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EXHIBIT 10.5
CYBERSOURCE CORPORATION
SERIES A PREFERRED
STOCK PURCHASE AGREEMENT
THIS SERIES A PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement") is
made as of the 6th day of January, 1995 by and between CYBERSOURCE CORPORATION,
a California corporation (the "Company"), XXXXXXX X. XXXXXXXXX ("XxXxxxxxx"),
(solely with respect to Sections 7.1--7.15 and 8.5 hereof) and the purchasers
listed on the signature pages hereto under the heading "Investors", each of whom
is herein referred to as an "Investor".
In consideration of the mutual promises, covenants and conditions
hereinafter set forth, the parties hereby agree as follows:
1. Purchase and Sale of Series A Preferred Stock.
1.1 Sale and Issuance of Series A Preferred Stock.
(a) The Board of Directors of the Company shall adopt
and file with the Secretary of State of the State of California on or before the
Closing (as defined below) the Certificate of Determination of Rights,
Preferences and Privileges (the "Certificate of Determination") in substantially
the form attached hereto as Exhibit A designating 3,000,000 shares of Preferred
Stock as Series A Preferred Stock.
(b) Subject to the terms and conditions of this
Agreement, each Investor agrees severally to purchase, and the Company agrees to
sell and issue to each Investor, the number of shares of Series A Preferred
Stock (the "Preferred Shares"), set forth opposite such Investor's name on the
Schedule of Investors attached as Exhibit B to this Agreement (the "Schedule of
Investors"), for an aggregate of 1,437,500 Preferred Shares at a purchase price
of $0.40 per share, for the purchase price shown opposite such Investor's name
on the Schedule of Investors (for an aggregate purchase price of $575,000).
1.2 Closing. The purchase and sale of the Preferred Shares shall
take place at the offices of Jackson, Tufts, Xxxx & Black, 00 X. Xxxxxx Xxxxxx,
Xxx Xxxx, Xxxxxxxxxx 00000 on January 6, 1995, or at such other time and place
an the Company and Investors mutually agree upon (which time and place are
designated as the "Closing"). At the Closing, the Company will deliver to the
Investors stock certificates representing 1,437,500 Preferred Shares against
payment of the purchase price therefor of $0.40 per share by checks payable to
the order of the Company or wire transfers of funds. The Investors acknowledge
that the Company intends to sell and issue up to an additional
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1,437,500 Preferred Shares, but no assurance can be given by the Company as to
when, or even if, such sale and issuance will occur.
2. Representations and Warranties of the Company. The Company hereby
represents and warrants to each Investor, except as set forth on the Schedule of
Exceptions attached hereto as Exhibit C, which exceptions shall be deemed to be
representations and warranties as if made hereunder as follows:
2.1 Organization, Good Standing and Qualification. The Company is
a corporation duly organized, validly existing and in good standing under the
laws of the State of California and has all requisite corporate power and
authority to carry on its business as now conducted and as proposed to be
conducted. The Company is duly qualified to transact business and is in good
standing in each jurisdiction in which the failure so to qualify would have a
material adverse effect on its business or properties. A copy of the Company's
Articles of Incorporation (as amended) and the Company's Bylaws (as amended)
have been delivered to each Investor.
2.2 Capitalization.
(a) Immediately prior to the Closing the authorized capital
of the Company consists, or will consist of:
(i) Preferred Stock. 4,000,000 shares of Preferred
Stock, 3,000,000 of which have been designated Series A Preferred Stock, no par
value. No shares of Series A Preferred Stock were issued and outstanding
immediately prior to the First Closing. The rights, preferences and privileges
of the Series A Preferred Stock will be as stated in the Company's Certificate
of Determination attached hereto as Exhibit A.
(ii) Common Stock. 10,000,000 shares of Common Stock,
4,500,000 shares of Common Stock of which were issued and outstanding.
(b) All such issued and outstanding shares have been duly
authorized and validly issued, are fully paid and non-assessable and have been
issued in compliance with all applicable state and federal laws concerning the
issuance of securities.
(c) Agreements for Purchase of Shares. Except for:
(i) the conversion privileges and preemptive rights of
the Series A Preferred Stock; and
(ii) options issued pursuant to the Company's stock
option plan and other agreements (as of the Closing, options for 500,000 shares
are presently outstanding and
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an additional 650,000 shares are available for grant under the Company's stock
option plan);
prior to the Closing there will not be any outstanding options, warrants, rights
(including conversion, preemptive rights or rights of first offer) or agreements
for the purchase or acquisition from the Company of any shares of its capital
stock.
2.3 Subsidiaries. The Company does not presently own or control,
directly or indirectly, any interest in any other corporation, association,
partnership or other business entity.
2.4 Authorization. All corporate action on the part of the
Company, its officers, directors and shareholders necessary for the
authorization, execution and delivery of this Agreement, the performance of all
obligations of the Company hereunder and the authorization, issuance (or
reservation for issuance) and delivery of the Preferred Shares being sold
hereunder and the Common Stock issuable upon conversion of the Preferred Shares,
has been taken or will be taken on or prior to the Closing, and this Agreement
constitutes a valid and legally binding obligation of the Company enforceable in
accordance with its terms, except as affected by (i) bankruptcy or insolvency
laws, or (ii) equitable principles.
2.5 Valid Issuance of Preferred Stock. The Preferred shares, when
issued, sold and delivered in accordance with the terms hereof for the
consideration expressed herein, will be duly and validly issued, fully paid and
nonassessable and, based in part upon the representations of the Investors set
forth in Section 3 of this Agreement, will be issued in compliance with all
applicable federal and state securities laws free and clear of all restrictions
on transfer (other than those arising from application of the securities laws).
The Common Stock issuable upon conversion of the Preferred Shares purchased
under this Agreement have been duly and validly reserved for issuance.
2.6 Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any United States federal, state, local or provincial governmental
authority on the part of the Company is required in connection with:
(a) the Company's valid execution, delivery, or performance
of this Agreement; and
(b) the offer, sale, or issuance of the Preferred Shares by
the Company hereunder or (assuming the exemption provided by Section 3(a)(9) of
the Securities Act of 1933, as amended, in its current form is available and no
commission is paid in conjunction therewith) the issuance of Common Stock upon
conversion of the Preferred Shares;
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except such filings as have been made prior to the Closing, and except for any
notices of sale required to be filed with the Securities and Exchange Commission
under Regulation D of the Securities Act of 1933, as amended (the "Securities
Act"), or such post-closing filings as may be required under applicable state
securities laws, which will be timely filed within the applicable periods
therefor.
2.7 Litigation. There is no action, suit, proceeding or
investigation pending or currently threatened against the Company which
questions the validity of this Agreement or the right of the company to enter
into this Agreement, or to consummate the transactions contemplated hereby, or
which might result, either individually or in the aggregate, in any material
adverse change in the assets or condition of the Company, financially or
otherwise, or any change in the current equity ownership of the Company, nor is
the Company aware that there is any basis for the foregoing. The Company is not
a party or subject to the provisions of any order, writ, injunction, judgment or
decree of any court or government agency or instrumentality. There is no action,
suit, proceeding or investigation by the Company, currently pending or which the
Company intends to initiate.
2.8 Patents and Trademarks. To the best of the Company's
knowledge, the Company's business as now conducted and as presently proposed to
be conducted does not conflict with or infringe upon anyone's patents,
copyrights, trademarks, trade secrets, or other proprietary rights. To the best
of the Company's knowledge, the Company owns, or has the right to use, all
patents, trademarks, trade secrets or other proprietary rights necessary for the
conduct of its business as it is presently conducted without infringing on any
patents, trademarks, trade secrets or other proprietary rights of others.
2.9 Compliance with Other Instruments. The Company is not in
material violation or default of any provisions of its Articles of Incorporation
or Bylaws or of any instrument, judgment, order, writ, decree or contract to
which it is a party or by which it is bound or, to its knowledge, of any
provision of federal or state statute, rule or regulation applicable to the
company, which violation or default would be materially adverse to the Company.
The execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby will not result in any such violation or
be in conflict with or constitute, with or without the passage of time and
giving of notice, either a default under any such provision, instrument,
judgment, order, writ, decree or contract or an event which results in the
creation of any material lion, charge or encumbrance upon any assets of the
Company, which violation, default, conflict or event would be materially adverse
to the Company.
2.10 Agreements; Action.
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(a) There are no agreements, understandings, instruments,
contracts or proposed transactions to which the Company is a party or by which
it is bound which involve (i) obligations of, or payments to the Company in
excess of, $75,000, or (ii) the license of any patent, copyright, trade secret
or other proprietary right of the Company.
(b) The Company has not (i) declared or paid any dividends,
or authorized or made any distribution upon or with respect to any class or
series of its capital stock, (ii) incurred any indebtedness for money borrowed
or incurred any other liabilities individually in excess of $25,000 or in excess
of $75,000 in the aggregate, other than obligations or liabilities of the
Company for compensation under employment, advisor or consulting agreements,
(iii) made any loans or advances to any person, other than in the ordinary
course of its business or (iv) sold, exchanged or otherwise disposed of any of
its assets or rights, other than in the ordinary course of its business.
2.11 Registration Rights. Except as provided in Section 7 of this
Agreement, the Company has not granted or agreed to grant any registration
rights, including piggy-back rights, to any person or entity.
2.12 Title to Property and Assets. The Company owns its property
and assets free and clear of all mortgages, liens, loans and encumbrances,
except such encumbrances and liens which arise in the ordinary course of
business and do not materially impair the Company's ownership or use of such
property or assets. With respect to the property and assets it leases, the
Company is in compliance with such leases and, to the best of its knowledge,
holds a valid leasehold interest free of any liens, claims or encumbrances,
which liens, claims or encumbrances would be materially adverse to the Company.
2.13 Voting Arrangements. To the Company's knowledge, there are
no outstanding shareholder agreements, voting trusts, proxies or other
arrangements or understandings among the shareholders of the Company relating to
the voting of their respective shares.
2.14 Financial Statements. The Company has delivered to each
Investor: (i) its unaudited financial statements (balance sheet and profit and
loss statement) at and for the period ended September 30, 1994 (the "Financial
Statements"). The Financial Statements are complete and correct in all material
respects and have been prepared on a consistent basis throughout the period
indicated. The Financial statements fairly present the financial condition and
operating results of the Company as of the dates, and for the period, indicated
therein, subject to normal year-end audit adjustments.
2.15 Changes. since September 30, 1994, there has not been any
change in the assets, liabilities, financial condition
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or operating results of the Company from that reflected in the Financial
Statements, except changes in the ordinary course of business which have not
been, in the aggregate, materially adverse.
2.16 Proprietary Information. To the best of the Company's
knowledge, it has done nothing to compromise the secrecy, confidentiality or
value of any of its trade secrets, know-how, inventions, prototypes, designs,
processes or technical data required to conduct its business as now conducted or
as proposed to be conducted. All of the Company's employees have executed a
non-disclosure/invention assignments agreement. To the Company's knowledge, no
employee of the Company in connection with such employee's employment with the
Company, has violated the terms of any agreement with a previous employer.
2.17 Permits. The Company has all franchises, permits, licenses,
and any similar authority necessary for the conduct of its business as now being
conducted by it, the lack of which could materially and adversely affect the
business, properties, prospects, or financial condition of the Company and
believes it can obtain, without undue burden or expense, any similar authority
for the conduct of its business as planned to be conducted. The Company is not
in default in any material respect under any of such franchises, permits,
licenses, or other similar authority.
2.18 Shareholder Agreements. There are presently no outstanding
shareholder agreements, voting trusts, proxies or other arrangements or
understandings between the Company and its shareholders, or among any of the
shareholders of the Company, relating to either the voting or the disposition of
their respective shares.
2.19 Brokers or Finders. The Company has not engaged any broker,
investment banker or finder in connection with the sale of the Preferred Shares.
2.20 Disclosure. The Company has provided each Investor with all
information that such Investor has requested in connection with such Investor's
decision to invest in the Preferred Shares. To the best of the Company's
knowledge, neither this Agreement nor any other written statement made or
delivered in connection herewith contains any untrue statement of a material
fact or, taking this Agreement and all such written statements as a whole, omits
to state a material fact necessary to make statements herein or therein
misleading; provided, however, with respect to any projections or expressions of
opinion or predictions, the Company represents only that such projections or
expressions of opinions and predictions were made in good faith and that the
Company believes that there is a reasonable basis therefor.
