EXHIBIT 10.14
HYBRID FAX, INC.
Subscription and Stock Purchase Agreement
TO: Hybrid Fax, Inc.
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx Xxxx, XX 00000
Attn: President
Gentlemen:
The undersigned has received the Confidential Private Placement Memorandum
dated July 17, 1989 (the "Memorandum") offering a minimum of 200,000 and a
maximum of 400,000 shares of Series B Preferred Stock ("Preferred Stock") of
Hybrid Fax, Inc., a Delaware corporation ("Company"), with a minimum investment
being $20,000 (except with respect to current holders of the Company's Series A
Preferred Stock) and additional investment being available in increments of
$10,000. The undersigned also acknowledges the receipt with this Subscription
and Stock Purchase Agreement. The Memorandum, its appendices and any material
delivered by the Company therewith are herein referred to as the "Offering
Documents".
The undersigned ("Purchaser") hereby subscribes for, and agrees to
purchase, one share of Preferred Stock for each $1.00 of the amount of
investment set forth in the space provided on the signature page below. The
undersigned hereby tenders this Subscription and Stock Purchase Agreement (the
"Agreement") with a check in the amount of the aggregate subscription amount
payable to the order of "Hybrid Fax, Inc."
Purchaser understands that, upon receipt, the check tendered as payment for
the subscription amount for the Preferred Stock shall not be negotiated by the
Company until subscriptions aggregating at least $200,000 in whole are received
and accepted by the Company provided that, if minimum subscriptions are not
accepted by the Company by July 31, 1989, the check will be promptly returned to
the undersigned.
This subscription shall be irrevocable and shall survive death, disability,
dissolution, liquidation or bankruptcy of Purchaser, subject, however, to all of
the terms and provisions contained in the Offering Documents and the closing
conditions set forth herein. The Company shall have the right to accept or
reject this subscription, in whole or in part, and this subscription shall be
deemed to be accepted by the Company only by execution of this Agreement.
All capitalized terms used but not defined herein shall have the same
meaning as defined in the Memorandum.
If Purchaser is a beneficial holder of Series A Preferred Stock, Purchaser
hereby consents to the creation of a series of Preferred Stock in accordance
with the Memorandum.
Purchaser represents the following to the Company:
(a) Purchaser has full power and authority to enter into this Agreement,
and to perform its obligations hereunder and to consummate the transactions
contemplated hereby. This Agreement in a legal, valid and binding obligation of
such Purchaser, enforceable against the purchaser in accordance with its terms.
(b) Purchaser recognizes that an investment in the Company is a
speculative investment involving a high degree of risk.
(c) Purchaser has adequate net worth and means of providing for current
needs and possible personal contingencies, and has no need, and anticipates no
need in the foreseeable future, to sell the Preferred Stock (or the Common Stock
issuable upon conversion) for which such Purchaser hereby subscribes. Purchaser
is able to bear the economic risk of this investment and, consequently, without
limiting the generality of the foregoing, is able to hold the Preferred Stock
(and the Common Stock issuable upon conversion) for an indefinite period of time
and has a sufficient net worth to sustain a loss of the entire investment in the
Company in the event such loss should occur.
(d) Purchaser is acquiring the Preferred Stock for his own account for
investment and not for the benefit of any other person or with a view toward
resale or redistribution in a manner which would require registration under the
1933 Act, and such Purchaser does not now have any reason to anticipate any
change in circumstances or other particular occasion or event which would cause
such Purchaser to sell the Preferred Stock (or the Common Stock issuable upon
conversion).
(e) Purchaser acknowledges that there are substantial restrictions on the
transferability of the Preferred Stock (and the Common Stock issuable upon the
conversion thereof). Since the Preferred Stock (and the Common Stock issuable
upon conversion thereof) will not be, and, except as provided in this Agreement,
the Purchaser has no right to require that they be, registered under the 1933
Act or qualified pursuant to applicable state securities law, the Preferred
Stock (and the Common Stock issuable upon conversion thereof) may not be, and
Purchaser agrees that they shall not be, sold unless such sale is exempt from
such registration under the 1933 Act, the Securities Act of Texas and any other
applicable state blue sky law or regulation. Each Purchaser further acknowledges
that the Company is under no obligation to aid me in obtaining any exemption
from the registration requirements. Purchaser acknowledges that Purchaser shall
be responsible for compliance with all conditions on transfer imposed by any
securities administrator of any state and for any expenses incurred by the
Company for legal or accounting services in connection with reviewing such a
proposed transfer and/or issuing opinions in connection therewith.
