sec document
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
(Amendment No. )1
New Century Equity Holdings Corp.
---------------------------------
(Name of Issuer)
Common Stock, $.01 Par Value
----------------------------
(Title of Class of Securities)
64353J107
---------
(CUSIP Number)
Steven J. Pully
Newcastle Capital Management, L.P.
300 Crescent Court, Suite 1110
Dallas, Texas 75201
(214) 661-7474
--------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
June 18, 2004
-------------
(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box / /.
Note. Schedules filed in paper format shall include a signed
original and five copies of the schedule, including all exhibits. See Rule 13d-7
for other parties to whom copies are to be sent.
(Continued on following pages)
(Page 1 of 36 Pages)
--------
1 The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall
not be deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
------------------- -----------------------
CUSIP 64353J107 13D Page 2 of 36 Pages
------------------- -----------------------
================================================================================
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
NEWCASTLE PARTNERS, L.P.
--------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
--------------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
--------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
--------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
TEXAS
--------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 19,380,768**
OWNED BY
EACH
REPORTING
PERSON WITH -----------------------------------------------------------------
8 SHARED VOTING POWER
- 0 -
-----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
19,380,768**
-----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
- 0 -
--------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
19,380,768**
--------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* / /
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
36%
--------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
** Consists of (a) 150,000 shares of Common Stock held by Newcastle Partners,
L.P. and (b) 19,230,768 shares of Common Stock issuable upon conversion of
Series A 4% Convertible Preferred Stock held by Newcastle Partners, L.P. that
are convertible at any time after June 18, 2005. Newcastle Partners, L.P. has
the power to vote the 19,230,768 shares underlying the Series A 4% Convertible
Preferred Stock on all matters on which holders of Common Stock of the Issuer
are entitled to vote.
------------------- -----------------------
CUSIP 64353J107 13D Page 3 of 36 Pages
------------------- -----------------------
================================================================================
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
NEWCASTLE CAPITAL MANAGEMENT, L.P.
--------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
--------------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
--------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
--------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
TEXAS
--------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 19,380,768**
OWNED BY
EACH
REPORTING
PERSON WITH -----------------------------------------------------------------
8 SHARED VOTING POWER
- 0 -
-----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
19,380,768**
-----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
- 0 -
--------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
19,380,768**
--------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* / /
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
36%
--------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
** Consists of (a) 150,000 shares of Common Stock held by Newcastle Partners,
L.P. and (b) 19,230,768 shares of Common Stock issuable upon conversion of
Series A 4% Convertible Preferred Stock held by Newcastle Partners, L.P. that
are convertible at any time after June 18, 2005. Newcastle Partners, L.P. has
the power to vote the 19,230,768 shares underlying the Series A 4% Convertible
Preferred Stock on all matters on which holders of Common Stock of the Issuer
are entitled to vote.
------------------- -----------------------
CUSIP 64353J107 13D Page 4 of 36 Pages
------------------- -----------------------
================================================================================
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
NEWCASTLE CAPITAL GROUP, L.L.C.
--------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
--------------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
--------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
--------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
TEXAS
--------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 19,380,768**
OWNED BY
EACH
REPORTING
PERSON WITH -----------------------------------------------------------------
8 SHARED VOTING POWER
- 0 -
-----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
19,380,768**
-----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
- 0 -
--------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
19,380,768**
--------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* / /
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
36%
--------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
OO
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
** Consists of (a) 150,000 shares of Common Stock held by Newcastle Partners,
L.P. and (b) 19,230,768 shares of Common Stock issuable upon conversion of
Series A 4% Convertible Preferred Stock held by Newcastle Partners, L.P. that
are convertible at any time after June 18, 2005. Newcastle Partners, L.P. has
the power to vote the 19,230,768 shares underlying the Series A 4% Convertible
Preferred Stock on all matters on which holders of Common Stock of the Issuer
are entitled to vote.
------------------- -----------------------
CUSIP 64353J107 13D Page 5 of 36 Pages
------------------- -----------------------
================================================================================
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
MARK E. SCHWARZ
--------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
--------------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
--------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
--------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
--------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 19,380,768**
OWNED BY
EACH
REPORTING
PERSON WITH -----------------------------------------------------------------
8 SHARED VOTING POWER
- 0 -
-----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
19,380,768**
-----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
- 0 -
--------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
19,380,768**
--------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* / /
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
36%
--------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
** Consists of (a) 150,000 shares of Common Stock held by Newcastle Partners,
L.P. and (b) 19,230,768 shares of Common Stock issuable upon conversion of
Series A 4% Convertible Preferred Stock held by Newcastle Partners, L.P. that
are convertible at any time after June 18, 2005. Newcastle Partners, L.P. has
the power to vote the 19,230,768 shares underlying the Series A 4% Convertible
Preferred Stock on all matters on which holders of Common Stock of the Issuer
are entitled to vote.
------------------- -----------------------
CUSIP 64353J107 13D Page 6 of 36 Pages
------------------- -----------------------
================================================================================
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
STEVEN J. PULLY
--------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
--------------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
--------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
--------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
--------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY - 0 -
OWNED BY
EACH
REPORTING
PERSON WITH -----------------------------------------------------------------
8 SHARED VOTING POWER
- 0 -
-----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
- 0 -
-----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
- 0 -
--------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
-0-
--------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* / /
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0%
--------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
------------------- -----------------------
CUSIP 64353J107 13D Page 7 of 36 Pages
------------------- -----------------------
================================================================================
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
JOHN P. MURRAY
--------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
--------------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
--------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
--------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
--------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY - 0 -
OWNED BY
EACH
REPORTING
PERSON WITH -----------------------------------------------------------------
8 SHARED VOTING POWER
- 0 -
-----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
- 0 -
-----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
- 0 -
--------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
-0-
--------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* / /
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0%
--------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
------------------- -----------------------
CUSIP 64353J107 13D Page 8 of 36 Pages
------------------- -----------------------
This Statement is jointly filed by Newcastle Partners, L.P., a Texas
limited partnership ("NP"), Newcastle Capital Management, L.P., a Texas limited
partnership ("NCM"), Newcastle Capital Group, L.L.C., a Texas limited liability
company ("NCG"), Mark E. Schwarz, Steven J. Pully and John P. Murray relating to
shares of common stock of New Century Equity Holdings Corp., a Delaware
corporation (the "Issuer").
Item 1. Security and Issuer.
-------------------
Securities acquired: Shares of Common Stock, par value $.01 per share
(the "Common Stock")
Issuer: New Century Equity Holdings Corp.
10101 Reunion Place, Suite 970
San Antonio, Texas 78216
Item 2. Identity and Background.
-----------------------
(a) - (c) This Statement is jointly filed by NP, NCM, NCG, Mark E.
Schwarz, Steven J. Pully and John P. Murray (collectively, the "Reporting
Persons"). Because Mark E. Schwarz is the managing member of NCG, which is the
general partner of NCM (with Mark Schwarz, NCG and NCM, hereinafter referred to
as the "Controlling Persons"), which in turn is the general partner of NP, the
Controlling Persons may be deemed, pursuant to Rule 13d-3 of the Securities
Exchange Act of 1934, as amended (the "Act"), to be the beneficial owners of all
shares of Common Stock held by NP. The Reporting Persons are filing this
Statement jointly, as they may be considered a "group" under Section 13(d)(3) of
the Act. However, neither the fact of this filing nor anything contained herein
shall be deemed to be an admission by the Reporting Persons that such a group
exists.
The principal occupation of Mark E. Schwarz is serving as the
managing member of NCG. The principal business of NCG is acting as the general
partner of NCM. The principal business of NCM is acting as the general partner
of NP. The principal business of NP is investing in securities. The principal
occupation of Steven J. Pully is serving as President of NCM. The principal
occupation of John P. Murray is serving as Chief Financial Officer of NCM. The
principal place of business for each of the Reporting Persons is 300 Crescent
Court, Suite 1110, Dallas, Texas 75201.
Mark E. Schwarz is also a director and Chairman of the Board of the
Issuer.
Steven J. Pully is also a director and Chief Executive Officer of
the Issuer.
John P. Murray is also the Chief Financial Officer of the Issuer.
(d) During the last five years, none of the Reporting Persons has
been convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors).
(e) During the last five years, none of the Reporting Persons has
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction, and as a result of such proceeding, was not or is not
subject to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws.
(f) NP, NCM and NCG are organized under the laws of the State of
Texas. Messrs. Schwarz, Pully and Murray are citizens of the United States of
America.
Item 3. Source and Amount of Funds or Other Consideration.
-------------------------------------------------
As of June 18, 2004, NP had invested $36,778 (inclusive of brokerage
commissions) in shares of Common Stock and $5,000,000 in shares of Series A 4%
Convertible Preferred Stock of the Issuer. The source of these funds was the
working capital of NP.
------------------- -----------------------
CUSIP 64353J107 13D Page 9 of 36 Pages
------------------- -----------------------
Item 4. Purpose of Transaction.
----------------------
On June 18, 2004, NP and the Issuer entered into a Stock Purchase
Agreement (the "Purchase Agreement"), a copy of which is attached hereto and
incorporated herein by reference, pursuant to which NP acquired 4,807,692 newly
issued shares of Series A 4% Convertible Preferred Stock (the "Preferred Stock")
of the Issuer at an aggregate purchase price of $5,000,000. The Preferred Stock
is convertible, at the holder's option at any time after the expiration of
twelve (12) months from the issuance date, into 19,230,768 shares of Common
Stock, subject to adjustment. The holders thereof are entitled to a 4% annual
cash dividend. In lieu of cash dividends the holders of the Preferred Stock may
elect to receive such number of additional shares of Preferred Stock that is
equal to the aggregate dividend amount divided by $1.04. So long as any shares
of Preferred Stock are outstanding, the Board of Directors may not exceed four
(4) members without the written consent of the holders of at least a majority of
the Preferred Stock then outstanding. In addition, the holders of the Preferred
Stock are entitled, voting separately as a class, to elect two (2) directors to
the Board of Directors and to vote on all matters on which holders of Common
Stock are entitled to vote. The other powers, preferences, rights,
qualifications and restrictions of the Preferred Stock are more fully set forth
in the Certificate of Designations of Series A Convertible Preferred Stock.
