Document:

EX-10

EX-10.3

 

BANCO POPULAR

 

April 30, 2002

 

Mr. James F. Callahan

Corporate Controller

Wallace International de Puerto

Rico, Inc.

175 McClellan Highway

East Boston, Massachusetts

02128

 

VIA FACSIMILE (617) 568-1370

 

Dear Mr. Callahan:

 

Please be advised that Wallace

International de Puerto Rico, Inc. has authorized line of credit with Banco

Popular de Puerto Rico for the amount of One million dollars ($1,000,000).  This facility bears interest at a floating

rate per annum equal to the sum of the Index Rate plus one hundred (100) basis

points.  It is required an annual clean

up to fifteen (15) calendar days during each approval period.  The expiration date for this line is March

15, 2003.

 

Please be advised that the

current Line of Credit Agreement with amendments and guarantees will continue

in full force and effect.

 

We trust this information is

useful to you.

 

Sincerely,

 

	

  /s/ Joffre

  Gomez

  	

   

  
	

  Credit &

  Commercial Relationships Officer

  	

   

  
	

  Mayaguez

  Commercial Banking CenterEXHIBIT 10

EXHIBIT

10.1

 

UNIT

PURCHASE AGREEMENT

 

This UNIT PURCHASE AGREEMENT (this “Agreement”) is

made as of February 8, 2002, by and between CENTERSPAN COMMUNICATIONS

CORPORATION, an Oregon corporation (the “Company”), and                         , a                  (the “Investor”).

 

RECITAL

 

On the terms and subject to the conditions set forth

herein, the Company desires to sell to the Investor, and the Investor desires

to purchase from the Company, Units of the Company, each Unit consisting of one

share of the Company’s Common Stock (“Common Stock”), and a warrant to purchase

one share of Common Stock.

 

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 Units

 

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 (as defined below),                Units at a price of $6.00 per Unit, for an

aggregate purchase price of $                 

 

Section 2.              Closing

 

The purchase and sale of the Units shall take place at

the offices of Perkins Coie LLP, 1211 S.W. Fifth Avenue, Portland, Oregon, at

10:00 a.m., on February 8, 2002 (which time and place are designated

as the “Closing”; the date of the Closing is referred to herein as the “Closing

Date”).  At the Closing, the Company

shall deliver to the Investor a certificate representing the aggregate shares

of Common Stock included in the Units the Investor is purchasing and a Warrant,

in substantially the form of Exhibit A attached hereto (the “Warrant”),

exercisable for the aggregate number of shares of Common Stock issuable upon

exercise of the warrants included in the Units the Investor is purchasing, in

each case against delivery to the Company by the Investor of a wire transfer of

immediately available funds in the amount of the aggregate purchase price for

such Units payable to the Company’s order.

 

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 A:

 

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 and Warrants 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.  The shares of Common Stock issuable upon

exercise of the Warrants (the “Warrant Shares”), when issued and delivered to the

Investor pursuant to the Warrant, shall be validly issued, fully paid and

nonassessable and, assuming the accuracy of the representations and warranties

contained in Section 4 as of the date of such issuance, 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 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, in each case as amended.

 

1

 

3.5          Capitalization

 

The authorized capital stock of the Company consists

of 25,000,000 shares of Common Stock, of which 8,789,206 shares were issued and

outstanding as of February 7, 2002, 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 or made available to the

Investor true and complete copies of (a) its Annual Report on Form 10–K

for the fiscal year ended December 31, 2000, (b) all Forms 8–K

filed after the date of such Form 10–K, if any, (c) its Quarterly

Reports on Form 10-Q for the quarters ended March 31, June 30 and

September 30, 2001, and (d) its Proxy Statement, dated April 16, 2001, for

the annual meeting of the Company’s shareholders which was held on May 15, 2001

(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 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.

 

3.9          S-3

Eligibility

 

As of the date hereof, the Company is eligible to use

a registration statement on Form S-3 to register resales of its Common

Stock.

 

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

 

2

 

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 and Warrants to

be received by the Investor hereunder and the Warrant Shares issuable upon

exercise of the Warrants (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 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 Securities 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 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 in

as much 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 

 

3

 

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 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

(A) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE

STATE SECURITIES LAWS COVERING ANY SUCH TRANSACTION INVOLVING SAID SECURITIES,

OR (B) SUCH TRANSACTION IS EXEMPT FROM, AND NOT SUBJECT TO, THE REGISTRATION

REQUIREMENTS OF THE ACT AND APPLICABLE STATE SECURITIES LAWS AND 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 (C) 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 indicated on

the signature pages hereof (or if not a natural person, the Investor made its

investment decision with respect to the Securities from its office located in

such state).