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3. Representations and Warranties of Each Investor. Each Investor
hereby severally and not jointly represents and warrants that:
3.1 Authorization. This Agreement constitutes such Investor's
valid and legally binding obligation, enforceable in accordance with its terms
except as affected by (i) bankruptcy or insolvency laws, and (ii) equitable
principles. Each Investor who is not a natural person, hereby represents that
the person executing this Agreement on its behalf is duly authorized to do SO.
3.2 Purchase Entirely for Own Account. This Agreement is made
with each Investor in reliance upon such Investor's representation to the
Company, which by such Investor's execution of this Agreement such Investor
hereby confirms, that the Preferred Shares to be received by such Investor
hereunder will be acquired for investment for such Investor's own account, not
as a nominee or agent, and not with a view to the resale or distribution of any
part thereof, and that such Investor has no present intention of selling,
granting any participation in, or otherwise distributing the same. By executing
this Agreement, each Investor purchasing Preferred Shares hereunder further
represents that such Investor does not have any contract, undertaking, agreement
or arrangement with any person to sell, transfer or grant participations to such
person or to any third person, with respect to any of the Preferred Shares, or
any portion thereof. Each Investor that is an entity represents that it has full
power and authority to enter into this Agreement.
3.3 Disclosure of Information. Each Investor believes he or it
has received all the information he or it considers necessary or appropriate for
deciding whether to purchase the Preferred Shares. Each such Investor further
represents that he or it has had an opportunity to ask questions and receive
answers from the Company regarding the terms and conditions of the offering of
the Preferred Shares. The foregoing does not modify the Company's
representations and warranties set forth herein or the Investor's right to rely
thereon.
3.4 Investment Experience. Each Investor is an investor in
securities of companies in the development stage and acknowledges that he or it
is able to fend for himself or itself, can bear the economic risk of his or its
investment and has such knowledge and experience in financial or business
matters that he or it is capable of evaluating the merits and risks of the
investment in the Preferred Shares. If other than an individual, Investor also
represents it has not been organized solely for the purpose of acquiring the
Preferred Shares.
3.5 Restricted Securities. Each Investor purchasing Preferred
Shares hereunder understands that the Preferred Shares are characterized as
"restricted securities" under the federal
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securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such Preferred Shares may be resold without registration
under the Securities Act only in certain limited circumstances. In this
connection each Investor represents that he or it is familiar with Securities
and Exchange Commission ("SEC") Rule 144, as presently in effect, and
understands the resale limitations imposed thereby and by the Securities Act.
Each Investor who is a resident of Pennsylvania agrees not to sell the Preferred
Shares within twelve (12) months of the closing, unless permitted under Section
204.011 of Pennsylvania's Blue Sky Regulations.
3.6 Further Limitations on Disposition. Without in any way
limiting the representations set forth above, each Investor purchasing Preferred
Shares hereunder further agrees not to make any disposition of all or any
portion of the Preferred Shares (or the Common Stock issuable upon the
conversion of the Preferred Shares) unless and until:
(a) There is then in effect a registration statement under
the Securities Act covering such proposed disposition and such disposition is
made in accordance with such registration statement; or
(b) (i) Such Investor shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, (ii) if
reasonably requested by the Company, such Investor shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration of such Preferred Shares under
the Securities Act and (iii) if reasonably requested by the Company, the
transferee shall have furnished to the Company its agreement to abide by the
restrictions on transfer set forth herein as if it were a purchaser hereunder.
3.7 Accredited Investor. The term "Accredited Investor" as used
in Sections 3.7, 3.8 and 3.9 refers to a person or entity who:
(a) is a director or executive officer of the Company; or
(b) is a natural person whose individual net worth, or joint
net worth with his or her spouse, at the time of purchase exceeds $1,000,000,
and the total purchase price does not exceed ten percent (10%) of his or her
individual not worth, or joint net worth with his or her spouse, at the time of
sale; or
(c) is a natural person who had an individual income in
excess of $200,000 in each of the two most recent years or joint income with
that person's spouse in excess of $300,000
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in each of those years and reasonably expects to reach the same income level in
the current year, and the total purchase price does not exceed ten percent (10%)
of his or her individual net worth, or joint net worth with his or her spouse,
at the time of sale; or
(d) is a private business development company as defined in
section 202(a)(22) of the Investment Advisors Act of 1940; or
(e) is either (i) a bank as defined in section 3(a)(2) of
the Securities Act, or a savings and loan association or other institution as
defined in section 3(a)(5)(A) of the Securities Act whether acting in its
individual or fiduciary capacity; (ii) a broker or dealer registered pursuant to
section 15 of the Securities Exchange Act of 1934; (iii) an insurance company as
defined in section 2(13) of the Securities Act; (iv) an investment company
registered under the Investment Company Act of 1940 or a business development
company as defined in section 2(a)(48) of that Act; (v) a Small Business
Investment Company licensed by the U.S. Small Business Administration under
section 301(c) or (d) of the Small Business Investment Act of 1958; or (vi) an
employee benefit plan within the meaning of Title I of the Employee Retirement
Income Security Act of 1974, if the investment decision is made by a plan
fiduciary, as defined in section 3(21) of such Act, which is either a bank,
savings and loan association, insurance company, or registered investment
adviser, or if the employee benefit plan has total assets in excess of
$5,000,000 or, if a self-directed plan, with investment decisions made solely by
persons that are Accredited Investors; or
(f) is any organization described in section 501(c)(3) of
the Internal Revenue Code, corporation, Massachusetts or similar business trust,
or partnership, not formed for the specific purpose of acquiring the Shares
offered, with total assets in excess of $5,000,000; or
(g) is any trust, with total assets in excess of $5,000,000,
not formed for the specific purpose of acquiring the Shares offered, whose
purchase is directed by a sophisticated person as described in Regulation
230.506(b)(2)(ii) promulgated under the Securities Act; or
(h) is an entity in which all of its equity owners meet one
or more of the standards set forth in (a) through (g) above.
As used in this Section 3.7 the term "net worth" means the excess of
total assets over total liabilities, and "income" means actual economic income,
which may differ from adjusted gross income for federal income tax purposes.
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3.8 Representations and Warranties as to Accredited Investors and
Excluded Purchasers Status. Each Investor as to himself or itself, severally and
not jointly, further represents to the Company that such Investor is (i) an
Accredited Investor and (ii) an excluded purchaser (as such term is described in
Section 260.102.13 of Title 10 of the California Code of Regulations or section
25102(f) of the California corporate Securities Law of 1968).
3.9 Legends. To the extent applicable, each certificate or other
document evidencing any of the Preferred Shares issued hereunder or any Common
Stock issued upon conversion of the Preferred Shares shall be endorsed with the
legends set forth below, and such Investor covenants that, except to the extent
such restrictions are waived by the Company, such Investor shall not transfer
the securities without complying with the restrictions on transfer described in
the legends endorsed thereon;
(a) The following legend under the Securities Act:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED ABSENT AN EFFECTIVE
REGISTRATION THEREOF UNDER SUCH ACT OR COMPLIANCE WITH RULE 144
PROMULGATED UNDER SUCH ACT, OR UNLESS THE COMPANY HAS RECEIVED AN
OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT
SUCH REGISTRATION IS REQUIRED."
(b) If required by the authorities of any state in
connection with the issuance or sale of the Preferred Shares, the legend
required by such state authority.
The Company shall not be required (i) to transfer on its books any
Preferred Shares which shall have been transferred in violation of any of the
provisions set forth in this Agreement, or (ii) to treat as owner of such
Preferred Shares or to accord the right to vote as such owner or to pay
dividends to any transferee to whom such Preferred Shares shall have been so
transferred.
3.10 Removal of Legends.
(a) Any legend endorsed on a certificate pursuant to Section
3.09(a) or (b) hereof shall be removed (i) if Preferred Shares represented by
such certificate shall have been effectively registered under the Securities Act
or otherwise lawfully sold in a public transaction, (ii) if such Preferred
Shares may be transferred in compliance with Rule 144(k) promulgated under the
Securities Act, or (iii) if the holder of such Preferred Shares shall have
provided the Company with an opinion from counsel, in form and substance
acceptable to the
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Company and from attorneys reasonably acceptable to the Company, stating that a
public sale, transfer or assignment of such Preferred Shares may be made without
registration.
(b) Any legend endorsed on a certificate pursuant to Section
3.9(b) hereof shall be removed if the Company receives an order of the
appropriate state authority authorizing such removal or if the holder of the
Preferred Shares provides the Company with an opinion of counsel, in form and
substance acceptable to the Company and from attorneys reasonably acceptable to
the Company, stating that such state legend may be removed.
4. California Commissioner of Corporations.
4.1 Corporate Securities Law. THE SALE OF THE SECURITIES WHICH
ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER
OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES
OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO
SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES EXEMPT FROM
QUALIFICATION BY Section 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS
CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON
SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.
5. Conditions of Investor's Obligations at Closing. The obligations of
each Investor under subsection 1.1(b) of this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions, the
waiver of which shall not be effective against any Investor who does not consent
in writing thereto:
5.1 Representations and Warranties. The representations and
warranties of the Company contained in Section 2 shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the date of such Closing.
5.2 Performance. The Company shall have performed and complied
with all agreements, obligations and conditions contained in this Agreement that
are required to be performed or complied with by it on or before the Closing.
The entering into, delivery and performance of this Agreement by the Company
shall have been duly authorized by all necessary corporate action.
5.3 Compliance Certificate. At the Closing, the Chief Executive
Officer of the Company shall deliver to the Investors a certificate certifying
that the conditions set forth in Sections 5.1 and 5.2 have been fulfilled.
5.4 Qualifications. The Commissioner of Corporations of the State
of California and any applicable United States state securities regulatory
authority shall have issued permits quali-
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fying the offer and sale of the Preferred Shares to the Investors pursuant to
this Agreement, or such offer and sale shall be exempt from such qualification
under the California Corporate Securities Law of 1968, as amended, and any other
applicable state blue-sky law.
5.5 certificate of Determination. The Company shall have adopted
and filed with the Secretary of State of the State of California on or before
the date of the Closing, the Certificate of Determination.
5.6 Legal Investment. At the time of such Closing, the purchase
of the Preferred Shares by the Investors shall be legally permitted by all laws
and regulations to which such Investors and the Company are subject.
5.7 Opinion of Counsel. At the Closing, the investors shall have
received an opinion of Jackson, Tufts, Xxxx & Black, counsel for the Company,
regarding the matters set forth an Exhibit D hereto.
5.8 Minimum Investment. The Investors shall have subscribed for a
minimum of 1,250,000 Preferred Shares at an aggregate purchase price of
$500,000.
6. Conditions of the Company's obligations at Closing. The obligations
of the Company to each Investor purchasing Preferred Shares hereunder are
subject to the fulfillment on or before the Closing of each of the following
conditions by such Investor:
6.1 Representations and Warranties. The representations and
warranties of the Investor contained in Section 3 hereof shall be true on and as
of the date of the Closing with the same effect as though such representations
and warranties had been made on and as of the Closing.
6.2 Payment of Purchase Price. Each Investor shall have delivered
the purchase price specified in Section 1.2.
6.3 California Qualification. The Commissioner of Corporations of
the State of California and any applicable United States state regulatory
authority shall have issued permits qualifying the offer and sale to the
Investors of the Preferred shares or such offer and sale shall be exempt from
such qualification under the California Corporate Securities Law of 1968, as
amended, and any other applicable state blue-sky law.
6.4 Certificate of Determination. The Company shall have adopted
and filed with the Secretary of State of the State of California on or before
the Closing, the Certificate of Determination.
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6.5 Legal Investment. At the time of such Closing, the purchase
of the Preferred Shares by the Investors shall be legally permitted by-all laws
and regulations to which the Investors and the Company are subject.
