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Ex 10.12
PREFERRED STOCK PURCHASE AGREEMENT
PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement"), dated as of May
14, 1999, by and between SoftCom, Inc., a Delaware corporation ("Seller") and
each purchaser executing a signature page hereto (collectively, the "Buyers",
and each individually a "Buyer").
WITNESSETH:
WHEREAS, Seller desires to sell to Buyers, and the Buyers desire to
purchase from Seller, the number of shares of Series A Convertible Preferred
Stock, par value $.001 per share (the "Preferred Stock") set forth under each
such Buyer's name on a signature page hereto (the "Shares"), subject to the
terms and conditions hereof.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the parties hereby
agree as follows:
1. Terms of Acquisition.
1.1 Stock Purchase. Upon the terms and subject to the conditions
of this Agreement, on the Closing Date (as hereinafter defined), each Buyer
shall purchase from Seller, and Seller shall sell, convey and deliver to each
Buyer, the Shares, free and clear of any and all charges, liens, claims,
security interests, adverse interests, pledges and encumbrances. The
certificates evidencing the Shares shall be delivered at the Closing (as
hereinafter defined) by Seller to each Buyer. Seller's agreement with each of
the Buyers is a separate agreement, and the sale of Shares to each Buyer is a
separate sale notwithstanding the fact that the terms of such sales are
contained in one agreement.
1.2 Purchase Price. As the purchase price for the Shares, each
Buyer shall pay to Seller, at the Closing, the aggregate sum set forth under
each such Buyer's name on a signature page hereto (the "Purchase Price"). Such
amount shall be payable by check, wire transfer or delivery of other
immediately available funds.
1.3 Closing Date. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Xxxxxxxxxxx &
Xxxxxxxx LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, on such
dates as funds for the Shares are received from each Buyer or at such other
time and place as Seller and Buyers shall mutually agree (the "Closing Date").
At each Closing, upon payment of the Purchase Price by a Buyer, Seller shall
deliver to such Buyer a certificate representing the amount of Shares purchased
by such Buyer.
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1.4 Subsequent Sale of Preferred Stock. At any time on or before May 19,
1999, Seller may sell up to an aggregate of 5,769,231 shares of Preferred Stock
(including shares sold on the date hereof) to new investors in Seller (each a
"New Investor"). In addition, the sale of up to an additional 641,026 shares of
Preferred Stock may be made after May 18, 1999 to an additional investor (also
referred to herein as a "New Investor"), subject to the limitation provided in
the second sentence of Section 7 below. All sales described herein shall be
made on the terms and conditions set forth in this Agreement, and each New
Investor shall execute and deliver a counterpart of this Agreement. All shares
of Preferred Stock sold pursuant to this Section 1.4 shall be deemed to be
"Shares" for all purposes under this Agreement, and each New Investor, upon
consummation of the purchase of such Shares, shall be deemed to be a "Buyer"
for all purposes under this Agreement.
2. Representations and Warranties.
2.1 Representations and Warranties of Seller. Seller hereby represents,
warrants, and covenants to the Buyers as follows:
(a) Organization and Good Standing. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has all necessary power and authority to carry on its business as
now being conducted and presently proposed to be conducted.
(b) Requisite Power and Authorization. Seller has all necessary
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. All corporate action of Seller required for
the execution, delivery and performance of this Agreement has been duly taken.
This Agreement constitutes the valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms except (i) as limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other laws
of general application affecting enforcement of creditor's rights in general
and (ii) as limited by general principles of equity that restrict the
availability of equitable remedies.
(c) No Conflicts. The execution, delivery and performance of this
Agreement will not (i) conflict with, result in a breach of, or constitute a
default under the Certificate of Incorporation (the "Certificate") or By-laws
of Seller, or any agreement or other obligation to which Seller is a party or
by which Seller or any of its assets are bound, or any judgment, decree, order,
writ, injunction, determination or award of any court or other governmental
agency, instrumentality or body applicable to Seller, or (ii) violate any law,
rule or regulation applicable to Seller or its property.
(d) No Consents. No consent, authorization, approval of, or order of
any governmental agency or court or any other person or entity is required in
connection with Seller's execution and delivery and performance of this
Agreement.
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(e) Qualification. Except as set forth on Schedule 2.1(e) attached
hereto, Seller is duly qualified to transact business and is in good standing in
each jurisdiction in which the failure so to qualify could have a material
adverse effect on its Condition (as defined below).
(f) Capitalization. The capital stock of Seller, as authorized by the
Certificate, will consist of: (i) 33,000,000 shares of Common Stock, 10,000,000
shares of which will be issued and outstanding and 6,615,384 shares of which
will be reserved for issuance upon conversion of the Shares and the conversion
of shares issued upon exercise of the Warrants described in Section 4 below (the
"Warrants") (the shares issued upon conversion of the Shares, upon exercise of
the Warrants or upon conversion of shares issued upon exercise of the Warrants
are sometimes hereinafter referred to, collectively, as "Conversion Shares");
and (ii) 7,000,000 shares of preferred stock, par value $0.01 per share of
Seller, of which 6,800,000 shares shall have been designated a Preferred Stock.
The rights, privileges and preferences of the Common Stock and Preferred Stock
are as stated in the Certificate and the Certificate of Designations relating to
the Preferred Stock, true and complete copies of which are attached hereto as
Exhibit A. Except as specifically set forth on Schedule 2.1(e) hereto, and
except for options to purchase up to 6,910,830 shares of Common Stock pursuant
to outstanding stock options, as of the Closing, Seller will not (i) have
outstanding any capital stock or other securities convertible into or
exchangeable for any shares of its capital stock and, except for the preemptive
rights contained in the Certificate, no person or entity will have any right to
subscribe for or to purchase (including conversion or preemptive rights), or any
options for the purchase of, or any agreements providing for the issuance
(contingent or otherwise) of, or any calls, commitments or other claims of any
character relating to, any capital stock or any stock or securities convertible
into or exchangeable for any capital stock of Seller; (ii) have any capital
stock, equity interests or other securities reserved for issuance for any
purpose (other than an aggregate of 6,910,832 shares of Common Stock reserved
for issuance upon exercise of options issued or issuable pursuant to the
Company's existing stock options or stock option or incentive plans); or (iii)
be subject to any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any shares of its capital stock or any convertible
securities, rights or options of the type described in the immediately preceding
clause (i). No outstanding options, warrants or other security directly or
indirectly exercisable for or convertible into any class or series of Seller's
capital stock require anti-dilution adjustments by reason of the transactions
contemplated by this Agreement. All of the issued and outstanding shares of
Common Stock have been duly and validly issued, are fully paid and nonassessable
and were issued in compliance with all applicable federal and state securities
laws. All of the shares of Preferred Stock and Conversion Shares, when issued,
(i) will be duly and validly issued, fully paid and nonassessable, (ii) except
as set forth in the Shareholders Agreement in the form of Exhibit D hereto (the
"Shareholders Agreement"), and except for certain Preferred Stock subject to
irrevocable proxies, will be free of any liens or encumbrances of any kind, and
(iii) will be issued in compliance with all applicable federal and state
securities laws. To the best knowledge of Seller, there are no agreements among
Seller's stockholders with respect to the voting or transfer of Seller's capital
stock, other than the agreements regarding voting and transfer contained in the
Shareholders Agreement. Schedule 2.1(e) sets forth a complete and correct list
of the name of each holder of Seller's stock, options or other securities and
the number of shares, options or other securities (and type, class and series of
capital stock owned by such stock, option or other security holder (and exercise
price, if applicable)). In addition Seller has agreed to issue warrants to
purchase 205,128 Shares of Preferred Stock to PS Capital Ventures, LP. Prior to
consummation of the transactions contemplated hereby, Seller shall amend its
Certificate of Incorporation and Certificate of Designations related to the
Preferred Stock to increase its authorized shares of preferred stock and the
authorized Series A Preferred Stock to be 7,500,000 shares.
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(g) Subsidiaries. Seller does not presently own or control, directly or
indirectly, any interest in any partnership, corporation or other business
entity.
(h) Financial Information. To the extent Seller has previously provided to
a Buyer its unaudited balance sheet as of December 31, 1998, and the related
unaudited statements of operations, stockholders' equity and cash flows for the
year then ended (the "Financials") such Financials are complete and correct in
all material respects; are in accordance with the books of account, ledgers and
records of Seller; have been prepared in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis (subject to
ordinary year-end adjustments not individually, or in the aggregate, material to
the Condition of the Company); and present fairly the consolidated financial
position, results of operations and cash flows of Seller as of the respective
dates thereof. Except as reflected in the Financials, the Seller does not have
as of the Closing any obligation or liability, contingent or otherwise, other
than (i) liabilities incurred in the ordinary course of business and consistent
with past practice since the date of the Financials, which liabilities are not,
individually or in the aggregate, material to the Condition of Seller, and (ii)
obligations and liabilities which, individually or in the aggregate, are not
material to the Condition of Seller and are not required under GAAP to be
reflected in the Financials.
(i) Certain Changes or Events. Since December 31, 1998, the business of
Seller has been operated only in the ordinary course, consistent with past
practice, and in addition to, and not in limitation of the foregoing: (i) there
has not been any significant adverse change in the business, properties,
operations, earnings, assets, liabilities, condition (financial or otherwise) or
prospects (collectively, "Condition") of Seller, except for changes in the
ordinary course of business consistent with past practice which have not been,
in the aggregate, materially adverse to Seller; (ii) there has been no change of
laws, rules or regulations applicable to Seller, or revocation or change in any
contract, permit or right to do business, and no other event or occurrence of
any character which has resulted, or could reasonably be expected to result, in
a material adverse change in the Condition of Seller; (iii) Seller has not
authorized or made any distributions, or declared or paid any dividends, upon or
with respect to any of its capital stock, or other equity interests, nor has
Seller redeemed, purchased or otherwise acquired, any of its capital stock or
other equity interests; (iv) except as set forth on Schedule 2.1(i) attached
hereto, there has been no material change in any compensation, arrangement or
agreement with any employee, director, stockholder or Affiliate (as defined
below); and (v) there has been no agreement or commitment by Seller to do or
perform any of the acts described in this Section 2.1(i). "Affiliate" of a
specified person or entity shall mean a person or entity that directly, or
indirectly through one or more intermediaries, controls or is controlled by, or
is under common control with, the person or entity specified.
(j) Title to Assets. Seller has good title to all of its assets and
properties, free and clear of any liens or encumbrances of any kind, except for
such liens and encumbrances which arise in the ordinary course of business and
do not materially impair Seller's use or ownership of such assets. With respect
to any assets or properties it leases, Seller holds a valid and subsisting
leasehold interest therein, free and clear of any liens or encumbrances of any
kind, and is in compliance, in all material respects, with the terms of the
applicable lease.
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(k) Contracts. Seller is not a party to, nor is its assets
or properties bound by, or subject to, any contracts, agreements, notes,
instruments, leases, licenses, commitments, arrangements or understandings,
written or oral (collectively, "Contracts") of the following types, except for
those listed in Schedule 2.1(k) attached hereto:
any Contract pursuant to which Seller, or another
party thereto, is obligated to pay in excess of twenty-five thousand dollars
($25,000) in any twelve-month period;
any Contract pursuant to which Seller acquired
the right to use any Intellectual Property (defined below) or information that
is material to or necessary in the business of Seller, or pursuant to which
Seller has granted to others the right to use, or which otherwise relates to,
its Intellectual Property;
any Contract (other than advances of expenses to
employees in the ordinary course of business) involving loans, loan agreements,
debt securities, mortgages, deeds of trust, security agreements, suretyships or
guarantees;
any Contract between Seller, on the one hand, and
any of its officers, directors, employees or persons or entities that
beneficially own in excess of 1.0% of the outstanding equity interest of
Seller, or any Affiliate or relative, or Affiliate of a relative, of any of the
foregoing, on the other;
any deferred compensation agreements, bonus,
pension, profit sharing, stock option and incentive plans or arrangements,
hospitalization, medical and insurance plans, agreements and policies,
retirement and severance plans and other employee compensation policies and
agreements affecting employees of Seller;
any Contract with any labor union affecting
employees of Seller;
any Contract which restricts Seller from freely
engaging in business or competing anywhere; or
any Contract which otherwise is material to the
Condition of Seller.
All of such Contracts are in full force and effect and constitute
legal, valid and binding obligations of Seller and, to the best knowledge of
Seller, the other parties thereto; the Seller and, to the best knowledge of
Seller, each other party thereto, has performed in all material respects all
obligations required to be performed by it under such Contracts.
