Exhibit 10.1
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "AGREEMENT"), dated as of December
31, 2002, by and among Viewpoint Corporation, a Delaware corporation, with
headquarters located at 000 Xxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000
(the "COMPANY"), and the investors listed on the Schedule of Buyers attached
hereto (individually, a "BUYER" and collectively, the "BUYERS").
WHEREAS:
A. The Company and each Buyer is executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Section 4(2) of the Securities Act of 1933, as amended (the "1933 ACT"), and
Rule 506 of Regulation D ("REGULATION D") as promulgated by the United States
Securities and Exchange Commission (the "SEC") under the 1933 Act;
B. The Company has authorized a new series of convertible notes of the
Company in the form attached hereto as Exhibit A (together with any convertible
notes issued in replacement thereof in accordance with the terms thereof, the
"INITIAL NOTES"), which Initial Notes shall be convertible into shares of the
Company's Common Stock, par value $.001 per share (the "COMMON STOCK") (as
converted, the "INITIAL CONVERSION SHARES"), in accordance with the terms of the
Initial Notes;
C. The Company has authorized a new series of convertible notes of the
Company in the form attached hereto as Exhibit B (together with any convertible
notes issued in replacement thereof in accordance with the terms thereof, the
"SUBSEQUENT NOTES"), which Subsequent Notes shall be convertible into shares of
the Common Stock (as converted, the "SUBSEQUENT CONVERSION SHARES"), in
accordance with the terms of the Subsequent Notes;
D. The Company has authorized a new series of convertible notes of the
Company in the form attached hereto as Exhibit C (together with any convertible
notes issued in replacement thereof in accordance with the terms thereof, the
"ADDITIONAL NOTES"), which Additional Notes shall be convertible into shares of
the Common Stock (as converted, the "ADDITIONAL CONVERSION SHARES" and
collectively with the Initial Conversion Shares, the Subsequent Conversion
Shares and any Common Stock issued upon any redemption pursuant to any of the
Notes, the "CONVERSION SHARES") in accordance with the terms of the Additional
Notes;
E. The Initial Notes, the Subsequent Notes and the Additional Notes
collectively are referred to in this Agreement as the "NOTES";
F. The Notes bear interest, which at the option of the Company, subject
to certain conditions, may be paid in shares of Common Stock ("INTEREST
SHARES");
G. The Company is agreeing to pledge certain limited assets to secure,
through and including the Interest Date (as defined in the Notes) occurring on
January 1, 2005 (the "PLEDGE PERIOD"), its obligations to pay interest on and
principal of the Notes. The pledge will be
evidenced by the Pledge Agreement, to be dated as of the Initial Closing Date,
by and among the Company and the Buyers substantially in the form attached
hereto as Exhibit E (the "PLEDGE AGREEMENT");
H. Each Buyer wishes to purchase, and the Company wishes to sell, upon
the terms and conditions stated in this Agreement, (i) that aggregate principal
amount of Initial Notes set forth opposite such Buyer's name in column (3) on
the Schedule of Buyers (which aggregate principal amount for all Buyers shall be
$7,000,000) and (ii) warrants, in substantially the form attached hereto as
Exhibit D (the "INITIAL WARRANTS"), to acquire that number of shares of Common
Stock for each $1,000 of principal amount of Initial Notes purchased (as
exercised, collectively, the "INITIAL WARRANT SHARES") equal to the quotient of
(i) $200 divided by (ii) $1.9275 (the "VALUATION PRICE");
I. Subject to the terms and conditions set forth in this Agreement,
each Buyer may be required to purchase, and the Company may have the right to
sell (i) up to that aggregate principal amount of Subsequent Notes set forth
opposite such Buyer's name in column (4) on the Schedule of Buyers (which
aggregate principal amount for all Buyers shall be up to $7,000,000) and (ii)
warrants, in substantially the form attached hereto as Exhibit D (the
"SUBSEQUENT WARRANTS"), to acquire that number of shares of Common Stock for
each $1,000 of principal amount of Subsequent Notes purchased (as exercised,
collectively, the "SUBSEQUENT WARRANT SHARES") equal to the quotient of (i) $200
divided by (ii) the Valuation Price (as appropriately adjusted for any stock
splits, stock dividends, stock combinations and other similar transactions of
the Common Stock which occur after the date of this Agreement and, on the terms
of Section 2 of the Subsequent Warrants in proportion to adjustments that would
be made to the initial Exercise Price thereunder, for any issuances or deemed
issuances of securities by the Company which occur after the date of this
Agreement);
J. Subject to the terms and conditions set forth in this Agreement,
each Buyer shall have the right to purchase, and the Company shall be required
to sell, (i) up to that aggregate principal amount of Additional Notes set forth
opposite such Buyer's name in column (5) on the Schedule of Buyers (which
aggregate principal amount for all Buyers shall be up to $2,800,000); and (ii)
related warrants, in substantially the form attached hereto as Exhibit D (the
"ADDITIONAL WARRANTS" and, collectively with the Initial Warrants and the
Subsequent Warrants, the "WARRANTS"), to acquire that number of shares of Common
Stock for each $1,000 of principal amount of Additional Notes purchased (as
exercised, collectively, the "ADDITIONAL WARRANT SHARES" and, collectively with
the Initial Warrant Shares and the Subsequent Warrant Shares, the "WARRANT
SHARES") equal to the quotient of (i) $200 divided by (ii) the Valuation Price
(as appropriately adjusted for any stock splits, stock dividends, stock
combinations and other similar transactions of the Common Stock which occur
after the date of this Agreement and, on the terms of Section 2 of the
Additional Warrants in proportion to adjustments that would be made to the
initial Exercise Price thereunder, for any issuances or deemed issuances of
securities by the Company which occur after the date of this Agreement);
K. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement,
substantially in the form attached hereto as Exhibit F (the "REGISTRATION RIGHTS
AGREEMENT"), pursuant to which the Company has agreed to provide certain
registration rights with respect to the Conversion Shares,
2
the Warrant Shares and the Interest Shares under the 1933 Act and the rules and
regulations promulgated thereunder, and applicable state securities laws.
L. The Notes, the Conversion Shares, the Interest Shares, the Warrants
and the Warrant Shares collectively are referred to herein as the "SECURITIES".
NOW, THEREFORE, the Company and each Buyer hereby agree as follows:
1. PURCHASE AND SALE OF NOTES AND WARRANTS.
(a) Purchase of Notes and Warrants.
(i) Initial Notes and Initial Warrants. Subject to the
satisfaction (or waiver) of the conditions set forth in Sections 6(a) and 7(a)
below, the Company shall issue and sell to each Buyer, and each Buyer severally,
but not jointly, agrees to purchase from the Company on the Initial Closing Date
(as defined below), a principal amount of Initial Notes, as is set forth
opposite such Buyer's name in column (3) on the Schedule of Buyers, along with
Initial Warrants to acquire that number of Initial Warrant Shares for each
$1,000 principal amount of Initial Notes purchased equal to the quotient of (A)
$200 divided by (B) the Valuation Price (the "INITIAL CLOSING").
(ii) Subsequent Notes and Subsequent Warrants. Subject to
satisfaction (or waiver) of the conditions set forth in Sections 1(c), 6(b) and
7(b) below, the Company may elect to issue and sell, and each Buyer severally,
but not jointly, if so elected by the Company, shall be required to purchase on
the Subsequent Closing Date (as defined below) a principal amount of Subsequent
Notes not to exceed such principal amount of Subsequent Notes as is set forth
opposite such Buyer's name in column (4) on the Schedule of Buyers, along with
Subsequent Warrants to acquire that number of Subsequent Warrant Shares for each
$1,000 principal amount of Subsequent Notes purchased equal to the quotient of
(A) $200 divided by (B) the Valuation Price (as appropriately adjusted for any
stock splits, stock dividends, stock combinations and other similar transactions
of the Common Stock which occur after the date of this Agreement and, on the
terms of Section 2 of the Subsequent Warrants in proportion to adjustments that
would be made to the initial Exercise Price thereunder, for any issuances or
deemed issuances of securities by the Company which occur after the date of this
Agreement) (the "SUBSEQUENT CLOSING").
(iii) Additional Notes and Additional Warrants. Subject to the
satisfaction (or waiver) of the conditions set forth in Sections 1(d), 6(c) and
7(c) below, at the option of each Buyer from time to time, the Company shall
issue and sell to each Buyer, at multiple closings, if applicable, and each
Buyer severally, but not jointly, may purchase from the Company on an Additional
Closing Date (as defined below), up to the principal amount of Additional Notes
as is set forth opposite such Buyer's name in column (5) on the Schedule of
Buyers, along with Additional Warrants to acquire that number of Additional
Warrant Shares for each $1,000 principal amount of Additional Notes purchased
equal to the quotient of (A) $200 divided by (B) the Valuation Price (as
appropriately adjusted for any stock splits, stock dividends, stock combinations
and other similar transactions of the Common Stock which occur after the date of
this Agreement and, on the terms of Section 2 of the Additional Warrants in
3
proportion to adjustments that would be made to the initial Exercise Price
thereunder, for any issuances or deemed issuances of securities by the Company
which occur after the date of this Agreement) (each, an "ADDITIONAL CLOSING").
(iv) Closings. The Initial Closing, the Subsequent Closing and
the Additional Closings collectively are referred to in this Agreement as the
"CLOSINGS". Each Closing shall occur on the applicable Closing Date at the
offices of Xxxxxxx Xxxx & Xxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
(v) Purchase Price. The purchase price for each Buyer (the
"PURCHASE PRICE") of the Notes and related Warrants to be purchased by each such
Buyer at each Closing shall be equal to $1.00 for each $1.00 of principal amount
of Notes being purchased by such Buyer at such Closing.
(b) Initial Closing Date. The date and time of the Initial Closing
(the "INITIAL CLOSING DATE") shall be 10:00 a.m., New York Time, on the date
hereof, subject to notification of satisfaction (or waiver) of the conditions to
the Initial Closing set forth in Sections 6(a) and 7(a) below (or such later
date as is mutually agreed to by the Company and each Buyer).