Pursuant to the terms of the Purchase Agreement, the Issuer caused
the number of directors serving on the Board of Directors to be fixed at four
(4) directors, Parris H. Holmes, Jr., Gary D. Becker and Stephen M. Wagner
resigned from the Board of Directors and Mark E. Schwarz and Steven J. Pully
were appointed to the Board of Directors. Messrs. Schwarz and Pully were
appointed directors of the class whose term of office expires at the 2006 annual
meeting of stockholders of the Issuer. Not later than August 1, 2004, the
parties agreed that the Issuer will cause the number of directors serving on the
Board of Directors to be fixed at five (5) directors and a representative of NP
will be appointed as a director of the class whose term of offices expires at
the 2004 annual meeting of stockholders of the Issuer to fill the vacancy
created by such expansion; provided, however, that a proxy or information
statement disclosing such appointment will be filed with the Securities and
Exchange Commission in compliance with Rule 14(f) of the Act not less than ten
(10) days prior to such appointment. Each of Parris H. Holmes, Jr., the Issuer's
former Chief Executive Officer, and David P. Tusa, the Issuer's former Executive
Vice President, Chief Financial Officer and Corporate Secretary, resigned from
their executive positions with the Issuer simultaneously with the closing of the
Purchase Agreement. Steven J. Pully was appointed Chief Executive Officer and
John P. Murray was appointed Chief Financial Officer to fill the vacancies
created by such resignations.
As a condition to the closing of the Purchase Agreement, the Issuer
amended its July 10, 1996 Rights Agreement by reducing the Common Stock
ownership threshold for triggering the distribution of rights under such
agreement from 15% to 5% and permitting NP and its successors and assigns to
purchase Common Stock of the Issuer without triggering the distribution of
rights.
NP purchased the Common Stock and the Preferred Stock based on the
belief that such securities represented an attractive investment opportunity.
Depending upon overall market conditions, other investment opportunities, and
the availability of Common Stock, Preferred Stock or other securities of the
Issuer at desirable prices, the Reporting Persons may endeavor to increase their
position in the Issuer through, among other things, the purchase of Common
Stock, Preferred Stock or other securities of the Issuer in open market or
private transactions on such terms and at such times as the Reporting Persons
deem advisable.
The Reporting Persons may, from time to time, evaluate various
alternatives that they might consider in order to influence the performance of
the Issuer in their capacity as officers and directors of the Issuer. Depending
on various factors, the Reporting Persons may take such actions as they deem
appropriate including, without limitation, communicating with other
stockholders, seeking additional Board representation, offering to acquire the
Issuer, making proposals to the Issuer concerning the capitalization and
operations of the Issuer, purchasing additional securities of the Issuer or
selling some or all of their securities of the Issuer or changing their
intention with respect to any and all matters referred to in Item 4.
Other than as described above and in the capacity of Messrs.
Schwarz, Pully and Murray as directors and executive officers of the Issuer, the
Reporting Persons have no present plans or proposals which would result in any
of the following:
1. any extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Issuer or any of its subsidiaries;
------------------- -----------------------
CUSIP 64353J107 13D Page 10 of 36 Pages
------------------- -----------------------
2. any sale or transfer of a material amount of assets of the Issuer
or any of its subsidiaries;
3. any change in the present board of directors or managers of the
Issuer;
4. any material change in the present capitalization or dividend
policy of the Issuer;
5. any other material change in the Issuer's business or corporate
structure;
6. any change in the Issuer's charter, by-laws or instruments
corresponding thereto or other actions which may impede the acquisition of
control of the Issuer by any person;
7. causing a class of securities of the Issuer to be delisted from a
national securities exchange or to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association;
8. causing a class of securities of the Issuer to become eligible
for termination of registration pursuant to Section 12(g)(4) of the Act; or
9. any action similar to any of those enumerated above.
Item 5. Interest in Securities of the Issuer.
-------------------------------------
(a) The aggregate percentage of shares of Common Stock reported to
be owned by the Reporting Persons is based upon 34,653,104 shares outstanding,
which is the total number of shares of Common Stock outstanding as reported in
the Issuer's Form 10-Q for the quarter ended March 31, 2004.
As of the filing date of this Statement, NP beneficially owned
19,380,768 shares of Common Stock, representing approximately 36% of the issued
and outstanding Common Stock of the Issuer. Included therein are the 19,230,768
shares of Common Stock issuable upon conversion of the Preferred Stock.
NCM, as the general partner of NP, may also be deemed to
beneficially own the 19,380,768 shares of Common Stock beneficially owned by NP.
NCG, as the general partner of NCM, which in turn is the general
partner of NP, may also be deemed to beneficially own the 19,380,768 shares of
Common Stock beneficially owned by NP.
Mark E. Schwarz, as the managing member of NCG, the general partner
of NCM, which in turn is the general partner of NP, may also be deemed to
beneficially own the 19,380,768 shares of Common Stock beneficially owned by NP.
Steven J. Pully and John P. Murray do not beneficially own any
shares of Common Stock of the Issuer.
------------------- -----------------------
CUSIP 64353J107 13D Page 11 of 36 Pages
------------------- -----------------------
(b) By virtue of his position with NP, NCM and NCG, Mark E. Schwarz
has the sole power to vote and dispose of the shares of Common Stock owned by NP
reported in this Statement.
(c) Schedule A annexed hereto lists all transactions in the Common
Stock and the Preferred Stock during the past sixty days by the Reporting
Persons. The transactions in the Common Stock were effected in the open market.
The transaction in the Preferred Stock was effected pursuant to the Purchase
Agreement as described in Item 4.
(d) No person other than the Reporting Persons is known to have the
right to receive, or the power to direct the receipt of dividends from, or
proceeds from the sale of, the shares of Common Stock.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships With
Respect to Securities of the Issuer.
------------------------------------
Other than as described herein, including the transactions effected
pursuant to the Purchase Agreement, there are no contracts, arrangements,
understandings or relationships among the Reporting Persons, or between the
Reporting Persons and any other person, with respect to the securities of the
Issuer.
Item 7. Material to be Filed as Exhibits.
--------------------------------
1. Joint Filing Agreement by and among Newcastle Partners, L.P.,
Newcastle Capital Management, L.P., Newcastle Capital Group,
L.L.C., Mark E. Schwarz, Steven J. Pully and John P. Murray
dated June 28, 2004.
2. Asset Purchase Agreement by and between Newcastle Partners,
L.P. and New Century Equity Holdings Corp. dated June 18, 2004.
------------------- -----------------------
CUSIP 64353J107 13D Page 12 of 36 Pages
------------------- -----------------------
SIGNATURES
After reasonable inquiry and to the best of his knowledge and
belief, each of the undersigned certifies that the information set forth in this
Statement is true, complete and correct.
Dated: June 28, 2004 NEWCASTLE PARTNERS, L.P.
By: Newcastle Capital Management, L.P.,
its General Partner
By: Newcastle Capital Group, L.L.C.,
its General Partner
By: /s/ Mark E. Schwarz
---------------------------------
Mark E. Schwarz, Managing Member
NEWCASTLE CAPITAL MANAGEMENT, L.P.
By: Newcastle Capital Group, L.L.C.,
its General Partner
By: /s/ Mark E. Schwarz
---------------------------------
Mark E. Schwarz, Managing Member
NEWCASTLE CAPITAL GROUP, L.L.C.
By: /s/ Mark E. Schwarz
---------------------------------
Mark E. Schwarz, Managing Member
/s/ Mark E. Schwarz
-------------------------------------
MARK E. SCHWARZ
/s/ Steven J. Pully
-------------------------------------
STEVEN J. PULLY
/s/ John P. Murray
-------------------------------------
JOHN P. MURRAY
------------------- -----------------------
CUSIP 64353J107 13D Page 13 of 36 Pages
------------------- -----------------------
SCHEDULE A
----------
Transactions in the Common Stock During the Past 60 Days
--------------------------------------------------------
Shares of Common Stock Price Per Date of
Purchased Share($) Purchase
--------- -------- --------
NEWCASTLE PARTNERS, L.P.
------------------------
9,000 0.2467 5/11/04
27,000 0.2456 5/12/04
8,200 0.2468 5/17/04
105,800 0.2448 5/20/04
Transactions in the Preferred Stock During the Past 60 Days
-----------------------------------------------------------
Shares of Preferred Stock Price Per Date of
Purchased Share($) Purchase
--------- -------- --------
NEWCASTLE PARTNERS, L.P.
------------------------
4,807,692 1.04 6/18/04
------------------- -----------------------
CUSIP 64353J107 13D Page 14 of 36 Pages
------------------- -----------------------
EXHIBIT INDEX
Exhibit Page
------- ----
1. Joint Filing Agreement by and among Newcastle
Partners, L.P., Newcastle Capital Management, L.P.,
Newcastle Capital Group, L.L.C., Mark E. Schwarz,
Steven J. Pully and John P. Murray dated June 28,
2004. 15
2. Asset Purchase Agreement by and between Newcastle
Partners, L.P. and New Century Equity Holdings Corp.
dated June 18, 2004. 16 to 36
------------------- -----------------------
CUSIP 64353J107 13D Page 15 of 36 Pages
------------------- -----------------------
JOINT FILING AGREEMENT
----------------------
In accordance with Rule 13d-1(k)(1)(iii) under the Securities
Exchange Act of 1934, as amended, the persons named below agree to the joint
filing on behalf of each of them of a Statement on Schedule 13D dated June 28,
2004 (including amendments thereto) with respect to the Common Stock of New
Century Equity Holdings Corp. This Joint Filing Agreement shall be filed as an
Exhibit to such Statement.
Dated: June 28, 2004 NEWCASTLE PARTNERS, L.P.
By: Newcastle Capital Management, L.P.,
its General Partner
By: Newcastle Capital Group, L.L.C.,
its General Partner
By: /s/ Mark E. Schwarz
---------------------------------
Mark E. Schwarz, Managing Member
NEWCASTLE CAPITAL MANAGEMENT, L.P.
By: Newcastle Capital Group, L.L.C.,
its General Partner
By: /s/ Mark E. Schwarz
---------------------------------
Mark E. Schwarz, Managing Member
NEWCASTLE CAPITAL GROUP, L.L.C.
By: /s/ Mark E. Schwarz
---------------------------------
Mark E. Schwarz, Managing Member
/s/ Mark E. Schwarz
-------------------------------------
MARK E. SCHWARZ
/s/ Steven J. Pully
-------------------------------------
STEVEN J. PULLY
/s/ John P. Murray
-------------------------------------
JOHN P. MURRAY
------------------- -----------------------
CUSIP 64353J107 13D Page 16 of 36 Pages
------------------- -----------------------
NEW CENTURY EQUITY HOLDINGS CORP.
SERIES A 4% CONVERTIBLE PREFERRED STOCK
STOCK PURCHASE AGREEMENT
June 18, 2004
------------------- -----------------------
CUSIP 64353J107 13D Page 17 of 36 Pages
------------------- -----------------------
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made as of the
18th day of June, 2004, by and between New Century Equity Holdings Corp., a
Delaware corporation (the "Company"), and Newcastle Partners, L.P., a Texas
limited partnership (the "Purchaser").
