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EXHIBIT 10.9
COMMON STOCK AND WARRANTS SUBSCRIPTION AGREEMENT
This COMMON STOCK AND WARRANTS SUBSCRIPTION AGREEMENT, dated as of March
18, 1998 (this "Agreement"), is entered into between CyberSource Corporation,
a/k/a "xxxxxxxx.xxx," a California corporation (the "Company") and America
Online, Inc., a Delaware corporation ("AOL").
RECITALS
WHEREAS, AOL wishes to subscribe for and purchase, and the Company
wishes to issue and sell, to AOL shares (the "Shares") of common stock, no par
value, of the Company ("Common Stock") in an amount and on the terms and subject
to the conditions set forth herein; and
WHEREAS, both AOL and the Company desire that the Company issue warrant
certificates to AOL for the future purchase of shares of Common Stock or shares
of Series D Preferred Stock (individually a "Warrant Certificate," collectively
the "Warrant Certificates") in conjunction with the purchase of the Shares in
the amounts and on the terms set forth herein; and
WHEREAS, in connection therewith, the Company and AOL have agreed to
enter into an agreement (the "Registration Rights Agreement") providing for
certain registration rights for the Shares and the shares of Common Stock
underlying the Warrant Certificates, or issuable upon conversion of shares of
Series D Preferred Stock (the "Series D Preferred Stock") of the Company
underlying the Warrant Certificates (collectively the "Warrant Shares");
NOW, THEREFORE, in consideration of the premises and mutual agreements
herein contained, and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto hereby agree as
follows:
I. Subscription for Common Stock and Warrant Certificates.
A. The Common Stock and IPO Warrant Certificate. The Company has
authorized the issuance and sale pursuant to the terms of this Agreement of the
Shares and the simultaneous issuance of a Warrant Certificate to AOL in the form
attached hereto as Exhibit A (the "IPO Warrant Certificate"). On the terms and
subject to the conditions of this Agreement, AOL hereby agrees to purchase from
the Company, and the Company hereby agrees to sell to AOL, the number of Shares
provided for in Section I.D.(1) below for an aggregate purchase price of
$2,000,000. AOL shall not be obligated to purchase any of the Shares unless the
conditions set forth in Article II hereof shall have been satisfied or waived by
AOL on or prior to the Closing Date (as defined below). The Company shall not be
obligated to sell any of the Shares to AOL or issue the IPO Warrant Certificate
to AOL unless the conditions set forth in Article III hereof shall have been
satisfied or waived by the Company or prior to the Closing Date.
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B. The Private Placement Warrant Certificate. Simultaneously with the
execution and delivery of this Agreement the Company is issuing a Warrant
Certificate to AOL in the form attached hereto as Exhibit B (the "Private
Placement Warrant Certificate") which by its term shall expire upon the IPO (as
defined below).
C. The Registration Rights Agreement. Simultaneously with the execution
and delivery of this Agreement the Company and AOL are entering into the
Registration Rights Agreement in the form attached hereto as Exhibit C (the
"Registration Rights Agreement").
D. The closing (the "Closing") of the transactions contemplated by this
Agreement shall take place as follows:
(1) At the Closing, on the terms and subject to the conditions of
this Agreement and on the basis of the representations and warranties herein set
forth, the Company will sell to AOL, and AOL will purchase from the Company, on
or immediately prior to the closing of the IPO (as defined below) (the "Closing
Date"), a number of Shares determined by dividing (i) the purchase price per
share of Common Stock paid to the Company by the underwriters in the IPO into
(ii) $2,000,000, in exchange for payment of an aggregate purchase price of
$2,000,000 (the "Purchase Price"). The Purchase Price shall be payable, by wire
transfer of immediately available funds to such account or accounts as to which
the Company may notify AOL.
(2) At the Closing, on the terms and subject to the conditions of this
Agreement and on the basis of the representations and warranties herein set
forth, the Company will deliver to, or at the direction of, AOL or a
representative thereof, a certificate registered in the name of AOL representing
the Shares to be purchased by AOL and the IPO Warrant Certificate, against
payment of the Purchase Price by AOL and the return of the Private Placement
Warrant Certificate. The Closing will take place at the offices where the
closing of the Company's IPO is held, on the Closing Date.
II. Conditions to the Obligations of AOL. The obligation of AOL to purchase
Common Stock under this Agreement is subject to the satisfaction at or prior to
the Closing Date of each of the following conditions:
A. Accuracy of Representations and Warranties. All representations and
warranties of the Company contained herein shall be true and correct in all
respects on the date hereof and shall be true and correct in material respects
on and as of the Closing Date as if made on and as of the Closing Date.
B. Performance of Agreements; Regulatory Approvals.
(1) The Company shall have performed all obligations and agreements,
and complied with all covenants and conditions contained in this Agreement to be
performed or complied with by it prior to or at the Closing Date.
(2) The Company shall have executed and delivered the IPO Warrant
Certificate.
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(3) The Company shall have obtained all corporate authorizations and
approvals and all consents and approvals of third parties and regulatory bodies
and authorities necessary to issue the Shares and the IPO Warrant Certificate
and to enter into and perform this Agreement, the Registration Rights Agreement
and the IPO Warrant Certificate and to consummate the transactions contemplated
hereby and thereby.
C. Consummation of IPO. The Company shall have consummated on or prior
to November 15, 1998 an initial public offering on a firm commitment basis (the
underwriting of which shall be managed or co-managed by either a top tier
national underwriter such as PaineWebber, Xxxxxxx Xxxxx, Xxxxxxxxx Xxxxxx &
Xxxxxxxx or Xxxxxxx Xxxxx, a regional firm such as Xxxxxxxxx Xxxxxxxxx or
Xxxxxxx Xxxxx or a recognized technology firm such as Xxxxxxxxx & Xxxxx or
Xxxxxxxxx Xxxxxx) of Common Stock (which stock will be listed on a national
stock exchange or the Nasdaq National Market) pursuant to a registration
statement on Form S-1 filed with the Securities and Exchange Commission with net
proceeds to the Company of not less than $20,000,000, and which would result in
a post-offering market capitalization of the Company of not less than
$125,000,000 based on the offering price to the public (the "IPO").
D. Delivery of Certificates. At the Closing, the Company shall deliver
to AOL a certificate signed by a senior executive officer of the Company
certifying as to each of the matters set forth above and the Company shall
deliver all other certificates customarily delivered in transactions of this
type.
E. Opinion of Xxxxxxx Tufts Cole & Black, LLP. Xxxxxxx Xxxxx Xxxx &
Black, LLP, counsel for the Company, shall have delivered to AOL an opinion
dated the Closing Date in form and substance reasonably satisfactory to AOL.
F. Marketing Agreement in Full Force and Effect. Neither AOL nor the
Company shall have terminated that certain Interactive Marketing Agreement dated
as of March 1, 1998 between the Company and AOL (the "Marketing Agreement").
If at or prior to the Closing all of the conditions of this Article II have not
been satisfied, AOL may elect to waive such conditions or to be relieved of all
further obligations hereunder.
III. Conditions to the Company's Obligations. The obligation of the Company to
issue and sell the Common Stock and the IPO Warrant Certificate under this
Agreement is subject to the satisfaction at the Closing Date of each of the
following conditions:
A. Accuracy of Representations and Warranties. All representations and
warranties of AOL contained herein shall be true and correct in all material
respects on and as of the Closing Date as if made on and as of the Closing Date.
B. Performance of Agreements. AOL shall have performed all obligations
and agreements, and complied with all covenants and conditions, contained in
this Agreement to be performed or complied with by it prior to or at the Closing
Date.
C. Payment for the Common Stock. AOL shall have delivered to the Company
and the Company shall have received full payment of the Purchase Price.
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D. Marketing Agreement in Full Force and Effect. Neither AOL nor the
Company shall have terminated the Marketing Agreement.
E. Consummation of IPO. The Company shall have consummated the IPO on or
prior to August 31, 1999.
F. Return of Private Placement Warrant Certificate. AOL shall have
returned the Private Placement Warrant Certificate to the Company for
cancellation.
If at or prior to the Closing all of the conditions of this Article III have not
been satisfied, the Company may elect to waive such conditions or to be relieved
of all further obligations hereunder.
IV. Representations; Warranties and Covenants of the Company. The Company hereby
represents and warrants to AOL as of the date of this Agreement and as of the
Closing Date, except as set forth on the Schedule of Exceptions attached hereto
as Exhibit D, which exceptions shall be deemed to be representations and
warranties as if made hereunder as follows:
A. Organization, Good Standing and Qualification. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of California and has all requisite corporate power and authority to own
and hold its properties, carry on its business as now conducted and as proposed
to be conducted. The Company has full corporate power and authority to enter
into and perform its obligations under this Agreement, the Registration Rights
Agreement and the Warrant Certificates and to carry out the transactions
contemplated by this Agreement, the Registration Rights Agreement and the
Warrant Certificates. The Company is duly qualified to transact business and is
in good standing in each jurisdiction in which the failure so to qualify would
have a material adverse effect on its business or properties. A copy of the
Company's Restated Articles and the Company's Bylaws (as amended) have been
delivered to AOL each of which are true and correct in full force and effect and
have not been amended.
B. Capitalization.
(a) Immediately prior to the date of this Agreement the
authorized capital of the Company consists, or will consist of:
(i) Preferred Stock. 10,000,000 shares of Preferred
Stock, 1,985,520 of which have been designated Series A
Preferred Stock, no par value (the "Series A Preferred Stock"),
of which 1,985,520 shares are issued and outstanding, 2,500,000
of which have been designated Series B Preferred Stock, no par
value (the "Series B Preferred Stock") of which 2,037,038 shares
are issued and outstanding, 3,000,000 of which have been
designated Series C Preferred Stock, no par value (the "Series C
Preferred Stock") of which 3,000,000 shares are issued and
outstanding and 1,523,424 shares of which have been designated
Series D Preferred Stock of which no shares are issued and
outstanding immediately prior to the date of this Agreement. The
rights, preferences and privileges of the Series
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A Preferred Stock, the Series B Preferred Stock, the Series C
Preferred Stock, and the Series D Preferred Stock are as stated
in the Restated Articles.
(ii) Common Stock. 30,000,000 shares of Common Stock,
9,070,000 shares of which were issued and outstanding.
(b) All issued and outstanding shares of the Company are validly
issued, fully paid and nonassessable.
(c) The list set forth in Item 2.2(b) of the Schedule of
Exceptions hereto is a complete and correct list of all security holders
of the Company, showing their holdings of issued and outstanding shares
of Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, Common Stock and other
Company securities (including options and warrants) as of the date of
this Agreement. To the best knowledge of the Company, each such holder
is the sole beneficial owner of all of the shares as to which such
holder is the record holder. Except as set forth in Item 2.2 of the
Schedule of Exceptions hereto, holders of shares of the Company's Series
A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock and Common Stock have no preemptive rights.
True and complete copies of the Series A Preferred Stock Purchase
Agreements (as defined in Section IV. K of this Agreement), the Series B
Preferred Stock Purchase Agreement (as defined in Section IV. K of this
Agreement), the Series C Preferred Stock Purchase Agreement (as defined
in Section IV. K of this Agreement) and the Series D Preferred Stock
Purchase Agreement (as defined in Section IV. K of this Agreement) have
been furnished to AOL prior to the date hereof. All such issued and
outstanding shares have been duly authorized and validly issued, are
fully paid and nonassessable and have been issued in compliance with all
applicable state and federal laws concerning the issuance of securities.
(d) Agreements for Purchase of Shares. Except for:
(i) the conversion privileges and preemptive rights of
the Series A Preferred Stock, the Series B Preferred Stock, the
Series C Preferred Stock and the Series D Preferred Stock; and
(ii) options issued pursuant to the Company's stock
option plan and other agreements, as of the date of this
Agreement options for 782,397 shares, including options for
1,000,000 shares issued outside of the Company's stock option
plan, are presently outstanding and an additional 1,217,603
shares are available for grant under the Company's stock option
plan, as amended.
prior to the date of this Agreement there will not be any outstanding options,
warrants, rights (including conversion, preemptive rights or rights of first
offer) or agreements for the purchase or acquisition from the Company of any
shares of its capital stock.
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C. Subsidiaries. Except as set forth in Item 2.3 of the Schedule of
Exceptions, the Company does not presently own or control, directly or
indirectly, any interest in any other corporation, association, partnership or
other business entity.
D. Authorization. All corporate action on the part of the Company, its
officers, directors and shareholders necessary for the authorization, execution
and delivery of this Agreement, the Registration Rights Agreement and the
Warrant Certificates, the performance of all obligations of the Company
hereunder and thereunder and the authorization, issuance (or reservation for
issuance) and delivery of the Shares and the Warrant Certificates being sold
hereunder of the Series D Preferred stock issuable upon the exercise of the
Private Placement Warrant and the Common Stock issuable upon conversion of the
Preferred Shares and the Common Stock issuable upon the exercise of the IPO
Warrant, has been taken or will be taken on or prior to each Closing, and each
of this Agreement, the Registration Rights Agreement and the Warrant
Certificates constitutes a valid and legally binding obligation of the Company
enforceable in accordance with its terms, except as affected by (i) bankruptcy
or insolvency laws, or (ii) equitable principles or public policy.
E. Valid Issuance of the Shares, Warrant Certificates and Series D
Preferred Stock. The Shares and each of the Warrant Certificates, when issued,
sold and delivered in accordance with the terms hereof for the consideration
expressed herein, will be duly and validly issued, fully paid and nonassessable
and, based in part upon the representations of AOL set forth in Section V of
this Agreement, will be issued in compliance with all applicable federal and
state securities laws free and clear of all restrictions on transfer (other than
those arising from application of the securities laws). The shares of Series D
Preferred issuable upon the exercise of the Private Placement Warrant
Certificate and the Common Stock issuable upon conversion of the Series D
Preferred Stock issuable upon the exercise of the Private Placement Warrant and
the Common Stock issuable upon the exercise of the IPO Warrant have been duly
and validly reserved for issuance and when issued and delivered in accordance
with the Warrant Certificates or the Restated Articles, as applicable, will be
duly and validly issued, fully paid and nonassessable.
