STOCK PURCHASE AND EXCHANGE AGREEMENT
THIS STOCK PURCHASE AND EXCHANGE AGREEMENT (this
"Agreement") is made and entered into as of June 1, 1999, by
and among Digital Courier Technologies, Inc., a Delaware
corporation ("DCTI") and XX.xxx, Inc., a Florida corporation
(the "Company"), and Xxx Xxxxxxxx, Xxx Xxxxx, Xxxx Xxxxxx and
Xxxxx Xxxxxx, the stockholders of the Company (the
"Stockholders").
RECITALS
WHEREAS, the Company is engaged in the business of
credit card transaction processing (the "Business");
WHEREAS, the Stockholders own all of the issued and
outstanding shares of capital stock of the Company; and
WHEREAS, the Stockholders desire to sell to DCTI, and
DCTI desires to purchase from the Stockholders, all of such
issued and outstanding shares of capital stock of the Company
on the terms and conditions set forth herein (the
"Acquisition").
NOW, THEREFORE, in consideration of the premises,
representations and mutual covenants hereinafter set forth and
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties
hereto, agree as follows:
PURCHASE AND SALE OF THE SHARES
Purchase and Sale of the Shares. The Stockholders hereby agree to
exchange, sell, transfer and deliver to DCTI, and DCTI hereby agrees to purchase
and acquire from the Stockholders, as of the date hereof, all of the outstanding
capital stock (the "Shares") of the Company free from any charge, lien,
encumbrance or adverse claim of any kind whatsoever.
Consideration for Shares. DCTI shall deliver to the Stockholders, in
exchange and as consideration for the Shares, stock certificates representing in
the aggregate 2,840,000 shares of DCTI's Common Stock (the "DCTI Shares"), par
value $.0001 per share.
Delivery of Shares. The Stockholders shall deliver to DCTI, in addition
to those items set forth in Section 6.2, in exchange for the DCTI Shares, stock
certificates representing all of the Shares, duly endorsed in favor of DCTI or
accompanied by stock powers duly executed in favor of and in a form reasonably
acceptable to DCTI, together with the minute books and stock ledger of the
Company.
Legends. The certificates evidencing the DCTI Shares shall bear the
following legend and any legends required by any state securities laws:
5
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE
SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT OR AN EXEMPTION UNDER THE ACT THE
AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE REASONABLE
SATISFACTION OF THE COMPANY."
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company and each of the Stockholders jointly and
severally agree with, and represent and warrant to DCTI as
follows:
Corporate Existence, Good Standing and Authority. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation. The Company has full corporate power and
corporate authority to carry on its business as now being conducted and is
entitled to own, lease or operate the property and assets now owned, leased or
operated by it. The Company is qualified to do business, is in good standing and
has all required and appropriate licenses in each jurisdiction in which its
failure to obtain or maintain such qualification, good standing or licensing (i)
would, individually or in the aggregate, have or reasonably could be expected to
have a material adverse effect on the assets, liabilities, business, financial
condition, results of operations, or prospects of the Company (a "Material
Adverse Effect"), or (ii) would result in a material breach of any of the other
representations, warranties or covenants set forth in this Agreement. The
Company has all requisite corporate power and corporate authority to enter into
this Agreement all other agreements and documents contemplated hereby (the
"Ancillary Agreements") and to consummate the transactions contemplated hereby
and thereby. This Agreement has been, and the Ancillary Agreements, when
executed, will be, duly executed and delivered by the Company and each of the
Stockholders, has been authorized by all necessary corporate action of the
Company and constitutes a legal, valid and binding obligation of the Company and
each of the Stockholders, enforceable against the Company and each of the
Stockholders in accordance with its terms, except as enforcement may be limited
by equitable principles or bankruptcy, insolvency, reorganization, moratorium or
similar laws relating to creditors' rights generally.
Capitalization. The authorized capital stock of the Company consists of
7,500,000 shares of common stock, $0.0001 par value per share, of which
7,500,000 shares are issued and outstanding (the "Shares"). All of the Shares
have been duly authorized and validly issued and are fully paid and
nonassessable. There are no options, warrants, conversion rights, rights of
exchange, or other rights, plans, agreements or other commitments providing for
the purchase, issuance or sale of any shares of the Company's capital stock or
any securities convertible into or exchangeable for any shares of the Company's
capital stock.
6
Good and Marketable Title To Shares. All of the Shares are owned,
beneficially and of record, only by the Stockholders and are free from any
charge, lien, encumbrance or adverse claim of any kind whatsoever. The
Stockholders have the absolute and unrestricted right, power, authority and
capacity to transfer the Shares to DCTI and upon the Closing, without exception,
DCTI will acquire from the Stockholders legal and beneficial ownership of, good
and valid title to, and all rights to vote, the Shares, free from any charge,
lien, encumbrance or adverse claim of any kind whatsoever.
Subsidiaries. The Company does not presently own, directly or
indirectly, any interest in any other corporation, association, joint venture or
other business entity.
Financial Statements. The unaudited balance sheet and related
statements of income and cash flows of the Company at and for its fiscal year
ended December 31, 1998 and at and for the quarter ended March 31, 1999 (the
"Company Financial Statements") have been provided to DCTI. The internal books
and records of the Company from which the Company Financial Statements were
prepared do not contain any information which is false or misleading. The
Company Financial Statements (i) were prepared in accordance with such books and
records; (ii) were prepared in accordance with the Company's accounting policies
and principles, applied on a consistent basis; and (iii) present fairly the
Company's financial position and results of operations at the dates and for the
periods reflected therein.
Properties. The Company does not own or hold title to any real
property. The Company has beneficial ownership of and good and marketable title
to all properties and assets it owns which are used in its operations or
necessary for the conduct of its business, and such properties and assets are
not subject to any mortgages, liens, pledges, loans or encumbrances of any kind
whatsoever. With respect to property and assets it leases, the Company is in
compliance in all material respects with such leases and holds a valid leasehold
interest free of any liens, claims or encumbrances of any kind whatsoever. All
real and tangible personal property, including machinery, equipment and fixtures
currently used by the Company in the operation of its businesses is, and at the
time of Closing will be, in good operating condition and repair, ordinary wear
and tear excepted.
Litigation. No litigation, arbitration or proceeding is pending or, to
the best knowledge of the Company, threatened by or against the Company, its
properties or assets, the Shares or its officers, directors or the Stockholders
before any court or any government agency, and, to the knowledge of the Company,
no facts exist which might form the basis for any such litigation, arbitration
or proceeding. To the knowledge of the Company, the Company is not the subject
of any investigation for violation of any laws, regulations or administrative
orders applicable to its businesses by any governmental authority or any other
person. There is no judgment, writ, decree, injunction, rule or order of any
court, governmental department, commission, agency, instrumentality or
arbitrator outstanding against the Company, its properties or assets or the
Shares.
Taxes.
------
Definition of Taxes. For the purposes of this Agreement, "Tax"
(and, with correlative meaning, "Taxes" and "Taxable") means any and all
7
federal, state, local and foreign taxes, assessments and other governmental
charges, duties, impositions and liabilities, including taxes based upon or
measured by gross receipts, income, profits, sales, use and occupation, and
value added, ad valorem, transfer, franchise, withholding, payroll, recapture,
employment, excise and property taxes, together with all interest, penalties and
additions imposed with respect to such amounts. "Tax Returns" means any return,
declaration, report, claim for refund or information return or statement filed
or required to be filed with any taxing authority in connection with the
determination, collection or imposition of any Taxes.
All Tax Returns of the Company required to be filed on or prior
to the date hereof have been timely filed. All such Tax Returns were correct and
complete in all material respects when filed. All Taxes shown as due and payable
on such Tax Returns have been paid in full. Taxes not yet due and payable do not
exceed by any material amount the reserve for Taxes set forth on the most recent
balance sheet of the Company delivered to DCTI. The Company has not been a
member of an affiliated group filing a consolidated federal income Tax Return.
