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SECURITIES PURCHASE AGREEMENT
Between
DIGITAL COURIER TECHNOLOGIES, INC.,
and
TRANSACTION SYSTEMS ARCHITECTS, INC.
Dated as of June 14, 1999
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SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement") is dated as
of June 14, 1999, between Digital Courier Technologies, Inc., a Delaware
corporation (the "Company"), and Transactions Systems Architects, Inc., a
Delaware corporation (the "Purchaser").
WHEREAS, subject to the terms and conditions set forth in this
Agreement, the Company desires to issue and sell to the Purchaser, and the
Purchaser desire to acquire from the Company, 1,250,000 units of the Company's
securities (the "Units"), each Unit to consist of one share (each, a "Share") of
the Company's common stock, par value $.0001 per share (the "Common Stock), and
a warrant to purchase eight-tenths (.8) of one share of Common Stock (each, a
"Warrant").
IN CONSIDERATION of the mutual covenants contained in this
Agreement, the Company and each Purchaser agree as follows:
PURCHASE AND SALE OF THE UNITS
Purchase and Sale.
------------------
Subject to the terms and conditions set forth herein, on the
Closing Date (as defined below), the Company shall issue and sell to the
Purchaser, and the Purchaser shall purchase from the Company an aggregate of
1,250,000 Units, for a purchase price of $5.20 per Unit or an aggregate purchase
price of $6,500,000.
The Closing.
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The closing of the purchase and sale of the Units (the "Closing")
shall take place at the offices of the Company at 000 Xxxxx Xxxxxx, Xxxxx 000,
Xxxx Xxxx, Xxxx 00000 or by transmission by facsimile and overnight courier,
immediately following the execution hereof or such later date or different
location as the parties shall agree, but not prior to the date that the
conditions set forth in Section 4.1 have been satisfied or waived by the
appropriate party (the "Closing Date"). At the Closing:
The Purchaser shall deliver to the Company an aggregate of
$6,500,000 in United States dollars in immediately available funds to an account
designated in writing by the Company;
The Company shall deliver to the Purchaser the certificates
representing one million two hundred and fifty thousand (1,250,000) Shares;
The Company shall deliver to the Purchaser a Warrant,
substantially in the form of Exhibit A hereto, to purchase one million Shares;
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The Company shall deliver to ACI Worldwide, Inc., a wholly-owned
subsidiary of the Purchaser, a duly executed amendment to Attachment A1 to
License Agreement #B1606 between the Company and ACI Worldwide, Inc. dated March
25, 1999 in form and substance reasonably acceptable to the parties hereto;
The parties shall execute and deliver each of the documents
referred to in Section 4.1 hereof.
REPRESENTATIONS AND WARRANTIES
Representations, Warranties and Agreements of the Company. The
Company hereby makes the following representations and warranties to the
Purchaser:
Organization and Qualification. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, with the requisite corporate power and authority to own and use its
properties and assets and to carry on its business as currently conducted.
Except as set forth in Schedule 2.1(a), the Company has no subsidiaries
(collectively, the "Subsidiaries"). Each of the Subsidiaries is a corporation
duly incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, with the full corporate power and authority
to own and use its properties and assets and to carry on its business as
currently conducted. Each of the Company and the Subsidiaries is duly qualified
to do business and is in good standing as a foreign corporation in each
jurisdiction in which the nature of the business conducted or property owned by
it makes such qualification necessary, except where the failure to be so
qualified or in good standing, as the case may be, would not, individually or in
the aggregate, (x) adversely affect the legality, validity or enforceability of
any of this Agreement or the Transaction Documents (as defined below) or any of
the transactions contemplated thereby, (y) have or result in a material adverse
effect on the results of operations, assets, prospects, or financial condition
of the Company and its Subsidiaries, taken as a whole or (z) adversely impair
the Company's ability to perform fully on a timely basis its obligations under
any Transaction Document (any of (x), (y) or (z), being a "Material Adverse
Effect").
Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by this Agreement and the Warrants and the Registration Rights
Agreement (as defined below) (collectively, the "Transaction Documents"), and
otherwise to carry out its obligations hereunder and thereunder. The execution
and delivery of each of this Agreement and the Transaction Documents by the
Company and the consummation by it of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action and no
further action is required by the Company, its Board of Directors or its
stockholders. Each of this Agreement and the Transaction Documents has been duly
executed by the Company and when delivered in accordance with the terms hereof
will constitute the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as such enforceability
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may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement
of, creditors' rights and remedies or by other equitable principles of general
application.
Capitalization. As of the date hereof and immediately after the
Closing Date, the authorized capital stock of the Company is as set forth in
Schedule 2.1(c). Immediately following the Closing, 18,456,355 shares of common
stock will be outstanding and 360 shares of Preferred Stock will be outstanding,
subject to adjustment only for exercise of those warrants or options, or
conversion of those shares of Preferred Stock, that are listed on Schedule
2.1(c). The issuance and sale of all interests in such capital stock have been
in compliance with all applicable federal and state securities laws. No shares
of Common Stock are entitled to preemptive or similar rights, nor is any holder
of the Common Stock entitled to preemptive or similar rights arising out of any
agreement or understanding with the Company by virtue of any of this Agreement
or the Transaction Documents. Except by virtue of this Agreement or as disclosed
in Schedule 2.1(c), other than the Warrants, there are no outstanding options,
warrants, rights to subscribe to, calls or commitments of any character
whatsoever relating to securities, rights or obligations convertible into or
exchangeable for, or giving any person any right to subscribe for or acquire any
shares of capital stock, or contracts, commitments, understandings, or
arrangements by which the Company or any Subsidiary is or may become bound to
issue additional shares of capital stock, or securities or rights convertible or
exchangeable into shares of capital stock. No anti-dilution or similar
adjustment provision of securities of the Company will be triggered by the
issuance of the Units except as described on Schedule 2.1(c). The Company is not
subject to any obligation (contingent or otherwise) to repurchase or otherwise
acquire or retire any units of its capital stock or any security convertible
into or exchangeable for any of its capital stock. Except as specifically
disclosed in the SEC Documents (as defined below), no Person or group of related
Persons beneficially owns (as determined pursuant to Rule 13d-3 promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) or
has the right to acquire by agreement with or by obligation binding upon the
Company beneficial ownership of in excess of 5% of the Common Stock. "Person"
means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind. The Company is not a party to, and does not have any knowledge of,
any agreement expressly restricting the transfer of the Shares, the Underlying
Shares, or any shares of the Company's capital stock which may be issued to the
Purchaser as a result of any stock split, stock dividend, recapitalization,
exchange or similar event.
Authorization and Validity; Issuance of Shares. All of the Shares
and the Warrants have been duly authorized, and when delivered against payment
therefor as contemplated hereby, will be validly issued, fully paid and
non-assessable free and clear of all liens, encumbrances and rights of first
refusals ("Liens") and will not be subject to any preemptive or similar rights.
The shares of Common Stock issuable upon exercise of the Warrants (the
"Underlying Shares") are and will at all times hereafter continue to be duly
authorized and reserved for issuance and upon issuance the Underlying Shares
will be validly issued, fully paid and nonassessable free and clear of all
Liens.
No Conflicts. The execution, delivery and performance of this
Agreement and the Transaction Documents by the Company and the consummation by
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the Company of the transactions contemplated hereby and thereby do not and will
not (i) conflict with or violate any provision of the articles of incorporation,
bylaws or other charter documents of the Company or any of the Subsidiaries,
(ii) subject to obtaining the consents referred to in Section 2.1(f), conflict
with, or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument (evidencing a Company or Subsidiary debt or otherwise) to which the
Company or any Subsidiary is a party or by which any property or asset of the
Company or any Subsidiary is bound or affected, or (iii) result in a violation
of any law, rule, regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which the Company or any
Subsidiary is subject (including Federal and state securities laws and
regulations), or by which any material property or asset of the Company or any
Subsidiary is bound or affected.
Consents and Approvals. Except as specifically set forth in
Schedule 2.1(f), neither the Company nor any Subsidiary is required to obtain
any consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other federal, state, local or other
governmental authority or other person in connection with the execution,
delivery and performance by the Company of this Agreement or the Transaction
Documents, other than (i) the filing of a registration statement with the
Securities and Exchange Commission (the "Commission"), which shall be filed in
accordance with and in the time periods set forth in the Registration Rights
Agreement, (ii) the application(s) or any letter(s) acceptable to the National
Market System of the Nasdaq Stock Market ("Nasdaq") for the listing of the
Shares and Underlying Shares with Nasdaq (and with any other national securities
exchange or market on which the Common Stock is then listed), and (iii) any
filings, notices or registrations under applicable state securities laws
(together with the consents, waivers, authorizations, orders, notices and
filings referred to in Schedule 2.1(f), the "Required Approvals").
Litigation; Proceedings. Except as specifically set forth in
Schedule 2.1(g), there is no action, suit, notice of violation, proceeding or
investigation pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of its Subsidiaries or any of their respective
properties before or by any court, governmental or administrative agency or
regulatory authority (federal, state, county, local or foreign) which (i)
adversely affects or challenges the legality, validity or enforceability of any
of this Agreement or the Transaction Documents or (ii) would individually or in
the aggregate, have a Material Adverse Effect.
No Default or Violation. Except as set forth on Schedule 2.1 (h),
neither the Company nor any Subsidiary (i) is in default under or in violation
or breach of any indenture, loan or credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its properties is
bound, (ii) is in violation of any order of any court, arbitrator or
governmental body applicable to, or (iii) is in violation of any statute, rule
or regulation of any governmental authority to which it is subject.
Disclosure; Absence of Certain Changes. Neither this Agreement,
the Schedules to this Agreement, the Transaction Documents nor the SEC Documents
contains any untrue statement of a material fact or omits to state any material
fact necessary in order to make the statements made herein and therein, in light
of the circumstances under which they were made, not misleading. Except as
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disclosed in Schedule 2.1(i) or the SEC Documents filed on XXXXX at least five
business days prior to the date hereof, since December 31, 1998 there has been
no material adverse change and no material adverse development in the business,
properties, operations, financial condition, liabilities or results of
operations or, insofar as can reasonably be foreseen, prospects of the Companies
or the Subsidiaries. The Company has not taken any steps, and does not currently
expect to take any steps, to seek protection pursuant to any bankruptcy law nor
does the Company or any of its Subsidiaries have any knowledge or reason to
believe that its creditors intend to initiate involuntary bankruptcy
proceedings. No event, liability, development or circumstance has occurred or
exists, or is contemplated to occur, with respect to the Company or its
Subsidiaries or their respective business, properties, operations or financial
condition or, insofar as can reasonably be foreseen, prospects, that would be
required to be disclosed by the Company under applicable securities laws on a
registration statement (including by way of incorporation by reference) filed
with the SEC, on the date this representation is made or deemed to be made,
relating to an issuance and sale by the Company of its Common Stock and which
has not been publicly disclosed.
Private Offering. The Company and all Persons acting on its
behalf have not directly or indirectly made, and will not make, offers or sales
of any securities or solicited any offers to buy any security under
circumstances that would require registration of the Units, the Shares, the
Warrants or the Underlying Shares or the issuance of such securities under the
Securities Act of 1933, as amended (the "Act"). The issuance of the Units, the
Shares, the Warrants and the Underlying Shares to the Purchaser will not be
integrated with any other issuance of the Company's securities (past, current,
or future) that would violate any securities laws exemptions under the Act or
otherwise adversely affect the Purchaser's ability to resell the Units, the
Shares, the Warrants or the Underlying Shares under the Act. Subject to the
accuracy and completeness of the representations and warranties of the Purchaser
contained in Section 2.2 hereof, the offer and sale by the Company to the
Purchaser of the Units is exempt from the registration requirements of the Act.
SEC Documents; Financial Statements. The Common Stock of the
Company is registered pursuant to Section 12(g) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). The Company has filed all reports
required to be filed by it under the Exchange Act, including pursuant to Section
13, 14 or 15(d) thereof (the foregoing materials being collectively referred to
herein as the "SEC Documents"), on a timely basis or has received a valid
extension of such time of filing and has filed any such SEC Documents prior to
the expiration of any such extension.. As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the Act and
the Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Documents, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. All material
agreements to which the Company or any Subsidiary is a party or to which the
property or assets of the Company or any Subsidiary are subject have been filed
as exhibits to the SEC Documents as required. The financial statements of the
Company included in the SEC Documents comply as to form in all material respects
with applicable accounting requirements and the published rules and regulations
of the Commission with respect thereto as in effect at the time of filing. Such
financial statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved,
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except as may be otherwise specified in such financial statements or the notes
thereto, and fairly present in all material respects the financial position of
the Company as of and for the dates thereof and the results of operations and
cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal year-end audit adjustments.
Investment Company. The Company is not, and is not controlled by
or under common control with an affiliate (an "Affiliate") of an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
Broker's Fees. Except as otherwise disclosed on Schedule 2.1(m),
no fees or commissions or similar payments with respect to the transactions
contemplated by this Agreement or the Transaction Documents have been paid or
will be payable by the Company to any broker, financial advisor, finder,
investment banker, or bank. The Purchaser shall have no obligation with respect
to any fees or with respect to any claims made by or on behalf of other Persons
for fees of a type contemplated in this Section 2.1(m) that may be due in
connection with the transactions contemplated by this Agreement and the
Transaction Documents.
Form S-3 Eligibility. The Company is, and at the Closing Date
will be, eligible to register securities (including the Shares and the
Underlying Shares) for resale with the Commission under Form S-3 (or any
successor form) promulgated under the Securities Act.
Listing and Maintenance Requirements Compliance. The principal
market on which the Common Shares are currently traded is Nasdaq. Except as
disclosed in Schedule 2.1(o), since the date that the Company has been listed on
Nasdaq, the Company has not received notice (written or oral) from Nasdaq (or
any stock exchange, market or trading facility on which the Common Stock is or
has been listed (or on which it has been quoted)) to the effect that the Company
is not in compliance with the listing or maintenance requirements of such market
or exchange. The Company is not aware of any facts which would reasonably lead
to delisting or suspension of the Common Stock by Nasdaq. After giving effect to
the transactions contemplated by this Agreement and the Transaction Documents,
the Company believes that it is and will be in compliance with all such
maintenance requirements .
