-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Eyj6fUjtY5L39QlY/WlJoSE04zMkzo8vY7rBqGKum/QAhW/tkczqXAcOvdtTWHYl mKYooK1TkUcLra/XWkgEwQ== 0000950123-03-003300.txt : 20030327 0000950123-03-003300.hdr.sgml : 20030327 20030326201444 ACCESSION NUMBER: 0000950123-03-003300 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20030326 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20030327 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VIEWPOINT CORP/NY/ CENTRAL INDEX KEY: 0000919794 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 954102687 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-27168 FILM NUMBER: 03619271 BUSINESS ADDRESS: STREET 1: 498 SEVENTH AVENUE STREET 2: SUITE 1810 CITY: NEW YORK STATE: NY ZIP: 10018 BUSINESS PHONE: 212-201-0800 MAIL ADDRESS: STREET 1: 498 SEVENTH AVENUE STREET 2: SUITE 1810 CITY: NEW YORK STATE: NY ZIP: 10018 FORMER COMPANY: FORMER CONFORMED NAME: HSC SOFTWARE CORP DATE OF NAME CHANGE: 19951019 FORMER COMPANY: FORMER CONFORMED NAME: METACREATIONS CORP DATE OF NAME CHANGE: 19970529 8-K 1 y84863e8vk.txt VIEWPOINT CORPORATION SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) March 26, 2003 VIEWPOINT CORPORATION (Exact name of registrant as specified in its charter) Delaware 0-27168 95-4102687 - -------- ------- ---------- (state or other juris- (Commission (I.R.S. Employer diction of incorporation) File Number) (Identification No.) 498 Seventh Avenue, Suite 1810, New York, NY 10018 - -------------------------------------------- ----- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (212) 201-0800 -------------- ------------------------------------------------------------ (Former name or former address, if changed since last report) ITEM 5. OTHER EVENTS. Viewpoint Corporation closed a private placement of subordinated notes and common stock with three investors on March 26, 2003. For a complete description of the transaction, reference is made to the Securities Purchase Agreement, Form of Subordinated Note and Registration Rights Agreement attached hereto as Exhibits 10.1, 10.2 and 10.3. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (c) Exhibits The following exhibits are filed herewith: 10.1 Securities Purchase Agreement, dated as of March 26, 2003, by and among Viewpoint Corporation and the Purchasers named therein. 10.2 Form of 4.95% Subordinated Note of Viewpoint Corporation. 10.3 Registration Rights Agreement, dated as March 26, 2003, by and among Viewpoint Corporation and the Purchasers named therein. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. VIEWPOINT CORPORATION /s/ Robert E. Rice ------------------------------- Robert E. Rice President and Chief Executive Officer Dated: March 26, 2003 EX-10.1 3 y84863exv10w1.txt SECURITIES PURCHASE AGREEMENT EXHIBIT 10.1 SECURITIES PURCHASE AGREEMENT SECURITIES PURCHASE AGREEMENT, dated as of March 26, 2003, between Viewpoint Corporation, a Delaware corporation (the "COMPANY"), and the Purchasers identified on the signature pages hereto. PREAMBLE The Company has duly authorized the creation of an issue of $3,500,000 principal amount of its 4.95% Notes due 2006 (the "NOTES") and the issuance of such Notes, together with 3,614,756 shares of the Company's common stock, par value $.001 per share (the "COMMON STOCK" and collectively with the Notes, the "SECURITIES") pursuant to the provisions of this Securities Purchase Agreement. Each party hereto agrees as follows for the benefit of the other parties and for the equal and ratable benefit of the Holders of the Securities. ARTICLE ONE DEFINITIONS SECTION 1.01. DEFINITIONS. "ACQUIRED INDEBTEDNESS" means Indebtedness of a Person or any of its Subsidiaries existing at the time such Person becomes a Subsidiary of the Company or at the time it merges or consolidates with the Company or any of its Subsidiaries or is assumed in connection with the acquisition of assets from such Person. An "AFFILIATE" of a Person means a Person who directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such Person. The term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. "BANKRUPTCY LAW" means Title 11, U.S. Code or any similar Federal, state or foreign law for the relief of debtors. "BOARD OF DIRECTORS" means, as to any Person, the board of directors of such Person or any duly authorized committee thereof. "BOARD RESOLUTION" means, with respect to any Person, a copy of a resolution certified by the Secretary or an Assistant Secretary of such Person to have been duly adopted by the Board of Directors of such Person and to be in full force and effect on the date of such certification. "BUSINESS DAY" means any day other than a Saturday, Sunday or any other day on which banking institutions in The City of New York are required or authorized by law or other governmental action to be closed. "CAPITAL STOCK" means (1) with respect to any Person that is a corporation, any and all shares, interests, participations or other equivalents, however designated, of corporate stock, including each class of common stock and preferred stock of such Person and (2) with respect to any Person that is not a corporation, any and all partnership or other equity interests of such Person. "CAPITALIZED LEASE OBLIGATIONS" means, as to any Person, the obligations of such Person under a lease that are required to be classified and accounted for as capital lease obligations under GAAP and, for purposes of this definition, the amount of such obligations at any date shall be the capitalized amount of such obligations at such date, determined in accordance with GAAP. "CASH EQUIVALENTS" means (1) marketable direct obligations issued by, or unconditionally guaranteed by, the United States Government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date of acquisition thereof; (2) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either S&P or Moody's; (3) commercial paper maturing no more than one year from the date of creation thereof and, at the time of acquisition, having a rating of at least A-1 from S&P or at least P-1 from Moody's; (4) certificates of deposit or bankers' acceptances (or, with respect to foreign banks, similar instruments) maturing within one year from the date of acquisition thereof issued by any bank organized under the laws of the United States of America or any state thereof or the District of Columbia or any U.S. branch of a foreign bank having at the date of acquisition thereof combined capital and surplus of not less than $500 million; (5) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clause (1) above entered into with any bank meeting the qualifications specified in clause (4) above; and (6) investments in money market funds which invest substantially all their assets in securities of the types described in clauses (1) through (5) above. "CHANGE OF CONTROL" means the occurrence of one or more of the following events: (1) any sale, lease, exchange or other transfer, in one transaction or a series of related transactions, of all or substantially all of the assets of the Company to any Person or group of related Persons for purposes of Section 13(d) of the Exchange Act (a 2 "GROUP") (whether or not otherwise in compliance with the provisions of this Securities Purchase Agreement); (2) the approval by the holders of Capital Stock of the Company of any plan or proposal for the liquidation or dissolution of the Company (whether or not otherwise in compliance with the provisions of this Securities Purchase Agreement); (3) any Person or Group shall become the owner, directly or indirectly, beneficially, of shares representing more than 51% of the aggregate voting power represented by the issued and outstanding Capital Stock of the Company entitled under ordinary circumstances to elect a majority of the directors of the Company; or (4) the consolidation or merger of the Company with or into another Person or the merger of another Person with or into the Company, in any case pursuant to a transaction in which the outstanding Capital Stock of the Company is converted into or exchanged for cash, securities or other property other than any such transaction in which the Capital Stock of the Company outstanding immediately prior to such transaction is converted into or exchanged for Capital Stock (other than Disqualified Capital Stock) of the resulting or surviving corporation representing more than 50% of the voting power of the then outstanding Capital Stock of the resulting or surviving corporation. "CHANGE OF CONTROL OFFER" has the meaning set forth in Section 5.12. "CLOSING" has the meaning set forth in Section 2.07. "CHANGE OF CONTROL PAYMENT DATE" has the meaning set forth in Section 5.12. "COMMON STOCK" has the meaning set forth in the Preamble. "COMMISSION" means the Securities and Exchange Commission, or any successor agency thereto with respect to the regulation or registration of securities. "COMPANY" means the party named as such in the Preamble until a successor replaces it pursuant to this Securities Purchase Agreement. "CURRENCY AGREEMENT" means any foreign exchange contract, currency swap agreement or other similar agreement or arrangement designed to protect the Company or any Subsidiary of the Company against fluctuations in currency values. "DEFAULT" means an event or condition the occurrence of which is, or with the lapse of time or the giving of notice or both would be, an Event of Default. "DISQUALIFIED CAPITAL STOCK" means any Capital Stock which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event (other than an event which would constitute a Change of Control), matures (excluding any maturity as the result of an optional redemption by the issuer thereof) or is mandatorily redeemable, pursuant to a sinking fund obligation or 3 otherwise, or is redeemable at the sole option of the holder thereof (except, in each case, upon the occurrence of a Change of Control), in whole or in part, on or prior to the Final Maturity Date. "EVENT OF DEFAULT" has the meaning set forth in Section 6.01. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, or any successor statute or statutes thereto. "EXCHANGE AGREEMENTS" means those certain Redemption, Amendment and Exchange Agreements, each dated as of the date hereof, by and among the Company and the investors listed on the signature pages therein. "FAIR MARKET VALUE" means, with respect to any asset or property, the price which could be negotiated in an arm's-length free market transaction, for cash, between a willing seller and a willing buyer, neither of whom is under pressure or compulsion to complete the transaction. Fair market value shall be determined by the Board of Directors of the Company acting reasonably and in good faith and shall be evidenced by a Board Resolution. "FINAL MATURITY DATE" means March 31, 2006. "GAAP" is defined to mean generally accepted accounting principles in the United States of America as in effect as of the Issue Date, including, without limitation, those set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as approved by a significant segment of the accounting profession. "HOLDER" means the Person in whose name a Note is registered on the books and records of the Company. "INCUR" means, with respect to any Indebtedness, to, directly or indirectly, create, incur, assume, guarantee, acquire, become liable, contingently or otherwise with respect to, or otherwise become responsible for payment of such Indebtedness. "INDEBTEDNESS" means with respect to any Person, without duplication, (1) the principal amount of all obligations of such Person for borrowed money, (2) the principal amount of all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (3) all Capitalized Lease Obligations of such Person, (4) all obligations of such Person to pay the deferred purchase price of property, all conditional sale obligations and all obligations under any title retention 4 agreement (but excluding accounts payable and other current liabilities arising in the Ordinary Course of Business), (5) all obligations of such Person for the reimbursement of any obligor on any letter of credit or banker's acceptance, (6) guarantees and other contingent obligations of such Person in respect of Indebtedness referred to in clauses (1) through (5) above and clause (8) below, (7) all Indebtedness of any other Person of the type referred to in clauses (1) through (6) above which are secured by any Lien on any property or asset of such Person, the amount of such obligation being deemed to be the lesser of the fair market value at such date of any asset subject to any Lien securing the Indebtedness of others and the amount of the Indebtedness secured, (8) all obligations under currency agreements relating to Currency Swap Agreements and Interest Swap Obligations of such Person, and (9) all Disqualified Capital Stock issued by such Person with the amount of Indebtedness represented by such Disqualified Capital Stock being equal to the greater of its voluntary or involuntary liquidation preference and its maximum fixed repurchase price, but excluding accrued dividends, if any. For purposes hereof, (1) the "Maximum Fixed Repurchase Price" of any Disqualified Capital Stock which does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Capital Stock as if such Disqualified Capital Stock were purchased on any date on which Indebtedness shall be required to be determined pursuant to this Securities Purchase Agreement, and if such price is based upon, or measured by, the fair market value of such Disqualified Capital Stock, such fair market value shall be determined reasonably and in good faith by the Board of Directors of the issuer of such Disqualified Capital Stock, and (2) accrual of interest, accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, and the payment of dividends on Disqualified Capital Stock in the form of additional shares of the same class of Disqualified Capital Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Capital Stock for purposes of Section 5.03. The amount of Indebtedness of any Person at any date shall be the amount of all unconditional obligations described above, as such amount would be reflected on a balance sheet prepared in accordance with GAAP, and the maximum liability at such date of such Person for any contingent obligations described above. "INITIAL PURCHASERS" means those purchasers of the Securities from the Company pursuant to this Securities Purchase Agreement indicated on the signature pages hereof. "INTEREST PAYMENT DATE" means the stated due date of an installment of interest on the Securities. 5 "INTEREST SWAP OBLIGATIONS" means the obligations of any Person, pursuant to any arrangement with any other Person, whereby, directly or indirectly, such Person is entitled to receive from time to time periodic payments calculated by applying either a floating or a fixed rate of interest on a stated notional amount in exchange for periodic payments made by such other Person calculated by applying a fixed or a floating rate of interest on the same notional amount. "INVESTMENT" means, with respect to any Person, any direct or indirect loan or other extension of credit (including, without limitation, a guarantee) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition by such Person of any Capital Stock, bonds, notes, debentures or other securities or evidences of Indebtedness issued by, any Person. "Investment" shall exclude extensions of trade credit by the Company and its Subsidiaries in the Ordinary Course of Business. For the purposes of Section 5.02, the amount of any Investment shall be the original cost of such Investment plus the cost of all additional Investments by the Company or any of its Subsidiaries, without any adjustments for increases or decreases in value, or write-ups, write-downs or write-offs with respect to such Investment, reduced by the payment of dividends or distributions (including tax sharing payments) in connection with such Investment or any other amounts received in respect of such Investment. If the Company or any Subsidiary of the Company sells or otherwise disposes of any Capital Stock of any Subsidiary such that, after giving effect to any such sale or disposition, such Person is no longer a Subsidiary of the Company, the Company shall be deemed to have made an Investment on the date of any such sale or disposition equal to the Fair Market Value of the Capital Stock of such Subsidiary not sold or disposed. "ISSUE DATE" means the original date of issuance of the Securities. "LIEN" means any lien, mortgage, deed of trust, pledge, security interest, charge or encumbrance of any kind (including any conditional sale or other title retention agreement, any lease in the nature thereof and any agreement to give any security interest). "MOODY'S" means Moody's Investor Service, Inc. and its successors. "NOTES" has the meaning set forth in the Preamble. "OBLIGATIONS" means, with respect to any Indebtedness, all principal, interest, premiums, penalties, fees, indemnities, expenses (including legal fees and expenses), reimbursement obligations and other liabilities payable to the holder of such Indebtedness under the documentation governing such Indebtedness. "OFFICER" means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, any Executive Vice President, the Chief Financial Officer or the Secretary of such Person. "OFFICERS' CERTIFICATE" means a certificate signed by two Officers of the Company. 