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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
</TABLE>
COMMISSION FILE NUMBER: 0-27470
---------------------------
CYBERCASH, INC.
(Exact name of registrant as specified in its charter)
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<S> <C>
DELAWARE 54-1725021
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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2100 RESTON PARKWAY, RESTON, VA 22091
(Address of principal executive offices, including zip code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (703) 620-4200
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No ____
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
<TABLE>
<S> <C>
COMMON STOCK, $0.001 PAR VALUE 10,899,449 SHARES
(CLASS) (OUTSTANDING AT JUNE 30, 1997)
</TABLE>
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TABLE OF CONTENTS
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PAGE NO.
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PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Statements of Operations for the three and six months ended
June 30, 1997 and 1996................................................ 2
Consolidated Balance Sheets as of June 30, 1997 and December 31, 1996... 3
Consolidated Statements of Cash Flows for the six months ended June 30,
1997 and 1996......................................................... 4
Notes to Consolidated Financial Statements.............................. 5
Item 2. Management's Discussion and Analysis of Financial Conditions and Results
of Operations......................................................... 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings....................................................... 10
Item 2. Changes in Securities................................................... 10
Item 3. Defaults upon Senior Securities......................................... 10
Item 4. Submission of Matters to a Vote of Security-Holders..................... 10
Item 5. Other Information....................................................... 10
Item 6. Exhibits and Reports on Form 8-K........................................ 11
Signatures.............................................................. 12
</TABLE>
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PART I -- FINANCIAL INFORMATION
ITEM I. CONSOLIDATED FINANCIAL STATEMENTS
CYBERCASH, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------- -------------------------------
1997 1996 1997 1996
----------- ----------- ------------ ----------------
<S> <C> <C> <C> <C>
Revenues................................. $ 812,361 $ 16,086 $ 967,756 $ 37,705
Costs and expenses:
Research and development............... 2,971,813 3,915,326 6,483,199 6,761,790
Sales and marketing.................... 2,824,716 2,111,687 5,285,058 3,258,126
General and administrative............. 1,650,783 916,042 3,261,479 1,931,713
Write-off of NetBill technology
license............................. -- -- 2,162,500 --
----------- ----------- ------------ ------------
Loss from operations..................... (6,634,951) (6,926,969) (16,224,480) (11,913,924)
Interest and other income................ 311,403 705,947 693,366 1,078,033
----------- ----------- ------------ ------------
Net loss................................. $(6,323,548) $(6,221,022) $(15,531,114) $(10,835,891)
=========== =========== ============ ============
Net loss per share....................... $ (0.58) $ (0.59) $ (1.44) $ (1.28)
=========== =========== ============ ============
Weighted average shares outstanding...... 10,888,088 10,633,569 10,810,106 8,467,357
=========== =========== ============ ============
</TABLE>
See accompanying notes.
2
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CYBERCASH, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents....................................... $ 19,592,353 $ 33,687,076
Restricted cash................................................. 250,000 250,000
Accounts receivable............................................. 1,314,362 151,765
Prepaid expenses and other current assets....................... 629,366 694,062
------------ ------------
Total current assets.................................... 21,786,081 34,782,903
Property and equipment, net....................................... 5,233,972 5,629,664
Investment in affiliates.......................................... 82,645 --
Other long-term assets............................................ 623,327 637,514
------------ ------------
Total assets............................................ $ 27,726,025 $ 41,050,081
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable................................................ $ 588,607 $ 1,263,923
Accrued bonus and employee benefits............................. 629,200 1,067,025
Other accrued expenses.......................................... 541,055 519,647
Deferred revenue................................................ 555,511 90,000
------------ ------------
Total current liabilities............................... 2,314,373 2,940,595
Commitments
Stockholders' equity:
Common Stock, $.001 par value; 25,000,000 shares authorized;
10,919,449 shares issued and 10,899,449 outstanding as of
June 30, 1997 and 10,732,262 issued and 10,712,262
outstanding as of
December 31, 1996............................................ 10,919 10,732
Class A Warrants................................................ 32,500 --
Additional paid-in capital...................................... 79,919,064 77,201,462
Accumulated deficit............................................. (53,245,544) (37,714,430)
Treasury stock, at cost, 20,000 shares.......................... (120,000) (120,000)
Foreign currency translation.................................... (112,559) (87,569)
Receivable from sale of Common Stock............................ (844,629) (820,233)
Unearned compensatory stock options............................. (228,099) (360,476)
------------ ------------
Total stockholders' equity.............................. 25,411,652 38,109,486
------------ ------------
Total liabilities and stockholders' equity.............. $ 27,726,025 $ 41,050,081
=========== ===========
</TABLE>
See accompanying notes.
3
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\
CYBERCASH, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
---------------------------
1997 1996
------------ ------------
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OPERATING ACTIVITIES
Net loss.......................................................... $(15,531,114) $(10,835,891)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation.................................................... 1,193,915 518,495
Write-off of NetBill technology license......................... 2,162,500 --
Accrued interest on receivable from sale of common stock........ (24,396) (33,624)
Compensation expense related to stock options................... 87,792 105,090
Changes in operating assets and liabilities:
Accounts receivable.......................................... (1,162,597) (24,869)
Prepaid expenses and other current assets.................... 64,696 (382,315)
Other long term assets....................................... 14,187 --
Accounts payable and accrued expenses........................ (1,091,733) 1,708,787
Deferred revenue............................................. 465,511 --
------------ ------------
Net cash used in operating activities............................. (13,821,239) (8,944,327)
INVESTING ACTIVITIES
Investment in affiliate........................................... (82,645) --
Purchases of property and equipment............................... (798,223) (3,091,368)
------------ ------------
Net cash used in investing activities............................. (880,868) (3,091,368)
FINANCING ACTIVITIES
Proceeds from issuance of Common Stock............................ -- 58,237,694
Proceeds from the issuance of Common Stock through the Employee
Stock Purchase Plan............................................. 239,551 --
Proceeds from the exercise of stock options....................... 392,823 --
------------ ------------
Net cash provided by financing activities......................... 632,374 58,237,694
------------ ------------
Effect of exchange rates changes on cash and cash equivalents..... (24,990) --
------------ ------------
Net (decrease) increase in cash and cash equivalents.............. (14,094,723) 46,201,999
Cash and cash equivalents at beginning of period.................. 33,687,076 5,294,622
------------ ------------
Cash and cash equivalents at end of period........................ $ 19,592,353 $ 51,496,621
============ ============
</TABLE>
See accompanying notes.
4
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CYBERCASH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ORGANIZATION AND NATURE OF OPERATIONS
CyberCash, Inc. (the "Company" or "CyberCash"), was incorporated on August
29, 1994 in the State of Delaware and was in the development stage from date of
inception through December 31, 1996. CyberCash is a technology-driven company
that provides software and services to enable secure financial transactions on
the Internet. The Company's suite of Internet payment services features the
electronic counterparts to cash, credit cards, and checks.
The accompanying condensed consolidated financial statements and notes
thereto have been prepared in accordance with generally accepted accounting
principles for interim financial information and should be read in conjunction
with the Company's consolidated financial statements found in the Company's Form
10-K. In the opinion of management, all adjustments (consisting only of normal,
recurring adjustments) considered necessary to reflect fairly the Company's
consolidated financial position and consolidated results of operations have been
included. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates. The results of operations for the six months ended June 30, 1997 and
1996 are not necessarily indicative of the results for the full year.
ACQUISITION OF NETBILL TECHNOLOGY LICENSE
On March 21, 1997, CyberCash entered into a technology licensing agreement
with Carnegie Mellon University ("CMU") whereby the Company acquired the
exclusive worldwide rights to CMU's NetBill technology for use in network-based
electronic commerce. NetBill is a development stage technology for the
facilitation of electronic commerce over the Internet. The consideration for the
license included 120,000 shares of the Company's Common Stock, plus Warrants to
purchase another 50,000 shares of the Company's Common Stock at an exercise
price of $16.45 per share. The Warrants are divided into 25,000 Class A Warrants
and 25,000 Class B Warrants. Each class will become exercisable in five equal
annual installments of 5,000 Warrant shares, commencing on the first anniversary
of the license, provided that the exercise of the Class B Warrants shall also be
conditioned upon certain milestones, as described in the agreement. In addition,
CyberCash agreed to pay a cash royalty of $450,000 over a period of four years.
The Company will expense the royalty payments as incurred. In accordance with
the Company's research and development policy, the Company recorded a non-cash
charge to operations of $2,162,500 during the three months ended March 31, 1997,
for the fair value of the Common Stock and Class A Warrants issued in the
acquisition of the NetBill technology license.
JOINT VENTURE AND SOFTWARE DEVELOPMENT AGREEMENTS
On May 13, 1997, CyberCash and Softbank Corporation ("Softbank") entered
into a joint venture agreement to commercialize CyberCash's technology in Japan.
Pursuant to the agreement, the parties have formed a Japanese corporation,
CyberCash Kabushiki Kaisha ("CCKK"), which will serve as the joint venture
entity. A 95%-owned subsidiary of CyberCash owns 200 shares of CCKK's Common
Stock, and Softbank and several other entities have purchased 220 shares of
CCKK's Preferred Stock, which are convertible into CCKK's Common Stock on a
one-for-one basis.
In May 1997, CyberCash and CCKK entered into a Software Development
Agreement. Under the agreement, CyberCash will modify the CyberCash technology
and will license it to CCKK for use in the Japanese market. CCKK will pay
CyberCash $100,000 plus its fully-burdened costs of performing this work, not to
exceed $1,100,000, in total.
5
<PAGE> 7
PRIVATE PLACEMENT
On August 5, 1997, the Company completed a private placement with two
institutional investors for 15,000 shares of the Company's Series C Convertible
Preferred Stock with a stated value of $1,000 per share resulting in net
proceeds of approximately $14.3 million. The Series C Convertible Preferred
Stock is convertible into the number of shares of the Company's Common Stock
equal to the stated value plus a premium of 5% per annum of the stated value
from the date of issuance of the Series C Convertible Preferred Stock divided by
a conversion price based on the market price of the Company's Common Stock on
the Nasdaq National Market during a measurement period immediately preceding the
election to convert. The Series C Convertible Preferred Stock is convertible at
the option of the holders subject to certain limits. The Company has agreed to
register under the Securities Act of 1933 the underlying common stock for
resale.
RECENT PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings Per Share" which is required to be adopted on December 31,
1997. The Company does not believe that Statement No. 128 will have an impact on
the Company's calculation of earnings per share.
