EXHIBIT 10.1
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT, dated as of March 26, 2003, between
Viewpoint Corporation, a Delaware corporation (the "COMPANY"), and the
Purchasers identified on the signature pages hereto.
PREAMBLE
The Company has duly authorized the creation of an issue of
$3,500,000 principal amount of its 4.95% Notes due 2006 (the "NOTES") and the
issuance of such Notes, together with 3,614,756 shares of the Company's common
stock, par value $.001 per share (the "COMMON STOCK" and collectively with the
Notes, the "SECURITIES") pursuant to the provisions of this Securities Purchase
Agreement.
Each party hereto agrees as follows for the benefit of the other
parties and for the equal and ratable benefit of the Holders of the Securities.
ARTICLE ONE
DEFINITIONS
SECTION 1.01. DEFINITIONS.
"ACQUIRED INDEBTEDNESS" means Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person becomes a Subsidiary of the
Company or at the time it merges or consolidates with the Company or any of its
Subsidiaries or is assumed in connection with the acquisition of assets from
such Person.
An "AFFILIATE" of a Person means a Person who directly or indirectly
through one or more intermediaries controls, or is controlled by, or is under
common control with, such Person. The term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"BANKRUPTCY LAW" means Title 11, U.S. Code or any similar Federal,
state or foreign law for the relief of debtors.
"BOARD OF DIRECTORS" means, as to any Person, the board of directors
of such Person or any duly authorized committee thereof.
"BOARD RESOLUTION" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification.
"BUSINESS DAY" means any day other than a Saturday, Sunday or any
other day on which banking institutions in The City of New York are required or
authorized by law or other governmental action to be closed.
"CAPITAL STOCK" means (1) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents,
however designated, of corporate stock, including each class of common stock and
preferred stock of such Person and (2) with respect to any Person that is not a
corporation, any and all partnership or other equity interests of such Person.
"CAPITALIZED LEASE OBLIGATIONS" means, as to any Person, the
obligations of such Person under a lease that are required to be classified and
accounted for as capital lease obligations under GAAP and, for purposes of this
definition, the amount of such obligations at any date shall be the capitalized
amount of such obligations at such date, determined in accordance with GAAP.
"CASH EQUIVALENTS" means
(1) marketable direct obligations issued by, or unconditionally
guaranteed by, the United States Government or issued by any agency
thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof;
(2) marketable direct obligations issued by any state of the United
States of America or any political subdivision of any such state or any
public instrumentality thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either S&P or Moody's;
(3) commercial paper maturing no more than one year from the date of
creation thereof and, at the time of acquisition, having a rating of at
least A-1 from S&P or at least P-1 from Moody's;
(4) certificates of deposit or bankers' acceptances (or, with
respect to foreign banks, similar instruments) maturing within one year
from the date of acquisition thereof issued by any bank organized under
the laws of the United States of America or any state thereof or the
District of Columbia or any U.S. branch of a foreign bank having at the
date of acquisition thereof combined capital and surplus of not less than
$500 million;
(5) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clause (1) above
entered into with any bank meeting the qualifications specified in clause
(4) above; and
(6) investments in money market funds which invest substantially all
their assets in securities of the types described in clauses (1) through
(5) above.
"CHANGE OF CONTROL" means the occurrence of one or more of the
following events:
(1) any sale, lease, exchange or other transfer, in one transaction
or a series of related transactions, of all or substantially all of the
assets of the Company to any Person or group of related Persons for
purposes of Section 13(d) of the Exchange Act (a
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"GROUP") (whether or not otherwise in compliance with the
provisions of this Securities Purchase Agreement);
(2) the approval by the holders of Capital Stock of the Company of
any plan or proposal for the liquidation or dissolution of the Company
(whether or not otherwise in compliance with the provisions of this
Securities Purchase Agreement);
(3) any Person or Group shall become the owner, directly or
indirectly, beneficially, of shares representing more than 51% of the
aggregate voting power represented by the issued and outstanding Capital
Stock of the Company entitled under ordinary circumstances to elect a
majority of the directors of the Company; or
(4) the consolidation or merger of the Company with or into another
Person or the merger of another Person with or into the Company, in any
case pursuant to a transaction in which the outstanding Capital Stock of
the Company is converted into or exchanged for cash, securities or other
property other than any such transaction in which the Capital Stock of the
Company outstanding immediately prior to such transaction is converted
into or exchanged for Capital Stock (other than Disqualified Capital
Stock) of the resulting or surviving corporation representing more than
50% of the voting power of the then outstanding Capital Stock of the
resulting or surviving corporation.
"CHANGE OF CONTROL OFFER" has the meaning set forth in Section 5.12.
"CLOSING" has the meaning set forth in Section 2.07.
"CHANGE OF CONTROL PAYMENT DATE" has the meaning set forth in
Section 5.12.
"COMMON STOCK" has the meaning set forth in the Preamble.
"COMMISSION" means the Securities and Exchange Commission, or any
successor agency thereto with respect to the regulation or registration of
securities.
"COMPANY" means the party named as such in the Preamble until a
successor replaces it pursuant to this Securities Purchase Agreement.
"CURRENCY AGREEMENT" means any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement designed to protect the
Company or any Subsidiary of the Company against fluctuations in currency
values.
"DEFAULT" means an event or condition the occurrence of which is, or
with the lapse of time or the giving of notice or both would be, an Event of
Default.
"DISQUALIFIED CAPITAL STOCK" means any Capital Stock which, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable), or upon the happening of any event (other than an event
which would constitute a Change of Control), matures (excluding any maturity as
the result of an optional redemption by the issuer thereof) or is mandatorily
redeemable, pursuant to a sinking fund obligation or
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otherwise, or is redeemable at the sole option of the holder thereof (except, in
each case, upon the occurrence of a Change of Control), in whole or in part, on
or prior to the Final Maturity Date.
"EVENT OF DEFAULT" has the meaning set forth in Section 6.01.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, or any successor statute or statutes thereto.
"EXCHANGE AGREEMENTS" means those certain Redemption, Amendment and
Exchange Agreements, each dated as of the date hereof, by and among the Company
and the investors listed on the signature pages therein.
"FAIR MARKET VALUE" means, with respect to any asset or property,
the price which could be negotiated in an arm's-length free market transaction,
for cash, between a willing seller and a willing buyer, neither of whom is under
pressure or compulsion to complete the transaction. Fair market value shall be
determined by the Board of Directors of the Company acting reasonably and in
good faith and shall be evidenced by a Board Resolution.
"FINAL MATURITY DATE" means March 31, 2006.
"GAAP" is defined to mean generally accepted accounting principles
in the United States of America as in effect as of the Issue Date, including,
without limitation, those set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as approved by
a significant segment of the accounting profession.
"HOLDER" means the Person in whose name a Note is registered on the
books and records of the Company.
"INCUR" means, with respect to any Indebtedness, to, directly or
indirectly, create, incur, assume, guarantee, acquire, become liable,
contingently or otherwise with respect to, or otherwise become responsible for
payment of such Indebtedness.
"INDEBTEDNESS" means with respect to any Person, without
duplication,
(1) the principal amount of all obligations of such Person for
borrowed money,
(2) the principal amount of all obligations of such Person evidenced
by bonds, debentures, notes or other similar instruments,
(3) all Capitalized Lease Obligations of such Person,
(4) all obligations of such Person to pay the deferred purchase
price of property, all conditional sale obligations and all obligations
under any title retention
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agreement (but excluding accounts payable and other current liabilities
arising in the Ordinary Course of Business),
(5) all obligations of such Person for the reimbursement of any
obligor on any letter of credit or banker's acceptance,
(6) guarantees and other contingent obligations of such Person in
respect of Indebtedness referred to in clauses (1) through (5) above and
clause (8) below,
(7) all Indebtedness of any other Person of the type referred to in
clauses (1) through (6) above which are secured by any Lien on any
property or asset of such Person, the amount of such obligation being
deemed to be the lesser of the fair market value at such date of any asset
subject to any Lien securing the Indebtedness of others and the amount of
the Indebtedness secured,
(8) all obligations under currency agreements relating to Currency
Swap Agreements and Interest Swap Obligations of such Person, and
(9) all Disqualified Capital Stock issued by such Person with the
amount of Indebtedness represented by such Disqualified Capital Stock
being equal to the greater of its voluntary or involuntary liquidation
preference and its maximum fixed repurchase price, but excluding accrued
dividends, if any.
For purposes hereof, (1) the "Maximum Fixed Repurchase Price" of any
Disqualified Capital Stock which does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Disqualified Capital Stock as if
such Disqualified Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to this Securities Purchase
Agreement, and if such price is based upon, or measured by, the fair market
value of such Disqualified Capital Stock, such fair market value shall be
determined reasonably and in good faith by the Board of Directors of the issuer
of such Disqualified Capital Stock, and (2) accrual of interest, accretion or
amortization of original issue discount, the payment of interest on any
Indebtedness in the form of additional Indebtedness with the same terms, and the
payment of dividends on Disqualified Capital Stock in the form of additional
shares of the same class of Disqualified Capital Stock will not be deemed to be
an incurrence of Indebtedness or an issuance of Disqualified Capital Stock for
purposes of Section 5.03. The amount of Indebtedness of any Person at any date
shall be the amount of all unconditional obligations described above, as such
amount would be reflected on a balance sheet prepared in accordance with GAAP,
and the maximum liability at such date of such Person for any contingent
obligations described above.
"INITIAL PURCHASERS" means those purchasers of the Securities from
the Company pursuant to this Securities Purchase Agreement indicated on the
signature pages hereof.
"INTEREST PAYMENT DATE" means the stated due date of an installment
of interest on the Securities.
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"INTEREST SWAP OBLIGATIONS" means the obligations of any Person,
pursuant to any arrangement with any other Person, whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such other
Person calculated by applying a fixed or a floating rate of interest on the same
notional amount.
