24 Business Plan................................................ 14
3.26 Full Disclosure.............................................. 14
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ARTICLE IV Representations and Warranties Regarding the
Members................................................... 14
4.1 Authorization................................................ 14
4.2 Non-contravention............................................ 14
4.3 No Consents.................................................. 15
4.4 Ownership of the Company Equity.............................. 15
4.5 Brokers...................................................... 15
4.6 Investment Intent............................................ 15
4.7 Full Disclosure.............................................. 16
ARTICLE V Representations and Warranties Regarding Europe.............. 16
5.1 Organization................................................. 16
5.2 Authorization................................................ 17
5.3 Non-contravention............................................ 17
5.4 No Consents.................................................. 17
5.5 Capitalization............................................... 17
5.6 Brokers...................................................... 18
5.7 Financial Statements......................................... 18
5.8 Absence of Certain Developments.............................. 18
5.9 Governmental Authorizations.................................. 18
5.10 Litigation................................................... 18
5.11 Undisclosed Liabilities...................................... 19
5.12 Full Disclosure.............................................. 19
ARTICLE VI Representations and Warranties Regarding Asia................ 19
6.1 Organization................................................. 19
6.2 Authorization................................................ 19
6.3 Non-contravention............................................ 19
6.4 No Consents.................................................. 20
6.5 Capitalization............................................... 20
6.6 Brokers...................................................... 20
6.7 Financial Statements......................................... 20
6.8 Absence of Certain Developments.............................. 20
6.9 Governmental Authorizations.................................. 21
6.10 Litigation................................................... 21
6.11 Undisclosed Liabilities...................................... 21
6.12 Full Disclosure.............................................. 22
ARTICLE VII Covenants and Agreements..................................... 22
7.1 Access and Information....................................... 22
7.2 Transfer and Other Taxes..................................... 22
7.3 Repayment of Indebtedness.................................... 23
7.4 Best Efforts; Further Assurances............................. 23
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7.5 Reports Under the Act........................................ 23
7.6 Management................................................... 24
7.7 No Issuance of Additional Equity Interests................... 24
7.8 Audit of Company............................................. 24
ARTICLE VIII Closing Deliveries........................................... 25
8.1 Mutual Condition............................................. 25
8.2 Deliveries by the Company and the Members.................... 25
8.3 Deliveries by Purchasers..................................... 26
8.4 Issuance of Equity........................................... 27
ARTICLE IX Survival of Representations and Warranties;
Indemnification........................................... 27
9.1 Survival of Representations and Warranties................... 27
9.2 Indemnification.............................................. 27
9.3 Procedures for Third Party Claims............................ 28
9.4 Procedures for Inter-Party Claims............................ 28
ARTICLE X Miscellaneous................................................ 29
10.1 Notices...................................................... 29
10.2 Expenses..................................................... 30
10.3 Governing Law; Consent to Jurisdiction....................... 30
10.4 Assignment; Successors and Assigns; No Third
Party Rights.............................................. 31
10.5 Counterparts................................................. 31
10.6 Titles and Headings; Schedules............................... 31
10.7 Entire Agreement............................................. 31
10.8 Amendment and Modification................................... 31
10.9 Public Announcement.......................................... 31
10.10 Waiver ...................................................... 32
10.11 Severability................................................. 32
10.12 No Strict Construction....................................... 32
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Schedules
Schedule A Equity Holders of the Company
Schedule 3.1 Foreign Qualifications of the Company
Schedule 3.4 Consents
Schedule 3.6 Encumbrances
Schedule 3.7 Leased Real Property
Schedule 3.9 Certain Developments
Schedule 3.11 Litigation
Schedule 3.13 Tax Contests
Schedule 3.14 Insurance
Schedule 3.15 Environmental Matters
Schedule 3.16 Employee Matters
Schedule 3.17 Employee Benefit Plans
Schedule 3.18 Proprietary Rights
Schedule 3.19 Accounts Receivable
Schedule 3.20 Contracts
Schedule 3.24 Business Plan
Schedule 5.5 Europe Options, Warrants, etc.
Schedule 5.7 Europe Financial Statements
Schedule 5.10 Litigation - Europe
Schedule 6.5 Asia Options, Warrants, etc.
Schedule 5.7 Asia Financial Statements
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Schedule 6.10 Litigation - Asia
Schedule 7.3 Company Indebtedness to be Satisfied
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EQUITY PURCHASE AGREEMENT
This EQUITY PURCHASE AGREEMENT, dated May 10, 1999, is made and entered
into by and among DSS Direct Connect, L.L.C., d/b/a DBS Direct, a Washington
limited liability company (the "Company"), the persons listed on Schedule A
hereto (each a "Member" and collectively the "Members"), Transmedia Europe,
Inc., a Delaware corporation ("Europe") and Transmedia Asia Pacific, Inc., a
Delaware corporation ("Asia"). Europe and Asia are hereinafter collectively as
"Purchasers" and individually as a "Purchaser."
R E C I T A L S
WHEREAS, the Members are the record and beneficial holders of all of the
issued and outstanding equity of the Company; and
WHEREAS, the Members desire to sell and transfer to Purchasers, and
Purchasers desire to purchase from the Members, all of the outstanding equity of
the Company, all as more specifically provided herein;
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and intending to be legally bound, the parties hereto agree as follows:
ARTICLE I Certain Definitions
1.1 Certain Definitions
As used in this Agreement, the following terms have the respective
meanings set forth below.
"Accounts Receivable" has the meaning ascribed to such term in Section
3.19.
"Affected Property" has the meaning ascribed to such term in Section 3.15.
"Affiliate" means, with respect to any Person, any other Person who
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. The term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise, and the terms
"controlled" and "controlling" have meanings correlative thereto.
"Agreement" means this Equity Purchase Agreement.
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"Asia Common Stock" has the meaning ascribed to such term in Section 2.2.
"Business Day" means a day, other than a Saturday or Sunday, on which
commercial banks in New York are open for the general transaction of business.
"Closing" has the meaning ascribed to such term in Section 2.3.
"Closing Date" has the meaning ascribed to such term in Section 2.3.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Equity" has the meaning ascribed to such term in Section 2.1.
"Contracts" has the meaning ascribed to such term in Section 3.20.
"Damages" has the meaning ascribed to such term in Section 9.2.
"DIRECTV Contracts" has the meaning ascribed to such term in Section 3.3.
"Employee Benefit Plans" has the meaning ascribed to such term in Section
3.17.
"Encumbrances" has the meaning ascribed to such term in Section 3.3.
"Environmental Laws" means any federal, state or local law, statute,
ordinance, rule, regulation, license, permit, authorization, approval, consent,
court order, judgment, decree, injunction, code, requirement or agreement with
any Governmental Authority, (x) relating to pollution (or the cleanup thereof or
the filing of information with respect thereto), human health or the protection
of air, surface water, ground water, drinking water supply, land (including land
surface or subsurface), plant and animal life or any other natural resource, or
(y) concerning exposure to, or the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, production or
disposal of Regulated Substances, in each case as amended and as now or
hereafter in effect.
"ERISA Affiliate" has the meaning ascribed to such term in Section 3.17.
"ERISA Plans" has the meaning ascribed to such term in Section 3.17.
"Europe Common Stock" has the meaning ascribed to such term in Section
2.2.
"Financial Statements" has the meaning ascribed to such term in Section
3.8.
"GAAP" means generally accepted accounting principles as in effect in the
United States on the date of this Agreement.
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"Governmental Authority" means any national, federal, state, provincial,
county, municipal or local government, foreign or domestic, or the government of
any political subdivision of any of the foregoing, or any entity, authority,
agency, ministry or other similar body exercising executive, legislative,
judicial, regulatory or administrative authority or functions of or pertaining
to government, including any authority or other quasi-governmental entity
established to perform any of such functions.
"Indemnified Party" has the meaning ascribed to such term in Section 9.2.
"Indemnifying Party" has the meaning ascribed to such term in Section 9.2
"Leased Real Property" has the meaning ascribed to such term in Section
3.7.
"Material Adverse Change" means a material adverse change in the business,
financial condition, or results of operations (financial and other) of the
entity.
"Material Adverse Effect" means a material adverse effect on the business,
financial condition or results of operations of the entity.
"1934 Act" means the Securities Exchange Act of 1934, as amended from time
to time.
"Person" means an individual, partnership, limited liability company,
corporation, joint stock company, unincorporated organization or association,
trust or joint venture, or a governmental agency or political subdivision
thereof.
"Proprietary Rights" has the meaning ascribed to such term in Section
3.18.
"Purchaser Common Stock" means the Europe Common Stock and the Asia Common
Stock.
"Regulated Substances" means pollutants, contaminants, hazardous or toxic
substances, compounds or related materials or chemicals, hazardous materials,
hazardous waste, flammable explosives, radon, radioactive materials, asbestos,
urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum and
petroleum products (including, but not limited to, waste petroleum and petroleum
products) as regulated under applicable Environmental Laws.
"Act" means the Securities Act of 1933, as amended from time to time.
"SEC" means the United States Security and Exchange Commission.
"Third Party Claim" has the meaning ascribed to such term in Section 9.3.
"Violation" has the meaning ascribed to such term in Section 7.7(a).
<PAGE>
1.2 Interpretation
Unless otherwise indicated to the contrary herein by the context or use
thereof: (i) the words, "herein," "hereto," "hereof" and words of similar import
refer to this Agreement as a whole and not to any particular Section or
paragraph hereof; (ii) words importing the masculine gender shall also include
the feminine and neutral genders, and vice versa; (iii) words importing the
singular shall also include the plural, and vice versa. References to the
"knowledge" of Members or the Company means matters which a Member knows or
should know in the performance of his duties for the Company.
