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* Certain sections omitted and filed separately with the Commission.
EXHIBIT 10.15
PRODUCT PROMOTION AGREEMENT
This PRODUCT PROMOTION AGREEMENT (this "AGREEMENT") is entered into as of
the 3rd day of February, 2000 (the "EFFECTIVE DATE") by and between
XXXXXXXXXXXX.XXX INC., a Delaware corporation with offices at 0000 X Xxxxxx, XX
0xx Xxxxx, Xxxxxxxxxx, X.X. 00000 ("VARSITYBOOKS") and XXXXXX XXX, INC. a
Delaware corporation with offices at 11600 Xxxxxx Mae Drive, Reston, V.A. 20193
("XXXXXX XXX").
WHEREAS, Xxxxxx Mae provides educational loan products, educational
enterprise-related products (the "XXXXXX XXX PRODUCTS") and operates a Web site
located at the URL http:///xxx.xxxxxxxxx.xxx (the "XXXXXX MAE WEB SITE") that
contains within it, among other things, an internet mall that is presently under
development (the "XXXXXX XXX MALL") and would like to expand its exposure by
having access to the users of the VarsityBooks Web Site (as defined below); and
WHEREAS, VarsityBooks maintains a Web site located at the URL
xxxx://xxx.xxxxxxxxxxxx.xxx (the "VARSITYBOOKS WEB SITE") through which it sells
and distributes college textbooks, general interest books, entertainment
products and other products (the "VARSITYBOOKS PRODUCTS") and would like to
expand its customer base by having access to the existing customers of Xxxxxx
Mae and users of the Xxxxxx Xxx Web Site; and
WHEREAS, VarsityBooks and Xxxxxx Mae would like to define an arrangement
whereby Xxxxxx Xxx will market the VarsityBooks Products to existing Xxxxxx Mae
customers and other users of the Xxxxxx Xxx Web Site and will create customers
for VarsityBooks.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties agree as follows:
1. DEFINITIONS
Capitalized terms used in this Agreement shall have the meaning set forth
below or elsewhere herein. All definitions will apply both to their
singular or plural forms, as the context may require. "DAYS" means calendar
days, unless otherwise specified. All references to "SECTION" are to
Sections of this Agreement, unless otherwise specified. "AGREEMENT"
collectively means this Agreement and any and all exhibits hereto (which
are hereby incorporated into this Agreement), and all valid amendments to
this Agreement. Headings are intended only for reference purposes.
(A) "AFFILIATE" means, with respect to a party to this Agreement, those
entities controlled by, controlling, or under common control with such
party. For the purposes of this definition, "CONTROL" (and its
derivatives) will mean, with respect to such an entity, having the
legal, beneficial or equitable ownership, directly or indirectly, of
fifty percent (50%) or more of the capital stock (or other ownership
interest, if the entity is not a corporation) of such entity
ordinarily having voting rights, or otherwise having a right to
appoint at least half of the directors (or analogous officers) of such
entity.
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(B) "COLLEGE TARGETED RETAILER" means any entity whose efforts in
marketing retail products are primarily directed towards college
students, including, without limitation, those entities listed on
Exhibit E hereto, as such exhibit may be amended from time to time,
with the consent of Xxxxxx Mae which consent shall not be
unreasonably withheld, delayed or conditioned. In the event a College
Targeted Retailer, other than VarsityBooks and those College Targeted
Retailers which are listed on Exhibit E hereto, as may be amended,
presents an opportunity to Xxxxxx Xxx with respect to a retail
product that VarsityBooks does not offer (the "NEW PRODUCT"), Xxxxxx
Mae will provide VarsityBooks with written notice (the "INITIAL
NOTICE") stating its desire to enter into an agreement with such
College Targeted Retailer specifying the New Product. Upon receipt of
the Initial Notice from Xxxxxx Xxx, VarsityBooks shall have sixty
days (60) days to provide Xxxxxx Mae with written notice (the
"RESPONSE") indicating that it intends to work in good faith to
provide such New Product. Upon delivery of the Response, VarsityBooks
shall have sixty days (60) days to work in good faith to enter into a
term sheet with a provider of the New Product which will set forth
terms under which VarsityBooks will become a provider of the New
Product. Failure by VarsityBooks to deliver notice within sixty (60)
days of receipt of the Initial Notice or to enter into a term sheet
to enable VarsityBooks to provide the New Products within sixty (60)
days of its delivery of the Response shall free Xxxxxx Xxx to enter
into a product promotion or joint marketing agreement with such
College Targeted Retailer only to the extent such agreement covers
the New Product which was the subject of the Initial Notice.
(C) "CORPORATE TRANSACTION" means (A) any consolidation or merger of the
Corporation with or into any other corporation or other entity, other
than any merger or consolidation resulting in the holders of the
capital stock of the Corporation entitled to vote for the election of
directors holding a majority of the capital stock of the surviving or
resulting corporation or other entity entitled to vote for the
election of directors, (B) any person or entity (including any
affiliates thereof) becoming the holder of a majority of the capital
stock of the Corporation entitled to vote for the election of
directors, or (C) any sale or other disposition by the Corporation of
all or substantially all of its assets or capital stock.
(D) "EQUITY OFFERING" means an equity offering resulting in net proceeds
to the Corporation in excess of ten million dollars ($10,000,000)
which occurs prior to the IPO Date.
(E) "INTELLECTUAL PROPERTY RIGHTS" means any and all worldwide rights,
title and interest in intellectual property (including without
limitation, all patents, patent registrations, copyrights, moral
rights, trademarks, trade names, service marks, service names, trade
secrets, know-how or other similar rights arising or enforceable under
U.S. law, foreign law, or international treaty regime).
(F) "IPO DATE" means the date on which the Corporation closes the initial
public offering of its Common Stock.
(G) "LAUREATE LOAN PRODUCT" means Xxxxxx Mae's internet-based student loan
information management and delivery system.
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(H) "PARTNERSHIP PROGRAM" means the program pursuant to which VarsityBooks
enters into agreements to market and sell the VarsityBooks Products to
students at the Partnership Schools.
(I) "PARTNERSHIP SCHOOLS" means secondary schools, distance learning
schools, community colleges, two-four year colleges and other
institutions which have entered into memoranda of understanding with
VarsityBooks pursuant to which VarsityBooks becomes the exclusive
online retailer of new textbooks for such schools.
(J) "REFERRAL FEE" has the meaning set forth in the chart on Exhibit A.
(K) "XXXXXX XXX CONTENT" means the Xxxxxx Xxx Xxxxx and the sounds,
pictures, text, graphics, templates, copyrightable materials and any
other items or information set forth in Exhibit C that are owned or
licensed by Xxxxxx Xxx and provided by Xxxxxx Mae to VarsityBooks for
use in accordance with this Agreement.
(L) "XXXXXX XXX XXXXX" means the names, trademarks, service marks, trade
names, service names, logos, symbols, and other product or service
designations set forth in Exhibit C and all Xxxxxx Mae domain names
and hyperlink icons, including without limitation, the domain name(s)
and hyperlink icon(s) used to locate the Xxxxxx Xxx Web Site.
(M) "XXXXXX MAE SOLUTIONS" means a division of Xxxxxx Xxx that provides
business processing, technical and software solutions to higher
education.
(N) "XXXXXX MAE TOP TIER TITLES" means a list of financial aid,
scholarship, career service, and other titles, as selected by Xxxxxx
Mae, which will appear on the Xxxxxx Xxx Web Site and which
VarsityBooks will use its best efforts to have stocked by Xxxxx &
Xxxxxx.
(O) "XXXXXX MAE WEB SITE(S)" means the internet web site(s) owned,
managed, or controlled by Xxxxxx Xxx and its Affiliates, including,
without limitation, all information, materials, features, products,
services, advertisements, promotions, links, pointers, technology and
software, in any format or medium, made available or embodied therein
(except for any VarsityBooks Marks).
(P) "SPLASH PAGE" means the first co-branded page to which all users
arrive when linking from a VarsityBooks hyperlink on any Xxxxxx Mae
e-mail or on the Xxxxxx Xxx Web Site or Xxxxxx Mae Mall site,
provided, however that users linking from the Xxxxxx Xxx Top Tier
Title list will link to mutually agreeable pages on the VarsityBooks
Web Site.
(Q) "TERM" has the meaning given in Section 5(A).
(R) "VARSITYBOOKS MARKS" means the names, trademarks, service marks, trade
names, service names, logos, symbols, and other product or service
designations set forth in Exhibit D and all VarsityBooks domain names
and hyperlink icons.
(S) *
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2. XXXXXX MAE OBLIGATIONS
(A) Access to Xxxxxx Xxx Customer Base
(1) Hyperlinks.
(i) Xxxxxx Mae will create and maintain hyperlinks from
mutually agreeable locations on the Xxxxxx Xxx Web Site(s),
including without limitation, the Xxxxxx Mae Mall and the
Xxxxxx Xxx Top Tier Titles, directly to mutually agreeable
locations on the VarsityBooks Web Site, using the icon(s)
and textual links provided by VarsityBooks.
(ii) Xxxxxx Mae will create and maintain a hyperlink to the
Splash Page on the Xxxxxx Xxx Web Site.
(iii) Xxxxxx Mae will work with VarsityBooks to determine
mutually agreeable strategically important locations for
the hyperlinks, provided, however, that Xxxxxx Xxx will
retain sole control over the ultimate location of any
hyperlinks to VarsityBooks which will be placed on its Web
site.
(iv) VarsityBooks will provide Xxxxxx Mae with guidelines and
graphical artwork (including, without limitation, the
VarsityBooks Marks, banners, logos buttons and designs) to
use in linking to the VarsityBooks Web Site. Approved
guidelines and artwork are available online in the
Affiliate member area of the VarsityBooks Web Site, and are
subject to change from time to time by VarsityBooks. Xxxxxx
Mae agrees to use the artwork only in accordance with
VarsityBooks' then-current artwork usage and trademark
usage guidelines provided in advance to Xxxxxx Xxx. The
VarsityBooks artwork and trademark usage guidelines as of
the date hereof are attached hereto as Exhibit F.
(2) Xxxxxx Mae will, in good faith, promote the VarsityBooks products
to its existing customers (its "CUSTOMER BASE") by including
mutually agreed upon VarsityBooks literature, inserts,
promotions, offers, and other marketing material (the "MARKETING
MATERIAL") and by creating and including a mutually agreed upon
coded coupon which VarsityBooks will make available to Xxxxxx Xxx
in electronic or physical form, for the VarsityBooks Products
(the "COUPON") in mailings sent to its Customer Base, provided,
however, that VarsityBooks shall have sole discretion over the
value of any and all Coupons created.
(3) Notwithstanding the foregoing, Xxxxxx Mae shall have sole control
over the mailings and emails sent to its customers, including but
not limited to, the
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determination of which of its customers will receive such
communications and the names and addresses of the recipients.
(B) Use of Xxxxxx Xxx Sales Force
(1) Xxxxxx Mae will make available to VarsityBooks its sales leaders,
as determined solely by Xxxxxx Xxx (the "Leaders"), for training
on the VarsityBooks Partnership Program so that such Leaders can
in turn train Xxxxxx Mae's sales force, including without
limitation those sales representatives responsible for selling
Xxxxxx Mae's K-12, Xxxxxx Mae Higher Education and Xxxxxx Xxx
Solutions Programs (the "XXXXXX MAE SALES FORCE"). This training
shall take place on a mutually agreeable schedule, but, in any
event, not later than February 20, 2000 and for not less than
four hours. In the event Xxxxxx Xxx xxxxx additional Leaders
after February 20, 2000, VarsityBooks agrees to arrange a
mutually agreeable schedule to train the new Leaders.
(2) Xxxxxx Mae will arrange to provide VarsityBooks with face-to-face
or telephonic meetings ("QUALITY REFERRALS") with Key
Decisionmakers (as defined below) at Target Institutions (as
defined below) which Key Decisionmakers have expressed a good
faith interest in becoming members of the VarsityBooks
Partnership Program. As used in this Agreement, the term Key
Decisionmakers shall mean the business officer, chief financial
officer, key influencer or decision maker of a Target Institution
who has the authority to contractually bind the Target
Institution or can directly influence such decision, and the term
Target Institutions shall mean those institutions listed on
Exhibit G hereto and any other institutions approved in
writing by VarsityBooks. Xxxxxx Xxx and VarsityBooks shall
jointly develop a reporting mechanism to track Quality Referrals,
and such mechanism shall be subject to the audit provisions set
forth in Section 3(B)(4) below.
3. VARSITYBOOKS OBLIGATIONS
(A) Co-branded Page.
(1) VarsityBooks will host and maintain, at its expense, a co-branded
Splash Page for the exclusive use of Xxxxxx Mae users. The Splash
Page shall be the initial destination of Xxxxxx Xxx users linking
to the VarsityBooks Web Site from Authorized Links (as defined
below) on the Xxxxxx Mae Web Site.
(2) VarsityBooks will work in good faith with Xxxxxx Xxx on the
content of the Splash Page but will retain sole control of such
contents and of the value of the Coupon.
(B) Tracking, Referral Fees and Audit Rights.
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(1) To permit accurate tracking, reporting, and Referral Fee accrual,
VarsityBooks or its agent will provide Xxxxxx Mae with authorized
"tagged" link formats to be used in all links between the Xxxxxx
Mae Web Site and the VarsityBooks Web Site. Xxxxxx Xxx will
ensure that each of the links between the Xxxxxx Mae Web Site and
the VarsityBooks Web Site properly utilizes such link formats.
Links to the VarsityBooks Web Site placed on the Xxxxxx Xxx Web
Site pursuant to this Agreement which properly utilize such
authorized link formats are referred to as "AUTHORIZED LINKS."
(2) VarsityBooks will provide Xxxxxx Mae with a password and with the
ability to enter a password-protected VarsityBooks Web Site to
access sales activity generated by Authorized Links from the
Xxxxxx Xxx Web Site or e-mail to Xxxxxx Mae existing and
prospective customers.
(3) If a product that generated a Referral Fee is returned by the
customer, VarsityBooks will deduct the corresponding Referral Fee
from the next Referral Fee payment it is scheduled to make to
Xxxxxx Xxx. If there is no subsequent payment, VarsityBooks will
send Xxxxxx Mae an invoice for the returned referral fee, and
Xxxxxx Xxx will pay any and all such invoiced return referral
fees within ten (10) days of the receipt of such invoice.
(4) VarsityBooks will maintain accurate records with respect to
payments due under this Agreement and methodology used to
calculate payment due, including tracking of Quality Referrals.
Xxxxxx Mae may, upon no less than thirty (30) days prior written
notice to VarsityBooks, cause an independent Certified Public
Accountant, mutually agreeable to both parties, to inspect all
relevant records of VarsityBooks upon which the calculation of
such payments are based during VarsityBooks' normal business
hours. The fees charged by such Certified Public Accountant in
connection with the inspection will be paid by Xxxxxx Xxx, unless
the payments made to Xxxxxx Mae are determined to have been less
than ninety-five percent (95%) of the payments actually owed to
Xxxxxx Xxx, in which case VarsityBooks will be responsible for
the payment of the reasonable fees for such inspection. In
addition, VarsityBooks shall immediately remit payment to Xxxxxx
Mae for the full amount of any disclosed shortfalls. The audit
rights set forth herein shall continue for one (1) year following
the termination of this Agreement for any reason. No such audit
may occur more than once a year during the term of this
Agreement.
(5) Xxxxxx Xxx will earn Referral Fees (as set forth on Exhibit A)
with respect to VarsityBooks Products ordered by users who access
the VarsityBooks Web Site directly through Authorized Links or
who enter the appropriate Coupon code at check-out ("QUALIFYING
PRODUCTS"). For a sale of a Qualifying Product to be eligible to
earn a Referral Fee, the customer must
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(i) follow an Authorized Link from the Xxxxxx Mae Web Site or an
e-mail received from Xxxxxx Xxx to the VarsityBooks Web Site or
must enter the appropriate Coupon code at check out, (ii) select
and purchase the Qualifying Product using the VarsityBooks
automated ordering system, (iii) accept delivery of the
Qualifying Product at the shipping destination, and (iv) remit to
VarsityBooks full payment for the Qualifying Product order by
cash, check money order, debit card, electronic payment or credit
card in readily available U.S. funds. In no event shall
VarsityBooks be liable to Xxxxxx Mae with respect to any failure
by Xxxxxx Xxx users to use Authorized Links, or the failure of
its users to enter the appropriate Coupon code, regardless of the
extent to which such failure may result in any reduction of
amounts that would otherwise be paid to Xxxxxx Mae pursuant to
this Agreement
(6) VarsityBooks will process Qualifying Product orders and will be
solely responsible for all aspects of order processing and
fulfillment and customer service. VarsityBooks will track sales
made to customers who purchase Qualifying Products, and will make
available to Xxxxxx Xxx reports summarizing this sales activity.
The form, content, and frequency of the reports may vary from
time to time, subject to legal limits on the gathering and
sharing of customer information, as mutually agreed by both
parties to this Agreement.
(7) VarsityBooks will pay any and all Referral Fees earned by Xxxxxx
Mae in accordance with the schedule set forth on Exhibit A.
(C) Identification as an Affiliate.
VarsityBooks will make available to Xxxxxx Xxx a graphic image that
identifies the Xxxxxx Mae Web Site as an Affiliate (the "Affiliate
Designation") and hereby authorizes Xxxxxx Xxx to display the
Affiliate Designation or the phrase "XxxxxxxXxxxx.xxx Affiliate" on
the Xxxxxx Mae Web Site or in correspondence to its Customer Base or
to prospective Xxxxxx Xxx customers. VarsityBooks shall retain the
right to modify the Affiliate Designation at any time, provided,
however, that VarsityBooks must provide Xxxxxx Mae with written notice
of such modification. Upon receipt of such notice, Xxxxxx Xxx will
immediately modify its use of the Affiliate Designation to incorporate
the revisions.
(D) Marketing and Sales Collateral
VarsityBooks will, at its sole expense, make available to the Xxxxxx
Mae Sales Force an adequate supply of marketing and sales collateral
to be used in marketing VarsityBooks products and programs.
(E) Xxxxxx Xxx Top Tier Titles
VarsityBooks will work in good faith with Xxxxxx Mae and Xxxxx &
Xxxxxx, Inc. to stock and feature on the VarsityBooks Web Site the Xxxxxx
Xxx Top Tier Titles.
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4. MUTUAL OBLIGATIONS
(A) Technical Integration of VarsityBooks Web Site.
Xxxxxx Mae and VarsityBooks will work in good faith to explore
opportunities for integrating the VarsityBooks Web Site with Xxxxxx
Mae Solutions Products.
(B) Integration and Co-branding.
(1) Xxxxxx Xxx and VarsityBooks will work together in good faith to
develop co-branded pages (the "INTEGRATED SCHOLARSHIP PAGES")
within the VarsityBooks Web Site, and specifically, within those
pages on the VarsityBooks Web Site which are dedicated to the
VarsityBooks scholarship and financial aid programs (the
"VARSITYBOOKS SCHOLARSHIP VERTICAL"), which integrate the Xxxxxx
Xxx XXXXX and the * module.
(2) LINKS. As part of the Integrated Scholarship Pages, the parties
agree that they will provide one or more links to and from the
VarsityBooks Web Site and the Xxxxxx Xxx XXXXX and * module.
Among the links to be provided hereunder, Xxxxxx Mae will
provide, without limitation, a link or links to the Xxxxxx Xxx
XXXXX Scholarship Profile Form and the Xxxxxx Mae * Paying,
Deciding and Financing tabs.
(3) PROMOTION.
(i) For all content hosted and served by Xxxxxx Xxx in the *
module, Xxxxxx Mae shall prominently display the Varsity
Books Marks. Such marks shall contain navigation features
linking site users back to the VarsityBooks Web Site.
(ii) All links and content on the VarsityBooks Web Site related
to the * module and Xxxxxx Xxx XXXXX web site shall
prominently display the Xxxxxx Xxx Xxxxx.
(iii) Each party must approve or reject any promotional
activities or materials that reference the other party's
Xxxx or other similar information.
(4) SCHOLARSHIP INCLUSION. The two parties will work in good faith to
include VarsityBooks sponsored scholarships in the Xxxxxx Xxx
XXXXX database.
