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EXHIBIT 10.12
EXHIBIT A
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD
PURSUANT TO RULE 144 UNDER SUCH ACT.
Void after
September 23, 2002
SOFTWARE TECHNOLOGIES CORPORATION
WARRANT TO PURCHASE 1,200,000 SHARES OF COMMON STOCK
This Warrant is issued to Computer Sciences Corp. ("CSC") by
Software Technologies Corporation, a California corporation (the "Company"), on
March 23, 2000 (the "Warrant Issue Date"). This Warrant is issued pursuant to
the terms of that certain Warrant Purchase Agreement (the "Purchase Agreement")
dated as of March 23, 2000.
1. Purchase of Shares. Subject to the terms and conditions
hereinafter set forth and set forth in the Purchase Agreement, the holder of
this Warrant is entitled, upon surrender of this Warrant at the principal office
of the Company (or at such other place as the Company shall notify the holder
hereof in writing), to purchase from the Company up to 1,200,000 fully paid and
nonassessable shares of the Common Stock of the Company, as more fully described
below. The number of shares of Common Stock issuable pursuant to this Section 1
(the "Shares") shall be subject to adjustment pursuant to Section 8 hereof.
2. Purchase Price. The per share purchase price for the Shares
shall be the greater of (i) $14.00, as adjusted from time to time pursuant to
Section 8 hereof, or (ii) the price at which the Company sells shares to the
public in the initial underwritten public offering of its common stock as
reflected on the front cover page of the final prospectus for such offering (the
"Exercise Price").
3. Exercise Period. This Warrant may be exercised at the sole
discretion of CSC (subject to the conditions set forth herein) after the
earliest to occur (the "Exercise Date") of (i) the date of the filing of a
registration statement under the Securities Act of 1933, as amended, in
connection with the issuance and sale of shares of the Company's Common Stock in
the Company's first underwritten public offering, (ii) the date of an agreement
(A) to sell or transfer all or substantially all of the Company's assets (an
"Asset Sale"), or (B) pursuant to which the Company is to be acquired by another
entity by means of any transaction or series of related transactions (including,
without limitation, any reorganization, merger or consolidation) that results in
the transfer of fifty percent (50%) or more of the outstanding voting power of
the
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Company to persons or entities that were not shareholders of the Company prior
to such transaction (a "Merger") or (iii) March 23, 2001; and this Warrant shall
remain so exercisable until the earliest to occur (the "Termination Date") of
(x) September 23, 2002, (y) the date of the closing of the Company's Asset Sale,
or (z) the date of the closing of the Company's Merger.
Starting on the Exercise Date, this Warrant shall be
exercisable for that number of shares of the Company's Common Stock equal to the
amount of such shares that have vested in accordance with the vesting schedule
attached hereto as Schedule I, which is fully incorporated herein. The holder of
this Warrant understands that this Warrant shall only become exercisable at such
times as the milestones set forth in such vesting schedule are achieved. In the
event that this Warrant has not become exercisable as to an aggregate of at
least 1,200,000 shares on or prior to March 23, 2002, then (provided the
Termination Date has not occurred) CSC shall be obligated to make a one-time
payment to the Company equal to $2.2 million. Such payment shall be made by CSC
to the Company by check or wire transfer no later than April 22, 2002. Any such
payment made under this provision by CSC shall have no effect on the
exercisability of any portion of this Warrant that had previously become
exercisable.
To the extent that any shares will have vested under the
Warrant at the time that CSC is required to make a one-time payment specified in
this Section, CSC may utilize the "Net Exercise" provision in Section 5 herein
to exercise that vested portion of the Warrant and, in lieu of receiving shares
equal to the value of the portion of the Warrant being canceled (less the
aggregate exercise price), forfeit the right to receive that number of shares
that would be equivalent to the dollar amount of the one-time payment for which
CSC is then obligated to make, based on the fair market value per share of the
Common Stock as calculated in Section 5 herein.