ARTICLE II Purchase and Sale of Equity; Additional Covenants
2.1 Purchase and Sale of Equity
Upon the terms and subject to the conditions of this Agreement and on the
basis of the representations, warranties and agreements contained herein, at the
Closing (as defined in Section 2.3), the Members shall sell, assign, transfer,
convey and deliver to each Purchaser 2,500 limited liability company interests
of the Company (the "Company Equity"), which the Members represent constitute
all of the issued and outstanding equity of the Company, and each Purchaser
shall purchase such shares from the Members.
2.2 Purchase Price
(a) The aggregate purchase price to be paid by Europe for the portion of
the Company Equity to be purchased by Europe shall be a number of shares of the
common stock of Europe ("Europe Common Stock") which Europe constitutes 19% of
the issued and outstanding common stock of Europe after the issuance of stock
contemplated by Section 8.4. The Europe Common Stock shall be allocated among
the Members as set forth on Schedule A.
(b) The aggregate purchase price to be paid by Asia for the portion of the
Company Equity to be purchased by Asia shall be a number of shares of the common
stock of Asia ("Asia Common Stock") which Asia constitutes 19% of the issued and
outstanding common stock of Asia after the issuance of stock contemplated by
Section 8.4. The Asia Common Stock shall be allocated among the Members as set
forth on Schedule A.
2.3 Closing
The closing of the transactions contemplated hereby (the "Closing") shall
take place at the offices of Perkins Coie LLP, at 10:00 A.M. PDT on [May ___],
1999, or by facsimile on such date with original documents to follow; provided
that, if the conditions set forth in Article VIII have not been either satisfied
or waived by such date, then the Closing shall occur within five Business Days
of the satisfaction or waiver of such
<PAGE>
conditions or at such other time and place as is mutually agreed by the parties
hereto. In the event that the Closing does not occur on or before May 28, 1999,
any party to this Agreement may terminate this Agreement by giving written
notice to the other parties. The time and date of the Closing is herein called
the "Closing Date".
ARTICLE III Representations and Warranties Regarding the Company
The Members and the Company, jointly and severally (except as otherwise
provided), represent and warrant to the Purchaser as follows:
3.1 Organization and Qualification of the Company
The Company is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Washington, with
full power and authority to own or lease its properties and assets and to carry
on its business as presently conducted. The Company has previously provided to
Purchasers true and complete copies of (i) its Certificate of Formation and all
amendments thereto, (ii) its Articles of Incorporation and all amendments
thereto, (iii) its Operating Agreement and all amendments thereto, and (iv) its
By-laws and all amendments thereto. Other than as indicated on Schedule 3.1 the
business of the Company is conducted solely through the Company and the Company
does not own, directly or indirectly, any subsidiaries.
3.2 Authorization
The Company has full power and authority to execute and deliver this
Agreement and to perform its obligations hereunder, all of which have been duly
authorized by all requisite action. This Agreement has been duly authorized,
executed and delivered by the Company and constitutes a valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms.
3.3 Non-contravention
Neither the execution and delivery of this Agreement nor the performance
by the Company of its obligations hereunder will (i) contravene any provision
contained in its Certificate of Formation, Articles of Incorporation, Operating
Agreement or By-laws, (ii) violate or result in a breach (with or without the
lapse of time, the giving of notice or both) of or constitute a default under
(A) any contract, agreement, commitment, indenture, mortgage, lease, pledge,
note, license, permit or other instrument or obligation, including but not
limited to the contracts with DIRECTV, Inc. or its Affiliates specified on
Schedule 3.20 (collectively the "DIRECTV Contracts") or (B) any judgment, order,
decree, law, rule or regulation or other restriction of any Governmental
Authority, in each case to which the Company is a party or by which it is bound
or to which any of its assets or properties are subject, or (iii) result in the
creation or imposition of any lien, claim,
<PAGE>
charge, mortgage, pledge, security interest, equity, restriction or other
encumbrance (collectively, "Encumbrances") on any of the assets or properties of
the Company.
3.4 No Consents
Except as set forth in Schedule 3.4, no notice to, filing with, or
authorization, registration, consent or approval of any Governmental Authority
or other Person is necessary for the execution, delivery or performance of this
Agreement or the consummation of the transactions contemplated hereby by the
Company.
3.5 Capitalization
The Company's authorized equity consists solely of 10,000 authorized
shares of Company Equity of which 5,000 shares of Company Equity are issued and
outstanding. The Company does not have any equity reserved for issuance and the
Company does not have any outstanding options, warrants, rights, calls or
commitments relating to its capital stock or any outstanding securities or
obligations convertible into or exchangeable for, or giving any Person any right
to subscribe for or acquire from it, any equity. There are no pre-emptive or
other subscription rights with respect to equity of the Company and all of the
issued and outstanding equity of the Company have been duly authorized, validly
issued, are fully paid and are nonassessable.
3.6 Personal Property
The Company has good and marketable title to (or valid leasehold or
contractual interests in) all personal property used in its business, free and
clear of any Encumbrances except as set forth in Schedule 3.6. All machinery,
equipment, furniture, fixtures and other personal property of the Company is in
good operating condition and fit for operation in the ordinary course of
business (subject to normal wear and tear).
3.7 Leased Real Property
The Company does not own any real property. Except as set forth in
Schedule 3.7, the Company has valid leasehold title to all real estate and real
property used in its business (the "Leased Real Property"), free and clear of
all Encumbrances. All plants, structures and buildings leased by the Company are
in good operating condition and fit for operation in the ordinary course of
business (subject to normal wear and tear) with no structural or other defects
that could interfere with the conduct of normal operation of such facilities.
The Company has delivered to Purchaser true and complete copies of any leases
for the Leased Real Property. The Company is not in material violation of any
building, zoning, anti-pollution, health, occupational safety or other law,
ordinance or regulation regarding its plants, structures and equipment or their
operations.
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3.8 Financial Statements
The Company has previously furnished to Purchaser an unauditied balance
sheet of the Company, as of December 31, 1998 (the "Balance Sheet Date"), and
the related unaudited statement of income for the period of June 1, 1998,
through December 31, 1998, which fairly present the financial condition of the
Company in all material respects.
3.9 Absence of Certain Developments
Except as set forth in Schedule 3.9, since the Balance Sheet Date, there
has not been any Material Adverse Change, or any development which could
reasonably be expected to result in a prospective Material Adverse Change or a
Material Adverse Change in the prospects of the Company. Except as set forth in
Schedule 3.9, since Balance Sheet Date, the Company has conducted its businesses
in the ordinary and usual course consistent with past practices and has not (i)
sold, leased, transferred or otherwise disposed of any of its assets (other than
dispositions in the ordinary course of business consistent with past practices),
(ii) terminated or amended in any material respect any contract or lease to
which it is a party or to which it is bound or to which its properties are
subject, (iii) amended its Certificate of Formation, Articles of Incorporation,
Operating Agreement or By-laws or taken any action in contemplation of an
amendment to such Certificate of Formation, Articles of Incorporation, Operating
Agreement or By-laws or in contemplation of its liquidation or dissolution and,
to its best knowledge after due investigation, no such action has been taken by
its Members, directors or officers, (iv) declared or paid any dividend or
distribution on the Company Equity, or repurchased or otherwise acquired any
shares of Company Equity or any option, warrant, right, call or commitment
relating to its capital stock or any outstanding securities or obligations
convertible into or exchangeable for, or giving any Person any right to
subscribe for or acquire from it, any shares of its capital stock, (v) suffered
any material loss, damage or destruction whether or not covered by insurance,
(vi) made any change in the accounting methods or practices it follows, whether
for general financial or tax purposes, (vii) incurred any liabilities (other
than in the ordinary course of business) none of which, individually or in the
aggregate, are material, (viii) incurred, created or suffered to exist any
Encumbrances on its assets, except those created in the ordinary course of
business, none of which, individually or in the aggregate, are material, (ix)
increased the compensation payable or to become payable to any of its officers
or employees or increased any bonus, severance, accrued vacation, insurance,
pension or other Employee Benefit Plan, payment or arrangement made by it for or
with any such officers or employees, (x) suffered any labor dispute, strike or
other work stoppage, (xi) made or obligated itself to make any capital
expenditures in excess of $10,000 individually or in the aggregate, (xii)
entered into any contract or other agreement requiring it to make payments in
excess of $10,000 per annum, individually or in the aggregate, other than in the
ordinary course of business consistent with past practices, or (xiii) entered
into any agreement to do any of the foregoing.
<PAGE>
3.10 Governmental Authorizations; Licenses; Etc.
The business of the Company has been operated in material compliance with
all material applicable laws, rules, regulations, codes, ordinances, orders,
policies and guidelines of all Governmental Authorities, including but not
limited to, those of the Federal Communications Commission and those related to:
fire, safety, labeling of products, pricing, sales or distribution of products,
antitrust, trade regulation, trade practices, sanitation, land use, employment
or employment practices, energy and similar laws. The Company has all permits,
licenses, approvals, certificates and other authorizations, and has made all
notifications, registrations, certifications and filings with all Governmental
Authorities, necessary or advisable for the operation of its business as
currently conducted. There is no action, case or proceeding pending or, to the
best knowledge of the Company or the Members, threatened by any Governmental
Authority with respect to (i) any alleged violation by the Company or its
Affiliates of any law, rule, regulation, code, ordinance, order, policy or
guideline of any Governmental Authority, or (ii) any alleged failure by the
Company or its Affiliates to have any permit, license, approval, certification
or other authorization required in connection with the operation of its
business. No notice of any violation of such laws has been received by the
Company or any of its Affiliates.