(5) EDITORIAL RIGHTS AND HOSTING. Xxxxxx Xxx will provide content for
the Integrated Scholarship Pages, and Xxxxxx Mae and VarsityBooks
will have joint creative, artistic and editorial responsibility
for the Integrated
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Scholarship Pages. VarsityBooks will host and maintain the
Integrated Scholarship Pages at its own expense.
(6) REPORTING. VarsityBooks shall provide Xxxxxx Xxx with
monthly reports, on the tenth business day of each month,
which include (a) the number of unique VarsityBooks users
that accessed the VarsityBooks home page, (b) the number
unique VarsityBooks users that access the VarsityBooks
Scholarship Vertical.
(7) LAUNCH DATE. Provided the parties reach an agreement on the
Integrated Scholarship Pages, the Integrated Scholarship
Pages will be created on such date as may be mutually agreed
upon by the parties, but in no event later than July 1,
2000.
(8) USER DATA. User data compiled and collected through the
CASHE system on the Integrated Scholarship Pages will be
co-owned by both parties provided that neither party will
sell, share or transfer any such data to any third party.
The parties will work in good faith to create a system to
compile, collect and track the usage of such user data.
5. LICENSES
(A) During the term of this Agreement VarsityBooks grants to Xxxxxx
Mae a non-exclusive, worldwide, royalty-free, fully paid-up,
non-transferable license to use the VarsityBooks Marks and the
Affiliate Designation solely as contemplated by this Agreement
on, or in developing, supporting and maintaining, the Xxxxxx Xxx
Web Site, and specifically without limitation, the Laureate Loan,
Exeter Product and Solutions Networks, in the ordinary course of
business, including without limitation, as applicable, the rights
to use, copy, display, distribute, and create and use derivative
works based on the VarsityBooks Marks. Except with the written
authorization of VarsityBooks, VarsityBooks Marks shall not be
displayed on any web site other than the Xxxxxx Mae Web Site. Any
VarsityBooks content incorporated into derivative works so
created shall be the property of VarsityBooks. Xxxxxx Mae's
exercise of this license with respect to the VarsityBooks Marks
is subject to VarsityBooks' Trademark Guidelines located on the
legal page of the VarsityBooks Web Site and attached hereto as
Exhibit F. Notwithstanding the foregoing,the form of any use of
any VarsityBooks Xxxx which is viewable by the public or any user
of the Xxxxxx Xxx Web Site must be approved by VarsityBooks in
advance either in writing or through the procedures set forth in
this Agreement. Any other use of any VarsityBooks Marks is
prohibited unless VarsityBooks gives its prior written consent to
each such use. Upon the expiration or termination of this
Agreement, Xxxxxx Mae will cease using the VarsityBooks Marks
except as VarsityBooks agrees in writing.
(B) During the term of this Agreement, Xxxxxx Xxx grants to
VarsityBooks a non-exclusive, worldwide, royalty-free, fully
paid-up, non-transferable license to use the Xxxxxx Xxx Xxxxx
solely as contemplated by this Agreement on, or in developing,
supporting and maintaining, the VarsityBooks Web Site, and
specifically without limitation, the Integrated Scholarship
Pages, in the ordinary course of business, including without
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limitation, as applicable, the rights to use, copy, display,
distribute, and create and use derivative works based on the
Xxxxxx Xxx Xxxxx. Except with the written authorization of Xxxxxx
Mae, Xxxxxx Xxx Xxxxx shall not be displayed on any web site
other than the VarsityBooks Web Site. Any Xxxxxx Mae content
incorporated into derivative works so created shall be the
property of Xxxxxx Xxx. VarsityBooks' exercise of this license
with respect to the Xxxxxx Xxx Xxxxx is subject to Xxxxxx Mae's
Trademark Guidelines attached hereto as Exhibit H.
Notwithstanding the foregoing, the form of any use of any Xxxxxx
Mae Xxxx which is viewable by the public or any user of the
VarsityBooks Web Site must be approved by Xxxxxx Mae in advance
either in writing or through the procedures set forth in this
Agreement. Any other use of any Xxxxxx Xxx Xxxxx is prohibited
unless Xxxxxx Mae gives its prior written consent to each such
use. Upon the expiration or termination of this Agreement,
Xxxxxx Xxx will cease using the VarsityBooks Marks except as
VarsityBooks agrees in writing.
(C) Each party agrees that in connection with each party's use of the
other party's Marks it will display symbols and notices clearly
and sufficiently indicating the trademark status and ownership of
the other party's Marks in accordance with applicable trademark
law and practice.
(D) VarsityBooks will not adopt or use in any manner any name, xxxx,
symbol, logo, icon, design, copyright or company, product or
service name or designation not currently in use and which is
confusingly similar to any Xxxxxx Xxx Xxxxx, or which constitutes
a translation thereof, without Xxxxxx Mae's prior written
consent. VarsityBooks will not register anywhere in the world,
directly or indirectly, any Xxxxxx Xxx Xxxxx or any other name,
xxxx, symbol, logo, icon, design, copyright or company, product
or service name or designation not currently in use and which is
confusingly similar thereto or which constitutes a translation
thereof.
(E) Xxxxxx Xxx will not adopt or use in any manner any name, xxxx,
symbol, logo, icon, design, copyright or company, product or
service name or designation not currently in use and which is
confusingly similar to any VarsityBooks Marks, or which
constitutes a translation thereof, without VarsityBooks' prior
written consent. Xxxxxx Xxx will not register anywhere in the
world, directly or indirectly, any VarsityBooks Marks or any
other name, xxxx, symbol, logo, icon, design, copyright or
company, product or service name or designation not currently in
use and which is confusingly similar thereto or which constitutes
a translation thereof.
(F) Each party retains all rights, title and interest in and to its
intellectual property except for those licenses and rights
expressly granted by this Agreement.
(G) Each party acknowledges that its use of licensed materials in
breach of the scope of the grant of license it is receiving under
Section 5(A) or 5(B) above, as applicable, or its breach of
Section 5(C) or 5(D) above, as applicable, will cause the other
party irreparable injury for which monetary damages will not make
the other party whole. Accordingly, in addition to all other
available remedies and notwithstanding Section 16, the other
party will be entitled to equitable or injunctive relief as and
where it deems fit in the event of an actual, threatened or
attempted breach by the first party of any such provision.
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(H) Nothing in this Agreement shall be deemed to require (i)
VarsityBooks or any of its Affiliates to offer or sell Xxxxxx Xxx
Products directly or on behalf of any other person or engage in
any other activity which would require licensing not currently
possessed by VarsityBooks or such Affiliate, or (ii) Xxxxxx Mae
or any of its Affiliates to offer or sell VarsityBooks Products
directly or on behalf of any other person or engage in any other
activity which would require licensing not currently possessed by
Xxxxxx Xxx or such Affiliate.
6. TERM; TERMINATION
(A) The term of this Agreement will begin on the Effective Date and
end two (2) years thereafter (the "Term"). Thereafter, this
Agreement may be renewed upon mutual agreement of the parties.
(B) In addition to the parties' termination rights set forth
elsewhere in this Agreement, either party may terminate this
Agreement in the event of a Corporate Transaction prior to the
earlier of (a) the IPO Date; or (b) an Equity Offering. Should
either party terminate this Agreement pursuant to this clause
6(B), all of the Xxxxxx Mae Warrants granted hereunder will
immediately cancel.
(C) In addition to the parties' termination rights set forth
elsewhere in this Agreement, either party may terminate this
Agreement:
(1) at any time during the Term, upon at least thirty (30) days'
prior written notice to the other party if such other party
materially breaches this Agreement or any of the
representations and warranties hereunder and fails to cure
such material breach within such thirty (30) days;
(2) immediately upon written notice to the other party, if such
other party: (a) ceases to conduct business in the normal
course; (b) makes an assignment for the benefit of
creditors; (c) is liquidated or otherwise dissolved; or (d)
becomes insolvent, is adjudicated bankrupt, or a receiver,
trustee or custodian is appointed for it.
(D) Upon the termination or expiration of this Agreement for any
reason:
(1) each party will immediately cease holding itself out as
having any commercial relationship with the other party and
the licenses conferred in Section 4 will cease;
(2) each party will comply with the requirements of Section
15(F);
(3) VarsityBooks will pay all amounts properly due and payable
to Xxxxxx Xxx pursuant to Section 7(B) and 7(C), up until
the effective date of such termination or expiration
(prorated on a daily basis) provided, that Xxxxxx Mae is
only eligible to earn Referral Fees on sales of Qualifying
Products occurring during the term, and Referral Fees earned
through the date of termination will remain payable only if
the related orders are not canceled
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or returned, and payments based on performance due under the
schedule of Performance Obligations will be pro-rated
through the date of termination; and
(4) neither party will have any further liability or obligation
to the other party, except as otherwise expressly provided
in this Agreement (including without limitation Section 6(D)
below).
(E) Any provision of this Agreement that imposes or contemplates
continuing obligations on a party will survive the expiration or
termination of this Agreement for any reason.
7. COSTS AND PAYMENT
(A) Unless otherwise expressly provided in this Agreement, each party
will be responsible for all costs and expenses that it incurs in
performing its obligations hereunder.
(B) VarsityBooks will pay Xxxxxx Xxx certain Referral Fees as set
forth on Exhibit A hereto.
(C) In addition, should Xxxxxx Mae meet the performance obligations
set forth on Exhibit A (the "PERFORMANCE OBLIGATIONS")
VarsityBooks will provide Xxxxxx Xxx with Warrants to purchase
shares of its Common Stock, par value $0.0001, in the form set
forth on Exhibit B (the "XXXXXX MAE Warrants")in such amounts as
set forth on Exhibit A in the column astride the respective
Performance Obligation.
8. REPRESENTATIONS AND WARRANTIES
(A) Each party represents that it has the full right and authority to
enter into and to perform its obligations under this Agreement,
and the execution and delivery of this Agreement by it, and the
performance of its obligations hereunder, have been duly
authorized by all requisite corporate actions on its part, and
this Agreement has been duly executed and delivered by it.
(B) Each party warrants that:
(1) The execution or implementation of this Agreement by such
party, and the exercise or performance of any rights or
obligations hereunder, will not contravene any provision of
its organizational documents, or to its knowledge violate or
conflict with any agreement or binding obligation to which
it is a party.
(2) Except as otherwise expressly authorized by this Agreement,
such party will not take any action or make any statement,
representation, or warranty regarding the other party, its
products or services (including the products and services of
third parties which the other party promotes, markets,
resells or distributes) which is not previously authorized
in writing by the other party.
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(3) all obligations owed to third parties with respect to the
activities contemplated to be undertaken by either party
pursuant to this Agreement are or will be fully satisfied by
such party, and the other party will have no obligations
with respect thereto;
The sole and exclusive remedy of the other party, and the sole
and exclusive liability and obligations of the warranting party,
for breach of any of the warranties set forth in Section 8(A) or
8(B) hereof will be as provided under Section 7(a) or 7(B) below,
as applicable. Notwithstanding the foregoing, both parties shall
have the right to seek injunctive relief for any breach under
this Agreement.
(C)
Each party covenants that:
(1) it will comply with all applicable federal, state and local
laws in the performance of its obligations hereunder; and
(2) it will not distribute any unwanted or unsolicited bulk,
junk or spam e-mail in connection with this Agreement.
(D) VarsityBooks warrants to Xxxxxx Xxx that it will not knowingly
allow either those pages of the VarsityBooks Web Site which
reference Xxxxxx Mae or which display any name or xxxx of Xxxxxx
Mae, or any VarsityBooks Marks used by Xxxxxx Xxx, nor the
operation, display or use of any of the foregoing as contemplated
by this Agreement, nor the content, goods and services offered
through the VarsityBooks Web Site to (a) constitute, or contain
material that would constitute, libel, defamation or slander; (b)
constitute, or contain material that would constitute, an
invasion of privacy or a violation of the rights to publicity of
any third party; (c) infringe upon the Intellectual Property
Rights of any third party; (d) violate any law, statute,
ordinance or regulation or promote illegal activities; (e)
constitute or contain or promote obscene materials; (f) promote
violence; (g) promote discrimination based on race, sex,
religion, nationality, disability, sexual orientation, or age;
(h) constitute or contain content which is defamatory, trade
libelous, unlawfully threatening or unlawfully harassing; (i)
sell or otherwise market fraudulent materials; or (j) include
"Xxxxxx Mae" or variations or misspellings thereof in their
domain names or in metatags or other tools designed to mislead
users or search engines.
(E) Xxxxxx Xxx warrants to VarsityBooks that it will not knowingly
allow either the Xxxxxx Mae Web Site (or those pages of the
Xxxxxx Xxx Web Site(s) which reference VarsityBooks or which
display any name or xxxx of VarsityBooks), nor any Xxxxxx Xxx
Content or Xxxxxx Xxx Xxxxx used by VarsityBooks, nor the
operation, display or use of any of the foregoing as contemplated
by this Agreement nor the content, goods and services offered
through the Xxxxxx Xxx Web Site, to: (a) constitute, or contain
material that would constitute, libel, defamation or slander; (b)
constitute, or contain material that would constitute, an
invasion of privacy or a violation of the rights to publicity of
any third party; (c) infringe upon the Intellectual Property
Rights of any third party; (d) violate any law, statute,
ordinance or regulation or promote illegal activities; (e)
constitute or contain or promote obscene materials; (f) promote
violence; (g) promote discrimination based on race, sex,
religion, nationality, disability, sexual orientation, or
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age; (h) constitute or contain content which is defamatory, trade
libelous, unlawfully threatening or unlawfully harassing; (i)
sell or otherwise market fraudulent materials; or (j) include
"VarsityBooks" or variations or misspellings thereof in their
domain names or in metatags or other tools designed to mislead
users or search engines
(F) Notwithstanding the foregoing, neither VarsityBooks nor Xxxxxx
Mae shall be liable for the content, goods, and/or services
provided by or available through third party Web sites made
available by hyperlinks on the Web sites of either VarsityBooks
or Xxxxxx Xxx.
(G) EXCEPT FOR THE WARRANTIES IN THIS SECTION 8, NEITHER PARTY MAKES
ANY AND EACH PARTY SPECIFICALLY DISCLAIMS ALL OTHER WARRANTIES,
EXPRESS OR IMPLIED, OR REPRESENTATIONS WITH RESPECT TO THE
PROGRAM CONTEMPLATED BY THIS AGREEMENT OR ANY PRODUCTS OR
SERVICES SOLD HEREUNDER, INCLUDING, BUT NOT LIMITED TO, THE
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE, AND ANY IMPLIED WARRANTIES ARISING FROM
STATUTE, COURSE OF DEALING, COURSE OF PERFORMANCE OR USAGE OF
TRADE.
(H) Neither party to this agreement makes any representation that the
operation of its Web site will be uninterrupted or error-free,
and neither party will be liable for the consequences of any such
interruptions or errors.
9. CUSTOMER POLICIES AND PRODUCT PRICING
Customers who buy products through this Program will be deemed to be
the joint customers of VarsityBooks and Xxxxxx Mae. Notwithstanding the
forgoing, Xxxxxx Xxx understands and agrees that all VarsityBooks
rules, policies, and operating procedures concerning customer orders,
customer service, and product sales will apply to those customers.
VarsityBooks may change its policies and operating procedures at any
time. VarsityBooks will use commercially reasonable efforts to present
accurate information, but it cannot guarantee the availability or price
of any particular product.
10. WEB SITE RESPONSIBILITY
(A) Xxxxxx Mae will be solely responsible for the development,
operation, maintenance, and content of the Xxxxxx Xxx Web Site
and for all materials that appear on the Xxxxxx Mae Web Site
including, without limitation, ensuring that the materials posted
on the Xxxxxx Xxx Web Site are accurate and do not defame or
violate or infringe upon the rights of any third party
(including, for example, copyrights, trademarks, privacy, or
other personal or proprietary rights). Xxxxxx Mae agrees to
indemnify and hold VarsityBooks harmless from all claims,
damages, and expenses (including, without limitation, attorneys'
fees) relating to the development, operation, maintenance, and
contents of the Xxxxxx Xxx Web Site.
(B) VarsityBooks will be solely responsible for the development,
operation, maintenance, and content of the VarsityBooks Web Site
and for all materials that appear on the VarsityBooks Web Site
including, without limitation, ensuring that the materials posted
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on the VarsityBooks Web Site are accurate and do not defame or
violate or infringe upon the rights of any third party
(including, for example, copyrights, trademarks, privacy, or
other personal or proprietary rights). VarsityBooks agrees to
indemnify and hold Xxxxxx Mae harmless from all claims, damages,
and expenses (including, without limitation, attorneys' fees)
relating to the development, operation, maintenance, and contents
of the VarsityBooks Web Site.
11. EXCLUSIVITY
Subject to the terms and conditions set forth above and for the term
of this Agreement or any renewal thereof, Xxxxxx Xxx agrees to make
VarsityBooks the exclusive College Targeted Retailer on the Xxxxxx Mae
Web Site. In consideration for the exclusivity rights granted by
Xxxxxx Xxx, VarsityBooks agrees that it will not (i) offer any
arrangement on terms substantially similar to those agreed to herein
to, or (ii) accept third-party content or functionality for the
VarsityBooks Scholarship Vertical from, any Xxxxxx Mae Competitors, as
such term is hereafter defined. "Xxxxxx Xxx Competitors" means a
lending institution or its affiliate which derives substantially all
of its revenues from the education loan business, including but not
limited to originating, funding, guaranteeing, buying, selling,
servicing, or securitizing education loans; and/or outsourcing
services to educational institutions which services may include
without limitation (1) advising on paying for/saving for primary,
secondary, vocational, or post-secondary education; (2) financial aid
services; and/or (3) federal and private student loan fulfillment (the
"EDUCATION LOAN BUSINESS") and the entities listed on Exhibit I hereto
as such exhibit may be amended from time to time with VarsityBooks'
consent, which consent shall not be unreasonably withheld, delayed or
conditioned.
12. INDEMNIFICATION
(A) BY VARSITY BOOKS. VarsityBooks will indemnify, defend and hold
harmless Xxxxxx Mae and its affiliates, directors, officers and
employees from and against any and all damages, losses,
liabilities, expenses, and costs (including, without limitation,
reasonable attorneys' fees) resulting or arising from a third
party claim alleging facts that would constitute a breach by
VarsityBooks of a warranty it is giving under Section 8 hereof or
a breach of an obligation of VarsityBooks under Section 25 below.
In the event the use or display of any VarsityBooks Marks by
Xxxxxx Xxx becomes or may be enjoined because it infringes a
third party's Intellectual Property Rights, VarsityBooks will, at
its sole expense: (1) obtain for Xxxxxx Mae the right to continue
using, displaying or operating the infringing materials; or (2)
replace or modify the infringing materials while still complying
with the requirements of this Agreement. If neither of the
foregoing can be reasonably accomplished, Xxxxxx Xxx will be
entitled to terminate this Agreement immediately without any
liability or obligation to VarsityBooks for doing so, if such
injunction materially reduces the value of VarsityBooks'
performance under this Agreement.
(B) BY XXXXXX MAE. Xxxxxx Xxx will indemnify, defend and hold
harmless VarsityBooks and its affiliates, directors, officers and
employees from and against any and all damages, losses,
liabilities, expenses, and costs (including, without limitation,
reasonable attorneys' fees) resulting or arising from a third
party claim alleging facts that would constitute a breach by
Xxxxxx Mae of a warranty it is giving under Section 8 hereof or a
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breach of an obligation of Xxxxxx Xxx in Section 25 below. In the
event the use or operation of the Xxxxxx Mae Web Site(s) or the
use or display of any Xxxxxx Xxx Xxxxx by VarsityBooks becomes or
may be enjoined because it infringes a third party's Intellectual
Property Rights, Xxxxxx Mae will, at its sole expense: (1) obtain
for VarsityBooks the right to continue using, displaying or
operating the infringing materials; or (2) replace or modify the
infringing materials while still complying with the requirements
of this Agreement. If neither of the foregoing can be reasonably
accomplished, VarsityBooks will be entitled to terminate this
Agreement immediately without any liability or obligation to
Xxxxxx Xxx for doing so, if such injunction materially reduces
the value of Xxxxxx Mae's performance under this Agreement.
