CENTERSPAN COMMUNICATIONS CORPORATION
COMMON STOCK PURCHASE AGREEMENT
Dated as of
August 6, 1999
CONTENTS
Section 1. Purchase and Sale of Common Stock .............................................. 1
Section 2. Closing ........................................................................ 1
Section 3. Representations and Warranties of the Company .................................. 2
3.1 Organization and Qualification ................................................. 2
3.2 Enforceability ................................................................. 2
3.3 Securities ..................................................................... 2
3.4 No Approvals or Notices Required; No Conflicts With Instruments ................ 2
3.5 Capitalization ................................................................. 3
3.6 SEC Documents .................................................................. 3
3.7 Full Disclosure ................................................................ 3
3.8 Brokers or Finders ............................................................. 4
Section 4. Representations and Warranties of the Investor ................................. 4
4.1 Authorization .................................................................. 4
4.2 Purchase Entirely for Own Account .............................................. 4
4.3 Disclosure of Information; Due Diligence ....................................... 5
4.4 Investment Experience; Accredited Investor Status .............................. 5
4.5 Restricted Securities .......................................................... 5
4.6 Legend ......................................................................... 6
4.7 Residency ...................................................................... 6
Section 5. Conditions of Investor's Obligations at the Closings ........................... 6
5.1 Representations and Warranties ................................................. 6
STOCK PURCHASE AGREEMENT PAGE i
5.2 Performance .................................................................... 7
5.3 Compliance Certificate ......................................................... 7
5.4 Qualification .................................................................. 7
Section 6. Conditions of the Company's Obligations at the Closings ........................ 7
6.1 Representations and Warranties ................................................. 7
6.2 Qualification .................................................................. 7
Section 7. Registration Rights ............................................................ 7
Section 8. Miscellaneous .................................................................. 9
8.1 Survival of Warranties ......................................................... 9
8.2 Successors and Assigns ......................................................... 9
8.3 Governing Law .................................................................. 10
8.4 Counterparts ................................................................... 10
8.5 Headings ....................................................................... 10
8.6 Notices ........................................................................ 10
8.7 Expenses ....................................................................... 10
8.8 Amendments and Waivers ......................................................... 10
8.9 Severability ................................................................... 11
8.10 Entire Agreement ............................................................... 11
SCHEDULES:
Schedule A: Investors
Schedule B: Schedule of Exceptions
STOCK PURCHASE AGREEMENT PAGE ii
COMMON STOCK PURCHASE AGREEMENT
This COMMON STOCK PURCHASE AGREEMENT (this "Agreement") is made as
of August 6, 1999, by and between CENTERSPAN COMMUNICATIONS CORPORATION, an
Oregon corporation (the "Company"), and PETER R. KELLOGG (the "Investor").
RECITAL
The Company desires to sell to the Investor, and the Investor desires
to purchase from the Company, shares of the Company's Common Stock, no par value
per share ("Common Stock"), upon the terms and subject to the conditions set
forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the premises, mutual covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
SECTION 1. PURCHASE AND SALE OF COMMON STOCK
Subject to the terms and conditions of this Agreement, the Investor
agrees to purchase, and the Company agrees to sell and issue to the Investor, at
the Closing, the number of shares of Common Stock set forth opposite the
Investor's name on Schedule A hereto, at a price of $18.258 per share of Common
Stock.
SECTION 2. CLOSING
(a) The purchase and sale of the Common Stock shall take place at
the offices of Perkins Coie LLP, 1211 S.W. Fifth Avenue, Portland, Oregon, at
10:00 a.m., on August 30, 1999, or at such other location and time or upon such
other date as the Company and the Investor shall mutually agree (which time and
place are designated as the "Closing").
(b) At the Closing, the Company shall deliver to the Investor a
certificate representing the shares of Common Stock which the Investor is
purchasing, against delivery to the Company by the Investor of a cashier's check
or wire transfer of funds in the amount of the purchase price for such shares
payable to the Company's order.
STOCK PURCHASE AGREEMENT PAGE 1
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Investor that, except
as set forth on a Schedule of Exceptions attached hereto as Schedule B:
3.1 ORGANIZATION AND QUALIFICATION
The Company is a corporation duly organized and validly existing under
the laws of the State of Oregon. The Company is duly qualified to transact
business and is in good standing in each jurisdiction in which the failure to so
qualify would have a material adverse effect on the assets, condition (financial
or other), prospects or business of the Company (a "Company Material Adverse
Effect").
