Exhibit 10.20
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SENIOR CONVERTIBLE NOTE PURCHASE AGREEMENT
dated as of June 11, 1997
between
INTERACTIVE IMAGINATIONS, INC.
and
THE TRAVELERS INSURANCE COMPANY
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SENIOR CONVERTIBLE NOTE PURCHASE AGREEMENT
SENIOR CONVERTIBLE NOTE PURCHASE AGREEMENT dated as of June 11, 1997
between INTERACTIVE IMAGINATIONS, INC., a New York corporation (the "Company"),
and THE TRAVELERS INSURANCE COMPANY (the "Purchaser").
WHEREAS, the Company wishes to sell, and the Purchaser wishes to
purchase, a senior note of the Company in the principal amount of $170,000,
substantially in the form of Exhibit A hereto (the "Note"), upon the terms and
subject to the conditions herein set forth;
NOW, THEREFORE, in consideration of the foregoing and other valuable
consideration, the receipt and sufficiency of which are acknowledged, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND USAGE
Section1.01. Definitions. As used herein:
"Act" means the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder.
"Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy," as now and hereafter in effect, or any successor statute.
"Business Day" means any day which is not a Saturday, Sunday or day
on which banking institutions in either the State or City of New York are
required or authorized by law to close.
"Closing Date" means the date hereof.
"Common Stock" means the common stock, par value $0.01 per
share, of the Company.
"Company" has the meaning given such term in the first paragraph
hereof.
"Conversion Price" has the meaning given such term in Section
5.01.
"Default" means an event which, with the giving of notice or lapse
of time, or both, would constitute an Event of Default.
"Event of Default" has the meaning given such term in Section
7.01.
Financing Lease" means any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance with
generally accepted accounting principles to be capitalized on a balance sheet of
the lessee.
"Guarantee" means, with respect to any Person, any obligation,
contingent or otherwise, of such Person guaranteeing or having the economic
effect of guaranteeing any Indebtedness of any other Person (the "primary
obligor") in any matter, whether directly or indirectly, and including any
obligation of such Person, direct or indirect, (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or to
purchase (or to advance or supply funds for the purchase of) any security for
the payment of such Indebtedness, (ii) to purchase or lease property, securities
or services for the purpose of assuring the owner of such Indebtedness of the
payment of such Indebtedness or (iii) to maintain working capital, equity
capital or any other financial statement condition or liquidity of the primary
obligor so as to enable the primary obligor to pay such Indebtedness; provided
however, that the term "Guarantee" shall not include endorsements for collection
or deposit in the ordinary course of business.
"Indebtedness" means with respect to any Person at any date (i) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services, excluding any trade payables and other accrued
current liabilities incurred in the ordinary course of business, (ii) any other
indebtedness of such Person which is evidenced by a note, bond, debenture,
letter of credit or similar instrument, (iii) all obligations of such Person
with respect to Guarantees, (iv) all obligations of such Person under Financing
Leases, (v) all obligations of such Person in respect of reimbursement
obligations under letters of credit, (vii) all liabilities of the type referred
to in clauses (i) through (v) above that are secured by any lien, charge,
security interest or encumbrance on any property owned by such Person even
though such Person has not assumed or otherwise become liable for the payment
thereof.
"Maturity Date" means May 15, 1999.
"Net Cash Proceeds" has the meaning given such term in Section
4.01.
"Note" has the meaning given such term in the second paragraph
hereof.
"Notes" means the senior notes of the Company of even date herewith
in the aggregate amount of $510,000, including the Note.
"Obligations" means all obligations, liabilities and indebtedness
now or hereafter owing to the Purchaser by the Company under this Agreement or
the Note.
"Person" means an individual, corporation, partnership, association,
joint stock company, limited liability company, governmental entity, business
trust, unincorporated organization, or other legal entity.
"Purchaser" has the meaning given such term in the first
paragraph hereof.
"Securities" has the meaning given such term in Section 6.03
hereof.
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"including" and correlative words shall be deemed to be followed by
"without limitation" whether or not followed by such words or words of like
import.
Section 1.02. References to Articles, Sections and Exhibits are to
sections hereof and exhibits and schedules hereto, references to a Person are
also references to its successors and assigns, and references to a document are
to it as amended, waived and otherwise modified from time to time. The
definitions set forth in Section 1.01 are equally applicable both to the
singular and plural forms and the feminine, masculine and neuter forms of the
terms defined. The headings of Articles and Sections and the table of contents
relating hereto have been included solely for convenience of reference and shall
not have any effect on the construction hereof.