(C) In connection with any claim or action described in this section,
the party seeking indemnification (a) will give the indemnifying
Party prompt written notice of the indemnifiable claim, including
the basis on which indemnification is being asserted and copies
of all relevant pleadings, demands and other papers relating to
the action and in possession of the Indemnified Party (b) will
cooperate with Indemnifying Party (at the Indemnifying Party's
expense) in connection with the defense and settlement of the
claim and (c) will permit the Indemnifying Party to control the
defense and settlement of the claim including the selection of
counsel, provided that the Indemnifying Party may not settle the
claim without the Indemnified Party's prior written consent
(which will not be unreasonably withheld). Further, the
Indemnifying Party will apprise the Indemnified Party of its
progress in handling the claim and permit Indemnified Party to
have its own counsel in attendance at all proceedings and
substantive negotiations relating to such claim at Indemnified
Party's cost and expense.
13. LIMITATION OF LIABILITY
EXCEPT FOR EACH PARTY'S OBLIGATIONS SET FORTH IN SECTION 12, IN NO
EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER PARTY OR ANY THIRD
PARTY FOR ANY SPECIAL, EXEMPLARY, PUNITIVE, CONSEQUENTIAL, INDIRECT OR
INCIDENTAL DAMAGES, INCLUDING WITHOUT LIMITATION LOST PROFITS, EVEN IF
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
14. CONFIDENTIAL INFORMATION
(A) "CONFIDENTIAL INFORMATION" means all information relating to the
Agreement, or received by a party (the "RECEIVING PARTY") from
the other party (the "FURNISHING PARTY") in the course of
performing under the Agreement, which is or should reasonably be
understood to be confidential or proprietary to the Furnishing
Party (including confidential information disclosed by the
Furnishing Party which relates to or is owned by its licensors,
suppliers, partners, contractors and agents), in whatever form
(whether tangible, intangible, electronic, oral or otherwise),
including without limitation the terms of this Agreement,
technical processes and formulas, source codes, product designs,
sales, cost and other unpublished financial information, customer
information, product and business plans, projections, marketing
data, trade secrets; specifications; programs; instructions;
object code; Intellectual Property Rights; technical know-how;
methods and
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procedures for operation; benchmark test results; information
about employees; marketing strategies; services; customer names;
business or technical plans and proposals (in any form). In
addition, until such time as Xxxxxx Xxx has publicly announced
its * , the * shall be included in the definition of Confidential
Information. For purposes of this Agreement, "INTELLECTUAL
PROPERTY RIGHTS" or "Intellectual Property" means all forms of
intellectual property rights and protections, including, without
limitation, all right, title and interest in and to all patents
(including all filed, pending or potential applications for
letters patent), copyrights, trade secrets, trademarks, trade
names, service marks, symbols, and any other intellectual
property rights under common law, state law or federal law.
(B) The Receiving Party acknowledges and agrees that any and all
Confidential Information received by it under this Agreement
hereunder is of a confidential, proprietary and/or trade secret
nature to the Furnishing Party (or its licensors, suppliers,
partners, contractors and agents) and that the Furnishing Party
(or its licensors, suppliers, partners, contractors and agents)
owns all Intellectual Property Rights in such Confidential
Information.
(C) The Receiving Party: (1) will protect Confidential Information
received hereunder from unauthorized use and disclosure with at
least the same degree of care that it utilizes with respect to
its own similar proprietary information, but in no event less
than a reasonable standard of care and use same solely and
exclusively in connection with the implementation or enforcement
of this Agreement; (2) except as contemplated by this Agreement,
may not directly or indirectly disclose, publish, copy, duplicate
onto, convey through, or store on any medium such Confidential
Information without the Furnishing Party's prior written consent;
and (3) will ensure that all copyright, trademark and other
proprietary notices affixed to or displayed on such Confidential
Information will not be removed or modified and will be
reproduced on any copies thereof. The Receiving Party will
promptly inform the Furnishing Party of any actual or suspected
breach of this Section 14 by it (including its contractors and
agents) upon becoming aware of such actual or suspected breach.
(D) The confidentiality provisions of this Section 14 will not apply
to any information that the Receiving Party can show: (1) is or
subsequently becomes publicly available without breach of any
obligation owed to the Furnishing Party; (2) was known to the
Receiving Party prior to the Furnishing Party's disclosure of
such information to the Receiving Party; (3) became known to the
Receiving Party from a source other than the Furnishing Party,
and without breach of an obligation of confidentiality owed to
the Furnishing Party; (4) is independently developed by the
Receiving Party without reference to the Furnishing Party's
Confidential Information; or (5) is used by the Receiving Party
in order to enforce any of its rights, claims or defenses under,
or as otherwise contemplated in, this Agreement.
(E) Nothing in this Agreement will be deemed to prevent the Receiving
Party from disclosing any Confidential Information received
hereunder pursuant to any applicable law, regulation or court
order, including, without limitation, the Securities Act of 1933
and the Securities Exchange Act of 1934, provided that such
disclosure will be limited to the minimum acceptable level of
disclosure and that such Receiving Party will immediately notify
the Furnishing Party of the imminent disclosure and minimize or
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prevent such disclosure to the maximum extent allowed under
applicable law, regulation or court order.
(F) Each party receiving confidential information under this
Agreement shall maintain the information in confidence in
accordance with the terms of the Agreement for a period of five
(5) years from the date of receipt of the information.
Immediately upon the earlier of the Furnishing Party's request or
the termination or expiration of this Agreement for any reason,
the Receiving Party will: (1) stop using all Confidential
Information of the other party then in its possession not under a
valid license; (2) erase or destroy all such Confidential
Information residing in any computer memory or data storage
apparatus; and (3) destroy or return to the Furnishing Party (in
the Furnishing Party's discretion) all such Confidential
Information in tangible form.
(G) The Receiving Party acknowledges that its breach of this Section
14 will cause the Furnishing Party (or its licensors) irreparable
injury for which monetary damages will not make the other party
whole. Accordingly, in addition to all other available remedies
and notwithstanding Section 13 ,the Furnishing Party (or its
licensors) will be entitled to equitable or injunctive relief as
and where it deems fit in the event of an actual, attempted or
threatened breach of any obligation of the Receiving Party
(including its contractors and agents) under this Section 14.
(H) The obligations of confidentiality and limitation of use,
disclosure, and access set forth herein shall survive the
termination or expiration of this Agreement for a period of five
years from the date of such termination or expiration.
15. PUBLICITY
(A) The parties will issue mutually agreeable joint news releases
from time to time as the parties deem appropriate, including, at
a minimum, upon the execution of this Agreement.
16. NOTICE
(A) Any notice or other communication required or permitted to be
made or given by either party pursuant to this Agreement will be
in writing, and will be deemed to have been duly given: (i) three
(3) business days after the date of mailing if sent by certified
U.S. mail, postage prepaid, with return receipt requested; (ii)
when transmitted if sent by facsimile, provided a confirmation of
transmission is produced by the sending machine and a copy of
such facsimile is promptly sent by another means specified in
this section; or (iii) when delivered if delivered personally or
sent by express courier service. All notices will be sent to the
other party at its address as set forth below or at such other
address as such party will have specified in writing:
In the case of VarsityBooks: In the case of Xxxxxx Xxx:
VARSITYBOOKS XXXXXX MAE, INC.
0000 X Xxxxxx, X.X. 00000 Xxxxxx Xxx Xxxxx
0xx Xxxxx Xxxxxx, XX 00000
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Washington, D.C. 20006 Attn: Xxxxxx X. Xxxxxxx, VP
Attn: Xxxx Xxxxx, SVP/CFO Phone: 000-000-0000
Phone: 000-000-0000 Fax: 000-000-0000
Fax: 000.000.0000
With a copy to: With a copy to:
Xxxx Xxxxxxx Xxxxxx Xxx, Inc.
0000 Xxxxxxxxxxxxx Xxxxx 00000 Xxxxxx Xxx Xxxxx
XxXxxx, XX 00000 Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx, Esq. Attn: Xxxxxx X. Xxxxx,
Phone: 000-000-0000 VP and Deputy General Counsel
Fax: 000-000-0000 Phone: 000-000-0000
Fax: 000-000-0000
17. INDEPENDENT CONTRACTOR
This Agreement will not create an agency, joint venture, partnership,
franchise, sales representative, employment, or other similar
relationship between the parties, it being understood that the
parties' relationship will only be that of independent contractors and
that each party will be solely responsible and liable for its own
actions or omissions. Neither party to this Agreement will have the
authority to make or accept any offers or representations on behalf of
the other. Neither party will make any statement, on its Web site or
otherwise, which could reasonably be understood to contradict this
Section 17.
18. WAIVER
No failure or delay by either party in exercising any right, power or
remedy will operate as a waiver of such right, power or remedy, and no
waiver will be effective unless it is in writing and signed by the
waiving party. If either party waives any right, power or remedy, such
waiver will not waive any successive or other right, power or remedy
the party may have under this Agreement.
19. SEVERABILITY
If any part of this Agreement is determined to be illegal, invalid,
unenforceable, or otherwise contrary to law by an arbitrator under
Section 20 or a court of competent jurisdiction, the remainder of the
Agreement will remain in full force and effect, and the parties will
substitute an enforceable provision that, to the maximum extent
possible in accordance with applicable law, preserves the original
intentions and economic positions of the parties.
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20. GOVERNING LAW; DISPUTE RESOLUTION
This Agreement will for all purposes be governed, interpreted,
construed, and enforced solely and exclusively in accordance with the
laws of the State of Delaware except for any provisions of Delaware
law which would require or permit the application of the substantive
law of another jurisdiction.
In discussions and activities relating to this Agreement, VarsityBooks
and Xxxxxx Mae will cooperate in good faith to accomplish the
objectives specified in this Agreement. If any dispute arises relating
to either Party's rights or obligations under this Agreement,
VarsityBooks and Xxxxxx Xxx will use good faith efforts to resolve the
matter in accordance with this Section 20
Within ten (10) business days following the written request of either
Party (which will describe the nature of the dispute and other
relevant information), the Parties' managers who are responsible for
the VarsityBooks/Xxxxxx Mae relationship will meet to resolve the
dispute at a mutually convenient time and place. If the relationship
managers are unable to resolve the dispute within two (2) business
days following their initial meeting, they will refer the matter to
the Parties' divisional executives who are responsible for the
administration of this Agreement; along with a written statement (or
statements) describing the nature of the dispute and other relevant
information.
Within five (5) business days following the referral of the matter to
the Parties' divisional executives, the divisional executives will
meet to resolve the dispute at a mutually convenient time and place.
Additional representatives of the parties may be present at the
meeting. All negotiations pursuant to this Section will be
confidential and treated as compromise and settlement negotiations for
purposes of the Federal Rules of Evidence and State Rules of Evidence.
Any resolution reached under this Section will be reduced to writing
and signed by the Parties. During a dispute resolution conducted under
this Section, the Parties will diligently perform all obligations
hereunder that are not directly related to the dispute. If the
divisional executives are unable to resolve the dispute within ten
(10) business days following their initial meeting, the controversy or
claim will be resolved through binding arbitration (excepting disputes
relating to issues of proprietary rights, including, but not limited
to intellectual property and confidentiality) conducted in accordance
with the commercial arbitration rules of the American Arbitration
Association then in effect, except to the extent that such rules are
inconsistent with the provisions set forth herein. If VarsityBooks
initiates arbitration, the arbitration proceedings will be held in
Fairfax County, Virginia and if Xxxxxx Xxx initiates arbitration, the
arbitration proceedings will be held in the District of Columbia. The
arbitration will be held before a single arbitrator. The Federal Rules
of Evidence will apply in toto. In no event will the arbitrator have
the authority to make any award that provides for punitive or
exemplary damages. Any decision rendered by the arbitrator will be
binding, final and conclusive upon both parties, and a judgment
thereon may be entered in, and enforced by, any court having
jurisdiction over the party against which an award is entered or the
location of such party's assets and the parties hereby irrevocably
waive any objections to the jurisdiction of such court based on any
ground, including without limitation, improper
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venue or forum nor conveniens. The prevailing party in any claim
action, arbitration or other proceeding arising under or in connection
with the implementation of enforcement of this Agreement will be
entitled to recover from the other party all attorneys' fees incurred
in connection therewith.
Nothing in this section shall be deemed to prohibit or restrict either
party from seeking injunctive relief or other interim or provisional
relief pending resolution of the dispute through such voluntary
dispute resolution procedures set forth herein.
21. ENTIRE AGREEMENT; MODIFICATION
This Agreement (including any and all exhibits attached hereto)
constitutes the sole, final and entire agreement of the parties and
supersedes and terminates all previous agreements, oral or written,
between the parties with respect to the subject matter hereof. All
amendments or modifications to this Agreement must be in writing and
signed by an officer of each party.
22. ASSIGNMENT
Neither party may assign, delegate or otherwise transfer this
Agreement or any rights or obligations arising under or in connection
with this Agreement without the prior written consent of the other
party, which consent will not be unreasonably withheld or delayed;
provided, however, that consent shall not be required (i) in
connection with any assignment by Xxxxxx Mae to an Affiliate, or (ii)
in connection with any assignment by VarsityBooks to either CollegeOps
LLC, a Delaware limited liability company or to CollegeImpact Inc., a
Delaware corporation, both wholly-owned subsidiaries of VarsityBooks.
Unless otherwise provided in a writing signed by VarsityBooks and
Xxxxxx Xxx, any such assignment to CollegeOps LLC or CollegeImpact
Inc. shall not relieve VarsityBooks of any of its obligations
hereunder. This Agreement will be binding upon the parties' respective
successors and permitted assigns.
23. CUMULATIVE REMEDIES
Each party's remedies set forth in this Agreement will be cumulative
and not exclusive and will be available in addition to all other
remedies available by law or equity, except as otherwise expressly
provided in this Agreement.
24. FORCE MAJEURE
Neither party will be deemed in default of this Agreement to the
extent that performance of its obligations, or attempts to cure any
breach, are delayed or prevented by reason of any act of God or other
force majeure; provided that, such party immediately gives the other
party written notice thereof and undertakes commercially reasonable
efforts to circumvent the cause of the delay or minimize the extent of
the delay. In any such event,
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the time for performance or cure will be extended for a period equal
to the duration of the delay, not to exceed four (4) weeks. If the
notifying party does not resume performance of such obligations or
cure such breach before the end of such four (4) week period, the
other party will be entitled to terminate this Agreement immediately
without any obligation or liability to the delayed party for doing so.
25. COMPLIANCE WITH LAWS.
(a) In implementing this Agreement, each party will comply with all
applicable laws and regulations and maintain in good standing all
required registrations, licenses and other authorizations.
(b) SEC Filings. In connection with any registration of its
securities under the Securities Act of 1933, as amended, or any
public disclosure under the Securities Exchange Act of 1934, as
amended, VarsityBooks shall (i) make timely written objection to
the public disclosure of information contained in the Agreement
that references Xxxxxx Mae's * (the "Xxxxxx Xxx Confidential
Information") by following applicable procedures, (ii) follow the
procedures contained in 17 C.F.R. Sec. 230.406, with respect to
the Xxxxxx Mae Confidential Information, (iii) provide Xxxxxx Xxx
with an advance copy of and reasonable opportunity, which at a
minimum shall be one day, to review and comment on VarsityBooks'
confidential treatment request and provide a copy of the relevant
portion of any response received from the SEC regarding such
request.
26. HEADINGS.
The captions and headings used in this Agreement are inserted for
convenience only and will not affect the meaning or interpretation of
this Agreement.
27. COUNTERPARTS.
This Agreement may be executed in counterparts, each of which will be
deemed an original and all of which together will constitute one and
the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date.
XXXXXX MAE, INC. XXXXXXXXXXXX.XXX INC.
/s/ XXXXXX XXX, INC. /s/ XXXXXXXXXXXX.XXX INC.
--------------------------- -----------------------------------
Signature Signature
--------------------------- -----------------------------------
Name Name
--------------------------- -----------------------------------
Title Title
--------------------------- -----------------------------------
Date Date
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EXHIBIT A
REFERRAL FEES, PAYMENT SCHEDULE AND PERFORMANCE OBLIGATIONS
-----------------------------------------------------------
1. Referral Fees
(a) Calculation of Fee
Xxxxxx Mae will earn Referral Fees based on Net Revenues
according to the Referral Fee schedule below. "NET REVENUES" are
revenues derived by VarsityBooks from the sale of Qualifying Products,
excluding costs for shipping, handling, special promotions,
gift-wrapping, service charges, credit card processing fees, returned
goods, sales taxes and bad debt.
i. Sallie Mae will receive a Referral fee of * of Net Revenues
from the sale of Qualifying Products in any term year in
which Net Revenues are less than or equal to*
ii. In the event that during any term year Net Revenues from the
sale of Qualifying Products exceeds * the fee will be
increased to * of Net Revenues from the sale of Qualifying
Products.
iii. In the event that during any term year Net Revenues from the
sale of Qualifying Products exceeds * the fee will be
increased to * of Net Revenues from the sale of Qualifying
Products.
iv. Referral Fees shall be based on a percentage of annual Net
Revenues but will be paid on a quarterly basis. At each
scheduled payment date (listed in 1(b) below), the
percentage of Referral Fees paid will be based on the amount
of Net Revenues generated as of that date. To the extent
that any amounts paid to Xxxxxx Xxx by VarsityBooks during
such term year were calculated and paid based on a lower fee
than Xxxxxx Mae is ultimately entitled to receive based on
its Net Revenues at term year end, VarsityBooks will pay
Xxxxxx Xxx any excess over the previously paid amounts due
as a result of the above-described increases. Such excess
amount shall be paid within thirty (30) days following the
end of such term year.
Exhibit A-1
25
(b) Schedule of Payment
Based on the schedule below, VarsityBooks will send to
Xxxxxx Mae the total Referral Fees due to Xxxxxx Xxx (based upon
sales of Qualifying Products according to the formula set forth
in paragraph 1(a) above) in the form of a commission check for
the applicable Referral Fees (less any taxes required to be
withheld under applicable law) as well as a statement of relevant
activity on the VarsityBooks Web Site. Such commission checks
will be sent quarterly within thirty days after each of the
following dates:
March 31
June 30
September 30
December 31
2. PERFORMANCE OBLIGATIONS AND APPLICABLE PAYMENTS
In addition to Referral Fees, VarsityBooks may compensate Xxxxxx Mae
with Warrants to purchase up to an aggregate of 616,863 shares of
common stock of VarsityBooks, par value $0.0001 (the "WARRANT
SHARES"). The Warrant Shares will be earned by Xxxxxx Xxx in
accordance with the terms of the Warrants attached hereto as Exhibit
B.
Exhibit A-2
26
EXHIBIT B
FORM OF WARRANTS
------------------
Exhibit B-1
27
CONFIDENTIAL
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THESE
SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID
ACT OR LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH
REGISTRATION IS NOT REQUIRED.
XXXXXXXXXXXX.XXX INC.
STOCK SUBSCRIPTION WARRANT
February 3, 2000
1. GENERAL.
(a) THIS CERTIFIES that, for value received, XXXXXX MAE, INC.
("Xxxxxx Xxx"), or assigns, is entitled to subscribe for and purchase from
XXXXXXXXXXXX.XXX INC., a Delaware corporation (the "Corporation"), at any time
or from time to time commencing as set forth in Section 1(b) and ending on the
seventh (7th) anniversary of the date hereof (the "Exercise Period"), on the
terms and subject to the provisions hereinafter set forth, up to 352,493 shares
(subject to adjustment as provided herein) (the "Warrant Shares") of fully paid
and non-assessable shares of Common Stock, $0.0001 par value, of the Corporation
(the "Common Stock") as shall be determined in accordance with the provisions of
Section 1(b) hereof, at a price per share (the "Warrant Price") equal to the per
share initial public offering price of the IPO (as hereinafter defined);
provided that if a Corporate Transaction (as defined below) occurs prior to the
IPO Date and prior to any Equity Offering (as defined below), the Warrant Price
shall be equal to the Fully-Diluted Per Share Valuation established in the
Corporate Transaction (as defined below). The Corporation represents, warrants
and covenants that, as of the date hereof, the maximum Warrant Shares issuable
hereunder shall constitute two percent (2%) of the number of shares of voting
capital stock of the Corporation that will be outstanding immediately prior to
the closing of the IPO (as hereinafter defined) after giving effect to the
exercise, exchange or conversion of all outstanding securities, rights, options,
warrants (including this Warrant), calls, commitments or agreements of any
nature or character (whether debt or equity) that are, directly or indirectly,
exercisable or exchangeable for, or convertible into or otherwise represent the
right to purchase or otherwise receive, directly or indirectly, any such capital
stock or other arrangement to acquire at any time or under any circumstance,
voting capital stock of the Corporation or any such other securities and
assuming that all stock options and/or shares
Exhibit B-2
28
CONFIDENTIAL
of capital stock reserved for grant or issuance to officers, directors,
employees and consultants under all agreements, plans or arrangements
theretofore approved by the Board of Directors of the Corporation have been so
granted or issued (as the case may be) (collectively, the "Fully-Diluted
Shares"). In the event that the number of Warrant Shares listed above does not
constitute two percent (2%) of the Fully-Diluted Shares existing immediately
prior to the closing of the IPO, the number of Warrant Shares initially issuable
hereunder (the "Initial Number") shall be adjusted accordingly to cause the
Initial Number to constitute two percent (2%) of the Fully-Diluted Shares
existing immediately prior to the closing of the IPO. As used in this Agreement,
the term "IPO Date" shall mean the date on which the Corporation closes the
initial public offering of its Common Stock (the "IPO"). In the event the
Corporation consummates an equity offering resulting in net proceeds to the
Corporation in excess of ten million dollars ($10,000,000) prior to the IPO Date
(the "EQUITY OFFERING"), the exercise price shall be equal to the lesser of
$10.00 per share or the per share value of the Common Stock in the Equity
Offering. In the event of a Corporate Transaction prior to the earlier of (a)
the IPO Date or (b) the closing of an Equity Offering, in lieu of exercising
this Warrant, Xxxxxx Xxx may cancel this Warrant by providing written notice of
its intent to do so to the Corporation (the "RIGHT TO CANCEL").