"INVESTMENT" means, with respect to any Person, any direct or
indirect loan or other extension of credit (including, without limitation, a
guarantee) or capital contribution to (by means of any transfer of cash or other
property to others or any payment for property or services for the account or
use of others), or any purchase or acquisition by such Person of any Capital
Stock, bonds, notes, debentures or other securities or evidences of Indebtedness
issued by, any Person. "Investment" shall exclude extensions of trade credit by
the Company and its Subsidiaries in the Ordinary Course of Business. For the
purposes of Section 5.02, the amount of any Investment shall be the original
cost of such Investment plus the cost of all additional Investments by the
Company or any of its Subsidiaries, without any adjustments for increases or
decreases in value, or write-ups, write-downs or write-offs with respect to such
Investment, reduced by the payment of dividends or distributions (including tax
sharing payments) in connection with such Investment or any other amounts
received in respect of such Investment.
If the Company or any Subsidiary of the Company sells or otherwise
disposes of any Capital Stock of any Subsidiary such that, after giving effect
to any such sale or disposition, such Person is no longer a Subsidiary of the
Company, the Company shall be deemed to have made an Investment on the date of
any such sale or disposition equal to the Fair Market Value of the Capital Stock
of such Subsidiary not sold or disposed.
"ISSUE DATE" means the original date of issuance of the Securities.
"LIEN" means any lien, mortgage, deed of trust, pledge, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof and any
agreement to give any security interest).
"MOODY'S" means Xxxxx'x Investor Service, Inc. and its successors.
"NOTES" has the meaning set forth in the Preamble.
"OBLIGATIONS" means, with respect to any Indebtedness, all
principal, interest, premiums, penalties, fees, indemnities, expenses (including
legal fees and expenses), reimbursement obligations and other liabilities
payable to the holder of such Indebtedness under the documentation governing
such Indebtedness.
"OFFICER" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, any Executive Vice President,
the Chief Financial Officer or the Secretary of such Person.
"OFFICERS' CERTIFICATE" means a certificate signed by two Officers
of the Company.
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"OPINION OF COUNSEL" means a written opinion from legal counsel
which counsel may be counsel to or an employee of the Company.
"ORDINARY COURSE OF BUSINESS" means, in respect of any transaction
involving the Company or any Subsidiary of the Company, the ordinary course of
such Person's business, as conducted by any such Person substantially in
accordance with past practice and undertaken by such Person in good faith and
not for the purposes of evading any covenant or restriction in this Securities
Purchase Agreement, the Notes and the Registration Rights Agreement.
"PERMITTED INDEBTEDNESS" means, without duplication,
(1) the Notes,
(2) other Indebtedness of the Company and its Subsidiaries
outstanding on the Issue Date (including Indebtedness Incurred subsequent
to the Issue Date in satisfaction of accrued but unpaid interest on such
Indebtedness outstanding on the Issue Date),
(3) other Indebtedness of the Company and its Subsidiaries which may
be issued pursuant to the terms of the 2002 Securities Purchase Agreement
and/or the Exchange Agreements.
(4) Interest Swap Obligations of the Company or any of its
Subsidiaries covering Indebtedness of the Company or any of its
Subsidiaries; provided, however, that any Indebtedness to which any such
Interest Swap Obligations correspond is otherwise permitted to be incurred
under this Securities Purchase Agreement; provided, further, that such
Interest Swap Obligations are entered into, in the reasonable judgment of
the Company, to protect the Company or any of its Subsidiaries from
fluctuation in interest rates on their respective outstanding
Indebtedness,
(5) Indebtedness under Currency Agreements,
(6) intercompany Indebtedness owed by the Company to any Wholly
Owned Subsidiary of the Company or by any Wholly Owned Subsidiary of the
Company to the Company or any Wholly Owned Subsidiary of the Company for
so long as such Indebtedness is held by the Company or a Wholly Owned
Subsidiary of the Company in each case subject to no Lien held by a Person
other than the Company or a Wholly Owned Subsidiary of the Company;
provided, however, that if as of any date any Person other than the
Company or a Wholly Owned Subsidiary of the Company owns or holds any such
Indebtedness or holds a Lien in respect of such Indebtedness, such date
shall be deemed the incurrence of Indebtedness not constituting Permitted
Indebtedness by the issuer of such Indebtedness under this clause (5),
(7) Acquired Indebtedness to the extent the Company could have
incurred such Indebtedness in accordance with clause 11 of this definition
on the date such Indebtedness became Acquired Indebtedness,
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(8) (A) guarantees by Subsidiaries of the Company of Indebtedness of
other Subsidiaries of the Company to the extent that such Indebtedness is
otherwise permitted under this Securities Purchase Agreement and (B)
guarantees by the Company of its Wholly Owned Subsidiaries' Indebtedness;
provided that such Indebtedness is otherwise permitted to be incurred
under this Securities Purchase Agreement,
(9) guarantees, letters of credit and indemnity agreements relating
to performance and surety bonds incurred in the Ordinary Course of
Business,
(10) any refinancing, modification, replacement, renewal, deferral,
extension, substitution, supplement, reissuance or resale of Indebtedness
referred to in clauses (2) or (6) of this definition, including any
additional Indebtedness incurred to pay premiums required by the
instruments governing such Indebtedness as in effect at the time of
issuance thereof ("REQUIRED PREMIUMS") and fees in connection therewith;
provided, however, that any such event shall not (1) result in an increase
in the aggregate principal amount of Permitted Indebtedness (except to the
extent such increase is a result of a simultaneous incurrence of
additional Indebtedness (A) to pay Required Premiums and related fees or
(B) otherwise permitted to be incurred under this Securities Purchase
Agreement) of the Company and its Subsidiaries, (2) create Indebtedness
with a stated maturity date earlier than the stated maturity date of the
Indebtedness being refinanced, unless otherwise permitted to be incurred
under this Securities Purchase Agreement, or (3) create Indebtedness with
a Weighted Average Life to Maturity at the time such Indebtedness is
incurred that is less than the Weighted Average Life to Maturity at such
time of the Indebtedness being refinanced, modified, replaced, renewed,
deferred, extended, or substituted, supplemented, reissued or resold,
unless otherwise permitted to be incurred under this Securities Purchase
Agreement, and
(11) additional Indebtedness of the Company or any Subsidiary (a) if
no Default or Event of Default shall have occurred and be continuing at
the time of the proposed incurrence thereof or shall occur as a result of
such proposed incurrence and (b) that is unsecured, that is subordinate or
pari passu in right of payment to the Notes, that provides for interest
that is no greater than market rate interest and that does not exceed in
the aggregate the sum of $1,500,000.
"PERMITTED INVESTMENTS" means
(1) Investments by the Company or any Subsidiary of the Company in,
or for the benefit of, any Subsidiary of the Company (whether existing on
the Issue Date or created thereafter and including Investments in any
Person, if after giving effect to such Investment, such Person would be a
Subsidiary of the Company or such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys all or substantially all
of its assets to, or is liquidated into, the Company or a Subsidiary of
the Company) and Investments in, or for the benefit of, the Company by any
Subsidiary of the Company;
(2) cash and Cash Equivalents;
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(3) Investments existing on the Issue Date;
(4) vendor equity or debt received in lieu of payment for services,
license fees or products sold;
(5) Investments in securities of trade creditors or customers
received pursuant to any plan of reorganization or similar arrangement
upon the bankruptcy or insolvency of such trade creditors or customers or
in settlement of or other resolution of claims or disputes, and in each
case, extensions, modifications and remands thereof;
(6) so long as no Default or Event of Default has occurred and is
continuing, loans and advances made by the Company and its Subsidiaries on
or after the date hereof to their respective employees not to exceed
$500,000 in the aggregate at any one time outstanding;
(7) Investments received by the Company or its Restricted
Subsidiaries as consideration for asset sales;
(8) Currency Agreements and Interest Swap Obligations entered into
in the ordinary course of the Company's or its Subsidiaries' business and
otherwise in compliance with this Securities Purchase Agreement; and
(9) guarantees by the Company or any of its Subsidiaries of
Indebtedness or other obligations otherwise permitted to be incurred by
the Company or any of its Subsidiaries under this Securities Purchase
Agreement.
"PERMITTED LIENS" means
(1) Liens securing Indebtedness consisting of Capitalized Lease
Obligations;
(2) Liens on property existing at the time of acquisition thereof by
the Company or a Subsidiary of the Company; provided that such Liens were
in existence prior to the contemplation of such acquisition;
(3) Liens securing Indebtedness incurred pursuant to clause (8) of
the definition of Permitted Indebtedness;
(4) Liens created to replace Liens described in clause (2) above to
the extent that such Liens do not extend beyond the originally encumbered
property (other than improvements thereto or thereon, attachments and
other modifications reasonably required to maintain such property) and are
not otherwise materially less favorable to the Company and its
Subsidiaries than the Liens being replaced, as determined by the Board of
Directors of the Company in good faith; or
(5) Liens existing or which may be created under the Pledge
Agreement, dated as of December 31, 2002, as amended, by and among the
Company and the investors listed on the signature pages therein, pursuant
to the terms of the 2002 Securities Purchase Agreement and/or the Exchange
Agreements.
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"PERSON" means an individual, partnership, corporation,
unincorporated organization, trust or joint venture, or a governmental agency or
political subdivision thereof.
"QUALIFIED CAPITAL STOCK" means any stock that is not Disqualified
Capital Stock.
"RECORD DATE" means the applicable Record Date (whether or not a
Business Day) specified in the Securities.
"REDEMPTION DATE," when used with respect to any Note to be
redeemed, means the date fixed for such redemption pursuant to this Securities
Purchase Agreement and the Notes.
"REDEMPTION PRICE," when used with respect to any Note to be
redeemed, means the price fixed for such redemption, payable in immediately
available funds, pursuant to this Securities Purchase Agreement and the Notes.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of March 26, 2003, by and among the Company and the Initial
Purchasers, as amended from time to time.
"RESTRICTED PAYMENT" has the meaning set forth in Section 5.02.