(c) Subsequent Closing Date. Subject to timely delivery by the
Company to the Buyers of the Subsequent Note Notice (as defined below), the date
and time of the Subsequent Closing (the "SUBSEQUENT CLOSING DATE") shall be
10:00 a.m., New York Time, on the date specified in the Subsequent Note Notice
(which date shall not be later than July 15, 2003), subject to satisfaction (or
waiver) of the conditions to the Subsequent Closing set forth in Sections 6(b)
and 7(b) and the conditions set forth in this Section 1(c) (or such later date
as is mutually agreed to by the Company and the Buyers). Subject to the
requirements of Sections 6(b) and 7(b) and the conditions contained in this
Section 1(c), the Company on one occasion may require each Buyer severally, but
not jointly, to purchase up to such principal amount of Subsequent Notes as is
set forth opposite such Buyer's name in column (4) on the Schedule of Buyers on
the Subsequent Closing Date by delivering written notice (the "SUBSEQUENT NOTE
NOTICE") to each Buyer on or prior to June 30, 2003 (the "SUBSEQUENT NOTE NOTICE
Date"). The Subsequent Note Notice shall be irrevocable and shall be delivered
to each Buyer at least 10 Business Days (as defined below) prior to the
Subsequent Closing Date set forth in the Subsequent Note Notice. The Company's
Subsequent Note Notice shall set forth (i) each Buyer's pro rata allocation
(based on the principal amount of Subsequent Notes as is set forth opposite each
such Buyer's name in column (4) on the Schedule of Buyers in relation to
$7,000,000) of the aggregate principal amount of Subsequent Notes (which
aggregate principal amount shall not exceed $7,000,000) and related Subsequent
Warrants which the Company is requiring all of the Buyers to purchase at the
Subsequent Closing and (ii) the aggregate Purchase Price for each such Buyer's
Subsequent Notes and related Subsequent Warrants. Notwithstanding anything in
this Agreement to the contrary, the Company shall not be entitled to require the
Buyers to purchase the Subsequent Notes unless, in addition to the requirements
of Sections 6(b) and 7(b), all of the following conditions are satisfied: (i) on
each day during the period beginning on the first day of the Measuring Period
(as defined below) and ending on the Subsequent Closing Date, the Registration
Statement (as defined in the Registration Rights Agreement) covering the Initial
Registrable Securities (as defined in the Registration Rights Agreement) (the
"INITIAL REGISTRATION STATEMENT") shall be effective and available for the sale
of at least all of the
4
Registrable Securities required to be included in such Registration Statement
and there shall not have been any Grace Periods (as defined in the Registration
Rights Agreement); (ii) on each day during the period beginning on the date
hereof and ending on the Subsequent Closing Date, the Common Stock is designated
for quotation on the Principal Market (as defined in Section 3(n)) and shall not
have been suspended from trading on such market (other than suspensions of not
more than one day and occurring prior to the first day of the Measuring Period
due to business announcements by the Company) nor shall delisting or suspension
by such market been threatened or pending in writing by such market; (iii) on
each day during the period beginning on the first Trading Day of the Measuring
Period (as defined below) and ending on the Subsequent Closing Date, delisting
or suspension by the Principal Market shall not have been threatened or pending
by falling below the minimum listing maintenance requirements of such market;
(iv) during the period beginning on the date hereof and ending on and including
the Subsequent Closing Date, there shall not have occurred (A) an event
constituting an Event of Default (as defined in the Notes), (B) an event that
with the passage of time and without being cured would be reasonably likely to
constitute an Event of Default or (C) the public announcement of a pending,
proposed or intended Change of Control (as defined in the Notes), unless such
pending, proposed or intended Change of Control has been terminated, abandoned
or consummated and the Company has publicly announced such termination,
abandonment or consummation of such Change of Control prior to the beginning of
the Measuring Period; (v) during the period beginning on the date hereof and
ending on and including the Subsequent Closing Date, the Company shall have
delivered Initial Conversion Shares upon conversion of the Initial Notes (and,
to the extent any Additional Notes have been issued, Additional Conversion
Shares upon conversion of the Additional Notes) and Initial Warrant Shares upon
exercise of the Initial Warrants (and, to the extent any Additional Warrants
have been issued, Additional Warrant Shares upon exercise of the Additional
Warrants) on a timely basis as set forth in the Initial Notes (or Additional
Notes, if applicable) and the Initial Warrants (or Additional Warrants, if
applicable), respectively; (vi) the Weighted Average Price (as defined in the
Subsequent Notes) of the Common Stock exceeds $3.25 (as appropriately adjusted
for any stock splits, stock dividends, stock combinations and other similar
transactions of the Common Stock which occur after the date of this Agreement)
on each of not less than 15 Trading Days (as defined in the Notes) (each, a
"QUALIFYING TRADING DAY") in any 20 consecutive Trading Day period (the
"MEASURING PERIOD") commencing after the effectiveness of the Initial
Registration Statement; (vii) the volume of shares of the Common Stock traded on
the Principal Market on each Qualifying Trading Day exceeds 35,000 shares
(excluding block trades of 20,000 shares or more); and (viii) on or before
delivery of the Subsequent Note Notice, the Company shall have received the
Stockholder Approval (as defined in Section 4(m) below). As used herein,
"BUSINESS DAY" means any day other than Saturday, Sunday or other day on which
commercial banks in The City of New York are authorized or required by law to
remain closed.
(d) Additional Closing Date. The date and time of each Additional
Closing (each, an "ADDITIONAL CLOSING DATE") shall be 10:00 a.m., New York Time,
on the date specified in the Additional Note Notice (as defined below), subject
to satisfaction (or waiver) of the conditions to each Additional Closing set
forth in Sections 6(c) and 7(c) and the conditions contained in this Section
1(d) (or such later date as is mutually agreed to by the Company and the
applicable Buyer). Subject to the requirements of Sections 6(c) and 7(c) and the
conditions contained in this Section 1(d), each Buyer may purchase, at such
Buyer's option, Additional
5
Notes by delivering written notice to the Company (an "ADDITIONAL NOTE NOTICE")
at any time during the period beginning after the date hereof and ending on and
including the date which is the later of (x) 365 days after the date hereof (the
"ANNIVERSARY DATE") and (y) a number of days after the Anniversary Date equal to
the aggregate number of days after each Effectiveness Deadline (as defined in
the Registration Rights Agreement) that the Registration Statement required to
be effective by such date is not so effective. The Additional Note Notice shall
be delivered at least five Business Days prior to the Additional Closing Date
set forth in the Additional Note Notice. The Additional Note Notice shall set
forth (i) the principal amount of Additional Notes and related Additional
Warrants to be purchased by such Buyer at the applicable Additional Closing
Date, which principal amount, when added to the principal amount of any
Additional Notes previously purchased by such Buyer, shall not exceed the
principal amount of Additional Notes as is set forth opposite such Buyer's name
in column (5) on the Schedule of Buyers, (ii) the aggregate Purchase Price for
the Additional Notes and related Additional Warrants to be purchased and (iii)
the Additional Closing Date. In the event that an Acquiring Entity Change of
Control Redemption Notice is delivered pursuant to Section 5(d) of the Notes
prior to the time that the Buyers have fully exercised their rights pursuant to
this Section 1(d), then from and after the Acquiring Entity Change of Control
Redemption Date (as defined in the Notes), the Buyers shall no longer be able to
exercise their rights pursuant to this Section 1(d) and the Acquiring Entity (as
defined in the Notes) shall pay to each Buyer an amount equal to the value of
any unexercised rights of such Buyer pursuant hereto determined in a manner
consistent with the manner used to determine the Acquiring Entity Change of
Control Redemption Price pursuant to the Notes.
(e) Form of Payment. On each Closing Date, (i) each Buyer shall pay
its Purchase Price to the Company for the Notes and Warrants to be issued and
sold to such Buyer at the applicable Closing, by wire transfer of immediately
available funds in accordance with the Company's written wire instructions, and
(ii) the Company shall deliver to each Buyer, the Notes (in the principal
amounts as such Buyer shall request) which such Buyer is then purchasing along
with the Warrants (in the amounts as such Buyer shall request) such Buyer is
purchasing, duly executed on behalf of the Company and registered in the name of
such Buyer or its designee.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
Each Buyer represents and warrants with respect to only itself that:
(a) No Public Sale or Distribution. Such Buyer is (i) acquiring the
Notes and Warrants and (ii) upon conversion of the Notes and exercise of the
Warrants (other than pursuant to a Cashless Exercise (as defined in the
Warrants)) will acquire the Conversion Shares issuable upon conversion of the
Notes and the Warrant Shares issuable upon exercise of the Warrants, for its own
account and not with a view towards, or for resale in connection with, the
public sale or distribution thereof, except pursuant to sales registered or
exempted under the 1933 Act; provided, however, that by making the
representations herein, such Buyer 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 1933 Act.
(b) Accredited Investor Status. Such Buyer is an "accredited
investor" as that
6
term is defined in Rule 501(a) of Regulation D.
(c) Reliance on Exemptions. Such Buyer understands that the
Securities are being offered and sold to it in reliance on specific exemptions
from the registration requirements of United States federal and state securities
laws and that the Company is relying in part upon the truth and accuracy of, and
such Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of such Buyer
to acquire the Securities.
(d) Information. Such Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Securities
which have been requested by such Buyer. Such Buyer and its advisors, if any,
have been afforded the opportunity to ask questions of the Company. Neither such
inquiries nor any other due diligence investigations conducted by such Buyer or
its advisors, if any, or its representatives shall modify, amend or affect such
Buyer's right to rely on the Company's representations and warranties contained
herein. Such Buyer understands that its investment in the Securities involves a
high degree of risk. Such Buyer has sought such accounting, legal and tax advice
as it has considered necessary to make an informed investment decision with
respect to its acquisition of the Securities.
(e) No Governmental Review. Such Buyer understands that no United
States federal or state agency or any other government or governmental agency
has passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.
(f) Transfer or Resale. Such Buyer understands that except as
provided in the Registration Rights Agreement: (i) the Securities have not been
and are not being registered under the 1933 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 Buyer 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 or Rule 144A promulgated under the
1933 Act, as amended, (or a successor rule thereto) (collectively, "RULE 144")
may be made only 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 the Person (as defined in Section 3(r)) through whom the sale is
made) may be deemed to be an underwriter (as that term is defined in the 0000
Xxx) may require compliance with some other exemption under the 1933 Act or the
rules and regulations of the SEC thereunder; and (iii) neither the Company nor
any other Person is under any obligation to register the Securities under the
1933 Act or any state securities laws or to comply with the terms and conditions
of any exemption thereunder. The Securities may be pledged in connection with a
bona fide margin account or other loan secured by the Securities and such pledge
of Securities shall not be deemed to be a transfer, sale or assignment of the
Securities hereunder, and no Buyer effecting a pledge of Securities shall be
required to provide the Company with any notice thereof or otherwise make any
delivery to the Company pursuant to this Agreement or any other
7
Transaction Document, including, without limitation, this Section 2(g);
provided, that in order to make any sale, transfer or assignment of Securities,
such Buyer and its pledgee makes such disposition in accordance with or pursuant
to a registration statement or an exemption under the 1933 Act.
(g) Legends. Such Buyer understands that the certificates or other
instruments representing the Notes and the Warrants and, until such time as the
sale of the Conversion Shares and the Warrant Shares have been registered under
the 1933 Act as contemplated by the Registration Rights Agreement, the stock
certificates representing the Conversion Shares and the Warrant Shares, 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):
[NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
[CONVERTIBLE][EXERCISABLE] HAVE BEEN][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.
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 1933 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 1933 Act, or (iii) such holder provides the Company with reasonable
assurance that the Securities can be sold, assigned or transferred pursuant to
Rule 144.
(h) Prohibited Transactions. Prior to the date hereof, such Buyer
has not, directly or indirectly, sold or agreed to sell any shares of Common
Stock, effected any short sale, whether or not against the box, established any
"put equivalent position" (as defined in Rule 16a-1(h) under the Securities
Exchange Act of 1934, as amended (the "1934 ACT"), with respect to the Common
Stock, granted any other right (including, without limitation, any put or call
option) with respect to the Common Stock or with respect to any security that
includes, relates to or derived any significant part of its value from the
Common Stock, in each case, in order to hedge
8
its position in the Notes or the Warrants (each, a "PROHIBITED TRANSACTION")."
(i) Validity; Enforcement. This Agreement, the Pledge Agreement, the
Control Agreement (as defined in the Pledge Agreement) and the Registration
Rights Agreement have been duly and validly authorized, executed and delivered
on behalf of such Buyer and shall constitute the legal, valid and binding
obligations of such Buyer enforceable against such Buyer in accordance with
their respective terms, except as such enforceability may be limited by general
principles of equity or to applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation and other similar laws relating to, or affecting
generally, the enforcement of applicable creditors' rights and remedies.
(j) No Conflicts. The execution, delivery and performance by such
Buyer of the Transaction Documents to which it is a party and the consummation
by the such Buyer of the transactions contemplated hereby and thereby will not
(i) result in a violation of the organizational documents of such Buyer or (ii)
conflict with, or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which such Buyer is a party, or (iii) result in a
violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws) applicable to such Buyer, except in the case
of clauses (ii) and (iii) above, for such conflicts, defaults, rights or
violations which would not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the ability of such Buyer to
perform its obligations hereunder.
