EXHIBIT 10.13
AVISTAR COMMUNICATIONS CORPORATION
COMMON STOCK PURCHASE AGREEMENT
DATED AS OF OCTOBER 15, 2003
TABLE OF CONTENTS
PAGE
----
1. AGREEMENT TO PURCHASE AND SELL STOCK...................................... 1
(a) Authorization.................................................... 1
(b) Agreement to Purchase and Sell Securities........................ 1
(c) Use of Proceeds.................................................. 1
2. CLOSING................................................................... 1
(a) Closing.......................................................... 1
(b) Delivery......................................................... 2
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................. 2
(a) Organization Good Standing and Qualification..................... 2
(b) Capitalization................................................... 2
(c) Subsidiaries..................................................... 3
(d) Due Authorization................................................ 3
(e) Valid Issuance of Stock.......................................... 3
(f) Governmental Consents............................................ 3
(g) Non-Contravention................................................ 3
(h) Litigation....................................................... 4
(i) Compliance with Law and Charter Documents........................ 4
(j) SEC Documents.................................................... 4
(k) Absence of Certain Changes Since Balance Sheet Date.............. 5
(l) Intellectual Property............................................ 5
(m) Registration Rights.............................................. 6
(n) Title to Property and Assets..................................... 6
(o) Taxes............................................................ 6
(p) Insurance........................................................ 6
(q) Broker's or Finder's Fee......................................... 6
(r) Foreign Corrupt Practices........................................ 6
4. REPRESENTATIONS, WARRANTIES AND CERTAIN AGREEMENTS OF THE PURCHASERS...... 7
(a) Power and Authority.............................................. 7
(b) Authorization.................................................... 7
(c) Litigation....................................................... 7
(d) Purchase for Own Account......................................... 7
(e) Investment Experience............................................ 7
(f) Accredited Purchaser Status...................................... 7
(g) Reliance Upon Purchaser's Representations........................ 7
(h) Receipt of Information........................................... 8
(i) HSR Compliance................................................... 8
(j) Forms 13D or 13G................................................. 8
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
(k) Reporting Obligations Pursuant to Section 16..................... 8
5. REGISTRATION; COMPLIANCE WITH THE SECURITIES ACT.......................... 8
(a) Certain Definitions.............................................. 8
(b) Company Registration............................................. 10
(c) Expenses of Registration......................................... 11
(d) Registration Procedures.......................................... 11
(e) Indemnification.................................................. 12
(f) Information by Holder............................................ 14
(g) Restrictions on Transfer......................................... 14
(h) Rule 144 Reporting............................................... 15
(i) Delay of Registration............................................ 15
(j) Transfer or Assignment of Registration Rights.................... 15
(k) Termination of Registration Rights............................... 15
6. COVENANTS................................................................. 16
(a) Satisfaction of Conditions....................................... 16
(b) Form D; Blue Sky Laws............................................ 16
(c) Expenses......................................................... 16
(d) Listing of Purchased Shares...................................... 16
(e) Forms 13D or 13G................................................. 16
(f) Reporting Obligations Pursuant to Section 16..................... 16
(g) Restricted Securities............................................ 16
(h) Legends.......................................................... 17
(i) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Policy; Short Sales.............................. 17
(j) Material Confidential Information................................ 17
7. CONDITIONS TO THE PURCHASER'S OBLIGATIONS AT CLOSING...................... 18
(a) Representations and Warranties True.............................. 18
(b) Performance...................................................... 18
(c) Compliance Certificate........................................... 19
(d) Opinion of Company Counsel....................................... 19
(e) Absence of Litigation............................................ 19
(f) Proceedings and Documents........................................ 19
(g) Other Actions.................................................... 19
8. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING........................ 19
(a) Representations and Warranties True.............................. 19
(b) Performance...................................................... 19
(c) Securities Exemptions............................................ 19
(d) Payment of Purchase Price........................................ 19
-ii-
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
(e) Proceedings and Documents........................................ 20
(f) Purchaser Questionnaires......................................... 20
(g) Fairness Opinion................................................. 20
(h) Absence of Litigation............................................ 20
(i) Other Actions.................................................... 20
9. PROVISIONS RELATING TO SPECIFIED SECURITIES............................... 20
(a) Voting of Specified Securities................................... 20
(b) Transfer Restrictions............................................ 21
(c) Certain Definitions.............................................. 21
10. MISCELLANEOUS............................................................. 22
(a) Effect of Purchaser's Knowledge.................................. 22
(b) Successors and Assigns........................................... 22
(c) Governing Law.................................................... 22
(d) Counterparts..................................................... 22
(e) Headings......................................................... 22
(f) Notices.......................................................... 23
(g) Amendments and Waivers........................................... 23
(h) Severability..................................................... 23
(i) Entire Agreement................................................. 23
(j) Further Assurances............................................... 23
(k) Meaning of Include and Including and Beneficial Ownership........ 23
(l) Stock Splits, Dividends and other Similar Events................. 24
Schedule A - Schedule of Purchasers
Schedule B - Company Disclosure Schedule
Schedule C - Purchasers' Disclosure Schedule
Exhibit A - Form of Legal Opinion
Exhibit B - Purchaser Questionnaire
-iii-
AVISTAR COMMUNICATIONS CORPORATION
COMMON STOCK PURCHASE AGREEMENT
This Common Stock Purchase Agreement (this "Agreement") is made and
entered into as of October 15, 2003, by and between Avistar Communications
Corporation, a Delaware corporation (the "Company"), and each of the purchasers
listed on Schedule A attached hereto (collectively, the "Purchasers" and each
individually, a "Purchaser").
RECITALS
WHEREAS, the Company desires to sell to the Purchasers, and the
Purchasers desire to purchase from the Company, shares of Common Stock, par
value $0.001 per share, of the Company (the "Common Stock") on the terms and
conditions set forth in this Agreement; and
NOW, THEREFORE, in consideration of the foregoing, the mutual promises
hereinafter set forth, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. AGREEMENT TO PURCHASE AND SELL STOCK.
(a) Authorization. The Special Committee of the Board of
Directors of the Company formed to evaluate a possible financing transaction by
the Company (the "Special Committee") has authorized the issuance, pursuant to
the terms and conditions of this Agreement, of 4,615,385 shares of Common Stock
(the "Purchased Shares").
(b) Agreement to Purchase and Sell Securities. Subject to the
terms and conditions of this Agreement, each Purchaser severally agrees to
purchase, and the Company agrees to sell and issue to each Purchaser, at the
Closing (as defined below), that number of Purchased Shares set forth opposite
such Purchaser's name on Schedule A attached hereto. The purchase price of each
Purchased Share (the "Per Share Price") shall be $1.30.
(c) Use of Proceeds. The Company intends to utilize the net
proceeds from the sale of the Purchased Shares for general corporate purposes
and to repay the Company's obligations, if any, to Comerica Bank - California
under the Company's revolving line of credit with such bank.
2. CLOSING.
(a) Closing. The purchase and sale of Purchased Shares shall
take place, upon the satisfaction of the closing conditions set forth in
Sections 7 and 8 hereof, at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇,
Professional Corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, at 10:00
a.m. California time, as soon as practicable but in any event, subject to
applicable law, no later than two (2) business days after the last of the
conditions set forth in Sections 7 and 8 hereof has been satisfied, or at such
other time and place as the Company and the Purchasers mutually agree
upon (which time and place are referred to in this Agreement as the "Closing").
The date of such Closing is referred to herein as the "Closing Date."
(b) Delivery. At the Closing or promptly thereafter, the
Company shall authorize its transfer agent to issue to each applicable
Purchaser, against delivery of payment for the Purchased Shares, one or more
stock certificates (the "Certificates") registered in the name of each
Purchaser, representing the number of shares set forth opposite such Purchaser's
name on Schedule A hereto, and bearing the legend set forth in Section 6(h)
herein and such other legends as may be contemplated by this Agreement. Closing
documents may be delivered by facsimile.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to each Purchaser that the statements in this Section 3
are true and correct, except as set forth in the SEC Documents (as defined
below) or in the Company Disclosure Schedule attached hereto as Schedule B (the
"Disclosure Schedule") and delivered to the Purchasers concurrently herewith:
(a) Organization Good Standing and Qualification. The Company
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all corporate power and authority required
to (a) carry on its business as presently conducted and (b) enter into this
Agreement and the other agreements, instruments and documents contemplated
hereby, and to consummate the transactions contemplated hereby and thereby. The
Company is qualified to do business and is in good standing in each jurisdiction
in which the failure to so qualify would have a Material Adverse Effect on the
Company. As used in this Agreement, "Material Adverse Effect" means a material
adverse effect on, or a material adverse change in, the business, operations,
financial condition or results of operations of the applicable party and its
subsidiaries, taken as a whole.