6
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
accompanying consolidated financial statements and notes thereto. Historical
results and percentage relationships among any amounts in the financial
statements are not necessarily indicative of trends in operating results for any
future period. This discussion contains, in addition to historical information,
forward-looking statements that involve risks and uncertainties. The Company's
actual results could differ significantly from the results discussed in the
forward-looking statements. The uncertainties and risks include the pace of
growth of Internet commerce, development by the Company and its competitors of
new products and services, strategic decisions by major participants in the
industry, competitive pricing pressures, legal and regulatory developments, and
general economic conditions. Further information about these and other relevant
risks and uncertainties may be found in the Company's Annual Report on Form
10-K.
RESULTS OF OPERATIONS
Overview. The Company's future operating performance will depend in large
part on whether, and how quickly, the Internet will emerge as a widely-used
commercial marketplace. Global commerce on the Internet is new and evolving
rapidly. It is therefore difficult to predict with any assurance if and when the
Internet will prove to be a viable commercial marketplace, and what role, if
any, payment systems such as those offered by the Company will play in that
marketplace. The Company's revenue expectations have been based almost entirely
on expectations of future demand rather than on actual experience. Moreover, the
Company has limited historical financial data on which to base forecasts of its
operating expenses. Accordingly, the Company's expense levels have been based in
part on expectations as to future revenues and expected development and
marketing requirements. Since its inception in August 1994, the Company has
devoted most of its efforts to development and marketing in preparation for and
anticipation of the growth in Internet commerce that it expected would create a
substantial market for its Internet payment services. The Company also has made
significant investments in computers, networking systems and telecommunications
equipment. Largely, as a result of the expenses associated with these efforts,
the Company's operating expenses increased each quarter through the end of 1996.
Internet commerce has been developing at a slower rate than anticipated,
and as a result, the number of transactions the Company processes has not grown
as quickly as it had expected. During the first half of 1997, the Company
implemented several initiatives intended to increase its transaction levels. The
Company introduced the PayNow(TM) Secure Electronic Check Service in a pilot
program with leading bill presentment services; introduced the Digital NewStand,
thus expanding the pay-per-view concept to the Internet for high-value
information; partnered with ESPNet SportZone and E*trade to provide single-day
access to its premium content using the CyberCoin(TM) service; entered into
alliances with Coopers & Lybrand, Oracle, Digital Insight and TRUSTe; and
entered into or agreed to enter into joint ventures in Japan and Germany to
develop and market the CyberCash technology in those markets.
In some cases, the Company has been able to get strategic allies or joint
venture partners to pay for all or part of the development work performed by the
Company for adapting its technology to new uses or to foreign markets. In many
of these cases, the Company anticipates that the software developed through
these joint efforts will produce transaction revenues for the Company in the
future. The Company intends to continue with this strategy of generating
revenues from software development whenever possible to help finance its overall
development program.
The Company implemented during the first six months of 1997, several
cost-cutting strategies to decrease operating costs in order to adjust for the
slow growth rate of Internet commerce. In connection with the Company's
restructuring plan, the Company recorded a $344,000 one-time restructuring
charge in the three months ended March 31, 1997 associated with the termination
of approximately 15 employees. As a result of the Company's restructuring plan,
operating expenses, net of the non-cash charge for the acquisition of NetBill of
$2,162,500 and the one-time restructuring charge of $344,000, decreased 13% from
$16,923,000 for the six months ended December 31, 1996 to $14,686,000 for six
months ended June 30, 1997.
7
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Revenues. The Company's revenues for the three months ended June 30, 1997
and 1996 were $812,000 and $16,000, respectively and $968,000 and $38,000 for
the six months ended June 30, 1997 and 1996, respectively. Revenues derived from
transaction processing and connection fees for Secure Credit Card and CyberCoin
services were $92,000 and $16,000 for the three months ended June 30, 1997 and
1996, respectively and $159,000 and $25,000 for the six months ended June 30,
1997 and 1996, respectively. Revenues from software development and technology
licensing related to international expansion and pilot programs were $720,000
for the three months ended June 30, 1997 and $809,000 and $13,000 for the six
months ended June 30, 1997 and 1996, respectively.
OPERATING EXPENSES
Research and Development. Research and development expenses were
$2,972,000 and $3,915,000 for the three months ended June 30, 1997 and 1996,
respectively and $6,483,000 and $6,762,000 for the six months ended June 30,
1997 and 1996, respectively. The Company's research and development expenses for
the six months ended June 30, 1997 were primarily related to continued
development of the PayNow Secure Electronic Check Service; maintenance and
upgrade of CyberCoin and Secure Credit Card Services; development and refinement
of methods for efficient connection to existing financial networks for
transaction processing; and the continuing development of open and interoperable
payment solutions. The Company believes that significant continuing investments
in research and development will be required to remain competitive. To date, all
of the Company's software development costs have been expensed as incurred. The
Company will continue to expense such costs until such time as the
recoverability of such costs through future benefits can be established.
Sales and Marketing. Sales and marketing expenses were $2,825,000 and
$2,112,000 for the three months ended June 30, 1997 and 1996, respectively and
$5,285,000 and $3,258,000 for the six months ended June 30, 1997 and 1996,
respectively. Sales and marketing expenses for the six months ended June 30,
1997 were primarily related to a marketing promotion with ESPNet SportZone; the
introduction and promotion of PayNow Secure Electronic Check Service; continued
promotion of Secure Credit Card and CyberCoin services; and the expansion of the
Company's relationships with financial institutions, processors and merchants.
General and Administrative. General and administrative expenses were
$1,651,000 and $916,000 for the three months ended June 30, 1997 and 1996,
respectively and $3,261,000 and $1,932,000 for the six months ended June 30,
1997 and 1996, respectively. The general and administrative expenses for the six
months ended June 30, 1997 primarily reflect personnel costs in the areas of
human resources, finance, legal and administration.
Acquisition of NetBill Technology License. On March 21, 1997, CyberCash
entered into a technology licensing agreement with Carnegie Mellon University
("CMU") whereby the Company acquired the exclusive worldwide rights to CMU's
NetBill technology for use in network-based electronic commerce. In accordance
with the Company's research and development policy, the Company recorded a
non-cash charge to operations of $2,163,000 during the three months ended March
31, 1997, for the fair value of the Common Stock and Class A Warrants issued in
the acquisition of the NetBill technology license.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1997, the Company had cash and cash equivalents of $19,592,000
compared to $33,687,000 at December 31, 1996. The decrease in cash and cash
equivalents of $14,095,000 is due to a net loss of $15,531,000; capital
expenditures of $798,000; a decrease in accounts payable and accrued expenses of
$1,092,000; an increase in the accrued interest on receivable from sale of
common stock of $24,000; an increase in accounts receivable and other assets of
$1,085,000; an investment in affiliate of $83,000; and the effect of exchange
rates of $25,000. These items are offset by non-cash expenses of $2,163,000 for
the write-off of the NetBill technology license; $1,282,000 for depreciation and
compensation expense related to stock options; an increase in deferred revenue
of $466,000; and proceeds from the issuance of Common Stock through the Employee
Stock Option Plan and Employee Stock Purchase Plan of $632,000.
8
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The Company currently anticipates that its available cash resources,
including the funds received from its sale of convertible preferred stock,
combined with future cash flows from operations will be sufficient to meet its
presently anticipated working capital needs for at least the next 12 months.
Thereafter, the Company may need to raise additional funds through debt and/or
equity financing. The Company's estimates of its cash requirements are
forward-looking statements, and there is no assurance that the Company's actual
cash requirements will not exceed its currently anticipated cash requirements.
The Company may need to raise additional funds sooner than anticipated in order
to fund more rapid expansion, to develop new or enhanced services, to respond to
competitive pressures or to acquire complementary businesses or technologies. If
additional funds are raised through the issuance of equity securities, the
percentage ownership of the stockholders of the Company will be reduced,
stockholders may experience additional dilution, or such equity securities may
have rights, preferences or privileges senior to those of the holders of the
Company's common stock. There can be no assurance that additional financing will
be available when needed on terms favorable to the Company or at all. If
adequate funds are not available or are not available on acceptable terms, the
Company may be unable to develop or enhance products or services, take advantage
of future opportunities, or respond to competitive pressures, which could have a
material adverse effect on the Company's business, financial condition or
operating results.
9
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PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
On March 21, 1997, CyberCash acquired a technology license from Carnegie
Mellon University ("CMU") part of the consideration of which was the issuance to
CMU of 120,000 shares of the Company's Common Stock, plus Warrants to purchase
another 50,000 shares of the Company's Common Stock at an exercise price of
$16.45 per share. The Warrants are divided into 25,000 Class A Warrants and
25,000 Class B Warrants. Each class will become exercisable in five equal annual
installments of 5,000 Warrant shares, commencing on the first anniversary of the
license, provided that the exercise of the Class B Warrants shall also be
conditioned upon certain milestones, as described in the license. The Company
issued these shares and warrants in reliance on the exemption from registration
provided by Section 4(2) of the Securities Act of 1933, as amended, and
Regulation D thereunder.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
At the Annual Meeting of Stockholders of CyberCash, Inc. on June 27, 1997
at 10:00 am, (PDT), in Redwood City, California, the following matters were
submitted to a vote of the stockholders:
1) Election of Directors. William N. Melton and Garen K. Staglin were
reelected as directors of the Company. The following directors' terms of
office continued after the Annual Meeting of Stockholders: Daniel C. Lynch,
Edward R. Kozel, and Michael Rothschild.
2) Ratification of Appointment of Independent Auditors. The
appointment of Ernst & Young LLP for the year ending December 31, 1997 was
ratified by the stockholders.
3) Approval of amendment of the Company's 1995 Stock Option Plan. The
Company's 1995 Stock Option Plan was amended to increase the number of
shares authorized for issuance from a total of 2,000,000 shares of the
Company's Common Stock to 3,500,000 shares.
TABULATION OF VOTES
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MATTER IN FAVOR WITHHELD/AGAINST ABSTENTIONS BROKER NONVOTES
- ------------------------------------------ --------- ---------------- ----------- ---------------
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Director Election:
William N. Melton.................... 6,723,829 45,323 -- --
Garen K. Staglin..................... 6,722,629 46,523 -- --
Appointment of Independent Auditors....... 6,741,708 20,322 7,122 --
Amendment of 1995 Stock Option Plan....... 5,229,462 358,661 26,100 1,154,929
</TABLE>
ITEM 5. OTHER INFORMATION
None.
10
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<S> <C>
10.1 1995 Stock Option Plan.
10.2 1995 Non-Employee Directors' Stock Option Plan.