ARTICLE II
THE NOTE; PAYMENT TERMS
Section 2.01. The Note. The Note is a senior unsecured
obligation of the Company in the initial aggregate principal amount of
$170,000.
Section 2.02. Principal. On the Closing Date, the Company shall
deliver to the Purchaser the Note, substantially in the form of Exhibit A, which
shall have an initial aggregate principal amount of $170,000 as of the date
hereof and which shall be issued in the name "Tral & Co." as designated by the
Purchaser. The Company shall repay the then outstanding aggregate principal
amount of the Note, including any additional principal amount of the Note paid
as interest as set forth in Section 2.03, on May 15, 1999.
Section 2.03. Interest. Interest on the outstanding and unpaid
principal amount of the Note shall accrue at a rate of 8% per annum, compounded
semiannually following the date hereof. Accrued interest shall be paid in
additional principal amount of the Note upon the earlier of prepayment of the
Note in accordance with Article III hereof, redemption of the Note in accordance
with Article IV hereof, conversion of the Note in accordance with Article V
hereof, or at the Maturity Date. All interest due and owing hereunder shall
continue to accrue until all payments due hereunder and under the Note are fully
and finally paid.
Section 2.04. Payments Generally. (a) All payments of
principal and interest in respect of this Agreement and the Note shall be
made by the Company to such account or accounts as the Purchaser may
designate from time to time in writing to the Company.
(b) Whenever any payment hereunder or under the Note shall be due on
a day other than a Business Day, such payment shall be made on the next
succeeding Business Day.
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ARTICLE III
PREPAYMENT OPTION
Section 3.01. Prepayment. The Note may not be redeemed or prepaid by
the Company prior to May 16, 1998. On or after May 16, 1998, the Note will be
redeemable, in whole or in part, at the option of the Company upon at least 30
days notice at the redemption prices set forth below, in each case together with
accrued and unpaid interest to the date of redemption:
Beginning May 16, 1998 104%
Beginning November 15, 1998 102%
On May 15, 1999 100%
All prepayments pursuant to this Section 3.01 shall be applied in reduction of
the Obligations, first toward payment of all interest then due and payable with
respect to the Obligations and second toward the then principal portion of the
Obligations (but excluding the portion of such redemption price constituting
premium).
ARTICLE IV
REDEMPTION AT OPTION OF PURCHASER
Section 4.01. Optional Redemption. (a) If, at any time prior to May
15, 1999, the Company receives cash proceeds from either (i) the sale or sales
of any material assets, including its Riddler or Commonwealth businesses (or the
sale or a series of sales of any consideration received in such a sale), or (ii)
the sale or sales of any Company securities to investors, in both cases after
subtraction of any taxes or transaction fees resulting from such sale (the "Net
Cash Proceeds"), each Purchaser shall have the right, at such Purchaser's
option, to require the Company to redeem all of such Purchaser's Notes or
portions thereof together with accrued interest on the date that is 30 days
after the date of the Company's notice of receipt of such Net Cash Proceeds. If
the Net Cash Proceeds from any such sale by the Company do not exceed or equal
the total principal amount of the Notes together with accrued interest presented
to the Company for redemption, then the Net Cash Proceeds will be used to redeem
an amount of each Purchaser's Notes presented for redemption in proportion to
the total principal amount of the Notes together with accrued interest presented
to the Company for redemption.
(b) In addition, in the event that, prior to the Obligations being
paid in full, the Company enters into any merger or consolidation where the
Company is not the surviving Person or the Person formed by or surviving any
such consolidation or merger, or liquidates, winds up or dissolves (or suffers
any liquidation or dissolution), or conveys, leases, sells, assigns, transfers
or otherwise disposes of, in one transaction or series of transactions, all or
substantially all the Company's business or property, whether now or hereafter
acquired, each Purchaser shall have the right, at such Purchaser's option, to
require the Company or any successor thereto to redeem all the outstanding
principal amount of, and any accrued interest under, such Purchaser's Note prior
to the consummation of such transaction or series of transactions.
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ARTICLE V
CONVERSION AT OPTION OF PURCHASER
Section 5.01. Optional Conversion. The Note is convertible in
whole or in part at the option of the Purchaser, unless previously redeemed,
into shares of Common Stock at any time prior to the Obligations being paid
in full at a conversion price of $2.87 per share, subject to adjustment as
described in Section 5.02. (the "Conversion Price").