3.11 Litigation
Except as set forth in Schedule 3.11, there are no lawsuits, actions,
proceedings, claims, arbitrations, orders or investigations by or before any
Governmental Authority pending or, to the best knowledge of the Company,
threatened against the Company or its Affiliates relating to the Company, its
business or any product or service alleged to have been sold by such Company or
seeking to enjoin the transactions contemplated hereby and, except as set forth
in Schedule 3.11, there are no facts or circumstances known to the Company that
could result in a claim for damages or equitable relief which, if decided
adversely, could reasonably be expected to result in a Material Adverse Change,
individually or in the aggregate.
3.12 Undisclosed Liabilities
Other than those reflected in the Financial Statements, there are no
material liabilities (defined below) of the Company of any kind or nature
whatsoever, whether known or unknown, absolute, accrued, contingent or
otherwise, or whether due or to become due, other than liabilities incurred in
the ordinary course of business and consistent with past practices since the
date of the Financial Statements, and to the Company's and the Members'
knowledge, there exists no facts or circumstances (other than general economic
conditions) that could reasonably be expected to result in any such liability.
"Material liabilities" means liabilities that in the aggregate exceed $5,000.
<PAGE>
3.13 Taxes
All federal, state, county, local and foreign tax returns and reports of
the Company required to be filed have been duly filed. All federal, state,
county, local, foreign and any other taxes (including all income, withholding
and employment taxes), assessments (including interest and penalties), fees and
other governmental charges with respect to the employees, properties, assets,
income or franchises of the Company have been paid or duly provided for, or are
being contested in good faith by appropriate proceedings as disclosed on
Schedule 3.13 and adequate reserves therefor have been established pursuant to
GAAP, and are reflected on the Financial Statements. There are no tax liens on
any of the assets of the Company.
3.14 Insurance
Schedule 3.14 sets forth a true and correct list of all insurance policies
or binders maintained by the Company on the date hereof showing, as to each
policy or binder, the carrier, policy number, coverage limits, expiration dates,
annual premiums, deductibles or retention levels and a general description of
the type of coverage provided. Such policies and binders are, and at all times
prior to the Closing will be, in full force and effect. The Company has not
permitted or suffered any gap in insurance coverage during the past six years.
3.15 Environmental Matters
Except as set forth on Schedule 3.15, to the knowledge of Company and the
Members, (i) the business of the Company is being and has been conducted in
compliance with all Environmental Laws, (ii) the real property owned, leased or
operated by the Company (including, without limitation, soil, groundwater or
surface water on, under or adjacent to the properties and buildings thereon)
(the "Affected Property") does not contain any Regulated Substance other than as
permitted under applicable Environmental Laws, (iii) the Company has, and at all
times has had, all permits, licenses and other approvals and authorizations
required under applicable Environmental Laws for the operation of the business
of the Company, (iv) the Company has not received any notice from any
Governmental Authority that the Company or any of its Affiliates may be a
potentially responsible party in connection with any waste disposal site or
facility used, directly or indirectly, by or otherwise related to the Company,
(v) no reports have been filed, or have been required to be filed, by the
Company concerning the release of any Regulated Substance or the violation of
any Environmental Law on or at the properties used in the business of the
Company, (vi) no Regulated Substance has been disposed of, transferred, released
or transported from the Affected Property, other than as permitted under
applicable Environmental Law pursuant to appropriate regulations, permits or
authorizations, (vii) there have been no environmental investigations, studies,
audits, tests, reviews, or other analyses conducted by or which are in the
possession of the
<PAGE>
Company relating to the business of the Company, true and complete copies of
which have not been delivered to Purchaser prior to the date hereof, (viii)
there are no underground storage tanks on, in or under any Affected Property and
no underground storage tanks have been closed or removed from any Affected
Property, (ix) the Company has not presently incurred, and the Affected Property
is not presently subject to, any liabilities (fixed or contingent) relating to
any suit, settlement, judgment or claim asserted or arising under any
Environmental Law, (x) all Environmental Laws in existence at the time the
Affected Property was acquired were complied with, and (xi) there are no civil,
criminal or administrative actions, suits, demands, claims, hearings,
investigations or other proceedings pending or threatened against the Company or
any of its Affiliates with respect to the business of the Company relating to
any violations, or alleged violations, of any Environmental Law, and neither the
Company nor any of its Affiliates has received any notices, demand letters or
requests for information, arising out of, in connection with, or resulting from,
a violation, or alleged violation, of any Environmental Law, and neither the
Company nor any of its Affiliates has been notified by any Governmental
Authority or any other Person that the Company has, or may have, any liability
pursuant to any Environmental Law.
3.16 Employee Matters
Except as set forth on Schedule 3.16, (i) the Company has not entered into
any collective bargaining agreements regarding its employees, (ii) there are no
written personnel policies applicable to such employees generally, other than
employee manuals, true and complete copies of which have previously been
provided to Purchaser, (iii) there is no labor strike, dispute, slowdown or work
stoppage or lockout pending or, to the best knowledge of the Company, threatened
against or affecting the Company and during the past three years there has been
no such action, (iv) to the best knowledge of the Company, no union organization
campaign is in progress with respect to any of the employees, and no question
concerning representation exists respecting such employees, (v) there is no
unfair labor practice, charge or complaint pending or, to the best knowledge of
the Company, threatened against the Company, and (vi) the Company has not
entered into any agreement, arrangement or understanding restricting its ability
to terminate the employment of any or all of its employees at any time, for any
lawful or no reason, without penalty or liability.
3.17 Employee Benefit Plans
Schedule 3.17 lists all bonus, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee ownership, stock bonus, stock
purchase, restricted stock and stock option plans, all employment or severance
contracts, health and medical insurance plans, life insurance and disability
insurance plans, other material employee benefit plans, contracts or
arrangements which cover employees or former employees of the Company including,
but not limited to, "employee benefit plans" within the meaning
<PAGE>
of Section 3(3) of ERISA (the "Employee Benefit Plans"). The Employee Benefit
Plans which are described in Section 3(3) of ERISA (the "ERISA Plans") are in
compliance in all material respects with the applicable provisions of ERISA and,
if intended to be tax qualified, Sections 401(a) and 501(a) of the Code. All
ERISA Plans which are intended to qualify under Section 401(a) of the Code have
been submitted to and approved under Section 401(a) of the Code by the Internal
Revenue Service or, alternatively, the applicable remedial amendment period with
respect to any such ERISA Plan will not have ended prior to the Closing Date. No
liability under Subtitle C or D of Title IV of ERISA has been or is expected to
be incurred by the Company or any of its Affiliates with respect to any ongoing,
frozen or terminated "single-employer plan," within the meaning of Section
4001(a)(15) of ERISA, currently or formerly maintained by any of them, or the
single-employer plan of any entity which is considered one employer with the
Company under Section 4001 of ERISA or Section 414 of the Code (an "ERISA
Affiliate"). Except as set forth on Schedule 3.17, neither the Company nor any
of its Affiliates have incurred or expect to incur any withdrawal liability with
respect to a multi-employer plan under Subtitle E of Title IV of ERISA
(regardless of whether based on contributions of an ERISA Affiliate).
3.18 Proprietary Rights
(a) All of the Company's patents, patent registrations, patent
applications, trademarks, service marks, trademark and service mark
registrations and applications therefor, copyrights, copyright registrations,
copyrights applications, trade names, corporate names, technology, inventions,
computer software, data and documentation (including electronic media), product
drawings, trade secrets, know-how, customer lists, processes, other intellectual
property and proprietary information or rights; and permits, licenses or other
agreements to or from third parties regarding the foregoing (the "Proprietary
Rights") are listed in Schedule 3.18. Except as disclosed therein, the Company,
either jointly or individually, owns and possesses all right, title and interest
in the Proprietary Rights. The Company has taken all necessary or desirable
action to protect the Proprietary Rights and the transactions contemplated by
this Agreement will have no material adverse effect on the Company's right,
title and interest in the Proprietary Rights.
(b) No claim by any third party contesting the validity, enforceability,
use or ownership of any Proprietary Right has been made, is currently pending
or, to the best knowledge of the Company, is threatened. The Company has not
received any notice nor is it aware of any fact which indicates a likelihood of,
any infringement or misappropriation by, or conflict with, any third party with
respect to any of the Proprietary Rights. The Company has not infringed,
misappropriated or otherwise conflicted with any rights of any third parties,
nor is it aware of any infringement, misappropriation or conflict which will
occur as a result of the continued operation of the business of the Company as
now conducted.
<PAGE>
3.19 Accounts Receivable
Schedule 3.19 sets forth a true and complete listing of all accounts
receivable (the "Accounts Receivable") as of [________]. All of the Accounts
Receivable represent commissions receivable from DIRECTV, Inc.
3.20 Contracts
(a) Schedule 3.20 describes all contracts (except for usual and ordinary
purchase orders executed in the normal course of business), agreements, leases,
commitments, instruments, plans, permits or licenses, whether written or oral,
to which the Company is a party or is otherwise bound, of the type described
below (the "Contracts"):
(i) all agreements or commitments for the sale by the Company of
products or services, or the purchase by the Company of raw materials,
products or services, other than those that are for amounts not to exceed
$10,000;
(ii) all agreements or commitments for the purchase by the Company
of machinery, equipment or other personal property other than those that
are for amounts not to exceed $10,000;
(iii) all agreements with DIRECTV, Inc. or its Affiliates;
(iv) all capitalized leases, pledges, conditional sale or title
retention agreements;
(v) all employment agreements and commitments, all consulting or
severance agreements or arrangements and all agreements between the
Company and the Member, any Affiliate of a Member or any other officer,
director or employee of the Company;
(vi) all agreements relating to the consignment or lease of personal
property (whether the Company is lessee, sublessee, lessor or sublessor),
other than such agreements that provide for annual payments of less than
$5,000;
(vii) all license, royalty or other agreements relating to the
Proprietary Rights;
(viii) all agreements prohibiting the Company from freely engaging
in the business presently conducted by the Company in any geographic area;
<PAGE>
(ix) all agreements to provide rebates to customers of the Company,
to the extent not reflected as a liability on the Financial Statements;
and
(x) any agreement other than those covered by clauses (i) through
(viii) above involving payment or receipt of more than $25,000 in the
aggregate.