The Company is not a party to any Tax allocation or sharing agreement.
The Company has withheld and paid all material Taxes required to
have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other third party.
No Tax Return of the Company is currently under audit, and, to
the best knowledge of the Company, no issue exists which would cause it to
believe that a material Tax deficiency may be imposed by any Tax authority. The
Company has not waived any statute of limitations in respect of Taxes or agreed
to any extension of time for the assessment of any Tax. No claim has ever been
made by an authority in a jurisdiction where the Company does not file Tax
Returns that it is or may be subject to taxation by that jurisdiction.
The Company is not obligated to make any payments, and is not a
party to any agreement that under certain circumstances could obligate it to
make any payments that will not be deductible under Code Section 162(m) or
Section 280G whether paid prior to or after the Closing. Prior to the Closing,
the Company will not have experienced a ownership change within the meaning of
Code Section 382. The Company has not been an United States real property
holding corporation within the meaning of Code Section 897(c)(2).
The Company does not have any liability for the Taxes of any
other Person (i) under Treasury Regulations Section 1.1502-6 (or any similar
provision of state, local, or foreign law), (ii) as a transferee or successor,
(iii) by contract, or (iv) otherwise.
Non-Contravention. The execution and delivery of this Agreement by the
Company and consummation of the transactions contemplated hereby will not result
in or constitute any of the following: (i) a conflict, violation or default with
or an event that, with notice or lapse of time or both, would be a default,
breach, or violation of the Articles of Incorporation or Bylaws of the Company,
any contract, lease, license, permit, promissory note, conditional sales
contract, commitment, indenture, mortgage, deed of trust, or other agreement,
instrument or arrangement to which the Company is a party or by which the
Company or its assets are bound; (ii) an event that would permit any party to
terminate any agreement or instrument or to accelerate the maturity of or permit
8
the subordination of any indebtedness or other obligation of the Company; (iii)
the creation or imposition of any lien, charge, or encumbrance on any of the
assets of the Company; or (iv) conflict with or result in the violation or
breach of any law, rule or regulation of any governmental authority, or any
judgment, order, injunction or decree applicable to the Company or its assets.
Absence of Certain Changes. Except as set forth in Schedule 2.10, since
March 31, 1999, there has not been:
Any Material Adverse Effect;
Any increase in the compensation paid or payable by the Company,
other than in the ordinary course of business, to any of its officers,
directors, employees, agents or stockholders;
Any declaration, setting aside or payment of dividends or
distributions in respect of the capital stock of the Company, or any split-up or
other recapitalization in respect of the capital stock of the Company or any
direct or indirect redemption, purchase or other acquisition of any such capital
stock or any agreement to do any of the foregoing;
Any issuance, transfer, sale or pledge by the Company of any
shares of its capital stock or other securities or of any commitment, option,
right or privilege under which the Company is or may become obligated to issue
any shares of its capital stock or other securities;
Any indebtedness incurred by the Company, except such as may have
been incurred or entered into in the ordinary course of business;
Any loan made or agreed to be made by the Company, nor has the
Company become liable or agreed to become liable as a guarantor with respect to
any loan;
Any waiver or compromise by the Company of any right or rights of
material value or any payment, direct or indirect, of any material debt,
liability or other obligation;
Any change in the accounting methods, practices or policies
followed by the Company from those in effect at March 31, 1999;
Any sale, assignment, or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets of material value other
than licenses granted in the ordinary course of business;
Any purchase or other acquisition of, or any sale, lease,
disposition of, mortgage, pledge or subjection to any lien or encumbrance on,
any material property or asset, tangible or intangible, of the Company or any
agreement to do any of the foregoing;
Any actual or threatened amendment, termination or loss of (i)
any material contract, lease, license or other agreement to which the Company is
a party; or (ii) any certificate or other authorization required for the
continued operation by the Company of any material portion of any of its
business;
9
Any resignation or termination of employment of any officer or
employee of the Company;
Any change in or amendment to the charter documents ("Articles of
Incorporation") or Bylaws of the Company; or
Any agreement or commitment by the Company to do any of the
things described in this Section 2.10.
Employees. The Company has complied in all material respects with all
applicable laws, rules and regulations relating to employment, including those
relating to wages, hours, collective bargaining and the payment and withholding
of taxes and other sums as required by appropriate governmental authorities.
Insurance. There is set forth in Schedule 2.12 hereto a complete and
accurate list and summary of all policies of insurance maintained by the Company
pertaining to the businesses of the Company, showing the amount of coverage, the
company issuing the policy and expiration date of each policy. Such policies are
in full force and effect and have been in full force and effect since the
Company's inception. Copies of all current insurance policies of the Company
have been made available to DCTI for inspection. The Company is not in default
under any of such policies. The Company is not aware of any facts concerning the
Company or its operations, assets and liabilities, contingent or otherwise, upon
which an insurer might be justified in reducing coverage or increasing premiums
on existing policies or terminating existing policies.
Compliance with Law; Consents. The business and operations of the
Company have been and are being conducted in compliance with all laws, rules,
regulations and licensing requirements applicable thereto, except where failure
to be so in compliance would not have a Material Adverse Effect. The Company is
unaware of any facts which might form the basis for a claim that any material
violation of such laws exists. No consent, approval, order or authorization of,
or registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority or any third party on the part of
the Company or the Stockholders is required in connection with the execution,
delivery and performance by the Company or the Stockholders of this Agreement,
the consummation of the transactions contemplated hereby or DCTI's operation of
the business of the Company following the Closing Date.
Contracts and Other Agreements. Schedule 2.14 sets forth a list of all
contracts and other agreements to which the Company is a party or by or to which
it or its assets or properties are bound or subject, whether or not made in the
ordinary course of business, that have or would be reasonably expected to have a
material effect on the Business of Company. True and complete copies of all the
contracts and other agreements (and all amendments, waivers or other
modifications thereto and all appendices and attachments) set forth on the
Schedule 2.14 have been furnished to DCTI. Each of such contracts is valid,
existing, in full force and effect, binding upon the Company, and to the best
knowledge of the Company, binding upon the other parties thereto in accordance
with their terms (subject in each case to the application of general principles
of equity or by the effect of bankruptcy, insolvency, reorganization, moratorium
or similar laws generally affecting creditors' rights), and the Company is not
10
in default under any of them, nor, to the best knowledge of the Company, is any
other party to any such contract or other agreement in default thereunder, nor
does any condition exist that with notice or lapse of time or both would
constitute a default thereunder, except, in each case, such defaults as would
not, individually or in the aggregate, have a material adverse effect on the
Business of Company.
Affiliate Relationships. Other than as provided on Schedule 2.15, the
Company does not have any material financial interest, direct or indirect, in
any supplier or service provider to, or customer of, the Company or other party
to any contract or other arrangement which is material to the Company. For
purposes of this Section 2.15, the term the Company shall be deemed to include
the Company, the Stockholders and any person, firm or corporation which,
directly or indirectly, alone or together with others, controls, is controlled
by, or is under common control with the Company.
No Termination of Business Relationship. None of the entities with
which the Company has a material business relationship or any other present
material customer of the Company has given notice of any intention to cancel or
otherwise terminate a material business relationship with the Company and the
Company has no knowledge of any event (including, without limitation, the
transactions contemplated hereby) which would precipitate the cancellation or
termination of, or entitle any such entity or customer to terminate, such a
material business relationship.
Consents of Non-Governmental Third Parties. No consent, waiver or
approval of any non-governmental third party is necessary for the consummation
by the Stockholders and the Company of the transactions contemplated hereby.