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(l) Intellectual Property. Seller has sufficient title, ownership or
other rights in all patents, trademarks, service marks, trade names, copyrights,
trade secrets, information, proprietary rights and processes (the "Intellectual
Property") necessary for its business as now conducted and as proposed to be
conducted without any conflict with or infringement of the rights of others
known to Seller. Except as set forth on Schedule 2.1(l) attached hereto, there
are no outstanding option, license or agreement of any kind relating to the
foregoing, nor is Seller bound by or a party to any options, licenses or
agreements of any kind with respect to the patents, trademarks, service marks,
trade names, copyrights, trade secrets, licenses, information, proprietary
rights and processes of any other person or entity. Seller has not received any
communications alleging that Seller has violated or, by conducting its business
as proposed, would violate any of the patents, trademarks, service marks, trade
names, copyrights or trade secrets or other proprietary rights of any other
person or entity, nor is Seller aware of any such violations. To Seller's
knowledge, none 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 the employee's best efforts to promote the
interests of Seller or that would conflict with Seller's business as proposed to
be conducted. Neither the execution nor delivery of this Agreement and the
consummation of the transactions contemplated hereby, nor the carrying on of
Seller's business by the employees of Seller, nor the conduct of Seller's
business as proposed, will, to Seller's knowledge, conflict with or result in a
breach of the terms, conditions or provisions of, or constitute a default under,
any contract, covenant or instrument under which any of such employees is now
obligated. Seller does not believe it is or will be necessary to utilize any
inventions of any of its employees (or people it currently intends to hire) made
prior to their employment by Seller.
(m) Insurance. Seller has in full force and effect fire and casualty
insurance policies, with extended coverage, sufficient in amount (subject to
reasonable deductibles) to allow it to replace any of its properties that might
be damaged or destroyed. Seller also has in full force and effect comprehensive
general liability insurance providing coverage in such amounts as are
customary for responsible companies engaged in the same or similar business.
(n) Litigation. There is no action, suit, proceeding, investigation
or governmental approval process pending or, to the knowledge of Seller,
threatened against Seller or affecting any of the properties or assets of
Seller which individually or in the aggregate could have a material adverse
effect on the Condition of Seller, nor is Seller aware of any basis for any
such action. Neither Seller nor any of its assets or properties, nor, to
Seller's knowledge, in connection with its business, any stockholder, director,
officer or employee of Seller, is subject to any action, order, judgment, writ,
injunction, decree, ruling or decision of any governmental authority which is
material to the Condition of Seller. There is no action or suit by Seller
currently pending or which Seller intends to initiate which is material to the
Condition of Seller.
(o) Compliance with Laws; Permits. Seller has not violated or failed
to comply with, in any material respect, any statute, law, ordinance, rule,
regulation or policy to which it or any of its properties or assets is
subject. Seller has all permits, licenses, orders, certificates, authorizations
and approvals that are material to the conduct of its business as presently
conducted and as proposed to be conducted and is not in violation thereof; all
such permits, licenses, orders, certificates, authorizations and approvals are,
and as of the Closing will be, in full force and effect.
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(p) Taxes. Seller has timely filed all tax returns and reports as
required by law. These returns and reports are true and correct in all material
respects. Seller has paid all taxes and other assessments due. The provision for
taxes of Seller as shown in the Financials is adequate for taxes due or accrued
as of the date thereof.
(q) Registration Rights. Except as otherwise provided in this
Agreement, no person or entity has, and as of the Closing no person or entity
will have, demand, "piggy-back," or other rights to cause Seller to file any
registration statement under the Securities Act of 1933, as amended, relating to
any securities of Seller or to participate in any such registration statement.
(r) No Brokers or Finders. Except for certain options issuable to
Xxxxx Xxxxxxxx to purchase up to 510,832 shares in his capacity as an advisor to
Seller, Seller has not entered into any agreement pursuant to which Seller or
any Buyer will be liable, as a result of the transactions contemplated by this
Agreement or the transactions contemplated hereby, for any claim of any person
or entity for any commission, fee or other compensation as finder or broker.
(s) Employee Confidentiality Agreements/Highly-Compensated Employees.
Each employee and officer of Seller has executed an agreement protecting
Seller's confidential and proprietary information in customary form. No employee
or officer of Seller has received compensation, or is currently compensated at a
rate, in excess of $150,000 per annum.
(t) Disclosure. In connection with the purchase of the Shares by the
Buyers as contemplated hereby, Seller has disclosed to the Buyers all material
facts and information known to Seller concerning Seller, its Condition and the
Shares, and has not in any of the representations or warranties contained in
this Agreement made any untrue statement of a material fact or omitted to state
any material fact necessary in order to make the statements contained in such
representations and warranties not misleading.
(u) ERISA. Except as set forth in Schedule 2.1(u) attached hereto,
Seller does not maintain (nor has it ever maintained) nor does it have (nor has
it ever had) any obligation under any employee benefit plan, program or policy,
whether written or unwritten, including without limitation an employee benefit
plan as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended.
2.2 Representations and Warranties of the Buyers. Each Buyer hereby
severally, and not jointly, represents, warrants and covenants to Sellers as
follows, provided, that nothing contained in this Section 2.2 shall in any
respect limit or modify the representations and warranties of Seller in Section
2.1 or the right of each Buyer to rely thereon:
(a) Requisite Power and Authorization. Such Buyer has full power and
authority and/or legal capacity to enter into this Agreement and this Agreement
constitutes such Buyer's valid and
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binding obligation, enforceable in accordance with its terms, except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium, or
other laws of general application affecting enforcement of creditors' rights in
general and (ii) as limited by general principles of equity that restrict the
availability of equitable remedies.
(b) Purchase Entirely for Own Account. The Shares purchased by such
Buyer under this Agreement are being acquired for investment for such Buyer's
own account, and not with a view to the resale or distribution of any part
thereof in violation of any applicable securities laws. Such Buyer has no
present intention of selling, granting any participation in, or otherwise
distributing any of the Shares purchased by such Buyer. By executing this
Agreement, each Buyer further represents that such Buyer does not have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participations to such person or to any third person, with
respect to any of the Shares in violation of any applicable securities laws.
(c) Disclosure of Information. Each Buyer has reviewed the
Certificate of Designation of Seller attached hereto as Exhibit A which sets
forth the rights of the Preferred Stock. Each Buyer believes it has received
all the information it considers necessary or appropriate for deciding whether
to purchase the Shares.
(d) Investment Experience. Each Buyer is an investor in securities
of companies in the development stage and acknowledges that it is able to fend
for itself, can bear the economic risk of its investment, and has such
knowledge and experience in financial or business matters that it is capable of
evaluating the merits and risks of the investment in the Shares. If other than
an individual, the Buyer represents it has not been organized for the purpose
of acquiring the Shares.
(e) Restricted Securities. Each Buyer understands that the Shares
have not been, and will not be, registered under the Securities Act of 1933, as
amended (the "Securities Act"), by reason of a specific exemption from the
registration provisions of the Securities Act which depends upon, among other
things, the bona fide nature of the investment intent and the accuracy of each
Buyer's representations as expressed herein. Each Buyer understands that the
Shares are "restricted securities" under applicable Federal and state
securities laws and that, pursuant to these laws, each Buyer must hold the
Shares indefinitely unless they are registered with the Securities and Exchange
Commission and qualified by state authorities, or an exemption from such
registration and qualification requirements is available. Each Buyer
acknowledges that, except as set forth herein, Seller has no obligation to
register or qualify the Shares for resale. Each Buyer further acknowledges that
if an exemption from registration or qualification is available, it may be
conditioned on various requirements including, but not limited to, the time and
manner of sale, the holding period for the Shares and on requirements relating
to Seller which are outside of such Buyer's control, and which Seller is under
no obligation and may not be able to satisfy. In this connection, each Buyer
represents that it is familiar with Securities and Exchange Commission Rule 144
("Rule 144"), as presently in effect, and understands the resale limitations
imposed thereby.
(f) Legends. It is understood that the certificates evidencing the
Shares may bear one or all of the following legends:
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(i) "These securities have not been registered under the Securities Act of
1933, as amended. They may not be sold, offered for sale, pledged or
hypothecated in the absence of a registration statement in effect with the
respect to the securities under such Act or an opinion of counsel satisfactory
to the Company that such registration is not required or unless sold pursuant to
Rule 144 of such Act."
(ii) "The Shares evidenced hereby are subject to a Shareholders Agreement
(a copy of which may be obtained upon written request from the Company), and by
accepting any interest in such Shares the person accepting such interest shall
be deemed to agree to and shall become bound by all the provisions of said
Shareholders Agreement."
(g) Accredited Investor. Each Buyer is an "accredited investor" as defined
in Rule 501(a) of Regulation D promulgated under the Securities Act.
3. Conditions Precedent.
(a) Conditions to Seller's Obligation. The obligation of Seller to
complete the Closing is subject to the fulfillment on or prior to the Closing
Date of all of the following conditions, any one or more of which may be waived
by Seller in writing:
(i) Representation and Warranties. The representations and
warranties of each Buyer purchasing at the Closing contained in this Agreement
shall be true and correct on and as of the Closing Date with the same force and
effect as though such representations and warranties had been made on and as of
the Closing Date.
(ii) Purchase Price. Each of the Buyers purchasing at the
Closing shall have delivered to Seller such Buyer's respective portion of the
Purchase Price.
(iii) Minimum Sales. Buyers shall have purchased Shares having an
aggregate minimum purchase price of at least $1,000,000.
(iv) Shareholders Agreement. The Shareholders Agreement,
substantially in the form attached hereto as Exhibit D, shall have been executed
by Seller and each of the Buyers.
(b) Conditions to the Buyer's Obligation. The obligation of each Buyer
to complete the Closing is subject to the fulfillment on or prior to the Closing
Date of all of the following conditions, any one or more of which may be waived
by such Buyer in writing:
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(i) Representations and Warranties. The representations and
warranties of Seller shall be true and correct on and as of the Closing Date
with the same force and effect as though such representations and warranties
have been made on and as of the Closing Date.
(ii) Share Certificates. Each Buyer purchasing at the Closing shall
have received from Seller stock certificates evidencing the Shares purchased by
such Buyer.
(iii) Certificate of Designation. The Certificate of Designation,
substantially in the form attached hereto as Exhibit A, shall have been filed
with the Secretary of State of the State of Delaware and shall be in full force
and effect.
(iv) Stock Split. Seller shall have consummated a 100:1 split of its
currently outstanding common stock.
(v) Founder's Note. Seller and Xxxxx X'Xxxxx shall have executed the
Founder's Note, substantially in the form attached hereto as Exhibit B.
(vi) Deferred Compensation Subordination Agreement. The Deferred
Compensation Subordination Agreement, substantially in the form attached hereto
as Exhibits C-1 and C-2, shall have been fully executed by all signatories
thereto.
(vii) Shareholders Agreement. The Shareholders Agreement,
substantially in the form attached hereto as Exhibit D, shall have been executed
by Seller and each of the Buyers.
(viii) Founder Non-Compete Agreement. Xxxxx X'Xxxxx and Xxxxx X'Xxxxx
shall have each entered a Founder Non-Compete Agreement, substantially in the
form attached hereto as Exhibit E.
(ix) By-laws. Seller's By-laws shall have been amended substantially
in the form attached hereto as Exhibit F, to require a supermajority vote by
Seller's Board of Directors on certain corporate governance issues.
(x) Minimum Sales. Buyers shall have purchased Shares having an
aggregate minimum purchase price of at least $1,000,000.
(xi) Legal Opinion. Buyers shall have received a legal opinion in
form and substance satisfactory to the Buyers.
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4. Warrants. Seller shall issue warrants to purchase Preferred Stock
to each Buyer ("Threshold Buyer") purchasing $800,000 or more in Preferred
Stock. The number of shares which such warrants shall entitle each such Buyer
to purchase shall equal fifteen (15%) percent of the number of shares of
Preferred Stock purchased by such Buyer. Seller shall also issue warrants to
purchase Preferred Stock to each group of Buyers (other than any Threshold
Buyers) purchasing $800,000 or more in Preferred Stock. The number of shares
which such warrants shall entitle such group of buyers to purchase shall equal
five (5%) percent of the number of shares of Preferred Stock purchased by such
group. Such warrants shall otherwise contain the terms and conditions set forth
in the Preferred Stock Purchase Warrant attached hereto as Exhibit G.
5. Intentionally omitted.
6. Registration Rights. Each Buyer will have the following
registration rights with respect to Shares purchased hereunder:
(a) If during any time any Buyer owns any Shares, Seller shall
determine to register for its own account or the account of others under the
Securities Act any of its equity securities, it shall send to each Buyer
written notice of such determination and, if within twenty (20) days after
receipt of such notice, any Buyer shall so request in writing, Seller shall
include in such registration statement all of the Shares held by such Buyer,
and requested to be registered by such Buyer. Notwithstanding the foregoing, in
the event that any registration shall be in whole or in part an underwritten
offering, the number of registrable securities to be included in such an
underwriting may be reduced (pro rata among the Buyers and the holders of the
other registrable securities requested to be registered by each of them) if and
to the extent that the managing underwriter shall be of the good faith opinion
that such inclusion would reduce the number of registrable securities to be
offered by Seller. Nothing herein shall be construed so as to require Seller,
in connection with any proposed offering, to engage the services of an
underwriter, as, for example, if Seller shall file a registration statement
under Rule 415 of the Securities Act without the services or engagement of any
underwriter. This "piggy-back" registration right shall not apply to an
offering of equity securities on Forms S-4 or S-8 (or their then equivalents)
relating to securities to be issued solely in connection with an acquisition of
any entity or business or securities issuable in connection with a stock option
or other employee benefit plan. At such time of any registration each Buyer and
Seller shall enter into customary reciprocal indemnification provisions with
respect to such registration; provided, that in no event shall any Buyer be
obligated to indemnify Seller for any amount in excess of the proceeds received
by such Buyer in such offering.
