SECURITIES PURCHASE AGREEMENT by Dialogic Inc.
Company: Dialogic Inc.
SEC CIK: 1366649
SEC Type: EX-10.1
SIC Code: 7373
SIC Industry: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN
Date Filed: 2012-04-13
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement is entered into and dated as of April 11, 2012 (this Agreement), by and among Dialogic Inc., a Delaware corporation with offices located at 1504 McCarthy Boulevard Milpitas, California 95035-7405 (the Company) and the purchasers identified on the Schedule of Purchasers attached hereto (each, a Purchaser and, together, the Purchasers). Capitalized terms not defined below shall have the meaning as set forth in Section 1.1.
A. The Company and each Purchaser is executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the Securities Act), and Rule 506 of Regulation D (Regulation D) as promulgated by the United States Securities and Exchange Commission (the Commission) under the Securities Act.
B. The Company has authorized a new series of special voting preferred stock of the Company designated as Series D-1 Preferred Stock, $0.001 par value, the terms of which are set forth in the certificate of designations for such series of preferred stock (the Certificate of Designations) in the form attached hereto as Exhibit A (together with any shares of preferred stock issued in replacement thereof in accordance with the terms of the Certificate of Designations, the Series D-1 Preferred Stock).
C. The Company has authorized a new series of convertible promissory notes of the Company, in the form attached hereto as Exhibit B (collectively, the Notes), convertible into shares of Common Stock (as converted, collectively, the Conversion Shares), in accordance with the terms of the Notes.
D. Each Purchaser wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, (i) the aggregate number of shares of Common Stock set forth opposite such Purchasers name in column (3) on the Schedule of Purchasers (such aggregate number of shares of Common Stock issued to all Purchasers, the Common Shares), (ii) an aggregate principal amount of Notes set forth opposite such Purchasers name in column (4) on the Schedule of Purchasers, and (iii) the aggregate number of shares of Series D-1 Preferred Stock set forth opposite such Purchasers name in column (5) on the Schedule of Purchasers (such aggregate number of shares of Series D-1 Preferred Stock issued to all Purchasers who receive Series D-1 Preferred Stock, the Preferred Shares).
E. At the Closing, the parties hereto shall execute and deliver a Registration Rights Agreement, in the form attached hereto as Exhibit C (the Registration Rights Agreement), pursuant to which the Company has agreed to provide certain registration rights with respect to the Registrable Securities under the Securities Act, the rules and regulations promulgated thereunder and applicable state securities laws.
F. The Common Shares, the Preferred Shares, the Notes and the Conversion Shares are collectively referred to herein as the Securities.
G. On October 1, 2010, the Company, certain of the Purchasers (the Loan Purchasers) and certain other lenders (the Other Lenders) entered into that certain Second Amended and Restated Credit Agreement (as amended, restated, substituted and modified from time to time, the Existing Credit Agreement).
H. On March 22, 2012, the Loan Purchasers amended and restated the Existing Credit Agreement, in the form attached hereto as Exhibit D (as amended by the First Amendment dated as of the date hereof and as otherwise amended, restated, substituted and modified from time to time, the Credit Agreement), and the Loan Purchasers have agreed to apply to the payment of the Purchase Price of the Securities being purchased by such Loan Purchaser hereunder (i) such portion of the outstanding principal amount of the Loans (as defined in the Credit Agreement) as set forth opposite such Purchasers name in column (6) on the Schedule of Purchasers (the Applied Principal Amount), (ii) such portion of the outstanding principal amount of the Loans which represented the Existing Accrued Interest (as defined in the Credit Agreement) that was capitalized and added to the outstanding principal amount of the Loans pursuant to the Credit Agreement as set forth opposite such Purchasers name in column (7) on the Schedule of Purchasers (the Applied Interest Amount), and (iii) such portion of the outstanding prepayment premium on the Applied Principal Amount as set forth opposite such Purchasers name in column (8) on the Schedule of Purchasers (the Applied Premium Amount).