Intellectual Property Rights. To the Company's best knowledge , the
Company possesses all patents, patent rights, trademarks, trademark rights,
service marks, service xxxx rights, trade names, trade name rights and
copyrights (collectively, the "Intellectual Property") necessary for its
business without any conflict with or infringement of the valid rights of others
and the lack of which could have a Material Adverse Effect, and the Company has
not received any notice of infringement upon or conflict with the asserted
rights of others. Schedule 2.18 contains a complete list of patents, patent
applications, trade names, trademarks, service marks, brandmarks copyrights,
registrations owned or used by the Company and any applications for the
foregoing. All Intellectual Property is vested in (or, if applicable, leased or
licensed by) the Company free and clear of any equities, claims, liens,
encumbrances or restrictions of any kind whatsoever. All Intellectual Property
which is licensed to the Company by others are identified in Schedule 2.18, and
all such licenses will continue in full force and effect upon the consummation
of the transactions contemplated hereby. The Company has a valuable body of
trade secrets, including know-how, concepts, computer programs and other
technical data (the "Proprietary Information") for the operation of its
business. To the Company's best knowledge, the Company has the right to use the
Proprietary Information free and clear of any rights, liens, encumbrances or
claims of others. The Company is not aware that any of its employees is
obligated under any contract (including licenses, covenants or commitments of
any nature) or other agreement, or subject to any judgment, decree or order of
any court or administrative agency, that would interfere with the use of his or
her best efforts to promote the interests of the Company or that would conflict
with the Company's business. The Company does not believe it is or will be
necessary to utilize any inventions of any of its employees (or people it
11
currently intends to hire) made prior to their employment by the Company, except
for inventions that have been assigned or licensed to the Company as of the date
hereof. Each employee, officer and consultant of the Company has executed a
Proprietary Information and Inventions Agreement in the form provided by DCTI.
To the Company's best knowledge, no employee, officer or consultant is in
violation thereof, and the Company will use its best efforts to prevent any such
violation.
No Undisclosed Liabilities. The Company does not have, and as of the
Closing Date will not have, any liabilities, obligations or commitments of any
nature (absolute, accrued, contingent or otherwise) matured or unmatured
("Liabilities") except (i) Liabilities which are adequately reflected or fully
reserved against in the Company Financial Statements; (ii) Liabilities which
have been incurred in the ordinary course of business and consistent with past
practice since March 31, 1999; (iii) Liabilities disclosed in the Schedules
hereto; and (iv) Liabilities arising under contracts or other agreements which
because of the dollar amount involved are not required to be listed in Schedule
2.14.
Representations Complete. None of the representations and warranties
made by the Stockholders or the Company herein, nor any statement made in any
Exhibit, Schedule or certificate furnished pursuant to this Agreement, contains
or will contain any untrue statement of a material fact, or omit to state any
material fact required to be stated therein, or necessary in order to make the
statements made, in light of the circumstances under which they were made, not
misleading.
Broker's and Finder's Fees. Neither the Company nor the Stockholders
has incurred, nor will it incur, directly or indirectly, any liability for
brokerage or finder's fees or agents' commissions or any similar charges in
connection with this Agreement or any transaction contemplated hereby.
REPRESENTATIONS AND WARRANTIES of STOCKHOLDERS
----------------------------------------------
Each of the Stockholders agree with, and represent and warrant to DCTI
as follows:
Good and Marketable Title to Shares. The Stockholders have and will
have on the Closing Date, full right, power, and authority to sell, transfer and
deliver the Shares as provided in this Agreement.
Purchase Entirely for Own Account. Each Stockholder understands that
DCTI is entering into this Agreement with each Stockholder in reliance upon such
Stockholder's representation to DCTI, which by such Stockholder's execution of
this Agreement such Stockholder hereby confirms, that the DCTI Shares to be
received by such Stockholder, (for purposes of Article III, the "Securities")
will be acquired for investment for such Stockholder'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 such Stockholder has no present intention of selling, granting
any participation in, or otherwise distributing the same. By executing this
Agreement, each Stockholder further represents that such Stockholder does not
have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participation to such person or to any third person,
with respect to any of the Securities. Each Stockholder represents that it has
full power and authority to enter into this Agreement.
12
Disclosure of Information. Each Stockholder believes that it has
received all the information it considers necessary or appropriate for deciding
whether to purchase the Securities. Each Stockholder further represents that it
has had an opportunity to ask questions and receive answers from DCTI regarding
DCTI and its business and operations and the terms and conditions of the
offering of the Securities.
Investment Experience. Each Stockholder 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 Securities.
Accredited Stockholder. Each Stockholder is an "accredited investor"
within the meaning of Regulation D promulgated under the Securities Act of 1993,
as now in effect.
Restricted Securities. Each Stockholder understands that the DCTI
Shares it is purchasing are characterized as "restricted securities" under the
United States securities laws inasmuch as they are being acquired from DCTI in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Securities Act of 1933, as amended (the "Act"), only in certain limited
circumstances. In this connection, each Stockholder represents that it is
familiar with Rule 144 promulgated under the Act, as now in effect, and
understands the resale limitations imposed thereby and by the Act.
Foreign Investor. If such Stockholder is not a United States person,
such Stockholder hereby represents that it has satisfied itself as to the full
observance of the laws of its jurisdiction in connection with any invitation to
subscribe for the Securities or any use of this Agreement, including (i) the
legal requirements within its jurisdiction for the purchase of the Securities,
(ii) any foreign exchange restrictions applicable to such purchase, (iii) any
governmental or other consents that may need to be obtained, and (iv) the income
tax and other tax consequences, if any, that may be relevant to the purchase,
holding, redemption, sale or transfer of the Securities. Such Investor's
subscription and payment for, and its continued beneficial ownership of the
Securities, will not violate any applicable securities or other laws of its
jurisdiction.
REPRESENTATIONS AND WARRANTIES OF DCTI
--------------------------------------
DCTI represents and warrants to the Stockholders and the Company that:
Corporate Existence, Good Standing and Authority. DCTI has been duly
incorporated and is validly existing and in good standing under the laws of the
State of Delaware. DCTI has full corporate power and authority to enter into,
deliver, perform its obligations under and carry out this Agreement and the
Ancillary Agreements to which it is a party. This Agreement constitutes, and all
agreements and Ancillary Agreements will constitute, valid and legally binding
obligations of DCTI enforceable in accordance with their terms, subject as to
enforcement to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.
13
Capitalization. The authorized capital stock of DCTI consists of
50,000,000 shares of common stock, par value $.0001 per share, of which
14,290,522 shares are issued and outstanding, and 2,500,000 shares of preferred
stock, par value $.0001 per share, of which 360 shares are issued and
outstanding. All outstanding shares of DCTI capital stock have been duly
authorized and validly issued and are fully paid and nonassessable.
DCTI Shares Fully Paid and Non-Assessable. The DCTI Shares deliverable
pursuant to Section 1.2, when issued and delivered as herein provided, will be
validly issued and outstanding shares of DCTI Common Stock, fully paid and
nonassessable, free and clear of all liens, encumbrances, restrictions and
claims of every kind.
Consents and Approvals. Except as otherwise described herein, no
consent, approval, authorization, order, registration or qualification of or
with any court or any regulatory authority or any other governmental body is
required for the consummation by DCTI of the transactions contemplated by this
Agreement has been obtained or will be obtained prior to or upon the Closing
Date.