Patents and Trademarks. The Company or its Subsidiaries have, or
have rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, licenses and rights
(collectively, the "Intellectual Property Rights") which are necessary for use
in connection with its business, as currently conducted and as described in the
SEC Documents. To the best knowledge of the Company, there is no existing
infringement by another Person of any of the Intellectual Property Rights which
are necessary for use in connection with the Company's business which would
individually or in the aggregate, have a Material Adverse Effect and the Company
is not infringing on any other person's Intellectual Property Rights.
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Employee Relations. Neither the Company nor any of its
Subsidiaries is involved in any union labor dispute nor, to the knowledge of the
Company or any of its Subsidiaries, is any such dispute threatened. Neither the
Company nor any of its Subsidiaries is a party to a collective bargaining
agreement, and the Company and its Subsidiaries believe that relations with
their employees are good. Except as set forth on Schedule 2.1(q), no executive
officer (as defined in Rule 501(f) of the Act) has notified the Company that
such officer intends to leave the Company or otherwise terminate such officer's
employment with the Company.
Registration Rights; Rights of Participation. Except as described
on Schedule 2.1(r) hereto, (i) the Company has not granted or agreed to grant to
any Person any rights (including "piggy-back" registration rights) to have any
securities of the Company registered with the Commission or any other
governmental authority which has not been satisfied and (ii) no Person,
including, but not limited to, current or former shareholders of the Company,
underwriters, brokers or agents, has any right of first refusal, preemptive
right, right of participation, or any similar right to participate in the
transactions contemplated by this Agreement or any Transaction Document.
Title. Except as disclosed in Schedule 2.1(s), the Company and
the Subsidiaries have good and marketable title in fee simple to all real
property and personal property owned by them which is material to the business
of the Company and its Subsidiaries, in each case free and clear of all Liens,
except for Liens that do not materially affect the value of such property and do
not interfere with the use made and proposed to be made of such property by the
Company and the Subsidiaries. Any real property and facilities held under lease
by the Company and the Subsidiaries are held by them under valid, existing and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by the
Company and the Subsidiaries.
Permits. The Company and the Subsidiaries possess all
certificates, authorizations, licenses, easements, consents, approvals, orders
and permits necessary to own, lease and operate their respective properties and
to conduct their respective businesses as currently conducted except where the
failure to possess such permits would not, individually or in the aggregate,
have a Material Adverse Effect ("Material Permits"), and there is no proceeding
pending, or, to the knowledge of the Company, threatened relating to the
revocation, modification, suspension or cancellation of any Material Permit.
Neither the Company nor any of the Subsidiaries is in conflict with or default
or violation of any Material Permit.
Insurance. The Company and each of its Subsidiaries are insured
by insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its Subsidiaries are
engaged. Neither the Company nor any such Subsidiary has any reason to believe
that it will not be able to renew its existing insurance coverages as and when
such coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business.
Internal Accounting Controls. The Company and each of the
Subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
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with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with
management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
Tax Status; Firpta. The Company and each of the Subsidiaries has
made or filed all federal and state income and all other tax returns, reports
and declarations required by any jurisdiction to which it is subject (unless and
only to the extent that the Company and each of its Subsidiaries has set aside
on its books provisions reasonably adequate for the payment of all unpaid and
unreported taxes) and has paid all taxes and other governmental assessments and
charged that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and has set aside on it books provisions reasonably adequate for the payment of
all taxes for periods subsequent to the periods to which such returns, reports
or declarations apply. There are no unpaid taxes in any material amount claimed
to be due by the taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim. The Company is not a "United States
real property holding corporation" within the meaning of Section 847(c)(2) of
the Internal Revenue Code of 1986, as amended.
Transactions With Affiliates. Except as set forth on Schedule
2.1(x), none of the officers, directors, or employees of the Company is
presently a party to any transaction with the Company or any of its Subsidiaries
(other than for services as employees, officers and directors), including any
contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or from,
or otherwise requiring payments to or from any officer, director or such
employee or, to the knowledge of the Company, any corporation, partnership,
trust or entity in which any officer, director, or any such employee has a
substantial interest or is an officer, director, trustee or partner other than
transactions that would not require disclosure under Section 404 of Regulation
S-K of the Act and the Exchange Act.
Application to Takeover Protection. The Company and its Board of
Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination or other
similar anti-takeover provision under the laws of the state of its incorporation
which is or could become applicable to the Purchaser as a result of the
transactions contemplated by this Agreement or the Transaction Documents. None
of the transactions contemplated by this Agreement or the Transaction Documents,
including the exercise of the Warrants will trigger any poison pill provisions
of any of the Company's stockholders' rights or similar agreements.
(a) Environmental Laws. The Company and its Subsidiaries (i) are
in compliance with any and all applicable foreign, federal, state and local laws
and regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permits, licenses or other approvals would not result in
a Material Adverse Effect.
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(b) Foreign Corrupt Practices. Neither the Company, nor any of
its Subsidiaries, nor any director, officer, agent, employee or other person
acting on behalf of the Company or any of its Subsidiaries has, in the course of
its actions for, or on behalf of, the Company used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses relating
to political activity; made any direct or indirect unlawful payment to any
foreign or domestic government official or employee form corporate funds;
materially violated or is in material violation of any provision of the U.S.
Foreign Corrupt Practices Act of 1977, as amended; or made any unlawful bribe,
rebate, payoff, influence payment, kickback or other unlawful payment to any
foreign or domestic government official or employee.
Representations and Warranties of the Purchaser. The Purchaser hereby
represents and warrants to the Company as follows:
Organization; Authority. The Purchaser is a corporation duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation with the requisite power and authority,
corporate or otherwise, to enter into and to consummate the transactions
contemplated hereby and by the Registration Rights Agreement and otherwise to
carry out its obligations hereunder and thereunder. The purchase by the
Purchaser of the Units hereunder has been duly authorized by all necessary
action on the part of the Purchaser. Each of this Agreement and the Registration
Rights Agreement has been duly executed and delivered by the Purchaser and
constitutes the valid and legally binding obligation of the Purchaser,
enforceable against the Purchaser in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
generally and to general principles of equity.
Investment Intent. The Purchaser is acquiring the Units for its
own account for investment purposes only and not with a view to or for
distributing or reselling the Units, the Shares, the Warrants or the Underlying
Shares or any part thereof or interest therein in violation of any securities
laws; provided, however, that by making the representations herein, the
Purchaser does not agree to hold any of the Units, the Shares, the Warrants or
the Underlying Shares for any minimum or other specific term and reserves the
right to dispose of the securities at any time in accordance with or pursuant to
a registration statement or an exemption under the Act.
Purchaser Status. At the time the Purchaser was offered the
Units, and at the Closing Date, (i) it was and will be an "accredited investor"
as defined in Rule 501 under the Act or (ii) the Purchaser, either alone or
together with its representatives, had and will have such knowledge,
sophistication and experience in business and financial matters so as to be
capable of evaluating the merits and risks of the prospective investment in the
Units.
Reliance. The Purchaser understands and acknowledges that (i) the
Units are being offered and sold to the Purchaser without registration under the
Act in a private placement that is exempt from the registration provisions of
the Act under Section 4(2) of the Act or Regulation D promulgated thereunder and
(ii) the availability of such exemption, depends in part on, and the Company
will rely upon the accuracy and truthfulness of, the representations set forth
in this Section 2.2 and the Purchaser hereby consents to such reliance.
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The Company acknowledges and agrees that the Purchaser makes no
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 2.2.
OTHER AGREEMENTS
3.1 Transfer Restrictions.
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If the Purchaser should decide to dispose of the Units, the
Shares, the Warrants or the Underlying Shares held by it, the Purchaser
understands and agrees that it may do so only pursuant to an effective
registration statement under the Act, to the Company or pursuant to an available
exemption from the registration requirements of the Act. The Company shall
announce any material non-public information it legally obligated to announce on
or prior to the Effective Date (as defined in the Registration Rights Agreement)
of the registration statement filed pursuant to the Registration Rights
Agreement and shall not enter into any subsequent non-disclosure agreements that
would prevent it from announcing any such information that otherwise legally
could have been announced on or prior to the Effective Date. In connection with
any transfer of any Units, Shares, Warrants or Underlying Shares other than
pursuant to an effective registration statement or to the Company, the Company
may require the transferor thereof to provide to the Company a written opinion
of counsel experienced in the area of United States securities laws selected by
the transferor, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require
registration of such transferred securities under the Act.
The Purchaser agrees to the imprinting, so long as is required by
this Section 3.1(b), of the following legend on the Shares, the Warrants, and
the Underlying Shares:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE ACT.
Neither the Shares, the Warrants, nor the Underlying Shares shall
contain the legend set forth above if (i) the issuance of any of such securities
occurs at any time while the Registration Statement is effective under the Act
and the issuance is covered by such Registration Statement, (ii) in the opinion
of counsel to the Company experienced in the area of United States securities
laws such legend is not required under applicable requirements of the Act
(including judicial interpretations and pronouncements issued by the staff of
the Commission) or (iii) in the opinion of counsel to the Company experienced in
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xxx xxxx xx Xxxxxx Xxxxxx securities laws such Shares, Warrants or Underlying
Shares may be sold pursuant to Rule 144. The Company agrees that it will provide
the Purchaser, upon request, with a certificate or certificates representing
Shares, Warrants or Underlying Shares, free from such legend at such time as
such legend is no longer required hereunder.
Stop Transfer Instruction. Except as otherwise required by law, the
Company may not make any notation on its records or give instructions to any
transfer agent of the Company which enlarge the restrictions of transfer set
forth in Section 3.1.
Furnishing of Information. As long as the Purchaser owns the Units, the
Shares, the Warrants or the Underlying Shares, the Company will cause the Common
Stock to continue at all times to be registered under 12(g) of the Exchange Act,
will timely file (or obtain extensions in respect thereof and file within the
applicable grace period) all reports required to be filed by the Company after
the date hereof pursuant to Section 13, 14 or 15(d) of the Exchange Act and
promptly furnish the Purchaser with true and complete copies of all such filings
and will not take any action or file any document (whether or not permitted by
the Exchange Act or the rules thereunder) to terminate or suspend such reporting
and filing obligations. The Company further covenants that it will take such
further action as any holder of the Units, the Shares, the Warrants or the
Underlying Shares may reasonably request, all to the extent required from time
to time to enable such Person to sell the Units, the Shares, the Warrants or the
Underlying Shares without registration under the Act within the limitation of
the exemptions provided by Rule 144 promulgated under the Act.
Blue Sky Laws. In accordance with the Registration Rights Agreement,
the Company shall qualify the Shares and the Underlying Shares under the
securities or Blue Sky laws of such jurisdictions as the Purchaser may request
and shall continue such qualification at all times through the third anniversary
of the Closing Date.
Integration. The Company shall not sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Act) that would be integrated with the offer or sale of the
Units, the Shares, the Warrants or the Underlying Shares in a manner that would
require the registration under the Act of the sale the Units, of the Shares, the
Warrants, the Underlying Shares or Underlying Shares to the Purchaser.
Listing and Reservation of Shares and Underlying Shares.
--------------------------------------------------------
The Company shall (i) not later than 5 days after the Closing
Date prepare and file with the Nasdaq (as well as any other national securities
exchange or market on which the Common Stock is then listed) an additional
shares listing application or a letter acceptable to Nasdaq covering and listing
a number of shares of Common Stock which is at least equal the aggregate amount
of Shares and Underlying Shares, (ii) take all steps necessary to cause the
Shares and Underlying Shares to be approved for listing on Nasdaq (as well as on
any other national securities exchange or market on which the Common Stock is
then listed) as soon as possible thereafter and (iii) provide to the Purchaser
evidence of such listing. Neither the Company nor any of its Subsidiaries shall
take any action which may result in the delisting or suspension of the Common
Stock on Nasdaq. The Company shall promptly provide to the Purchaser copies of
any notices it receives from the Nasdaq regarding the continued eligibility of
the Common Stock for listing on such automated quotation system.
11
The Company at all times shall reserve shares of its authorized
but unissued Common Stock for issuance the number of shares of Common Stock
which would be issuable upon exercise of the Warrants.
Notice of Breaches.
-------------------
The Company and the Purchaser shall give prompt written notice to
the other of any breach by it of any representation, warranty or other agreement
contained in this Agreement or in the Registration Rights Agreement, as well as
any events or occurrences arising after the date hereof and prior to the
Closing, which would reasonably be likely to cause any representation or
warranty or other agreement of such party, as the case may be, contained herein
to be incorrect or breached as of the Closing Date provided such notice will not
constitute material non-public information. However, no disclosure by either
party pursuant to this Section 3.7 shall be deemed to cure any breach of any
representation, warranty or other agreement contained herein or in the
Registration Rights Agreement.
Notwithstanding the generality of Section 3.7(a), the Company
shall promptly notify, provided such notification will not constitute material
non-public information, the Purchaser of any notice or claim (written or oral)
that it receives from any lender of the Company or any Subsidiary to the effect
that the consummation of the transactions contemplated hereby and by the
Registration Rights Agreement violates or would violate any written agreement or
understanding between such lender and the Company or any Subsidiary, and the
Company shall promptly furnish by facsimile to the Purchaser a copy of any
written statement in support of or relating to such claim or notice.
Use of Proceeds. The Company shall use the proceeds from the sale of
the Units for working capital and general corporate purposes, including
acquisitions, and not for the satisfaction of any portion of Company borrowings
outside the normal course of business or to redeem Company equity or
equity-equivalent securities. Pending application of the proceeds of this
placement in the manner permitted hereby, the Company will invest such proceeds
in interest bearing accounts and/or short-term, investment grade interest
bearing securities.