4. Method of Exercise. While this Warrant remains outstanding
and exercisable in accordance with Section 3 above, the holder may exercise, in
whole or in part, the purchase rights evidenced hereby. Such exercise shall be
effected by:
(a) the surrender of the Warrant (for notice of partial
exercise, if not for the entire 1,200,000 shares), together with a duly executed
copy of the form of subscription attached hereto, to the Secretary of the
Company at its principal offices; and
(b) the payment to the Company of an amount equal to the
aggregate Exercise Price for the number of Shares being purchased.
5. Net Exercise. In lieu of cash exercising this Warrant, the
holder of this Warrant may elect to receive shares equal to the value of this
Warrant (or the portion thereof being canceled) by surrender of this Warrant at
the principal office of the Company together with notice of such election, in
which event the Company shall issue to the holder hereof a number of shares of
Common Stock computed using the following formula:
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Y (A - B)
---------
X = A
Where
X -- The number of shares of Common Stock to be issued to the
holder of this Warrant.
Y -- The number of shares of Common Stock as to which this
Warrant is being exercised.
A -- The fair market value of one share of the Company's Common
Stock.
B -- The Exercise Price (as adjusted to the date of such
calculations).
For purposes of this Paragraph 5, the fair market value of Common
Stock shall mean the average of the closing bid and asked prices of the Common
Stock quoted in the over-the-counter market in which the Common Stock is traded
or the closing price quoted on any exchange on which the Common Stock is listed,
whichever is applicable, as published in the Western Edition of The Wall Street
Journal for the ten (10) trading days prior to the date of determination of fair
market value (or such shorter period of time during which such stock was traded
over-the-counter or on such exchange). If the Common Stock is not traded on the
over-the-counter market or on an exchange, the fair market value shall be the
price per share as shall be determined in good faith by the Company's Board of
Directors, or if CSC objects to such determination, by nationally recognized
investment bankers mutually acceptable to Company and CSC. Notwithstanding the
foregoing, in the event this Warrant is exercised pursuant to this paragraph
after the date of the final prospectus for the Company's initial public offering
and prior to the closing of such offering, the fair market value of the Common
Stock shall be equal to the public offering price set forth on the cover of the
Company's prospectus.
6. Certificates for Shares. Upon the exercise of the purchase
rights evidenced by this Warrant, one or more certificates for the number of
Shares so purchased shall be issued as soon as practicable thereafter, and in
any event within ten (10) days of the delivery of the subscription notice.
7. Issuance of Shares. The Company covenants that the Shares,
when issued pursuant to the exercise of this Warrant, will be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens, and charges
with respect to the issuance thereof.
8. Adjustment of Exercise Price and Number of Shares. The number
of and kind of securities purchasable upon exercise of this Warrant and the
Exercise Price shall be subject to adjustment from time to time as follows:
(a) Subdivisions, Combinations and Other Issuances. If
the Company shall at any time prior to the expiration of this Warrant subdivide
its Common Stock, by split-up
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or otherwise, or combine its Common Stock, or issue additional shares of its
Common Stock or Common Stock as a dividend or distribution with respect to any
shares of its Common Stock, the number of Shares issuable on the exercise of
this Warrant shall forthwith be proportionately increased in the case of a
subdivision or stock dividend, or proportionately decreased in the case of a
combination. Appropriate adjustments shall also be made to the purchase price
payable per share, but the aggregate purchase price payable for the total number
of Shares purchasable under this Warrant (as adjusted) shall remain the same.
Any adjustment under this Section 8(a) shall become effective at the close of
business on the date the subdivision or combination becomes effective, or as of
the record date of such dividend, or in the event that no record date is fixed,
upon the making of such dividend.
(b) Reclassification, Reorganization and Consolidation.
In case of any reclassification, capital reorganization, or change in the Common
Stock of the Company (other than as a result of a subdivision, combination, or
stock dividend provided for in Section 8(a) above), then, as a condition of such
reclassification, reorganization, or change, lawful provision shall be made, and
duly executed documents evidencing the same from the Company or its successor
shall be delivered to the holder of this Warrant, so that the holder of this
Warrant shall have the right at any time prior to the expiration of this Warrant
to purchase, at a total price equal to that payable upon the exercise of this
Warrant, the kind and amount of shares of stock and other securities and
property receivable in connection with such reclassification, reorganization, or
change by a holder of the same number of shares of Common Stock as were
purchasable by the holder of this Warrant immediately prior to such
reclassification, reorganization, or change. In any such case appropriate
provisions shall be made with respect to the rights and interest of the holder
of this Warrant so that the provisions hereof shall thereafter be applicable
with respect to any shares of stock or other securities and property deliverable
upon exercise hereof, and appropriate adjustments shall be made to the purchase
price per share payable hereunder, provided the aggregate purchase price shall
remain the same.