Section 5.02. Conversion Price Adjustment. The Conversion Price
shall and may be adjusted and readjusted from time to time as provided below,
and as so adjusted or readjusted, shall remain in effect until a further
adjustment or readjustment thereof is required or deemed appropriate as set
forth below.
(a) Mandatory Adjustment. (1) In case the Company shall, from the
date of the Note's issuance to its maturity on May 15, 1999 (i) pay a dividend
on its outstanding Common Stock in shares of Common Stock or make a distribution
to all holders of its outstanding Common Stock in shares of Common Stock, (ii)
subdivide its outstanding shares of Common Stock, (iii) combine its outstanding
shares of Common Stock into a smaller number of shares of Common Stock, or (iv)
issue by reclassification of its shares of Common Stock other securities of the
Company (including any such reclassification in connection with a consolidation
or merger in which the Company is the surviving corporation), the Conversion
Price shall be adjusted so that the holder hereof upon exercise hereof shall be
entitled to receive the kind and number of such shares or other securities of
the Company which such holder would have owned or have been entitled to receive
had the Note been converted immediately prior to the happening of any event
described above or any record date with respect thereto. An adjustment made
pursuant to this subparagraph (a) shall become effective on the date of the
dividend payment, subdivision, combination or issuance retroactive to the record
date with respect to the record date with respect thereto, if any, for such
event. Such adjustment shall be made successively whenever such an issuance is
made.
(A) No adjustment in the Conversion Price shall be required
unless such adjustment would require an increase or
decrease of at least one percent (1%) in the number of
shares of Common Stock for which the Note shall be
converted; provided, however, that any adjustment which by
reason of this subparagraph (A) is not required to be made
shall be carried forward and taken into account in any
subsequent adjustments or at conversion. All calculations
shall be made to the nearest one-thousandth of a share.
(B) In the event that at any time, as a result of an adjustment
made pursuant to subparagraph (1) above, the holder hereof
shall become entitled to purchase any securities other than
shares of Common Stock, thereafter the number of such other
securities so purchasable upon conversion of each Note and
the purchase price of such securities shall be subject to
adjustment from time to time in a manner and on the terms
as nearly equivalent as practicable to the provisions of
this purchase price adjustment provision with respect to
the shares of Common Stock for which the Note shall be
converted.
(2) If the Company shall ever issue or grant Common Stock, or
options (other than stock options under the Company's Amended and
Restated 1995 Stock
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Option Plan, or any successor plan), warrants, rights or
subscriptions to purchase directly or indirectly Common Stock or
securities convertible into Common Stock for a per share
consideration less than $2.87 per share, or without consideration,
then, and thereafter successively upon each such issuance or sale,
the per share Conversion Price in effect immediately prior to each
such issuance or sale shall forthwith be reduced to a per share
Conversion Price determined by dividing: (i) an amount equal to (v)
the total number of Common Stock outstanding immediately prior to
such issuance or sale multiplied by the per share conversion price
in effect immediately prior to such issuance or sale, plus (w) the
consideration, if any, received by the Company upon such issuance or
sale, by (ii) the total number of Common Stock outstanding
immediately after such issuance or sale.
Upon each adjustment of the per share Conversion Price as a
result of the adjustments made pursuant to this Subsection (2), the
number of shares of Common Stock issuable upon conversion shall
thereupon be changed to a number of shares of Common Stock (issuable
at the adjusted per share Conversion Price) obtained by (1)
multiplying (x) the number of outstanding shares of Common Stock
prior to the adjustment to the per share Conversion Price required
by the foregoing provisions by (y) the per share conversion price in
effect prior to such adjustment of the per share conversion price
and (2) dividing the product so obtained by the per share Conversion
Price in effect after such adjustment of the per share conversion
price.
For purposes of this Subsection 2 and, in particular,
determining the number of issued and outstanding shares of any class
of Common Stock of the Company in connection with computing
adjustments to the per share conversion price pursuant to this
Subsection 5.02(a)(2), the following provisions (A), (B) and (C)
shall also be applicable.
(A) Options. If at any time there shall exist or otherwise be
outstanding any valid and unexercised rights to subscribe
for or to purchase, or any option or warrant for the
purchase of, (A) Common Stock or (B) a security directly or
indirectly convertible or exchangeable for Common Stock
(such convertible or exchangeable securities being
hereinafter referred to as "Convertible Securities")
granted or issued by the Company, then the total maximum
number of shares of Common Stock directly or indirectly
issuable pursuant to exercise of such rights, options or
warrants or upon conversion or exchange of the total
maximum amount of such Convertible Securities or issuable
upon the exercise of such options or warrants shall be
deemed to be fully issued and outstanding at such time.