"2002 Securities Purchase Agreement" means the Securities Purchase
Agreement, dated as of December 31, 2002, as amended as of the date hereof, by
and among the Company and the investors listed on the signature pages therein.
"S&P" means Standard & Poor's, a division of the XxXxxx-Xxxx
Companies, and its successors.
"SALE AND LEASEBACK TRANSACTION" means any direct or indirect
arrangement with any Person or to which any such Person is a party, providing
for the leasing to the Company or a Subsidiary of the Company of any property,
whether owned by the Company or any Subsidiary of the Company at the Issue Date
or later acquired, which has been or is to be sold or transferred by the Company
or such Subsidiary to such Person or to any other Person from whom funds have
been or are to be advanced by such Person on the security of such Property.
"SECURITIES" has the meaning set forth in the Preamble.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or
any successor statute or statutes thereto.
"SECURITIES PURCHASE AGREEMENT" means this Securities Purchase
Agreement, dated as of March 26, 2003, by and among the Company and the Initial
Purchasers, as amended from time to time.
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"SUBSIDIARY," with respect to any Person, means (i) any corporation
of which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary circumstances
shall at the time be owned, directly or indirectly, by such Person, or (ii) any
other Person of which at least a majority of the voting interest under ordinary
circumstances is at the time, directly or indirectly, owned by such Person.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing
(a) the then outstanding aggregate principal amount of such
Indebtedness into
(b) the sum of the total of the products obtained by
multiplying
(1) the amount of each then remaining installment,
sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect
thereof, by
(2) the number of years (calculated to the nearest
one-twelfth) which will elapse between such date and the
making of such payment.
"WHOLLY OWNED SUBSIDIARY" of any Person means any Subsidiary of such
Person of which all the outstanding voting securities (other than directors'
qualifying shares) are owned by such Person or any Wholly Owned Subsidiary of
such Person.
SECTION 1.02. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(2) "or" is not exclusive;
(3) words in the singular include the plural, and words in the
plural include the singular;
(4) provisions apply to successive events and transactions; and
(5) "herein," "hereof" and other words of similar import refer to
this Securities Purchase Agreement as a whole and not to any particular
Article, Section or other subdivision.
ARTICLE TWO
THE SECURITIES
SECTION 2.01. FORM AND DATING OF NOTES.
The Notes shall be substantially in the form of EXHIBIT A hereto.
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Upon any transfer provided for in Section 2.05, the Company shall
execute and deliver to the Person specified by the Assignment Form attached to
such Note a new Note in such names and in such authorized denominations as are
specified in such Assignment Form. Thereupon, the beneficial ownership of such
Note shown on the records maintained by the Company shall be amended to reflect
such transfer.
The Company shall act as registrar to maintain a record of the
issuance, registered transfer and registered Holder of each Note.
SECTION 2.02. REPLACEMENT NOTES.
If a mutilated Note is surrendered to the Company or if the Holder
of a Note claims that the Note has been lost, destroyed or wrongfully taken, the
Company shall issue a replacement Note if the following requirements are met. If
required by the Company, such Holder shall provide indemnity, sufficient in the
reasonable judgment of the Company, to protect the Company from any loss which
may suffer if a Note is replaced. The Company may charge such Holder for its
reasonable out-of-pocket expenses in replacing a Note, including reasonable fees
and expenses of counsel. Every replacement Note shall constitute an additional
obligation of the Company.
SECTION 2.03. NOTES HELD BY THE COMPANY.
In determining whether the Holders of the required principal amount
of Notes have concurred in any direction, waiver or consent, Notes owned by the
Company or any of its Affiliates shall be disregarded.
SECTION 2.04. DEFAULTED INTEREST.
The Company will pay interest on overdue principal from time to time
on demand at the rate of 10% per annum. The Company shall, to the extent lawful,
pay interest on overdue installments of interest (without regard to any
applicable grace periods) from time to time on demand at the rate of 10% per
annum. Interest will be computed on the basis of a 365-day year and the actual
number of days elapsed.
If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted interest, plus (to the extent lawful) any interest
payable on the defaulted interest, to the Persons who are Holders.
SECTION 2.05. ASSIGNMENT AND TRANSFER.
Neither any Security nor any beneficial interest therein may be
sold, assigned or otherwise transferred except (a) in a principal amount of not
less than $500,000, (b) in accordance with applicable securities laws (as
referenced in the restrictive legend appearing on the form of Note), (c) by due
execution and delivery of the Form of Assignment attached to such Note, and (d)
with the consent of the Company, which consent shall not unreasonably be
withheld or delayed.
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SECTION 2.06. PURCHASE AND SALE OF THE SECURITIES.
Subject to the terms and conditions of this Securities Purchase
Agreement and in reliance on the representations, warranties and covenants of
the parties contained herein, the Company shall issue and deliver the Securities
to each of the Initial Purchasers in the denominations set forth opposite their
respective names on SCHEDULE 2.06, and each Initial Purchaser, severally and not
jointly, shall purchase such Securities from the Company for the aggregate
purchase price set forth opposite its name on SCHEDULE 2.06, at the Closing
described in Section 2.07.
SECTION 2.07. CLOSING.
The closing of the transactions contemplated by Section 2.06 (the
"CLOSING") shall take place at ___ p.m. on the date hereof at the offices of
_______________________.
At the Closing, the Company shall deliver to each Initial Purchaser
certificates representing the Securities to be purchased by such Initial
Purchaser at the Closing duly registered in the name of such Initial Purchaser.
Delivery of such certificates to each Initial Purchaser shall be made against
receipt by the Company from such Initial Purchaser of the aggregate purchase
price set forth opposite its name on SCHEDULE 2.06 by wire transfer of
immediately available funds to an account designated by the Company in writing
for such purpose.
SECTION 2.08. ORIGINAL ISSUE DISCOUNT.
For purposes of Section 1273(c)(2) of the Internal Revenue Code of
1986, as amended, the Company and the Initial Holders agree that the issue price
of the Notes is equal to 85% of the principal amount of the Notes and that the
aggregate sum of $525,000 therefore shall be treated as original issue discount
for all purposes, including the preparation of tax returns and the preparation
of financial statements of the Company (except to the extent such treatment in
connection with the preparation of financial statements of the Company would not
be in accordance with GAAP).
ARTICLE THREE
REDEMPTION OF THE NOTES
SECTION 3.01. NOTICES.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Paragraph 4 of the Notes, it shall notify the Holders
in writing of the Redemption Date, the Redemption Price and the principal amount
of Notes to be redeemed at least 5 days but not more than 30 days before the
Redemption Date together with an Officers' Certificate and an Opinion of Counsel
stating that such redemption will comply with the conditions contained herein.
Any such notice shall be irrevocable.
13
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.
In the event that less than all of the Notes are to be redeemed at
any time pursuant to the optional redemption provisions of Paragraph 4 of the
Notes, selection of such Notes for redemption will be made by the Company on a
pro rata basis among all of the Holders (based upon the relative principal
amounts of Notes held by each such Holder).
SECTION 3.03. EFFECT OF NOTICE OF REDEMPTION.
Unless the Company defaults in the payment when due of such
Redemption Price plus accrued interest, if any, interest on the Notes to be
redeemed will cease to accrue after the applicable Redemption Date, whether or
not such Notes are presented for payment.
SECTION 3.04. NOTES REDEEMED IN PART.
Upon surrender and cancellation of a Note that is to be redeemed in
part only, the Company shall deliver to the Holder a new Note or Notes in a
principal amount equal to the unredeemed portion of the Note surrendered.
ARTICLE FOUR
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
In order to induce each Initial Purchaser to enter into this
Securities Purchase Agreement and purchase the Securities, the Company
represents and warrants to each Initial Purchaser as follows:
(a) Organization, Good Standing and Corporate Power. The Company is
a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware, with all requisite corporate power and
authority to own its properties and to conduct its business as presently
conducted. The Company is qualified to do business and is in good standing
(or has active status) in each jurisdiction in which the failure to be so
qualified could have a Material Adverse Effect (as hereinafter defined).
The Company has all requisite corporate power and authority to enter into
this Agreement and to perform its obligations hereunder, including,
without limitation, the issuance and sale of the Securities.
(b) Due Authorization; Enforceability; No Conflicts. The Company has
taken all corporate and stockholder action necessary to authorize the
execution, delivery and performance by it of this Securities Purchase
Agreement. Assuming the due execution and delivery of this Securities
Purchase Agreement by each Initial Purchaser, this Securities Purchase
Agreement constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and other
similar laws relating to the enforcement of creditors' rights generally,
the availability of equitable
14
remedies and to general equity principles. The execution, delivery and
performance by the Company of this Securities Purchase Agreement and
compliance by the Company with the terms hereof will not violate, conflict
with or cause an event of default under the Company's Certificate of
Incorporation or the Company's Bylaws, or any resolutions of the Company's
Board of Directors or stockholders or any agreement, instrument, judgment,
order, law, rule or regulation applicable to the Company or by which the
Company is bound or to which any of the Company's properties are subject,
except where such violation, conflict or event of default would not result
in a material adverse effect on the Company's business, financial
condition, results of operations or properties (a "Material Adverse
Effect"). The shares of Common Stock included in the Securities, upon
issuance in accordance with the terms of this Securities Purchase
Agreement, are and will continue upon issuance to be duly authorized and
reserved, validly issued, fully-paid and nonassessable and free of any
liens, claims or encumbrances and rights of first refusal.
(c) Capitalization. The authorized capital stock of the Company
consists of (i) 5,000,000 shares of preferred stock, par value .001 per
share, of which no shares are issued and outstanding, and (ii) 75,000,000
shares of Common Stock, of which 42,530,751 shares are issued and
outstanding. Except with respect to the Securities or as set forth on
SCHEDULE 4.01(c) annexed hereto, there are no outstanding subscriptions,
rights, options, warrants, conversion rights, agreements or other claims
for the purchase or acquisition from the Company of any shares of its
capital stock or obligating the Company to issue, repurchase, register or
otherwise acquire, any shares of its capital stock or any securities
convertible into, exercisable or exchangeable for, or otherwise entitling
the holder to acquire, any shares of capital stock of the Company.
