EXHIBIT 10.17
HYBRID FAX, INC.
Subscription and Stock Purchase Agreement
TO: Hybrid Fax, Inc.
000 Xxxxxxxx Xxxxx
Xxxxx Xxxx XX 00000
Attn: President
Gentlemen:
The undersigned has received the Confidential Private Placement Memorandum
dated August 17, 1990 (the "Memorandum") offering a minimum of 200,000 and a
maximum of 600,000 shares of Series C Preferred Stock ("Preferred Stock") of
Hybrid Fax, Inc., a Delaware corporation ("Company"), with a minimum investment
being $20,000 (except with respect to current holders of the Company's Series A
and Series B Preferred Stock) and additional investment being available in
increments of $10,000. The undersigned also acknowledges the receipt thereof
with this Subscription and Stock Purchase Agreement. The Memorandum, its
appendices and any material delivered by the Company therewith are herein
referred to as the "Offering Documents".
The undersigned ("Purchasers") hereby subscribes for, and irrevocably
agrees to purchase (subject to and on the terms set forth herein), 200,000
shares of Preferred Stock at a purchase price of $1.25 per share. The 200,000
shares of Preferred Stock subscribed for hereby are to be purchased as follows:
(a) 40,000 shares of Preferred Stock are being purchased by the
undersigned as of the date of acceptance of this Subscription and Stock
Purchase Agreement (the "Agreement") by the delivery of a check in the
amount of $50,000 payable to the order of the Company; and
(b) On the 15th day of each calender month commencing with October 1990
and ending with May 1991 the undersigned agrees to purchase, and the
Company agrees to issue, 20,000 shares of Preferred Stock (a total of
160,000 shares) by the delivery of a check on the 15th of each such month
in the amount of $25,000 payable to the order of the Company.
(c) The undersigned shall have the right to elect to withdraw its
subscription to purchase, and the undersigned shall thereafter not be
obligated to purchase, any further shares of preferred Stock not already
paid for under clause (b) of this paragraph in the even that (i) gross
revenues billed to the Company by the undersigned or its affiliated
companies under all contracts, agreements and orders for work performed
during either of the calender quarters ended December 31, 1990 and march
31, 1991 does not exceed $375,000 and (ii)
within 15 days from the last day of either of such calender quarter, the
undersigned delivers the Company a written election to cease further
purchases of Preferred Stock under this Agreement.
This subscription shall be irrevocable and shall survive dissolution,
liquidation or bankruptcy of purchaser, subject, however, to all of the terms
and provisions contained in the offering Documents and the closing conditions
set forth herein. The Company shall have the right to accept or reject this
subscription, in whole or in part, and this subscription shall be deemed to be
accepted by the Company only by execution of this Agreement.
All capitalized terms used but not defined herein shall have the same
meaning as defined in the Memorandum.
If Purchaser is a beneficial holder of Series A or Series B Preferred
Stock, Purchaser hereby consents to the creation of a third series of Preferred
Stock in accordance with the Memorandum.
Purchaser represents the following to the Company:
(a) Purchaser has full power and authority to enter into this
Agreement, and to perform its obligations hereunder and to consummate the
transactions contemplated hereby. This Agreement is a legal, valid and binding
obligation of such Purchaser, enforceable against the purchaser in accordance
with its terms.
(b) Purchaser recognizes that an investment in the Company is a
speculative investment involving a high degree of risk.
(c) Purchaser has adequate net worth and means of providing for
current needs and possible personal contingencies, and has no need, and
anticipates no need in the foreseeable future, to sell the Preferred Stock (or
the Common Stock issuable upon conversion) for which such Purchaser hereby
subscribes. Purchaser is able to bear the economic risk of this investment and,
consequently, without limiting the generality of the foregoing, is able to hold
the Preferred Stock (and the Common Stock issuable upon conversion) for an
indefinite period of time and has a sufficient net worth to sustain a loss of
the entire investment in the Company in the event such loss should occur.
(d) Purchaser is acquiring the Preferred Stock for his own account
for investment and not for the benefit of any other person or with a view toward
resale or redistribution in a manner which would require registration under the
1933 Act, and such Purchaser does not now have any reason to anticipate any
change in circumstances or other particular occasion or event which would cause
such Purchaser to sell the Preferred Stock (or the Common Stock issuable upon
conversion).