F. Governmental Consents. No consent, approval, order or authorization
of, or registration, qualification, designation, declaration or filing with, any
United States federal, state, local or provincial governmental authority on the
part of the Company is required in connection with:
(a) the Company's valid execution, delivery, or performance of
this Agreement, the Registration Rights Agreement and the Warrant
Certificates; and
(b) the offer, sale, or issuance of the Shares or the Warrant
Certificates by the Company hereunder or (assuming the exemption
provided by Section 3(a)(9) of the Securities Act of 1933, as amended,
in its current form is available and no commission is paid in
conjunction therewith) the issuance of Shares or shares of Series D
Preferred Stock upon the exercise of the Private Placement Warrant
Certificate and the issuance of Common Stock upon conversion of the
shares of Series D Preferred Stock or upon the exercise of the IPO
Warrant;
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except such filings as have been made prior to the Closing, and except for any
notices of sale required to be filed with the Securities and Exchange Commission
under Regulation D of the Securities Act of 1933, as amended (the "Securities
Act"), or such post-closing filings as may be required under applicable state
securities laws, which will be timely filed within the applicable periods
therefor. To the best knowledge of the Company, neither the Company nor anyone
acting on its behalf has offered any of the Shares or Warrant Certificates being
sold hereunder or substantially similar securities of the Company for sale to,
or solicited offers to buy any securities of the Company from, or otherwise
approached or negotiated with respect thereto with any prospective purchaser
other than AOL. The Company agrees that neither the Company nor anyone acting on
its behalf will offer such securities of the Company or any part thereof or any
similar securities for issuance or sale to, or solicit any offer to acquire any
of the same from, anyone so as to make the issuance and sale of the Shares or
Warrant Certificates being sold hereunder not exempt from the registration
requirements of Section 5 of the Securities Act. None of the shares of the
Company's capital stock issued and outstanding has been offered or sold in such
a manner as to make the issuance and sale of such shares or the Shares or
Warrant Certificates being sold hereunder not exempt from such registration
requirements, and all such shares of capital stock have been offered and sold in
compliance with all applicable federal and state securities laws.
G. Litigation. Except as disclosed in Item 2.7 of the Schedule
of Exceptions, there is no action, suit, proceeding or investigation
pending or currently threatened against the Company which questions the
validity of this Agreement, the Registration Rights Agreement or the
Warrant Certificates or the right of the Company to enter into this
Agreement, or to consummate the transactions contemplated hereby, or
which might result, either individually or in the aggregate, in any
material adverse change in the assets, prospects, business, operations,
or condition (financial or otherwise) of the Company or any change in
the current equity ownership of the Company, nor is the Company aware
that there is any basis for the foregoing. The Company is not a party or
subject to the provisions of any order, writ, injunction, judgment or
decree of any court or government agency or instrumentality. There is no
action, suit, proceeding or investigation by the Company currently
pending or which the Company intends to initiate.
H. Patents and Trademarks.
(a) The list set forth in Item 2.8 of the Schedule of Exceptions
is a true and complete list and summary description of all patents,
patent applications, registered trademarks, registered service marks,
registered trade names and registered copyrights, and licenses and
rights to the foregoing presently owned or held by the Company, none of
which is in dispute or in any conflict with the right of any other
person or entity except as indicated on Item 2.7 of the Schedule of
Exceptions.
(b) The Company's business as now conducted and as presently
proposed to be conducted does not conflict with or infringe upon
anyone's patents, copyrights, trademarks, trade secrets, trade dress,
know how, processes, or other proprietary rights. The Company owns, or
has the unrestricted right to use free and clear of all material liens,
claims and restrictions, all patents, copyrights, trademarks, trade
secrets, trade dress or other proprietary rights necessary for the
conduct of its business as it is presently
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conducted or currently contemplated to be conducted, without infringing
on the right or claim of any person, any patents, copyrights,
trademarks, trade secrets, trade dress, know how, processes, or other
proprietary rights of others. Notwithstanding any other provision of
this Agreement, the exceptions described in the Schedule of Exceptions
do not apply to this subparagraph (b) of this Section IV. H.
I. Compliance with Laws and Other Instruments. The Company is not in
violation or default of any provisions of its Restated Articles or Bylaws or of
any instrument, judgment, order, writ, decree or contract to which it is a party
or by which it is bound or, to its knowledge, of any provision of federal or
state statute, rule or regulation applicable to the Company or any of its
property, which violation or default would be materially adverse to the assets,
properties, prospects, business, operations, or condition (financial or
otherwise) of the Company. To the best knowledge of the Company, there is no
contamination of any real property leased or operated by the Company that could
subject the Company to liability in the aggregate in excess of $10,000 under any
environmental laws or regulations. The execution, delivery and performance of
this Agreement, the Registration Rights Agreement or the Warrant Certificates
and the consummation of the transactions contemplated hereby will not result in
any such violation or be in conflict with or constitute, with or without the
passage of time and giving of notice, either a default under any such provision,
instrument, judgment, order, writ, decree or contract or an event which results
in the creation of any lien, charge or encumbrance upon any assets of the
Company, which violation, default, conflict or event would be materially adverse
to the assets, properties, prospects, business, operations, or condition
(financial or otherwise) of the Company.
J. Agreements; Action.
(a) Except as set forth in Item 2.10 of the Schedule of
Exceptions, there are no agreements, understandings, instruments,
contracts or proposed transactions to which the Company is a party or by
which it is bound which involve (i) obligations of, or payments to the
Company in excess of, $25,000; (ii) the license of any patent,
copyright, trade secret or other proprietary right of the Company; (iii)
material restrictions on the Company's business; or (iv) material
proprietary rights of the Company.
(b) The Company has not (i) declared or paid any dividends, or
authorized or made any distribution upon or with respect to any class or
series of its capital stock, (ii) incurred any indebtedness for money
borrowed or incurred any other liabilities or obligations (absolute or
contingent), individually in excess of $10,000 or in excess of $25,000
in the aggregate not reflected in the balance sheet dated December 31,
1997 other than obligations or liabilities of the Company for
compensation under employment, advisor or consulting agreements, or
other than obligations or liabilities incurred in the ordinary course of
business, (iii) made any loans or advances to any person, other than in
the ordinary course of its business. Without limiting the generality of
the foregoing, the Company does not know of any basis for the assertion
against the Company of any material liabilities of the Company (not
provided for in the documents listed in Item 2.10 of the Schedule of
Exceptions or the Financial Statements).
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K. Registration Rights. Except as set forth in (i) that certain Series A
Preferred Stock Purchase Agreement dated as of the 6th day of January 1995, as
amended as of (A) the 27th day of February, 1996, (B) the 3rd day of July, 1996,
and (C) the 12th day of July, 1996; (ii) that certain Series A Preferred Stock
Purchase Agreement dated as of the 27th day of February, 1996 (collectively, the
"Series A Stock Purchase Agreements"), (iii) that certain Series B Preferred
Stock Purchase Agreement dated as of the 12th day of July, 1996, (iv) that
certain Series C Preferred Stock Purchase Agreement dated as of the 26th day of
September, 1997, and (v) that certain Series D Preferred Stock Purchase
Agreement (the "Series D Stock Purchase Agreement") and except as provided in
the Registration Rights Agreement, the Company has not granted or agreed to
grant any registration rights, including piggy-back rights, to any person or
entity.
L. Title to Property and Assets. The Company has good and marketable
title to the property and assets it purports to own free and clear of all
mortgages, liens, loans and encumbrances, except such encumbrances and liens
which arise in the ordinary course of business and do not materially impair the
Company's ownership or use of such property or assets. With respect to the
property and assets it leases, the Company is in compliance with such leases and
holds a valid leasehold interest free of any liens, claims or encumbrances,
which liens, claims or encumbrances would be materially adverse to the Company.
Except as set forth in Item 2.12 of the Schedule of Exceptions, the Company owns
or has the right to use all assets (tangible and intangible), necessary for the
conduct of its business as presently conducted and believes it can acquire the
right to use or the ownership of all assets, necessary for the conduct of its
business as it is proposed to be conducted, except for such assets that are
individually or in the aggregate immaterial to the business of the Company. The
Company knows of no assets required for the conduct of its business as it is
presently conducted, or as it is proposed to be conducted, the right to use or
ownership of which it is unlikely to obtain, except for such assets that are
individually or in the aggregate immaterial to the business of the Company.
M. Financial Statements. The Company has delivered to AOL its audited
financial statements (income statement, balance sheet and cash flow statement)
at and for the periods ended December 31, 1995, December 31, 1996, and unaudited
financial statements (balance sheet and profit and loss statement) at and for
the period ended December 31, 1997 (the "Financial Statements"). The Financial
Statements are complete and correct in all material respects and have been
prepared in accordance with generally accepted accounting principles on a
consistent basis throughout the periods indicated. The Financial Statements
fairly present the financial condition and operating results of the Company as
of the dates, and for the periods, indicated therein, subject to normal year-end
adjustments. All accounts receivable shown on the balance sheet constitute
accounts receivable resulting from the sale of goods and services in the
ordinary course of business, and, to the best knowledge of the Company, such
accounts receivable are subject to no conditions as to payment, offsets,
counterclaims, defenses of any kind, returns, allowances, or credits other than
to the extent of the allowance for doubtful accounts shown thereon, and other
than warranty claims that in the aggregate do not exceed $5,000. The Company has
not received any material customer complaints concerning its products or
services.
N. Changes. Since December 31, 1997, there has not been (i) any change
in the assets, liabilities, condition (financial or otherwise), business, or
operating results, or to the best of the Company's knowledge, prospects of the
Company from that reflected in the Financial Statements,
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except changes in the ordinary course of business which have not been, in the
aggregate, materially adverse; (ii) any damage, destruction or loss, whether or
not covered by insurance, affecting in any material way the assets, properties,
condition (financial or otherwise), operating results, prospects or business of
the Company (as such business is presently conducted and as it is proposed to be
conducted); (iii) any waiver by the Company of a material right or of a material
debt owed to it or any satisfaction or discharge of any material lien, claim or
encumbrance or payment of any obligation by the Company, except in the ordinary
course of business; (iv) any change or amendment in any material respect to a
material contract or agreement by which the Company or any of its assets or
properties is bound or subject; or (v) any change in any compensation
arrangement or agreement with any officer, director or key employee. For the
purposes of this Section IV. N only, prospects shall not include general
economic or industry trends. Notwithstanding any other provision of this
Agreement, the exceptions described in the Schedule of Exceptions do not apply
to this Section IV. N.
O. Proprietary Information. To the best of the Company's knowledge, it
has done nothing to compromise the secrecy, confidentiality or value of any of
its trade secrets, know-how, inventions, prototypes, designs, processes or
technical data required to conduct its business as now conducted or as proposed
to be conducted and has taken security measures to protect the secrecy,
confidentiality and value of all the intellectual property which it believes are
reasonable and customary in the industry in which it operates. All of the
Company's employees and consultants have executed a non-disclosure/invention
assignments agreement in the form attached as Annex III to the Schedule of
Exceptions. To the Company's knowledge, no employee of the Company in connection
with such employee's employment with the Company, has violated the terms of any
agreement with a previous employer.
P. Permits. The Company has all franchises, permits, licenses, and any
similar authority necessary for the conduct of its business as now being
conducted by it, the lack of which could materially and adversely affect the
business, properties, prospects, or financial condition of the Company and
believes it can obtain, without undue burden or expense, any similar authority
for the conduct of its business as planned to be conducted. The Company is not
in default in any material respect under any of such franchises, permits,
licenses, or other similar authority.
Q. Shareholder Agreements. Except as set forth in the Series A Preferred
Stock Purchase Agreements, the Series B Preferred Stock Purchase Agreement, the
Series C Preferred Stock Purchase Agreement, and the Series D Stock Purchase
Agreement and in that certain Shareholders' Agreement of even date with the
Series D Stock Purchase Agreement between and among the Company, various holders
of Series C Preferred Stock and the Series D Preferred Stock and various
Investors (the "Shareholders' Agreement"), there are presently no outstanding
shareholder agreements, voting trusts, proxies or other arrangements or
understandings between the Company and its shareholders, or among any of the
shareholders of the Company, relating to either the voting or the disposition of
their respective shares.
R. Brokers or Finders. The Company has not engaged any broker,
investment banker or finder in connection with the sale of the Shares or the
Warrant Certificates.
S. Disclosure. The Company has provided AOL with all information that
AOL has requested in connection with AOL's decision to invest in the Shares and
the Warrant Certificates.
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To the best of the Company's knowledge after due inquiry, neither this Agreement
nor any other written statement made or delivered in connection herewith
contains any untrue statement of a material fact or, taking this Agreement and
all such written statements as a whole, omits to state a material fact necessary
to make statements herein or therein misleading; provided, however, with respect
to any projections or expressions of opinion or predictions, the Company
represents only that such projections or expressions of opinions and predictions
were made in good faith and that the Company believes that there is a reasonable
basis therefor.
T. Insurance. Set forth in Item 2.20 of the Schedule of Exceptions is a
true and complete list of all current insurance policies of the Company, all of
which are in full force and effect.
U. Taxes. The Company has accurately prepared and timely filed all
federal, state and local reports, returns, estimates, declarations, information
returns and statements with respect to taxes (together, "Tax Returns") that are
required to be filed by it and has paid or made provision for the payment of all
taxes due with respect to the periods covered by such Tax Returns. The provision
for taxes in the financial statements is sufficient for the payment of all
accrued and unpaid taxes. No such Tax Returns of the Company have been audited
by any taxing authority, and there are no waivers in effect of the applicable
statute of limitations for any period. No deficiency assessment or proposed
adjustment of federal income taxes or state or municipal taxes of the Company is
pending and the Company has no knowledge of any proposed liability for any tax
to be imposed. There are no tax sharing agreements or similar contracts or
arrangements to which the Company is a party. The Company has not been a member
of an affiliated group (within the meaning of Section 1504 of the Internal
Revenue Code), filing a consolidated federal income Tax Return. No closing
agreement pursuant to Section 7121 of the Internal Revenue Code, or similar
provision of any state or local law, has been entered into by or with respect to
the Company. For the purpose of this Section IV.U, "tax" or "taxes" shall mean
all federal, state, local or foreign taxes, including but not limited to income,
gross receipts, windfall profits, alternative minimum, value added, severance,
property, production, sales, use, license, excise, franchise, employment,
withholding or similar taxes, together with any interest, additions or penalties
with respect thereto and any interest in respect of such additions or penalties.