(d) Reports and Financial Statements. The Company has previously
furnished each Initial Purchaser with true and complete copies, as amended
or supplemented, of the following documents, to the extent not available
on the XXXXX system (i) Annual Report on Form 10-K for the year ended
December 31, 2001, as filed with the Commission, (ii) proxy statements
relating to all meetings of its shareholders (whether annual or special)
since June 1, 2002 and (iii) all other reports or registration statements
filed by the Company with the SEC since December 31, 2001 (such reports,
registration statements and other filings, together with any amendments or
supplements thereto, are collectively referred to as the "the Company
Commission Filings"). The Company Commission Filings constituted all of
the documents required to be filed by the Company with the Commission
since December 31, 2001. As of their respective dates, such Company's
Commission Filings (as amended or supplemented) complied in all material
respects with the requirements of the Securities Act and the Exchange Act
and the rules and regulations of the Commission promulgated thereunder,
and did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they
were made, not misleading. The audited consolidated financial statements
and any unaudited interim financial statements of the Company included in
such Company's Commission Filings comply as to form in all material
respects with applicable accounting requirements and the published rules
and regulations of the Commission with respect thereto, and have been
prepared in accordance with GAAP
15
(except as may be indicated therein or in the notes thereto and, in the
case of the quarterly financial statements, as permitted by Form 10-Q
under the Exchange Act) and fairly present in all material respects the
financial position of the Company at the dates thereof and the results of
its operations and its cash flows for the periods then ended.
(e) Absence of Certain Changes or Events. Except as publicly
disclosed or otherwise disclosed in writing or orally (provided that any
oral disclosure hereunder must be made to Xxxxx Xxxx) prior to the date of
this Securities Purchase Agreement or as otherwise contemplated by this
Securities Purchase Agreement, since, September 30, 2002, there has not
been any material adverse change or material adverse development in the
financial condition, results of operations, or the business or properties
of the Company.
(f) Information in the Registration Statement. None of the
information relating to the Company, its officers or directors, supplied
by the Company for inclusion or incorporation by reference in the
registration statement (the "Registration Statement") to be filed with the
Commission by the Company pursuant to the Registration Rights Agreement to
be entered into between the Company and the Initial Purchasers or any
amendments or supplements thereto, will, at the time it becomes effective
under the Securities Act and at the effective date, contain any untrue
statement of material fact or omit to state any 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. If
at any time prior to the effective date any event with respect to the
Company, its officers or directors should occur which is required to be
described in an amendment, or a supplement to, the Registration Statement,
such event shall be so described and such description in such amendment or
supplement of such information will not contain any statement which, at
the time and in light of circumstances under which it is made, is false or
misleading with respect to any material fact or omits to state any
material fact required to be stated therein or in the Registration
Statement or necessary to make the statements therein or in the
Registration Statement not false or misleading.
(g) Compliance With Laws. The conduct of the business of the Company
complies in all material respects with all statutes, laws, regulations,
ordinances, rules, judgments, orders or decrees applicable thereto. Except
as set forth on SCHEDULE 4.01(g) annexed hereto, the Company has not
received notice of any alleged material violation of any statute, law,
regulation, ordinance, rule, judgment, order or decree from any
governmental authority applicable to the Company or any of its assets or
properties which has not been satisfactorily disposed of.
(h) Consents. Except as set forth on SCHEDULE 4.01(h) annexed
hereto, no consent or waiver of, order or approval by, or filing with any
governmental authority or other third party is required in connection with
the Company's execution, delivery and performance of this Securities
Purchase Agreement.
(i) Litigation Proceedings. Except as set forth on SCHEDULE 4.01(i)
annexed hereto, there is no action, suit, notice of violation, proceeding
or investigation
16
pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of its properties before or by any court,
governmental or administrative agency or regulatory authority (federal,
state, county, local or foreign) which (i) adversely affects or challenges
the legality, validity or enforceability of any of this Securities
Purchase Agreement and (ii) could reasonably be expected to, individually
or in the aggregate, have a Material Adverse Effect.
(j) No Default or Violation. Except as set forth on SCHEDULE 4.01(j)
annexed hereto, the Company (i) is not in default under or in violation of
any indenture, loan or other credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its properties
is bound, (ii) is not in violation of any order of any court, arbitrator
or governmental body applicable to it, (iii) is not in violation of any
statute, rule or regulation of any governmental authority to which it is
subject or (iv) is not in default under or in violation of its Certificate
of Incorporation, Bylaws or other organizational documents, respectively,
except in each case for defaults and violations which individually or in
the aggregate would not reasonably be expected to have a Material Adverse
Effect. The business of the Company is not being conducted, and shall not
be conducted in violation of any law, ordinance, rule or regulation of any
governmental entity, except where such violations have not resulted or
would not reasonably be expected to result, individually or in the
aggregate, in a Material Adverse Effect. The Company is not in breach of
any agreement where such breach, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect.
(k) Private Offering. Neither the Company nor any person acting on
its behalf has taken or will take any action which might subject the
offering, issuance or sale of the Securities to each Initial Purchaser
hereunder to the registration requirements of the Securities Act. The
offer, sale and issuance of the Securities to each Initial Purchaser will
not be integrated with any other offer, sale and issuance of the Company's
securities (past, current, or future) under the Securities Act or any
regulations of any exchange or automated quotation system on which any of
the securities of the Company are listed or designated or for purposes of
any stockholder approval provision applicable to the Company or its
securities. Subject to the accuracy and completeness of the
representations and warranties of each Initial Purchaser contained in
Section 4.02 hereof, the offer, sale and issuance by the Company to each
Initial Purchaser of the Securities hereunder is exempt from the
registration requirements of the Securities Act.
(l) Investment Company. The Company is not, and is not controlled by
or under common control with an affiliate of an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
(m) Solicitation Materials. The Company has not (i) distributed any
offering materials in connection with the offering and sale of the
Securities to each Initial Purchaser hereunder or (ii) solicited any offer
to buy or sell the Securities hereunder by means of any form of general
solicitation or advertising.
(n) Listing and Maintenance Requirements Compliance. Except as set
forth on SCHEDULE 4.01(n) annexed hereto, the Company has not in the two
years preceding
17
the date hereof received written notice from any stock exchange or market
on which the Common Stock is or has been listed (or on which it has been
quoted) to the effect that the Company is not in compliance with the
listing or maintenance requirements of such exchange or market.
(o) Registration Rights; Rights of Participation. Except as set
forth on SCHEDULE 4.01(o) annexed hereto, the Company has not granted or
agreed to grant to any person any rights (including "piggy-back"
registration rights) to have any securities of the Company registered with
the Commission or any other governmental authority which has not been
satisfied, and no person, including, but not limited to, current or former
stockholders of the Company, underwriters, brokers or agents, has any
right of first refusal, preemptive right, right of participation, or any
similar right to participate in the transactions contemplated by this
Securities Purchase Agreement.
SECTION 4.02. REPRESENTATIONS AND WARRANTIES OF INITIAL PURCHASERS.
In order to induce the Company to enter into this Securities
Purchase Agreement and issue the Securities, each Initial Purchaser represents
and warrants to the Company only with respect to itself as follows:
(a) Organization, Good Standing and Corporate Power. Such Initial
Purchaser is a corporation, limited partnership or limited liability
company, as the case may be, duly formed, validly existing and in good
standing under the laws of the State of its organization, with all
requisite corporate power and authority to own its properties, conduct its
business, enter into this Securities Purchase Agreement and perform its
obligations hereunder.
(b) Due Authorization; Enforceability; No Conflicts. Such Initial
Purchaser has taken all corporate, limited partnership or limited
liability company action, as the case may be, necessary to authorize the
execution, delivery and performance by it of this Securities Purchase
Agreement. Assuming the due execution and delivery of this Securities
Purchase Agreement by the Company, this Securities Purchase Agreement
constitutes a valid and binding obligation of such Initial Purchaser,
enforceable against such Initial Purchaser in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium
and other similar laws relating to the enforcement of creditors' rights
generally, the availability of equitable remedies and general equity
principles. The execution, delivery and performance by such Initial
Purchaser of this Securities Purchase Agreement and compliance by such
Initial Purchaser with the terms hereof will not violate, conflict with or
cause an event of default under such Initial Purchaser's organizational
documents or any other agreement, instrument, judgment, order, law, rule
or regulation by which such Initial Purchaser is bound or to which any
properties of such Initial Purchaser are subject.
(c) Accredited Investor. Such Initial Purchaser is an "accredited
investor" as that term is defined in Rule 501(a) under the Securities Act.
18
(d) Investment. Such Initial Purchaser is acquiring the Securities
for investment for its own account and not with a present view to, or for
resale in connection with, any distribution thereof. Such Initial
Purchaser understands that the Securities have not been registered under
the Securities Act or applicable state securities laws by reason of
certain exemptions from the registration provisions thereof that depend
upon, among other things, the truth and accuracy of each Initial
Purchaser's representations and warranties herein; provided, however, that
by making the representations herein, each Initial Purchaser does not
agree to hold any of the Securities for any minimum or other specific term
and reserves the right to dispose of the Securities at any time in
accordance with or pursuant to a registration statement or an exemption
under the Securities Act.
(e) Restricted Transferability. Such Initial Purchaser acknowledges
that the Securities are being offered and sold hereunder in a private
placement that is exempt from the registration requirements of the
Securities Act and that certificates for such Shares will bear the legend
set forth in Section 4.02(f) below.
(f) Legends. Such Initial Purchaser understands that the
certificates representing the Securities, except as set forth below, shall
bear any legend as required by the "blue sky" laws of any state and a
restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of such stock
certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED
FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF (A) AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES
LAWS, OR (B) AN OPINION OF COUNSEL ADDRESSED TO THE COMPANY, IN A
GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT OR APPLICABLE STATE SECURITIES LAWS. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA
FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED
BY THE SECURITIES.