(B) Convertible Securities. If at any time there shall be
outstanding any Convertible Securities (other than
Convertible Securities otherwise taken into account under
paragraph (x) above), then the total maximum number of
shares of Common Stock directly or indirectly issuable upon
conversion or exchange of all such Convertible Securities
shall be deemed to be issued and outstanding at any such
time.
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(C) Treasury Shares. Shares of Common Stock or other equity
securities that as of a specified time are owned directly or
indirectly by the Company shall as of such time not be deemed
outstanding.
(b) Voluntary Adjustment by the Company. The Company may, at its option
and in its sole discretion, at any time or from time to time during the term of
the Note, reduce the then current Conversion Price to an amount deemed
appropriate by the Company; provided, however, that if the Company elects to so
reduce the then current Conversion Price, such reduction shall remain in effect
for at least a 30-day period, after which time the Company may, at its option,
reinstate the Conversion Price in effect prior to such reduction.
(c) Other Adjustments to Per Share Conversion Price. The number and
kind of securities purchasable upon conversion of the Notes shall be subject to
adjustment from time to time as follows:
(1) Reclassification, Reorganization or Merger. In case of any
reclassification or capital reorganization of the outstanding
shares of Common Stock of the Company (other than a change in
par value, or from par value to no par value, or from no par
value to par value), or in case of any consolidation or merger
of the Company with or into another corporation or entity
(other than a merger in which the Company is the continuing
corporation and which does not result in any reclassification
or capital reorganization of outstanding Common Stock) or in
case of any sale or conveyance to another corporation or
entity of all or substantially all of the assets of the
Company, the Company shall cause effective provision to be
made so that each holder of the Notes shall have the right
thereafter, by converting the Notes represented hereby, to
receive the kind and amount of shares of stock and other
securities and property receivable upon such reclassification,
capital reorganization, consolidation, merger, sale or
conveyance as would be equivalent to the number of shares of
equity securities issuable upon conversion of the Notes owned
by such holder at such time had the holder converted such
Notes immediately prior to the occurrence of such events. Any
such provision shall be as nearly equivalent as may be
practicable to the adjustments provided for herein.
(2) Shares Split or Reverse Shares Split. In case the Company
shall at any time subdivide its outstanding Common Stock into
a greater number of shares, the number of shares of Common
Stock into which the Notes is convertible immediately prior to
such subdivision shall be proportionately increased, and
conversely, in case the outstanding shares of Common Stock of
the Company shall be combined into a smaller number of shares,
the number of shares of Common Stock into which the Notes are
convertible immediately prior to such combination shall be
proportionately decreased.
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(d) Certificate as to Adjustments. Upon the occurrence of each adjustment
or readjustment of the per share conversion price pursuant to Section 5.02(a)
hereof, the Company at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and as promptly as practicable
furnish to each holder of Notes a certificate executed and verified by an
officer of the Company setting forth such adjustment or readjustment and showing
in detail the facts upon which such adjustment or readjustment is based.
ARTICLE VI
COVENANTS; REPRESENTATIONS AND WARRANTIES
Section 6.01. Covenants. (a) The Company covenants and agrees so
long as any amount under the Note is outstanding and until the Obligations are
paid in full that the Company will not, without the consent of not less than a
majority in aggregate principal amount of outstanding Notes, issue one or more
additional Notes (or other Indebtedness of the Company that is pari passu in
right of payment to the Notes), except as set forth in subparagraph (b) hereof.
(b) The Company may, at any time and from time to time, without the
consent of any Purchaser, issue one or more additional Notes (or other
Indebtedness of the Company that is pari passu in right of payment to the Notes)
up to a total aggregate principal amount of $3 million (which total shall
include the principal amount the Notes issued hereunder).
Section 6.02. Representations and Warranties of Company. The
Company hereby represents and warrants to the Purchaser that as of the
Closing Date:
(a) Existence and Power. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York. The Company has all requisite corporate power to own its properties
and to carry on its business as now being conducted and as proposed to be
conducted, and to execute, deliver and perform its obligations under this
Agreement and to engage in the respective transactions contemplated hereby.