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(e) Purchaser acknowledges that there are substantial restrictions on
the transferability of the Preferred Stock (and the Common Stock issuable upon
the conversion thereof). Since the Preferred Stock (and the Common Stock
issuable upon conversion thereof) will not be, and, except as provided in this
Agreement, the Purchaser has no right to require that they be, registered under
the 1933 Act or qualified pursuant to applicable state securities law, the
Preferred Stock (and the Common Stock issuable upon conversion thereof) may not
be, and Purchaser agrees that they shall not be, sold unless such sale is exempt
from such registration under the 1933 Act and any other applicable state
securities law or regulation. Each Purchaser further acknowledges that the
Company is under no obligation to aid me in obtaining any exemption from the
registration requirements. Purchaser acknowledges that Purchaser shall be
responsible for compliance with all conditions on transfer imposed by any
securities administrator of any state and for any expenses incurred by the
Company for legal or accounting services in connection with reviewing such a
proposed transfer and/or issuing opinions in connection therewith.
(f) The undersigned hereby represents and warrants to the Company that
the undersigned (i) is a corporation not specifically formed for the purpose of
investing in the Company, (ii) has a net worth in excess of more than $5,000,000
or (iii) is owned exclusively by persons who either (1) have a net worth
(jointly with spouse) in excess of $1,000,000, (2) had an individual income* in
each of the last two years of more than $200,000 and reasonably expects to have
an individual income* in the current year of more than $200,000 or (3) had joint
income* with his or her spouse in each of the last two years of more than
$300,000 and reasonably expects to have joint income* with his or her spouse and
joint income in the current year of more than $300,000.
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* Joint income is calculated for any year as follows: (i) adjusted gross income
(as reported on Subscriber's and his or her spouse's federal income tax
return), plus (ii) any deductions for long-term capital gain under Section
1202 of the Internal Revenue Code of 1954 (the "Code"), plus (iii) any
deductions for depletion under Sections 611 et seq. of the Code, plus (iv)
any exclusion for interest under Section 103 of the Code, plus (v) any losses
of a limited partnership allocated to Subscriber and his or her spouse (as a
limited partner) as reported on Schedule E of Form 1040.
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1. Requested Registration.
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(a) Request for Registration. In case the Company shall receive from
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Holders of 50% of the issued or issuable Registrable Securities (the "Initiating
Holders") a written request that the Company effect a registration under the
Securities Act of 1933, as amended (the "Securities Act") with respect to not
less than a number of shares (as adjusted for recapitalizations) of Registrable
Securities, sufficient (when aggregated with the offering of other holders who
have similar registration rights who have so requested registration) so that the
net proceeds of a proposed offering of such shares would be reasonably estimated
to exceed $3,000,000, the Company will (i) promptly give written notice of the
proposed registration, qualification or compliance to all other Holders and (ii)
as soon as practicable, use its best efforts to effect such registration
(including, without limitation, appropriate qualification under blue sky or
other state securities laws and appropriate compliance with applicable
regulations issued under the Securities Act and any other governmental
requirements or regulations) as may be so requested and as would permit or
facilitate
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the sale and distribution of all or such portion of such Registrable Securities
as are specified in such request, together with all or such portion of the
Registrable Securities of any Holder or Holders joining in such request as are
specified in a written request received by the Company within 20 days after
receipt of such written notice from the Company; provided, however, that the
Company shall not be obligated to take any action to effect any such
registration, qualification or compliance pursuant to this Section 1:
(A) In any particular jurisdiction in which the Company would be
required to execute a general consent to service of process in effecting
such registration, qualification or compliance unless the Company is
already subject to service in such jurisdiction and except as may be
required by the Securities Act;
(B) Prior to the earlier of (i) December 31, 1992, or (ii) six months
after the effective date of the Company's first registered public offering
of its stock;
(C) If the Company receives an opinion of counsel, reasonably
satisfactory to a majority of the requesting Holders, to the effect that
the Holders can make open market sales of the outstanding Common Stock held
by them without registration, subject to the volume and manner of sale
limitations contained in Rule 144 promulgated by the Securities and
Exchange Commission or such similar exemption from registration
requirements of the Act;
(D) During the period starting with the date sixty (60) days prior to
the Company's estimated date of filing of, and ending on the date six (6)
months immediately following the effective date of, any registration
statement pertaining to securities of the Company (other than a
registration of securities in a Rule 145 transaction or with respect to an
employee benefit plan), provided that the Company is actively employing in
good faith all reasonable efforts to cause such registration statement to
become effective;
(E) After the Company has effected one such registration pursuant to
this paragraph 1(a), and such registrations have been declared or ordered
effective; or
(F) If the Company shall furnish to such Holders 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 seriously detrimental to
the Company or its shareholders for a registration statement to be filed in
the near future, in which case the Company's obligation to use its best
efforts to register, qualify or comply under this Section 6.1 shall be
deferred for a period not to exceed 120 days from the date of receipt of
the written request from the Initiating Holders.