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Upon issuance of the Preferred Stock to Purchaser pursuant hereto, the
Company agrees that Purchaser shall have the following registration rights with
respect to such shares of Preferred Stock purchased hereunder (and the Common
Stock issuable upon conversion thereof):
1. Requested Registration.
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(a) Request for Registration. In case the Company shall receive from
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Holders of 50% of the issued or issuable Registrable Securities (the "Initiating
Holders") a written request that the Company effect a registration under the
Securities Act of 1933, as amended (the "Securities Act") with respect to not
less than a number of shares (as adjusted for recapitalizations) of Registrable
Securities, sufficient (when aggregated with the offering of other holders who
have similar registration rights who have so requested registration) so that the
net proceeds of a proposed offering of such shares would be reasonably estimated
to exceed $3,000,000, the Company will (i) promptly give written notice of the
proposed registration, qualification or compliance to all other Holders and (ii)
as soon as practicable, use its best efforts to effect such registration
(including, without limitation, appropriate qualification under blue sky or
other state securities laws and appropriate compliance with applicable
regulations issued under the Securities Act and any other governmental
requirements or regulations) as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Registrable
Securities as are specified in such request, together with all or such portion
of the Registrable Securities of any Holder or Holders joining in such request
as are specified in a written request received by the Company within 20 days
after receipt of such written notice from the Company; provided, however, that
the Company shall not be obligated to take any action to effect any such
registration, qualification or compliance pursuant to this Section 1:
(A) In any particular jurisdiction in which the Company would be
required to execute a general consent to service of process in effecting
such registration, qualification or compliance unless the Company is
already subject to service in such jurisdiction and except as may be
required by the Securities Act;
(B) Prior to the earlier of (i) December 31, 1992, or (ii) six months
after the effective date of the Company's first registered public offering
of its stock;
(C) If the Company receives an opinion of counsel, reasonably
satisfactory to a majority of the requesting Holders, to the effect that
the Holders can make open market sales of the outstanding Common Stock held
by them without registration, subject to the volume and manner of sale
limitations contained in Rule 144 promulgated by the Securities and
Exchange Commission or such similar exemption from registration
requirements of the Act;
(D) During the period starting with the date sixty (60) days prior to
the Company's estimated date of filing of, and ending on the date six (6)
months immediately following the effective date of, any registration
statement pertaining to securities of the
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Company (other than a registration of securities in a Rule 145 transaction
or with respect to an employee benefit plan), provided that the Company is
actively employing in good faith all reasonable efforts to cause such
registration statement to become effective;
(E) After the Company has effected one such registration pursuant to
this paragraph 1(a), and such registrations have been declared or ordered
effective; or
(F) If the Company shall furnish to such Holders a certificate signed
by the President of the Company stating that in the good faith judgment of
the Board of Directors of the Company it would be seriously detrimental to
the Company or its shareholders for a registration statement to be filed in
the near future, in which case the Company's obligation to use its best
efforts to register, qualify or comply under this Section 1 shall be
deferred for a period not to exceed 120 days from the date of receipt of
the written request from the Initiating Holders.
Subject to the foregoing clauses (A) through (F), the Company shall file a
registration statement covering the Registrable Securities so requested to be
registered as soon as practicable after receipt of the request or requests of
the Initiating Holders.
(b) Underwriting. In the event that a registration pursuant to this
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Section 1 is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as part of the notice given pursuant to
Section 1(a)(i). In such event, the right of any Holder to registration pursuant
to this Section 1 shall be conditioned upon such Holder's participation in the
underwriting arrangements required by this Section 1, and the inclusion of such
Holder's Registrable Securities in the underwriting to the extent requested
shall be limited as provided herein. The Company shall (together with all
Holders proposing to distribute their securities through such underwriting)
enter into an underwriting agreement in customary form with the managing
underwriter(s) selected for such underwriting by a majority in interest of the
Initiating Holders, but subject to the Company's reasonable approval.