This Warrant is being issued pursuant to a Product Promotion Agreement dated as
of the date hereof (the "Agreement"), between the Corporation and Xxxxxx Mae,
Inc. All terms used but not defined herein shall have the meanings set forth in
the Agreement.
(b) This Warrant shall become exercisable as to that number of
Warrant Shares, and at such times, as are determined in accordance with Exhibit
A attached hereto; provided, however, that this Warrant shall become exercisable
as to all unvested Warrant Shares immediately upon the occurrence of a
Stipulated Event, unless Xxxxxx Xxx elects to exercise its Right to Cancel this
Warrant in accordance with Section 1(a) above. As used herein, the term
"Stipulated Event" shall mean (a) a Corporate Transaction (as hereinafter
defined) or (b) a termination of the Agreement that results from a material
breach by the Corporation of the Agreement. "Corporate Transaction" means (A)
any consolidation or merger of the Corporation with or into any other
corporation or other entity, other than any merger or consolidation resulting in
the holders of the capital stock of the Corporation entitled to vote for the
election of directors holding a majority of the capital stock of the surviving
or resulting corporation or other entity entitled to vote for the election of
directors, (B) any person or entity (including any affiliates thereof) becoming
the holder of a majority of the capital stock of the Corporation entitled to
vote for the election of directors, or (C) any sale or other disposition by the
Corporation of all or substantially all of its assets or capital stock.
"FULLY-DILUTED PER SHARE VALUATION ESTABLISHED IN A CORPORATE TRANSACTION" means
the value ascribed to the Corporation in the Corporate Transaction divided by
the number of Fully-Diluted shares.
2. EXERCISE OF WARRANT. The rights represented by this Warrant may be
exercised by the holder hereof, in whole or in part, at any time or from time to
time during the Exercise Period, by the surrender of this Warrant (properly
endorsed) at the office of the Corporation at 0000 X Xx., XX, 0xx Xxxxx,
Xxxxxxxxxx, XX 00000, or at
Exhibit B-3
29
CONFIDENTIAL
such other agency or office of the Corporation in the United States of America
as it may designate by notice in writing to the holder hereof at the address of
such holder appearing on the books of the Corporation, and by payment (either in
cash, by check or wire transfer, by cancellation of indebtedness and/or in
shares of capital stock of the Corporation valued at Fair Market Value (as
hereinafter defined) on the date of such exercise) to the Corporation of the
Warrant Price for each Warrant Share being purchased. In the event of the
exercise of the rights represented by this Warrant, a certificate or
certificates for the Warrant Shares so purchased, registered in the name of the
holder, and if this Warrant shall not have been exercised for all of the Warrant
Shares, a new Warrant, registered in the name of the holder hereof, of like
tenor to this Warrant, shall be delivered to the holder hereof within a
reasonable time, not exceeding six business days, after the rights represented
by this Warrant shall have been so exercised. The person in whose name any
certificate for Warrant Shares is issued upon exercise of this Warrant shall for
all purposes be deemed to have become the holder of record of such shares on the
date on which the Warrant was surrendered and payment of the Warrant Price and
any applicable taxes was made, irrespective of the date of delivery of such
certificate, except that, if the date of such surrender and payment is a date
when the stock transfer books of the Corporation are closed, such person shall
be deemed to have become the holder of such shares at the close of business on
the next succeeding date on which the stock transfer books are open.
3. EXCHANGE OF WARRANT.
(a) In addition to, and independent of, the rights of the
holder of this Warrant set forth in Section 2 hereof, the holder hereof may at
any time or from time to time elect to receive, without the payment by the
holder of any additional consideration, that number of Warrant Shares determined
as hereinafter provided in this Section 3 by the surrender of this Warrant or
any portion hereof to the Corporation, accompanied by an executed Notice of
Exchange in substantially the form thereof attached hereto (the "Net Issue
Election"). Thereupon, the Corporation shall issue to the holder hereof such
number of fully paid and nonassessable Warrant Shares as is computed using the
following formula:
X = Y (A-B)
-----------
A
where X = the number of Warrant Shares to be issued to the holder
pursuant to this Section 3.
Y = the number of Warrant Shares covered by this Warrant in repect
of which the Net Issue Election is made pursuant to this
Section 3.
A = the Fair Market Value (as hereinafter defined) of one Warrant
Share determined at the time the Net Issue Election is made
pursuant to this Section 3 (the "Determination Date").
B = the Warrant Price in effect under this Warrant at the
Determination Date.
Exhibit B-4
30
CONFIDENTIAL
All references in this Warrant to an "exercise" of the Warrant shall
include an exchange pursuant to this Section 3.
(b) For purposes of the above calculation, "Fair Market Value"
of one Warrant Share as of the Determination Date shall mean:
(i) if the Common Stock of the Corporation is not
then traded on a national securities exchange, the average of the
closing prices quoted on the National Association of Securities
Dealers, Inc. Automated Quotation National Market System, if
applicable, or the average of the last bid and asked prices of the
Common Stock quoted in the over-the-counter-market or (B) if the Common
Stock is then traded on a national securities exchange, the average of
the high and low prices of the Common Stock listed on the principal
national securities exchange on which the Common Stock is so traded, in
each case for the twenty (20) trading days immediately preceding the
Determination Date or, if such date is not a business day on which
shares are traded, the next immediately preceding trading day;
(ii) in the event of a Warrant Exchange in connection
with a Corporate Transaction, the value per share of Common Stock
received or receivable by each holder thereof (assuming for purposes of
this determination, in the case of a sale of assets, the Corporation is
liquidated immediately following such sale and the consideration paid
to the Corporation is immediately distributed to its stockholders); and
(iii) in all other circumstances, the fair market
value per share of Common Stock shall be the value thereof, as agreed
upon by the Corporation and the holder of this Warrant, provided,
however, that if the Corporation and the holder cannot agree on such
value, such value shall be determined by an independent investment
banking or valuation firm experienced in valuing businesses such as the
Corporation and jointly selected in good faith by the Corporation and
the holder. Fees and expenses of the valuation firm shall be paid for
by the Corporation.
The closing of any Warrant Exchange shall take place at the offices of the
Corporation on the date specified in the Notice of Exchange (the "Exchange
Date"), which shall be not less than three and not more than 30 days after the
delivery of such Notice. At such closing, the Corporation shall issue and
deliver to the holder or its designee a certificate or certificates for the
Warrant Shares to be issued upon such Warrant Exchange, registered in the name
of the holder or such designee, and if such Warrant Exchange shall not have been
for all Warrant Shares, a new Warrant, registered in the name of the holder, of
like tenor to this Warrant for the number of shares still subject to this
Warrant following such Warrant Exchange.
Exhibit B-5
31
CONFIDENTIAL
4. ADJUSTMENT OF WARRANT PRICE.
(a) The Warrant Price shall be subject to adjustment from time
to time as follows:
(i) If the Corporation shall at any time or from time
to time during the Exercise Period, issue any shares of Common Stock
(or be deemed to have issued any shares of Common Stock as provided
herein), other than Excluded Securities (as defined in Section 4(a)(
v)) without consideration or for a consideration per share less than
the Fair Market Value (determined in accordance with the formula set
forth in Section 3) of a share of Common Stock in effect immediately
prior to the issuance of Common Stock, the Warrant Price in effect
immediately prior to such issuance shall forthwith be lowered to a
price equal to the quotient obtained by dividing: (x) an amount equal
to the sum of (1) the total number of shares of Common Stock
outstanding (including any shares of Common Stock deemed to have been
issued pursuant to Section 4(a)(ii)(D)) immediately prior to such
issuance multiplied by the Warrant Price in effect immediately prior to
such issuance, plus (2) the consideration received by the Corporation
upon such issuance, by (y) the total number of shares of Common Stock
outstanding (including any shares of Common Stock deemed to have been
issued pursuant to Section 4(a)(ii)(D)) immediately after the issuance
or deemed issuance of such Common Stock.
(ii) For the purposes of any adjustment of the
Warrant Price pursuant to Section 4(a)(i), the following provisions
shall be applicable:
(A) In the case of the issuance of
Common Stock for cash, the consideration received by the Corporation
from such issuance shall be deemed to be the amount of cash paid
therefor before deducting therefrom any discounts, commissions or other
expenses allowed, paid or incurred by the Corporation for any
underwriting or otherwise in connection with the issuance and sale
thereof.
(B) In the case of the issuance of Common
Stock for a consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the fair market
value thereof as determined in good faith by the Board of Directors of
the Corporation, irrespective of any accounting treatment.
(C) In the case of the issuance of Common
Stock without consideration, the consideration shall be deemed to be
$0.01 per share.
(D) In the case of the issuance of (x)
options to purchase or rights to subscribe for Common Stock, (y)
securities by their terms convertible into or exchangeable for Common
Stock or (z) options to purchase rights to subscribe for such
convertible or exchangeable securities:
Exhibit B-6
32
CONFIDENTIAL
(1) the aggregate maximum
number of shares of Common Stock deliverable upon exercise of
such options to purchase or rights to subscribe for Common
Stock shall be deemed to have been issued at the time such
options or rights were issued and for a consideration equal to
the consideration (determined in the manner provided in
subdivisions (A), (B) and (C) above), if any, received by the
Corporation upon the issuance of such options or rights plus
the minimum purchase price provided in such options or rights
for the Common Stock covered thereby;
(2) the aggregate maximum
number of shares of Common Stock deliverable upon conversion
of or in exchange for any such convertible or exchangeable
securities or upon the exercise of options to purchase or
rights to subscribe for such convertible or exchangeable
securities and subsequent conversion or exchange thereof shall
be deemed to have been issued at the time such securities were
issued or such options or rights were issued and for a
consideration equal to the consideration received by the
Corporation for any such securities and related options or
rights (excluding any cash received on account of accrued
interest or accrued dividends), plus the additional
consideration, if any, to be received by the Corporation upon
the conversion or exchange of such securities or the exercise
of any related options or rights (the consideration in each
case to be determined in the manner provided in subdivisions
(A), (B) and (C) above);
(3) on any change in the
number of shares or exercise price of Common Stock deliverable
upon exercise of any such options or rights or conversions of
or exchanges for such securities, other than a change
resulting from the antidilution provisions thereof, the
applicable Warrant Price shall forthwith be readjusted to such
Warrant Price as would have resulted had the adjustment made
upon the issuance of such options, rights or securities not
converted prior to such change (or options or rights related
to such securities not converted prior to such change) been
made upon the basis of such change; provided, however, that
such readjustment shall not result in a Warrant Price that is
greater than the original Warrant Price; and
(4) on the expiration of all
such options or rights, the termination of all such rights to
convert or exchange or the expiration of all options or rights
related to such convertible or exchangeable securities in each
case having been issued by the Corporation for the same
consideration (as determined pursuant to subdivision (A), (B)
and (C) above), the applicable Warrant Price shall forthwith
be readjusted to such Warrant Price as would have resulted had
the adjustment made upon the issuance of such options, rights,
securities or options or rights related to such securities not
been made; provided, however, that such readjustment shall not
result in a Warrant Price that is greater that the original
Warrant Price.
Exhibit B-7
33
CONFIDENTIAL
(iii) If, at any time during the Exercise Period, the
number of shares of Common Stock outstanding is increased by a stock
dividend payable in shares of Common Stock or by a subdivision or split-up
of shares of Common Stock, then, following the record date fixed for the
determination of holders of Common Stock entitled to receive such stock
dividend, subdivision or split-up, the Warrant Price shall be appropriately
decreased and the number of shares of Common Stock issuable upon exercise
of this Warrant shall be appropriately increased, in each case in
proportion to such increase in outstanding shares.
(iv) If, at any time during the Exercise Period, the
number of shares of Common Stock outstanding is decreased by a combination
of the outstanding shares of Common Stock, then, following the record date
for such combination, the Warrant Price shall be appropriately increased
and the number of shares of Common Stock issuable upon exercise of this
Warrant shall be appropriately decreased, in each case, in proportion to
such decrease in outstanding shares.
(v) For purposes of Section 4(a), the term "Excluded
Securities" shall mean (A) shares of Common Stock (subject to equitable
adjustment for stock splits, dividends, combinations and like occurrences)
issued to officers, employees or directors of Corporation, pursuant to any
agreement, plan or arrangement approved by the Board of Directors of the
Corporation, or options to purchase or rights to subscribe for such Common
Stock, or securities by their terms convertible into or exchangeable for
such Common Stock, or options to purchase or rights to subscribe for such
convertible or exchangeable securities pursuant to such agreement, plan or
arrangement; (B) shares of Common Stock issued as a stock dividend or upon
any stock split or other subdivision or combination of shares of Common
Stock; (C) securities issued pursuant to the acquisition of another
corporation or other entity by the Corporation by merger or purchase of
stock or purchase of all or substantially all of such other corporation's
or other entity's assets whereby the Corporation owns not less than a
majority of the voting power of such other corporation or other entity
following such acquisition or purchase; or (D) securities issued in an
underwritten public offering approved by the Board of Directors.
(vi) All calculations under this Section 4 shall be
made to the nearest one tenth (1/10) of a cent or to the nearest one tenth
(1/10) of a share, as the case may be.
(b) Whenever the Warrant Price shall be adjusted as provided in this
Section 4 the Corporation shall forthwith file, at the office of the
Corporation or any transfer agent designated by the Corporation for the
Common Stock, a statement, signed by its chief financial officer,
showing in detail the facts requiring such adjustment and the adjusted
Warrant Price. The Corporation shall also cause a copy of such
statement to be sent by first-class certified mail, return receipt
requested, postage prepaid, to each holder of a Warrant at his or its
address appearing on the Corporation's records. Where appropriate, such
copy may be
Exhibit B-8
34
CONFIDENTIAL
given in advance and may be included as part of a notice
required to be mailed under the provisions set forth immediately below.
(c) In case the Corporation shall make or issue, or shall fix a record date
for the determination of eligible holders entitled to receive, a
dividend or other distribution with respect to the Common Stock (or any
shares of stock or other securities at the time issuable upon exercise
of the Warrant) payable in assets (excluding cash dividends paid or
payable solely out of retained earnings but including shares of any
subsidiary), then, in each such case, the holder of this Warrant on
exercise hereof at any time after the consummation, effective date or
record date of such dividend or other distribution, shall receive, in
addition to the Warrant Shares (or such other stock or securities)
issuable on such exercise prior to such date, and without the payment
of additional consideration therefor, the securities or such other
assets of the Corporation to which such holder would have been entitled
upon such date if such holder had exercised this Warrant on the date
hereof and had thereafter, during the period from the date hereof to
and including the date of such exercise, retained such shares and/or
all other additional stock available by it as aforesaid during such
period giving effect to all adjustments called for by this Section 4.
(d) In the event the Corporation shall propose to take any action of the
types described in Section 4(a)(iii) or (iv) or Section 11, the
Corporation shall give notice to each holder of a Warrant in the manner
set forth herein, which notice shall specify the record date, if any,
with respect to any such action and the date on which such action is to
take place. Such notice shall also set forth such facts with respect
thereto as shall be reasonably necessary to indicate the effect of such
action (to the extent such effect may be known at the date of such
notice) on the Warrant Price then in effect and the number, kind or
class of shares or other securities or property which shall be
delivered or purchasable upon the occurrence of such action or
deliverable upon exercise of this Warrant. In the case of any action
which would require the fixing of a record date, such notice shall be
given at least 10 days prior to the date so fixed, and in case of all
other action, such notice shall be given at least 20 days prior to the
taking of such proposed action. Failure to give such notice, or any
defect therein, shall not affect the legality or validity of any such
action.
5. ADJUSTMENT OF WARRANT SHARES. Upon each adjustment of the Warrant
Price as provided in Section 4, the holder hereof shall thereafter be entitled
to subscribe for and purchase, at the Warrant Price resulting from such
adjustment, the number of Warrant Shares equal to the product of (i) the number
of Warrant Shares existing prior to such adjustment and (ii) the quotient
obtained by dividing (A) the Warrant Price existing prior to such adjustment by
(B) the new Warrant Price resulting from such adjustment. No fractional shares
of Common Stock shall be issued as a result of any such adjustment, and any
fractional shares resulting from the computations pursuant to this paragraph
shall be eliminated without consideration.
Exhibit B-9
35
CONFIDENTIAL
6. COVENANTS AS TO COMMON STOCK. The Corporation covenants and agrees
that all shares of Common Stock that may be issued upon the exercise of the
rights represented by this Warrant, will, upon issuance, be validly issued,
fully paid and non-assessable and free from all taxes, liens and charges with
respect to the issuance thereof. The Corporation further covenants and agrees
that the Corporation will from time to time take all such action as may be
requisite to assure that the stated or par value per share of Common Stock is at
all times equal to or less than the then effective Warrant Price per share of
Common Stock issuable upon exercise of this Warrant. The Corporation further
covenants and agrees that the Corporation will at all times have authorized and
reserved, free from preemptive rights, a sufficient number of shares of Common
Stock to provide for the exercise of the rights represented by this Warrant. The
Corporation further covenants and agrees that if any shares of capital stock to
be reserved for the purpose of the issuance of shares of Common Stock upon the
exercise of this Warrant require registration with or approval of any
governmental authority under any Federal or state law before such shares may be
validly issued or delivered upon exercise, then the Corporation will in good
faith and expeditiously as possible endeavor to secure such registration or
approval, as the case may be. If and so long as the Common Stock issuable upon
the exercise of the rights represented by this Warrant is listed on any national
securities exchange, the Corporation will, if permitted by the rules of such
exchange, list and keep listed on such exchange, upon official notice of
issuance, all shares of such capital stock.
7. NO SHAREHOLDER RIGHTS. This Warrant shall not entitle the holder
hereof to any voting rights or other rights as a shareholder of the Corporation.
8. RESTRICTIONS ON TRANSFER. The holder of this Warrant acknowledges
that neither this Warrant nor the Warrant Shares have been registered under the
Securities Act of 1933, as amended (the "Securities Act") and the holder of this
Warrant agrees that no sale, transfer, assignment, hypothecation or other
disposition of this Warrant or the Warrant Shares shall be made in the absence
of (a) current registration statement under the Securities Act as to this
Warrant or the Warrant Shares and the registration or qualification of this
Warrant or the Warrant Shares under any applicable state securities laws then in
effect or (ii) an opinion of counsel reasonably satisfactory to the Corporation
to the effect that such registration or qualification is not required. Each
certificate or other instrument for Warrant Shares issued upon exercise of this
Warrant shall, if required under the Securities Act or the rules promulgated
thereunder, be imprinted with a legend substantially to the foregoing effect.
9. INVESTOR RIGHTS AGREEMENT. Anything contained herein to the contrary
notwithstanding, the Warrant Shares shall be entitled to all rights and benefits
accorded thereto in that certain Fourth Amended and Restated Investors' Rights
Agreement, dated as of February 3, 2000, by and among the Corporation and the
Investors (as defined therein) .