(b) To the knowledge of the Company, none of the other parties to any such
Contracts intends to terminate or materially alter the material provisions of
such Contracts either as a result of transactions contemplated hereby or
otherwise, except as disclosed in Schedule 3.20.
(c) Except as disclosed in Schedule 3.20, the Company is not in, nor has
given or received notice of, any default or claimed, purported or alleged
default, or facts that, with notice or lapse of time, or both, would constitute
a material default (or give rise to a termination right) on the part of any
party in the performance of any obligation to be performed under any of the
material Contracts.
(d) True and complete copies of all written Contracts, including any
amendments thereto, have been delivered to Purchaser and such documents
constitute the legal, valid and binding obligation of the Company and, to the
best knowledge of the Company, each other party purportedly obligated
thereunder.
3.21 Suppliers
Neither DIRECTV, Inc. nor Hughes Electronics Company, nor any of either's
Affiliates, has notified or otherwise indicated to the Company that it will
stop, or decrease the rate of, or, other than publicly announced generally
applicable price increases, materially increase the cost of, its supply of
materials, products or services used or sold by the Company, and no such company
has, during the current fiscal year, ceased, materially decreased the rate of or
materially raised the cost of, any such materials, products or services.
3.22 Books and Records
The records of the Company fairly and accurately reflect the record
ownership of all of its equity . Since the formation of the Company, the other
books and records of the Company, including financial records and books of
account, are complete and accurate and have been maintained in accordance with
GAAP, to the extent applicable, and sound business practices.
<PAGE>
3.23 Brokers
No Person engaged by the Company is or will be entitled to a broker's,
finder's, investment banker's, financial adviser's or similar fee in connection
with this Agreement or any of the transactions contemplated hereby.
3.24 Business Plan
The Confidential Private Placement Memorandum of the Company attached as
Schedule 3.24 was made in good faith based upon assumptions that the Members
believe are reasonable. To the Members' knowledge, the projections contained in
such Memorandum are reasonable and attainable. The Company is on schedule with
meeting the roll-out of its business. No event has occurred that is reasonably
likely to prevent the Company from successfully completing the Business Plan and
attaining the projections contained therein.
3.26 Full Disclosure
No representation or warranty made by the Company or the Members in this
Agreement, any Schedule, any Exhibit or any certificate delivered by or on
behalf of the Company by the Members pursuant hereto contains or will contain
any untrue statement of a material fact or omits or, to the knowledge of the
Members or the Company, will omit to state a material fact necessary to make the
statements contained herein or therein not misleading.
ARTICLE IV Representations and Warranties Regarding the Members
The Members represent and warrant to the Purchaser as follows:
4.1 Authorization
Each Member has the capacity to execute and deliver this Agreement and to
perform his or her obligations hereunder. No Member is under any impairment or
other disability, legal, physical, mental or otherwise, that would preclude or
limit his or her ability to perform his obligations hereunder. This Agreement
constitutes a binding and valid obligation of each Member, enforceable against
such Member in accordance with its terms.
4.2 Non-contravention
Neither the execution and delivery of this Agreement nor the performance
by the Members of their respective obligations hereunder will (i) violate or
result in a breach (with or without the lapse of time, the giving of notice or
both) of or constitute a default under (A) any contract, agreement, commitment,
indenture, mortgage, lease, pledge, note, license, permit or other instrument or
obligation or (B) any judgment, order, decree, law,
<PAGE>
rule or regulation or other restriction of any Governmental Authority, in each
case to which any Member is a party or by which any Member is bound or to which
any of his or her assets or properties are subject, (ii) result in the creation
or imposition of any Encumbrances on any of the assets or properties of the
Company, or (iii) result in the acceleration of, or permit any Person to
accelerate or declare due and payable prior to its stated maturity, any
obligation of the Company.
4.3 No Consents
No notice to, filing with, or authorization, registration, consent or
approval of any Governmental Authority or other Person is necessary for the
execution, delivery or performance of this Agreement or the consummation of the
transactions contemplated hereby by the Member.
4.4 Ownership of the Company Equity
The Members own 5,000 shares of Company Equity beneficially and of record,
free and clear of any Encumbrances which represents all of the issued and
outstanding equity of the Company, in accordance with the distribution set forth
as Schedule A. There are no voting trust arrangements or other agreements (i)
granting any option, warrant or right of first refusal with respect to the
Company Equity to any Person, (ii) restricting the right of the Members to sell
the Company Equity to Purchaser, (iii) restricting any other right of any Member
with respect to the Company Equity or (iv) creating any penalties, liabilities
or disabilities from a sale of the Company Equity. The Members have the absolute
and unrestricted right, power and capacity to sell, assign and transfer the
Company Equity to Purchaser free and clear of any Encumbrances. Upon delivery to
Purchaser of the certificates representing the Company Equity at Closing in
exchange for the consideration to be paid by Purchaser at the Closing, Purchaser
will acquire good, valid and marketable title to the Company Equity, free and
clear of any Encumbrances.
4.5 Brokers
No Person engaged by any Member is or will be entitled to a broker's,
finder's, investment banker's, financial adviser's or similar fee in connection
with this Agreement or any of the transactions contemplated hereby.
4.6 Investment Intent
(a) The Members are acquiring the Purchaser Common Stock for their own
accounts, with no present intention of reselling or otherwise distributing the
same. The Purchasers understand and agree that they may dispose of the Purchaser
Common Stock to be issued to them hereunder, only in compliance with the Act, as
amended, and applicable state
<PAGE>
securities laws, as then in effect, and that the certificates of Purchaser
Common Stock to be received by them may bear a legend to that effect.
(b) The Members have not entered into any contracts, undertakings,
agreements or arrangements with any person to sell, transfer or pledge to such
person or anyone else the Purchaser Common Stock to be issued to them and have
no present plans or intentions to enter into any such contracts, undertakings,
agreements or arrangements.
(c) Each Member can bear the economic risk of losing his or her entire
investment in the Purchaser Common Stock and is prepared to bear the economic
risk of this investment for an indefinite time.
(d) Each Member is a sophisticated investor and has substantial experience
in making investment decisions of this type and/or is relying on his or her own
advisors in making this investment decision and, therefore, either alone or
together with their advisors, the Members have such knowledge and experience in
financial and business matters that they are capable of evaluating the merits
and risks of an investment in the Purchaser.
(e) The principal business address of each Member, or if the Member is an
individual, his or her principal residence, is in the state indicated in the
address set forth on Schedule A. Unless otherwise indicated, all communications,
contacts and discussions relating to the offering of the Purchaser Common Stock
occurred in the state in which the undersigned maintains its office, or if the
Member is an individual, in the state in which he or she maintains his or her
residence.
4.7 Full Disclosure
No representation or warranty made by any Member in this Agreement, any
Schedule, any Exhibit or any certificate delivered, or to be delivered, by or on
behalf of any Member pursuant hereto contains or will contain any untrue
statement of a material fact or, to the knowledge of the Members, omits or will
omit to state a material fact necessary to make the statements contained herein
or therein not misleading.
ARTICLE V Representations and Warranties Regarding Europe
Europe represents and warrants to the Company and the Members as follows:
5.1 Organization
Europe is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has full power and
authority, corporate and other, to own or lease its property and assets and to
carry on its business as presently conducted.
<PAGE>
5.2 Authorization
Europe has full power and authority, corporate and other, to execute and
deliver this Agreement and to perform its obligations hereunder, all of which
have been duly authorized by all requisite corporate action. This Agreement has
been duly authorized, executed and delivered by Europe and constitutes a valid
and binding agreement of Europe, enforceable against such party in accordance
with its terms.
5.3 Non-contravention
Europe is not subject to any provision of its respective Certificate of
Incorporation or by-laws or any agreement, instrument, law, rule, regulation,
order, decree or judgment of any Governmental Authority or other restriction
that would prevent the consummation of the transactions contemplated by this
Agreement.
5.4 No Consents
No notice to, filing with, or authorization, registration, consent or
approval of any Governmental Authority or other Person is necessary for the
execution, delivery or performance of this Agreement or the consummation of the
transactions contemplated hereby by Europe.
5.5 Capitalization
Europe's authorized capital stock consists solely of 95,000,000 authorized
shares of common stock, of which [_______] shares are issued and outstanding
(excluding the Europe Common Stock to be issued to the Members pursuant to
Section 2.2 and to be issued as described in Section 8.4), and of 5,000,000
authorized shares of preferred stock, of which [_______] shares are issued and
outstanding. Except as disclosed on Schedule 5.5, Europe does not have any
shares of its capital stock reserved for issuance and Europe does not have any
outstanding options, warrants, rights, calls or commitments relating to its
capital stock or any outstanding securities or obligations convertible into or
exchangeable for, or giving any Person any right to subscribe for or acquire
from it, any shares of its capital stock. There are no pre-emptive or other
subscription rights with respect to any shares of the capital stock of Europe.
The shares of Europe Common Stock to be issued to Members pursuant to Section
2.2 will be duly authorized and when issued, will be validly issued, fully paid
and nonassessable and will constitute 19% of the aggregate number of shares of
Europe's common stock issued and outstanding after the issuance of stock
contemplated by Section 8.4.