(b) Authority. The execution, delivery and performance by the
Company of this Agreement have been duly authorized by all necessary corporate
action on the part of the Company.
(c) Binding Effect. This Agreement is the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its respective terms, except to the extent that enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and similar laws and court decisions now or hereafter in effect
relating to or affecting creditors' rights and remedies generally and general
principles of equity.
The shares of Common Stock issuable upon conversion of the Note are
and will be validly authorized, validly issued, fully paid and non-assessable,
and have not and will not have been issued, and when issued, will not be owned
or held in violation of any rights of first refusal, preemptive rights or the
rights of shareholders. A sufficient number of shares of the Company's Common
Stock will at all times be reserved so as to permit conversion of the Note.
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(d) Non-Contravention. The execution, delivery and performance of
this Agreement does not violate the charter, by-laws, or any material agreement
of the Company.
(e) No Material Adverse Change. Since the date of its last audited
financial statements, there has been no material adverse change in the Company's
business, results of operation, financial condition, or prospects, other than as
disclosed to the Purchaser.
Section 6.03. Representations and Warranties of Purchaser.
The Purchaser hereby represents and warrants to the Company as follows:
(a) Investment Intent. The Purchaser is acquiring the Note from the
Company, and any shares of Common Stock that may be acquired as a result of the
conversion of the Note in accordance with Section 5.01 hereof (collectively with
the Note, the "Securities"), for its own account for investment without any
present intention of selling or distributing all or any part thereof; and no one
other than the Purchaser has any beneficial interest therein;
(b) Information. The Purchaser acknowledges that it (or its
representatives) (i) has received the opportunity to ask any and all questions
and receive any and all answers from the Company and its officers concerning the
Securities and the business of the Company, (ii) has received access to the kind
of information required by Regulation D promulgated under the Act, and (iii) is
sophisticated and able to assess the risks of an investment in the Securities
and is able to bear the loss of its entire investment therein;
(c) Registration. The Purchaser acknowledges that the Securities are
not registered under the Act, that they may not be offered, sold or transferred
except in compliance with the Act and the rules and regulations adopted pursuant
thereto, that the Securities must be held indefinitely unless they are
subsequently registered under such Act or an exemption from such registration is
available, that except as otherwise provided herein the Company is under no
obligation to register the Securities or to supply the information necessary for
the applicability of certain of such exemptions, that any such exemptions may
only be applicable in certain limited circumstances and that any routine public
sales of securities made in reliance upon Rule 144 promulgated under the Act can
be made only in limited amounts in accordance with the terms and conditions of
that Rule and that in the event the provisions of such Rule are not applicable
to the proposed public sale of the Securities, compliance with Regulation A or
some other applicable exemption will be required;
(d) Stop Transfer Order. The Purchaser consents to the placing of a
"stop transfer" order against the Securities on the records of the Company and
its transfer agent to the general effect stated in the legend set forth in
Section 8.02 hereof.
(e) Legend. The Purchaser understands and agrees that the
certificates representing the Securities will bear the legend set forth in
Section 8.02 hereof.
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ARTICLE VII
EVENTS OF DEFAULT
Section 7.01 Events of Default. Any of the following
events, occurring for any reason, shall be an "Event of Default":
(a) the Company fails to perform, keep or observe any term,
provision, condition, covenant, warranty or representation contained in this
Agreement, which is required to be performed, kept or observed by the Company
and the same is not cured within 15 days after the receipt of written notice
thereof from the Purchaser to the Company;
(b) the Company fails to repay any installment of interest on the
Note, in each case within five Business Days of the date on which such
installment becomes due and payable;
(c) a petition under any section or chapter of the Bankruptcy Code
or any similar law or regulation is filed by the Company or the Company makes an
assignment for the benefit of its creditors or any case or proceeding is filed
by the Company for its dissolution or liquidation;
(d) a petition under any section or chapter of the Bankruptcy Code
or any similar law or regulation is filed against the Company or any case or
proceeding is filed against the Company for its dissolution or liquidation and
such petition, case or proceeding is not dismissed or stayed within 60 days
after the entry or filing thereof;
(e) an event of default occurs and is continuing under any
Indebtedness of the Company and, as a result thereof, the Indebtedness is
accelerated; provided, however, that in the event the holders of such
Indebtedness elect to waive such event of default or to otherwise de-accelerate
such Indebtedness, no Default shall subsist hereunder.