Reimbursement. In the event that the Purchaser, other than by reason of
its gross negligence or willful misconduct, becomes involved in any capacity in
any action, proceeding or investigation brought by or against any person,
including shareholders of the Company, in connection with or as a result of (a)
any misrepresentation or breach of any representation or warranty made by the
Company in this Agreement or the Transaction Documents or any other certificate,
instrument or document contemplated hereby or thereby, (b) any breach of any
covenant, agreement or obligation of the Company contained in this Agreement or
the Transaction Documents or any other certificate, instrument or document
hereby or thereby, or (c) any cause of action, suit or claim brought or made
against the Purchaser and arising out of or resulting from the execution,
delivery, performance or enforcement of this Agreement or the Transaction
Documents or any other certificate, instrument or document contemplated hereby
or thereby, the Company will reimburse the Purchaser for its legal and other
actual out-of-pocket expenses (including the cost of any investigation and
12
preparation) incurred in connection therewith. The reimbursement obligations of
the Company under this paragraph shall be in addition to any liability which the
Company may otherwise have, shall extend upon the same terms and conditions to
any affiliate of the Purchaser and partners, directors, agents, employees and
controlling persons (if any), as the case may be, of the Purchaser and any such
affiliate, and shall be binding upon and inure to the benefit of any successors,
assigns, heirs and personal representatives of the Company, the Purchaser and
any such affiliate and any such Person. The Company also agrees that neither the
Purchaser or any such Affiliates, partners, directors, agents, employees or
controlling persons shall have any liability to the Company or any Person
asserting claims on behalf of or in right of the Company in connection with or
as a result of the consummation of this Agreement or any of the Transaction
Documents except to the extent that any losses, claims, damages, liabilities or
expenses incurred by the Company result from the gross negligence or willful
misconduct of the Purchaser or entity in connection with the transactions
contemplated by this Agreement or the Registration Rights Agreement. To the
extent that the foregoing undertaking by the Company may be unenforceable for
any reason, the Company shall make the maximum contribution to the payment and
satisfaction of its obligations hereunder which is permissible under applicable
law. The rights of the Purchaser (and its affiliates, directors, officers,
agents, employees, and controlling persons) under this Section 3.9 shall be in
addition to and not limit the other rights or claims of the Purchaser (and its
affiliates, directors, officers, agents, employees, and controlling persons) to
or for indemnification by or against the Company in connection with any breach
of the representations, warranties or covenants made by the Company herein or in
the Transaction Documents or limit any other rights or remedies which they may
have.
Transactions With Affiliates. So long as any Units, Shares, Warrants or
Underlying Shares are held by the Purchaser, the Company shall not, and shall
cause each of its Subsidiaries not to, enter into, amend, modify or supplement
any agreement, transaction, commitment or arrangement with any of its respective
officers, directors, Persons who were officers or directors at any time during
the previous two years, stockholders who beneficially own 5% or more of the
Common Stock, or Affiliates or with any individual related by blood, marriage or
adoption to any such individual or with any entity in which any such entity or
individual owns a 5% or more beneficial interest (each a "Related Party"),
except for (a) customary employment arrangements and benefit programs on
reasonable terms, (b) any agreement, transaction, commitment or arrangement on
an arms-length basis on terms no less favorable than terms which would have been
obtained from a person other than such Related Party, or (c) any agreement,
transaction, commitment or arrangement which is approved by a majority of the
disinterested directors of the Company. For purposes hereof, any director who is
also an officer of the Company or any Subsidiary of the Company shall not be a
disinterested director with respect to any such agreement, transaction,
commitment or arrangement. "Affiliate" for purposes of this Section 3.13 only
means, with respect to any person or entity, another person or entity that,
directly or indirectly, (i) has a 5% or more equity interest in that person or
entity, (ii) has 5% or more common ownership with that person or entity, (iii)
controls that person or entity, or (iv) shares common control with that person
or entity. "Control" or "controls" for purposes hereof means that a person or
entity has the power, direct or indirect, to conduct or govern the policies of
another person or entity.
13
Transfer Agent Instructions. The Company shall issue irrevocable
instructions to its transfer agent, and any subsequent transfer agent, to issue
certificates, registered in the name of the Purchaser or its nominee(s), for the
Shares and the Underlying Shares in such amounts as specified from time to time
by each Purchaser to the Company in the form attached hereto as Exhibit B (the
"Irrevocable Transfer Agent Instructions"). Prior to registration of the Shares
and Underlying Shares under the Act, all such certificates shall bear the
restrictive legend specified in Section 3.1(b) of this Agreement. The Company
warrants that no instruction other than the Irrevocable Transfer Agent
Instructions referred to in this Section 3.11, and stop transfer instructions to
give effect to Section 3.1 hereof (in the case of the Underlying Shares, prior
to registration of the Underlying Shares under the Act) will be given by the
Company to its transfer agent and that the Units, the Shares, the Warrants and
the Underlying Shares shall otherwise be freely transferable on the books and
records of the Company as and to the extent provided in this Agreement and the
Registration Rights Agreement. If a Purchaser provides the Company with an
opinion of counsel, in form and substance reasonably satisfactory to the
Company, to the effect that a public sale, assignment or transfer of the Units,
the Shares, the Warrants and the Underlying Shares may be made without
registration under the Act or the Purchaser provides the Company with reasonable
assurances that the Units, the Shares, the Warrants and the Underlying Shares
can be sold pursuant to Rule 144 without any restriction as to the number of
securities acquired as of a particular date that can then be immediately sold,
the Company shall permit the transfer, and, in the case of the Shares and the
Underlying Shares, promptly instruct its transfer agent to issue one or more
certificates in such name and in such denominations as specified by such
Purchaser and without any restrictive legend. The Company acknowledges that a
breach by it of its obligations hereunder will cause irreparable harm to the
Purchaser by violating the intent and purpose of the transactions contemplated
hereby. Accordingly, the Company acknowledges that the remedy at law for a
breach of its obligations under this Section 3.11 will be inadequate and agrees,
in the event of a beach or threatened breach by the Company of the provisions of
this Section 3.11, that the Purchaser shall be entitled, in addition to all
other available remedies, to an order and/or injunction restraining any breach
and requiring immediate issuance and transfer, without the necessity of showing
economic loss and without any bond or other security being required.
3.12 Directors. For so long as the Purchaser or any of its affiliates
shall own at least 500,000 shares (subject to adjustment for stock splits, stock
dividends, subdivisions or similar transactions) of Common Stock in the
aggregate, the Purchaser shall be entitled to propose one candidate (the
"Purchaser Designee") for election to the Board of Directors of the Company.
Subject to its fiduciary duties to stockholders, the Company will recommend to
its stockholders that the Purchaser Designee be elected to the Company's Board
of Directors.
CONDITIONS
(a) Conditions Precedent to the Obligation of the Company to Sell the
Units. The obligation of the Company to sell the Units hereunder is subject to
the satisfaction or waiver (with prior written notice to the Purchaser) by the
Company, at or before the Closing, of each of the following conditions:
Accuracy of the Purchaser's Representations and
Warranties. The representations and warranties of the Purchaser in this
Agreement shall be true and correct in all material respects as of the date when
made and as of the Closing Date;
14
Performance by the Purchaser. The Purchaser shall have
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Purchaser at or prior to the Closing; and
No Injunction. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement or the Transaction Documents.
Conditions Precedent to the Obligation of the Purchaser to
Purchase the Units. The obligation of the Purchaser hereunder to acquire and pay
for the Units is subject to the satisfaction or waiver by the Purchaser, at or
before the Closing, of each of the following conditions:
Accuracy of the Company's Representations and Warranties.
The representations and warranties of the Company set forth in this Agreement
and in the Registration Rights Agreement shall be true and correct in all
respects as of the date when made and as of the Closing Date;
Performance by the Company. The Company shall have
performed, satisfied and complied in all respects with all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to the Closing;
No Injunction. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement and the Transaction Documents;
No Suspensions of Trading in Common Stock. The trading in
the Common Stock shall not have been suspended by the Commission or on Nasdaq
which suspension shall remain in effect;
Listing of Common Stock. Nasdaq shall have approved, if
required, for listing upon notice of issuance the Shares and the Underlying
Shares;
Required Approvals. All Required Approvals shall have been
obtained;
Shares of Common Stock. The Company shall have duly
reserved the number of Underlying Shares required by this Agreement and the
Transaction Documents to be reserved for issuance upon the exercise of the
Warrants;
Change of Control. No Change of Control shall have
occurred between the date hereof and the Closing Date. "Change of Control" means
the occurrence of any of (i) an acquisition after the date hereof by an
individual or legal entity or "group" (as described in Rule 13d-5(b)(1)
promulgated under the Exchange Act), other than the Purchaser or any of its
Affiliates, of in excess of 50% of the voting securities of the Company, (ii) a
15
replacement of more than one-half of the members of the Company's Board of
Directors which is not approved by those individuals who are members of the
Board of Directors on the date hereof in one or a series of related
transactions, (iii) the merger of the Company with or into another entity,
consolidation or sale of all or substantially all of the assets of the Company
in one or a series of related transactions or (iv) the execution by the Company
of an agreement to which the Company is a party or by which it is bound,
providing for any of the events set forth above in (i), (ii) or (iii); and
Transfer Agent Instructions. The Irrevocable Transfer
Agent Instructions, in the form of Exhibit B attached hereto, shall have been
delivered to the Company's transfer agent.
Documents and Certificates. At the Closing, the Company shall
have delivered to the Purchaser, the following in form and substance reasonably
satisfactory to the Purchaser:
An opinion of the Company's legal counsel, who may be
in-house counsel, in the form attached hereto as Exhibit C dated as of the
Closing Date;
A stock certificate(s) representing the number of Shares
purchased by the Purchaser in form satisfactory to the Purchaser;
A Warrant(s) representing the Warrants purchased by the
Purchaser, registered in the name of the Purchaser;
The Company shall have executed and delivered the
Registration Rights Agreement;
Officer's Certificate. An Officer's Certificate dated the
Closing Date and signed by an executive officer of the Company confirming the
accuracy of the Company's representations and warranties and compliance with its
covenants as of the Closing Date and confirming the compliance by the Company
with the conditions precedent set forth in this Section 4.1 as of the Closing
Date.
Secretary's Certificate. A Secretary's Certificate dated
the Closing Date and signed by the Secretary or Assistant Secretary of the
Company certifying (A) that attached thereto is a true and complete copy of the
Certificate of Incorporation of the Company, as in effect on the Closing Date,
(B) that attached thereto is a true and complete copy of the by-laws of the
Company, as in effect on the Closing Date and (C) that attached thereto is a
true and complete copy of the resolutions duly adopted by the Board of Directors
of the Company authorizing the execution, delivery and performance this
Agreement and of the Transaction Documents, and that such resolutions have not
been modified, rescinded or revoked.
MISCELLANEOUS
Fees and Expenses. Except as set forth in the Registration Rights
Agreement and as otherwise set forth in this Agreement, each party shall pay the
16
fees and expenses of its advisers, counsel, accountants and other experts, if
any, and all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement. The Company
shall pay all stamp and other taxes and duties levied in connection with the
issuance of the Shares and the Underlying Shares pursuant hereto.
Entire Agreement. This Agreement, together with the Exhibits and
Schedules hereto and the Registration Rights Agreement contain the entire
understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, oral or written, with respect
to such matters.
Notices. Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be deemed to have been received
(a) upon hand delivery (receipt acknowledged) or delivery by telex (with correct
answer back received), telecopy or facsimile (with transmission confirmation
report) at the address or number designated below (if received by 7:00 p.m. EST
where such notice is to be received), or the first business day following such
delivery (if delivered on a business day after during normal business hours
where such notice is to be received) or (b) on the second business day following
the date of mailing by express courier service, fully prepaid, addressed to such
address, or upon actual receipt of such mailing, whichever shall first occur.
The addresses for such communications are (i) if to the Company to Digital
Courier Technologies, Inc., 000 Xxxxx Xxxxxx, Xxxxx 000 XX Xxx 0000, Xxxx Xxxx,
XX 00000 attn: Xxxxxxxx Xxxxxxx, fax no. (000) 000 0000 and (ii) if to the
Purchaser to Transaction Systems Architects, Inc., 000 X. 000 Xxxxxx, Xxxxx,
Xxxxxxxx 00000 attn: General Counsel; fax no. (000) 000 0000, or such other
address as may be designated in writing hereafter, in the same manner, by such
Person.
Amendments; Waivers. No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, by
both the Company and the Purchaser; or, in the case of a waiver, by the party
against whom enforcement of any such waiver is sought. No waiver of any default
with respect to any provision, condition or requirement of this Agreement shall
be deemed to be a continuing waiver in the future or a waiver of any other
provision, condition or requirement hereof, nor shall any delay or omission of
either party to exercise any right hereunder in any manner impair the exercise
of any such right accruing to it thereafter.
Headings; Interpretive Matters. The headings herein are for convenience
only, do not constitute a part of this Agreement and shall not be deemed to
limit or affect any of the provisions hereof. No provision of this Agreement
will be interpreted in favor of, or against, any of the parties hereto by reason
of the extent to which any such party or its counsel participated in the
drafting thereof or by reason of the extent to which any such provision is
inconsistent with any prior draft hereof or thereof.
Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and permitted assigns. The
Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchaser. The Purchaser may assign
this Agreement or any rights or obligations hereunder without the prior written
consent of the Company, provided that the right to propose a candidate for
election to the Board of Directors contained in Section 3.12 of this Agreement
17
may not be assigned without the prior written consent of the Company, and
provided further that any assignees must otherwise comply with the terms of
Section 3.1 of this Agreement and make the following representations and
warranties:
Any Shares, Warrants or Underlying Shares the assignee is acquiring are
being acquired by the assignee for its own account for investment purposes only
and not with a view to or for distributing or reselling any such Shares,
Warrants or Underlying Shares or any part thereof or interest therein in
violation of any securities laws; provided, however, that by making the
representations herein, the assignee does not agree to hold any Shares, Warrants
or Underlying Shares for any minimum or other specific term and reserves the
right to dispose of the securities at any time in accordance with or pursuant to
a registration statement or an exemption under the Act.
At the time of any offer or sale of Shares, Warrants or Underlying
Shares (as the case may be) to the assignee, (i) the assignee was and will be an
"accredited investor" as defined in Rule 501 under the Act or (ii) the assignee,
either alone or together with its representatives, had and will have such
knowledge, sophistication and experience in business and financial matters so as
to be capable of evaluating the merits and risks of the prospective investment.
The assignee understands and acknowledges that (i) any Shares, Warrants
or Underlying Shares being offered or sold to the assignee (as the case may be)
are being offered and sold to the assignee without registration under the Act in
a private placement that is exempt from the registration provisions of the Act
under Section 4(2) of the Act or Regulation D promulgated thereunder and (ii)
the availability of such exemption, depends in part on, and the Company will
rely upon the accuracy and truthfulness of, the representations set forth in
this section and the assignee hereby consents to such reliance.
This provision shall not limit the Purchaser's right to transfer
securities in accordance with all of the terms of this Agreement or under the
Registration Rights Agreement.
No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of Delaware without
regard to the principles of conflicts of law thereof. Each party hereby
irrevocably submits to the nonexclusive jurisdiction of the state and federal
courts sitting in Omaha, Nebraska, for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or
discussed herein, and hereby irrevocably waives, and agrees not to assert in any
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consent to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
18
Survival. The agreements, covenants, representations, warranties and
provisions contained in this Agreement shall survive the delivery of the Units
pursuant to this Agreement and the Closing hereunder and any exercise of the
Warrants.