 

4.8          No

Intent to Control the Company

 

The Investor represents to the Company that it has no

intention to control the Company and that it is not purchasing the Securities

with a view to exerting control of the Company.  As used herein, “control” means the possession, directly or

indirectly, of the power to direct or cause the direction of the management and

policies of the Company, whether through the ownership of voting securities or

by contract or otherwise.

 

Section 5.              Conditions of the Investor’s Obligations at the Closing

 

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

 

4

 

representations and warranties had been made as of the Closing Date,

other than such representations and warranties as are made as of another date.

 

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 Units 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.

 

5.5          Legal

Opinion

 

Perkins Coie LLP, counsel to the Company, shall have

delivered to the Investor its legal opinion in substantially the form of

Exhibit B attached hereto.

 

Section 6.              Conditions of the Company’s Obligations at the Closing

 

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 included in the Units purchased under this Agreement and the

Warrant Shares (collectively, the “Registrable Shares”), a registration

statement on Form S–3 (or any successor form) on or before the date 60

days after the Closing Date to register such Registrable Shares held by the

Investor under the Act.  Any such

registration statement may also include other shares of Common Stock issued to

other investors by the Company.  The

Company shall use its best efforts to have the

 

5

 

registration statement declared effective within 120 days after the

Closing Date and to maintain the effectiveness of such registration statement

(and maintain the current status of the prospectus or prospectuses contained

therein) until the earliest of (i) the fifth anniversary of the Closing

Date, (ii) the date all such Registrable Shares have been disposed of

pursuant to such effective registration statement and (iii) the date such

Registrable Shares are sold or otherwise transferred by the Investor in a

transaction in which the rights under this Section 7 are not assigned in

accordance with Section 8.2 hereof. 

The Company shall respond to the SEC within 15 days after the Company’s

receipt of any SEC comments with respect to the registration statement or any

amendments thereto, subject to timely receipt from the Investor and other

holders of shares of Common Stock to be included in such registration statement

of information required to so respond to such comments.

 

(b)           The

Company shall not be obligated to effect any such registration pursuant to

Section 7(a):

 

(1)           if the offering is deemed by the SEC

to involve a primary offering by the Company and Form S-3 is not available for

such offering; or

 

(2)           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 Registrable

Shares then held by the Investor, subject to the provisions of

Section 7(d) below.  If an Investor

wants to include in any such registration statement all or any part of such

Registrable Shares 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 such Registrable Shares 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

an Investor to include any of the Investor’s Registrable Shares 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

Registrable Shares in the underwriting on the same terms and conditions as the

other 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

 

6

 

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 an 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 Registrable Shares excluded or withdrawn from such underwriting

shall be excluded and withdrawn from the registration.

 

(e)           The

Investor shall have no right to obtain or seek, nor shall the Investor obtain

or seek, an injunction restraining or otherwise delaying any registration as

the result of any controversy that might arise with respect to the

interpretation or implementation of this Agreement.

 

(f)            In

the event any Registrable Shares are included in a registration statement under

this Agreement or the terms of the Warrant:

 

(i)            To

the extent permitted by law, the Company will indemnify and hold harmless the

Investor and each person, if any, who controls the Investor within the meaning

of the Act or the Securities Exchange Act of 1934, as amended (the “1934 Act”),

against any losses, claims, damages, or liabilities to which they may become

subject under the Act, the 1934 Act or other federal or state law, insofar as

such losses, claims, damages, or liabilities (or actions in respect thereof)

arise out of or are based upon any of the following statements, omissions or

violations (collectively a “Violation”): (A) any untrue statement or alleged

untrue statement of a material fact contained in such registration statement,

including any preliminary prospectus or final prospectus contained therein or

any amendments or supplements thereto, (B) the omission or alleged omission to

state therein 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, or (C) any violation or alleged violation by the

Company of the Act, the 1934 Act, any state securities law or any rule or

regulation promulgated under the Act, the 1934 Act or any state securities law

in connection with such registration and sale of securities; and the Company

will pay to the Investor or such controlling person, as incurred, any legal or

other expenses reasonably incurred by them in connection with investigating or

defending any such loss, claim, damage, liability, or action; provided,

however, that the indemnity agreement contained in this subsection 7(f)(i)

shall not apply to amounts paid in settlement of any such loss, claim, damage,

liability, or action if such settlement is effected without the consent of the

Company (which consent shall not be unreasonably withheld), nor shall the

Company be liable in any such case for any such loss, claim, damage, liability,

or action to the extent that it arises out of or is based upon a Violation that

occurs in reliance upon and in conformity with written information furnished

expressly for use in connection with such registration by the Investor or such

controlling person or their respective agents.