I. The Company, Dialogic and each of the Purchasers that is a party to its respective loan agreement with Dialogic listed on the Schedule of Loan Agreements, and that has provided certain loans to the Company pursuant to such loan agreement, have agreed to apply to the payment of the Purchase Price of the securities being purchased by such Purchasers hereunder (i) such portion of the outstanding principal amount of the loans under its respective loan agreement as set forth opposite such Purchasers name in column (10) on the Schedule of Purchasers (the Stockholders Applied Principal Amount), and (ii) such portion of the amount of accrued and unpaid interest on such loans under such respective loan agreements as set forth opposite such Purchasers name in column (11) on the Schedule of Purchasers (the Stockholders Applied Interest Amount).
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser, severally and not jointly, agree as follows:
1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, the following terms shall have the meanings set forth in this Section 1.1:
8-K Filing is defined in Section 4.6.
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Affiliate of a Person means any other Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with the first Person, as such terms are used in and construed under Rule 144 promulgated under the Securities Act. Without limiting the foregoing with respect to a Purchaser, any investment fund or managed account that is managed on a discretionary basis by the same investment manager as such Purchaser will be deemed to be an Affiliate of such Purchaser.
Agreement is defined in the Preamble hereto.
Applicable Law means all laws, rules and regulations applicable to a Person, its Property or a transaction, as the case may be, including but not limited to, all applicable common law principles and all provisions of all applicable Canadian and United States federal, provincial, state, local and foreign constitutions, treatises, codes, statutes, rules, regulations, orders and ordinances of any Governmental Authority; and writs, orders, judgments, injunctions and decrees of all courts and arbitrators.
Applied Interest Amount is defined in the Recitals.
Applied Premium Amount is defined in the Recitals.
Applied Principal Amount is defined in the Recitals.
Available Undersubscription Amount is defined in Section 4.8(a)(ii).
Basic Amount is defined in Section 4.8(a)(i).
BHCA is defined in Section 3.1(ss).
Bloomberg means Bloomberg, L.P.
Business Day means any day except Saturday, Sunday and any day which is a federal legal holiday or a day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.
Buy-In Price is defined in Section 4.1(d).
Capital Lease means, at any time, a lease with respect to which the lessee is required concurrently to recognize the acquisition of an asset and the incurrence of a liability in accordance with GAAP.
Cash Amount is defined in Section 2.4.
Certificate of Designations is defined in the Recitals.
Closing is defined in Section 2.2.
Closing Date is defined in Section 2.2.
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Closing Sale Price means, for any security as of any date, the last closing trade price for such security on the Trading Market, as reported by Bloomberg, or, if the Trading Market begins to operate on an extended hours basis and does not designate the closing trade price, then the last trade price of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if the Trading Market is not the principal securities exchange or trading market for such security, the last trade price of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last trade price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no last trade price is reported for such security by Bloomberg, the average of the ask prices of any market makers for such security as reported in the OTC Link or pink sheets by OTC Markets Group Inc. (formerly Pink OTC Markets Inc.). If the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period.
Code means the Internal Revenue Code of 1986, as amended from time to time, and the rules and regulations promulgated thereunder from time to time.
Commission is defined in the Recitals.
Common Shares is defined in the Recitals.
Common Stock means the common stock of the Company, par value $0.001 per share, and any securities into which such common stock may hereafter be reclassified or converted.
Common Stock Equivalents means, collectively, Options and Convertible Securities.
Company is defined in the Preamble hereto.
Company Intellectual Property means all Intellectual Property Rights used in or necessary for the conduct of the business of the Company or any of its Subsidiaries, or owned or licensed for use in connection with, or reasonably deemed necessary in the conduct of, the business of the Company or any of its Subsidiaries.
Company-Owned IP Rights means the Company Intellectual Property that the Company or any of its Subsidiaries owns.