(b) If and to the extent Seller grants registration rights to
any group of investors in the future that are more favorable to such investors
than the registration rights granted to Buyers hereunder, the Buyers hereunder
shall be entitled to such registration rights granted to such investors on a
pari passu basis.
7. Maximum Sales. Subject to the next succeeding sentence, Seller
shall not sell Shares having an aggressive purchase price in excess of
$2,250,000. Notwithstanding the immediately preceding sentence, Seller shall be
permitted to sell additional Shares having an aggregate purchase price
11
12
of $250,000 (for a total maximum or $2,500,000) with the unanimous consent of
Seller's board of directors (as such board of directors is constituted as set
forth in the Shareholders Agreement).
8. Financial Information. Seller shall within forty-five (45) days after
the end of each financial quarter provide its members of the board of directors
with quarterly unaudited financial statements including (a) an unaudited balance
sheet as of the last day of such quarter, (b) an unaudited statement of income
for such quarter and (c) a cash flow statement for such quarter. In addition,
Seller shall provide each Buyer on a current basis copies of financial
statements or other financial information that it provides to any other of its
stockholders.
9. Miscellaneous Provisions.
(a) Amendments. This Agreement may be amended or modified but only by
a written instrument executed by all of the parties hereto.
(b) Entire Agreement. This Agreement constitutes the entire agreement
among the parties hereto with respect to the subject matter hereof, and
supersedes all prior agreements and understandings, oral and written, among the
parties hereto with respect to the subject matter hereof.
(c) Applicable Law. This Agreement and the legal relations among the
parties hereto shall be governed by and construed in accordance with the
internal laws of the State of New York applicable to contracts made and to be
wholly performed therein.
(d) Survival of Representations. The parties hereto agree that the
representations and warranties contained herein shall survive the execution
and delivery of this Agreement and the consummation of the transaction
contemplated hereby.
(e) Binding Effect; Benefits. This Agreement shall inure to the
benefit of, and be binding upon, the parties hereto and their respective
successors and permitted assigns.
(f) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(g) Severability. If any provision or party thereof contained in this
Agreement is declared invalid by any court of competent jurisdiction or a
government agency having jurisdiction, such declaration shall not affect the
remainder of the provision or the other provisions and each shall remain in full
force and effect.
(h) Headings. The headings in this Agreement are for reference
purposes only and shall not in any way affect or limit the meaning or
interpretation of this Agreement.
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(i) Expenses. Each party hereto shall bear its own expenses incurred in
connection with the consummation of the transactions contemplated in this
Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Preferred Stock
Purchase Agreement as of the day and year first above written.
SELLER:
SOFTCOM, INC.
By: /s/Xxxxx X'Xxxxx
--------------------------
Name: Xxxxx X'Xxxxx
Title: Chief Executive Officer
BUYER:
SCREAMINGMEDIA NET, INC.
By: /s/ Xxxx Xxxxxx
-------------------------
Name: Xxxx Xxxxxx
Title: President
384,615 $.39 $150,000
Number of Shares purchased x purchase price per share = Aggregate purchase
price
15
EXHIBIT A
Certificate of Designation
16
EXHIBIT A
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION OF
SOFTCOM, INC.
PURSUANT TO SECTION 242 OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
The undersigned, being a duly elected officer of SoftCom,
Inc., a Delaware corporation (the "Corporation"), for the purpose of amending
the Certificate of Incorporation of the Corporation pursuant to Section 242 of
the General Corporation Law of the State of Delaware, does hereby certify as
follows:
1. The name of the Corporation is SoftCom, Inc.
2. The Corporation's Certificate of Incorporation was filed
with the Secretary of State on May 11, 1994, and was previously amended on June
25, 1997.
3. The Board of Directors of the Corporation deems it
advisable to further amend such Certificate of Incorporation as permitted by
Section 242 of the General Corporation Law of the State of Delaware as set forth
below.
4. The Fourth Article of the Corporation's Certificate of
Incorporation is hereby amended by deleting such article in its entirety and
substituting in lieu thereof the following:
The aggregate number of shares which the Corporation shall
have authority to issue is 40,000,000, divided into 33,000,000 shares
of common stock, $.001 par value and 7,000,000 shares of preferred
stock, $.001 par value.
The Board of Directors shall be authorized, subject to
limitations prescribed by law and the provisions of this Fourth
Article, to provide for the issuance of the shares of Preferred Stock
in series, and by filing a certificate pursuant to the applicable law
of the State of Delaware, to establish from time to time the number of
shares to be included in each such series, and to fix the designation,
powers, preferences and rights of the shares of each such series and
the qualifications, limitations or restrictions thereof.
17
The authority of the Board with respect to each series shall
include, but not be limited to, determination of the following:
(a) The number of shares constituting that series and the
distinctive designation of that series;
(b) The dividend rate on the shares of that series, whether
dividends shall be cumulative, and, if so, from which date or dates,
and the relative rights of priority, if any, of payment of dividends on
shares of that series;
(c) Whether that series shall have voting rights, in addition
to the voting rights provided by law, and, if so, the terms of such
voting rights;
(d) Whether that series shall have conversion privileges, and,
if so, the terms and conditions of such conversion, including provision
for adjustment of the conversion rate in such events as the Board of
Directors shall determine;
(e) Whether or not the shares of that series shall be
redeemable, and, if so, the terms and conditions of such redemption,
including the date or date upon or after which they shall be
redeemable, and the amount per share payable in case of redemption,
which amount may vary under different conditions and at different
redemption dates;
(f) Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so, the terms
and amount of such sinking fund;
(g) The rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
corporation, and the relative rights of priority, if any, of payment of
shares of that series;
(h) Any other relative rights, preferences and limitations of
that series.
As of May 14, 1999 (the "Effective Time"), each share of
Common Stock issued and outstanding as of the close of business on May
13, 1999 shall automatically be changed and converted, without any
action on the part of the holder thereof, into 100 shares of Common
Stock, par value $.001 per share, for each 1 share of Common Stock, no
par value, held of record by such holder.
5. The Seventh Article of the Corporation's Certificate of
Incorporation is hereby amended by adding immediately after the words "To make,
alter or repeal the by-laws of the Corporation" the following:
; provided, that, any provision of the by-laws that requires or
provides for approval of a matter by greater than a simple majority
vote of the board of directors shall only be
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amended, altered or repealed by a vote of the board of directors equal
to such specified super majority.
6. The amendment of the Certificate of Incorporation herein
certified has been duly adopted in accordance with the provisions of Sections
228 and 242 of the General Corporation Law of the State of Delaware. Prompt
written notice of the adoption of the amendment herein certified has been given
to those stockholders who have not consented in writing thereto, as provided in
Section 228 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, said SoftCom, Inc. has caused this
certificate to be signed, under penalties of perjury, by Xxxxx X'Xxxxx, its
Chief Executive Officer, this l4th day of May, 1999.
SOFTCOM, INC.
-------------------------------
Name: Xxxxx X'Xxxxx
Title: Chief Executive Officer
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EXHIBIT A
CERTIFICATE OF DESIGNATIONS
OF THE
SERIES A CONVERTIBLE PREFERRED STOCK
(Par Value $.001 Per Share)
OF
SOFTCOM, INC.
-------------------
Pursuant to Section 151 of Title 8 of the
General Corporation Law of the State of
Delaware
The undersigned duly authorized officer of SoftCom, Inc., a
corporation organized and existing under the General Corporation Law of the
State of Delaware (the "Company"), in accordance with the provisions of Section
151 thereof, DOES HEREBY CERTIFY that the following resolution was duly adopted
by the Board of Directors of the Company, by unanimous written consent, pursuant
to Section 141(f) of the General Corporation Law of the State of Delaware on May
13, 1999:
RESOLVED that, pursuant to the authority conferred upon the
Board of Directors by the Company's Certificate of Incorporation, the Board of
Directors hereby provides for the issuance of a series of Series A Convertible
Preferred Stock, par value $.001 per share of the Company (the "Preferred
Stock"), to consist of 6,800,000 shares, and hereby fixes the voting powers,
designations, preferences and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions thereof, of the shares
of such Preferred Stock, in addition to those set forth in the Certificate of
Incorporation that are applicable to the Preferred Stock, as follows:
SECTION 1
DESIGNATION AND RANK
1.1 Designation. This resolution shall provide for a single
series of Preferred Stock, the designation of which shall be "Series A
Convertible Preferred Stock", par value $.001 per share (sometimes referred to
herein as the "Preferred Stock"). The number of authorized
20
shares constituting the Preferred Stock is 6,800,000. The Preferred Stock will
have a liquidation preference as determined in Section 3.1 below.
1.2 Rank. With respect to the payment of dividends and other
distributions on the capital stock of the Company, including distribution of the
assets of the Company upon liquidation, the Preferred Stock shall be senior to
the common stock of the Company, no par value per share (the "Common Stock") and
to all other series and classes of stock of the Company, whether such series and
classes are now existing or are created in the future.
SECTION 2
DIVIDEND RIGHTS
2.1 Dividends or Distributions. The holders of Preferred Stock
shall be entitled to receive dividends when, as and if declared by the Board of
Directors of the Company. No dividends or distributions, in cash, securities or
other property (except dividends of Common Stock to holders of Common Stock)
shall be declared or paid or set apart for payment on any class or series of
stock, unless such dividend or distribution is likewise declared, paid or set
apart for payment on the Preferred Stock (a) in an amount equal to the dividend
or distribution that would be payable if the Preferred Stock were converted into
Common Stock on the date of payment, declaration or distribution, if the
dividend or distribution is on Common Stock or (b) at a rate proportionate to
the relative stated values of the Preferred Stock and the recipient class or
series of stock, if the recipient class or series is other than Common Stock.
SECTION 3
LIQUIDATION RIGHTS
3.1 Liquidation Preference. In the event of any voluntary or
involuntary liquidation, dissolution, winding up of affairs of the Company or
other similar event, or in the event of a sale of all or substantially all of
the assets of the Company, or a merger of the Company in which the holders of
the Company's securities immediately prior to such merger transaction hold less
than fifty percent (50%) of the securities of the surviving, continuing or
purchasing entity immediately after such merger transaction (each, a "Liquidity
Event"), before any distribution is made on any other class of stock of the
Company, the holders of shares of Preferred Stock shall be entitled to be paid,
out of the assets of the Company available for distribution to its shareholders,
an amount per share (the "Liquidation Amount") equal to (a) if the Fair Market
Value of the Company is less than $7,000,000, the greater of (i) the Face Value
for such share of Preferred Stock plus the Liquidation Yield or (ii) the
proportionate amount that would be received for such shares as a result of a
conversion of such shares into Common Stock immediately prior to such Liquidity
Event or (b) if the Fair Market Value of the Company is
2
21
equal to or greater than $7,000,000, the greater of (i) the Face Value of such
share or (ii) the proportionate amount that would be received for such shares as
a result of a conversion of such shares into Common Stock immediately prior to
such Liquidity Event; provided, that if the Liquidity Event is a merger in which
holders of the Company's securities receive securities in another entity, the
holders of shares of Preferred Stock shall receive securities of the other
entity equal in value to the Liquidation Amount as calculated above. For
purposes hereof, (A) "Face Value" shall mean $.39 per share, (B) "Liquidation
Yield" shall mean the amount which would be earned on a share of Preferred Stock
if such share bore interest on its Face Value plus 8% from the date of issuance
to the date of payment of such Face Value pursuant to this Section 3.1. and (C)
"Fair Market Value" shall mean (i) if such Liquidity Event results from a sale
of all or substantially all of the assets of the Company, the sum of (x) the net
proceeds received by the Company, (y) the total liabilities of the Company
assumed by the transferee of such assets and (z) the fair market value of
remaining assets of the Company, as determined, in good faith, by the Board of
Directors and (ii) in all other events, as determined, in good faith, by the
Board of Directors.
3.2 Pro Rata Distribution. If, upon distribution of the
Company's assets in liquidation, dissolution, winding-up or other similar event,
the net assets of the Company to be distributed among the holders of shares of
the Preferred Stock are insufficient to permit payment in full of the
Liquidation Amount to such holders, then the entire net assets of the
Corporation shall be distributed among the holders of shares of the Preferred
Stock ratably in proportion to the full amounts to which they would otherwise be
respectively entitled and such distributions may be made in cash or in property
taken at its fair value (as determined, in good faith, by the Board of
Directors), or both, at the election of the Board of Directors; provided, that
all available cash will first be applied to pay the Liquidation Amount.