Execution. This Agreement may be executed in two or more counterparts,
all of which when taken together shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
Disclosure. The Company shall not use the name of or refer to the
Purchaser or make any disclosure concerning this Agreement, the Transaction
Documents or the transactions contemplated hereby or thereby (including without
limitation in any press release or public statement, offering materials, product
literature or promotional materials, or in connection with any commercial or
financing agreements or transactions) without the prior written consent of the
Purchaser, except as may be required by applicable law, and then only after
giving the Purchaser reasonable prior notice and reasonable opportunity to
review and comment on the disclosure.
Severability. In case any one or more of the provisions of this
Agreement shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Agreement shall not
in any way be affecting or impaired thereby and the parties will attempt to
agree upon a valid and enforceable provision which shall be a reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Agreement.
Remedies. In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, the Purchaser will be
entitled to specific performance of the obligations of the Company under this
Agreement or the Transaction Documents without the showing of economic loss and
without any bond or other security being required. Each of the Company and the
Purchaser agree that monetary damages would not be adequate compensation for any
loss incurred by reason of any breach of its obligations described in the
foregoing sentence and hereby agrees to waive in any action for specific
performance of any such obligation the defense that a remedy at law would be
adequate.
Payment Set Aside. To the extent that the Company makes a payment to
the Purchaser hereunder or pursuant to the Registration Rights Agreement or the
Purchaser enforces or exercises its rights hereunder or thereunder, and such
payment or payments or the proceeds of such enforcement or exercise or any part
thereof are subsequently invalidated, declared fraudulent or preferential, set
aside, recovered from, disgorged by or are required to be refunded, repaid or
otherwise restored to the Company, a trustee, receiver or any other Person under
any law (including, without limitation, any bankruptcy law, state or federal
law, common law or equitable cause of action), then to the extent of any such
restoration the obligation or part thereof originally intended to be satisfied
shall be revived and continued in full force and effect as if such payment had
not been made or such enforcement or setoff had not occurred.
19
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SIGNATURE PAGE FOLLOWS]
20
IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective authorized persons as
of the date first indicated above.
DIGITAL COURIER TECHNOLOGIES, INC.
By: /s/ Xxxxxx Xxxxxx
---------------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President-Legal
TRANSACTION SYSTEMS ARCHITECTS, INC.
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Executive Vice President
21
Exhibit A
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
WITH THE SECURITIES AND EXCHANGE COMMISSION IN RELIANCE UPON
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE ACT.
June 14, 1999
1,000,000 shares Warrant No. E-1
DIGITAL COURIER TECHNOLOGIES, INC.
STOCK PURCHASE WARRANT
Registered Owner:
This certifies that, for value received, Digital Courier Technologies,
Inc., a Delaware corporation, the ("Company") grants the following rights to the
Registered Owner, or assigns, of this Warrant:
1. Issue. Upon tender (as defined in section 5 hereof) to the
Company, the Company shall issue to the Registered Owner, Transaction Systems
Architects, Inc. ("TSA"), or assigns, up to the number of shares specified in
paragraph 2 hereof of fully paid and nonassessable shares of Common Stock, par
value $.0001 per share ("Common Stock"), that the Registered Owner, or assigns,
is otherwise entitled to purchase.
2. Number of Shares. The total number of shares of Common Stock that
the Registered Owner, or assigns, of this Warrant is entitled to receive upon
exercise of this Warrant is 1,000,000 shares of Common Stock, subject to
adjustment from time to time as set forth herein. The Company shall at all times
reserve and hold available sufficient shares of Common Stock to satisfy all
conversion and purchase rights represented by outstanding convertible
securities, options and warrants, including this Warrant. The Company covenants
and agrees that all shares of Common Stock that may be issued upon the exercise
of this Warrant shall, upon issuance, be duly and validly issued, fully paid and
nonassessable, and free from all taxes, liens and charges with respect to the
purchase and the issuance of the shares.
3. Exercise Price. (a) The initial exercise price of this Warrant,
the price at which the shares of stock issuable upon exercise of this Warrant
may be purchased, is $5.20, and upon the six-month anniversary of the date
hereof, shall be adjusted as set forth in section 3(b) hereof, and subject to
adjustment from time to time pursuant to the provisions of paragraph 6 below
(the "Exercise Price").
(b) At 5:00 p.m. on December 14, 1999 (the "Reset Date"), the
Exercise Price shall be adjusted to be equal to the lesser of (i) $5.20, or (ii)
the average Per Share Market Value for the five (5) consecutive Trading Days
with the lowest average Per Share Market Value during the period of the 22
Trading Days immediately preceding the Reset Date.
22
4. Exercise Period. This Warrant may only be exercised beginning on
June 14, 1999 and up to and including June 13, 2004 (the "Exercise Period"). If
not exercised during this period, this Warrant and all rights granted under this
Warrant shall expire and lapse.
5. Tender. (a) This Warrant may be exercised, in whole or in part,
by actual delivery of (i) the Exercise Price in cash or by certified or bank
check, or in the manner provided in paragraph 5(b) hereof, (ii) a duly executed
Warrant Exercise Form, a copy of which is attached to this Warrant as Exhibit A,
properly executed by the Registered Owner, or assigns, of this Warrant, and
(iii) by surrender of this Warrant. The payment and Warrant Exercise Form must
be delivered, personally or by mail, to the registered office of the Company.
Documents sent by mail shall be deemed to be delivered when they are received by
the Company. If this Warrant is exercised in part, a new Warrant or Warrants
will be issued, at the Company's expense for the balance of the number of Shares
purchasable hereunder less any fraction of a Share paid in Cash to the Holder.
(b) At any time in which there is no effective Registration
Statement as defined in the Registration Rights Agreement, the holder may, at
its option, instruct the Company, by written notice accompanying the surrender
of this Warrant at the time of exercise, to apply to the payment required by
paragraph 3 such number of shares of Common Stock otherwise issuable to such
holder upon such exercise as shall be specified in such notice, in which case an
amount equal to the excess of the aggregate Per Share Market Value of such
specified number of shares on the date of exercise over the portion of the
payment required by paragraph 3 attributable to such shares shall be deemed to
have been paid to the Company and the number of shares issuable upon such
exercise shall be reduced by such specified number.
6. Further Adjustment of Exercise Price.
(a) If the Company, at any time while this Warrant is
outstanding, (a) shall pay a stock dividend on its Common Stock, (b) subdivide
outstanding shares of Common Stock into a larger number of shares, (c) combine
outstanding shares of Common Stock into a smaller number of shares, or (d) issue
by reclassification of shares of Common Stock any shares of capital stock of the
Company, the Exercise Price shall be multiplied by a fraction the numerator of
which shall be the number of shares of Common Stock (excluding treasury shares,
if any) outstanding before such event and the denominator of which shall be the
number of shares of Common Stock outstanding after such event. Any adjustment
made pursuant to this paragraph (6)(a) shall become effective immediately after
the record date for the determination of shareholders entitled to receive such
dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or re-classification.
(b) If the Company, at any time while this Warrant is
outstanding, shall issue rights or warrants to all of the holders of Common
Stock entitling them to subscribe for or purchase shares of Common Stock at a
price per share less than the Per Share Market Value of Common Stock at the
record date mentioned below, the Exercise Price shall be multiplied by a
fraction, the denominator of which shall be the number of shares of Common Stock
(excluding treasury shares, if any) outstanding on the date of issuance of such
rights or warrants plus the number of additional shares of Common Stock offered
for subscription or purchase, and the numerator of which shall be the number of
shares of Common Stock (excluding treasury shares, if any) outstanding on the
date of issuance of such rights or warrants plus the number of shares which the
aggregate offering price of the total number of shares so offered would purchase
at such Per Share Market Value. Such adjustment shall be made whenever such
rights or warrants are issued, and shall become effective immediately after the
record date for the determination of shareholders entitled to receive such
rights or warrants. However, upon the expiration of any right or warrant to
purchase Common Stock the issuance of which resulted in an adjustment in the
Exercise Price pursuant to this paragraph (6)(b), if any such right or warrant
shall expire and all or any portion thereof shall not have been exercised, the
Exercise Price shall immediately upon such expiration be re-computed and
effective immediately upon such expiration be increased to the price which it
would have been (but reflecting any other adjustments in the Exercise Price made
pursuant to the provisions of section (g) after the issuance of such rights or
warrants) had the adjustment of the Exercise Price made upon the issuance of
23
such rights or warrants been made on the basis of offering for subscription or
purchase only that number of shares of Common Stock (if any) actually purchased
upon the exercise of such rights or warrants actually exercised.
(c) If the Company, at any time while this Warrant is
outstanding, shall distribute to all of the holders of Common Stock evidences of
its indebtedness or assets or rights or warrants to subscribe for or purchase
any security (excluding those referred to in paragraphs 6(a) and (b) above),
then in each such case the Exercise Price at which the Warrant shall thereafter
be exercisable shall be determined by multiplying the Exercise Price in effect
immediately prior to the record date fixed for determination of shareholders
entitled to receive such distribution by a fraction the denominator of which
shall be the Per Share Market Value of Common Stock determined as of the record
date mentioned above, and the numerator of which shall be such Per Share Market
Value of the Common Stock on such record date less the then fair market value at
such record date of the portion of such assets or evidence of indebtedness so
distributed applicable to one outstanding share of Common Stock as determined by
the Board of Directors in good faith; provided, however, that in the event of a
distribution exceeding ten percent (10%) of the net assets of the Company, such
fair market value shall be determined by a nationally recognized or major
regional investment banking firm or firm of independent certified public
accountants of recognized standing (an "Appraiser") selected in good faith by
the Registered Owner of the Warrant; and provided, further, that the Company,
after receipt of the determination by such Appraiser shall have the right to
select an additional Appraiser meeting the same qualifications, in good faith,
in which case the fair market value shall be equal to the average of the
determinations by each such Appraiser. Such adjustment shall be made whenever
any such distribution is made and shall become effective immediately after the
record date mentioned above.
(d) All calculations under this section 6 shall be made to the
nearest cent or the nearest l/l00th of a share, as the case may be.
(e) Whenever the Exercise Price is adjusted pursuant to
paragraphs 6(a), (b) or (c), the Company shall promptly mail to the holder of
the Warrant, a notice setting forth the Exercise Price after such adjustment and
setting forth a brief statement of the facts requiring such adjustment.
(f) Redemption Event. In case of (A) any reclassification of
the Common Stock, (B) any Change of Control (as such term is defined in the
Purchase Agreement), (C) any compulsory share exchange pursuant to which the
Common Stock is converted into other securities, cash or property or (D) (i) the
Company's notice to any Registered Owner, including by way of public
announcement, at any time, of its intention, for any reason, not to comply with
proper requests for the exercise of any Warrant or (ii) the Company's refusal to
honor a duly executed Warrant Exercise Form delivered pursuant to Section 5(a)
hereof (clauses (A) through (D) above are referred to as a "Redemption Event"),
in the case of (A), (B) or (C), the Registered Owner shall have the right
thereafter to convert the Warrant for shares of stock and other securities, cash
and property receivable upon or deemed to be held by holders of Common Stock
following such Redemption Event, and the Registered Owner shall be entitled upon
such event to receive such amount of securities, cash or property as the shares
of the Common Stock of the Company into which the Warrant could have been
converted immediately prior to such Redemption Event (without taking into
account any limitations or restrictions on the convertibility of the Securities)
would have been entitled; provided, however, that in the case of a transaction
specified in (B) in which holders of the Company's Common Stock receive cash,
the Registered Owners shall have the right to convert the Underlying Shares for
such number of shares of the surviving company equal to the amount of cash into
which the Warrant is convertible divided by the fair market value of the shares
of the surviving company on the effective date of the merger; provided, further,
that in the case of an event specified in (D), the Registered Owner shall have
the option to require the Company to redeem, from funds legally available
therefor at the time of such redemption, its shares of Common Stock immediately
theretofore acquirable and receivable upon the conversion of such Registered
Owner's Warrants at a price per share equal to the product of (i) the average
Per Share Market Value for the five Trading Days immediately preceding (1) the
effective date, the date of the closing, date of occurrence or the date of the
announcement, as the case may be, of the Redemption Event triggering such
redemption right or (2) the date of payment in full by the Company of the
redemption price hereunder, whichever is greater, and (ii) the number of shares
of Common Stock of the Company into which the Warrant could have been converted
immediately prior to such Redemption Event. The entire redemption price shall be
paid in cash. In the case of (A), (B) and (C), the terms of any such Redemption
Event shall include such terms so as to continue to give to the Registered Owner
the right to receive the securities, cash or property set forth in this Section
6(f) upon any conversion or redemption following such Redemption Event. This
provision shall similarly apply to successive Redemption Events.
24
(g) If:
A. the Company shall declare a dividend (or any other
distribution) on its Common Stock; or
B. the Company shall declare a special nonrecurring cash
dividend on or a redemption of its Common Stock; or
C. the Company shall authorize the granting to the holders of
the Common Stock rights or warrants to subscribe for or
purchase any shares of capital stock of any class or of
any rights; or
D. the approval of any shareholders of the Company shall be
required in connection with any reclassification of the
Common Stock of the Company, any consolidation or merger
to which the Company is a party, any sale or transfer of
all or substantially all of the assets of the Company, of
any compulsory share exchange whereby the Common Stock is
converted into other securities, cash or property; or
E. the Company shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of
the Company;
then the Company shall cause to be filed at each office or agency maintained for
the purpose of exercise of this Warrant, and shall cause to be mailed to the
holder of this Warrant at its address as it shall appear below, at least 30
calendar days prior to the applicable record or effective date hereinafter
specified, a notice (provided such notice shall not include any material
non-public information) stating (x) the date on which a record is to be taken
for the purpose of such dividend, distribution, redemption, rights or warrants,
or if a record is not to be taken, the date as of which the holders of Common
Stock of record to be entitled to such dividend, distributions, redemption,
rights or warrants are to be determined or (y) the date on which such
reclassification, consolidation, merger, sale, transfer or share exchange is
expected to become effective or close, and the date as of which it is expected
that holders of Common Stock of record shall be entitled to exchange their
shares of Common Stock for securities, cash or other property deliverable upon
such reclassification, consolidation, merger, sale, transfer or share exchange;
provided, however, that the failure to mail such notice or any defect therein or
in the mailing thereof shall not affect the validity of the corporate action
required to be specified in such notice.
