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Exhibit 10.22
PARTICIPATION AGREEMENT
This Agreement dated as of May 7, 1996 is entered into by and among
FlexiInternational Software, Inc., a Delaware corporation (the "Company") and
the persons listed on EXHIBIT A hereto (the "Purchasers").
As used in this Agreement, the term "Shares" shall include all shares of
capital stock of the Company held by the Purchasers, whether now owned or
hereafter acquired. For purposes of calculating a Purchaser's ownership of
shares, all shares of Series A Convertible Preferred Stock, Series B Convertible
Preferred Stock and Series C Convertible Preferred Stock (collectively,
"Preferred Stock") of the Company shall be deemed to have been converted into
shares of Common Stock.
In consideration of the mutual promises and covenants contained in this
Agreement, the parties hereto agree as follows:
1. RIGHT OF FIRST REFUSAL.
(a) The Company shall not issue, sell or exchange, agree to issue,
sell or exchange, or reserve or set aside for issuance, sale or exchange, (i)
any shares of its common stock, $.01 par value per share ("the Common Stock"),
(ii) any other equity securities of the Company, including, without limitation,
shares of Preferred Stock, (iii) any option, warrant or other right to subscribe
for, purchase or otherwise acquire any equity securities of the Company, or (iv)
any debt securities convertible into capital stock of the Company (collectively,
the "Offered Securities"), unless in each such case the Company shall have first
complied with this Agreement. The Company shall deliver to each Purchaser a
written notice of any proposed or intended issuance, sale or exchange of Offered
Securities (the "Offer"), which Offer shall (i) identify and describe the
Offered Securities, (ii) describe the price and other terms upon which they are
to be issued, sold or exchanged, and the number or amount of the Offered
Securities to be issued, sold or exchanged, (iii) identify the persons or
entities to which or with which the Offered Securities are to be offered,
issued, sold or exchanged and (iv) offer to issue and sell to or exchange with
such Purchaser (A) such portion of the Offered Securities as the aggregate
number of Shares then held by such Purchaser bears to the total number of Shares
then held by to all Purchasers (the "Basic Amount"), and (B) any additional
portion of the Offered Securities as such Purchaser shall indicate it will
purchase or acquire should the other Purchasers subscribe for less than their
Basic Amounts (the "Undersubscription Amount"). Each Purchaser shall have the
right, for a period of 30 days following delivery of the Offer, to purchase or
acquire, at a price and upon the other terms specified in the Offer, the number
or amount of Offered Securities described above. The Offer by its term shall
remain open and irrevocable for such 30-day period.
(b) To accept an Offer, in whole or in part, a Purchaser must deliver
a written notice to the Company prior to the end of the 30-day period of the
Offer,
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setting forth the portion of the Purchaser's Basic Amount that such Purchaser
elects to purchase and, if such Purchaser shall elect to purchase all of its
Basic Amount, the Undersubscription Amount (if any) that such Purchaser elects
to purchase (the "Notice of Acceptance"). If the Basic Amounts subscribed for by
all Purchasers are less than the total Offered Securities, then each Purchaser
who has set forth Undersubscription Amounts in its Notice of Acceptance shall be
entitled to purchase, in addition to the Basic Amounts subscribed for, all
Undersubscription Amounts it has subscribed for; PROVIDED, HOWEVER, that should
the Undersubscription Amounts subscribed for exceed the difference between the
Offered Securities and the Basic Amounts subscribed for (the "Available
Undersubscription Amount"), each Purchaser who has subscribed for any
Undersubscription Amount shall be entitled to purchase only that portion of the
Available Undersubscription Amount as the Undersubscription Amount subscribed
for by such Purchaser bears to the total Undersubscription Amounts subscribed
for by all Purchasers, subject to rounding by the Board of Directors to the
extent it reasonably deems necessary.
(c) In the event that Notices of Acceptance are not given by the
Purchasers in respect of all the Offered Securities, the Company shall have 90
days from the expiration of the period set forth in Section 1(a) above to issue,
sell or exchange all or any part of such Offered Securities as to which a Notice
of Acceptance has not been given by the Purchasers (the "Refused Securities"),
but only to the offerees or purchasers described in the Offer and only upon
terms and conditions (including, without limitation, unit prices and interest
rates) which are not more favorable, in the aggregate, to the acquiring person
or persons or less favorable to the Company than those set forth in the Offer.