10. TRANSFER OF WARRANT; AMENDMENT. Subject to the restriction set
forth in Section 8, this Warrant and all rights hereunder are transferable, in
whole, or in part, at the agency or office of the Corporation referred to in
Section 2, by the holder hereof in
Exhibit B-10
36
CONFIDENTIAL
person or by duly authorized attorney, upon surrender of this Warrant properly
endorsed. Each taker and holder of this Warrant, by taking or holding the same,
consents and agrees that this Warrant, when endorsed, in blank, shall be deemed
negotiable, and, when so endorsed the holder hereof may be treated by the
Corporation and all other persons dealing with this Warrant as the absolute
owner hereof for any purposes and as the person entitled to exercise the rights
represented by this Warrant, or to the transfer hereof on the books of the
Corporation, any notice to the contrary notwithstanding; but until each transfer
on such books, the Corporation may treat the registered holder hereof as the
owner hereof for all purposes.
11. REORGANIZATIONS, ETC. In case, at any time during the Exercise
Period, of any capital reorganization, of any reclassification of the stock of
the Corporation (other than a change in par value or from par value to no par
value or from no par value to par value or as a result of a stock dividend or
subdivision, split-up or combination of shares), or the consolidation or merger
of the Corporation with or into another corporation (other than a consolidation
or merger in which the Corporation is the continuing operation and which does
not result in any change in the Common Stock) or of the sale of all or
substantially all the properties and assets of the Corporation as an entirety to
any other corporation, this Warrant shall, after such reorganization,
reclassification, consolidation, merger or sale, be exercisable for the kind and
number of shares of stock or other securities or property of the Corporation or
of the corporation resulting from such consolidation or surviving such merger or
to which such properties and assets shall have been sold to which such holder
would have been entitled if he had held the Common Stock issuable upon the
exercise hereof immediately prior to such reorganization, reclassification,
consolidation, merger or sale. In any such reorganization or other action or
transaction described above, appropriate provision shall be made with respect to
the rights and interests of the holder of this Warrant to the end that the
provisions hereof (including, without limitation, provisions for adjustments of
the Warrant Price and of the number of shares purchasable and receivable upon
the exercise of this Warrant) shall thereafter be applicable, as nearly as may
be, in relation to any shares of stock, securities or assets thereafter
deliverable upon the exercise hereof. The Corporation will not effect any such
consolidation, merger or sale unless, prior to the consummation thereof, the
successor corporation or entity (if other than the Corporation) resulting from
such transaction or the corporation or entity purchasing such assets shall
assume by written instrument, executed and mailed or delivered to the registered
holder hereof at the last address of such holder appearing on the books of the
Corporation, the obligation to deliver to such holder such shares of stock,
securities or assets as, in accordance with the foregoing provisions, such
holder may be entitled to purchase.
12. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If this Warrant is
lost, stolen, mutilated or destroyed, the Corporation may, on such terms as to
indemnity or otherwise as it may in its discretion impose (which shall, in the
case of a mutilated Warrant, include the surrender thereof), issue a new Warrant
of like denomination and tenor as the Warrant so lost, stolen, mutilated or
destroyed. Any such new Warrant shall constitute an original contractual
obligation of the Corporation, whether or not the allegedly lost, stolen,
mutilated or destroyed Warrant shall be at any time enforceable by anyone.
Exhibit B-11
37
CONFIDENTIAL
13. MODIFICATION AND WAIVER. This Warrant and any provision hereof may
be changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
14. NOTICES. All notices, advises and communications to be given or
otherwise made to any party to this Agreement shall be deemed to be sufficient
if contained in a written instrument delivered in person or by telecopier or
duly sent by first class registered or certified mail, return receipt requested,
postage prepaid, or by overnight courier, or by electronic mail, with a copy
thereof to be sent by mail (as aforesaid) within 24 hours of such electronic
mail, addressed to such party at the address set forth below or at such other
address as may hereafter be designated in writing by the addressee to the
addresser listing all parties:
If to the Corporation, to:
XxxxxxxXxxxx.xxx Inc.
0000 X Xx., XX
0xx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxx
Telecopier: 000-000-0000
Electronic mail: xxxx@xxxxxxxxxxxx.xxx
With a copy to:
Xxxx Xxxxxxx
0000 Xxxxxxxxxxxxx Xxxxx
XxXxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxx
Telecopier: 000-000-0000
Electronic mail: xxxx.xxxxxx@xxxxxxxxxxx.xxx
and
If to Xxxxxx Mae as follows:
Xxxxxx Xxx, Inc.
11600 Xxxxxx Mae Drive
Reston, V.A. 20193
Attention: General Counsel
Telecopier:
Electronic mail:
Or to such other address as the party to whom notice is to be given may have
furnished to the other parties hereto in writing in accordance herewith. Any
such notice or
Exhibit B-12
38
CONFIDENTIAL
communication shall be deemed to have been delivered and received (i) in the
case of personal delivery or delivery by telecopier, on the date of such
delivery, (ii) in the case of nationally-recognized overnight courier, on the
next business day after the date when sent and (ii) in the case of mailing, on
the third business day following that on which the piece of mail containing such
communication is posted. As used in this Section 14, "business day" shall mean
any day other than a day on which banking institutions in the District of
Columbia are legally closed for business.
15. BINDING EFFECT ON SUCCESSORS; SURVIVAL. This Warrant shall be
binding upon any corporation succeeding the Corporation by merger, consolidation
or acquisition of all or substantially all of the Corporation's assets. All of
the obligations of the Corporation relating to the Common Stock issuable upon
the exercise of this Warrant shall survive the exercise and termination of this
Warrant. All of the covenants and agreements of the Corporation shall inure to
the benefit of the successors and assigns of Xxxxxx Xxx.
16. DESCRIPTIVE HEADINGS AND GOVERNING LAW. The description headings of
the several sections and paragraphs of this Warrant are inserted for convenience
only and do not constitute a part of this Warrant. This Warrant shall be
construed and enforced in accordance with, and the rights of the parties shall
be governed by, the laws of the State of Delaware.
17. FRACTIONAL SHARES. No fractional shares shall be issued upon
exercise of this Warrant. The Corporation shall, in lieu of issuing any
fractional share, pay the holder entitled to such fraction a sum in cash equal
to such fraction multiplied by the then Fair Market Value of one Warrant Share.
* * *
Exhibit B-13
39
CONFIDENTIAL
IN WITNESS WHEREOF, the undersigned have caused this Warrant and
Warrant Agreement to be executed by their duly authorized officers on the date
first above written.
XXXXXXXXXXXX.XXX INC.
By: /s/ Xxxx X. Xxxx
--------------------------------
Name: Xxxx X. Xxxx
Title: Chief Executive Officer
ATTEST: ___________________________
SECRETARY
XXXXXX MAE, INC.
By: /s/ XXXXXX XXX, INC.
--------------------------------
Name:
Title:
Exhibit B-14
40
CONFIDENTIAL
FORM OF SUBSCRIPTION
[To be signed upon exercise of Warrant]
The undersigned, the holder of the Warrant, hereby irrevocably
elects to exercise the purchase rights represented by such Warrant for, and to
purchase thereunder, _________ shares of Common Stock, par value $0.0001, of
Xxxxxxxxxxxx.xxx Inc., and herewith makes payment of $_________ therefor, and
requests that the certificates for such shares be issued on _____________ in the
name of and delivered to, ____________, whose address is
_________________________________________________.
Dated:_____________
---------------------------------
(Signature)
---------------------------------
(Address)
Exhibit B-15
41
CONFIDENTIAL
NOTICE OF EXCHANGE
(To be executed by the holder in
order to exchange the Warrant.)
The undersigned hereby irrevocably elects to exchange this
Warrant into __________ shares (the foregoing number constituting the number of
Warrant Shares to be issued pursuant to Section 3 of this Warrant) of Common
Stock, par value $0.0001, of Xxxxxxxxxxxx.xxx Inc., minus any shares to be
deducted from the foregoing number in accordance with the terms of this Warrant,
according to the conditions thereof. The undersigned desires to consummate such
exchange on ________________ and requests that the certificates be issued in the
name of delivered to _____________ whose address is __________________.
Dated:
_____________________________
Name of Holder:
By:__________________________
Exhibit B-16
42
FORM OF ASSIGNMENT
[To be signed only upon transfer of Warrant]
For value received, the undersigned hereby sells, assigns and
transfers unto ______________ the right represented by the Warrant to purchase
_______ shares of Common Stock, par value $0.0001, of Xxxxxxxxxxxx.xxx Inc., to
which the Warrant relates, and appoints [Name of Attorney] to transfer such
right on the books of [ISSUER], with full power of substitution in the premises.
Dated:_____________
----------------------------
(Signature)
Signed in the presence of:
------------------------------
Exhibit B-17
43
CONFIDENTIAL
EXHIBIT A
NUMBER OF SHARES FOR WHICH THE
WARRANT SHALL BE EXERCISABLE:
All of the Warrant Shares shall be fully vested as of the date of execution of
the Product Promotion Agreement between the Corporation and Xxxxxx Mae.
Notwithstanding the foregoing, should Xxxxxx Xxx elect to exercise its Right to
Cancel in accordance with Section 1(a) hereof, all of the Warrant Shares shall
immediately divest and be cancelled.
Exhibit B-18
44
CONFIDENTIAL
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THESE
SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID
ACT OR LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH
REGISTRATION IS NOT REQUIRED.
XXXXXXXXXXXX.XXX INC.
STOCK SUBSCRIPTION WARRANT
February 3, 2000
1. GENERAL.
(a) THIS CERTIFIES that, for value received, XXXXXX MAE, INC.
("Xxxxxx Xxx"), or assigns, is entitled to subscribe for and purchase from
XXXXXXXXXXXX.XXX INC., a Delaware corporation (the "Corporation"), at any time
or from time to time commencing as set forth in Section 1(b) and ending on the
seventh (7th) anniversary of the date hereof (the "Exercise Period"), on the
terms and subject to the provisions hereinafter set forth, up to 132,185 shares
(subject to adjustment as provided herein) (the "Warrant Shares") of fully paid
and non-assessable shares of Common Stock, $0.0001 par value, of the Corporation
(the "Common Stock") as shall be determined in accordance with the provisions of
Section 1(b) hereof, at a price per share (the "Warrant Price") equal to the per
share initial public offering price of the IPO (as hereinafter defined);
provided that if a Corporate Transaction (as defined below) occurs prior to the
IPO Date and prior to an Equity Offering (as defined below), the Warrant Price
shall be equal to the Fully-Diluted Per Share Valuation established in the
Corporate Transaction (as defined below). The Corporation represents, warrants
and covenants that, as of the date hereof, the maximum Warrant Shares issuable
hereunder shall constitute three quarters of one percent (.75%) of the number of
shares of voting capital stock of the Corporation that will be outstanding
immediately prior to the closing of the IPO (as hereinafter defined) after
giving effect to the exercise, exchange or conversion of all outstanding
securities, rights, options, warrants (including this Warrant), calls,
commitments or agreements of any nature or character (whether debt or equity)
that are, directly or indirectly, exercisable or exchangeable for, or
convertible into or otherwise represent the right to purchase or otherwise
receive, directly or indirectly, any such capital stock or other arrangement to
acquire at any time or under any circumstance, voting capital stock of the
Corporation or any such other securities and assuming that all
Exhibit B-19
45
CONFIDENTIAL
stock options and/or shares of capital stock reserved for grant or issuance to
officers, directors, employees and consultants under all agreements, plans or
arrangements theretofore approved by the Board of Directors of the Corporation
have been so granted or issued (as the case may be) (collectively, the
"Fully-Diluted Shares"). In the event that the number of Warrant Shares listed
above does not constitute three quarters of one percent (.75%) of the
Fully-Diluted Shares existing immediately prior to the closing of the IPO, the
number of Warrant Shares initially issuable hereunder (the "Initial Number")
shall be adjusted accordingly to cause the Initial Number to constitute three
quarters of one percent (.75%) of the Fully-Diluted Shares existing immediately
prior to the closing of the IPO. As used in this Agreement, the term "IPO Date"
shall mean the date on which the Corporation closes the initial public offering
of its Common Stock (the "IPO"). In the event the Corporation consummates an
equity offering resulting in net proceeds to the Corporation in excess of ten
million dollars ($10,000,000) prior to the IPO Date (the "EQUITY OFFERING"), the
exercise price shall be equal to the lesser of $10.00 per share or the per share
value of the Common Stock in the Equity Offering. In the event of a Corporate
Transaction prior to the earlier of (a) the IPO Date or (b) the closing of an
Equity Offering, in lieu of exercising this Warrant, Xxxxxx Xxx may cancel this
Warrant by providing written notice of its intent to do so to the Corporation
(the "RIGHT TO CANCEL").
This Warrant is being issued pursuant to a Product Promotion Agreement
dated as of the date hereof (the "Agreement"), between the Corporation and
Xxxxxx Mae, Inc. All terms used but not defined herein shall have the meanings
set forth in the Agreement.
(b) This Warrant shall become exercisable as to that number of
Warrant Shares, and at such times, as are determined in accordance with Exhibit
A attached hereto; provided, however, that this Warrant shall become exercisable
as to all unvested Warrant Shares immediately upon the occurrence of a
Stipulated Event, unless Xxxxxx Xxx elects to exercise its Right to Cancel this
Warrant in accordance with Section 1(a) above. As used herein, the term
"Stipulated Event" shall mean (a) a Corporate Transaction (as hereinafter
defined) or (b) a termination of the Agreement that results from a material
breach by the Corporation of the Agreement. "Corporate Transaction" means (A)
any consolidation or merger of the Corporation with or into any other
corporation or other entity, other than any merger or consolidation resulting in
the holders of the capital stock of the Corporation entitled to vote for the
election of directors holding a majority of the capital stock of the surviving
or resulting corporation or other entity entitled to vote for the election of
directors, (B) any person or entity (including any affiliates thereof) becoming
the holder of a majority of the capital stock of the Corporation entitled to
vote for the election of directors, or (C) any sale or other disposition by the
Corporation of all or substantially all of its assets or capital stock.
"FULLY-DILUTED PER SHARE VALUATION ESTABLISHED IN A CORPORATE TRANSACTION" means
the value ascribed to the Corporation in the Corporate Transaction divided by
the number of Fully-Diluted shares.
2. EXERCISE OF WARRANT. The rights represented by this Warrant may be
exercised by the holder hereof, in whole or in part, at any time or from time to
time during the Exercise Period, by the surrender of this Warrant (properly
endorsed) at the
Exhibit B-20
46
office of the Corporation at 0000 X Xx., XX, 0xx Xxxxx, Xxxxxxxxxx, XX 00000, or
at such other agency or office of the Corporation in the United States of
America as it may designate by notice in writing to the holder hereof at the
address of such holder appearing on the books of the Corporation, and by payment
(either in cash, by check or wire transfer, by cancellation of indebtedness
and/or in shares of capital stock of the Corporation valued at Fair Market Value
(as hereinafter defined) on the date of such exercise) to the Corporation of the
Warrant Price for each Warrant Share being purchased. In the event of the
exercise of the rights represented by this Warrant, a certificate or
certificates for the Warrant Shares so purchased, registered in the name of the
holder, and if this Warrant shall not have been exercised for all of the Warrant
Shares, a new Warrant, registered in the name of the holder hereof, of like
tenor to this Warrant, shall be delivered to the holder hereof within a
reasonable time, not exceeding six business days, after the rights represented
by this Warrant shall have been so exercised. The person in whose name any
certificate for Warrant Shares is issued upon exercise of this Warrant shall for
all purposes be deemed to have become the holder of record of such shares on the
date on which the Warrant was surrendered and payment of the Warrant Price and
any applicable taxes was made, irrespective of the date of delivery of such
certificate, except that, if the date of such surrender and payment is a date
when the stock transfer books of the Corporation are closed, such person shall
be deemed to have become the holder of such shares at the close of business on
the next succeeding date on which the stock transfer books are open.
3. EXCHANGE OF WARRANT.
(a) In addition to, and independent of, the rights of the
holder of this Warrant set forth in Section 2 hereof, the holder hereof may at
any time or from time to time elect to receive, without the payment by the
holder of any additional consideration, that number of Warrant Shares determined
as hereinafter provided in this Section 3 by the surrender of this Warrant or
any portion hereof to the Corporation, accompanied by an executed Notice of
Exchange in substantially the form thereof attached hereto (the "Net Issue
Election"). Thereupon, the Corporation shall issue to the holder hereof such
number of fully paid and nonassessable Warrant Shares as is computed using the
following formula:
X = Y (A-B)
------
A
where X = the number of Warrant Shares to be issued to the holder pursuant
to this Section 3.
Y = the number of Warrant Shares covered by this Warrant in respect of
which the Net Issue Election is made pursuant to this Section 3.
A = the Fair Market Value (as hereinafter defined) of one Warrant
Share determined at the time the Net Issue Election is made
pursuant to this Section 3 (the "Determination Date").
Exhibit B-21
47
CONFIDENTIAL
B = the Warrant Price in effect under this Warrant at the
Determination Date.
All references in this Warrant to an "exercise" of the Warrant shall
include an exchange pursuant to this Section 3.
(b) For purposes of the above calculation, "Fair Market Value"
of one Warrant Share as of the Determination Date shall mean:
(i) if the Common Stock of the Corporation is not
then traded on a national securities exchange, the average of the
closing prices quoted on the National Association of Securities
Dealers, Inc. Automated Quotation National Market System, if
applicable, or the average of the last bid and asked prices of the
Common Stock quoted in the over-the-counter-market or (B) if the Common
Stock is then traded on a national securities exchange, the average of
the high and low prices of the Common Stock listed on the principal
national securities exchange on which the Common Stock is so traded, in
each case for the twenty (20) trading days immediately preceding the
Determination Date or, if such date is not a business day on which
shares are traded, the next immediately preceding trading day;
(ii) in the event of a Warrant Exchange in connection
with a Corporate Transaction, the value per share of Common Stock
received or receivable by each holder thereof (assuming for purposes of
this determination, in the case of a sale of assets, the Corporation is
liquidated immediately following such sale and the consideration paid
to the Corporation is immediately distributed to its stockholders); and
(iii) in all other circumstances, the fair market
value per share of Common Stock shall be the value thereof, as agreed
upon by the Corporation and the holder of this Warrant, provided,
however, that if the Corporation and the holder cannot agree on such
value, such value shall be determined by an independent investment
banking or valuation firm experienced in valuing businesses such as the
Corporation and jointly selected in good faith by the Corporation and
the holder. Fees and expenses of the valuation firm shall be paid for
by the Corporation.
The closing of any Warrant Exchange shall take place at the offices of the
Corporation on the date specified in the Notice of Exchange (the "Exchange
Date"), which shall be not less than three and not more than 30 days after the
delivery of such Notice. At such closing, the Corporation shall issue and
deliver to the holder or its designee a certificate or certificates for the
Warrant Shares to be issued upon such Warrant Exchange, registered in the name
of the holder or such designee, and if such Warrant Exchange shall not have been
for all Warrant Shares, a new Warrant, registered in the name of the holder, of
like tenor to this Warrant for the number of shares still subject to this
Warrant following such Warrant Exchange.
Exhibit B-22
48
CONFIDENTIAL
4. ADJUSTMENT OF WARRANT PRICE.
(a) The Warrant Price shall be subject to adjustment from time
to time as follows:
(i) If the Corporation shall at any time or from time
to time during the Exercise Period, issue any shares of Common Stock
(or be deemed to have issued any shares of Common Stock as provided
herein), other than Excluded Securities (as defined in Section 4(a)(
v)) without consideration or for a consideration per share less than
the Fair Market Value (determined in accordance with the formula set
forth in Section 3) of a share of Common Stock in effect immediately
prior to the issuance of Common Stock, the Warrant Price in effect
immediately prior to such issuance shall forthwith be lowered to a
price equal to the quotient obtained by dividing: (x) an amount equal
to the sum of (1) the total number of shares of Common Stock
outstanding (including any shares of Common Stock deemed to have been
issued pursuant to Section 4(a)(ii)(D)) immediately prior to such
issuance multiplied by the Warrant Price in effect immediately prior to
such issuance, plus (2) the consideration received by the Corporation
upon such issuance, by (y) the total number of shares of Common Stock
outstanding (including any shares of Common Stock deemed to have been
issued pursuant to Section 4(a)(ii)(D)) immediately after the issuance
or deemed issuance of such Common Stock.