(h) Adjustment to Exercise Price. In order to prevent dilution
of the rights granted under this Warrant, the Exercise Price will be subject to
adjustment from time to time as provided in this Section 6(h).
(i) Adjustment of Exercise Price upon Issuance of Common
Stock. If at any time prior to the one year anniversary of the Reset
Date, the Company issues or sells, or is deemed to have issued or sold,
any shares of Common Stock (other than the Underlying Shares or shares
of Common Stock deemed to have been issued by the Company in connection
with an Approved Stock Plan (as defined below) or shares of Common
Stock issuable upon the exercise of any options or warrants outstanding
on the date hereof and listed in Schedule 2.1(c) of the Purchase
Agreement) for a consideration per share less than the Exercise Price
in effect immediately prior to such issuance or sale, then immediately
after such issue or sale, the Exercise Price then in effect shall be
reduced to an amount equal to the consideration per share of Common
Stock of such issuance or sale. If at any time prior to the one year
anniversary of the Reset Date, the Company issues or sells, or is
deemed to have issued or sold, any shares of Common Stock (other than
Underlying Shares, shares of Common Stock deemed to have been issued by
the Company in connection with an Approved Stock Plan (as defined
below) or shares of Common Stock issuable upon the exercise of any
options or warrants outstanding on the date hereof and listed in
Schedule 2.1(c) of the Purchase Agreement or shares of Common Stock
issued or deemed to have been issued as consideration for an
acquisition by the Company of a license or of a division, assets or
business (or stock constituting any portion thereof) from another
person) for a consideration per share which is (A) greater than the
Exercise Price in effect immediately prior to such issuance or sale and
(B) less than the average of the Per Share Market Values on the five
consecutive Trading Days immediately preceding the date of such
issuance or sale (the price in this clause (B) is herein referred to as
"Market Price"), then immediately after such issue or sale, the
Exercise Price then in effect shall be reduced to an amount equal to
25
the product of (x) the Exercise Price in effect immediately prior to
such issue or sale and (y) the quotient determined by dividing (1) the
sum of (I) the product of (A) the Market Price and (B) the number of
shares of Common Stock Deemed Outstanding (as defined below)
immediately prior to such issue or sale, and (II) the consideration, if
any, received by the Company upon such issue or sale, by (2) the
product of (I) the Market Price and (II) the number of shares of Common
Stock Deemed Outstanding (as defined below) immediately after such
issue or sale; provided that no adjustment shall be made if such
adjustment would result in an increase of the Exercise Price in effect
immediately prior to such issuance or sale. For purposes of determining
the adjusted Exercise Price under this Section 6(h)(i), the following
shall be applicable:
(A) Issuance of Options. If at any time prior to the one year
anniversary of the Reset Date, the Company in any manner grants, sells
or otherwise issues any rights or options to subscribe for or to
purchase Common Stock or any stock or other securities convertible into
or exchangeable for Common Stock (such rights or options being herein
called "Options" and such convertible or exchangeable stock or
securities being herein called "Convertible Securities") and the price
per share for which Common Stock is issuable upon the exercise of such
Options or upon conversion or exchange of such Convertible Securities
is less than the Exercise Price in effect immediately prior to such
grant, sale or issuance, then the Exercise Price shall be adjusted to
equal the price per share for which Common Stock is issuable upon the
exercise of such Options or upon the conversion or exchange of such
Convertible Securities. If at any time prior to the one year
anniversary of the Reset Date, the Company in any manner grants, sells
or otherwise issues any Options (other than Underlying Shares, shares
of Common Stock deemed to have been issued by the Company in connection
with an Approved Stock Plan (as defined below) or shares of Common
Stock issuable upon the exercise of any options or warrants outstanding
on the date hereof and listed in Schedule 2.1(c) of the Purchase
Agreement and the price per share for which Common Stock is issuable
upon exercise of such Options or upon the conversions or exchange of
such Convertible Securities is (A) greater than the Exercise Price in
effect immediately prior to such grant, issuance or sale and (B) less
than the Market Price, then immediately after such grant, issue or
sale, the Exercise Price then in effect shall be reduced to an amount
equal to the product of (x) the Exercise Price in effect immediately
prior to such grant, sale or issuance and (y) the quotient determined
by dividing (1) the sum of (I) the product of (A) the Market Price and
(B) the number of shares of Common Stock Deemed Outstanding (as defined
below) immediately prior to such issue or sale, and (II) the
consideration, if any, received by the Company upon such issue, sale,
grant, exercise, conversion or exchange, by (2) the product of (I) the
Market Price and (II) the number of shares of Common Stock Deemed
Outstanding (as defined below) immediately after such grant; provided
that no adjustment shall be made if such adjustment would result in an
increase of the Exercise Price in effect immediately prior to such
grant. No adjustment of the Exercise Price shall be made upon the
actual issuance of such Common Stock or of such Convertible Securities
upon the exercise of such Options or upon the actual issuance of such
Common Stock upon conversion or exchange of such Convertible
Securities.
(B) Issuance of Convertible Securities. If at any time prior
to the one year anniversary of the Reset Date, the Company in any
manner issues or sells any Convertible Securities and the price per
share for which Common Stock is issuable upon such conversion or
exchange is less than the Exercise Price in effect immediately prior to
issuance or sale, then the Exercise Price shall be adjusted to equal
the price per share for which Common Stock is issuable upon the
conversion or exchange of such Convertible Securities. If at any time
prior to the one year anniversary of the Reset Date, the Company issues
or sells, or is deemed to have issued or sold, any Convertible
Securities and the price per share for which Common Stock issuable upon
conversion or exchange of such Convertible Securities is (A) greater
than the Exercise Price in effect immediately prior to such issuance or
sale and (B) less the Market Price, then immediately after such issue
or sale, the Exercise Price then in effect shall be reduced to an
amount equal to the product of (x) the Exercise Price in effect
immediately prior to such issue or sale and (y) the quotient determined
by dividing (1) the sum of (I) the product of (A) the Market Price and
(B) the number of shares of Common Stock Deemed Outstanding (as defined
below) immediately prior to such issue or sale, and (II) the
consideration, if any, received by the Company upon such issue or sale,
by (2) the product of (I) the Market Price and (II) the number of
shares of Common Stock Deemed Outstanding (as defined below)
immediately after such issue or sale; provided that no adjustment shall
be made if such adjustment would result in an increase of the Exercise
Price in effect immediately prior to such issuance or sale. No
adjustment of the Exercise Price shall be made upon the actual issue of
such Common Stock upon conversion or exchange of such Convertible
Securities, and if any such issue or sale of such Convertible
Securities is made upon exercise of any Options for which adjustment of
26
the Exercise Price had been or are to be made pursuant to other
provisions of this Section 6(h)(i), no further adjustment of the
Exercise Price shall be made by reason of such issue or sale. For
purposes of Section 6(h)(i)(A) and Section 6(h)(i)(B), the price per
share for which Common Stock is issuable upon conversion or exchange of
Convertible Securities shall be calculated by dividing (i) the total
amount, if any, received and receivable by the Company as consideration
for the issue or sale of the Convertible Securities in question, plus
the minimum aggregate amount of additional consideration payable to the
Company upon the conversion or exchange of such Convertible Securities,
by (ii) the maximum number of shares issuable upon conversion or
exchange of the Convertible Securities.
(C) Change in Option Price or Rate of Conversion. If there is
a change at any time in (i) the purchase price provided for in any
Options, (ii) the additional consideration, if any, payable upon the
issue, conversion or exchange of any Convertible Securities or (iii)
the rate at which any Convertible Securities are convertible into or
exchangeable for Common Stock, then the Exercise Price in effect at the
time of such change shall be readjusted to the Exercise Price which
would have been in effect at such time had such Options or Convertible
Securities still outstanding provided for such changed purchase price,
additional consideration or changed conversion rate, as the case may
be, at the time initially granted, issued or sold; provided that no
adjustment shall be made if such adjustment would result in an increase
of the Exercise Price then in effect.
(D) Certain Definitions. For purposes of determining the
adjusted Exercise Price under this Section 6(h)(i), the following terms
have meanings set forth below:
(I) "Approved Stock Plan" shall mean any contract, plan or
agreement which has been approved by the Board of Directors of the
Company, pursuant to which the Company's securities may be issued to
any employee, officer, director or consultant.
(II) "Common Stock Deemed Outstanding" means, at any given
time, the number of shares of Common Stock issued and outstanding at
such time, plus the number of shares of Common Stock underlying any
Options or Convertible Securities regardless of whether the Options or
Convertible Securities are actually exercisable at such time, but
excluding any shares of Common Stock issuable upon exercise of the
Warrants.
(E) Effect on Exercise Price of Certain Events. For purposes
of determining the adjusted Exercise Price under this Section 6(h)(i),
the following shall be applicable:
(I) Calculation of Consideration Received. If any Common
Stock, Options or Convertible Securities are issued or sold for cash,
the consideration received therefor will be deemed to be the net amount
received by the Company therefor. In case any Common Stock, Options or
Convertible Securities are issued or sold for a consideration other
than cash, the amount of the consideration other than cash received by
the Company will be the fair value of such consideration, except where
such consideration consists of securities, in which case the amount of
consideration received by the Company will be the arithmetic average of
the Per Share Market Values of such security for the five (5)
consecutive Trading Days immediately preceding the date of receipt. In
case any Common Stock, Options or Convertible Securities are issued to
the owners of the non-surviving entity in connection with any merger in
which the Company is the surviving entity the amount of consideration
therefor will be deemed to be the fair value of such portion of the net
assets and business of the non-surviving entity as is attributable to
such Common Stock, Options or Convertible Securities, as the case may
be. The fair value of any consideration other than cash or securities
will be determined jointly by the Company and the holder of this
Warrant. If such parties are unable to reach agreement within ten (10)
days after the occurrence of an event requiring valuation (the
"Valuation Event"), the fair value of such consideration will be
determined within forty-eight (48) hours of the tenth (10th) day
following the Valuation Event by an Appraiser selected by the Company,
provided, however, that the holder of the Warrant, after receipt of the
determination by such Appraiser, shall have the right to select an
additional Appraiser, in which case, the fair market value shall be
equal to the average of the determinations by each such Appraiser. The
determination of such Appraisers shall be binding upon all parties
absent manifest error.
27
(II) Integrated Transactions. In case any Option is issued
in connection with the issue or sale of other securities of the
Company, together comprising one integrated transaction in which no
specific consideration is allocated to such Options by the parties
thereto, the Options will be deemed to have been issued for an
aggregate consideration of $.01.
(III) Treasury Shares. The number of shares of Common Stock
outstanding at any given time does not include shares owned or held by
or for the account of the Company, and the disposition of any shares so
owned or held will be considered an issue or sale of Common Stock.
(IV) Record Date. If the Company takes a record of the
holders of Common Stock for the purpose of entitling them (1) to
receive a dividend or other distribution payable in Common Stock,
Options or in Convertible Securities or (2) to subscribe for or
purchase Common Stock, Options or Convertible Securities, then such
record date will be deemed to be the date of the issue or sale of the
shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution
or the date of the granting of such right of subscription or purchase,
as the case may be.
(ii) Certain Events. If any event occurs of the type contemplated by
the provisions of Section 6(h)(i) (subject to the exceptions
stated therein) but not expressly provided for by such provisions
(including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with
equity features), then the Company's Board of Directors will make
an appropriate adjustment in the Exercise Price so as to protect
the rights of the Registered Holder, or assigns, of this Warrant;
provided, however, that no such adjustment will increase the
Exercise Price as otherwise determined pursuant to this Section
6(h).
7. Adjustment of Shares Issuable Upon Exercise. The number of shares
of Common Stock which the holder of this Warrant shall be entitled to receive
upon each exercise hereof shall be determined by multiplying the number of
shares of Common Stock which would otherwise (but for the provisions of this
paragraph 7) be issuable upon such exercise, as designated by the holder hereof,
by the fraction of which (a) the numerator is the Exercise Price applicable
pursuant to paragraph 3 of this Warrant (before any adjustment pursuant to
paragraph 6) and (b) the denominator is the Exercise Price in effect on the date
of such exercise as adjusted pursuant to paragraph 6.
8. Definitions. Capitalized terms used herein and not otherwise
defined herein shall have the meanings given to such terms in the Purchase
Agreement. As used in this Warrant, the following terms have the following
meanings:
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls or is controlled by or under common control with
such Person. For the purposes of this definition, "control," when used with
respect to any Person, means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms of "affiliated," controlling" and "controlled" have meanings
correlative to the foregoing.
"Appraiser" has the meaning assigned to it in section 6(c) hereof.
"Business Day" means any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in the state of
New York generally are authorized or required by law or other government actions
to close.
"Common Stock" means the shares of the Company's Common Stock, par
value $.0001 per share.
"Company" means Digital Courier Technologies, Inc., a Delaware
corporation.
"Convertible Securities" has the meaning assigned to it in section
6(h)(i)(A) hereof.
28
"Exercise Period" has the meaning assigned to it the section 4 hereof.
"Exercise Price" has the meaning assigned to it in section 3 hereof.
"Market Price" has the meaning assigned to it in section 6(h)(i)
hereof.
"Options" has the meaning assigned to it in section 6(h)(i)(A) hereof.
"Per Share Market Value" means on any particular date (i) the closing
bid price per share of the Common Stock on such date on the National Market
System of the Nasdaq Stock Market or other registered national stock exchange on
which the Common Stock is then listed or if there is no such price on such date,
then the closing bid price on such exchange or quotation system on the date
nearest preceding such date, or (ii) if the Common Stock is not listed then on
the National Market System of the Nasdaq Stock Market or any registered national
stock exchange, the closing bid price for a share of Common Stock in the
over-the-counter market, as reported by the National Quotation Bureau
Incorporated (or similar organization or agency succeeding to its functions of
reporting prices) at the close of business on such date, or (iii) if the Common
Stock is not then publicly traded the fair market value of a share of Common
Stock as determined by an Appraiser selected in good faith by the holder of this
Warrant; provided, however, that the Company, after receipt of the determination
by such Appraiser, shall have the right to select an additional Appraiser, in
which case, the fair market value shall be equal to the average of the
determinations by each such Appraiser; and provided, further that all
determinations of the Per Share Market Value shall be appropriately adjusted for
any stock dividends, stock splits or other similar transactions during such
period.