W I T N E S S E T H:
WHEREAS, the Company has announced that it completed the sale of all
of its holdings in Princeton eCom Corporation ("Princeton") and that its Board
of Directors has approved a plan of liquidation and dissolution of the Company;
WHEREAS, the Company has filed definitive proxy materials (the
"Proxy Materials") seeking stockholder approval of the proposed sale of its
holdings in Princeton (the "Princeton Transaction") and the proposed liquidation
and dissolution of the Company (the "Liquidation");
WHEREAS, the Company now desires to issue and sell, and the
Purchaser desires to purchase, all upon the terms and subject to the conditions
set forth in this Agreement, shares of Series A 4% Convertible Preferred Stock
of the Company, par value $.01 per share (the "Series A Preferred Stock");
WHEREAS, the Company has determined that as a result of the issuance
and sale of the Series A Preferred Stock as contemplated herein, the Princeton
Transaction would not constitute a sale of substantially all the assets of the
Company, and therefore stockholder approval of such transaction would not be
required under applicable law;
WHEREAS, as an inducement for the Purchaser to purchase the Series A
Preferred Stock, the parties have agreed that the Company shall remain a going
concern and the Company shall not seek stockholder approval for the Liquidation.
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. PURCHASE AND SALE OF STOCK.
1.1 SALE AND ISSUANCE OF SERIES A PREFERRED STOCK.
(a) The Company has authorized the Series A Preferred Stock,
par value $.01 per share, which shall have the designations, powers, preferences
and rights and the qualifications, limitations and restrictions, in accordance
with the Company's Certificate of Designations of the Series A Preferred Stock,
in the form attached hereto as Exhibit A (the "Certificate of Designations").
(b) Subject to the terms and conditions of this Agreement, the
Purchaser agrees to purchase, and the Company agrees to sell and issue to the
Purchaser, 4,807,692 shares of Series A Preferred Stock, at a purchase price of
$1.04 per share.
1.2 CLOSING. The initial purchase and sale of the Series A Preferred
Stock shall take place at 10:00 a.m. on the date of execution and delivery of
this Agreement (the "Closing Date"), at the offices of Olshan Grundman Frome
Rosenzweig & Wolosky LLP, Park Avenue Tower, 65 East 55th Street, New York, New
York 10022, or at such other time and place as shall be mutually agreed upon
between the Purchaser and the Company (the "Closing"). At the Closing, the
Company shall deliver to the Purchaser a certificate representing the number of
shares of the Series A Preferred Stock that the Purchaser is purchasing hereby
against receipt of a wire transfer of the purchase price to an account
designated by the Company.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. For purposes of
Subsections 2.10 through 2.28 and Section 6, references to the "Company" shall
include the Company, its predecessors and any subsidiaries of the Company. The
Company hereby represents and warrants, as of the date hereof (except as
otherwise specifically set forth in Subsections 2.1 through 2.28) to the
Purchaser that, except where indicated for the exceptions set forth on the
Schedules hereto and furnished to the Purchaser, which exceptions shall be
deemed to be representations and warranties as if made hereunder:
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CUSIP 64353J107 13D Page 18 of 36 Pages
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2.1 ORGANIZATION, GOOD STANDING, QUALIFICATION AND CORPORATE POWER.
(a) The Company and each of its subsidiaries is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to carry
on its business as now conducted and as proposed to be conducted. The Company is
qualified to transact business and in good standing as a foreign corporation in
each jurisdiction where it is required to so qualify except for such
jurisdictions where the failure to so qualify would not have a Material Adverse
Effect. True and correct copies of the Company's Certificate of Incorporation,
as amended and/or restated and as in effect on the date hereof (the "Charter")
and Bylaws, as amended and/or restated and as in effect on the date hereof (the
"Bylaws") have been provided to the Purchaser.
(b) The Company has all requisite legal and corporate power to
execute and deliver this Agreement and each of the other Basic Documents, and to
issue and sell the Series A Preferred Stock hereunder, to issue the Reserved
Shares and to carry out and perform its obligations under the terms of this
Agreement and the other Basic Documents.
2.2 CAPITALIZATION AND VOTING RIGHTS. As of the date hereof, the
authorized capital stock of the Company consists of 75,000,000 shares of Common
Stock, par value $.01 per share (the "Common Stock"), and 10,000,000 shares of
Preferred Stock, par value $.01 per share (the "Preferred Stock"). As of the
Closing Date, there were 34,653,104 shares of Common Stock issued and
outstanding. No other shares of capital stock are issued and outstanding. As of
the date hereof, there were options outstanding issued by the Company to
purchase an aggregate of 5,729,937 shares of Common Stock, and no warrants of
the Company were outstanding. The Persons listed on Schedule 2.2 are the holders
of all the outstanding options to purchase Common Stock and the number and
exercise price of the options held by such Persons (including the number of
options exercisable assuming the consummation of the transactions contemplated
herein) are set forth opposite the respective names of such Persons thereon. All
of the outstanding shares of Common Stock and Preferred Stock are duly
authorized, validly issued, fully paid and nonassessable, and all such shares
were issued in compliance with all applicable Federal and state securities laws,
including available exemptions therefrom, and none of such issuances were made
in violation of any pre-emptive or other rights. The Company has reserved
15,973,153 shares of Common Stock for issuance pursuant to its stock option and
stock purchase plans and existing outstanding options. There are no other
options, warrants or other rights (including conversion, pre-emptive or other
rights) or agreements outstanding to purchase any of the Company's authorized
and unissued capital stock. Except as provided for in the Basic Documents, the
Company is not a party or subject to any agreement or understanding and, to the
Company's knowledge, there is no agreement or understanding between any persons
and/or entities, which affects or relates to the voting or giving of written
consents with respect to any security or by any director of the Company.
2.3 SUBSIDIARIES. Except as listed on Schedule 2.3 hereto, the
Company does not presently own or control, directly or indirectly, any equity
interest in any other corporation, partnership, limited liability company,
association or other business entity.
2.4 AUTHORIZATION. The Basic Documents have been duly authorized,
executed and delivered by the Company and constitute the legal, valid and
binding obligations of the Company, enforceable in accordance with their
respective terms, subject to (a) applicable bankruptcy, insolvency,
reorganization and moratorium laws, (b) other laws of general application
affecting the enforcement of creditors' rights generally and general principles
of equity, (c) the discretion of the court before which any proceeding therefor
may be brought, and (d) as rights to indemnity may be limited by Federal or
state securities laws or by public policy.
2.5 VALID ISSUANCE OF PREFERRED AND COMMON STOCK. The issuance, sale
and delivery of the Series A Preferred Stock that is being purchased by the
Purchaser hereunder, and the reservation for issuance of the Reserved Shares
have been duly authorized by all required corporate action on the part of the
Company, and when issued, sold, and delivered in accordance with the terms
hereof for the consideration expressed herein, will be duly authorized, validly
issued, fully paid and non-assessable. The Reserved Shares have been duly and
validly reserved for issuance and, upon issuance in accordance with the terms of
the Certificate of Designations, shall be duly authorized, validly issued, fully
paid, and non-assessable. The Series A Preferred Stock issued hereunder (and the
Reserved Shares) will be free and clear from any liens or encumbrances other
than those created by, or imposed upon, the holders thereof through no action of
the Company, other than restrictions on transfer under state and/or Federal
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CUSIP 64353J107 13D Page 19 of 36 Pages
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securities laws and restrictions set forth in the Basic Documents. Issuance of
the Series A Preferred Stock and the Reserved Shares will be free of statutory
preemptive rights.
2.6 SECTION 203 OF DGCL. The Board of Directors of the Company has
taken all action necessary so that the provisions of Section 203 of the DGCL
applicable to a "business combination" (as defined in Section 203 of the DGCL)
will not apply to this Agreement or the transactions contemplated herein.
2.7 REPORTS AND FINANCIAL STATEMENTS. (a) The Company has delivered
to the Purchaser prior to the execution of this Agreement a copy of the
Company's Annual Report on Form 10-K for the year ended December 31, 2003, the
Company's Quarterly Reports on Form 10-Q that have been filed for all quarters
ended since December 31, 2003, all of the Company's proxy materials filed since
its 2003 Annual Meeting of Stockholders (including the Proxy Materials) and all
Current Reports on Form 8-K filed since December 31, 2003 (as such documents
have since the time of their filing been amended or supplemented) together with
all reports, documents and information filed on or after the date first written
above through the Closing Date with the SEC, including all information
incorporated therein by reference (collectively, the "SEC Reports"). The SEC
Reports (i) complied and will comply as to form with the requirements of the
Securities Act and the Exchange Act, and (ii) did not contain and will not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The audited consolidated financial statements and unaudited interim
consolidated financial statements (including, in each case, the notes, if any,
thereto), if any, included in the SEC Reports (the "Financial Statements")
complied and will comply, in all material respects, as to form with the SEC's
rules and regulations with respect thereto, were prepared in accordance with
GAAP applied on a consistent basis during the periods involved (except as may be
indicated therein or in the notes thereto) and fairly present (subject, in the
case of the unaudited interim financial statements, to normal, recurring
year-end audit adjustments not material and to the absence of footnotes) the
financial position and shareholders' equity of the Company as of the respective
dates thereof and the consolidated earnings and cash flows for the respective
periods then ended. The Financial Statements reflect all liabilities or
obligations of the Company of any kind or matter (whether direct, accrued,
absolute, contingent, unliquidated or otherwise, whether due or to become due
and regardless of when or by whom asserted) for the periods covered thereby.
(b) The Company has a duly constituted audit committee of its
Board of Directors (the "Audit Committee"), all of whose members are
"independent" as defined in Rule 4200(a)(14) of the National Association of
Securities Dealers, Inc. and such committee has operated in accordance with
applicable law and regulations. The Company's independent public accountants
have reviewed each interim financial statement in accordance with the
requirements of applicable Federal securities laws, the Audit Committee's
charter, the SEC's rules and regulations and the applicable rules of any
securities exchange or automated quotation system or market on which the
Company's securities are or have been traded or listed. The Company has received
no communications from its independent public accountants that the independent
public accountants are considering or are likely to consider issuing any report
other than a clean, unqualified opinion as to the Company's audited financial
statements or have raised any unresolved issues with respect to any of the
Company's interim financial statements.