(c) Notice of Adjustment. When any adjustment is
required to be made in the number or kind of shares purchasable upon exercise of
the Warrant, or in the Exercise Price, the Company shall promptly notify the
holder of such event and of the number of shares of Common Stock or other
securities or property thereafter purchasable upon exercise of this Warrant.
9. Piggyback Registration Rights
(a) Piggyback Registration. Commencing one year
following the closing date of the Company's IPO, if (but without any obligation
to do so) the Company proposes to register any of its stock or other securities
under the Securities Act of 1933, as amended, (the "Act") in connection with the
public offering of such securities solely for cash (other than a registration
relating solely to the sale of securities to participants in a Company stock
plan, a registration pursuant to a Rule 145 transaction, a registration on any
form which does not include substantially the same information as would be
required to be included in a registration statement covering the sale of the
Warrant Securities or a registration in which the only Common Stock being
registered is Common Stock issuable upon conversion of debt
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securities which are also being registered), the Company shall prior to the
filing of any such registration, promptly give CSC written notice of such
registration. Upon the written request of CSC given within ten (10) days after
receipt of such notice by the Company, the Company shall, subject to the
provisions of Section 9(b) below, cause to be registered under the Act any of
the Shares that have then vested under the Warrant that CSC has requested to be
registered. If CSC decides not to include all of its shares in any registration
statement filed by the Company, CSC shall nevertheless continue to have the
right to include any Shares that have then vested under the Warrant in any
subsequent registration statement or registration statements as may be filed by
the Company with respect to the offering of its stock or other securities under
the Act, all upon the terms and conditions set forth herein.
(b) Underwriting Requirements. In connection
with any offering involving an underwriting of shares of the Company's capital
stock in which CSC makes a written request pursuant to Section 9(a) hereof, the
Company shall not be required under this Section 9 to include any of CSC's
Shares in such underwriting unless CSC accepts the terms of the underwriting as
agreed upon between the Company and the underwriters selected by it (or by other
persons entitled to select the underwriters), and then only in such quantity as
the underwriters determine in their sole reasonable discretion will not
jeopardize the success of the offering by the Company. If the total amount of
securities, including CSC's Shares, requested by shareholders to be included in
such offering exceeds the amount of securities sold other than by the Company
that the underwriters determine in their sole reasonable discretion is
compatible with the success of the offering, then CSC may be excluded entirely
if the underwriters make the determination described above and no other
shareholder's securities are included, or then the Company shall be required to
include in the offering only that number of such securities, including CSC's
Shares, which the underwriters determine in their sole reasonable discretion
will not jeopardize the success of the offering, but in no event shall the
amount of securities of CSC included in the offering be reduced below ten
percent (10%) of the total amount of securities included in such offering.
Allocation of securities to be sold in any such offering shall be made on a
pro-rata basis among any selling shareholders involved in such offering
according to the total number of securities held by each such selling
shareholder and entitled to inclusion therein on the basis of a registration
rights agreement with the Company.
10. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant, but in lieu of such fractional shares the Company shall make a cash
payment therefor on the basis of the Exercise Price then in effect.
11. No Stockholder Rights. Prior to exercise of this Warrant, the
holder shall not be entitled to any rights of a stockholder with respect to the
Shares, including (without limitation) the right to vote such Shares, receive
dividends or other distributions thereon, exercise preemptive rights or be
notified of stockholder meetings, and such holder shall not be entitled to any
notice or other communication concerning the business or affairs of the Company.