No Breach. The execution and delivery of this Agreement by DCTI and
consummation of the transactions contemplated hereby will not result in or
constitute any of the following: (i) a conflict, violation or default with or an
event that, with notice or lapse of time or both, would be a default, breach, or
violation of the Certificate of Incorporation or Bylaws of DCTI, any contract,
lease, license, permit, promissory note, conditional sales contract, commitment,
indenture, mortgage, deed of trust, or other agreement, instrument or
arrangement to which DCTI is a party or by which DCTI or its assets are bound;
(ii) an event that would permit any party to terminate any agreement or
instrument or to accelerate the maturity of or permit the subordination of any
indebtedness or other obligation of the DCTI; (iii) the creation or imposition
of any lien, charge, or encumbrance on any of the assets of the DCTI; or (iv)
conflict with or result in the violation or breach of any law, rule or
regulation of any governmental authority, or any judgment, order, injunction or
decree applicable to DCTI or its assets.
Financial Statements. The consolidated audited financial statements of
DCTI and its subsidiaries as filed with the Securities and Exchange Commission
(the "SEC") on Form 10K/A on October 14, 1998, as amended (the "DCTI Audited
Financial Statements") and the unaudited consolidated financial statements of
DCTI and its subsidiaries as filed with the SEC on Forms 10-Q on February 12,
1999 and May 6, 1999 (the "DCTI Unaudited Financial Statements") comply as to
form in all material respects with applicable accounting requirements and with
applicable rules and regulations of the Securities and Exchange Commission. The
DCTI Audited Financial Statements and the DCTI Unaudited Financial Statements
(i) were prepared in accordance with DCTI's internal books and records; (ii)
were prepared in accordance with DCTI's accounting policies and principles, and
are in accordance with GAAP, applied on a consistent basis; and (iii) present
fairly DCTI's financial position and results of operations at the dates for the
periods reflected therein.
Representations Complete. None of the representations and warranties
made by DCTI herein, nor any statement made in any Exhibit, Schedule or
certificate furnished pursuant to this Agreement, contains or will contain any
untrue statement of a material fact, or omit to state any material fact required
to be stated therein, or necessary in order to make the statements made, in
light of the circumstances under which they were made, not misleading.
14
Broker's and Finder's Fees. DCTI has not incurred, nor will it incur,
directly or indirectly, any liability for brokerage or finder's fees or agents'
commissions or any similar charges in connection with this Agreement or any
transaction contemplated hereby.
CONDITIONS PRECEDENT TO
OBLIGATIONS OF DCTI
-------------------
The obligation of DCTI to consummate the transactions
contemplated by this Agreement is subject to the satisfaction,
at or before the Closing, of all the following conditions,
unless waived in writing by DCTI:
Representations and Warranties True. All representations and warranties
of the Company and the Stockholders in this Agreement or the Schedules and
Exhibits hereto, or in any written statement or certificate that shall be
delivered to DCTI by the Company or the Stockholders under this Agreement, shall
be true and correct on and as of the Closing Date as if made on the date
thereof.
Delivery of Documents. The Stockholders and DCTI shall have entered
into the Employment Agreements and a registration rights agreement (the
"Registration Rights Agreement") substantially in the form attached hereto as
Exhibit C.
Schedules. The Company shall have completed and attached hereto all
Schedules required by this Agreement, and all such Schedules shall have been
acceptable to DCTI, in its sole discretion.
CLOSING
-------
Time and Place. The purchase and sale of the Shares hereunder (the
"Closing") shall occur at DCTI's office in Park City, Utah at 10:00 a.m. on June
4, 1999 or at such other time and date to which the parties may agree in writing
(the "Closing Date").
Deliveries of the Company. At the Closing, the Company will execute and
deliver or cause to be executed and delivered to DCTI:
Stock Certificates. Certificates representing the Shares,
endorsed over to DCTI or accompanied by duly executed stock powers;
Corporate Documents. The Articles of Incorporation of the
Company, certified by the Secretary of State of the State of Delaware as of a
recent date and the Bylaws of the Company, certified by the secretary of the
Company as in effect at the Closing;
Certificate of Good Standing. Certificates of Good Standing,
dated as of a recent date, with respect to the Company, issued by the
appropriate authority of each jurisdiction listed in Schedule 6.2(c);
15
Resolutions. A copy of the resolutions of the Board of Directors
of the Company, certified by the secretary of the Company as having been duly
and validly adopted and being in full force and effect, authorizing execution
and delivery of this Agreement and performance of the transactions contemplated
hereby by the Company;
Books and Records. All of the minute books, stock ledgers and
similar corporate records of the Company;
Consents. Evidence that all consents, approvals, or
authorizations of or notifications to any third parties (including governmental
agencies), if any, required to sell and exchange the Shares and to consummate
the transactions contemplated hereby have been obtained by the Company;
Termination of Employment Agreements. Evidence of the termination
of those employment agreements listed in Schedule 6.2 (h);
Opinion of Counsel. An opinion of counsel to Seller, in the form
attached hereto as Exhibit B (the "Seller's Counsel Opinion");
Company's Certificate. A certificate from Company dated the
Closing Date, in the form attached hereto as Exhibit C.;
Registration Rights Agreements. The Registration Rights
Agreement;
Non-Competition Agreements. The Non-competition Agreements; and
Other Documents. Such other documents and instruments as DCTI or
its counsel reasonably shall deem necessary to consummate the transactions
contemplated hereby.
All documents delivered to DCTI shall be in form and
substance reasonably satisfactory to DCTI and its counsel.
Deliveries of DCTI. At the Closing, DCTI will execute and deliver or
cause to be executed and delivered to the Company simultaneously with delivery
of the items referred to in Section 6.2 above:
Payment of the Consideration. The DCTI Shares;
Registration Rights Agreement. The Registration Rights Agreement;
Other Documents. Such other documents and instruments as DCTI or
its counsel reasonably shall deem necessary to consummate the transactions
contemplated hereby.
All documents delivered to the Company shall be in
form and substance reasonably satisfactory to DCTI.
16
OBLIGATIONS OF STOCKHOLDERS AND DCTI AFTER CLOSING
--------------------------------------------------
Indemnification by the Stockholders. The Stockholders shall indemnify
and hold harmless DCTI and its respective officers, directors, employees,
successors and assigns in respect of any and all claims, actions, suits or other
proceedings and any and all losses, costs, expenses, liabilities, fines,
penalties, interest, and damages, whether or not arising out of any claim,
action, suit or other proceeding (and including reasonable counsel and
accountants' fees and expenses and all other reasonable costs and expenses of
investigation, defense or settlement of claims and amounts paid in settlement)
incurred by, imposed on or borne by DCTI (collectively "Damages") resulting
from:
The breach of any of the representations or warranties made by
the Company or the Stockholders in this Agreement;
The breach or the failure of performance by the Company or the
Stockholders of any of the covenants that they are to perform hereunder;
The payment of any taxes (including interest and penalties) of
any kind or nature imposed, whether before or after the Closing, by any
government or subdivision thereof upon the business, assets or employees or
independent contractors of the Company or otherwise resulting from or relating
to the respective businesses or operations of the Company prior to the Closing
or any of its properties or assets as they existed as of or any time prior to
the Closing Date and the transactions contemplated by this Agreement;
The death of or injury to any person or damage to property that
occurred prior to the Closing and arose out of or in connection with the
business or operations of the Company (whether asserted, discovered or
established before or after the Closing), and whether or not it is the subject
matter of a claim or action disclosed in the Schedules to this Agreement; and
All employment-related claims and causes of action, and all other
claims and causes of actions, that have arisen or arise out of in connection
with the operations of the businesses of the Company conducted prior to the
Closing (whether asserted, discovered or established before or after the
Closing).
Damages shall exclude any amount with respect to which
DCTI or the Company as the case may be shall have received under
any insurance policy which provides coverage for the liability to
which such amount relates.