(k) Residency. Such Buyer is a resident of that country specified
below its address on the Schedule of Buyers.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Buyers that:
9
(a) Organization and Qualification. The Company and its
"SUBSIDIARIES" (which for purposes of this Agreement means any entity in which
the Company, directly or indirectly, owns capital stock or holds an equity or
similar interest) are corporations duly organized and validly existing in good
standing under the laws of the jurisdiction in which they are incorporated, to
the extent such qualification is required by law, and have the requisite
corporate power and authorization to own their properties and to carry on their
business as now being conducted. Each of the Company and its Subsidiaries is
duly qualified as a foreign corporation to do business and is in good standing
in every jurisdiction in which its ownership of property or the nature of the
business conducted by it makes such qualification necessary, except to the
extent that the failure to be so qualified or be in good standing would not
reasonably be expected to have a Material Adverse Effect. As used in this
Agreement, "MATERIAL ADVERSE EFFECT" means any material adverse effect on the
business, properties, assets, operations, results of operations or condition
(financial or otherwise) of the Company and its Subsidiaries, taken as a whole,
or on the transactions contemplated hereby or by the agreements and instruments
to be entered into in connection herewith, or on the authority or ability of the
Company to perform its obligations under the Transaction Documents (as defined
below). The Company has no Subsidiaries except as set forth on Schedule 3(a).
(b) Authorization; Enforcement; Validity. The Company has the
requisite corporate power and authority to enter into and perform its
obligations under this Agreement, the Notes, the Registration Rights Agreement,
the Irrevocable Transfer Agent Instructions (as defined in Section 5(b)), the
Warrants, the Pledge Agreement, the Control Agreement and each of the other
agreements entered into by the parties hereto in connection with the
transactions contemplated by this Agreement (collectively, the "TRANSACTION
DOCUMENTS") and to issue the Securities in accordance with the terms hereof and
thereof. The execution and delivery of the Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated hereby and
thereby, including, without limitation, the issuance of the Notes and the
Warrants and the reservation for issuance and the issuance of the Conversion
Shares and the Warrant Shares issuable upon conversion or exercise thereof, as
the case may be, have been duly authorized by the Company's Board of Directors
and no further consent or authorization is required by the Company, its Board of
Directors or its stockholders. This Agreement and the other Transaction
Documents of even date herewith have been duly executed and delivered by the
Company, and constitute the legal, valid and binding obligations of the Company
enforceable against the Company in accordance with their respective terms,
except as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally, the enforcement of applicable
creditors' rights and remedies. As of each Closing, the Company shall represent
and warrant that the Transaction Documents dated after the date hereof and
required to have been executed and delivered with respect to such Closing shall
have been duly executed and delivered by the Company, and shall constitute the
legal, valid and binding obligations of the Company enforceable against the
Company in accordance with their respective terms, except as such enforceability
may be limited by general principles of equity or applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating to,
or affecting generally, the enforcement of applicable creditor's rights and
remedies.
(c) Issuance of Securities. The Notes and Warrants are duly
authorized and, upon issuance in accordance with the terms hereof, shall be free
from all taxes, liens and charges
10
with respect to the issue thereof. As of the applicable Closing, a number of
shares of Common Stock shall have been duly authorized and reserved for issuance
which equals the sum of 130% of the number of shares of Common Stock issuable
upon conversion of, or as payment for interest on, the Notes to be issued at
such Closing and 100% of the number of shares of Common Stock issuable upon
exercise of the Warrants to be issued at such Closing. Upon conversion or
exercise in accordance with the Notes or the Warrants, as the case may be, and
upon issuance of Interest Shares as interest on the Notes, the Conversion
Shares, the Warrant Shares and the Interest Shares, respectively, will be
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issue thereof, with the holders being entitled to
all rights accorded to a holder of Common Stock. Assuming the accuracy of each
of the representations and warranties of Buyer contained in Section 2, the
issuance by the Company of the Securities is exempt from registration under the
1933 Act.
(d) No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without limitation, the
issuance of the Notes and Warrants and reservation for issuance and issuance of
the Conversion Shares, the Interest Shares and the Warrant Shares) will not (i)
result in a violation of the certificate of incorporation, any certificate of
designations, preferences and rights of any outstanding series of preferred
stock or bylaws of the Company or any Subsidiary or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company or any of its Subsidiaries is a party, or (iii)
result in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations and the rules and
regulations of the Principal Market) applicable to the Company or any of its
Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries is bound or affected, except in the case of clauses (ii) and (iii)
above, for such conflicts, defaults, rights or violations which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(e) Consents. Except as disclosed in Schedule 3(e), the Company is
not required to obtain any consent, authorization or order of, or make any
filing or registration with, any court, governmental agency or any regulatory or
self-regulatory agency or any other Person in order for it to execute, deliver
or perform any of its obligations under or contemplated by the Transaction
Documents, in each case in accordance with the terms hereof or thereof. All
consents, authorizations, orders, filings and registrations which the Company is
required to obtain pursuant to the preceding sentence have been obtained or
effected on or prior to the Initial Closing Date. The Company and its
Subsidiaries are unaware of any facts or circumstances which might reasonably be
expected to prevent the Company from obtaining or effecting any of the
foregoing. The Company is not in violation of the listing requirements of the
Principal Market and, except as disclosed on Schedule 3(e), has no knowledge of
any facts which would reasonably lead to delisting or suspension of the Common
Stock in the foreseeable future.
(f) Acknowledgment Regarding Buyer's Purchase of Securities. The
Company acknowledges and agrees that each Buyer is acting solely in the capacity
of arm's length purchaser with respect to the Transaction Documents and the
transactions contemplated hereby and thereby. The Company further acknowledges
that no Buyer is acting as a financial
11
advisor or fiduciary of the Company (or in any similar capacity) with respect to
the Transaction Documents and the transactions contemplated hereby and thereby,
and any advice given by a Buyer or any of its representatives or agents in
connection with the Transaction Documents and the transactions contemplated
hereby and thereby is merely incidental to such Buyer's purchase of the
Securities. The Company further represents to each Buyer that the Company's
decision to enter into the Transaction Documents has been based solely on (i)
the independent evaluation by the Company and its representatives and (ii) each
Buyer's representations and warranties contained in Section 2.
(g) No General Solicitation; Placement Agent's Fees. Neither the
Company, nor any of its affiliates, nor any Person acting on its or their
behalf, has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D) in connection with the offer or sale of the
Securities. Other than engaging Banc of America Securities LLC as placement
agent (the "AGENT"), the Company has not engaged any placement agent or other
agent in connection with the sale of the Notes and the Warrants.
(h) No Integrated Offering. None of the Company, its Subsidiaries,
any of their affiliates, and any Person acting on their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would require registration of any of
the Securities under the 1933 Act or cause this offering of the Securities to be
integrated with prior offerings by the Company for purposes of the 1933 Act or
any applicable stockholder approval provisions, including, without limitation,
under the rules and regulations of any exchange or automated quotation system on
which any of the securities of the Company are listed or designated. None of the
Company, its Subsidiaries, their affiliates and any Person acting on their
behalf will take any action or steps referred to in the preceding sentence that
would require registration of any of the Securities under the 1933 Act or cause
the offering of the Securities to be integrated with other offerings.
(i) Dilutive Effect. The Company understands and acknowledges that
the number of Conversion Shares issuable upon conversion of the Notes and the
Warrant Shares issuable upon exercise of the Warrants will increase in certain
circumstances. The Company further acknowledges that its obligation to issue
Conversion Shares upon conversion of the Notes in accordance with this Agreement
and the Notes and its obligation to issue the Warrant Shares upon exercise of
the Warrants in accordance with this Agreement and the Warrants is (subject to
the receipt of any necessary Stockholder Approval), in each case, absolute and
unconditional regardless of the dilutive effect that such issuance may have on
the ownership interests of other stockholders of the Company.
(j) Application of Takeover Protections; Rights Agreement. The
Company and its board of directors have taken all necessary action in order to
render inapplicable any control share acquisition, business combination, poison
pill (including any distribution under a rights agreement) or other similar
anti-takeover provision under the Certificate of Incorporation (as defined in
Section 3(q)) or the laws of the state of its incorporation which is or could
become applicable to any Buyer as a result of the transactions contemplated by
this Agreement, including, without limitation, the Company's issuance of the
Securities and any Buyer's ownership of the Securities. The Company specifically
represents, warrants and agrees that, in accordance with Section 1 of the rights
agreement, dated as of June 24, 1999, between the
12
Company and BankBoston, N.A., as amended (the "RIGHTS PLAN"), regardless of the
number of Conversion Shares, Interest Shares and Warrant Shares of which each
Buyer is deemed the Beneficial Owner (as defined in the Rights Plan), none of
the Buyers is intended to be or will be deemed to be an Acquiring Person within
the meaning of the Rights Plan because of the acquisition of the Securities
(including the Conversion Shares, Interest Shares and the Warrant Shares)
pursuant to this Agreement, and the acquisition of the Securities (including the
Conversion Shares, Interest Shares and the Warrant Shares) pursuant to this
Agreement shall not, under any circumstances, trigger a Distribution Date within
the meaning of the Rights Plan; provided, however, that only Securities
(including the Conversion Shares, Interest Shares and the Warrant Shares)
acquired pursuant to this Agreement, upon conversion or redemption of or as
interest on the Notes or upon exercise of the Warrants, as the case may be,
shall be deemed excluded from the number of shares of Common Stock deemed
beneficially owned by each Buyer in determining whether such Buyer is an
Acquiring Person within the meaning of the Rights Plan. The exclusion of the
Securities from the number of shares of Common Stock deemed beneficially owned
by each Buyer, as provided in the preceding sentence, shall no longer apply in
the event that such Buyer becomes the beneficial owner of any additional
securities of the Company, other than in connection with the transactions
contemplated by this Agreement.
(k) SEC Documents; Financial Statements. Since December 31, 2000,
the Company has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the 1934 Act (all of the foregoing filed prior to the date
hereof, or in connection with any Closing subsequent to the date hereof, filed
prior to the date of such Closing, and all exhibits included therein and
financial statements and schedules thereto and documents incorporated by
reference therein being hereinafter referred to as the "SEC DOCUMENTS"). The
Company has delivered to the Buyers or their respective representatives true,
correct and complete copies of the SEC Documents not available on the XXXXX
system. As of their respective dates, the SEC Documents complied in all material
respects with the requirements of the 1934 Act and the rules and regulations of
the SEC promulgated thereunder applicable to the SEC Documents, and none of the
SEC Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. As of
their respective dates, the financial statements of the Company included in the
SEC Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto. Such financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). None of the
presentations that were provided in writing by the Company to the Buyers and
that are attached to this Agreement as Schedule 3(k), which are not included in
the SEC Documents, contains any untrue statement of a material fact or omits to
state any material fact necessary in order to make the statements therein, in
the light of the circumstance under which they are or were made, not
13
misleading.
(l) Absence of Certain Changes. Except as disclosed in Schedule
3(l), since September 30, 2002, there has been no material adverse change and no
material adverse development in the business, properties, operations, condition
(financial or otherwise), or results of operations of the Company or its
Subsidiaries. Since December 31, 2001, the Company has not (i) declared or paid
any dividends, (ii) sold any assets, individually or in the aggregate, in excess
of $100,000 outside of the ordinary course of business or (iii) had capital
expenditures, individually or in the aggregate, in excess of $1,300,000. The
Company has not taken any steps to seek protection pursuant to any bankruptcy
law nor does the Company have any knowledge that its creditors intend to
initiate involuntary bankruptcy proceedings or any actual knowledge of any fact
which would reasonably lead a creditor to do so. The Company is not as of the
date hereof, and after giving effect to the transactions contemplated hereby to
occur at each Closing, will not be Insolvent (as defined below). For purposes of
this Section 3(l), "INSOLVENT" means (i) the present fair saleable value of the
Company's assets is less than the amount required to pay the Company's total
indebtedness, contingent or otherwise, (ii) the Company is unable to pay its
debts and liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured, (iii) the Company intends to incur or
believes that it will incur debts that would be beyond its ability to pay as
such debts mature or (iv) the Company has unreasonably small capital with which
to conduct the business in which it is engaged as such business is now conducted
and is proposed to be conducted.