12. Successors and Assigns. The terms and provisions of this
Warrant and the Purchase Agreement shall inure to the benefit of, and be binding
upon, the Company and its
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successors and assigns. This Warrant cannot be assigned by CSC without the
express written consent of the Company. Notwithstanding the foregoing, this
Warrant may be assigned, sold or otherwise transferred in whole or in part by
CSC to an affiliate (as such term is defined in Rule 405 under the Securities
Act of 1933) or successor of CSC, and such assignment, sale or transfer shall
not require the consent of the Company so long as such assignment, sale or
transfer complies with applicable laws, rules and regulations, and provided that
CSC has provided the Company with prior written notice of any such transfer.
13. Amendments and Waivers. Any term of this Warrant may be
amended and the observance of any term of this Warrant may be waived (either
generally or in a particular instance and either retroactively or
prospectively), with the written consent of the Company and CSC. Any waiver or
amendment effected in accordance with this Section shall be binding upon CSC,
each holder of any Shares purchased under this Warrant at the time outstanding
(including securities into which such Shares have been converted), each future
holder of all such Shares, and the Company.
14. Market Stand-off Agreement. The holder of this Warrant agrees
not to sell or otherwise transfer or dispose of any Common Stock (or other
securities) of the Company held by such holder during a period of time
determined by the Company and its underwriters (not to exceed 180 days)
following the effective date of the registration statement of the Company filed
under the Act with respect to the Company's initial public offering. The holder
of this Warrant further agrees to execute any standard lock-up agreement that
the underwriters require in connection with such offering, provided that the
lock-up period does not exceed 180 days. The Company may impose stop-transfer
instructions with respect to the Common Stock (or securities) subject to the
foregoing restriction until the end of said period.
15. Governing Law. This Warrant shall be governed by the laws of
the State of California as applied to agreements among California residents made
and to be performed entirely within the State of California.
16. Replacement of Warrant. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of loss, theft or destruction, on delivery of an
indemnity agreement reasonably satisfactory in form and substance to the
Company, or, in the case of mutilation, on surrender and cancellation of this
Warrant, the Company at its expense shall execute and deliver, in lieu of this
Warrant, a new warrant of like tenor and amount.
SOFTWARE TECHNOLOGIES CORPORATION
By: /s/ XXXXX XXXXXXXXXXX
-------------------------------------
Xxxxx Xxxxxxxxxxx
Chief Executive Officer
Address: 000 X. Xxxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
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SUBSCRIPTION
Software Technologies Corporation
Attention: Corporate Secretary
The undersigned hereby elects to purchase, pursuant to the
provisions of the Warrant to Purchase Shares of Common Stock issued by Software
Technologies Corporation and held by the undersigned, ___________ shares of
Common Stock of Software Technologies Corporation.
Payment of the exercise price per share required under such
Warrant accompanies this Subscription.
WARRANTHOLDER:
COMPUTER SCIENCES CORPORATION
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Address:
Date:
---------------------
Name in which shares should be registered:
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SOFTWARE TECHNOLOGIES CORPORATION
000 X. XXXXXXXXXX XXXXX
XXXXXXXX, XX 00000
March 23, 2000
Computer Sciences Corporation
0000 Xxxx Xxxxx Xxxxxx
Xx Xxxxxxx, XX 00000
Re: WARRANT TO PURCHASE SHARES OF COMMON STOCK
Ladies and Gentlemen:
This is to confirm that the shares of Common Stock of Software
Technologies Corporation, a California corporation (the "Company") that may be
purchased upon exercise of that certain Warrant to Purchase Shares of Common
Stock dated as of March 23, 2000 (the "Warrant") issued by the Company to
Computer Sciences Corporation shall become exercisable in accordance with the
Warrant Exercise Schedule attached hereto. This letter and the attached schedule
are being provided pursuant to Section 3 of the Warrant.
Sincerely,
SOFTWARE TECHNOLOGIES CORPORATION
By: /s/ XXXXX XXXXXXXXXXX
------------------------------------
Title: Chief Executive Officer
---------------------------------
Agreed to:
COMPUTER SCIENCES CORPORATION
By: /s/ XXXX X. LEVEL
-----------------------------------------------
Title: Vice President and Chief Financial Officer
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STC WARRANT ISSUED TO COMPUTER SCIENCES CORPORATION
WARRANT EXERCISE SCHEDULE
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Category Activity Vesting Event Number of Shares
Vesting
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Market Offering Market Offering #1 (#) CSC will create a 100,000
Market Offering to be
determined at a later
date which is mutually
agreeable to CSC and
STC.