(b) Capitalization. The capitalization of the Company, without
giving effect to the transactions contemplated by this Agreement, is as follows.
As of October 15, 2003, the authorized stock of the Company consisted of (i)
250,000,000 shares of Common Stock, of which 25,385,124 shares were issued and
outstanding; and (ii) 10,000,000 shares of Preferred Stock, none of which were
issued and outstanding. All such shares of Common Stock and Preferred Stock have
been duly authorized, and all such issued and outstanding shares of Common Stock
have been validly issued, and are fully paid and nonassessable. No such
outstanding shares of Common Stock were issued in violation of any pre-emptive
rights.
As of October 15, 2003, the Company had also reserved (net of
exercises and purchases): (i) 6,022,127 shares of Common Stock for issuance upon
exercise of options granted under the Company's 2000 Stock Option Plan; (ii)
953,432 shares of Common Stock for issuance upon exercise of options granted
under the Company's 1997 Stock Option Plan; (iii) 2,004,429 shares of Common
Stock for issuance to employees of the Company under the Company's Employee
Stock Purchase Plan; and (iv) 360,000 shares of Common Stock for issuance upon
exercise of options granted under the Company's 2000 Director Option Plan (the
1997 Stock Option Plan, together with the 2000 Stock Option Plan and the 2000
Director Option Plan, the "Company's Stock Option Plans"). All shares of Common
Stock subject to issuance as aforesaid, upon issuance
-2-
on the terms and conditions specified in the instruments pursuant to which they
are issuable, will be duly authorized, validly issued, fully paid and
nonassessable. Except as provided in this Agreement, and except for the (i)
shares of Common Stock subject to outstanding options issued under the Company's
Stock Option Plans and Employee Stock Purchase Plan, and (ii) shares of Common
Stock reserved for future issuance pursuant to the Company's Stock Option Plans
and Employee Stock Purchase Plan, there are no other equity securities, options,
warrants, calls, rights, commitments or agreements of any character to which the
Company is a party or by which it is bound obligating the Company to issue,
deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold,
repurchased or redeemed, any shares of the capital stock of the Company or
obligating the Company to grant, extend or enter into any such equity security,
option, warrant, call, right, commitment or agreement.
(c) Subsidiaries. Except for Collaboration Properties Inc.,
Avistar Corporation, Avistar Financial Corporation and Avistar Systems U.K.
Limited, the Company does not have any subsidiaries, nor does the Company own
any capital stock, assets comprising the business of, obligations of, or any
other interest (including any equity or partnership interest) in, or any
outstanding loan or advance to or from, any person or entity.
(d) Due Authorization. All corporate actions on the part of
the Company necessary for the authorization, execution, delivery of, and the
performance of all obligations of the Company under this Agreement and the
authorization, issuance, reservation for issuance and delivery of all of the
Purchased Shares being sold under this Agreement have been taken, and this
Agreement constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except (a) as may
be limited by (i) applicable bankruptcy, insolvency, reorganization or others
laws of general application relating to or affecting the enforcement of
creditors' rights generally and (ii) the effect of rules of law governing the
availability of equitable remedies and (b) as rights to indemnity or
contribution may be limited under federal or state securities laws or by
principles of public policy thereunder.
(e) Valid Issuance of Stock. The Purchased Shares will be,
upon payment therefor by the Purchasers in accordance with this Agreement, duly
authorized, validly issued, fully paid and non-assessable.
(f) Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, or notice to, any federal, state or local governmental authority on
the part of the Company is required in connection with the issuance of the
Purchased Shares, as of the date hereof, to the Purchasers, or the consummation
of the other transactions contemplated by this Agreement, except (i) such
filings as have been made prior to the date hereof, (ii) the filing of a
notification form with The Nasdaq Stock Market, Inc. ("Nasdaq"), (iii) the
filing of a Form D with respect to the Purchased Shares as required by
Regulation D promulgated under the Securities Act, and (iv) such additional
post-Closing filings as may be required to comply with applicable state and
federal securities laws.
(g) Non-Contravention. The execution, delivery and performance
of this Agreement by the Company, and the consummation by the Company of the
transactions contemplated hereby
-3-
(including issuance of the Purchased Shares), do not: (i) contravene or conflict
with the Amended and Restated Certificate of Incorporation or Bylaws of the
Company, each as amended; (ii) constitute a material violation of any provision
of any federal, state, local or foreign law binding upon or applicable to the
Company; or (iii) constitute a default or require any consent under, give rise
to any right of termination, cancellation or acceleration of, or to a loss of
any material benefit to which the Company is entitled under, or result in the
creation or imposition of any lien, claim or encumbrance on any assets of the
Company under, any material contract to which the Company is a party or any
material permit, license or similar right relating to the Company or by which
the Company may be bound or affected.
(h) Litigation. There is no action, suit, proceeding, claim,
arbitration or investigation ("Action") pending or, to the Company's knowledge,
threatened: (a) against the Company, its activities, properties or assets, or
any officer, director or employee of the Company in connection with such
officer's, director's or employee's relationship with, or actions taken on
behalf of, the Company, that is reasonably likely to have a Material Adverse
Effect on the Company, or (b) that seeks to prevent, enjoin, alter or delay the
transactions contemplated by this Agreement (including issuance of the Purchased
Shares). The Company is not a party to or subject to the provisions of, any
order, writ, injunction, judgment or decree of any court or government agency or
instrumentality that is reasonably likely to have a Material Adverse Effect on
the Company. No Action by the Company is currently pending nor does the Company
intend to initiate any Action that is reasonably likely to have a Material
Adverse Effect on the Company.
(i) Compliance with Law and Charter Documents. The Company is
not in violation or default of any provisions of its Amended and Restated
Certificate of Incorporation or Bylaws. To the Company's knowledge, the Company
has complied in all respects and is in compliance with all applicable statutes,
laws, rules, regulations and orders of the United States of America and all
states thereof, foreign countries and other governmental bodies and agencies
having jurisdiction over the Company's business or properties, including without
limitation, laws, rules, regulations or orders relating to the export or import
of goods as technology, except for any instance of non-compliance that has not
had, and would not reasonably be expected to have, a Material Adverse Effect on
the Company.
(j) SEC Documents.
(1) Reports. The Company has made available
to the Purchasers prior to the date hereof copies of its Annual Report on Form
10-K for the fiscal year ended December 31, 2002, its quarterly report on Form
10-Q for the fiscal quarter ended June 30, 2003, its Current Reports on Form 8-K
filed to date in 2003 and its Proxy Statement on Schedule 14A for its 2003
Annual Meeting of Stockholders filed by the Company with the SEC (the Form 10-K,
Form 10-Q, Form 8-Ks and Schedule 14A are collectively referred to herein as the
"SEC Documents"). Each of the SEC Documents, as of the respective date thereof
(or if amended or superseded by a filing prior to the Closing Date, then on the
date of such filing), did not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
-4-
(2) Financial Statements. The financial
statements of the Company in the SEC Documents present fairly, in accordance
with generally accepted accounting principles ("GAAP"), the financial position
of the Company as of the dates indicated, and the results of its operations and
cash flows for the period therein specified, subject, in the case of unaudited
financial statements for interim periods, to normal year-end audit adjustments.