3.3 Priority. All of the preferential amounts to be paid to
the holders of the Preferred Stock as to distributions upon liquidation shall be
paid or set apart for payment before the payment or setting apart for payment of
any amount for, or the distribution of any assets of the Company to, the holders
of the Common Stock or any other class or series of stock of the Company.
SECTION 4
CONVERSION RIGHTS
4.1 Conversion. The holders of Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Preferred Stock shall
be convertible, at the option of the holder thereof, at any time after the date
of issuance of such share, at the office of the Company or any transfer agent
for the Preferred Stock into such
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22
number of fully paid and non-assessable shares of Common Stock as is determined
by dividing the Face Value by the "Conversion Price" at the time in effect for
such share. The initial Conversion Price per share for shares of Preferred Stock
shall be the Face Value; provided, however, that such Conversion Price shall be
subject to adjustment as provided herein; or
(b) Automatic Conversion. Each share of Preferred Stock
automatically shall convert into shares of Common Stock at the Conversion Price
then in effect immediately upon the consummation of the Company's sale of its
Common Stock in a bona fide, firm commitment underwriting pursuant to a
registration statement on Form S-1 (or a successor form) under the Securities
Act of 1933, as amended, which results in aggregate cash proceeds to the Company
of not less than ten million dollars ($10,000,000).
4.2 Adjustments. The Conversion Price of the Preferred Stock
as described in Section 4.1 above shall be adjusted from time to time as
follows:
(a) In case the Company shall at any time or from time to
time declare or pay any dividend on its Common Stock payable in its Common Stock
(or other securities directly or indirectly exercisable for Common Stock
(hereinafter referred to as "Common Stock Equivalents")) or effect a subdivision
or split of the outstanding shares of its Common Stock into a greater number of
shares of Common Stock (by reclassification or otherwise than by payment of a
dividend in its Common Stock), then, and in each such case, the Conversion Price
shall be appropriately decreased so that the number of shares of Common Stock
into which each share of Preferred Stock is convertible shall be adjusted so
that the holder of each share thereof shall be entitled to receive, upon the
conversion thereof, the number of shares of Common Stock determined by
multiplying (i) the number of shares of Common Stock into which such share was
convertible immediately prior to the occurrence of such event by (ii) a
fraction, the numerator of which is the sum of (A) the number of shares of
Common Stock into which such share was convertible immediately prior to the
occurrence of such event plus (B) the number of shares of Common Stock and/or
Common Stock Equivalents which such holder would have been entitled to receive
in connection with the occurrence of such event had such share been converted
immediately prior thereto, and the denominator of which is the number of shares
of Common Stock into which such share was convertible immediately prior to the
occurrence of such event. An adjustment made pursuant to this subparagraph (a)
shall become effective (1) in the case of any such dividend, immediately on the
close of business on the record date for the determination of holders of Common
Stock entitled to receive such dividend, or (2) in the case of any such stock
split or subdivision, at the time at which such corporate action becomes
effective.
(b) In case the Company at any time or from time to time
shall combine or consolidate the outstanding shares of its Common Stock into a
lesser number of shares of Common Stock, by reclassification, reverse stock
split or otherwise, then, and in each such case, the Conversion Price shall be
appropriately increased so that the number of shares of Common Stock into which
each share of Preferred Stock is convertible shall be adjusted so that the
holder of each share thereof shall be entitled to receive, upon the conversion
thereof, the
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number of shares of Common Stock determined by multiplying (i) the number of
shares of Common Stock into which such share was convertible immediately prior
to the occurrence of such event by (ii) a fraction, the numerator of which is
the number of shares which the holder would have owned after giving effect to
such event had such share been converted immediately prior to the occurrence of
such event and the denominator of which is the number of shares of Common Stock
into which such share was convertible immediately prior to the occurrence of
such event. An adjustment made pursuant to this subparagraph (b) shall become
effective at the time at which such corporate action becomes effective.
(c) In the event of any reclassification of the Common
Stock or recapitalization involving Common Stock (other than a change in par
value or as a result of a stock dividend, subdivision, or combination of shares
or any other event described in sections (a) or (b) above) the holders of the
Preferred Stock shall thereafter be entitled to receive, and provision shall be
made therefor in any agreement relating to the reclassification or
recapitalization, upon conversion of the Preferred Stock, the kind and number of
shares of Common Stock or other securities or property (including cash) to which
such holders of Preferred Stock would have been entitled if they had held the
number of shares of Common Stock into which the Preferred Stock was convertible
immediately prior to such reclassification or recapitalization; and in any such
case appropriate adjustment shall be made in the application of the provisions
herein set forth with respect to the rights and interests thereafter of the
holders of the Preferred Stock, to the end that the provisions set forth herein
shall thereafter be applicable, as nearly as reasonably may be, in relation to
any shares, other securities, or property thereafter receivable upon conversion
of the Preferred Stock. An adjustment made pursuant to this subparagraph (c)
shall become effective at the time at which such reclassification or
recapitalization becomes effective.
(d) In the event the Company shall declare a distribution
payable in securities of other entities or persons, evidences of indebtedness
issued by the Company or other entities or persons, assets (excluding cash
dividends) or options or rights not referred to in sections (a) through (c)
above, the holders of the Preferred Stock shall be entitled to a proportionate
share of any such distribution as though they were the holders of the number of
shares of Common Stock of the Company into which their shares of Preferred Stock
are convertible as of the record date fixed for the determination of the holders
of shares of Common Stock of the Company entitled to receive such distribution
or if no such record date is fixed, as of the date such distribution is made.
4.3 Procedures for Conversion.
(a) The holder of any shares of Preferred Stock must, upon
conversion of such Preferred Stock in accordance with this Section 4, surrender
certificates representing the Preferred Stock to the Company, at its principal
office, and specify the name or names in which such holder wishes the
certificate or certificates for shares of Common Stock to be issued. In case
such notice shall specify a name or names other than that of such holder, such
notice shall
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be accompanied by payment of all transfer taxes (if transfer is to a person or
entity other than the holder thereof) payable upon the issuance of shares of
Common Stock in such name or names. As promptly as practicable, and, if
applicable, after payment of all transfer taxes (if transfer is to a person or
entity other than the holder thereof), the Company shall deliver or cause to be
delivered certificates representing the number of validly issued, fully paid and
nonassessable shares of Common Stock to which the holder of the Preferred Stock
so converted shall be entitled. Such conversion, to the extent permitted by law,
shall be deemed to have been effected as of the close of business on the date on
which certificates representing the Preferred Stock shall have been surrendered
to the Company.
(b) In connection with the conversion of any shares of
Preferred Stock, no fractions of shares of Common Stock shall be issued, but the
Company shall pay cash in respect of such fractional interest in an amount equal
to the product of the initial sales price of Preferred Stock and such fractional
interest.
(c) The Company shall at all times reserve and keep
available out of its authorized Common Stock the full number of shares of Common
Stock of the Company issuable upon the conversion of all outstanding shares of
Preferred Stock.
4.4 Notices of Record Date. In the event that the Company
shall propose at any time: (a) to declare any dividend or distribution upon any
class or series of capital stock, whether in cash, property, stock or other
securities; (b) to effect any reclassification or recapitalization of its Common
Stock outstanding involving a change in the Common Stock; or (c) to merge or
consolidate with or into any other corporation, or to sell, lease or convey all
or substantially all of its property or business, or to liquidate, dissolve or
wind up; then, in connection with each such event, the Company shall mail to
each holder of Preferred Stock:
(i) at least twenty (20) days' prior written notice of the
date on which a record shall be taken for such dividend or
distribution (and specifying the date on which the holders of
the affected class or series of capital stock shall be
entitled thereto) or for determining the rights to vote, if
any, in respect of the matters referred to in clauses (b) and
(c) in Section 4.4 above; and
(ii) in the case of the matters referred to in Section 4.4
(b) and (c) above, written notice of such impending
transaction not later than twenty (20) days prior to the
shareholders' meeting called to approve such transaction, or
twenty (20) days prior to the closing of such transaction,
whichever is earlier, and shall also notify such holder in
writing of the final approval of such transaction. The first
of such notices shall describe the material terms and
conditions of the impending transaction (and specify the date
on which the holders of shares of Common Stock shall be
entitled to exchange their Common Stock for securities or
other property
6
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deliverable upon the occurrence of such event) and the Company
shall thereafter give such holders prompt notice of any
material changes. The transaction shall in no event take place
sooner than twenty (20) days after the Company has given the
first notice provided for herein or sooner than ten (10) days
after the Company has given notice of any material changes
provided for herein.
SECTION 5
VOTING RIGHTS
5.1 General. In addition to the special voting rights set
forth in Section 5.2 hereof, the holders of shares of Preferred Stock shall vote
together with the holders of shares of Common Stock as a single class on all
matters to be voted on by the stockholders of the Corporation, except as
otherwise required under the General Corporation Law of the State of Delaware.
With respect to any such vote, each holder of Preferred Stock shall be entitled
to the number of votes that such holder would have if the Preferred Stock held
by such holder were converted into Common Stock in accordance with Section 4
above on the record date for determination of holders of Common Stock entitled
to participate in such vote.
5.2 Stockholder Approvals. So long as any shares of the
Preferred Stock are outstanding, except where the vote or written consent of the
holders of a greater number of shares of the Company is required by law or the
Certificate of Incorporation and in addition to any other vote required by law,
without the prior consent of the majority of the outstanding shares of Preferred
Stock, given in person or by proxy, either in writing or at a special meeting
called for that purpose, the Company will not:
(a) authorize, designate or issue equity securities (or
any equity or debt securities convertible into equity
securities) ranking senior to or on a parity with the
Preferred Stock in respect of dividends, distributions or
rights upon liquidation;
(b) authorize or effect any reclassification of any
securities (or securities convertible into other securities)
into equity securities of the Company ranking senior to or on
a parity with the Preferred Stock in respect of dividends,
distributions or right upon liquidation;
(c) amend, alter or repeal, this Certificate of
Designation, the Certificate of Incorporation or the Bylaws of
the Corporation in any manner so as to adversely affect the
respective relative rights, privileges and preferences of the
Preferred Stock, or to increase the number of authorized
shares of Preferred Stock;
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(d) effect any liquidation, dissolution or
recapitalization of the Company;
(e) declare or pay any dividend on (including a dividend
payable in stock of the Company), make any other distribution
with respect to, or repurchase, any stock of the Company (or
any other securities that are convertible into or exercisable
for such stock);
(f) effect any merger or consolidation of the Company with
or into any other corporation or other entity; or sell, lease,
convey, exchange or otherwise dispose of, in a single
transaction or a series of related transactions, all or
substantially all of, or any substantial part of, the assets
of the Company; or
(g) create or permit to exist any subsidiary of the
Company.
SECTION 6
PARTICIPATION RIGHTS
6.1 Participation Rights. Before issuing additional shares of
capital stock or securities directly or indirectly convertible into or
exercisable for capital stock (other than options pursuant to a stock option
plan approved by the Company's Board of Directors) (the "Proposed Issuance") the
Company shall first offer the holders of the Preferred Stock the right to
subscribe to such Proposed Issuance in the following manner:
(a) the Company shall give prompt written notice to the
holders of the Preferred Stock, stating the amount and the
terms and conditions of the Proposed Issuance;
(b) For ten (10) calendar days after the receipt of such
written notice by the holders of the Preferred Stock, the
holders of the Preferred Stock shall have the right to
subscribe to purchase such amount of the Proposed Issuance as
it requests in writing that will allow such holders of the
Preferred Stock to preserve their respective voting and
economic percentage in the Company following the Proposed
Issuance. Holders of Preferred Stock may purchase such portion
of the Proposed Issuance only on the same terms and conditions
as such additional shares of stock are sold by the Company to
other parties in the Proposed Issuance; and
(c) To the extent any holder of Preferred Stock shall not
purchase the entire amount of shares to which such holder is
entitled to purchase in the Proposed Issuance (the "Refused
Shares") then the Company shall give prompt
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27
written notice to the other holders of Preferred Stock of the
aggregate amount of Refused Shares and for ten (10) calendar
days after receipt of such second written notice the other
holders of the Preferred Stock shall be entitled to purchase
an amount of Refused Shares not to exceed the amount
determined by multiplying the aggregate Refused Shares by the
quotient of (i) the number of shares of Preferred Stock owned
by each such holder after giving effect to any shares
purchased in the Proposed Issuance (collectively, the
"Aggregate Shares") by (ii) the sum of the Aggregate Shares
plus the number of shares held by all holders of the Preferred
Stock who exercised rights under clause (a) of this Section 6
(after giving effect to any shares so purchased). This
procedure shall be repeated until either no shares remain to
be issued to third parties or no holder of Preferred Stock
desires to purchase additional shares in the Proposed
Issuance.