3.2 ENFORCEABILITY
The Company has the requisite corporate power and authority to execute,
deliver and perform its obligations under this Agreement and each of the
certificates, instruments and documents executed or delivered by it pursuant to
the terms of this Agreement. All corporate action on the part of the Company
necessary for the authorization, execution and delivery of this Agreement and
the performance of all of its obligations under this Agreement has been taken.
This Agreement has been duly executed and delivered by the Company, and this
Agreement is a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as to the effect, if
any, of (a) applicable bankruptcy and other similar laws affecting the rights of
creditors generally, (b) rules of law governing specific performance, injunctive
relief and other equitable remedies, and (c) the enforceability of provisions
requiring indemnification in connection with the offering, sale or issuance of
securities.
3.3 SECURITIES
The Common Stock to be issued pursuant to this Agreement, when issued
and delivered to the Investor pursuant to this Agreement, shall be validly
issued, fully paid and nonassessable and, assuming the accuracy of the
representations and warranties contained in Section 4, issued in compliance with
applicable federal and state securities laws.
3.4 NO APPROVALS OR NOTICES REQUIRED; NO CONFLICTS WITH
INSTRUMENTS
The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not (a) constitute a
violation (with or without the giving of notice or lapse of time, or both) of
any
STOCK PURCHASE AGREEMENT PAGE 2
provision of law or any judgment, decree, order, regulation or rule of any
court or other governmental authority applicable to the Company; (b) require any
consent, approval or authorization of, or declaration, filing or registration
with, any person or entity, except (i) compliance with applicable securities
laws and (ii) such consents, approvals, authorizations, declarations, filings
and registrations (A) which have been or as of the Closing Date will have been
obtained or effected or (B) the failure of which to obtain or effect would not,
both individually and in the aggregate, have a Company Material Adverse Effect;
(c) result in a default (with or without the giving of notice or lapse of time,
or both) under, or acceleration or termination of, or the creation in any party
of the right to accelerate, terminate, modify or cancel any agreement or
document filed as an exhibit the Company's SEC Documents (as defined below),
except for such defaults, accelerations, terminations or creations of such
rights which would not, both individually and in the aggregate, have a Company
Material Adverse Effect; or (d) conflict with or result in a breach of or
constitute a default under any provision of the Articles of Incorporation or
Bylaws of the Company.
3.5 CAPITALIZATION
The authorized capital stock of the Company consists of 25,000,000
shares of Common Stock, of which 4,893,426 shares were issued and outstanding as
of July 31, 1999, and 5,000,000 shares of preferred stock, par value $0.01 per
share, none of which is issued or outstanding. Such issued and outstanding
shares of Common Stock are validly issued, fully paid and nonassessable.
3.6 SEC DOCUMENTS
The Company has furnished the Investor with true and complete copies of
(i) its Annual Report on Form 10-K for the fiscal year ended December 31, 1998,
(ii) all Forms 8-K filed after the date of such Form 10-K, if any, (iii) its
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999 and June
30, 1999, and (iv) a draft (dated August 26, 1999) of its Proxy Statement for
the special meeting of the Company's shareholders to be held in September 1999
(collectively, the "SEC DOCUMENTS"). As of their respective filing dates, each
of the SEC Documents complied in all material respects with the requirements of
the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and the
rules and regulations of the Securities and Exchange Commission promulgated
thereunder.
3.7 FULL DISCLOSURE
The information furnished by the Company to the Investor or its
representatives in connection with this Agreement (including, without
limitation, the information contained in the SEC Documents, as the same may have
been updated by
STOCK PURCHASE AGREEMENT PAGE 3
filings by the Company with the Securities and Exchange Commission after the
date hereof but prior to the Closing Date), when taken together, does not
contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements so made or information so
delivered, in light of the circumstances under which they were made, not
misleading.