Indemnification by DCTI. DCTI shall indemnify and hold harmless the
Stockholders, in respect of any and all claims, losses, costs, expenses,
liabilities, fines, penalties, interest, and damages (including reasonable
counsel and accountants' fees and expenses and all other reasonable costs and
expenses of investigation, defense or settlement of claims and amounts paid in
settlement) incurred by, imposed on or borne by the Stockholders resulting from:
The breach of any of the representations or warranties made by
DCTI in this Agreement; or
The breach or the failure of performance by DCTI of any of the
covenants that it is to perform hereunder.
17
Indemnification Procedure for Claims. Whenever any claim shall arise
for indemnification hereunder, the party entitled to indemnification (the
"indemnified party") shall promptly notify the other party or parties (the
"indemnifying party") of the claim and, when known, the facts constituting the
basis for such claim; provided, that the indemnified party's failure to give
such notice shall not affect any rights or remedies of an indemnified party
hereunder with respect to indemnification for damages except to the extent that
the indemnifying party is materially prejudiced thereby. In the event of any
claim for indemnification hereunder resulting from or in connection with any
claim or legal proceedings by a third party, the notice to the indemnifying
party shall specify, if known, the amount or an estimate of the amount of the
liability arising therefrom. The indemnified party shall not settle or
compromise any claim by a third party for which it is entitled to
indemnification hereunder, without the prior written consent of the indemnifying
party (which shall not be unreasonably withheld) unless suit shall have been
instituted against it and the indemnifying party shall not have taken control of
such suit after notification thereof as provided in Section 9.8 of this
Agreement.
Defense by Indemnifying Party. In connection with any claim giving rise
to indemnity hereunder or resulting from or arising out of any claim or legal
proceeding by a person who is not a party to this Agreement, the indemnifying
party at its sole cost and expense may, upon written notice to the indemnified
party, assume the defense of any such claim or legal proceeding if it
acknowledges to the indemnified party in writing its obligations to indemnify
the indemnified party with respect to all elements of such claim, and thereafter
diligently conducts the defense thereof with counsel reasonably acceptable to
the indemnified party. The indemnified party shall be entitled to participate in
(but not control) the defense of any such action, with its counsel and at its
own expense. If the indemnifying party does not assume or fails to conduct in a
diligent manner the defense of any such claim or litigation resulting therefrom,
(i) the indemnified party may defend against such claim or litigation, in such
manner as it may deem appropriate, including, without limitation, settling such
claim or litigation, after giving notice of the same to the indemnifying party,
on such terms as the indemnified party may deem appropriate, and (ii) the
indemnifying party shall be entitled to participate in (but not control) the
defense of such action, with its counsel and at its own expense. If the
indemnifying party thereafter seeks to question the manner in which the
indemnified party defended such third party claim or the amount or nature of any
such settlement, the indemnifying party shall have the burden to prove by a
preponderance of the evidence that the indemnified party did not defend or
settle such third party claim in a reasonably prudent manner. Each party agrees
to cooperate fully with the other, such cooperation to include, without
limitation, attendance at depositions and the provision of relevant documents as
may be reasonably requested by the indemnifying party; provided, that the
indemnifying party will hold the indemnified party harmless from all of its
expenses, including reasonable attorneys' fees, incurred in connection with such
cooperation by the indemnified party.
Manner of Indemnification. All indemnification hereunder shall be
effected by payment of cash or delivery of a certified or official bank check to
the indemnified party.
Limitations on Indemnification. Notwithstanding any provision of this
Agreement to the contrary, the Stockholders shall (i) have no obligation to
indemnify any person entitled to indemnity under Section 8.1 unless the persons
so entitled to indemnity thereunder have suffered Damages in an aggregate amount
18
in excess of $25,000 (the "Deductible") and then only to the extent of such
excess, and (ii) the Stockholders' aggregate liability under Section 8.1 shall
in no event exceed the value (determined as of the Closing Date) of the DCTI
Shares.
GENERAL PROVISIONS
------------------
Survival. The representations and warranties of the Company and the
Stockholders set forth in this Agreement or in any instrument or document
furnished in connection herewith shall survive the Closing and (a) the
representations and warranties set forth in Sections 2.3 and 2.7 will survive
until the expiration of the respective statute of limitations with respect to
such matters and (b) all other representations and warranties set forth herein
or in any instrument or document furnished in connection herewith will expire on
the third anniversary of the Closing Date. No claim or action for indemnity
pursuant to Sections 8.1 or 8.2 hereof for breach of any representation or
warranty shall be asserted or maintained by any party hereto after the
expiration of such representation or warranty pursuant to the provisions of this
Section 9.1 except for claims made in writing prior to such expiration and
actions (whether instituted before or after such expiration) based on any claim
made in writing prior to such expiration. Each party hereto may rely on the
representations and warranties made by the other parties hereto notwithstanding
any investigation of the facts constituting the basis of the representations and
warranties of any party by any other party hereto.
Further Assurances. At the request of any of the parties hereto, and
without further consideration, the other parties agree to execute such documents
and instruments and to do such further acts as may be necessary or desirable to
effectuate the transactions contemplated hereby.
Each Party to Bear Own Costs. Each of the parties shall pay all costs
and expenses incurred or to be incurred by it in negotiating and preparing this
Agreement and in closing and carrying out the transactions contemplated by this
Agreement.
Headings. The subject headings of the Articles and Sections of this
Agreement are included for purposes of convenience only, and shall not affect
the construction or interpretation of any of its provisions.
Entire Agreement; Waivers. This Agreement and the Exhibits and
Schedules hereto constitute the entire agreement between the parties pertaining
to the contemporaneous agreements, representations, and understandings of the
parties. No supplement, modification, or amendment of this Agreement shall be
binding unless executed in writing by all parties. No waiver of any of the
provisions of this Agreement shall be deemed, or shall constitute, a waiver of
any other provision, whether or not similar, nor shall any waiver constitute a
continuing waiver. No waiver shall be binding unless executed in writing by the
party making the waiver.
Third Parties. Nothing in this Agreement, whether express or implied,
is intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the parties to it and their respective
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third person to any party to this
Agreement, nor shall any provision give any third persons any right of
subrogation or action over against any party to this Agreement.
19
Successors and Assigns. This Agreement shall not be assigned by the
Company or the Stockholders without the written consent of DCTI. This Agreement
shall be binding on, and shall inure to the benefit of, the parties to it and
their respective heirs, legal representatives, successors, and assigns.
Notices. All notices, requests, demands, and other communications under
this Agreement shall be in writing and shall be deemed to have been duly given
when so delivered in person, by overnight courier, by facsimile transmission
(with receipt confirmed by telephone or by automatic transmission report) or two
business days after being sent by registered or certified mail (postage prepaid,
return receipt requested) as follows:
To the Company at: ------------------------------------
------------------------------------
------------------------------------
To the Stockholders: ------------------------------------
------------------------------------
------------------------------------
To DCTI at: Digital Courier Technologies, Inc.
000 Xxxxx Xxxxxx, Xxxxx 000
X.X. Xxx 0000
Xxxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Executive Vice President
Any party may change its address for purposes of this paragraph by giving notice
of the new address to each of the other parties in the manner set forth above.
Attorneys' Fees. If any party to this Agreement shall bring any action,
suit, counterclaim or appeal for any relief against the other, declaratory or
otherwise, to enforce the terms hereof or to declare rights hereunder
(collectively, an "Action"), the Prevailing Party shall be entitled to recover
as part of any such Action its reasonable attorneys' fees and costs, including
any fees and costs incurred in bringing and prosecuting such Action and/or
enforcing any order, judgment, ruling or award granted as part of such Action.
"Prevailing party" within the meaning of this Section 9.9 includes, without
limitation, a party who agrees to dismiss an Action upon the other party's
payment of all or a portion of the sums allegedly due or performance of the
covenants allegedly breached, or who obtains substantially the relief sought by
it.
Governing Law. The terms of this Agreement shall be governed by the
laws of the State of Utah applicable to agreements entered into, to be wholly
performed in and among residents exclusively of, Utah.