"Purchase Agreement" means that certain Securities Purchase Agreement,
dated June 14, 1999 between the Company and TSA.
"Redemption Event" has the meaning assigned to it in section 6(f)
hereof.
"Registered Owner" means TSA or such other Person as shown on the
records of the Company as being the registered owner of this Warrant.
"Registration Rights Agreement" means that certain Registration Rights
Agreement, dated June 14, 1999 between the Company and TSA.
"Trading Day(s)" means any day on which the primary market on which
shares of Common Stock are listed is open for trading.
"Warrant" means the warrant issuable at the Closing or any replacement
therof.
"Underlying Shares" has the meaning assigned to it in section 2.1(d) of
the Purchase Agreement.
9. Registration Rights. The Company will undertake the registration
of the Common Stock into which such Warrants are exercisable at such times and
upon such terms pursuant to the provisions of the Registration Rights Agreement.
10. Reservation of Underlying Shares. The Underlying Shares are and
will at all times hereafter continue to be duly authorized and reserved for
issuance pursuant to this Warrant.
11. Assignment and Replacement. This Warrant may be assigned by the
holder, subject to the restrictions contained in Section 3.1 of the Purchase
Agreement.
29
Upon surrender of any Warrant for registration of transfer or for
exchange to the Company at its principal office, the Company at its expense will
execute and deliver in exchange therefor a new Warrant or Warrants of like
tenor, in the name of such holder or as such holder may direct, calling in the
aggregate on the face or faces thereof for the number of shares of Common Stock
called for on the face or faces of the Warrant or Warrants so surrendered.
Upon receipt of evidence reasonably satisfactory to the Company of the
loss, theft, destruction or mutilation of any Warrant and, in the case of any
such loss, theft or destruction of any Warrant, upon delivery of an indemnity
bond in such reasonable amount as the Company may determine or, in the case of
any such mutilation, upon the surrender of such Warrant for cancellation to the
Company at its principal office, the Company at its expense will execute and
deliver, in lieu thereof, a new Warrant of like tenor.
12. Notices. Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be deemed to have been received
(a) upon hand delivery (receipt acknowledged) or delivery by telex (with correct
answer back received), telecopy or facsimile (with transmission confirmation
report) at the address or number designated below (if received by 7:00 p.m. EST
where such notice is to be received), or the first business day following such
delivery (if delivered on a business day after during normal business hours
where such notice is to be received) or (b) on the second business day following
the date of mailing by express courier service, fully prepaid, addressed to such
address, or upon actual receipt of such mailing, whichever shall first occur.
The addresses for such communications are (i) if to the Company to Digital
Courier Technologies, Inc., 000 Xxxxx Xxxxxx, Xxxxx 000 XX Xxx 0000, Xxxx Xxxx,
XX 00000 attn: Xxxxxxxx Xxxxxxx, fax no. (000) 000 0000 and (ii) if to the
Purchaser to Transaction Systems Architects, Inc., 000 X. 000 Xxxxxx, Xxxxx,
Xxxxxxxx 00000 attn: General Counsel; fax no. (000) 000 0000, or such other
address as may be designated in writing hereafter, in the same manner, by such
Person.
[signature page follows]
30
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its duly authorized officer as of the date first set forth above.
DIGITAL COURIER TECHNOLOGIES, INC.
By: /s/ Xxxxxx Xxxxxx
-------------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President-Legal
31
EXHIBIT A
Warrant Exercise Form
---------------------
TO: DIGITAL COURIER TECHNOLOGIES, INC.
The undersigned hereby: (1) irrevocably subscribes for and offers to
purchase _______ shares of Common Stock of Digital Courier Technologies, Inc.,
pursuant to Warrant No. ___ heretofore issued to ___________________ on
____________, 1999; (2) encloses a payment of $__________ for these shares at a
price of $____ per share (as adjusted pursuant to the provisions of the
Warrant); and (3) requests that a certificate for the shares be issued in the
name of the undersigned and delivered to the undersigned at the address
specified below.
Date:
---------------------------------------------
Investor Name:
---------------------------------------------
Taxpayer Identification
Number:
---------------------------------------------
By:
---------------------------------------------
Printed Name:
---------------------------------------------
Title:
---------------------------------------------
Address:
---------------------------------------------
---------------------------------------------
---------------------------------------------
Note: The above signature should correspond exactly with
the name on the face of this Warrant Certificate or
with the name of assignee appearing in assignment
form below.
AND, if said number of shares shall not be all the shares purchasable under the
within Warrant, a new Warrant Certificate is to be issued in the name of said
undersigned for the balance remaining of the shares purchasable thereunder less
any fraction of a share paid in cash and delivered to the address stated above.
32
REGISTRATION RIGHTS AGREEMENT
-----------------------------
This Registration Rights Agreement (this "Agreement") is made and
entered into as of June 14, 1999 between Digital Courier Technologies, Inc., a
Delaware corporation (the "Company") and Transaction Systems Architects, Inc., a
Delaware corporation (the "Purchaser"). This Agreement is made pursuant to the
Securities Purchase Agreement, dated as of the date hereof between the Company
and the Purchaser (the "Purchase Agreement").
The Company and the Purchaser hereby agree as follows:
1. Definitions
-----------
Capitalized terms used and not otherwise defined herein shall
have the meanings given such terms in the Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings:
"Advice" has meaning set forth in Section 3(o) hereof.
"Affiliate" means, with respect to any Person, any other Person
that directly or indirectly controls or is controlled by or under common control
with such Person. For the purposes of this definition, "control," when used with
respect to any Person, means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms of "affiliated," controlling" and "controlled" have meanings
correlative to the foregoing.
"Allowable Grace Period" has the meaning set forth in Section
3(p) hereof.
"Business Day" means any day except Saturday, Sunday and any day
which shall be a legal holiday or a day on which banking institutions in the
State of New York generally are authorized or required by law or other
government actions to close.
"Closing Date" has the meaning set forth in the Purchase
Agreement.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Company's Common Stock, par value $.0001
per share.
"Effectiveness Date" means the earlier of (i) the 120th day
following the Closing Date, or (ii) the fifth day after the Company received
notice (written or oral) from the Commission that the Commission Staff would not
be reviewing the Registration Statement.
"Effectiveness Period" has the meaning set forth in Section 2(a)
hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Event" has the meaning set forth in Section 2(d) hereof.
"Filing Date" means as soon as practicable but in not event later
than the 60th day following the Closing Date.
"Holder" or "Holders" means the holder or holders, as the case
may be, from time to time of Registrable Securities.
"Indemnified Party" has the meaning set forth in Section 5(c)
hereof.
"Indemnifying Party" has the meaning set forth in Section 5(c)
hereof.
33
"Losses" has the meaning set forth in Section 5(a) hereof.
"Person" means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind.
"Proceeding" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
"Prospectus" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference in such Prospectus.
"Purchase Price" has the meaning set forth in Section 2(d)
hereof.
"Registrable Securities" means the shares of Common Stock
issuable upon (i) the Closing Date, (ii) the exercise of the Warrant, and (iii)
any shares of the Company's capital stock issued with respect to the Shares
purchased by the Purchaser under the Purchase Agreement or Underlying Shares as
a result of any stock split, stock dividend, recapitalization, exchange or
similar event or otherwise.
"Registration Delay Payment" has the meaning set forth in Section
2(d) hereof.
"Registration Statement(s)" means the Registration Statement and
any additional registration statements contemplated by Section 2(a), including
(in each case) the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments, all
exhibits thereto, and all material incorporated by reference in such
registration statement.
"Rule 144" means Rule 144 promulgated by the Commission pursuant
to the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Rule 158" means Rule 158 promulgated by the Commission pursuant
to the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Rule 415" means Rule 415 promulgated by the Commission pursuant
to the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" means the shares of Common Stock issuable at the
Closing.
"Special Counsel" means any special counsel to the Holders, for
which the Holders will be reimbursed by the Company pursuant to Section 4.
"Underwritten Offering" means an offering in which securities of
the Company are sold to an underwriter for reoffering to the public pursuant to
an effective registration statement.
"Warrant" means the warrant issuable at the Closing and any
replacement thereof.
34
2. Shelf Registration
------------------
(a) On or prior to each applicable Filing Date, the Company
shall prepare and file with the Commission the Registration Statement covering
all Registrable Securities , for an offering to be made on a continuous basis
pursuant to a "Shelf" registration statement under Rule 415. Each Registration
Statement shall be on Form S-3 or any successor form (except if the Company is
not then eligible to register for resale the Registrable Securities on Form S-3,
in which case such registration shall be on another appropriate form in
accordance herewith). The Company shall (i) not permit any securities other than
the Registrable Securitiesto be included in the Registration Statement and (ii)
use its commercially reasonable efforts to cause the Registration Statement to
be declared effective under the Securities Act as promptly as possible after the
filing thereof, but in any event on or prior to the Effectiveness Date, and to
keep such Registration Statement continuously effective under the Securities Act
until the date which is two years after the date that the Warrant has been fully
exercised or such earlier date when all Registrable Securities covered by such
Registration Statement have been sold or may be sold without volume restrictions
pursuant to Rule 144 as determined by the counsel to the Company pursuant to a
written opinion letter, addressed to the Company's transfer agent to such effect
(the "Effectiveness Period").
(b) If the Registrable Securities are to be offered and sold
in an Underwritten Offering, and if the managing underwriters advise the Company
and such Holders in writing that in their opinion the amount of Registrable
Securities proposed to be sold in such Underwritten Offering exceeds the amount
of Registrable Securities which can be sold in such Underwritten Offering, there
shall be included in such Underwritten Offering the amount of such Registrable
Securities which in the opinion of such managing underwriters can be sold, and
such amount shall be allocated pro rata among the Holders proposing to sell
Registrable Securities in such Underwritten Offering.
(c) If the Holders of a majority of the Registrable Securities
so elect, an offering of Registrable Securities pursuant to a Registration
Statement may be effected in the form of an Underwritten Offering. If any of the
Registrable Securities are to be sold in an Underwritten Offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Holders of a majority of the
Registrable Securities included in such offering.
(d) If (i) the Registration Statement covering all the
applicable Registrable Securities and required to be filed by the Company
pursuant to this Agreement is not (A) filed with the Commission on or before the
applicable Filing Date or (B) declared effective by the Commission on or before
the applicable Effectiveness Date or (ii) on any day after the Registration
Statement has been declared effective by the Commission, other than days during
an Allowable Grace Period, sales of all the Registrable Securities required to
be included on a Registration Statement cannot be made pursuant to the
respective Registration Statement (including, without limitation, because of a
failure to keep the Registration Statement effective, to disclose such
information as is necessary for sales to be made pursuant to the Registration
Statement, to register sufficient shares of Common Stock, or to file any
required amendment or supplement) (each such event specified in (A) and (B)
above, an "Event"), then, as partial relief for the damages to any Holder by
reason of any such delay in or reduction of its ability to sell the Shares
(which remedy shall not be exclusive of any other remedies available at law or
in equity), the Company shall pay to each Holder an amount in cash (a
"Registration Delay Payment") equal to two percent (2%) of the product of (x)
purchase price per Unit specified in Section 1.1 of the Purchase Agreement (the
"Purchase Price") multiplied by (y) the number of Registrable Securities held by
such Holder. Registration Delay Payments shall be paid on the earlier of (I) the
last Business Day of the calendar month during which such Registration Delay
Payments are incurred and (II) the third (3rd) Business Day after the Event
giving rise to the Registration Delay Payment is cured. In the event the Company
fails to make a Registration Delay Payment in a timely manner, such Registration
Delay Payment shall bear interest at the rate of 2.0% per month (prorated for
35
partial months) until paid in full. If the Company fails to pay a Registration
Delay Payment, including any interest thereon, within 15 Business Days of the
date such Registration Delay Payment is due, or if the Event giving rise to the
Registration Delay Payment is not cured within 60 days after such Event, then
the Holder entitled to such Registration Delay Payment or all Holders in the
event of a failure to cure shall have the right at any time, so long as the
Company fails to make such Registration Delay Payments or to cure the Event, to
require the Company, upon written notice, to immediately pay to the Holder
entitled to the Registration Delay Payment or to all Holders in the case of an
uncured Event an amount in cash equal to the Purchase Price paid by such Holder
or Holders plus any unpaid interest relating to Registration Delay Payments.
3. Registration Procedures
-----------------------
In connection with the Company's registration obligations
hereunder, the Company shall:
(a) Prepare and file with the Commission on or prior to each
applicable Filing Date, a Registration Statement on Form S-3 or its successor
form (or if the Company is not then eligible to register for resale the
Registrable Securities on Form S-3 such registration shall be on another
appropriate form in accordance herewith) in accordance with the method or
methods of distribution thereof as specified by the Holders (except if otherwise
directed by the Holders), and cause the Registration Statement to become
effective and remain effective as provided herein; provided, however, that not
less than a reasonable time prior to the filing of the Registration Statement or
any related Prospectus or any amendment or supplement thereto (including any
document that would be incorporated therein by reference), the Company shall,
(i) upon request furnish to the Holders, their Special Counsel and any managing
underwriters, copies of all such documents proposed to be filed (including
documents incorporated by reference if reasonably practicable), which documents
will be subject to the review of such Holders, their Special Counsel and such
managing underwriters, and (ii) cause its officers and directors, counsel and
independent certified public accountants to respond to such inquiries as shall
be necessary, in the reasonable opinion of respective counsel to such Holders
and such underwriters, to conduct a reasonable investigation within the meaning
of the Securities Act. The Company shall not file the Registration Statement or
any such Prospectus or any amendments or supplements thereto to which the
Holders of a majority of the Registrable Securities, their Special Counsel, or
any managing underwriters, shall reasonably object.
(b) (i) Prepare and file with the Commission such amendments,
including post-effective amendments, to the Registration Statement as may be
necessary to keep the Registration Statement continuously effective as to the
applicable Registrable Securities for the Effectiveness Period and prepare and
file with the Commission any additional Registration Statements in order to
register for resale under the Securities Act all of the Registrable Securities;
(ii) cause the related Prospectus to be amended or supplemented by any required
Prospectus supplement, and as so supplemented or amended to be filed pursuant to
Rule 424 (or any similar provisions then in force) promulgated under the
Securities Act; (iii) respond as promptly as possible to any comments received
from the Commission with respect to the Registration Statement or any amendment
thereto and as promptly as possible provide the Holders true and complete copies
of all correspondence from and to the Commission relating to the Registration
Statement; and (iv) comply in all material respects with the provisions of the
Securities Act and the Exchange Act with respect to the disposition of all
Registrable Securities covered by the Registration Statement during the
applicable period in accordance with the intended methods of disposition by the
Holders thereof set forth in the Registration Statement as so amended or in such
Prospectus as so supplemented.