3.8 BROKERS OR FINDERS
The Company has not incurred, and will not incur, directly or
indirectly, as a result of any action taken by or on behalf of the Company, any
liability for brokerage or finders' fees or agents' commissions or any similar
charges in connection with this Agreement or any transaction contemplated
hereby, except for the Company's warrants to be issued to First Montauk
Securities on behalf of Lucas Capital Management, Inc.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
The Investor hereby represents and warrants for itself, and not for any
other Investor that:
4.1 AUTHORIZATION
All corporate or other similar action, if any, required on the part of
the Investor for the authorization, execution and delivery of this Agreement and
the other agreements and transactions contemplated herein, and the performance
of all of the Investor's obligations hereunder and thereunder have been taken,
and this Agreement constitutes, and when executed and delivered by the Investor
the other agreements contemplated herein to which the Investor is a party will
constitute, valid and legally binding obligations of the Investor, enforceable
in accordance with their respective terms, except as to the effect, if any, of
(a) applicable bankruptcy and other similar laws affecting the rights of
creditors generally, (b) rules of law governing specific performance, injunctive
relief and other equitable remedies, and (c) the enforceability of provisions
requiring indemnification in connection with the offering, sale or issuance of
securities. The Investor has full power and authority to execute, deliver and
perform its obligations under this Agreement and such other agreements and to
own the Common Stock to be received by the Investor hereunder (collectively, the
"Securities").
4.2 PURCHASE ENTIRELY FOR OWN ACCOUNT
This Agreement is made with the Investor in reliance upon the
Investor's representation to the Company, which by the Investor's execution of
this Agreement
STOCK PURCHASE AGREEMENT PAGE 4
the Investor hereby confirms, that the Securities will be acquired for
investment for the Investor's own account, and not with a view to the
distribution of any part thereof, and that the Investor has no present
intention of selling, granting any participation in, or otherwise
distributing the same in a manner contrary to the Securities Act of 1933, as
amended (the "Act"), or applicable state securities laws.
4.3 DISCLOSURE OF INFORMATION; DUE DILIGENCE
The Investor has received and reviewed a copy of each SEC Document. The
Investor represents and acknowledges that it has been solely responsible for its
own "due diligence" investigation of the Company and of the management and
business of the Company, for its own analysis of the merits and risks of this
investment, and for its own analysis of the fairness and desirability of the
terms of the investment; that in taking any action or performing any role
relative to the arranging of the proposed investment, the Investor has acted
solely in its own interests.
4.4 INVESTMENT EXPERIENCE; ACCREDITED INVESTOR STATUS
The Investor is an investor in securities of the type of the Common
Stock and acknowledges that the Securities are a speculative risk. The Investor
is able to fend for itself in the transactions contemplated by this Agreement,
can bear the economic risk of its investment (including possible complete loss
of such investment) for an indefinite period of time and has such knowledge and
experience in financial or business matters that it is capable of evaluating the
merits and risks of the investment in the Securities. The Investor represents it
has not been organized for the purpose of acquiring the Securities. The Investor
understands that the Securities have not been registered under the Act, or under
the securities laws of any jurisdiction, by reason of reliance upon certain
exemptions, and that the reliance of the Company on such exemptions is
predicated upon the accuracy of the Investor's representations and warranties in
this Section 4. The Investor is familiar with Regulation D promulgated under the
Act and is an "accredited investor" as defined in Rule 501(a) of such Regulation
D.
4.5 RESTRICTED SECURITIES
The Investor understands that the Securities are characterized as
"restricted securities" under the federal securities laws inasmuch as they are
being acquired from the Company in a transaction not involving a public offering
and that under such laws and applicable regulations such securities may be
resold without registration under the Act only in certain limited circumstances
and in accordance with the terms and conditions set forth in the legend
described in Section 4.6 below. In this connection, the Investor represents that
it is familiar with Rule 144 promulgated under the Act, as
STOCK PURCHASE AGREEMENT PAGE 5
currently in effect, and understands the resale limitations imposed thereby
and by the Act.
4.6 LEGEND
It is understood that the certificates evidencing the Securities may
bear the following or a similar legend:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE
STATE LAW, AND NO INTEREST THEREIN MAY BE SOLD, DISTRIBUTED, ASSIGNED,
OFFERED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS (i) THERE IS AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS COVERING ANY SUCH TRANSACTION INVOLVING SAID
SECURITIES, (ii) THIS CORPORATION RECEIVES AN OPINION OF LEGAL COUNSEL
FOR THE HOLDER OF THESE SECURITIES SATISFACTORY TO THIS CORPORATION
STATING THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION, OR (iii)
THIS CORPORATION OTHERWISE SATISFIES ITSELF THAT SUCH TRANSACTION IS
EXEMPT FROM REGISTRATION.
4.7 RESIDENCY
For purposes of the application of state securities laws, the Investor
represents that it is a resident of the state set forth opposite the Investor's
name on Schedule A hereto.