(ii) For the purposes of any adjustment of the
Warrant Price pursuant to Section 4(a)(i), the following provisions
shall be applicable:
(A) In the case of the issuance of
Common Stock for cash, the consideration received by the Corporation
from such issuance shall be deemed to be the amount of cash paid
therefor before deducting therefrom any discounts, commissions or other
expenses allowed, paid or incurred by the Corporation for any
underwriting or otherwise in connection with the issuance and sale
thereof.
(B) In the case of the issuance of Common
Stock for a consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the fair market
value thereof as determined in good faith by the Board of Directors of
the Corporation, irrespective of any accounting treatment.
(C) In the case of the issuance of Common
Stock without consideration, the consideration shall be deemed to be
$0.01 per share.
(D) In the case of the issuance of (x)
options to purchase or rights to subscribe for Common Stock, (y)
securities by their terms convertible into or exchangeable for Common
Stock or (z) options to purchase rights to subscribe for such
convertible or exchangeable securities:
Exhibit B-23
49
CONFIDENTIAL
(1) the aggregate maximum
number of shares of Common Stock deliverable upon exercise of
such options to purchase or rights to subscribe for Common
Stock shall be deemed to have been issued at the time such
options or rights were issued and for a consideration equal to
the consideration (determined in the manner provided in
subdivisions (A), (B) and (C) above), if any, received by the
Corporation upon the issuance of such options or rights plus
the minimum purchase price provided in such options or rights
for the Common Stock covered thereby;
(2) the aggregate maximum
number of shares of Common Stock deliverable upon conversion
of or in exchange for any such convertible or exchangeable
securities or upon the exercise of options to purchase or
rights to subscribe for such convertible or exchangeable
securities and subsequent conversion or exchange thereof shall
be deemed to have been issued at the time such securities were
issued or such options or rights were issued and for a
consideration equal to the consideration received by the
Corporation for any such securities and related options or
rights (excluding any cash received on account of accrued
interest or accrued dividends), plus the additional
consideration, if any, to be received by the Corporation upon
the conversion or exchange of such securities or the exercise
of any related options or rights (the consideration in each
case to be determined in the manner provided in subdivisions
(A), (B) and (C) above);
(3) on any change in the number
of shares or exercise price of Common Stock deliverable upon
exercise of any such options or rights or conversions of or
exchanges for such securities, other than a change resulting
from the antidilution provisions thereof, the applicable
Warrant Price shall forthwith be readjusted to such Warrant
Price as would have resulted had the adjustment made upon the
issuance of such options, rights or securities not converted
prior to such change (or options or rights related to such
securities not converted prior to such change) been made upon
the basis of such change; provided, however, that such
readjustment shall not result in a Warrant Price that is
greater than the original Warrant Price; and
(4) on the expiration of all
such options or rights, the termination of all such rights to
convert or exchange or the expiration of all options or rights
related to such convertible or exchangeable securities in each
case having been issued by the Corporation for the same
consideration (as determined pursuant to subdivision (A), (B)
and (C) above), the applicable Warrant Price shall forthwith
be readjusted to such Warrant Price as would have resulted had
the adjustment made upon the issuance of such options, rights,
securities or options or rights related to such securities not
been made; provided, however, that such readjustment shall not
result in a Warrant Price that is greater that the original
Warrant Price.
Exhibit B-24
50
CONFIDENTIAL
(iii) If, at any time during the Exercise Period, the
number of shares of Common Stock outstanding is increased by a stock
dividend payable in shares of Common Stock or by a subdivision or split-up
of shares of Common Stock, then, following the record date fixed for the
determination of holders of Common Stock entitled to receive such stock
dividend, subdivision or split-up, the Warrant Price shall be appropriately
decreased and the number of shares of Common Stock issuable upon exercise
of this Warrant shall be appropriately increased, in each case in
proportion to such increase in outstanding shares.
(iv) If, at any time during the Exercise Period, the
number of shares of Common Stock outstanding is decreased by a combination
of the outstanding shares of Common Stock, then, following the record date
for such combination, the Warrant Price shall be appropriately increased
and the number of shares of Common Stock issuable upon exercise of this
Warrant shall be appropriately decreased, in each case, in proportion to
such decrease in outstanding shares.
(v) For purposes of Section 4(a), the term "Excluded
Securities" shall mean (A) shares of Common Stock (subject to equitable
adjustment for stock splits, dividends, combinations and like occurrences)
issued to officers, employees or directors of Corporation, pursuant to any
agreement, plan or arrangement approved by the Board of Directors of the
Corporation, or options to purchase or rights to subscribe for such Common
Stock, or securities by their terms convertible into or exchangeable for
such Common Stock, or options to purchase or rights to subscribe for such
convertible or exchangeable securities pursuant to such agreement, plan or
arrangement; (B) shares of Common Stock issued as a stock dividend or upon
any stock split or other subdivision or combination of shares of Common
Stock; (C) securities issued pursuant to the acquisition of another
corporation or other entity by the Corporation by merger or purchase of
stock or purchase of all or substantially all of such other corporation's
or other entity's assets whereby the Corporation owns not less than a
majority of the voting power of such other corporation or other entity
following such acquisition or purchase; or (D) securities issued in an
underwritten public offering approved by the Board of Directors.
(vi) All calculations under this Section 4 shall be
made to the nearest one tenth (1/10) of a cent or to the nearest one tenth
(1/10) of a share, as the case may be.
(b) Whenever the Warrant Price shall be adjusted as provided
in this Section 4 the Corporation shall forthwith file, at the office of the
Corporation or any transfer agent designated by the Corporation for the Common
Stock, a statement, signed by its chief financial officer, showing in detail the
facts requiring such adjustment and the adjusted Warrant Price. The Corporation
shall also cause a copy of such statement to be sent by first-class certified
mail, return receipt requested, postage prepaid, to each holder of a Warrant at
his or its address appearing on the Corporation's records. Where
Exhibit B-25
51
CONFIDENTIAL
appropriate, such copy may be given in advance and may be included as part of a
notice required to be mailed under the provisions set forth immediately below.
(c) In case the Corporation shall make or issue, or shall fix
a record date for the determination of eligible holders entitled to receive, a
dividend or other distribution with respect to the Common Stock (or any shares
of stock or other securities at the time issuable upon exercise of the Warrant)
payable in assets (excluding cash dividends paid or payable solely out of
retained earnings but including shares of any subsidiary), then, in each such
case, the holder of this Warrant on exercise hereof at any time after the
consummation, effective date or record date of such dividend or other
distribution, shall receive, in addition to the Warrant Shares (or such other
stock or securities) issuable on such exercise prior to such date, and without
the payment of additional consideration therefor, the securities or such other
assets of the Corporation to which such holder would have been entitled upon
such date if such holder had exercised this Warrant on the date hereof and had
thereafter, during the period from the date hereof to and including the date of
such exercise, retained such shares and/or all other additional stock available
by it as aforesaid during such period giving effect to all adjustments called
for by this Section 4.
(d) In the event the Corporation shall propose to take any
action of the types described in Section 4(a)(iii) or (iv) or Section 11, the
Corporation shall give notice to each holder of a Warrant in the manner set
forth herein, which notice shall specify the record date, if any, with respect
to any such action and the date on which such action is to take place. Such
notice shall also set forth such facts with respect thereto as shall be
reasonably necessary to indicate the effect of such action (to the extent such
effect may be known at the date of such notice) on the Warrant Price then in
effect and the number, kind or class of shares or other securities or property
which shall be delivered or purchasable upon the occurrence of such action or
deliverable upon exercise of this Warrant. In the case of any action which would
require the fixing of a record date, such notice shall be given at least 10 days
prior to the date so fixed, and in case of all other action, such notice shall
be given at least 20 days prior to the taking of such proposed action. Failure
to give such notice, or any defect therein, shall not affect the legality or
validity of any such action.
5. ADJUSTMENT OF WARRANT SHARES. Upon each adjustment of the Warrant
Price as provided in Section 4, the holder hereof shall thereafter be entitled
to subscribe for and purchase, at the Warrant Price resulting from such
adjustment, the number of Warrant Shares equal to the product of (i) the number
of Warrant Shares existing prior to such adjustment and (ii) the quotient
obtained by dividing (A) the Warrant Price existing prior to such adjustment by
(B) the new Warrant Price resulting from such adjustment. No fractional shares
of Common Stock shall be issued as a result of any such adjustment, and any
fractional shares resulting from the computations pursuant to this paragraph
shall be eliminated without consideration.
6. COVENANTS AS TO COMMON STOCK. The Corporation covenants and agrees
that all shares of Common Stock that may be issued upon the exercise of the
rights represented by this Warrant, will, upon issuance, be validly issued,
fully paid and non-
Exhibit B-26
52
CONFIDENTIAL
assessable and free from all taxes, liens and charges with respect to the
issuance thereof. The Corporation further covenants and agrees that the
Corporation will from time to time take all such action as may be requisite to
assure that the stated or par value per share of Common Stock is at all times
equal to or less than the then effective Warrant Price per share of Common Stock
issuable upon exercise of this Warrant. The Corporation further covenants and
agrees that the Corporation will at all times have authorized and reserved, free
from preemptive rights, a sufficient number of shares of Common Stock to provide
for the exercise of the rights represented by this Warrant. The Corporation
further covenants and agrees that if any shares of capital stock to be reserved
for the purpose of the issuance of shares of Common Stock upon the exercise of
this Warrant require registration with or approval of any governmental authority
under any Federal or state law before such shares may be validly issued or
delivered upon exercise, then the Corporation will in good faith and
expeditiously as possible endeavor to secure such registration or approval, as
the case may be. If and so long as the Common Stock issuable upon the exercise
of the rights represented by this Warrant is listed on any national securities
exchange, the Corporation will, if permitted by the rules of such exchange, list
and keep listed on such exchange, upon official notice of issuance, all shares
of such capital stock.
7. NO SHAREHOLDER RIGHTS. This Warrant shall not entitle the holder
hereof to any voting rights or other rights as a shareholder of the Corporation.
8. RESTRICTIONS ON TRANSFER. The holder of this Warrant acknowledges
that neither this Warrant nor the Warrant Shares have been registered under the
Securities Act of 1933, as amended (the "Securities Act") and the holder of this
Warrant agrees that no sale, transfer, assignment, hypothecation or other
disposition of this Warrant or the Warrant Shares shall be made in the absence
of (a) current registration statement under the Securities Act as to this
Warrant or the Warrant Shares and the registration or qualification of this
Warrant or the Warrant Shares under any applicable state securities laws is then
in effect or (ii) an opinion of counsel reasonably satisfactory to the
Corporation to the effect that such registration or qualification is not
required. Each certificate or other instrument for Warrant Shares issued upon
exercise of this Warrant shall, if required under the Securities Act or the
rules promulgated thereunder, be imprinted with a legend substantially to the
foregoing effect.
9. INVESTOR RIGHTS AGREEMENT. Anything contained herein to the contrary
notwithstanding, the Warrant Shares shall be entitled to all rights and benefits
accorded thereto in that certain Fourth Amended and Restated Investors' Rights
Agreement, dated as of February 3, 2000, by and among the Corporation and the
Investors (as defined therein).
10. TRANSFER OF WARRANT; AMENDMENT. Subject to the restriction set
forth in Section 8, this Warrant and all rights hereunder are transferable, in
whole, or in part, at the agency or office of the Corporation referred to in
Section 2, by the holder hereof in person or by duly authorized attorney, upon
surrender of this Warrant properly endorsed. Each taker and holder of this
Warrant, by taking or holding the same, consents and agrees that this Warrant,
when endorsed, in blank, shall be deemed negotiable, and, when so
Exhibit B-27
53
CONFIDENTIAL
endorsed the holder hereof may be treated by the Corporation and all other
persons dealing with this Warrant as the absolute owner hereof for any purposes
and as the person entitled to exercise the rights represented by this Warrant,
or to the transfer hereof on the books of the Corporation, any notice to the
contrary notwithstanding; but until each transfer on such books, the Corporation
may treat the registered holder hereof as the owner hereof for all purposes.
11. REORGANIZATIONS, ETC. In case, at any time during the Exercise
Period, of any capital reorganization, of any reclassification of the stock of
the Corporation (other than a change in par value or from par value to no par
value or from no par value to par value or as a result of a stock dividend or
subdivision, split-up or combination of shares), or the consolidation or merger
of the Corporation with or into another corporation (other than a consolidation
or merger in which the Corporation is the continuing operation and which does
not result in any change in the Common Stock) or of the sale of all or
substantially all the properties and assets of the Corporation as an entirety to
any other corporation, this Warrant shall, after such reorganization,
reclassification, consolidation, merger or sale, be exercisable for the kind and
number of shares of stock or other securities or property of the Corporation or
of the corporation resulting from such consolidation or surviving such merger or
to which such properties and assets shall have been sold to which such holder
would have been entitled if he had held the Common Stock issuable upon the
exercise hereof immediately prior to such reorganization, reclassification,
consolidation, merger or sale. In any such reorganization or other action or
transaction described above, appropriate provision shall be made with respect to
the rights and interests of the holder of this Warrant to the end that the
provisions hereof (including, without limitation, provisions for adjustments of
the Warrant Price and of the number of shares purchasable and receivable upon
the exercise of this Warrant) shall thereafter be applicable, as nearly as may
be, in relation to any shares of stock, securities or assets thereafter
deliverable upon the exercise hereof. The Corporation will not effect any such
consolidation, merger or sale unless, prior to the consummation thereof, the
successor corporation or entity (if other than the Corporation) resulting from
such transaction or the corporation or entity purchasing such assets shall
assume by written instrument, executed and mailed or delivered to the registered
holder hereof at the last address of such holder appearing on the books of the
Corporation, the obligation to deliver to such holder such shares of stock,
securities or assets as, in accordance with the foregoing provisions, such
holder may be entitled to purchase.
12. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If this Warrant is
lost, stolen, mutilated or destroyed, the Corporation may, on such terms as to
indemnity or otherwise as it may in its discretion impose (which shall, in the
case of a mutilated Warrant, include the surrender thereof), issue a new Warrant
of like denomination and tenor as the Warrant so lost, stolen, mutilated or
destroyed. Any such new Warrant shall constitute an original contractual
obligation of the Corporation, whether or not the allegedly lost, stolen,
mutilated or destroyed Warrant shall be at any time enforceable by anyone.
Exhibit B-28
54
CONFIDENTIAL
13. MODIFICATION AND WAIVER. This Warrant and any provision hereof may
be changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
14. NOTICES. All notices, advises and communications to be given or
otherwise made to any party to this Agreement shall be deemed to be sufficient
if contained in a written instrument delivered in person or by telecopier or
duly sent by first class registered or certified mail, return receipt requested,
postage prepaid, or by overnight courier, or by electronic mail, with a copy
thereof to be sent by mail (as aforesaid) within 24 hours of such electronic
mail, addressed to such party at the address set forth below or at such other
address as may hereafter be designated in writing by the addressee to the
addresser listing all parties:
If to the Corporation, to:
XxxxxxxXxxxx.xxx Inc.
0000 X Xx., XX
0xx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxx
Telecopier: 000-000-0000
Electronic mail: xxxx@xxxxxxxxxxxx.xxx
With a copy to:
Xxxx Xxxxxxx
0000 Xxxxxxxxxxxxx Xxxxx
XxXxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxx
Telecopier: 000-000-0000
Electronic mail: xxxx.xxxxxx@xxxxxxxxxxx.xxx
and
If to Xxxxxx Mae as follows:
Xxxxxx Xxx, Inc.
11600 Xxxxxx Mae Drive
Reston, V.A. 20193
Attention: General Counsel
Telecopier:
Electronic mail:
Or to such other address as the party to whom notice is to be given may have
furnished to the other parties hereto in writing in accordance herewith. Any
such notice or
Exhibit B-29
55
CONFIDENTIAL
communication shall be deemed to have been delivered and received
(i) in the case of personal delivery or delivery by telecopier, on the date of
such deliver, (ii) in the case of nationally-recognized overnight courier, on
the next business day after the date when sent and (ii) in the case of mailing,
on the third business day following that on which the piece of mail containing
such communication is posted. As used in this Section 14, "business day" shall
mean any day other than a day on which banking institutions in the District of
Columbia are legally closed for business.
15. BINDING EFFECT ON SUCCESSORS; SURVIVAL. This Warrant shall be
binding upon any corporation succeeding the Corporation by merger, consolidation
or acquisition of all or substantially all of the Corporation's assets. All of
the obligations of the Corporation relating to the Common Stock issuable upon
the exercise of this Warrant shall survive the exercise and termination of this
Warrant. All of the covenants and agreements of the Corporation shall inure to
the benefit of the successors and assigns of Xxxxxx Xxx.
16. DESCRIPTIVE HEADINGS AND GOVERNING LAW. The description headings of
the several sections and paragraphs of this Warrant are inserted for convenience
only and do not constitute a part of this Warrant. This Warrant shall be
construed and enforced in accordance with, and the rights of the parties shall
be governed by, the laws of the State of Delaware.
17. FRACTIONAL SHARES. No fractional shares shall be issued upon
exercise of this Warrant. The Corporation shall, in lieu of issuing any
fractional share, pay the holder entitled to such fraction a sum in cash equal
to such fraction multiplied by the then Fair Market Value of one Warrant Share.
* * *
Exhibit B-30
56
CONFIDENTIAL
IN WITNESS WHEREOF, the undersigned have caused this Warrant and
Warrant Agreement to be executed by their duly authorized officers on the date
first above written.
XXXXXXXXXXXX.XXX INC.
By: /s/ XXXXXXXXXXXX.XXX INC.
---------------------------------
Name: Xxxx X. Xxxx
Title: Chief Executive Officer
ATTEST: ___________________________
SECRETARY
XXXXXX XXX, INC.
By: /s/ XXXXXX MAE, INC.
---------------------------------
Name:
Title:
Exhibit B-31
57
CONFIDENTIAL
FORM OF SUBSCRIPTION
[To be signed upon exercise of Warrant]
The undersigned, the holder of the Warrant, hereby irrevocably
elects to exercise the purchase rights represented by such Warrant for, and to
purchase thereunder, _________ shares of Common Stock, par value $0.0001, of
XxxxxxxXxxxx.xxx Inc., and herewith makes payment of $_________ therefor, and
requests that the certificates for such shares be issued on _____________ in the
name of and delivered to, ___________, whose address is
_________________________________________________.
Dated:_____________
---------------------------------
(Signature)
---------------------------------
(Address)
Exhibit B-32
58
CONFIDENTIAL
NOTICE OF EXCHANGE
(To be executed by the holder in
order to exchange the Warrant.)
The undersigned hereby irrevocably elects to exchange this
Warrant into __________ shares (the foregoing number constituting the number of
Warrant Shares to be issued pursuant to Section 3 of this Warrant) of Common
Stock, par value $0.0001, of Xxxxxxxxxxxx.xxx Inc., minus any shares to be
deducted from the foregoing number in accordance with the terms of this Warrant,
according to the conditions thereof. The undersigned desires to consummate such
exchange on ________________. and requests that the certificates be issued in
the name of delivered to _____________ whose address is __________________.
Dated:
_____________________________
Name of Holder:
By:__________________________
Exhibit B-33
59
FORM OF ASSIGNMENT
[To be signed only upon transfer of Warrant]
For value received, the undersigned hereby sells, assigns and
transfers unto _________ the right represented by the Warrant to purchase
_______ shares of Common Stock, par value $0.0001, of Xxxxxxxxxxxx.xxx Inc., to
which the Warrant relates, and appoints [Name of Attorney] to transfer such
right on the books of [ISSUER], with full power of substitution in the premises.
Dated:_____________
______________________________
(Signature)
Signed in the presence of:
______________________________
Exhibit B-34
60
Confidential
EXHIBIT A
NUMBER OF SHARES FOR WHICH THE
WARRANT SHALL BE EXERCISABLE:
Up to a maximum 132,185 Warrant Shares (subject to adjustment in accordance with
the terms of this Warrant) shall vest as follows:
Number of Warrant Shares Vesting
(A)33,047 Shall vest and become exercisable upon the
production of * Out-of-School Xxxxxx Xxx
Customer Transactions for the Corporation on or
before January 31, 2001; provided, however, that
if the * threshold is not met as of January
31, 2001, no Warrant Shares shall vest pursuant to
this Exhibit A, Section (A).
