EXHIBIT 4.6
NOTE EXCHANGE AGREEMENT
This AGREEMENT dated as of December 17, 1999, is made and entered into
among MODEM MEDIA.XXXXX XXXXX, INC., a Delaware corporation (the "Purchaser"),
VIVID HOLDINGS, INC., a Delaware corporation (the "Company"), and the holder
(the "Holder") of promissory note or notes issued by the Company, as maker, with
aggregate principal amount specified on the signature page hereto (collectively,
the "Note").
RECITALS
WHEREAS, the Purchaser, a subsidiary of Purchaser (the "Acquisition Sub"),
the Company and a subsidiary of the Company (the "Operating Sub") are entering
into an Agreement and Plan of Merger (the "Merger Agreement") of even date
herewith under the terms of which Acquisition Sub will merge with and into the
Company, with the Company surviving and becoming a wholly-owned subsidiary of
the Purchaser (the "Merger");
WHEREAS, it is a condition to the consummation of the Merger Agreement (the
"Closing") that the promissory notes issued by the Company, as maker, to
Computer Associates International, Inc. and to a lender code named XYZ Corp.
shall be paid in full in cash, and that all other outstanding promissory notes
(including the Note) issued by the Company, as maker, be exchanged for shares of
Class A common stock of the Purchaser, par value $.001 per share (the "Purchaser
Common Stock"); and
WHEREAS, Holder wishes to exchange its Note for shares of Purchaser Common
Stock at the Effective Time (as defined in the Merger Agreement) on the terms
specified herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter contained, and intending to be legally bound, the parties to this
Agreement hereby agree as follows:
Section 1. Exchange of Notes. (a) Holder, the Company and Purchaser
agree that, at the Effective Time, by virtue of the Merger and without any
action on the part of Holder, the Note shall be exchanged for such number of
fully paid and nonassessable shares of Purchaser Common Stock as equals the
quotient of (x) the sum of the aggregate principal amount of the Note plus any
accrued but unpaid interest on the Note through the date of the Closing divided
by (y) the Stock Value (as defined in the Merger Agreement) (such shares to be
received, the "Note Consideration").
(b) At the Effective Time, the Holder, upon surrender to the Purchaser of
the Note, shall be entitled to receive the Note Consideration. Until so
surrendered, the Note shall, after the Effective Time, represent for all
purposes only the right to receive such Note Consideration.
(c) No certificates or scrip representing fractional shares of Purchaser
Common Stock shall be issued upon the surrender for exchange of Note pursuant to
this Section and no dividend, stock split or other change in the capital
structure of Purchaser shall relate to any fractional security, and such
fractional interests shall not entitle the owner thereof to vote or to any
rights of a security holder. In lieu of any such fractional shares of Purchaser
Common Stock, any Holder who would otherwise have been entitled to a fraction of
a share of Purchaser Common Stock upon surrender of Note for exchange pursuant
to this Section will be paid cash upon such surrender in an amount equal to the
product of such fraction multiplied by the Stock Value. For purposes of this
Section, a Note represented by two or more promissory notes may be aggregated,
and in no event shall any Holder be paid an amount of cash in respect of more
than one share of Purchaser Common Stock.
Section 2. Limitations on Transfer. Holder agrees that the former
employees and other security holders of the Company will, in any day,
collectively transfer no more than 6,000 shares of Purchaser Common Stock which
they received in connection with the Merger, including shares received by the
Holder in exchange for the Note. The allocation of the 6,000 share per day limit
will be determined by Xx. Xxxxx Xxxxxxx or, if he is unavailable, by other
officers designated by Purchaser. Holder agrees to comply with whatever
reasonable sales procedures may be adopted by Purchaser to comply with these
limits. For purposes of this Section, "transfer" means (i) to sell, pledge or
contract to sell any Purchaser Common Stock, (ii) to sell any option or contract
to purchase, purchase any option or contract to sell or otherwise transfer or
dispose of any Purchaser Common Stock or securities exchangeable or convertible
for Purchaser Common Stock, or (iii) to enter into any swap, derivative or other
arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of Purchaser Common Stock.
Section 3. Piggyback Registration Rights. (a) If Purchaser proposes to
register any Purchaser Common Stock under the Securities Act (other than a
registration (A) on Form S-8 or S-4 or any successor or similar forms, (B)
relating to Purchaser Common Stock issuable upon exercise of employee stock
options or in connection with any employee benefit or similar plan of Purchaser
or (C) in connection with a direct or indirect acquisition by Purchaser of
another entity), whether or not for sale for its own account, it will each such
time, subject to the provisions of Section 3(b), give prompt written notice at
least 20 days prior to the
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anticipated filing date of the registration statement relating to such
registration to Holder, which notice shall set forth Holder's rights under this
Section and shall offer Holder the opportunity to include in such registration
statement such number of shares of Registrable Stock as Holder may request. Upon
the written request of Holder made within 10 days after the receipt of notice
from Purchaser (which request shall specify the number of shares of Registrable
Stock intended to be disposed of by Holder), Purchaser will use its best efforts
to effect the registration under the Securities Act of all Registrable Stock
which Purchaser has been so requested to register by Holder, to the extent
requisite to permit the disposition of the Registrable Stock so to be
registered; provided that (x) if Holder requests to be included in Purchaser's
registration, Holder must sell its Registrable Stock to the underwriters
selected by Purchaser on the same terms and conditions as apply to Purchaser and
(y) if, at any time after giving written notice of its intention to register any
stock pursuant to this Section 3(a) and prior to the effective date of the
registration statement filed in connection with such registration, Purchaser
shall determine for any reason not to register such stock, Purchaser shall give
written notice to Holder and, thereupon, shall be relieved of its obligation to
register any Registrable Stock in connection with such registration.