V. ERISA. Except as listed in Item 2.22 of the Schedule of Exceptions,
the Company does not maintain, sponsor, or contribute to any program or
arrangement that is an "employee pension benefit plan" (a "Pension Plan"), an
"employee welfare benefit plan" or a "multiemployer plan", as those terms are
defined in Section 3(2), 3(1), and 3(37) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). Except as listed in Item 2.22 of the
Schedule of Exceptions, the Company has no other incentive or benefit
arrangements. Each plan listed on Item 2.22 of the Schedule of Exceptions which
is subject to ERISA is in substantial compliance with ERISA. Each plan listed on
Item 2.22 of the Schedule of Exceptions which is a Pension Plan intended to be
qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended,
has been amended to comply with the qualification provisions of the Tax Reform
Act of 1986 and subsequent legislation before the expiration of the applicable
remedial amendment period and has received a favorable determination letter from
the Internal Revenue Service, and the Company is not aware of circumstances
likely to result in the revocation of any such favorable determination letter.
Other than as set forth in Item 2.22, there are no other deferred
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compensation, bonus, incentive, profit sharing, retirement or other employee
compensation arrangements or plans.
W. Labor Agreements and Actions. The Company is not bound by or subject
to (and none of its assets or properties is bound by or subject to) any written
or oral, express or implied, contract, commitment or arrangement with any labor
union, and no labor union has requested or has sought to represent any of the
employees, representatives or agents of the Company. There is no strike or other
labor dispute involving the Company pending, or to the best knowledge of the
Company threatened, which could have a material adverse effect on the assets,
properties, condition (financial or otherwise), operating results, prospects or
business of the Company (as such business is presently conducted and as it is
proposed to be conducted), nor is the Company aware of any labor organization
activity involving its employees. The Company is not aware that any officer, key
employee, key consultant or key contractor, or that any group of key employees,
intends to terminate such person's employment or relationship with the Company,
as the case may be, nor does the Company have a present intention to terminate
the employment of or relationship with any of the foregoing persons.
X. Additional Representations and Warranties. All representations and
warranties of the Company contained in an underwriting agreement entered into by
the Company in connection with the IPO (the "Underwriting Agreement"), between
the Company and the several underwriters named therein (the "Underwriters"),
except those that refer specifically to the Underwriting Agreement or
arrangements with the Underwriters that are not germane to the placement of the
Shares or the IPO Warrant Certificate (other than those related generally to the
IPO), shall, effective upon the Closing Date, be deemed incorporated herein by
reference and made a part hereof as if set forth herein in their entirety and
AOL shall be entitled to fully rely thereon.
Y. Private Placement. The offer and sale of the Shares and the Warrant
Certificates by the Company are being accomplished in a transaction exempt from
registration under Section 5 of the Securities Act and from registration or
qualification under all applicable state securities and "Blue-Sky" laws.
V. Representations of AOL. AOL hereby represents and warrants to the Company as
of the date of this Agreement and as of the Closing Date as follows:
A. Due Organization, Good Standing and Authority of the Purchaser and
the Founders. AOL is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. AOL has full right, power and
authority to enter into this Agreement, the Registration Rights Agreement and
the Warrant Certificates and perform its obligations hereunder and thereunder.
B. Authorization and Validity of Agreements. This Agreement and the
Registration Rights Agreement have been duly authorized, executed and delivered
by AOL and, assuming the due authorization, execution and delivery by the
Company, constitute valid and binding obligations of AOL enforceable against AOL
in accordance with their terms, except as affected by (i) bankruptcy or
insolvency laws or (ii) equitable principles or public policy.
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C. No Conflict with Other Instruments; No Approvals Required Except as
Have Been Obtained. The execution and delivery of this Agreement and the
Registration Rights Agreement by AOL and compliance by AOL with the terms and
conditions hereof and thereof, will not violate, with or without the giving of
notice or the lapse of time, or both, or require any registration,
qualification, approval or filing under, any provision of law, statute,
ordinance or regulation applicable to AOL and will not conflict with, or require
any consent or approval under, or result in the breach or termination of any
provision of, or constitute a default under, or result in the acceleration of
the performance of the obligations of AOL under, or result in the creation of
any claim, lien, charge or encumbrance upon any of the properties, assets or
businesses of AOL pursuant to the Certificate of Incorporation or By-laws of AOL
or any order, judgment, decree, law, ordinance or regulation applicable to the
AOL, or any contract, instrument, agreement or restriction to which AOL is a
party or by which AOL or any of its assets or properties is bound, in each case,
that would prevent AOL from entering into this Agreement or the Registration
Rights Agreement or from consummating the transactions contemplated in
accordance with the terms hereof.
D. Purchaser Awareness. AOL acknowledges, agrees and is aware that the
Shares, the Warrant Certificates and the shares of Common Stock to be issued
upon the exercise thereof (the "Warrant Shares") have not been registered under
the Securities Act, as amended, or under the securities laws of any other
jurisdiction, including any state of the United States. An offer or sale of the
Shares or the Warrant Shares by AOL in the absence of registration under such
securities laws will require the availability of an exemption thereunder. A
restrictive legend in substantially the form set forth in Section VI hereof
shall be placed on the certificates representing the Shares, the Warrant
Certificates and the Warrant Shares and a notation shall be made in the
appropriate records of the Company indicating that the securities representing
the Shares and the Warrant Shares are subject to restrictions on transfer.
E. Receipt of Information, Access to Information, Investment Intent. AOL
acknowledges that it:
(1) has been furnished with sufficient information regarding the
Company and its prospects such that it has been able to understand and evaluate
the risks of a purchase of the Company's securities;
(2) has been given the opportunity to ask questions of, and receive
answers from, the Company concerning the terms and conditions of the offering of
the Company's securities hereunder and other matters pertaining to an investment
therein, has been given the opportunity to obtain such additional information
necessary to evaluate the merits and risks of a purchase of the securities to
the extent the Company possesses such information, and has received all
documents and information that it has requested relating to an investment in the
securities provided, however, that the foregoing shall not derogate from or
diminish the representations and warranties of the Company contained or to be
incorporated herein or the right of AOL to rely thereon;
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(3) has carefully considered and has, to the extent AOL believes
such discussion necessary, discussed with its professional legal, financial and
tax advisors, the suitability of an investment in the securities;
(4) understands that the Shares and Warrant Certificates to be
received by AOL hereunder will be acquired for investment for AOL's own account,
not as a nominee or agent, and not with a view to the resale or distribution of
any part thereof, and that AOL has no present intention of otherwise
distributing the same, except pursuant to an effective registration statement
under the Securities Act or an exempt transaction. By executing this Agreement,
AOL further represents that AOL does not have any contract, undertaking,
agreement or arrangement with any person (other than the Company) to sell,
transfer or grant participations to such person or to any third person, with
respect to such securities, or any portion thereof;
(5) is an investor in securities of companies in the development
stage and acknowledges that it is able to fend for itself, can bear the economic
risk of its investment and has such knowledge and experience in financial or
business matters that it is capable of evaluating the merits and risks of the
investment in the Shares and Warrant Certificates; and
(6) understands that the Shares and the Warrant Certificates are
characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such Shares and the Warrant Certificates may be resold without registration
under the Securities Act only in certain limited circumstances. In this
connection AOL represents that it is familiar with Securities and Exchange
Commission ("SEC") Rule 144, as presently in effect, and understands the resale
limitations imposed thereby and by the Securities Act.
F. Accredited Investor Status. AOL is an Accredited Investor as such
term is defined in Regulation D under the Securities Act.
VI. Restrictions on Transfer. The Shares, the Warrant Certificates and the
Warrant Shares shall not be transferable except upon the conditions specified in
this Article VI, which are intended to insure compliance with the provisions of
the Securities Act in respect of the transfer of any of the Shares, the Warrant
Certificates or Warrant Shares and, with respect to the Private Placement
Warrant Certificate and the shares of Common Stock to be issued upon the
exercise thereof, to insure compliance with the Bylaws of the Company.
A. Restrictive Legends. Each certificate representing the Shares or the
Warrant Shares shall (unless otherwise permitted by the provisions of this
Article VI) be stamped or otherwise imprinted with a legend in substantially the
following form:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR UNDER THE
SECURITIES LAWS OF ANY JURISDICTION AND MAY NOT BE TRANSFERRED,
SOLD OR OTHERWISE DISPOSED OF UNLESS A REGISTRATION STATEMENT IS
IN EFFECT UNDER THE SECURITIES ACT AND
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ANY APPLICABLE SECURITIES LAWS WITH RESPECT TO SUCH SECURITIES OR
A WRITTEN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY
IS PROVIDED TO THE COMPANY TO THE EFFECT THAT NO REGISTRATIONS
ARE REQUIRED UNDER SUCH SECURITIES LAWS."
provided, however, that the following additional language shall be added to the
foregoing legend with respect to the Private Placement Warrant Certificate and
the shares of Common Stock to be issued upon the exercise thereof:
"AND ARE SUBJECT TO RESTRICTIONS UPON TRANSFER SET FORTH IN THE
BYLAWS OF THE COMPANY AND MAY NOT BE TRANSFERRED, ASSIGNED,
PLEDGED OR HYPOTHECATED EXCEPT IN COMPLIANCE WITH THE TERMS OF
SUCH BYLAWS."
B. Notice of Proposed Transfers.
(1) The holder of the Shares or Warrant Shares bearing a restrictive
legend set forth in Section VI.A above ("Restricted Common Stock"), by
acceptance thereof, agrees that, unless a registration statement is in effect
under the Securities Act and under applicable securities laws with respect to
such Restricted Common Stock, prior to any transfer or attempted transfer of
such Restricted Common Stock, such holder will give the Company (i) written
notice describing the proposed transfer of any Restricted Common Stock in
reasonable detail, (ii) such other information about the proposed transfer of
such Restricted Common Stock or the proposed transferee of such Restricted
Common Stock as the Company may reasonably request and (iii) an opinion of
counsel (both counsel and opinion reasonably satisfactory to the Company) to the
effect that the proposed transfer of such Restricted Common Stock may be
effected without registration of such Restricted Common Stock under the
Securities Act and under other applicable securities laws.
(2) If the holder of the Restricted Common Stock delivers to the Company
an opinion of counsel that subsequent transfers of such Restricted Common Stock
will not require registration or qualification under the Securities Act or under
other applicable securities laws, the Company will or will cause the transfer
agent for such Restricted Common Stock promptly (but in any event within 3
business days) after such contemplated transfer to deliver new certificates for
such Restricted Common Stock that do not bear that section of the restrictive
legend set forth in Section VI.A above imposed by the Securities Act and under
other applicable securities laws of any other jurisdictions. If the foregoing
conditions entitling the holder to effect a proposed transfer of such Restricted
Common Stock without registration under the Securities Act and under other
applicable securities laws have not been satisfied, AOL shall not transfer the
Restricted Common Stock, and the Company will cause the transfer agent not to
transfer such Restricted Common Stock on its books or issue any certificates
representing such Restricted Common Stock. Any purported transfer of Restricted
Common Stock not in accordance with applicable securities laws shall be void.
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(3) The restrictions imposed by this Agreement with respect to the
Securities Act and under other applicable securities laws of any other
jurisdictions upon the transferability of any particular shares of Restricted
Common Stock shall cease and terminate when such shares of Restricted Common
Stock have been sold pursuant to an effective registration statement under the
Securities Act or under other applicable securities laws or transferred pursuant
to Rule 144 promulgated under the Securities Act or need not bear the legend
under Rule 144(k). The holder of any Restricted Common Stock as to which such
restrictions shall have terminated shall be entitled to receive from the
Company, without expense, a new certificate representing Common Stock that does
not bear the restrictive legend set forth above imposed by the Securities Act
and under other applicable securities laws of any other jurisdictions.
(4) As used in this Agreement, the term "transfer" encompasses any
sale, transfer, pledge or other disposition of any Common Stock referred to
herein.
C. Additional Covenants.
(1) Delivery of Financial Statements. The Company shall deliver to
AOL for as long as AOL (together with its affiliates) holds, or has the right to
acquire upon exercise or exchange of Warrant Certificates, not less than 100,000
Warrant Shares, as adjusted for stock splits, stock dividends, reclassifications
and similar events:
(i) as soon as practicable, but in any event within one hundred
twenty (120) days after the end of each fiscal year of the Company, an
income statement for such fiscal year, a balance sheet of the Company as
of the end of such year, and a cash flow statement, such year-end
financial reports to be in reasonable detail, prepared in accordance
with generally accepted accounting principles ("GAAP") audited by
independent public accountants of recognized national standing; and
(ii) within forty-five (45) days of the end of each quarter, a
statement of operations, cash flow analysis and balance sheet for and as
of the end of such quarter, in reasonable detail; such quarterly
statements shall also compare actual performance to budget and to the
prior year's comparable period.
(2) Termination of Covenants. The covenants set forth in Section
C(1) above shall terminate and be of no further force or effect upon the
consummation of the IPO or the Company first becomes subject to the periodic
reporting requirements of section 13(a) or 15(d) of the Securities Exchange Act
of 1934, as amended, whichever event shall first occur.
(3) Insurance. The Company shall keep and maintain in full force and
effect (i) fire and casualty insurance policies, with extended coverage,
reasonably sufficient in amount to allow it to replace any of its properties
that might be damaged or destroyed and (ii) general liability insurance in
amounts customary for entities in similar business and at a similar stage of
development.
D. California Commissioner of Corporations. THE SALE OF THE SECURITIES
WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH
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THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF
SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION
THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES
IS EXEMPT FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO
EXEMPT.
VII. Miscellaneous.
A. Survival of Representations, Warranties and Covenants. The
representations, warranties and covenants of the parties contained in this
Agreement and in any document delivered or to be delivered pursuant to this
Agreement and in connection with the Closing hereunder shall survive the
Closing. The parties have made no representations or warranties other than those
that are expressly set forth or incorporated by reference in this Agreement.