 

(ii)           To

the extent permitted by law, the Investor will indemnify and hold harmless the

Company, each of its directors, each of its officers who has signed the

registration statement, each person, if any, who controls the Company within

the meaning of the Act, each agent and any underwriter, any other person or

entity selling securities in such registration statement and any controlling

person of any such underwriter or other person or entity, against any losses,

claims, damages, or liabilities (joint or several) to which any of the

foregoing persons may become subject, under the Act, the 1934 Act or other

federal or state law, insofar as such losses, claims, damages, or liabilities

(or actions in respect thereto) arise out of or are based upon any Violation,

in each case to the extent (and only to the extent) that such Violation occurs

in reliance upon and in conformity with written information furnished by the

Investor or its agents expressly for use in connection with such

 

7

 

 registration; and the Investor

will pay, as incurred, any legal or other expenses reasonably incurred by any

person intended to be indemnified pursuant to this subsection 7(f)(ii), in

connection with investigating or defending any such loss, claim, damage,

liability, or action; provided, however, that the indemnity agreement contained

in this subsection 7(f)(ii) shall not apply to amounts paid in settlement

of any such loss, claim, damage, liability or action if such settlement is

effected without the consent of the Investor (which consent shall not be

unreasonably withheld); and, provided further, that in no event shall any

indemnity under this subsection 7(f)(ii) exceed the net proceeds from the

offering received by the Investor.

 

(iii)          Promptly

after receipt by an indemnified party under this Section 7(f) of notice of

the commencement of any action (including any governmental action), such

indemnified party will, if a claim in respect thereof is to be made against any

indemnifying party under this Section 7(f), deliver to the indemnifying

party a written notice of the commencement thereof and the indemnifying party shall

have the right to participate in, and, to the extent the indemnifying party so

desires, jointly with any other indemnifying party similarly noticed, to assume

the defense thereof with counsel mutually satisfactory to the parties;

provided, however, that an indemnified party (together with all other

indemnified parties that may be represented without conflict by one counsel)

shall have the right to retain one separate counsel, with reasonable fees and

expenses to be paid by the indemnifying party, 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 such

indemnified party and any other party represented by such counsel in such

proceeding.  The failure to deliver

written notice to the indemnifying party within a reasonable time of the

commencement of any such action, if prejudicial to its ability to defend such

action, shall relieve such indemnifying party of any liability to the

indemnified party under this Section 7(f), but the omission so to deliver

written notice to the indemnifying party will not relieve it of any liability

that it may have to any indemnified party otherwise than under this

Section 7(f).

 

(iv)          To

the extent the indemnification provided for in this Section 7(f) is held

by a court of competent jurisdiction to be unavailable to an indemnified party

with respect to any losses, claims, damages or liabilities referred to herein,

the indemnifying party, in lieu of indemnifying such indemnified party

hereunder, shall to the extent permitted by applicable law contribute to the

amount paid or payable by such indemnified party as a result of such loss,

claim, damage or liability in such proportion as is appropriate to reflect the

relative fault of the indemnifying party on the one hand and of the indemnified

party on the other, in connection with the Violation(s) that resulted in such

loss, claim, damage or liability, as well as any other relevant equitable

considerations.  The relative fault of

the indemnifying party and of the indemnified party shall be determined by a

court of law by reference to, among other things, whether the untrue or

allegedly untrue statement of a material fact or the omission to state a

material fact relates to information supplied by the indemnifying party or by

the indemnified party and the parties’ relative intent, knowledge, access to

information and opportunity to correct or prevent such statement or omission.

 

(v)           The

obligations of the Company and the Investor under this Section 7(f) shall

survive the completion of any offering of Registrable Shares in a registration

statement under Section 7, and otherwise.