(b) If, in any registration pursuant to this Section, the managing
underwriter advises Purchaser that, in its view, the number of shares of
Purchaser Common Stock that Purchaser and its stockholders (including Holder)
intend to include in such registration exceeds the largest number of shares of
Purchaser Common Stock which can be sold without having an adverse effect on
such offering, including the price at which such shares can be sold (the
"Maximum Offering Size"), then Purchaser will include in such registration, in
the following priority, up to the Maximum Offering Size
(i) first, all shares of Purchaser Common Stock proposed to be
registered by Purchaser and other Purchaser stockholders having demand or
piggyback registration rights on the date hereof (other than the Vivid
Rollover Stock) up to the Maximum Offering Size; and
(ii) second, all Registrable Stock requested to be included in such
registration by Holder and all Vivid Rollover Stock requested to be
included in such registration by the holders thereof (allocated, if
necessary for the offering not to exceed the Maximum Offering Size, pro
rata among Holder's Registrable Stock and the Vivid Rollover Stock on the
basis of the relative number of shares of Registrable Stock so requested to
be included in such registration).
(c) Purchaser will pay all registration and filing fees in connection with
each registration of Registrable Stock requested pursuant to this Section.
Holder
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will pay the fees and expenses of any legal counsel retained by Holder and any
underwriting fees, discounts or commissions attributable to the sale of
Registrable Stock of Holder. Purchaser agrees to indemnify Holder with respect
to any registration of Holder's Registrable Stock pursuant to this Section on
the same basis as the Purchaser agreed to indemnify other Purchaser stockholders
having demand or piggyback registration rights on the date hereof.
(d) For purposes of this Section, the following terms have the following
meanings:
"Registrable Stock" means any shares of Purchaser Common Stock until (i) a
registration statement covering such shares has been declared effective by the
Securities and Exchange Commission and such shares have been disposed of
pursuant to such effective registration statement, (ii) such shares are sold
under circumstances in which all of the applicable conditions of Rule 144 are
met or under which they may be sold pursuant to Rule 144(k) or (iii) such shares
are otherwise transferred, Purchaser has delivered a new certificate or other
evidence of ownership for such shares not bearing the legend required pursuant
to this Agreement and such shares may be resold without subsequent registration
under the Securities Act. Purchaser agrees to use its best efforts to cause
Rule 144 to be made available to Holder.
"Vivid Rollover Stock" means Purchaser Common Stock received upon the
conversion of Common Stock in connection with the Merger or in exchange for the
promissory notes issued by the Company, as maker, to founders and third
parties, including the Note.
Section 4. Representations and Warranties. Holder represents and
warrants to the Purchaser and the Company as follows:
(a) Holder has good and marketable title to the Note.
(b) The Note is the only indebtedness for borrowed money owed by the
Company or the Operating Sub to Holder.
(c) Holder acknowledges and agrees with the Purchaser that the shares of
Purchaser Common Stock to be received by Holder in exchange for the Note will
not be registered under the Securities Act of 1933, as amended, (the "Securities
Act") and may not be offered or sold except pursuant to registration or an
exemption from the registration requirements of the Securities Act. Holder
further agrees that he/she has not entered and will not enter into any
transaction or arrangement with respect to the sale, transfer or delivery of the
Purchaser Common Stock, other than pursuant to any transaction that does not
require
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registration under the Securities Act. Holder represents that he/she is an
"accredited investor" as that term is defined in Regulation D promulgated under
the Securities Act. Holder represents that he/she is a resident of the State of
California and has no present intention of becoming a resident of any other
state or jurisdiction. Holder has been given access to all Purchaser documents,
records, and other information of the Purchaser, has received physical delivery
of all such documents, records and information which such Holder has requested,
and has had adequate opportunity to ask questions of, and receive answers from,
the Purchaser as well as the Purchaser's officers, employees, agents,
accountants, and representatives concerning the Purchaser's business,
operations, financial condition, assets, liabilities, and all other matters
relevant to his investment in the Purchaser Common Stock to be received in
exchange for the Note.
Section 5. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
MODEM MEDIA.XXXXX XXXXX, INC.
By _____________________________________________
Name:
Title:
VIVID HOLDINGS, INC.
By ____________________________________________
Name:
Title:
HOLDER of a promissory note or notes issued by
the Company, as maker, with aggregate principal
amount of $_____________________
_______________________________________________
Name:
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