Subject to the foregoing clauses (A) through (F), the Company shall
file a registration statement covering the Registrable Securities so requested
to be registered as soon as practicable after receipt of the request or requests
of the Initiating Holders.
(b) Underwriting. In the event that a registration pursuant to this
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Section 1 is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as
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part of the notice given pursuant to Section 1(a)(i). In such event, the right
of any Holder to registration pursuant to this Section 1 shall be conditioned
upon such Holder's participation in the underwriting arrangements required by
this Section 1, and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent requested shall be limited as provided herein. 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 managing underwriter(s) selected for such underwriting
by a majority in interest of the Initiating Holders, but subject to the
Company's reasonable approval. Notwithstanding any other provision of this
Section 1, if the managing underwriter(s) advise(s) the Initiating Holders in
writing that marketing factors require a limitation of the number of shares to
be underwritten, then the Company shall so advise all Holders participating and
the number of shares of Registrable Securities that may be included in the
registration and underwriting shall be allocated among all Holders thereof in
proportion, as nearly as practicable, to the respective amounts of Registrable
Securities held by such Holders at the time of filing the registration
statement. No Registrable Securities excluded from the underwriting by reason of
the underwriters' marketing limitation shall be included in such registration.
To facilitate the allocation of shares in accordance with the above provisions,
the Company or the underwriters may round the number of shares allocated to any
Holder to the nearest 100 shares.
If any Holder disapproves of the terms of the underwriting, such
person may elect to withdraw therefrom by written notice to the Company, the
managing underwriter and the Initiating Holders. The Registrable Securities so
withdrawn shall also be withdrawn from registration, and such Registrable
Securities shall not be transferred in a public distribution prior to 90 days
after the effective date of such registration, or such other shorter period of
time as the underwriters may require.
2. Optional Registrations. If at any time or times prior to
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December 31, 1995 the Company shall determine to register any of its securities
(for itself or for any other securities holder of the Company) under the
Securities Act or any successor legislation (other than a registration relating
to stock option plans, employee benefit plans or a Rule 145 transaction), and in
connection therewith the Company may lawfully register its Common Stock, the
Company will promptly give written notice thereof to the then holders (the
"Holders") of all issued or issuable Registrable Securities (as hereinafter
defined) and will use its best efforts to include in such registration and to
effect the registration under the Securities Act of all Registrable Securities
which such Holders may request in writing delivered to the Company within 15
days after receipt by such Holder of the notice given by the Company; provided,
however, if the managing underwriter for the Company advises the Company in
writing that including all or part of the Registrable Shares in such offering
will adversely affect the marketing of the proposed offering, then, in
connection with any such underwritten offering by the Company of any of its
securities, such registration of Registrable Securities shall be limited to not
less than 10% of the total number of shares to be sold in the case of an initial
public offering of the Company's securities, and 20% of the total number of
shares to be sold in the case of a subsequent offering; further provided,
however, that such limited number of shares of Common Stock in such offering,
which shares shall be taken from those owned (or obtainable upon the exercise of
rights with respect to other securities) by a group of holders requesting
registration consisting of the Holders and other holders having similar
registration rights to those of the Holders, and such limitation shall be
imposed upon the Holders and such other
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holders pro rata on the basis of the total number of (i) shares of Registrable
Securities owned by the requesting Holders and (ii) shares of Common Stock
owned, or obtainable by them upon the exercise of rights with respect to other
securities, by such other requesting holders. In the event of such a limitation,
shares of persons not having similar registration rights will not be included in
such registration. The Company shall have the right to select the managing
underwriter or underwriters for any underwritten offering made pursuant to a
registration under this Section 2 hereof.
3. Registrable Securities. For the purposes of these provisions, the
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term "Registrable Securities" shall mean (i) the Common Stock issued or issuable
upon conversion of any series of Preferred Stock of the Company (including the
Preferred Stock) where the holder thereof has the right under this agreement or
a substantially similar right to require registration of such stock (the
"Conversion Stock"), (ii) the Common Stock issued or issuable upon exercise of
the Company's outstanding Common Stock Purchase Warrants, of which warrants to
purchase 75,009 shares are outstanding and (iii) any Common Stock issued or
issuable with respect to the Common Stock described in clauses (i) or (ii) by
way of a stock dividend or stock split.