 

(g)           If

a registration statement covering Registrable Shares pursuant to this Section 7

is not declared effective by the SEC on or before the date 120 days after the

Closing Date (the “Effective Deadline”), then as relief for the damages

suffered therefrom by the Investor (which remedy shall be exclusive of any

other remedies available at law or in equity), the Company shall,

 

8

 

(i) on the Effective Deadline and on each of the first five

monthly anniversaries following the Effective Deadline until the earlier of (x)

the date such registration statement is declared effective and (y) the date 270

days after the Closing Date, pay to the Investor an amount, in cash, as

liquidated damages and not as a penalty equal to 1.0% of the purchase price

paid by the Investor pursuant to this Agreement on the Closing Date for Units

(the “Purchase Price”) and (ii) provided such registration statement is

not then declared effective, on the date 300 days after the Closing Date and on

each of the five immediately following monthly anniversaries thereof until the

earlier of (x) the date such registration statement is declared effective and

(y) the date 450 days after the Closing Date, pay to the Investor an

amount, in cash, as liquidated damages and not as a penalty equal to 1.5% of

the Purchase Price.  The payments to

which the Investor may be entitled pursuant to this Section 7(g) are referred

to herein as “Registration Delay Payments.” 

Registration Delay Payments shall be paid within five (5) business days

of the Effective Deadline and, as applicable, each monthly anniversary thereof.  If the Company fails to make Registration

Delay Payments in a timely manner, such Registration Delay Payments shall bear

interest at the rate of 8.0% per annum until paid in full.  Notwithstanding anything to the contrary,

the Company shall not be required to make any Registration Delay Payments if

the registration statement is not declared effective prior to the Effective

Deadline as a result of any comments by the SEC, or refusal of the SEC to

accept or review the registration statement for reasons, relating to or

directed at the Investor or any other purchaser of Units of the Company with

shares included in such registration statement (or any assignee or affiliate of

the Investor or any such other purchaser) in connection with the registration statement

(the Investor and any such other purchaser, assignee or affiliate being

refereed to herein each as a “Registering Party”).

 

(h)           Notwithstanding

the foregoing, without the prior written consent of the investors (the

“Required Investors”) purchasing at least 75% of the aggregate number of shares

of Common Stock included in the Units being sold by the Company on or about the

date hereof pursuant to this Agreement and other Unit Purchase Agreements in

substantially the same form as this Agreement (which consent shall not be

unreasonably withheld), the Company shall not file with the SEC any

registration statement to register shares of its capital stock until after the

registration statement described in Section 7(a) above has been declared

effective, other than any registration statements (a) relating to any

employee benefit plan of the Company or (b) required to be filed by the

Company pursuant to registration rights granted prior to the date hereof;

provided, however, that the Company shall not be bound by the provisions of

this Section 7(h) if, at any time at least 30 days after the filing date

of the registration statement described in Section 7(a), such registration

statement has not been declared effective as a result of any comments by the

SEC, or refusal of the SEC to accept or review the registration statement for

reasons, relating to or directed at any Registering Party in connection with

the registration statement.

 

(i)            With

a view to making available to the Investor the benefits of Rule 144 promulgated

under the Act, the Company agrees to (i) make and keep public information

available, as those terms are understood and defined in SEC Rule 144, at all

times, and (ii) file with the SEC in a timely manner all reports and other

documents required of the Company under the Act and the 1934 Act.(j)  The legend set forth in Section 4.6 above

shall be removed from any certificate evidencing shares of Common Stock

included in the Securities, and the Company shall cause its transfer agent

promptly to issue a certificate or certificates without any such legend (upon

surrender of the legended certificate(s) duly endorsed) to the holder of such

legended certificate(s), as long as the resale of such shares is covered by an

effective registration statement and the holder of such shares represents in

writing to the Company that such shares (i) have been or are being sold

pursuant to such registration

 

9

 

statement or pursuant to Rule 144 under the Act or (ii) may be made

pursuant to Rule 144(k) under the Act, or any successor rule or provision.

 

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, permitted

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 permitted assigns any rights, remedies,

obligations or liabilities under or by reason of this Agreement, except as

expressly provided in this Agreement. 

