form8k.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
[Missing
Graphic Reference]
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of
The
Securities Exchange Act of 1934
Date
of
Report (Date of earliest event reported)
January
4, 2008
[Missing
Graphic Reference]
AVISTAR
COMMUNICATIONS CORPORATION
(Exact
name of registrant as specified in its charter)
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Delaware
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000-31121
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88-0383089
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(State
or other jurisdiction of incorporation)
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(Commission
File Number)
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(IRS
Employer
Identification
No.)
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1875
S. Grant Street, 10th
Floor
San
Mateo, California 94402
(Address
of principal executive offices, including zip code)
(650)
525-3300
(Registrant’s
telephone number, including area code)
(Former
name or former address, if changed since last report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
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Written communications pursuant to Rule 425 under the Securities
Act (17
CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR
240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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Item
1.01 Entry into a Material Definitive Agreement.
On
January 4, 2008, Avistar Communications Corporation (the “Company”), sold
$7,000,000 in principal amount of the Company’s 4.5% Convertible Subordinated
Secured Notes due 2010 (the “Notes”). The Notes were sold pursuant to a
Convertible Note Purchase Agreement, dated as of January 4, 2008 (the “Purchase
Agreement”), among the Company, Baldwin Enterprises, Inc., a subsidiary of
Leucadia National Corporation, directors Gerald Burnett, R. Stephen Heinrichs,
William Campbell, Simon Moss and Craig Heimark, officer Darren Innes, and WS
Investment Company (the “Purchasers”),. The Company’s obligations
under the Notes are secured by the grant of a security interest in substantially
all tangible and intangible assets of the Company pursuant to a Security
Agreement among the Company and the Purchasers dated as of January 4,
2008.
The
Notes
have a two year term and will be due on January 4, 2010. The Notes
may not be prepaid or redeemed prior to maturity. Interest on the
Notes will accrue at the rate of 4.5% per annum and will be payable
semi-annually in arrears on June 4 and December 4 of each year, commencing
on
June 4, 2008. From the one year anniversary of the issuance of the
Notes until maturity, the holders of the Notes will be entitled to convert
the
Notes into shares of common stock of the Company at an initial conversion price
per share of $0.70. The conversion price of the Notes is subject to
adjustment in the event of (1) stock splits and combinations of the Company’s
common stock, (2) dividends of common stock on the Company’s common stock, (3)
issuances of rights or warrants to purchase common stock at less than the
current market price, and (4) certain distributions or dividends of capital
stock, indebtedness, cash or assets. In addition, the Notes contain a
broad-based weighted average anti-dilution provision pursuant to which the
conversion price of the Notes is subject to adjustment in the event that the
Company issues shares of its common stock or securities convertible into common
stock for a price per share less than the then effective conversion price of
the
Notes. The Notes further provide that unless and until the Company
receives any necessary stockholder approval, no anti-dilution adjustment shall
cause the conversion price to be less than $0.35 (as adjusted for stock splits,
combinations, reclassifications or similar events).
With
certain exceptions, the payment rights of the holders of the Notes are
subordinated to the payment rights of JPMorgan Chase Bank, N.A. (the “Bank”)
under the Company’s $10,000,000 Revolving Credit Facility with the Bank dated as
of December 23, 2006, as amended and extended on December 17, 2007, and, with
one exception, the lien granted to the Purchasers is subordinated in priority
to
the lien granted to the Bank. In connection with the issuance of the
Notes, the Company entered into amendments to the Revolving Credit Facility
Promissory Note and Security Agreement with the Bank to permit the grant of
a
security interest to the Purchasers of the Notes and to allocate specific assets
of the Company solely to secure the Company’s obligations under the
Notes. The Notes and the Security Agreement include restrictions on
the Company’s ability to grant additional security interests in its tangible and
intangible assets for borrowed money, with the maximum secured debt senior
to
the Notes set at $10,000,000 and the maximum for additional secured debt on
par
with or subordinated to the Notes set at $1,000,000.