(d) In the event the Company does not consummate the
Proposed Issuance (to the extent not purchased by the holders
of Preferred Stock) within sixty (60) calendar days of the
notice required by Section 6.1 (a) above, the Company shall be
required again to comply with this Section 6.1 prior to
issuing any shares of capital stock or securities directly or
indirectly convertible into or exercisable for capital stock.
SECTION 7
MISCELLANEOUS
7.1 Headings of Subdivisions. The headings of the various
Sections hereof are for convenience of reference only and shall not affect the
interpretation of any of the provisions hereof.
7.2 Severabililty of Provisions. If any right, preference or
limitation of the Preferred Stock set forth herein (as this resolution may be
amended from time to time) is invalid, unlawful or incapable of being enforced
by reason of any rule of law or public policy, all other rights, preferences and
limitations set forth in this resolution (as so amended) which can be given
effect without the invalid, unlawful or unenforceable right, preference or
limitation shall, nevertheless, remain in full force and effect, and no right,
preference or limitation herein set forth shall be deemed dependent upon any
other such right, preference or limitation unless so expressed herein.
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IN WITNESS WHEREOF, the Company has caused this Certificate of
Designations to be signed, under penalties of perjury, by Xxxxx X'Xxxxx, its
Chief Executive Officer.
SOFTCOM, INC.
Dated: May_, 1999
By:
-----------------------
Name: Xxxxx X'Xxxxx
Title: Chief Executive Officer
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EXHIBIT B
Founder's Note
30
EXHIBIT B
SUBORDINATED
PROMISSORY NOTE
May __, 1999
$581,905 New York, New York
The undersigned, SoftCom, Inc. a Delaware corporation (the
"Borrower"), hereby acknowledges that it is obligated to pay to Xxxxx X'Xxxxx
(the "Lender") the sum of $581,905 ("Principal"). The Borrower hereby
unconditionally promises to pay to the order of the Lender the Principal,
together with interest thereon at the rate of eight (8%) percent per annum from
the date hereof, payable in thirty-six equal (as nearly as practicable) monthly
installments commencing on the earlier to occur of (a) the consummation of the
Borrower's next private equity financing (or series of financings) after
consummation of the offering of the Borrower's Series A Convertible Preferred
Stock on the date hereof which yields aggregate proceeds to the Lender of at
least $5,000,000 (the "Equity Financing Trigger Date") or (b) December 31, 2001
(to the extent of any excess cash derived from operations held by Borrower net
of reserves for reasonably anticipated needs of the Borrower as determined by
Borrower's Board of Directors in accordance with Borrower's By-laws), and,
subject to the immediately preceding parenthetical, shall fully repay the
amounts evidenced by this Note not later than the numerically corresponding day
in the thirty-fifth (35th) month thereafter. In the event that (i) Borrower
shall consummate an initial public offering of its securities, merge or
consolidate with or into any other entity or sell all or substantially all of
its business or assets or (ii) there shall occur any event (or series of related
events) as a result of which any person or entity, or group of persons and/or
entities (other than members of the O'Brien family) shall have the right to
elect a majority of the Board of Directors, whether by agreement, stock
ownership or otherwise, the entire Principal shall then become immediately due
and payable, together with interest thereon.
This Note may be prepaid, at any time without premium or
penalty.
All payments to be made by the Borrower to the Lender
hereunder shall be made, without set-off or counterclaim, in lawful money of the
United States of America and in immediately available funds to the Lender at 000
Xxxxxxxxx Xxxxx Xxxxxxxx, Xxxxx 000, Xxxxxx, Xxx Xxxxxx 00000 or at such other
place or address of the Lender as the Lender may specify in a written notice to
the Borrower.
If all or a portion of the Principal of this Note, or any
interest payable thereon, shall not be paid when due, whether on a stated
repayment date, by acceleration or otherwise, such overdue amount shall bear
interest, to the extent permitted by law, at a rate of fifteen (15%) percent per
annum from the date of such non-payment until such amount is paid in full (after
as well as before judgment).
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The Borrower hereby waives demand, acceptance, presentment and
any and all notices required for the enforceability hereof.
No failure to exercise and no delay in exercising, on the part
of the Lender, any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege preclude any other or further exercise thereof, or the exercise of any
other power or right. The rights and remedies herein provided are cumulative and
not exclusive of any rights or remedies provided by law.
The obligations and rights under this Note shall be binding
upon and inure to the benefit of the Borrower and the Lender and their
respective permitted successors, endorsees and assigns, except that the Borrower
may not assign or transfer its obligations hereunder without the prior written
consent of the Lender. The Lender may assign this Note and any rights and
obligations it has pursuant to this Note to any third party upon written notice
to the Borrower.
THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
This Note is subordinate, and junior in right of payment, to
the obligation of Borrower to pay any liquidation preference that may be
required to be paid to holders of the Borrower's Series A Convertible Preferred
Stock pursuant to the rights and preferences thereof as set forth in Borrower's
certificate of incorporation and all amounts received hereon after (but not
before) any such payments shall become due and payable to the holders thereof
shall be held in trust for the benefit of such holders and promptly returned to
the Borrower.
SOFTCOM, INC.
By:
-----------------------
Title:
AGREED TO AND ACCEPTED:
By:
------------------------
Xxxxx X'Xxxxx
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EXHIBIT C-1
Non-Founder Deferred Compensation Subordination Agreement
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EXHIBIT C-1
DEFERRED COMPENSATION ACKNOWLEDGEMENT
The undersigned ___________________________ ("Employee") and
SoftCom, Inc., a Delaware corporation (the "Company"), hereby acknowledge that
for employment services rendered to the Company through _________, 199__, the
Company owes Employee $________ in deferred compensation. Employee agrees that
any deferred compensation due hereunder is subordinate, and junior in right of
payment, to the obligation of the Company to pay any liquidation preference that
may be required to be paid to holders of the Company's Series A Convertible
Preferred Stock pursuant to the rights and preferences thereof as set forth in
the Company's certificate of incorporation and all amounts received hereon after
(but not before) any such payments shall become due and payable to the holders
of such Preferred Stock shall be held in trust for the benefit of such persons
and promptly returned to the Company.
SOFTCOM, INC. Employee:
By:
_____________________________ _____________________________
Name:
Title:
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EXHIBIT C-2
Founder Deferred Compensation Subordination Agreement
35
EXHIBIT C-2
FOUNDER'S DEFERRED COMPENSATION ACKNOWLEDGEMENT
The undersigned ("Employee") and SoftCom, Inc., a Delaware
corporation (the "Company"), hereby acknowledge that for employment services
rendered to the Company through 199_, the Company owes Employee $________ in
deferred compensation. Employee agrees that any deferred compensation due
hereunder is subordinate, and junior in right of payment, to the obligation of
the Company to pay any liquidation preference that may be required to be paid to
holders of the Company's Series A Convertible Preferred Stock pursuant to the
rights and preferences thereof as set forth in the Company's certificate of
incorporation and all amounts received hereon after (but not before) any such
payments shall become due and payable to the holders of such Preferred Stock
shall be held in trust for the benefit of such persons and promptly returned to
the Company. Employee further agrees that any deferred compensation due
hereunder shall be paid only after the earlier to occur of (a) the consummation
of the Company's next private equity financing (or series of financings) after
consummation of the offering of the Company's Series A Convertible Preferred
Stock which yields aggregate proceeds to the Company of at least $5,000,000 or
(b) December 31, 2001 (to the extent of any excess cash derived from operations
held by the Company net of reserves for reasonably anticipated needs of the
Company as determined by the Company's Board of Directors in accordance with the
Company's By-laws).
SOFTCOM, INC. Employee:
By:
___________________________ _________________________
Name:
Title:
36
EXHIBIT D
Shareholders Agreement
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EXHIBIT D
SHAREHOLDERS AGREEMENT
THIS SHAREHOLDERS AGREEMENT (this "Agreement"), dated as of
May 14, 1999, by and between SoftCom, Inc., a Delaware corporation (the
"Company") and each of the holders of the Company's capital stock and/or rights
to acquire capital stock signatories hereto (each a "Shareholder" and
collectively, the "Shareholders").
WHEREAS, the Shareholders own in the aggregate (a) all of the
issued and outstanding shares of the Company's Series A Convertible Preferred
Stock, $.001 par value per share (the "Preferred Stock") which they acquired
pursuant to that certain Preferred Stock Purchase Agreement, dated as of May 14,
1999, between the Company and the Shareholders (the "Purchase Agreement"), and
(b) all of the issued and outstanding shares of the Company's common stock, par
value $.001 per share ("Common Stock");
WHEREAS, the term "Shares" shall refer to any and all shares
of capital stock of the Company and securities convertible into or exercisable
for capital stock of the Company, including without limitation, shares of
capital stock of the Company that the Preferred Stock is converted into and for
which options and/or warrants may be exercised, whether now owned or
subsequently acquired by the Shareholders, however acquired, including without
limitation, pursuant to recapitalizations, stock splits and stock dividends; and
WHEREAS, the parties hereto desire to make various agreements
with respect to the transfer and voting of the Shares.
NOW, THEREFORE, in consideration of the foregoing and other
good and valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. Restriction on Transfers.
1.1 No Shareholder shall sell, assign, exchange, encumber,
pledge, transfer, grant an option in respect of, or otherwise dispose of (any of
the foregoing being hereinafter referred to as a "Transfer") any Shares in whole
or in part (other than a Permitted Transfer (as defined below)) except pursuant
to Section 3 hereof.
1.2 Any attempted Transfer of Shares by any Shareholder
contrary to the provisions of this Agreement shall be null and void. In addition
to any other legal or equitable remedies which it may have, the Company may
enforce its rights by actions for specific performance (to the extent permitted
by law) and shall refuse to recognize any prohibited transferee as one of its
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stockholders for any purpose, including without limitation for purposes of
dividend and voting rights, until all applicable provisions hereof have been
complied with.
1.3 For purposes of this Agreement "Permitted Transfer" means
any distribution and/or transfer by a Shareholder to (a) a spouse (other than
pursuant to any divorce or separation proceeding or settlement), parents,
children (natural or otherwise), stepchildren or grandchildren or to a trust for
any of their benefit, (b) a corporation or other entity owned or controlled by
such Shareholder, (c) any other Shareholder, (d) such Shareholder's
stockholders, partners or members, as applicable; provided, that at the request
of the Company such Shareholder shall, prior to making such Permitted Transfer,
enter into a voting trust or other satisfactory voting arrangement for such
shares where such shares shall be voted by a single stockholder, partner or
member, as applicable or (e) any other party in a Sale of Control pursuant to
Section 4 hereof, provided, however that prior to such Permitted Transfer, such
transferee shall agree in writing to be bound by the obligations imposed on the
Shareholder under this Agreement as if such transferee were originally a
signatory to this Agreement.
2. Certain Transfers Prohibited. Each of the Shareholders agree that,
notwithstanding any provision of this Agreement to the contrary, it will not at
any time Transfer or agree to Transfer any Shares to any person or entity
(including any stockholders or equityholders of such entity) that to the
knowledge of the transferring party is engaged in a business or activity
competing with the Company's business as then conducted.
3. Right of First Refusal.
3.1 At any time a Shareholder desires to Transfer (other than
a Permitted Transfer), for cash and/or negotiable promissory notes only, all or
any part of his or its Shares pursuant to a bona fide written offer (which, upon
acceptance by such Shareholder, would constitute a legally binding obligation)
from a third party (the "Proposed Transferee"), such Shareholder (the "Selling
Shareholder") shall first submit a written offer (the "Offer") to sell such
Shares (the "Offered Shares") to the other Shareholders and the Company on
identical terms and conditions, including price, on which the Selling
Shareholder proposes to sell such Offered Shares to the Proposed Transferee. The
Offer shall disclose the identity of the Proposed Transferee, the Offered Shares
proposed to be sold, the total number of Shares owned by the Selling
Shareholder, the terms and conditions, including price, of the proposed sale,
and any other material facts relating to the proposed sale and shall include a
copy of the written offer with the Proposed Transferee. The Offer shall further
state that the other Shareholders and the Company may acquire, in accordance
with the provisions of this Agreement, all, but not less than all of the Offered
Shares for the price and upon the other terms and conditions, including deferred
payment (if applicable), set forth in the Offer.
3.2 Within thirty (30) days following the date on which the
Offer is given, the Shareholders may notify the Selling Shareholder that they
desire to purchase from the Selling Shareholder, upon the terms and conditions
set forth in the Offer, such number of the Offered Shares
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39
as shall equal such Shareholder's percentage of the outstanding Shares of the
Company (or such other number(s) as any other Shareholders may agree inter se).