SECTION 5. CONDITIONS OF INVESTOR'S OBLIGATIONS AT THE CLOSINGS
The obligations of the Investor under Section 1 of this Agreement are
subject to the fulfillment at or before the Closing of each of the following
conditions:
5.1 REPRESENTATIONS AND WARRANTIES
The representations and warranties of the Company contained in Section
3 hereof shall be true in all material respects on and as of the Closing Date
with the same effect as though such representations and warranties had been made
as of the Closing Date, other than such representations and warranties as are
made as of another date.
STOCK PURCHASE AGREEMENT PAGE 6
5.2 PERFORMANCE
The Company shall have performed and complied in all material respects
with all agreements, obligations and covenants contained in this Agreement that
are required to be performed or complied with by it on or before the Closing
Date.
5.3 COMPLIANCE CERTIFICATE
The Chief Executive Officer of the Company shall deliver to the
Investor at the Closing a certificate certifying that the conditions specified
in Sections 5.1 and 5.2 have been fulfilled.
5.4 QUALIFICATION
The offer and sale of the Securities to the Investor pursuant to this
Agreement shall be qualified or exempt from qualification under all applicable
federal and state securities laws, which qualification or exemption the Company
shall have exercised its reasonable best efforts to obtain.
SECTION 6. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT THE CLOSINGS
The obligations of the Company to the Investor under this Agreement are
subject to the fulfillment at or before the Closing of each of the following
conditions:
6.1 REPRESENTATIONS AND WARRANTIES
The representations and warranties of the Investor contained in Section
4 shall be true in all material respects on and as of the Closing Date with the
same effect as though such representations and warranties had been made as of
the Closing Date.
6.2 QUALIFICATION
The offer and sale to the Investor of the Securities shall be qualified
or exempt from qualification under all applicable federal and state securities
laws, which qualification or exemption the Company shall have exercised its
reasonable best efforts to obtain.
SECTION 7. REGISTRATION RIGHTS
(a) Subject to Section 7(b) below, the Company shall file, with
respect to the shares of Common Stock purchased under this Agreement, a
registration statement on Form S-3 (or any successor form) on or before the
180th day after the Closing Date to register the Securities held by the Investor
under the Act. The Company shall use commercially reasonable efforts to have the
registration statement declared effective
STOCK PURCHASE AGREEMENT PAGE 7
and to maintain the effectiveness of such registration statement (and
maintain the current status of the prospectus or prospectuses contained
therein) for at least 120 days.
(b) The Company shall not be obligated to effect any such
registration pursuant to Section 7(a):
(1) if Form S-3 is not available for such offering by the
Investor;
(2) if the Company shall furnish to the Investor a
certificate signed by the President or Chief Executive Officer of the
Company stating that in the good faith judgment of the Board of
Directors of the Company, it would be materially detrimental to the
Company and its shareholders for such Form S-3 registration to be
effected at such time, in which event the Company shall have the right
to defer the filing of the Form S-3 registration statement for a period
of not more than ninety (90) days after the expiration of the 180-day
period set forth above; or
(3) in any particular jurisdiction in which the Company
would be required to qualify to do business or to execute a general
consent to service of process in effecting such registration.
(c) The Company shall notify the Investor in writing at least
thirty (30) days prior to filing any registration statement under the Act for
purposes of effecting a public offering of securities of the Company (including,
but not limited to, registration statements relating to secondary offerings of
securities of the Company, but excluding registration statements relating to any
registration under Section 7(a) of this Agreement or to any employee benefit
plan or a corporate reorganization) and will afford the Investor an opportunity
to include in such registration statement all or any part of the Securities then
held by the Investor, subject to the provisions of Sections 7(d) and 7(e) below.
If the Investor wants to include in any such registration statement all or any
part of the Securities held by the Investor, the Investor shall within twenty
(20) days after receipt of the above-described notice from the Company, so
notify the Company in writing, and in such notice shall inform the Company of
the number of Securities the Investor wishes to include in such registration
statement.
(d) If a registration statement under which the Company gives
notice under Section 7(c) is for an underwritten offering, then the Company
shall so advise the Investor. In such event, the right of the Investor to
include any of the Investor's Securities in a registration pursuant to Section
7(c) shall be conditioned upon the Investor's participation in such underwriting
and the inclusion of the Investor's Securities in the underwriting on the same
terms and conditions as the other
STOCK PURCHASE AGREEMENT PAGE 8
participants in such offering, including, without limitation, entering into
an underwriting agreement in customary form with the managing underwriter or
underwriters selected for such underwriting (including a market stand-off
agreement of up to 180 days if required by such underwriters).