As
the
only purchaser acquiring $3,000,000 or more in Notes, Baldwin Enterprises,
Inc.
will be entitled to purchase up to its pro rata share of equity or convertible
securities issued by the Company in future financings closing on or prior to
January 4, 2011. The Notes issued pursuant to the Purchase Agreement
were offered and sold to the Purchasers without being registered under the
Securities Act of 1933, as amended (the “Securities Act”), in reliance on
applicable exemptions from the registration requirements of the Securities
Act. Subject to certain exceptions and limitations, the Company has
agreed to register the shares of common stock issuable upon conversion of the
Notes in the event that the Company elects to register shares for its own
account or for the account of other stockholders under the Securities Act prior
to January 4, 2011.
The
Purchase Agreement and the Security Agreement contain customary events of
default that include, among other things, non-payment defaults, covenant
defaults, inaccuracy of representations and warranties, cross-defaults to other
indebtedness and bankruptcy and insolvency defaults. The occurrence
of an event of default could result in the acceleration of the Company’s
obligations under the Notes. The Notes further provide that if any
amount of principal, other than interest, on the Note which is not paid when
due
will result in a late charge being incurred and payable by the Company in an
amount equal to interest on such amount at the rate of twelve (12%) percent
per
annum from the date such amount was due until the same is paid in
full.
The
terms
of this financing were negotiated between the Company and Leucadia National
Corporation. Members of the board and management participated in this
financing as follow-on investors based on the terms negotiated by
Leucadia. The transactions described herein were approved by the
board, including two independent directors who did not participate in the
financing. The participation of members of the board and management
was also considered and approved by the audit committee of the Company’s
board.
The
Company intends to use the net proceeds from the issuance of the Notes for
working capital, capital expenditures and other general corporate
purposes.
The
foregoing description of the Notes, the Purchase Agreement, the Security
Agreement and the amendments to the Revolving Credit Facility with the Bank
does
not purport to be complete and is qualified in its entirety by the terms and
conditions of the Note, the Purchase Agreement, the Security Agreement, which
are to be filed as exhibits to this Current Report on Form 8-K, or in the case
of the Amendment to the Revolving Credit Promissory Note and Security Agreement,
are expected to be filed with the Company’s Annual Report on Form 10-K for the
year ended December 31, 2007.
Item
2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off−Balance Sheet Arrangement of a Registrant
See
disclosure under Item 1.01 of this report, which is incorporated by reference
in
this Item 2.03.
Item
7.01 Regulation FD
On
January 7, 2007, the Company issued
a press release regarding the convertible note financing described above, a
copy
of which is attached as Exhibit 99.1.
The
information in this Item 7.01 and Exhibit 99.1 attached hereto shall not be
deemed “filed” for purposes of Section 18 of the Securities Exchange Act of
1934, as amended, (the “Exchange Act”) or otherwise subject to the liabilities
of that section, nor shall it be deemed incorporated by reference in any filing
under the Securities Act of 1933, as amended, or the Exchange Act, regardless
of
any general incorporation language in such filing.
Item
9.01. Financial Statements and Exhibits
(d) Exhibits.
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Exhibit No.
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Description
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10.23
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Convertible
Note Purchase Agreement among the Company and the Purchasers named
therein
dated January 4, 2008
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10.24
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Security
Agreement among the Company, Baldwin Enterprises, Inc., as Collateral
Agent, and the Purchasers named therein dated January 4,
2008
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10.25
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Form
of 4.5% Convertible Subordinated Secured Note Due 2010
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10.26
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Inter-creditor
Agreement among the Purchasers of the 4.5% Convertible Subordinated
Secured Notes Due 2010 dated January 4, 2008
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99.1
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Press
Release of the Company issued on January 7, 2008 regarding the Convertible
Note Financing
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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AVISTAR
COMMUNICATIONS CORPORATION
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By:
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/s/
Robert J. Habig
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Robert
J. Habig
Chief
Financial Officer
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Date: January
9, 2008
EXHIBIT
INDEX
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Exhibit No.
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Description
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10.23
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Convertible
Note Purchase Agreement among the Company and the Purchasers named
therein
dated January 4, 2008
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10.24
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Security
Agreement among the Company, Baldwin Enterprises, Inc., as Collateral
Agent, and the Purchasers named therein dated January 4,
2008
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10.25
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Form
of 4.5% Convertible Subordinated Secured Note Due 2010
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10.26
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Intercreditor
Agreement among the Purchasers of the 4.5% Convertible Subordinated
Secured Notes Due 2010
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99.1
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Press
Release of the Company issued on January 7, 2008 regarding the Convertible
Note Financing
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