3.3 The sale of any Offered Shares shall occur forty-five (45)
days following the date on which the Offer was first delivered to the other
Shareholders (or, if such date shall not be a business day, on the next
succeeding business day). Such sale shall be effected by the Selling
Shareholder's delivery to the acquiring Shareholders of certificates evidencing
the Offered Shares purchased, duly endorsed for transfer, against payment to the
Selling Shareholder of the purchase price therefor by such acquiring
Shareholders. The Company hereby agrees to reasonably cooperate with the Selling
Shareholder to issue new certificates to the acquiring Shareholders in exchange
for the Selling Shareholder's certificate.
3.4 If the Shareholders do not elect to purchase all of the
Offered Shares, then the Company shall have the option to purchase all remaining
Offered Shares not so elected to be purchased by the Shareholders on the same
terms and conditions as specified in the Offer. Not later than forty-five (45)
days following the date on which the Offer was first received, the Company may
notify the Selling Shareholder that it desires to purchase from the Selling
Shareholders all of the remaining Offered Shares not previously agreed to be
purchased by the other Shareholders pursuant to Section 3.2 above. If the
Shareholders and the Company do not elect to purchase all of the Offered Shares
then the Shareholders and the Company shall have no right to purchase any of the
Offered Shares, and the Offered Shares may be sold by the Selling Shareholder at
any time within 60 days after the date the Offer was made. Any such sale shall
be to the Proposed Transferee and at not less than the price and upon other
terms and conditions, if any, not more favorable to the Proposed Transferee than
those specified in the Offer. If all such Offered Shares are not sold within
such 60 day period, any subsequent Transfer of such Offered Shares shall again
be subject to the requirements of this Section 3. Any Offered Shares sold or
transferred pursuant to this Agreement shall remain subject to this Agreement
and any such transferee shall agree in writing to be bound by the obligations
imposed upon the Shareholders pursuant to this Agreement as if such transferee
were originally a signatory to this Agreement.
3.5 The Shareholders' right provided in this Section 3 shall
not apply with respect to sales, transfers or exchanges of Shares in conjunction
with the sale of the Company to an unaffiliated third party whether by merger,
consolidation or sale of stock in a transaction in which all of the
Shareholders' Shares are also to be sold or Transferred.
4. Sale of Control.
4.1 Tag-Along. Subject to Section 4.2 below, in the event that
at any time a Shareholder or group of Shareholders propose to Transfer, in any
transaction or series of related transactions, to a third party, or group which
is not a shareholder or consisting primarily of Shareholders, for valuable
consideration Shares consisting of a majority of the then outstanding capital
stock of the Company and a majority of the then outstanding Shares entitled to
vote on any action of the Company (a "Sale of Control"), the Shareholder or
group of Shareholders proposing
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such Sale of Control must first afford the other Shareholders the opportunity to
transfer up to their pro rata percentage of all the outstanding Shares to the
third party on the same terms and conditions governing such Sale of Control
(subject to Section 4.3 below). At least thirty (30) days prior to the scheduled
closing of a Sale of Control, the Shareholder or group of Shareholders proposing
such Sale of Control shall give written notice to the other Shareholders of the
terms and conditions of the Sale of Control. If the other Shareholders desire to
transfer to such third party any of the Shares then owned by such other
Shareholders pursuant to this tag-along right, such other Shareholders shall, at
least fifteen (15) days prior to the scheduled closing of the Sale of Control,
give the Shareholder or group of Shareholders proposing such Sale of Control
written notice of their desire to so transfer Shares (and setting forth the
number of Shares to be transferred) and at the closing of the Sale of Control
the other Shareholders shall transfer, and the Shareholder or group of
Shareholders proposing such Sale of Control shall take such actions necessary to
effectuate such Transfer to the third party such Shares on the same terms and
conditions governing the Sale of Control (subject to Section 4.3 below).
4.2 Bring Along. In the event that a Shareholder or a group of
Shareholders agree to Transfer in a Sale of Control, then the other Shareholders
shall, upon the written request of such transferring Shareholder or group of
Shareholders, also Transfer to such third party a proportionate number of their
Shares on the same terms and conditions pursuant to which such Shareholder or
group of Shareholders have transferred their Shares (subject to Section 4.3
below).
4.3 Pricing. In the event of a sale of Shares pursuant to this
Section 4, the allocation of the aggregate purchase price (and the determination
of the appropriate price per share of each class or series of capital stock)
will be determined by valuing the entire Company at the price per share upon
which the Sale of Control is proposed (or the aggregate purchase price which has
been proposed for the Company, as applicable), and treating the sale as if the
Company had sold all of its assets, had the aggregate purchase price available
for distribution to its stockholders, and distributed such proceeds in
accordance with the terms of the Company's Certificate of Incorporation
(including all Certificates of Designations).
5. Voting of Shares. In any and all elections of members of the Company's Board
of Directors (whether at a meeting or by written consent in lieu of a meeting),
each Shareholder shall vote or cause to be voted (at a meeting or by consent)
all Shares owned by him or it or over which he or it has voting control, in
accordance with, and shall use his or its best efforts otherwise to elect (a)
Xxxxx X'Xxxxx or such other person as may be designated by him to serve in his
stead, or in the event of his death or disability, Xxxxx X'Xxxxx or such other
person as may be designated to serve in his stead (b) Xxxxx X'Xxxxx or such
other person as may be designated by him to serve in his stead, or in the event
of his death or disability, Xxxxx X'Xxxxx or such other person as may be
designated to serve in his stead (c) a nominee of Xxxxx X'Xxxxx and Xxxxx
X'Xxxxx, or in the event of either of their deaths or disability, a nominee of
the survivor, (d) a nominee of Xxxxx X'Xxxxx and Xxxxx X'Xxxxx, reasonably
acceptable to the holders of a majority of all preferred stock of any series
issued by the Company, to serve as an independent member of the Board, or in the
event of either of their deaths or disability, a nominee of the survivor
reasonably acceptable to the holders of a majority of all
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preferred stock of any series issued by the Company, (e) one nominee of the
holders of a majority of all preferred stock of any series issued by the
Company, reasonably acceptable to Xxxxx X'Xxxxx or Xxxxx X'Xxxxx, or in the
event of either of their deaths or disability the survivor, to serve as an
independent member of the board, (f) one nominee of PS Capital Ventures, LP and
(g) one nominee of Xxxxxxxx & Co., Ltd. Notwithstanding any provision of the
By-laws to the contrary, any Shareholder(s) entitled to designate a person to
serve as a member of the Board may remove such person, with or without cause and
the other Shareholders agree to cooperate as may be necessary to effect such
removal.
Following the consummation of the sale of the Preferred Stock
the Shareholders agree that the board shall consist of the following members:
Xxxxx X'Xxxxx, Xxxxx X'Xxxxx, Xxxx Xxxxxxxxx (as nominee pursuant to (d) above),
Xxxxx Xxxxxxxx (as nominee pursuant to (g) above), Xxx Xxxxx (as nominee
pursuant to (e) above), Xxxxx Xxxxx (as nominee pursuant to (c) above), and
Xxxxxx Xxxxxxxx (as nominee pursuant to (f) above).
6. Termination. This Agreement shall terminate in its entirety (a) on the
closing of the Company's initial public offering pursuant to an effective
registration statement under the Securities Act of 1933, as amended, covering
the offer and sale of capital stock for the account of the Company to the public
with net proceeds to the Company of not less than $10,000,000, (b) upon the
consummation of a Sale of Control pursuant to Section 4 hereof or (c) upon the
vote of a majority of the holders of shares of Common Stock and Preferred Stock
each voting as a separate class.
7. No Revocation. The voting agreements contained herein are coupled with an
interest and may not be revoked.
8. Restrictive Legend. So long as any Shares are subject to the provisions
hereof, all certificates representing Shares owned or hereafter acquired by any
Shareholder or any transferee thereof bound by this Agreement shall bear the
following legend:
(i) "These securities have not been registered under the
Securities Act of 1933, as amended. They may not be sold, offered for sale,
pledged or hypothecated in the absence of a registration statement in effect
with the respect to the securities under such Act or an opinion of counsel
satisfactory to the Company that such registration is not required or unless
sold pursuant to Rule 144 of such Act."
(ii) "The Shares evidenced hereby are subject to a
Shareholders Agreement (a copy of which may be obtained upon written request
from the Company), and by accepting any interest in such Shares the person
accepting such interest shall be deemed to agree to and shall become bound by
all the provisions of said Shareholders Agreement."
9. Amendment to By-Laws. Article IX of the Company's By-laws shall only be
amended or repealed by the stockholders of the Company upon the vote of (i) a
majority of the outstanding Common Stock and (ii) holders of 66 2/3% of the
Preferred Stock; provided, however, that the
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Shareholders hereby consent to all such amendments to Article IX to the extent
recommended or approved by five out of seven directors (or as similar a
percentage as possible if the board of directors consists of a greater or lesser
number of directors).
10. Provisions of General Application.
10.1 Severability. If any of the terms, provisions, or
conditions of this Agreement or the application thereof in any circumstances
shall, to any extent, be invalid or unenforceable, the remainder of this
Agreement and the application of such term, provision, or condition to
circumstances other than those to which it is held invalid or unenforceable
shall not be affected thereby, and each of the terms, provisions and conditions
of this Agreement shall be valid and enforceable to the fullest extent permitted
by law.
10.2 Entire Agreement. This Agreement constitutes the entire
agreement among the parties pertaining to the subject matter hereof and
supersedes all prior and contemporaneous agreements and understandings of the
parties.
10.3 Successors and Assigns. This Agreement shall be binding
upon, and shall inure to the benefit of, the parties hereto and the respective
successors and permitted assigns of each of them, so long as they hold Shares.
10.4 Remedies. The parties stipulate that money damages may
not be an adequate remedy for any actual, apparent, or attempted breach of the
provisions of this Agreement and that any party may apply to any court of law or
equity of competent jurisdiction for specific performance and/or injunctive
relief in order to remedy or prevent any actual, apparent, or attempted
violation of this Agreement.
10.5 Notices. Any notice or other communication required or
which may be given hereunder shall be in writing and shall be delivered
personally, telegraphed, telexed, sent by facsimile transmission, or by
overnight courier, certified, registered, or express mail, postage or fees
prepaid, and shall be deemed given when so delivered personally, telegraphed,
telexed, sent by facsimile transmission or by overnight courier or express mail
service or, if mailed, four days after the date of mailing to the address set
forth on the signature page hereto. The parties hereto may, by notice given in
accordance with this Section, change their addresses and transmission numbers
for notices.
10.6 Governing Law. This Agreement shall be governed by and
construed and interpreted in accordance with the laws of the State of New York
without regard to any choice of law rules that would require or permit the
application of the laws of any other jurisdiction.
10.7 Descriptive Headings. The subject headings of the
sections of this Agreement are included for purposes of convenience only, and
shall not affect the construction or interpretation of any of its provisions.
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10.8 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.9 Amendments. This Agreement may be amended upon the vote
of a majority of the holders of shares of Common Stock and Preferred Stock each
voting as a separate class; provided, that no amendment shall adversely affect
any person or entity's rights hereunder unless such person or entity has
approved such amendment.
10.10 Additional Shareholders. Pursuant to Section 1.4 of the
Purchase Agreement, at any time on or before May 19, 1999, the Company may sell
up to an aggregate of 5,769,231 shares of Preferred Stock (including shares sold
on the date hereof) to "New Investors" (as defined in the Purchase Agreement).
In addition, the Purchase Agreement provides for the sale by the Company after
May 19, 1999 to a New Investor of up to an additional 641,026 shares of
Preferred Stock, subject to certain limitations provided in the Purchase
Agreement. If a New Investor purchases shares of Preferred Stock as provided in
the Purchase Agreement, it shall, as a condition to such purchase, execute and
deliver a counterpart of this agreement and thereafter shall be deemed to be a
"Shareholder" for all purposes under this Agreement.
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IN WITNESS WHEREOF, the undersigned have executed this
Shareholders Agreement on the date first above written.
SOFTCOM, INC.
By:
Name: Xxxxx X'Xxxxx
Title: Chief Executive Officer
Buyer:
Address for Notice:
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Name: Xxxxx X'Xxxxx
Address for Notice:
Name: Xxxxx X'Xxxxx
Address for Notice:
Name: Xxxxx X'Xxxxx
Address for Notice:
Name: Xxxx X'Xxxxx
Address for Notice:
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Name: Xxxxx Xxxxxxxxxxxx
Address for Notice:
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EXHIBIT E
Founder Non-Compete Agreements
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EXHIBIT E
CONFIDENTIALITY, INVENTIONS AND NONCOMPETE AGREEMENT
CONFIDENTIALITY, INVENTIONS AND NONCOMPETE AGREEMENT (this
"Agreement"), dated as of May 14, 1999, made by ____________________________
("Employee") in favor of SoftCom, Inc., a Delaware corporation (the "Company").