10.3 Subscription Agreement dated as of March 21, 1997 between the
Company and Carnegie Mellon University.
10.4 Warrant Certificate dated as of March 21, 1997.
10.5 Joint Venture Agreement dated as of May 13, 1997 among the Company,
CyberCash Japan C.V. and Softbank Corporation.
10.6 Software License Agreement dated as of May 13, 1997 between the
Company and CyberCash K.K.
</TABLE>
(b) Reports on Form 8-K
On August 8, 1997, the Company filed a Form 8-K that reported under items 5
and 7 the closing of a private placement of convertible preferred stock on
August 5, 1997.
11
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CyberCash, Inc.
--------------------------------------
(Registrant)
<TABLE>
<S> <C>
Date: August 14, 1997 /s/ WILLIAM N. MELTON
---------------------------------------------
William N. Melton
President and Chief Executive Officer
Date: August 14, 1997 /s/ JAMES J. CONDON
---------------------------------------------
James J. Condon
Chief Financial Officer
</TABLE>
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EXHIBIT 10.1
CYBERCASH, INC.
1995 STOCK OPTION PLAN,
AS AMENDED
Adopted by the Board of Directors on April 6, 1995
and approved by the Stockholders on August 21, 1995,
Amendment approved by the Board of Directors on
December 20, 1995 and approved by the Stockholders
on February 1, 1996,
Amendment approved by the Board of Directors on
April 25, 1997 and approved by the Stockholders
on June 27, 1997.
1. PURPOSES.
(a) The purpose of the Plan is to provide a means by which
selected Employees and Directors of and Consultants to the Company, and its
Affiliates, may be given an opportunity to purchase stock of the Company.
(b) The Company, by means of the Plan, seeks to retain the
services of persons who are now Employees or Directors of, or Consultants to,
the Company or its Affiliates, to secure and retain the services of new
Employees, Directors and Consultants, and to provide incentives for such
persons to exert maximum efforts for the success of the Company and its
Affiliates.
(c) The Company intends that the Options issued under the Plan
shall, in the discretion of the Board or any Committee to which responsibility
for administration of the Plan has been delegated pursuant to subsection 3(c),
be either Incentive Stock Options or Nonqualified Stock Options. All Options
shall be separately designated Incentive Stock Options or Nonqualified Stock
Options at the time of grant, and in such form as issued pursuant to Section 6,
and a separate certificate or certificates will be issued for shares purchased
on exercise of each type of Option.
2. DEFINITIONS.
(a) "AFFILIATE" means any parent corporation or subsidiary
corporation, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f) respectively, of the Code.
(b) "BOARD" means the Board of Directors of the Company.
1.
<PAGE> 2
(c) "CODE" means the Internal Revenue Code of 1986, as amended.
(d) "COMMITTEE" means a Committee appointed by the Board in
accordance with subsection 3(c) of the Plan.
(e) "COMPANY" means CYBERCASH, INC., a Delaware corporation.
(f) "CONSULTANT" means any person, including an advisor, engaged
by the Company or an Affiliate to render consulting services and who is
compensated for such services, provided that the term "Consultant" shall not
include Directors who are paid only a director's fee by the Company or who are
not compensated by the Company for their services as Directors.
(g) "CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR CONSULTANT"
means the employment or relationship as a Director or Consultant is not
interrupted or terminated. The Board, in its sole discretion, may determine
whether Continuous Status as an Employee, Director or Consultant shall be
considered interrupted in the case of: (i) any leave of absence approved by
the Board, including sick leave, military leave, or any other personal leave;
or (ii) transfers between locations of the Company or between the Company,
Affiliates or their successors.
(h) "COVERED EMPLOYEE" means the Chief Executive Officer and
the four (4) other highest compensated officers of the Company.
(i) "DIRECTOR" means a member of the Board.
(j) "EMPLOYEE" means any person, including Officers and Directors,
employed by the Company or any Affiliate of the Company. Neither service as a
Director nor payment of a director's fee by the Company shall be sufficient to
constitute "employment" by the Company.
(k) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(l) "FAIR MARKET VALUE" means, as of any date, the value of the
common stock of the Company determined as follows and in each case in a manner
consistent with Section 260.140.50 of Title 10 of the California Code of
Regulations:
(1) If the common stock is listed on any established
stock exchange or a national market system, including without limitation the
National Market System of the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ") System, the Fair Market Value of a share of
common stock shall be the closing sales price for such stock (or the closing
bid, if no sales were reported) as quoted on such system or exchange (or the
exchange with the greatest volume of trading in common stock) on the last
market trading day prior to the day of
2.
<PAGE> 3
determination, as reported in the Wall Street Journal or such other source as
the Board deems reliable;
(2) If the common stock is quoted on the NASDAQ System
(but not on the National Market System thereof) or is regularly quoted by a
recognized securities dealer but selling prices are not reported, the Fair
Market Value of a share of common stock shall be the mean between the bid and
asked prices for the common stock on the last market trading day prior to the
day of determination, as reported in the Wall Street Journal or such other
source as the Board deems reliable;
(3) In the absence of an established market for the
common stock, the Fair Market Value shall be determined in good faith by the
Board.
(m) "IMMEDIATE FAMILY MEMBERS" means the spouse, children and
grandchildren of the Optionee.
(n) "INCENTIVE STOCK OPTION" means an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code and
the regulations promulgated thereunder.
(o) "NON-EMPLOYEE DIRECTOR" means a Director who is considered to
be a "nonemployee director" in accordance with Rule 16b-3, or any other
applicable rules, regulations or interpretations of the Securities and Exchange
Commission.
(p) "NONQUALIFIED STOCK OPTION" means an Option not intended to
qualify as an Incentive Stock Option.
(q) "OFFICER" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(r) "OPTION" means a stock option granted pursuant to the Plan.
(s) "OPTION AGREEMENT" means a written agreement between the
Company and an Optionee evidencing the terms and conditions of an individual
Option grant. Each Option Agreement shall be subject to the terms and
conditions of the Plan.
(t) "OPTIONEE" means an Employee, Director or Consultant who holds
an outstanding Option.
(u) "OUTSIDE DIRECTOR" means a Director who either (i) is not a
current employee of the Company or an "affiliated corporation" (as defined in
the Treasury regulations promulgated under Section 162(m) of the Code), is not
a former employee of the Company or an affiliated corporation receiving
compensation for
3.
<PAGE> 4
prior services (other than benefits under a tax qualified pension plan), was
not an officer of the Company or an affiliated corporation at any time, and is
not currently receiving compensation for personal services in any capacity
other than as a Director, or (ii) is otherwise considered an "outside director"
for purposes of Section 162(m) of the Code.
(v) "PLAN" means this 1995 Stock Option Plan.
(w) "RULE 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.
3. ADMINISTRATION.
(a) The Plan shall be administered by the Board unless and until
the Board delegates administration to a Committee, as provided in subsection
3(c).
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(1) To determine from time to time which of the persons
eligible under the Plan shall be granted Options; when and how each Option
shall be granted; whether an Option will be an Incentive Stock Option or a
Nonqualified Stock Option; the provisions of each Option granted (which need
not be identical), including the time or times such Option may be exercised in
whole or in part; and the number of shares for which an Option shall be granted
to each such person.
(2) To construe and interpret the Plan and Options
granted under it, and to establish, amend and revoke rules and regulations for
its administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Option Agreement, in a
manner and to the extent it shall deem necessary or expedient to make the Plan
fully effective.
(3) To amend the Plan as provided in Section 11.
(c) The Board may delegate administration of the Plan to a
committee composed of not fewer than two (2) members (the "Committee"), all of
the members of which Committee shall be Non-Employee Directors and may also be,
in the discretion of the Board, Outside Directors. If administration is
delegated to a Committee, the Committee shall have, in connection with the
administration of the Plan, the powers theretofore possessed by the Board (and
references in this Plan to the Board shall thereafter be to the Committee),
subject, however, to such resolutions, not inconsistent with the provisions of
the Plan, as may be adopted from time to time by the Board. The Board may
abolish the Committee at any time and revest in the Board the administration of
the Plan. Additionally, prior to the date of the first registration of an
equity security of the Company under Section 12
4.
<PAGE> 5
of the Exchange Act, and notwithstanding anything to the contrary contained
herein, the Board may delegate administration of the Plan to any person or
persons and the term "Committee" shall apply to any person or persons to whom
such authority has been delegated. Notwithstanding anything in this Section 3
to the contrary, the Board or the Committee may delegate to a committee of one
or more members of the Board the authority to grant Options to eligible persons
who (1) are not then subject to Section 16 of the Exchange Act and/or (2) are
either (i) not then Covered Employees and are not expected to be Covered
Employees at the time of recognition of income resulting from such Option, or
(ii) not persons with respect to whom the Company wishes to comply with Section
162(m) of the Code.
(d) Any requirement that an administrator of the Plan be a
Non-Employee Director shall not apply (i) prior to the date of the first
registration of an equity security of the Company under Section 12 of the
Exchange Act, or (ii) if the Board or the Committee expressly declares that
such requirement shall not apply. Any Non-Employee Director shall otherwise
comply with the requirements of Rule 16b-3.
4. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of Section 10 relating to
adjustments upon changes in stock, the stock that may be sold pursuant to
Options shall not exceed in the aggregate Three Million Five Hundred Thousand
(3,500,000) shares of the Company's common stock. If any Option shall for any
reason expire or otherwise terminate, in whole or in part, without having been
exercised in full, the stock not purchased under such Option shall revert to
and again become available for issuance under the Plan.
(b) The stock subject to the Plan may be unissued shares or
reacquired shares, bought on the market or otherwise.
5. ELIGIBILITY.
(a) Incentive Stock Options may be granted only to Employees.
Nonqualified Stock Options may be granted only to Employees, Directors or
Consultants. The Board or Committee may grant Options covering up to the
entire number of shares available for issuance under the Plan (as determined
under Section 4(a)) to any one participant or to several participants, in the
sole discretion of the Board or Committee.
(b) The Board shall comply with the requirements of Rule 16b-3.
This subsection 5(b) shall not apply (i) prior to the date of the first
registration of an equity security of the Company under Section 12 of the
Exchange Act, or (ii) if the Board or Committee expressly declares that it
shall not apply.
(c) No person shall be eligible for the grant of an Incentive
Stock Option
5.
<PAGE> 6
if, at the time of grant, such person owns (or is deemed to own pursuant to
Section 424(d) of the Code) stock possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or of any of
its Affiliates unless the exercise price of such Option is at least one hundred
ten percent (110%) of the Fair Market Value of such stock at the date of grant
and the Option is not exercisable after the expiration of five (5) years from
the date of grant.
6. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms
and conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise) the
substance of each of the following provisions:
(a) TERM. No Option shall be exercisable after the expiration of
ten (10) years from the date it was granted.
(b) PRICE. The exercise price of each Incentive Stock Option
shall be not less than one hundred percent (100%) of the Fair Market Value of
the stock subject to the Option on the date the Option is granted. The
exercise price of each Nonqualified Stock Option shall be not less than
eighty-five percent (85%) of the Fair Market Value of the stock subject to the
Option on the date the Option is granted.
(c) CONSIDERATION. The purchase price of stock acquired pursuant
to an Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised, or (ii) at
the discretion of the Board or the Committee, either at the time of the grant
or exercise of the Option, (A) by delivery to the Company of other common stock
of the Company, (B) according to a deferred payment or other arrangement (which
may include, without limiting the generality of the foregoing, the use of other
common stock of the Company) with the person to whom the Option is granted or
to whom the Option is transferred pursuant to subsection 6(d), or (C) in any
other form of legal consideration that may be acceptable to the Board. Payment
in full of the exercise price need not accompany the written notice of exercise
provided the notice directs that the stock certificate or certificates for the
shares for which the Option is exercised be delivered to a licensed broker
acceptable to the Company as the agent for the individual exercising the Option
and, at the time such stock certificate or certificates are delivered, the
broker tenders to the Company cash (or cash equivalents acceptable to the
Corporation) equal to the exercise price plus the amount (if any) of federal
and/or other taxes which the Company may, in its judgment, be required to
withhold with respect to the exercise of the Option.
In the case of any deferred payment arrangement, interest shall be
payable
6.
<PAGE> 7
at least annually and shall be charged at the minimum rate of interest
necessary to avoid the treatment as interest, under any applicable provisions
of the Code, of any amounts other than amounts stated to be interest under the
deferred payment arrangement.
(d) TRANSFERABILITY. An Incentive Stock Option shall not be
transferable except by will or by the laws of descent and distribution, and
shall be exercisable during the lifetime of the person to whom the Incentive
Stock Option is granted only by such person. Subject to the terms of the
applicable Option Agreement, an Optionee may transfer all or part of an Option
which is not an Incentive Stock Option to (i) any Immediate Family Member, (ii)
a trust or trusts for the exclusive benefit of any Immediate Family Member, or
(iii) a partnership in which Immediate Family Members are the only partners,
provided that (x) there may be no consideration for any such transfer, and (y)
subsequent transfers of transferred Options are prohibited except those in
accordance with this Section 6(d) or by will or the laws of descent and
distribution. Following transfer, any such Option shall continue to be subject
to the same terms and conditions as were applicable immediately prior to
transfer, provided that for purposes of Section 6 hereof the term "Optionee"
shall be deemed to refer the transferee. The events of termination of the
employment or relationship as a Director or Consultant of Section 6(g) hereof
shall continue to be applied with respect to the original Optionee, following
which the Option shall be exercisable by the transferee only to the extent, and
for the periods specified in the Option Agreement. The person to whom the
Option is granted may, by delivering written notice to the Company, in a form
satisfactory to the Company, designate a third party who, in the event of the
death of the Optionee, shall thereafter be entitled to exercise the Option.
(e) VESTING. The total number of shares of stock subject to an
Option may, but need not, be allotted in periodic installments (which may, but
need not, be equal). The Option Agreement may provide that from time to time
during each of such installment periods, the Option may become exercisable
("vest") with respect to some or all of the shares allotted to that period, and
may be exercised with respect to some or all of the shares allotted to such
period and/or any prior period as to which the Option became vested but was not
fully exercised. The Option may be subject to such other terms and conditions
on the time or times when it may be exercised (which may be based on
performance or other criteria) as the Board may deem appropriate. The vesting
provisions of individual Options may vary but in each case will provide for
vesting of at least twenty percent (20%) per year of the total number of shares
subject to the Option. The provisions of this subsection 6(e) are subject to
any Option provisions governing the minimum number of shares as to which an
Option may be exercised.
Notwithstanding the preceding paragraph, stock options
designated as "Performance Options" may vest as determined by the Board of
Directors; provided,
7.
<PAGE> 8
however, that such option grants either are not subject to the requirement to
qualify securities under Section 25110 of the California Corporations Code
because no offer and sale is made in California or can rely upon an exemption
from the securities qualification requirements of the California Corporate
Securities Law of 1968, as amended.
(f) SECURITIES LAW COMPLIANCE. The Company may require any
Optionee, or any person to whom an Option is transferred under subsection 6(d),
as a condition of exercising any such Option, (1) to give written assurances
satisfactory to the Company as to the Optionee's knowledge and experience in
financial and business matters and/or to employ a purchaser representative
reasonably satisfactory to the Company who is knowledgeable and experienced in
financial and business matters, and that he or she is capable of evaluating,
alone or together with the purchaser representative, the merits and risks of
exercising the Option; and (2) to give written assurances satisfactory to the
Company stating that such person is acquiring the stock subject to the Option
for such person's own account and not with any present intention of selling or
otherwise distributing the stock. The foregoing requirements, and any
assurances given pursuant to such requirements, shall be inoperative if (i) the
issuance of the shares upon the exercise of the Option has been registered
under a then currently effective registration statement under the Securities
Act of 1933, as amended (the "Securities Act"), or (ii) as to any particular
requirement, a determination is made by counsel for the Company that such
requirement need not be met in the circumstances under the then applicable
securities laws. The Company may, upon advice of counsel to the Company, place
legends on stock certificates issued under the Plan as such counsel deems
necessary or appropriate in order to comply with applicable securities laws,
including, but not limited to, legends restricting the transfer of the stock.
(g) TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR
CONSULTANT. In the event an Optionee's Continuous Status as an Employee,
Director or Consultant terminates (other than upon the Optionee's death or
disability), the Optionee may exercise his or her Option (to the extent that
the Optionee was entitled to exercise it at the date of termination) but only
within such period of time ending on the earlier of (i) the date three (3)
months after the termination of the Optionee's Continuous Status as an
Employee, Director or Consultant (or such longer or shorter period, which in no
event shall be less than thirty (30) days, specified in the Option Agreement),
or (ii) the expiration of the term of the Option as set forth in the Option
Agreement. If, after termination, the Optionee does not exercise his or her
Option within the time specified in the Option Agreement, the Option shall
terminate, and the shares covered by such Option shall revert to and again
become available for issuance under the Plan.
(h) DISABILITY OF OPTIONEE. In the event an Optionee's Continuous
Status as an Employee, Director or Consultant terminates as a result of the
8.
<PAGE> 9
Optionee's disability, the Optionee may exercise his or her Option (to the
extent that the Optionee was entitled to exercise it at the date of
termination), but only within such period of time ending on the earlier of (i)
the date twelve (12) months following such termination (or such longer or
shorter period, which in no event shall be less than six (6) months, specified
in the Option Agreement), or (ii) the expiration of the term of the Option as
set forth in the Option Agreement. If, at the date of termination, the
Optionee is not entitled to exercise his or her entire Option, the shares
covered by the unexercisable portion of the Option shall revert to and again
become available for issuance under the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified herein,
the Option shall terminate, and the shares covered by such Option shall revert
to and again become available for issuance under the Plan.
(i) DEATH OF OPTIONEE. In the event of the death of an Optionee
during, or within a period specified in the Option after the termination of,
the Optionee's Continuous Status as an Employee, Director or Consultant, the
Option may be exercised (to the extent the Optionee was entitled to exercise
the Option at the date of death) by the Optionee's estate, by a person who
acquired the right to exercise the Option by bequest or inheritance or by a
person designated to exercise the option upon the Optionee's death pursuant to
subsection 6(d), but only within the period ending on the earlier of (i) the
date eighteen (18) months following the date of death (or such longer or
shorter period, which in no event shall be less than six (6) months, specified
in the Option Agreement), or (ii) the expiration of the term of such Option as
set forth in the Option Agreement. If, at the time of death, the Optionee was
not entitled to exercise his or her entire Option, the shares covered by the
unexercisable portion of the Option shall revert to and again become available
for issuance under the Plan. If, after death, the Option is not exercised
within the time specified herein, the Option shall terminate, and the shares
covered by such Option shall revert to and again become available for issuance
under the Plan.
(j) EARLY EXERCISE. The Option may, but need not, include a
provision whereby the Optionee may elect at any time while an Employee,
Director or Consultant to exercise the Option as to any part or all of the
shares subject to the Option prior to the full vesting of the Option. Any
unvested shares so purchased may be subject to a repurchase right in favor of
the Company, with the repurchase price to be equal to the original purchase
price of the stock, or to any other restriction the Board determines to be
appropriate, provided, however, that (i) the right to repurchase at the
original purchase price shall lapse at a minimum rate of twenty percent (20%)
per year over five (5) years from the date the Option was granted, and
(ii) such right shall be exercisable only within (A) the ninety (90) day period
following the termination of employment or relationship as a Director or
Consultant or (B) such longer period as may be agreed to by the Company and the
Optionee (for example, for purposes of satisfying the requirements of Section
1202(c)(3) of the Code (regarding "qualified small business stock")), and (iii)
such
9.
<PAGE> 10
right shall be exercisable only for cash or cancellation of purchase money
indebtedness for the shares. Should the right of repurchase be assigned by the
Company, the assignee shall pay the Company cash equal to the difference
between the original purchase price and the stock's Fair Market Value if the
original purchase price is less than the stock's Fair Market Value.
(k) WITHHOLDING. To the extent provided by the terms of an Option
Agreement, the Optionee may satisfy any federal, state or local tax withholding
obligation relating to the exercise of such Option by any of the following
means or by a combination of such means: (1) tendering a cash payment; (2)
authorizing the Company to withhold shares from the shares of the common stock
otherwise issuable to the participant as a result of the exercise of the
Option; or (3) delivering to the Company owned and unencumbered shares of the
common stock of the Company.
7. COVENANTS OF THE COMPANY.
(a) During the terms of the Options, the Company shall keep
available at all times the number of shares of stock required to satisfy such
Options.
(b) The Company shall seek to obtain from each regulatory
commission or agency having jurisdiction over the Plan such authority as may be
required to issue and sell shares of stock upon exercise of the Options;
provided, however, that this undertaking shall not require the Company to
register under the Securities Act either the Plan, any Option or any stock
issued or issuable pursuant to any such Option. If, after reasonable efforts,
the Company is unable to obtain from any such regulatory commission or agency
the authority which counsel for the Company deems necessary for the lawful
issuance and sale of stock under the Plan, the Company shall be relieved from
any liability for failure to issue and sell stock upon exercise of such Options
unless and until such authority is obtained.
8. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to Options shall constitute
general funds of the Company.
9. MISCELLANEOUS.
(a) Neither an Optionee nor any person to whom an Option is
transferred under subsection 6(d) shall be deemed to be the holder of, or to
have any of the rights of a holder with respect to, any shares subject to such
Option unless and until such person has satisfied all requirements for exercise
of the Option pursuant to its terms.
(b) Throughout the term of any Option, the Company shall deliver
to the
10.
<PAGE> 11
holder of such Option, not later than one hundred twenty (120) days after the
close of each of the Company's fiscal years during the Option term, a balance
sheet and an income statement. This section shall not apply when issuance is
limited to key employees whose duties in connection with the Company assure
them access to equivalent information.
(c) Nothing in the Plan or any instrument executed or Option
granted pursuant thereto shall confer upon any Employee, Director, Consultant
or Optionee any right to continue in the employ of the Company or any Affiliate
(or to continue acting as a Director or Consultant) or shall affect the right
of the Company or any Affiliate to terminate the employment or relationship as
a Director or Consultant of any Employee, Director, Consultant or Optionee with
or without cause.
(d) To the extent that the aggregate Fair Market Value (determined
at the time of grant) of stock with respect to which Incentive Stock Options
granted after 1986 are exercisable for the first time by any Optionee during
any calendar year under all plans of the Company and its Affiliates exceeds one
hundred thousand dollars ($100,000), the Options or portions thereof which
exceed such limit (according to the order in which they were granted) shall be
treated as Nonqualified Stock Options.
(e) (1) The Board or the Committee shall have the authority
to effect, at any time and from time to time (i) the repricing of any
outstanding Options under the Plan and/or (ii) with the consent of the affected
holders of Options, the cancellation of any outstanding Options and the grant
in substitution therefor of new Options under the Plan covering the same or
different numbers of shares of Common Stock, but having an exercise price per
share not less than eighty-five percent (85%) of the Fair Market Value (one
hundred percent (100%) of the Fair Market Value in the case of an Incentive
Stock Option or, in the case of a ten percent (10%) stockholder (as defined in
subsection 5(c)), not less than one hundred and ten percent (110%) of the Fair
Market Value) per share of Common Stock on the new grant date.
(2) Shares subject to an Option canceled under this
subsection 9(e) shall continue to be counted against the maximum award of
Options permitted to be granted pursuant to the Plan. The repricing of an
Option under this subsection 9(e), resulting in a reduction of the exercise
price, shall be deemed to be a cancellation of the original Option and the
grant of a substitute Option; in the event of such repricing, both the original
and the substituted Options shall be counted against the maximum awards of
Options permitted to be granted pursuant to the Plan. The provisions of this
subsection 9(e) shall be applicable only to the extent required by Section
162(m) of the Code.
11.
<PAGE> 12
10. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or
subject to any Option (through merger, consolidation, reorganization,
recapitalization, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or otherwise), the Plan will be appropriately adjusted
in the class(es) and maximum number of shares subject to the Plan pursuant to
subsection 4(a), and the outstanding Options will be appropriately adjusted in
the class(es) and number of shares and price per share of stock subject to such
outstanding Options.
(b) In the event of: (1) a merger or consolidation in which the
Company is not the surviving corporation or (2) a reverse merger in which the
Company is the surviving corporation but the shares of the Company's common
stock outstanding immediately preceding the merger are converted by virtue of
the merger into other property, whether in the form of securities, cash or
otherwise then to the extent permitted by applicable law: (i) any surviving
corporation shall assume any Options outstanding under the Plan or shall
substitute similar Options for those outstanding under the Plan, or (ii) such
Options shall continue in full force and effect. In the event any surviving
corporation refuses to assume or continue such Options, or to substitute
similar options for those outstanding under the Plan, then such Options shall
be terminated if not exercised prior to such event. In the event of a
dissolution or liquidation of the Company, any Options outstanding under the
Plan shall terminate if not exercised prior to such event.
11. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend the
Plan. However, except as provided in Section 10 relating to adjustments upon
changes in stock, no amendment shall be effective unless approved by the
stockholders of the Company within twelve (12) months before or after the
adoption of the amendment, where the amendment will:
(1) Increase the number of shares reserved for Options
under the Plan;
(2) Modify the requirements as to eligibility for
participation in the Plan (to the extent such modification requires stockholder
approval in order for the Plan to satisfy the requirements of Section 422 of
the Code); or
(3) Modify the Plan in any other way if such modification
requires stockholder approval in order for the Plan to satisfy the requirements
of Section 422 of the Code or to comply with the requirements of Rule 16b-3.
(a) The Board may in its sole discretion submit any other
amendment to
12.
<PAGE> 13
the Plan for stockholder approval, including, but not limited to, amendments to
the Plan intended to satisfy the requirements of Section 162(m) of the Code and
the regulations promulgated thereunder regarding the exclusion of
performance-based compensation from the limit on corporate deductibility of
compensation paid to certain executive officers.
(c) It is expressly contemplated that the Board may amend the Plan
in any respect the Board deems necessary or advisable to provide Optionees with
the maximum benefits provided or to be provided under the provisions of the
Code and the regulations promulgated thereunder relating to Incentive Stock
Options and/or to bring the Plan and/or Incentive Stock Options granted under
it into compliance therewith.
(d) Rights and obligations under any Option granted before
amendment of the Plan shall not be altered or impaired by any amendment of the
Plan unless (i) the Company requests the consent of the person to whom the
Option was granted and (ii) such person consents in writing.
12. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time.
Unless sooner terminated, the Plan shall terminate on April 5, 2005, which
shall be within ten (10) years from the date the Plan is adopted by the Board
or approved by the stockholders of the Company, whichever is earlier. No
Options may be granted under the Plan while the Plan is suspended or after it
is terminated.
(b) Rights and obligations under any Option granted while the Plan
is in effect shall not be altered or impaired by suspension or termination of
the Plan, except with the consent of the person to whom the Option was granted.
13. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board, but no
Options granted under the Plan shall be exercised unless and until the Plan has
been approved by the stockholders of the Company, which approval shall be
within twelve (12) months before or after the date the Plan is adopted by the
Board, and, if required, an appropriate permit has been issued by the
Commissioner of Corporations of the State of California.
13.
<PAGE> 1
EXHIBIT 10.2
CYBERCASH, INC.
1995 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN,
AS AMENDED
ADOPTED ON DECEMBER 20, 1995
APPROVED BY STOCKHOLDERS
ON FEBRUARY 1, 1996
AMENDMENT APPROVED BY THE BOARD OF DIRECTORS
ON JULY 18, 1997
1. PURPOSE.
(a) The purpose of the 1995 Non-Employee Directors' Stock
Option Plan (the "Plan") is to provide a means by which each director of
CyberCash, Inc. (the "Company") who is not otherwise at the time of grant an
employee of or consultant to the Company or of any Affiliate of the Company
(each such person being hereafter referred to as a "Non-Employee Director")
will be given an opportunity to purchase stock of the Company.
(b) The word "Affiliate" as used in the Plan means any parent
corporation or subsidiary corporation of the Company as those terms are defined
in Sections 424(e) and (f), respectively, of the Internal Revenue Code of 1986,
as amended from time to time (the "Code").
(c) The Company, by means of the Plan, seeks to retain
the services of persons now serving as Non-Employee Directors of the Company,
to secure and retain the services of persons capable of serving in such
capacity, and to provide incentives for such persons to exert maximum efforts
for the success of the Company.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Board of
Directors of the Company (the "Board") unless and until the Board delegates
administration to a committee, as provided in subparagraph 2(b).
1.
<PAGE> 2
(b) The Board may delegate administration of the Plan to
a committee composed of not fewer than two (2) members of the Board (the
"Committee"). If administration is delegated to a Committee, the Committee
shall have, in connection with the administration of the Plan, the powers
theretofore possessed by the Board, subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time to
time by the Board. The Board may abolish the Committee at any time and revest
in the Board the administration of the Plan.
3. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 10 relating to
adjustments upon changes in stock, the stock that may be sold pursuant to
options granted under the Plan shall not exceed in the aggregate one hundred
thousand (100,000) shares of the Company's common stock. If any option granted
under the Plan shall for any reason expire or otherwise terminate without
having been exercised in full, the stock not purchased under such option shall
again become available for the Plan.
(b) The stock subject to the Plan may be unissued shares
or reacquired shares, bought on the market or otherwise.
4. ELIGIBILITY.
Options shall be granted only to a Non-Employee Director of the
Company who becomes a Non-Employee Director of the Company after the Effective
Date of the Plan.
5. NON-DISCRETIONARY GRANTS.
(a) Each person who is, after the date that the
registration of the initial offering of shares of the Company's common stock
for sale to the public becomes effective (the "Effective Date"), elected for
the first time to be a Non-Employee Director automatically shall, upon the date
of his or her initial election to be a Non-Employee Director by the Board or
stockholders of the Company, be granted an option to purchase ten thousand
(10,000) shares of common stock of the Company on the terms and conditions set
forth herein.
2.
<PAGE> 3
(b) On the date of each Annual Meeting of Stockholders of
the Company, commencing with the Annual Meeting of Stockholders occurring in
1997, each person who is then a Non-Employee Director automatically shall be
granted an option to purchase five thousand (5,000) shares of common stock of
the Company on the terms and conditions set forth herein. If the Non-Employee
Director has not served for twelve months prior to such date, then the number
of shares subject to that Non-Employee Director's option under this
subparagraph 5(b) shall be equal to the number set forth in the previous
sentence, adjusted by a fraction, the numerator of which fraction shall be
equal to the number of days on which the individual was a Non-Employee Director
during the preceding twelve months and the denominator of which fraction shall
be three hundred sixty five (365), and increased to the next higher whole
number of shares.
(c) On the date of each Annual Meeting of Stockholders of the
Company, commencing with the Annual Meeting of Stockholders occurring in 1997,
each person who is then a Non-Employee Director automatically shall be granted
an option to purchase 1,500 shares of common stock of the Company on the terms
and conditions set forth herein for each committee of the Board of Directors of
the Company on which such person has served for at least the five months
immediately prior to the Annual Meeting of Stockholders.