(k) Absence of Certain Changes Since Balance Sheet Date. Since
June 30, 2003, the business and operations of the Company have been conducted in
the ordinary course consistent with past practice, and there has not been:
(i) any declaration, setting aside or payment of any
dividend or other distribution of the assets of the Company with respect to any
shares of capital stock of the Company or any repurchase, redemption or other
acquisition by the Company or any subsidiary of the Company of any outstanding
shares of the Company's capital stock, other than the repurchase of Common Stock
acquired upon the exercise of stock options from former employees or consultants
of the Company pursuant to existing contractual agreements;
(ii) any damage, destruction or loss, whether or not
covered by insurance, except for such occurrences, individually and
collectively, that have not had, and would not reasonably be expected to have, a
Material Adverse Effect on the Company;
(iii) any waiver by the Company of a valuable right
or of a material debt owed to it, except for such waivers, individually and
collectively, that have not had, and would not reasonably be expected to have, a
Material Adverse Effect on the Company;
(iv) any change by the Company in its accounting
principles, methods or practices or in the manner it keeps its accounting books
and records, except any such change required by a change in GAAP or by the SEC;
or
(v) any other event or condition of any character,
except for such events and conditions that have not resulted, and are not
expected to result, either individually or collectively, in a Material Adverse
Effect on the Company.
(l) Intellectual Property. The Company owns or possesses
adequate rights to use all patents, patent rights, inventions, trade secrets,
know-how, trademarks, service marks, trade names, copyrights or other
information (collectively, "Intellectual Property"), which are necessary to
conduct its businesses as currently conducted, except where the failure to
currently own or possess would not result, either individually or in the
aggregate, in a Material Adverse Effect on the Company. The Company has not
received any notice of, and has no knowledge of, any infringement of or conflict
with asserted rights of others with respect to any Intellectual Property which,
singly or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would reasonably be expected to have a Material Adverse Effect on the
Company, and to the Company's knowledge, none of the patent rights owned or
licensed by the Company are unenforceable or invalid. The Company has entered
into proprietary rights agreements with its key employees to protect its
-5-
Intellectual Property. The Company has not received notice that any of its
employees is infringing the proprietary rights of others.
(m) Registration Rights. Except as contemplated by Section 5
herein and as provided in the Registration and Information Rights Agreement
dated as of December 9, 1999 by and among the Company, UBS (USA) Inc., WS
Investments 99B and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (the "Prior Registration Rights Agreement"),
the Company is not currently subject to any agreement providing any person or
entity any rights (including piggyback registration rights) to have any
securities of the Company registered with the SEC or registered or qualified
with any other governmental authority.
(n) Title to Property and Assets. Except as set forth in the
Master Loan and Security Agreement between the Company and Comerica Bank -
California dated February 27, 2002 as amended on December 17, 2002, the
properties and assets of the Company are owned by the Company free and clear of
all mortgages, deeds of trust, liens, charges, encumbrances and security
interests except for statutory liens for the payment of current taxes that are
not yet delinquent and liens, encumbrances and security interests that arise in
the ordinary course of business and do not in any material respect affect the
properties and assets of the Company. With respect to the property and assets it
leases, the Company is in compliance with such leases in all material respects.
(o) Taxes. The Company has filed all necessary federal, state,
and foreign income and franchise tax returns due prior to the date hereof or
requested available extensions thereof and has paid or accrued all taxes shown
as due thereon, and the Company has no knowledge of any material tax deficiency
which has been or might be asserted or threatened against it.
(p) Insurance. The Company maintains and will continue to
maintain insurance of the types and in the amounts that the Company reasonably
believes is prudent and adequate for its business, all of which insurance is in
full force and effect.
(q) Broker's or Finder's Fee. Except for Alliant Partners, no
agent, broker, person or firm acting on behalf of the Special Committee, the
Company or any of the Company's subsidiaries is, or will be, entitled to any
fee, commission or brokers or finder's fees from any of the parties hereto, or
from any person controlling, controlled by, or under common control with any of
the parties hereto, in connection with this Agreement or any of the transactions
contemplated hereby.
(r) Foreign Corrupt Practices. Neither the Company nor any
director, officer, employee, agent or other person acting on behalf of the
Company, nor any subsidiary of the Company, has, in the course of that person's
actions for, or on behalf of, the Company, (a) used any corporate assets for any
unlawful contribution, gift, entertainment or other unlawful expenses relating
to political activity, (b) made any direct or indirect unlawful payment to any
foreign or domestic governmental official or employee, (c) violated or is in
violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, or
(d) made any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment to any foreign or domestic governmental official or employee.
-6-
4. REPRESENTATIONS, WARRANTIES AND CERTAIN AGREEMENTS OF THE
PURCHASERS. Each Purchaser hereby represents and warrants to the Company
severally and not jointly, and agrees that:
(a) Power and Authority. Such Purchaser has all requisite
authority, including in the case of non-individual Purchasers, all trustee,
corporate, membership or partnership power and authority required to enter into
this Agreement and the other agreements, instruments and documents contemplated
hereby, and to consummate the transactions contemplated hereby and thereby.
(b) Authorization. With respect to non-individual Purchasers,
the execution of this Agreement has been duly authorized by all necessary
trustee, corporate, membership or partnership action on the part of such
Purchaser. This Agreement constitutes such Purchaser's legal, valid and binding
obligation, enforceable in accordance with its terms, except (a) as may be
limited by (i) applicable bankruptcy, insolvency, reorganization or other laws
of general application relating to or affecting the enforcement of creditors'
rights generally and (ii) the effect of rules of law governing the availability
of equitable remedies and (b) as rights to indemnity or contribution may be
limited under federal or state securities laws or by principles of public policy
thereunder.
(c) Litigation. There is no Action pending against such
Purchaser that seeks to prevent, enjoin, alter or delay the transactions
contemplated by this Agreement.
(d) Purchase for Own Account. The Purchased Shares being
acquired by such Purchaser are being acquired for investment for such
Purchaser's own account, not as a nominee or agent, and not with a view to the
public resale or distribution thereof within the meaning of the Securities Act,
and such Purchaser has no present intention of selling, granting any
participation in, or otherwise distributing the same. With respect to any
Purchaser that is not a natural person, such Purchaser also represents that it
has not been formed for the specific purpose of acquiring the Purchased Shares
and that, as of the date hereof, and except as disclosed in such Purchaser's
public filings with the SEC or in Schedule C to this Agreement, it is not the
beneficial owner of any shares of Common Stock of the Company.
(e) Investment Experience. Such Purchaser understands that the
purchase of the Purchased Shares involves substantial risk. Such Purchaser has
experience as an investor in securities of companies and acknowledges that it is
able to fend for itself, can bear the economic risk of its investment in the
Purchased Shares and has such knowledge and experience in financial or business
matters that it is capable of evaluating the merits and risks of this investment
in the Purchased Shares and protecting its own interests in connection with this
investment.
(f) Accredited Purchaser Status. Such Purchaser is an
"accredited investor" within the meaning of Regulation D promulgated under the
Securities Act.
(g) Reliance Upon Purchaser's Representations. Such Purchaser
understands that the issuance and sale of Purchased Shares to it will not be
registered under the Securities Act on the ground that such issuance and sale
will be exempt from registration under the Securities Act
-7-
pursuant to Regulation D promulgated under the Securities Act and/or Section
4(2) of the Securities Act, and that the Company's reliance on such exemptions
is based on such Purchaser's representations set forth herein.
(h) Receipt of Information. Such Purchaser has had an
opportunity to ask questions and receive answers from the Company regarding the
terms and conditions of the issuance and sale of Purchased Shares and the
business, properties, prospects and financial condition of the Company and to
obtain any additional information requested and has received and considered all
information it deems relevant to make an informed decision to purchase the
Purchased Shares.
(i) HSR Compliance.
(i) Such Purchaser is its own "ultimate parent
entity" as defined in the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976,
as amended (the "HSR Act").
(ii) Such Purchaser will hold less than $50,000,000
in voting securities of the Company following execution of this Agreement, as
valued under the HSR Act.
(j) Forms 13D or 13G. Such Purchaser has filed with the SEC
any reports regarding its ownership of the Company's Common Stock as required by
Section 13(d) or Section 13(g) of the Exchange Act and the rules and regulations
promulgated thereunder. If such Purchaser is required to file such SEC reports
regarding its ownership of the Company's Common Stock, such Purchaser will fully
and accurately reflect the Purchased Shares of such Purchaser.