Consent to Jurisdiction and Forum Selection. The parties agree that all
actions or proceedings arising in connection with this Agreement shall be tried
and litigated exclusively in the State and Federal courts located in Utah. The
aforementioned choice of venue is intended by the parties to be mandatory and
not permissive in nature, thereby precluding the possibility of litigation
between the parties with respect to or arising out of this Agreement in any
20
jurisdiction other than that specified in this Section 9.11. Each party hereby
waives any right it may have to assert the doctrine of forum non conveniens or
similar doctrine or to object to venue with respect to any proceeding brought in
accordance with this paragraph, and stipulates that the State and Federal courts
located in Utah shall have in personam jurisdiction and venue over each of them
for the purposes of litigating any dispute, controversy or proceeding arising
out of or related to this Agreement. Each party hereby authorizes and accepts
service of process sufficient for personal jurisdiction in any action against it
as contemplated by this Schedule 9.11 by registered or certified mail, return
receipt requested, postage prepaid, to its address for the giving of notices as
set forth in this Agreement, or in the manner set forth in Schedule 9.8 of this
Agreement for the giving of notice. Any final judgment rendered against a party
in any action or proceeding shall be conclusive as to the subject of such final
judgment and may be enforced in other jurisdictions in any manner provided by
law.
Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
Severability. All provisions contained herein are severable and in the
event that any of them shall be held to be to any extent invalid or otherwise
unenforceable by any court of competent jurisdiction, such provision shall be
construed as if it were written so as to effectuate to the greatest possible
extent the parties' expressed intent; and in every case the remainder of this
Agreement shall not be affected thereby and shall remain valid and enforceable,
as if such affected provision were not contained herein.
Publicity. The parties shall cooperate with each other in the
development and distribution of all news releases and other public disclosures
relating to the transactions contemplated hereby. None of the parties shall
issue or make, or cause to have issued or made, any press release or
announcement concerning the transactions contemplated hereby without the advance
approval in writing of the form and substance thereof by the other parties,
unless otherwise required by applicable law.
21
IN WITNESS WHEREOF, the parties hereto have executed this Stock
Purchase and Exchange Agreement as of the date first above written.
XX.xxx, Inc.
By: /s/ Xxxxxxx X. Xxxxx
--------------------------
Name: Xxxxxxx X. Xxxxx
--------------------------
Title: President
---------------------------------
DIGITAL COURIER TECHNOLOGIES, INC.
By: /s/ Xxxxxxxx Xxxxxxx
--------------------------
Name: Xxxxxxxx Xxxxxxx
--------------------------
Title: Executive Vice President
------------------
STOCKHOLDERS
/s/ Xxxxxxx X. Xxxxx
/s/ Xxxxxxx X. Xxxxx
/s/ Xxxxx Xxxxx
/s/ Xxxxxxx Xxxxx
/s/ Xxxxxxx Xxxxxx
/s/ Xxxxxx Xxxxxx
/s/ Xxxxxxx Xxxxxx
/s/ Xxxxxxx Xxxxxx
/s/ Xxxxx Xxxxxxxx
/s/ Xxxxx Xxxxxxxx Mauro
/s/ Xxxx Xxxx
22
REGISTRATION RIGHTS AGREEMENT
-----------------------------
This Registration Rights Agreement (this "Agreement") is made and
entered into as of June 1, 1999, among Digital Courier Technologies, Inc., a
Delaware corporation (the "Company"), and Xxx Xxxxxxxx, Xxx Xxxxx, Xxxx Xxxxxx
and Xxxxx Xxxxxx (the "Stockholders").
This Agreement is made pursuant to the Stock Purchase and
Exchange Agreement, dated as of the date hereof among the Company and the
Purchaser (the "Purchase Agreement").
The Company and the Stockholders hereby agree as follows:
1. Definitions
Capitalized terms used and not otherwise defined herein shall
have the meanings given such terms in the Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings:
"Advice" has meaning set forth in Section 3(o) hereof.
"Affiliate" means, with respect to any Person, any other Person
that directly or indirectly controls or is controlled by or under common control
with such Person. For the purposes of this definition, "control," when used with
respect to any Person, means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms of "affiliated," controlling" and "controlled" have meanings
correlative to the foregoing.
"Allowable Grace Period" has the meaning set forth in Section
3(p) hereof.
"Business Day" means any day except Saturday, Sunday and any day
which shall be a legal holiday or a day on which banking institutions in the
State of New York generally are authorized or required by law or other
government actions to close.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Company's Common Stock, par value $.0001
per share.
"Effectiveness Date" the date that the Commission declares the
Registration Statement to be effective.
"Effectiveness Period" has the meaning set forth in Section 2(a)
hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Holder" or "Holders" means the holder or holders, as the case
may be, from time to time of the Shares.
"Person" means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind.
"Prospectus" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Shares covered by the
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference in such Prospectus.
23
"Registration Statement(s)" means the Registration Statement and
any additional registration statements contemplated by Section 2(a), including
(in each case) the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments, all
exhibits thereto, and all material incorporated by reference in such
registration statement.
"Rule 144" means Rule 144 promulgated by the Commission pursuant
to the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Rule 158" means Rule 158 promulgated by the Commission pursuant
to the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Rule 415" means Rule 415 promulgated by the Commission pursuant
to the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" the shares of Common Stock issuable pursuant to the
Purchase Agreement, up to a maximum of one million shares.
"Underwritten Offering" means a registration in connection with
which securities of the Company are sold to an underwriter for reoffering to the
public pursuant to an effective registration statement.
2. Shelf Registration
------------------
(a) As soon as practicable after the date hereof, the Company
shall prepare and file with the Commission a Registration Statement covering
250,000 Shares, for an offering to be made on a continuous basis pursuant to a
"Shelf" registration statement under Rule 415. As soon as practicable after the
three-month, six-month, and nine-month anniversaries of the Effectiveness Date,
the Company shall, at its option, either prepare and file with the Commission a
new registration statement covering an additional 250,000 Shares or amend an
existing Registration Statement to include an additional 250,000 Shares on each
such anniversary. The Registration Statement shall be on Form S-3 or any
successor form (except if the Company is not then eligible to register for
resale the Shares on Form S-3, in which case such registration shall be on
another appropriate form in accordance herewith). The Company shall use its
commercially reasonable efforts to cause the Registration Statement to be
declared effective under the Securities Act as promptly as practicable after the
filing thereof, and to keep such Registration Statement continuously effective
under the Securities Act until the date which is two years after the date that
such Registration Statement is declared effective by the Commission or such
earlier date when all Shares covered by such Registration Statement have been
sold or may be sold without volume restrictions pursuant to Rule 144 as
determined by the counsel to the Company pursuant to a written opinion letter,
addressed to the Company's transfer agent to such effect (the "Effectiveness
Period").
(b) If the Shares are to be offered and sold in an
Underwritten Offering, and if the managing underwriters advise the Company and
the Stockholders in writing that in their opinion the amount of Shares proposed
to be sold in such Underwritten Offering exceeds the amount of Shares which can
be sold in such Underwritten Offering, there shall be included in such
Underwritten Offering the amount of such Shares which in the opinion of such
managing underwriters can be sold, and such amount shall be allocated pro rata
among the Stockholders proposing to sell Shares in such Underwritten Offering.
(c) No Holder may participate in any Underwritten Offering
hereunder unless such Holder (i) agrees to sell its Shares on the basis provided
24
in any underwriting agreements approved by the Persons entitled hereunder to
approve such arrangements and (ii) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
required under the terms of such arrangements.