(m) No Undisclosed Events, Liabilities, Developments or
Circumstances. No event, liability, development or circumstance has occurred or
exists with respect to the Company or its Subsidiaries or their respective
business, properties, prospects, operations or financial condition, that would
be required to be disclosed by the Company under applicable securities laws on a
registration statement on Form S-1 filed with the SEC relating to an issuance
and sale by the Company of its Common Stock and which has not been publicly
announced.
(n) Conduct of Business; Regulatory Permits. Neither the Company nor
its Subsidiaries is in violation of any term of or in default under its
Certificate of Incorporation, any Certificate of Designations, Preferences and
Rights of any outstanding series of preferred stock of the Company or Bylaws or
their organizational charter or bylaws, respectively. Except as disclosed in
Schedule 3(n), neither the Company nor any of its Subsidiaries is in violation
of any judgment, decree or order or any statute, ordinance, rule or regulation
applicable to the Company or its Subsidiaries, and neither the Company nor any
of its Subsidiaries will conduct its business in violation of any of the
foregoing, except for possible violations which would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect. Without
limiting the generality of the foregoing, the Company is not in violation of any
of the rules, regulations or requirements of the Nasdaq National Market (the
"PRINCIPAL MARKET") and has no knowledge of any facts or circumstances which
would reasonably lead to delisting or suspension of the Common Stock by the
Principal Market in the foreseeable future. Except as disclosed on Schedule
3(n), since December 31, 2001, (i) the Common Stock has been designated for
quotation or listed on the Principal Market, (ii) trading in the Common Stock
has not been suspended by the SEC or the Principal Market and (iii) the Company
has received no communication, written or oral, from the SEC or the Principal
Market regarding the suspension or delisting of the Common Stock from the
Principal Market. The Company and its Subsidiaries
14
possess all certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct their
respective businesses, except where the failure to possess such certificates,
authorizations or permits would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect, and neither the Company nor any
such Subsidiary has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or permit.
(o) Foreign Corrupt Practices. Neither the Company, nor any of its
Subsidiaries, nor any director, officer, agent, employee or other Person acting
on behalf of the Company or any of its Subsidiaries has, in the course of its
actions for, or on behalf of, the Company (i) used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses relating
to political activity; (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds; (iii)
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate,
payoff, influence payment, kickback or other unlawful payment to any foreign or
domestic government official or employee.
(p) Transactions With Affiliates. Except as set forth on Schedule
3(p) and in the SEC Documents filed at least ten days prior to the date hereof
and other than the grant of stock options disclosed on Schedule 3(q), none of
the officers, directors or employees of the Company is presently a party to any
transaction with the Company or any of its Subsidiaries (other than for ordinary
course services as employees, officers or directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any such officer, director or employee or, to the
knowledge of the Company, any corporation, partnership, trust or other entity in
which any such officer, director, or employee has a substantial interest or is
an officer, director, trustee or partner.
(q) Equity Capitalization. As of the date hereof, the authorized
capital stock of the Company consists of (x) 75,000,000 shares of Common Stock,
of which as of the date hereof, 41,179,400 are issued (none of which are
treasury shares) and 41,179,400 are outstanding, 10,288,454 shares are reserved
for issuance pursuant to the Company's stock option and purchase plans and
57,500 shares are reserved for issuance pursuant to securities (other than the
Notes and the Warrants) exercisable or exchangeable for, or convertible into,
shares of Common Stock, and (y) 5,000,000 shares of preferred stock, of which as
of the date hereof, none are issued and outstanding. All of such outstanding
shares have been, or upon issuance will be, validly issued and are fully paid
and nonassessable. Except as disclosed in Schedule 3(q): (i) no shares of the
Company's capital stock are subject to preemptive rights or any other similar
rights or any liens or encumbrances suffered or permitted by the Company; (ii)
there are no outstanding options, warrants, scrip, rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any shares of capital
stock of the Company or any of its Subsidiaries, or contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries
is or may become bound to issue additional shares of capital stock of the
Company or any of its Subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, or exercisable or exchangeable for, any
shares of capital stock of the Company or any of its Subsidiaries; (iii)
15
there are no financing statements securing obligations in any material amounts,
either singly or in the aggregate, filed in connection with the Company; (iv)
there are no agreements or arrangements under which the Company or any of its
Subsidiaries is obligated to register the sale of any of their securities under
the 1933 Act (except the Registration Rights Agreement); (v) there are no
outstanding securities or instruments of the Company or any of its Subsidiaries
which contain any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to redeem a security of the Company or any
of its Subsidiaries; (vi) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Securities; (vii) the Company does not have any stock appreciation rights or
"phantom stock" plans or agreements or any similar plan or agreement; and (viii)
the Company and its Subsidiaries have no liabilities or obligations required to
be disclosed in the SEC Documents (as defined herein) but not so disclosed in
the SEC Documents, other than those incurred in the ordinary course of the
Company's or its Subsidiaries' respective businesses and which, individually or
in the aggregate, do not or would not reasonably be expected to have a Material
Adverse Effect. The Company has furnished to the Buyer true, correct and
complete copies of the Company's Certificate of Incorporation, as amended and as
in effect on the date hereof (the "CERTIFICATE OF INCORPORATION"), and the
Company's Bylaws, as amended and as in effect on the date hereof (the "BYLAWS"),
and the terms of all securities convertible into, or exercisable or exchangeable
for, Common Stock.
(r) Indebtedness and Other Contracts. Except as disclosed in
Schedule 3(r), neither the Company nor any of its Subsidiaries (i) has any
outstanding Indebtedness (as defined below), or (ii) is in violation of any term
of or in default under any contract, agreement or instrument relating to any
Indebtedness, except where such violations and defaults would not reasonably be
expected to result, individually or in the aggregate, in a Material Adverse
Effect. Schedule 3(r) provides a detailed description of the material terms of
any such outstanding Indebtedness. For purposes of this Agreement: (x)
"INDEBTEDNESS" of any Person means, without duplication (A) all indebtedness for
borrowed money, (B) all obligations issued, undertaken or assumed as the
deferred purchase price of property or services (other than trade payables
entered into in the ordinary course of business), (C) all reimbursement or
payment obligations with respect to letters of credit, surety bonds and other
similar instruments, (D) all obligations evidenced by notes, bonds, debentures
or similar instruments, including obligations so evidenced incurred in
connection with the acquisition of property, assets or businesses, (E) all
indebtedness created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect to
any property or assets acquired with the proceeds of such indebtedness (even
though the rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such property), (F) all
monetary obligations under any leasing or similar arrangement which, in
connection with generally accepted accounting principles, consistently applied
for the periods covered thereby, is classified as a capital lease, (G) all
indebtedness referred to in clauses (A) through (F) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any mortgage, lien, pledge, change, security
interest or other encumbrance upon or in any property or assets (including
accounts and contract rights) owned by any Person, even though the Person which
owns such assets or property has not assumed or become liable for the payment of
such indebtedness, and (H) all Contingent Obligations in
16
respect of indebtedness or obligations of others of the kinds referred to in
clauses (A) through (G) above; (y) "CONTINGENT OBLIGATION" means, as to any
Person, any direct or indirect liability, contingent or otherwise, of that
Person with respect to any indebtedness, lease, dividend or other obligation of
another Person if the primary purpose or intent of the Person incurring such
liability, or the primary effect thereof, is to provide assurance to the obligee
of such liability that such liability will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such
liability will be protected (in whole or in part) against loss with respect
thereto; and (z) "PERSON" means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency thereof.
(s) Absence of Litigation. There is no action, suit, proceeding,
inquiry or investigation before or by the Principal Market, any court, public
board, government agency, self-regulatory organization or body pending or, to
the knowledge of the Company, threatened against or affecting the Company (other
than industry-wide actions or suits that are not directed against the Company
and that would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect), the Common Stock or any of the Company's
Subsidiaries or any of the Company's or the Company's Subsidiaries' officers or
directors in their capacities as such, except as set forth in Schedule 3(s).
(t) Insurance. The Company and each of its Subsidiaries are insured
by insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its Subsidiaries are
engaged. Neither the Company nor any such Subsidiary has been refused any
insurance coverage sought or applied for and neither the Company nor any such
Subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect.
(u) Employee Relations. (i) Neither the Company nor any of its
Subsidiaries is a party to any collective bargaining agreement or employs any
member of a union. The Company and its Subsidiaries believe that their relations
with their employees are good. No executive officer of the Company (as defined
in Rule 501(f) of the 0000 Xxx) has notified the Company that such officer
intends to leave the Company or otherwise terminate such officer's employment
with the Company. No executive officer of the Company, to the knowledge of the
Company, is, or is now expected to be, in violation of any material term of any
employment contract, confidentiality, disclosure or proprietary information
agreement, non-competition agreement, or any other contract or agreement or any
restrictive covenant, and the continued employment of each such executive
officer does not subject the Company or any of its Subsidiaries to any liability
with respect to any of the foregoing matters.
(ii) The Company and its Subsidiaries are in compliance with all
federal, state, local and foreign laws and regulations respecting employment and
employment practices, terms and conditions of employment and wages and hours,
except where failure to be in compliance would not, either individually or in
the aggregate, reasonably be expected to result in a Material Adverse Effect.
17
(v) Title. The Company and its Subsidiaries have good and marketable
title to all personal property owned by them which is material to the business
of the Company and its Subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in Schedule 3(v) or such
as do not materially affect the value of such property and do not interfere with
the use made and proposed to be made of such property by the Company and any of
its Subsidiaries. Neither the Company nor any of its Subsidiaries owns any real
property. Any real property and facilities held under lease by the Company and
any of its Subsidiaries are held by them under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere with the
use made and proposed to be made of such property and buildings by the Company
and its Subsidiaries.
(w) Intellectual Property Rights. The Company and its Subsidiaries
own or possess adequate rights or licenses to use all trademarks, trade names,
service marks, service xxxx registrations, service names, patents, patent
rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and other intellectual property rights
("INTELLECTUAL PROPERTY RIGHTS") necessary to conduct their respective
businesses as now conducted, other than those the absence of which would not
reasonably be expected to have a Material Adverse Effect. Except as set forth in
Schedule 3(w), none of the Company's Intellectual Property Rights have expired
or terminated, or are expected to expire or terminate within three years from
the date of this Agreement. The Company does not have any knowledge of any
infringement by the Company or its Subsidiaries of Intellectual Property Rights
of others. Except as set forth in Schedule 3(w), there is no claim, action or
proceeding being made or brought, or to the knowledge of the Company, being
threatened, against the Company or its Subsidiaries regarding its Intellectual
Property Rights. The Company is unaware of any facts or circumstances which
might give rise to any of the foregoing infringements or claims, actions or
proceedings. The Company and its Subsidiaries have taken reasonable security
measures to protect the secrecy, confidentiality and value of all of their
intellectual properties.
(x) Environmental Laws. The Company and its Subsidiaries (i) are in
compliance with any and all Environmental Laws (as hereinafter defined), (ii)
have received all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses and (iii)
are in compliance with all terms and conditions of any such permit, license or
approval where, in each of the foregoing clauses (i), (ii) and (iii), the
failure to so comply could be reasonably expected to have, individually or in
the aggregate, a Material Adverse Effect. The term "ENVIRONMENTAL LAWS" means
all federal, state, local or foreign laws relating to pollution or protection of
human health or the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata), including,
without limitation, laws relating to emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants, or toxic or
hazardous substances or wastes (collectively, "HAZARDOUS MATERIALS") into the
environment, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous Materials,
as well as all authorizations, codes, decrees, demands or demand letters,
injunctions, judgments, licenses, notices or notice letters, orders, permits,
plans or regulations issued, entered, promulgated or approved thereunder.