(g) The legend set forth above shall be removed and the Company
shall issue a certificate without such legend to the holder of the
Securities upon which it is stamped, if, unless otherwise required by
state securities laws, (i) such Securities are registered for sale under
the Securities Act, (ii) in connection with a sale, assignment or other
transfer, such holder provides the Company with an opinion of counsel, in
a generally acceptable form, to the effect that such sale, assignment or
transfer of the Securities may be made without registration under the
Securities Act, or (iii) such holder provides the Company with reasonable
assurance that the Securities can be sold, assigned or transferred
pursuant to Rule 144 or Rule 144A promulgated under the Securities Act (or
a successor rule thereto) (collectively, "Rule 144").
19
(h) Such Initial Purchaser understands that except as provided in
the Registration Rights Agreement: (i) the Securities have not been and
are not being registered under the Securities Act or any state securities
laws, and may not be offered for sale, sold, assigned or transferred
unless (A) subsequently registered thereunder, or (B) such Initial
Purchaser shall have delivered to the Company an opinion of counsel, in a
generally acceptable form, to the effect that such Securities to be sold,
assigned or transferred may be sold, assigned or transferred pursuant to
an exemption from such registration, (ii) any sale of the Securities made
in reliance on Rule 144 may be made in accordance with the terms of Rule
144 and further, if Rule 144 is not applicable, any resale of the
Securities under circumstances in which the seller or Person through whom
the sale is made may be deemed to be an underwriter (as that term is
defined in the Securities Act) may require compliance with some other
exemption under the Securities Act or the rules and regulations of the
Commission thereunder; and (iii) neither the Company nor any other Person
is under any obligation to register the Securities under the Securities
Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder.
ARTICLE FIVE
COVENANTS
SECTION 5.01. PAYMENT OF NOTES.
The Company will pay the principal of and interest on the Notes in
the manner provided in the Notes. Interest, including defaulted interest, if
any, will be computed on the basis of a 365-day year and the actual number of
days elapsed.
Notwithstanding anything to the contrary contained in this
Securities Purchase Agreement, the Company may, to the extent it is required to
do so by law, deduct or withhold income or other similar taxes imposed by the
United States of America from principal, premium or interest payments hereunder.
SECTION 5.02. LIMITATION ON RESTRICTED PAYMENTS.
The Company will not, and will not cause or permit any of its
Subsidiaries to, directly or indirectly,
(a) declare or pay any dividend or make any distribution (other than
dividends or distributions payable in Qualified Capital Stock of the
Company or in warrants, rights or options to acquire Qualified Capital
Stock of the Company) on or in respect of shares of the Company's Capital
Stock to holders of such Capital Stock,
(b) purchase, redeem or otherwise acquire or retire for value any
Capital Stock of the Company or any warrants, rights or options to
purchase or acquire shares of any class of such Capital Stock, other than
the exchange of such Capital Stock, warrants,
20
rights or options for Qualified Capital Stock and/or for warrants, rights
or options to acquire Qualified Capital Stock, or
(c) make any Investment (other than Permitted Investments) (each of
the foregoing actions set forth in clauses (a), (b) and (c) being referred
to as a "RESTRICTED PAYMENT"), if at the time of such Restricted Payment
or immediately after giving effect thereto,
(1) a Default or an Event of Default shall have occurred and be
continuing,
(2) the Company could not incur at least $1.00 of Indebtedness
pursuant to Section 5.03, or
(3) the aggregate amount of Restricted Payments made subsequent to
the Issue Date shall exceed the sum of $1,500,000.
Notwithstanding the foregoing, the provisions set forth in the
immediately preceding paragraph shall not prohibit
(1) the payment of any dividend or distribution or the redemption of
any securities within 60 days after the date of declaration of such
dividend or distribution or the giving of formal notice by the Company of
such redemption, if the dividend or distribution would have been permitted
on the date of declaration or the redemption would have been permitted on
the date of the giving of the formal notice thereof;
(2) the repurchase of any Capital Stock of the Company or any
warrants, rights or options to purchase or acquire shares of any such
Capital Stock deemed to occur upon the exercise of stock options to
acquire Qualified Capital Stock or other similar arrangements to acquire
Qualified Capital Stock if such repurchased Capital Stock or warrants,
rights or options to acquire shares of any such Capital Stock represent a
portion of the exercise price thereof; and
(3) the redemption of any notes issued pursuant to the 2002
Securities Purchase Agreement and/or the Exchange Agreements.
SECTION 5.03. LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS.
The Company will not, and will not permit any of its Subsidiaries
to, Incur any Indebtedness, other than Permitted Indebtedness.
SECTION 5.04. CORPORATE EXISTENCE.
The Company shall do or cause to be done, at its own cost and
expense, all things necessary to preserve and keep in full force and effect its
corporate existence and the corporate, partnership or other existence of each of
its Subsidiaries in accordance with the respective organizational documents of
the Company or the Subsidiary, as the case may be, and the rights (charter and
statutory) and material franchises of the Company and each of its Subsidiaries;
21
provided, however, that the Company shall not be required to preserve any such
right or franchise, or the corporate existence of any Subsidiary, if the Board
of Directors of the Company shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company and each of the
Subsidiaries, taken as a whole and that the loss thereof is not adverse in any
material respect to the Holders.
SECTION 5.05. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (a) all material taxes, assessments and
governmental charges levied or imposed upon it or any of its Subsidiaries or
upon the income, profits or property of it or any of its Subsidiaries and (b)
all lawful claims for labor, materials and supplies which, in each case, if
unpaid, would reasonably be expected, by law, to become a material liability or
Lien upon the property of it or any of its Subsidiaries; provided, however, that
the Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim the amount, applicability
or validity of which is being contested in good faith by appropriate proceedings
and for which adequate provision has been made or for which adequate reserves,
to the extent required under GAAP, have been taken.
SECTION 5.06. MAINTENANCE OF PROPERTIES AND INSURANCE.
(a) The Company shall cause all material properties owned by or
leased by it or any of its Subsidiaries used or useful to the conduct of its
business or the business of any of its Subsidiaries to be maintained and kept in
normal condition, repair and working order and supplied with all necessary
equipment and shall cause to be made all necessary repairs, renewals and
replacements thereof, all as in its judgment may be reasonably necessary, so
that the business carried on in connection therewith may be properly conducted
at all times; provided, however, that nothing in this Section 5.06 shall prevent
the Company or any of its Subsidiaries from discontinuing the use, operation or
maintenance of any of such properties, or disposing of any of them, if such
properties are, in the reasonable and good faith judgment of the Board of
Directors of the Company or such Subsidiary, as the case may be, no longer
reasonably necessary in the conduct of their respective businesses or such
disposition is otherwise permitted by this Securities Purchase Agreement.
(b) The Company shall provide or cause to be provided, for itself
and each of its Subsidiaries, insurance (including appropriate self-insurance)
against loss or damage of the kinds that, in the reasonable, good faith judgment
of the Board of Directors of the Company, are adequate and appropriate for the
conduct of the business of the Company and such Subsidiaries in a prudent
manner, with reputable insurers or with the government of the United States of
America or an agency or instrumentality thereof, in such amounts, with such
deductibles and by such methods as shall be customary, in the good faith
judgment of the Board of Directors of the Company, for companies similarly
situated in the industry.
SECTION 5.07. COMPLIANCE CERTIFICATE; NOTICE OF DEFAULT.
(a) The Company shall deliver to the Holders, within 90 days after
the end of each of the Company's fiscal years, an Officers' Certificate (signed
by the principal executive
22
officer, principal financial officer and principal accounting officer) stating
that a review of its activities and the activities of its Subsidiaries during
the preceding fiscal year has been made under the supervision of the signing
officers with a view to determining whether it has kept, observed, performed and
fulfilled its obligations under this Securities Purchase Agreement and further
stating, as to each such officer signing such certificate, that to the best of
his knowledge the Company during such preceding fiscal year has kept, observed,
performed and fulfilled each and every such obligation and no Default or Event
of Default has occurred during such year and at the date of such certificate
there is no Default or Event of Default that has occurred and is continuing or,
if such signers do know of such Default or Event of Default, the certificate
shall describe the Default or Event of Default and its status in reasonable
detail.
(b) So long as any of the Notes are outstanding, if any Default or
Event of Default has occurred and is continuing, the Company shall promptly
deliver to the Holders an Officers' Certificate specifying such event, notice or
other action within 2 Business Days of its becoming aware of such occurrence.
SECTION 5.08. COMPLIANCE WITH LAWS.
The Company will comply, and will cause each of its Subsidiaries to
comply, with all applicable statutes, rules, regulations, orders and
restrictions of the United States, all states and municipalities thereof, and of
any governmental department, commission, board, regulatory authority, bureau,
agency and instrumentality of the foregoing, in respect of the conduct of their
respective businesses and the ownership of their respective properties, except
for such noncompliances as are being contested in good faith and by appropriate
proceedings and except for such noncompliances as would not in the aggregate
reasonably be expected to have a Material Adverse Effect.
SECTION 5.09. COMMISSION REPORTS.
(a) The Company will deliver to the Holders promptly, but in any
event no later than 5 Business Days after it files with the Commission, to the
extent not available on the XXXXX system, copies of the quarterly and annual
reports and of the information, documents and other reports, if any, which the
Company is required to file with the Commission pursuant to Section 13 or 15(d)
of the Exchange Act.
(b) In the event the Company is not required to furnish such reports
to its stockholders pursuant to the Exchange Act, the Company (at its own
expense) shall cause its consolidated financial statements, comparable to those
which would have been required to appear in annual or quarterly reports, to be
delivered to the Holders.
SECTION 5.10. LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS
AFFECTING SUBSIDIARIES.