7. Registration Rights. The Company covenants and agrees as follows:
7.1 Definitions. For purposes of this Section 7:
(a) The terms "register," "registered," and "registration"
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Securities Act, and the
declaration or ordering of effectiveness of such registration statement or
document;
(b) The term "Registrable Securities" means (i) the Common
Stock issuable or issued upon conversion of the Preferred Shares, (ii) all
Common Stock owned by XxXxxxxxx (or transferred by XxXxxxxxx to his ancestors,
descendants or spouse or to trusts for the benefit of such persons) (the
"XxXxxxxxx Common Stock") and (iii) any Common Stock of the Company issued as
(or issuable upon the conversion or exercise of any warrant, right or other
security which is issued as) a dividend or other distribution with respect to,
or in exchange for or in replacement of, such Preferred Shares or XxXxxxxxx
Common Stock, excluding in all cases, however, any Registrable Securities sold
by a person in a transaction in which his registration rights are not assigned;
(c) The number of shares of Registrable Securities then
outstanding" shall be determined by the number of shares of Common Stock
outstanding which are, and the number of shares of Common Stock issuable
pursuant to the exercisable or convertible securities which are exercisable or
convertible into, Registrable Securities; and
(d) The term "Holder" means any person owning or having the
right to acquire Registrable Securities or any assignee thereof in accordance
with Section 7.12 hereof.
7.2 Request for Registration.
(a) If the Company shall receive at any time after one year
following the closing of the Company's initial public offering of securities a
written request from Holders holding at least forty percent (40%) of the
Registrable Securities then outstanding (the "Initiating Holders") that the
Company file a registration statement under the Securities Act covering the
registration of at least 40% of the Registrable Securities then outstanding and
such registration would cover sales having an anticipated aggregate offering
price, not of underwriting discounts and commissions, equal or more than
$7,500,000, then the Company shall, within twenty-one (21) days
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14
of the receipt thereof, give written notice of such request to all Holders and
shall, subject to the limitations of subsection 7.2(b), file as soon as
practicable a registration statement under the Securities Act covering all
Registrable Securities which the Holders request to be registered within twenty
(20) days of the mailing of such notice by the Company in accordance with
Section 9.6.
(b) Notwithstanding the foregoing, the Company shall not be
obligated to take any action to effect any such registration pursuant to this
Section 7.2:
(i) in any particular jurisdiction in which the Company
would be required to execute a general consent to service of process in
effecting such registration, unless the Company is already subject to service in
such jurisdiction and except as may be required by the Securities Act;
(ii) if the Company shall have initiated one
registration pursuant to this Section 7.2; or
(iii) anytime after five (5) years immediately
following the Closing and one year following the Company's initial registered
firm commitment public offering on Form S-1 with an aggregate offering price of
at least $7,500,000.
(c) (i) Subject to the foregoing paragraph 7.2(b), the
Company shall file a registration statement as soon as possible after receipt of
the request or requests of the Initiating Holders under this Section 7.2;
provided, however, that if the Company shall furnish to such Initiating Holders
within ninety (90) days of receipt of such request a certificate signed by the
President of the Company stating that in the good faith judgment of the Board of
Directors of the Company it would be detrimental to the Company and its
shareholders for such registration statement to be filed on or before the date
filing would be required and it is therefore essential to defer the filing of
such registration statement, the Company shall have the right to defer such
filing to a date not later than one hundred twenty (120) days after receipt of
such request.
(d) The underwriting shall be managed by an underwriter or
underwriters of national reputation selected by the Initiating Holders, which
selection shall be subject to the consent of the Company, which consent shall
not be unreasonably withheld. The right of any Holder to registration pursuant
to Section 7.2 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting. The Company shall (together with all Holders proposing to
distribute their securities through such underwriting) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected as above provided. Notwithstanding any other provision of this Section
7.2, if the underwriters advise the Initiating
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15
Holders and the Company in writing that marketing factors require a limitation
of the number of shares to be underwritten and that the total amount of
securities that all Holders (initiating and noninitiating) request pursuant to
this Section 7.2(d) to be included in such offering exceeds the amount of
securities that the underwriters reasonably believe compatible with the success
of the offering, the Company shall so advise all Holders and all of the shares
to be included in the registration shall be allocated among all Holders
requesting inclusion (initiating and noninitiating) pro rata according to the
total amount of securities entitled to be included in such registration owned by
each Holder requesting inclusion (initiating or non-initiating) or in such other
proportions as shall be mutually agreed by such selling shareholders; provided
however, that in the event of such an allocation XxXxxxxxx may not include more
than 35% of the shares to be included in such registration statement by all
selling shareholders without the consent of the holders of the majority of the
shares requesting inclusion in the registration.
If any person does not agree to the terms of any such underwriting, he
shall be excluded therefrom by written notice from the Company or the
underwriter. Any Registrable Securities or other securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration. If
shares are so withdrawn from the registration, the Company shall then offer to
all persons who have retained the right to include securities in the
registration the right to include additional securities in the registration in
an aggregate amount equal to the number of shares so withdrawn, with such shares
to be allocated among the persons requesting additional inclusion pro rata
according to the total amount of securities entitled to be included in such
registration owned by each such person or in such other proportions as shall be
mutually agreed by such selling shareholders.
7.3 Company Registration. If (but without any obligation to do
so) at any time after the date of the Closing hereunder the Company proposes to
register (including for this ,purpose a registration effected by the Company for
shareholders other than the Holders) any of its stock or other securities under
the Securities Act in connection with the public offering of such securities
solely for cash (other than a registration relating solely to the sale of
securities to participants in a Company stock plan, or a registration relating
to shares to be issued in connection with the acquisition of another company, or
a registration on any form which does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of the Registrable Securities), the Company shall, at such
time, promptly give each Holder written notice of such registration. Upon the
written request of each Holder given within twenty (20) days after the
effectiveness of such notice by the Company in accordance with Section 9.6, the
Company shall, subject to the provisions of Section 7.8, cause to be registered
under the Securities Act all
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16
of the Registrable Securities that each such Holder has requested to be
registered.
7.4 Obligations of the Company. Whenever required under this
Section 7 to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder, keep
such registration statement effective for up to one hundred twenty (120) days;
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement;
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them;
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as shall be reasonably requested by the
Holders, provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions; and
(a) Enter into and perform its obligations under an
underwriting agreement, in usual and customary form, with the managing
underwriter of such offering. Each Holder participating in such underwriting
shall also enter into and perform its obligations under such an agreement.
7.5 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 7 that
the selling Holders shall furnish to the Company such information regarding
themselves, the Registrable Securities hold by them, and the intended method of
disposition of such securities as shall be required to effect the registration
of the Registrable Securities.
7.6 Expenses of Demand Registration. All expenses other than
underwriting discounts and commissions incurred in
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17
connection with registrations, filings or qualifications pursuant to Section
7.2, including (without limitation) all registration, filing and qualification
fees, printers' and accounting fees, fees and disbursements of counsel for the
Company, and the reasonable fees and disbursements of one counsel for the
selling Holders shall be borne by the Company; provided, however, that the
Company shall not be required to pay for any expenses of any registration
proceeding begun pursuant to Section 7.2 if the registration request is
subsequently withdrawn at the request of the Holders (initiating and
noninitiating) holding a majority of the Registrable Securities to be registered
(in which case all participating Holders shall bear such expenses), unless the
Holders of at least 66-2/3% of the Registrable Securities agree to forfeit their
right to initiate their demand registration pursuant to Section 7.2.
7.7 Expenses of Company Registration. The Company shall bear and
pay all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to Section 7.3 for each Holder (which right may be assigned as provided
in Section 7.12), including (without limitation) all registration, filing and
qualification fees, printers' and accounting fees relating or apportionable
thereto and the fees and disbursements. of one counsel for the selling Holders
selected by them, but excluding underwriting discounts and commissions relating
to Registrable Securities.
7.8 Underwriting Requirements. In connection with any offering
involving an underwriting of shares being issued by the Company, the Company
shall not be required under Section 7.3 to include any of the Holders'
securities in such underwriting unless they accept the terms of the underwriting
as agreed upon between the Company and the underwriters selected by it, and then
only in such quantity as will not, in the opinion of the underwriters,
jeopardize the success of the offering by the Company. If the total amount of
securities, including Registrable Securities, requested by shareholders to be
included in an offering (other than a registration affected pursuant to Section
7.2) exceeds the amount of securities sold other than by the Company that the
underwriters reasonably believe compatible with the success of the offering,
then the Company shall be required to include in the offering only that number
of such securities, including Registrable Securities, which the underwriters
believe will not jeopardize the success of the offering (the securities so
included to be apportioned pro rata among the selling shareholders according to
the total amount of securities entitled to be included therein owned by each
selling shareholder or in such other proportions an shall mutually be agreed to
by such selling shareholders; provided, however, that in the event of such an
apportionment, XxXxxxxxx may not include more than 35% of the shares to be
included in such registration by all selling shareholders, without the consent
of the holders of the majority of the shares requesting inclusion in the
registration). The
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18
underwriters, pursuant to the preceding sentence, may completely exclude the
Holder's securities from such underwriting if no other selling shareholders'
securities are so included.
If any person does not agree to the terms of any such underwriting, he
shall be excluded therefrom by written notice from the Company or the
underwriter. Any Registrable Securities or other securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration. If
shares are so withdrawn from the registration, the Company shall then offer to
all persons who have retained the right to include securities in the
registration the right to include additional securities in the registration in
an aggregate amount equal to the number of shares so withdrawn, with such shares
to be allocated among the persons requesting additional inclusion pro rata
according to the total amount of securities entitled to be included in such
registration owned by each such person or in such other proportions as shall be
mutually agreed by such selling shareholders.
For purposes of the immediately preceding parenthetical concerning
apportionment, for any selling shareholder which is a holder of Registrable
Securities and which is a partnership or corporation, the partners, retired
partners and shareholders of such holder, or the estates and family members of
any such partners and retired partners, and any trusts for the benefit of any of
the foregoing persons shall be deemed to be a single "selling shareholder," and
any pro rata reduction with respect to such "selling shareholder" shall be based
upon the aggregate amount of shares carrying registration rights owned by all
entities and individuals included in such "selling shareholder," as defined in
this sentence.
7.9 Delay of Registration. No Holder shall have any right to
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 7.
7.10 Indemnification. In the event any Registrable Securities are
included in a registration statement under this Section 7:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, the officers, directors, partners and
legal counsel of each Holder, and each person, if any, who controls such Holder
within the meaning of the Securities Act or the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), against any losses, claims, damages or
liabilities (joint or several) to which they may become subject under the
Securities Act, the Exchange Act or other federal or state law, rule or
regulation insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively, a "Violation"): (i) any untrue
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19
statement or alleged untrue statement of a material fact contained in such
registration statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, (ii) the omission or
alleged omission to state therein a material fact required to be stated therein,
or necessary to make the statements therein not misleading, or (iii) any
violation or alleged violation by the Company of the Securities Act, the
Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law; and the
Company will reimburse each such Holder, officer, director, partner, legal
counsel, underwriter or controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this subsection 7.10(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Company, nor shall the
Company be liable in any such case for any such loss, claim, damage, liability
or action to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by any such Holder,
officer, partner, director, legal counsel or controlling person.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors and officers, its
legal counsel, each person, if any, who controls the Company within the meaning
of the Securities Act, and any other Holder selling securities in such
registration statement or any of such other Holder's directors, legal counsel or
officers or any person who controls such Holder, against any losses, claims,
damages or liabilities (joint or several) to which the Company or any such
director, officer, legal counsel, or controlling person, or other such Holder or
director, officer, legal counsel or controlling person of such other Holder may
become subject, under the Securities Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in reliance upon
and in conformity with written information furnished by such Holder expressly
for use in connection with such registration; and each such Holder will
reimburse any legal or other expenses reasonably incurred by the Company or any
such director, officer, legal counsel, controlling person, other Holder, or
officer, director, legal counsel, or controlling person of such other Holder in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this subsection 7.10(b) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Investor.
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20
(c) Promptly after receipt by an indemnified party under
this Section 7.10 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 7.10, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel at its own expense if it so desires.