(k) Reporting Obligations Pursuant to Section 16. Such
Purchaser has filed with the SEC any reports required to be filed pursuant to
Section 16(a) of the Exchange Act and the rules and regulations promulgated
thereunder by such Purchaser and, in the case of non-individual Purchasers,
their officers, directors, employees or affiliates, within the time such filings
are required to be made.
5. REGISTRATION; COMPLIANCE WITH THE SECURITIES ACT.
(a) Certain Definitions. As used in this Agreement, the
following terms shall have the meanings set forth below:
(i) "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended, or any similar successor federal statute and the rules
and regulations thereunder, all as the same shall be in effect from time to
time.
(ii) "Holder" shall mean any Purchaser who holds
Registrable Securities and any holder of Registrable Securities to whom the
registration rights conferred by this Agreement have been duly and validly
transferred in accordance with Section 5(j) of this Agreement.
(iii) "Indemnified Party" shall have the meaning set
forth in Section 5(e)(iii) hereto.
-8-
(iv) "Indemnifying Party" shall have the meaning set
forth in Section 5(e)(iii) hereto.
(v) "Other Selling Stockholders" shall mean persons
other than Holders who, by virtue of agreements with the Company, are entitled
to include their Other Shares in certain registrations hereunder.
(vi) "Other Shares" shall mean shares of Common
Stock, other than Registrable Securities (as defined below), (including shares
of Common Stock issuable upon conversion of shares of any currently unissued
series of Preferred Stock of the Company) with respect to which registration
rights have been or will be granted.
(vii) "Registrable Securities" shall mean (i) shares
of Common Stock issued or issuable pursuant to this Agreement and (ii) any
Common Stock issued as a dividend or other distribution with respect to or in
exchange for or in replacement of the shares referenced in (i) above; provided,
however, that Registrable Securities shall not include any shares of Common
Stock described in clause (i) or (ii) above which have previously been
registered or which have been sold to the public either pursuant to a
registration statement or Rule 144, or which have been sold in a private
transaction in which the transferor's rights under this Agreement are not
validly assigned in accordance with this Agreement.
(viii) The terms "register," "registered" and
"registration" shall refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act and applicable
rules and regulations thereunder, and the declaration or ordering of the
effectiveness of such registration statement.
(ix) "Registration Expenses" shall mean all expenses
incurred in effecting any registration pursuant to this Agreement, including,
without limitation, all registration, qualification, and filing fees, printing
expenses, escrow fees, fees and disbursements of counsel for the Company, fees
and disbursements of a single law firm acting as counsel for the Holders, blue
sky fees and expenses, and expenses of any regular or special audits incident to
or required by any such registration, but shall not include Selling Expenses,
fees and disbursements of other counsel for the Holders and the compensation of
regular employees of the Company, which shall be paid in any event by the
Company.
(x) "Restricted Securities" shall mean any
Registrable Securities required to bear the legend set forth in Section 6(h)
hereof.
(xi) "Rule 144" shall mean Rule 144 as promulgated by
the SEC under the Securities Act, as such Rule may be amended from time to time,
or any similar successor rule that may be promulgated by the SEC.
(xii) "Rule 145" shall mean Rule 145 as promulgated
by the SEC under the Securities Act, as such Rule may be amended from time to
time, or any similar successor rule that may be promulgated by the SEC
-9-
(xiii) "Rule 415" shall mean Rule 415 as promulgated
by the SEC under the Securities Act, as such Rule may be amended from time to
time, or any similar successor rule that may be promulgated by the SEC.
(xiv) "Selling Expenses" shall mean all underwriting
discounts, selling commissions and stock transfer taxes applicable to the sale
of Registrable Securities and fees and disbursements of counsel for any Holder
other than the single counsel representing all Holders pursuant to subsection
(ix) above.
(b) Company Registration.
(i) Company Registration. If the Company shall
determine to register any of its securities either for its own account or the
account of a security holder or holders, other than a registration relating
solely to employee benefit plans, a registration relating to the offer and sale
of debt securities, a registration relating to a corporate reorganization or
other Rule 145 transaction, or a registration on any registration form that does
not permit secondary sales, the Company will:
(1) promptly give written notice of the
proposed registration to all Holders; and
(2) use its commercially reasonable efforts
to include in such registration (and any related qualification under blue sky
laws or other compliance), except as set forth in Section 5(b)(ii) below, and in
any underwriting involved therein, all of such Registrable Securities as are
specified in a written request or requests made by any Holder or Holders
received by the Company within twenty (20) days after such written notice from
the Company is mailed or delivered. Such written request may specify all or a
part of a Holder's Registrable Securities.
(ii) Underwriting. If the registration of which the
Company gives notice is for a registered public offering involving an
underwriting, the Company shall so advise the Holders as a part of the written
notice given pursuant to Section 5(b)(i). In such event, the right of any Holder
to registration pursuant to this Section 5 shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their securities through such underwriting shall
(together with the Company and the Other Selling Stockholders, if any,
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the representative of the
underwriter or underwriters selected by the Company. Notwithstanding any other
provision of this Section 5(b), if the underwriters advise the Company in
writing that marketing factors require a limitation on the number of shares to
be underwritten, the underwriters may (subject to the limitations set forth
below) exclude all Registrable Securities from, or limit the number of
Registrable Securities to be included in, the registration and underwriting. The
Company shall so advise all holders of securities requesting registration, and
the number of shares of securities that are entitled to be included in the
registration and underwriting shall be allocated, as follows: (i) first, to the
Company for securities being sold for its own account; (ii) second, to the
holders requesting to include registrable securities in such registration
statement pursuant to the Prior Registration Rights Agreement; (iii) third, to
the Holders requesting to include
-10-
Registrable Securities in such registration statement based on the pro rata
percentage of Registrable Securities held by such Holders, assuming conversion;
and (iv) fourth, to the Other Selling Stockholders, if any, requesting to
include Other Shares in such registration statement based on the pro rata
percentage of Other Shares held by such Other Selling Stockholders. If a person
who has requested inclusion in such registration as provided above does not
agree to the terms of any such underwriting, such person shall also be excluded
therefrom by written notice from the Company or the underwriter. The Registrable
Securities or other securities so excluded shall also be withdrawn from such
registration. Any Registrable Securities or other securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration. If
shares are so withdrawn from the registration and if the number of shares of
Registrable Securities to be included in such registration was previously
reduced as a result of marketing factors, the Company shall then offer to all
persons who have retained the right to include securities in the registration
the right to include additional securities in the registration in an aggregate
amount equal to the number of shares so withdrawn, with such shares to be
allocated among the persons requesting additional inclusion, in the manner set
forth above.
(iii) Right to Terminate Registration. The Company
shall have the right to terminate or withdraw any registration initiated by it
under this Section 5(b) prior to the effectiveness of such registration whether
or not any Holder has elected to include securities in such registration.
(c) Expenses of Registration. All Registration Expenses
incurred in connection with registrations pursuant to this Section 5 shall be
borne by the Company. All Selling Expenses relating to securities registered on
behalf of the Holders shall be borne by the holders of securities included in
such registration pro rata among each other on the basis of the number of
Registrable Securities and Other Shares so registered.
(d) Registration Procedures. In the case of each registration
effected by the Company pursuant to this Section 5, the Company will keep each
Holder advised in writing as to the initiation of each registration and as to
the completion thereof. At its expense, the Company will use its commercially
reasonable efforts to:
(i) Keep such registration effective for a period
ending on the earlier of the date which is sixty (60) days from the effective
date of the registration statement or such time as the Holder or Holders have
completed the distribution described in the registration statement relating
thereto;
(ii) Prepare and file with the SEC such amendments
and supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply with
the provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement for the period set forth in
subsection (i) above;
-11-
(iii) Furnish such number of prospectuses, including
any preliminary prospectuses, and other documents incident thereto, including
any amendment of or supplement to the prospectus, as a Holder from time to time
may reasonably request;
(iv) Use its reasonable efforts to register and
qualify the securities covered by such registration statement under such other
securities or Blue Sky laws of such jurisdiction as shall be reasonably
requested by the Holders; provided, that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions;
(v) Notify each seller of Registrable Securities
covered by such registration statement at any time when a prospectus relating
thereto is required to be delivered under the Securities Act of the happening of
any event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or incomplete in light of the
circumstances then existing, and following such notification promptly prepare
and furnish to such seller a reasonable number of copies of a supplement to or
an amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such shares, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading or
incomplete in light of the circumstances then existing;
(vi) Cause all such Registrable Securities registered
pursuant hereunder to be listed on each securities exchange or automated
quotation system such as the Nasdaq on which similar securities issued by the
Company are then listed, if any; and
(vii) In connection with any underwritten offering
pursuant to a registration statement filed pursuant to this Section 5, enter
into an underwriting agreement in form reasonably necessary to effect the offer
and sale of Common Stock, provided such underwriting agreement contains
reasonable and customary provisions, and provided further, that each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(e) Indemnification.