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Market Offering Market Offering #2 (#)CSC will create a 100,000
Market Offering to be
determined at a later
date which is mutually
agreeable to CSC and STC
--------------------------------------------------------------------------------------------------------
Market Offering Market Offering #3 (#) CSC will create a 100,000
Market Offering to be
determined at a later
date which is mutually
agreeable to CSC and STC
--------------------------------------------------------------------------------------------------------
Field Engagement Client Introductions (*) CSC will make 100 9,000 per Client
opportunity Introduction, up to an
introductions of an STC aggregate of 900,000;
representative to CSC provided that no
clients, each of which shares shall vest
results, after the date pursuant to Client
of the warrant, in a Introductions until a
signed license between minimum of 50 such
STC and such CSC client Client Introductions
(such event being a shall have occurred.
"Client Introduction")
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(#) "Market Offering" is defined as the completion of the following: (1) STC
software is "embedded" in market offering/repeatable/vertical solution that CSC
takes to market; (2) STC is installed in the solution center showcasing the
market offering; (3) Market offering personnel are trained in STC software; and
(4) CSC will issue a media announcement relating to these facts, which
announcement shall be reasonably acceptable to STC. If CSC and STC cannot, after
reasonable efforts, come to mutual agreement on what constitutes a "Market
Offering," CSC may define the subject matter of a Market Offering (so long as
such Market Offering meets the definition for Market Offering articulated
above), notify STC of such Market Offering and submit a media announcement
(subject to STC's approval, such approval not to be unreasonably withheld)
regarding such Market Offering, at which time, the shares with respect to such
Market Offering shall vest.
(*) The vesting event will have been achieved and the related portion of the
Warrant shall become vested at such time as a Client Introduction has resulted
in a signed license agreements with STC, each resulting in a minimum of $150,000
in license revenue to STC; provided, however, that in order for the
corresponding portion of the Warrant to become exercisable, the vesting event
must be achieved on or prior to March __, 2002. For license amounts with a
single customer license amount greater than $150,000, additional customer
credits will be given to CSC in multiples of $300,000 in license revenue to STC.
The maximum number of credits that may be earned on a single customer is 20,
which would be as a result of a customer providing license revenue to STC in the
amount of $5,850,000, which would result in the vesting of 180,000 shares
pursuant to this vesting schedule. However, such additional credits shall not be
counted for purposes of calculating the minimum threshold of 50 Client
Introductions, which threshold in order to be met must be achieved through 50
different CSC clients.
For purposes of defining a "Client Introduction," different operating units,
divisions or affiliates of the same corporate entity, or different agencies
within a governmental body, shall be determined to be separate Client
Introductions, provided that to constitute separate Client Introductions, each
discrete unit, division or affiliate either (a) signs a separate license with
STC, or (b) purchases software from STC such that STC recognizes revenue in an
amount greater than $150,000 from each discrete unit, division or affiliate.
However, if the sole purpose of a license resulting from a Client Introduction
is to connect two or more units, divisions or affiliates within a corporate
entity, then such purchase would constitute one project, and therefore one
Client Introduction for purposes of this schedule. For the avoidance of doubt
and for illustrative purposes only, (a) an investment banking division and a
retail banking division of the same corporate entity may be separate Client
Introductions if each results in separate licenses with STC or each purchases
software in an amount greater than $150,000; (b) NASA, the IRS, State
Department, Army Logistics, Army Land Warrior, FBI, Los Angeles Police
Department, Los Angeles Fire Department, etc., shall each be considered separate
Client Introductions if each results in a separate license with STC or each
purchases software in an amount greater than
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$150,000; and (c) if a bank signs a single STC license for the purposes of
integrating two separate units, divisions or affiliates within the bank entity,
such project shall be considered a single Client Introduction because it
resulted in only one signed license with STC, unless each separate unit
purchases software in an amount greater than $150,000.