Notwithstanding the foregoing, if the indemnified party and the indemnifying
party have conflicting interests with respect to the action so that joint
counsel for them would be inappropriate, (as determined by counsel to the
indemnified party and counsel to the indemnifying party), then the indemnifying
party shall pay reasonable fees and expenses of one counsel to the indemnified
party. The failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action, if prejudicial to its
ability to defend such action, shall relieve such indemnifying party of any .
liability to the indemnified party under this Section 7.10, but the omission to
deliver written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than under this
Section 7.10.
(d) If the indemnification provided for in this Section 7.10
is held by a court of competent jurisdiction to be unavailable to an indemnified
party, then each indemnifying party, in lieu of indemnifying such indemnified
party thereunder, hereby agrees to contribute to the amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other.
(e) The obligations of the Company and Holders under this
Section 7.10 shall survive the completion of any offering of, Registrable
Securities in a registration statement under this Section 7, and otherwise.
7.11 Reports Under Securities Exchange Act of 1934. with a view
to making available to the Investors purchasing Shares hereunder the benefits of
Rule 144 promulgated under the Securities Act and any other rule or regulation
of the SEC that may at any time permit a Holder to sell securities of the
Company to the public without registration, the Company agrees to:
(a) make and keep public information available, as those
terms are understood and defined in SEC Rule 144, at all times after ninety (90)
days after the effective date of the first registration statement filed by the
Company for the offering of its securities to the general public;
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21
(b) file with the SEC in a timely manner all reports and
other documents required of the Company under the securities Act and the
Exchange Act; and
(c) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144 (at
any time after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Securities Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements), and (ii) a copy of the most recent annual or quarterly report of
the Company and such other reports and documents so filed by the Company.
7.12 Assignment of Registration Rights. The rights to cause the
Company to register Registrable Securities pursuant to this Section 7 may be
assigned by a Holder to a transferee or assignee who (i) is not a competitor of
the Company and acquires at least fifty thousand (50,000) shares (as adjusted
for stock splits, combinations, etc.) of Registrable Securities, (ii) is an
Investor as defined hereunder, or (iii) is a partner or equity holder of an
Investor (or a third party duly authorized to act on behalf of an Investor or
its partners or equity holders), provided that such partner or equity holder has
appointed such Investor (or such duly authorized third party) as its lawful
attorney-in-fact to receive notices, vote and otherwise make binding decisions
under the terms of this Section 7; provided, in each case, the Company is,
within a reasonable period of time after such transfer, furnished with written
notice of the name and address of such transferee or assignee and the securities
with respect to which such registration rights are being assigned; and provided,
further, that such assignment shall be effective only if immediately following
such transfer the further disposition of such securities by the transferee or
assignee is restricted under the Securities Act.
7.13 "Market Stand-Off" Agreement. Each Holder hereby agrees that
it shall not,, to the extent requested by the Company and an underwriter of
Common Stock (or other securities) of the company, sell or otherwise transfer or
dispose of any securities of the Company (other than securities registered in
the offering) whether or not acquired by such Holder under this Agreement during
a reasonable and customary period of time (not to exceed one hundred twenty
(120) days), as agreed to by the Company and the underwriters, following the
effective date of a registration statement of the Company filed under the
Securities Act; provided, however, that:
(a) such agreement shall be applicable only to the first
such registration statement of the Company which covers shares (or securities)
to be sold on its behalf to the public in an underwritten offering; and
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22
(b) all officers and directors of the Company, holders of 5%
or more of the Company's issued and outstanding capital stock and all other
persons with registration rights (whether or not pursuant to this Agreement)
similarly agree not to sell or transfer.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of each
Holder (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such reasonable and customary period.
7.14 Amendment of Registration Rights. Any provision of this
Section 7 may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
at least 66-2/3% of the Registrable Securities. Any amendment or waiver effected
in accordance with this paragraph shall be binding upon each holder of any
securities purchased under this Agreement at the time outstanding (including
securities into which such securities are convertible), each future holder of
all such securities, and the Company.
7.15 Termination of Registration Rights. The company's
obligations pursuant to this Section 7 shall terminate four years from the date
of consummation of the Company's sale of its Common Stock in a bona fide, firm
commitment underwriting pursuant to a registration statement on Form S-1 under
the Securities Act which results in gross offering proceeds to the Company of at
least $7,500,000.
8. Covenants.
8.1 Delivery of Financial Statements. The Company shall deliver
to each Investor:
(a) as soon as practicable, but in any event within one
hundred twenty (120) days after the and of each fiscal year of the Company, an
income statement for such fiscal year, a balance shoot of the Company as of the
and of such year, and a cash flow statement, such year-end financial reports to
be in reasonable detail, prepared in accordance with generally accepted
accounting principles ("GAAP"); and
(b) within forty-five (45) days of the end of each quarter,
a statement of operations, cash flow analysis and balance sheet for and as of
the end of such quarter, in reasonable detail; such quarterly statements shall
also compare actual performance to budget and to the prior year's comparable
period.
8.2 Inspections. The Company shall permit each Investor, at such
Investor's expense, to visit and inspect the
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23
Company's properties, to examine its books of account and records and to discuss
the Company's affairs, finances and accounts with its officers, all at such
reasonable times as may be requested by the investor; provided, however, that
the Company shall not be obligated pursuant to this Section 8.2 to provide
access to any information which it reasonably considers to be a trade secret or
similar confidential information.
8.3 Termination of Covenants. The covenants set forth in Section
8.1 and 8.2 shall terminate and be of no further force or effect when the sale
of securities pursuant to a registration statement filed by the Company under
the Securities Act in connection with the firm commitment underwritten offering
of its securities to the general public is consummated or when the Company first
becomes subject to the periodic reporting requirements of section 13(a) or 15(d)
of the Exchange Act, whichever event shall first occur.
8.4 Election of Director. For so long as any Preferred Shares are
outstanding, the Preferred Shares, shall be entitled to elect one member of the
Company's Board of Directors. Upon the Closing, Unterberg Harris Capital
Management ("UHCM") shall designate the individual to serve as the member of
the Board of Directors elected by the holders of the Preferred Shares ("UHCM
Designee") and the Company's Board of Directors shall elect such UHCM Designee
to the Board of Directors. The Investors acknowledge and agree that the UHCM
Designee shall join the Company's Board of Directors upon the Closing. Upon the
closing of the sale of additional Preferred Shares, or shares of any other
series of Preferred Stock, the UHCM Designee shall resign and the holders of the
shares of the Company's Preferred Stock then outstanding, as a group, shall
elect a new Board designee. The UHCM Designee may be so elected by the holders
of the Company's Preferred Stock.
8.5 Co-Sale Rights. XxXxxxxxx agrees that during the period
ending upon the earlier of (i) the Company's initial public offering of
securities or the sale or merger of the Company (where the Company is not the
surviving entity and where there is a change in control); or (ii) five (5) years
from the date hereof, he will not sell any shares of XxXxxxxxx Common Stock
without notifying the Investors twenty (20) or more days prior to the closing of
such-sale and permitting the Investors to participate (through the sale of
shares of Common Stock) in such sale on a pro rata basis, treating the XxXxxxxxx
Common Stock and all of the Preferred Shares (on an as converted to Common Stock
basis) as a group. Each Investor must notify XxXxxxxxx in writing that such
Investor will participate in such sale (and sell such Investor's shares of
common Stock in strict accordance with the terms and conditions of such sale as
described in the notice) on or before ten (10) business days before the
anticipated closing of such sale, or such Investor will have no right to
participate in such sale. This Section 8.5 shall not
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24
pertain to any transfers by XxXxxxxxx to his ancestors, descendants or spouse or
to trusts for the benefit of such persons, or any bona fide gift by XxXxxxxxx;
provided, however, any shares of XxXxxxxxx Common Stock transferred in a
transaction described in this sentence shall continue to be subject to the same
co-sale obligations set forth in this Section 8.5 as if XxXxxxxxx continued to
own such shares.
8.6 Right of First Refusal on Preferred Shares. As long as
Preferred Shares are outstanding, in the event any Investor ("Selling Investor")
desires to sell his or its Preferred Shares in a bona fide sales transaction,
such Investor will notify the Company and all other Investors then owning
Preferred Shares ("Other Investors") of the terms and conditions of such sale
and each other Investor shall have the right to purchase his or its pro rata
share (based on the total Preferred Shares owned by the Other Investors) of the
Selling Investor's Preferred Shares pursuant to such terms and conditions.
Within ten (10) business days after receipt of such notice, each Other Investor
shall notify the Company and the Selling Investor of the amount of his or its
pro rata. share of the Selling Investor's Preferred Shares they desire to
purchase. In the event any Other Investor does not elect to purchase his or its
full pro rata share, the remaining Other Investors shall have the right to
purchase such shares on a pro rata basis. Notice of such additional purchases
shall be delivered to the Company and Selling Investor within twenty (20)
business days following the initial notice given by the Selling Investor. This
right of first refusal comes before the right of first refusal in the Company's
Bylaws and the Company's Bylaws will be so amended prior to the Closing.
8.7 Additional Covenants. For a period of six months from the
date hereof, the Company shall not sell additional capital stock pursuant to an
agreement containing covenants which are in addition, or greater or superior, to
those set forth herein without the approval of the Investors holding a majority
of the Preferred Shares being sold hereunder. For a period of six months from
the date hereof, the Company shall not sell shares of capital stock at a price
less than $0.40 per share without the approval of the Investors holding a
majority of the Preferred Shares being sold hereunder; provided, however, the
foregoing approval does not pertain to the shares referred to in Section
2.2(c)(ii) hereof. As long as Preferred Shares remain outstanding, the Company
shall not grant registration rights superior to those granted to the Investors
in Sections 7.1 -- 7.15 hereof without the consent of the Investors holding a
majority of the Preferred Shares outstanding.
9. Miscellaneous.
9.1 Survival of Warranties. The warranties, representations and
covenants of the Company and the Investors contained in or made pursuant to this
Agreement shall survive the
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execution and delivery of this Agreement and the Closing and shall in no way be
affected by any investigation of the subject matter thereof made by or on behalf
of the Investors or the Company.
9.2 Successors and Assigns. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
9.3 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of California.,
9.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.5 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
9.6 Notices. Except as otherwise expressly provided herein, any
notice required or permitted hereunder shall be given in writing and it or any
certificates or other documents delivered hereunder shall be deemed effectively
given or delivered (as the case may be) upon personal delivery (professional
courier permissible) or when mailed by receipted United states certified mail
delivery, five (5) business days after deposit in the United States mail. Such
certificates, documents or notice may be personally delivered or sent to the
following address: (a) if to a Investor, to the address set forth with respect
to such investor on Exhibit B attached hereto, or to such other address of which
such investor shall have given notice pursuant hereto the Company, or (b) if to
the Company, to CyberSource Corporation, 0000 Xxxxxxxx Xxxxxx, Xxxxx Xxxx,
Xxxxxxxxxx 00000, or to such other address of which the Company shall have given
notice pursuant hereto.
9.7 Finder's Fee. Each Investor severally agrees to indemnify and
hold harmless the Company from any liability for any commission or compensation
in the nature of a finder's fee (and the costs and expenses of defending against
such liability or asserted liability) for which such investor or any of its
officers, partners, employees or representatives is responsible.
The Company agrees to indemnify and hold harmless each Investor from
any liability for any commission or compensation in the nature of a finder's fee
(and the costs and expenses of
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26
defending against such liability or asserted liability) for which the Company or
any of its officers, employees or representatives is responsible.
9.8 Expenses. Each party to this Agreement shall bear its own
expenses incurred in connection with the negotiation, preparation, execution and
consummation of this Agreement, including the fees, expenses and disbursements
of its respective legal counsel incurred in connection herewith.
9.9 Amendments and Waivers. Except as specified in Section 7.14,
any term of this Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and the holders of at least 66-2/3% of shares of the Common Stock issued or
issuable upon conversion of the Preferred Shares; provided, however, the
conditions to Closing set forth in Section 5 hereof may only be amended by
unanimous agreement of the Investors.
9.10 Severability. If one or more provision of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of this Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
9.11 Aggregation of Stock. All Preferred Shares (or Common Stock
issued on conversion thereof) hold or acquired by affiliated entities or persons
shall be aggregated together for the purpose of determining the availability of
any rights under this Agreement.