The rights to cause the Company to register shares of Common Stock

pursuant to Section 7 may be assigned by the Investor to a transferee or

assignee of such shares that acquires at least 50,000 shares

(appropriately adjusted for any stock dividend, stock split, or combination

applicable to the Common Stock), and who assumes the Investor’s obligations

hereunder; provided the Company is, within a reasonable time after such

transfer, furnished with written notice of the name and address of such

transferee or assignee and the Registrable Shares with respect to which such

registration rights are being assigned; and, provided, further, that such

assignment shall be effective only if immediately following such transfer the

further disposition of such shares by the transferee or assignee is restricted

under the Act.

 

8.3          Governing

Law; Jurisdiction; Venue

 

This Agreement shall be governed by and construed

under the laws of the State of New York as applied to agreements among persons

domiciled in New York entered into and to be performed entirely within the

State of New York.  The parties

irrevocably consent to the exclusive jurisdiction and venue of the state and

federal courts located in New York City in connection with any action relating

to this Agreement or the Securities.

 

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

business 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

 

10

 

7175 NW Evergreen Parkway, Hillsboro, Oregon 97124, Attention: Chief

Financial Officer, or, if to an Investor, at the address indicated for the Investor

on the signature page hereof, 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; provided, however, that the provisions

of Section 7 hereof may be amended with the written consent of the Company

and the Required Investors, with any such consent being binding upon the

Company and the Investor.

 

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.

 

8.11        Limitation

on Short Sales

 

The Investor agrees that as long as the Investor or any of its

affiliates holds or beneficially owns any Securities issued in connection with

this Agreement, neither the Investor nor any of the Investor’s affiliates will

enter into any Short Sales (as defined below). 

For purposes hereof, a “Short Sale” by the Investor or any affiliate

thereof shall mean a short sale of Common Stock or any equivalent derivative by

the Investor or any affiliate thereof that is made at a time when there is no

equivalent offsetting long position in the Company’s Common Stock held by the

Investor or such affiliate involved in such short sale.  For purposes of determining whether there is

an equivalent offsetting long position in the Common Stock held by the Investor

or any such affiliate, shares that could be received from the exercises of

Warrants issued hereunder shall be deemed to be held long by the Investor and

affiliates thereof.

 

11

 

IN WITNESS WHEREOF, the parties have duly executed

this Unit Purchase Agreement as of the date first above written.

 

	

   

  	

  CENTERSPAN COMMUNICATIONS CORPORATION

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

  Name:  Mark

  B. Conan

  
	

   

  	

  Title:  Vice

  President of Finance, Administration

  and Chief Financial Officer

  
	

   

  	

   

  
	

   

  	

  INVESTOR:

  
	

   

  	

   

  
	

   

  	

  [NAME]

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

  Name:

  
	

   

  	

  Title:

  
	

   

  	

   

  
	

   

  	

  Address:

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  Investor’s State of Residency:

  	

   

  	

   

  
											

 

S-1

 

EXHIBIT

A

 

FORM OF WARRANT

 

 

EXHIBIT

B

 

FORM OF

LEGAL OPINION

 

 

SCHEDULE

A

 

SCHEDULE OF EXCEPTIONS

 

 

Schedule

to Exhibit 10.1

 

All Unit Purchase Agreements are not required to be

filed because each of them is substantially identical to Exhibit 10.1, and the

material details by which each such Unit Purchase Agreement differs from

Exhibit 10.1 are as follows:

 

	

  Investor

  	

   

  	

  Date of

  Purchase

  	

   

  	

  Number of

  Units

  	

   

  	

  Aggregate

  Purchase

  Price

  	

   

  
	

  AIG DKR SoundShore Holdings Ltd.

  	

   

  	

  02/08/02

  	

   

  	

  23,600

  	

   

  	

  $

  	

  141,600.00

  	

   

  
	

  AIG DKR

  SoundShore Opportunity Holding Fund Ltd.

  	

   

  	

  02/08/02

  	

   

  	

  18,700

  	

   

  	

  $

  	

  112,200.00

  	

   

  
	

  AIG DKR

  SoundShore Private Investors Holding Fund Ltd.

  	

   

  	

  02/08/02

  	

   

  	

  44,600

  	

   

  	

  $

  	

  267,600.00

  	

   

  
	

  AIG DKR

  SoundShore Strategic Holding Fund Ltd.

  	

   

  	

  02/08/02

  	

   

  	

  13,100

  	

   

  	

  $

  	

  78,600.00

  	

   

  
	

  Louise G. Brooks

  IRA

  	

   

  	

  02/08/02

  	

   

  	

  6,000

  	

   

  	

  $

  	

  36,000.00

  	

   

  
	

  Gryphon Master

  Fund, L.P.