Company Technology shall mean all Technology used in or necessary for the conduct of the business of the Company or any of its Subsidiaries or owned or licensed for use in connection with the business of the Company or any of its Subsidiaries.
Company Websites is defined in Section 3.1(q)(xii).
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Contingent Obligation means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto.
Contract shall mean any Contract: (a) to which the Company or any of the Subsidiaries is a party; (b) by which the Company or any of the Subsidiaries or any Company Intellectual Property or any other asset of the Company or any of the Subsidiaries is or may become bound or under which the Company or any of the Subsidiaries has, or may become subject to, any obligation; or (c) under which the Company or any of the Subsidiaries has or may acquire any right or interest. For the avoidance of doubt, end user license agreements constitute Contracts to the extent not overridden by other signed Contracts.
Contractual Obligation, as applied to any Person, means any provision of any security (as defined in the next sentence) issued by that Person or of any material indenture, mortgage, deed of trust, contract, undertaking, agreement or other instrument to which that Person is a party or by which it or any of its Properties is bound or to which it or any of its Properties is subject. For the purposes of this definition, securities means any stock, shares, partnership interests, voting trust certificates, certificates of interest or participation in any profit-sharing agreement or arrangement, options, warrants, bonds, debentures, notes, or other evidences of indebtedness, secured or unsecured, convertible, subordinated, certificated or uncertificated, or otherwise, or in general any instruments commonly known as securities or any certificates of interest, shares or participations in temporary or interim certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire, any of the foregoing.
Conversion Shares is defined in the Recitals.
Convertible Securities means any stock or securities (other than Options) directly or indirectly convertible into or exercisable or exchangeable for Common Stock.
Credit Agreement is defined in the Recitals.
Dialogic means Dialogic Corporation.
DTC is defined in Section 4.1(b).
Eligible Market means any of The New York Stock Exchange, Inc., the NYSE Amex Equities, the NASDAQ Global Select Market, the NASDAQ Capital Market or the Trading Market.
Employee means any current officer, director, consultant, employee, independent contractor, agent and other Person who renders services to the Company or any of its Subsidiaries.
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Employee Benefit Plan means (i) any employee benefit plan as defined in Section 3(3) of ERISA (whether or not such plan is subject to ERISA) which is or was maintained or contributed to by any of the Companys U.S. Subsidiaries and (ii) any Employee Program set forth on Schedule 3.1(m)(vii).
Employee Program means any employee benefit arrangement maintained or contributed to by the Company or any of its Subsidiaries which is (i) the portion of any employment or consulting agreement which provide employee benefits; (ii) an arrangement providing for insurance coverage or workers compensation benefits; (iii) an incentive bonus or deferred bonus arrangement; (iv) a stock purchase or stock option arrangement, including any employee stock ownership plan; (v) a death benefit arrangement; (vi) an arrangement providing termination allowance, salary continuation, severance, retention compensation or similar benefits; (vii) a change in control agreement; (viii) an equity compensation or profit-sharing plan (ix) a deferred compensation plan; (x) an employee relocation, a tuition reimbursement, psychiatric or other counseling, dependent care assistance, or legal assistance plan or arrangement; (xi) a fringe benefit arrangement (cash or non-cash); (xii) a holiday or vacation plan or policy; (xiii) any welfare, hospitalization, health, medical, vision, dental plan; or (xiv) any other compensation policy or practice.
Environmental Laws is defined in Section 3.1(ff)(i).
ERISA means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.
ERISA Affiliate as applied to any Person, means (i) any corporation that is a member of a controlled group of corporations within the meaning of Section 414(b) of the Code of which that Person is a member; (ii) any trade or business (whether or not incorporated) that is a member of a group of trades or businesses under common control within the meaning of Section 414(c) of the Code of which that Person is a member; and (iii) any member of an affiliated service group within the meaning of Section 414(m) or (o) of the Code of which that Person, any corporation described in clause (i) above or any trade or business described in clause (ii) above is a member. Any former ERISA Affiliate of a Person or any of its Subsidiaries shall continue to be considered an ERISA Affiliate of such Person or such Subsidiary within the meaning of this definition with respect to the period such entity was an ERISA Affiliate of such Person or such Subsidiary and with respect to liabilities arising after such period for which such Person or such Subsidiary could be liable under the Code or ERISA.