9.12 Confidentiality Agreement. Each Investor and any successor
or assign of such Investor who receives from the Company or its agents, directly
or indirectly, any information which the Company has not made generally
available to the public, pursuant to the preparation and execution of this
Agreement or disclosure in connection therewith or pursuant to the provisions of
Section 8 hereof, acknowledges and agrees that such information is confidential
and for its use only in connection with evaluating its investment in the
company, and further agrees that it will not disseminate such information to any
person other than its accountant, investment advisor or attorney and that such
dissemination shall be only for purposes of evaluating its investment.
9.13 Entire Agreement. This Agreement and the other documents and
agreements delivered pursuant hereto constitute the full and entire
understanding and agreement among the parties with regard to the subjects hereof
and thereof and supersedes any prior agreements (including any memorandum of
understanding or
- 26 -
27
letters of intent) between the parties regarding the subject matter hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
Solely with respect to the "Company"
agreements made in Sections
7.1--7.15 and 8.5 hereof: CYBERSOURCE CORPORATION, a
California corporation
------------------------------ By:
Xxxxxxx X. XxXxxxxxx -------------------------------
Name:
-----------------------------
Title:
----------------------------
"Investors"
UNTERBERG HARRIS CAPITAL MANAGEMENT
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
WA&H INVESTMENT, L.L.C.
BY: XXXXXXX, XXXXXX & XXXXXXXXX
GROUP, L.L.C., MANAGING MEMBER
By:
--------------------------------------
Xxxxxxx X. Xxxxxxx
Title: CEO
MIEHAUS XXXX XXXXXX
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
-----------------------------------------
XXXXXX X. XXXXXXX
-----------------------------------------
XXXXX X. XXXXXXXXX
-----------------------------------------
R. XXXXXXX XXXXXXX, JR.
/s/ XXXXX XXXXXXXXX
-----------------------------------------
XXXXX XXXXXXXXX
/s/ XXXXXX XXXXXXX
-----------------------------------------
XXXXXX XXXXXXX
-----------------------------------------
W. DANA LA FORGE
/s/ XXXXXX X. XXXXXX, XX.
-----------------------------------------
Xxxxxx X. Xxxxxx, Xx.
- 27 -
28
CYBERSOURCE CORPORATION
SERIES A PREFERRED
STOCK PURCHASE AGREEMENT
THIS SERIES A PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement") is
made as of the 27th day of February 1996 by and between CYBERSOURCE CORPORATION,
a California corporation (the "Company") and the purchasers listed on the
signature pages hereto under the heading "Investors," each of whom is herein
referred to as an "Investor."
In consideration of the mutual promises, covenants and conditions
hereinafter set forth, the parties hereby agree as follows:
1 . Purchase and Sale of Series A Preferred Stock.
1.1. Sale and Issuance of Series A Preferred Stock. Subject to
the terms and conditions of this Agreement, each Investor agrees severally to
purchase, and the Company agrees to sell and issue to each Investor, the number
of shares of Series A Preferred Stock (the "Preferred Shares"), set forth
opposite such Investor's name on the Schedule of Investors attached as Exhibit A
to this Agreement (the "Schedule of Investors"), for an aggregate of 548,020
Preferred Shares at a purchase price of $0.91 per share, for the purchase price
shown opposite such Investor's name on the Schedule of Investors (for an
aggregate purchase price of $498,697).
1.2. Closing.
(a) The purchase and sale of the Preferred Shares shall take
place at the offices of Xxxxxxx Xxxxx Xxxx & Black, LLP, 00 X. Xxxxxx Xxxxxx,
Xxx Xxxx, Xxxxxxxxxx 00000 on 199 or at such other time and place as
the Company and Investors mutually agree upon (which time and place are
designated as the "Closing"). At the Closing, the Company will deliver to the
Investors stock certificates representing 548,020 Preferred Shares against
payment of the purchase price therefor of $0.91 per share by wire transfers of
funds or cancellation of indebtedness as set forth on the Schedule of Investors.
(b) Any cancellation of indebtedness in accordance with
subsection (a) of this Section 1.2 shall be effected by means of surrender to
the Company at the Closing of the debt instrument evidencing such indebtedness
(if any), which instrument together with any rights or claims pursuant to such
instrument shall be cancelled and extinguished upon such surrender without any
further action on the part of the Company or the Investor.
29
2. Representations and Warranties of Each Investor. Each Investor
hereby severally and not jointly represents and warrants that:
2.1. Purchase Entirely for Own Account. This Agreement is made
with each Investor in reliance upon such Investor's representation to the
Company, which by such Investor's execution of this Agreement such Investor
hereby confirms, that the Preferred Shares to be received by such Investor
hereunder will be acquired for investment for such Investor's own account, not
as a nominee or agent, and not with a view to the resale or distribution of any
part thereof, and that such Investor has no present intention of selling,
granting any participation in, or otherwise distributing the same. By executing
this Agreement, each Investor purchasing Preferred Shares hereunder further
represents that such Investor does not have any contract, undertaking, agreement
or arrangement with any person to sell, transfer or grant participations to such
person or to any third person, with respect to any of the Preferred Shares, or
any portion thereof. Each Investor that is an entity represents that it has full
power and authority to enter into this Agreement.
2.2. Disclosure of Information. Each Investor believes he or it
has received all the information it considers necessary or appropriate for
deciding whether to purchase the Preferred Shares. Each such Investor further
represents that it has had an opportunity to ask questions and receive answers
from the Company regarding the terms and conditions of the offering of the
Preferred Shares.
2.3. Investment Experience. Each Investor is an investor in
securities of companies in the development stage and acknowledges that it is
able to fend for itself, can bear the economic risk of its investment and has
such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment in the Preferred
Shares. If other than an individual, Investor also represents it has not been
organized solely for the purpose of acquiring the Preferred Shares.
2.4. Restricted Securities. Each Investor purchasing Preferred
Shares hereunder understands that the Preferred Shares are characterized as
"restricted securities" under the federal securities laws inasmuch as they are
being acquired from the Company in a transaction not involving a public offering
and that under such laws and applicable regulations such Preferred Shares may be
resold without registration under the Securities Act only in certain limited
circumstances. In this connection each Investor represents that he or it is
familiar with Securities and Exchange Commission ("SEC") Rule 144, as presently
in effect, and understands the resale limitations imposed thereby and by the
Securities Act.
2.5. Further Limitations on Disposition. Without in any way
limiting the representations set forth above, each Investor purchasing Preferred
Shares hereunder further agrees not to make any disposition of all or any
portion of the Preferred Shares (or the common stock issuable upon the
conversion of the Preferred Shares) unless and until:
(a) There is then in effect a registration statement under
the Securities Act covering such proposed disposition and such disposition is
made in accordance with such registration statement; or
- 2 -
30
(b) (i) Such Investor shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, (ii) if
reasonably requested by the Company, such Investor shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration of such Preferred Shares under
the Securities Act and (iii) if reasonably requested by the Company, the
transferee shall have furnished to the Company its agreement to abide by the
restrictions on transfer set forth herein as if it were a purchaser hereunder.
2.6. Accredited Investor. The term "Accredited Investor" as used
in Sections 2.6. 2.7 and 2.8 refers to a person or entity who:
(a) is a director or executive officer of the Company; or
(b) is a natural person whose individual net worth, or joint
net worth with his or her spouse, at the time of purchase exceeds $1,000,000,
and the total purchase price does not exceed ten percent (10%) of his or her
individual net worth, or joint net worth with his or her spouse, at the time of
sale; or
(c) is a natural person who had an individual income in
excess of $200,000 in each of the two most recent years or joint income with
that person's spouse in excess of $300,000 in each of those years and reasonably
expects to reach the same income level in the current year, and the total
purchase price does not exceed ten percent (10%) of his or her individual net
worth, or joint net worth with his or her spouse, at the time of sale; or
(d) is a private business development company as defined in
section 20(b)(22) of the Investment Advisors Act of 1940; or
(e) is either (i) a bank as defined in section 3(a)(2) of
the Securities Act, or a savings and loan association or other institution as
defined in section 3(a)(5)(A) of the Securities Act whether acting in its
individual or fiduciary capacity; (ii) a broker or dealer registered pursuant to
section 15 of the Securities Exchange Act of 1934; (iii) an insurance company as
defined in section 2(13) of the Securities Act; (iv) an investment company
registered under the Investment Company Act of 1940 or a business development
company as defined in section 2(a)(48) of that Act; (V) a Small Business
Investment Company licensed by the U.S. Small Business Administration under
section 301(c) or (d) of the Small Business Investment Act of 1958; or (vi) an
employee benefit plan within the meaning of Title I of the Employee Retirement
Income Security Act of 1974, if the investment decision is made by a plan
fiduciary, as defined in section 3(21) of such Act, which is either a bank,
savings and loan association, insurance company, or registered investment
adviser, or if the employee benefit plan has total assets in excess of
$5,000,000 or, if a self-directed plan, with investment decisions made solely by
persons that are Accredited Investors; or
(f) is any organization described in section 501(c)(3) of
the Internal Revenue Code, corporation, Massachusetts or similar business trust,
or partnership, not formed
- 3 -
31
for the specific purpose of acquiring the Shares offered, with total assets in
excess of $5,000,000; or
(g) is any trust, with total assets in excess of $5,000,000,
not formed for the specific purpose of acquiring the Shares offered, whose
purchase is directed by a sophisticated person as described in Regulation
230.506(b)(2)(ii) promulgated under the Securities Act; or
(h) is an entity in which all of its equity owners meet one
or more of the standards set forth in (a) through (g) above.
As used in this Section 2.6, the term "net worth" means the excess of
total assets over total liabilities, and "income" means actual economic income,
which may differ from adjusted gross income for federal income tax purposes.
2.7. Representations and Warranties as to Accredited Investors and
Excluded Purchasers Status. Each Investor as to himself or itself, severally and
not jointly, further represents to the Company that such Investor is (i) an
Accredited Investor and (ii) an excluded purchaser (as such term is described in
Section 260.102.13 of Title 10 of the California Code of Regulations or section
25102(f) of the California Corporate Securities Law of 1968).
2.8. Legends. To the extent applicable, each certificate or other
document evidencing any of the Preferred Shares issued hereunder or any Common
Stock issued upon conversion of the Preferred Shares shall be endorsed with the
legends set forth below, and such Investor covenants that, except to the extent
such restrictions are waived by the Company, such Investor shall not transfer
the securities without complying with the restrictions on transfer described in
the legends endorsed thereon:
(a) The following legend under the Securities Act:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED ABSENT AN EFFECTIVE
REGISTRATION THEREOF UNDER SUCH ACT OR COMPLIANCE WITH RULE 144
PROMULGATED UNDER SUCH ACT, OR UNLESS THE COMPANY HAS RECEIVED AN
OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT
SUCH REGISTRATION IS NOT REQUIRED."
(b) If required by the authorities of any state in
connection with the issuance or sale of the Preferred Shares, the legend
required by such state authority.
The Company shall not be required (i) to transfer on its books any
Preferred Shares which shall have been transferred in violation of any of the
provisions set forth in this Agreement, or
- 4 -
32
(ii) to treat as owner of such Preferred Shares or to accord the right to vote
as such owner or to pay dividends to any transferee to whom such Preferred
Shares shall have been so transferred.
2.9. Removal of Legends.
(a) Any legend endorsed on a certificate pursuant to Section
2.8 hereof shall be removed (i) if Preferred Shares represented by such
certificate shall have been effectively registered under the Securities Act or
otherwise lawfully sold in a public transaction, (ii) if such Preferred Shares
may be transferred in compliance with Rule 144(k) promulgated under the
Securities Act, or (iii) if the holder of such Preferred Shares shall have
provided the Company with an opinion from counsel, in form and substance
acceptable to the Company and from attorneys reasonably acceptable to the
Company, stating that a public sale, transfer or assignment of such Preferred
Shares may be made without registration.
(b) Any legend endorsed on a certificate pursuant to Section
2.8(b) hereof shall be removed if the Company receives an order of the
appropriate state authority authorizing such removal or if the holder of the
Preferred Shares provides the Company with an opinion of counsel, in form and
substance acceptable to the Company and from attorneys reasonably acceptable to
the Company, stating that such state legend may be removed.