3. Registration Procedures
-----------------------
In connection with the Company's registration obligations
hereunder, the Company shall:
(a) As soon as practicable after the date hereof, prepare and
file with the Commission, a Registration Statement on Form S-3 or its successor
form (or if the Company is not then eligible to register for resale the Shares
on Form S-3 such registration shall be on another appropriate form in accordance
herewith), and cause the Registration Statement to become effective and remain
effective as provided herein; provided, however, that not less than a reasonable
time prior to the filing of the Registration Statement or any related Prospectus
or any amendment or supplement thereto (but not including any document that
would be incorporated therein by reference), the Company shall, if reasonably
practicable (i) upon request furnish to the Holders, copies of all such
documents proposed to be filed, and (ii) cause its officers and directors,
counsel and independent certified public accountants to respond to such
inquiries as shall be necessary, in the reasonable opinion of respective counsel
to such Holders, to conduct a reasonable investigation within the meaning of the
Securities Act. The Company shall not file the Registration Statement or any
such Prospectus or any amendments or supplements thereto to which the Holders of
a majority of the Shares, shall reasonably object.
(b) (i) Prepare and file with the Commission such amendments,
including post-effective amendments, to the Registration Statement as may be
necessary to keep the Registration Statement continuously effective as to the
applicable Shares for the Effectiveness Period; (ii) cause the related
Prospectus to be amended or supplemented by any required Prospectus supplement,
and as so supplemented or amended to be filed pursuant to Rule 424 (or any
similar provisions then in force) promulgated under the Securities Act; (iii)
respond as promptly as practicable to any comments received from the Commission
with respect to the Registration Statement or any amendment thereto and as
promptly as possible provide the Holders true and complete copies of all
correspondence from and to the Commission relating to the Registration
Statement; and (iv) comply in all material respects with the provisions of the
Securities Act and the Exchange Act with respect to the disposition of all
Shares covered by the Registration Statement during the applicable period in
accordance with the intended methods of disposition by the Holders thereof set
forth in the Registration Statement as so amended or in such Prospectus as so
supplemented.
(c) Notify the Holders of the Shares to be sold, and any
managing underwriters as promptly as possible (and, in the case of (i)(A) below,
not less than a reasonable time prior to such filing) no later than one (1)
Business Day following the day (i)(A) when a Prospectus or any Prospectus
supplement or post-effective amendment to the Registration Statement is proposed
to be filed; (B) when the Commission notifies the Company whether there will be
a "review" of such Registration Statement and whenever the Commission comments
in writing on such Registration Statement and (C) with respect to the
Registration Statement or any post-effective amendment, when the same has become
effective; (ii) of any request by the Commission or any other Federal or state
governmental authority for amendments or supplements to the Registration
Statement or Prospectus or for additional information; (iii) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement covering any or all of the Shares or the initiation of
any Proceedings for that purpose; (iv) if at any time any of the representations
and warranties of the Company contained in any agreement (including any
underwriting agreement) contemplated hereby ceases to be true and correct in all
material respects; (v) of the receipt by the Company of any notification with
respect to the suspension of the qualification or exemption from qualification
of any of the Shares for sale in any jurisdiction, or the initiation or
threatening of any Proceeding for such purpose; and (vi) of the occurrence of
any event that makes any statement made in the Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any revisions to the
Registration Statement, Prospectus or other documents so that, in the case of
the Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
(d) Use its best efforts to avoid the issuance of, or, if
issued, obtain the withdrawal of (i) any order suspending the effectiveness of
the Registration Statement or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Shares for sale in any jurisdiction,
at the earliest practicable moment.
25
(e) Furnish to each Holder, and any managing underwriters,
without charge, at least one conformed copy of each Registration Statement and
each amendment thereto, including financial statements and schedules, all
documents incorporated or deemed to be incorporated therein by reference, and
all exhibits to the extent requested by such Person (including those previously
furnished or incorporated by reference) promptly after the filing of such
documents with the Commission.
(f) Promptly deliver to each Holder, and any underwriters,
without charge, as many copies of the Prospectus or Prospectuses (including each
form of prospectus) and each amendment or supplement thereto as such Persons may
reasonably request; and the Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
Holders and any underwriters in connection with the offering and sale of the
Shares covered by such Prospectus and any amendment or supplement thereto.
(g) Prior to any public offering of the Shares, use its best
efforts to register or qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as
any Holder or underwriter requests in writing, to keep each such registration or
qualification (or exemption therefrom) effective during the Effectiveness Period
and to do any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Shares covered by a Registration
Statement; provided, however, that the Company shall not be required to qualify
generally to do business in any jurisdiction where it is not then so qualified
or to take any action that would subject it to general service of process in any
such jurisdiction where it is not then so subject or subject the Company to any
material tax in any such jurisdiction where it is not then so subject.
(h) Cooperate with the Holders and any managing underwriters
to facilitate the timely preparation and delivery of certificates representing
the Shares to be sold pursuant to a Registration Statement, which certificates
shall be free, to the extent permitted by applicable law, of all restrictive
legends, and to enable such Shares to be in such denominations and registered in
such names as any such managing underwriters or Holders may request at least two
(2) Business Days prior to any sale of Shares.
(i) Upon the occurrence of any event contemplated by Section
3(c)(vi), as promptly as possible, prepare a supplement or amendment, including
a post-effective amendment, to the Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as
thereafter delivered, neither the Registration Statement nor such Prospectus
will contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
(j) Make available for inspection by the selling Holders, any
representative of such Holders, any underwriter participating in any disposition
of the Shares, and any attorney or accountant retained by such selling Holders
or underwriters, at the offices where normally kept, during reasonable business
hours, all financial and other records, pertinent corporate documents and
properties of the Company and its subsidiaries, and cause the officers,
directors, agents and employees of the Company and its subsidiaries to supply
all information in each case reasonably requested by any such Holder,
representative, underwriter, attorney or accountant in connection with the
Registration Statement; provided, however, that any information that is
determined in good faith by the Company in writing to be of a confidential
nature at the time of delivery of such information shall be kept confidential by
such Persons, unless (i) disclosure of such information is required by court or
administrative order or is necessary to respond to inquiries of regulatory
authorities; (ii) disclosure of such information, in the opinion of counsel to
such Person, is required by law; (iii) such information becomes generally
available to the public other than as a result of a disclosure or failure to
safeguard by such Person; or (iv) such information becomes available to such
Person from a source other than the Company and such source is not known by such
Person to be bound by a confidentiality agreement with the Company.
(k) Comply in all material respects with all applicable rules
and regulations of the Commission and make generally available to its security
holders earning statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 not later than 45 days after the end of any 12-month
period (or 90 days after the end of any 12-month period if such period is a
fiscal year) (i) commencing at the end of any fiscal quarter in which the Shares
are sold to underwriters in a firm commitment or best efforts Underwritten
26
Offering and (ii) if not sold to underwriters in such an offering, commencing on
the first day of the first fiscal quarter of the Company after the effective
date of the Registration Statement, which statement shall conform to the
requirements of Rule 158.
(l) The Company may require each selling Holder to furnish to
the Company information regarding such Holder and the distribution of such
Shares as is required by law to be disclosed in the Registration Statement, and
the Company may exclude from such registration the Shares of any such Holder who
unreasonably fails to furnish such information within a reasonable time after
receiving such request.
(m) If the Registration Statement refers to any Holder by name
or otherwise as the holder of any securities of the Company, then such Holder
shall have the right to require (if such reference to such Holder by name or
otherwise is not required by the Securities Act or any similar Federal statute
then in force) the deletion of the reference to such Holder in any amendment or
supplement to the Registration Statement filed or prepared subsequent to the
time that such reference ceases to be required.
(n) Each Holder covenants and agrees that (i) it will not sell
any Shares under the Registration Statement until it has received copies of the
Prospectus as then amended or supplemented and notice from the Company that such
Registration Statement and any post-effective amendments thereto have become
effective, and (ii) it and its officers, directors or Affiliates, if any, will
comply with the prospectus delivery requirements of the Securities Act as
applicable to them in connection with sales of the Shares pursuant to the
Registration Statement.