(y) Subsidiary Rights. The Company or one of its Subsidiaries has
the unrestricted right to vote, and (subject to limitations imposed by
applicable law) to receive
18
dividends and distributions on, all capital securities of its material
Subsidiaries as owned by the Company or such Subsidiary.
(z) Tax Status. The Company and each of its Subsidiaries (i) has
made or filed all federal and state income and all other material tax returns,
reports and declarations required by any jurisdiction to which it is subject,
(ii) has paid all taxes and other governmental assessments and charges that are
material in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith or that are not
material and (iii) has set aside on its books provision reasonably adequate for
the payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any jurisdiction,
and the officers of the Company know of no basis for any such claim.
(aa) Internal Accounting Controls. The Company and each of its
Subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
and liability accountability, (iii) access to assets or incurrence of
liabilities is permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability for assets and
liabilities is compared with the existing assets and liabilities at reasonable
intervals and appropriate action is taken with respect to any difference.
4. COVENANTS.
(a) Reasonable Best Efforts. Each party shall use its reasonable
best efforts timely to satisfy each of the conditions to be satisfied by it as
provided in Sections 6 and 7 of this Agreement.
(b) Form D and Blue Sky. The Company agrees to file a Form D with
respect to the Securities as required under Regulation D and to provide a copy
thereof to each Buyer promptly after such filing. The Company shall, on or
before each of the Closing Dates, take such action as the Company shall
reasonably determine is necessary in order to obtain an exemption for or to
qualify the Securities for sale to the Buyers at each of the Closings pursuant
to this 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 Buyers on or prior to
the Closing Dates. 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 each of the Closing
Dates.
(c) Reporting Status. Until the date on which the Investors (as
defined in the Registration Rights Agreement) shall have sold all the Conversion
Shares, Interest Shares and Warrant Shares and none of the Notes or Warrants is
outstanding, or, if earlier, until such time as the Conversion Shares, Interest
Shares and/or Warrant Shares can be sold without restriction pursuant to Rule
144(k) promulgated under the 1933 Act (the "REPORTING PERIOD"), the Company
shall file all reports required to be filed with the SEC pursuant to the 1934
Act, and the Company shall not terminate its status as an issuer required to
file reports under the 1934 Act
19
even if the 1934 Act or the rules and regulations thereunder would otherwise
permit such termination.
(d) Use of Proceeds. The Company will use the proceeds from the sale
of the Securities for working capital purposes, to fund the pledge required
pursuant to Section 4(q), to fund strategic acquisitions (provided, that from
the date of the Initial Closing until the Subsequent Closing Date, if any, no
more than $2 million of the Purchase Price at the Initial Closing may be used to
fund strategic acquisitions) and not for the repayment of any outstanding
Indebtedness of the Company or any of its Subsidiaries.
(e) Financial Information. The Company agrees to send the following
to each Investor during the Reporting Period (i) unless the following are filed
with the SEC through XXXXX and are available to the public through the XXXXX
system, within three (3) Business Days after the filing thereof with the SEC, a
copy of its Annual Reports on Form 10-K, its Quarterly Reports on Form 10-Q, any
Current Reports on Form 8-K and any registration statements (other than on Form
S-8) or amendments filed pursuant to the 1933 Act, (ii) on the same day as the
release thereof, facsimile copies of all press releases issued by the Company or
any of its Subsidiaries, and (iii) copies of any notices and other information
made available or given to the stockholders of the Company generally,
contemporaneously with the making available or giving thereof to the
stockholders.
(f) Listing. The Company shall promptly secure the listing of all of
the 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 then listed (subject to official notice of
issuance) and shall maintain, so long as any other shares of Common Stock shall
be so listed, such listing of all Registrable Securities from time to time
issuable under the terms of the Transaction Documents. The Company shall
maintain the Common Stock's authorization for quotation on the Nasdaq National
Market or obtain a listing on The New York Stock Exchange, Inc. (the "NYSE") or
the American Stock Exchange (the "AMEX"). If the Company obtains a listing of
the Common Stock on the NYSE or the AMEX and terminates its listing on the
Nasdaq National Market, references in the Transaction Documents to the
"Principal Market" shall mean, from and after the date of the NYSE or AMEX
listing, the NYSE or AMEX, as applicable. Neither the Company nor any of its
Subsidiaries shall take any action which would be reasonably expected to result
in the delisting or suspension of the Common Stock on the Principal Market. The
Company shall pay all fees and expenses in connection with satisfying its
obligations under this Section 4(f).
(g) Fees. Subject to Section 8 below, at the Initial Closing, the
Company shall pay a nonaccountable expense allowance of $30,000 to Smithfield
Fiduciary LLC (a Buyer) or its designee(s) (in addition to any other expense
amounts paid to any Buyer prior to the date of this Agreement), which amount
shall be withheld by Buyer from its Purchase Price at the Initial Closing. The
Company shall be responsible for the payment of any placement agent's fees,
financial advisory fees, or broker's commissions (other than for Persons engaged
by any Buyer) relating to or arising out of the transactions contemplated
hereby, including, without limitation, any fees or commissions payable to the
Agent. The Company shall pay, and hold each Buyer harmless against, any
liability, loss or expense (including, without limitation, reasonable attorney's
fees and out-of-pocket expenses) arising in connection with claim relating to
any such
20
payment. Except as otherwise set forth in this Agreement or in the Registration
Rights Agreement, each party to this Agreement shall bear its own expenses in
connection with the sale of the Securities to the Buyers.
(h) Pledge of Securities. The Company acknowledges and agrees that
the Securities may be pledged by an Investor (as defined in the Registration
Rights Agreement) in connection with a bona fide margin agreement or other loan
or financing arrangement that is secured by the Securities. The pledge of
Securities shall not be deemed to be a transfer, sale or assignment of the
Securities hereunder, and no Investor effecting a pledge of Securities shall be
required to provide the Company with any notice thereof or otherwise make any
delivery to the Company pursuant to this Agreement or any other Transaction
Document, including, without limitation, Section 2(f) of this Agreement;
provided that an Investor and its pledgee shall be required to comply with the
provisions of Section 2(f) hereof in order to effect a sale, transfer or
assignment of Securities to such pledgee. The Company hereby agrees to execute
and deliver such documentation as a pledgee of the Securities may reasonably
request in connection with a pledge of the Securities to such pledgee by an
Investor.
(i) Disclosure of Transactions and Other Material Information. On or
before 8:30 a.m., New York Time, on the first Trading Day following the Initial
Closing Date, the Company shall file a Current Report on Form 8-K describing the
terms of the transactions contemplated by the Transaction Documents in the form
required by the 1934 Act, and attaching the material Transaction Documents
(including, without limitation, this Agreement (and all schedules to this
Agreement), the form of each of the Notes, the form of Warrant, the Pledge
Agreement, the Control Agreement and the Registration Rights Agreement) as
exhibits to such filing (including all attachments, the "8-K FILING", and the
description and attachments, the "8-K MATERIALS"). On or before 8:30 a.m., New
York Time, on the first Trading Day following the Subsequent Closing Date and
each Additional Closing Date, the Company shall file a Current Report on Form
8-K with the SEC describing the transaction consummated or proposed on such
date. From and after the filing of the 8-K Filing with the SEC, no Buyer shall
be in possession of any material, nonpublic information received from the
Company, any of its Subsidiaries or any of its respective officers, directors,
employees or agents, that is not disclosed in the 8-K Filing. The Company shall
not, and shall cause each of its Subsidiaries and its and each of their
respective officers, directors, employees and agents, not to, provide any Buyer
with any material nonpublic information regarding the Company or any of its
Subsidiaries from and after the filing of the 8-K Filing with the SEC without
the express written consent of such Buyer. In the event of a breach of the
foregoing covenant by the Company, any of its Subsidiaries, or any of its or
their respective officers, directors, employees and agents, in addition to any
other remedy provided herein or in the Transaction Documents, a Buyer shall have
the right to make a public disclosure, in the form of a press release, public
advertisement or otherwise, of the 8-K Materials without the prior approval by
the Company, its Subsidiaries, or any of its or their respective officers,
directors, employees or agents. No Buyer shall have any liability to the
Company, its Subsidiaries, or any of its or their respective officers,
directors, employees, shareholders or agents for any such disclosure. Subject to
the foregoing, neither the Company nor any Buyer shall issue any press releases
or any other public statements with respect to the transactions contemplated
hereby; provided, however, that the Company shall be entitled, without the prior
approval of any Buyer, to make any press release or other public disclosure with
respect to such transactions (i) in substantial conformity with the 8-K Filing
and contemporaneously therewith
21
and (ii) as is required by applicable law and regulations, including the
applicable rules and regulations of the Principal Market (provided that in the
case of clause (i) each Buyer shall be consulted by the Company (although the
consent of such Buyer shall not be required) in connection with any such press
release or other public disclosure prior to its release).
(j) Restriction on Redemption and Cash Dividends. So long as any
Notes are outstanding, the Company shall not, directly or indirectly, redeem, or
declare or pay any cash dividend or distribution on, the Common Stock without
the prior express written consent of the holders of Notes representing not less
than two-thirds of the aggregate principal amount of the then outstanding Notes.
(k) Additional Notes. For so long as any Buyer beneficially owns any
Notes, the Company will not issue any Notes other than to the Buyers as
contemplated hereby and the Company shall not issue any other securities that
would cause a breach or default under the Notes.
(l) Variable Securities. The Company shall not, in any manner, issue
or sell any rights, warrants or options to subscribe for or purchase Common
Stock or directly or indirectly convertible into or exchangeable or exercisable
for Common Stock at a price which varies or may vary with the market price of
the Common Stock, including by way of one or more reset(s) to any fixed price
unless the conversion, exchange or exercise price of any such security cannot be
less than the then applicable Conversion Price (as defined in the Notes) under
any Note.
(m) Proxy Statement. The Company shall provide each stockholder
entitled to vote at the next meeting of stockholders of the Company, which shall
not be later than June 15, 2003 (the "STOCKHOLDER MEETING DEADLINE"), a proxy
statement, which has been previously reviewed by the Buyers and a single legal
counsel of their choice, soliciting each such stockholder's affirmative vote at
such stockholder meeting for approval of the Company's issuance of all of the
Securities as described in the Transaction Documents in accordance with
applicable law and the rules and regulations of the Principal Market (such
affirmative approval being referred to herein as the "STOCKHOLDER APPROVAL"),
and the Company shall use its best efforts to solicit its stockholders' approval
of such issuance of the Securities and to cause the Board of Directors of the
Company to recommend to the stockholders that they approve such proposal. The
Company shall be obligated to obtain the Stockholder Approval by the Stockholder
Meeting Deadline.
(n) Corporate Existence. So long as any Buyer beneficially owns any
Notes or Warrants or has the right to purchase any Additional Notes, the Company
shall maintain its corporate existence and shall not sell all or substantially
all of the Company's assets, except in the event of a merger or consolidation or
sale of all or substantially all of the Company's assets, where the surviving or
successor entity in such transaction (i) assumes the Company's obligations
hereunder and under the agreements and instruments entered into in connection
herewith and (ii) is a publicly traded corporation whose common stock is quoted
on or listed for trading on the Principal Market, the NYSE or the AMEX.