<PAGE>
5.6 Brokers
No Person engaged by Europe (other than Gleacher & Co. LLC) is or will be
entitled to a broker's, finder's, investment banker's, financial adviser's or
similar fee in connection with this Agreement or any of the transactions
contemplated hereby.
5.7 Financial Statements
Schedule 5.7 sets forth true and complete financial statements of Europe,
as of December 31, 1998 (the "Europe Financial Statement Date"), prepared in
conformity with GAAP, subject to normal audit adjustments.
5.8 Absence of Certain Developments
Since Europe Financial Statement Date, there has not been any Material
Adverse Change, or any development which could reasonably be expected to result
in a prospective Material Adverse Change or a Material Adverse Change in the
prospects of Europe.
5.9 Governmental Authorizations
The business of Europe has been operated in material compliance with all
material applicable laws, rules, regulations, codes, ordinances, orders,
policies and guidelines of all Governmental Authorities, including but not
limited to, those of the SEC and those related to: antitrust, trade regulation
and trade practices. The Company has all material permits, licenses, approvals,
certificates and other authorizations, and has made all notifications,
registrations, certifications and filings with all Governmental Authorities,
necessary or advisable for the operation of its business as currently conducted.
There is no action, case or proceeding pending or, to the best knowledge of
Europe, threatened by any Governmental Authority with respect to (i) any alleged
violation by Europe or its Affiliates of any law, rule, regulation, code,
ordinance, order, policy or guideline of any Governmental Authority, or (ii) any
alleged failure by Europe or its Affiliates to have any permit, license,
approval, certification or other authorization required in connection with the
operation of its business. No notice of any violation of such laws has been
received by Europe or any of its Affiliates.
5.10 Litigation
Except as set forth in Schedule 5.10, there are no lawsuits, actions,
proceedings, claims, arbitrations, orders or investigations by or before any
Governmental Authority pending or, to the best knowledge of Europe, threatened
against Europe or its Affiliates relating to the Company, its business or any
product or service alleged to have been sold by Europe or seeking to enjoin the
transactions contemplated hereby and, there are no facts or circumstances known
to Europe that could result in a claim for damages or
<PAGE>
equitable relief which, if decided adversely, could reasonably be expected to
result in a Material Adverse Change, individually or in the aggregate.
5.11 Undisclosed Liabilities
Other than those reflected in the balance sheet attached as Schedule 5.7,
there are no material liabilities (defined below) of Europe of any kind or
nature whatsoever, whether known or unknown, absolute, accrued, contingent or
otherwise, or whether due or to become due, other than liabilities incurred in
the ordinary course of business and consistent with past practices, and to
Europe's knowledge, there exists no facts or circumstances (other than general
economic conditions) that could reasonably be expected to result in any such
liability. "Material liabilities" means liabilities that in the aggregate exceed
$100,000.
5.12 Full Disclosure
No representation or warranty made by Europe in this Agreement, any
Schedule, any Exhibit or any certificate delivered by or on behalf of Europe
pursuant hereto contains or will contain any untrue statement of a material fact
or, to the knowledge of Europe, omits or will omit to state a material fact
necessary to make the statements contained herein or therein not misleading.
ARTICLE VI Representations and Warranties Regarding Asia
Asia represents and warrants to the Company and the Members as follows:
6.1 Organization
Asia is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has full power and
authority, corporate and other, to own or lease its property and assets and to
carry on its business as presently conducted.
6.2 Authorization
Asia has full power and authority, corporate and other, to execute and
deliver this Agreement and to perform its obligations hereunder, all of which
have been duly authorized by all requisite corporate action. This Agreement has
been duly authorized, executed and delivered by Asia and constitutes a valid and
binding agreement of Asia, enforceable against such party in accordance with its
terms.
6.3 Non-contravention
Asia is not subject to any provision of its respective Certificate of
Incorporation or by-laws or any agreement, instrument, law, rule, regulation,
order, decree or judgment of
<PAGE>
any Governmental Authority or other restriction that would prevent the
consummation of the transactions contemplated by this Agreement.
6.4 No Consents
No notice to, filing with, or authorization, registration, consent or
approval of any Governmental Authority or other Person is necessary for the
execution, delivery or performance of this Agreement or the consummation of the
transactions contemplated hereby by Asia.
6.5 Capitalization
Asia's authorized capital stock consists solely of 95,000,000 authorized
shares of common stock, of which [_______] shares are issued and outstanding
(excluding the Asia Common Stock to be issued to the Members pursuant to Section
2.2 and to be issued as described in Section 8.4), and of 5,000,000 authorized
shares of preferred stock, of which no shares are issued and outstanding. Except
as disclosed on Schedule 6.5, Asia does not have any shares of its capital stock
reserved for issuance and Asia does not have any outstanding options, warrants,
rights, calls or commitments relating to its capital stock or any outstanding
securities or obligations convertible into or exchangeable for, or giving any
Person any right to subscribe for or acquire from it, any shares of its capital
stock. There are no pre-emptive or other subscription rights with respect to any
shares of the capital stock of Asia. The shares of Asia Common Stock to be
issued to Members pursuant to Section 2.2 will be duly authorized and when
issued, will be validly issued, fully paid and nonassessable and will constitute
19% of the aggregate number of shares of Asia's common stock issued and
outstanding after the issuance of stock contemplated by Section 8.4.
6.6 Brokers
No Person engaged by Asia (other than Gleacher & Co. LLC) is or will be
entitled to a broker's, finder's, investment banker's, financial adviser's or
similar fee in connection with this Agreement or any of the transactions
contemplated hereby.
6.7 Financial Statements
Schedule 6.7 sets forth true and complete financial statements of Asia, as
of December 31, 1998 (the "Asia Financial Statement Date"), prepared in
conformity with GAAP, subject to normal audit adjustments.
6.8 Absence of Certain Developments
Since Asia Financial Statement Date, there has not been any Material
Adverse Change, or any development which could reasonably be expected to result
in a
<PAGE>
prospective Material Adverse Change or a Material Adverse Change in the
prospects of the Asia.
6.9 Governmental Authorizations
The business of Asia has been operated in material compliance with all
material applicable laws, rules, regulations, codes, ordinances, orders,
policies and guidelines of all Governmental Authorities, including but not
limited to, those of the Securities and Exchange Commission and those related
to: antitrust, trade regulation and trade practices. The Company has all
material permits, licenses, approvals, certificates and other authorizations,
and has made all notifications, registrations, certifications and filings with
all Governmental Authorities, necessary or advisable for the operation of its
business as currently conducted. There is no action, case or proceeding pending
or, to the best knowledge of Asia, threatened by any Governmental Authority with
respect to (i) any alleged violation by Asia or its Affiliates of any law, rule,
regulation, code, ordinance, order, policy or guideline of any Governmental
Authority, or (ii) any alleged failure by Asia or its Affiliates to have any
permit, license, approval, certification or other authorization required in
connection with the operation of its business. No notice of any violation of
such laws has been received by Asia or any of its Affiliates.
6.10 Litigation
Except as set forth in Schedule 6.10, there are no lawsuits, actions,
proceedings, claims, arbitrations, orders or investigations by or before any
Governmental Authority pending or, to the best knowledge of Asia, threatened
against Asia or its Affiliates relating to the Company, its business or any
product or service alleged to have been sold by Asia or seeking to enjoin the
transactions contemplated hereby and, there are no facts or circumstances known
to Asia that could result in a claim for damages or equitable relief which, if
decided adversely, could reasonably be expected to result in a Material Adverse
Change, individually or in the aggregate.
6.11 Undisclosed Liabilities
Other than those reflected in the balance sheet attached as Schedule 6.7,
there are no material liabilities (defined below) of Asia of any kind or nature
whatsoever, whether known or unknown, absolute, accrued, contingent or
otherwise, or whether due or to become due, other than liabilities incurred in
the ordinary course of business and consistent with past practices, and to
Asia's knowledge, there exists no facts or circumstances (other than general
economic conditions) that could reasonably be expected to result in any such
liability. "Material liabilities" means liabilities that in the aggregate exceed
$100,000.
<PAGE>
6.12 Full Disclosure
No representation or warranty made by Asia in this Agreement, any
Schedule, any Exhibit or any certificate delivered by or on behalf of Asia
pursuant hereto contains or will contain any untrue statement of a material fact
or, to the knowledge of Asia, omits or will omit to state a material fact
necessary to make the statements contained herein or therein not misleading.
ARTICLE VII Covenants and Agreements
7.1 Access and Information
(a) No investigation by Purchasers or their Affiliates heretofore or
hereafter made shall modify or otherwise affect any representations and
warranties of the Company or the Members, which shall survive any such
investigation, or the conditions to the respective obligations of Purchasers to
consummate the transactions contemplated hereby.
(b) No investigation by the Members, the Company or its Affiliates
heretofore or hereafter made shall modify or otherwise affect any
representations and warranties of Purchasers, which shall survive any such
investigation, or the conditions to the respective obligations of the Company or
the Members to consummate the transactions contemplated hereby.
7.2 Transfer and Other Taxes
(a) The Members represent that there are no stamp, stock transfer, sales,
purchase, use or similar tax under the laws of any Governmental Authority
arising out of or resulting from the purchase of the Company Equity.
(b) Purchasers represent that there are no stamp, stock transfer, sales,
purchase, use or similar tax under the laws of any Governmental Authority
arising out of or resulting from the issuance of Purchaser Common Stock to the
Members.
(c) Each party hereto shall (i) prepare and file all income and other tax
returns reporting income or other taxes due through the Closing Date, (ii) be
responsible for the conduct of all tax examinations relating to its, his of her
respective tax returns referred to in (i) above, and (iii) pay all taxes owing
with respect to his or her respective tax returns referred to in (i) above. The
Members shall also be responsible for filing any income tax returns and paying
any income taxes for the Company for any fiscal year or reporting period which
ends on or before the Closing Date. Purchaser will provide the Members and their
accountants with reasonable access to books and records necessary for the
preparation of such returns.