The Company will not, and will not permit any of its Subsidiaries
to, directly or indirectly, create or otherwise cause or permit to exist or
become effective any consensual encumbrance or restriction on the ability of any
Subsidiary of the Company to
23
(a) pay dividends or make any other distributions on or in respect
of its Capital Stock;
(b) make loans or advances to or pay any Indebtedness or other
obligation owed to the Company or any other Subsidiary of the Company; or
(c) transfer any of its property or assets to the Company or any
other Subsidiary of the Company, except for such encumbrances or
restrictions existing under or by reason of:
(1) applicable law and agreements with governmental authorities with
respect to assets located in their jurisdiction,
(2) the Notes or this Securities Purchase Agreement,
(3) (A) customary provisions restricting (1) the subletting or
assignment of any lease or (2) the transfer of copyrighted or patented
materials, (B) provisions in agreements that restrict the assignment of
such agreements or rights thereunder or (C) provisions of a customary
nature contained in the terms of Capital Stock restricting the payment of
dividends and the making of distributions on Capital Stock,
(4) any agreement or instrument governing Acquired Indebtedness,
which encumbrance or restriction is not applicable to any Person, or the
properties or assets of any Person, other than (a) the Person or the
properties or assets of the Person so acquired (including the Capital
Stock of such Person), or (b) any Subsidiary having no assets other than
(i) the Person or the properties or assets of the Person so acquired
(including the Capital Stock of such Person) and (ii) other assets having
a fair market value not in excess of $1 million, and, in each case, the
monetary proceeds thereof,
(5) restrictions on the transfer of assets subject to any Lien
permitted under this Securities Purchase Agreement,
(6) restrictions imposed by any agreement to sell assets not in
violation of this Securities Purchase Agreement to any Person pending the
closing of such sale,
(7) customary rights of first refusal with respect to the Company's
and its Subsidiaries' interests in their respective Subsidiaries and joint
ventures,
(8) Indebtedness of a Person that was a Subsidiary of the Company at
the time of incurrence and the incurrence of which Indebtedness is
permitted by Section 5.03; provided that such encumbrances and
restrictions apply only to such Subsidiary and its assets; and provided,
further, that the Board of Directors of the Company has determined in good
faith, at the time of creation of each such encumbrance or restriction,
that such encumbrances and restrictions would not singly or in the
aggregate have a materially adverse effect on the Holders, or,
(9) the subordination of any Indebtedness owed by the Company or any
of its Subsidiaries to the Company or any other Subsidiary of the Company
to any other
24
Indebtedness of the Company or any of its Subsidiaries; provided (A) such
other Indebtedness is permitted under this Securities Purchase Agreement
and (B) the Board of Directors of the Company has determined in good
faith, at the time of creation of each such encumbrance or restriction,
that such encumbrances and restrictions would not singly or in the
aggregate have a materially adverse effect on the Holders.
SECTION 5.11. LIMITATION ON LIENS.
The Company will not, and will not permit any of its Subsidiaries
to, directly or indirectly, create, incur or assume any Lien securing
Indebtedness (other than Permitted Liens) upon any property or asset now owned
or hereafter acquired by them, or any income or profits therefrom, or assign or
convey any right to receive income therefrom; provided, however, that in
addition to creating Permitted Liens on their properties or assets, the Company
and any of its Subsidiaries may create any Lien securing Indebtedness upon any
of their properties and assets (including, but not limited to, any Capital Stock
of its Subsidiaries) if the Notes are equally and ratably secured.
SECTION 5.12. CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, each Holder will
have the right to require that the Company repurchase all or a portion of such
Holder's Notes, at a purchase price equal to 100% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the date of repurchase.
(b) On or promptly following the date of the public announcement of
a proposed Change of Control, the Company shall send, by first class mail, a
notice to each Holder, which notice shall govern the terms of the Change of
Control offer to purchase (the "CHANGE OF CONTROL OFFER"). The notice to the
Holders shall contain all instructions and materials necessary to enable such
Holders to tender Notes pursuant to the Change of Control Offer. Such notice
shall state:
(1) that the Change of Control Offer is being made pursuant to this
Section 5.12 and that all Notes tendered and not withdrawn will be
accepted for payment;
(2) the purchase price (including the amount of accrued interest)
and the purchase date, which shall be no later than the effective date of
such Change in Control other than as may be required by law (the "Change
of Control Payment Date");
(3) that any Note not tendered will continue to accrue interest;
(4) that, unless the Company defaults in making payment therefor,
any Note accepted for payment pursuant to the Change of Control Offer
shall cease to accrue interest after the Change of Control Payment Date;
(5) that Holders electing to have a Note purchased pursuant to a
Change of Control Offer will be required to surrender the Note , with the
form entitled "Option of Holder to Elect Purchase" on the reverse of the
Note completed, to the Company at the
25
address specified in the notice prior to 5:00 p.m. New York City time on
the Business Day prior to the Change of Control Payment Date;
(6) that Holders whose Notes are purchased only in part will be
issued new Notes in a principal amount equal to the unpurchased portion of
the Notes surrendered; and
(7) a copy of the press release relating to such Change of Control.
On or before the Change of Control Payment Date, the Company shall
accept for payment Notes or portions thereof tendered (in integral multiples of
$1,000) pursuant to the Change of Control Offer. The Company shall promptly
deliver to the Holders of Notes so accepted payment in an amount equal to the
purchase price plus accrued and unpaid interest, if any, thereon to the Change
of Control Payment Date and shall promptly deliver to such Holders new Notes
equal in principal amount to any unpurchased portion of the Notes surrendered.
Any Securities not so accepted shall be promptly mailed by the Company to the
Holder thereof.
The Company shall comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent, if any, such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Change of Control Offer. To the extent the
provisions of any securities laws or regulations conflict with the provisions
under this Section 5.12, the Company shall comply with the applicable securities
laws and regulations and shall not be deemed to have breached its obligations
under this Section 5.12 by virtue thereof.
(c) Notwithstanding the foregoing, the Company shall have no
obligation to purchase any Notes under this Section 5.12 in the event that the
Change of Control with respect to which a Change of Control Offer has been made
is terminated or abandoned prior to the consummation thereof.
SECTION 5.13. LIMITATION ON SALE AND LEASEBACK TRANSACTIONS.
The Company will not, and will not permit any of its Subsidiaries
to, enter into any Sale and Leaseback Transaction.
SECTION 5.14. STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay, extension or usury law
wherever enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of this Securities Purchase Agreement; and the
Company (to the extent it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law, and covenants that it will not, by resort
to any such law, hinder, delay or impede the execution of any power herein
granted to the Holders, but will suffer and permit the execution of every such
power as though no such law had been enacted.
26
SECTION 5.15. SECURITIES MATTERS.
The Company shall file all periodic reports required to be filed
with the Commission pursuant to the Exchange Act in a timely manner and shall
not terminate its status as an issuer required to file periodic reports under
the Exchange Act.
The Company shall promptly secure the listing of all Registrable
Securities (as defined in the Registration Rights Agreement) upon each national
securities exchange and automated quotation system, if any, upon which shares of
Common Stock are listed (subject to official notice of issuance) and shall
maintain such listing. The Company shall maintain the Common Stock's
authorization for quotation on the NASDAQ National market or obtain a listing on
the NASDAQ SmallCap Market, The New York Stock Exchange or the American Stock
Exchange.
The Company shall timely file a Form D with respect to the
Securities as required under Regulation D and provide a copy thereof to each
Initial Purchaser promptly after such filing. The Company shall, on or before
the date of the Closing, take such actions as shall be reasonably necessary in
order to obtain an exemption for or to qualify the Securities for sale to the
Initial Purchasers pursuant to this Securities Purchase Agreement under
applicable securities or "Blue Sky" laws of the states of the United States (or
to obtain an exemption from such qualification) and shall provide evidence of
any such action so taken to the Initial Purchasers on or prior to the date of
the Closing. The Company shall make all filings and reports relating to the
offer and sale of the Securities required under applicable securities or "Blue
Sky" laws of the states of the United States following the date of the Closing.
SECTION 5.16 BOARD REPRESENTATION.
[INTENTIONALLY OMITTED]
SECTION 5.18 USE OF PROCEEDS.
The Company will use the proceeds from the sale of the Securities to
pay existing indebtedness of the Company or for general corporate working
capital purposes.
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
An "Event of Default" means any of the following events:
(a) the failure to pay interest on any Notes when the same becomes
due and payable;
(b) the failure to pay the principal on any Notes, when such
principal becomes due and payable, at maturity, upon redemption or
otherwise, including the failure to make
27
a payment to purchase any Notes tendered pursuant to a Change of Control
Offer, except as provided in Section 5.12(c);
(c) a material default in the observance or performance of any other
covenant or agreement contained in this Securities Purchase Agreement or
the Registration Rights Agreement, which default, in the case of any
default which is susceptible of cure, continues for a period of 10 days
after the Company receives written notice specifying the default, and
demanding that such default be remedied, from the Holders of at least 50%
in outstanding principal amount of the Notes;
(d) the failure to pay at final maturity, giving effect to any
extensions thereof, the principal amount of any Indebtedness of the
Company or any Subsidiary of the Company, other than intercompany
Indebtedness, or the acceleration of the final stated maturity of any such
Indebtedness, if, in either case, the aggregate principal amount of such
Indebtedness, together with the principal amount of any other such
Indebtedness in default for failure to pay principal at final maturity or
which has been accelerated, aggregates $1 million or more at any time;
(e) one or more judgments in an aggregate amount in excess of $1
million shall have been rendered against the Company or any of its
Subsidiaries and such judgments remain undischarged, unpaid or unstayed
for a period of 60 days;
(f) the Company or any of its Subsidiaries (i) admits in writing its
inability to pay its debts generally as they become due, (ii) commences a
voluntary case or proceeding under any Bankruptcy Law with respect to
itself, (iii) consents to the entry of a judgment, decree or order for
relief against it in an involuntary case or proceeding under any
Bankruptcy Law, (iv) consents to the appointment of a Custodian of it or
for substantially all of its property, (v) consents to or acquiesces in
the institution of a bankruptcy or an insolvency proceeding against it,
(vi) makes a general assignment for the benefit of its creditors or (vii)
takes any partnership or corporate action, as the case may be, to
authorize or effect any of the foregoing;
(g) a court of competent jurisdiction enters a judgment, decree or
order for relief in respect of the Company or any of its Subsidiaries in
an involuntary case or proceeding under any Bankruptcy Law, which shall
(i) approve as properly filed a petition seeking reorganization,
arrangement, adjustment or composition in respect of the Company or any of
its Subsidiaries, (ii) appoint a custodian of the Company or any of its
Subsidiaries or for substantially all of any of their property or (iii)
order the winding-up or liquidation of its affairs; and such judgment,
decree or order shall remain unstayed and in effect for a period of 60
consecutive days; or
(h) the representations and warranties of the Company set forth in
this Securities Purchase Agreement or the Registration Rights Agreement
shall prove to be untrue in any material respect on the date as of which
made.