2.8 LEASE AGREEMENTS AND GUARANTY. The Company hereby represents
that pursuant to that certain Agreement and Plan of Merger by and among Billing
Concepts Corp., Billing Concepts, Inc., Enhanced Services Billing, Inc., BC
Transaction Processing Services, Inc., Aptis, Inc., Operator Service Company, BC
Holding I Corporation, BC Holding II Corporation, BC Holding III Corporation, BC
Acquisition I Corporation, BC Acquisition II Corporation, BC Acquisition III
Corporation, and BC Acquisition IV Corporation dated as of September 15, 2000
(the "Merger Agreement"), the Company is indemnified from and against all
Damages (as defined in the Merger Agreement") arising out of or caused by,
directly or indirectly, any claim against the Company under any guarantee of
certain leases, including (a) that certain Office Building Lease Agreement, as
amended, by and between Medical Plaza Partners, Ltd. and Billing Information
Concepts, Inc. dated July 12, 1996 (the "Medical Plaza Lease") and (b) that
certain Office Building Lease Agreement, as amended, by and between Prentiss
Properties Acquisition Partners, L.P. and Aptis, Inc. dated November 11, 1999
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CUSIP 64353J107 13D Page 20 of 36 Pages
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(the "Prentiss Lease") with respect to obligations or liabilities arising on or
after the closing of the Merger Agreement. Pursuant to the Merger Agreement,
Platinum Equity Holdings, LLC ("Platinum") executed that certain Guarantee of
Performance dated as of September 15, 2000 (the "Guarantee") for the purpose of
guaranteeing the payment and performance of the obligations of the Buyers, the
Acquisition Subs and the Surviving Corporations (as such terms are defined in
the Merger Agreement) under the Merger Agreement. The Company hereby represents
that the Guarantee of Performance is a valid, binding and enforceable obligation
of Platinum, and by virtue of Section 1(i) thereof, Platinum has guaranteed and
shall continue to guarantee the payment and performance in full, when and as
due, of any and all payments and performance of the obligations of the Company
that may arise out of or be caused by, directly or indirectly, any claim under
any guarantee of the Medical Plaza Lease and the Prentiss Lease. Furthermore,
except as set forth on Schedule 2.8, the Company has not received any notices,
either orally or in writing, suggesting the Company's or any other party's
failure or threatened failure to make payments or perform any obligations under
the Medical Plaza Lease or the Prentiss Lease.
2.9 PRINCETON TRANSACTION. All information furnished by the Company
to Richards, Layton & Finger, P.A., Delaware counsel for the Company, for the
purpose of preparing and delivering the Delaware Opinion (described and defined
in Section 4.7) is accurate and complete. The Company hereby represents that as
a result of the issuance and sale of the Series A Preferred Stock as
contemplated herein, the Princeton Transaction would not constitute a sale of
substantially all the assets of the Company, and therefore stockholder approval
of such sale would not be required under the DGCL and reported judicial
decisions interpreting the applicable provisions of the DGCL.
2.10 CHANGES. (a) Except as set forth in the SEC Reports filed not
less than five (5) business days prior to the date hereof, and any other items
set forth in Schedule 2.10, there has not been:
(i) any significant change in the assets, liabilities,
condition (financial or otherwise), affairs, earnings, business, operations, or
prospects of the Company from that reflected in the balance sheet as of March
31, 2004;
(ii) any incurrence of liabilities or obligations by the
Company of any kind or matter (whether direct, accrued, absolute, contingent,
unliquidated or otherwise, whether due or to become due and regardless of when
or by whom asserted) individually in excess of $5,000, or in the aggregate in
excess of $10,000;
(iii) any increase in compensation of any of its existing
officers, or the rate of pay of its employees as a group, except as part of
regular compensation increases in the ordinary course of business;
(iv) any resignation or termination of employment of any
officer or key employee of the Company and the Company has not received any
written notice of the impending resignation or termination of employment of any
such officer;
(v) any change in the Company's ability to utilize its net
operating loss carryforwards for the tax benefits afforded by the Internal
Revenue Code of 1986, as amended, in connection therewith.
(vi) any change in the accounting methods or practices
followed by the Company;
(vii) any issuance of any stock, bonds, or other securities
of the Company or options, warrants, or rights or agreements or commitments to
purchase or issue such securities or grant such options, warrants or rights,
except as described in Section 2.2 hereof or for those issuances contemplated or
permitted by the Basic Documents;
(viii) any waiver or compromise by the Company of a right or
of a debt owed to it;
(ix) any satisfaction or discharge of any lien, claim, or
encumbrance or payment of any material obligation by the Company;
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CUSIP 64353J107 13D Page 21 of 36 Pages
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(x) any change to a material contract or arrangement by
which the Company or any of its assets is bound or subject;
(xi) any agreement by the Company to do or enter into any of
the foregoing;
(xii) any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the properties,
operation or business of the Company;
(xiii) any loans made by the Company to its employees,
officers, or directors other than advances of expenses made in the ordinary
course of business;
(xiv) any declaration or payment of any dividend or other
distribution of the assets of the Company or any direct or indirect redemption,
purchase or acquisition of any securities of the Company;
(xv) any labor organization activity or organized labor
trouble;
(xvi) any sale, transfer, or lease of any of the Company's
assets except in the ordinary course of business, individually in excess of
$5,000, or in the aggregate in excess of $10,000, or any mortgage or pledge of
or lien imposed upon any of the Company's assets;
(xvii) any other event or condition of any character which
has materially and adversely affected the business, condition, affairs,
operations, properties or assets of the Company; or
(xviii) any agreement by the Company to do or enter into any
of the foregoing.
2.11 GOVERNMENTAL CONSENTS. No consent, approval, order, or
authorization of, or registration, qualification, designation, declaration or
filing with, any Federal, state, local or provincial governmental authority on
the part of the Company is required in connection with the consummation of the
transactions contemplated by the Basic Documents. Except for the filing of any
notice subsequent to the Closing that may be required under applicable Federal
and/or state securities laws (which, if required, shall be filed on a timely
basis as may be so required), no consent, approval or authorization of, or
declaration to, or filing with, any Person (governmental or private) is required
for the valid authorization, execution, delivery and performance by the Company
of the Basic Documents or for the valid authorization, designation, issuance,
sale and delivery of the Series A Preferred Stock, or for the valid
authorization, reservation, issuance, sale and delivery of the Reserved Shares
other than (a) the filing of the Certificate of Designations with the Secretary
of State of the State of Delaware, (b) filings pursuant to Regulation D of the
Securities Act, and (c) applicable "blue sky" securities filings.
2.12 LITIGATION. Except as described in the SEC Reports, and the
attached Schedule 2.12, as of the date of this Agreement, (a) there are no
actions, suits or proceedings at law or in equity, or any arbitration or any
administrative or other proceeding (or to the Company's knowledge, any
investigations) pending, publicly announced or, to the Company's knowledge,
threatened in writing against or affecting the Company or its subsidiaries, or
any of their respective properties or rights, and the Company does not have
reason to be aware of any basis for the foregoing; (b) there are no orders,
writs, judgments, injunctions, decrees, determinations or awards of any Federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, outstanding against the Company
or its subsidiaries; (c) there are no actions, suits or proceedings at law or in
equity, or any arbitration or any administrative or other proceeding (or to
Company's knowledge, any investigations) pending, publicly announced or, to
Company's knowledge, threatened which question the validity or enforceability of
the Basic Documents or the right of the Company to enter into such agreements,
or to consummate the transactions contemplated thereby, and the Company does not
have reason to be aware of any basis for the foregoing; and (d) there is no
action, suit, proceeding or investigation by the Company currently pending or
which the Company intends to initiate.
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CUSIP 64353J107 13D Page 22 of 36 Pages
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2.13 INTELLECTUAL PROPERTY RIGHTS. The Company possesses adequate
rights or licenses to use all trademarks, trademark applications, trade names
and service marks, whether or not registered, and all patents, patent
applications, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and intellectual property rights (collectively,
"Intellectual Property Rights") which are necessary for use in connection with
their business as now conducted and as described in the SEC Reports. The Company
has no knowledge that it has infringed on any of the Intellectual Property
Rights of any Person and the Company is not infringing on any of the
Intellectual Property Rights of any Person. There is no proceeding that is
pending, or to the Company's knowledge, is threatened against, the Company
regarding the infringement of any of the Intellectual Property Rights. The
Company has taken reasonable security measures to protect the secrecy,
confidentiality and value of all of its Intellectual Property Rights.
2.14 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in
violation or default of any provisions of its Charter or Bylaws or of any
instrument, judgment, order, writ, decree, or contract to which it is a party or
by which it or any of its assets may be bound or, to the Company's knowledge, of
any provision of Federal or state statute, rule or regulation, license, or
permit applicable to the Company. The execution, delivery, and performance of
the Basic Documents and the consummation of the transactions contemplated
thereby will not result in any such violation or be in conflict with or
constitute, with or without the passage of time and giving of notice, either a
default under any such provision, instrument, judgment, order, writ, decree, or
contract or an event which results in the creation of any lien, charge, or
encumbrance upon any assets of the Company or trigger any anti-dilution
provisions, provisions for the right to purchase stock, or preemptive rights in
any agreements to which the Company is a party. The Company does not have any
knowledge of any termination or breach or anticipated termination or breach by
the other parties to any contract or commitment to which it is a party or to
which any of its assets is subject. There are no warranty claims or other
uninsured claims against the Company under completed contracts which could
reasonably be expected to involve a monetary liability which is not reserved
against in the Financial Statements incurred in the ordinary course of business.
2.15 AGREEMENTS; ACTION.
(a) Except as set forth in the SEC Reports and Schedule 2.10
and except for agreements expressly contemplated by the Basic Documents, there
are no agreements, understandings, or proposed transactions between the Company
and any of its officers, directors, affiliates, or any affiliate thereof.
(b) Except as set forth in the SEC Reports and Schedule 2.10
and except for agreements expressly contemplated by the Basic Documents, there
are no agreements, understandings, instruments or contracts to which the Company
is a party or by which it is bound, which (i) involve obligations (contingent or
otherwise) of, or payments to, the Company in excess of $5,000, (ii) are
material to the conduct and operations of the Company's business or properties,
including, without limitation, the license of any patent, copyright, trade
secret, or other proprietary rights to or from the Company, (iii) involve any
employment or consulting arrangement, whether written or oral, between the
Company and any Person or (iv) provide for the grant to any person of a right to
cause the Company to register any securities of the Company for sale.
(c) Except as set forth in the SEC Reports or Schedule 2.10,
the Company has not (i) declared or paid any dividends, or authorized or made
any distribution upon or with respect to any series of its capital stock, (ii)
incurred any indebtedness for money borrowed or any other liabilities
individually in excess of $5,000 or, in the case of indebtedness and/or
liabilities individually less than $5,000, in excess of $25,000 in the
aggregate, or (iii) sold, exchanged, or otherwise disposed of any of its assets
or rights.
(d) For the purposes of subsections (b) and (c) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts,
and proposed transactions involving the same Person (including Persons the
Company has reason to believe are affiliated therewith) shall be aggregated for
the purpose of meeting the individual minimum dollar amounts of such
subsections.
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CUSIP 64353J107 13D Page 23 of 36 Pages
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(e) Except as set forth in the SEC Reports or Schedule 2.10,
the Company is not a party to any indenture, loan or credit agreement or any
lease or other agreement or instrument or subject to any Charter or corporate
restriction which limits or restricts the ability of the Company to carry out
its obligations under the Basic Documents.
(f) All the material contracts, agreements and instruments to
which the Company is a party are disclosed in the SEC Reports or in the attached
Schedules and such contracts, agreements and instruments are valid, binding and
in full force and effect, and are valid, binding and enforceable by the Company
in accordance with their respective terms, subject to laws of general
application relating to bankruptcy, insolvency and debtor relief or other
equitable remedies. The Company is not in default in any respect in the
performance, observance or fulfillment of any obligations, covenants or
conditions contained in any agreement or instrument that would allow a third
party to alter, amend or terminate such agreement or instrument, and, to the
Company's knowledge, no other party to any such agreement or instrument is in
default.