6. OPTION PROVISIONS.
Each option shall be subject to the following terms and conditions:
(a) The term of each option commences on the date it is
granted and, unless sooner terminated as set forth herein, expires on the date
("Expiration Date") ten (10) years from the date of grant. If the optionee's
service as a Non-Employee Director or employee of or consultant to the Company
or any Affiliate terminates for any reason or for no reason, the option shall
terminate on the earlier of the Expiration Date or the date six (6) months
following the date of termination of all such service; provided, however, that
if such termination of service is due to (i) the optionee's death, the option
shall terminate on the earlier of the Expiration Date or eighteen (18) months
following the date of the optionee's death, or (ii)
3.
<PAGE> 4
the optionee's disability, the option shall terminate on the earlier of the
Expiration Date or twelve (12) months following the date of the optionee's
disability. In any and all circumstances, an option may be exercised following
termination of the optionee's service as a Non-Employee Director or employee of
or consultant to the Company or any Affiliate only as to that number of shares
as to which it was exercisable as of the date of termination of all such
service under the provisions of subparagraph 6(e).
(b) Subject to subparagraph 4(b), the exercise price of
each option shall be one hundred percent (100%) of the fair market value of the
stock subject to such option on the date such option is granted.
(c) Payment of the exercise price of each option is due
in full in cash or by check upon any exercise or in any one or a combination of
cash and/or the following alternatives:
(i) Provided that at the time of the
exercise the Company's common stock is publicly traded and quoted regularly in
the Wall Street Journal, payment by delivery of shares of common stock of the
Company already owned by the optionee, held for the period required to avoid a
charge to the Company's reported earnings, and owned free and clear of any
liens, claims, encumbrances or security interest, which common stock shall be
valued at its fair market value on the date preceding the date of exercise; or
(ii) This option may be exercised
pursuant to a program developed under Regulation T as promulgated by the
Federal Reserve Board which results in the receipt of cash (or check) by the
Company either prior to the issuance of shares of the Company's common stock or
pursuant to the terms of irrevocable instructions issued by the optionee prior
to the issuance of shares of the Company's common stock.
(d) An option shall not be transferable except by will or
by the laws of descent and distribution, or pursuant to a qualified domestic
relations order satisfying the requirements of Rule 16b-3 under the Securities
Exchange Act of 1934 ("Rule 16b-3") and shall be exercisable during the
lifetime of
4.
<PAGE> 5
the person to whom the option is granted only by such person (or by his
guardian or legal representative) or transferee pursuant to such an order.
Notwithstanding the foregoing, the optionee may, by delivering written notice
to the Company in a form satisfactory to the Company, designate a third party
who, in the event of the death of the optionee, shall thereafter be entitled to
exercise the option.
(e) The option shall become exercisable in monthly
installments over a period of five (5) years from the date of grant at the rate
of one-sixtieth (1/60th) of the number of shares of the Company's common stock
subject to such option for each month, commencing on the date one month after
the date of grant of the option, provided that the optionee has, during the
entire period prior to such vesting date, continuously served as a Non-Employee
Director or employee of or consultant to the Company or any Affiliate of the
Company, whereupon such option shall become fully exercisable in accordance
with its terms with respect to that portion of the shares represented by that
installment.
(f) The Company may require any optionee, or any person
to whom an option is transferred under subparagraph 6(d), as a condition of
exercising any such option: (i) to give written assurances satisfactory to the
Company as to the optionee's knowledge and experience in financial and business
matters; and (ii) to give written assurances satisfactory to the Company
stating that such person is acquiring the stock subject to the option for such
person's own account and not with any present intention of selling or otherwise
distributing the stock. These requirements, and any assurances given pursuant
to such requirements, shall be inoperative if (i) the issuance of the shares
upon the exercise of the option has been registered under a
then-currently-effective registration statement under the Securities Act of
1933, as amended (the "Securities Act"), or (ii) as to any particular
requirement, a determination is made by counsel for the Company that such
requirement need not be met in the circumstances under the then applicable
securities laws. The Company may require any optionee to provide such other
representations, written assurances or information which the Company shall
determine is necessary, desirable or appropriate to comply with applicable
securities laws as a condition of granting an option to the optionee or
permitting the
5.
<PAGE> 6
optionee to exercise the option. The Company may, upon advice of counsel to
the Company, place legends on stock certificates issued under the Plan as such
counsel deems necessary or appropriate in order to comply with applicable
securities laws, including, but not limited to, legends restricting the
transfer of the stock.
(g) Notwithstanding anything to the contrary contained
herein, an option may not be exercised unless the shares issuable upon exercise
of such option are then registered under the Securities Act or, if such shares
are not then so registered, the Company has determined that such exercise and
issuance would be exempt from the registration requirements of the Securities
Act.
7. COVENANTS OF THE COMPANY.
(a) During the terms of the options granted under the
Plan, the Company shall keep available at all times the number of shares of
stock required to satisfy such options.
(b) The Company shall seek to obtain from each regulatory
commission or agency having jurisdiction over the Plan such authority as may be
required to issue and sell shares of stock upon exercise of the options granted
under the Plan; provided, however, that this undertaking shall not require the
Company to register under the Securities Act either the Plan, any option
granted under the Plan, or any stock issued or issuable pursuant to any such
option. If, after reasonable efforts, the Company is unable to obtain from any
such regulatory commission or agency the authority which counsel for the
Company deems necessary for the lawful issuance and sale of stock under the
Plan, the Company shall be relieved from any liability for failure to issue and
sell stock upon exercise of such options.
8. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to options granted under the
Plan shall constitute general funds of the Company.
6.
<PAGE> 7
9. MISCELLANEOUS.
(a) Neither an optionee nor any person to whom an option
is transferred under subparagraph 6(d) shall be deemed to be the holder of, or
to have any of the rights of a holder with respect to, any shares subject to
such option unless and until such person has satisfied all requirements for
exercise of the option pursuant to its terms.
(b) Throughout the term of any option granted pursuant to
the Plan, the Company shall make available to the holder of such option, not
later than one hundred twenty (120) days after the close of each of the
Company's fiscal years during the option term, upon request, such financial and
other information regarding the Company as comprises the annual report to the
stockholders of the Company provided for in the Bylaws of the Company and such
other information regarding the Company as the holder of such option may
reasonably request.
(c) Nothing in the Plan or in any instrument executed
pursuant thereto shall confer upon any Non-Employee Director any right to
continue in the service of the Company or any Affiliate in any capacity or
shall affect any right of the Company, its Board or stockholders or any
Affiliate to remove any Non-Employee Director pursuant to the Company's By-Laws
and the provisions of the Delaware General Corporation Law (or the applicable
laws of the Company's state of incorporation if the Company's state of
incorporation should change in the future).
(d) No Non-Employee Director, individually or as a member
of a group, and no beneficiary or other person claiming under or through him,
shall have any right, title or interest in or to any option reserved for the
purposes of the Plan except as to such shares of common stock, if any, as shall
have been reserved for him pursuant to an option granted to him.
7.
<PAGE> 8
(e) In connection with each option made pursuant to the
Plan, it shall be a condition precedent to the Company's obligation to issue or
transfer shares to a Non-Employee Director, or to evidence the removal of any
restrictions on transfer, that such Non-Employee Director make arrangements
satisfactory to the Company to insure that the amount of any federal or other
withholding tax required to be withheld with respect to such sale or transfer,
or such removal or lapse, is made available to the Company for timely payment
of such tax.
(f) As used in this Plan, "fair market value" means, as
of any date, the value of the common stock of the Company determined as
follows:
(i) If the common stock is listed on any
established stock exchange or a national market system, including without
limitation the National Market System of the National Association of Securities
Dealers, Inc. Automated Quotation ("NASDAQ") System, the Fair Market Value of a
share of common stock shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such system or exchange
(or the exchange with the greatest volume of trading in common stock) on the
last market trading day prior to the day of determination, as reported in the
Wall Street Journal or such other source as the Board deems reliable;
(ii) If the common stock is quoted on the NASDAQ
System (but not on the National Market System thereof) or is regularly quoted
by a recognized securities dealer but selling prices are not reported, the Fair
Market Value of a share of common stock shall be the mean between the bid and
asked prices for the common stock on the last market trading day prior to the
day of determination, as reported in the Wall Street Journal or such other
source as the Board deems reliable;
(iii) In the absence of an established market for
the common stock, the Fair Market Value shall be determined in good faith by
the Board.
8.
<PAGE> 9
10. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the
Plan, or subject to any option granted under the Plan (through merger,
consolidation, reorganization, recapitalization, stock dividend, dividend in
property other than cash, stock split, liquidating dividend, combination of
shares, exchange of shares, change in corporate structure or other transaction
not involving the receipt of consideration by the Company), the Plan and
outstanding options will be appropriately adjusted in the class(es) and maximum
number of shares subject to the Plan and the class(es) and number of shares and
price per share of stock subject to outstanding options. Such adjustments
shall be made by the Board, the determination of which shall be final, binding
and conclusive. (The conversion of any convertible securities of the Company
shall not be treated as a "transaction not involving the receipt of
consideration by the Company.")
(b) In the event of: (1) a dissolution, liquidation, or
sale of all or substantially all of the assets of the Company; (2) a merger or
consolidation in which the Company is not the surviving corporation; (3) a
reverse merger in which the Company is the surviving corporation but the shares
of the Company's common stock outstanding immediately preceding the merger are
converted by virtue of the merger into other property, whether in the form of
securities, cash or otherwise; or (4) the acquisition by any person, entity or
group within the meaning of Section 13(d) or 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") or any comparable successor
provisions (excluding any employee benefit plan, or related trust, sponsored or
maintained by the Company or any Affiliate of the Company) of the beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act,
or comparable successor rule) of securities of the Company representing at
least fifty percent (50%) of the combined voting power entitled to vote in the
election of directors, then to the extent not prohibited by applicable law, the
time during which options outstanding under the Plan may be exercised shall be
9.
<PAGE> 10
accelerated prior to such event and the options terminated if not exercised
after such acceleration and at or prior to such event.
11. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may
amend the Plan and/or some or all outstanding options granted under the Plan,
provided, however, that the Board shall not amend the Plan more than once every
six (6) months, with respect to the provisions of the Plan which relate to the
amount, price and timing of grants, other than to comport with changes in the
Code, the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or the rules thereunder. Except as provided in paragraph 10
relating to adjustments upon changes in stock, no amendment shall be effective
unless approved by the stockholders of the Company within twelve (12) months
before or after the adoption of the amendment, where the amendment will:
(i) Increase the number of shares which
may be issued under the Plan;
(ii) Modify the requirements as to eligibility for
participation in the Plan (to the extent such modification requires
stockholder approval in order for the Plan to comply with the requirements of
Rule 16b-3); or
(iii) Modify the Plan in any other way if such
modification requires stockholder approval in order for the Plan to comply
with the requirements of Rule 16b-3.