(i) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, each of its officers, directors and
partners, legal counsel, and accountants and each person controlling such Holder
within the meaning of Section 15 of the Securities Act, with respect to which
registration, qualification, or compliance has been effected pursuant to this
Section 5, and each underwriter, if any, and each person who controls within the
meaning of Section 15 of the Securities Act any underwriter, against all
expenses, claims, losses, damages, and liabilities (or actions, proceedings, or
settlements in respect thereof) arising out of or based on: (i) any untrue
statement (or alleged untrue statement) of a material fact contained or
incorporated by reference in any prospectus, offering circular, or other
document (including any related registration statement, notification, or the
like) incident to any such registration, qualification, or compliance, (ii) any
omission (or alleged omission) to state therein a material fact required to be
stated therein or
-12-
necessary to make the statements therein not misleading, or (iii) any violation
(or alleged violation) by the Company of the Securities Act, any state
securities laws or any rule or regulation thereunder applicable to the Company
and relating to action or inaction required of the Company in connection with
any offering covered by such registration, qualification, or compliance, and the
Company will reimburse each such Holder, each of its officers, directors,
partners, legal counsel, and accountants and each person controlling such
Holder, each such underwriter, and each person who controls any such
underwriter, for any legal and any other expenses reasonably incurred in
connection with investigating and defending or settling any such claim, loss,
damage, liability, or action; provided that the Company will not be liable in
any such case to the extent that any such claim, loss, damage, liability, or
action arises out of or is based on any untrue statement or omission based upon
written information furnished to the Company by such Holder, any of such
Holder's officers, directors, partners, legal counsel or accountants, or any
person controlling such Holder, such underwriter or any person who controls any
such underwriter and stated to be specifically for use therein; and provided,
further that, the indemnity agreement contained in this Section 5(e)(i) shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability, or action if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld).
(ii) To the extent permitted by law, each Holder
will, if Registrable Securities held by such Holder are included in the
securities as to which such registration, qualification, or compliance is being
effected, indemnify and hold harmless the Company, each of its directors,
officers, partners, legal counsel, and accountants and each underwriter, if any,
of the Company's securities covered by such a registration statement, each
person who controls the Company or such underwriter within the meaning of
Section 15 of the Securities Act, each other such Holder, and each of their
officers, directors, and partners, and each person controlling such other
Holder, against all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on: (i) any untrue statement (or
alleged untrue statement) of a material fact contained or incorporated by
reference in any such registration statement, prospectus, offering circular, or
other document, or (ii) any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse the Company and such Holders,
directors, officers, partners, legal counsel, and accountants, persons,
underwriters, or control persons for any legal or any other expenses reasonably
incurred in connection with investigating or defending any such claim, loss,
damage, liability, or action, in each case to the extent, but only to the
extent, that such untrue statement (or alleged untrue statement) or omission (or
alleged omission) is made in such registration statement, prospectus, offering
circular, or other document in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such Holder and stated
to be specifically for use therein; provided, however, that the obligations of
such Holder hereunder shall not apply to amounts paid in settlement of any such
claims, losses, damages, or liabilities (or actions in respect thereof) if such
settlement is effected without the consent of such Holder (which consent shall
not be unreasonably withheld); and provided that in no event shall any indemnity
under this Section 5(e) exceed the net proceeds from the offering received by
such Holder.
(iii) Each party entitled to indemnification under
this Section 5(e) (the "Indemnified Party") shall give notice to the party
required to provide indemnification (the
-13-
"Indemnifying Party") promptly after such Indemnified Party has actual knowledge
of any claim as to which indemnity may be sought, and shall permit the
Indemnifying Party to assume the defense of such claim or any litigation
resulting therefrom; provided that counsel for the Indemnifying Party, who shall
conduct the defense of such claim or any litigation resulting therefrom, shall
be approved by the Indemnified Party (whose approval shall not be unreasonably
withheld), and the Indemnified Party may participate in such defense at such
party's expense; and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Section 5(e), to the extent such failure is not
prejudicial. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation. Each Indemnified Party shall furnish such information regarding
itself or the claim in question as an Indemnifying Party may reasonably request
in writing and as shall be reasonably required in connection with defense of
such claim and litigation resulting therefrom.
(iv) If the indemnification provided for in this
Section 5(e) is held by a court of competent jurisdiction to be unavailable to
an Indemnified Party with respect to any loss, liability, claim, damage, or
expense referred to herein, then the Indemnifying Party, in lieu of indemnifying
such Indemnified Party hereunder, shall contribute to the amount paid or payable
by such Indemnified Party as a result of such loss, liability, claim, damage, or
expense in such proportion as is appropriate to reflect the relative fault of
the Indemnifying Party on the one hand and of the Indemnified Party on the other
in connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(v) Notwithstanding the foregoing, to the extent
that the provisions on indemnification and contribution contained in the
underwriting agreement entered into in connection with the underwritten public
offering are in conflict with the foregoing provisions, the provisions in the
underwriting agreement shall control.
(f) Information by Holder. Each Holder of Registrable
Securities shall furnish to the Company such information regarding such Holder
and the distribution proposed by such Holder as the Company may reasonably
request in writing and as shall be reasonably required in connection with any
registration, qualification, or compliance referred to in this Section 5.
(g) Restrictions on Transfer.
The holder of each certificate representing Registrable Securities by acceptance
thereof agrees to comply in all respects with the provisions of this Section
5(g). Each Holder agrees not to make any sale, assignment, transfer, pledge or
other disposition of all or any portion of the Restricted
-14-
Securities, unless and until (x) the transferee thereof has agreed in writing
for the benefit of the Company to take and hold such Restricted Securities
subject to, and to be bound by, the terms and conditions set forth in this
Agreement, including, without limitation, this Section 5, or (y) such transfer
complies in all respects with subclause (i) or (iii) of the first sentence of
Section 6(g).
(h) Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the SEC that may permit the sale of
the Restricted Securities to the public without registration, the Company agrees
to use its commercially reasonable efforts to:
(i) Make and keep public information regarding
the Company available as those terms are understood and defined in Rule 144
under the Securities Act;
(ii) File with the SEC in a timely manner all
reports and other documents required of the Company under the Securities Act and
the Exchange Act; and
(iii) So long as a Holder owns any Restricted
Securities, furnish to the Holder forthwith upon written request a written
statement by the Company as to its compliance with the reporting requirements of
Rule 144 and of the Securities Act and the Exchange Act, a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents so filed as a Holder may reasonably request in availing itself of any
rule or regulation of the SEC allowing a Holder to sell any such securities
without registration.
(i) Delay of Registration. No Holder shall have any right to
take any action to restrain, enjoin, or otherwise delay any registration as the
result of any controversy that might arise with respect to the interpretation or
implementation of this Section 5.
(j) Transfer or Assignment of Registration Rights. The
rights to cause the Company to register securities granted to a Holder by the
Company under this Section 5 may be transferred or assigned by a Holder only to
a transferee or assignee of not less than 500,000 shares of Registrable
Securities (as presently constituted and subject to subsequent adjustments for
stock splits, stock dividends, reverse stock splits, and the like); provided
that (i) such transfer or assignment of Registrable Securities is effected in
accordance with the terms of Section 5(g) hereof and applicable securities laws,
(ii) the Company is given written notice prior to said transfer or assignment,
stating the name and address of the transferee or assignee and identifying the
securities with respect to which such registration rights are intended to be
transferred or assigned and (iii) the transferee or assignee of such rights
assumes in writing the obligations of such Holder under this Agreement,
including without limitation the obligations set forth in Section 5(g).