2.16 TITLE TO PROPERTY AND ASSETS. The Company has good and
marketable title to its property and assets free and clear of all mortgages,
liens, loans, and encumbrances, except such encumbrances and liens which arise
in the ordinary course of business and do not impair the Company's ownership or
use of such property or assets. With respect to the property and assets it
leases, the Company is in compliance with such leases and, to its knowledge,
holds a valid leasehold interest free of any liens, claims, or encumbrances
except such encumbrances and liens which arise in the ordinary course of
business and do not impair the Company's ownership or use of such property or
assets. All of the Company's properties and assets are in good operating and
usable condition, subject to normal wear and tear.
2.17 LABOR AGREEMENTS AND ACTIONS; EMPLOYEE BENEFITS. The Company is
not bound by or subject to (and none of its assets or properties is bound by or
subject to) any written or oral, express or implied, contract, commitment, or
arrangement with any labor union, and no labor union has requested or, to the
knowledge of the Company, has sought to represent any of the employees,
representatives, or agents of the Company. There is no strike or other labor
dispute involving the Company pending, or, to the knowledge of the Company,
threatened, nor is the Company aware of any labor organization activity
involving its employees. The Company has complied, in all material respects,
with all applicable state and Federal equal opportunity and other laws related
to employment. The Company has not received written notice that any employee of
the Company is in violation of any judgment, decree, or order, or any term of
any employment contract, patent disclosure agreement, or other contract or
agreement relating to the relationship of any such employee with the Company, or
any other party because of the nature of the business conducted or presently
proposed to be conducted by the Company or to the use by the employee of his or
her best efforts with respect to such business. Except as set forth in Schedule
2.10, the Company is not a party to or bound by any currently effective
employment contract, deferred compensation agreement, bonus plan, incentive
plan, profit sharing plan, retirement agreement, or other employee compensation
agreement or arrangement (collectively, "Compensation/Benefit Arrangements").
The Company has not incurred any liability for any prohibited transaction or
funding deficiency or any complete or partial withdrawal liability with respect
to any pension, profit sharing or other plan ("Plans") which is subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), to which
the Company makes or ever has made a contribution. With respect to such Plans,
the Company is in compliance in all material respects with all applicable
provisions of ERISA and has performed all its obligations under such Plans.
2.18 CHANGE IN CONTROL PROVISIONS. Except as set forth on Schedule
2.18, neither the execution and delivery of this Agreement nor the consummation
of the transactions contemplated therein will (a) trigger any change in control
or similar provision in the Compensation/Benefit Arrangements, (b) result in any
payment (including, without limitation, severance, unemployment compensation,
golden parachute or otherwise) becoming due under any Compensation/Benefit
Arrangements, (c) increase any benefits otherwise payable under any
Compensation/Benefit Arrangements, or (d) result in any acceleration of the time
of payment or vesting of any benefit under any Compensation/Benefit
Arrangements.
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CUSIP 64353J107 13D Page 24 of 36 Pages
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2.19 INSURANCE. The Company has in full force and effect fire,
casualty, and liability insurance policies, with extended coverage, in such
amounts and with such coverage as is reasonable and prudent in view of the
business and operations of the Company.
2.20 TAX MATTERS. The Company (a) has filed all tax returns that are
required to have been filed by it with all appropriate governmental agencies
(and all such returns are true and correct and fairly reflect its operations for
tax purposes); and (b) has paid all taxes owed or assessments by it as indicated
on such tax returns (other than taxes the validity of which are being contested
in good faith by appropriate proceedings). The assessment of any additional
taxes for periods for which returns have been filed is not expected to exceed
the recorded liability therefor and there are no unresolved questions or claims
concerning the Company's tax liability. The Company's federal tax returns have
been audited and reviewed by the Internal Revenue Service through September
2001. There is no pending dispute with any taxing authority relating to any of
said returns which, if determined adversely to the Company, would result in the
assertion by any taxing authority of any valid deficiency for taxes. The Company
has withheld or collected from each payment made to each of its employees the
amount of all taxes, including, but not limited to, income taxes, Federal
Insurance Contribution Act taxes and Federal Unemployment Tax Act taxes required
to be withheld or collected therefrom, and has paid the same to the proper tax
receiving officers or authorized depositaries.
2.21 MINUTE BOOKS. The minute books of the Company contain, in all
material respects, a complete and accurate record of all meetings of directors
and stockholders since the date of incorporation of the Company and all actions
taken by written consent.
2.22 PERMITS. The Company possesses all certificates,
authorizations, licenses, easements, consents, approvals, orders, permits and
approvals ("Permits") necessary to own, lease and operate its properties and to
conduct its business as currently conducted, and there is no proceeding pending,
or, to the knowledge of the Company, threatened relating to the revocation,
modification, suspension or cancellation of any Permit. The Company has
fulfilled and performed all of the obligations with respect to such Permits, and
no event or change in condition has occurred which allows, or which upon notice,
the lapse of time or both would allow, the revocation or termination thereof or
results in any other impairment of the rights of the holder of any such Permits.
The Company is not in conflict with, in default under or in violation of any
Permit.
2.23 GOVERNMENTAL REGULATION. The Company is not subject to
regulation under the Investment Company Act of 1940 or to any United States of
America, state or local statute or regulation limiting its ability to incur
debt.
2.24 FINDERS' FEES. There is no investment banker, broker, finder or
other intermediary which has been retained by or is authorized to act on behalf
of the Company who might be entitled to any fee or commission from the
Purchaser, the Company or any of their respective affiliates upon consummation
of the transactions contemplated by the Basic Documents.
2.25 SOLVENCY. The Company is, and immediately after the Closing
will be, Solvent. As used herein, the term "Solvent" means, with respect to a
particular date, that on such date, (a) the fair market value of the assets of
each of the Company and its subsidiaries exceeds their respective liabilities
(including, without limitation, stated liabilities and contingent liabilities),
and (b) the Company can pay its debts as they come due or mature. The Company
has not taken any steps, and does not currently expect to take any steps, to
seek protection pursuant to any bankruptcy, insolvency, debtor relief,
reorganization or similar law, nor does the Company have any knowledge or reason
to believe that creditors of the Company have initiated or intend to initiate
involuntary bankruptcy or similar proceedings.
2.26 RELATED PARTY TRANSACTIONS. No employee, officer, stockholder
or director of the Company or member of his or her immediate family is (a) party
to a related party transaction described in Item 404 of Regulation S-K of the
Exchange Act not already disclosed in the SEC Reports or the attached Schedules,
including, specifically, Schedule 2.10, or (b) indebted to the Company, nor is
the Company indebted (or committed to make loans or extend or guarantee credit)
to any of them, except as set forth in the SEC Reports or the attached
Schedules, including, specifically, Schedules 2.10 and 2.18, other than (i) for
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CUSIP 64353J107 13D Page 25 of 36 Pages
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payment of salary for services rendered, (ii) reimbursement for reasonable
expenses incurred on behalf of the Company, and (iii) for other standard
employee benefits made generally available to all employees (not including stock
option agreements outstanding under any stock option plan approved by the Board
of Directors of the Company). To the Company's knowledge, except as set forth in
the SEC Reports or the attached Schedules, including, specifically, Schedules
2.10 and 2.18, no employee or officer of the Company has any direct or indirect
ownership interest in any firm or corporation with which the Company is
affiliated or with which the Company has a business relationship, or any firm or
corporation that competes with the Company, except that employees, officers or
directors of the Company and members of their immediate families may own stock
in publicly traded companies that may compete with the Company. Except as set
forth in the SEC Reports or the attached Schedules, including, specifically,
Schedules 2.10 and 2.18, no officer or stockholder or any member of their
immediate families is, directly or indirectly, interested in any contract with
the Company (other than such contracts as relate to any such person's ownership
of capital stock or other securities of the Company and other than employment
agreements).
2.27 ENVIRONMENTAL AND SAFETY LAWS. The Company is not in violation
of any applicable statute, law or regulation relating to the environment or
occupational health and safety of its employees and no material expenditures are
or will be required in order to comply with any such existing statute, law or
regulation.
2.28 OFFERING. Subject to the accuracy of the Purchaser's
representations in Section 3 hereof, the offer, sale and issuance of the Series
A Preferred Stock to be issued in conformity with the terms of this Agreement
and the issuance of the Common Stock to be issued upon conversion of the Series
A Preferred Stock constitute transactions exempt from the registration
requirements of Section 5 of the Securities Act, and are in compliance with all
applicable securities laws of the United States and each of the states whose
laws govern the issuance of such securities.
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
hereby represents and warrants to the Company that:
3.1 ORGANIZATION AND EXISTENCE. The Purchaser is a limited
partnership duly organized and validly existing under the laws of the State of
Texas.
3.2 AUTHORIZATION. The execution, delivery and performance by the
Purchaser of this Agreement and the consummation by the Purchaser of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary partnership action. This Agreement constitutes the valid and binding
agreement of the Purchaser, enforceable in accordance with its terms, subject to
(i) applicable bankruptcy, insolvency, reorganization and moratorium laws, (ii)
other laws of general application affecting the enforcement of creditors' rights
generally and general principles of equity, (iii) the discretion of the court
before which any proceeding therefor may be brought, and (iv) as rights to
indemnity may be limited by Federal or state securities laws or by public
policy.
3.3 FINDERS' FEES. There is no investment banker, broker, finder or
other intermediary which has been retained by or is authorized to act on behalf
of the Purchaser who might be entitled to any fee or commission from the Company
upon consummation of the transactions contemplated by the Basic Documents.
3.4 PURCHASE ENTIRELY FOR OWN ACCOUNT. The Series A Preferred Stock
to be received by the Purchaser pursuant to the terms hereof will be acquired
for investment for the Purchaser's own account, not as a nominee or agent, and
not with a view to the resale or distribution of any part thereof. The Purchaser
has no present intention of selling, granting any participation in, or otherwise
distributing the shares of Series A Preferred Stock or the Reserved Shares
acquired by the Purchaser. The Purchaser has no contract, undertaking, agreement
or arrangement with any Person to sell or transfer, or grant any participation
to such Person or to any third Person, with respect to any shares of Series A
Preferred Stock to be acquired by the Purchaser.
3.5 PURCHASER ADDRESS, ACCESS TO INFORMATION, EXPERIENCE, ETC.
(a) The address set forth on the signature pages of this
Agreement is the Purchaser's true and correct business address. The Purchaser
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CUSIP 64353J107 13D Page 26 of 36 Pages
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has received and read and is familiar with this Agreement. The Purchaser has had
an opportunity to (i) ask questions of and receive answers from representatives
of the Company concerning the terms and conditions of this investment, and (ii)
conduct such investigation as the Purchaser deems necessary. The Purchaser can
fend for itself, can bear the economic risk of its investment, has substantial
experience in evaluating non-liquid investments such as the Series A Preferred
Stock, and is capable of evaluating the merits and risks of an investment in the
Company. The Purchaser is an "accredited investor" as that term is defined in
Rule 501(c) of Regulation D promulgated under the Securities Act.