(c) Notify the Holders of Registrable Securities to be sold,
their Special Counsel and any managing underwriters as promptly as possible
(and, in the case of (i)(A) below, not less than a reasonable time prior to such
filing) and (if requested by any such Person) confirm such notice in writing no
later than one (1) Business Day following the day (i)(A) when a Prospectus or
any Prospectus supplement or post-effective amendment to the Registration
Statement is proposed to be filed; (B) when the Commission notifies the Company
whether there will be a "review" of such Registration Statement and whenever the
Commission comments in writing on such Registration Statement and (C) with
respect to the Registration Statement or any post-effective amendment, when the
same has become effective; (ii) of any request by the Commission or any other
Federal or state governmental authority for amendments or supplements to the
Registration Statement or Prospectus or for additional information; (iii) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement covering any or all of the Registrable Securities or the
initiation of any Proceedings for that purpose; (iv) if at any time any of the
representations and warranties of the Company contained in any agreement
contemplated hereby ceases to be true and correct in all material respects; (v)
36
of the receipt by the Company of any notification with respect to the suspension
of the qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction, or the initiation or threatening of any
Proceeding for such purpose; and (vi) of the occurrence of any event that makes
any statement made in the Registration Statement or Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in any
material respect or that requires any revisions to the Registration Statement,
Prospectus or other documents so that, in the case of the Registration Statement
or the Prospectus, as the case may be, it will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(d) Use its best efforts to avoid the issuance of, or, if
issued, obtain the withdrawal of (i) any order suspending the effectiveness of
the Registration Statement or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.
(e) If requested by any managing underwriter or the Holders of
a majority in interest of the Registrable Securities to be sold in connection
with an Underwritten Offering, (i) promptly incorporate in a Prospectus
supplement or post-effective amendment to the Registration Statement such
information as the Company reasonably agrees should be included therein and (ii)
make all required filings of such Prospectus supplement or such post-effective
amendment as soon as practicable after the Company has received notification of
the matters to be incorporated in such Prospectus supplement or post-effective
amendment; provided, however, that the Company shall not be required to take any
action pursuant to this Section 3(e) that would, in the opinion of counsel for
the Company, violate applicable law or be materially detrimental to the business
prospects of the Company.
(f) Furnish to each Holder, their Special Counsel and any
managing underwriters, without charge, at least one conformed copy of each
Registration Statement and each amendment thereto, including financial
statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference, and all exhibits to the extent requested by
such Person (including those previously furnished or incorporated by reference)
promptly after the filing of such documents with the Commission.
(g) Promptly deliver to each Holder, their Special Counsel,
and any underwriters, without charge, as many copies of the Prospectus or
Prospectuses (including each form of prospectus) and each amendment or
supplement thereto as such Persons may reasonably request; and the Company
hereby consents to the use of such Prospectus and each amendment or supplement
thereto by each of the selling Holders and any underwriters in connection with
the offering and sale of the Registrable Securities covered by such Prospectus
and any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Securities,
use its best efforts to register or qualify or cooperate with the selling
Holders, any underwriters and their Special Counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as
any Holder or underwriter requests in writing, to keep each such registration or
qualification (or exemption therefrom) effective during the Effectiveness Period
and to do any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by a
Registration Statement; provided, however, that the Company shall not be
required to qualify generally to do business in any jurisdiction where it is not
then so qualified or to take any action that would subject it to general service
of process in any such jurisdiction where it is not then so subject or subject
the Company to any material tax in any such jurisdiction where it is not then so
subject.
(i) Cooperate with the Holders and any managing underwriters
to facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold pursuant to a Registration Statement, which
certificates shall be free, to the extent permitted by applicable law, of all
restrictive legends, and to enable such Registrable Securities to be in such
denominations and registered in such names as any such managing underwriters or
Holders may request at least two (2) Business Days prior to any sale of
Registrable Securities.
(j) Upon the occurrence of any event contemplated by Section
3(c)(vi), as promptly as possible, prepare a supplement or amendment, including
37
a post-effective amendment, to the Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as
thereafter delivered, neither the Registration Statement nor such Prospectus
will contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
(k) Use its best efforts to cause all Registrable Securities
relating to such Registration Statement to be listed on the National Market
System of the Nasdaq Stock Market and any other securities exchange, quotation
system, market or over-the-counter bulletin board, if any, on which similar
securities issued by the Company are then listed as and when required pursuant
to the Purchase Agreement.
(l) Enter into such agreements (including an underwriting
agreement in form, scope and substance as is customary in Underwritten
Offerings) and take all such other actions in connection therewith (including
those reasonably requested by any managing underwriters and the Holders of a
majority of the Registrable Securities being sold) in order to expedite or
facilitate the disposition of such Registrable Securities, and whether or not an
underwriting agreement is entered into, (i) make such representations and
warranties to such Holders and such underwriters as are customarily made by
issuers to underwriters in underwritten public offerings, and confirm the same
if and when requested; (ii) in the case of an Underwritten Offering obtain and
deliver copies thereof to the managing underwriters, if any, of opinions of
counsel to the Company and updates thereof addressed to each such underwriter,
in form, scope and substance reasonably satisfactory to any such managing
underwriters and Special Counsel to the selling Holders covering the matters
customarily covered in opinions requested in Underwritten Offerings and such
other matters as may be reasonably requested by such Special Counsel and
underwriters; (iii) immediately prior to the effectiveness of the Registration
Statement, and, in the case of an Underwritten Offering, at the time of delivery
of any Registrable Securities sold pursuant thereto, obtain and deliver copies
to the Holders and the managing underwriters, if any, of "cold comfort" letters
and updates thereof from the independent certified public accountants of the
Company (and, if necessary, any other independent certified public accountants
of any subsidiary of the Company or of any business acquired by the Company for
which financial statements and financial data is, or is required to be, included
in the Registration Statement), addressed to each selling Holder and each of the
underwriters, if any, in form and substance as are customary in connection with
Underwritten Offerings; (iv) if an underwriting agreement is entered into, the
same shall contain indemnification provisions and procedures no less favorable
to the selling Holders and the underwriters, if any, than those set forth in
Section 6 (or such other provisions and procedures acceptable to the managing
underwriters, if any, and holders of a majority of Registrable Securities
participating in such Underwritten Offering; and (v) deliver such documents and
certificates as may be reasonably requested by the Holders of a majority of the
Registrable Securities being sold, their Special Counsel and any managing
underwriters to evidence the continued validity of the representations and
warranties made pursuant to clause 3(1)(i) above and to evidence compliance with
any customary conditions contained in the underwriting agreement or other
agreement entered into by the Company.
(m) Make available for inspection by the selling Holders, any
representative of such Holders, any underwriter participating in any disposition
of Registrable Securities, and any attorney or accountant retained by such
selling Holders or underwriters, at the offices where normally kept, during
reasonable business hours, all financial and other records, pertinent corporate
documents and properties of the Company and its subsidiaries, and cause the
officers, directors, agents and employees of the Company and its subsidiaries to
supply all information in each case reasonably requested by any such Holder,
representative, underwriter, attorney or accountant in connection with the
Registration Statement; provided, however, that any information that is
determined in good faith by the Company in writing to be of a confidential
nature at the time of delivery of such information shall be kept confidential by
such Persons, unless (i) disclosure of such information is required by court or
administrative order or is necessary to respond to inquiries of regulatory
authorities; (ii) disclosure of such information, in the opinion of counsel to
such Person, is required by law; (iii) such information becomes generally
available to the public other than as a result of a disclosure or failure to
safeguard by such Person; or (iv) such information becomes available to such
Person from a source other than the Company and such source is not known by such
Person to be bound by a confidentiality agreement with the Company.
(n) Comply in all material respects with all applicable rules
and regulations of the Commission and make generally available to its security
holders earning statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 not later than 45 days after the end of any 12-month
38
period (or 90 days after the end of any 12-month period if such period is a
fiscal year) (i) commencing at the end of any fiscal quarter in which
Registrable Securities are sold to underwriters in a firm commitment or best
efforts Underwritten Offering and (ii) if not sold to underwriters in such an
offering, commencing on the first day of the first fiscal quarter of the Company
after the effective date of the Registration Statement, which statement shall
conform to the requirements of Rule 158.
(o) The Company may require each selling Holder to furnish to
the Company information regarding such Holder and the distribution of such
Registrable Securities as is required by law to be disclosed in the Registration
Statement, and the Company may exclude from such registration the Registrable
Securities of any such Holder who unreasonably fails to furnish such information
within a reasonable time after receiving such request.
If the Registration Statement refers to any Holder by name or
otherwise as the holder of any securities of the Company, then such Holder shall
have the right to require (if such reference to such Holder by name or otherwise
is not required by the Securities Act or any similar Federal statute then in
force) the deletion of the reference to such Holder in any amendment or
supplement to the Registration Statement filed or prepared subsequent to the
time that such reference ceases to be required.
Each Holder covenants and agrees that (i) it will not sell any
Registrable Securities under the Registration Statement until it has received
copies of the Prospectus as then amended or supplemented as contemplated in
Section 3(g) and notice from the Company that such Registration Statement and
any post-effective amendments thereto have become effective as contemplated by
Section 3(c) and (ii) it and its officers, directors or Affiliates, if any, will
comply with the prospectus delivery requirements of the Securities Act as
applicable to them in connection with sales of Registrable Securities pursuant
to the Registration Statement.
Each Holder agrees by its acquisition of such Registrable
Securities that, upon receipt of a notice from the Company of the occurrence of
any event of the kind described in Section 3(c)(ii), 3(c)(iii), 3(c)(v) or
3(c)(vi), such Holder will forthwith discontinue disposition of such Registrable
Securities under the Registration Statement until such Holder's receipt of the
copies of the supplemented Prospectus and/or amended Registration Statement
contemplated by Section 3(j), or until it is advised in writing (the "Advice")
by the Company that the use of the applicable Prospectus may be resumed, and, in
either case, has received copies of any additional or supplemental filings that
are incorporated or deemed to be incorporated by reference in such Prospectus or
Registration Statement.
(p) If (a) there is material non-public information regarding
the Company which the Company's Board of Directors reasonably determines not to
be in the Company's best interest to disclose and which the Company is not
otherwise required to disclose, or (b) there is a significant business
opportunity (including but not limited to the acquisition or disposition of
assets (other than in the ordinary course of business) or any merger,
consolidation, tender offer or other similar transaction) available to the
Company which the Company's Board of Directors determines not to be in the
Company's best interest to disclose, then the Company may postpone or suspend
filing or effectiveness of a registration statement for a period not to exceed
20 consecutive days (an "Allowable Grace Period"), provided that the Company may
not postpone or suspend its obligation under this Section 3(p) for more than 30
days in the aggregate during any 365-day period and there shall be an aggregate
of not more than two (2) such suspensions during any 365-day period; provided,
however, that no such postponement or suspension shall be permitted for
consecutive periods aggregating more than 20 days, arising out of the same set
of facts, circumstances or transactions.
4. Registration Expenses
---------------------
All fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by the Company
whether or not pursuant to an Underwritten Offering and whether or not the
Registration Statement is filed or becomes effective and whether or not any
Registrable Securities are sold pursuant to the Registration Statement. The fees
and expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses (A) with respect to filings required to be made with the
Nasdaq Stock Market and each other securities exchange or market on which
Registrable Securities are required hereunder to be listed and (B) in compliance
with state securities or Blue Sky laws (including, without limitation, fees and
39
disbursements of counsel for the Holders in connection with Blue Sky
qualifications of the Registrable Securities and determination of the
eligibility of the Registrable Securities for investment under the laws of such
jurisdictions as the managing underwriters, if any, or the Holders of a majority
of Registrable Securities may designate)), (ii) printing expenses (including,
without limitation, expenses of printing certificates for Registrable Securities
and of printing prospectuses if the printing of prospectuses is requested by the
managing underwriters, if any, or by the holders of a majority of the
Registrable Securities included in the Registration Statement), (iii) messenger,
telephone and delivery expenses, (iv) fees and disbursements of counsel for the
Company and Special Counsel for the Holders, in the case of the Special Counsel,
to a maximum amount of $10,000, (v) fees and disbursements of the Company's
accountants, (vi) Securities Act liability insurance, if the Company so desires
such insurance, and (vii) fees and expenses of all other Persons retained by the
Company in connection with the consummation of the transactions contemplated by
this Agreement. In addition, the Company shall be responsible for all of its
internal expenses incurred in connection with the consummation of the
transactions contemplated by this Agreement (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit, the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder. If the Holders require an
Underwritten Offering pursuant to the terms hereof, the Company shall be
responsible for all costs, fees and expenses in connection therewith, except for
the any underwriting commissions and discounts.
5. Indemnification
---------------
(a) Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold harmless
each Holder, the officers, directors, agents (including any underwriters
retained by such Holder in connection with the offer and sale of Registrable
Securities), brokers (including brokers who offer and sell Registrable
Securities as principal as a result of a pledge or any failure to perform under
a margin call of Common Stock), investment advisors and employees of each of
them, each Person who controls any such Holder (within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act) and the officers,
directors, agents and employees of each such controlling Person, to the fullest
extent permitted by applicable law, from and against any and all losses, claims,
damages, liabilities, costs (including, without limitation, costs of preparation
and attorneys' fees) and expenses (collectively, "Losses"), as incurred, arising
out of or relating to any untrue or alleged untrue statement of a material fact
contained in the Registration Statement, any Prospectus or any form of
prospectus or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or relating to any omission or alleged omission of
a material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in light of the circumstances under which they were made)
not misleading, except to the extent, but only to the extent, that such untrue
statements or omissions are based solely upon information regarding such Holder
furnished in writing to the Company by such Holder expressly for use therein,
which information was reasonably relied on by the Company for use therein or to
the extent that such information relates to such Holder or such Holder's
proposed method of distribution of Registrable Securities and was reviewed and
expressly approved in writing by such Holder expressly for use in the
Registration Statement, such Prospectus or such form of Prospectus or in any
amendment or supplement thereto. The Company shall notify the Holders promptly
of the institution, threat or assertion of any Proceeding of which the Company
is aware in connection with the transactions contemplated by this Agreement.