  	

   

  	

  02/08/02

  	

   

  	

  166,667

  	

   

  	

  $

  	

  1,000,0002.00

  	

   

  
	

  Frank G.

  Hausmann, Jr.

  	

   

  	

  02/08/02

  	

   

  	

  5,000

  	

   

  	

  $

  	

  30,000.00

  	

   

  
	

  Langley

  Partners, L.P.

  	

   

  	

  02/08/02

  	

   

  	

  100,000

  	

   

  	

  $

  	

  600,000.00

  	

   

  
	

  Quantico Partners,

  L.P.

  	

   

  	

  02/08/02

  	

   

  	

  66,666

  	

   

  	

  $

  	

  399,996.00

  	

   

  
	

  Steelhead

  Investments Ltd.

  	

   

  	

  02/08/02

  	

   

  	

  166,667

  	

   

  	

  $

  	

  1,000,0002.00

  	

   

  
	

  Synapse Fund II,

  LLC

  	

   

  	

  02/08/02

  	

   

  	

  41,667

  	

   

  	

  $

  	

  250,002.00

  	

   

  
	

  TCMP3 Limited

  Partnership

  	

   

  	

  02/08/02

  	

   

  	

  10,000

  	

   

  	

  $

  	

  60,000.00

  	

   

  
	

  AIG DKR SoundShore

  Holdings Ltd. (1)

  	

   

  	

  03/28/02

  	

   

  	

  39,333

  	

   

  	

  $

  	

  235,998.00

  	

   

  
	

  AIG DKR

  SoundShore Opportunity Holding Fund Ltd. (1)

  	

   

  	

  03/28/02

  	

   

  	

  31,167

  	

   

  	

  $

  	

  187,002.00

  	

   

  
	

  AIG DKR

  SoundShore Private Investors Holding Fund Ltd. (1)

  	

   

  	

  03/28/02

  	

   

  	

  74,334

  	

   

  	

  $

  	

  446,004.00

  	

   

  
	

  AIG DKR SoundShore

  Strategic Holding Fund Ltd. (1)

  	

   

  	

  03/28/02

  	

   

  	

  21,833

  	

   

  	

  $

  	

  130,998.00

  	

   

  
	

  Gryphon Master

  Fund L.P. (1)

  	

   

  	

  03/28/02

  	

   

  	

  83,333

  	

   

  	

  $

  	

  499,998.00

  	

   

  
	

  Quantico

  Partners, L.P. (1)

  	

   

  	

  03/28/02

  	

   

  	

  83,333

  	

   

  	

  $

  	

  499,998.00

  	

   

  
	

  BG Development

  Corp. Pension Fund (1)

  	

   

  	

  04/01/02

  	

   

  	

  5,000

  	

   

  	

  $

  	

  30,000.00

  	

   

  
	

  Mark B. Conan

  (1)

  	

   

  	

  04/01/02

  	

   

  	

  1,000

  	

   

  	

  $

  	

  6,000.00

  	

   

  
	

  Frank G.

  Hausmann, Jr. (1)

  	

   

  	

  04/01/02

  	

   

  	

  5,000

  	

   

  	

  $

  	

  30,000.00

  	

   

  
	

  Alfred Lee (1)

  	

   

  	

  04/01/02

  	

   

  	

  1,000

  	

   

  	

  $

  	

  6,000.00

  	

   

  
	

  G. Gerald Pratt

  (1)

  	

   

  	

  04/01/02

  	

   

  	

  10,000

  	

   

  	

  $

  	

  60,000.00

  	

   

  

 

(1)    Section 7(a) differs as

follows:

 

A.            CenterSpan is obligated to file a

registration statement on Form S-3 within 15 days of the Closing Date, as

opposed to 60 days.

 

B.             CenterSpan will use its best

efforts to have such registration statement declared effective within 75 days

of the Closing Date, as opposed to 120 days.

 

C.            CenterSpan will use its best efforts

to maintain the effectiveness of such registration statement until the earliest

of each of the events listed in the Unit Purchase Agreement filed as Exhibit

10.1 and the date the Investor is able to dispose of all Registrable Shares in

one three-month period pursuant to Rule 144 under the Securities Act of 1933,

as amended, without registration under such Act.

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