6 "OPINION OF COUNSEL" means a written opinion from legal counsel which counsel may be counsel to or an employee of the Company. "ORDINARY COURSE OF BUSINESS" means, in respect of any transaction involving the Company or any Subsidiary of the Company, the ordinary course of such Person's business, as conducted by any such Person substantially in accordance with past practice and undertaken by such Person in good faith and not for the purposes of evading any covenant or restriction in this Securities Purchase Agreement, the Notes and the Registration Rights Agreement. "PERMITTED INDEBTEDNESS" means, without duplication, (1) the Notes, (2) other Indebtedness of the Company and its Subsidiaries outstanding on the Issue Date (including Indebtedness Incurred subsequent to the Issue Date in satisfaction of accrued but unpaid interest on such Indebtedness outstanding on the Issue Date), (3) other Indebtedness of the Company and its Subsidiaries which may be issued pursuant to the terms of the 2002 Securities Purchase Agreement and/or the Exchange Agreements. (4) Interest Swap Obligations of the Company or any of its Subsidiaries covering Indebtedness of the Company or any of its Subsidiaries; provided, however, that any Indebtedness to which any such Interest Swap Obligations correspond is otherwise permitted to be incurred under this Securities Purchase Agreement; provided, further, that such Interest Swap Obligations are entered into, in the reasonable judgment of the Company, to protect the Company or any of its Subsidiaries from fluctuation in interest rates on their respective outstanding Indebtedness, (5) Indebtedness under Currency Agreements, (6) intercompany Indebtedness owed by the Company to any Wholly Owned Subsidiary of the Company or by any Wholly Owned Subsidiary of the Company to the Company or any Wholly Owned Subsidiary of the Company for so long as such Indebtedness is held by the Company or a Wholly Owned Subsidiary of the Company in each case subject to no Lien held by a Person other than the Company or a Wholly Owned Subsidiary of the Company; provided, however, that if as of any date any Person other than the Company or a Wholly Owned Subsidiary of the Company owns or holds any such Indebtedness or holds a Lien in respect of such Indebtedness, such date shall be deemed the incurrence of Indebtedness not constituting Permitted Indebtedness by the issuer of such Indebtedness under this clause (5), (7) Acquired Indebtedness to the extent the Company could have incurred such Indebtedness in accordance with clause 11 of this definition on the date such Indebtedness became Acquired Indebtedness, 7 (8) (A) guarantees by Subsidiaries of the Company of Indebtedness of other Subsidiaries of the Company to the extent that such Indebtedness is otherwise permitted under this Securities Purchase Agreement and (B) guarantees by the Company of its Wholly Owned Subsidiaries' Indebtedness; provided that such Indebtedness is otherwise permitted to be incurred under this Securities Purchase Agreement, (9) guarantees, letters of credit and indemnity agreements relating to performance and surety bonds incurred in the Ordinary Course of Business, (10) any refinancing, modification, replacement, renewal, deferral, extension, substitution, supplement, reissuance or resale of Indebtedness referred to in clauses (2) or (6) of this definition, including any additional Indebtedness incurred to pay premiums required by the instruments governing such Indebtedness as in effect at the time of issuance thereof ("REQUIRED PREMIUMS") and fees in connection therewith; provided, however, that any such event shall not (1) result in an increase in the aggregate principal amount of Permitted Indebtedness (except to the extent such increase is a result of a simultaneous incurrence of additional Indebtedness (A) to pay Required Premiums and related fees or (B) otherwise permitted to be incurred under this Securities Purchase Agreement) of the Company and its Subsidiaries, (2) create Indebtedness with a stated maturity date earlier than the stated maturity date of the Indebtedness being refinanced, unless otherwise permitted to be incurred under this Securities Purchase Agreement, or (3) create Indebtedness with a Weighted Average Life to Maturity at the time such Indebtedness is incurred that is less than the Weighted Average Life to Maturity at such time of the Indebtedness being refinanced, modified, replaced, renewed, deferred, extended, or substituted, supplemented, reissued or resold, unless otherwise permitted to be incurred under this Securities Purchase Agreement, and (11) additional Indebtedness of the Company or any Subsidiary (a) if no Default or Event of Default shall have occurred and be continuing at the time of the proposed incurrence thereof or shall occur as a result of such proposed incurrence and (b) that is unsecured, that is subordinate or pari passu in right of payment to the Notes, that provides for interest that is no greater than market rate interest and that does not exceed in the aggregate the sum of $1,500,000. "PERMITTED INVESTMENTS" means (1) Investments by the Company or any Subsidiary of the Company in, or for the benefit of, any Subsidiary of the Company (whether existing on the Issue Date or created thereafter and including Investments in any Person, if after giving effect to such Investment, such Person would be a Subsidiary of the Company or such Person is merged, consolidated or amalgamated with or into, or transfers or conveys all or substantially all of its assets to, or is liquidated into, the Company or a Subsidiary of the Company) and Investments in, or for the benefit of, the Company by any Subsidiary of the Company; (2) cash and Cash Equivalents; 8 (3) Investments existing on the Issue Date; (4) vendor equity or debt received in lieu of payment for services, license fees or products sold; (5) Investments in securities of trade creditors or customers received pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such trade creditors or customers or in settlement of or other resolution of claims or disputes, and in each case, extensions, modifications and remands thereof; (6) so long as no Default or Event of Default has occurred and is continuing, loans and advances made by the Company and its Subsidiaries on or after the date hereof to their respective employees not to exceed $500,000 in the aggregate at any one time outstanding; (7) Investments received by the Company or its Restricted Subsidiaries as consideration for asset sales; (8) Currency Agreements and Interest Swap Obligations entered into in the ordinary course of the Company's or its Subsidiaries' business and otherwise in compliance with this Securities Purchase Agreement; and (9) guarantees by the Company or any of its Subsidiaries of Indebtedness or other obligations otherwise permitted to be incurred by the Company or any of its Subsidiaries under this Securities Purchase Agreement. "PERMITTED LIENS" means (1) Liens securing Indebtedness consisting of Capitalized Lease Obligations; (2) Liens on property existing at the time of acquisition thereof by the Company or a Subsidiary of the Company; provided that such Liens were in existence prior to the contemplation of such acquisition; (3) Liens securing Indebtedness incurred pursuant to clause (8) of the definition of Permitted Indebtedness; (4) Liens created to replace Liens described in clause (2) above to the extent that such Liens do not extend beyond the originally encumbered property (other than improvements thereto or thereon, attachments and other modifications reasonably required to maintain such property) and are not otherwise materially less favorable to the Company and its Subsidiaries than the Liens being replaced, as determined by the Board of Directors of the Company in good faith; or (5) Liens existing or which may be created under the Pledge Agreement, dated as of December 31, 2002, as amended, by and among the Company and the investors listed on the signature pages therein, pursuant to the terms of the 2002 Securities Purchase Agreement and/or the Exchange Agreements. 9 "PERSON" means an individual, partnership, corporation, unincorporated organization, trust or joint venture, or a governmental agency or political subdivision thereof. "QUALIFIED CAPITAL STOCK" means any stock that is not Disqualified Capital Stock. "RECORD DATE" means the applicable Record Date (whether or not a Business Day) specified in the Securities. "REDEMPTION DATE," when used with respect to any Note to be redeemed, means the date fixed for such redemption pursuant to this Securities Purchase Agreement and the Notes. "REDEMPTION PRICE," when used with respect to any Note to be redeemed, means the price fixed for such redemption, payable in immediately available funds, pursuant to this Securities Purchase Agreement and the Notes. "REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement, dated as of March 26, 2003, by and among the Company and the Initial Purchasers, as amended from time to time. "RESTRICTED PAYMENT" has the meaning set forth in Section 5.02. "2002 Securities Purchase Agreement" means the Securities Purchase Agreement, dated as of December 31, 2002, as amended as of the date hereof, by and among the Company and the investors listed on the signature pages therein. "S&P" means Standard & Poor's, a division of the McGraw-Hill Companies, and its successors. "SALE AND LEASEBACK TRANSACTION" means any direct or indirect arrangement with any Person or to which any such Person is a party, providing for the leasing to the Company or a Subsidiary of the Company of any property, whether owned by the Company or any Subsidiary of the Company at the Issue Date or later acquired, which has been or is to be sold or transferred by the Company or such Subsidiary to such Person or to any other Person from whom funds have been or are to be advanced by such Person on the security of such Property. "SECURITIES" has the meaning set forth in the Preamble. "SECURITIES ACT" means the Securities Act of 1933, as amended, or any successor statute or statutes thereto. "SECURITIES PURCHASE AGREEMENT" means this Securities Purchase Agreement, dated as of March 26, 2003, by and among the Company and the Initial Purchasers, as amended from time to time. 10 "SUBSIDIARY," with respect to any Person, means (i) any corporation of which the outstanding Capital Stock having at least a majority of the votes entitled to be cast in the election of directors under ordinary circumstances shall at the time be owned, directly or indirectly, by such Person, or (ii) any other Person of which at least a majority of the voting interest under ordinary circumstances is at the time, directly or indirectly, owned by such Person. "WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Indebtedness at any date, the number of years obtained by dividing (a) the then outstanding aggregate principal amount of such Indebtedness into (b) the sum of the total of the products obtained by multiplying (1) the amount of each then remaining installment, sinking fund, serial maturity or other required payment of principal, including payment at final maturity, in respect thereof, by (2) the number of years (calculated to the nearest one-twelfth) which will elapse between such date and the making of such payment. "WHOLLY OWNED SUBSIDIARY" of any Person means any Subsidiary of such Person of which all the outstanding voting securities (other than directors' qualifying shares) are owned by such Person or any Wholly Owned Subsidiary of such Person. SECTION 1.02. RULES OF CONSTRUCTION. Unless the context otherwise requires: (1) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (2) "or" is not exclusive; (3) words in the singular include the plural, and words in the plural include the singular; (4) provisions apply to successive events and transactions; and (5) "herein," "hereof" and other words of similar import refer to this Securities Purchase Agreement as a whole and not to any particular Article, Section or other subdivision. ARTICLE TWO THE SECURITIES SECTION 2.01. FORM AND DATING OF NOTES. The Notes shall be substantially in the form of EXHIBIT A hereto. 11 Upon any transfer provided for in Section 2.05, the Company shall execute and deliver to the Person specified by the Assignment Form attached to such Note a new Note in such names and in such authorized denominations as are specified in such Assignment Form. Thereupon, the beneficial ownership of such Note shown on the records maintained by the Company shall be amended to reflect such transfer. The Company shall act as registrar to maintain a record of the issuance, registered transfer and registered Holder of each Note. SECTION 2.02. REPLACEMENT NOTES. If a mutilated Note is surrendered to the Company or if the Holder of a Note claims that the Note has been lost, destroyed or wrongfully taken, the Company shall issue a replacement Note if the following requirements are met. If required by the Company, such Holder shall provide indemnity, sufficient in the reasonable judgment of the Company, to protect the Company from any loss which may suffer if a Note is replaced. The Company may charge such Holder for its reasonable out-of-pocket expenses in replacing a Note, including reasonable fees and expenses of counsel. Every replacement Note shall constitute an additional obligation of the Company. SECTION 2.03. NOTES HELD BY THE COMPANY. In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Company or any of its Affiliates shall be disregarded. SECTION 2.04. DEFAULTED INTEREST. The Company will pay interest on overdue principal from time to time on demand at the rate of 10% per annum. The Company shall, to the extent lawful, pay interest on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the rate of 10% per annum. Interest will be computed on the basis of a 365-day year and the actual number of days elapsed. If the Company defaults in a payment of interest on the Notes, it shall pay the defaulted interest, plus (to the extent lawful) any interest payable on the defaulted interest, to the Persons who are Holders. SECTION 2.05. ASSIGNMENT AND TRANSFER. Neither any Security nor any beneficial interest therein may be sold, assigned or otherwise transferred except (a) in a principal amount of not less than $500,000, (b) in accordance with applicable securities laws (as referenced in the restrictive legend appearing on the form of Note), (c) by due execution and delivery of the Form of Assignment attached to such Note, and (d) with the consent of the Company, which consent shall not unreasonably be withheld or delayed. 12 SECTION 2.06. PURCHASE AND SALE OF THE SECURITIES. Subject to the terms and conditions of this Securities Purchase Agreement and in reliance on the representations, warranties and covenants of the parties contained herein, the Company shall issue and deliver the Securities to each of the Initial Purchasers in the denominations set forth opposite their respective names on SCHEDULE 2.06, and each Initial Purchaser, severally and not jointly, shall purchase such Securities from the Company for the aggregate purchase price set forth opposite its name on SCHEDULE 2.06, at the Closing described in Section 2.07. SECTION 2.07. CLOSING. The closing of the transactions contemplated by Section 2.06 (the "CLOSING") shall take place at ___ p.m. on the date hereof at the offices of _______________________. At the Closing, the Company shall deliver to each Initial Purchaser certificates representing the Securities to be purchased by such Initial Purchaser at the Closing duly registered in the name of such Initial Purchaser. Delivery of such certificates to each Initial Purchaser shall be made against receipt by the Company from such Initial Purchaser of the aggregate purchase price set forth opposite its name on SCHEDULE 2.06 by wire transfer of immediately available funds to an account designated by the Company in writing for such purpose. SECTION 2.08. ORIGINAL ISSUE DISCOUNT. For purposes of Section 1273(c)(2) of the Internal Revenue Code of 1986, as amended, the Company and the Initial Holders agree that the issue price of the Notes is equal to 85% of the principal amount of the Notes and that the aggregate sum of $525,000 therefore shall be treated as original issue discount for all purposes, including the preparation of tax returns and the preparation of financial statements of the Company (except to the extent such treatment in connection with the preparation of financial statements of the Company would not be in accordance with GAAP). ARTICLE THREE REDEMPTION OF THE NOTES SECTION 3.01. NOTICES. If the Company elects to redeem Notes pursuant to the optional redemption provisions of Paragraph 4 of the Notes, it shall notify the Holders in writing of the Redemption Date, the Redemption Price and the principal amount of Notes to be redeemed at least 5 days but not more than 30 days before the Redemption Date together with an Officers' Certificate and an Opinion of Counsel stating that such redemption will comply with the conditions contained herein. Any such notice shall be irrevocable. 13 SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED. In the event that less than all of the Notes are to be redeemed at any time pursuant to the optional redemption provisions of Paragraph 4 of the Notes, selection of such Notes for redemption will be made by the Company on a pro rata basis among all of the Holders (based upon the relative principal amounts of Notes held by each such Holder). SECTION 3.03. EFFECT OF NOTICE OF REDEMPTION. Unless the Company defaults in the payment when due of such Redemption Price plus accrued interest, if any, interest on the Notes to be redeemed will cease to accrue after the applicable Redemption Date, whether or not such Notes are presented for payment. SECTION 3.04. NOTES REDEEMED IN PART. Upon surrender and cancellation of a Note that is to be redeemed in part only, the Company shall deliver to the Holder a new Note or Notes in a principal amount equal to the unredeemed portion of the Note surrendered. ARTICLE FOUR REPRESENTATIONS AND WARRANTIES SECTION 4.01. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. In order to induce each Initial Purchaser to enter into this Securities Purchase Agreement and purchase the Securities, the Company represents and warrants to each Initial Purchaser as follows: (a) Organization, Good Standing and Corporate Power. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, with all requisite corporate power and authority to own its properties and to conduct its business as presently conducted. The Company is qualified to do business and is in good standing (or has active status) in each jurisdiction in which the failure to be so qualified could have a Material Adverse Effect (as hereinafter defined). The Company has all requisite corporate power and authority to enter into this Agreement and to perform its obligations hereunder, including, without limitation, the issuance and sale of the Securities. (b) Due Authorization; Enforceability; No Conflicts. The Company has taken all corporate and stockholder action necessary to authorize the execution, delivery and performance by it of this Securities Purchase Agreement. Assuming the due execution and delivery of this Securities Purchase Agreement by each Initial Purchaser, this Securities Purchase Agreement constitutes a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to the enforcement of creditors' rights generally, the availability of equitable 14 remedies and to general equity principles. The execution, delivery and performance by the Company of this Securities Purchase Agreement and compliance by the Company with the terms hereof will not violate, conflict with or cause an event of default under the Company's Certificate of Incorporation or the Company's Bylaws, or any resolutions of the Company's Board of Directors or stockholders or any agreement, instrument, judgment, order, law, rule or regulation applicable to the Company or by which the Company is bound or to which any of the Company's properties are subject, except where such violation, conflict or event of default would not result in a material adverse effect on the Company's business, financial condition, results of operations or properties (a "Material Adverse Effect"). The shares of Common Stock included in the Securities, upon issuance in accordance with the terms of this Securities Purchase Agreement, are and will continue upon issuance to be duly authorized and reserved, validly issued, fully-paid and nonassessable and free of any liens, claims or encumbrances and rights of first refusal. (c) Capitalization. The authorized capital stock of the Company consists of (i) 5,000,000 shares of preferred stock, par value .001 per share, of which no shares are issued and outstanding, and (ii) 75,000,000 shares of Common Stock, of which 42,530,751 shares are issued and outstanding. Except with respect to the Securities or as set forth on SCHEDULE 4.01(c) annexed hereto, there are no outstanding subscriptions, rights, options, warrants, conversion rights, agreements or other claims for the purchase or acquisition from the Company of any shares of its capital stock or obligating the Company to issue, repurchase, register or otherwise acquire, any shares of its capital stock or any securities convertible into, exercisable or exchangeable for, or otherwise entitling the holder to acquire, any shares of capital stock of the Company. (d) Reports and Financial Statements. The Company has previously furnished each Initial Purchaser with true and complete copies, as amended or supplemented, of the following documents, to the extent not available on the EDGAR system (i) Annual Report on Form 10-K for the year ended December 31, 2001, as filed with the Commission, (ii) proxy statements relating to all meetings of its shareholders (whether annual or special) since June 1, 2002 and (iii) all other reports or registration statements filed by the Company with the SEC since December 31, 2001 (such reports, registration statements and other filings, together with any amendments or supplements thereto, are collectively referred to as the "the Company Commission Filings"). The Company Commission Filings constituted all of the documents required to be filed by the Company with the Commission since December 31, 2001. As of their respective dates, such Company's Commission Filings (as amended or supplemented) complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission promulgated thereunder, and did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The audited consolidated financial statements and any unaudited interim financial statements of the Company included in such Company's Commission Filings comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the Commission with respect thereto, and have been prepared in accordance with GAAP 15 (except as may be indicated therein or in the notes thereto and, in the case of the quarterly financial statements, as permitted by Form 10-Q under the Exchange Act) and fairly present in all material respects the financial position of the Company at the dates thereof and the results of its operations and its cash flows for the periods then ended. (e) Absence of Certain Changes or Events. Except as publicly disclosed or otherwise disclosed in writing or orally (provided that any oral disclosure hereunder must be made to Steve Duff) prior to the date of this Securities Purchase Agreement or as otherwise contemplated by this Securities Purchase Agreement, since, September 30, 2002, there has not been any material adverse change or material adverse development in the financial condition, results of operations, or the business or properties of the Company. (f) Information in the Registration Statement. None of the information relating to the Company, its officers or directors, supplied by the Company for inclusion or incorporation by reference in the registration statement (the "Registration Statement") to be filed with the Commission by the Company pursuant to the Registration Rights Agreement to be entered into between the Company and the Initial Purchasers or any amendments or supplements thereto, will, at the time it becomes effective under the Securities Act and at the effective date, contain any untrue statement of material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. If at any time prior to the effective date any event with respect to the Company, its officers or directors should occur which is required to be described in an amendment, or a supplement to, the Registration Statement, such event shall be so described and such description in such amendment or supplement of such information will not contain any statement which, at the time and in light of circumstances under which it is made, is false or misleading with respect to any material fact or omits to state any material fact required to be stated therein or in the Registration Statement or necessary to make the statements therein or in the Registration Statement not false or misleading. (g) Compliance With Laws. The conduct of the business of the Company complies in all material respects with all statutes, laws, regulations, ordinances, rules, judgments, orders or decrees applicable thereto. Except as set forth on SCHEDULE 4.01(g) annexed hereto, the Company has not received notice of any alleged material violation of any statute, law, regulation, ordinance, rule, judgment, order or decree from any governmental authority applicable to the Company or any of its assets or properties which has not been satisfactorily disposed of. (h) Consents. Except as set forth on SCHEDULE 4.01(h) annexed hereto, no consent or waiver of, order or approval by, or filing with any governmental authority or other third party is required in connection with the Company's execution, delivery and performance of this Securities Purchase Agreement. (i) Litigation Proceedings. Except as set forth on SCHEDULE 4.01(i) annexed hereto, there is no action, suit, notice of violation, proceeding or investigation 16 pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its properties before or by any court, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) which (i) adversely affects or challenges the legality, validity or enforceability of any of this Securities Purchase Agreement and (ii) could reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect. (j) No Default or Violation. Except as set forth on SCHEDULE 4.01(j) annexed hereto, the Company (i) is not in default under or in violation of any indenture, loan or other credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound, (ii) is not in violation of any order of any court, arbitrator or governmental body applicable to it, (iii) is not in violation of any statute, rule or regulation of any governmental authority to which it is subject or (iv) is not in default under or in violation of its Certificate of Incorporation, Bylaws or other organizational documents, respectively, except in each case for defaults and violations which individually or in the aggregate would not reasonably be expected to have a Material Adverse Effect. The business of the Company is not being conducted, and shall not be conducted in violation of any law, ordinance, rule or regulation of any governmental entity, except where such violations have not resulted or would not reasonably be expected to result, individually or in the aggregate, in a Material Adverse Effect. The Company is not in breach of any agreement where such breach, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect. (k) Private Offering. Neither the Company nor any person acting on its behalf has taken or will take any action which might subject the offering, issuance or sale of the Securities to each Initial Purchaser hereunder to the registration requirements of the Securities Act. The offer, sale and issuance of the Securities to each Initial Purchaser will not be integrated with any other offer, sale and issuance of the Company's securities (past, current, or future) under the Securities Act or any regulations of any exchange or automated quotation system on which any of the securities of the Company are listed or designated or for purposes of any stockholder approval provision applicable to the Company or its securities. Subject to the accuracy and completeness of the representations and warranties of each Initial Purchaser contained in Section 4.02 hereof, the offer, sale and issuance by the Company to each Initial Purchaser of the Securities hereunder is exempt from the registration requirements of the Securities Act. (l) Investment Company. The Company is not, and is not controlled by or under common control with an affiliate of an "investment company" within the meaning of the Investment Company Act of 1940, as amended. (m) Solicitation Materials. The Company has not (i) distributed any offering materials in connection with the offering and sale of the Securities to each Initial Purchaser hereunder or (ii) solicited any offer to buy or sell the Securities hereunder by means of any form of general solicitation or advertising. (n) Listing and Maintenance Requirements Compliance. Except as set forth on SCHEDULE 4.01(n) annexed hereto, the Company has not in the two years preceding 17 the date hereof received written notice from any stock exchange or market on which the Common Stock is or has been listed (or on which it has been quoted) to the effect that the Company is not in compliance with the listing or maintenance requirements of such exchange or market. (o) Registration Rights; Rights of Participation. Except as set forth on SCHEDULE 4.01(o) annexed hereto, the Company has not granted or agreed to grant to any person any rights (including "piggy-back" registration rights) to have any securities of the Company registered with the Commission or any other governmental authority which has not been satisfied, and no person, including, but not limited to, current or former stockholders of the Company, underwriters, brokers or agents, has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by this Securities Purchase Agreement. SECTION 4.02. REPRESENTATIONS AND WARRANTIES OF INITIAL PURCHASERS. In order to induce the Company to enter into this Securities Purchase Agreement and issue the Securities, each Initial Purchaser represents and warrants to the Company only with respect to itself as follows: (a) Organization, Good Standing and Corporate Power. Such Initial Purchaser is a corporation, limited partnership or limited liability company, as the case may be, duly formed, validly existing and in good standing under the laws of the State of its organization, with all requisite corporate power and authority to own its properties, conduct its business, enter into this Securities Purchase Agreement and perform its obligations hereunder. (b) Due Authorization; Enforceability; No Conflicts. Such Initial Purchaser has taken all corporate, limited partnership or limited liability company action, as the case may be, necessary to authorize the execution, delivery and performance by it of this Securities Purchase Agreement. Assuming the due execution and delivery of this Securities Purchase Agreement by the Company, this Securities Purchase Agreement constitutes a valid and binding obligation of such Initial Purchaser, enforceable against such Initial Purchaser in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to the enforcement of creditors' rights generally, the availability of equitable remedies and general equity principles. The execution, delivery and performance by such Initial Purchaser of this Securities Purchase Agreement and compliance by such Initial Purchaser with the terms hereof will not violate, conflict with or cause an event of default under such Initial Purchaser's organizational documents or any other agreement, instrument, judgment, order, law, rule or regulation by which such Initial Purchaser is bound or to which any properties of such Initial Purchaser are subject. (c) Accredited Investor. Such Initial Purchaser is an "accredited investor" as that term is defined in Rule 501(a) under the Securities Act. 18 (d) Investment. Such Initial Purchaser is acquiring the Securities for investment for its own account and not with a present view to, or for resale in connection with, any distribution thereof. Such Initial Purchaser understands that the Securities have not been registered under the Securities Act or applicable state securities laws by reason of certain exemptions from the registration provisions thereof that depend upon, among other things, the truth and accuracy of each Initial Purchaser's representations and warranties herein; provided, however, that by making the representations herein, each Initial Purchaser does not agree to hold any of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption under the Securities Act. (e) Restricted Transferability. Such Initial Purchaser acknowledges that the Securities are being offered and sold hereunder in a private placement that is exempt from the registration requirements of the Securities Act and that certificates for such Shares will bear the legend set forth in Section 4.02(f) below. (f) Legends. Such Initial Purchaser understands that the certificates representing the Securities, except as set forth below, shall bear any legend as required by the "blue sky" laws of any state and a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of such stock certificates): THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS, OR (B) AN OPINION OF COUNSEL ADDRESSED TO THE COMPANY, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES. (g) The legend set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of the Securities upon which it is stamped, if, unless otherwise required by state securities laws, (i) such Securities are registered for sale under the Securities Act, (ii) in connection with a sale, assignment or other transfer, such holder provides the Company with an opinion of counsel, in a generally acceptable form, to the effect that such sale, assignment or transfer of the Securities may be made without registration under the Securities Act, or (iii) such holder provides the Company with reasonable assurance that the Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the Securities Act (or a successor rule thereto) (collectively, "Rule 144"). 19 (h) Such Initial Purchaser understands that except as provided in the Registration Rights Agreement: (i) the Securities have not been and are not being registered under the Securities Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder, or (B) such Initial Purchaser shall have delivered to the Company an opinion of counsel, in a generally acceptable form, to the effect that such Securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration, (ii) any sale of the Securities made in reliance on Rule 144 may be made in accordance with the terms of Rule 144 and further, if Rule 144 is not applicable, any resale of the Securities under circumstances in which the seller or Person through whom the sale is made may be deemed to be an underwriter (as that term is defined in the Securities Act) may require compliance with some other exemption under the Securities Act or the rules and regulations of the Commission thereunder; and (iii) neither the Company nor any other Person is under any obligation to register the Securities under the Securities Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder. ARTICLE FIVE COVENANTS SECTION 5.01. PAYMENT OF NOTES. The Company will pay the principal of and interest on the Notes in the manner provided in the Notes. Interest, including defaulted interest, if any, will be computed on the basis of a 365-day year and the actual number of days elapsed. Notwithstanding anything to the contrary contained in this Securities Purchase Agreement, the Company may, to the extent it is required to do so by law, deduct or withhold income or other similar taxes imposed by the United States of America from principal, premium or interest payments hereunder. SECTION 5.02. LIMITATION ON RESTRICTED PAYMENTS. The Company will not, and will not cause or permit any of its Subsidiaries to, directly or indirectly, (a) declare or pay any dividend or make any distribution (other than dividends or distributions payable in Qualified Capital Stock of the Company or in warrants, rights or options to acquire Qualified Capital Stock of the Company) on or in respect of shares of the Company's Capital Stock to holders of such Capital Stock, (b) purchase, redeem or otherwise acquire or retire for value any Capital Stock of the Company or any warrants, rights or options to purchase or acquire shares of any class of such Capital Stock, other than the exchange of such Capital Stock, warrants, 20 rights or options for Qualified Capital Stock and/or for warrants, rights or options to acquire Qualified Capital Stock, or (c) make any Investment (other than Permitted Investments) (each of the foregoing actions set forth in clauses (a), (b) and (c) being referred to as a "RESTRICTED PAYMENT"), if at the time of such Restricted Payment or immediately after giving effect thereto, (1) a Default or an Event of Default shall have occurred and be continuing, (2) the Company could not incur at least $1.00 of Indebtedness pursuant to Section 5.03, or (3) the aggregate amount of Restricted Payments made subsequent to the Issue Date shall exceed the sum of $1,500,000. Notwithstanding the foregoing, the provisions set forth in the immediately preceding paragraph shall not prohibit (1) the payment of any dividend or distribution or the redemption of any securities within 60 days after the date of