<PAGE>
7.3 Repayment of Indebtedness
Concurrently with the Closing, $3,000,000 in cash will be contributed to
the capital of the Company by Purchasers depositing such funds into the
Company's general account at Wells Fargo Bank, N.A. Upon receipt of such funds,
the Company will pay in full the indebtedness of the Company set forth on
Schedule 7.3, [this schedule will include the $250,000 loan recently made to
DBS] including all outstanding principal, accrued interest and prepayment
charges, if any. The balance of such funds shall be available to the Company for
capital expenditures and working capital.
7.4 Best Efforts; Further Assurances
Subject to the terms and conditions herein provided, each of the parties
hereto shall use its best efforts to take, or cause to be taken, all action, and
to do, or cause to be done, all things reasonably necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement. Each of the Company, the Members,
and Purchasers shall use their respective best efforts to obtain consents of all
Governmental Authorities and third parties necessary to the consummation of the
transactions contemplated by this Agreement. In the event that at any time after
Closing any further action is necessary to carry out the purposes of this
Agreement, each of the Company, each Member, and Purchasers shall take all such
action as may be required without any further consideration therefor.
7.5 Reports Under the Act
With a view to making available to the Members the benefits of SEC Rule
144 promulgated under the Act and any other rule or regulation of the SEC that
may at any time permit the Members to sell the Purchaser Common Stock to the
public without registration or pursuant to a registration on Form S-3,
Purchasers agrees to:
(a) Make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times;
(b) File with the SEC in a timely manner all reports and other documents
required of Purchasers under the Act and the 1934 Act; and
(c) Furnish to the Members, so long as the Members own any Purchaser
Common Stock, forthwith upon request (i) a written statement by Purchasers that
they have complied with the reporting requirements of SEC Rule 144, the Act and
the 1934 Act, or that it qualifies as a registrant whose securities may be
resold pursuant to Form S-3 (at any time it so qualifies), (ii) a copy of the
most recent annual or quarterly report of Purchasers and such other reports and
documents so filed by Purchasers, and (iii) such other information as may be
reasonably requested in availing the Members of any rule or
<PAGE>
regulation of the SEC that permits the selling of any such securities without
registration or pursuant to such form.
7.6 Management
(a) Purchasers agree that the Company will be operated as a subsidiary of
Purchasers. Purchasers agree that they will promptly cause William D. Marks to
be elected the president of the Company for a period of not less than three
years from the date of this Agreement. This provision shall not be construed and
an employment agreement that binds William D. Marks.
(b) Purchasers agree that they will promptly cause William D. Marks to be
elected as a member of the board of directors of each Purchaser for a term that
will expire as of the date of the next regularly scheduled meeting of the
shareholders of each Purchaser. Each Purchase also agrees to nominate William D.
Marks for a position on its board of directors at such meeting of its
shareholders.
7.7 No Issuance of Additional Equity Interests
Between the date of this Agreement and the Closing Date, the Company shall
not issue any additional equity interests.
7.8 Audit of Company
The Company and the Members agree to cooperate in order to allow an audit
of the Company's financial statements to be completed within 45 days of the
Closing Date.
<PAGE>
ARTICLE VIII Closing Deliveries
8.1 Mutual Condition
The respective obligations of each party to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment at or prior
to Closing of the condition that no Governmental Authority of competent
jurisdiction shall have (i) enacted, issued, promulgated, enforced or entered
any statute, rule, regulation, judgment, decree, injunction or other order which
is in effect; or (ii) commenced or threatened any action or proceeding, which in
either case would prohibit consummation of the transactions contemplated by this
Agreement. Any conditions not satisfied at or prior to Closing shall constitute
a covenant of the party that was to have satisfied the condition.
8.2 Deliveries by the Company and the Members
The obligations of Purchasers to consummate the transactions contemplated
by this Agreement shall be subject to the fulfillment prior to or at Closing of
each of the following conditions:
(a) (i) All authorizations, consents, waivers, approvals or other actions
required in connection with the execution, delivery and performance of this
Agreement by the Company and the Members and the consummation by the Company and
the Members of the transactions contemplated hereby, including without
limitation those of DIRECTV, Inc. necessary or appropriate to approve the
transactions contemplated hereby or as the Purchaser shall reasonably request,
shall have been obtained and shall be in full force and effect; (ii) the Company
and the Members shall have obtained any authorizations, consents, waivers,
approvals or other actions required to prevent a material breach or default by
the Company under any contract to which such Company is party or for the
continuation of any agreement to which such Company is a party; and (iii) all
authorizations, consents, waivers, approvals or other actions necessary to
permit Purchaser to own the Company Equity shall have been obtained and shall be
in full force and effect. By Closing, the Members shall be deemed to have
represented and warranted that such conditions have been fulfilled.
(b) Concurrently with the Closing, (i) the Members shall have delivered to
the Company, as applicable, for cancellation the certificates representing the
Company Equity, (ii) the Company shall have canceled such certificates, and
(iii) the Company shall have issued to Purchaser new certificates representing
the Company Equity registered in the name of Purchaser or as otherwise directed
by it.
(c) Prior to or at the Closing, the Members and the Company shall have
delivered such other closing documents as shall be requested by Purchaser in
form and substance reasonably acceptable to counsel for Purchaser, including the
following:
<PAGE>
(i) a certificate of the Members, dated the Closing Date, as to the
incumbency of any officer of the Company executing this Agreement or any
document related thereto and covering such other matters as Purchaser may
reasonably request;
(ii) a certified copy of (1) the Certificate of Formation, Articles
of Incorporation, Operating Agreement and By-laws of the Company and all
amendments thereto, and (2) the resolutions of the Members authorizing the
execution, delivery and consummation of this Agreement and the
transactions contemplated hereby;
(iii) such other documents or instruments as Purchaser reasonably
requests to effect the transactions contemplated hereby.
(d) Concurrently with the Closing, William D. Marks shall have executed
and delivered an employment agreement for a term of not less than three years in
a form acceptable to William D. Marks and Purchasers.
8.3 Deliveries by Purchasers
The obligations of the Members to consummate the transactions contemplated
by this Agreement shall be subject to the fulfillment at or prior to the Closing
of each of the following conditions:
(a) Prior to or at the Closing, Purchasers shall have delivered to the
Members such closing documents as shall be reasonably requested by the Members
in form and substance reasonably acceptable to its counsel, including the
following:
(i) a certificate of the Secretary or Assistant Secretary of
Purchaser, dated the Closing Date, as to the incumbency of any officer
thereof executing this Agreement or any document related thereto and
covering such other matters as the Members may reasonably request;
(ii) a certified copy of the resolutions of the Board of Directors
of Purchaser authorizing the execution, delivery and consummation of this
Agreement and the transactions contemplated hereby and thereby;
(iii) certificates representing shares of Europe Common Stock and
Asia Common Stock as set forth in Section 2.2; and
(iv) such other documents or instruments as the Members reasonably
request to effect the transactions contemplated hereby.
<PAGE>
8.4 Issuance of Equity
The obligations of the Members to consummate the transactions contemplated
by this Agreement shall be subject to Purchasers providing the Members with
evidence that Purchasers have received within the 30-day period preceding the
Closing Date or will receive concurrently with the Closing, as proceeds of the
issuance of its common stock, cash in the amount of $6,000,000.
ARTICLE IX Survival of Representations and Warranties; Indemnification
9.1 Survival of Representations and Warranties
Except as set forth below, the representations and warranties provided for
in this Agreement shall survive the Closing for one year from the Closing Date
for the benefit of the parties hereto and their successors and assigns.
9.2 Indemnification
(a) The Members, jointly and severally (except in the case of
representations and warranties made only on a several basis), shall indemnify
and hold harmless Purchaser, its Affiliates, officers, directors, employees,
agents and representatives, and any Person claiming by or through any of them,
against and in respect of any and all claims, costs, expenses, damages,
liabilities, losses or deficiencies (including, without limitation, counsel's
fees and other costs and expenses incident to any suit, action or proceeding)
(the "Damages") arising out of, resulting from or incurred in connection with
(i) any material inaccuracy in any representation or the breach of any warranty
made by a Member or the Company in this Agreement, or (ii) the material breach
by a Member or the Company of any covenant or agreement to be performed by him
or it hereunder or (iii) any material tax or other material liabilities of the
Company for periods prior to the Closing Date which were not accrued for on the
Financial Statements or otherwise disclosed to Purchaser.
(b) Each Purchaser shall indemnify and hold harmless Members, their
respective Affiliates, agents and representatives, and any Person claiming by or
through any of the foregoing, against and in respect of any and all Damages
arising out of, resulting from or incurred in connection with (i) any material
inaccuracy in any representation or the breach of any warranty made by such
Purchaser in this Agreement or (ii) the material breach by such Purchaser of any
covenant or agreement to be performed by it hereunder.
(c) Any Person providing indemnification pursuant to the provisions of
this Section 9.2 is hereinafter referred to as an "Indemnifying Party" and any
Person entitled to be indemnified pursuant to the provisions of this Section 9.2
is hereinafter referred to as an "Indemnified Party."