(o) Each Holder agrees that, upon receipt of a notice from the
Company of the occurrence of any event of the kind described in Section
3(c)(ii), 3(c)(iii), 3(c)(iv), 3(c)(v) or 3(c)(vi), such Holder will forthwith
discontinue disposition of such Shares under the Registration Statement until
such Holder's receipt of the copies of the supplemented Prospectus and/or
amended Registration Statement contemplated by Section 3(j), or until it is
advised in writing (the "Advice") by the Company that the use of the applicable
Prospectus may be resumed, and, in either case, has received copies of any
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus or Registration Statement.
(p) If (a) there is material non-public information regarding
the Company which the Company's Board of Directors reasonably determines not to
be in the Company's best interest to disclose and which the Company is not
otherwise required to disclose, or (b) there is a significant business
opportunity (including but not limited to the acquisition or disposition of
assets (other than in the ordinary course of business) or any merger,
consolidation, tender offer or other similar transaction) available to the
Company, which the Company's Board of Directors determines not to be in the
Company's best interest to disclose, then the Company may postpone or suspend
filing or effectiveness of a registration statement for a period not to exceed
90 consecutive days (an "Allowable Grace Period).
4. Registration Expenses
---------------------
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by the Company, except as and to the extent
specified in Section 4(b), shall be borne by the Company whether or not pursuant
to an Underwritten Offering and whether or not the Registration Statement is
filed or becomes effective and whether or not any Shares are sold pursuant to
the Registration Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses (A) with respect to filings
required to be made with the Nasdaq Stock Market and each other securities
exchange or market on which Registrable Securities are required hereunder to be
listed and (B) in compliance with state securities or Blue Sky laws, (ii)
printing expenses (including, without limitation, expenses of printing
certificates for the Shares and of printing prospectuses if the printing of
prospectuses is requested by the managing underwriters, if any, or by the
holders of a majority of the Shares included in the Registration Statement),
(iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Company, (v) Securities Act liability insurance, if the Company
so desires such insurance, and (vi) fees and expenses of all other Persons
retained by the Company in connection with the consummation of the transactions
contemplated by this Agreement. In addition, the Company shall be responsible
for all of its internal expenses incurred in connection with the consummation of
the transactions contemplated by this Agreement (including, without limitation,
27
all salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit, the fees and expenses
incurred in connection with the listing of the Shares on any securities exchange
as required hereunder.
5. Rule 144
--------
As long as any Holder owns Shares, the Company covenants to timely file
(or obtain extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the date hereof
pursuant to Section 13(a) or l5(d) of the Exchange Act and to promptly furnish
the Holders with true and complete copies of all such filings. As long as any
Holder owns Shares, if the Company is not required to file reports pursuant to
Section 13(a) or l5(d) of the Exchange Act, it will prepare and furnish to the
Holders and make publicly available in accordance with Rule 144(c) promulgated
under the Securities Act annual and quarterly financial statements, together
with a discussion and analysis of such financial statements in form and
substance substantially similar to those that would otherwise be required to be
included in reports required by Section 13(a) or 15(d) of the Exchange Act, as
well as any other information required thereby, in the time period that such
filings would have been required to have been made under the Exchange Act. Upon
the request of any Holder, the Company shall deliver to such Holder a written
certification of a duly authorized officer as to whether it has complied with
such requirements.
6. Miscellaneous
-------------
(a) Remedies. In the event of a breach by the Company or by a
Holder, of any of their obligations under this Agreement, each Holder or the
Company, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement. The
Company and each Holder agree that monetary damages would not provide adequate
compensation for any losses incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of any
action for specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate.
(b) No Inconsistent Agreements. Neither the Company nor any of
its subsidiaries has, as of the date hereof, nor shall the Company or any of its
subsidiaries, on or after the date of this Agreement, enter into any agreement
with respect to its securities that is inconsistent with the rights granted to
the Holders in this Agreement or otherwise conflicts with the provisions hereof.
(c) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the same shall be in writing and signed by the Company
and the Holders of at least two-thirds of the Shares. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of Holders and that does not
directly or indirectly affect the rights of other Holders may be given by
Holders of at least a majority of the Shares to which such waiver or consent
relates; provided, however, that the provisions of this sentence may not be
amended, modified, or supplemented except in accordance with the provisions of
the immediately preceding sentence.
(d) Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Section prior to 7:00 p.m. (New
York City time) on a Business Day, (ii) the Business Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in the Purchase Agreement later than 7:00
p.m. (New York City time) on any date and earlier than 11:59 p.m. (New York City
time) on such date, (iii) the Business Day following the date of mailing, if
sent by nationally recognized overnight courier service, or (iv) upon actual
receipt by the party to whom such notice is required to be given to each Holder
at its address set forth under its name on Schedule 1 attached hereto or such
other address as may be designated in writing hereafter, in the same manner, by
such Person.
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of each of
28
the parties and shall inure to the benefit of each Holder. The Company may not
assign its rights or obligations hereunder without the prior written consent of
each Holder. Each Purchaser may assign its rights hereunder in the manner and to
the Persons as permitted under the Purchase Agreement.
(f) Assignment of Registration Rights. The rights of each
Holder hereunder, including the right to have the Company register for resale
the Shares in accordance with the terms of this Agreement, shall be
automatically assignable by each Holder if: (i) the Holder agrees in writing
with the transferee or assignee to assign such rights, and a copy of such
agreement is furnished to the Company within a reasonable time after such
assignment, (ii) the Company is, within a reasonable time after such transfer or
assignment, furnished with written notice of (a) the name and address of such
transferee or assignee, and (b) the securities with respect to which such
registration rights are being transferred or assigned, (iii) following such
transfer or assignment the further disposition of such securities by the
transferee or assignees is restricted under the Securities Act and applicable
state securities laws, (iv) at or before the time the Company receives the
written notice contemplated by clause (ii) of this Section, the transferee or
assignee agrees in writing with the Company to be bound by all of the provisions
of this Agreement, and (v) such transfer shall have been made in accordance with
the applicable requirements of the Purchase Agreement. The rights to assignment
shall apply to the Holders (and to subsequent) successors and assigns.
(g) Counterparts. This Agreement may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original and, all of which taken together shall constitute one and the same
Agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature were the original
thereof.
(h) Governing Law. The corporate laws of the State of Delaware
shall govern all issues concerning the relative rights of the Company and the
Stockholders, as stockholders. All other questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
and construed in accordance with the laws of the State of Utah, without regard
to principles of conflicts of law. Each party hereby irrevocably submits to the
nonexclusive jurisdiction of the state and federal courts sitting in Salt Lake
City, for the adjudication of any dispute hereunder or in connection herewith or
with any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such
court, that such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consent to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law.
(i) Cumulative Remedies. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
(j) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.
29
(k) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
DIGITAL COURIER TECHNOLOGIES, INC.
By: /s/ Xxxxxxxx Xxxxxxx
---------------------------------
Name: Xxxxxxxx Xxxxxxx
Title: Executive Vice President
THE STOCKHOLDERS
By: /s/ Xxx Xxxxxxxx
---------------------------------
Name:
By: /s/ Xxx Xxxxx
---------------------------------
Name:
By: /s/ Xxxxx Xxxxxx
---------------------------------
Name:
By: /s/ Xxxx Xxxxxx
---------------------------------
Name:
Company
-------
Digital Courier Technologies, Inc.
000 Xxxxx Xxxxxx, Xxxxx 000
X.X. Xxx 0000
Xxxx Xxxx, Xxxx 00000
Fax: 000-000-0000
30