declaration of such dividend or distribution or the giving of formal notice by the Company of such redemption, if the dividend or distribution would have been permitted on the date of declaration or the redemption would have been permitted on the date of the giving of the formal notice thereof; (2) the repurchase of any Capital Stock of the Company or any warrants, rights or options to purchase or acquire shares of any such Capital Stock deemed to occur upon the exercise of stock options to acquire Qualified Capital Stock or other similar arrangements to acquire Qualified Capital Stock if such repurchased Capital Stock or warrants, rights or options to acquire shares of any such Capital Stock represent a portion of the exercise price thereof; and (3) the redemption of any notes issued pursuant to the 2002 Securities Purchase Agreement and/or the Exchange Agreements. SECTION 5.03. LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS. The Company will not, and will not permit any of its Subsidiaries to, Incur any Indebtedness, other than Permitted Indebtedness. SECTION 5.04. CORPORATE EXISTENCE. The Company shall do or cause to be done, at its own cost and expense, all things necessary to preserve and keep in full force and effect its corporate existence and the corporate, partnership or other existence of each of its Subsidiaries in accordance with the respective organizational documents of the Company or the Subsidiary, as the case may be, and the rights (charter and statutory) and material franchises of the Company and each of its Subsidiaries; 21 provided, however, that the Company shall not be required to preserve any such right or franchise, or the corporate existence of any Subsidiary, if the Board of Directors of the Company shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and each of the Subsidiaries, taken as a whole and that the loss thereof is not adverse in any material respect to the Holders. SECTION 5.05. PAYMENT OF TAXES AND OTHER CLAIMS. The Company will pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (a) all material taxes, assessments and governmental charges levied or imposed upon it or any of its Subsidiaries or upon the income, profits or property of it or any of its Subsidiaries and (b) all lawful claims for labor, materials and supplies which, in each case, if unpaid, would reasonably be expected, by law, to become a material liability or Lien upon the property of it or any of its Subsidiaries; provided, however, that the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim the amount, applicability or validity of which is being contested in good faith by appropriate proceedings and for which adequate provision has been made or for which adequate reserves, to the extent required under GAAP, have been taken. SECTION 5.06. MAINTENANCE OF PROPERTIES AND INSURANCE. (a) The Company shall cause all material properties owned by or leased by it or any of its Subsidiaries used or useful to the conduct of its business or the business of any of its Subsidiaries to be maintained and kept in normal condition, repair and working order and supplied with all necessary equipment and shall cause to be made all necessary repairs, renewals and replacements thereof, all as in its judgment may be reasonably necessary, so that the business carried on in connection therewith may be properly conducted at all times; provided, however, that nothing in this Section 5.06 shall prevent the Company or any of its Subsidiaries from discontinuing the use, operation or maintenance of any of such properties, or disposing of any of them, if such properties are, in the reasonable and good faith judgment of the Board of Directors of the Company or such Subsidiary, as the case may be, no longer reasonably necessary in the conduct of their respective businesses or such disposition is otherwise permitted by this Securities Purchase Agreement. (b) The Company shall provide or cause to be provided, for itself and each of its Subsidiaries, insurance (including appropriate self-insurance) against loss or damage of the kinds that, in the reasonable, good faith judgment of the Board of Directors of the Company, are adequate and appropriate for the conduct of the business of the Company and such Subsidiaries in a prudent manner, with reputable insurers or with the government of the United States of America or an agency or instrumentality thereof, in such amounts, with such deductibles and by such methods as shall be customary, in the good faith judgment of the Board of Directors of the Company, for companies similarly situated in the industry. SECTION 5.07. COMPLIANCE CERTIFICATE; NOTICE OF DEFAULT. (a) The Company shall deliver to the Holders, within 90 days after the end of each of the Company's fiscal years, an Officers' Certificate (signed by the principal executive 22 officer, principal financial officer and principal accounting officer) stating that a review of its activities and the activities of its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing officers with a view to determining whether it has kept, observed, performed and fulfilled its obligations under this Securities Purchase Agreement and further stating, as to each such officer signing such certificate, that to the best of his knowledge the Company during such preceding fiscal year has kept, observed, performed and fulfilled each and every such obligation and no Default or Event of Default has occurred during such year and at the date of such certificate there is no Default or Event of Default that has occurred and is continuing or, if such signers do know of such Default or Event of Default, the certificate shall describe the Default or Event of Default and its status in reasonable detail. (b) So long as any of the Notes are outstanding, if any Default or Event of Default has occurred and is continuing, the Company shall promptly deliver to the Holders an Officers' Certificate specifying such event, notice or other action within 2 Business Days of its becoming aware of such occurrence. SECTION 5.08. COMPLIANCE WITH LAWS. The Company will comply, and will cause each of its Subsidiaries to comply, with all applicable statutes, rules, regulations, orders and restrictions of the United States, all states and municipalities thereof, and of any governmental department, commission, board, regulatory authority, bureau, agency and instrumentality of the foregoing, in respect of the conduct of their respective businesses and the ownership of their respective properties, except for such noncompliances as are being contested in good faith and by appropriate proceedings and except for such noncompliances as would not in the aggregate reasonably be expected to have a Material Adverse Effect. SECTION 5.09. COMMISSION REPORTS. (a) The Company will deliver to the Holders promptly, but in any event no later than 5 Business Days after it files with the Commission, to the extent not available on the EDGAR system, copies of the quarterly and annual reports and of the information, documents and other reports, if any, which the Company is required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act. (b) In the event the Company is not required to furnish such reports to its stockholders pursuant to the Exchange Act, the Company (at its own expense) shall cause its consolidated financial statements, comparable to those which would have been required to appear in annual or quarterly reports, to be delivered to the Holders. SECTION 5.10. LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES. The Company will not, and will not permit any of its Subsidiaries to, directly or indirectly, create or otherwise cause or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Subsidiary of the Company to 23 (a) pay dividends or make any other distributions on or in respect of its Capital Stock; (b) make loans or advances to or pay any Indebtedness or other obligation owed to the Company or any other Subsidiary of the Company; or (c) transfer any of its property or assets to the Company or any other Subsidiary of the Company, except for such encumbrances or restrictions existing under or by reason of: (1) applicable law and agreements with governmental authorities with respect to assets located in their jurisdiction, (2) the Notes or this Securities Purchase Agreement, (3) (A) customary provisions restricting (1) the subletting or assignment of any lease or (2) the transfer of copyrighted or patented materials, (B) provisions in agreements that restrict the assignment of such agreements or rights thereunder or (C) provisions of a customary nature contained in the terms of Capital Stock restricting the payment of dividends and the making of distributions on Capital Stock, (4) any agreement or instrument governing Acquired Indebtedness, which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than (a) the Person or the properties or assets of the Person so acquired (including the Capital Stock of such Person), or (b) any Subsidiary having no assets other than (i) the Person or the properties or assets of the Person so acquired (including the Capital Stock of such Person) and (ii) other assets having a fair market value not in excess of $1 million, and, in each case, the monetary proceeds thereof, (5) restrictions on the transfer of assets subject to any Lien permitted under this Securities Purchase Agreement, (6) restrictions imposed by any agreement to sell assets not in violation of this Securities Purchase Agreement to any Person pending the closing of such sale, (7) customary rights of first refusal with respect to the Company's and its Subsidiaries' interests in their respective Subsidiaries and joint ventures, (8) Indebtedness of a Person that was a Subsidiary of the Company at the time of incurrence and the incurrence of which Indebtedness is permitted by Section 5.03; provided that such encumbrances and restrictions apply only to such Subsidiary and its assets; and provided, further, that the Board of Directors of the Company has determined in good faith, at the time of creation of each such encumbrance or restriction, that such encumbrances and restrictions would not singly or in the aggregate have a materially adverse effect on the Holders, or, (9) the subordination of any Indebtedness owed by the Company or any of its Subsidiaries to the Company or any other Subsidiary of the Company to any other 24 Indebtedness of the Company or any of its Subsidiaries; provided (A) such other Indebtedness is permitted under this Securities Purchase Agreement and (B) the Board of Directors of the Company has determined in good faith, at the time of creation of each such encumbrance or restriction, that such encumbrances and restrictions would not singly or in the aggregate have a materially adverse effect on the Holders. SECTION 5.11. LIMITATION ON LIENS. The Company will not, and will not permit any of its Subsidiaries to, directly or indirectly, create, incur or assume any Lien securing Indebtedness (other than Permitted Liens) upon any property or asset now owned or hereafter acquired by them, or any income or profits therefrom, or assign or convey any right to receive income therefrom; provided, however, that in addition to creating Permitted Liens on their properties or assets, the Company and any of its Subsidiaries may create any Lien securing Indebtedness upon any of their properties and assets (including, but not limited to, any Capital Stock of its Subsidiaries) if the Notes are equally and ratably secured. SECTION 5.12. CHANGE OF CONTROL. (a) Upon the occurrence of a Change of Control, each Holder will have the right to require that the Company repurchase all or a portion of such Holder's Notes, at a purchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of repurchase. (b) On or promptly following the date of the public announcement of a proposed Change of Control, the Company shall send, by first class mail, a notice to each Holder, which notice shall govern the terms of the Change of Control offer to purchase (the "CHANGE OF CONTROL OFFER"). The notice to the Holders shall contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Change of Control Offer. Such notice shall state: (1) that the Change of Control Offer is being made pursuant to this Section 5.12 and that all Notes tendered and not withdrawn will be accepted for payment; (2) the purchase price (including the amount of accrued interest) and the purchase date, which shall be no later than the effective date of such Change in Control other than as may be required by law (the "Change of Control Payment Date"); (3) that any Note not tendered will continue to accrue interest; (4) that, unless the Company defaults in making payment therefor, any Note accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest after the Change of Control Payment Date; (5) that Holders electing to have a Note purchased pursuant to a Change of Control Offer will be required to surrender the Note , with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Note completed, to the Company at the 25 address specified in the notice prior to 5:00 p.m. New York City time on the Business Day prior to the Change of Control Payment Date; (6) that Holders whose Notes are purchased only in part will be issued new Notes in a principal amount equal to the unpurchased portion of the Notes surrendered; and (7) a copy of the press release relating to such Change of Control. On or before the Change of Control Payment Date, the Company shall accept for payment Notes or portions thereof tendered (in integral multiples of $1,000) pursuant to the Change of Control Offer. The Company shall promptly deliver to the Holders of Notes so accepted payment in an amount equal to the purchase price plus accrued and unpaid interest, if any, thereon to the Change of Control Payment Date and shall promptly deliver to such Holders new Notes equal in principal amount to any unpurchased portion of the Notes surrendered. Any Securities not so accepted shall be promptly mailed by the Company to the Holder thereof. The Company shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent, if any, such laws and regulations are applicable in connection with the repurchase of Notes pursuant to a Change of Control Offer. To the extent the provisions of any securities laws or regulations conflict with the provisions under this Section 5.12, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section 5.12 by virtue thereof. (c) Notwithstanding the foregoing, the Company shall have no obligation to purchase any Notes under this Section 5.12 in the event that the Change of Control with respect to which a Change of Control Offer has been made is terminated or abandoned prior to the consummation thereof. SECTION 5.13. LIMITATION ON SALE AND LEASEBACK TRANSACTIONS. The Company will not, and will not permit any of its Subsidiaries to, enter into any Sale and Leaseback Transaction. SECTION 5.14. STAY, EXTENSION AND USURY LAWS. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Securities Purchase Agreement; and the Company (to the extent it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Holders, but will suffer and permit the execution of every such power as though no such law had been enacted. 26 SECTION 5.15. SECURITIES MATTERS. The Company shall file all periodic reports required to be filed with the Commission pursuant to the Exchange Act in a timely manner and shall not terminate its status as an issuer required to file periodic reports under the Exchange Act. The Company shall promptly secure the listing of all Registrable Securities (as defined in the Registration Rights Agreement) upon each national securities exchange and automated quotation system, if any, upon which shares of Common Stock are listed (subject to official notice of issuance) and shall maintain such listing. The Company shall maintain the Common Stock's authorization for quotation on the NASDAQ National market or obtain a listing on the NASDAQ SmallCap Market, The New York Stock Exchange or the American Stock Exchange. The Company shall timely file a Form D with respect to the Securities as required under Regulation D and provide a copy thereof to each Initial Purchaser promptly after such filing. The Company shall, on or before the date of the Closing, take such actions as shall be reasonably necessary in order to obtain an exemption for or to qualify the Securities for sale to the Initial Purchasers pursuant to this Securities Purchase Agreement under applicable securities or "Blue Sky" laws of the states of the United States (or to obtain an exemption from such qualification) and shall provide evidence of any such action so taken to the Initial Purchasers on or prior to the date of the Closing. The Company shall make all filings and reports relating to the offer and sale of the Securities required under applicable securities or "Blue Sky" laws of the states of the United States following the date of the Closing. SECTION 5.16 BOARD REPRESENTATION. [INTENTIONALLY OMITTED] SECTION 5.18 USE OF PROCEEDS. The Company will use the proceeds from the sale of the Securities to pay existing indebtedness of the Company or for general corporate working capital purposes. ARTICLE SIX DEFAULT AND REMEDIES SECTION 6.01. EVENTS OF DEFAULT. An "Event of Default" means any of the following events: (a) the failure to pay interest on any Notes when the same becomes due and payable; (b) the failure to pay the principal on any Notes, when such principal becomes due and payable, at maturity, upon redemption or otherwise, including the failure to make 27 a payment to purchase any Notes tendered pursuant to a Change of Control Offer, except as provided in Section 5.12(c); (c) a material default in the observance or performance of any other covenant or agreement contained in this Securities Purchase Agreement or the Registration Rights Agreement, which default, in the case of any default which is susceptible of cure, continues for a period of 10 days after the Company receives written notice specifying the default, and demanding that such default be remedied, from the Holders of at least 50% in outstanding principal amount of the Notes; (d) the failure to pay at final maturity, giving effect to any extensions thereof, the principal amount of any Indebtedness of the Company or any Subsidiary of the Company, other than intercompany Indebtedness, or the acceleration