B. Entire Agreement. This Agreement (including the Schedules, Exhibits
and Annexes hereto), together with the Registration Rights Agreement and the
Warrant Certificates to which any of the parties hereto are parties, constitutes
the entire agreement between the parties hereto and supersede all prior
agreements and understandings, oral and written, between the parties hereto with
respect to the subject matter hereof.
C. Severability. Any provision of this Agreement that is prohibited,
unenforceable or not authorized in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition, unenforceability
or lack of authorization without invalidating the remaining provisions hereof or
affecting the validity, unenforceability or legality of such provision in any
other jurisdiction.
D. Binding Effect; Benefit. This Agreement shall inure to the benefit of
and be binding upon the parties hereto, and their respective successors, legal
representatives and permitted assigns. Nothing in this Agreement, expressed or
implied, is intended to confer on any person other than the parties hereto, and
their respective successors, legal representatives and permitted assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
E. Amendment; Waiver. No provision of this Agreement may be amended,
waived or otherwise modified except by an instrument in writing executed by the
parties hereto.
F. Expenses. Each party shall pay its own fees and expenses, including
attorney's fees, incurred in connection with this Agreement and the other
agreements and transactions contemplated hereby.
G. Assignment. Neither party can assign this Agreement without the prior
written consent of the other provided that AOL may assign this Agreement to an
affiliate and provided, further, that in the event of a party's sale,
consolidation, or merger, or the sales of substantially all of such party's
assets the other party's prior approval shall not be required.
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H. Headings. The Articles and Section headings contained in this
Agreement are for convenience only and shall not affect the meaning or
interpretation of this Agreement.
I. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
J. Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of California without giving effect to the principles
of conflicts of laws thereof.
K. Remedies. The remedies provided in this Agreement are cumulative and
not exclusive of any remedies provided by law.
L. Notices and Payment.
(1) All notices, requests, demands and other communications
hereunder shall be in writing and, except to the extent otherwise provided in
this Agreement, shall be deemed to have been duly given if delivered by same day
or next day courier or mailed, registered mail, return receipt requested, or
transmitted by telegram, telex or facsimile:
if to AOL:
America Online, Inc.
00000 XXX Xxx
Xxxxxx, Xxxxxxxx 00000
Fax No.: (000) 000-0000
Attention: Xxxxx Xxxxxxx and the General Counsel
with a copy to:
Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxxx
if to the Company
CyberSource Corporation
a/k/a "xxxxxxxx.xxx"
0000 Xxxxx Xxx, Xxxxx 000
Xxx Xxxx, XX 00000
Fax No.: (000) 000-0000
Attention: President
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with a copy to:
Xxxxxxx Xxxxx Xxxx & Black, LLP
00 Xxxxx Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Fax No.: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxxxx, Esq.
A notice hereunder shall be deemed to have been given on the day such notice is
sent or transmitted; provided, however, that if such notice is sent by next-day
courier it shall be deemed to have been given the day following sending and, if
by registered mail, five business days following sending and if sent by
facsimile, when receipt is acknowledged by recipient's facsimile machine
operator.
(2) Unless otherwise provided in this Agreement, payments hereunder
shall be made by wire transfer of immediately available funds.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
CYBERSOURCE CORPORATION,
a California corporation
By [SIG]
-------------------------------------
Name:
Title:
AMERICA ONLINE, INC., a
Delaware Corporation
By
-------------------------------------
Name:
Title:
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EXHIBIT A TO COMMON STOCK
AND WARRANTS SUBSCRIPTION AGREEMENT
FORM OF IPO WARRANT CERTIFICATE
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR UNDER THE
SECURITIES LAWS OF ANY JURISDICTION AND MAY NOT BE
TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF UNLESS A
REGISTRATION STATEMENT IS IN EFFECT UNDER THE SECURITIES ACT
AND ANY APPLICABLE SECURITIES LAWS WITH RESPECT TO SUCH
SECURITIES OR A WRITTEN OPINION OF COUNSEL REASONABLY
ACCEPTABLE TO THE COMPANY IS PROVIDED TO THE COMPANY TO THE
EFFECT THAT NO REGISTRATIONS ARE REQUIRED UNDER SUCH
SECURITIES LAWS.
Warrant No. ___ [__________](1) Warrants
(Subject to Adjustment
as Provided Herein)
CYBERSOURCE CORPORATION
WARRANT CERTIFICATE
This warrant certificate ("Warrant Certificate") certifies that for
value received AMERICA ONLINE, INC., 00000 XXX Xxx, Xxxxxx, Xxxxxxxx 00000, or
its registered assigns (the "Holder") is the owner of the number of warrants
("Warrants") specified above, each of which entitles the Holder thereof to
purchase one fully paid and non-assessable share of Common Stock, no par value
("Common Stock"), of CyberSource Corporation a/k/a "xxxxxxxx.xxx", a California
corporation (the "Company"), at a purchase price of $______________2 per share
of Common Stock in lawful money of the United States of America in cash or by
certified or cashier's check or a combination of cash and certified or cashier's
check (subject to adjustment as hereinafter provided).
------------------
(1) 1.5 times the number of shares of Common Stock purchased by AOL
pursuant to the Common Stock and Warrants Subscription
Agreement.
(2) Price per share paid by the public in the IPO (as defined in the
Common Stock and Warrants Subscription Agreement) less
underwriter discount.
22
1. Warrant; Purchase Price. Each Warrant shall entitle the Holder
initially to purchase one share of Common Stock of the Company and the purchase
price payable upon exercise of the Warrants shall initially be $___________ per
share of Common Stock (the "Purchase Price"). The Purchase Price and number of
shares of Common Stock issuable upon exercise of each Warrant are subject to
adjustment as provided in Article 6. The shares of Common Stock issuable upon
exercise of the Warrants (and/or other shares of Common Stock so issuable by
reason of any adjustments pursuant to Article 6) are sometimes referred to
herein as the "Warrant Shares."
2. Exercise; Expiration Date.
2.1. The Warrants are exercisable, at the option of the Holder,
in whole or in part at any time and from time to time in an amount up to
[_____](3) Warrants for each full month following March ____, 1998 and ending,
in each case, on the Expiration Date, upon surrender of this Warrant Certificate
to the Company together with a duly completed Notice of Exercise, in the form
attached hereto as Exhibit A, and payment of an amount equal to the Purchase
Price times the number of Warrants to be exercised. In the case of exercise of
less than all the Warrants represented by this Warrant Certificate, the Company
shall cancel the Warrant Certificate upon the surrender thereof and shall
execute and deliver a new Warrant Certificate for the balance of such Warrants.
Notwithstanding the foregoing provisions of this Section 2.1, in the event of a
Change of Control (as hereafter defined), any outstanding Warrants granted
hereunder that are not then exercisable, in accordance with the vesting
provisions set forth in this Section 2.1, shall become immediately exercisable.
For purposes of this Section 2.1, a Change of Control shall mean (i) at such
time as any person (other than existing shareholders of the Company) obtains the
right to designate a majority of the members of the Company's Board of Directors
or acquires sufficient shares of the Company's outstanding voting stock to cause
the election of a majority of the seats on the Company's Board of Directors,
(ii) the Company merges with another entity and the Company's stockholders prior
to the merger do not retain control of the combined entity, or (iii) the Company
sells substantially all of its assets or capital stock.
2.2. The term "Expiration Date" shall mean 5:00 p.m. California
time on March ___, 200__(4) or if such day shall in the State of California be a
holiday or a day on which banks are authorized to close, then 5:00 p.m.
California time the next following day which in the State of California is not a
holiday or a day on which banks are authorized to close.
3. Registration and Transfer on Company Books.
3.1. The Company shall maintain books for the registration and
transfer of the Warrants and the registration and transfer of the Warrant
Shares.
(1) One thirty-sixth of total Warrants issued.
(2) Seven years from date of issuance.
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3.2. Prior to due presentment for registration of transfer of
this Warrant Certificate, or the Warrant Shares, the Company may deem and treat
the registered Holder as the absolute owner thereof.
4. Reservation of Shares. The Company covenants that it will at all
times reserve and keep available out of its authorized capital stock, solely for
the purpose of issue upon exercise of the Warrants, such number of shares of
capital stock as shall then be issuable upon the exercise or exchange of all
outstanding Warrants and upon conversion of shares issuable upon exercise of
such Warrants. The Company covenants that all shares of capital stock which
shall be issuable upon exercise of the Warrants shall be duly and validly issued
and fully paid and non-assessable and free from all taxes, liens and charges
with respect to the issue thereof, and that upon issuance such shares shall be
listed on each national securities exchange, if any, or the Nasdaq National
Market on which the other shares of such outstanding capital stock of the
Company are then listed or traded.
5. Loss or Mutilation. Upon receipt by the Company of reasonable
evidence of the ownership of and the loss, theft, destruction or mutilation of
any Warrant Certificate and, in the case of loss, theft or destruction, of
indemnity reasonably satisfactory to the Company (provided that if Holder is an
institutional investor or a nominee of an institutional investor, such
institutional investor's own unsecured agreement of indemnity shall be deemed to
be satisfactory for such purpose), or, in the case of mutilation, upon surrender
and cancellation of the mutilated Warrant Certificate, the Company shall execute
and deliver in lieu thereof a new Warrant Certificate representing an equal
number of Warrants.
6. Adjustment of Purchase Price and Number of Shares Deliverable.
6.1. The number of Warrant Shares purchasable upon the exercise
of each Warrant and the Purchase Price with respect to the Warrant Shares shall
be subject to adjustment as follows:
(a) In case the Company shall (i) declare a dividend or
make a distribution on its Common Stock payable in shares of its capital stock,
(ii) subdivide its outstanding shares of Common Stock through stock split or
otherwise, (iii) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock, or (iv) issue by reclassification of its
Common Stock (including any reclassification in connection with a consolidation
or merger in which the Company is the continuing corporation) other securities
of the Company, the number and/or nature of Warrant Shares purchasable upon
exercise of each Warrant immediately prior thereto shall be adjusted so that the
Holder shall be entitled to receive the kind and number of Warrant Shares or
other securities of the Company which it would have owned or have been entitled
to receive after the happening of any of the events described above, had such
Warrant been exercised immediately prior to the happening of such event or any
record date with respect thereto. Any adjustment made pursuant to this paragraph
(a) shall become effective retroactively as of the record date of such event.
(b) In case the Company shall issue rights, options or
warrants or securities convertible into or exercisable or exchangeable directly
or indirectly into Common
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Stock to all holders of its shares of Common Stock, entitling them to subscribe
for or purchase shares of Common Stock at a price per share which (together with
the value of the consideration, if any, payable for such rights, options,
warrants or convertible securities) is lower on the record date referred to
below than the then Market Price Per Share of such Common Stock (as determined
pursuant to Section 9.2) the number of Warrant Shares thereafter purchasable
upon the exercise of each Warrant shall be determined by multiplying the number
of Warrant Shares immediately theretofore purchasable upon exercise of each
Warrant by a fraction, of which the numerator shall be the number of shares of
Common Stock outstanding on such record date plus the number of additional
shares of Common Stock offered for subscription or purchase, and of which the
denominator shall be the number of shares of Common Stock outstanding on such
record date plus the number of shares which the aggregate offering price of the
total number of shares of Common Stock so offered would purchase at the then
Market Price Per Share of such Common Stock. Such adjustment shall be made
whenever such rights, options, warrants or convertible securities are issued,
and shall become effective retroactively as of the record date for the
determination of shareholders entitled to receive such rights, options, warrants
or convertible securities. In the case such subscription price may be paid in
consideration, part of which or all which is in a form other than cash, the
value of such consideration shall be determined in good faith by the Board of
Directors of the Company.
(c) In case the Company shall distribute to all holders of
its shares of Common Stock, or all holders of Common Stock shall otherwise
become entitled to receive, shares of capital stock of the Company (other than
dividends or distributions on its Common Stock referred to in paragraph (a)
above), evidences of its indebtedness or rights, options, warrants or
convertible securities providing the right to subscribe for or purchase any
shares of the Company's capital stock or evidences of its indebtedness (other
than any rights, options, warrants or convertible securities referred to in
paragraph (b) above), then in each case the number of Warrant Shares thereafter
purchasable upon the exercise of each Warrant shall be determined by multiplying
the number of Warrant Shares theretofore purchasable upon the exercise of each
Warrant, by a fraction, of which the numerator shall be the then Market Price
Per Share of the Warrant Shares (as determined pursuant to Section 9.2) on the
record date mentioned below in this paragraph (c), and of which the denominator
shall be the then Market Price Per Share of the Warrant Shares on such record
date, less the then fair value (as determined by the Board of Directors of the
Company, in good faith) of the portion of the shares of the Company's capital
stock other than Common Stock, evidences of indebtedness, or of such rights,
options, warrants or convertible securities, distributable with respect to each
Warrant Share. Such adjustment shall be made whenever any such distribution is
made, and shall become effective retroactively as of the record date for the
determination of shareholders entitled to receive such distribution.
(d) In the event of any capital reorganization or any
reclassification of the capital stock of the Company or in case of the
consolidation or merger of the Company with another corporation (other than a
consolidation or merger in which the outstanding shares of the Company's Common
Stock are not converted into or exchanged for other rights or interests), or in
the case of any sale, transfer or other disposition to another corporation of
all or substantially all the properties and assets of the Company, the Holder of
each Warrant shall thereafter be entitled to purchase (and it shall be a
condition to the consummation of any such reorganization,
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25
reclassification, consolidation, merger, sale, transfer or other disposition
that appropriate provisions shall be made so that such Holder shall thereafter
be entitled to purchase) the kind and amount of shares of stock and other
securities and property (including cash) which the Holder would have been
entitled to receive had such Warrants been exercised immediately prior to the
effective date of such reorganization, reclassification, consolidation, merger,
sale, transfer or other disposition; and in any such case appropriate
adjustments shall be made in the application of the provisions of this Article 6
with respect to rights and interest thereafter of the Holder of the Warrants to
the end that the provisions of this Article 6 shall thereafter be applicable, as
near as reasonably may be, in relation to any shares or other property
thereafter purchasable upon the exercise of the Warrants. The provisions of this
Section 6.1(d) shall similarly apply to successive reorganizations,
reclassifications, consolidations, mergers, sales, transfers or other
dispositions.