(b) The Purchaser has been furnished access to the business
records of the Company and such additional information and documents as the
Purchaser has requested and has been afforded an opportunity to ask questions
of, and receive answers from, representatives of the Company concerning the
terms and conditions of this Agreement, the purchase of the Series A Preferred
Stock, the business, operations, market potential, capitalization, financial
condition and prospects of the Company, and all other matters deemed relevant to
the Purchaser.
3.6 RESTRICTED SECURITIES. The Purchaser understands that the shares
of Series A Preferred Stock to be acquired by the Purchaser and the Reserved
Shares have not been registered under the Securities Act or the laws of any
state and may not be sold or transferred, or otherwise disposed of, without
registration under the Securities Act and applicable state securities laws, or
pursuant to an exemption therefrom. In the absence of an effective registration
statement covering the shares of Series A Preferred Stock to be acquired by the
Purchaser, and the Reserved Shares, the Purchaser will sell or transfer, or
otherwise dispose of, the shares of Series A Preferred Stock to be acquired by
the Purchaser only in a manner consistent with its representations and
agreements set forth herein, the terms and conditions set forth in the Basic
Documents and any applicable Federal and state securities laws.
4. CONDITIONS OF THE PURCHASER'S OBLIGATIONS AT CLOSING. The
obligations of the Purchaser to purchase Series A Preferred Stock pursuant to
this Agreement are subject to the fulfillment on or before the Closing of each
of the following conditions, the waiver of which shall not be effective against
the Purchaser unless the Purchaser has consented in writing thereto:
4.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in Section 2 shall be true and correct on
and as of the Closing Date with the same effect as though such representations
and warranties had been made on and as of the Closing Date.
4.2 PERFORMANCE. The Company shall have performed and complied with
all agreements, obligations, and conditions contained in the Basic Documents
that are required to be performed or complied with by it on or before the
Closing.
4.3 COMPLIANCE CERTIFICATE. The Chief Executive Officer of the
Company shall deliver to the Purchaser at the Closing a certificate certifying
to the matters set forth in Sections 4.1 and 4.2.
4.4 SECRETARY'S CERTIFICATE. The Secretary of the Company shall
deliver to the Purchaser at the Closing a certificate certifying: (i) that
attached thereto is a true and complete copy of the Charter of the Company as
then in effect; (ii) that attached thereto is a true and complete copy of the
Bylaws of the Company as then in effect, (iii) that attached thereto is a true
and complete copy of all resolutions adopted by the Board of Directors of the
Company authorizing the transactions contemplated by the Basic Documents; and
(iv) to the incumbency and specimen signatures of each officer of the Company
executing the Basic Documents and the other agreements and certificates
contemplated thereby.
4.5 CERTIFICATE OF DESIGNATIONS. The Certificate of Designations in
the form attached hereto as Exhibit A shall have been executed by the Company
and filed with the Secretary of State of the State of Delaware and evidence of
such filing shall have been provided to the Purchaser (with a complete copy of
such filing being provided to the Purchaser as soon as practicable thereafter).
4.6 OPINION OF COMPANY CORPORATE COUNSEL. The Purchaser shall have
received from Loeffler Jonas & Tuggey LLP, corporate counsel for the Company, an
opinion, dated as of the Closing, in the form attached hereto as Exhibit B.
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CUSIP 64353J107 13D Page 27 of 36 Pages
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4.7 OPINION OF COMPANY DELAWARE COUNSEL. The Purchaser shall have
received from Richards, Layton & Finger, P.A., Delaware counsel for the Company,
an opinion, dated as of the Closing, in the form attached hereto as Exhibit C,
that contains an opinion that as a result of the issuance and sale of the Series
A Preferred Stock as contemplated herein, the Princeton Transaction would not
constitute a sale of substantially all the assets of the Company, and therefore
stockholder approval of such sale would not be required under the DGCL and
reported judicial decisions interpreting the applicable provisions of the DGCL
(the "Delaware Opinion").
4.8 CONSENTS AND WAIVERS; QUALIFICATIONS. The Company shall have
obtained any and all consents and waivers necessary or appropriate for
consummation of the transactions contemplated by the Basic Documents. The
Company shall have obtained all necessary "blue sky" law permits and
qualifications, or have the availability of exemptions therefrom, required for
the State of Texas for the offer and sale of the Series A Preferred Stock and
the Reserved Shares.
4.9 STOCK CERTIFICATES. The Purchaser shall have received a stock
certificate dated the Closing Date for the number of shares of Series A
Preferred Stock being purchased hereby.
4.10 PRINCETON TRANSACTION. The Purchaser shall have received
written evidence satisfactory to the Purchaser that the Princeton Transaction
has been consummated, including written evidence that the Company has received
$10,000,000 in cash or by wire transfer of immediately available funds in
payment of its holdings in Princeton being sold pursuant to the Princeton
Transaction.
4.11 AMENDMENT TO RIGHTS AGREEMENT. The Purchaser shall have
received an executed copy of the First Amendment to the July 10, 1996 Rights
Agreement, in the form attached hereto as Exhibit D (the "Amendment to Rights
Agreement"), that amends the Company's July 10, 1996 Rights Agreement.
4.12 OTHER FEES AND EXPENSES. The Company shall have paid to the
Purchaser all fees and expenses payable to the Purchaser pursuant to Section
10.10 hereof.
5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING. The
obligations of the Company to the Purchaser under this Agreement are subject to
the fulfillment on or before the Closing of each of the following conditions by
the Purchaser:
5.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Purchaser contained in Section 3 shall be true and correct in
all material respects on and as of the Closing with the same effect as though
such representations and warranties had been made on and as of the Closing.
5.2 QUALIFICATIONS. All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Series A Preferred Stock pursuant to this Agreement shall have been duly
obtained and effective as of the Closing.
5.3 PAYMENT OF PURCHASE PRICE. The Purchaser shall have paid the
requisite purchase price for the Series A Preferred Stock being purchased hereby
pursuant to the terms of this Agreement.
5.4 PAYMENT OF RELATED EXPENSES. The Company shall have paid all
liabilities and obligations due and payable at the Closing of this Agreement, as
applicable, including the amounts payable under (a) the Amendment to Employment
Agreement by and between the Company and Parris H. Holmes, Jr. dated May 28,
2004, together with the Business Consultant Agreement by and between such
parties, attached hereto as Exhibit E and the Letter Agreement by and between
the Company and Parris H. Holmes, Jr. dated May 28, 2004 attached hereto as
Exhibit F, and (b) the Amendment to Employment Agreement by and between the
Company and David P. Tusa dated May 28, 2004, together with the Business
Consultant Agreement by and between such parties, attached hereto as Exhibit G.
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CUSIP 64353J107 13D Page 28 of 36 Pages
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5.5 STOCK OPTIONS. The Company shall have accelerated the vesting of
all unvested stock options of non-executive employees of the Company granted
pursuant to the Company's 1996 Employee Stock Purchase Plan, as amended, and the
Company's 1996 Employee Comprehensive Stock Plan, as amended, all as applicable.
Options of outside directors shall be exercisable for a period of one hundred
twenty (120) days after the expiration or termination (for any reason) of such
director's term as a director of the Company. Options of non-executive employees
shall not terminate, and shall be exercisable, for a period of two (2) years
after the termination date of such options provided in each applicable award
agreement.
6. COVENANTS. The Company covenants and agrees that, except as
otherwise provided in this Agreement and the other Basic Documents, so long as
at least 33 1/3% of the shares of Series A Preferred Stock issued pursuant to
this Agreement shall remain outstanding:
6.1 FINANCIAL STATEMENTS AND OTHER INFORMATION. The Company will
furnish or cause to be furnished to Persons (either individually or as a
"group," as such term is used in Section 13d(3) of the Exchange Act, a "Group")
holding at least 25% of the shares of Series A Preferred Stock then outstanding,
at such Person's written request to the Company, the information set forth in
subparagraphs (a) through (d) below, and each such Person severally and not
jointly agrees to maintain the confidentiality of any information received by it
pursuant to this Section 6.1, none of which shall be duplicated, disclosed, or
distributed to any third-party, until such information becomes public or is
otherwise no longer confidential through no wrongful act of such Persons or
their agents or as otherwise required by law, provided, however, that each such
Person may share the information received by it pursuant to this Section 6.1
with its partners, if any, and with its legal, accounting, financial and other
advisors and representatives, provided that such persons agree to maintain the
confidentiality of any information disclosed hereunder as provided for in this
Section 6.1.
(a) promptly after receipt, all written reports delivered to the
Company by its accountants;
(b) promptly after the commencement or threatened commencement
thereof, notice of all actions, suits, investigations, and proceedings before
any court or governmental department, arbitration panel, commission, board,
bureau, agency or instrumentality, domestic or foreign, affecting the Company or
any of its subsidiaries other than ordinary and routine litigation covered under
the limits of existing insurance policies or other matters which could not
reasonably be expected to result in a Material Adverse Effect:
(c) promptly, copies of minutes of meetings of the Board of
Directors of the Company and of any press releases issued by the Company; and
(d) promptly, copies of all amendments to the Charter or Bylaws
of the Company.
6.2 CONDUCT OF BUSINESS, LEGAL EXISTENCE, ETC.
(a) The Company will maintain its existence as a corporation
duly organized, validly existing and in good standing under the laws of the
state of its incorporation.
(b) The Company shall act and carry on its operations only in
the ordinary course of business consistent with past practice and, to the extent
consistent therewith, use reasonable efforts to preserve intact its business
organizations, keep available the services of its key officers and employees and
preserve the goodwill of those engaged in significant business relationships
with it.
(c) The Company will conduct its business in compliance in all
material respects with all permits and licenses issued by, and all statutes,
rules, regulations and orders of, and all restrictions imposed by, all
governmental authorities, domestic or foreign, Federal or state, applicable to
the conduct of its business and the ownership of its property (including,
without limitation, applicable statutes, rules, regulations, orders and
restrictions relating to environmental, safety and other similar standards or
controls).
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CUSIP 64353J107 13D Page 29 of 36 Pages
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(d) The Company will conduct its business in compliance in all
material respects with all licenses, agreements and contracts to which it is a
party, except where the failure to so comply could not reasonably be expected to
have a Material Adverse Effect.
(e) The Company will maintain, keep, and preserve all of its
material properties (tangible and intangible) necessary in the proper conduct of
its business in good working order and condition, ordinary wear and tear
excepted.