(o) Prohibited Transactions. Prior to the earlier of (i) the
termination of this
22
Agreement, or (ii) the Initial Closing Date, no Buyer shall engage, directly or
indirectly, in a Prohibited Transaction. Each Buyer acknowledges that the
representations, warranties, agreements and covenants contained in Section 2(i)
and this Section 4(o) are being made for the benefit of the Buyers as well as
the Company and that each of the other Buyers shall have an independent right to
assert any claims against any Buyer arising out of any breach or violation of
the provisions of Section 2(h) and this Section 4(o).
(p) Computer Associates Note. So long as any Notes are outstanding,
the Company shall not, directly or indirectly, repay in cash or cash equivalents
any amount due and owing to Computer Associates International, Inc. under the
promissory note due April 30, 2002.
(q) Pledge Agreement. At the Initial Closing, the Company shall
purchase and pledge for the benefit of the Buyers and deliver to the Account
Holder (as defined in the Pledge Agreement) pursuant to the terms of the Pledge
Agreement, U.S. Treasury securities in an amount, including principal and coupon
amounts, sufficient to pay any interest payments required to be paid on the
Initial Notes on any Interest Date during the Pledge Period and shall deliver at
the Initial Closing reasonably sufficient evidence of such purchase, pledge and
delivery. In addition to the foregoing, if the Subsequent Closing or any
Additional Closing occurs during the Pledge Period, the Company shall also
purchase and pledge to the Buyers and deliver to the Account Holder pursuant to
the terms of the Pledge Agreement, U.S. Treasury securities in an amount,
including principal and coupon amounts, sufficient to pay any additional
interest payments required to be paid on the Subsequent Notes or Additional
Notes, as applicable, on any Interest Dates remaining during the Pledge Period
and shall deliver at the Subsequent Closing and applicable Additional Closing
reasonably sufficient evidence of such purchase, pledge and delivery.
(r) Reservation of Shares. The Company shall take all action
necessary to at all times have authorized, and reserved for the purpose of
issuance, (x) as of the each Closing Date, the sum of 130% of the number of
shares of Common Stock issuable upon conversion of, or as payment for interest
on, the Notes being issued at such Closing and (ii) 100% of the number of shares
of Common Stock issuable upon exercise of the Warrants being issued at such
Closing, and (y) after each Closing Date, no less than the sum of (i) 110% of
the number of shares of Common Stock issuable upon conversion of, or as payment
for interest on, the Notes issued at all previous Closings and (ii) 100% of the
number of shares of Common Stock issuable upon exercise of the Warrants issued
at such Closings.
5. REGISTER; TRANSFER AGENT INSTRUCTIONS.
(a) Register. The Company shall maintain at its principal executive
offices (or such other office or agency of the Company as it may designate by
notice to each holder of Notes or Warrants), a register for the Notes and the
Warrants, in which the Company shall record the name and address of the Person
in whose name the Notes and the Warrants have been issued (including the name
and address of each transferee), the principal amount of Notes held by such
Person and the number of Warrant Shares issuable upon exercise of the Warrants
held by such Person. The Company shall keep the register open and available at
all times during business hours for inspection of any Buyer or its legal
representatives.
23
(b) Transfer Agent Instructions. The Company shall issue irrevocable
instructions to its transfer agent, and any subsequent transfer agent, to issue
certificates or credit shares to the applicable balance accounts at DTC,
registered in the name of each Buyer or its respective nominee(s), for the
Conversion Shares, the Interest Shares, if any, and the Warrant Shares in such
amounts as specified from time to time by each Buyer to the Company upon
conversion of the Notes or exercise of the Warrants in the form of Exhibit G
attached hereto (the "IRREVOCABLE TRANSFER AGENT INSTRUCTIONS"). The Company
warrants that no instruction other than the Irrevocable Transfer Agent
Instructions referred to in this Section 5(b), and stop transfer instructions to
give effect to Section 2(g) hereof, will be given by the Company to its transfer
agent, and that the Securities shall otherwise be freely transferable on the
books and records of the Company as and to the extent provided in this Agreement
and the other Transaction Documents. If a Buyer effects a sale, assignment or
transfer of the Securities in accordance with Section 2(g), the Company shall
permit the transfer and shall promptly instruct its transfer agent to issue one
or more certificates or credit shares to the applicable balance accounts at DTC
in such name and in such denominations as specified by such Buyer to effect such
sale, transfer or assignment. In the event that such sale, assignment or
transfer involves Conversion Shares, Interest Shares or Warrant Shares sold,
assigned or transferred pursuant to an effective registration statement or
pursuant to Rule 144, the transfer agent shall issue such Securities to the
Buyer, assignee or transferee, as the case may be, without any restrictive
legend (subject, in the case of a sale under Rule 144, to the Company's receipt
of the opinion of Buyer's counsel referred to in Section 2(f)(i)(B)). The
Company acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to a Buyer. Accordingly, the Company acknowledges that the
remedy at law for a breach of its obligations under this Section 5(b) will be
inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Section 5(b), that a Buyer shall be entitled,
in addition to all other available remedies, to an order and/or injunction
restraining any breach and requiring immediate issuance and transfer, without
the necessity of showing economic loss and without any bond or other security
being required.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
(a) Initial Closing Date. The obligation of the Company hereunder to
issue and sell the Initial Notes and the related Initial Warrants to each Buyer
at the Initial Closing is subject to the satisfaction, at or before the Initial
Closing Date, 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 Buyer with prior written
notice thereof:
(i) Such Buyer shall have executed each of the Transaction
Documents to which it is a party and delivered the same to the Company.
(ii) Such Buyer and each other Buyer shall have delivered to the
Company the Purchase Price (less, in the case of Smithfield Fiduciary LLC, the
amounts withheld pursuant to Section 4(g)) for the Initial Notes and the related
Initial Warrants being purchased by such Buyer and each other Buyer at the
Initial Closing by wire transfer of immediately available funds pursuant to the
wire instructions provided by the Company.
24
(iii) The representations and warranties of such Buyer shall be
true and correct in all material respects as of the date when made and as of the
Initial Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date), and such Buyer shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by such Buyer at or prior to the Initial Closing Date.
(b) Subsequent Closing Date. The obligation of the Company hereunder
to issue and sell the Subsequent Notes and the related Subsequent Warrants to
each Buyer at the Subsequent Closing is subject to the satisfaction, at or
before the Subsequent Closing Date, 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 Buyer
with prior written notice thereof:
(i) Such Buyer shall have delivered to the Company the Purchase
Price for the Subsequent Notes and the related Subsequent Warrants being
purchased by such Buyer at the Subsequent Closing by wire transfer of
immediately available funds pursuant to the wire instructions provided by the
Company.
(ii) The representations and warranties of such Buyer shall be
true and correct in all material respects as of the date when made and as of the
Subsequent Closing Date as though made at that time (except for representations
and warranties that speak as of a specific date), and such Buyer shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by such Buyer at or prior to the Subsequent Closing Date.
(c) Additional Closing Date. The obligation of the Company hereunder
to issue and sell the Additional Notes and the related Additional Warrants to
each Buyer at each Additional Closing is subject to the satisfaction, at or
before such Additional Closing Date, 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 Buyer
with prior written notice thereof:
(i) Such Buyer shall have delivered to the Company the Purchase
Price for the Additional Notes and the related Additional Warrants being
purchased by such Buyer at the applicable Additional Closing by wire transfer of
immediately available funds pursuant to the wire instructions provided by the
Company.
(ii) The representations and warranties of such Buyer shall be
true and correct in all material respects as of the date when made and as of the
applicable Additional Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date), and such Buyer
shall have performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be performed,
satisfied or complied with by such Buyer at or prior to the applicable
Additional Closing Date.
25
7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.
(a) Initial Closing Date. The obligation of each Buyer hereunder to
purchase the Initial Notes and the related Initial Warrants at the Initial
Closing is subject to the satisfaction, at or before the Initial Closing Date,
of each of the following conditions, provided that these conditions are for each
Buyer's sole benefit and may be waived by such Buyer at any time in its sole
discretion by providing the Company with prior written notice thereof:
(i) The Company shall have executed and delivered to such Buyer
(i) each of the Transaction Documents and (ii) the Initial Notes (in such
principal amounts as such Buyer shall request) and the related Initial Warrants
(in such amounts as such Buyer shall request) being purchased by such Buyer at
the Initial Closing pursuant to this Agreement.
(ii) Such Buyer shall have received the opinions of Milbank,
Tweed, Xxxxxx & XxXxxx LLP, the Company's outside counsel, and Xxxxx X'Xxxxxxxx,
the Company's General Counsel, each dated as of the Initial Closing Date, in
substantially the form of Exhibits H-1 and H-2 attached hereto.
(iii) The Company shall have delivered to such Buyer a copy of
the Irrevocable Transfer Agent Instructions, in the form of Exhibit G attached
hereto, which instructions shall have been delivered to and acknowledged in
writing by the Company's transfer agent.
(iv) The Company shall have delivered to such Buyer a
certificate evidencing the incorporation and good standing of the Company and
each Subsidiary in such corporation's state of incorporation issued by the
Secretary of State of such state of incorporation, to the extent required by
Section 3(a), as of a date within 10 days of the Initial Closing Date.
(v) The Company shall have delivered to such Buyer a certificate
evidencing the Company's qualification as a foreign corporation and good
standing issued by the Secretary of State of the State of New York as of a date
within 10 days of the Initial Closing Date.
(vi) The Company shall have delivered to such Buyer a certified
copy of the Certificate of Incorporation as certified by the Secretary of State
of the State of Delaware within 10 days of the Initial Closing Date.
(vii) The Company shall have delivered to such Buyer a
certificate, executed by the Secretary of the Company and dated as of the
Initial Closing Date, as to (i) the resolutions consistent with Section 3(b) as
adopted by the Company's Board of Directors in a form reasonably acceptable to
such Buyer (the "RESOLUTIONS"), (ii) the Certificate of Incorporation and (iii)
the Bylaws, each as in effect at the Initial Closing, in the form attached
hereto as Exhibit I.
(viii) The representations and warranties of the Company shall
be true and correct in all material respects (except for those representations
and warranties that are qualified by materiality or Material Adverse Effect,
which shall be true and correct in all
26
respects) as of the date when made and as of the Initial Closing Date as though
made at that time (except for representations and warranties that speak as of a
specific date) and the Company shall have performed, satisfied and complied in
all material respects with the covenants, agreements and conditions required by
the Transaction Documents to be performed, satisfied or complied with by the
Company at or prior to the Initial Closing Date. Such Buyer shall have received
a certificate, executed by the Chief Executive Officer of the Company, dated as
of the Initial Closing Date, to the foregoing effect and as to such other
matters as may be reasonably requested by such Buyer in the form attached hereto
as Exhibit J.
(ix) The Company shall have delivered to such Buyer a letter
from the Company's transfer agent certifying the number of shares of Common
Stock outstanding as of a date within five days of the Initial Closing Date.
(x) The Common Stock (I) shall be designated for quotation or
listed on the Principal Market and (II) shall not have been suspended, as of the
Initial Closing Date, by the SEC or the Principal Market from trading on the
Principal Market nor shall suspension by the SEC or the Principal Market have
been threatened, as of the Initial Closing Date, either (A) in writing by the
SEC or the Principal Market or (B) by falling below the minimum listing
maintenance requirements of the Principal Market.
(xi) The Company shall have obtained all governmental,
regulatory or third party consents and approvals, if any, necessary for the sale
of the Initial Notes and the Initial Warrants.
(xii) The Company shall have delivered to such Buyer such other
documents relating to the transactions contemplated by this Agreement as such
Buyer or its counsel may reasonably request.
(b) Subsequent Closing Date. The obligation of each Buyer hereunder
to purchase the Subsequent Notes and the related Subsequent Warrants at the
Subsequent Closing is subject to the satisfaction, at or before the Subsequent
Closing Date, of each of the following conditions, provided that these
conditions are for each Buyer's sole benefit and may be waived by such Buyer at
any time in its sole discretion by providing the Company with prior written
notice thereof:
(i) The Company shall have executed and delivered to such Buyer
the Subsequent Notes (in such principal amounts as such Buyer shall request) and
related Subsequent Warrants (in such amounts as such Buyer shall request) being
purchased by such Buyer at the Subsequent Closing pursuant to this Agreement.