of the final stated maturity of any such Indebtedness, if, in either case, the aggregate principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness in default for failure to pay principal at final maturity or which has been accelerated, aggregates $1 million or more at any time; (e) one or more judgments in an aggregate amount in excess of $1 million shall have been rendered against the Company or any of its Subsidiaries and such judgments remain undischarged, unpaid or unstayed for a period of 60 days; (f) the Company or any of its Subsidiaries (i) admits in writing its inability to pay its debts generally as they become due, (ii) commences a voluntary case or proceeding under any Bankruptcy Law with respect to itself, (iii) consents to the entry of a judgment, decree or order for relief against it in an involuntary case or proceeding under any Bankruptcy Law, (iv) consents to the appointment of a Custodian of it or for substantially all of its property, (v) consents to or acquiesces in the institution of a bankruptcy or an insolvency proceeding against it, (vi) makes a general assignment for the benefit of its creditors or (vii) takes any partnership or corporate action, as the case may be, to authorize or effect any of the foregoing; (g) a court of competent jurisdiction enters a judgment, decree or order for relief in respect of the Company or any of its Subsidiaries in an involuntary case or proceeding under any Bankruptcy Law, which shall (i) approve as properly filed a petition seeking reorganization, arrangement, adjustment or composition in respect of the Company or any of its Subsidiaries, (ii) appoint a custodian of the Company or any of its Subsidiaries or for substantially all of any of their property or (iii) order the winding-up or liquidation of its affairs; and such judgment, decree or order shall remain unstayed and in effect for a period of 60 consecutive days; or (h) the representations and warranties of the Company set forth in this Securities Purchase Agreement or the Registration Rights Agreement shall prove to be untrue in any material respect on the date as of which made. 28 SECTION 6.02. ACCELERATION. If an Event of Default (other than an Event of Default specified in Section 6.01(f) or (g)) shall occur and be continuing, the Holders of at least 50% in principal amount of outstanding Notes may declare the principal of and accrued and unpaid interest on all the Notes to be due and payable by notice in writing to the Company specifying the respective Event of Default and that it is a "notice of acceleration", and the same shall become immediately due and payable. If an Event of Default specified in Section 6.01(f) or (g) occurs and is continuing, then all unpaid principal of and premium, if any, and accrued and unpaid interest on all of the outstanding Notes shall automatically become and be immediately due and payable without any declaration or other act on the part of any Holder. At any time after a declaration of acceleration with respect to the Notes as described in the preceding paragraph, the Holders of at least 50% in principal amount of the Notes may rescind and cancel such declaration and its consequences (i) if the rescission would not conflict with any judgment or decree, (ii) if all existing Events of Default have been cured or waived except nonpayment of principal or interest that has become due solely because of the acceleration, (iii) to the extent the payment of such interest is lawful, interest on overdue installments of interest and overdue principal, which has become due otherwise than by such declaration of acceleration, has been paid, and (iv) in the event of the cure or waiver of an Event of Default of the type described in clause (f) or (g) of Section 6.01, the Holder' shall have received an Officers' Certificate that such Event of Default has been cured or waived. No such rescission shall affect any subsequent Default or impair any right consequent thereto. SECTION 6.03. OTHER REMEDIES. If an Event of Default occurs and is continuing, the Holders of not less than 50% in principal amount of the outstanding Notes may pursue any available remedy by proceeding at law or in equity to collect the payment of principal of or interest on the Notes or to enforce the performance of any provision of the Notes or this Securities Purchase Agreement. No remedy is exclusive of any other remedy. All available remedies are cumulative to the extent permitted by law. SECTION 6.04. WAIVER OF PAST DEFAULTS. The Holders of not less than 50% in principal amount of the outstanding Notes by written notice to the Company may waive an existing Default or Event of Default and its consequences, except a Default in the payment of principal of or interest on any Note as specified in clauses (a) and (b) of Section 6.01. When a Default or Event of Default is waived, it is cured and ceases. SECTION 6.05. CONTROL. The Holders of not less than 50% in principal amount of the outstanding Notes may direct the time, method and place of conducting any proceeding for any remedy available to the Holders or exercising any trust or power conferred on it. 29 SECTION 6.06. RIGHTS OF HOLDERS TO RECEIVE PAYMENT. Notwithstanding any other provision of this Securities Purchase Agreement, the right of any Holder to receive payment of principal of and interest on a Note, on or after the respective due dates expressed in such Note, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the written consent of the Holder. ARTICLE SEVEN [Intentionally Omitted] ARTICLE EIGHT CONDITIONS SECTION 8.01. CONDITIONS TO THE COMPANY'S OBLIGATION. The obligation of the Company hereunder to issue and sell the Securities to each Initial Purchaser at the Closing is subject to the satisfaction, at or before the Closing, of each of the following conditions, provided that these conditions are for the Company's sole benefit and may be waived by the Company at any time in its sole discretion by providing each Initial Purchaser with prior written notice thereof: (a) Each Initial Purchaser shall have delivered to the Company the Registration Rights Agreement duly executed by such Initial Purchaser. (b) Each Initial Purchaser shall have delivered to the Company the purchase price for the Securities being purchased by such Initial Purchaser at the Closing by wire transfer of immediately available funds pursuant to the wire instructions provided by the Company. SECTION 8.02. CONDITIONS TO THE INITIAL PURCHASERS' OBLIGATION. The obligation of each Initial Purchaser to purchase the Securities at the Closing is subject to the satisfaction, at or before the Closing, of each of the following conditions, provided that these conditions are for each Initial Purchaser's sole benefit and may be waived by such Initial Purchaser at any time in its sole discretion by providing the Company with prior written notice thereof: (a) Such Initial Purchaser shall have received the Notes to be purchased by it at the Closing duly executed by the Company. (b) Such Initial Purchaser shall have received the Registration Rights Agreement duly executed by the Company. 30 (c) Such Initial Purchaser shall have received certificates for shares of Common Stock included in the Securities to be purchased by it at the Closing. (d) Such Initial Purchaser shall have received the legal opinions of the Company's General Counsel in the form and content reasonably acceptable to it. (e) Such Initial Purchaser shall have received a certified copy of the Certificate of Incorporation of the Company, together with a Good Standing Certificate with respect to the Company issued by the Secretary of State of such state of incorporation as of a date within 10 days of the date of the Closing. (f) Such Initial Purchaser shall have received a copy of the certificate evidencing the Company's qualification as a foreign corporation in good standing issued by the Secretary of State of the State of New York as of a date within 10 days of the date of the Closing. (g) Such Initial Purchaser shall have received a certificate executed by the Secretary of the Company and dated as of the date of the Closing, certifying as to (i) the resolutions as adopted by the Company's Board of Directors in connection with the authorization of the transactions contemplated hereby, (ii) the Certificate of Incorporation of the Company and (iii) the Bylaws of the Company, each as in effect at the time of the Closing Date. (h) Such Initial Purchaser shall have received a copy of all governmental, regulatory or third party consents and approvals, if any, necessary for the sale of the Securities. (i) Such Initial Purchaser shall have received a copy of such other documents relating to the transactions contemplated by this Securities Purchase Agreement as such Initial Purchaser or its counsel may reasonably request. ARTICLE NINE MISCELLANEOUS SECTION 9.01. NOTICES. Any notices or other communications required or permitted hereunder shall be in writing, and shall be sufficiently given if made by hand delivery, by telecopier, by reputable overnight delivery service, or registered mail, postage prepaid, return receipt requested, addressed as follows: if to the Company: Viewpoint Corporation 498 Seventh Avenue, Suite 1810 New York, New York 10018 Facsimile: (212) 201-0846 31 Attention: Jeffrey J. Kaplan, Executive Vice President and Brian J. O'Donoghue, Esq. Executive Vice President and General Counsel with a copy to Milbank, Tweed, Hadley & McCloy LLP 1 Chase Manhattan Plaza New York, New York 10005 Facsimile: (212) 822-5171 Attention: Alexander M. Kaye, Esq. if to the Holders: to their respective addresses set forth on Schedule 2.06 or otherwise specified to the Company in writing by notice given in accordance with this Section 9.01, with a copy to: Patterson, Belknap, Webb & Tyler LLP 1133 Avenue of the Americas New York, New York 10036 Attention: Jeffrey E. LaGueux, Esq. Facsimile: (212) 336-2222 Each of the Company and the Holders by written notice to each other may designate additional or different addresses for notices to such Person. Any notice or communication to the Company shall be deemed to have been given or made as of the date so delivered if personally delivered; when receipt is acknowledged, if telecopied; one (1) business day after mailing by reputable overnight courier; and five (5) calendar days after mailing if sent by registered mail, postage prepaid (except that, notwithstanding the foregoing, a notice of change of address shall not be deemed to have been given until actually received by the addressee). Notice to the Holders shall be deemed given when actually received by the Holders. SECTION 9.02. GOVERNING LAW. THIS SECURITIES PURCHASE AGREEMENT, THE SECURITIES AND THE NOTES WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE FEDERAL OR STATE COURTS LOCATED IN 32 THE CITY OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SECURITIES PURCHASE AGREEMENT OR THE NOTES. SECTION 9.03. SUCCESSORS. All agreements of the Company in this Securities Purchase Agreement and the Notes shall bind its successors. SECTION 9.04. COUNTERPARTS. All parties may sign any number of copies of this Securities Purchase Agreement. Each signed copy or counterpart shall be an original, but all of them together shall represent the same agreement. SECTION 9.05. SEVERABILITY. In case any one or more of the provisions in this Securities Purchase Agreement or in the Notes shall be held invalid, illegal or unenforceable, in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions shall not in any way be affected or impaired thereby, it being intended that all of the provisions hereof shall be enforceable to the full extent permitted by law. SECTION 9.06. PAYMENT OF EXPENSES. The Company shall pay or reimburse Clark Partners P L.P. for its reasonable out-of-pocket costs and expenses, including reasonable legal fees and disbursements, incurred in connection with the preparation, execution and delivery of this Securities Purchase Agreement up to a maximum of $30,000. The Company shall pay or reimburse the Holders for their reasonable out-of-pocket costs and expenses, including reasonable legal fees and disbursements, incurred in connection with any amendment, supplement, waiver or modification to this Securities Purchase Agreement and for all of their out-of-pocket costs and expenses, including reasonable legal fees, incurred in connection with the enforcement of this Securities Purchase Agreement, the Notes or the Registration Rights Agreement. [SIGNATURE PAGES TO FOLLOW] 33 SIGNATURES IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed, all as of the date first written above. THE COMPANY: VIEWPOINT CORPORATION, INC. By: /s/ Brian J. O' Donoghue --------------------------------- Name: Brian J. O' Donohgue Title: Executive Vice President THE PURCHASERS: FEDERAL PARTNERS P, L.P. by Ninth Floor Corporation, its general partner By: /s/ Stephen M. Duff --------------------------------- Name: Stephen M. Duff Title: Treasurer /s/ Baruch Halpern ------------------------------------ Baruch Halpern, as Joint Tenant with the Right of Survivorship /s/ Shana Halpern ------------------------------------ Shana Halpern, as Joint Tenant with the Right of Survivorship CRCK, L.L.C. by Paul P. Tanico and Ellen H. Adams its general partner By: /s/ Maria Lamari Burden --------------------------------- Name: Maria Lamari Burden Title: Chief Financial Officer 34 SCHEDULE 2.06
Name and Address of Principal Amount of Number of Shares of Purchase Price -------------------- -------------------- -------------------- -------------- Initial Purchaser Notes Purchased Common Stock Paid ----------------- --------------- ------------ ---- Purchased --------- Federal Partners P, L.P. c/o Ninth Floor Corporation, its General Partner $3,050,000 3,150,002 $3,050,000 One Rockefeller Plaza 1st Floor New York, N.Y. 10020 Attn: Stephen M. Duff, Esq Treasurer Baruch Halpern and Shana Halpern 9601 Holland Avenue $ 250,000 258,197 $ 250,000 Apt. 1105 Bal Harbour, Florida 33154 CRCK, L.L.C. $ 200,000 206,557 $ 200,000 101 Park Avenue, 23rd Floor New York, N.Y. 10178
SCHEDULES TO SECURITIES PURCHASE AGREEMENT DATED AS OF MARCH 26, 2003 BY AND BETWEEN VIEWPOINT CORPORATION AND THE PURCHASERS IDENTIFIED ON THE SIGNATURE PAGES THERETO SCHEDULE 4.01(C) CAPITALIZATION 1. VIEWPOINT CORPORATION OUTSTANDING OPTIONS AS OF MARCH 20, 2003 PRICE ISSUED VESTED ($/SHARE) (# OF SHARES) (# OF SHARES) ---------------------------------- ------------------------ ------------------ 0.8700 2,221,866 2,044,707 0.9300 14,000 0 1.7100 15,000 0 1.8700 24,000 0 2.1800 77,000 0 2.6100 802,092 653,512 3.0000 15,000 11,750 3.1000 68,000 0 3.2680 23,000 0 3.4000 16,500 7,459 3.5000 37,000 33,000 3.8130 25,000 11,979 3.8800 1,200,000 62,500 4.0000 4,000 1,333 4.0800 200,000 0 4.1800 44,000 0 4.2500 10,000 3,750 4.3500 1,361,815 1,224,485 4.4000 67,000 0 4.4100 58,000 21,667 4.4690 52,417 35,231 4.6800 5,000 5,000 4.6900 103,602 85,802 4.7660 210,178 140,969 4.8200 24,000 0 5.0300 90,165 90,165 5.0625 5,000 0 5.0900 269,500 266,375 5.0938 258,396 254,588 5.1300 18,417 9,208 5.1500 39,167 19,480 5.3750 152,115 88,615 5.5200 0 0 5.6250 88,825 48,018 5.6500 80,500 80,500 5.7000 18,000 0 5.7300 265,000 56,797 5.7500 78,750 49,218 5.8100 323,750 74,689 5.9900 125,000 27,083 6.0000 46,000 0 6.0400 4,000 0 6.1000 8,000 3,166 6.1300 460,000 239,583 6.2900 20,000 16,668 6.6250 5,000 5,000 6.7000 5,500 1,489 6.8750 10,000 5,417 7.3100 40,825 27,602 7.9375 25,000 23,438 8.5000 6,500 4,167 8.5630 84,375 84,375 8.7000 15,333 15,333 8.7300 16,100 9,727 9.0000 5,000 5,000 10.7500 5,000 5,000 11.0000 20,000 20,000 11.0900 9,200 5,750 12.8750 5,000 5,000 25.1250 5,000 5,000 -------------------------- --------------- TOTALS: 9,286,887.99 5,889,594.66 ========================== =============== AVERAGE ISSUED PRICE 3.8081 AVERAGE VESTED PRICE 3.3622 2. VIEWPOINT CORPORATION OUTSTANDING WARRANTS AS OF DECEMBER 31, 2002 PRICE ISSUED ($/SHARE) (# OF SHARES) ---------------------------- ---------------------------- 2.2600 269,780 2.2600 249,027 2.2600 207,523 15.6500 57,500 ---------------------------- TOTALS: 783,830 ============================ AVERAGE ISSUED PRICE 3.2423 3. VIEWPOINT CORPORATION PRE-EMPTIVE RIGHTS a. Pursuant to Section 7.4 of the Amended and Restated Series A Preferred Stock Purchase Agreement, dated as of June 12, 2000 among Metastream Corporation, a Delaware corporation and predecessor in interest to Viewpoint Corporation, MetaCreations Corporation, a Delaware corporation (now known as Viewpoint Corporation) and America Online, Inc., a Delaware corporation ("AOL"), AOL has a right, upon the issuance of Viewpoint common stock to a third party under certain circumstances, to acquire an amount of shares of Viewpoint common stock as will permit AOL to maintain its percentage equity interest in Viewpoint immediately prior to the proposed issuance at the same price and on the same terms and conditions as such proposed issuance to a third party. AOL currently owns 1,725,000 shares of Viewpoint common stock (approximately 4.2%) and has orally stated that it will waive the above-described rights. b. Pursuant to Section 7.4 of the Series B Preferred Stock Purchase Agreement, dated as of July 18, 2000 among Metastream Corporation, a Delaware corporation and predecessor in interest to Viewpoint Corporation, MetaCreations Corporation, a Delaware corporation now known as Viewpoint Corporation, and Adobe Systems Incorporated, a Delaware corporation ("Adobe"), Adobe has a right, upon the issuance of Viewpoint common stock to a third party under certain circumstances, to acquire an amount of shares of Viewpoint common stock as will permit Adobe to maintain its percentage equity interest in Viewpoint immediately prior to the proposed issuance at the same price and on the same terms and conditions as such proposed issuance to a third party. Adobe currently owns 1,499,000 shares of Viewpoint common stock (approximately 3.7%) and has orally stated that it will waive the above-described rights. c. Pursuant to Section 8.1 of the Exchange Agreement, dated as of August 10, 2000 (this "Agreement"), by and between MetaCreations Corporation, a Delaware corporation now known as Viewpoint Corporation, and Computer Associates International, Inc., a Delaware corporation ("Computer Associates"), Computer Associates has a right, upon the issuance of Viewpoint common