Notwithstanding any other provision of this Section 1, if the managing
underwriter(s) advise(s) the Initiating Holders in writing that marketing
factors require a limitation of the number of shares to be underwritten, then
the Company shall so advise all Holders participating and the number of shares
of Registrable Securities that may be included in the registration and
underwriting shall be allocated among all Holders thereof in proportion, as
nearly as practicable, to the respective amounts of Registrable Securities held
by such Holders at the time of filing the registration statement. No Registrable
Securities excluded from the underwriting by reason of the underwriters'
marketing limitation shall be included in such registration. To facilitate the
allocation of shares in accordance with the above provisions, the Company or the
underwriters may round the number of shares allocated to any Holder to the
nearest 100 shares.
If any Holder disapproves of the terms of the underwriting, such person may
elect to withdraw therefrom by written notice to the Company, the managing
underwriter and the Initiating Holders. The Registrable Securities so withdrawn
shall also be withdrawn from registration, and
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such Registrable Securities shall not be transferred in a public distribution
prior to 90 days after the effective date of such registration, or such other
shorter period of time as the underwriters may require.
2. Optional Registrations. If at any time or times the Company shall
----------------------
determine to register any of its securities (for itself or for any other
securities holder of the Company) under the Securities Act or any successor
legislation (other than a registration relating to stock option plans, employee
benefit plans or a Rule 145 transaction), and in connection therewith the
Company may lawfully register its Common Stock, the Company will promptly give
written notice thereof to the then holders (the "Holders") of all issued or
issuable Registrable Securities (as hereinafter defined) and will use its best
efforts to include in such registration and to effect the registration under the
Securities Act of all Registrable Securities which such Holders may request in
writing delivered to the Company within 15 days after receipt by such Holder of
the notice given by the Company; provided, however, if the managing underwriter
for the Company advises the Company in writing that including all or part of the
Registrable Shares in such offering will adversely affect the marketing of the
proposed offering, then, in connection with any such underwritten offering by
the Company of any of its securities, such registration of Registrable
Securities shall be limited to not less than 10% of the total number of shares
to be sold in the case of an initial public offering of the Company's
securities, and 20% of the total number of shares to be sold in the case of a
subsequent offering; further provided, however, that such limited number of
shares of Common Stock in such offering, which shares shall be taken from those
owned (or obtainable upon the exercise of rights with respect to other
securities) by a group of holders requesting registration consisting of the
Holders and other holders having similar registration rights to those of the
Holders, and such limitation shall be imposed upon the Holders and such other
holders pro rata on the basis of the total number of (i) shares of Registrable
Securities owned by the requesting Holders and (ii) shares of Common Stock
owned, or obtainable by them upon the exercise of rights with respect to other
securities, by such other requesting holders. In the event of such a
limitation, shares of persons not having similar registration rights will not be
included in such registration. The Company shall have the right to select the
managing underwriter or underwriters for any underwritten offering made pursuant
to a registration under this Section 2 hereof.
3. Registrable Securities. For the purposes of these provisions, the term
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"Registrable Securities" shall mean (i) the Common Stock issued or issuable upon
conversion of the Series A Preferred Stock of the Company and the Preferred
Stock (the "Conversion Stock"), (ii) the Common Stock issued or issuable upon
exercise of the Company's outstanding Common Stock Purchase Warrants, of which
warrants to purchase 75,009 shares are outstanding and (iii) any Common Stock
issued or issuable with respect to the Common Stock described in clauses (i) or
(ii) by way of a stock dividend or stock split.
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4. Expenses of Registration.