(ii) Such Buyer shall have received the opinions of Milbank,
Tweed, Xxxxxx & XxXxxx LLP, the Company's outside counsel, and Xxxxx X'Xxxxxxxx,
the Company's General Counsel, each dated as of the Subsequent Closing Date, in
substantially the form of Exhibits H-1 and H-2 attached hereto.
(iii) The Irrevocable Transfer Agent Instructions shall remain
in effect as of the Subsequent Closing Date and the Company shall cause its
transfer agent to deliver a letter to such Buyer to that effect.
27
(iv) The Company shall have delivered to such Buyer a
certificate evidencing the incorporation and good standing of the Company and
each Subsidiary in such corporation's state of incorporation issued by the
Secretary of State of such state of incorporation, to the extent required by
Section 3(a), as of a date within 10 days of the Subsequent Closing Date.
(v) The Company shall have delivered to such Buyer a certificate
evidencing the Company's qualification as a foreign corporation and good
standing issued by the Secretary of State of the State of New York as of a date
within 10 days of the Subsequent Closing Date.
(vi) The Company shall have delivered to such Buyer a certified
copy of the Certificate of Incorporation as certified by the Secretary of State
of the State of Delaware within 10 days of the Subsequent Closing Date.
(vii) The Company shall have delivered to such Buyer a
certificate, executed by the Secretary of the Company dated as of the Subsequent
Closing Date, as to (i) the Resolutions, (ii) the Certificate of Incorporation
and (iii) the Bylaws, each as in effect at the Subsequent Closing, in the form
attached hereto as Exhibit I.
(viii) The representations and warranties of the Company shall
be true and correct in all material respects (except for those representations
and warranties that are qualified by materiality or Material Adverse Effect,
which shall be true and correct in all respects) as of the date when made and as
of the Subsequent Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date) and the Company
shall have performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by the Company at or prior to the
Subsequent Closing Date. Such Buyer shall have received a certificate, executed
by the Chief Executive Officer of the Company, dated as of the Subsequent
Closing Date, to the foregoing effect and as to such other matters as may be
reasonably requested by such Buyer in the form attached hereto as Exhibit J.
(ix) The Company shall have delivered to such Buyer a letter
from the Company's transfer agent certifying the number of shares of Common
Stock outstanding as of a date within five days of the Subsequent Closing Date.
(x) The Common Stock (I) shall be designated for quotation or
listed on the Principal Market and (II) shall not have been suspended, as of the
Subsequent Closing Date, by the SEC or the Principal Market from trading on the
Principal Market nor shall suspension by the SEC or the Principal Market have
been threatened, as of the Subsequent Closing Date, either (A) in writing by the
SEC or the Principal Market or (B) by falling below the minimum listing
maintenance requirements of the Principal Market.
(xi) The Company shall have obtained all governmental,
regulatory or third party consents and approvals, if any, necessary for the sale
of the Subsequent Notes and the
28
Subsequent Warrants.
(xii) During the period beginning on the Initial Closing Date
and ending on and including the Subsequent Closing Date, neither the Company nor
any of its Subsidiaries shall have been in default under any mortgage, indenture
or instrument under which there may be issued or by which there may be secured
or evidenced any Indebtedness of the Company or any of its Subsidiaries.
(xiii) The Company shall have delivered to such Buyer such other
documents relating to the transactions contemplated by this Agreement as such
Buyer or its counsel may reasonably request.
(c) Additional Closing Date. The obligation of each Buyer hereunder
to purchase the Additional Notes and the related Additional Warrants at each of
the applicable Additional Closings is subject to the satisfaction, at or before
each of the Additional Closing Dates, of each of the following conditions,
provided that these conditions are for each Buyer's sole benefit and may be
waived by such Buyer at any time in its sole discretion by providing the Company
with prior written notice thereof:
(i) The Company shall have executed and delivered to such Buyer
the Additional Notes (in such principal amounts as such Buyer shall request) and
related Additional Warrants (in such principal amounts as such Buyer shall
request) being purchased by such Buyer at the applicable Additional Closing
pursuant to this Agreement.
(ii) Such Buyer shall have received the opinions of Milbank,
Tweed, Xxxxxx & XxXxxx LLP, the Company's outside counsel, and Xxxxx X'Xxxxxxxx,
the Company's General Counsel, each dated as of the applicable Additional
Closing Date, in substantially the form of Exhibits H-1 and H-2 attached hereto.
(iii) The Irrevocable Transfer Agent Instructions shall remain
in effect as of the applicable Additional Closing Date and the Company shall
cause its transfer agent to deliver a letter to such Buyer to that effect.
(iv) The Company shall have delivered to such Buyer a
certificate evidencing the incorporation and good standing of the Company and
each Subsidiary in such corporation's state of incorporation issued by the
Secretary of State of such state of incorporation, to the extent required by
Section 3(a), as of a date within 10 days of the applicable Additional Closing
Date.
(v) The Company shall have delivered to such Buyer a certificate
evidencing the Company's qualification as a foreign corporation and good
standing issued by the Secretary of State of the State of New York as of a date
within 10 days of the Additional Closing Date.
(vi) The Company shall have delivered to such Buyer a certified
copy of the Certificate of Incorporation as certified by the Secretary of State
of the State of Delaware within 10 days of the applicable Additional Closing
Date.
29
(vii) The Company shall have delivered to such Buyer a
certificate, executed by the Secretary of the Company dated as of the applicable
Additional Closing Date, as to (i) the Resolutions, (ii) the Certificate of
Incorporation and (iii) the Bylaws, each as in effect at the applicable
Additional Closing, in the form attached hereto as Exhibit I.
(viii) The representations and warranties of the Company shall
be true and correct in all material respects (except for those representations
and warranties that are qualified by materiality or Material Adverse Effect,
which shall be true and correct in all respects) as of the date when made and as
of the applicable Additional Closing Date as though made at that time (except
for representations and warranties that speak as of a specific date) and the
Company shall have performed, satisfied and complied in all material respects
with the covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by the Company at or prior
to the applicable Additional Closing Date. Such Buyer shall have received a
certificate, executed by the Chief Executive Officer of the Company, dated as of
the applicable Additional Closing Date, to the foregoing effect and as to such
other matters as may be reasonably requested by such Buyer in the form attached
hereto as Exhibit J.
(ix) The Company shall have delivered to such Buyer a letter
from the Company's transfer agent certifying the number of shares of Common
Stock outstanding as of a date within five days of the applicable Additional
Closing Date.
(x) The Common Stock (I) shall be designated for quotation or
listed on the Principal Market and (II) shall not have been suspended, as of the
Additional Closing Date, by the SEC or the Principal Market from trading on the
Principal Market nor shall suspension by the SEC or the Principal Market have
been threatened, as of the Additional Closing Date, either (A) in writing by the
SEC or the Principal Market or (B) by falling below the minimum listing
maintenance requirements of the Principal Market.
(xi) The Company shall have obtained all governmental,
regulatory or third party consents and approvals, if any, necessary for the sale
of the Additional Notes and the Additional Warrants being purchased at the
applicable Additional Closing.
(xii) During the period beginning on the Initial Closing Date
and ending on and including the applicable Additional Closing Date, neither the
Company nor any of its Subsidiaries shall have been in default under any
mortgage, indenture or instrument under which there may be issued or by which
there may be secured or evidenced any Indebtedness of the Company or any of its
Subsidiaries.
(xiii) During the period beginning on the Initial Closing Date
and ending on and including the Additional Closing Date, there shall not have
occurred (A) an Event of Default or (B) consummation of a Change of Control (as
defined in the Notes) or a public announcement of a pending, proposed or
intended Change of Control, which has not been abandoned or terminated prior to
the applicable Additional Closing Date.
(xiv) The Company shall have delivered to such Buyer such other
documents relating to the transactions contemplated by this Agreement as such
Buyer or its
30
counsel may reasonably request.
8. TERMINATION. In the event that the Initial Closing shall not have
occurred with respect to a Buyer on or before five (5) Business Days from the
date hereof due to the Company's or such Buyer's failure to satisfy the
conditions set forth in Sections 6 and 7 above (and the nonbreaching party's
failure to waive such unsatisfied condition(s)), the nonbreaching party shall
have the option to terminate this Agreement with respect to such breaching party
at the close of business on such date without liability of any party to any
other party; provided, however, this if this Agreement is terminated pursuant to
this Section 8, the Company shall remain obligated to reimburse the
non-breaching Buyers for the expenses described in Section 4(g) above.
9. MISCELLANEOUS.
(a) Governing Law; Jurisdiction; Jury Trial. All questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other jurisdictions) that would cause
the application of the laws of any jurisdictions other than the State of New
York. Each party hereby irrevocably submits to the non-exclusive jurisdiction of
the state and federal courts sitting in The City of New York, Borough of
Manhattan, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
(b) Counterparts. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.
(c) Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
(d) Severability. If any provision of this Agreement shall be
invalid or
31
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.
(e) Entire Agreement; Amendments. This Agreement supersedes all
other prior oral or written agreements between the Buyers, the Company, their
affiliates and Persons acting on their behalf with respect to the matters
discussed herein, and this Agreement and the instruments referenced herein
contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or
therein, neither the Company nor any Buyer makes any representation, warranty,
covenant or undertaking with respect to such matters. No provision of this
Agreement may be amended other than by an instrument in writing signed by the
Company and the holders of Notes representing at least two-thirds of the
aggregate principal amount of the Initial Notes, or, if prior to the Initial
Closing Date, the Company and the Buyers listed on the Schedule of Buyers as
being obligated to purchase at least two-thirds of the aggregate principal
amount of the Initial Notes. No provision hereof may be waived other than by an
instrument in writing signed by the party against whom enforcement is sought. No
such amendment shall be effective to the extent that it applies to less than all
of the holders of the Notes then outstanding. No consideration shall be offered
or paid to any Person to amend or consent to a waiver or modification of any
provision of any of the Transaction Documents unless the same consideration also
is offered to all of the parties to the Transaction Documents, holders of Notes
or holders of the Warrants, as the case may be. The Company has not, directly or
indirectly, made any agreements with any Buyers relating to the terms or
conditions of the transactions contemplated by the Transaction Documents except
as set forth in the Transaction Documents.
(f) Notices. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one Business Day after deposit with
an overnight courier service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such communications
shall be:
If to the Company:
Viewpoint Corporation
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Executive Vice President,
Business Affairs and
Xxxxx X. X'Xxxxxxxx, Executive Vice President and
General Counsel
with a copy to:
32
Milbank, Tweed, Xxxxxx & XxXxxx LLP
0 Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxxxx X. Xxxx, Esq.
If to the Transfer Agent:
Equiserve Trust Company
Xxxx Xxxxxx Xxx 0000
Xxxxxx, Xxxxxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxx
If to a Buyer, to its address and facsimile number set forth on the Schedule of
Buyers, with copies to such Buyer's representatives as set forth on the Schedule
of Buyers, or to such other address and/or facsimile number and/or to the
attention of such other Person as the recipient party has specified by written
notice given to each other party five (5) days prior to the effectiveness of
such change. Written confirmation of receipt (A) given by the recipient of such
notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender's facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (C) provided by an overnight courier service shall be rebuttable
evidence of personal service, receipt by facsimile or receipt from an overnight
courier service in accordance with clause (i), (ii) or (iii) above,
respectively.