(e) Whenever the number of Warrant Shares purchasable upon
the exercise of each Warrant is adjusted, as provided in this Section 6.1, the
Purchase Price with respect to the Warrant Shares shall be accordingly adjusted
in order to reflect the number of Warrant Shares then and thereafter issuable.
6.2. In the event the Company shall declare a dividend, or make a
distribution to the holders of its Series D Preferred generally, whether in
cash, property or assets of any kind, including any dividend payable in stock or
securities of any other issuer owned by the Company (excluding any dividend or
distribution referred to in Section 6.1(a) or (c) above), the Purchase Price of
each Warrant shall be reduced, without any further action by the parties hereto,
by the Per Share Value (as hereinafter defined) of the dividend. For purposes of
this Section 6.2, the "Per Share Value" of a cash dividend or other distribution
shall be the dollar amount of the distribution on each share of Series D
Preferred and the "Per Share Value" of any dividend or distribution other than
cash shall be equal to the fair market value of such non-cash distribution on
each share of Series D Preferred as determined in good faith by the Board of
Directors of the Company.
6.3. No adjustment in the number of Warrant Shares purchasable
under the Warrants, or in the Purchase Price with respect to the Warrant Shares,
shall be required unless such adjustment would require an increase or decrease
of at least 1% in the number of Warrant Shares issuable upon the exercise of
such Warrant, or in the Purchase Price thereof; provided, however, that any
adjustments which by reason of this Section 6.3 are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All final results of adjustments to the number of Warrant Shares and the
Purchase Price thereof shall be rounded to the nearest share or the nearest
cent, as the case may be. Anything in this Section 6 to the contrary
notwithstanding, the Company shall be entitled, but shall not be required, to
make such changes in the number of Warrant Shares purchasable upon the exercise
of each Warrant, or in the Purchase Price thereof, in addition to those required
by such Section, as it in its discretion shall determine to be advisable in
order that any dividend or distribution in shares of Common Stock, subdivision,
reclassification or combination of shares of Common Stock, issuance of rights,
warrants or options to purchase Common Stock, or distribution of shares of stock
other than Common Stock, evidences of indebtedness or assets (other than
distributions of cash out of retained earnings) or convertible or exchangeable
securities hereafter made by the Company to the
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holders of its Common Stock shall not result in any tax to the holders of its
Common Stock or securities convertible into Common Stock.
6.4. Whenever the number of Warrant Shares purchasable upon the
exercise of each Warrant or the Purchase Price of such Warrant Shares is
adjusted, as herein provided, the Company shall mail to the Holder, at the
address of the Holder shown on the books of the Company, a notice of such
adjustment or adjustments, prepared and signed by the Chief Financial Officer or
Secretary of the Company, which sets forth the number of Warrant Shares
purchasable upon the exercise of each Warrant and the Purchase Price of such
Warrant Shares after such adjustment, a brief statement of the facts requiring
such adjustment and the computation by which such adjustment was made.
6.5. In the event that at any time prior to the expiration of the
Warrants and prior to their exercise:
(a) the Company shall declare any distribution (other than
a cash dividend or a dividend payable in securities of the Company with respect
to the Common Stock); or
(b) the Company shall offer for subscription to the
holders of the Common Stock (as a class) any additional shares of stock of any
class or any other securities convertible into Common Stock or any rights to
subscribe thereto; or
(c) the Company shall declare any stock split, stock
dividend, subdivision, combination, or similar distribution with respect to the
Common Stock, regardless of the effect of any such event on the outstanding
number of shares of Common Stock; or
(d) the Company shall declare a dividend, other than a
dividend payable in shares of the Company's own Common Stock; or
(e) there shall be any capital change in the Company as
set forth in Section 6.1(d); or
(f) there shall be a voluntary or involuntary dissolution,
liquidation, or winding up of the Company (other than in connection with a
consolidation, merger, or sale of all or substantially all of its property,
assets and business as an entity); (each such event hereinafter being referred
to as a "Notification Event"); or
the Company shall cause to be mailed to the Holder, not less than 20 days prior
to the record date, if any, in connection with such Notification Event
(provided, however, that if there is no record date, or if 20 days prior notice
is impracticable, as soon as practicable) written notice specifying the nature
of such event and the effective date of, or the date on which the books of the
Company shall close or a record shall be taken with respect to, such event.
Such notice shall also set forth facts indicating the effect of such action (to
the extent such effect may be known at the date of such notice) on the Purchase
Price and the kind and amount of the shares of stock or other securities or
property deliverable upon exercise of the Warrants.
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6.6. The form of Warrant Certificate need not be changed because
of any change in the Purchase Price, the number of Warrant Shares issuable upon
the exercise of a Warrant or the number of Warrants outstanding pursuant to this
Section 6, and Warrant Certificates issued before or after such change may state
the same Purchase Price, the same number of Warrants, and the same number of
Warrant Shares issuable upon exercise of Warrants as are stated in the Warrant
Certificates theretofore issued pursuant to this Agreement. The Company may,
however, at any time, in its sole discretion, make any change in the form of
Warrant Certificate that it may deem appropriate and that does not affect the
substance thereof, and any Warrant Certificates thereafter issued or
countersigned, whether in exchange or substitution for an outstanding Warrant
Certificate or otherwise, may be in the form as so changed.
7. Conversion Rights.
7.1. In lieu of exercising of any portion of the Warrants as
provided in Section 2.1 hereof, the Warrants represented by this Warrant
Certificate (or any portion thereof) may, at the election of the Holder, be
converted into the nearest whole number of shares of Common Stock equal to: (1)
the product of (a) the number of shares of Common Stock then issuable upon the
exercise of each Warrant multiplied by (b) the excess, if any, of (i) the Market
Price Per Share (as determined pursuant to Section 9.2) with respect to the date
of conversion over (ii) the Purchase Price in effect on the business day next
preceding the date of conversion, divided by (2) the Market Price Per Share with
respect to the date of conversion.
7.2. The conversion rights provided under this Section 7 may be
exercised in whole or in part and at any time and from time to time while any
Warrants remain outstanding, provided that they are at the time currently
exercisable. In order to exercise the conversion privilege, the Holder shall
surrender to the Company, at its offices, this Warrant Certificate accompanied
by a duly completed Notice of Conversion in the form attached hereto as Exhibit
B. The Warrants (or so much thereof as shall have been surrendered for
conversion) shall be deemed to have been converted immediately prior to the
close of business on the day of surrender of such Warrant Certificate for
conversion in accordance with the foregoing provisions. As promptly as
practicable on or after the conversion date, the Company shall issue and shall
deliver to the Holder (i) a certificate or certificates representing the number
of shares of Common Stock to which the Holder shall be entitled as a result of
the conversion, and (ii) if the Warrant Certificate is being converted in part
only, a new certificate of like tenor and date for the balance of the
unconverted portion of the Warrant Certificate.
8. Voluntary Adjustment by the Company. The Company may, at its option,
at any time during the term of the Warrants, reduce the then current Purchase
Price to any amount deemed appropriate by the Board of Directors of the Company
and/or extend the date of the expiration of the Warrants.
9. Fractional Shares and Warrants; Determination of Market Price Per
Share.
9.1. Anything contained herein to the contrary notwithstanding,
the Company shall not be required to issue any fraction of a share of Common
Stock in connection with the
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exercise of Warrants. Warrants may not be exercised in such number as would
result (except for the provisions of this paragraph) in the issuance of a
fraction of a share of Common Stock unless the Holder is exercising all Warrants
then owned by the Holder. In such event, the Company shall, upon the exercise of
all of such Warrants, issue to the Holder the largest aggregate whole number of
shares of Common Stock called for thereby upon receipt of the Purchase Price for
all of such Warrants and pay a sum in cash equal to the remaining fraction of a
share of Common Stock, multiplied by its Market Price Per Share (as determined
pursuant to Section 9.2 below) as of the last business day preceding the date on
which the Warrants are presented for exercise.
9.2. As used herein, the "Market Price Per Share" with respect to
any class or series of Common Stock on any date shall mean the average closing
price per share of the Company's Common Stock for the five trading days
immediately preceding such date. The closing price for each such day shall be
the last sale price regular way or, in case no such sale takes place on such
day, the average of the closing bid and asked prices regular way, in either case
on the principal securities exchange on which the shares of such Common Stock of
the Company are listed or admitted to trading or, if applicable, the last sale
price, or in case no sale takes place on such day, the average of the closing
bid and asked prices of such Common Stock on Nasdaq National Market or any
comparable system, or if such Common Stock is not reported on Nasdaq National
Market or a comparable system, the average of the closing bid and asked prices
as furnished by two members of the National Association of Securities Dealers,
Inc. selected from time to time by the Company for that purpose. If such bid and
asked prices are not available, then "Market Price Per Share" shall be equal to
the fair market value of such Common Stock as determined in good faith by the
Board of Directors of the Company.
10. Registration and Information Rights. The Holder shall be entitled to
the registration rights, the special covenants of the Company relating to
certain rights to information, and other covenants contained in that certain
Registration Rights Agreement dated as of March ___, 1998, between the Holder
and the Company and Common Stock and Warrant Subscription Agreement dated as of
March ___, 1998, between the Holder and the Company (the "Subscription
Agreement").
11. Transferability of Warrant. THIS WARRANT CERTIFICATE AND/OR THE
WARRANTS MAY ONLY BE TRANSFERRED UPON COMPLIANCE WITH THE TERMS OF THE
SUBSCRIPTION AGREEMENT.
12. Amendments.
12.1. Any term of this Warrant Certificate may be amended and the
observance of any term of the Warrant Certificate may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Holder.
12.2. No waivers of, or exceptions to, any term, condition or
provision of this Warrant Certificate, in any one or more instances, shall be
deemed to be, or construed as, a further or continuing waiver of any such term,
condition or provision.
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13. Governing Law. This Warrant Certificate shall be governed by and
construed in accordance with the laws of the State of California.
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IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed by its officers thereunto duly authorized and its corporate
seal to be affixed hereon, as of this ___ day of _____________, 199__
CYBERSOURCE CORPORATION, a California corporation.
By: ___________________________________________
Name: ___________________________________________
Title: ___________________________________________
Acknowledged and Agreed
this ___ day of _________, 199_
AMERICAN ONLINE, INC., a
Delaware Corporation
By: ______________________________________________
Name: ____________________________________________
Title: ___________________________________________
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EXHIBIT A
NOTICE OF EXERCISE
The undersigned hereby irrevocably elects to exercise, pursuant to
Section 2 of the Warrant Certificate accompanying this Notice of Exercise,
_______ Warrants of the total number of Warrants owned by the undersigned
pursuant to the accompanying Warrant Certificate, and herewith makes payment of
the Purchase Price of such shares in full.
By: __________________________________
Name: __________________________________
Address: __________________________________
__________________________________
__________________________________
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EXHIBIT B
NOTICE OF CONVERSION
The undersigned hereby irrevocably elects to convert, pursuant to
Section 7 of the Warrant Certificate accompanying this Notice of Conversion,
_________ Warrants of the total number of Warrants owned by the undersigned
pursuant to the accompanying Warrant Certificate into shares of the Common Stock
of the Company (the "Shares"). The number of Shares to be received by the
undersigned shall be calculated in accordance with the provisions of Section 7.1
of the accompanying Warrant Certificate.
By: __________________________________
Name: __________________________________
Address: __________________________________
__________________________________
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33
EXHIBIT B TO COMMON STOCK
AND WARRANTS SUBSCRIPTION AGREEMENT
FORM OF PRIVATE PLACEMENT WARRANT CERTIFICATE
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR UNDER THE
SECURITIES LAWS OF ANY JURISDICTION AND MAY NOT BE TRANSFERRED,
SOLD OR OTHERWISE DISPOSED OF UNLESS A REGISTRATION STATEMENT IS
IN EFFECT UNDER THE SECURITIES ACT AND ANY APPLICABLE SECURITIES
LAWS WITH RESPECT TO SUCH SECURITIES OR A WRITTEN OPINION OF
COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY IS PROVIDED TO THE
COMPANY TO THE EFFECT THAT NO REGISTRATIONS ARE REQUIRED UNDER
SUCH SECURITIES LAWS AND ARE SUBJECT TO RESTRICTIONS UPON
TRANSFER SET FORTH IN THE BYLAWS OF THE COMPANY AND MAY NOT BE
TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED EXCEPT IN
COMPLIANCE WITH THE TERMS OF SUCH BYLAWS.
Warrant No. 1 369,578 Warrants
(Subject to Adjustment
as Provided Herein)
CYBERSOURCE CORPORATION
WARRANT CERTIFICATE
This warrant certificate ("Warrant Certificate") certifies that for
value received AMERICA ONLINE, INC., 00000 XXX Xxx, Xxxxxx, Xxxxxxxx 00000, or
its registered assigns (the "Holder") is the owner of the number of warrants
("Warrants") specified above, each of which entitles the Holder thereof to
purchase, one fully paid and non-assessable share of Series D Preferred Stock,
no par value ("Series D Preferred"), of CyberSource Corporation a/k/a
"xxxxxxxx.xxx", a California corporation (the "Company"), at a purchase price
per share of Series D Preferred $2.60 (the "Purchase Price"). The Purchase Price
shall be payable in lawful money of the United States of America in cash or by
certified or cashier's check or a combination of cash and certified or cashier's
check (subject to adjustment as hereinafter provided). As used in this
Agreement, Private Financing means any private placement by the Company of its
securities (other than pursuant to a short-term interim bridge financing) with
investors in exchange for an investment of new capital.
34
1. Warrant; Purchase Price. The Purchase Price and number of shares of
Series D Preferred issuable upon exercise of each Warrant are subject to
adjustment as provided in Article 6. The shares of Series D Preferred issuable
upon exercise of the Warrants (and/or other shares of Series D Preferred so
issuable by reason of any adjustments pursuant to Article 6) are sometimes
referred to herein as the "Warrant Shares."