stock to a third party under certain circumstances, to acquire an amount of shares as will permit Computer Associates to maintain its percentage equity interest in Viewpoint immediately prior to the proposed issuance at the same price and on the same terms and conditions as such proposed issuance to a third party. Computer Associates currently owns 3,744,093 shares of Viewpoint common stock (approximately 9.1%) and has orally stated that it will waive the above-described rights. SCHEDULE 4.01(G) COMPLIANCE WITH LAWS Due to the recent decline in the Company's stock price, the Company does not currently meet The NASDAQ National Market quantitative maintenance criteria. The Company received notice from The NASDAQ National Market on March 20, 2003 stating that the Company is not in compliance with Marketplace Rule 4450(e)(2) and that the Company will be provided 180 days to regain compliance with National Market standards. SCHEDULE 4.01(H) CONSENTS 1. Common Stock to be listed on the NASDAQ National Market 2. Registration Statement to be filed with the SEC 3. Form D to be filed with the SEC. SCHEDULE 4.01(I) LITIGATION PROCEEDINGS Viewpoint v. Abate: Litigation commenced by the Company against James A. Abate 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 (Jose Maria de Espona) to recover damages for intellectual property infringement. Viewpoint alleges that de Espona is marketing and selling a collection of three-dimensional models to which Viewpoint has exclusive rights. A decision by the court in Spain is expected in the first half of 2003 and the amount in dispute is less than $750,000. SCHEDULE 4.01(J) NO DEFAULT OR VIOLATION Irrevocable Clean Transferable Standby Letter of Credit No. S303505 Date: October 1, 2001 Bank: KeyBank National Association Benefeciary: 498 Seventh, LLC; c/o George Comfort & Sons, Inc. Issued Amount: $289, 328.00; Current Amount: $252,581.00 Expiry, original: October 1, 2002; current expiry: October 1, 2003 Automatic One-Year Extensions [Backed by KeyBank restricted cash bank account] SCHEDULE 4.01(N) LISTING AND MAINTENANCE REQUIREMENTS COMPLIANCE Due to the recent decline in the Company's stock price, the Company does not currently meet The NASDAQ National Market quantitative maintenance criteria. The Company received notice from The NASDAQ National Market on March 20, 2003 stating that the Company is not in compliance with Marketplace Rule 4450(e)(2) and that the Company will be provided 180 days to regain compliance with National Market standards. SCHEDULE 4.01(O) REGISTRATION RIGHTS; RIGHTS OF PARTICIPATION The Company has granted certain registration rights pursuant to the terms of a Registration Agreement, dated as of December 31, 2002, as amended, which was entered into in connection with the Exchange Agreements and the 2002 Securities Purchase Agreement. EX-10.2 4 y84863exv10w2.txt FORM OF 4.95% SUBORDINATED NOTE Exhibit 10.2 THE SECURITY REPRESENTED BY THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITY MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITY 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 SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITY. VIEWPOINT CORPORATION 4.95% SUBORDINATED NOTE DUE 2006 $______________ New York, New York No. R-1 March 26, 2003 VIEWPOINT CORPORATION, a Delaware corporation (the "Company", which term includes any successor corporation), for value received, promises to pay to ________________________________ (the "Holder"), or registered assigns, the principal sum of ___________________________________ ($__________) on March 31, 2006. 1. INTEREST. The Company promises to pay interest on the outstanding principal amount of this Note at the rate of 4.95 percent per annum. The Company will pay interest quarterly in arrears on March 31, June 30, September 30 and December 31 of each year (each an "Interest Payment Date"), commencing March 31, 2003. Interest on the outstanding principal amount of this Note will accrue from the most recent date on which interest has been paid or, if no interest has been paid, from March 26, 2003. Interest will be computed on the basis of a 365-day year and the actual number of days elapsed. The Company shall pay interest on overdue installments of principal and on overdue installments of interest to the extent lawful as provided in Section 2.04 of the Securities Purchase Agreement (defined below). 2. METHOD OF PAYMENT. The Company shall pay interest on this Note (except defaulted interest) to the registered Holder of this Note at the close of business on the Interest Payment Date (or if such Interest Payment Date is not a Business Day, then on the Business Day following such Interest Payment Date) in lawful money of the United States of America by wire transfer of immediately available funds to an account designated in writing for such purpose by the Holder of this Note. The Holder of this Note must surrender this Note to the Company at its principal place of business to collect principal payments, which shall be paid in lawful money of the United States of America by wire transfer of immediately available funds to an account designated in writing for such purpose by the Holder of this Note. 3. SECURITIES PURCHASE AGREEMENT. The Company issued this Note under the Securities Purchase Agreement, dated as of March 26, 2003, (the "Securities Purchase Agreement"), by and among the Company and the other parties described therein. Capitalized terms herein are used as defined in the Securities Purchase Agreement unless otherwise defined herein. The terms of this Note include those stated in the Securities Purchase Agreement and as it may be amended from time to time. 4. OPTIONAL REDEMPTION. This Note will be redeemable, at the Company's option, in accordance with Article III of the Securities Purchase Agreement, in whole at any time or in part from time to time, upon not less than 15 nor more than 30 days' notice, at 100% of the principal amount thereof, plus, in each case, accrued and unpaid interest to the date of redemption. 5. NOTICE OF OPTIONAL REDEMPTION. Notice of redemption will be sent, by first class mail, postage prepaid or by an individual recognized courier service, at least 15 days but not more than 30 days before the Redemption Date to the Holder of this Note, to be redeemed at such Holder's registered address. Except as set forth in the Securities Purchase Agreement, unless the Company defaults in the payment when due of such Redemption Price plus accrued and unpaid interest, if any, this Note (once called for redemption) will cease to bear interest from and after such Redemption Date and the only right of the Holder of this Note will be to receive payment of the Redemption Price plus accrued and unpaid interest, if any, to the Redemption Date. 6. OFFERS TO PURCHASE. Upon the occurrence of a Change of Control, subject to the limitations contained in and in accordance with section 5.13 of the Securities Purchase Agreement, the Company will make an offer to purchase this Note on the terms and conditions set forth therein. 7. DENOMINATIONS; TRANSFER; EXCHANGE. This Note is in registered form, without coupons. The Holder shall register the transfer of or exchange of this Note in accordance with the Securities Purchase Agreement. The Company may require the Holder of this Note, among other things, to furnish appropriate endorsements and transfer documents and to pay certain transfer taxes or similar governmental charges payable in connection therewith as permitted by the Securities Purchase Agreement. 8. PERSONS DEEMED OWNERS. The Holder of this Note shall be treated as the owner of it for all purposes. 9. AMENDMENT; SUPPLEMENT; WAIVER. Subject to certain exceptions, the Securities Purchase Agreement and the Notes (including this Note) may be amended or supplemented with the written consent of the Holders of at least 50% in aggregate principal amount of the Notes then outstanding, and any existing Default or Event of Default (except a Default or Event of Default of principal of or interest on any Note outstanding) or compliance with any provision may be waived with the consent of the Holders of a majority in aggregate principal amount of the Notes then outstanding. 10. RESTRICTIVE COVENANTS. The Securities Purchase Agreement contains certain covenants that, among other things, limit the ability of the Company and the Subsidiaries, if any, to incur additional Indebtedness, create certain Liens (other than Permitted Liens), pay dividends or make certain other Restricted Payments. The limitations are subject to a number of important qualifications and exceptions. 11. REISSUANCE OF THIS NOTE. (a) Transfer. If this Note is to be transferred, the Holder shall surrender this Note to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Note (in accordance with Section 11(d)), registered as the Holder may request, representing the outstanding principal being transferred by the Holder and, if less then the entire outstanding principal is being transferred, a new Note (in accordance with Section 11(d)) to the Holder representing the outstanding principal not being transferred. (b) Lost, Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary form and reasonably acceptable to the Company (based in part on the net worth of, or security provided by, the Holder) and, in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver to the Holder a new Note (in accordance with Section 11(d)) representing the outstanding principal. (c) Note Exchangeable for Different Denominations. This Note is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Note or Notes (in accordance with Section 11(d) and in principal amounts of at least $500,000) representing in the aggregate the outstanding principal of this Note, and each such new Note will represent such portion of such outstanding principal as is designated by the Holder at the time of such surrender. (d) Issuance of New Notes. Whenever the Company is required to issue a new Note pursuant to the terms of this Note, such new Note (i) shall be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the principal remaining outstanding (or in the case of a new Note being issued pursuant to Section 11(a) or Section 11(c), the principal designated by the Holder which, when added to the principal represented by the other new Notes issued in connection with such issuance, does not exceed the principal remaining outstanding under this Note immediately prior to such issuance of new Notes), (iii) shall have an issuance date, as indicated on the face of such new Note which is the same as the Issuance Date of this Note and (iv) shall have the same rights and conditions as this Note. 12. CANCELLATION. After all principal, accrued interest and other amounts at any time owed on this Note has been indefeasibly paid in full, this Note shall automatically be deemed canceled, shall be surrendered to the Company for cancellation and shall not be reissued. 13. DEFAULTS AND REMEDIES. If an Event of Default (other than an Event of Default specified in Section 6.01(f) or (g) of the Securities Purchase Agreement) occurs and is continuing, the Holders of not less than 50% in aggregate principal amount of the Notes then outstanding may declare the principal of and accrued interest on all the Notes to be due and payable immediately in the manner and with the effect provided in Section 6.02 of the Securities Purchase Agreement. If an Event of Default under Section 6.01(f) or (g) of the Securities Purchase Agreement occurs and is continuing, the principal of and accrued interest on all Notes shall automatically become and be due and payable without any declaration or other act on the part of any Holder. The Holder of this Note may not enforce the Securities Purchase Agreement or this Note except as provided in the Securities Purchase Agreement. The Securities Purchase Agreement permits, subject to certain limitations therein provided, Holders of a majority in aggregate principal amount of the Notes then outstanding to exercise or pursue any other remedy to the extent permitted at law or in equity to enforce the performance of this Note or the Securities Purchase Agreement. 14. NO RECOURSE AGAINST OTHERS. No stockholder, director, officer, employee or incorporator, as such, of the Company shall have any liability for any obligation of the Company under this Note or the Securities Purchase Agreement or for any claim based on, in respect of or by reason of, such Obligations or their creation. The Holder of this Note by accepting this Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of this Note. 15. NOTICES. Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be given in accordance with Section 9.01 of the Securities Purchase Agreement. 16. VOTING RIGHTS. The Holder shall have no voting rights as the holder of this Note, except as required by law, including but not limited to the Delaware General Corporation Law, and as expressly provided in this Note. 17. SUBORDINATION. This Note is and shall be subordinate, to the extent and in the manner herein set forth, in right of payment to the prior payment in full in cash of all obligations of the Company (whether for principal, interest (including interest accruing subsequent to the filing of a bankruptcy or other insolvency petition), fees, expenses or otherwise) owing to the Holders (the "Senior Debt") under the $2,700,000 aggregate principal amount of Convertible Notes due December 31, 2007 issued by the Company on March 26, 2003 (as amended or otherwise modified from time to time, together with any notes issued in replacement thereof or substitution therefor, the "Senior Notes"). By accepting this Note, the Holder of this Note agrees that it will not ask, demand, sue for, take or receive, directly or indirectly, from the Company, in cash or other property, by set-off or in any other manner, payment of, or security for any or all of the obligations hereunder unless and until the Senior Debt shall have been paid in full in cash; provided, however, that the Holder of this Note may receive, and the Company may pay, principal and interest hereunder (without regard to any amendment), unless at the time of making such payment and immediately after giving effect thereto, (A) an Event of Default (as defined in the Senior Notes) under Section 4(a)(vi) of the Senior Notes or event which, with the giving of notice or the passage of time, or both, would constitute an Event of Default under Section 4(a)(vi) of the Senior Notes shall have occurred and be continuing, (B) any other Event of Default shall have occurred and be continuing under the Senior Notes and either (x) fewer than 90 days shall have elapsed since the occurrence of such Event of Default, or (y) the holders of the Senior Notes shall have accelerated the maturity of the Senior Notes by reason of the occurrence of such Event of Default, or (C) a Change of Control (as defined in the Senior Notes) shall have occurred and payment required to be made in accordance with any Change of Control Redemption Notice (as defined in the Senior Notes) shall not have been paid in full to the holders of Senior Notes delivering any such Change of Control Redemption Notice to the Company. 18. GOVERNING LAWS. This Note and the Securities Purchase Agreement shall be governed by and construed in accordance with the laws of the State of New York, as applied to contracts made and performed within the State of New York, without regard to principles of conflict of laws. Each of the parties hereto agrees to submit to the jurisdiction of the courts of the State of New York in any action or proceeding arising out of or relating to this Note. IN WITNESS WHEREOF, the Company has caused this Note to be signed manually or by facsimile by its duly authorized officers. VIEWPOINT CORPORATION By: --------------------- Name: Brian J. O'Donoghue Title: Executive Vice President ASSIGNMENT FORM I or we assign and transfer this Note to: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Print or type name, address and zip code of assignee or transferee) (Insert Social Security or other identifying number of assignee or transferee) and irrevocably appoint ___________________________________, agent to transfer this Note on the books of the Company. The agent may substitute another to act for him. Dated: ------------------------------- Signed: ------------------------------ (Sign exactly as name appears on the other side of this Note) Signature Guarantee: ---------------------- Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor program reasonably acceptable to the Company) OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Company pursuant to Section ___ of the Securities Purchase Agreement, check the box: If you want to elect to have only part of this Security purchased by the Company pursuant to ___ of the Securities Purchase Agreement, state the amount: $_____________ Dated: ------------------------------- Signed: ------------------------------ (Sign exactly as name appears on the other side of this Security) Signature Guarantee: ---------------------- Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor program reasonably acceptable to the Company) EX-10.3 5 y84863exv10w3.txt REGISTRATION RIGHTS AGREEMENT Exhibit 10.3 REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS AGREEMENT, dated as of March 26, 2003 (the "Agreement") by and among Viewpoint Corporation, a Delaware corporation (the "Company"), and several Initial Purchasers (the "Initial Purchasers") of securities of the Company executing this Agreement, identified on Schedule I hereto. W I T N E S S E T H WHEREAS, in connection with the Securities Purchase Agreement by and among the parties hereto of even date herewith (the "Securities Purchase Agreement"), the Company has agreed, upon the terms and conditions set forth therein, to issue and sell to the Initial Purchasers $3,500,000 of its 4.95% Notes due March 31, 2006 (the "Notes") and 3,614,756 shares of its common stock, par value $.001 per share (the "Common Stock"). NOW, THEREFORE, in consideration of the premises and the mutual agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. Certain Definitions. As used in this Agreement, the following terms shall have the meanings ascribed to them below: "Commission": the Securities and Exchange Commission or any successor agency. "Common Stock": Common Stock, par value $.001 per share, of the Company. "Initial Purchasers": each Initial Purchaser identified on Schedule I hereto and any Person who shall hereafter acquire Registrable Securities from any Initial Purchaser and to whom such Initial Purchaser assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 3.4(a). "Exchange Agreements" means those certain Redemption, Amendment and Exchange Agreements, each dated as of the date hereof, by and among the Company and the investors listed on the signature pages therein. "Person": any natural person, corporation, partnership, limited liability company, firm, association, trust, government, governmental agency or other entity, whether acting in an individual, fiduciary, or other capacity. "Registrable Securities": shares of Common Stock acquired, pursuant to the Securities Purchase Agreement, as listed in Schedule I hereto; provided, that any shares of Common Stock constituting Registrable Securities shall cease to be such at such time as (A) they are distributed to the public pursuant to a registration statement under the Securities Act or Rule 144 thereunder, (B) they become subject to resale pursuant to Rule 144(k) under the Securities Act (or any successor provision) ("Rule 144"), (C) the Initial Purchaser thereof may sell all such shares held by such Initial Purchaser in a single 90-day period under Rule 144 because such shares constitute not more than 1.0% of the outstanding shares of Common Stock (provided, in the case of clause (B) and this clause (C), that any shares which cease to be Registrable Securities by operation of such clauses shall again become Registrable Securities if such shares can no longer be sold in a single 90-day period pursuant to Rule 144), or (D) they shall have otherwise been transferred and the new certificate evidencing ownership thereof does not bear a restrictive legend pursuant to the Securities Act and is not subject to a stop transfer order delivered by or on behalf of the Company. For all purposes of this Agreement, a "majority in interest" of the Initial Purchasers or a group thereof shall be determined on the basis of the Registrable Securities held by them. "Registration Statement" means the registration statement or registration statements filed under the Securities Act covering the Registrable Securities. "Securities Act": the Securities Act of 1933, as amended. "Senior Securities Purchase Agreement" means the Securities Purchase Agreement, dated as of the date hereof, by and among the Company and the Buyers listed therein, in connection with the issuance and sale of convertible notes due December 31, 2007. 