(d) In the event the Company shall propose to sell less than all the
Refused Securities (any such sale to be in the manner and on the terms specified
in Section 1(c) above), then each Purchaser may, at its sole option and in its
sole discretion, reduce the number or amount of the Offered Securities specified
in its Notice of Acceptance to an amount that shall be not less than the number
or amount of the Offered Securities that the Purchaser elected to purchase
pursuant to Section 1(b) above multiplied by a fraction, (i) the numerator of
which shall be the number or amount of Offered Securities the Company actually
proposes to issue, sell or exchange (including Offered Securities to be issued
or sold to Purchasers pursuant to Section 1(b) above prior to such reduction)
and (ii) the denominator of which shall be the amount of all Offered Securities.
In the event that any Purchaser so elects to reduce the number or amount of
Offered Securities specified in its Notice of Acceptance, the Company may not
issue, sell or exchange more than the reduced number or amount of the Offered
Securities unless and until such securities have again been offered to the
Purchasers in accordance with Section 1(a) above.
(e) Upon the closing of the issuance, sale or exchange of all or less
than all the Refused Securities, the Purchasers shall acquire from the Company,
and
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the Company shall issue to the Purchasers, the number or amount of Offered
Securities specified in the Notices of Acceptance, as reduced pursuant to
Section 1(d) above if the Purchasers have so elected, upon the terms and
conditions specified in the Offer. The purchase by the Purchasers of any Offered
Securities is subject in all cases to the preparation, execution and delivery by
the Company and the Purchasers of a purchase agreement relating to such Offered
Securities reasonably satisfactory in form and substance to the Purchasers and
their respective counsel.
(f) Any Offered Securities not acquired by the Purchasers or other
persons in accordance with Section 1(c) above may not be issued, sold or
exchanged until they are again offered to the Purchasers under the procedures
specified in this Agreement.
(g) The rights of the Purchasers under this Agreement shall not apply
to:
(1) Common Stock issued as a stock dividend to holders of
Common Stock or upon any subdivision or combination of shares of
Common Stock,
(2) the issuance of any shares of Common Stock upon
conversion of outstanding shares of convertible Preferred Stock,
(3) up to 1,816,500 shares of Common Stock, or options
exercisable therefor, including options outstanding on the date
of this Agreement (such number to be proportionately adjusted in
the event of any stock splits, stock dividends, recapitalizations
or similar events occurring on or after the date of this
Agreement) issuable to officers, directors, consultants and
employees of the Company and any subsidiary pursuant to any plan,
agreement or arrangement approved by a vote of not less than a
majority of the Board of Directors of the Company,
(4) securities issued solely in consideration for the
acquisition (whether by merger or otherwise) by the Company or
any of its subsidiaries of all or substantially all of the stock
or assets of any other entity, or
(5) shares of Common Stock sold by the Company in an
underwritten public offering pursuant to an effective
registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), resulting in at least $10,000,000
of gross proceeds to the Company.
2. TERMINATION OF AGREEMENT. This Agreement shall terminate upon the
earliest of the following events:
(1) The written agreement of all of the Purchasers to terminate this
Agreement;
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(2) The sale of all or substantially all of the assets or business of
the Company, by merger, sale of assets or otherwise; or
(3) The closing of the Company's initial public offering of shares of
Common Stock pursuant to an effective registration statement under the
Securities Act at a price of not less than $3.30 per share (appropriately
adjusted to reflect any stock dividend, stock split, combination or other
recapitalization affecting such shares) and resulting in at least $10,000,000 of
gross proceeds to the Company.
3. TRANSFER OF RIGHTS. This Agreement, and the rights and obligations of
each Purchaser hereunder, may be assigned by such Purchaser to any person or
entity to which Shares are transferred by such Purchaser, and such transferee
shall be deemed a "Purchaser" for purposes of this Agreement; provided that the
transferee provides written notice of such assignment to the Company.
4. GENERAL.
(a) SEVERABILITY. The provisions of this Agreement are severable, so
that the invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other term or provision of this
Agreement, which shall remain in full force and effect.
(b) SPECIFIC PERFORMANCE. In addition to any and all other remedies
that may be available at law in the event of any breach of this Agreement, each
Purchaser shall be entitled to specific performance of the agreements and
obligations of the Company hereunder and to such other injunctive or other
equitable relief as may be granted by a court of competent jurisdiction.
(c) GOVERNING LAW. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of Delaware.