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(a) All expenses of the registration and offering incurred in connection
with (i) one registration pursuant to Section 1, and (ii) one registration
pursuant to Section 2, shall be borne by the Company, except that the Holders
shall bear underwriting commissions and discounts attributable to their
Registrable Securities being registered and the fees and expenses of separate
counsel, if any, for such Holders. Unless otherwise stated, all Selling Expenses
relating to securities registered on behalf of the Holders and all other
Registration Expenses shall be borne by the Holders of such securities pro rata.
If the Company includes in such registration any securities to be offered by it,
all expenses shall be borne by the Company.
(b) A proportionate share of the expenses of the registration and offering
incurred in connection with any registration pursuant to Section 2 after the
first registration thereunder, shall be borne pro rata by the Holder or Holders
requesting the registration on the basis of the ratio of the number of their
shares so registered to the total number of shares included in such
registration.
5. Transfer of Registration Rights. The rights to cause the Company to
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register securities granted Purchasers under Sections 1 and 2 may be assigned to
a transferee or assignee reasonably acceptable to the Company in connection with
any transfer or assignment of Registrable Securities by a Purchaser provided
that: (i) such transfer may otherwise be effected in accordance with applicable
securities laws, and (ii) such assignee or transferee acquires at least 5,000
shares of the Registrable Securities (appropriately adjusted for
Recapitalizations).
6. Standoff Agreement. The Holders shall, if requested by the managing
------------------
underwriter or underwriters of any proposed firm underwritten offering of
securities by the Company, agree not to sell any of their Registrable Securities
or any other securities of the Company owned by such Holders in any transaction
other than pursuant to such underwritten offering for a period of up to 90 days
beginning on the effective date of the registration statement, provided that the
Company's officers and directors and each holder of 10% or more of the Company's
issued and outstanding Common Stock also agree to such limitations. The Holders
shall upon request execute a written agreement confirming and agreeing as to the
foregoing.
7. Registration Indemnification. In the event of any Registration under
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the Act pursuant to these provisions of Registrable Securities of any Holder,
the Company will hold harmless such Holder and each underwriter of such
securities and each other person, if any, who controls such Holder or such
underwriter within the meaning of the Act, against any losses, claims, damages
or liabilities to which such Holder or such underwriter or controlling person
may become subject under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any registration statement, or any preliminary prospectus or final
prospectus or amendment or supplement thereto on the effective date thereof, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated
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therein or necessary to make the statements therein not misleading; and will
reimburse such Holder and each such underwriter and each such controlling person
for any legal or any other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Company will not be liable in any such case
to the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, or any preliminary
prospectus or final prospectus or amendment or supplement thereto, in reliance
upon and in conformity with written information furnished to the Company through
an instrument duly executed by such Holder or such underwriter specifically for
use in the preparation thereof.
It shall be a condition precedent to the obligation of the Company to
include in any registration statement any Registrable Securities then held by a
Holder that the Company shall have received an undertaking satisfactory to it
and its counsel from each Holder, to indemnify and hold harmless (in the same
manner and to the same extent as set forth in the preceding paragraph) the
Company, each director of the Company, each officer of the Company who shall
sign such registration statement and any person who controls the Company within
the meaning of the Act, with respect to any statement or omission from such
registration statement, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereto, if such statement or omission
was made in reliance upon and in conformity with information furnished to the
Company through an instrument duly executed by the Holder specifically for use
in the preparation of such registration statement, preliminary prospectus or
final prospectus or such amendment or supplement thereto.
Promptly after receipt by an indemnified party of notice of the
commencement of any action involving a claim referred to in the preceding
paragraphs of these provisions, such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party, give written notice
to the latter of the commencement of such action. In case any such action is
brought against an indemnified party, the indemnifying party will be entitled to
participate in and to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such indemnified party for
any legal or other expenses incurred by the latter in connection with the
defense thereof.
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PLEASE COMPLETE THE FOLLOWING
The undersigned hereby represents and warrants to the Company that the answers
to the following questions are true and correct and that the Company may rely on
such answers in deciding whether to accept this subscription.
1. The undersigned subscriber is [_] a natural person, [_] a trust, [_] a
corporation, [_] a partnership, [_] other (please
specify)_____________________________________________________________.