(f) The Company will maintain or cause to be maintained, with
financially sound and reputable insurers, insurance with respect to its assets
and businesses against loss or damage of the kinds customarily insured against
by corporations of established reputation engaged in the same or similar
businesses and similarly situated, of such types and in such amounts and with
such deductibles as are customarily carried by such other corporations.
6.3 RESERVATION OF SHARES. The Company shall at all times duly
reserve for issuance the Reserved Shares. The Company shall comply with the
terms and conditions of the Series A Preferred Stock as set forth in the
Certificate of Designations.
6.4 RIGHT OF INSPECTION. At any reasonable time and from time to
time, upon reasonable notice, the Company shall permit any Person (either
individually or as Group) that holds at least 25% of the shares of Series A
Preferred Stock originally issued hereunder or any agent or representative
thereof, at such Person's or Group's expense, to examine and make copies of and
abstracts from the records and books of account of, and visit the properties of,
the Company and to discuss the affairs, finances and accounts of the Company
with any of its officers and directors and furnish to each such Person, promptly
upon the request of such Person, copies of such financial and operating data and
other information as reasonably requested by such Person. The Company will
permit such Persons to inspect, audit and make copies of the books and records
of the Company, to discuss the business and affairs of the Company with the
officers of the Company, and to inspect any of the properties or assets of the
Company upon reasonable notice to the Company and at such reasonable times as
such Persons may from time to time request. Upon five (5) business days' prior
notice to the Company, such Persons shall have the right to confer in their
discretion with the independent certified public accountants of the Company at
any time during normal business hours upon any matter involving the financial
condition of the Company. Each such Person severally and not jointly agrees to
maintain the confidentiality of any information received by it pursuant to this
Section 6.4, until such information becomes public or is otherwise no longer
confidential through no wrongful act of any such Person or their agents or as
otherwise required by law, provided, however, that each such Person may share
the information received by it pursuant to this Section 6.4 with its partners,
if any, and with its legal, accounting, financial and other advisors and
representatives if such persons agree to maintain the confidentiality of any
information disclosed hereunder as provided for in this Section 6.4.
6.5 FURTHER ASSURANCES. At any time or from time to time upon the
reasonable request of any party to this Agreement, the Company and the Purchaser
shall execute and deliver such further documents and do such other acts and
things as such other parties may reasonably request in order to effect fully the
purposes of the Basic Documents.
7. ADDITIONAL COVENANTS. The parties hereby acknowledge and agree
that:
(a) SEC MATERIALS. Within five (5) business days after the
Closing Date, the Company shall file with the SEC revised proxy materials
withdrawing the proposals to approve the Liquidation and Princeton Transaction.
Within 48 hours of the Closing, the Company shall prepare and issue a press
release and file with the SEC a Current Report on Form 8-K disclosing the
consummation of the transactions contemplated herein.
(b) PRINCETON TRANSACTION. The Company shall have consummated the
Princeton Transaction.
(c) BOARD OF DIRECTORS. Simultaneously with the Closing, (i) the
Company shall cause the number of directors serving on the Company's Board of
Directors to be fixed at four (4) directors, (ii) Gary D. Becker and Stephen M.
Wagner shall resign from the Board of Directors, and (iii) the two directors
remaining on the Board of Directors after such resignations (the "Continuing
Directors") shall appoint the following representatives of the Purchaser to the
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CUSIP 64353J107 13D Page 30 of 36 Pages
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Board of Directors to replace the resigning directors: Mark E. Schwarz as a
director of the class whose term of office expires at the 2006 annual meeting of
stockholders of the Company and Steven J. Pully as a director of the class whose
term of office expires at the 2006 annual meeting of stockholders of the
Company. Mark E. Schwarz shall also be appointed Chairman of the Board of
Directors. Not later than August 1, 2004, the Company shall cause the number of
directors serving on the Company's Board of Directors to be fixed at five (5)
directors and a representative of the Purchaser shall be appointed as a director
of the class whose term of office expires at the 2004 annual meeting of
stockholders of the Company to fill the vacancy created by such expansion;
provided, however, that a proxy or information statement disclosing such
appointment shall be filed with the SEC and transmitted to the stockholders of
the Company in compliance with Rule 14(f) of the Exchange Act not less than ten
(10) days prior to such appointment (the "Statement Filing Date"). The Company
shall cause each of the Continuing Directors to serve on the Company's Board of
Directors through the Statement Filing Date. In the event a representative of
the Purchaser appointed to the Board pursuant to this Section 7(c) ceases to
serve as a member of the Board of Directors by reason of death, resignation,
removal, disqualification or for any other reason, then such vacancy on the
Board of Directors shall be filled by the Purchaser. A director selected by the
Purchaser to fill such a vacancy shall hold office until such director's
successor shall have been duly elected and qualified.
(d) MANAGEMENT; EMPLOYEES. Simultaneously with the Closing, (i)
Parris H. Holmes, Jr. and David P. Tusa shall resign from their respective
positions as executives of the Company, (ii) Steven J. Pully shall be appointed
Chief Executive Officer of the Company and John P. Murray shall be appointed
Chief Financial Officer of the Company, and (iii) Cynthia Jergins shall continue
to be employed by the Company pursuant to the Severance Agreement attached
hereto as Exhibit H, Denise Spencer shall continue to be employed by the Company
pursuant to the Severance Agreement attached hereto as Exhibit I, and Diane
Nowacki shall continue to be employed by the Company pursuant to the Severance
Agreement attached hereto as Exhibit J.
(e) D&O INSURANCE; INDEMNITIES. For a period of twenty-four (24)
months following the Closing Date, the Company (i) shall maintain its existing
director and executive officer insurance policy and prior acts coverage on terms
that are the same or no less favorable to the Company's directors and executive
officers as in effect on the date of this Agreement (to the extent such policy
and coverage are available on economically reasonable terms); and (ii) shall not
reduce any rights to indemnification possessed, as of the Closing Date, by the
directors and officers of the Company. In summary, such insurance coverage and
indemnification currently provide that each director and officer shall be
indemnified to the maximum allowable extent permitted under the DGCL, the
Securities Act and the Exchange Act, as well as other applicable law.
8. DEFINITIONS. All capitalized terms used in this Agreement shall
have the meanings assigned to them elsewhere in this Agreement or as specified
below:
"BASIC DOCUMENT" shall mean each of this Agreement, the Certificate
of Designations and the Amendment to Rights Agreement, each as at any time
amended and in effect from time to time.
"DGCL" shall mean the Delaware General Corporation Law.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as at
any time amended.
"GAAP" shall mean generally accepted accounting principles that are
(i) consistent with the principles promulgated or adopted by the Financial
Accounting Standards Board and its predecessors, (ii) applied on a basis
consistent with prior periods (except for changes in the application of such
principles that have been approved by the Company's Board of Directors), and
(iii) such that, insofar as the use of accounting principles is pertinent, a
certified public accountant could deliver an unqualified opinion with respect to
financial statements in which such principles have been properly applied,
subject, however, to the absence of footnotes.
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CUSIP 64353J107 13D Page 31 of 36 Pages
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"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on
the assets, condition (financial or otherwise), affairs, earnings, business,
operations or prospects of the Company.
"PERSON" shall mean an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever
nature, including, as appropriate, the Company or any subsidiary thereof.
"RESERVED SHARES" shall mean the 19,230,768 shares of Common Stock
issuable upon conversion of the Series A Preferred Stock pursuant to the
Certificate of Designations, subject to adjustment.
"SECURITIES ACT" shall mean the Securities Act of 1933, as at any
time amended.
"SEC" shall mean the Securities and Exchange Commission.
9. INDEMNITY. Each party (an "Indemnifying Party") shall, with
respect to the representations, warranties, covenants and agreements made by
each such party herein indemnify, defend and hold the other party (and its
respective shareholders, members, directors, officers, managers, employees,
agents, affiliates and controlling parties) (each, an "Indemnified Party")
harmless from and against all liability, loss or damage, together with all costs
and expenses related thereto (including legal and accounting fees and expenses),
arising from the untruth, inaccuracy or breach of any such representations,
warranties, covenants, obligations or agreements of the Indemnifying Party
contained in this Agreement (or any schedule, exhibit, certificate or other
instrument furnished in connection herewith) or the assertion of any claims
relating to the foregoing. The Indemnifying Party shall indemnify and hold
harmless each Indemnified Party against any losses, claims, damages or
liabilities, joint or several, to which any of the foregoing persons may become
subject, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any violations by the
Indemnifying Party of the Securities Act or state securities or "blue sky" laws
applicable to the Indemnifying Party relating to action or inaction required of
the Indemnifying Party in connection with the Securities Act or registration or
qualification under such state securities or blue sky laws; and shall reimburse
each such Indemnified Party for any legal or any other expenses reasonably
incurred by any of them in connection with investigating or defending any such
loss, claim, damage, liability or action. In case any such action is brought
against an Indemnified Party, the Indemnifying Party will be entitled to
participate in and assume the defense thereof with counsel reasonably
satisfactory to such Indemnified Party, and after notice from the Indemnifying
Party to such Indemnified Party of its election to assume the defense thereof,
the Indemnifying Party shall be responsible for any legal or other expenses
subsequently incurred by the latter in connection with the defense thereof,
provided that if any Indemnified Party shall have reasonably concluded that
there may be one or more legal defenses available to such Indemnified Party
which conflict with those available to the Indemnifying Party, or that such
claim or litigation involves or could have an effect upon matters beyond the
scope of the indemnity agreement provided in this Section 9, the Indemnifying
Party shall not have the right to assume the defense of such action on behalf of
such Indemnified Party and the Company shall reimburse such Indemnified Party
and any person controlling such Indemnified Party for that portion of the fees
and expenses of one counsel retained by the Indemnified Party which are
reasonably related to the matters covered by the indemnity agreement provided in
this Section 9. The Indemnifying Party shall not be liable for the settlement by
the Indemnified Party of any action, proceeding or investigation effected
without its written consent, which consent shall not be unreasonably withheld.
The Indemnifying Party shall not make any settlement of any claims indemnified
against under this Section 9 without the written consent of the Indemnified
Party or Parties, which consent shall not be unreasonably withheld.
Notwithstanding the foregoing, the Company and Purchaser acknowledge that at
Closing, Purchaser shall obtain substantial, day-to-day control of the Company.
Such control may, in the event of a dispute arising under or related to this
Agreement, constitute a conflict of interest requiring special procedures
involving independent review and action by the Company to resolve any dispute.
