Exhibit 10.12
WARRANT HOLDER AGREEMENT
THIS WARRANT HOLDER AGREEMENT (this "Agreement") is made by and between the
Warrant Holder (as identified on the signature page hereto) and VSource, Inc., a
Delaware corporation ("Parent"), with reference to the following facts:
A. Parent, XXX Acquisition Corp., a California corporation and a
wholly-owned subsidiary of Parent ("Merger Sub"), Online Transaction
Technologies, Inc., a California corporation (the "Company"), and Xxxxx X.
Xxxxxx and Xxxxxxx Xxxxxxx (the "Founders"), have entered into an Agreement and
Plan of Merger dated as of December 14, 2000 (the "Merger Agreement"), whereby
Merger Sub will be merged with and into the Company (the "Merger"), the Company
will be the surviving corporation and become a wholly-owned subsidiary of Parent
and shares of the common stock of Parent will be issued to the shareholders of
the Company.
B. The Warrant Holder is the holder of a warrant to purchase the number
of shares of common stock of the Company set forth under the Warrant Holder's
name on the signature page hereto (the "Warrant").
C. The Warrant Holder believes that the Merger is in the best interests
of the Warrant Holder.
D. It is a condition precedent to Parent's obligation to consummate the
Merger that the Warrant Holder execute and deliver this Agreement to Parent.
NOW THEREFORE, in consideration of the foregoing, the parties hereby agree
as follows (capitalized terms not defined herein shall have the meanings
ascribed to them in the Merger Agreement):
1. The Warrant Holder hereby acknowledges that the Warrant Holder has
carefully read the Merger Agreement (including, without limitation, Section
2.1(e), which provides for the issuance of a Replacement Warrant to the Warrant
Holder), this Agreement and the Information Statement, dated December 14, 2000,
delivered by the Company on behalf of Parent to the Warrant Holder, and either
has been represented by independent counsel who has explained to the Warrant
Holder the meaning and legal consequences of the Merger Agreement and this
Agreement or has determined not to obtain such independent counsel.
2. The Warrant Holder hereby agrees to be bound by the provisions of
Section 2.1(e) of the Merger Agreement.
3. The Warrant Holder hereby represents and warrants to Parent as
follows (it being agreed by the Warrant Holder that these representations and
warranties are true as of the date hereof and shall be true as of the Closing
Date as if made thereon).
a. The Warrant Holder has the requisite power and authority to
execute and deliver this Agreement and to perform the Warrant Holder's
obligations hereunder. This Agreement has been duly authorized, executed and
delivered by the Warrant Holder and constitutes the legal, valid and binding
obligations of the Warrant Holder enforceable in accordance with its terms.
b. The Warrant Holder holds the Warrant free and clear of all
liens, encumbrances, charges, adverse claims and restrictions (other than
restrictions of general applicability imposed by federal or state securities
laws). Except for the Warrant, the Warrant Holder does not, directly or
indirectly, own or have rights to any (i) securities convertible into or
exchangeable for any Company Capital Stock; (ii) options, warrants or other
rights to purchase or subscribe to Company Capital Stock or securities
convertible into or exchangeable for capital stock of the Company; or (iii)
-1-
contracts, commitments, agreements, understandings, arrangements, calls or
claims of any kind relating to the issuance of any Company Capital Stock, any
such convertible or exchangeable securities or any such options, warrants or
rights.
c. If the Warrant Holder is an individual, the address set forth
for the Warrant Holder on the signature page hereto is the Warrant Holder's
residence, and the Warrant Holder has no present intention of becoming a
resident of any other state or jurisdiction.
d. If the Warrant Holder is other than an individual, the address
set forth for the Warrant Holder on the signature page hereto is the Warrant
Holder's principle place of business, and the Warrant Holder has no present
intention of moving the Warrant Holder's principal place of business to any
other state or jurisdiction.
e. The Warrant Holder is an accredited investor as defined in Rule
501 of Regulation D promulgated under the Securities Act, as indicated on Annex
-----
A hereto, or is "sophisticated" within the meaning of Rule 506 thereunder, as
--
indicated on Annex B hereto. The Warrant Holder has such knowledge and
--------
experience in financial and business matters that the Warrant Holder is capable
of evaluating the merits and risks of acquiring the Replacement Warrant and the
shares underling the Replacement Warrant. Parent has made available to the
Warrant Holder the opportunity to ask questions of the officers and management
of Parent and to acquire additional information about the business, assets and
financial condition of Parent. The Warrant Holder will acquire the Replacement
Warrant and the shares underlying the Replacement Warrant for investment only,
and not with a view toward or for sale in connection with any distribution
thereof, or with any present intention of distributing or selling any such
shares. The Warrant Holder understands that except as may otherwise be
expressly provided in the Replacement Warrant, neither the Replacement Warrant
nor the shares underlying the Replacement Warrant have been, and will not be,
the subject of a registration statement filed under the Securities Act, or
qualified under applicable states securities law, by reason of a specific
exemption from the registration provisions of the Securities Act and the
qualification provisions of the applicable state securities laws, and that
accordingly none of such securities may be resold unless such resale is
registered under the Securities Act and qualified under applicable state
securities laws, or an exemption from such registration and qualification is
available.
f. The Warrant Holder has not assigned or transferred or purported
to assign or transfer to any person any Claim (as defined below) covered by the
Release (as defined below).