3. California Commissioner of Corporations.
3.1. Corporate Securities Law. THE SALE OF THE SECURITIES WHICH
ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER
OF CORPORATIONS, OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES
OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO
SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM
QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS
CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON
SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.
4. Miscellaneous.
4.1. Survival of Warranties. The warranties, representations and
covenants of the Investors contained in or made pursuant to this Agreement shall
survive the execution and delivery of this Agreement and the Closing.
4.2. Successors and Assigns. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
- 5 -
33
4.3. Governing Law. This Agreement shall be governed by and
construed under the laws of the State of California.
4.4. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
4.5. Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
4.6. Notices. Except as otherwise expressly provided herein, any
notice required or permitted
4.7. Finder's Fee. Each Investor severally agrees to indemnify
and hold harmless the Company from any liability for any commission or
compensation in the nature of a finder's fee (and the costs and expenses of
defending against such liability or asserted liability) for which such Investor
or any of its officers, partners, employees or representatives is responsible.
The Company agrees to indemnify and hold harmless each Investor from any
liability for any commission or compensation in the nature of a finder's fee
(and the costs and expenses of defending against such liability or asserted
liability) for which the Company or any of its officers, employees or
representatives is responsible.
4.8. Expenses. Each party to this Agreement shall bear its own
expenses incurred in connection with the negotiation, preparation, execution and
consummation of this Agreement, including the fees, expense disbursements
of its respective legal counsel incurred in connection herewith.
4.9. Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
at least 66-2/3% of shares of the Common Stock issued or issuable upon
conversion of the Preferred Shares.
4.10. Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of this Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
4.11. Entire Agreement. This Agreement and Amendment No. I to
Series A Preferred Stock Purchase Agreement of even date herewith and the other
documents and agreements delivered pursuant hereto constitute the full and
entire understanding and agreement among the parties with regard to the subjects
hereof and thereof and supersedes any prior agreements (including any memorandum
of understanding or letters of intent) between the parties regarding the subject
matter hereof.
- 6 -
34
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
"Company"
CYBERSOURCE CORPORATION, a California
corporation
By:_____________________________________
Name:___________________________________
Title:__________________________________
"Investors"
UNTERBERG HARRIS CAPITAL PARTNERS I,
L.P.
By:_____________________________________
Name:___________________________________
Title:__________________________________
WA&H INVESTMENT, INC.
By:_____________________________________
Name:___________________________________
Title:__________________________________
XXXXXXX XXXX XXXXXX PUBLIC RELATIONS,
INC.
By:_____________________________________
Name:___________________________________
Title:__________________________________
- 7 -
35
CYBERSOURCE CORPORATION
AMENDMENT NO. I SERIES A PREFERRED
STOCK PURCHASE AGREEMENT
REFERENCE IS HEREBY MADE TO THAT CERTAIN SERIES A PREFERRED STOCK
PURCHASE AGREEMENT (the "Agreement") dated as of the 6th day of January, 1995 by
and between CYBERSOURCE CORPORATION, a California corporation (the "Company"),
XXXXXXX X. XXXXXXXXX ("XxXxxxxxx"), Xxxxxxxxx Xxxxxx Capital Partners I, L.P.
("Unterberg"), WA&H Investment L.L.C. ("WA&H") and each of the other purchasers
listed on the signature pages thereto under the heading "Investors"
(collectively with Unterberg and WA&H, the "Investors"). All capitalized terms
used herein and not otherwise defined shall have the meaning ascribed to them in
the Agreement.
In consideration of the mutual promises, covenants and conditions
hereinafter set forth, the parties hereby agree as follows:
1. Section 7.1 (b) of the Agreement is hereby deleted and the following
is substituted in its place: "(b) The term "Registrable
Securities" means (i) the Common Stock issuable or issued upon
conversion of any shares of Series A Preferred Stock, (ii) all
Common Stock owned by XxXxxxxxx (or transferred by XxXxxxxxx to
his ancestors, descendants or spouse or to trusts for the benefit
of such persons) (the "XxXxxxxxx Common Stock") and (iii) any
Common Stock of the Company issued as (or issuable upon the
conversion or exercise of any warrant, right or other security
which is issued as) a dividend or other distribution with respect
to, or in exchange for or in replacement of, such shares of
Series A Preferred Stock or XxXxxxxxx Common Stock, excluding in
all cases, however, any Registrable Securities sold by a person
in a transaction in which his registration rights are not
assigned;"
2. Section 8.6 of the Agreement is hereby deleted and the following is
substituted in its place: "Right of First Refusal on Shares of
Series A Preferred Stock. As long as shares of Series A Preferred
Stock are outstanding, in the event any Investor ("Selling
Investor") desires to sell his or its shares of Series A
Preferred Stock in a bona fide sales transaction, such Investor
will notify the Company and all other Investors then owning
shares of Series A Preferred Stock ("Other Investors") of the
terms and conditions of such sale and each Other Investor shall
have the right to purchase his or its pro rata share (based on
the total number of shares of Series A Preferred Stock owned by
the Other Investors) of the Selling Investor's shares of Series A
Preferred Stock pursuant to such terms and conditions. Within ten
(10) business days after receipt of such notice, each Other
Investor shall notify the Company and the Selling Investor
36
terms and conditions. Within ten (10) business days after receipt
of such notice, each Other Investor shall notify the Company and
the Selling Investor of the amount of his or its pro rata share
of the Selling Investor's shares of Series A Preferred Stock they
desire to purchase. In the event any Other Investor does not
elect to purchase his or its full pro rata share, the remaining
Other Investors shall have the right to purchase such shares on a
pro rata basis. Notice of such additional purchases shall be
delivered to the Company and Selling Investor within twenty (20)
business days following the initial notice given by the Selling
Investor. This right of first refusal comes before the right of
first refusal in the Company's Bylaws."
3. The Agreement as amended by this Amendment is in full force and
effect and is hereby in all respects ratified and confirmed. References in the
Agreement to "this Agreement" and to the words such as "herein," "hereinafter,"
"hereof," "hereunder," and any words of similar import shall refer to the
Agreement as amended by this Amendment No. 1.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
th day of 199 ,
"Company"
CYBERSOURCE CORPORATION, a California
corporation
_____________________________________
Xxxxxxx X. XxXxxxxxx
By:_______________________________________
Name:_____________________________________
Title:____________________________________
"Investors"
UNTERBERG HARRIS CAPITAL MANAGEMENT
By:_______________________________________
Name:_____________________________________
Title:____________________________________
WA&H INVESTMENT, L.L.C.
BY: XXXXXXX, XXXXXX & XXXXXXXXX
GROUP, L.L.C., MANAGING MEMBER
By:_______________________________________
XXXXXXX XXXX XXXXXX PUBLIC RELATIONS, INC.
By: /s/ XXXXXXX XXXX
---------------------------------------
Name: Xxxxxxx Xxxx
--------------------------------------
Title: Chairman
------------------------------------
-------------------------------------------
XXXXXX X. XXXXXXX
-------------------------------------------
XXXXX X. XXXXXXXXX
-------------------------------------------
R. XXXXXXX XXXXXXX, JR.
-------------------------------------------
XXXXX XXXXXXXXX
-------------------------------------------
XXXXXX XXXXXXX
/s/ XXXXXX XXXXXXX
-------------------------------------------
XXXXXX XXXXXXX
-------------------------------------------
W. DANA LA FORGE
-------------------------------------------
XXXXXX X. XXXXXX, XX.
- 2 -
37
CYBERSOURCE CORPORATION
AMENDMENT NO. 2 TO SERIES A PREFERRED
STOCK PURCHASE AGREEMENT
REFERENCE IS HEREBY MADE TO THAT CERTAIN SERIES A PREFERRED STOCK
PURCHASE AGREEMENT dated as of the day of , 199 by and between
CYBERSOURCE CORPORATION, a California corporation (the "Company"), XXXXXXX X.
XXXXXXXXX ("XxXxxxxxx"), Xxxxxxxxx Xxxxxx Capital Partners I, L.P.
("Unterberg"), WA&H Investment L.L.C. ("WA&H") and each of the other purchasers
listed on the signature pages thereto under the heading "Investors"
(collectively with Unterberg and WA&H, the "Investors"), as amended by Amendment
No. I thereto dated as of , 199 (the "Agreement"). All capitalized
terms used herein and not otherwise defined shall have the meaning ascribed to
them in the Agreement.
In consideration of the mutual promises, covenants and conditions
hereinafter set forth, and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the parties hereby agree
as follows:
1. Section 8.5 of the Agreement is hereby deleted and the following is
substituted in its place:
"XxXxxxxxx agrees that during the period ending upon the earlier of
(i) the Company's initial public offering of securities or the sale or
merger of the Company (where the Company is not the surviving entity
and where there is a change in control); or (ii) five (5) years from
the date hereof, he will not sell any shares of XxXxxxxxx Common Stock
without notifying the Investors twenty (20) or more days prior to the
closing of such sale and permitting the Investors to participate
(through the sale of shares of Common Stock) in such sale on a pro
rata basis, treating the XxXxxxxxx Common Stock, all of the Preferred
Shares (on an as converted to Common Stock basis) and all of the
issued and outstanding shares of the Company's Series B Preferred
Stock (the "Series B Preferred Stock") (on an as converted to Common
Stock basis) as a group. Each Investor must notify XxXxxxxxx in
writing that such Investor will participate in such sale (and sell
such Investor's shares of Common Stock in strict accordance with the
terms and conditions of such sale as described in the notice) on or
before ten (10) business days before the anticipated closing of such
sale, or such Investor will have no right to participate in such sale.
This Section 8.5 shall not pertain to any transfers by XxXxxxxxx to
his ancestors, descendants or spouse or to trusts for the benefit of
such persons, or any bona fide gift by XxXxxxxxx; provided, however,
any shares of XxXxxxxxx Common Stock transferred in a transaction
described in this sentence shall continue to be subject to the same
co-sale obligations set forth in this Section 8.5 as if XxXxxxxxx
continued
38
to own such shares."
2. Section 8.6 of the Agreement is hereby deleted and the following is
substituted in its place:
"Right of First Refusal on Shares of Series A Preferred Stock. As long
as shares of Series A Preferred Stock are outstanding, in the event
any Investor ("Selling Investor") desires to sell his or its shares of
Series A Preferred Stock in a bona fide sales transaction, such
Investor will notify the Company, all other Investors then owning
shares of Series A Preferred Stock and all holders of shares of the
Company's Series B Preferred Stock (collectively, "Other Investors")
of the terms and conditions of such sale and each Other Investor shall
have the right to purchase his or its pro rata share (based on the
total number of shares of Series A Preferred Stock or Series B
Preferred Stock owned by the Other Investors) of the Selling
Investor's shares of Series A Preferred Stock pursuant to such terms
and conditions. Within ten (10) business days after receipt of such
notice, each Other Investor shall notify the Company and the Selling
Investor of the amount of his or its pro rata share of the Selling
Investor's shares of Series A Preferred Stock they desire to purchase.
In the event any Other Investor does not elect to purchase his or its
full pro rata share, the remaining Other Investors shall have the
right to purchase such shares on a pro rata basis. Notice of such
additional purchases shall be delivered to the Company and Selling
Investor within twenty (20) business days following the initial notice
given by the Selling Investor. This right of first refusal comes
before the right of first refusal in the Company's Bylaws."
3.The Agreement as amended by this Amendment is in full force and
effect and is hereby in all respects ratified and confirmed. References in the
Agreement to "this Agreement" and to the words such as "herein," "hereinafter,"
"hereof," "hereunder," and any words of similar import shall refer to the
Agreement as amended by this Amendment No. 2.
- 2 -
39
IN WITNESS WHEREOF, the parties have executed this Agreement as of the ___th day
of 199
"Company"
CYBERSOURCE CORPORATION, a California
corporation
__________________________________________
Xxxxxxx X. XxXxxxxxx
By:_______________________________________
Name:_____________________________________
Title:____________________________________
By:_______________________________________
Name:_____________________________________
Title:____________________________________
By:_______________________________________
Name:_____________________________________
Title:____________________________________
By:_______________________________________
Name:_____________________________________
Title:____________________________________
By:_______________________________________
Name:_____________________________________
Title:____________________________________
- 3 -
40
CYBERSOURCE CORPORATION
AMENDMENT NO.3 TO SERIES A PREFERRED
STOCK PURCHASE AGREEMENT
REFERENCE IS HEREBY MADE TO THAT CERTAIN SERIES A PREFERRED STOCK
PURCHASE AGREEMENT dated as of the day of 199 by and between
CYBERSOURCE CORPORATION, a California corporation (the "Company"), XXXXXXX X.