(B)33,047 Shall vest and become exercisable upon the
production of * In-School Xxxxxx Mae Customer
Transactions for the Corporation on or before
January 31, 2001; provided, however, that if the
* threshold is not attained as of January 31,
2001, no Warrant Shares shall vest pursuant to
this Exhibit A, Section (B).
(C)66,093 Shall vest and become exercisable if Xxxxxx Xxx
does not meet the performance requirements set
forth in Exhibit A, Section (A) by January 31,
2001, and it produces * Out-of-School Xxxxxx
Mae Customer Transactions for the Corporation on
or before March 31, 2002; provided, however, that
if Xxxxxx Xxx does not achieve the *
threshold, a number of Warrant Shares shall vest
equal to the total number of Out-of-School
Customer Transactions provided by Xxxxxx Mae
divided by * multiplied by the number of
Warrant Shares that may vest pursuant to this
Exhibit A, Section (C).
(D)66,092 Shall vest and become exercisable if Xxxxxx Xxx
does not meet the performance requirements set
forth in Exhibit A, Section (B) by January 31,
2001, and it produces * In-School Xxxxxx Mae
Customer Transactions for the Corporation on or
before March 31, 2002; provided, however, that if
Xxxxxx Xxx does not achieve the *
Exhibit B-35
61
Confidential
threshold by March 31, 2002, a number of Warrant Shares
shall vest equal to the total number of In-School
Customer Transactions provided by Xxxxxx Mae divided by
* multiplied by the number of Warrant Shares that
may vest pursuant to this Exhibit A, Section (D).
Notwithstanding the preceding chart, should Xxxxxx Xxx elect to exercise its
Right to Cancel in accordance with Section 1(a) hereof, all of the Warrant
Shares shall immediately divest and be cancelled.
Exhibit B-36
62
Confidential
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THESE
SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID
ACT OR LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH
REGISTRATION IS NOT REQUIRED.
XXXXXXXXXXXX.XXX INC.
STOCK SUBSCRIPTION WARRANT
February 3, 2000
1. GENERAL.
(a) THIS CERTIFIES that, for value received, XXXXXX MAE, INC.
("Xxxxxx Xxx"), or assigns, is entitled to subscribe for and purchase from
XXXXXXXXXXXX.XXX INC., a Delaware corporation (the "Corporation"), at any time
or from time to time commencing as set forth in Section 1(b) and ending on the
seventh (7th) anniversary of the date hereof (the "Exercise Period"), on the
terms and subject to the provisions hereinafter set forth, up to 132,185 shares
(subject to adjustment as provided herein) (the "Warrant Shares") of fully paid
and non-assessable shares of Common Stock, $0.0001 par value, of the Corporation
(the "Common Stock") as shall be determined in accordance with the provisions of
Section 1(b) hereof, at a price per share (the "Warrant Price") equal to the per
share initial public offering price of the IPO (as hereinafter defined);
provided that if a Corporate Transaction (as defined below) occurs prior to the
IPO Date and prior to an Equity Offering (as defined below), the Warrant Price
shall be equal to the Fully-Diluted Per Share Valuation established in the
Corporate Transaction (as defined below). The Corporation represents, warrants
and covenants that, as of the date hereof, the maximum Warrant Shares issuable
hereunder shall constitute three quarters of one percent (.75%) of the number of
shares of voting capital stock of the Corporation that will be outstanding
immediately prior to the closing of the IPO (as hereinafter defined) after
giving effect to the exercise, exchange or conversion of all outstanding
securities, rights, options, warrants (including this Warrant), calls,
commitments or agreements of any nature or character (whether debt or equity)
that are, directly or indirectly, exercisable or exchangeable for, or
convertible into or otherwise represent the right to purchase or otherwise
receive, directly or indirectly, any such capital stock or other arrangement to
acquire at any time or under any circumstance, voting capital stock of the
Corporation or any such other securities and assuming that all
Exhibit B-37
63
Confidential
stock options and/or shares of capital stock reserved for grant or issuance to
officers, directors, employees and consultants under all agreements, plans or
arrangements theretofore approved by the Board of Directors of the Corporation
have been so granted or issued (as the case may be) (collectively, the
"Fully-Diluted Shares"). In the event that the number of Warrant Shares listed
above does not constitute three quarters of one percent (.75%) of the
Fully-Diluted Shares existing immediately prior to the closing of the IPO, the
number of Warrant Shares initially issuable hereunder (the "Initial Number")
shall be adjusted accordingly to cause the Initial Number to constitute three
quarters of one percent (.75%) of the Fully-Diluted Shares existing immediately
prior to the closing of the IPO. As used in this Agreement, the term "IPO Date"
shall mean the date on which the Corporation closes the initial public offering
of its Common Stock (the "IPO"). In the event the Corporation consummates an
equity offering resulting in net proceeds to the Corporation in excess of ten
million dollars ($10,000,000) prior to the IPO Date (the "EQUITY OFFERING"), the
exercise price shall be equal to the lesser of $10.00 per share or the per share
value of the Common Stock in the Equity Offering. In the event of a Corporate
Transaction prior to the earlier of (a) the IPO Date or (b) the closing of an
Equity Offering, in lieu of exercising this Warrant, Xxxxxx Xxx may cancel this
Warrant by providing written notice of its intent to do so to the Corporation
(the "RIGHT TO CANCEL").
This Warrant is being issued pursuant to a Product Promotion Agreement
dated as of the date hereof (the "Agreement"), between the Corporation and
Xxxxxx Mae, Inc. All terms used but not defined herein shall have the meanings
set forth in the Agreement.
(b) This Warrant shall become exercisable as to that number of
Warrant Shares, and at such times, as are determined in accordance with Exhibit
A attached hereto; provided, however, that this Warrant shall become exercisable
as to all unvested Warrant Shares immediately upon the occurrence of a
Stipulated Event, unless Xxxxxx Xxx elects to exercise its Right to Cancel this
Warrant in accordance with Section 1(a) above. As used herein, the term
"Stipulated Event" shall mean (a) a Corporate Transaction (as hereinafter
defined) or (b) a termination of the Agreement that results from a material
breach by the Corporation of the Agreement. "Corporate Transaction" means (A)
any consolidation or merger of the Corporation with or into any other
corporation or other entity, other than any merger or consolidation resulting in
the holders of the capital stock of the Corporation entitled to vote for the
election of directors holding a majority of the capital stock of the surviving
or resulting corporation or other entity entitled to vote for the election of
directors, (B) any person or entity (including any affiliates thereof) becoming
the holder of a majority of the capital stock of the Corporation entitled to
vote for the election of directors, or (C) any sale or other disposition by the
Corporation of all or substantially all of its assets or capital stock.
"FULLY-DILUTED PER SHARE VALUATION ESTABLISHED IN A CORPORATE TRANSACTION" means
the value ascribed to the Corporation in the Corporate Transaction divided by
the number of Fully-Diluted shares.
2. EXERCISE OF WARRANT. The rights represented by this Warrant may be
exercised by the holder hereof, in whole or in part, at any time or from time to
time during the Exercise Period, by the surrender of this Warrant (properly
endorsed) at the
Exhibit B-38
64
Confidential
office of the Corporation at 0000 X Xx., XX, 0xx Xxxxx, Xxxxxxxxxx, XX 00000, or
at such other agency or office of the Corporation in the United States of
America as it may designate by notice in writing to the holder hereof at the
address of such holder appearing on the books of the Corporation, and by payment
(either in cash, by check or wire transfer, by cancellation of indebtedness
and/or in shares of capital stock of the Corporation valued at Fair Market Value
(as hereinafter defined) on the date of such exercise) to the Corporation of the
Warrant Price for each Warrant Share being purchased. In the event of the
exercise of the rights represented by this Warrant, a certificate or
certificates for the Warrant Shares so purchased, registered in the name of the
holder, and if this Warrant shall not have been exercised for all of the Warrant
Shares, a new Warrant, registered in the name of the holder hereof, of like
tenor to this Warrant, shall be delivered to the holder hereof within a
reasonable time, not exceeding six business days, after the rights represented
by this Warrant shall have been so exercised. The person in whose name any
certificate for Warrant Shares is issued upon exercise of this Warrant shall for
all purposes be deemed to have become the holder of record of such shares on the
date on which the Warrant was surrendered and payment of the Warrant Price and
any applicable taxes was made, irrespective of the date of delivery of such
certificate, except that, if the date of such surrender and payment is a date
when the stock transfer books of the Corporation are closed, such person shall
be deemed to have become the holder of such shares at the close of business on
the next succeeding date on which the stock transfer books are open.
3. EXCHANGE OF WARRANT.
(a) In addition to, and independent of, the rights of the
holder of this Warrant set forth in Section 2 hereof, the holder hereof may at
any time or from time to time elect to receive, without the payment by the
holder of any additional consideration, that number of Warrant Shares determined
as hereinafter provided in this Section 3 by the surrender of this Warrant or
any portion hereof to the Corporation, accompanied by an executed Notice of
Exchange in substantially the form thereof attached hereto (the "Net Issue
Election"). Thereupon, the Corporation shall issue to the holder hereof such
number of fully paid and nonassessable Warrant Shares as is computed using the
following formula:
X = Y (A-B)
-----------
A
where X = the number of Warrant Shares to be issued to
the holder pursuant to this Section 3.
Y= the number of Warrant Shares covered by this
Warrant in respect of which the Net Issue Election
is made pursuant to this Section 3.
A= the Fair Market Value (as hereinafter defined)
of one Warrant Share determined at the time the
Net Issue Election is made pursuant to this
Section 3 (the "Determination Date").
Exhibit B-39
65
Confidential
B= the Warrant Price in effect under this Warrant
at the Determination Date.
All references in this Warrant to an "exercise" of the Warrant shall
include an exchange pursuant to this Section 3.
(b) For purposes of the above calculation, "Fair Market Value"
of one Warrant Share as of the Determination Date shall mean:
(i) if the Common Stock of the Corporation is not
then traded on a national securities exchange, the average of the
closing prices quoted on the National Association of Securities
Dealers, Inc. Automated Quotation National Market System, if
applicable, or the average of the last bid and asked prices of the
Common Stock quoted in the over-the-counter-market or (B) if the Common
Stock is then traded on a national securities exchange, the average of
the high and low prices of the Common Stock listed on the principal
national securities exchange on which the Common Stock is so traded, in
each case for the twenty (20) trading days immediately preceding the
Determination Date or, if such date is not a business day on which
shares are traded, the next immediately preceding trading day;
(ii) in the event of a Warrant Exchange in connection
with a Corporate Transaction, the value per share of Common Stock
received or receivable by each holder thereof (assuming for purposes of
this determination, in the case of a sale of assets, the Corporation is
liquidated immediately following such sale and the consideration paid
to the Corporation is immediately distributed to its stockholders); and
(iii) in all other circumstances, the fair market
value per share of Common Stock shall be the value thereof, as agreed
upon by the Corporation and the holder of this Warrant, provided,
however, that if the Corporation and the holder cannot agree on such
value, such value shall be determined by an independent investment
banking or valuation firm experienced in valuing businesses such as the
Corporation and jointly selected in good faith by the Corporation and
the holder. Fees and expenses of the valuation firm shall be paid for
by the Corporation.
The closing of any Warrant Exchange shall take place at the offices of the
Corporation on the date specified in the Notice of Exchange (the "Exchange
Date"), which shall be not less than three and not more than 30 days after the
delivery of such Notice. At such closing, the Corporation shall issue and
deliver to the holder or its designee a certificate or certificates for the
Warrant Shares to be issued upon such Warrant Exchange, registered in the name
of the holder or such designee, and if such Warrant Exchange shall not have been
for all Warrant Shares, a new Warrant, registered in the name of the holder, of
like tenor to this Warrant for the number of shares still subject to this
Warrant following such Warrant Exchange.
Exhibit B-40
66
Confidential
4. ADJUSTMENT OF WARRANT PRICE.
(a) The Warrant Price shall be subject to adjustment from time
to time as follows:
(i) If the Corporation shall at any time or from time
to time during the Exercise Period, issue any shares of Common Stock
(or be deemed to have issued any shares of Common Stock as provided
herein), other than Excluded Securities (as defined in Section 4(a)
(v)) without consideration or for a consideration per share less than
the Fair Market Value (determined in accordance with the formula set
forth in Section 3) of a share of Common Stock in effect immediately
prior to the issuance of Common Stock, the Warrant Price in effect
immediately prior to such issuance shall forthwith be lowered to a
price equal to the quotient obtained by dividing: (x) an amount equal
to the sum of (1) the total number of shares of Common Stock
outstanding (including any shares of Common Stock deemed to have been
issued pursuant to Section 4(a)(ii)(D)) immediately prior to such
issuance multiplied by the Warrant Price in effect immediately prior to
such issuance, plus (2) the consideration received by the Corporation
upon such issuance, by (y) the total number of shares of Common Stock
outstanding (including any shares of Common Stock deemed to have been
issued pursuant to Section 4(a)(ii)(D)) immediately after the issuance
or deemed issuance of such Common Stock.
(ii) For the purposes of any adjustment of the
Warrant Price pursuant to Section 4(a)(i), the following provisions
shall be applicable:
(A) In the case of the issuance of Common Stock
for cash, the consideration received by the Corporation from such
issuance shall be deemed to be the amount of cash paid therefor before
deducting therefrom any discounts, commissions or other expenses
allowed, paid or incurred by the Corporation for any underwriting or
otherwise in connection with the issuance and sale thereof.
(B) In the case of the issuance of Common Stock
for a consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the fair market
value thereof as determined in good faith by the Board of Directors of
the Corporation, irrespective of any accounting treatment.
(C) In the case of the issuance of Common Stock
without consideration, the consideration shall be deemed to be $0.01
per share.
(D) In the case of the issuance of (x) options
to purchase or rights to subscribe for Common Stock, (y) securities by
their terms convertible into or exchangeable for Common Stock or (z)
options to purchase rights to subscribe for such convertible or
exchangeable securities:
Exhibit B-41
67
Confidential
(1) the aggregate maximum number of shares of
Common Stock deliverable upon exercise of such options to purchase or
rights to subscribe for Common Stock shall be deemed to have been
issued at the time such options or rights were issued and for a
consideration equal to the consideration (determined in the manner
provided in subdivisions (A), (B) and (C) above), if any, received by
the Corporation upon the issuance of such options or rights plus the
minimum purchase price provided in such options or rights for the
Common Stock covered thereby;
(2) the aggregate maximum number of shares of
Common Stock deliverable upon conversion of or in exchange for any such
convertible or exchangeable securities or upon the exercise of options
to purchase or rights to subscribe for such convertible or exchangeable
securities and subsequent conversion or exchange thereof shall be
deemed to have been issued at the time such securities were issued or
such options or rights were issued and for a consideration equal to the
consideration received by the Corporation for any such securities and
related options or rights (excluding any cash received on account of
accrued interest or accrued dividends), plus the additional
consideration, if any, to be received by the Corporation upon the
conversion or exchange of such securities or the exercise of any
related options or rights (the consideration in each case to be
determined in the manner provided in subdivisions (A), (B) and (C)
above);
(3) on any change in the number of shares or
exercise price of Common Stock deliverable upon exercise of any such
options or rights or conversions of or exchanges for such securities,
other than a change resulting from the antidilution provisions thereof,
the applicable Warrant Price shall forthwith be readjusted to such
Warrant Price as would have resulted had the adjustment made upon the
issuance of such options, rights or securities not converted prior to
such change (or options or rights related to such securities not
converted prior to such change) been made upon the basis of such
change; provided, however, that such readjustment shall not result in a
Warrant Price that is greater than the original Warrant Price; and
(4) on the expiration of all such options or
rights, the termination of all such rights to convert or exchange or
the expiration of all options or rights related to such convertible or
exchangeable securities in each case having been issued by the
Corporation for the same consideration (as determined pursuant to
subdivision (A), (B) and (C) above), the applicable Warrant Price shall
forthwith be readjusted to such Warrant Price as would have resulted
had the adjustment made upon the issuance of such options, rights,
securities or options or rights related to such securities not been
made; provided, however, that such readjustment shall not result in a
Warrant Price that is greater that the original Warrant Price.
Exhibit B-42
68
Confidential
(iii) If, at any time during the Exercise Period, the
number of shares of Common Stock outstanding is increased by a
stock dividend payable in shares of Common Stock or by a
subdivision or split-up of shares of Common Stock, then,
following the record date fixed for the determination of
holders of Common Stock entitled to receive such stock
dividend, subdivision or split-up, the Warrant Price shall be
appropriately decreased and the number of shares of Common
Stock issuable upon exercise of this Warrant shall be
appropriately increased, in each case in proportion to such
increase in outstanding shares.
(iv) If, at any time during the Exercise Period, the
number of shares of Common Stock outstanding is decreased by a
combination of the outstanding shares of Common Stock, then,
following the record date for such combination, the Warrant
Price shall be appropriately increased and the number of
shares of Common Stock issuable upon exercise of this Warrant
shall be appropriately decreased, in each case, in proportion
to such decrease in outstanding shares.
(v) For purposes of Section 4(a), the term "Excluded
Securities" shall mean (A) shares of Common Stock (subject to
equitable adjustment for stock splits, dividends, combinations
and like occurrences) issued to officers, employees or
directors of Corporation, pursuant to any agreement, plan or
arrangement approved by the Board of Directors of the
Corporation, or options to purchase or rights to subscribe for
such Common Stock, or securities by their terms convertible
into or exchangeable for such Common Stock, or options to
purchase or rights to subscribe for such convertible or
exchangeable securities pursuant to such agreement, plan or
arrangement; (B) shares of Common Stock issued as a stock
dividend or upon any stock split or other subdivision or
combination of shares of Common Stock; (C) securities issued
pursuant to the acquisition of another corporation or other
entity by the Corporation by merger or purchase of stock or
purchase of all or substantially all of such other
corporation's or other entity's assets whereby the Corporation
owns not less than a majority of the voting power of such
other corporation or other entity following such acquisition
or purchase; or (D) securities issued in an underwritten
public offering approved by the Board of Directors.
(vi) All calculations under this Section 4 shall be
made to the nearest one tenth (1/10) of a cent or to the
nearest one tenth (1/10) of a share, as the case may be.
(b) Whenever the Warrant Price shall be adjusted
as provided in this Section 4 the Corporation shall forthwith file, at
the office of the Corporation or any transfer agent designated by the
Corporation for the Common Stock, a statement, signed by its chief
financial officer, showing in detail the facts requiring such
adjustment and the adjusted Warrant Price. The Corporation shall also
cause a copy of such statement to be sent by first-class certified
mail, return receipt requested, postage prepaid, to each holder of a
Warrant at his or its address appearing on the Corporation's records.
Where
Exhibit B-43
69
appropriate, such copy may be given in advance and may be included as part of a
notice required to be mailed under the provisions set forth immediately below.
(c) In case the Corporation shall make or issue, or shall fix
a record date for the determination of eligible holders entitled to receive, a
dividend or other distribution with respect to the Common Stock (or any shares
of stock or other securities at the time issuable upon exercise of the Warrant)
payable in assets (excluding cash dividends paid or payable solely out of
retained earnings but including shares of any subsidiary), then, in each such
case, the holder of this Warrant on exercise hereof at any time after the
consummation, effective date or record date of such dividend or other
distribution, shall receive, in addition to the Warrant Shares (or such other
stock or securities) issuable on such exercise prior to such date, and without
the payment of additional consideration therefor, the securities or such other
assets of the Corporation to which such holder would have been entitled upon
such date if such holder had exercised this Warrant on the date hereof and had
thereafter, during the period from the date hereof to and including the date of
such exercise, retained such shares and/or all other additional stock available
by it as aforesaid during such period giving effect to all adjustments called
for by this Section 4.
(d) In the event the Corporation shall propose to take any
action of the types described in Section 4(a)(iii) or (iv) or Section 11, the
Corporation shall give notice to each holder of a Warrant in the manner set
forth herein, which notice shall specify the record date, if any, with respect
to any such action and the date on which such action is to take place. Such
notice shall also set forth such facts with respect thereto as shall be
reasonably necessary to indicate the effect of such action (to the extent such
effect may be known at the date of such notice) on the Warrant Price then in
effect and the number, kind or class of shares or other securities or property
which shall be delivered or purchasable upon the occurrence of such action or
deliverable upon exercise of this Warrant. In the case of any action which would
require the fixing of a record date, such notice shall be given at least 10 days
prior to the date so fixed, and in case of all other action, such notice shall
be given at least 20 days prior to the taking of such proposed action. Failure
to give such notice, or any defect therein, shall not affect the legality or
validity of any such action.