4. Effective as of the Closing Date, the Warrant Holder hereby
irrevocably, unconditionally and forever releases, discharges and acquits Parent
and the Company (and each of their respective officers, directors, employees,
shareholders, agents, attorneys, successors and assigns) of and from any and all
allegations, assertions, contentions, claims, demands, causes of action, suits,
obligations, liabilities, contracts, debts, damages, losses, judgments,
interest, penalties, costs and expenses (including, without limitation,
attorneys' fees and costs) of every kind and nature whatsoever (whether
absolute, contingent or otherwise, whether known or unknown, and however
arising) (each a "Claim" and, collectively, "Claims") which the Warrant Holder
has or may have from the beginning of time to and including the Closing Date and
which arises from or relates to any matter, cause or thing whatsoever arising
from or related to Parent or the Company (including, without limitation, any
claims arising under any agreement between the Warrant Holder and the Company,
but excluding the Warrant Holder's rights to the Replacement Warrant) (the
"Release"). It is the Warrant Holder's intention that the Release shall be
effective as a full and final accord and satisfactory release of each and every
matter specifically or generally referred to in the Release. In furtherance of
this intention, the Warrant Holder acknowledges that the Warrant Holder is
familiar with Section 1542 of the Civil Code of the State of California, which
provides as follows:
"A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his
settlement with the debtor."
The Warrant Holder waives and relinquishes any rights and benefits
which the Warrant Holder has or may have under Section 1542 of the Civil Code of
the State of California to the full extent that the Warrant Holder may lawfully
waive all such rights and benefits.
-2-
The Warrant Holder hereby covenants and agrees not to bring any claim,
action, suit or proceeding against any person in whose favor the Release is
given, directly or indirectly, regarding or related in any manner to any Claims,
of whatever nature, character or description, whether known or unknown,
anticipated or unanticipated, which the Warrant Holder may have or may hereafter
have against such person and further covenants and agrees that the Release
constitutes a bar to any such claim, action, suit or proceeding.
5. Parent agrees that the Warrant Holder shall be entitled to
registration rights on the terms and conditions provided in that certain
Registration Rights Agreement dated as of the Closing Date by and among Parent,
the XXX Shareholders and certain other persons.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the Closing Date.
"Parent"
VSOURCE, INC.
By_______________________________
_______________________________
[print name and title]
the "Warrant Holder"
By_______________________________
_______________________________
[print name and, if applicable, title]
_______________________________
[print address]
_______________________________
[print city, state and zip code]
_______________________________
[print facsimile number]
_______________________________
[print number and class/series of shares]
-3-
ANNEX A
Accredited Investor
-------------------
INSTRUCTIONS: THE WARRANT HOLDER IS TO INITIAL THE SPECIFIC APPLICABLE CATEGORY
OR CATEGORIES.
______ The Warrant Holder is a natural person and has a net worth, either
alone or with the Warrant Holder's spouse, of more than $1,000,000.
_____ The Warrant Holder is a natural person and had income in excess of
$200,000 during each of the previous two years and reasonably expects to have
income in excess of $200,000 during the current year.
_____ The Warrant Holder had joint income with the Warrant Holder's spouse
in excess of $300,000 during each of the previous two years and reasonably
expects to have joint income in excess of $300,000 during the current year.
_____ The Warrant Holder is an investment company registered under the
Investment Company Act of 1940 or a business development company as defined in
Section 2(a)(48) of the Securities Act.
_____ The Warrant Holder is 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.
_____ The Warrant Holder is a private business development company as
defined in Section 202(a)(22) of the Investment Advisers Act of 1940.
_____ The Warrant Holder is an organization described in Section 501(c)(3)
of the Internal Revenue Code of 1986, corporation, Massachusetts or similar
business trust, or partnership, not formed for the specific purpose of acquiring
the Securities, with total assets in excess of $5,000,000.
_____ The Warrant Holder is a trust with total assets in excess of
$5,000,000, that was not formed for the specific purpose of purchasing the
Securities and whose purchase is directed by a person who has such knowledge and
experience in financial and business matters that he is capable of evaluating
the merits and risks of investing in the Company.
_____ The Warrant Holder is 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 acting in its individual or
fiduciary capacity.
_____ The Warrant Holder is a broker dealer registered pursuant to Section
15 of the Securities Exchange Act of 1934.
_____ The Warrant Holder is an insurance company as defined in Section 2(13)
of the Securities Act.
_____ The Warrant Holder is 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.
_____ The Warrant Holder is 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 advisor, or if the employee benefit plan has
total assets over $5,000,000, or, if a self-directed plan, with investment
decisions made solely by persons that are accredited investors.
_____ The Warrant Holder is a plan established and maintained by a state,
its political subdivisions, or any agency or instrumentality of a state or its
political subdivisions for the benefit of its employees, and such plan has
assets in excess of $5,000,000.
A-1
_____ The Warrant Holder is an entity in which all of the equity owners meet
one or more of the criteria set out in this Annex A. (IF NO OTHER CATEGORY
APPLIES, A SEPARATE QUESTIONNAIRE COVERING THE CRITERIA SET FORTH IN THIS ANNEX
A MUST BE COMPLETED BY EACH SUCH EQUITY OWNER.)
A-2
ANNEX B
-------
Sophisticated Investor
----------------------
INSTRUCTIONS: THE WARRANT HOLDER IS TO LIST IN THE SPACE PROVIDED BELOW
INFORMATION THE WARRANT HOLDER BELIEVES IS RELEVANT IN SHOWING THAT WARRANT
HOLDER IS "SOPHISTICATED" WITHIN THE MEANING OF RULE 506:
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
B-1
State of California )
)
County of __________ )
On ______________ before me, __________________, Notary Public, personally
appeared ___________________________________, ____ personally known to me or
____ proved to me on the basis of satisfactory evidence to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged to me
that he/she/they executed the same in his/her/their authorized capacity(ies),
and that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
_______________________________
B-2