XXXXXXXXX ("XxXxxxxxx"), Xxxxxxx Xxxx Xxxxxx Public Relations, Inc. and each of
the other purchasers listed on the signature pages thereto under the heading
"Investors" (collectively, the "Investors"), as amended by Amendment No. I
thereto dated as of , 199 and Amendment No. 2 thereto dated as
of , 199 (the "Agreement"). All capitalized terms used herein and not
otherwise defined shall have the meaning ascribed to them in the Agreement.
In consideration of the mutual promises, covenants and conditions
hereinafter set forth, and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the parties hereby agree
as follows:
Section 7 of the Agreements hereby deleted in its entirety and the
following is substituted in its place:
7. Registration Rights. The Company covenants and agrees as follows:
7.1. Definitions. For purposes of this Section 7:
(a) The terms "register," "registered," and "registration"
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Securities Act, and the
declaration or ordering of effectiveness of such registration statement or
document;
(b) The term "Registrable Securities" means (i) the Common
Stock issuable or issued upon conversion of the Preferred Shares being purchased
hereunder (ii) any Common Stock of the Company issued as (or issuable upon the
conversion or exercise of any warrant, right or other security which is issued
as) a dividend or other distribution with respect to, or in exchange for or in
replacement of, such Preferred Shares, excluding in all cases, however, any
Registrable Securities sold by a person in a transaction in which his
registration rights are not assigned and (iii) all shares of Common Stock which
the Investors and their permitted assignees may hereafter purchase (or shares of
Common Stock issuable upon exercise or conversion of securities hereafter
purchased) pursuant to their rights of first refusal or otherwise;
(c) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of Common Stock
outstanding which are, and the number
41
of shares of Common Stock issuable pursuant to the exercisable or convertible
securities which are exercisable or convertible into, Registrable Securities;
(d) The term "Holder" means any person owning or having the
right to acquire Registrable Securities or any assignee thereof in accordance
with Section 7.12 hereof. It is acknowledged and agreed by the parties that the
registration rights contained in this Section 7 are pari-passu with and are not
superior to the registration rights granted pursuant to the Series B Purchase
Agreements;
(e) The term "Series B Holder" shall mean a Holder under
that certain Series B Preferred Stock Purchase Agreement dated as of ,
199 by and among the Company and the "Investors" set forth therein or any
subsequent Series B Preferred Stock Purchase Agreement entered into by the
Company in respect of the sale of shares of its Series Preferred Stock.
7.2. Request for Registration.
(a) If the Company shall receive at any time after one (1)
year following the closing of the Company's initial public offering of
securities a written request from Holders holding at least forty percent (40%)
of the Registrable Securities then outstanding (the "Initiating Holders") that
the Company file a registration statement under the Securities Act covering the
registration in an underwritten public offering of at least 40% of the
Registrable Securities then outstanding and such registration would cover sales
having an anticipated aggregate offering price, net of underwriting discounts
and commissions, equal to or more than $7,500,000, then the Company shall,
within twenty-one (21) days of the receipt thereof, give written notice of such
request to all Holders and Series B Holders and shall, subject to the
limitations of subsection 7.2(b), file as soon as practicable a registration
statement under the Securities Act covering all Registrable Securities which the
Holders and Series B Holders request to be registered within twenty (20) days of
the mailing of such notice by the Company in accordance with Section 9.6.
(b) Notwithstanding the foregoing, the Company shall not be
obligated to take any action to effect any such registration pursuant to this
Section 7.2:
(i) in any particular jurisdiction in which the Company
would be required to execute a general consent to service of process in
effecting such registration, unless the Company is already subject to service in
such jurisdiction and except as may be required by the Securities Act;
(ii) if the Company shall have initiated one (1)
registration pursuant to this Section 7.2 and the applicable registration
statement has been declared effective by the SEC and remained effective until
the earlier of (A) such time as all of the Registrable Securities included by
the Holders in such registration have been sold or disposed of by them or (B)
the expiration of the period described in Section 7.4(a). In addition, a request
for registration shall not be deemed to constitute a registration for purposes
of this subparagraph if: (I) the conditions to closing specified in the purchase
agreement or underwriting agreement entered into in connection with such
registration are not satisfied other than by reason of some act or omission by
the Holders requesting such registration; (II) the Company voluntarily takes any
action that would result in the Holder not being able to sell such Registrable
Securities covered thereby during the period during which the registration
statement must be kept effective; or (III) if, after
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it has become effective, such registration becomes subject to any stop order,
injunction or other order or requirement of the SEC or other governmental
agency or court and such order, injunction or requirement is not promptly
withdrawn or lifted, and such registration has not otherwise remained effective
for the relevant period (including effective periods both before and after the
order, injunction or requirement is made or imposed); or
(iii) any time after five (5) years immediately
following the Closing and one year following the Company's initial registered
firm commitment public offering on Form S-1 with an aggregate offering price of
at least $7,500,000.
(c) Subject to the foregoing paragraph 7.2(b), the Company
shall file a registration statement as soon as possible after receipt of the
request or requests of the Initiating Holders under this Section 7.2; provided,
however, that if the Company shall furnish to such Initiating Holders within
sixty (60) days of receipt of such request a certificate signed by the President
of the Company stating that in the good faith judgment of the Board of Directors
of the Company (as evidenced by a board resolution) it would be significantly
detrimental to the Company and its shareholders for such registration statement
to be filed on or before the date filing would be required and it is therefore
essential to defer the filing of such registration statement, the Company shall
have the right to defer such filing to a date not later than one hundred twenty
(120) days after receipt of such request, provided that the Company will not
exercise this right more than once in any twelve-month period.
(d) The underwriting shall be managed by an underwriter or
underwriters of national reputation selected by the Initiating Holders, which
selection shall be subject to the consent of the Company, which consent shall
not be unreasonably withheld. The right of any Holder to registration pursuant
to Section 7.2 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting. The Company shall (together with all Holders and Series B Holders
proposing to distribute their securities through such underwriting) enter into
an underwriting agreement in customary form with the underwriter or underwriters
selected as above provided. Notwithstanding any other provision of this Section
7.2, if the underwriters advise the Initiating Holders and the Company in
writing that marketing factors require a limitation of the number of shares to
be underwritten and that the total amount of securities that all Holders and
Series B Holders (initiating and non-initiating) request pursuant to this
Section 7.2(d) to be included in such offering exceeds the amount of securities
that the underwriters reasonably believe compatible with the success of the
offering, the Company shall so advise all Holders and all of the shares to be
included in the registration shall be allocated among all Holders and Series B
Holders requesting inclusion (initiating and non-initiating) pro rata. according
to the total amount of securities entitled to be included in such registration
owned by each Holder and each Series B Holder requesting inclusion (initiating
or non-initiating) or in such other proportions as shall be mutually agreed by
such selling shareholders; provided, however, that in the event of such an
allocation XxXxxxxxx may not include more than 35% of the shares to be included
in such registration statement by all selling shareholders without the consent
of the holders of the majority of the shares requesting inclusion in the
registration. For the purposes of this Section 7.2(d) and Section 7.8 of this
Agreement, the language in such sections referring to XxXxxxxxx'x right to
participate as a selling shareholder at the 35% level means that all XxXxxxxxx
Shares (as defined in this Agreement) included in such a registration, whether
held by XxXxxxxxx or a transferee of XxXxxxxxx, shall be counted against such
35% limit. In addition, the language in Section 7.2 (d) and Section 7.8 of this
Agreement referring to the ability of the holders of a
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majority of the shares requesting inclusion in a registration to waive such 35%
limit means that only the holders of a majority of such shares, calculated
without regard to any XxXxxxxxx shares, may effect such a waiver.
If any person does not agree to the terms of any such underwriting, he
shall be excluded therefrom by written notice from the Company or the
underwriter. Any Registrable Securities or other securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration. If
shares are so withdrawn from the registration, the Company shall then offer to
all persons who have retained the right to include securities in the
registration the right to include additional securities in the registration in
an aggregate amount equal to the number of shares so withdrawn, with such shares
to be allocated among the persons requesting additional inclusion pro rata
according to the total amount of securities entitled to be included in such
registration owned by each such person or in such other proportions as shall be
mutually agreed by such selling shareholders.
7.3. Company Registration. If (but without any obligation to do so) at
any time after the date of the Closing hereunder the Company proposes to
register (including for this purpose a registration effected by the Company for
shareholders other than the Holders of Registrable Securities except a
registration in which the Holders have the right to include Registrable
Securities under Section 7.2) any of its stock or other securities under the
Securities Act in connection with the public offering of such securities solely
for cash (other than a registration relating solely to the sale of securities to
participants in a Company stock plan, or a registration relating to shares to be
issued in connection with the acquisition of another company, or a registration
on any form which does not include substantially the same information as would
be required to be included in a registration statement covering the sale of the
Registrable Securities), the Company shall, at such time, promptly give each
Holder of Registrable Securities written notice of such registration. Upon the
written request of each Holder of Registrable Securities given within twenty
(20) days after the effectiveness of such notice by the Company in accordance
with Section 9.6, the Company shall, subject to the provisions of Section 7.8,
cause to be registered under the Securities Act all of the Registrable
Securities that each such Holder of Registrable Securities has requested to be
registered.
7.4. Obligations of the Company. Whenever required under this Section
7 to effect the registration of any Registrable Securities, the Company shall,
as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective (but in no event later than 120
days after the initial request for registration), and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder, keep
such registration statement effective for up to one hundred twenty (120) days,
plus a period equal to any period during which the Holders are prohibited from
making sales because of any stop order, injunction or other order or requirement
of the SEC or any other governmental agency or court or a period during which
the happening of any event which makes any statement made in the registration
statement, the prospectus or any document incorporated therein by reference
untrue or misleading in any material respect until a curative amendment or
supplement is filed and furnished to the Holders; provided, however, that before
filing a registration statement or prospectus or any amendments or supplements
thereto (including documents that would be incorporated or deemed to be
incorporated therein by reference) the Company will furnish to the
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Holders of the Registrable Securities covered by such registration and, the
underwriters, and any attorney, accountant or other agent retained by the
Holders of Registrable Securities covered by such registration statement or
underwriters copies of all such documents proposed to be filed, which documents
will be subject to the reasonable and timely review and comment of such Holders,
such counsel and underwriters, if any, and the Company will not file any
registration statement or any amendment thereto or any prospectus or any
supplement thereto filed in connection with a registration pursuant to Section
7.2 (including such documents incorporated by reference and proposed to be filed
after the initial filing of the registration statement) to which the Holders of
a majority of the Registrable Securities covered by such registration statement
or the underwriters, if any, shall reasonably and timely object;
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement;
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus and all amendments and
supplements thereto, in conformity with the requirements of the Securities Act,
and such other documents as they may reasonably request in order to facilitate
the disposition of Registrable Securities owned by them;
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as shall be reasonably requested by the
Holders of Registrable Securities, provided that the Company shall not be
required in connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any such states
or jurisdictions; and
(e) Enter into and perform its obligations under an
underwriting agreement, in usual and customary form, with the managing
underwriter of such offering. Each Holder of Registrable Securities
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
7.5. Furnish Information. It shall be a condition precedent to
the obligations of the Company to take any action pursuant to this Section 7
that the selling Holders of Registrable Securities shall furnish to the Company
such information regarding themselves, the Registrable Securities held by them,
and the intended method of disposition of such securities as shall be required
to effect the registration of the Registrable Securities.