(b) Rights and obligations under any option granted
before any amendment of the Plan shall not be impaired by such amendment unless
(i) the Company requests the consent of the person to whom the option was
granted and (ii) such person consents in writing.
10.
<PAGE> 11
12. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any
time. Unless sooner terminated, the Plan shall terminate on the date on which
all shares of the Company's common stock which have been reserved for issuance
under this Plan shall have been issued. No options may be granted under the
Plan while the Plan is suspended or after it is terminated.
(b) Rights and obligations under any option granted while
the Plan is in effect shall not be impaired by suspension or termination of the
Plan, except with the consent of the person to whom the option was granted.
(c) The Plan shall terminate upon the occurrence of any
of the events described in Section 10(b) above.
13. EFFECTIVE DATE OF PLAN; CONDITIONS OF EXERCISE.
(a) The Plan shall become effective upon adoption by the
Board of Directors, subject to the condition subsequent that the Plan is
approved by the stockholders of the Company.
(b) No option granted under the Plan shall be exercised
or exercisable unless and until the condition of subparagraph 13(a) above has
been met.
11.
<PAGE> 1
EXHIBIT 10.3
SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT dated as of March 21, 1997 (this
"Subscription Agreement") is by and between CYBERCASH, INC., a Delaware
corporation ("Cybercash" or the "Company"), and CARNEGIE MELLON UNIVERSITY
("CMU").
RECITALS:
CyberCash and CMU are parties to a License Agreement dated as
of March 21, 1997 (the "License Agreement") pursuant to which CyberCash has
agreed to issue to CMU 120,000 shares of Common Stock, par value $.001 per
share (the "Shares") and warrants to purchase an additional 50,000 shares of
Common Stock, par value $.001 per share (the "Warrants"). The Shares, the
Warrants and the Common Stock issuable upon exercise of the Warrants are
sometimes referred to herein collectively as the "Securities".
NOW, THEREFORE, CyberCash and CMU, in consideration of the
mutual covenants contained herein and intending to be legally bound, do hereby
agree as follows:
I. SECURITIES
1.1. Shares. Subject to the terms and conditions hereof and
the License Agreement, CMU hereby subscribes for, and CyberCash shall issue to
CMU, the Shares on the date hereof.
1.2. Warrants. Subject to the terms and conditions hereof
and the License Agreement, CyberCash shall issue the Warrants to CMU on the
date hereof. The Warrants shall be in the form of the Warrant Certificate
attached hereto as Annex 1.
II. REGISTRATION OF SHARES
2.1. Securities Laws Requirements. The Company will use its
best efforts to comply with the reporting requirements of Section 13 and 15(d)
of the Securities Exchange Act of 1934 (whether or not it shall be required to
do so pursuant to such Sections) and will use its best efforts to comply with
all other public information reporting requirements of the Securities and
Exchange Commission (such Commission or any successor to any or all of its
functions being the "Commission") (including, without limitation, meeting the
information requirements described in Rule 144 promulgated by the Commission
under the Securities Act of 1933 (the "Act") from time to time in effect and
relating to the availability of an exemption from the Act for sale of
restricted securities. The Company also will cooperate with CMU and with each
holder of any Shares in supplying such information as may be necessary for any
such holder to complete and file any information reporting forms presently or
hereafter required by the
<PAGE> 2
Commission as a condition to the availability of an exemption from the Act for
the sale of restricted securities.
2.2. "Piggyback" Registration. Whenever the Company proposes
to file under the Act a registration statement relating to any of its Common
Stock (other than a registration statement required to be filed in respect of
employee benefit plans of the Company on Form S-8 or any similar form from time
to time in effect or pursuant to Section 2.3 of this Article), the Company
shall at least fifteen days prior to such filing give effective written notice
of such proposed filing to the registered holder of each Share. Upon receipt
by the Company not more than fifteen days after such effective notice of a
written request or written requests from one or more of such holders for
registration of Shares, the Company shall include in such offering the Shares
as to which such holder or holders request such inclusion, on terms and
conditions comparable to those of the securities offered on behalf of the
Company.
2.3. Demand Registration. Whenever one or more registered
holders of Shares shall make a written request to the Company to register under
the Act Shares held by such holder or holders and the aggregate number of
Shares so requested to be registered represents, as of the date of such
request, at least 51 percent of the total of the Shares, the Company within
five days after such request is effective shall promptly give written notice of
such request to all registered holders of Shares other than the holder or
holders making such request, such notice stating the estimated approximate date
of filing such registration statement, and shall thereupon promptly use its
best efforts to register the Shares of or pertaining to the holder or holders
making such request and each other holder of Shares from whom written request
for registration is effective or received on or before the later to occur of
(i) the twentieth day after the effective date of such notice by the Company or
(ii) the thirtieth day prior to the estimated date of filing specified in such
notice; provided, that the Company shall not be required to effect more than
two registrations pursuant to Sections 2.2 and 2.3 of this Article II. Any
registration statement pursuant to this Section 2.3 shall be undertaken
pursuant to a Form S-3 registration statement if the Company then qualifies for
use of such form. Otherwise, any such registration statement shall be
undertaken pursuant to a Form S-1 registration statement.
2.4. Other Provisions Relating to Registration Rights. In
connection with any registration pursuant to this Article:
(i) Cooperation with Underwriters. Upon the request of the
registered holder of any Shares participating in such registration,
the Company will cooperate with any underwriters for such holder,
including, without limitation, providing such information,
certificates, comfort letters of accountants and opinions of counsel
as may be reasonably requested by such underwriters.
(ii) Duration of Effectiveness of the Registration Statement.
The Company shall not be required to maintain the effectiveness of any
registration statement under
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<PAGE> 3
Section 2.2 or 2.3 of this Article for a period in excess of six
months or, in the case of any registration statement under Section 2.2
or 2.3 of this Article filed on a Form S-3 Registration Statement
under the Act, for a period in excess of twelve months, or in the case
of an underwritten offering, such longer period as may be required by
the Act to enable the underwriters to complete such offering.
(iii) Certain Documents to be Provided by the Company. The
Company will furnish to each holder of Shares (A) at least seven days
prior to the filing thereof with the Commission, a copy of the
registration statement in the form in which the Company proposes to
file the same with the Commission and, not later than the effective
date thereof, a copy of any and all amendments to such registration
statement, (B) within five days of the filing thereof with the
Commission, a copy of any and all post-effective amendments to such
registration statement, and (C) at the request of any such holder and,
in the case of a registration pursuant to Section 2.3 of this Article,
the Shareholders' Managers (as defined below), a reasonable number of
copies of a preliminary prospectus and a final prospectus (each of
which shall, as of their respective dates, comply with Section 10 of
the Act and shall not, as of such dates, include an untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make statements therein not misleading)
covering the offering and sale by such holders of the Shares to be
covered thereby as aforesaid.
(iv) Stop Order. The Company will advise each of such
holders of the entry of any stop order suspending the effectiveness of
such registration statement or of the initiation of any proceeding for
that purpose, and, if such stop order should be entered, use its best
efforts promptly to cause such stop order to be lifted or removed.
(v) Required Amendments and Supplements to the Registration
Statement. For such period of time (not exceeding the maximum period
of time for which the Company is required to maintain the
effectiveness of such registration statement) as any of such holders
may be required by law to deliver a prospectus in connection with a
sale of any Shares pursuant to such registration statement, if any
event shall occur as a result of which it is necessary to amend or
supplement the prospectus forming a part of such registration
statement in order to correct an untrue statement of a material fact,
or an omission to state a material fact necessary to make statements
therein, in the light of the circumstances existing when such
prospectus is delivered to a purchaser, not misleading or if it is
necessary to amend or supplement such prospectus to comply with any
law, the Company will forthwith prepare and furnish to each of such
holders and, in the case of a registration pursuant to Section 2.3 of
this Article, the Shareholders' Managers, a reasonable number of
amended or supplemented prospectuses so that statements in the
prospectuses as so amended or supplemented will not, in the light of
the circumstances then existing, be misleading, or so that such
prospectuses will comply with law.
-3-
<PAGE> 4
(vi) Underwriting Agreement. At any time prior to the filing
of a registration statement pursuant to Section 2.3 of this Article,
the holders of Shares making or joining in a request for such
registration may select an investment banker or bankers (collectively,
the "Shareholders' Managers") which shall be satisfactory to the
Company, and the offering pursuant to such registration statement
shall be made through the Shareholders' Managers. The Company shall
enter into an underwriting agreement in customary form with the
Shareholders' Managers and will indemnify the Shareholders' Managers,
their officers and directors, and each person, if any, who controls
the Shareholders' Managers within the meaning of the Act to the same
extent as hereinafter provided with respect to the holders of Shares
requesting such registration.
(vii) Blue Sky Compliance. The Company will use its best
efforts to qualify, file or register the Shares being registered under
the securities laws of such states of the United States of America as
may be reasonably designated by the holders of Shares or by the
Shareholders' Managers and to obtain the consent, authorization or
approval of any governmental agency (other than any such consent,
authorization or approval required under any statute or regulation
applicable to any such holders and not applicable to investors
generally) required in connection with the issuance of the Shares
being registered or in order that such holders may publicly sell the
Shares covered by such registration statement.
(viii) Expenses. All fees, disbursements and expenses
incurred by the Company in connection with the registration pursuant
to Section 2.2 or 2.3 of this Article, and all reasonable fees and
disbursements of one counsel for the holders of Shares, shall be borne
by the Company, including, without limitation, all registration and
filing fees, all costs of preparation and printing (in such quantities
as the holders of Shares, or the Shareholders' Managers, may
reasonably request) of any registration statement and related
prospectus and any amendments or supplements thereto, all fees and
disbursements of counsel for the Company, the expenses of complying
with applicable securities or blue sky laws, and all costs in
connection with the preparation and delivery of such legal opinions,
auditors' comfort letters or other closing documents as the holders of
Shares, or as the Shareholders' Managers, shall reasonably request.
All underwriting commissions and expenses of the Shareholders'
Managers shall be allocated among the holders of Shares pro rata
according to the number of Shares being registered by each such holder
or in such other manner as such holders may agree.