4. Expenses of Registration.
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(a) All expenses of the registration and offering incurred in
connection with (i) one registration pursuant to Section 1, and (ii) one
registration pursuant to Section 2, shall be borne by the Company, except that
the Holders shall bear underwriting commissions and discounts attributable to
their Registrable Securities being registered and the fees and expenses of
separate counsel, if any, for such Holders. Unless otherwise stated, all Selling
Expenses relating to securities registered on behalf of the Holders and all
other Registration Expenses shall be borne by the Holders of such securities pro
rata. If the Company includes in such registration any securities to be offered
by it, all expenses shall be borne by the Company,
(b) A proportionate share of the expenses of the registration and
offering incurred in connection with any registration pursuant to Section 2
after the first registration thereunder, shall be borne pro rata by the Holder
or Holders requesting the registration on the basis of the ratio of the number
of their shares so registered to the total number of shares included in such
registration.
5. Transfer of Registration Rights. The rights to cause the Company
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to register securities granted Purchasers under Sections 1 and 2 may be assigned
to a transferee or assignee reasonably acceptable to the Company in connection
with any transfer or assignment of Registrable Securities by a Purchaser
provided that: (i) such transfer may otherwise be effected in accordance with
applicable securities laws, and (ii) such assignee or transferee acquires at
least 5,000 shares of the Registrable Securities (appropriately adjusted for
Recapitalizations).
6. Standoff Agreement. The Holders shall, if requested by the
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managing underwriter or underwriters of any proposed firm underwritten offering
of securities by the Company, agree not to sell any of their Registrable
Securities or any other securities of the Company owned by such Holders in any
transaction other than pursuant to such underwritten offering for a period of up
to 90 days beginning on the effective date of the registration statement,
provided that the Company's officers and directors and each holder of 10% or
more of the Company's issued and
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outstanding Common Stock also agree to such limitations. The Holders shall upon
request execute a written agreement confirming and agreeing as to the foregoing.
7. Registration Indemnification. In the event of any Registration
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under the Act pursuant to these provisions of Registrable Securities of any
Holder, the Company will hold harmless such Holder and each underwriter of such
securities and each other person, if any, who controls such Holder or such
underwriter within the meaning of the Act, against any losses, claims, damages
or liabilities to which such Holder or such underwriter or controlling person
may become subject under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any registration statement, or any preliminary prospectus or final
prospectus or amendment or supplement thereto on the effective date thereof, or
arise out of or are based upon 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; and will reimburse such Holder and each such
underwriter and each such controlling person for any legal or any other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such
registration statement, or any preliminary prospectus or final prospectus or
amendment or supplement thereto, in reliance upon and in conformity with written
information furnished to the Company through an instrument duly executed by such
Holder or such underwriter specifically for use in the preparation thereof.
It shall be a condition precedent to the obligation of the Company to
include in any registration statement any Registrable Securities then held by a
Holder that the Company shall have received an undertaking satisfactory to it
and its counsel from each Holder, to indemnify and hold harmless (in the same
manner and to the same extent as set forth in the preceding paragraph) the
Company, each director of the Company, each officer of the Company who shall
sign such registration statement and any person who controls the Company within
the meaning of the Act, with respect to any statement or omission from such
registration statement, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereto, if such statement or omission
was made in reliance upon and in conformity with information furnished to the
Company through an instrument duly executed by the Holder specifically for use
in the preparation of such registration statement, preliminary prospectus or
final prospectus or such amendment or supplement thereto.
Promptly after receipt by an indemnified party of notice of the
commencement of any action involving a claim referred to in the preceding
paragraphs of these provisions, such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party, give written notice
to the latter of the commencement of such action. In case any such action is
brought against an indemnified party, the indemnifying party will be entitled to
participate in and to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
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thereof, the indemnifying party will not be liable to such indemnified party for
any legal or other expenses incurred by the latter in connection with the
defense thereof.
PLEASE SIGN, DATE AND FURNISH THE BOXED INFORMATION
IN WITNESS WHEREOF, the undersigned has executed this Subscription and
Stock Purchase Agreement as of this 7th day of September, 1990.
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SUBSCRIBER'S NAME AND MAILING ADDRESS:
ADLAR Turnkey Manuf Corp
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(Name)
0000 Xxxxx Xxxxx
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(Xxxxxx)
Xxx Xxxx XX 00000
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(City) (State) (Zip)
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/s/A A
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Signature of Subscriber
Title:
Chairman of the Board of Directors
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ACCEPTED this 7th day of September, 1990.
HYBRID FAX, INC.
By: /s/ Xxxxxx X. Xxxxxx III
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President
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