EXHIBIT 10.22
EXCHANGE OPTION EXERCISE AGREEMENT
This Exchange Option Exercise Agreement (this "Agreement") dated as of
February 3, 1999, is by and between RoweCom Inc. ("RoweCom"), a Delaware
corporation; and Working Ventures Canadian Fund Inc. ("WV"), a corporation
organized under the laws of Canada.
WV owns certain shares of the capital stock of Xxxx Communications Ltd.
("RoweCan"), a corporation incorporated under the laws of the Province of
Ontario, Canada. WV and RoweCom and certain others are parties to a Second
Amended and Restated Stockholders' Agreement dated as of December 11, 1998 (such
agreement, as it may be amended and/or restated with the consent of, among
others, WV and the Company, and in effect from time to time, the "Stockholders'
Agreement"), pursuant to which RoweCom granted to WV certain options to exchange
its shares of RoweCan's capital stock for shares of RoweCom's capital stock.
Capitalized terms used and not otherwise defined in this Agreement have the
respective meanings ascribed to them in the Stockholders' Agreement.
WV and RoweCom now desire that WV exercise these exchange options,
effective as of the closing of a contemplated initial public offering of
RoweCom's Common Shares; and accordingly, the parties hereby agree as follows:
1. Exercise of Exchange Options. Subject to the provisions of the
following proviso and of Section 6 hereof, WV hereby irrevocably agrees to and
does exercise each of the Exchange Options, such exercise to be effective
immediately prior to the closing (the "IPO Closing") of RoweCom's first
underwritten public offering of shares of its Common Stock registered in an
effective registration statement filed pursuant to the Securities Act of 1933,
as amended, if the equity valuation of the Corporation immediately before such
offering is at least $80 million, and the aggregate gross proceeds from the
offering are at least $20,000,000 (for this purpose, equity valuation means the
product of the initial per-share price at which Common Shares are offered to the
public in the offering multiplied by the number of Common Shares that are
outstanding, or that are issuable upon conversion of Preferred Shares that are
outstanding, immediately before the offering); provided, that such exercise will
not be effective unless the IPO Closing occurs before the termination of this
Agreement in accordance with Section 6 hereof.
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2. Stockholders' Agreement. The parties acknowledge and agree that the
exercise of the Exchange Options hereunder will occur in accordance with all of
the relevant provisions of the Stockholders' Agreement.
3. Timing. All of the transactions contemplated hereby, including without
limitation WV's exercise of the Exchange Options and the resulting exchange of
shares of RoweCan's capital stock for shares of RoweCom's capital stock, will
occur and for all purposes be deemed to occur immediately prior to the IPO
Closing.
4. Representations and Warranties.
(a) Of WV. WV hereby represents and warrants as follows:
(i) The shares of RoweCan's capital stock that are to be transferred
by WV to RoweCom hereunder are, and when transferred to RoweCom will be,
free and clear of all liens, charges, mortgages, and encumbrances (other
than restrictions on transfer arising by reason of the issuance and sale of
such shares without registration under the Securities Act of 1933, as
amended).
(ii) The representations and warranties of WV set forth in Section
4.1 of the Stock Purchase Agreement dated as of May 4, 1998, by and among
WV, the Company, and certain others, were true and correct when made and
are true and correct on the date hereof as though made as of the date
hereof.
(b) Of RoweCom. RoweCom hereby represents and warrants that the shares of
RoweCom's capital stock issuable to WV hereunder have been duly authorized, and
when issued to WV in accordance with this Agreement, will be validly issued,
fully paid, and non-assessable and free and clear of liens, charges, mortgages,
and encumbrances (other than restrictions on transfer arising by reason of the
issuance and sale of such shares without registration under the Securities Act
of 1933, as amended).
5. Miscellaneous. This Agreement may be executed by the parties in
separate counterparts, each of which when so executed and delivered will be an
original, but all of which together will constitute one and the same agreement.
This Agreement will bind and inure to the benefit of the parties hereto and
their respective heirs, successors, and permitted assigns. Nothing in this
Agreement is intended to or will confer and rights or remedies on any person
other than the parties hereto and their respective
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heirs, successors, and permitted assigns. This Agreement is an agreement under
seal governed by and to be interpreted and construed in accordance with the
internal laws of the Commonwealth of Massachusetts, without reference to
principles of conflicts or choices of law.
6. Termination. This Agreement will terminate and be of no further force
or effect (and the Exchange Options will NOT be exercised hereby) if the IPO
Closing does not occur by 5:00 p.m. (Boston time) on March 31, 1999.
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Executed and delivered under seal as of the date first above written.
ROWECOM INC.
By /s/ Xx. Xxxxxxx X. Xxxx
----------------------------
Name: Xx. Xxxxxxx X. Xxxx
Title: President and CEO
WORKING VENTURES CANADIAN
FUND INC.
By /s/ Xxxxx Xxxxx
----------------------------
Name: Xxxxx Xxxxx
Title: V.P. Investments
CONSENT OF XXXX COMMUNICATIONS LTD.
Xxxx Communications Ltd. hereby consents to the transactions contemplated
by the foregoing agreement.
XXXX COMMUNICATIONS LTD.
By /s/ Xx. Xxxxxxx X. Xxxx
----------------------------
Name: Xx. Xxxxxxx X. Xxxx
Title: President and CEO