5. ADJUSTMENT OF WARRANT SHARES. Upon each adjustment of the Warrant
Price as provided in Section 4, the holder hereof shall thereafter be entitled
to subscribe for and purchase, at the Warrant Price resulting from such
adjustment, the number of Warrant Shares equal to the product of (i) the number
of Warrant Shares existing prior to such adjustment and (ii) the quotient
obtained by dividing (A) the Warrant Price existing prior to such adjustment by
(B) the new Warrant Price resulting from such adjustment. No fractional shares
of Common Stock shall be issued as a result of any such adjustment, and any
fractional shares resulting from the computations pursuant to this paragraph
shall be eliminated without consideration.
6. COVENANTS AS TO COMMON STOCK. The Corporation covenants and agrees
that all shares of Common Stock that may be issued upon the exercise of the
rights represented by this Warrant, will, upon issuance, be validly issued,
fully paid and non-
Exhibit B-44
70
CONFIDENTIAL
assessable and free from all taxes, liens and charges with respect to the
issuance thereof. The Corporation further covenants and agrees that the
Corporation will from time to time take all such action as may be requisite to
assure that the stated or par value per share of Common Stock is at all times
equal to or less than the then effective Warrant Price per share of Common Stock
issuable upon exercise of this Warrant. The Corporation further covenants and
agrees that the Corporation will at all times have authorized and reserved, free
from preemptive rights, a sufficient number of shares of Common Stock to provide
for the exercise of the rights represented by this Warrant. The Corporation
further covenants and agrees that if any shares of capital stock to be reserved
for the purpose of the issuance of shares of Common Stock upon the exercise of
this Warrant require registration with or approval of any governmental authority
under any Federal or state law before such shares may be validly issued or
delivered upon exercise, then the Corporation will in good faith and
expeditiously as possible endeavor to secure such registration or approval, as
the case may be. If and so long as the Common Stock issuable upon the exercise
of the rights represented by this Warrant is listed on any national securities
exchange, the Corporation will, if permitted by the rules of such exchange, list
and keep listed on such exchange, upon official notice of issuance, all shares
of such capital stock.
7. NO SHAREHOLDER RIGHTS. This Warrant shall not entitle the holder
hereof to any voting rights or other rights as a shareholder of the Corporation.
8. RESTRICTIONS ON TRANSFER. The holder of this Warrant acknowledges
that neither this Warrant nor the Warrant Shares have been registered under the
Securities Act of 1933, as amended (the "Securities Act") and the holder of this
Warrant agrees that no sale, transfer, assignment, hypothecation or other
disposition of this Warrant or the Warrant Shares shall be made in the absence
of (a) current registration statement under the Securities Act as to this
Warrant or the Warrant Shares and the registration or qualification of this
Warrant or the Warrant Shares under any applicable state securities laws is then
in effect or (ii) an opinion of counsel reasonably satisfactory to the
Corporation to the effect that such registration or qualification is not
required. Each certificate or other instrument for Warrant Shares issued upon
exercise of this Warrant shall, if required under the Securities Act or the
rules promulgated thereunder, be imprinted with a legend substantially to the
foregoing effect.
9. INVESTOR RIGHTS AGREEMENT. Anything contained herein to the contrary
notwithstanding, the Warrant Shares shall be entitled to all rights and benefits
accorded thereto in that certain Fourth Amended and Restated Investors' Rights
Agreement, dated as ofFebruary 3, 2000, by and among the Corporation and the
Investors (as defined therein) .
10. TRANSFER OF WARRANT; AMENDMENT. Subject to the restriction set
forth in Section 8, this Warrant and all rights hereunder are transferable, in
whole, or in part, at the agency or office of the Corporation referred to in
Section 2, by the holder hereof in person or by duly authorized attorney, upon
surrender of this Warrant properly endorsed. Each taker and holder of this
Warrant, by taking or holding the same, consents and agrees that this Warrant,
when endorsed, in blank, shall be deemed negotiable, and, when so
--------------------------------------------------------------------------------
Exhibit B-45
71
CONFIDENTIAL
endorsed the holder hereof may be treated by the Corporation and all other
persons dealing with this Warrant as the absolute owner hereof for any purposes
and as the person entitled to exercise the rights represented by this Warrant,
or to the transfer hereof on the books of the Corporation, any notice to the
contrary notwithstanding; but until each transfer on such books, the Corporation
may treat the registered holder hereof as the owner hereof for all purposes.
11. REORGANIZATIONS, ETC. In case, at any time during the Exercise
Period, of any capital reorganization, of any reclassification of the stock of
the Corporation (other than a change in par value or from par value to no par
value or from no par value to par value or as a result of a stock dividend or
subdivision, split-up or combination of shares), or the consolidation or merger
of the Corporation with or into another corporation (other than a consolidation
or merger in which the Corporation is the continuing operation and which does
not result in any change in the Common Stock) or of the sale of all or
substantially all the properties and assets of the Corporation as an entirety to
any other corporation, this Warrant shall, after such reorganization,
reclassification, consolidation, merger or sale, be exercisable for the kind and
number of shares of stock or other securities or property of the Corporation or
of the corporation resulting from such consolidation or surviving such merger or
to which such properties and assets shall have been sold to which such holder
would have been entitled if he had held the Common Stock issuable upon the
exercise hereof immediately prior to such reorganization, reclassification,
consolidation, merger or sale. In any such reorganization or other action or
transaction described above, appropriate provision shall be made with respect to
the rights and interests of the holder of this Warrant to the end that the
provisions hereof (including, without limitation, provisions for adjustments of
the Warrant Price and of the number of shares purchasable and receivable upon
the exercise of this Warrant) shall thereafter be applicable, as nearly as may
be, in relation to any shares of stock, securities or assets thereafter
deliverable upon the exercise hereof. The Corporation will not effect any such
consolidation, merger or sale unless, prior to the consummation thereof, the
successor corporation or entity (if other than the Corporation) resulting from
such transaction or the corporation or entity purchasing such assets shall
assume by written instrument, executed and mailed or delivered to the registered
holder hereof at the last address of such holder appearing on the books of the
Corporation, the obligation to deliver to such holder such shares of stock,
securities or assets as, in accordance with the foregoing provisions, such
holder may be entitled to purchase.
12. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If this Warrant is
lost, stolen, mutilated or destroyed, the Corporation may, on such terms as to
indemnity or otherwise as it may in its discretion impose (which shall, in the
case of a mutilated Warrant, include the surrender thereof), issue a new Warrant
of like denomination and tenor as the Warrant so lost, stolen, mutilated or
destroyed. Any such new Warrant shall constitute an original contractual
obligation of the Corporation, whether or not the allegedly lost, stolen,
mutilated or destroyed Warrant shall be at any time enforceable by anyone.
--------------------------------------------------------------------------------
Exhibit B-46
72
CONFIDENTIAL
13. MODIFICATION AND WAIVER. This Warrant and any provision hereof may
be changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
14. NOTICES. All notices, advises and communications to be given or
otherwise made to any party to this Agreement shall be deemed to be sufficient
if contained in a written instrument delivered in person or by telecopier or
duly sent by first class registered or certified mail, return receipt requested,
postage prepaid, or by overnight courier, or by electronic mail, with a copy
thereof to be sent by mail (as aforesaid) within 24 hours of such electronic
mail, addressed to such party at the address set forth below or at such other
address as may hereafter be designated in writing by the addressee to the
addresser listing all parties:
If to the Corporation, to:
XxxxxxxXxxxx.xxx Inc.
0000 X Xx., XX
0xx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxx
Telecopier: 000-000-0000
Electronic mail: xxxx@xxxxxxxxxxxx.xxx
With a copy to:
Xxxx Xxxxxxx
0000 Xxxxxxxxxxxxx Xxxxx
XxXxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxx
Telecopier: 000-000-0000
Electronic mail: xxxx.xxxxxx@xxxxxxxxxxx.xxx
and
If to Xxxxxx Mae as follows:
Xxxxxx Xxx, Inc.
11600 Xxxxxx Mae Drive
Reston, V.A. 20193
Attention: General Counsel
Telecopier:
Electronic mail:
Or to such other address as the party to whom notice is to be given may have
furnished to the other parties hereto in writing in accordance herewith. Any
such notice or
--------------------------------------------------------------------------------
Exhibit B-47
73
CONFIDENTIAL
communication shall be deemed to have been delivered and received (i) in the
case of personal delivery or delivery by telecopier, on the date of such
deliver, (ii) in the case of nationally-recognized overnight courier, on the
next business day after the date when sent and (ii) in the case of mailing, on
the third business day following that on which the piece of mail containing such
communication is posted. As used in this Section 14, "business day" shall mean
any day other than a day on which banking institutions in the District of
Columbia are legally closed for business.
15. BINDING EFFECT ON SUCCESSORS; SURVIVAL. This Warrant shall be
binding upon any corporation succeeding the Corporation by merger, consolidation
or acquisition of all or substantially all of the Corporation's assets. All of
the obligations of the Corporation relating to the Common Stock issuable upon
the exercise of this Warrant shall survive the exercise and termination of this
Warrant. All of the covenants and agreements of the Corporation shall inure to
the benefit of the successors and assigns of Xxxxxx Xxx.
16. DESCRIPTIVE HEADINGS AND GOVERNING LAW. The description headings of
the several sections and paragraphs of this Warrant are inserted for convenience
only and do not constitute a part of this Warrant. This Warrant shall be
construed and enforced in accordance with, and the rights of the parties shall
be governed by, the laws of the State of Delaware.
17. FRACTIONAL SHARES. No fractional shares shall be issued upon
exercise of this Warrant. The Corporation shall, in lieu of issuing any
fractional share, pay the holder entitled to such fraction a sum in cash equal
to such fraction multiplied by the then Fair Market Value of one Warrant Share.
* * *
--------------------------------------------------------------------------------
Exhibit B-48
74
CONFIDENTIAL
IN WITNESS WHEREOF, the undersigned have caused this Warrant and
Warrant Agreement to be executed by their duly authorized officers on the date
first above written.
XXXXXXXXXXXX.XXX INC.
By: /s/ Xxxx X. Xxxx
------------------------------------
Name: Xxxx X. Xxxx
Title: Chief Executive Officer
ATTEST: ___________________________
SECRETARY
XXXXXX MAE, INC.
By: /s/ XXXXXX XXX, INC.
------------------------------------
Name:
Title:
--------------------------------------------------------------------------------
Exhibit B-49
75
CONFIDENTIAL
FORM OF SUBSCRIPTION
[To be signed upon exercise of Warrant]
The undersigned, the holder of the Warrant, hereby irrevocably
elects to exercise the purchase rights represented by such Warrant for, and to
purchase thereunder, _________ shares of Common Stock, par value $0.0001, of
XxxxxxxXxxxx.xxx Inc., and herewith makes payment of $_________ therefor, and
requests that the certificates for such shares be issued on _____________ in the
name of and delivered to, ____________, whose address is
_________________________________________________.
Dated:_____________
_________________________________
(Signature)
_________________________________
(Address)
--------------------------------------------------------------------------------
Exhibit B-50
76
CONFIDENTIAL
NOTICE OF EXCHANGE
(To be executed by the holder in
order to exchange the Warrant.)
The undersigned hereby irrevocably elects to exchange this
Warrant into __________ shares (the foregoing number constituting the number of
Warrant Shares to be issued pursuant to Section 3 of this Warrant) of Common
Stock, par value $0.0001, of Xxxxxxxxxxxx.xxx Inc., minus any shares to be
deducted from the foregoing number in accordance with the terms of this Warrant,
according to the conditions thereof. The undersigned desires to consummate such
exchange on ________________ and requests that the certificates be issued in the
name of delivered to _____________ whose address is __________________.
Dated:
_________________________________
Name of Holder:
By:__________________________
--------------------------------------------------------------------------------
Exhibit B-51
77
CONFIDENTIAL
FORM OF ASSIGNMENT
[To be signed only upon transfer of Warrant]
For value received, the undersigned hereby sells, assigns and
transfers unto _________ the right represented by the Warrant to purchase
_______ shares of Common Stock, par value $0.0001, of Xxxxxxxxxxxx.xxx Inc., to
which the Warrant relates, and appoints [Name of Attorney] to transfer such
right on the books of [ISSUER], with full power of substitution in the premises.
Dated:_____________
____________________________
(Signature)
Signed in the presence of:
____________________________
--------------------------------------------------------------------------------
Exhibit B-52
78
CONFIDENTIAL
EXHIBIT A
NUMBER OF SHARES FOR WHICH THE
WARRANT SHALL BE EXERCISABLE:
Up to a maximum 132,185 Warrant Shares (subject to adjustment in accordance with
the terms of this Warrant) shall vest as follows:
Number of Warrant Shares Vesting
------------------------ --------------------------------------------------
(A) 66,093 Shall vest and become exercisable if Xxxxxx Mae
makes * Quality Referrals consisting of (i) at
least * Preparatory Schools, (ii) at least *
Traditional 4-year Colleges, (iii) at most *
Career Centers or Community Colleges and (iv) at
most * Distance Learning Schools, on or before
April 1, 2000.
(B) 132,185 Shall vest and become exercisable if Xxxxxx Xxx
has not achieved the performance requirements set
forth in Exhibit A, Section (A) herein and makes
* Quality Referrals for (i) at least *
Preparatory Schools, (ii) at least * Traditional
4-year Colleges, (iii) at most * Career Centers
or Community Colleges and (iv) at most * Distance
Learning Schools, on or before December 31,
2000. However, if Xxxxxx Mae does not achieve the
foregoing requirements on or before December 31,
2000, a number of Warrant Shares shall vest equal
to the total number of Quality Referrals made by
Xxxxxx Xxx divided by *, provided that in
determining the number of Quality Referrals only
the first * Distance Learning Schools and *
Career Centers or Community Colleges should be
included.
Notwithstanding the preceding chart, should Xxxxxx Mae elect to exercise its
Right to Cancel in accordance with Section 1(a) hereof, all of the Warrant
Shares shall immediately divest and be cancelled.
--------------------------------------------------------------------------------
Exhibit B-53
79
EXHIBIT C
XXXXXX XXX CONTENT AND MARKS
------------------------------
1. U.S. FEDERALLY REGISTERED TRADEMARKS AND SERVICE MARKS
See page C-2 below.
2. COMMON LAW TRADEMARKS AND SERVICE MARKS - U.S. APPLICATIONS PENDING
NONE
3. COMMON LAW TRADEMARKS AND SERVICE MARKS
NONE
4. OTHER XXXXXX MAE CONTENT TO BE PROVIDED BY XXXXXX XXX
NONE
Exhibit C-1
80
[EDUCATION LEADS US. SALLIEMAE LOGO]
Exhibit C-2
81
EXHIBIT D
VARSITYBOOKS CONTENT AND MARKS
--------------------------------
1. U.S. FEDERALLY REGISTERED TRADEMARKS AND SERVICE MARKS
(a) The stylized "V" in the VarsityBooks logo.
2. COMMON LAW TRADEMARKS AND SERVICE MARKS - U.S. APPLICATIONS PENDING
(a) VarsityBooks has submitted an application for a trademark on
"XxxxxxxXxxxx.xxx." The application is currently pending.
3. COMMON LAW TRADEMARKS AND SERVICE MARKS
None.
4. OTHER VARSITYBOOKS CONTENT TO BE PROVIDED BY VARSITYBOOKS
None.
Exhibit D-1
82
EXHIBIT E
DESIGNATED COLLEGE TARGETED RETAILERS
--------------------------------------
*
VarsityBooks reserves the right to amend this list at any time subject to the
consent of Xxxxxx Mae (such consent not to be unreasonably withheld, delayed or
conditioned).
* * shall not be deemed to be a College Targeted Retailer for the
limited purpose of the provision of content to the * Initiative.
Exhibit E-1
83
EXHIBIT F
VARSITYBOOKS TRADEMARK USAGE GUIDELINES
---------------------------------------
These guidelines apply to your use of XxxxxxxXxxxx.xxx (R) (the "Trademark") in
materials which have been approved in advance by XxxxxxxXxxxx.xxx, Inc.
0.Xxx may use the Trademark solely for the purpose authorized by
XxxxxxxXxxxx.xxx, Inc.
0.Xxx may not alter the Trademark in any manner. For example, you may not change
the proportion, color, or font of the Trademark.
0.Xxx may not display the Trademark in any manner that implies sponsorship,
endorsement by XxxxxxxXxxxx.xxx, Inc. outside of your involvement in the
affiliate program.
0.Xxx may not use the Trademark to disparage XxxxxxxXxxxx.xxx, its products or
services, or in a manner which, in XxxxxxxXxxxx.xxx, Inc.'s reasonable
judgement, may diminish or otherwise damage XxxxxxxXxxxx.xxx, Inc.'s goodwill in
the Trademark.
5.The Trademark must appear by itself, with reasonable spacing (at least the
height of the Trademark) between each side of the Trademark and other graphic or
textual elements.
0.Xxx must use the (R) symbol adjacent to the Trademark.
0.Xxx must include the following statement in your materials that include the
Trademark: XxxxxxxXxxxx.xxx is the registered trademark of XxxxxxxXxxxx.xxx,
Inc.
0.Xxx acknowledge that all rights to the Trademark are the exclusive property of
XxxxxxxXxxxx.xxx, Inc., and all goodwill generated through your use of the
Trademark will inure to the benefit of XxxxxxxXxxxx.xxx, Inc.
XxxxxxxXxxxx.xxx, Inc. reserves the right in its sole discretion to modify these
guidelines at any time. XxxxxxxXxxxx.xxx, inc. reserves the right to take action
against any use that does not conform to these guidelines.
Exhibit F-1
84
EXHIBIT G
TARGET INSTITUTIONS
---------------------
TO BE MUTUALLY AGREED UPON
Exhibit G-1
85
EXHIBIT H
XXXXXX XXX TRADEMARK USAGE GUIDELINES
--------------------------------------
These guidelines apply to your use of XXXXXX MAE(R) EDUCATION LEADS US(SM) (the
"Trademark") in materials that have been approved in advance by Xxxxxx Xxx.
1. You may use the Trademark solely for the purpose authorized by Xxxxxx Mae.
2. You may not alter the Trademark in any manner. For example, you may not
change the proportion, color, or font of the Trademark.
3. You may not display the Trademark in any manner that implies sponsorship,
endorsement by Xxxxxx Xxx outside of your involvement in the program
contemplated by this Agreement.
4. You may not use the Trademark to disparage Xxxxxx Mae, its products or
services, or in a manner which, in Xxxxxx Mae's reasonable judgement, may
diminish or otherwise damage Xxxxxx Mae's goodwill in the Trademark.
5. The Trademark must appear by itself, with reasonable spacing (at least the
height of the Trademark) between each side of the Trademark and other graphic or
textual elements.
6. You must use the (R) symbol adjacent to EDUCATION LEADS US, and the (SM)
symbol adjacent to XXXXXX XXX.
7. You must include the following statement in your materials that include the
Trademark: XXXXXX MAE is a registered service xxxx of the Student Loan Marketing
Association, and EDUCATION LEADS US is a service xxxx of Xxxxxx Xxx, Inc.
8. You acknowledge that all rights to the Trademark are the exclusive property
of Xxxxxx Mae, Inc. and/or the Student Loan Marketing Association (collectively
"Xxxxxx Xxx") and all goodwill generated through your use of the Trademark will
inure to the benefit of Xxxxxx Mae. Xxxxxx Xxx reserves the right in its sole
discretion to modify these guidelines at any time. Xxxxxx Mae reserves the right
to take action against any use that does not conform to these guidelines.
9. You understand that any advertisement or promotional materials which use
the Xxxxxx Xxx name or Trademark shall prominently display the following
disclaimer: SLM HOLDING CORPORATION AND ITS SUBSIDIARIES, OTHER THAN THE STUDENT
LOAN MARKETING ASSOCIATION, ARE NOT SPONSORED BY OR AGENCIES OF THE UNITED
STATES.
Exhibit H-1
86
EXHIBIT I
XXXXXX MAE COMPETITORS
----------------------
*
* Only to the extent the entity, or any divisions or subsidiary of the entity is
engaged in the Education Loan Business.
Xxxxxx Xxx reserves the right to amend this list at any time subject to the
consent of VarsityBooks (such consent not to be unreasonably withheld, delayed
or conditioned).
I-1