2. Exercise; Expiration Date.
2.1. The Warrants are exercisable, at the option of the Holder,
in whole or in part at any time and from time to time in an amount up to 10,266
Warrants for each full month following March 1, 1998 and ending, in each case,
on the Expiration Date, upon surrender of this Warrant Certificate to the
Company together with a duly completed Notice of Exercise, in the form attached
hereto as Exhibit A, and payment of an amount equal to the Purchase Price times
the number of Warrants to be exercised. In the case of exercise of less than all
the Warrants represented by this Warrant Certificate, the Company shall cancel
the Warrant Certificate upon the surrender thereof and shall execute and deliver
a new Warrant Certificate for the balance of such Warrants. Notwithstanding the
foregoing provisions of this Section 2.1, under no circumstances will any
Warrants be exercisable until after August 31, 1999 except in the event of a
Change of Control (as hereafter defined), in which case any outstanding Warrants
granted hereunder that are not then exercisable, in accordance with the vesting
provisions set forth in this Section 2.1, shall become immediately exercisable.
For purposes of this Section 2.1, a Change of Control shall mean (i) any person
(other than existing shareholder(s) of the Company) obtains the right to
designate a majority of the members of the Company's Board of Directors or
acquires sufficient shares of the Company's outstanding voting stock to cause
the election of a majority of the seats on the Company's Board of Directors,
(ii) the Company merges with another entity and the Company's stockholders prior
to the merger do not retain control of the combined entity, or (iii) the Company
sells substantially all of its assets or capital stock.
2.2. The term "Expiration Date" shall mean the earlier to occur
of (i) 5:00 p.m. California time on March ___, 2006 or if such day shall in the
State of California be a holiday or a day on which banks are authorized to
close, then 5:00 p.m. California time the next following day which in the State
of California is not a holiday or a day on which banks are authorized to close
and (ii) immediately prior to the consummation of the IPO (as defined in the
Marketing Agreement).
3. Registration and Transfer on Company Books.
3.1. The Company shall maintain books for the registration and
transfer of the Warrants and the registration and transfer of the Warrant
Shares.
3.2. Prior to due presentment for registration of transfer of
this Warrant Certificate, or the Warrant Shares, the Company may deem and treat
the registered Holder as the absolute owner thereof.
4. Reservation of Shares. The Company covenants that it will at all
times reserve and keep available out of its authorized capital stock, solely for
the purpose of issue upon exercise of
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35
the Warrants, such number of shares of Series D Preferred as shall then be
issuable upon the exercise or exchange of all outstanding Warrants and such
number of shares of Common Stock as shall be issuable upon conversion of shares
of Series D Preferred. The Company covenants that all shares of capital stock
which shall be issuable upon exercise of the Warrants shall be duly and validly
issued and fully paid and non-assessable and free from all taxes, liens and
charges with respect to the issue thereof, and that upon issuance, and
conversion of any shares of Series D Preferred in shares of Common Stock, such
shares shall be listed on each national securities exchange, if any, on which
the other shares of such outstanding capital stock of the Company are then
listed.
5. Loss or Mutilation. Upon receipt by the Company of reasonable
evidence of the ownership of and the loss, theft, destruction or mutilation of
any Warrant Certificate and, in the case of loss, theft or destruction, of
indemnity reasonably satisfactory to the Company (provided that if Holder is an
institutional investor or a nominee of an institutional investor, such
institutional investor's own unsecured agreement of indemnity shall be deemed to
be satisfactory for such purpose), or, in the case of mutilation, upon surrender
and cancellation of the mutilated Warrant Certificate, the Company shall execute
and deliver in lieu thereof a new Warrant Certificate representing an equal
number of Warrants.
6. Adjustment of Purchase Price and Number of Shares Deliverable.
6.1. The number of Warrant Shares purchasable upon the exercise
of each Warrant and the Purchase Price with respect to the Warrant Shares shall
be subject to adjustment as follows:
(a) In case the Company shall (i) declare a dividend or
make a distribution on its shares of Series D Preferred payable in shares of its
capital stock, (ii) subdivide its outstanding shares of Series D Preferred
through stock split or otherwise, (iii) combine its outstanding shares of Series
D Preferred into a smaller number of shares of Series D Preferred, or (iv) issue
by reclassification of its Series D Preferred (including any reclassification in
connection with a consolidation or merger in which the Company is the continuing
corporation) other securities of the Company, the number and/or nature of
Warrant Shares purchasable upon exercise of each Warrant immediately prior
thereto shall be adjusted so that the Holder shall be entitled to receive the
kind and number of Warrant Shares or other securities of the Company which it
would have owned or have been entitled to receive after the happening of any of
the events described above, had such Warrant been exercised immediately prior to
the happening of such event or any record date with respect thereto. Any
adjustment made pursuant to this paragraph (a) shall become effective
retroactively as of the record date of such event.
(b) In case the Company shall distribute to all holders of
its shares of Series D Preferred, or all holders of shares of Series D Preferred
shall otherwise become entitled to receive, shares of capital stock of the
Company (other than dividends or distributions on its shares of Series D
Preferred referred to in paragraph (a) above), evidences of its indebtedness or
rights, options, warrants or convertible securities providing the right to
subscribe for or purchase any shares of the Company's capital stock or evidences
of its indebtedness, then in each case the number of Warrant Shares thereafter
purchasable upon the exercise of each Warrant shall be
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36
determined by multiplying the number of Warrant Shares theretofore purchasable
upon the exercise of each Warrant, by a fraction, of which the numerator shall
be the then Market Price Per Share of the Warrant Shares (as determined pursuant
to Section 9.2) on the record date mentioned below in this paragraph (b), and of
which the denominator shall be the then Market Price Per Share of the Warrant
Shares on such record date, less the then fair value (as determined by the Board
of Directors of the Company, in good faith) of the portion of the shares of the
Company's capital stock other than Common Stock, evidences of indebtedness, or
of such rights, options, warrants or convertible securities, distributable with
respect to each Warrant Share. Such adjustment shall be made whenever any such
distribution is made, and shall become effective retroactively as of the record
date for the determination of shareholders entitled to receive such
distribution.
(c) In the event of any capital reorganization or any
reclassification of the capital stock of the Company or in case of the
consolidation or merger of the Company with another corporation (other than a
consolidation or merger in which the outstanding shares of the Company's Series
D Preferred are not converted into or exchanged for other rights or interests),
or in the case of any sale, transfer or other disposition to another corporation
of all or substantially all the properties and assets of the Company, the Holder
of each Warrant shall thereafter be entitled to purchase (and it shall be a
condition to the consummation of any such reorganization, reclassification,
merger, sale, transfer or other disposition that approriate provisions shall be
made so that such holder shall be entitled to purchase) the kind and amount of
shares of stock and other securities and property (including cash) which the
Holder would have been entitled to receive had such Warrants been exercised
immediately prior to the effective date of such reorganization,
reclassification, consolidation, merger, sale, transfer or other disposition;
and in any such case appropriate adjustments shall be made in the application of
the provisions of this Article 6 with respect to rights and interest thereafter
of the Holder of the Warrants to the end that the provisions of this Article 6
shall thereafter be applicable, as near as reasonably may be, in relation to any
shares or other property thereafter purchasable upon the exercise of the
Warrants. The provisions of this Section 6.1(c) shall similarly apply to
successive reorganizations, reclassifications, consolidations, mergers, sales,
transfers or other dispositions.
(d) Whenever the number of Warrant Shares purchasable upon
the exercise of each Warrant is adjusted, as provided in this Section 6.1, the
Purchase Price with respect to the Warrant Shares shall be accordingly adjusted
in order to reflect the number of Warrant Shares then and thereafter issuable.
6.2. In the event the Company shall declare a dividend, or make a
distribution to the holders of its Series D Preferred generally, whether in
cash, property or assets of any kind, including any dividend payable in stock or
securities of any other issuer owned by the Company (excluding any dividend or
distribution referred to in Section 6.1(a) or (c) above), the Purchase Price of
each Warrant shall be reduced, without any further action by the parties hereto,
by the Per Share Value (as hereinafter defined) of the dividend. For purposes of
this Section 6.2, the "Per Share Value" of a cash dividend or other distribution
shall be the dollar amount of the distribution on each share of Series D
Preferred and the "Per Share Value" of any dividend or distribution other than
cash shall be equal to the fair market value of such non-cash distribution on
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37
each share of Series D Preferred as determined in good faith by the Board of
Directors of the Company.
6.3. No adjustment in the number of Warrant Shares purchasable
under the Warrants, or in the Purchase Price with respect to the Warrant Shares,
shall be required unless such adjustment would require an increase or decrease
of at least 1% in the number of Warrant Shares issuable upon the exercise of
such Warrant, or in the Purchase Price thereof; provided, however, that any
adjustments which by reason of this Section 6.2 are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All final results of adjustments to the number of Warrant Shares and the
Purchase Price thereof shall be rounded to the nearest share or the nearest
cent, as the case may be. Anything in this Section 6 to the contrary
notwithstanding, the Company shall be entitled, but shall not be required, to
make such changes in the number of Warrant Shares purchasable upon the exercise
of each Warrant, or in the Purchase Price thereof, in addition to those required
by this Section 6, as it in its discretion shall determine to be advisable in
order that any dividend or distribution in shares of Series D Preferred,
subdivision, reclassification or combination of shares of Series D Preferred,
issuance of rights, warrants or options to purchase Series D Preferred, or
distribution of shares of stock other than Series D Preferred, evidences of
indebtedness or assets (other than distributions of cash out of retained
earnings) or convertible or exchangeable securities hereafter made by the
Company to the holders of its Series D Preferred shall not result in any tax to
the holders of its Series D Preferred or securities convertible into Series D
Preferred.
6.4. Whenever the number of Warrant Shares purchasable upon the
exercise of each Warrant or the Purchase Price of such Warrant Shares is
adjusted, as herein provided, the Company shall mail to the Holder, at the
address of the Holder shown on the books of the Company, a notice of such
adjustment or adjustments, prepared and signed by the Chief Financial Officer or
Secretary of the Company, which sets forth the number of Warrant Shares
purchasable upon the exercise of each Warrant and the Purchase Price of such
Warrant Shares after such adjustment, a brief statement of the facts requiring
such adjustment and the computation by which such adjustment was made.
6.5. In the event that at any time prior to the expiration of the
Warrants and prior to their exercise:
(a) the Company shall declare any distribution (other than
a cash dividend or a dividend payable in securities of the Company with respect
to the Series D Preferred); or
(b) the Company shall offer for subscription to the
holders of the Series D Preferred (as a class) any additional shares of stock of
any class or any other securities convertible into Series D Preferred or any
rights to subscribe thereto; or
(c) the Company shall declare any stock split, stock
dividend, subdivision, combination, or similar distribution with respect to the
Series D Preferred, regardless of the effect of any such event on the
outstanding number of shares of Series D Preferred; or
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38
(d) the Company shall declare a dividend, other than a
dividend payable in shares of the Company's own Series D Preferred; or
(e) there shall be any capital change in the Company as
set forth in Section 6.1(c); or
(f) there shall be a voluntary or involuntary dissolution,
liquidation, or winding up of the Company (other than in connection with a
consolidation, merger, or sale of all or substantially all of its property,
assets and business as an entity); (each such event hereinafter being referred
to as a "Notification Event"),
the Company shall cause to be mailed to the Holder, not less than 20 days prior
to the record date, if any, in connection with such Notification Event
(provided, however, that if there is no record date, or if 20 days prior notice
is impracticable, as soon as practicable) written notice specifying the nature
of such event and the effective date of, or the date on which the books of the
Company shall close or a record shall be taken with respect to, such event. Such
notice shall also set forth facts indicating the effect of such action (to the
extent such effect may be known at the date of such notice) on the Purchase
Price and the kind and amount of the shares of stock or other securities or
property deliverable upon exercise of the Warrants.
6.6. The form of Warrant Certificate need not be changed because
of any change in the Purchase Price, the number of Warrant Shares issuable upon
the exercise of a Warrant or the number of Warrants outstanding pursuant to this
Section 6, and Warrant Certificates issued before or after such change may state
the same Purchase Price, the same number of Warrants, and the same number of
Warrant Shares issuable upon exercise of Warrants as are stated in the Warrant
Certificates theretofore issued pursuant to this Agreement. The Company may,
however, at any time, in its sole discretion, make any change in the form of
Warrant Certificate that it may deem appropriate and that does not affect the
substance thereof, and any Warrant Certificates thereafter issued or
countersigned, whether in exchange or substitution for an outstanding Warrant
Certificate or otherwise, may be in the form as so changed.
7. Conversion Rights.
7.1. In lieu of exercising of any portion of the Warrants as
provided in Section 2.1 hereof, the Warrants represented by this Warrant
Certificate (or any portion thereof) may, at the election of the Holder, be
converted into the nearest whole number of shares of Common Stock equal to: (1)
the product of (a) the number of shares of Common Stock issuable upon conversion
of the shares of Series D Preferred then issuable upon the exercise of each
Warrant multiplied by (b) the excess, if any, of (i) the Market Price Per Share
(as determined pursuant to Section 9.2) with respect to the date of conversion
over (ii) the Purchase Price in effect on the business day next preceding the
date of conversion, divided by (2) the Market Price Per Share with respect to
the date of conversion.
7.2. The conversion rights provided under this Section 7 may be
exercised in whole or in part and at any time and from time to time while any
Warrants remain outstanding,
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39
provided that they are at the time currently exercisable. In order to exercise
the conversion privilege, the Holder shall surrender to the Company, at its
offices, this Warrant Certificate accompanied by a duly completed Notice of
Conversion in the form attached hereto as Exhibit B. The Warrants (or so much
thereof as shall have been surrendered for conversion) shall be deemed to have
been converted immediately prior to the close of business on the day of
surrender of such Warrant Certificate for conversion in accordance with the
foregoing provisions. As promptly as practicable on or after the conversion
date, the Company shall issue and shall deliver to the Holder (i) a certificate
or certificates representing the number of shares of Series D Preferred to which
the Holder shall be entitled as a result of the conversion, and (ii) if the
Warrant Certificate is being converted in part only, a new certificate of like
tenor and date for the balance of the unconverted portion of the Warrant
Certificate.