2. State principal occupation:__________________________________________.
3. Please state educational background(schools, degrees, majors):
_____________________________________________________________________
_____________________________________________________________________.
4. In the last five years, the subscriber has invested in:
(check whichever statement is applicable)
[_] venture capital private placements;
[_] oil and gas or real estate private placements; or
[_] other business investments:____________________________________
_____________________________________________________________________
_____________________________________________________________________.
(briefly describe type of investments)
5. I have a net worth (with my spouse and including home, furnishings and
automobiles) of:
(check whichever statement is applicable)
[_] less than or equal to $1,000,000; or
[_] more than $1,000,000.
6. My investment in the Company [_] is [_] is not more than 20% of my net
worth (including home, furnishing and automobiles).
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7. I had an individual income* in each of the last two years of:
(check whichever statement is applicable)
[_] less than $200,000; or
[_] more than $200,000.
8. I reasonably expect to have an individual income* in the current year
of:
(check whichever statement is applicable)
[_] less than $200,000; or
[_] more than $200,000.
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* Individual income is calculated for any year as follows: (i) individual
adjusted gross income (as reported on Subscriber's federal income tax
return), plus (ii) any deductions for long-term capital gain under Section
1202 of the Internal Revenue Code of 1954 (the "Code"), plus (iii) any
deductions for depletion under Sections 611 et seq. of the Code, plus (iv)
any exclusion for interest under Section 103 of the Code, plus (v) any losses
of a limited partnership allocated to Subscriber (as a limited partner) as
reported on Schedule E of Form 1040.
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9. I had joint income* with my spouse in each of the last two years of:
(check whichever statement is applicable)
[_] less than or equal to $300,000; or
[_] more than $300,000.
10. I reasonably expect to have a joint income* with my spouse and joint
income in the current year of:
(check whichever statement is applicable)
[_] less than or equal to $300,000; or
[_] more than $300,000.
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* Joint income is calculated for any year as follows: (i) adjusted gross income
(as reported on Subscriber's and his or her spouse's federal income tax
return), plus (ii) any deductions for long-term capital gain under Section
1202 of the Internal Revenue Code of 1954 (the "Code"), plus (iii) any
deductions for depletion under Sections 611 et seq. of the Code, plus (iv)
any exclusion for interest under Section 103 of the Code, plus (v) any losses
of a limited partnership allocated to Subscriber and his or her spouse (as a
limited partner) as reported on Schedule E of Form 1040.
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11. Complete if subscriber is a natural person and married:
I reasonably expect to have a joint income* with my spouse and joint
income in the current year of:
(check whichever statement is applicable)
[_] less than or equal to $300,000; or
[_] more than $300,000.
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* Joint income is calculated for any year as follows: (i) adjusted gross income
(as reported on Subscriber's and his or her spouse's federal income tax
return), plus (ii) any deductions for long-term capital gain under Section
1202 of the Internal Revenue Code of 1954 (the "Code"), plus (iii) any
deductions for depletion under Sections 611 et seq. of the Code, plus (iv)
any exclusion for interest under Section 103 of the Code, plus (v) any losses
of a limited partnership allocated to Subscriber and his or her spouse (as a
limited partner) as reported on Schedule E of Form 1040.
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PLEASE SIGN, DATE AND FURNISH THE BOXED INFORMATION
IN WITNESS WHEREOF, the undersigned has executed this Subscription and
Stock Purchase Agreement as of this 12th day of December, 1989.
SUBSCRIBER'S NAME AND MAILING ADDRESS: SUBSCRIBER'S RESIDENCE ADDRESS:
----------------------------------------- --------------------------------------------------
(Name) (Street)
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----------------------------------------- (City) (State) (Zip)
(Street)
SUBSCRIBER'S SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER:
-----------------------------------------
(City) (State) (Zip) --------------------------------------------------
AMOUNT OF INVESTMENT: --------------------------------------------------
SIGNATURE OF SUBSCRIBER
$_______________________ TITLE, IF SIGNING ON BEHALF OF AN ENTITY:
--------------------------------------------------
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ACCEPTED this _________ day of December, 1989.
HYBRID FAX, Inc.
By:________________________________________
President
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