(d) NOTICES. All notices, requests, consents, and other communications
under this Agreement shall be in writing and shall be delivered by hand or
mailed by first class certified or registered mail, return receipt requested,
postage prepaid:
If to the Company, at Xxx Xxxxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxxxxx 00000,
Attention: Chairman, or at such other address or addresses as may have been
furnished in writing by the Company to the Purchasers, with a copy to Xxxx X.X.
Xxxxx, III, Esq., Xxxx and Xxxx, 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000;
or
If to a Purchaser, at such address or addresses set forth after the
respective Purchaser on EXHIBIT A hereto, or at such address as may have been
furnished to the Company in writing by such Purchaser.
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Notices provided in accordance with this Section 4(d) shall be deemed
delivered upon personal delivery or two business days after deposit in the mail.
(e) COMPLETE AGREEMENT; AMENDMENTS. This Agreement constitutes the
full and complete agreement of the parties hereto with respect to the subject
matter hereof, and the Participation Agreement dated as of January 20, 1995, as
amended to date, among the Company and certain of the Purchasers and their
affiliates is hereby terminated. No amendment, modification or termination of
any provision of this Agreement shall be valid unless in writing and signed by
the Company and the holders of 80% of the voting power of the Shares then held
by the Purchasers (giving effect to the conversion into Common Stock of all
securities convertible thereinto).
(f) PRONOUNS. Whenever the content may require, any pronouns used in
this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular form of nouns and pronouns shall include the plural, and
vice versa.
(g) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall constitute one Agreement binding on all the
parties hereto.
(h) CAPTIONS. Captions of sections have been added only for
convenience and shall not be deemed to be a part of this Agreement.
EXECUTED as of the date first above written.
COMPANY:
FlexiInternational Software, Inc.
By:/s/ Xxxxxx X. Xxxxx
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Title:
----------------------------
PURCHASERS:
Xxxxxxx Xxxxx Capital Partners V, L.P.
By: Xxxxxxx Xxxxx Capital Management
Company, L.L.C.,
its General Partner
By:/s/ Xxxxx Xxxxxxxx
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Managing Director
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Menlo Ventures VI, L.P.
By: MV Management VI, L.P.,
its General Partner
By:/s/ Xxxxxx X. Xxxxx
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General Partner
Menlo Entrepreneurs Fund VI, L.P.
By: MV Management VI, L.P.,
its General Partner
By:/s/ Xxxxxx X. Xxxxx
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General Partner
Primus Capital Fund III
Limited Partnership
By: Primus Venture Partners III
Limited Partnership,
its General Partner
By: Primus Venture Partners, Inc.,
its General Partner
By:/s/ Xxxxxxxx X. Xxxx
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Title: Executive Vice President
Xxxxxx Xxxx SBIC, L.P.
By: Xxxxxx Xxxx SBIC Investments LLC,
its General Partner
By:/s/ Xxxxx Xxxxxxx
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Title: Vice President
/s/ Xxxxxxxx X. Xxxxx
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Xxxxxxxx X. Xxxxx
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Comdisco, Inc.
By:/s/ Xxxx X. Xxxxxx
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Its: Assistant Vice President
CDC Realty, Inc.
By:/s/ Xxxx X. Xxxxxx
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Its: Assistant Vice President
The Connecticut Development Authority
By:/s/ [not eligible]
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Title: Senior Vice President and
Managing Director
/s/ Xxxxxxxxxxx XxXxxxx
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Xxxxxxxxxxx XxXxxxx
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EXHIBIT A
SCHEDULE OF PURCHASERS
NAME AND ADDRESS
Xxxxxxx Xxxxx Capital Partners V, L.P.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Menlo Ventures VI, L.P.
0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
Menlo Entrepreneurs
Fund VI, L.P.
0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
Primus Capital Fund III
Limited Partnership
Suite 0000
Xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Xxxxxx Xxxx SBIC, L.P.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Xxxxxxxx X. Xxxxx
00 Xxx Xxxxxxx Xxxx
Xxxxxx, XX 00000
in each case with a copy to:
Xxxxxx X. Xxxxxxxx, Esq.
Xxxxxxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxx Xxxxxxxx
& Hachigan, LLP
000 Xxxxxx Xxx, Xxxxxx Xxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000.
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Xxxxxxxxxxx XxXxxxx
Offshore Asset Management, Inc.
000 Xxxx Xxxx Xxxx
Xxxxxxxx, XX 00000
Comdisco, Inc.
0000 Xxxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
CDC Realty, Inc.
0000 Xxxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
The Connecticut Development Authority
000 Xxxxx Xxxxxx, XXX 0
Xxxxx Xxxx, XX 00000
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