8. Voluntary Adjustment by the Company. The Company may, at its option,
at any time during the term of the Warrants, reduce the then current Purchase
Price to any amount deemed appropriate by the Board of Directors of the Company
and/or extend the date of the expiration of the Warrants.
9. Fractional Shares and Warrants; Determination of Market Price Per
Share.
9.1. Anything contained herein to the contrary notwithstanding,
the Company shall not be required to issue any fraction of a share of Series D
Preferred in connection with the exercise of Warrants. Warrants may not be
exercised in such number as would result (except for the provisions of this
paragraph) in the issuance of a fraction of a share of Series D Preferred unless
the Holder is exercising all Warrants then owned by the Holder. In such event,
the Company shall, upon the exercise of all of such Warrants, issue to the
Holder the largest aggregate whole number of shares of Series D Preferred called
for thereby upon receipt of the Purchase Price for all of such Warrants and pay
a sum in cash equal to the remaining fraction of a share of Series D Preferred,
multiplied by its Market Price Per Share (as determined pursuant to Section 9.2
below) as of the last business day preceding the date on which the Warrants are
presented for exercise.
9.2. As used herein, the "Market Price Per Share" with respect to
any class or series of Common Stock on any date shall mean the average closing
price per share of the Company's Common Stock for the five trading days
immediately preceding such date. The closing price for each such day shall be
the last sale price regular way or, in case no such sale takes place on such
day, the average of the closing bid and asked prices regular way, in either case
on the principal securities exchange on which the shares of such Common Stock of
the Company are listed or admitted to trading or, if applicable, the last sale
price, or in case no sale takes place on such day, the average of the closing
bid and asked prices of such Common Stock on Nasdaq National Market or any
comparable system, or if such Common Stock is not reported on Nasdaq National
Market or a comparable system, the average of the closing bid and asked prices
as furnished by two members of the National Association of Securities Dealers,
Inc. selected from time to time by the Company for that purpose. If such bid and
asked prices are not available, then "Market Price Per Share" shall be equal to
the fair market value of such Series D Preferred or Common Stock as determined
in good faith by the Board of Directors of the Company taking into account any
prior issuances of securities of the Company to investors and, in the event of a
Change of Control, the
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price per share of Series D Preferred or Common Stock to be paid in connection
with such Change of Control.
10. Registration and Information Rights. The Holder shall be entitled to
the registration rights, the special covenants of the Company relating to
certain rights to information, and other covenants contained in that certain
Registration Rights Agreement dated as of March 18, 1998, between the Holder and
the Company and the Common Stock and Warrants Subscription Agreement dated as of
March 18, 1998, between the Holder and the Company (the "Subscription
Agreement").
11. Transferability of Warrant. THIS WARRANT CERTIFICATE AND/OR THE
WARRANTS MAY ONLY BE TRANSFERRED UPON COMPLIANCE WITH THE TERMS OF THE
SUBSCRIPTION AGREEMENT.
12. Amendments.
12.1. Any term of this Warrant Certificate may be amended and the
observance of any term of the Warrant Certificate may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Holder.
12.2. No waivers of, or exceptions to, any term, condition or
provision of this Warrant Certificate, in any one or more instances, shall be
deemed to be, or construed as, a further or continuing waiver of any such term,
condition or provision.
13. Governing Law. This Warrant Certificate shall be governed by and
construed in accordance with the laws of the State of California.
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IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed by its officers thereunto duly authorized and its corporate
seal to be affixed hereon, as of this ___ day of March, 1998
CYBERSOURCE CORPORATION, a
Delaware corporation.
By: [SIG]
---------------------------
Name:
-------------------------
Title:
------------------------
Acknowledged and Agreed
this ___ day of March, 1998
AMERICAN ONLINE, INC., a
Delaware Corporation
By:
---------------------------
Name:
-------------------------
Title:
------------------------
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EXHIBIT A
NOTICE OF EXERCISE
The undersigned hereby irrevocably elects to exercise, pursuant to
Section 2 of the Warrant Certificate accompanying this Notice of Exercise,
_______ Warrants of the total number of Warrants owned by the undersigned
pursuant to the accompanying Warrant Certificate, and herewith makes payment of
the Purchase Price of such shares in full.
By:
----------------------------
Name:
-------------------------
Address:
----------------------
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EXHIBIT B
NOTICE OF CONVERSION
The undersigned hereby irrevocably elects to convert, pursuant to
Section 7 of the Warrant Certificate accompanying this Notice of Conversion,
_________ Warrants of the total number of Warrants owned by the undersigned
pursuant to the accompanying Warrant Certificate into shares of Series D
Preferred Stock of the Company (the "Shares"). The number of Shares to be
received by the undersigned shall be calculated in accordance with the
provisions of Section 7.1 of the accompanying Warrant Certificate.
By:
----------------------------
Name:
-------------------------
Address:
----------------------
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EXHIBIT C TO COMMON STOCK AND
WARRANTS SUBSCRIPTION AGREEMENT
REGISTRATION RIGHTS AGREEMENT
March ___, 1998
Ladies and Gentlemen:
CyberSource Corporation, a/k/a "xxxxxxxx.xxx," a California corporation
(the "Company"), proposes to issue and sell to America Online, Inc., a Delaware
corporation ("AOL"), upon the terms set forth in that certain Common Stock and
Warrants Subscription Agreement of even date herewith (the "Subscription
Agreement"), shares of the Company's common stock, no par value (the "Purchase
Shares"). Simultaneously with the execution and delivery of the Subscription
Agreement, the Company will issue to AOL the Private Placement Warrant
Certificate (as defined in the Subscription Agreement) for the future purchase
of shares of the Company's Series D Preferred Stock (the "Preferred Shares") as
set forth in the Private Placement Warrant Certificate and simultaneously with
the issuance and sale of the Purchase Shares, the Company will issue to AOL the
IPO Warrant Certificate for the future purchase of additional shares of the
Company's common stock as set forth in the IPO Warrant Certificate (together
with the Preferred Shares and the Shares of Common Stock issuable upon
conversion of the Preferrred Shares, the "Warrant Shares"). As an inducement to
AOL to purchase the Purchase Shares, the Company agrees with AOL as follows:
1. Definitions. As used in this Agreement, the following terms shall
have the following respective meanings:
1.1. "Commission" shall mean the Securities and Exchange
Commission, or any other Federal agency at the time administering the Securities
Act.
1.2. "Person" shall mean and include an individual, a
corporation, a partnership, a trust, an unincorporated organization and a
government or any department, agency or political subdivision thereof.
1.3. "Restricted Shares" shall mean the Purchase Shares, the
Warrant Shares and any shares of capital stock received in respect thereof,
evidenced by certificates bearing a restrictive legend substantially in the form
set forth in Section VI.A of the Subscription Agreement.
1.4. "Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar Federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
45
1.5. "Transfer" shall include any disposition of any shares of
Restricted Shares or of any interest therein which would constitute a sale
thereof within the meaning of the Securities Act.
1.6. Capitalized terms used herein without definition shall have
the meanings ascribed to such terms in the Subscription Agreement.
2. Registration Rights
2.1. Incidental Registration. If the Company proposes for any
reason to register, including pursuant to Section 2.2 hereof, any of its
securities under the Securities Act (other than pursuant to the initial public
offering of the Company's securities on Form S-1 or pursuant to a registration
statement on Forms S-8 or S-4 or similar or successor forms), it shall each such
time promptly give written notice to AOL of its intention to do so, and, upon
the written request, given within 30 days after receipt of any such notice of
AOL to register any Restricted Shares (which request shall specify the
Restricted Shares intended to be sold or disposed of by AOL), the Company shall
use its best efforts to cause all such Restricted Shares to be included in such
registration under the Securities Act, all to the extent requisite to permit the
sale or other disposition (in accordance with the Company's intended methods
thereof, as aforesaid) by AOL of the Restricted Shares so registered. In the
event that the proposed registration by the Company is, in whole or in part, an
underwritten public offering of securities by the Company, if the managing
underwriter determines and advises in writing that the inclusion of all
Restricted Shares proposed to be included in the underwritten public offering
and other issued and outstanding shares of Common Stock proposed to be included
therein by persons other than AOL (the "Other Shares") would interfere with the
successful marketing of such securities by the Company, then (i) the number of
Restricted Shares and Other Shares shall be reduced, pro rata among the holders
of Other Shares and AOL (based upon the number of shares of Common Stock
requested by the holders thereof to be registered in such underwritten public
offering), but such other shares shall only be reduced to the extent permitted
by any existing agreements with respect to registration rights to which the
Company is a party, and (ii) in each case those shares of Common Stock which are
excluded from the underwritten public offering shall be withheld from the market
by the holders thereof for a period, not to exceed 90 days, which the managing
underwriter reasonably determines as necessary in order to effect the
underwritten public offering.
2.2. Registrations on Form S-2 or S-3. At such time as the
Company shall have qualified for the use of Form S-2 or S-3 (or any similar form
or forms promulgated by the Commission), provided that AOL is at such time
unable to sell all of the Restricted Shares (other than Warrant Shares in
respect of which the Warrants are not then executable) in one transaction
pursuant to Rule 144 under the Securities Act, AOL shall have the right to
request one registration on Form S-2 and two registrations on Form S-3 (which
request shall be in writing, shall specify the Restricted Shares intended to be
sold or disposed of by AOL, shall state the intended method of disposition of
such Restricted Shares by AOL and shall relate to Restricted Shares having a
proposed aggregate gross offering price (before deduction of underwriting
discounts and expenses of sale) of at least $2,000,000 for a registration on
Form S-2 and $1,000,000 for a registration on Form S-3), and the Company shall
be obligated to effect such registration or registrations on Form S-2 or Form
S-3 (as the case may be); provided, however,
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that the Company shall in no event be obligated to cause the effectiveness of
more than one such registration statement in any calendar year. The Company
shall not register securities for sale for its own account in any registration
requested pursuant to this Section 2.2 unless requested to do so by the holders
of Restricted Shares who hold at least 51% of the stock as to which registration
has been requested. At any time prior to the time that the Company shall have
qualified for the use of Form S-2 or S-3 (or any similar form or forms
promulgated by the Commission) AOL shall have the one time right to request the
Company to file a registration statement on any form which the Company is then
entitled to use. Such request shall be in writing, shall specify the shares of
Common Stock intended to be sold or disposed of by AOL, shall state the intended
method of disposition by AOL and shall relate to Common Stock having a proposed
aggregate gross offering price (before deduction of underwriting discounts and
expenses of sale) of at least $2,000,000, and the Company shall be obligated to
effect such registration as promptly as practical, subject in any event to all
applicable securities laws; provided, however, that the Company shall not be
required to file such registration statement prior to the expiration of 180 days
from the effective date of the Company's registration statement covering its
initial public offering. Notwithstanding the foregoing, if the Company shall
furnish to AOL within fifteen (15) days of receipt of such request a certificate
signed by the President of the Company stating that in the good faith judgment
of the Board of Directors of the Company (as evidenced by a board resolution)
(A) the Company is in possession of material, non-public information concerning
an acquisition, merger, recapitalization, consolidation, reorganization or other
material transaction by or of the Company or concerning pending or threatened
litigation and (B) disclosure of such information would seriously jeopardize any
such transaction or litigation or otherwise materially harm the Company and it
is therefore essential to defer the filing of such registration statement, the
Company shall have the right to defer such filing to a date not later than sixty
(60) days after receipt of such request, provided that the Company will not
exercise this right more than once in any twelve-month period.
2.3. Designation of Underwriter.
2.3.1. In the case of any registration effected pursuant to
Sections 2.2, AOL shall have the right to designate the managing
underwriter (if any) in any such underwritten offering, provided
that it is reasonably acceptable to the Company.
2.3.2. In the case of any registration initiated by the
Company, the Company shall have the right to designate the managing
underwriter in any underwritten offering.
2.4. Preparation and Filing. If and whenever the Company is under
an obligation pursuant to the provisions of Section 2.2 to effect the
registration of any Restricted Shares, the Company shall, as expeditiously as
practicable:
2.4.1. prepare and file with the Commission a registration
statement with respect to such securities and use its best efforts
to cause such registration statement to become and remain effective;
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2.4.2. prepare and file with the Commission such amendments
and supplements to such registration statements and the prospectus
used in connection therewith as may be necessary to keep such
registration statement effective and current for at least ninety
(90) day and to comply with the provisions of the Securities Act
with respect to the sale or other disposition of all Restricted
Shares covered by such registration statement;
2.4.3. furnish to AOL such number of copies of a summary
prospectus or other prospectus, including a preliminary prospectus,
in conformity with the requirements of the Securities Act, and such
other documents as AOL may reasonably request in order to facilitate
the public sale or other disposition of such Restricted Shares;
2.4.4. use its best efforts to register or qualify the
Restricted Shares covered by such registration statement under the
securities or blue sky laws of such jurisdictions as AOL shall
reasonably request (provided, however, the Company shall not be
required to consent to general service of process for all purposes
in any jurisdiction where it is not then qualified) and do any and
all other acts or things which may be necessary or advisable to
enable AOL to consummate the public sale or other disposition in
such jurisdictions of such securities;
2.4.5. notify AOL, at any time when a prospectus relating
thereto covered by such registration statement is required to be
delivered under the Securities Act within the appropriate period
mentioned in Section 2.4.2 above, of the happening of any event as a
result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing and at the
request of AOL, prepare and furnish to AOL a reasonable number of
copies of a supplement to or an amendment of such prospectus as may
be necessary so that, as thereafter delivered to the purchasers of
such shares, such prospectus shall not include 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 not
misleading in light of the circumstances then existing;
2.4.6. furnish, upon request, to AOL a signed counterpart,
addressed to AOL, of (i) an opinion of counsel for the Company,
dated the effective date of the registration statement, and (ii) a
"comfort" letter signed by the independent public accountants who
have certified the Company's financial statements included in the
registration statement, covering substantially the same matters with
respect to the registration statement (and the prospectus included
therein) and (in the case of the "comfort" letter) with respect to
events subsequent to the date of the financial statements, as are
customarily covered (at the time of such registration ) in opinions
of issuer's counsel and in "comfort" letters delivered to the
underwriters in underwritten public offerings of securities; and
2.4.7. shall register or qualify or cooperate with AOL and
its counsel in connection with the registration or qualification of
the Restricted Shares for offer and sale
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under the securities or "blue sky" laws of such states of the
United States as AOL reasonably requests in writing and do any and
all other acts or things necessary or advisable to enable the offer
and sale in such jurisdiction of the Restricted Shares covered in
the registration statement; provided that the Company shall not be
required to (i) qualify generally to do business in any jurisdiction
where it is not then so qualified or (ii) take any action which
would subject it to general service of process or to taxation in any
jurisdiction where it is not then so subject; and
2.4.8. make reasonably available for inspection by AOL, any
underwriter participating in any disposition pursuant to the
registration statement and any attorney, accountant or other agent
retained by AOL or any such underwriter all relevant financial and
other records, pertinent corporate documents and properties of the
Company and cause the Company's officers, directors, employees,
accountants and auditors to supply all relevant information
reasonably requested by AOL or any such underwriter, attorney,
accountant or agent in connection with the registration statement,
in each case, as shall be reasonably necessary to enable such
persons to conduct a reasonable investigation within the meaning of
Section 11 of the Securities Act.