(k) Termination of Registration Rights. The right of any
Holder to request registration or inclusion in any registration pursuant to this
Section 5 shall terminate on the earlier of (i) such date on which all shares of
Registrable Securities held by such Holder may immediately be sold under Rule
144 during any ninety (90)-day period, and (ii) three (3) years after the
Closing Date.
-15-
6. COVENANTS.
(a) Satisfaction of Conditions. The parties shall use their
best efforts to satisfy in a timely manner each of the conditions set forth in
Section 7 and Section 8 of this Agreement.
(b) Form D; Blue Sky Laws. The Company agrees to file a Form D
with respect to the Purchased Shares as required under Regulation D and to
provide a copy thereof to each Purchaser promptly after such filing. The Company
shall, on or before the Closing Date, take such action as the Company shall
reasonably determine is necessary to qualify the Purchased Shares for sale to
the Purchasers pursuant to this Agreement under the Securities Act, the Exchange
Act and applicable securities or "blue sky" laws of the states of the United
States or obtain exemption therefrom, and shall provide evidence of any such
action so taken to each Purchaser on or prior to the Closing Date.
(c) Expenses. All fees, costs and expenses (including
attorneys' fees and expenses) incurred by any party hereto in connection with
the preparation, negotiation and execution of this Agreement and the exhibits
and schedules hereto and the consummation of the transactions contemplated
hereby and thereby (including the costs associated with any filings with, or
compliance with any of the requirements of, any governmental authorities), shall
be the sole and exclusive responsibility of such party.
(d) Listing of Purchased Shares. The Company shall use its
best efforts to cause the Purchased Shares to be authorized for quotation or
listing on the Nasdaq or such other automated quotation system or securities
exchange on which similar securities issued by the Company are then listed, if
any.
(e) Forms 13D or 13G. Each Purchaser shall, when and as
required, file with the SEC any reports regarding its ownership of the Company's
Common Stock as required by Section 13(d) or Section 13(g) of the Exchange Act
and the rules and regulations promulgated thereunder.
(f) Reporting Obligations Pursuant to Section 16. Each
Purchaser shall, when and as required, file with the SEC any reports required to
be filed pursuant to Section 16(a) of the Exchange Act, and the rules and
regulations promulgated thereunder, by such Purchaser, its officers, directors,
employees or Affiliates within the time such filings are required to be made and
to provide the Company with a copy of all such filings promptly thereafter.
(g) Restricted Securities. No Purchaser may sell, offer to
sell, assign, pledge, hypothecate or otherwise transfer any of the Purchased
Shares unless (i) pursuant to an effective registration statement under the
Securities Act, (ii) such Purchaser provides the Company with an opinion of
counsel, in a generally acceptable form, to the effect that a sale, assignment
or transfer of the Purchased Shares may be made without registration under the
Securities Act, or (iii) such Purchaser provides the Company with reasonable
assurances that the Purchased Shares can be sold pursuant to Rule 144 under the
Securities Act. Notwithstanding anything to the contrary contained in this
Agreement, such Purchaser may transfer (without restriction and without the need
for an opinion of counsel) Purchased Shares to its Affiliates (as such term is
defined in Rule 405
-16-
promulgated by the SEC under the Securities Act; provided that such Affiliate is
an "accredited investor" under Regulation D and such Affiliate agrees to be
bound by the terms and conditions of this Agreement (and any such Affiliate will
following any such transfer be considered a "Purchaser" hereunder for all
purposes).
(h) Legends. Each Purchaser agrees that the certificates for
the Purchased Shares shall bear the following legend:
"The securities represented by this certificate have
not been registered under the Securities Act of 1933
or with any state securities commission, and may not
be transferred or disposed of by the holder in the
absence of a registration statement which is
effective under the Securities Act of 1933 and
applicable state laws and rules, or, unless,
immediately prior to the time set for transfer, such
transfer may be effected without violation of the
Securities Act of 1933 and other applicable state
laws and rules."
In addition, each Purchaser agrees that the Company may place stop
transfer orders with its transfer agents with respect to such certificates. The
appropriate portion of the legend and the stop transfer orders will be removed
promptly upon delivery to the Company of such satisfactory evidence as
reasonably may be required by the Company that such legend or stop orders are
not required to ensure compliance with the Securities Act.
(i) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Policy; Short Sales. For so long as any
Purchasers are officers of the Company or members of the Board of Directors of
the Company (such Purchasers, the "Inside Purchasers"), the Inside Purchasers
and their Affiliates who have access to Material Confidential Information (as
defined below) of the Company agree to comply with the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Compliance Program of the Company including, but not limited to, trade
pre-clearance requirements and trading blackout periods as may be in effect from
time to time. In addition, each Purchaser hereby acknowledges that such
Purchaser is aware that United States securities laws prohibit any person who
has received from an issuer material nonpublic information concerning the issuer
from communicating such information to any other person under circumstances in
which it is reasonably foreseeable that such person is likely to purchase or
sell the securities of such issuer, make investment recommendations based on
such material nonpublic information or otherwise affect the trading price of
such issuer's securities.
(j) Material Confidential Information.
(i) In connection with the Purchasers'
decision-making with respect to their acquisition of the Purchased Shares, the
Company may furnish to the Purchasers and their officers, directors, employees
and agents, if applicable (collectively referred to as "Purchasers and Agents")
financial and other information which has not theretofore been made available to
the public ("Material Confidential Information"). The Purchasers and Agents
shall treat all such Material Confidential Information in accordance with the
provisions of this Agreement and agree to take or abstain from taking certain
other actions herein set forth. The term "Material Confidential Information"
does not include information which (i) was already in the Purchasers' or Agents'
-17-
possession prior to the disclosure by the Company of the Material Confidential
Information, provided that such information is not known by the Purchasers and
Agents to be subject to another confidentiality agreement with or other
obligation of secrecy to the Company or another party, (ii) becomes generally
available to the public other than as a result of disclosure by the Purchasers
or Agents or (iii) becomes available to Purchasers and Agents on a
non-confidential basis from a source other than the Company or its advisors,
provided that such source is not known to the Purchasers or Agents to be bound
by a confidentiality agreement with or other obligation of secrecy to the
Company or another party. The Purchasers agree that the Company's Material
Confidential Information will be used solely for the purpose of monitoring the
Purchasers' holdings of the Purchased Shares. The Purchasers also agree that the
Purchasers and Agents will not disclose any of the Company's Material
Confidential Information now or hereafter received or obtained from the Company
or its representatives to any third party or otherwise use or permit the use of
the Material Confidential Information, except as required by applicable law or
legal process, without the prior written consent of the Company; provided,
however, that any such Material Confidential Information of the Company may be
disclosed to such of the Purchasers' representatives who need to know such
information for the purpose of monitoring the Purchasers' investment in the
Purchased Shares, in which case it is understood that the Purchasers'
representatives, directors, officers, employees, agents and advisors, if
applicable, shall be informed by the Purchasers of the confidential nature of
such information and shall be directed by the Purchasers to treat such
information confidentially. In the event that the Purchasers and Agents or any
of their representatives becomes legally compelled (by deposition,
interrogatory, request for documents, subpoena, civil investigative demand,
other demand or rules and regulations under the federal securities laws or
similar process) to disclose any of the Material Confidential Information, the
Purchasers and Agents shall provide the Company with prompt prior written notice
of such requirement prior to such disclosure. In the event that a protective
order or other remedy is not obtained, or that the Company waives compliance
with the provisions hereof, each Purchaser agrees to furnish only that portion
of the Material Confidential Information which such Purchaser is legally
required to furnish and, where appropriate, to exercise the Purchasers' and
Agents' reasonable efforts to obtain assurances that confidential treatment will
be accorded such Material Confidential Information.