Notwithstanding any other provision of this Agreement, if the managing
underwriter(s) determine(s) in good faith that marketing factors require a
limitation of the number of shares to be underwritten, then the managing
underwriter(s) may exclude shares from the registration and the underwriting,
and the number of shares that may be included in the registration and the
underwriting shall be allocated, FIRST, to the Company, SECOND, to each
holder of registration rights granted by the Company before the date of this
Agreement that contractually require the Company to include such holder's
shares on a priority basis, and THIRD, to the Investor and any other holder
of registration rights granted by the Company (excluding those covered
above), on a pro rata basis based on the total number of shares of Common
Stock then sought to be included by each in such offering. If the Investor
disapproves of the terms of any such underwriting, the Investor may elect to
withdraw therefrom by written notice to the Company and the underwriter(s),
delivered at least ten (10) business days prior to the effective date of the
registration statement. Any Securities excluded or withdrawn from such
underwriting shall be excluded and withdrawn from the registration.
(e) The Investor may not have any Securities registered pursuant
to any registration statement initiated pursuant to the Registration Rights
Agreement, dated as of June 9, 1999, among the Company, Strong River Investment
Inc., and Bay Harbor Investments, Inc.
SECTION 8. MISCELLANEOUS
8.1 SURVIVAL OF WARRANTIES
The warranties, representations and covenants contained in or made
pursuant to this Agreement shall survive the execution and delivery of this
Agreement and the Closing.
8.2 SUCCESSORS AND ASSIGNS
The terms and conditions of this Agreement shall inure to the benefit
of and be binding upon the respective successors, assigns, heirs and legal
representatives of the parties. Nothing in this Agreement, express or implied,
is intended to confer upon any party other than the parties hereto and their
respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
STOCK PURCHASE AGREEMENT PAGE 9
8.3 GOVERNING LAW
This Agreement shall be governed by and construed under the laws of the
State of Oregon as applied to agreements among persons domiciled in Oregon
entered into and to be performed entirely within the State of Oregon.
8.4 COUNTERPARTS
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
8.5 HEADINGS
The headings used in this Agreement are used for convenience only and
are not to be considered in construing or interpreting this Agreement.
8.6 NOTICES
Unless otherwise provided, any notice required or permitted under this
Agreement shall be given in writing and shall be deemed effectively given upon
personal delivery to the party to be notified or three days after deposit in the
United States Mail, postage prepaid, registered or certified with return receipt
requested and addressed to the party to be notified, if to the Company, at 7175
NW Evergreen Parkway, Hillsboro, Oregon 97124, Attention: Frank Hausmann, or, if
to an Investor, at the address indicated for the Investor on Schedule A hereto,
or at such other address as any such party may designate by ten days' advance
written notice to the other parties given in the foregoing manner.
8.7 EXPENSES
The Company shall pay all costs and expenses incurred by it with
respect to the preparation and performance of this Agreement. The Investor shall
pay all costs and expenses incurred thereby with respect to the preparation and
performance of this Agreement.
8.8 AMENDMENTS AND WAIVERS
This Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of the Company and
the Investor.
STOCK PURCHASE AGREEMENT PAGE 10
8.9 SEVERABILITY
If one or more provisions of this Agreement is held to be unenforceable
under applicable law, such provision shall be excluded from this Agreement, and
the balance of this Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
8.10 ENTIRE AGREEMENT
This Agreement constitutes the full and entire understanding and
agreement between the parties with respect to the subject matter hereof, and
supersedes all prior agreements with respect to the subject matter hereof, other
than any confidentiality agreements entered into in connection with the
transactions contemplated hereby.
[This space intentionally left blank.]
STOCK PURCHASE AGREEMENT PAGE 11
IN WITNESS WHEREOF, the parties have duly executed this Common Stock
Purchase Agreement as of the date first above written.
CENTERSPAN COMMUNICATIONS CORPORATION
By:
-----------------------------
Name: Frank G. Hausmann
Title: Chief Executive Officer
and President
INVESTOR:
By:
-----------------------------
Name:
Title:
STOCK PURCHASE AGREEMENT PAGE S-1
SCHEDULE A
INVESTOR
SHARES OF PURCHASE
STATE COMMON PRICE FOR
OF STOCK COMMON
INVESTOR AND ADDRESS RESIDENCE PURCHASED STOCK
- -------------------- --------- --------- ---------
Peter R. Kellogg 273,853 $5,000,008.10
SCHEDULE B
SCHEDULE OF EXCEPTIONS