Purchaser shall, in the event of any such dispute, comply in all material
respects with applicable law relating to the resolution of disputes with
insiders of the Company. Specifically, and without limitation, Purchaser shall,
in the event of such a dispute, recuse itself of all actions in review and
resolution of such dispute. Additionally, in such event, Purchaser shall cause
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CUSIP 64353J107 13D Page 32 of 36 Pages
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or permit the appointment of an independent subcommittee of the board of
directors, and counsel thereto, with authority to resolve such dispute. The
Company agrees to indemnify the Purchaser from and against any liability, loss
or damage, together with all costs and expenses related thereto (including legal
and accounting fees and expenses) of any kind or nature that the Company may
suffer, to the extent such liability or exposure arose out of or related to the
affairs of the Company, its Board of Directors or its employees (including, but
not limited to, affairs related to the Medical Plaza Lease and the Prentiss
Lease) prior to the Closing (each, a "Loss"). The Company shall be obligated to
indemnify the Purchaser for any Loss by, at the option of the Purchaser, (i)
issuing to the Purchaser such number of additional shares of Series A Preferred
Stock equal to the quotient obtained by dividing (a) the dollar amount of the
Loss, by (b) $2.914, rounded to the nearest whole share, (ii) modifying the
conversion price of the Series A Preferred Stock, (iii) a payment of cash or
redemption of shares of the Series A Preferred Stock or (iv) a combination of
the foregoing.
10. MISCELLANEOUS.
10.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations, warranties and covenants of the Company and the Purchaser
contained in or made pursuant to this Agreement shall survive the execution and
delivery of this Agreement and the Closing and shall in no way be affected by
any investigation of the subject matter thereof made by or on behalf of the
Purchaser or the Company.
10.2 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein,
the terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and permitted assigns of the parties
(including permitted transferees of any shares of Series A Preferred Stock sold
hereunder or the Reserved Shares). Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and permitted assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement. The Company may not assign or transfer any
of its rights under this Agreement without the prior written consent of the
holders of a majority of the then outstanding shares of Series A Preferred
Stock. The Purchaser (or subsequent holder of any Series A Preferred Stock) may
assign and transfer its rights under this Agreement at such times and upon such
conditions as the Purchaser shall determine in its sole discretion subject to
the obligations imposed on the Purchaser by this Agreement. Notwithstanding the
foregoing, each such permitted transferee or assignee shall be bound by the
terms and conditions of this Agreement and the other applicable Basic Documents
pursuant to a written instrument signed by such permitted transferee reasonably
satisfactory to the Company.
10.3 GOVERNING LAW; JURISDICTION. This Agreement shall be governed
by, construed, applied and enforced in accordance with the laws of the State of
Texas, except that no doctrine of choice of law shall be used to apply any law
other than that of Texas, and no defense, counterclaim or right of set-off given
or allowed by the laws of any other state or jurisdiction, or arising out of the
enactment, modification or repeal of any law, regulation, ordinance or decree of
any foreign jurisdiction, shall be interposed in any action hereon. The parties
hereto agree that any action or proceeding to enforce any right arising out of
this Agreement and the other Basic Documents may be commenced in any Delaware
State court or United States District Court sitting in Delaware, and the parties
hereto consent to such jurisdiction, agree that venue will be proper in such
courts in any such matter, agree that the State of Delaware is the most
convenient forum for litigation in any such suit, action or legal proceeding,
and agree that a summons and complaint commencing an action or proceeding in any
such court shall be properly served and shall confer personal jurisdiction if
served by registered or certified mail, or as otherwise provided by the laws of
the State of Delaware or the United States. The parties hereto agree that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
10.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.5 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
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CUSIP 64353J107 13D Page 33 of 36 Pages
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10.6 NOTICES. Any and all notices, designations, consents, offers,
acceptances, or any other communication provided for herein shall be given in
writing by hand, facsimile transmission, overnight courier or by registered or
certified mail, addressed to the address specified for such party on the
signature pages hereof, or to such other address as may be designated in writing
by any such party. Except as otherwise provided in this Agreement, each such
notice shall be deemed given when delivered in person, by facsimile transmission
or by overnight courier or on a date which is three days after it is mailed at
any post office or branch post office regularly maintained by the United States
Postal Service (registered or certified, with postage prepaid and properly
addressed). Copies of all such notices shall be provided to (i), if to the
Company, Loeffler Jonas & Tuggey LLP, 755 E. Mulberry, Suite 200, San Antonio,
Texas 78212, Attention: Timothy N. Tuggey, Esq., facsimile (210) 354-4034, and
(ii) if to the Purchaser, Olshan Grundman Frome Rosenzweig & Wolosky LLP, Park
Avenue Tower, 65 East 55th Street, New York, New York 10022, Attention: Steven
Wolosky, Esq., facsimile (212) 451-2222.
10.7 FINDER'S FEE. Each party represents that it neither is nor will
be obligated for any finder's fee or commission in connection with this
transaction. Each party agrees to indemnify and hold harmless the other parties
from any liability for any commission or compensation in the nature of a
finder's fee (and the costs and expenses of defending against such liability or
asserted liability) for which each party or any of its officers, employees, or
representatives is responsible.
10.8 ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement,
including the Schedules and Exhibits hereto and the other Basic Documents,
constitutes the full and entire understanding and agreement between the parties
with regard to the subject hereof. Any term of this Agreement may be amended and
the observance of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively), only with
the written consent of the Company and the holders of two-thirds of the shares
of Series A Preferred Stock then outstanding. Any amendment or waiver effected
in accordance with this Section 10.8 shall be binding upon each holder of the
Series A Preferred Stock and the Company.
10.9 SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
10.10 EXPENSES AND TAXES. At the Closing, upon receipt of invoices,
the Company shall reimburse the reasonable fees and expenses of the Purchaser,
and all out-of-pocket expenses of the Purchaser incurred in connection with this
transaction (all of which shall not exceed an aggregate of $15,000). In
addition, the Company shall pay any and all stamp and other taxes and fees
payable or determined to be payable in connection with the execution, delivery,
filing and recording of this Agreement and agrees to save the holders of Series
A Preferred Stock harmless from and against any and all liabilities with respect
to or resulting from any delay in paying or omission to pay such taxes and fees.
10.11 ATTORNEYS' FEES AND COSTS. With respect to any dispute
relating to this Agreement, or in the event that a suit, action, arbitration, or
other proceeding of any nature whatsoever, including, without limitation, any
proceeding under the U.S. Bankruptcy Code and involving issues peculiar to
Federal bankruptcy law, any action seeking a declaration of rights or a suit for
rescission, is instituted to interpret or enforce this Agreement or any
provision of this Agreement, except as otherwise provided herein, the prevailing
party shall be entitled to recover from the losing party its reasonable
attorneys', paralegals', accountants', and other experts' and professional fees
and all other fees, costs, and expenses actually incurred and reasonably
necessary in connection therewith, as determined by the judge or arbitrator at
trial or other proceeding, or on any appeal or review, in additional to all
other amounts provided by law.
10.12 WAIVER OF TRIAL BY JURY. TO THE EXTENT THEY MAY LEGALLY DO SO,
THE COMPANY AND THE PURCHASER HEREBY EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY
OF ANY CLAIM, DEMAND, ACTION, CAUSE OF ACTION, OR PROCEEDING ARISING UNDER OR
WITH RESPECT TO THIS AGREEMENT AND THE BASIC DOCUMENTS OR IN ANY WAY CONNECTED
WITH, OR RELATED TO, OR INCIDENTAL TO, THE DEALINGS OF THE PARTIES HERETO WITH
RESPECT TO THIS AGREEMENT OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE
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CUSIP 64353J107 13D Page 34 of 36 Pages
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WHETHER NOW EXISTING OR HEREAFTER ARISING, AND IRRESPECTIVE OF WHETHER SOUNDING
IN CONTRACT, TORT OR OTHERWISE. TO THE EXTENT THEY MAY LEGALLY DO SO, THE
COMPANY AND THE PURCHASER HEREBY AGREE THAT ANY SUCH CLAIM, DEMAND, ACTION,
CAUSE OF ACTION, OR PROCEEDING SHALL BE DECIDED BY A COURT TRIAL WITHOUT A JURY
AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
SECTION 10.12 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE OTHER
PARTY OR PARTIES HERETO TO WAIVER OF ITS OR THEIR RIGHT TO TRIAL BY JURY.
10.13 INDEPENDENCE OF COVENANTS. All covenants under this Agreement
shall be given independent effect so that if a particular action or condition is
not permitted by any one covenant, the fact that it would be permitted by
another covenant, by an exception thereto, or would otherwise be within the
limitations thereof, shall not avoid the occurrence of breach of this Agreement
if such action is taken or condition exists.
10.14 EXCHANGES; LOST, STOLEN OR MUTILATED CERTIFICATES. Upon
surrender by a holder of Series A Preferred Stock to the Company of any
certificate representing Series A Preferred Stock purchased or acquired
hereunder, the Company at its expense will issue in exchange therefor, and
deliver to the holder of Series A Preferred Stock, a new certificate or
certificates representing such shares, in such denominations as may be requested
by the holder of Series A Preferred Stock. Upon receipt of evidence satisfactory
to the Company of the loss, theft, destruction or mutilation of any certificate
representing any Series A Preferred Stock purchased or acquired by a holder of
Series A Preferred Stock hereunder, and in case of any such loss, theft or
destruction, upon delivery of any indemnity agreement satisfactory to the
Company, or in case of any such mutilation, upon surrender and cancellation of
such certificate, the Company at its expense will issue and deliver to such
holder a new certificate for such Series A Preferred Stock of like tenor, in
lieu of such lost, stolen or mutilated certificate.
10.15 PUBLIC ANNOUNCEMENTS. The Company shall consult with the
Purchaser before issuing, and provide to the Purchaser the opportunity to review
and comment upon, any press release, SEC filing (including without limitation
the materials to be filed in accordance with Section 7(a)) or other public
statements with respect to the transactions contemplated by this Agreement, and
shall not issue any such press release, SEC filing, or public statement prior to
such consultation, except as may be required by applicable law, by court process
or by any national securities exchange or national securities association, but
only if it has used all reasonable efforts to consult with the other party
unless it has been unable to do so in a timely manner.
[Signatures begin on the following page.]
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CUSIP 64353J107 13D Page 35 of 36 Pages
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[COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have executed this STOCK
PURCHASE AGREEMENT as of the day and year first above written.
NEW CENTURY EQUITY HOLDINGS CORP.
By: /s/ David P. Tusa
---------------------
Name: David P. Tusa
Title: Executive Vice President, Chief
Financial Officer and Secretary
Address: 10101 Reunion Place, Suite 970
San Antonio, Texas 78216
Telephone: (210) 302-0444
Facsimile: (713) 432-0555
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CUSIP 64353J107 13D Page 36 of 36 Pages
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[COUNTERPART SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have executed this STOCK
PURCHASE AGREEMENT as of the day and year first above written.
NEWCASTLE PARTNERS, L.P.
By: Newcastle Capital Management, L.P.
its general partner
By: Newcastle Capital Group, L.L.C.
its general partner
By: /s/ Mark E. Schwarz
-----------------------
Name: Mark E. Schwarz
Title: Managing Member
Address: 300 Crescent Court, Suite 1110
Dallas Texas, 75201
Telephone: (214) 661-7474
Facsimile: (214) 661-7475