7. CONDITIONS TO THE PURCHASER'S OBLIGATIONS AT CLOSING. The
obligations of each Purchaser under Sections 1 and 2 of this Agreement are
subject to the fulfillment or waiver, at or before the Closing, of each of the
following conditions:
(a) Representations and Warranties True. Except as set forth
in the Disclosure Schedule or the SEC Documents, each of the representations and
warranties of the Company contained in Section 3 shall be true and correct in
all material respects on and as of the date hereof and on and as of the date of
the Closing, with the same effect as though such representations and warranties
had been made as of the Closing.
(b) Performance. The Company shall have performed and complied
in all material respects with all agreements, obligations and conditions
contained in this Agreement that are required to be performed or complied with
by it on or before the Closing and shall have obtained all approvals, consents
and qualifications necessary to complete the purchase and sale described herein.
-18-
(c) Compliance Certificate. The Company will have delivered to
such Purchaser at the Closing a certificate signed on its behalf by its Chief
Financial Officer certifying that the conditions specified in Sections 7(a) and
7(b) hereof have been fulfilled.
(d) Opinion of Company Counsel. Such Purchaser will have
received an opinion on behalf of the Company, dated as of the date of the
Closing, from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Professional Corporation,
counsel to the Company, in the form attached as Exhibit A.
(e) Absence of Litigation. No proceeding challenging this
Agreement or the transactions contemplated hereby, or seeking to prohibit,
alter, prevent or materially delay the Closing, shall have been instituted
before any court, arbitrator or governmental body, agency or official and shall
be pending.
(f) Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated at the Closing and
all documents incident thereto will be reasonably satisfactory in form and
substance to the Purchasers and to the Purchasers' legal counsel, and the
Purchaser will have received all such counterpart originals and certified or
other copies of such documents as it may reasonably request.
(g) Other Actions. The Company shall have executed such
certificates, agreements, instruments and other documents, and taken such other
actions as shall be customary or reasonably requested by the Purchasers in
connection with the transactions contemplated hereby.
8. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING. The obligations
of the Company to the Purchasers under Sections 1 and 2 of this Agreement are
subject to the fulfillment or waiver, on or before the Closing, of each of the
following conditions:
(a) Representations and Warranties True. The representations
and warranties of the Purchasers contained in Section 4 shall be true and
correct in all material respects on and as of the date hereof, and on and as of
the date of the Closing with the same effect as though such representations and
warranties had been made as of the Closing.
(b) Performance. The Purchasers shall have performed and
complied in all material respects with all agreements, obligations and
conditions contained in this Agreement that are required to be performed or
complied with by them on or before the Closing and shall have obtained all
approvals, consents and qualifications necessary to complete the purchase and
sale described herein.
(c) Securities Exemptions. The offer and sale of the Purchased
Shares to the Purchasers pursuant to this Agreement shall be exempt from the
registration requirements of the Securities Act and the registration and/or
qualification requirements of all applicable state securities laws.
(d) Payment of Purchase Price. The Purchasers shall have
delivered to the Company same day funds in full payment of the purchase price as
specified in Section 1(b).
-19-
(e) Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated at the Closing and
all documents incident thereto will be reasonably satisfactory in form and
substance to the Company and to the Company's legal counsel, and the Company
will have received all such counterpart originals and certified or other copies
of such documents as it may reasonably request.
(f) Purchaser Questionnaires. Each Purchaser shall have
executed and delivered to the Company a Purchaser Questionnaire, in the form
attached hereto as Exhibit B, pursuant to which each Purchaser shall provide
information necessary to confirm such Purchaser's status as an "accredited
investor" (as such term is defined in Rule 501 promulgated under the Securities
Act).
(g) Fairness Opinion. The Special Committee shall have
received an opinion from Alliant Partners or another recognized valuation firm
that as of the date of such opinion, the Per Share Price is fair, from a
financial point of view, to the Company and the Company's common stockholders
(other than the Purchasers).
(h) Absence of Litigation. No proceeding challenging this
Agreement or the transactions contemplated hereby, or seeking to prohibit,
alter, prevent or materially delay the Closing, shall have been instituted
before any court, arbitrator or governmental body, agency or official and shall
be pending.
(i) Other Actions. The Purchasers shall have executed such
certificates, agreements, instruments and other documents, and taken such other
actions as shall be customary or reasonably requested by the Company in
connection with the transactions contemplated hereby.
9. PROVISIONS RELATING TO SPECIFIED SECURITIES.
(a) Voting of Specified Securities. During the period from the
Closing Date through the twentieth anniversary of the Closing Date:
(i) with respect to the election of directors of
the Company or (if applicable) a Company Successor (as defined in Section 9(c)),
The ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Revocable Trust (the "Specified
Purchaser") shall vote all Specified Securities (as defined in Section 9(c))
held by it in the same proportions as the votes cast for the respective nominees
by holders of Other Outstanding Voting Securities (as defined in Section 9(c))
with respect to such Other Outstanding Voting Securities; and
(ii) with respect to any other matter on which
Specified Securities are entitled to be voted: (A) the Specified Purchaser shall
not cast any vote in respect of the percentage of the Specified Securities held
by it that is equal to the percentage of the Other Outstanding Voting Securities
that is not voted; and (B) the Specified Purchaser shall vote the balance of the
Specified Securities held by it "for," "against" and "abstain" in the same
proportions as the votes cast with respect to the Other Outstanding Voting
Securities by holders of such Other Outstanding Voting Securities.
-20-
(b) Transfer Restrictions. Without limiting the effect of any
other transfer restrictions or similar restrictions contained in this Agreement,
the Specified Purchaser may not, at any time prior to the twentieth anniversary
of the Closing Date, directly or indirectly pledge or otherwise encumber, or
directly or indirectly sell or otherwise transfer (voluntarily, by operation of
law or otherwise), any of the Specified Securities or any beneficial interest in
any of the Specified Securities; provided, however, that:
(i) if there is a tender or exchange offer made
for any securities of the same class as the Specified Securities, then the
Specified Purchaser shall tender in such tender or exchange offer the percentage
of the Specified Securities then held by it equal to the percentage of the other
outstanding securities of such class actually tendered in such tender or
exchange offer, excluding from the calculation of such percentage all Specified
Securities and other securities of such class beneficially owned by ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇;
(ii) the Specified Purchaser may transfer
Specified Securities to a person or entity that executes and delivers to the
Company or (if applicable) a Company Successor a document, satisfactory in form
and substance to the Company or such Company Successor, confirming that such
person or entity will be bound by the provisions of this Agreement with respect
to the Specified Securities acquired by such person or entity;
(iii) the Specified Purchaser may sell Specified
Securities in a bona fide, registered public offering;
(iv) the Specified Purchaser may sell Specified
Securities if the Specified Purchaser complies with the limitations and other
provisions set forth in paragraphs (e), (f) and (g) of Rule 144 under the
Securities Act with respect to the sale of such Specified Securities (regardless
of whether such limitations or other provisions are then applicable to the
Specified Purchaser or such Specified Securities); and
(v) if the Company or (if applicable) a Company
Successor effects a merger with another entity, then the Specified Purchaser may
permit its Specified Securities to be converted into the merger consideration to
be received generally by holders of securities of the same class.
If the Specified Purchaser transfers shares pursuant to subsections (i), (iii),
(iv) or (v) hereof, the transferee shall not be bound by Section 9 hereof. The
Specified Purchaser acknowledges and agrees that the certificates representing
the Specified Securities may be marked with appropriate legends referring to the
provisions of this Section 9.
(c) Certain Definitions. For purposes of this Section 9:
(i) "Specified Securities" shall mean 1,602,847
shares of Common Stock being purchased by the Specified Purchaser pursuant to
this Agreement, it being understood that such 1,602,847 shares represent the
difference between (A) 3,661,539, the number of shares being purchased by the
Specified Purchaser pursuant to this Agreement, and (B) a number equal to
44.605% of the total number of Purchased Shares. If, as a result of the sale by
the Company of
-21-
additional shares of Common Stock (pursuant to the exercise of outstanding stock
options or otherwise) after the Closing Date, the aggregate number of issued and
outstanding shares of Common Stock is increased to a number greater than
30,000,509 shares, then, a sufficient number of the Specified Securities held by
the Specified Purchaser shall be released from the restrictions set forth in
Sections 9(a) and 9(b), such that the combined voting power of all voting
securities beneficially owned by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and not subject to the
restrictions set forth in Sections 9(a) and 9(b) of this Agreement shall equal
44.605% of the aggregate voting power of all issued and outstanding voting
securities of the Company (or such lesser percentage as would result from the
release of all of the Specified Securities from such restrictions).