Section 7.02. Remedies. If any Event of Default shall occur and be
continuing, the Purchaser may, by notice to the Company, declare the outstanding
principal of the Note, all interest thereon and all other amounts payable
hereunder and under the Note to be forthwith due and payable, whereupon the
Note, all such principal and interest and all such other amounts shall become
and be forthwith due and payable, without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived by the
Company; provided, however, that, in the case of an Event of Default referred to
in Section 7.01(c) or (d), the outstanding principal of the Note and all
interest thereon and all other amounts payable under this Agreement shall be
immediately due and payable without presentment, demand, protest or any notice
of any kind, all of which are hereby expressly waived by the Company.
Upon and during the continuance of an Event of Default, the
Purchaser, in its sole discretion, may:
(i) exercise any one or more of the rights and remedies
accruing to a creditor under applicable law upon default by a debtor; and
(ii) exercise any other right or remedy granted to it under
this Agreement.
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ARTICLE VIII
TRANSFER AND ASSIGNMENT
Section 8.01. Transfers and Assignments. Prior to the occurrence of
an Event of Default (but subject to the prohibitions set forth in Section 8.02),
the Purchaser shall not assign or transfer, or sell participation in, any or all
of its rights and interests hereunder to any Person, other than to an affiliate,
without the consent of the Company.
Section 8.02. Restrictive Legend on Certificates. The
Purchaser understands and agrees that the Company shall place the following
legend on the certificates representing the Note:
THIS NOTE AND ANY SHARES ISSUABLE UPON THE CONVERSION OF THIS NOTE
HAVE BEEN ISSUED WITHOUT REGISTRATION OR QUALIFICATION UNDER THE
SECURITIES ACT OF 1933 OR UNDER ANY STATE BLUE SKY OR SECURITIES
LAWS IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND BLUE SKY LAWS AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF
SUCH REGISTRATION OR QUALIFICATION, OR AN EXEMPTION FROM THE
REGISTRATION OR QUALIFICATION REQUIREMENTS OF SUCH ACT OR LAWS, OR
UNLESS SUCH ACT OR LAWS DO NOT APPLY. THIS NOTE AND EACH SUCH SHARES
ARE SUBJECT TO THE PROVISIONS OF THE SENIOR CONVERTIBLE NOTE
PURCHASE AGREEMENT DATED AS OF JUNE 11, 1997 BETWEEN THE COMPANY AND
THE ORIGINAL PURCHASER OF THIS NOTE. SUCH AGREEMENT CONTAINS
PROVISIONS RESTRICTING THE TRANSFER OF THIS NOTE AND SUCH SHARES IN
CERTAIN CIRCUMSTANCES. A COPY OF SUCH AGREEMENT MAY BE OBTAINED FROM
THE COMPANY WITHOUT CHARGE.
The Company shall, upon the request of the Purchaser issue a new
Note without the first sentence of the foregoing legend if the transfer of the
Note or the shares evidenced by such certificate has been effectively registered
under the Act and such Note or shares shall have been sold by the Purchaser in
accordance with such registration.
ARTICLE IX
MISCELLANEOUS
Section 9.01. Amendments and Waivers. No amendment or waiver of any
provision of this Agreement or the Note, nor consent to any departure by the
Company herefrom, shall in any event be effective unless the same shall be in
writing and signed by the Purchaser or the assignee(s) of its interest in the
Note. The Purchaser by notice to the Company may waive as to itself an existing
Default and its consequences.
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Section 9.02. Notices. All notices and other communications provided
for hereunder shall be in writing (including telecopier, telegraphic, telex or
cable communication) and mailed, telecopied, telegraphed, cabled or delivered,
if to the Company, at its address at 000 Xxxxxxxx, Xxx Xxxx, XX 00000 Attention:
Chief Financial Officer, Telecopier No. (000) 000-0000; and if to the Purchaser,
at the registered address of the Purchaser as kept at the principal office of
the Company; or, as to each party, at such other address as shall be designated
by such party in a written notice to the other party.
Section 9.03. No Waiver; Remedies. No failure on the part of any
party to exercise, and no delay in exercising, any right hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise of any right
hereunder preclude any other or further exercise thereof or the exercise of any
other right. The remedies herein provided are cumulative and not exclusive of
any remedies provided by law.
Section 9.04. Presentment. The Company and any endorser hereof, and
each of them hereby waive, except to the extent otherwise provided herein or in
any other agreement, presentment for payment, notice of dishonor, protest and
notice of protest and other notices of every kind in connection with this
Agreement or the Note.