<PAGE>
9.3 Procedures for Third Party Claims
In the case of any claim for indemnification arising from a claim of a
third party (a "Third Party Claim"), an Indemnified Party shall give prompt
written notice to the Indemnifying Party of any claim or demand which such
Indemnified Party has knowledge and as to which it may request indemnification
hereunder. The Indemnifying Party shall have the right to defend and to direct
the defense against any such Third Party Claim, in its name or in the name of
the Indemnified Party, as the case may be, at the expense of the Indemnifying
Party, and with counsel selected by the Indemnifying Party unless (i) such Third
Party Claim seeks an order, injunction or other equitable relief against the
Indemnified Party (in which case the Indemnified Party may defend against such
injunctive or equitable relief without affecting its claim for indemnification
hereunder), or (ii) the Indemnified Party shall have reasonably concluded that
the Indemnified Party has one or more defenses not available to the Indemnifying
Party (in which case the Indemnified Party shall nonetheless permit the
Indemnifying Party to have meaningful participation in the litigation).
Notwithstanding anything in this Agreement to the contrary, the Indemnified
Party shall, at the expense of the Indemnifying Party, cooperate with the
Indemnifying Party, and keep the Indemnifying Party fully informed, in the
defense of such Third Party Claim. The Indemnified Party shall have the right to
participate in the defense of any Third Party Claim with counsel employed at its
own expense; provided, however, that, in the case of any Third Party Claim
described in clause (i) or (ii) of the second preceding sentence or as to which
the Indemnifying Party shall not in fact have employed counsel to assume the
defense of such Third Party Claim, the reasonable fees and disbursements of such
counsel shall be at the expense of the Indemnifying Party. The Indemnifying
Party shall have no indemnification obligations with respect to any Third Party
Claim which shall be settled by the Indemnified Party without the prior written
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld or delayed.
9.4 Procedures for Inter-Party Claims
In the event that an Indemnified Party determines that it has a claim for
Damages against an Indemnifying Party hereunder (other than as a result of a
Third Party Claim), the Indemnified Party shall give prompt written notice
thereof to the Indemnifying Party, specifying the amount of such claim and any
relevant facts and circumstances relating thereto. The Indemnified Party shall
provide the Indemnifying Party with reasonable access to its books and records
for the purpose of allowing the Indemnifying Party a reasonable opportunity to
verify any such claim for Damages. The Indemnified Party and the Indemnifying
Party shall negotiate in good faith regarding the resolution of any disputed
claims for Damages. Promptly following the final determination of the amount of
any Damages claimed by the Indemnified Party, the Indemnifying Party shall pay
such Damages to the Indemnified Party by wire transfer or check made payable to
the order of the Indemnified Party, without interest. In the event that the
Indemnified Party is
<PAGE>
required to institute legal proceedings in order to recover Damages hereunder,
the cost of such proceedings (including costs of investigation and reasonable
attorneys' fees and disbursements) shall be added to the amount of Damages
payable to the Indemnified Party.
ARTICLE X Miscellaneous
10.1 Notices
All notices or other communications required or permitted hereunder shall
be in writing and shall be delivered personally, by facsimile or sent by
certified, registered or express air mail, postage prepaid, and shall be deemed
given when so delivered personally, or by facsimile, or if mailed, five days
after the date of mailing, as follows:
If to the Europe: _______________________________
_______________________________
_______________________________
Telephone:_____________________
Facsimile:_____________________
Attention:_____________________
With a copy to: _______________________________
_______________________________
_______________________________
Telephone:_____________________
Facsimile:_____________________
Attention:_____________________
If to the Asia: _______________________________
_______________________________
_______________________________
Telephone:_____________________
Facsimile:_____________________
Attention:_____________________
<PAGE>
With a copy to: _______________________________
_______________________________
_______________________________
Telephone:_____________________
Facsimile:_____________________
Attention:_____________________
If to the Members: to the addresses set forth on Schedule A
With a copy to: Perkins Coie, LLP
1201 Third Avenue, 40th Floor
Seattle, Washington 98101
Telephone: (206) 583-8401
Facsimile: (206) 583-8500
Attention: James Gradel
or to such other address as any party hereto shall notify the other parties
hereto (as provided above) from time to time.
10.2 Expenses
Regardless of whether the transactions provided for in this Agreement are
consummated, each party hereto shall pay its own expenses incident to this
Agreement and the transactions contemplated herein.
10.3 Governing Law; Consent to Jurisdiction
This Agreement shall be governed by, and construed in accordance with, the
internal laws of the State of New York, without reference to the choice of law
principles thereof. Each of the parties hereto irrevocably submits to the
non-exclusive jurisdiction of the courts of the State of New York and the United
States District Court for the District of New York for the purpose of any suit,
action, proceeding or judgment relating to or arising out of this Agreement and
the transactions contemplated hereby. Service of process in connection with any
such suit, action or proceeding may be served on each party hereto anywhere in
the world by the same methods as are specified for the giving of notices under
this Agreement. Each of the parties hereto irrevocably consents to the
jurisdiction of any such court in any such suit, action or proceeding and to the
laying of venue in such court. Each party hereto irrevocably waives any
objection to the laying of venue of any such suit, action or proceeding brought
in such courts and irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum.
<PAGE>
10.4 Assignment; Successors and Assigns; No Third Party Rights
Except as otherwise provided herein, this Agreement may not be assigned by
operation of law or otherwise, and any attempted assignment shall be null and
void. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, successors, assigns and legal
representatives. This Agreement shall be for the sole benefit of the parties to
this Agreement and their respective heirs, successors, assigns and legal
representatives and is not intended, nor shall be construed, to give any Person,
other than the parties hereto and their respective heirs, successors, assigns
and legal representatives, any legal or equitable right, remedy or claim
hereunder.
10.5 Counterparts
This Agreement may be executed in counterparts, each of which shall be
deemed an original agreement, but all of which together shall constitute one and
the same instrument.
10.6 Titles and Headings; Schedules
The headings and table of contents in this Agreement are for reference
purposes only, and shall not in any way affect the meaning or interpretation of
this Agreement.
10.7 Entire Agreement
This Agreement, including the Schedules and Exhibits attached thereto,
constitutes the entire agreement among the parties with respect to the matters
covered hereby and supersedes all previous written, oral or implied
understandings among them with respect to such matters.
10.8 Amendment and Modification
This Agreement may only be amended or modified in writing signed by the
party against whom enforcement of such amendment or modification is sought.
10.9 Public Announcement
The Company and the Members, on the one hand, and Purchaser, on the other
hand, shall not issue any press release or otherwise publicly disclose this
Agreement or the transactions contemplated hereby or any dealings between or
among the parties in connection with the subject matter hereof without the prior
approval of the other. In the event that any such press release or other public
disclosure shall be required, the party required to issue such release or other
disclosure shall consult in good faith with the other party hereto with respect
to the form and substance of such release or other disclosure prior to the
public dissemination thereof.
<PAGE>
10.10 Waiver
Any of the terms or conditions of this Agreement may be waived at any time
by the party or parties entitled to the benefit thereof, but only by a writing
signed by the party or parties waiving such terms or conditions.
10.11 Severability
The invalidity of any portion hereof shall not affect the validity, force
or effect of the remaining portions hereof. If it is ever held that any
restriction hereunder is too broad to permit enforcement of such restriction to
its fullest extent, such restriction shall be enforced to the maximum extent
permitted by law.
10.12 No Strict Construction
Each of the parties to this Agreement acknowledge that this Agreement has
been prepared jointly by the parties hereto, and shall not be strictly construed
against any party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
COMPANY:
DSS DIRECT CONNECT, L.L.C.
By: /s/ William D. Marks
----------------------------------
Name: William D. Marks
Title: President, CEO and
Managing Member
MEMBERS:
/s/ William D. Marks
-------------------------------------
William D. Marks
/s/ Donna M. Marks
-------------------------------------
Donna M. Marks
<PAGE>
/s/ Kevin R. Drewyer
-------------------------------------
Kevin R. Drewyer
DIRECT INVESTORS, INC.
By: /s/ Kevin R. Drewyer
---------------------------------
Name: Kevin R. Drewyer
Title: President
PURCHASERS:
TRANSMEDIA EUROPE, INC.
By: /s/ Authorized Officer
----------------------------------
Name:
-----------------------------
Title:
----------------------------
TRANSMEDIA ASIA PACIFIC, INC.
By: /s/ Authorized Officer
----------------------------------
Name:
-----------------------------
Title:
----------------------------
<PAGE>
SCHEDULE A
NUMBER OF SHARES
NUMBER OF SHARES OF PURCHASER TO BE
NAME ADDRESS OF COMPANY RECEIVED
William D. Marks 2,425
Donna M. Marks 2,025
Kevin R. Drewyer 50
DIRECT Investors,
Inc. 500
<PAGE>
FIRST AMENDMENT TO
EQUITY PURCHASE AGREEMENT
This FIRST AMENDMENT TO EQUITY PURCHASE AGREEMENT (this "Amendment"),
dated June 11, 1999, is made and entered into by and among DSS Direct Connect,
L.L.C., d/b/a DBS Direct, a Washington limited liability company (the
"Company"), the persons listed on Schedule A hereto (each a "Member" and
collectively the "Members"), Transmedia Europe, Inc., a Delaware corporation
("Europe") and Transmedia Asia Pacific, Inc., a Delaware corporation ("Asia").
Europe and Asia are hereinafter collectively as "Purchasers" and individually as
a "Purchaser."
R E C I T A L S
WHEREAS, the Members, the Company and Purchasers entered into that certain
Equity Purchase Agreement dated as of May 10, 1999 (the "Agreement"), pursuant
to which the Members agreed to sell and transfer to Purchasers, and Purchasers
agreed to purchase from the Members, all of the outstanding equity of the
Company; and
WHEREAS, the parties to the Agreement wish to amend the Agreement upon the
terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and intending to be legally bound, the parties hereto agree as follows:
ARTICLE I Definitions
As used herein capitalized terms shall have the meanings ascribed to them
in the Agreement.