BACKGROUND
It is recognized by the undersigned Employee that the
day-to-day performance of his or her duties while in the employment of the
Company is likely to give or require access to confidential Company records and
sources of information and to bring him or her into contact with others engaged
in confidential work for the Company. It is further recognized by the Employee
that by reason of being employed by the Company, he or she may create or develop
intellectual property (including inventions, ideas, discoveries, trade secrets
and copyrightable works) resulting from or arising out of the work performed by
the undersigned within the scope of his or her responsibilities, or with the
Company's facilities, equipment or supplies, or in connection with or resulting
from his or her use or knowledge of confidential or trade secret information
which is proprietary to the Company.
NOW, THEREFORE, in consideration of employment by the Company
and of prospective assignments to work on confidential matters which Employee
acknowledges is sufficient consideration for this Agreement, Employee agrees to
the following continuing obligations:
1. Confidentiality. During the period of Employee's
employment with the Company, Employee agrees, except in the course of Employee's
duties on behalf of the Company:
(a) to keep secret and treat confidentially all
confidential information of the Company pertaining to Company customers and
prospective customers, customer requirements, customer financial information,
and other such confidential information compiled or maintained internally by the
Company concerning its customers and prospective customers; and
(b) to keep secret and treat confidentially all
confidential information of the Company pertaining to Company products, costs,
marketing plans and contemplated activities, financial matters, research and
development, production, engineering, product design, and other such
confidential information compiled or maintained internally by the Company
concerning its business, operations and activities; by way of illustration, but
not limitation, confidential information includes inventions, processes,
formulae, data, computer programs (whether in source or object code form) and
all information relating to programs now existing or under development, computer
program listings, know-how, improvements, discoveries, developments, designs,
techniques, marketing plans, strategies, forecasts, new products, unpublished
financial statements, budgets, projections, licenses,
49
prices, costs, customer and supplier lists and compilations of information.
Confidential information does not include information (i) known to the Employee
prior to employment by the Company and not used in connection with the Company's
business, (ii) received from a third party not in connection with or as a result
of, or used in connection with, the undersigned's employment by the Company, or
(iii) which is or becomes generally known to the public (other than through a
breach of this agreement or any other obligation of confidentiality to the
Company).
2. Confidentiality Upon Termination. Upon termination
of Employee's employment with the Company, whether voluntary or involuntary and
for whatever reason, Employee agrees:
(a) to promptly return to the Company any and all
documents made or obtained by Employee in the course of his or her employment
pertaining to or containing any of the confidential information of the Company
referred to in Section 1 above; and
(b) to keep confidential and to make no written
record of confidential information of the Company referred to in Section 1
above, and to make no use or disclosure thereof.
3. Confidential Relationship. Employee acknowledges
that this Agreement provides notice that the Company regards it to be vital to
its interest that its confidential information and trade secrets be safeguarded
by its employees. Employee understands that this Agreement establishes a
confidential relationship between Employee and the Company, and that Employee
has a duty under the law not to breach the confidential relationship by using or
disclosing Company confidential information and trade secrets. Employee further
understands that the Company relies upon Employee honoring such duty of
confidence when the Company entrusts Employee with access to Company
confidential information and trade secrets.
4. Invention Disclosure and Assignment.
4.1 During the period of Employee's employment with
the Company, Employee agrees to report to the Company fully and promptly in
writing, all intellectual property (including inventions, ideas and discoveries,
patentable or unpatentable, trade secrets and copyrightable works) which is
made, developed, conceived or reduced to practice by Employee either solely or
jointly with others resulting from or arising out of the work performed by
Employee, within the scope of his or her responsibilities, or with the Company's
facilities, equipment or supplies, or in connection with or which results from
his or her use or knowledge of confidential or trade secret information which is
proprietary to the Company.
4.2 Upon termination of Employee's employment with
the Company, and for a period of eighteen (18) months after termination,
Employee agrees to report to the Company fully and promptly in writing, all
intellectual property (including inventions, ideas and discoveries, patentable
or unpatentable, trade secrets and copyrightable works) which is reduced to
practice by Employee either solely or jointly with others, reasonably resulting
from the work performed by
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Employee during employment by the Company within the scope of his or her
responsibilities, or with the Company's facilities, equipment or supplies, or in
connection with or which results from his or her use or knowledge of
confidential or trade secret information which is proprietary to the Company.
4.3 Employee agrees to hold all such intellectual property
described in this Section 4 for the benefit of the Company and not to assign nor
attempt to assign any rights therein to anyone other than the Company.
4.4 Employee agrees to assign to the Company upon its request
and without further compensation all rights, title and interest in such
intellectual property described in this Section 4 to which the Company is
entitled as set forth in this Section 4, at any time whether during or
subsequent to his or her period of said employment. Employee agrees to execute
and deliver in a prompt manner all proper documents provided by the Company and
presented to Employee including those necessary and attendant to domestic and
foreign patent applications including but not limited to divisional,
continuation, continuation-in-part, substitute and/or reissue applications, and
all other instruments for the perfection of intellectual property rights
including related registrations of issued patents, design patent applications
and registrations, applications for utility models and industrial models and
copyrights, as well as formal assignments thereof. The Company will pay all
reasonable out-of-pocket expenses incurred by Employee in perfecting the
Company's rights as they relate to assisting the Company in all proper ways in
the acquisition and preservation of the fights to such intellectual property as
described in this subsection 4.4.
4.5 Employee covenants that there are no unpatented
inventions, discoveries, ideas or information currently held by Employee which
are to be outside the scope of this agreement.
5. Non-Competition; Non-Solicitation.
5.1 During the period of Employee's employment with the
Company and for a period of eighteen (18) months after the termination or
expiration thereof for any reason, the Employee will not directly or indirectly:
(a) as an individual proprietor, partner,
stockholder, officer, employee, director, joint venturer, investor, lender, or
in any other capacity whatsoever (other than as the holder of not more than two
percent (2%) of the total outstanding stock of a publicly held company), and in
any city, county, state or other geographic area where the Company is then
marketing or selling its products or providing services, engage in the business
of developing, producing, marketing or selling products or providing services of
the kind or type developed or being developed, produced, marketed, sold or
provided by the Company while Employee was employed by the Company; or
(b) recruit, solicit, hire or induce, or attempt to
recruit, solicit, hire or induce, any employee or employees of the Company to
terminate their employment with, or otherwise cease their relationship with, the
Company; or
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(c) solicit, divert or take away, or attempt to
solicit, divert or to take away, the business or patronage of any of the
clients, customers or accounts, or prospective clients, customers or accounts,
of the Company which were contracted, solicited or served by the Employee while
employed by the Company.
5.2 If any restriction set forth in this Section 5 is found by
any court of competent jurisdiction to be unenforceable because it extends for
too long a period of time or over too great a range of activities or in too
broad a geographic area, it shall be interpreted to extend only over the maximum
period of time, range of activities or geographic area as to which it may be
enforceable.
5.3 The restrictions contained in this Section 5 are necessary
for the protection of the business and goodwill of the Company and are
considered by Employee to be reasonable for such purpose. In addition, Employee
acknowledges that Employee's education, background, skills, and experience are
such that the enforcement of the restrictions in this Section 5 will not
unreasonably interfere with Employee's ability to earn a living.
6. Miscellaneous. (a) All of the covenants and provisions
herein contained are severable; in the event that any of said covenants or
provisions shall be held by any court of competent jurisdiction to be invalid or
unenforceable, this agreement shall be construed as if any such invalid or
unenforceable covenant or provision were not herein contained. In addition to
any other available remedies in enforcing this agreement, the Company shall be
entitled to injunctive relief. No delay or omission by the Company in exercising
any right under this agreement shall operate as a waiver of that or any other
right. A written waiver or consent given by the Company on any one occasion
shall be effective only in that instance and shall not be construed as a bar or
waiver of any right on any other occasion.
(b) This Agreement shall be governed by and construed
in accordance with the laws of the State of New York. Employee agrees that
notwithstanding Employee's place of residence at the time of or subsequent to
any breach by undersigned of this agreement, that he or she shall be subject to
suit in the New York State or Federal court located in or having jurisdiction
over agreements entered into in New York County, New York.
IN WITNESS WHEREOF, the undersigned has executed this
Confidentiality, Inventions and Noncompete Agreement as of the day and year
first above written.
Employee:
----------------------------------
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EXHIBIT F
Amendment to By-laws
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EXHIBIT F
AMENDMENTS TO THE BY-LAWS OF
SOFTCOM, INC. EFFECTIVE AS OF MAY 14, 1999
1. Article III, Section 8 of the By-laws is hereby amended by deleting the
word "of" after the word "meetings" in the first line thereof.
2. Article III, Section 8 of the By-laws is hereby further amended by
adding at the end of the first sentence thereof the following:
"or by another Article or Section of these by-laws."
3. Article VI, Section 4 of the By-laws is hereby amended by deleting
everything after the first sentence thereof.
4. The By-laws are hereby amended by adding a new Article IX at the end
thereof as follows:
ARTICLE IX
SUPER MAJORITY BOARD VOTING; APPROVAL
Section 1. Notwithstanding anything to the contrary contained elsewhere in these
by-laws, the following actions may only be taken by the corporation if approved
by five out of seven directors (or as similar a percentage as possible if the
board of directors consists of a greater or lesser number of directors) at a
meeting of directors held pursuant to the other provisions of these by-laws:
(a) approval and adoption of the annual budget of the corporation;
(b) any change (including any termination, replacement or creation of a
new position) in senior management of the corporation, involving the
office of the President, any Vice President, the Treasurer or Secretary
of the Corporation;
(c) any sale or other issuance of any debt securities by the
corporation;
(d) any transaction or series of related transactions, outside the
ordinary course of the corporation's business, resulting in obligations
of $50,000 with the same party or group of related or affiliated
parties (whether or not part of any approved budget);
(e) any issuance of any of the corporation's capital stock at a price
below the fair market value of such capital stock on the date of such
issuance (as such fair market value is determined, in good faith, by
the directors);
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(f) increasing the size of the board of directors to a number greater
than seven;
(g) any offer or issuance of securities of the corporation pursuant to
a public offering;
(h) any transaction with any party or entity related to or affiliated
with any member of the corporation's board of directors;
(i) any adoption of, or reservation of shares for awards under any new
stock option or other stock-based incentive plan (not in existence or
awarded as of May 14, 1999);
(j) prepayment of any amount of that certain Promissory Note, dated May
14, 1999, made by the Corporation in favor of Xxxxx X'Xxxxx (the
"O'Brien Note");
(k) calculation of reserves from excess cash derived from operations
held by the Corporation for purposes of payments on the O'Brien Note
and payments of deferred compensation owed to Xxxxx X'Xxxxx and Xxxxx
X'Xxxxx; and
(l) any amendment to this Section 1 of this Article IX.
Section 2. Notwithstanding anything to the contrary contained elsewhere in these
by-laws, and in addition to the restrictions set forth in Section 1 of this
Article IX, any transaction or series of related transactions, outside the
ordinary course of the corporation's business, resulting in obligations to one
party (or a group of related or affiliated parties) of $25,000 or more shall be
required to be approved by the President or Chief Executive Officer, the
Chairman of the board of directors and the Chief Technology Officer (to the
extent such positions then exist).
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EXHIBIT G
Preferred Stock Purchase Warrant
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EXHIBIT G
THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES WHICH MAY BE
ISSUED UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED OR ANY STATE SECURITIES OR BLUE SKY
LAWS. NO SALE OR DISTRIBUTION HEREOF OR THEREOF MAY BE EFFECTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN
OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED.
--------------------------------------------------------------------------------
Warrant No. W-1 Date of Issuance: May 14, 1999
SOFTCOM, INC.
Preferred Stock Purchase Warrant
SoftCom, Inc. (the "Company"), for value received, hereby certifies
that ___________________________, or its registered assigns (the "Registered
Holder"), is entitled, subject to the terms set forth below, to purchase from
the Company, at any time after the date hereof and on or before the Expiration
Date (as defined in Section 5 below) upon surrender of this warrant up to
________ shares (subject to adjustment as described herein) of Series A
Convertible Preferred Stock of the Company ("Preferred Stock"), at an exercise
price per share equal to $.39. The shares of Preferred Stock purchasable upon
exercise of this Warrant, and the purchase price per share shall be adjusted
from time to time pursuant to the provisions of this Warrant and are hereinafter
referred to as the "Warrant Stock" and the "Purchase Price," respectively.
1. Exercise.
1.1 Manner of Exercise. This Warrant may be exercised by the
Registered Holder, in whole or in part, by surrendering this Warrant, with the
purchase form appended hereto as Exhibit A duly executed by such Registered
Holder or by such Registered Holder's duly authorized attorney, at the principal
office of the Company, or at such other office or agency as the Company may
designate, accompanied by payment in full of the Purchase Price payable in
respect of the number of shares of Warrant Stock purchased upon such exercise.
The Purchase Price may be paid by cash, check, wire transfer or other
immediately available funds.