7.6. Expenses of Demand Registration. All expenses other than
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Section 7.2, including
(without limitation) all registration, filing and qualification fees, printers'
and accounting fees, fees and disbursements of counsel for the Company, and the
reasonable fees and disbursements (not to exceed $35,000) of one counsel for the
selling Holders and selling Series B Holders shall be borne by the Company;
provided, however, that the Company shall not be required to pay for any
expenses of any registration proceeding begun pursuant to Section 7.2 if the
registration request is subsequently withdrawn at the request of the Holders
(initiating and non-initiating) holding a majority of the Registrable Securities
to be registered (in which case all participating Holders shall bear such
expenses), unless the Holders of at least 66-2/3% of the Registrable Securities
agree to forfeit their right to initiate one demand
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registration pursuant to Section 7.2. (provided that if immediately prior to
the time of such withdrawal, the Holders have learned of a materially adverse
change in the condition, business or prospects of the Company from that known to
the Holders at the time of their request, then the Holders shall not be required
to pay any such expenses and shall retain their rights pursuant to Section 7.2).
7.7. Expenses of Company Registration. The Company shall bear and pay
all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to Section 7.3 for each Holder (which right may be assigned as provided
in Section 7.12), including (without limitation) all registration, filing and
qualification fees, printers' and accounting fees relating or apportionable
thereto and the fees and disbursements of one counsel (not to exceed $35,000)
for the selling Holders and selling Series B Holders selected by them, but
excluding underwriting discounts and commissions relating to Registrable
Securities.
7.8. Underwriting Requirements. In connection with any offering
involving an underwriting of shares being issued by the Company, the Company
shall not be required under Section 7.3 to include any of the Holders'
Registrable Securities in such underwriting unless they accept the terms of the
underwriting as agreed upon between the Company and the underwriters selected by
it, and then only in such quantity as will not, in the opinion of the
underwriters, jeopardize the success of the offering by the Company. If the
total amount of securities, including Registrable Securities, requested by
shareholders to be included in an offering (other than a registration effected
pursuant to Section 7.2) exceeds the amount of securities sold other than by the
Company that the underwriters reasonably believe compatible with the success of
the offering, then the Company shall be required to include in the offering only
that number of such securities, including Registrable Securities, which the
underwriters believe will not jeopardize the success of the offering (the
securities so included to be apportioned pro rata among the selling
shareholders, including Series B Holders, according to the total amount of
securities entitled to be included therein owned by each selling shareholder or
in such other proportions as shall mutually be agreed to by such selling
shareholders). The underwriters, pursuant to the preceding sentence, may
completely exclude the Holder's Registrable Securities from such underwriting if
no other selling shareholders' securities are so included.
If any person does not agree to the terms of any such underwriting, he
shall be excluded therefrom by written notice from the Company or the
underwriter. Any Registrable Securities or other securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration. If
shares are so withdrawn from the registration, the Company shall then offer to
all persons who have retained the right to include securities in the
registration the right to include additional securities in the registration in
an aggregate amount equal to the number of shares so withdrawn, with such shares
to be allocated among the persons requesting additional inclusion pro rata
according to the total amount of securities entitled to be included in such
registration owned by each such person or in such other proportions as shall be
mutually agreed by such selling shareholders.
For purposes of the immediately preceding parenthetical concerning
apportionment, for any selling shareholder which is a holder of Registrable
Securities and which is a partnership or corporation, the partners, retired
partners and shareholders of such holder, or the estates and family members of
any such partners and retired partners, and any trusts for the benefit of any of
the foregoing persons shall be deemed to be a single "selling shareholder," and
any pro rata
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reduction with respect to such "selling shareholder" shall be based upon the
aggregate amount of shares carrying registration rights owned by all entities
and individuals included in such "selling shareholder," as defined in this
sentence.
7.9. Delay of Registration. No Holder shall have any right to obtain
or seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 7.
7.10. Indemnification. In the event any Registrable Securities are
included in a registration statement under this Section 7:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless: (i) each Holder, the officers, directors, agents,
partners and legal counsel of each Holder of Registrable Securities, and (ii)
each person, if any, who controls such Holder within the meaning of the
Securities Act or the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the officers, directors, agents, partners and legal counsel of such
control person, against any losses, claims, damages or liabilities (joint or
several) to which they may become subject under the Securities Act, the Exchange
Act or other federal or state law, rule or regulation insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any of the following statements, omissions or violations
(collectively, a "Violation"): (A) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (B) the omission or alleged omission to state
therein a material fact required to be stated therein, or necessary to make the
statements therein not misleading, or (C) any violation or alleged violation by
the Company of the Securities Act, the Exchange Act, any state securities law
or any rule or regulation promulgated under the Securities Act, the Exchange Act
or any state securities law; and the Company will reimburse each such Holder,
officer, agent, director, partner, legal counsel, underwriter or controlling
person each officer, director, agent, partner and legal counsel of such
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this subsection 7.10(a) shall not apply to amounts paid in settlement of
any such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Company (which shall not be unreasonably withheld),
nor shall the Company be liable in any such case for any such loss, claim,
damage, liability or action to the extent that it arises out of or is based upon
a Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
any such Holder, officer, partner, director, agent, legal counsel or controlling
person.
(b) To the extent permitted by law, each selling Holder
will, severally but not jointly, indemnify and hold harmless (i) the Company;
each of its officers, directors, agents, partners and legal counsel; and (ii)
each person, if any, who controls the Company within the meaning of the
Securities Act and the officers, directors, agents, partners and legal counsel
of such control person, and any other Holder selling securities in such
registration statement or any of such other Holder's officers, directors,
agents, partners, legal counsel or any person who controls such Holder, against
any losses, claims, damages or liabilities (joint or several) to which the
Company or any officer, director, agent, partner, legal counsel, or controlling
person, or other such Holder or director, officer, legal counsel or controlling
person of such other Holder may
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become subject, under the Securities Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in reliance upon
and in conformity with written information furnished by such Holder expressly
for use in connection with such registration; and each such Holder will
reimburse any legal or other expenses reasonably incurred by the Company or any
officer, director, agent, partner, legal counsel, controlling person, other
Holder, or officer, director, agent, partner, legal counsel or controlling
person of such other Holder in connection with investigating or defending any
such loss, claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this subsection 7.10(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Investor (which
consent shall not be unreasonably withheld) and provided further that in no
event shall the liability of any selling Holder hereunder be greater in amount
than the dollar amount of the proceeds (net of the payment of underwriting
discounts and commissions payable by such selling Holder) received by any such
selling Holder upon the sale of the Registrable Securities giving rise to such
indemnification obligation.
(c) Promptly after receipt by an indemnified party under
this Section 7.10 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party, under this Section 7.10, deliver
to the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel at its own expense if it so desires.
Notwithstanding the foregoing, if the indemnified party and the indemnifying
party have conflicting interests with respect to the action so that joint
counsel for them would be inappropriate, (as determined by counsel to the
indemnified party and counsel to the indemnifying party), then the indemnifying
party shall pay reasonable fees and expenses of one counsel to the indemnified
party. The failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action, if prejudicial to its
ability to defend such action, shall relieve such indemnifying party of any
liability to the indemnified party under this Section 7.10, but the omission to
deliver written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than under this
Section 7.10. No indemnifying party, in the defense of any such action, shall,
except with the consent of each indemnified party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from liability in respect of such action.
(d) If the indemnification provided for in this Section 7.10
is held by a court of competent jurisdiction to be unavailable to an indemnified
party, then, except to the extent that contribution is not permitted under
Section 11(f) of the Securities Act, each indemnifying party, in lieu of
indemnifying such indemnified party thereunder, hereby agrees to contribute to
the amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and of the indemnified party on the other. The parties hereto agree that it
would not be just and equitable if contribution pursuant to this Section 7.1O(d)
were determined by pro rata allocation or by any other method of allocation that
does not take into account the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of this Section
7.1O(d), no
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indemnifying party that is a selling Holder shall be required to contribute any
amount in excess of the amount by which the net proceeds received by such
selling Holder from the sale of Registrable Securities exceeds the amount of any
damages that such selling Holder has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The indemnity and contribution
agreements contained in this Section 7.10 are in addition to any liability
that the indemnifying parties may have to the indemnified parties.
(e) The obligations of the Company and Holders under this
Section 7.10 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 7, and otherwise.
7.11. Reports Under Securities Exchange Act of 1934. With a view
to making available to the Investors purchasing Shares hereunder the benefits of
Rule 144 promulgated under the Securities Act and any other rule or regulation
of the SEC that may at any time permit a Holder to sell securities of the
Company to the public without registration, the Company agrees to:
(a) make and keep public information available, as those
terms are understood and defined in SEC Rule 144, at all times after ninety (90)
days after the effective date of the first registration statement filed by the
Company for the offering of its securities to the general public;
(b) file with the SEC in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act; and
(c) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144 (at
any time after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Securities Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements), and (ii) a copy of the most recent annual or quarterly report of
the Company and such other reports and documents so filed by the Company.
7.12. Assignment of Registration Rights. The rights to cause the
Company to register Registrable Securities pursuant to this Section 7 may be
assigned by a Holder to a transferee or assignee who (i) is not a competitor of
the Company and acquires at least fifty thousand (50,000) shares (as adjusted
for stock splits, combinations, etc.) of Registrable Securities, (ii) is an
Investor as defined hereunder, or (iii) is a partner or equity holder or an
affiliate of an Investor (or a third party duly authorized to act on behalf of
an Investor or its partners or equity holders), provided that such partner or
equity holder or affiliate has appointed such Investor (or such duly authorized
third party) as its lawful attorney-in-fact to receive notices, vote and
otherwise make binding decisions under the terms of this Section 7; provided, in
each case, the Company is, within thirty days of such transfer, furnished with
written notice of the name and address of such transferee or assignee and the
securities with respect to which such registration rights are being assigned;
and provided, further, that such assignment shall be effective only if
immediately
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following such transfer the further disposition of such securities by the
transferee or assignee is restricted under the Securities Act.
7.13. "Market Stand-Off" Agreement. Each Holder of Registrable
Securities hereby agrees that it shall not, to the extent requested by the
Company and an underwriter of Common Stock (or other securities) of the Company,
sell or otherwise transfer or dispose of any securities of the Company (other
than securities registered in the offering) whether or not acquired by such
Holder under this Agreement during a reasonable and customary period of time
(not to exceed one hundred twenty (120) days, as agreed to by the Company and
the underwriters, following the effective date of a registration statement of
the Company filed under the Securities Act; provided, however, that:
(a) such agreement shall be applicable only to the first
such registration statement of the Company which covers shares (or securities)
to be sold on its behalf to the public in an underwritten offering; and
(b) all officers and directors of the Company, holders of 5%
or more of the Company's issued and outstanding capital stock and all other
persons with registration rights (whether or not pursuant to this Agreement)
similarly agree not to sell or transfer.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of each
Holder (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such reasonable and customary period.
7.14. Amendment of Registration Rights. Any provision of this
Section 7 may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
at least 66-2/3% of the Registrable Securities. Any amendment or waiver effected
in accordance with this paragraph shall be binding upon each holder of any
securities purchased under this Agreement at the time outstanding (including
securities into which such securities are convertible), each future holder of
all such securities, and the Company.
7.15. Termination of Registration Rights. The Company's
obligations pursuant to this Section 7 shall terminate with respect to each
Holder of Registrable Securities on the earlier to occur of (i) four years from
the date of consummation of the Company's sale of its Common Stock in a bona
fide, firm commitment underwriting pursuant to a registration statement on Form
S-1 under the Securities Act at a price equal to or greater than $2.70 per share
which results in gross offering proceeds to the Company of at least $15,000,000
or (ii) such time as such Holder is eligible to sell all of its Registrable
Securities pursuant to Rule 144 in a single three (3) month period (other than
pursuant to Rule 144(k)) under the Securities Act provided that the Company has
been continually subject to the reporting requirements of the Exchange Act for
at least two years immediately prior to the time of the sale.
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50
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
____ day of __________________ 199
"Company"
CYBERSOURCE CORPORATION, a California
corporation
_____________________________________
Xxxxxxx X. XxXxxxxxx
By:_____________________________________
Name:___________________________________
Title:__________________________________
By:_____________________________________
Name:___________________________________
Title:__________________________________
By:_____________________________________
Name:___________________________________
Title:__________________________________
By:_____________________________________
Name:___________________________________
Title:__________________________________
By:_____________________________________
Name:___________________________________
Title:__________________________________
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