ERISA Event means (i) a reportable event within the meaning of Section 4043 of ERISA and the regulations issued thereunder with respect to any Pension Plan (excluding those for which the provision for 30-day notice to the PBGC has been waived by regulation); (ii) the failure to meet the minimum funding standard of Section 412 of the Code with respect to any Pension Plan (whether or not waived in accordance with Section 412(c) of the Code) or the failure to make by its due date a required installment under Section 430(j) of the Code with respect to any Pension Plan or the failure to make any required contribution to a
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Multiemployer Plan; (iii) the provision by the administrator of any Pension Plan pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such plan in a distress termination described in Section 4041(c) of ERISA; (iv) the withdrawal by the Company, any of its Subsidiaries or any of their respective ERISA Affiliates from any Pension Plan with two or more contributing sponsors or the termination of any such Pension Plan resulting in liability pursuant to Section 4063 or 4064 of ERISA; (v) the institution by the PBGC of proceedings to terminate any Pension Plan, or the occurrence of any event or condition which might constitute grounds under ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (vi) the imposition of liability on the Company, any of its Subsidiaries or any of their respective ERISA Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of Section 4212(c) of ERISA; (vii) the withdrawal of the Company, any of its Subsidiaries or any of their respective ERISA Affiliates in a complete or partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if there is any potential liability therefor, or the receipt by the Company, any of its Subsidiaries or any of their respective ERISA Affiliates of notice from any Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, or that it intends to terminate or has terminated under Section 4041A or 4042 of ERISA; (viii) the assertion of a material claim (other than routine claims for benefits) against any Employee Benefit Plan other than a Multiemployer Plan or the assets thereof, or against the Company, any of its Subsidiaries or any of their respective ERISA Affiliates in connection with any Employee Benefit Plan; (ix) receipt from the Internal Revenue Service of notice of the failure of any Pension Plan (or any other Employee Benefit Plan intended to be qualified under Section 401(a) of the Code) to qualify under Section 401(a) of the Code, or the failure of any trust forming part of any Pension Plan to qualify for exemption from taxation under Section 501(a) of the Code; or (x) the imposition of a Lien pursuant to Section 436(f)(1) or 430 of the Code or pursuant to ERISA with respect to any Pension Plan.
Evaluation Date is defined in Section 3.1(t).
Exchange Act means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
Excluded Stock means any Common Stock issued or issuable (i) upon the conversion of any Convertible Securities or Options outstanding as of the date hereof, pursuant to the terms of such Convertible Securities or Options, as applicable, as of the date hereof, (ii) as a stock dividend distributed pro rata to all holders of Common Stock, (iii) to employees, officers, directors or consultants of the Company pursuant to the Management Pool, (iv) Options (and the issuance of Common Stock upon exercise thereof) or restricted stock of the Company to employees, officers, directors or consultants of the Company pursuant to a stock option plan, restricted stock agreement or other incentive stock plan or pursuant to any employee benefit plan, in each case as in effect on the Closing Date or as approved by the Board of Directors subsequent to the Closing Date, (v) in a firm commitment underwritten public offering pursuant to an effective registration statement under the Securities Act, which results in aggregate cash proceeds to the Company of not less than $40,000,000 (net of underwriting discounts and commissions), (vi) to financial institutions solely in connection with commercial credit
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arrangements approved by the Board of Directors, (vii) pursuant to acquisitions or strategic transactions (including without limitation, joint ventures, technology licensing or development activities) approved by a majority of the disinterested directors of the Company, provided that any such issuance shall only be to a Person (or to the equity holders of a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the business of the Company and shall provide to the Company additional benefits in addition to the investment
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