(b) Indemnification by Holders. Each Holder shall, severally
and not jointly, indemnify and hold harmless the Company, the directors,
officers, agents and employees, each Person who controls the Company (within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act),
and the directors, officers, agents or employees of such controlling Persons, to
the fullest extent permitted by applicable law, from and against all Losses, as
incurred, arising solely out of or based solely upon any untrue statement of a
material fact contained in the Registration Statement, any Prospectus, or any
form of prospectus, or arising solely out of or based solely upon any omission
of a material fact required to be stated therein or necessary to make the
statements therein not misleading to the extent, but only to the extent, that
such untrue statement or omission is contained in any information so furnished
in writing by such Holder to the Company specifically for inclusion in the
Registration Statement or such Prospectus and that such information was
reasonably relied upon by the Company for use in the Registration Statement,
such Prospectus or such form of prospectus and that such information relates to
such Holder or such Holder's proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing by such Holder
expressly for use in the Registration Statement, such Prospectus or such form of
Prospectus. In no event shall the liability of any Holder hereunder be greater
40
in amount than the dollar amount of the net proceeds received by such Holder
upon the sale of the Registrable Securities giving rise to such indemnification
obligation.
(c) Conduct of Indemnification Proceedings. If any Proceeding
shall be brought or asserted against any Person entitled to indemnity hereunder
(an "Indemnified Party"), such Indemnified Party promptly shall notify the
Person from whom indemnity is sought (the "Indemnifying Party") in writing, and
the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of all fees and expenses incurred in connection with defense thereof;
provided, however, that the failure of any Indemnified Party to give such notice
shall not relieve the Indemnifying Party of its obligations or liabilities
pursuant to this Agreement, except (and only) to the extent that it shall be
finally determined by a court of competent jurisdiction (which determination is
not subject to appeal or further review) that such failure shall have
proximately and materially adversely prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate
counsel in any such Proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in
writing to pay such fees and expenses; or (2) the Indemnifying Party shall have
failed promptly to assume the defense of such Proceeding and to employ counsel
reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3)
the named parties to any such Proceeding (including any impleaded parties)
include both such Indemnified Party and the Indemnifying Party, and such
Indemnified Party shall have been advised by counsel that a conflict of interest
is likely to exist if the same counsel were to represent such Indemnified Party
and the Indemnifying Party (in which case, if such Indemnified Party notifies
the Indemnifying Party in writing that it elects to employ separate counsel at
the expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the expense of
the Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such Proceeding.
All fees and expenses of the Indemnified Party (including
reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within 10 Business Days of written notice thereof to the Indemnifying
Party (regardless of whether it is ultimately determined that an Indemnified
Party is not entitled to indemnification hereunder; provided, that the
Indemnifying Party may require such Indemnified Party to undertake to reimburse
all such fees and expenses to the extent it is finally judicially determined
that such Indemnified Party is not entitled to indemnification hereunder).
(d) Contribution. If a claim for indemnification under Section
5(a) or 5(b) is unavailable to an Indemnified Party because of a failure or
refusal of a governmental authority to enforce such indemnification in
accordance with its terms (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying
Party and Indemnified Party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a material fact,
has been taken or made by, or relates to information supplied by, such
Indemnifying Party or Indemnified Party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include, subject to the limitations set forth
in Section 5(c), any reasonable attorneys' or other reasonable fees or expenses
incurred by such party in connection with any Proceeding to the extent such
party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party in
accordance with its terms.
The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 5(d) were determined by pro rata
41
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 5(d), the Purchaser shall not be
required to contribute, in the aggregate, any amount in excess of the amount by
which the proceeds actually received by the Purchaser from the sale of the
Registrable Securities subject to the Proceeding exceeds the amount of any
damages that the Purchaser has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged 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 are in addition to any liability that the Indemnifying Parties
may have to the Indemnified Parties.
6. Rule 144
--------
As long as any Holder owns Registrable Securities, the Company
covenants to timely file (or obtain extensions in respect thereof and
file within the applicable grace period) all reports required to be
filed by the Company after the date hereof pursuant to Section 13(a) or
l5(d) of the Exchange Act and to promptly furnish the Holders with true
and complete copies of all such filings. As long as any Holder owns
Registrable Securities, if the Company is not required to file reports
pursuant to Section 13(a) or l5(d) of the Exchange Act, it will prepare
and furnish to the Holders and make publicly available in accordance
with Rule 144(c) promulgated under the Securities Act annual and
quarterly financial statements, together with a discussion and analysis
of such financial statements in form and substance substantially
similar to those that would otherwise be required to be included in
reports required by Section 13(a) or 15(d) of the Exchange Act, as well
as any other information required thereby, in the time period that such
filings would have been required to have been made under the Exchange
Act. The Company further covenants that it will take such further
action as any Holder may reasonably request, all to the extent required
from time to time to enable such Person to sell Registrable Securities
without registration under the Securities Act within the limitation of
the exemptions provided by Rule 144 promulgated under the Securities
Act, including providing any legal opinions referred to in the Purchase
Agreement. Upon the request of any Holder, the Company shall deliver to
such Holder a written certification of a duly authorized officer as to
whether it has complied with such requirements.
7. Miscellaneous
-------------
(a) Remedies. In the event of a breach by the Company or by a
Holder, of any of their obligations under this Agreement, each Holder or the
Company, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement. The
Company and each Holder agree that monetary damages would not provide adequate
compensation for any losses incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of any
action for specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate.
(b) No Inconsistent Agreements. Neither the Company nor any of
its subsidiaries has, as of the date hereof, nor shall the Company or any of its
42
subsidiaries, on or after the date of this Agreement, enter into any agreement
with respect to its securities that is inconsistent with the rights granted to
the Holders in this Agreement or otherwise conflicts with the provisions hereof.
Except as disclosed in Schedule 2.1(r) of the Purchase Agreement, neither the
Company nor any of its subsidiaries has previously entered into any agreement
granting any registration rights with respect to any of its securities to any
Person. Without limiting the generality of the foregoing, without the written
consent of the Holders of a majority of the then outstanding Registrable
Securities, the Company shall not grant to any Person the right to request the
Company to register any securities of the Company under the Securities Act
unless the rights so granted are subject in all respects to the prior rights in
full of the Holders set forth herein, and are not otherwise in conflict or
inconsistent with the provisions of this Agreement.
(c) No Piggyback on Registrations. Neither the Company nor any
of its security holders (other than the Holders in such capacity pursuant
hereto) may include securities of the Company in the Registration Statements,
and the Company shall not after the date hereof enter into any agreement
providing such right to any of its securityholders, unless the right so granted
is subject in all respects to the prior rights in full of the Holders set forth
herein, and is not otherwise in conflict or inconsistent with the provisions of
this Agreement.
(d) Piggy-Back Registrations. If at any time when there is not
an effective Registration Statement covering the Registrable Securities, the
Company shall determine to prepare and file with the Commission a registration
statement relating to an offering for its own account or the account of others
under the Securities Act of any of its equity securities, other than on Form S-4
or Form S-8 (each as promulgated under the Securities Act) or their then
equivalents relating to equity securities to be issued solely in connection with
any acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans, the Company shall
send to each Holder of Registrable Securities written notice of such
determination and, if within ten (10) days after receipt of such notice, any
such Holder shall so request in writing, (which request shall specify the
Registrable Securities intended to be disposed of by the Purchasers), the
Company will use reasonable efforts to effect the registration under the
Securities Act of all Registrable Securities which the Company has been so
requested to register by the holder, to the extent requisite to permit the
disposition of the Registrable Securities so to be registered, provided that if
at any time after giving written notice of its intention to register any
securities and prior to the effective date of the registration statement filed
in connection with such registration, the Company shall determine for any reason
not to register or to delay registration of such securities, the Company may, at
its election, give written notice of such determination to such Holder and,
thereupon, (i) in the case of a determination not to register, shall be relieved
of its obligation to register any Registrable Securities in connection with such
registration (but not from its obligation to pay expenses in accordance with
Section 4 hereof), and (ii) in the case of a determination to delay registering,
shall be permitted to delay registering any Registrable Securities being
registered pursuant to this Section 7(d) for the same period as the delay in
registering such other securities. The Company shall include in such
registration statement all or any part of such Registrable Securities such
Holder requests to be registered; provided, however, that the Company shall not
be required to register any Registrable Securities pursuant to this Section 7(d)
that are eligible for sale pursuant to Rule 144(k) of the Securities Act. In the
case of an underwritten public offering, if the managing underwriter(s) or
underwriter(s) should reasonably object to the inclusion of the Registrable
Securities in such registration statement, then if the Company after
44
consultation with the Underwriter's Representative should reasonably determine
that the inclusion of such Registrable Securities, would materially adversely
affect the offering contemplated in such registration statement, and based on
such determination recommends inclusion in such registration statement of fewer
or none of the Registrable Securities of the Holders, then (x) the number of
Registrable Securities of the Holders included in such registration statement
shall be reduced pro-rata among such Holders (based upon the number of
Registrable Securities requested to be included in the registration), if the
Company after consultation with the underwriter(s) recommends the inclusion of
fewer Registrable Securities, or (y) none of the Registrable Securities of the
Holders shall be included in such registration statement, if the Company after
consultation with the underwriter(s) recommends the inclusion of none of such
Registrable Securities; provided, however, that if securities are being offered
for the account of other persons or entities as well as the Company, such
reduction shall not represent a greater fraction of the number of Registrable
Securities intended to be offered by the Holders than the fraction of similar
reductions imposed on such other persons or entities (other than the Company).
No Holder may participate in any Underwritten Offering pursuant to this Section
7(d) unless such Holder (i) agrees to sell its Registrable Securities on the
basis provided in any underwriting agreements approved by the Persons entitled
hereunder to approve such arrangements and (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such arrangements.
(e) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the same shall be in writing and signed by the Company
and the Holders of at least two-thirds of the then outstanding Registrable
Securities; provided, however, that, for the purposes of this sentence,
Registrable Securities that are owned, directly or indirectly, by the Company,
or an Affiliate of the Company are not deemed outstanding. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of Holders and that does not
directly or indirectly affect the rights of other Holders may be given by
Holders of at least a majority of the Registrable Securities to which such
waiver or consent relates; provided, however, that the provisions of this
sentence may not be amended, modified, or supplemented except in accordance with
the provisions of the immediately preceding sentence.
(f) Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be deemed to have been received
(a) upon hand delivery (receipt acknowledged) or delivery by telex (with correct
answer back received), telecopy or facsimile (with transmission confirmation
report) at the address or number designated below (if received by 7:00 p.m. EST
where such notice is to be received), or the first business day following such
delivery (if delivered on a business day after during normal business hours
where such notice is to be received) or (b) on the second business day following
the date of mailing by express courier service, fully prepaid, addressed to such
address, or upon actual receipt of such mailing, whichever shall first occur.
The addresses for such communications are (i) if to the Company to Digital
Courier Technologies, Inc., 000 Xxxxx Xxxxxx, Xxxxx 000 XX Xxx 0000, Xxxx Xxxx,
XX 00000 attn: Xxxxxxxx Xxxxxxx, fax no. (000) 000 0000 and (ii) if to the
44
Purchaser to Transaction Systems Architects, Inc., 000 X. 000 Xxxxxx, Xxxxx,
Xxxxxxxx 00000 attn: General Counsel; fax no. (000) 000 0000, or such other
address as may be designated in writing hereafter, in the same manner, by such
Person.
(g) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of each of
the parties and shall inure to the benefit of each Holder. The Company may not
assign its rights or obligations hereunder without the prior written consent of
each Holder. The Purchaser may assign its rights hereunder in the manner and to
the Persons as permitted under the Purchase Agreement.
(h) Assignment of Registration Rights. The rights of each
Holder hereunder, including the right to have the Company register for resale
Registrable Securities in accordance with the terms of this Agreement, shall be
automatically assignable by each Holder if: (i) the Holder agrees in writing
with the transferee or assignee to assign such rights, and a copy of such
agreement is furnished to the Company within a reasonable time after such
assignment, (ii) the Company is, within a reasonable time after such transfer or
assignment, furnished with written notice of (a) the name and address of such
transferee or assignee, and (b) the securities with respect to which such
registration rights are being transferred or assigned, (iii) following such
transfer or assignment the further disposition of such securities by the
transferee or assignees is restricted under the Securities Act and applicable
state securities laws, (iv) at or before the time the Company receives the
written notice contemplated by clause (ii) of this Section, the transferee or
assignee agrees in writing with the Company to be bound by all of the provisions
of this Agreement, and (v) such transfer shall have been made in accordance with
the applicable requirements of the Purchase Agreement. The rights to assignment
shall apply to the Holders (and to subsequent) successors and assigns.
(i) Counterparts. This Agreement may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original and, all of which taken together shall constitute one and the same
Agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature were the original
thereof.
(j) Governing Law. The corporate laws of the State of Delaware
shall govern all issues concerning the relative rights of the Company and the
Purchaser as its stockholder. All other questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware, without
regard to principles of conflicts of law. Each party hereby irrevocably submits
to the nonexclusive jurisdiction of the state and federal courts sitting in
Omaha, Nebraska, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is improper. Each party
hereby irrevocably waives personal service of process and consent to process
being served in any such suit, action or proceeding by mailing a copy thereof to
such party at the address for such notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of process and
notice thereof. Nothing contained herein shall be deemed to limit in any way any
right to serve process in any manner permitted by law.
(k) Cumulative Remedies. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
45
(l) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.
(m) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(n) Shares Held by The Company and its Affiliates. Whenever
the consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the Company or
its Affiliates (other than any Holder or transferees or successors or assigns
thereof if such Holder is deemed to be an Affiliate solely by reason of its
holdings of such Registrable Securities) shall not be counted in determining
whether such consent or approval was given by the Holders of such required
percentage.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE TO FOLLOW]
46
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
DIGITAL COURIER TECHNOLOGIES, INC.
By: /s/ Xxxxxx Xxxxxx
-------------------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President-Legal
Transaction Systems Architects, Inc.
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Executive Vice President
47
Company
-------
Digital Courier Technologies, Inc.
Attention: Xxxxxxxx Xxxxxxx
000 Xxxxx Xxxxxx, Xxxxx 000
X.X. Xxx 0000
Xxxx Xxxx, Xxxx 00000
Fax: 000-000-0000
Purchaser:
----------
48