2. Registration Rights. 2.1 Mandatory Registrations. (a) The Company shall prepare, and, as soon as practicable but in no event later than 45 days after the Closing (as defined in the Securities Purchase Agreement) (the "Filing Deadline"), file with Securities and Exchange Commission (the "SEC") a Registration Statement covering the resale of all of the Registrable Securities. The Registration Statement prepared pursuant hereto shall register for resale all of the Registrable Securities. The Company shall use its reasonable best efforts to have the Registration Statement declared effective by the SEC as soon as practicable, but in no event later than the date which is 90 days after the Closing Date (the "Effectiveness Deadline"). (b) Registrations pursuant to this Section 2.1 shall be on Form S-3 (or any equivalent successor form), if permitted. (c) Notwithstanding anything to the contrary contained herein, the parties hereto agree that prior to September 30, 2003, the Company will not cause the Registration Statement to be declared effective prior to the effectiveness of the first registration statement under which the securities issued pursuant to the Exchange Agreement or the Senior Securities Purchase Agreement are required to be registered. 2 2.2 Effect of Failure to File and Obtain and Maintain Effectiveness of Registration Statement. If (i) a Registration Statement covering all the Registrable Securities required to be covered thereby and required to be filed by the Company pursuant to this Agreement is (A) not filed with the SEC on or before the respective Filing Deadline or (B) not declared effective by the SEC on or before 30 days after the respective Effectiveness Deadline or (ii) on any day after such Registration Statement has been declared effective by the SEC sales of all the Registrable Securities required to be included on such Registration Statement cannot be made pursuant to such Registration Statement (including, without limitation, because of a failure to keep such Registration Statement effective, to disclose such information as is necessary for sales to be made pursuant to such Registration Statement or to register sufficient shares of Common Stock), then, as partial relief for the damages to any holder by reason of any such delay in or reduction of its ability to sell the Registrable Securities (which remedy shall not be exclusive of any other remedies available at law or in equity), the Company shall pay to each holder of Registrable Securities an amount in cash equal to 3% of the number of Registrable Securities held by such Initial Purchaser as of the Filing Deadline, the 30th day after the Effectiveness Deadline or the date referred to in clause (ii) above, as the case may be. Such payments shall be due within 5 days after the relevant date and on the earlier to occur of (i) every 30 days thereafter (prorated for periods of less than 30 days) and (ii)(a) the date that the Registration Statement is declared effective, in the case of the failure to file by the Filing Deadline or to have the Registration Statement declared effective by the 30th day after the Effectiveness Deadline, or (b) the date that sales of all the Registrable Securities required to be included in the Registration Statement may lawfully resume. 2.3 Registration Procedures. When the Company, pursuant to the provisions of this Agreement, uses its reasonable best efforts to effect or cause the registration of any Registrable Securities under the Securities Act as provided in this Agreement, the Company shall, as expeditiously as possible: (a) prepare and file with the Commission a Registration Statement on Form S-3, to the extent permitted, or other available form for the disposition of Registrable Securities in accordance with the intended method of disposition thereof (provided such intended method of distribution shall not include an underwritten public offering), which form shall be available for the sale of the Registrable Securities by the selling Initial Purchasers thereof and such Registration Statement shall comply as to form in all material respects with the requirements of the applicable form and include all financial statements required by the Commission to be filed therewith, and the Company shall use its reasonable best efforts to cause such Registration Statement to become and remain effective (provided, however, that before filing a Registration Statement or prospectus or any amendments or supplements thereto, or comparable statements under securities or blue sky laws of any jurisdiction, the Company will furnish to one counsel designated by a majority of the Initial Purchasers (the "Designated Counsel") participating in the planned offering, copies of all such documents proposed to be filed (including all exhibits thereto but excluding Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and any similar or successor reports), which documents will be subject to the reasonable review and reasonable comment of such counsel; 3 (b) prepare and file with the Commission such amendments and supplements to such Registration Statement and the prospectus used in connection therewith as may be necessary to keep such Registration Statement effective for such period as any seller of Registrable Securities pursuant to such Registration Statement shall reasonably request and to comply with the provisions of the Securities Act with respect to the sale or other disposition of all Registrable Securities covered by such Registration Statement in accordance with the intended methods of disposition (provided such intended method of distribution shall not include an underwritten public offering) by the seller or sellers thereof as set forth in such Registration Statement; (c) furnish, without charge and upon request, to each seller of such Registrable Securities covered by such Registration Statement such number of copies of such Registration Statement, each amendment and supplement thereto (in each case including all exhibits), and the prospectus included in such registration statement (including each preliminary prospectus) in conformity with the requirements of the Securities Act, and other documents, as such seller may reasonably request in order to facilitate the public sale or other disposition of the Registrable Securities owned by such seller (the Company hereby consenting to the use in accordance with all applicable law of each such Registration Statement (or amendment or post-effective amendment thereto) and each such prospectus (or preliminary prospectus or supplement thereto) by each such seller of Registrable Securities in connection with the offering and sale of the Registrable Securities covered by such Registration Statement or prospectus; (d) use its reasonable best efforts to register or qualify the Registrable Securities covered by such Registration Statement under such other applicable securities or "blue sky" laws of such jurisdictions as any sellers of Registrable Securities shall reasonably request, and do any and all other acts and things which may be reasonably necessary or advisable to enable such sellers or underwriter, if any, to consummate the disposition of the Registrable Securities in such jurisdictions, except that in no event shall the Company be required to qualify to do business as a foreign corporation in any jurisdiction where it would not, but for the requirements of this paragraph (d), be required to be so qualified, to subject itself to taxation in any such jurisdiction or to consent to general service of process in any such jurisdiction; (e) promptly notify each Initial Purchaser selling Registrable Securities covered by such Registration Statement: (i) when the Registration Statement, any pre-effective amendment, the prospectus or any prospectus supplement related thereto or post-effective amendment to the Registration Statement has been filed and, with respect to the Registration Statement or any post-effective amendment, when the same has become effective; (ii) of any request by the Commission or state securities authority for amendments or supplements to the Registration Statement or the prospectus related thereto or for additional information; (iii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose; (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification of any Registrable Securities for sale under the securities or blue sky laws of any jurisdiction or the initiation of any proceeding for such purpose; and (v) of the existence of any fact of which the Company becomes aware which results in the Registration Statement, the prospectus related thereto or any document incorporated therein by reference containing an untrue statement of a material fact or omitting to state a material fact required to be stated therein or necessary to make 4 any statement therein not misleading (provided that in no event shall such notification contain any material, non-public information); and, subject to Section 2.2(m), if the notification relates to an event described in clause (v), the Company shall promptly prepare and furnish to each such seller a reasonable number of copies of a prospectus supplemented or amended so that, as thereafter delivered to the purchasers of such Registrable Securities, 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 in the light of the circumstances under which they were made not misleading; (f) comply with all applicable rules and regulations of the Commission, and make generally available to its security holders, as soon as reasonably practicable after the effective date of the Registration Statement (and in any event within 16 months thereafter), an earnings statement (which need not be audited) covering the period of at least twelve consecutive months beginning with the first day of the Company's first calendar quarter after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 1.1(a) of the Securities Act and Rule 158 thereunder; (g) (i) use its reasonable best efforts to cause all such Registrable Securities covered by such registration statement to be listed on the principal securities exchange on which similar securities issued by the Company are then listed (if any), if the listing of such Registrable Securities is then permitted under the rules of such exchange, or (ii) if no similar securities are then so listed, use reasonable best efforts to cause all such Registrable Securities to be, at the Company's option, listed on a national securities exchange or, as a NASDAQ security within the meaning of Rule 11Aa2-1 promulgated by the Commission pursuant to the Exchange Act or, failing that, secure NASDAQ authorization for such shares and without limiting the generality of the foregoing, take all actions that may be required by the Company as the issuer of such Registrable Securities in order to facilitate the managing underwriter's arranging for the registration of at least two market makers as such with respect to such shares with the National Association of Securities Dealers, Inc. (the "NASD"); (h) at the reasonable request of any Initial Purchaser, the Company shall furnish to such purchaser, not later than the next business day following the date of the effectiveness of the Registration Statement, an opinion from the Company's General Counsel in customary form covering such matters as are customarily covered by such opinions, addressed to such Initial Purchaser; (i)deliver to the Designated Counsel copies of all correspondence between the Commission and the Company, its counsel or auditors or with the Commission or its staff with respect to the Registration Statement, other than those portions of any such correspondence and memoranda which contain information subject to attorney-client privilege with respect to the Company, and, upon receipt of such confidentiality agreements as the Company may reasonably request, make reasonably available for inspection by (i) any seller of such Registrable Securities covered by such registration statement, (ii) the Designated Counsel and (iii) one firm of accountants or other agents designated by the majority of the Initial Purchasers whose Registrable Securities are included in the registration statement, all pertinent financial and other records, pertinent corporate documents and properties of the Company, and cause all of the 5 Company's officers, directors and employees to supply all information reasonably requested by any such persons or entities, in connection with such Registration Statement; (j) use its reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of the registration statement; (k) cooperate with the selling Initial Purchasers of Registrable Securities to facilitate the timely preparation and delivery of certificates representing the Registrable Securities to be sold, and cause such Registrable Securities to be issued in such denominations and registered in such names in accordance with the instructions of the selling Initial Purchasers of Registrable Securities, at least three business days prior to any sale of Registrable Securities; (l) take all such other commercially reasonable actions as the Company deems necessary or advisable in order to expedite or facilitate the disposition of such Registrable Securities in accordance with this Agreement; and (m) notwithstanding anything to the contrary herein, at any time after the Registration Statement has been declared effective by the Commission, the Company may delay the disclosure of material non-public information concerning the Company the disclosure of which at the time is not, in the good faith opinion of the Board of Directors of the Company and its counsel, in the best interest of the Company and, based upon the advice of counsel to the Company, otherwise required (a "Grace Period"); provided, that the Company shall promptly (i) notify the Initial Purchasers in writing of the existence of material non-public information giving rise to a Grace Period (provided that in each notice the Company will not disclose the content of such material non-public information to the Initial Purchasers) and the date on which the Grace Period will begin, and (ii) notify the Initial Purchasers in writing of the date on which the Grace Period ends; and, provided further, that no Grace Period shall exceed twenty (20) consecutive days and during any three hundred sixty five (365) day period such Grace Periods shall not exceed an aggregate of ninety (90) days and the first day of any Grace Period must be at least five (5) trading days after the last day of any prior Grace Period (each, an "Allowable Grace Period"). For purposes of determining the length of a Grace Period above, the Grace Period shall begin on and include the date the Initial Purchasers receive the notice referred to in clause (i) and shall end on and include the later of the date the Initial Purchasers receive the notice referred to in clause (ii), the last day on which such Grace Period will be on Allowable Grace Period and (iii) the date referred to in such notice. The provisions of the last clause of Section 2.3 (e) hereof shall not be applicable during the period of any Allowable Grace Period. Upon expiration of the Grace Period, the Company shall again be bound by the last clause of Section 2.3 (e) with respect to the information giving rise thereto unless such material non-public information is no longer applicable. It shall be a condition precedent to the Company's obligations under this Section 2 that each seller of Registrable Securities as to which any registration is being effected furnish the Company such information regarding such seller, the Registrable Securities held by it and the intended method of distribution of such securities as the Company may from time to time reasonably request provided that such information shall be used only in connection with such registration; provided, however, that any such information shall be given or made by a seller of Registrable Securities without representation or warranty of any kind whatsoever, except 6 representations with respect to the identity of the seller, such seller's Registrable Securities and such seller's intended method of distribution or any other representations required by applicable law. Each Initial Purchaser, by such Initial Purchaser's acceptance of the Registrable Securities, agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of any Registration Statement hereunder unless such Initial Purchaser has notified the Company in writing of such Initial Purchaser's election to exclude all of such Initial Purchaser's Registrable Securities from such Registration Statement. Each Initial Purchaser of Registrable Securities agrees that upon receipt of any notice from the Company of the happening of any event of the kind described in clause (v) of paragraph (e) of this Section 2.3, such Initial Purchaser will immediately discontinue such Initial Purchaser's disposition of Registrable Securities pursuant to the registration statement covering such Registrable Securities until such Initial Purchaser's receipt of the copies of the supplemented or amended prospectus contemplated by paragraph (e) of this Section 2.3 and if so directed by the Company will deliver to the Company (at the Company's expense) all copies, other than permanent file copies, then in such Initial Purchaser's possession of the prospectus covering such Registrable Securities that was in effect at the time of receipt of such notice. 