2.5. The Company shall maintain the effectiveness of any
registration statement filed pursuant to Section 2.2 until the sooner to occur
of (i) such time that all Restricted Shares included therein are sold or no
longer constitute Restricted Shares as defined in Section 1.3 hereof or (ii) 90
days following the effective date of such registration statement.
3. Registration Expenses. All expenses incurred by the Company in
complying with its obligations under Section 2 hereof shall be paid by the
Company, including, without limitation, all registration and filing fees,
printing expenses, blue sky filing fees, fees and disbursements of counsel for
the Company, and expenses of any required audits; provided, however, that (i)
all underwriting discounts and selling commissions and other similar fees and
costs applicable to the Restricted Shares covered by registrations effected
hereunder, as well as the fees and disbursements of counsel designated for AOL
shall be borne by AOL in proportion to the number of Restricted Shares sold by
AOL and (ii) all other expenses incurred by the Company in excess of $75,000
shall be borne by AOL pro rata (i) with other selling shareholders of the
Company and (ii) with the Company in connection with the sale of shares other
than shares of the Company issue and outstanding immediately prior to the date
of the registration statement, each selling pursuant to a registration statement
filed under Section 2 hereof.
4. Indemnification.
4.1. In the event of any registration of any Restricted Shares
under the Securities Act pursuant to this Agreement or registration or
qualification of any Restricted Shares under state securities or blue sky laws,
the Company shall indemnify and hold harmless AOL, its directors, officers and
underwriters or any other person acting on behalf of AOL and each other person,
if any, who controls any of the foregoing persons, within the meaning of the
Securities Act, against any losses, claims, damages or liabilities, joint or
several, or any action in respect thereof (including but not limited to, any
losses, claims, damages, liabilities or actions relating to the purchase and
sale of Restricted Shares) to which any of the foregoing persons may become
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49
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any registration statement under which such Restricted Shares were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereto, or any
document prepared and/or furnished by the Company (incident to the registration
or qualification of any Restricted Shares under state securities or blue sky
laws, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading or, with respect to any prospectus,
necessary to make the statements therein in light of the circumstances under
which they were made, not misleading, or any violation by the Company of the
Securities Act or state securities or blue sky laws applicable to the Company
and relating to action or inaction required of the Company in connection with
such registration or qualification under such state securities or blue sky laws,
and shall reimburse as incurred AOL, its directors, officers and underwriters,
or any other person acting on behalf of AOL and any person controlling AOL for
any legal or any other expenses reasonably incurred by any of them in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Company shall not be liable in any such case
to the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in said registration statement, said preliminary
prospectus or said prospectus or said amendment or supplement or any document
incident to the registration or qualification of any Restricted Shares under
state securities or blue sky laws, in reliance upon and in conformity with
written information pertaining to AOL furnished to the Company by AOL or AOL's
agent or representative specifically for use in the preparation thereof,
provided further, that this indemnity agreement will be in addition to any
liability which the Company may otherwise have to AOL, its directors, officers
and control persons.
4.2. AOL shall indemnify and hold harmless (in the same manner
and to the same extent as set forth in the preceding paragraph or, if different,
in the manner and to the extent as is in accordance with standard industry
practice at the time of the proposed sale) the Company, each director of the
Company, each officer of the Company who shall sign such registration statement,
and any person who controls the Company within the meaning of the Securities
Act, with respect to any untrue statement or omission from such registration
statement, any preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereto, if such untrue statement or omission was
made in reliance upon and in conformity with written information pertaining to
AOL furnished to the Company by AOL or AOL's agent or representative
specifically for use in the preparation of such registration statement,
preliminary prospectus, final prospectus or amendment or supplement; provided,
however, that the amount of AOL's indemnification obligation shall be limited to
the net proceeds received by AOL from the sale of AOL's Restricted Shares
pursuant to the registration statement.
4.3. Promptly after receipt by an indemnified party of notice of
the commencement of any action involving a claim referred to in the preceding
paragraphs of this Section 4, such indemnified party will, if a claim in respect
thereof is made against an indemnifying party, give written notice to the latter
of the commencement of such action. In case any such action is brought against
an indemnified party, the indemnifying party will be entitled to participate in
and to assume the defense thereof, jointly with any other indemnifying party
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similarly notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party (who shall not, except with the consent
of the indemnified party, be counsel to the indemnifying party), and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party shall not be responsible
for any legal or other expenses subsequently incurred by the indemnified party
in connection with the defense thereof; provided, however, that if any
indemnified party shall have reasonably concluded that there may be one or more
legal defenses available to such indemnified party which are different from or
additional to those available to the indemnifying party, or that such claim or
litigation involves or could have an effect upon matters beyond the scope of the
indemnity agreement provided in this Section 4, the indemnifying party shall not
have the right to assume the defense of such action on behalf of such
indemnified party and such indemnifying party shall reimburse such indemnified
party and any person controlling such indemnified party for that portion of the
fees and expenses of any counsel retained by the indemnified party which are
reasonably related to the matters covered by the indemnity agreement provided in
this Section 4.
4.4. The indemnifying party shall not make any settlement of any
claims indemnified against hereunder without the written consent of the
indemnified party or parties, which consent shall not be unreasonably withheld.
4.5. In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in this Section 4 is due
in accordance with its terms but is for any reason held by a court to be
unavailable from the Company or AOL on grounds of public policy or otherwise,
the Company and AOL shall contribute to the aggregate losses, claims, damages
and liabilities (including legal or other expenses reasonably incurred in
connection with investigating or defending the same) to which the Company and
AOL or an underwriter (and any person who controls any of the foregoing persons,
and any person acting on behalf of any of the foregoing persons in connection
with such registration), including, without limitation, any officer, director,
broker, employee, agent, attorney and accountant, and in the case of a
partnership, each of its partners) is subject, as the case may be, in such
proportion as is appropriate to reflect the relative fault of the Company and
AOL or such underwriter (and any person who controls any of the foregoing
persons, and any person acting on behalf of any of the foregoing in connection
with such registration, including, without limitation, any officer, director,
broker, employee, agent, attorney or accountant, and in the case of a
partnership, each of its partners), as the case may be, in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as all other relevant equitable considerations; provided,
however, that no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of Securities Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation;
provided, further, that in the case of AOL, the maximum amount of such
contribution shall be limited to an amount equal to the net proceeds actually
received by AOL from the sale of Restricted Shares effected pursuant to such
registration. Any party entitled to contribution under this paragraph shall,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties under this paragraph, notify such other
party or parties from whom contribution may be sought, but the omission to so
notify such other party or parties shall not relieve the party or parties from
whom contribution may be sought from any other contribution obligation it or
they may have under this paragraph or otherwise.
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4.6. The agreement contained in this Section 4 shall survive the
sale of the Restricted Shares pursuant to Section 2 hereof and shall remain in
full force and effect, regardless of any termination or cancellation of this
Agreement or any investigation made by or on behalf of any indemnified party.
5. Rule 144. The Company shall use its best efforts to file the reports
required to be filed by it under the Securities Act and the Exchange Act in a
timely manner and, if at any time the Company is not required to file such
reports, it will, upon the request of AOL, make publicly available other
information so long as necessary to permit sales of the Restricted Shares
pursuant to Rule 144. The Company covenants that it will take such further
action as AOL may reasonably request, all to the extent required from time to
time to enable AOL to sell the Restricted Shares without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144.
Upon the request of AOL, the Company shall deliver to AOL a written statement as
to whether it has complied with such requirements. The Company shall furnish to
AOL upon request its most recent annual or quarterly report of the Company and
other reports or documents so filed by the Company.
6. Underwritten Registrations. If any of the Restricted Shares are to be
sold in an underwritten offering pursuant to Section 2.2, the investment banker
or investment bankers and manager or managers that will administer the offering
will be selected by AOL, provided that it or they are reasonably acceptable to
the Company. If the Shares are sold in an underwritten offering, AOL agrees to
(i) sell the Shares on the basis reasonably provided in any underwriting
arrangements approved by AOL, (ii) complete and execute all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements and (iii)
provide such information to the Company as is necessary to include AOL as a
selling stockholder.
7. Granting of Registration Rights.
7.1. Nothing in this Registration Rights Agreement shall restrict
any rights to any person(s) pursuant to registration rights previously granted
by the Company to register any shares of capital stock or other securities of
the Company regardless of whether such rights would be superior to the rights of
AOL granted pursuant to this Agreement.
7.2. The Company shall not grant any rights to any person(s) to
register any shares of capital stock or other securities of the Company if such
rights would conflict with or impair AOL's rights under this Agreement.
8. "Market Stand-Off" Agreement. AOL hereby agrees that it shall not, to
the extent requested by the Company and an underwriter of Common Stock (or other
securities) of the Company, sell or otherwise transfer or dispose of any
securities of the Company (other than securities registered in the offering)
whether or not acquired by AOL under the subscription Agreement for a period of
one hundred eighty (180) days, following the effective date of a registration
statement of the Company filed under the Securities Act; provided, however,
that:
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(a) such agreement shall be applicable only to the first such
registration statement of the Company which covers shares (or
securities) to be sold on its behalf to the public in an
underwritten offering; and
(b) all officers and directors of the Company, holders of 5%
or more of the Company's issued and outstanding capital stock and
all other persons with registration rights (whether or not pursuant
to this Agreement) similarly agree not to sell or transfer.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Restricted Shares (and the shares
or securities of every other person subject to the foregoing restriction) until
the end of such reasonable and customary period.
9. Miscellaneous.
9.1. Registration Review. AOL shall have the right to review any
references to AOL that appear in any registration statements contemplated hereby
filed with the Securities and Exchange Commission by the Company, provided, that
AOL shall not unreasonably object to such references and, provided further, that
this review right shall not impede the Company in meeting its disclosure
obligations under applicable securities laws, as reasonably interpreted by its
counsel, or unreasonably delay the filing of any such registration statements.
9.2. Amendments and Waivers. The provisions of this Agreement may
not be amended, modified or supplemented, and waivers or consents to departures
from the provisions hereof may not be given, except with the written consent of
the Company and AOL.
9.3. Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand delivery, first-class
mail, facsimile transmission, or air courier which guarantees overnight
delivery:
(1) if to AOL. at its address as follows: America Online, Inc.
00000 XXX Xxx
Xxxxxx, Xxxxxxxx 00000
Fax No.: (000) 000-0000
Attention: Xxxxx Xxxxxxx and
General Counsel
with a copy to Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxxx
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(2) if to the Company, at its address
as follows: CyberSource Corporation
a/k/a "xxxxxxxx.xxx"
0000 Xxxxx Xxx, Xxxxx 000
Xxx Xxxx, XX 00000
Fax No.: (000) 000-0000
Attention: President
with a copy to: Xxxxxxx Xxxxx Xxxx & Black, LLP
00 Xxxxx Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Fax No.: (000) 000-0000
Attn: Xxxxxxx Xxxxxxxxxx, Esq.
All such notices and communications shall be deemed to have been duly given: at
the time delivered by hand, if personally delivered; five business days after
being deposited in the mail, postage prepaid, if mailed; when receipt is
acknowledged by recipient's facsimile machine operator, if sent by facsimile
transmission; and on the day delivered, if sent by overnight air courier
guaranteeing next day delivery.
9.4. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of AOL and the Company and their respective successors
and assigns. The registration rights of AOL under Sections 2.1 and 2.2 hereof
(and, except as provided in the next sentence, all other rights and benefits
under this Agreement) may be transferred to a transferee that acquires at least
50% of the Purchase Shares originally issued to AOL. The registration rights of
AOL under Sections 2 and 3 hereof (and all other rights and benefits under this
Agreement) may also be transferred to a transferee that is a current or future
affiliate of AOL or to another party reasonably acceptable to the Company
without restriction as to minimum transfer amount and is not a competitor of the
Company. The Company shall be given written notice by the holder at the time of
such transfer stating the name and address of the transferee and identifying the
securities with respect to which the registration rights are being assigned
pursuant to this Section 8.4.. The registration rights of AOL under this
Agreement shall not be otherwise transferable without the consent of the
Company.
9.5. Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate 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. Signatures may be provided
by facsimile, provided that actual execution copies are sent by an overnight
delivery service on the same date as the facsimile transmission.
9.6. Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
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9.7. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAWS.
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9.8. Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions contained
herein shall not be affected. If the foregoing is in accordance with your
understanding of our agreement, please sign and return to the Company a
counterpart hereof, whereupon this instrument, along with all counterparts, will
become a binding agreement between us in accordance with its terms.
Very truly yours,
CYBERSOURCE CORPORATION,
a California corporation
By [SIG]
--------------------------------
Name:
Title:
The foregoing Registration Rights Agreement is hereby confirmed and
accepted as of the date first above written.
AMERICA ONLINE, INC..
a Delaware corporation
By________________________________
Name:
Title:
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