1.2 Net Issue Exercise. In lieu of exercising this Warrant in the
manner provided above in Section 1.1, the Registered Holder may elect to receive
shares equal to the value of this Warrant (or the portion thereof being
cancelled) by surrender of this Warrant at the principal office of the Company
together with notice of such election in which event the Company shall issue to
such Holder a number of shares of Warrant Stock computed using the following
formula:
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X= Y(A-B)
------
A
Where X= The number of shares of Warrant Stock to be issued to the Registered
Holder.
Y= The number of shares of Warrant Stock purchasable under this Warrant
(at the date of such calculation).
A= The fair market value of one share of Warrant Stock (at the date of
such calculation).
B= The Purchase Price (as adjusted to the date of such calculation).
(a) For purposes of this Section 1.2, the fair market value of Warrant
Stock on the date of calculation shall mean with respect to each share of
Warrant Stock:
(i) if the exercise is in connection with an initial public
offering of the Company's common stock, and if the Company's Registration
Statement relating to such public offering has been declared effective by the
Securities and Exchange Commission, then the fair market value per share shall
be the product of (A) the initial "Price to Public" specified in the final
prospectus with respect to the offering and (B) the number of shares of
Preferred Stock into which each share of Warrant Stock is convertible at the
date of calculation; and
(ii) if (i) above is not applicable, the fair market value of
Warrant Stock shall be at the highest price per share which the Company could
obtain on the date of calculation from a willing buyer (not a current employee
or director) for shares of Warrant Stock sold by the Company, from authorized
but unissued shares, as determined in good faith by the Board of Directors.
1.3 Effective Time of Exercise. Each exercise of this Warrant shall
be deemed to have been effected immediately prior to the close of business on
the day on which this Warrant shall have been surrendered to the Company as
provided above. At such time, the person or persons in whose name or names any
certificate(s) for Warrant Stock shall be issuable upon such exercise as
provided in Section 1.4 below shall be deemed to have become the holder or
holders of record of the Warrant Stock represented by such certificates.
1.4 Delivery to Holder. As soon as practicable after the exercise
of this Warrant in whole or in part, and in any event within fifteen (15) days
thereafter, the Company at its expense will cause to be issued in the name of,
and delivered to, the Registered Holder, or as such Holder (upon payment by such
Holder of any applicable transfer taxes) may direct:
(a) a certificate or certificates for the number of shares of
Warrant Stock to which such Registered Holder shall be entitled; and
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(b) in case such exercise is in part only, a new warrant (dated
the date hereof) of like tenor for the remaining Warrant Stock not so purchased.
2. Adjustments
2.1 Redemption or Conversion of Preferred Stock. If all of the
Preferred Stock underlying this Warrant shall become converted into shares of
Common Stock, then this Warrant shall automatically become exercisable for that
number of shares of Common Stock equal to the number of shares of Common Stock
that would have been received if this Warrant had been exercised in full and the
shares of Preferred Stock received thereupon had been simultaneously converted
into shares of Common Stock immediately prior to such event, and the Exercise
Price shall be automatically adjusted to equal the number obtained by dividing
(a) the aggregate Purchase Price of the shares of Preferred Stock for which this
Warrant was exercisable immediately prior to such redemption or conversion, by
(b) the number of shares of Common Stock for which this Warrant is exercisable
immediately after such redemption or conversion.
2.2 Stock Splits and Dividends. If outstanding shares of the
Company's Preferred Stock or Common Stock (depending on the class of stock for
which this warrant is then exercisable) shall be subdivided into a greater
number of shares or a dividend in Preferred Stock or Common Stock, as
applicable, shall be paid in respect of Preferred Stock or Common Stock, the
Purchase Price in effect immediately prior to such subdivision or at the record
date of such dividend shall simultaneously with the effectiveness of such
subdivision or immediately after the record date of such dividend be
proportionately reduced. If outstanding shares of Preferred Stock or Common
Stock, as applicable, shall be combined into a smaller number of shares, the
Purchase Price in effect immediately prior to such combination shall,
simultaneously with the effectiveness of such combination, be proportionately
increased. When any adjustment is required to be made in the Purchase Price, the
number of shares of Warrant Stock purchasable upon the exercise of this Warrant
shall be changed to the number determined by dividing (a) an amount equal to the
number of shares issuable upon the exercise of this Warrant immediately prior to
such adjustment, multiplied by the Purchase Price in effect immediately prior to
such adjustment, by (b) the Purchase Price in effect immediately after such
adjustment.
2.3 Reclassification, Etc. In case there occurs any
reclassification or change of the outstanding securities of the Company or of
any reorganization of the Company (or any other corporation the stock or
securities of which are at the time receivable upon the exercise of this
Warrant) or any similar corporate reorganization on or after the date hereof,
then and in each such case the Registered Holder, upon the exercise hereof at
any time after the consummation of such reclassification, change, or
reorganization shall be entitled to receive, in lieu of the stock or other
securities and property receivable upon the exercise hereof prior to such
consummation, the stock or other securities or property to which such Holder
would have been entitled upon such consummation if such Holder had exercised
this Warrant immediately prior thereto, all subject to further adjustment
pursuant to the provisions of this Section 2.
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2.4 Adjustment Certificate. When any adjustment is required to be
made in the Warrant Stock or the Purchase Price pursuant to this Section 2, the
Company shall promptly mail to the Registered Holder a certificate setting forth
(a) a brief statement of the facts requiring such adjustment, (b) the Purchase
Price after such adjustment and (c) the kind and amount of stock or other
securities or property into which this Warrant shall be exercisable after such
adjustment.
3. Transfers.
3.1 Unregistered Security. Each Holder of this Warrant acknowledges
that this Warrant and the Warrant Stock have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), and each Holder
agrees not to sell, pledge, distribute, offer for sale, transfer or otherwise
dispose of this Warrant or any Warrant Stock issued upon its exercise in the
absence of (a) an effective registration statement under the Act as to this
Warrant or such Warrant Stock and registration or qualification of this Warrant
or such Warrant Stock under any applicable Federal or state securities law then
in effect, or (b) an opinion of counsel, satisfactory to the Company, that such
registration and qualification are not required. Each certificate or other
instrument for Warrant Stock issued upon the exercise of this Warrant shall bear
a legend substantially to the foregoing effect.
3.2 Transferability. Subject to the provisions of Section 3.1
hereof, this Warrant and all rights hereunder are transferable, in whole or in
part, upon surrender of the Warrant with a properly executed assignment at the
principal office of the Company.
3.3 Warrant Register. The Company will maintain a register
containing the names and addresses of the Registered Holders of this Warrant.
Until any transfer of this Warrant is made in the warrant register, the Company
may treat the Registered Holder of this Warrant as the absolute owner hereof for
all purposes; provided, however, that if this Warrant is properly assigned in
blank, the Company may (but shall not be required to) treat the bearer hereof as
the absolute owner hereof for all purposes, notwithstanding any notice to the
contrary. Any Registered Holder may change such Registered Holder's address as
shown on the warrant register by written notice to the Company requesting such
change.
4. No Impairment. The Company will not, by amendment of its charter or
through reorganization, consolidation, merger, dissolution, sale of assets or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all such action as
may be necessary or appropriate in order to protect the rights of the holder of
this Warrant against impairment.
5. Termination. This Warrant (and the right to purchase Warrant Stock
upon exercise hereof) shall terminate, to the extent then unexercised, upon the
date five (5) years after the date of issuance of this Warrant (the "Expiration
Date").
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6. Notices of Certain Transactions. In case:
6.1 the Company shall take a record of the holders of its Preferred
Stock or Common Stock (or other stock or securities at the time deliverable upon
the exercise of this Warrant) for the purpose of entitling or enabling them to
receive any dividend or other distribution, or to receive any right to subscribe
for or purchase any shares of stock of any class or any other securities, or to
receive any other right, to subscribe for or purchase any shares of stock of any
class or any other securities, or to receive any other right; or
6.2 of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation or
merger of the Company, any consolidation or merger of the Company with or into
another corporation (other than a consolidation or merger in which the Company
is the surviving entity), or any transfer of all or substantially all of the
assets of the Company; or
6.3 of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company; or
6.4 of any automatic conversion of the Preferred Stock into Common
Stock of the Company,
then, and in each such case, the Company will mail or cause to be mailed to the
Registered Holder of this Warrant a notice specifying, as the case may be, (a)
the date on which a record is to be taken for the purpose of such dividend,
distribution or right, and stating the amount and character of such dividend,
distribution or right, or (b) the effective date on which such reorganization,
reclassification, consolidation, merger, transfer, dissolution, liquidation,
winding-up or conversion is to take place, and the time, if any is to be fixed,
as of which the holders of record of Preferred Stock or Common Stock (or such
other stock or securities at the time deliverable upon such reorganization,
reclassification, consolidation, merger, transfer, dissolution, liquidation,
winding-up or conversion) are to be determined. Such notice shall be mailed at
least ten (10) days prior to the record date or effective date for the event
specified in such notice.
7. Reservation of Stock. The Company will at all times reserve and keep
available, solely for the issuance and delivery upon the exercise of this
Warrant, such shares of Warrant Stock and other stock, securities and property,
as from time to time shall be issuable upon the exercise of this Warrant.
8. Exchange of Warrants. Upon the surrender by the Registered Holder of
any Warrant or Warrants, properly endorsed, to the Company at the principal
office of the Company, the Company will, subject to the provisions of Section 3
hereof, issue and deliver to or upon the order of such Holder, at the Company's
expense, a new Warrant or Warrants of like tenor, in the name of such Registered
Holder or as such Registered Holder (upon payment by such Registered Holder of
any applicable transfer taxes) may direct, calling in the aggregate on the face
or faces thereof for the
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61
number of shares of Warrant Stock called for on the face or faces of the Warrant
or Warrants so surrendered.
9. Replacement of Warrants. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and (in the case of loss, theft or destruction) upon delivery of
any indemnity agreement (with surety if reasonably required) in an amount
reasonably satisfactory to the Company, or (in the case of mutilation) upon
surrender and cancellation of this Warrant, the Company will issue, in lieu
thereof, a new Warrant of like tenor.
10. Mailing of Notices. Any notice required or permitted pursuant to
this Warrant shall be in writing and shall be deemed sufficient upon receipt,
when delivered personally or sent by courier, overnight delivery service or
confirmed facsimile, or three (3) business days after being deposited in the
regular mail, as certified or registered mail (airmail if sent internationally),
with postage prepaid, addressed (a) if to the Registered Holder, to the address
of the Registered Holder most recently furnished in writing to the Company and
(b) if to the Company, to the address set forth below or subsequently modified
by written notice to the Registered Holder.
11. No Rights as Stockholder. Until the exercise of this Warrant, the
Registered Holder of this Warrant shall not have or exercise any rights by
virtue hereof as a stockholder of the Company.
12. No Fractional Shares. No fractional shares of Warrant Stock will be
issued in connection with any exercise hereunder. In lieu of any fractional
shares which would otherwise be issuable, the Company shall pay cash equal to
the product of such fraction multiplied by the fair market value of one share of
Warrant Stock received on the date of exercise, as determined in good faith by
the Company's Board of Directors.
13. Amendment or Waiver. Any term of this Warrant may be amended or
waived only in a written instrument executed by the Company and the Registered
Holder.
14. Headings. The headings in this Warrant are for purposes or
reference only and shall not limit or otherwise affect the meaning of any
provision of this Warrant.
15. Governing Law. This Warrant shall be governed, construed and
interpreted in accordance with the laws of the State of New York, without giving
effect to principles of conflicts of law.
[Signature Page Follows]
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IN WITNESS WHEREOF, the undersigned has executed this
Preferred Stock Purchase Warrant on the date first above written.
SOFTCOM, INC.
By: ______________________________________
Name: Xxxxx X'Xxxxx
Title: Chief Executive Officer
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EXHIBIT A
PURCHASE FORM
Dated: _________________
To: SoftCom, Inc.
The undersigned, pursuant to the provisions set forth in the attached
Warrant No. __, hereby irrevocably elects to purchase shares of the Preferred
Stock or Common Stock covered by such Warrant and herewith makes payment of
$______, representing the full purchase price for such shares at the price per
share provided for in such Warrant.
The undersigned acknowledges that it has reviewed the representations
and warranties contained in Section 2.2 of the Preferred Stock Purchase
Agreement, dated as of May __, 1999, between SoftCom, Inc. and the other
investors signatures thereto (the "Purchase Agreement"), and by its signature
below hereby makes such representations and warranties to the Company, effective
as of the date written above. Defined terms contained in such representations
and warranties shall have the meanings assigned to them in the Purchase
Agreement provided that the term "Buyer" shall refer to the undersigned and the
term "Shares" shall refer to the Warrant Stock received upon exercise of the
Warrant.
Signature: _______________________________
Name (print): ____________________________
Title (if applicable): ___________________
Company (if applicable): _________________