28
SECTION 6.02. ACCELERATION.
If an Event of Default (other than an Event of Default specified in
Section 6.01(f) or (g)) shall occur and be continuing, the Holders of at least
50% in principal amount of outstanding Notes may declare the principal of and
accrued and unpaid interest on all the Notes to be due and payable by notice in
writing to the Company specifying the respective Event of Default and that it is
a "notice of acceleration", and the same shall become immediately due and
payable. If an Event of Default specified in Section 6.01(f) or (g) occurs and
is continuing, then all unpaid principal of and premium, if any, and accrued and
unpaid interest on all of the outstanding Notes shall automatically become and
be immediately due and payable without any declaration or other act on the part
of any Holder.
At any time after a declaration of acceleration with respect to the
Notes as described in the preceding paragraph, the Holders of at least 50% in
principal amount of the Notes may rescind and cancel such declaration and its
consequences (i) if the rescission would not conflict with any judgment or
decree, (ii) if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of the
acceleration, (iii) to the extent the payment of such interest is lawful,
interest on overdue installments of interest and overdue principal, which has
become due otherwise than by such declaration of acceleration, has been paid,
and (iv) in the event of the cure or waiver of an Event of Default of the type
described in clause (f) or (g) of Section 6.01, the Holder' shall have received
an Officers' Certificate that such Event of Default has been cured or waived. No
such rescission shall affect any subsequent Default or impair any right
consequent thereto.
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Holders of not
less than 50% in principal amount of the outstanding Notes may pursue any
available remedy by proceeding at law or in equity to collect the payment of
principal of or interest on the Notes or to enforce the performance of any
provision of the Notes or this Securities Purchase Agreement. No remedy is
exclusive of any other remedy. All available remedies are cumulative to the
extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
The Holders of not less than 50% in principal amount of the
outstanding Notes by written notice to the Company may waive an existing Default
or Event of Default and its consequences, except a Default in the payment of
principal of or interest on any Note as specified in clauses (a) and (b) of
Section 6.01. When a Default or Event of Default is waived, it is cured and
ceases.
SECTION 6.05. CONTROL.
The Holders of not less than 50% in principal amount of the
outstanding Notes may direct the time, method and place of conducting any
proceeding for any remedy available to the Holders or exercising any trust or
power conferred on it.
29
SECTION 6.06. RIGHTS OF HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Securities Purchase
Agreement, the right of any Holder to receive payment of principal of and
interest on a Note, on or after the respective due dates expressed in such
Note, or to bring suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the written consent
of the Holder.
ARTICLE SEVEN
[Intentionally Omitted]
ARTICLE EIGHT
CONDITIONS
SECTION 8.01. CONDITIONS TO THE COMPANY'S OBLIGATION.
The obligation of the Company hereunder to issue and sell the
Securities to each Initial Purchaser at the Closing is subject to the
satisfaction, at or before the Closing, of each of the following conditions,
provided that these conditions are for the Company's sole benefit and may be
waived by the Company at any time in its sole discretion by providing each
Initial Purchaser with prior written notice thereof:
(a) Each Initial Purchaser shall have delivered to the Company the
Registration Rights Agreement duly executed by such Initial Purchaser.
(b) Each Initial Purchaser shall have delivered to the Company the
purchase price for the Securities being purchased by such Initial
Purchaser at the Closing by wire transfer of immediately available funds
pursuant to the wire instructions provided by the Company.
SECTION 8.02. CONDITIONS TO THE INITIAL PURCHASERS' OBLIGATION.
The obligation of each Initial Purchaser to purchase the Securities
at the Closing is subject to the satisfaction, at or before the Closing, of each
of the following conditions, provided that these conditions are for each Initial
Purchaser's sole benefit and may be waived by such Initial Purchaser at any time
in its sole discretion by providing the Company with prior written notice
thereof:
(a) Such Initial Purchaser shall have received the Notes to be
purchased by it at the Closing duly executed by the Company.
(b) Such Initial Purchaser shall have received the Registration
Rights Agreement duly executed by the Company.
30
(c) Such Initial Purchaser shall have received certificates for
shares of Common Stock included in the Securities to be purchased by it at
the Closing.
(d) Such Initial Purchaser shall have received the legal opinions of
the Company's General Counsel in the form and content reasonably
acceptable to it.
(e) Such Initial Purchaser shall have received a certified copy of
the Certificate of Incorporation of the Company, together with a Good
Standing Certificate with respect to the Company issued by the Secretary
of State of such state of incorporation as of a date within 10 days of the
date of the Closing.
(f) Such Initial Purchaser shall have received a copy of the
certificate evidencing the Company's qualification as a foreign
corporation in good standing issued by the Secretary of State of the State
of New York as of a date within 10 days of the date of the Closing.
(g) Such Initial Purchaser shall have received a certificate
executed by the Secretary of the Company and dated as of the date of the
Closing, certifying as to (i) the resolutions as adopted by the Company's
Board of Directors in connection with the authorization of the
transactions contemplated hereby, (ii) the Certificate of Incorporation of
the Company and (iii) the Bylaws of the Company, each as in effect at the
time of the Closing Date.
(h) Such Initial Purchaser shall have received a copy of all
governmental, regulatory or third party consents and approvals, if any,
necessary for the sale of the Securities.
(i) Such Initial Purchaser shall have received a copy of such other
documents relating to the transactions contemplated by this Securities
Purchase Agreement as such Initial Purchaser or its counsel may reasonably
request.
ARTICLE NINE
MISCELLANEOUS
SECTION 9.01. NOTICES.
Any notices or other communications required or permitted hereunder
shall be in writing, and shall be sufficiently given if made by hand delivery,
by telecopier, by reputable overnight delivery service, or registered mail,
postage prepaid, return receipt requested, addressed as follows:
if to the Company:
Viewpoint Corporation
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
31
Attention: Xxxxxxx X. Xxxxxx,
Executive Vice President and
Xxxxx X. X'Xxxxxxxx, Esq.
Executive Vice President and
General Counsel
with a copy to
Milbank, Tweed, Xxxxxx & XxXxxx LLP
0 Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxxx X. Xxxx, Esq.
if to the Holders:
to their respective addresses set forth on Schedule 2.06 or
otherwise specified to the Company in writing by notice given
in accordance with this Section 9.01,
with a copy to:
Patterson, Belknap, Xxxx & Tyler LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. XxXxxxx, Esq.
Facsimile: (000) 000-0000
Each of the Company and the Holders by written notice to each other
may designate additional or different addresses for notices to such Person. Any
notice or communication to the Company shall be deemed to have been given or
made as of the date so delivered if personally delivered; when receipt is
acknowledged, if telecopied; one (1) business day after mailing by reputable
overnight courier; and five (5) calendar days after mailing if sent by
registered mail, postage prepaid (except that, notwithstanding the foregoing, a
notice of change of address shall not be deemed to have been given until
actually received by the addressee). Notice to the Holders shall be deemed given
when actually received by the Holders.
SECTION 9.02. GOVERNING LAW.
THIS SECURITIES PURCHASE AGREEMENT, THE SECURITIES AND THE NOTES
WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW
YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS. EACH OF THE PARTIES
HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE FEDERAL OR STATE COURTS
LOCATED IN
00
XXX XXXX XX XXX XXXX IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS SECURITIES PURCHASE AGREEMENT OR THE NOTES.
SECTION 9.03. SUCCESSORS.
All agreements of the Company in this Securities Purchase Agreement
and the Notes shall bind its successors.
SECTION 9.04. COUNTERPARTS.
All parties may sign any number of copies of this Securities
Purchase Agreement. Each signed copy or counterpart shall be an original, but
all of them together shall represent the same agreement.
SECTION 9.05. SEVERABILITY.
In case any one or more of the provisions in this Securities
Purchase Agreement or in the Notes shall be held invalid, illegal or
unenforceable, in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions shall not in any way be affected or impaired thereby, it being
intended that all of the provisions hereof shall be enforceable to the full
extent permitted by law.
SECTION 9.06. PAYMENT OF EXPENSES.
The Company shall pay or reimburse Xxxxx Partners P L.P. for its
reasonable out-of-pocket costs and expenses, including reasonable legal fees and
disbursements, incurred in connection with the preparation, execution and
delivery of this Securities Purchase Agreement up to a maximum of $30,000.
The Company shall pay or reimburse the Holders for their reasonable
out-of-pocket costs and expenses, including reasonable legal fees and
disbursements, incurred in connection with any amendment, supplement, waiver or
modification to this Securities Purchase Agreement and for all of their
out-of-pocket costs and expenses, including reasonable legal fees, incurred in
connection with the enforcement of this Securities Purchase Agreement, the Notes
or the Registration Rights Agreement.
[SIGNATURE PAGES TO FOLLOW]
33
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed, all as of the date first written above.
THE COMPANY:
VIEWPOINT CORPORATION, INC.