(g) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns,
including any purchasers of the Notes or the Warrants. The Company shall not
assign this Agreement or any rights or obligations hereunder without the prior
written consent of the holders of Notes representing at least two-thirds of the
aggregate principal amount of the Notes then outstanding, including by merger or
consolidation, except pursuant to a Change of Control (as defined in Section 5
of the Notes) with respect to which the Company is in compliance with Section 5
of the Notes and Section 4(b) of the Warrants. A Buyer may assign some or all of
its rights hereunder without the consent of the Company, in which event such
assignee shall be deemed to be a Buyer hereunder with respect to such assigned
rights.
(h) No Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.
(i) Survival. Unless this Agreement is terminated under Section 8,
the representations and warranties of the Company and the Buyers contained in
Sections 2 and 3, the agreements and covenants set forth in Sections 4, 5 and 9
shall survive each Closing. Each
33
Buyer shall be responsible only for its own representations, warranties,
agreements and covenants hereunder.
(j) Further Assurances. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
(k) Indemnification. In consideration of each Buyer's execution and
delivery of the Transaction Documents and acquiring the Securities thereunder
and in addition to all of the Company's other obligations under the Transaction
Documents, the Company shall defend, protect, indemnify and hold harmless each
Buyer and each other holder of the Securities who is a successor or assignee
pursuant to Section 9(g) and all of their stockholders, partners, members,
officers, directors, employees and direct or indirect investors and any of the
foregoing Persons' agents or other representatives (including, without
limitation, those retained in connection with the transactions contemplated by
this Agreement) (collectively, the "INDEMNITEES") from and against any and all
actions, causes of action, suits, claims, losses, costs, penalties, fees,
liabilities and damages, and reasonable expenses in connection therewith
(irrespective of whether any such Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys' fees
and disbursements (the "INDEMNIFIED LIABILITIES"), incurred by any Indemnitee as
a result of, or arising out of, or relating to (a) any misrepresentation or
breach of any representation or warranty made by the Company in the Transaction
Documents or any other certificate, instrument or document contemplated hereby
or thereby, (b) any breach of any covenant, agreement or obligation of the
Company contained in the Transaction Documents or any other certificate,
instrument or document contemplated hereby or thereby or (c) any cause of
action, suit or claim brought or made against such Indemnitee by a third party
(including for these purposes a derivative action brought on behalf of the
Company) and arising out of or resulting from (i) the execution, delivery,
performance or enforcement of the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby, (ii) any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Securities, (iii) any
disclosure made by such Buyer pursuant to Section 4(i), or (iv) the status of
such Buyer or holder of the Securities as an investor in the Company. To the
extent that the foregoing undertaking by the Company may be unenforceable for
any reason, the Company shall make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law. Except as otherwise set forth herein, the mechanics and
procedures with respect to the rights and obligations under this Section 9(k)
shall be the same as those set forth in Section 6 of the Registration Rights
Agreement.
(l) No Strict Construction. The language used in this Agreement will
be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.
(m) Remedies. Each Buyer and each holder of the Securities shall
have all rights and remedies set forth in the Transaction Documents and all
rights and remedies which such holders have been granted at any time under any
other agreement or contract and all of the
34
rights which such holders have under any law. Any Person having any rights under
any provision of this Agreement shall be entitled to enforce such rights
specifically (without posting a bond or other security), to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights granted by law. Furthermore, the Company recognizes that in the
event that it fails to perform, observe, or discharge any or all of its
obligations under this Agreement, any remedy at law may prove to be inadequate
relief to the Buyers. The Company therefore agrees that the Buyers shall be
entitled to seek temporary and permanent injunctive relief in any such case
without the necessity of proving actual damages and without posting a bond or
other security.
(n) Payment Set Aside. To the extent that the Company makes a
payment or payments to the Buyers hereunder or pursuant to any of the other
Transaction Documents or the Buyers enforce or exercise their rights hereunder
or thereunder, and such payment or payments or the proceeds of such enforcement
or exercise or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by or are
required to be refunded, repaid or otherwise restored to the Company, a trustee,
receiver or any other Person under any law (including, without limitation, any
bankruptcy law, state or federal law, common law or equitable cause of action),
then to the extent of any such restoration the obligation or part thereof
originally intended to be satisfied shall be revived and continued in full force
and effect as if such payment had not been made or such enforcement or setoff
had not occurred.
[SIGNATURE PAGE FOLLOWS]
35
IN WITNESS WHEREOF, each Buyer and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date first written
above.
COMPANY: BUYERS:
VIEWPOINT CORPORATION SMITHFIELD FIDUCIARY LLC
By: /s/ Xxxxx X'Xxxxxxxx By: /s/ Xxxx X. Chill
------------------------------- -------------------------------
Name: Xxxxx X'Xxxxxxxx Name: Xxxx X. Chill
Title: Executive Vice President Title: Authorized Signatory
PORTSIDE GROWTH & OPPORTUNITY FUND
By:
-------------------------------
Name:
Title:
RIVERVIEW GROUP, LLC
By:
-------------------------------
Name:
Title:
SCHEDULE OF BUYERS
(1) (2) (3) (4) (5) (6)
AGGREGATE AGGREGATE AGGREGATE
PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT OF AMOUNT OF AMOUNT OF
INITIAL SUBSEQUENT ADDITIONAL LEGAL REPRESENTATIVE'S
BUYER ADDRESS AND FACSIMILE NUMBER NOTES NOTES NOTES ADDRESS AND FACSIMILE NUMBER
------------------------------------------------------------------------------------------------------------------------------------
Smithfield Fiduciary c/o Highbridge Capital $2,600,000 $2,600,000 $1,040,000 Xxxxxxx Xxxx & Xxxxx LLP
LLC Management, LLC 000 Xxxxx Xxxxxx
0 Xxxx 00xx Xxxxxx, 00xx Xxxxx Xxx Xxxx, Xxx Xxxx 10022
Xxx Xxxx, Xxx Xxxx 00000 Attention: Xxxxxxx Xxxxx, Esq.
Attention: Xxx X. Xxxxxx Facsimile: (000) 000-0000
Xxxx X. Chill Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Residence: Cayman Islands
Portside Growth & c/o Ramius Capital Group, $2,000,000 $2,000,000 $ 800,000 Xxxxxxx Xxxx & Xxxxx LLP
Opportunity Fund L.L.C. 000 Xxxxx Xxxxxx
000 Xxxxx Xxxxxx, 00xx Xxxxx Xxx Xxxx, Xxx Xxxx 00000
Xxx Xxxx, Xxx Xxxx 00000 Attention: Xxxxxxx Xxxxx, Esq.
Attention: Xxxxxxx Xxxxxxx Facsimile: (000) 000-0000
Xxxxxxx Xxxxx Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Residence: Cayman Islands
Riverview Group,
LLC c/o Millennium Partners $2,400,000 $2,400,000 $ 960,000 Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx, 0xx Xxxxx 000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 Xxx Xxxx, XX 00000
Attention: Manager Attention: Xxxxxxx Xxxxx, Esq.
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Residence: New York Telephone: (000) 000-0000
EXHIBITS
Exhibit A Form of Initial Notes
Exhibit B Form of Subsequent Notes
Exhibit C Form of Additional Notes
Exhibit D Form of Warrants
Exhibit E Form of Pledge Agreement
Exhibit F Form of Registration Rights Agreement
Exhibit G Form of Irrevocable Transfer Agent Instructions
Exhibit H-1 Form of Company Outside Counsel Opinion
Exhibit H-2 Form of Company General Counsel Opinion
Exhibit I Form of Secretary's Certificate
Exhibit J Form of Officer's Certificate
SCHEDULES
Schedule 3(a) Subsidiaries
Schedule 3(e) Consents
Schedule 3(k) Presentations
Schedule 3(l) Absence of Certain Changes
Schedule 3(n) Conduct of Business; Regulatory Permits
Schedule 3(p) Transactions with Affiliates
Schedule 3(q) Capitalization
Schedule 3(r) Indebtedness and Other Contracts
Schedule 3(s) Litigation
Schedule 3(v) Title
Schedule 3(w) Intellectual Property
SCHEDULES TO
SECURITIES PURCHASE AGREEMENT
DATED AS OF DECEMBER 31, 2002
BY AND BETWEEN
VIEWPOINT CORPORATION
AND
THE INVESTORS LISTED ON THE SCHEDULE OF
BUYERS ATTACHED THERETO
SCHEDULE 3(A)
SUBSIDIARIES
MetaCreations Europe SARL (France)
MetaCreations Holding Corporation (California)
MetaCreations Holding Limited (Ireland)
MetaCreations International Limited (Ireland)
MetaTools Barbados FSC (Barbados)
Viewpoint Digital, Inc. (Delaware)
Viewpoint Digital SARL (France)
Viewpoint Digital Limited (UK)
Thinkfish Acquisition Company (Delaware)
Canoma, Inc. (California)
SCHEDULE 3(E)
CONSENTS
None
SCHEDULE 3(L)
ABSENCE OF CERTAIN CHANGES
None
SCHEDULE 3(N)
CONDUCT OF BUSINESS; REGULATORY PERMITS
None
SCHEDULE 3(P)
TRANSACTIONS WITH AFFILIATES
None
SCHEDULE 3(Q)
EQUITY CAPITALIZATION
1. VIEWPOINT CORPORATION OUTSTANDING OPTIONS AS OF DECEMBER 31, 2002
Price Issued Vested
($/Share) (# of Shares) (# of Shares)
--------- ------------- -------------
0.8700 2,167,433 1,873,589
2.1800 77,000 0
2.6100 805,350 621,733
3.0000 15,000 11,250
3.1000 68,000 0
3.2680 23,000 0
3.4000 22,000 6,875
3.5000 37,000 32,000
3.8130 25,000 10,938
3.8800 1,200,000 54,167
4.0000 4,000 1,167
4.1800 44,000 0
4.2500 10,000 3,125
4.3500 1,535,542 1,200,745
4.4000 67,000 0
4.4100 58,000 19,166
4.4690 72,333 42,062
4.6800 5,000 5,000
4.6900 168,600 78,039
4.7660 269,042 128,158
4.8200 36,000 0
5.0300 90,165 90,165
5.0625 9,000 0
5.0900 269,500 265,333
5.0938 258,396 251,606
5.1300 18,417 8,501
5.1500 45,000 17,813
5.3750 180,500 82,187
5.5200 500 0
5.6250 88,825 44,378
5.6500 80,500 80,500
5.7000 24,000 0
5.7300 265,000 0
5.7500 78,750 47,031
5.8100 342,500 8,438
5.9900 125,000 0
6.0000 46,000 0
6.0400 8,000 0
6.1000 8,000 2,834
6.1300 460,000 210,833
6.2900 20,000 14,168
6.6250 5,000 5,000
6.7000 5,500 0
6.8750 10,000 5,000
7.3100 45,233 28,174
7.9375 25,000 22,396
8.5000 6,500 4,000
8.5630 150,000 84,375
8.7000 15,333 15,333
8.7300 16,100 8,721
9.0000 5,000 5,000
10.7500 5,000 5,000
11.0000 20,000 20,000
11.0900 9,200 5,176
12.8750 5,000 5,000
25.1250 5,000 5,000
-------------------- ---------
TOTALS: 9,455,220 5,429,976
==================== =========
AVERAGE ISSUED PRICE 3.8081
AVERAGE VESTED PRICE 3.3622
2. VIEWPOINT CORPORATION OUTSTANDING WARRANTS AS OF DECEMBER 31, 2002
Price Issued
($/Share) (# of Shares)
-------------------------- ------------------
15.6500 57,500
-----------------
TOTALS: 57,500
=================
AVERAGE ISSUED PRICE 15.6500
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 3(R)
INDEBTEDNESS AND OTHER CONTRACTS
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 3(S)
LITIGATION
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 3(V)
TITLE
None
SCHEDULE 3(W)
INTELLECTUAL PROPERTY RIGHTS
None