Section 9.05. Successors and Assigns. This Agreement and the Note
shall be binding upon and inure to the benefit of the Company and the Purchaser
and their respective successors and permitted assigns pursuant to Section 8.01.
Section 9.07. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the internal laws of the State of New York,
without giving effect to principles governing conflicts of law. Any action
arising out of, resulting from or in any way relating to this Agreement or any
alleged breach hereof or default hereunder shall be brought in the state courts
in the State of New York in New York County or in the United States District
Court for the Southern District of New York, and the parties hereto agree that
such courts shall have the sole and exclusive jurisdiction over any dispute or
controversy related to this Agreement.
Section 9.08. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. One or more counterparts of this Agreement (or portions hereof) may
be delivered via telecopier, with the intention that they shall have the same
effect as an original counterpart hereof (or such portions hereof). All
signature pages need not be on the same counterpart.
Section 9.09. Entire Agreement; Severability of Provisions. This
Agreement and the Note contain the entire agreement of the parties hereto and
supersede all prior agreements and understandings, oral or otherwise, among the
parties hereto with respect to the matters contained in this Agreement and the
Note. If any provision of this Agreement or the application thereof to any
Person or circumstance is invalid or unenforceable, or contravenes any law,
regulation or
13
document applicable to such Person, such provision or application shall be
deemed ineffective ab initio, but the remainder of this Agreement and the
application of such provision to other Persons or circumstances shall not be
affected thereby, and the provisions of this Agreement shall be severable in any
such instances.
Anything herein to the contrary notwithstanding, the obligations of
the Company under this Agreement and the Note shall be subject to the limitation
that payments of interest shall not be required to the extent that receipt of
any such payment by Purchaser would be contrary to provisions of law applicable
to Purchaser limiting the maximum rate of interest that may be charged or
collected by Purchaser.
* * * *
THE REMAINDER OF THIS PAGE INTENDED TO BE BLANK
14
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the date first above written.
INTERACTIVE IMAGINATIONS, INC.
By:_______________________________
Name:
Title:
THE TRAVELERS INSURANCE COMPANY
By:_______________________________
Name:
Title:
15
EXHIBIT A
FORM OF
SENIOR CONVERTIBLE NOTE
THIS NOTE AND ANY SHARES ISSUABLE UPON THE CONVERSION OF THIS NOTE
HAVE BEEN ISSUED WITHOUT REGISTRATION OR QUALIFICATION UNDER THE
SECURITIES ACT OF 1933 OR UNDER ANY BLUE SKY OR SECURITIES LAWS IN
RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND BLUE SKY LAWS AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF SUCH
REGISTRATION OR QUALIFICATION, OR AN EXEMPTION FROM THE REGISTRATION
OR QUALIFICATION REQUIREMENTS OF SUCH ACT OR LAW, OR UNLESS SUCH ACT
OR LAWS DO NOT APPLY. THIS NOTE AND SUCH SHARES ARE SUBJECT TO THE
PROVISIONS OF THE SENIOR CONVERTIBLE NOTE PURCHASE AGREEMENT DATED
AS OF JUNE , 1997, AS AMENDED, BETWEEN THE COMPANY AND THE ORIGINAL
PURCHASER OF THIS NOTE. SUCH AGREEMENT CONTAINS PROVISIONS
RESTRICTING THE TRANSFER OF THIS NOTE AND SUCH SHARES IN CERTAIN
CIRCUMSTANCES. A COPY OF SUCH AGREEMENT MAY BE OBTAINED FROM THE
COMPANY WITHOUT CHARGE.
$____________ New York, New York
_________, 199_
FOR VALUE RECEIVED, INTERACTIVE IMAGINATIONS, INC., a New York
corporation (the "Company"), HEREBY PROMISES TO PAY to the order of
________________, a ________________ (the "Purchaser"), or permitted assigns,
the principal sum of ________________________________ AND NO/100 DOLLARS
($____________), together with interest on any and all outstanding and unpaid
principal amounts hereunder from the date hereof until such principal amount is
paid in full, payable upon prepayment, redemption, or conversion of the Note or
at the Maturity Date at an interest rate equal at all times to 8% per annum
compounded semiannually following the date hereof. Interest payable on any of
the foregoing dates shall be paid to the Purchaser or its permitted assigns. All
interest due and owing hereunder shall be paid in additional principal amount of
this Note and shall continue to accrue until all payments due hereunder are
fully and finally paid.