(ii) "Other Outstanding Voting Securities" shall
mean the outstanding voting securities of the Company or (if applicable) a
Company Successor not beneficially owned by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
(iii) "Company Successor" shall mean any entity
that directly or indirectly acquires all or a substantial portion of the
business or assets of the Company (or a Company Successor) by means of a
transaction or series of transactions as a result of which the persons and
entities that were the beneficial owners of the Company's issued and outstanding
voting securities (or the issued and outstanding voting securities of a Company
Successor) immediately before such transaction or series of transactions
beneficially own at least 50% of the issued and outstanding voting securities of
such entity immediately after such transaction or series of transactions.
10. MISCELLANEOUS.
(a) Effect of Purchaser's Knowledge. Notwithstanding anything
to the contrary contained in this Agreement, no representation or warranty of
the Company contained in this Agreement (including in Section 3 hereof) shall be
deemed to be untrue, incorrect or breached if any facts or circumstances that
constitute or give rise to the untruth or inaccuracy in, or breach of, the
representation or warranty were known to any Purchaser at the time such
representation or warranty was made by the Company.
(b) Successors and Assigns. The terms and conditions of this
Agreement will inure to the benefit of and be binding upon the respective
successors and permitted assigns of the parties.
(c) Governing Law. This Agreement will be governed by and
construed under the internal laws of the State of Delaware, without reference to
principles of conflict of laws or choice of laws.
(d) Counterparts. This Agreement may be executed in two or
more counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
(e) Headings. The headings and captions used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement. All references in this Agreement to sections,
paragraphs, exhibits and schedules will, unless otherwise
-22-
provided, refer to sections and paragraphs hereof and exhibits and schedules
attached hereto, all of which exhibits and schedules are incorporated herein by
this reference.
(f) Notices. Any notice required or permitted under this
Agreement shall be given in writing, shall be effective when received, and shall
in any event be deemed received and effectively given upon personal delivery to
the party to be notified or three (3) business days after deposit with the
United States Post Office, by registered or certified mail, postage prepaid, or
one (1) business day after deposit with a nationally recognized courier service
such as Federal Express for next business day delivery under circumstances in
which such service guarantees next business day delivery, or one (1) business
day after facsimile with copy delivered by registered or certified mail, in any
case, postage prepaid and addressed to the party to be notified at the address
indicated for such party on the signature page hereof or at such other address
as the Purchaser or the Company may designate by giving at least ten (10) days
advance written notice pursuant to this Section 10(f).
(g) Amendments and Waivers. This Agreement may be amended and
the observance of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively), only with
the written consent of the Company and the holders of Purchased Shares
representing at least a majority of the total aggregate number of Purchased
Shares then outstanding (excluding any of such shares that have been sold in a
transaction in which registration rights are not assigned in accordance with
this Agreement or sold to the public pursuant to SEC Rule 144 or otherwise). Any
amendment or waiver effected in accordance with this Section 10(g) will be
binding upon the Purchasers, the Company and their respective successors and
assigns.
(h) Severability. If any provision of this Agreement is held
to be unenforceable under applicable law, such provision will be excluded from
this Agreement and the balance of this Agreement will be interpreted as if such
provision were so excluded and will be enforceable in accordance with its terms.
(i) Entire Agreement. This Agreement, together with all
exhibits and schedules hereto and thereto constitutes the entire agreement and
understanding of the parties with respect to the subject matter hereof and
supersedes any and all prior negotiations, correspondence, agreements,
understandings, duties or obligations between the parties with respect to the
subject matter hereof.
(j) Further Assurances. From and after the date of this
Agreement upon the request of the Company or the Purchasers, the Company and the
Purchasers will execute and deliver such instruments, documents or other
writings, and take such other actions, as may be reasonably necessary or
desirable to confirm and carry out and to effectuate fully the intent and
purposes of this Agreement.
(k) Meaning of Include and Including and Beneficial Ownership.
Whenever in this Agreement the word "include" or "including" is used, it shall
be deemed to mean "include, without limitation" or "including, without
limitation," as the case may be, and the language following "include" or
"including" shall not be deemed to set forth an exhaustive list.
-23-
For purposes of this Agreement, "beneficial owner," "beneficially own"
and similar words shall have the meaning ascribed to "beneficial owner" in Rule
13d-3 under the Exchange Act.
(l) Stock Splits, Dividends and other Similar Events. The
provisions of this Agreement (including the number of shares of Common Stock and
other securities described herein) shall be appropriately adjusted to reflect
any stock split, stock dividend, reorganization or other similar event that may
occur with respect to the Company after the date hereof.
[THE BALANCE OF THIS PAGE IS LEFT BLANK INTENTIONALLY.]
-24-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
AVISTAR COMMUNICATIONS
CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Financial Officer
[PURCHASER SIGNATURE PAGES TO FOLLOW]
SIGNATURE PAGE TO
COMMON STOCK PURCHASE AGREEMENT
DATED AS OF OCTOBER 15, 2003
BY AND AMONG
AVISTAR COMMUNICATIONS CORPORATION
AND EACH PURCHASER NAMED THEREIN
The undersigned hereby executes and delivers to Avistar Communications
Corporation the Common Stock Purchase Agreement (the "Agreement") to which this
Signature Page is attached effective as of the date of the Agreement, which
Agreement and Signature Page, together with all counterparts of the Agreement
and signature pages of the other Purchasers named in such Agreement, shall
constitute one and the same document in accordance with the terms of the
Agreement.
Number of Shares: 3,661,539
PURCHASER: The ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Revocable Trust
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Trustee
SIGNATURE PAGE TO
COMMON STOCK PURCHASE AGREEMENT
DATED AS OF OCTOBER 15, 2003
BY AND AMONG
AVISTAR COMMUNICATIONS CORPORATION
AND EACH PURCHASER NAMED THEREIN
The undersigned hereby executes and delivers to Avistar Communications
Corporation the Common Stock Purchase Agreement (the "Agreement") to which this
Signature Page is attached effective as of the date of the Agreement, which
Agreement and Signature Page, together with all counterparts of the Agreement
and signature pages of the other Purchasers named in such Agreement, shall
constitute one and the same document in accordance with the terms of the
Agreement.
Number of Shares: 476,923
PURCHASER: ▇▇▇▇▇ ▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
SIGNATURE PAGE TO
COMMON STOCK PURCHASE AGREEMENT
DATED AS OF OCTOBER 15, 2003
BY AND AMONG
AVISTAR COMMUNICATIONS CORPORATION
AND EACH PURCHASER NAMED THEREIN
The undersigned hereby executes and delivers to Avistar Communications
Corporation the Common Stock Purchase Agreement (the "Agreement") to which this
Signature Page is attached effective as of the date of the Agreement, which
Agreement and Signature Page, together with all counterparts of the Agreement
and signature pages of the other Purchasers named in such Agreement, shall
constitute one and the same document in accordance with the terms of the
Agreement.
Number of Shares: 476,923
PURCHASER: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-2-
Schedule A
Schedule of Purchasers
NUMBER OF
SHARES OF
COMMON STOCK PRICE PER AGGREGATE
NAME OF PURCHASER PURCHASED SHARE PURCHASE PRICE
------------------------------------- ------------ --------- --------------
The ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ Revocable Trust 3,661,539* $ 1.30 $ 4,760,000.70
▇▇▇▇▇ ▇▇▇▇▇▇▇ 476,923 $ 1.30 $ 619,999.90
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ 476,923 $ 1.30 $ 619,999.90
TOTAL 4,615,385 $ 6,000,000.50
========= ==============
* These 3,661,539 shares shall be issued in two separate
certificates. One such certificate shall be for 1,602,847 shares and shall bear
a legend referring to the restrictions set forth in Section 9 of the Agreement.
The other certificate representing 2,058,692 shares shall not bear the
restrictive legend referred to above.
-3-