2.4 Registration Expenses. The Company shall, whether or not any registration pursuant to this Agreement becomes effective, pay all reasonable and customary expenses incident to the Company's performance of or compliance with this Article 2, including (i) Commission, stock exchange or NASD registration and filing fees and all listing fees and fees with respect to the inclusion of securities in NASDAQ, (ii) fees and expenses of compliance with state securities or "blue sky" laws and in connection with the preparation of a "blue sky" survey, including without limitation, reasonable fees and expenses of blue sky counsel, (iii) printing expenses, (iv) messenger and delivery expenses, (v) internal expenses (including, without limitation, all salaries and expenses of the Company's officers and employees performing legal and accounting duties), (vi) fees and disbursements of counsel for the Company, (vii) the reasonable and documented fees and disbursements of the Designated Counsel, which amount shall not exceed $5,000, and fees and expenses of other persons, including special experts, retained by the Company. Notwithstanding the foregoing, (A) the provisions of this Section 2.4 shall be deemed amended to the extent necessary to cause these expense provisions to comply with "blue sky" laws of each state in which the offering is made and (B) in connection with any registration hereunder, each Initial Purchaser of Registrable Securities being registered shall pay all underwriting discounts and commissions and transfer taxes, if any, attributable to such Registrable Securities. 2.5 Indemnification and Contribution. (a) In the event of any registration of any of the Registrable Securities under the Securities Act pursuant to this Agreement, to the extent permitted by law, the Company will indemnify and hold harmless the seller of such Registrable Securities, and each other person, if any, who controls such seller or underwriter within the meaning of the Securities Act or the Exchange Act (each, a "Seller Indemnified Party") against any losses, claims, damages or liabilities, joint or several, to which such Seller Indemnified Party may become subject under the 7 Securities Act, the Exchange Act, state securities or Blue Sky laws or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement under which such Registrable Securities were registered under the Securities Act, any preliminary prospectus or final prospectus contained in the Registration Statement, or any amendment or supplement to such Registration Statement, or arise out of or are based upon the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and the Company will reimburse such Seller Indemnified Party for any legal or other expenses (in each case, to the extent such expenses are documented and reasonable) incurred by such Seller Indemnified Party in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the foregoing indemnification and reimbursement (i) shall not apply to the extent that any such loss, claim, damage or liability arises out of or is based upon any untrue statement or omission made in such Registration Statement, preliminary prospectus, final prospectus or in any filing made in connection with the securities or blue sky laws of any jurisdiction, or any such amendment or supplement thereto, in each case, in reliance upon and in conformity with information furnished to the Company, in writing, by or on behalf of such Seller Indemnified Party specifically for use in the preparation thereof; (ii) with respect to any preliminary prospectus, shall not inure to the benefit of any such person from whom the person asserting any such loss, claim, damage or liability purchased the Registrable Securities that are the subject thereof (or to the benefit of any person controlling such person) if the untrue statement or omission of material fact contained in the preliminary prospectus was corrected in the prospectus, as then amended or supplemented, and the Seller Indemnified Party was promptly advised in writing not to use the incorrect prospectus prior to the use giving rise to a violation and such Seller Indemnified Party, notwithstanding such advice, used it or failed to deliver the correct prospectus as required by the Securities Act; (iii) shall not be available to the extent such loss, claim, damage or liability is based on a failure of the Initial Purchaser to deliver or to cause to be delivered the prospectus made available by the Company, including a corrected prospectus; and (iv) shall not apply to amounts paid in settlement of any loss, claim, damage or liability if such settlement is effected without the prior written consent of the Company. (b) In the event of any registration of any of the Registrable Securities under the Securities Act pursuant to this Agreement, each seller of Registrable Securities, severally and not jointly, will indemnify and hold harmless the Company, each of its directors and officers and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act (each, a "Company Indemnified Party"), against any losses, claims, damages or liabilities, joint or several, to which such Company Indemnified Party may become subject under the Securities Act, Exchange Act, state securities or Blue Sky laws or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement under which such Registrable Securities were registered under the Securities Act, any preliminary prospectus, final prospectus or summary prospectus contained in the Registration Statement, or any amendment or supplement to the Registration Statement, or arise out of or are based upon any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, if the statement or omission was made in reliance upon and in conformity with information relating to such seller furnished in writing to the Company by or on behalf of such seller specifically for use in connection with the 8 preparation of such Registration Statement, preliminary prospectus, final prospectus, or in any filing made in connection with the securities or blue sky laws of any jurisdiction or any amendment or supplement thereto and each seller of Registrable Securities shall reimburse the Company for any legal or other expenses (in each case, to the extent such expenses are documented and reasonable) incurred by such Company Indemnified Party in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the obligations of such Initial Purchasers hereunder shall be limited to an amount equal to the proceeds to each Initial Purchaser of Registrable Securities sold in connection with such registration. (c) Each party entitled to indemnification under this Section 2.5 (the "Indemnified Party") shall give notice to the party required to provide indemnification (the "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 any such claim or any litigation resulting therefrom; provided, that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not be unreasonably withheld); 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 2.5 except to the extent, if any, that the Indemnifying Party shall have been actually prejudiced as a result of such failure (except that the Indemnifying Party shall not be liable for any expenses incurred during the period in which the Indemnified Party failed to give such notice). The Indemnified Party may participate in such defense at such party's expense; provided, however, that the Indemnifying Party shall pay such expense if representation of such Indemnified Party by the counsel retained by the Indemnifying Party would be inappropriate due to actual or potential differing interests between the Indemnified Party and any other party represented by such counsel in such proceeding. 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 which 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 of such claim or litigation, and no Indemnified Party shall consent to entry of any judgment or settle such claim or litigation without the prior written consent of the Indemnifying Party. (d) In order to provide for just and equitable contribution to joint liability under the Securities Act in any case in which either (i) any holder of Registrable Securities exercising rights under this Agreement, or any controlling person of any such holder, makes a claim for indemnification pursuant to this Section 2.5 but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that this Section 2.5 provides for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of any such selling Investor or any such controlling person in circumstances for which indemnification is provided under this Section 2.5; then, in each such case, the Company and such Initial Purchaser will contribute to the aggregate losses, claims, damages or liabilities to which they may be subject (after contribution from others) in such proportions so that such holder is responsible for the portion represented by the percentage that the public offering price of its Registrable Securities offered by the Registration Statement bears to the public offering price of all securities offered by such 9 Registration Statement, and the Company is responsible for the remaining portion; provided, however, that, in any such case, (A) no such holder will be required to contribute any amount in excess of the proceeds to it of all Registrable Securities sold by it pursuant to such Registration Statement, and (B) no person or entity guilty of fraudulent misrepresentation, within the meaning of Section 11(f) of the Securities Act, shall be entitled to contribution from any person or entity who is not guilty of such fraudulent misrepresentation. 2.6 Grant of Further Registration Rights. For so long as the Initial Purchasers hold Registrable Securities, the Company shall not grant any registration rights to any person without the prior written consent of a majority in interest of the Initial Purchasers, and which consent may be withheld in the Initial Purchaser' sole discretion unless such registration rights are subordinate in every respect to the rights of the Initial Purchasers pursuant to this Agreement. 3. General. 3.1 Rule 144. If the Company shall have filed a registration statement pursuant to the requirements of Section 12 of the Exchange Act or a registration statement pursuant to the requirements of the Securities Act in respect of the Common Stock, the Company covenants that it will timely file the reports required to be filed by it under the Securities Act or the Exchange Act (including, but not limited to, the reports under Sections 13 and 15(d) of the Exchange Act referred to in subparagraph (c)(1) of Rule 144 under the Securities Act), and will take such further action as any Initial Purchaser of Registrable Securities may reasonably request, all to the extent required from time to time to enable such Initial Purchaser to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by (i) Rule 144 under the Securities Act, as such Rule may be amended from time to time, or (ii) any similar rule or regulation hereafter adopted by the Commission. Upon the request of any Initial Purchaser of Registrable Securities (so long as such purchaser owns such Registrable Securities), the Company will deliver to such Initial Purchaser a written statement as to whether it has complied with such requirements. 3.2 Notices and Other Communications. All notices, requests, demands and other communications made in connection with this Agreement shall be in writing and shall be deemed to have been duly given (a) on the date of delivery, if delivered to the persons identified below, (b) five calendar days after mailing if mailed, with proper postage, by certified or registered mail, return receipt requested, (c) on the date of receipt if sent by telecopy, and confirmed in writing in the manner set forth in (b) on or before the next day after the sending of the telecopy, or (d) one business day after delivered to a nationally recognized overnight courier service marked for overnight delivery, in each case addressed to the Initial Purchasers at their respective addresses set forth on the stock records of the Company, and to the Company at: Viewpoint Corporation 498 Seventh Avenue, Suite 1810 New York, New York 10018 Attention: Jeffrey J. Kaplan, Executive Vice President, Business Affairs and Brian J. O'Donoghue, Executive Vice President and General Counsel Telephone: (212) 201-0800 Telecopy No. (212) 201-0846 10 Milbank, Tweed, Hadley & McCloy LLP 1 Chase Manhattan Plaza New York, New York 10005 Telephone: (212) 530-5171 Facsimile: (212) 822-5171 Attention: Alexander M. Kaye, Esq. or to such other address as any party may, from time to time, designate in a written notice given in a like manner. 3.3 Amendments. This Agreement may be amended only by written instruments signed by the Company and a majority in interest of the Initial Purchasers. No waiver of any right or remedy provided for in this Agreement shall be effective unless it is set forth in writing signed by a majority in interest of the Initial Purchasers. No waiver of any right or remedy granted in one instance shall be deemed to be a continuing waiver under the same or similar circumstances thereafter arising. 3.4 Miscellaneous. (a) This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and the respective successors and assigns of the parties hereto, whether so expressed or not. This Agreement and the rights of the parties hereunder may be assigned by any of the parties hereto to any transferee of Registrable Securities if: (i) the Initial Purchaser agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company within a reasonable time after such assignment; (ii) the Company is, within a reasonable time after such transfer or assignment, furnished with written notice of (a) the name and address of such transferee or assignee, and (b) the securities with respect to which such registration rights are being transferred or assigned; (iii) immediately following such transfer or assignment the further disposition of such securities by the transferee or assignee is restricted under the Securities Act and applicable state securities laws; (iv) at or before the time the Company receives the written notice contemplated by clause (ii) of this sentence the transferee or assignee agrees in writing with the Company to be bound by all of the provisions contained herein; and (v) such transfer shall have been made in accordance with the applicable requirements of the Securities Purchase Agreement. (b) If any term, provision, covenant or restriction of this Agreement or any exhibit hereto is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement and such exhibits shall remain in full force and effect and shall in no way be affected, impaired or invalidated. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and recitations without including any of such which may be hereafter declared invalid, void or unenforceable. (c) This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more of the counterparts have been signed by each party and delivered to the other parties, it being understood that all parties need not sign the same counterpart. 11 (d) This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York, without giving effect to conflict of laws principles that would require the application of the laws of another jurisdiction. (e) Except as set forth in Sections 2.5(a) and (b), 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. [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] 12 IN WITNESS WHEREOF, the Company and Initial Purchasers have caused this Agreement to be executed and delivered by their respective officers thereunto duly authorized. THE COMPANY: VIEWPOINT CORPORATION, INC. By: /s/ Brian J. O' Donoghue --------------------------------------------- Name: Brian J. O' Donoghue Title: Executive Vice President THE INITIAL PURCHASERS: FEDERAL PARTNERS P, L.P. by Ninth Floor Corporation, its general partner By: /s/ Stephen M. Duff --------------------------------------------- Name: Stephen M. Duff Title: Treasurer /s/ Baruch Halpern -------------------------------------------------- Baruch Halpern, as Joint Tenant with the Right of Survivorship /s/ Shana Halpern ------------------------------------------------- Shana Halpern, as Joint Tenant with the Right of Survivorship CRCK, L.L.C. by Paul P. Tanico and Ellen H. Adams, its managers By: /s/ Maria Lamari Burden --------------------------------------------- Name: Maria Lamari Burden Title: Chief Financial Officer 13 Schedule I Registrable Securities as of March 26, 2003
Name of Initial Purchaser Common Shares ------------------------- ------------- Federal Partners P, L.P. 3,150,002 Baruch Halpern and Shana Halpern, as 258,197 Joint Tenants with the Rights of Survivorship CRCK, L.L.C. 206,557
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