ARTICLE II Purchase and Sale of Equity
2.1 Purchase Price
Sections 2.2(a) and (b) of the Agreement are hereby deleted in their
entirety and replaced with the following:
(a) The aggregate purchase price to be paid by Europe for the
portion of the Company Equity to be purchased by Europe shall be 4,831,057
of the common stock of Europe ("Europe Common Stock"). The Europe Common
Stock shall be allocated among the Members as set forth on Schedule A.
(b) The aggregate purchase price to be paid by Asia for the portion
of the Company Equity to be purchased by Asia shall be 4,589,732
<PAGE>
shares of the common stock of Asia ("Asia Common Stock"). The Asia Common
Stock shall be allocated among the Members as set forth on Schedule A.
2.2 Closing
Section 2.3 of the Agreement is hereby deleted in its entirety and
replaced with the following:
The closing of the transactions contemplated hereby (the "Closing")
shall take place at the offices of Perkins Coie LLP, at 10:00 A.M. PDT on
June 11, 1999, or by facsimile on such date with original documents to
follow; provided that, if the conditions set forth in Article VIII have
not been either satisfied or waived by such date, then the Closing shall
occur within five Business Days of the satisfaction or waiver of such
conditions or at such other time and place as is mutually agreed by the
parties hereto. In the event that the Closing does not occur on or before
June 18, 1999, any party to this Agreement may terminate this Agreement by
giving written notice to the other parties. The time and date of the
Closing is herein called the "Closing Date".
2.3 Adjustment to Purchase Price
It is contemplated by the parties that Purchasers will merge with each
other subsequent to the Closing. Purchasers hereby agree that in the event such
merger is consummated and in the event that the aggregate number of shares of
common stock of the surviving entity resulting from the ownership of the Europe
Common Stock and the Asia Common Stock would be less than 19% of the aggregate
issued and outstanding common stock of the surviving entity as of the effective
date of the merger (inclusive of the 4,000,000 shares of the common stock of
Purchasers to be issued as described in Article V of this Amendment, but
exclusive of the Europe Common Stock and the Asia Common Stock), Purchasers
shall cause to be issued to the owners of the Europe Common Stock and the Asia
Common Stock (allocated among such owners based upon their respective, aggregate
percentage ownership of the Europe Common Stock and the Asia Common Stock as of
such date) the number of additional shares of the surviving entity such that the
aggregate number of shares of common stock of the surviving entity resulting
from the ownership of the Europe Common Stock and the Asia Common Stock would
equal 19% of the aggregate issued and outstanding common stock of the surviving
entity as of the effective date of the merger (inclusive of the 4,000,000 shares
of the common stock of Purchasers to be issued as described in Article V of this
Amendment, but exclusive of the Europe Common Stock and the Asia Common Stock).
<PAGE>
ARTICLE III Representations and Warranties
3.1 Representations and Warranties Regarding the Company
Section 3.19 of the Agreement is hereby deleted in its entirety and
replaced with the following:
Schedule 3.19 sets forth a true and complete listing of all accounts
receivable (the "Accounts Receivable") as of April 14, 1999. All of the
Accounts Receivable represent commissions receivable from DIRECTV, Inc.
3.2 Representations and Warranties Regarding Europe
Section 5.5 of the Agreement is hereby deleted in its entirety and
replaced with the following:
Europe's authorized and issued capital stock (as well as outstanding
warrants and options for the issuance of capital stock) as of June 9,
1999, are as set forth on Schedule 5.5, including 2,000,000 shares of the
common stock of Europe to be issued on or before June 22, 1999, in
exchange for $3,000,000 in cash to Europe and Asia as described in Section
8.4. Except as disclosed on Schedule 5.5, Europe does not have any shares
of its capital stock reserved for issuance and Europe does not have any
outstanding options, warrants, rights, calls or commitments relating to
its capital stock or any outstanding securities or obligations convertible
into or exchangeable for, or giving any Person any right to subscribe for
or acquire from it, any shares of its capital stock. There are no
pre-emptive or other subscription rights with respect to any shares of the
capital stock of Europe. The shares of Europe Common Stock to be issued to
Members pursuant to Section 2.2 will be duly authorized and when issued,
will be validly issued, fully paid and nonassessable.
3.3 Representations and Warranties Regarding Asia
Section 6.5 of the Agreement is hereby deleted in its entirety and
replaced with the following:
Asia's authorized and issued capital stock (as well as outstanding
warrants and options for the issuance of capital stock) as of June 9,
1999, are as set forth on Schedule 6.5, including 2,000,000 of the common
stock of Asia to be issued on or before June 22, 1999, in exchange for
$3,000,000 in cash to Europe and Asia as described in Section 8.4. Except
as disclosed on Schedule 6.5, Asia does not have any shares of its capital
stock reserved
<PAGE>
for issuance and Asia does not have any outstanding options, warrants,
rights, calls or commitments relating to its capital stock or any
outstanding securities or obligations convertible into or exchangeable
for, or giving any Person any right to subscribe for or acquire from it,
any shares of its capital stock. There are no pre-emptive or other
subscription rights with respect to any shares of the capital stock of
Asia. The shares of Asia Common Stock to be issued to Members pursuant to
Section 2.2 will be duly authorized and when issued, will be validly
issued, fully paid and nonassessable.
ARTICLE IV Repayment of Indebtedness
Section 7.3 of the Agreement is hereby deleted in its entirety and
replaced with the following:
On June 8, 1999, $250,000 in cash was contributed to the capital of
the Company by Purchaser's deposit of such cash into the Company's general
account at Wells Fargo Bank, N.A. Concurrently with the Closing,
$1,000,000 in cash will be contributed to the capital of the Company by
Purchasers depositing such funds into the Company's general account at
Wells Fargo Bank, N.A. To the extent such cash is not used by the Company
for ordinary and necessary costs of operation, such cash will be used by
the Company to reduce the indebtedness of the Company set forth on
Schedule 7.3. Out of the next $2,000,000 of equity raised by Purchasers,
$1,750,000 in cash will be contributed by Purchasers to the capital of the
Company by Purchasers depositing such funds into the Company's general
account at Wells Fargo Bank, N.A. Upon receipt of such funds from
Purchasers, the Company will pay in full the unpaid balance of the
indebtedness of the Company set forth on Schedule 7.3, including all
outstanding principal, accrued interest and prepayment charges, if any.
The balance of such funds shall be available to the Company for capital
expenditures and working capital.
ARTICLE V Issuance of Equity
Section 8.4 of the Agreement is hereby deleted in its entirety and
replaced with the following:
Purchasers hereby represent and warrant that Purchasers have
received cash in the aggregate amount of $3,000,000 as proceeds of the
issuance of their common stock during the 30-day period ending on June 8,
1999. Purchasers covenant and agree that during the period commencing June
10, 1999, and ending June 22, 1999, Purchasers shall receive, as proceeds
of the issuance of 2,000,000 shares each of their common stock, additional
cash in the aggregate amount of $3,000,000.
<PAGE>
ARTICLE VI Miscellaneous
6.1 Notices
Section 10.1 of the Agreement is deleted in its entirety and replaced with
the following:
All notices or other communications required or permitted hereunder
shall be in writing and shall be delivered personally, by facsimile or
sent by certified, registered or express air mail, postage prepaid, and
shall be deemed given when so delivered personally, or by facsimile, or if
mailed, five days after the date of mailing, as follows:
If to the Europe: Transmedia Europe, Inc.
11 St. James's Square
London, SW1Y 4LB England
Telephone: (44) 171930 0706
Facsimile: (44) 171 839 5727
Attention: Paul Harrison
If to the Asia: Transmedia Europe, Inc.
11 St. James's Square
London, SW1Y 4LB England
Telephone: (44) 171930 0706
Facsimile: (44) 171 839 5727
Attention: Paul Harrison
[The remainder of this page intentionally left blank]
<PAGE>
If to the Members: to the addresses set forth on Schedule A
With a copy to: Perkins Coie, LLP
1201 Third Avenue, 40th Floor
Seattle, Washington 98101
Telephone: (206) 583-8401
Facsimile: (206) 583-8500
Attention: James Gradel
or to such other address as any party hereto shall notify the other
parties hereto (as provided above) from time to time.
6.2 Amendment
The Agreement is amended as set forth herein, and Schedules 5.5, 6.5 and
7.3 attached to this Amendment shall replace Schedules 5.5, 6.5 and 7.3 attached
to the Agreement. Except as specifically provided in this Amendment, all of the
terms, covenants and conditions of the Agreement shall remain in full force and
effect.
6.3 Negotiation and Construction
This Amendment and each of its terms and provisions are deemed to have
been explicitly negotiated among the parties, and the language in all parts of
this Amendment will, in all cases, be construed according to its fair meaning
and not strictly for or against any party.
6.4 Counterparts
This Amendment may be executed in several counterparts, each of which
shall be deemed an original, but all of which shall constitute one and the same
document.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
COMPANY:
DSS DIRECT CONNECT, L.L.C.
By: /s/ William D. Marks
----------------------------------
Name: William D. Marks
Title: President, CEO and
Managing Member
<PAGE>
MEMBERS:
/s/ William D. Marks
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William D. Marks
/s/ Donna M. Marks
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Donna M. Marks
/s/ Kevin R. Drewyer
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Kevin R. Drewyer
DIRECT INVESTORS, INC.
By: /s/ Kevin R. Drewyer
----------------------------------
Name: Kevin R. Drewyer
Title: President
PURCHASERS:
TRANSMEDIA EUROPE, INC.
By: /s/ Authorized Officer
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Name:
-----------------------------
Title:
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TRANSMEDIA ASIA PACIFIC, INC.
By: /s/ Authorized Officer
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Name:
-----------------------------
Title:
----------------------------
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SCHEDULE A
William D. Marks
Donna M. Marks
Kevin R. Drewyer
DIRECT Investors,
Inc.