By: /s/ Xxxxx X. X' Xxxxxxxx
---------------------------------
Name: Xxxxx X. X' Xxxxxxxx
Title: Executive Vice President
THE PURCHASERS:
FEDERAL PARTNERS P, L.P.
by Ninth Floor Corporation, its
general partner
By: /s/ Xxxxxxx X. Xxxx
---------------------------------
Name: Xxxxxxx X. Xxxx
Title: Treasurer
/s/ Xxxxxx Xxxxxxx
------------------------------------
Xxxxxx Xxxxxxx, as Joint Tenant with
the Right of Survivorship
/s/ Xxxxx Xxxxxxx
------------------------------------
Xxxxx Xxxxxxx, as Joint Tenant with
the Right of Survivorship
CRCK, L.L.C.
by Xxxx X. Xxxxxx and Xxxxx X. Xxxxx
its general partner
By: /s/ Xxxxx Xxxxxx Burden
---------------------------------
Name: Xxxxx Xxxxxx Burden
Title: Chief Financial Officer
34
SCHEDULE 2.06
Name and Address of Principal Amount of Number of Shares of Purchase Price
-------------------- -------------------- -------------------- --------------
Initial Purchaser Notes Purchased Common Stock Paid
----------------- --------------- ------------ ----
Purchased
---------
Federal Partners P, L.P.
c/o Ninth Floor Corporation,
its General Partner $3,050,000 3,150,002 $3,050,000
Xxx Xxxxxxxxxxx Xxxxx
0xx Xxxxx
Xxx Xxxx, X.X. 00000
Attn: Xxxxxxx X. Xxxx, Esq
Treasurer
Xxxxxx Xxxxxxx and Xxxxx Xxxxxxx
0000 Xxxxxxx Xxxxxx $ 250,000 258,197 $ 250,000
Xxx. 0000
Xxx Xxxxxxx, Xxxxxxx 00000
CRCK, L.L.C. $ 200,000 206,557 $ 200,000
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, X.X. 00000
SCHEDULES TO
SECURITIES PURCHASE AGREEMENT
DATED AS OF MARCH 26, 2003
BY AND BETWEEN
VIEWPOINT CORPORATION
AND
THE PURCHASERS IDENTIFIED ON THE
SIGNATURE PAGES THERETO
SCHEDULE 4.01(C)
CAPITALIZATION
1. VIEWPOINT CORPORATION OUTSTANDING OPTIONS AS OF MARCH 20, 2003
PRICE ISSUED VESTED
($/SHARE) (# OF SHARES) (# OF SHARES)
---------------------------------- ------------------------ ------------------
0.8700 2,221,866 2,044,707
0.9300 14,000 0
1.7100 15,000 0
1.8700 24,000 0
2.1800 77,000 0
2.6100 802,092 653,512
3.0000 15,000 11,750
3.1000 68,000 0
3.2680 23,000 0
3.4000 16,500 7,459
3.5000 37,000 33,000
3.8130 25,000 11,979
3.8800 1,200,000 62,500
4.0000 4,000 1,333
4.0800 200,000 0
4.1800 44,000 0
4.2500 10,000 3,750
4.3500 1,361,815 1,224,485
4.4000 67,000 0
4.4100 58,000 21,667
4.4690 52,417 35,231
4.6800 5,000 5,000
4.6900 103,602 85,802
4.7660 210,178 140,969
4.8200 24,000 0
5.0300 90,165 90,165
5.0625 5,000 0
5.0900 269,500 266,375
5.0938 258,396 254,588
5.1300 18,417 9,208
5.1500 39,167 19,480
5.3750 152,115 88,615
5.5200 0 0
5.6250 88,825 48,018
5.6500 80,500 80,500
5.7000 18,000 0
5.7300 265,000 56,797
5.7500 78,750 49,218
5.8100 323,750 74,689
5.9900 125,000 27,083
6.0000 46,000 0
6.0400 4,000 0
6.1000 8,000 3,166
6.1300 460,000 239,583
6.2900 20,000 16,668
6.6250 5,000 5,000
6.7000 5,500 1,489
6.8750 10,000 5,417
7.3100 40,825 27,602
7.9375 25,000 23,438
8.5000 6,500 4,167
8.5630 84,375 84,375
8.7000 15,333 15,333
8.7300 16,100 9,727
9.0000 5,000 5,000
10.7500 5,000 5,000
11.0000 20,000 20,000
11.0900 9,200 5,750
12.8750 5,000 5,000
25.1250 5,000 5,000
-------------------------- ---------------
TOTALS: 9,286,887.99 5,889,594.66
========================== ===============
AVERAGE ISSUED PRICE 3.8081
AVERAGE VESTED PRICE 3.3622
2. VIEWPOINT CORPORATION OUTSTANDING WARRANTS AS OF DECEMBER 31, 2002
PRICE ISSUED
($/SHARE) (# OF SHARES)
---------------------------- ----------------------------
2.2600 269,780
2.2600 249,027
2.2600 207,523
15.6500 57,500
----------------------------
TOTALS: 783,830
============================
AVERAGE ISSUED PRICE 3.2423
3. VIEWPOINT CORPORATION PRE-EMPTIVE RIGHTS
a. Pursuant to Section 7.4 of the Amended and Restated Series A
Preferred Stock Purchase Agreement, dated as of June 12, 2000
among Metastream Corporation, a Delaware corporation and
predecessor in interest to Viewpoint Corporation, MetaCreations
Corporation, a Delaware corporation (now known as Viewpoint
Corporation) and America Online, Inc., a Delaware corporation
("AOL"), AOL has a right, upon the issuance of Viewpoint common
stock to a third party under certain circumstances, to acquire an
amount of shares of Viewpoint common stock as will permit AOL to
maintain its percentage equity interest in Viewpoint immediately
prior to the proposed issuance at the same price and on the same
terms and conditions as such proposed issuance to a third party.
AOL currently owns 1,725,000 shares of Viewpoint common stock
(approximately 4.2%) and has orally stated that it will waive the
above-described rights.
b. Pursuant to Section 7.4 of the Series B Preferred Stock Purchase
Agreement, dated as of July 18, 2000 among Metastream
Corporation, a Delaware corporation and predecessor in interest
to Viewpoint Corporation, MetaCreations Corporation, a Delaware
corporation now known as Viewpoint Corporation, and Adobe Systems
Incorporated, a Delaware corporation ("Adobe"), Adobe has a
right, upon the issuance of Viewpoint common stock to a third
party under certain circumstances, to acquire an amount of shares
of Viewpoint common stock as will permit Adobe to maintain its
percentage equity interest in Viewpoint immediately prior to the
proposed issuance at the same price and on the same terms and
conditions as such proposed issuance to a third party. Adobe
currently owns 1,499,000 shares of Viewpoint common stock
(approximately 3.7%) and has orally stated that it will waive the
above-described rights.
c. Pursuant to Section 8.1 of the Exchange Agreement, dated as of
August 10, 2000 (this "Agreement"), by and between MetaCreations
Corporation, a Delaware corporation now known as Viewpoint
Corporation, and Computer Associates International, Inc., a
Delaware corporation ("Computer Associates"), Computer Associates
has a right, upon the issuance of Viewpoint common stock to a
third party under certain circumstances, to acquire an amount of
shares as will permit Computer Associates to maintain its
percentage equity interest in Viewpoint immediately prior to the
proposed issuance at the same price and on the same terms and
conditions as such proposed issuance to a third party. Computer
Associates currently owns 3,744,093 shares of Viewpoint common
stock (approximately 9.1%) and has orally stated that it will
waive the above-described rights.
SCHEDULE 4.01(G)
COMPLIANCE WITH LAWS
Due to the recent decline in the Company's stock price, the Company does not
currently meet The NASDAQ National Market quantitative maintenance criteria. The
Company received notice from The NASDAQ National Market on March 20, 2003
stating that the Company is not in compliance with Marketplace Rule 4450(e)(2)
and that the Company will be provided 180 days to regain compliance with
National Market standards.
SCHEDULE 4.01(H)
CONSENTS
1. Common Stock to be listed on the NASDAQ National Market
2. Registration Statement to be filed with the SEC
3. Form D to be filed with the SEC.
SCHEDULE 4.01(I)
LITIGATION PROCEEDINGS
Viewpoint x. Xxxxx: Litigation commenced by the Company against Xxxxx X. Xxxxx
to recover $1.5 million. Bench trial ended November 21, 2002. Awaiting judge's
decision.
Viewpoint v. de Espona: Litigation commenced in Spain by Viewpoint against an
individual (Xxxx Xxxxx de Espona) to recover damages for intellectual property
infringement. Viewpoint alleges that de Espona is marketing and selling a
collection of three-dimensional models to which Viewpoint has exclusive rights.
A decision by the court in Spain is expected in the first half of 2003 and the
amount in dispute is less than $750,000.
SCHEDULE 4.01(J)
NO DEFAULT OR VIOLATION
Irrevocable Clean Transferable Standby Letter of Credit No. S303505
Date: October 1, 2001
Bank: KeyBank National Association
Benefeciary: 498 Seventh, LLC; c/o Xxxxxx Comfort & Sons, Inc.
Issued Amount: $289, 328.00; Current Amount: $252,581.00
Expiry, original: October 1, 2002; current expiry: October 1, 2003
Automatic One-Year Extensions
[Backed by KeyBank restricted cash bank account]
SCHEDULE 4.01(N)
LISTING AND MAINTENANCE REQUIREMENTS COMPLIANCE
Due to the recent decline in the Company's stock price, the Company does not
currently meet The NASDAQ National Market quantitative maintenance criteria. The
Company received notice from The NASDAQ National Market on March 20, 2003
stating that the Company is not in compliance with Marketplace Rule 4450(e)(2)
and that the Company will be provided 180 days to regain compliance with
National Market standards.
SCHEDULE 4.01(O)
REGISTRATION RIGHTS; RIGHTS OF PARTICIPATION
The Company has granted certain registration rights pursuant to the terms of a
Registration Agreement, dated as of December 31, 2002, as amended, which was
entered into in connection with the Exchange Agreements and the 2002 Securities
Purchase Agreement.