This Senior Convertible Note is the Note referred to in, and is
entitled to the benefits of, the Senior Convertible Note Purchase Agreement
dated as of June , 1997 (the "Agreement") between the Company and
. Terms used herein without definition
A-1
have the meanings assigned to them in the Agreement. THIS NOTE IS SUBJECT TO THE
TERMS AND CONDITIONS CONTAINED IN THE AGREEMENT.
This Note is a senior unsecured obligation of the Company.
The provisions of this Note shall be governed by, and construed in
accordance with, the internal laws of the State of New York, without giving
effect to principles governing conflicts of law. Any action arising out of,
resulting from or in any way relating to this Agreement or any alleged breach
hereof or default hereunder shall be brought in the state courts in the State of
New York in New York County or in the United States District Court for the
Southern District of New York, and the parties hereto agree that such courts
shall have the sole and exclusive jurisdiction over any dispute or controversy
related to this Agreement.
INTERACTIVE IMAGINATIONS, INC.
By:__________________________
Name:
Title:
A-2
SENIOR CONVERTIBLE NOTE
THIS NOTE AND ANY SHARES ISSUABLE UPON THE CONVERSION OF THIS NOTE
HAVE BEEN ISSUED WITHOUT REGISTRATION OR QUALIFICATION UNDER THE
SECURITIES ACT OF 1933 OR UNDER ANY BLUE SKY OR SECURITIES LAWS IN
RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND BLUE SKY LAWS AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF SUCH
REGISTRATION OR QUALIFICATION, OR AN EXEMPTION FROM THE REGISTRATION
OR QUALIFICATION REQUIREMENTS OF SUCH ACT OR LAW, OR UNLESS SUCH ACT
OR LAWS DO NOT APPLY. THIS NOTE AND SUCH SHARES ARE SUBJECT TO THE
PROVISIONS OF THE SENIOR CONVERTIBLE NOTE PURCHASE AGREEMENT DATED
AS OF JUNE 11, 1997, AS AMENDED, BETWEEN THE COMPANY AND THE
ORIGINAL PURCHASER OF THIS NOTE. SUCH AGREEMENT CONTAINS PROVISIONS
RESTRICTING THE TRANSFER OF THIS NOTE AND SUCH SHARES IN CERTAIN
CIRCUMSTANCES. A COPY OF SUCH AGREEMENT MAY BE OBTAINED FROM THE
COMPANY WITHOUT CHARGE.
$170,000 New York, New York
June 11, 1997
FOR VALUE RECEIVED, INTERACTIVE IMAGINATIONS, INC., a New York
corporation (the "Company"), HEREBY PROMISES TO PAY to the order of TRAL & CO.
or its registered assigns (the "Purchaser"), the principal sum of ONE HUNDRED
SEVENTY THOUSAND AND NO/100 DOLLARS ($170,000), together with interest on any
and all outstanding and unpaid principal amounts hereunder from the date hereof
until such principal amount is paid in full, payable upon prepayment,
redemption, or conversion of the Note or at the Maturity Date at an interest
rate equal at all times to 8% per annum compounded semiannually following the
date hereof. Interest payable on any of the foregoing dates shall be paid to the
Purchaser or its permitted assigns. All interest due and owing hereunder shall
be paid in additional principal amount of this Note and shall continue to accrue
until all payments due hereunder are fully and finally paid.
This Senior Convertible Note is the Note referred to in, and is
entitled to the benefits of, the Senior Convertible Note Purchase Agreement
dated as of June 11, 1997 (the "Agreement") between the Company and The
Travelers Insurance Company. Terms used herein
A-3
without definition have the meanings assigned to them in the Agreement. THIS
NOTE IS SUBJECT TO THE TERMS AND CONDITIONS CONTAINED IN THE AGREEMENT.
This Note is a senior unsecured obligation of the Company.
The provisions of this Note shall be governed by, and construed in
accordance with, the internal laws of the State of New York, without giving
effect to principles governing conflicts of law. Any action arising out of,
resulting from or in any way relating to this Agreement or any alleged breach
hereof or default hereunder shall be brought in the state courts in the State of
New York in New York County or in the United States District Court for the
Southern District of New York, and the parties hereto agree that such courts
shall have the sole and exclusive jurisdiction over any dispute or controversy
related to this Agreement.
INTERACTIVE IMAGINATIONS, INC.
By:__________________________
Name:
Title:
A-4