(ix) Indemnity. The Company will indemnify and hold harmless
each holder of Shares and any underwriter for such holder and each
person or entity, if any, who controls such holder or underwriter
within the meaning of the Act, against any losses, claims, damages,
liabilities, costs or expenses, joint or several, or actions in
respect thereof to which such holder or underwriter or controlling
person or entity may become subject under the Act, or otherwise,
insofar as such losses, claims, damages, liabilities,
-4-
<PAGE> 5
costs, expenses or actions in respect thereof arise out of, or are
based upon, or are related to, any untrue statement or alleged untrue
statement of any material fact contained in any registration statement
under which Shares of or pertaining to such holder were registered
under the Act, any preliminary prospectus, amended preliminary
prospectus, or final prospectus contained therein, or any amendment or
supplement thereto, or arise out of, or are based upon, or are related
to, the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse such holder or underwriter
or controlling person or entity for any legal or other expenses
reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided
that to the extent that any such loss, claim, damage or liability
arises out of, or is based upon, an untrue statement or alleged untrue
statement or omission or alleged omission made in said registration
statement, said preliminary prospectus, said amended preliminary
prospectus or said final prospectus or any said amendment or
supplement in reliance upon, and in conformity with, written
information furnished to the Company in an instrument duly executed by
such holder or by any underwriter for such holder specifically for use
in the preparation thereof, the Company will not be so liable to such
holder or underwriter.
III. REPRESENTATIONS AND WARRANTIES OF CYBERCASH
CyberCash represents and warrants to CMU that:
3.1. Organization, Standing, etc. CyberCash is a corporation
duly organized, validly existing and in good standing under the laws of
Delaware, and has all requisite power and authority to carry on its business,
to own its properties, to enter into this Subscription Agreement, and to issue
the securities to be issued by it hereunder and to carry out the provisions of
this Subscription Agreement.
3.2. Corporate Acts and Proceedings. The execution and
delivery of this Subscription Agreement and the offer, issuance and sale of the
Securities to be issued by CyberCash hereunder and the performance of this
Subscription Agreement by CyberCash have been duly authorized by its Board of
Directors, and all corporate acts and other proceedings required for the due
and valid authorization, execution, delivery and performance of this
Subscription Agreement by CyberCash and the due, valid and legal issue and sale
of the Securities to be issued by it hereunder have been appropriately taken or
will have been taken on or prior to the date hereof.
3.3. Enforceability. This Subscription Agreement has been
duly authorized, executed and delivered by and constitutes the valid and
binding obligation of CyberCash
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<PAGE> 6
enforceable in accordance with its terms, except as the enforceability hereof
may be limited by bankruptcy, insolvency or other similar laws of general
application affecting the enforcement of creditors' rights or by general
principles of equity limiting the availability of equitable remedies.
3.4. No Conflict. Neither the execution and delivery of this
Subscription Agreement nor the consummation of the transactions contemplated
hereby conflicts with the Certificate of Incorporation or By-Laws of CyberCash
or results or will result in any material breach of any terms or provisions of,
or constitutes a default under, any material contract, agreement or instrument
to which CyberCash is a party or by which it is bound.
3.5. Shares. The Securities are duly authorized and when
issued in accordance with the terms of this Subscription Agreement, the License
Agreement and the Warrant Certificate will be validly issued and outstanding,
fully paid, non-assessable and free and clear of all liens, encumbrances and
restrictions of any kind created by CyberCash, other than restrictions imposed
by the Act and any applicable state or foreign securities laws.
IV. REPRESENTATIONS, WARRANTIES AND COVENANTS OF CMU
CMU represents, warrants and covenants as follows:
4.1. Enforceability. This Subscription Agreement has been
duly authorized, executed and delivered by CMU and constitutes the valid and
binding obligation of CMU enforceable in accordance with its terms, except as
the enforceability hereof may be limited by bankruptcy, insolvency or other
similar laws of general application affecting the enforcement of creditors'
rights or by general principles of equity limiting the availability of
equitable remedies.
4.2. Adequate Information. Prior to making the decision to
enter into this Subscription Agreement and invest in the Securities, CMU has
been provided the opportunity to ask questions of, and receive answers from,
the officers of CyberCash concerning CyberCash and its business, operations,
financial condition and prospects and to obtain from CyberCash additional
information relevant to investment. On the basis of the foregoing, CMU
acknowledges that it possesses sufficient information to understand the merits
and risks associated with the investment in the Securities.
4.3. Investment Experience. CMU believes that its prior
investment experience enables it to make an informed decision with respect to
an investment in the Securities. CMU has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of the investment in the Securities.
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4.4. Investment Purpose. The Securities are being acquired
for CMU's own account and for the purpose of investment and not with a view to,
or for sale in connection with, the distribution thereof, nor with any present
intention of distributing or selling any of the Securities. CMU has been
advised that the Securities have not been registered under the Act and that in
this connection CyberCash is relying in part on CMU's representations set forth
in this Subscription Agreement.
4.5. No Resale. CMU understands that it must bear the
economic risk of the investment in the Securities for an indefinite period of
time because the Securities have not been registered under the Act or any
applicable state or foreign securities laws and, accordingly, CMU agrees that
the Securities cannot be offered, sold, pledged or otherwise disposed of, and
CMU will not offer, sell, pledge or otherwise dispose of the Securities, except
pursuant to (i) an effective registration statement under the Act and
qualification under applicable state and foreign securities laws, or (ii) an
opinion of Reed Smith Shaw & McClay, special counsel to CMU, or such other
counsel as may be acceptable to CMU, that such registration and qualification
are not required. A stop-transfer order will be placed on the books of
CyberCash (or its transfer agent) respecting the certificates evidencing the
Securities and such certificate shall bear, until such time as the Securities
evidenced by such certificates shall have been registered under the Act or
shall have been transferred in accordance with an opinion of Reed Smith Shaw &
McClay, special counsel to CMU, or such other counsel as may be acceptable to
CMU, that such registration is not required as provided above, legends in
substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER ANY STATE OR
FOREIGN SECURITIES LAWS. THESE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT
BE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH
SHARES UNDER THE SECURITIES ACT OF 1933 AND ANY APPLICABLE STATE AND
FOREIGN SECURITIES LAWS, OR PURSUANT TO APPLICABLE EXEMPTIONS FROM
REGISTRATION.
V. MISCELLANEOUS
5.1. Severability. Should any one or more of the provisions
of this Subscription Agreement be determined to be illegal or unenforceable,
all other provisions of this Subscription Agreement shall be given effect
separately from the provision or provisions determined to be illegal or
unenforceable and shall not be affected thereby.
5.2. Parties in Interest. Except as otherwise expressly
provided herein, all of the terms and provisions of this Subscription Agreement
shall be binding upon and inure to the
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<PAGE> 8
benefit of and be enforceable by the respective successors or permitted assigns
of the parties hereto. Without limiting the generality of the foregoing, the
provisions hereof (including without limitation Article II) shall inure to the
benefit of, and shall be enforceable by, the holders from time to time of the
Shares.
5.3. Choice of Law. The Subscription Agreement is made under
the laws of the State of Delaware, and for all purposes shall be governed by
and construed in accordance with the laws of that jurisdiction, including,
without limitation, the validity of this Subscription Agreement, the
construction of its terms, and the interpretation of the rights and obligations
of the parties hereto.
CYBERCASH, INC.
By: /s/ Stephen D. Crocker
-------------------------------------
Title: Chief Technology Officer
----------------------------------
CARNEGIE MELLON UNIVERSITY
By: /s/ Susan Burkett
-------------------------------------
Title: Associate Provost
---------------------------------
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<PAGE> 1
EXHIBIT 10.4
ANNEX 1
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THESE SECURITIES HAVE
BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION, AND MAY NOT
BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR AN OPINION OF COUNSEL DELIVERED TO THE COMPANY THAT REGISTRATION IS
NOT REQUIRED UNDER SUCH ACT.
CYBERCASH, INC.
WARRANT CERTIFICATE
Dated as of March 21, 1997
WARRANTS TO PURCHASE COMMON STOCK
CYBERCASH, INC., a Delaware corporation (the "Company"),
hereby certifies that, for value received, CARNEGIE MELLON UNIVERSITY, or
registered assigns, is the registered owner of 50,000 Warrants (the
"Warrants"), each of which will entitle the registered owner thereof to
purchase one share, as adjusted from time to time as provided in Section 7, of
the Common Stock of the Company (the "Common Stock", each such share being a
"Warrant Share" and all such shares being the "Warrant Shares") at the exercise
price of $16.45 per share (herein, as adjusted from time to time as provided in
Section 7 the "Exercise Price") on or before March 21, 2007 (the "Expiration
Date"), all subject to the following terms and conditions:
SECTION 1. REGISTRATION. The Company shall register each
Warrant, upon records to be maintained by the Company for that purpose, in the
name of the record holder of such Warrant from time to time. The Company may
deem and treat the registered holder of each Warrant as the absolute owner
thereof for the purpose of any exercise thereof or any distribution to the
holder thereof, and for all other purposes, and the Company shall not be
affected by any notice to the contrary.
SECTION 2. REGISTRATION OF TRANSFERS AND EXCHANGES.
(a) GENERAL. The Company shall register the transfer of any
Warrants upon records to be maintained by the Company for that purpose, upon
surrender of this Warrant Certificate, with the Form of Assignment attached
hereto duly filled in and signed, to the Company at the office specified in or
pursuant to Section 3(c). Upon any such registration of transfer, a new
Warrant Certificate, in substantially the form of this Warrant Certificate,
evidencing the Warrants so transferred shall be issued to the transferee and a
new Warrant Certificate, in similar form, evidencing the remaining Warrants not
so transferred, if any, shall be issued to the then registered holder thereof.
(b) WARRANTS EXCHANGEABLE FOR DIFFERENT DENOMINATIONS. This
Warrant Certificate is exchangeable, upon the surrender hereof by the holder
hereof at the office of the Company specified in or pursuant to Section 3(c),
for new Warrant Certificates, in substantially the form of this Warrant
Certificate, evidencing in the aggregate the right to purchase the number of
Warrant Shares which may then be purchased hereunder, each of such new Warrant
Certificates to be dated the date of such
<PAGE> 2
exchange and to represent the right to purchase such number of Warrant Shares
as shall be designated by said holder hereof at the time of such surrender.
SECTION 3. DURATION AND EXERCISE OF WARRANTS.
(a) DURATION. Warrants shall be exercisable by the
registered holder thereof on any business day before 5:00 P.M., Pittsburgh
time, on the Expiration Date. At 5:00 P.M., Pittsburgh time, on the Expiration
Date, each Warrant not exercised prior thereto shall be and become void and of
no value.
(b) EXERCISE. Subject to the provisions of this Warrant
Certificate, including adjustments to the number of Warrant Shares issuable on
the exercise of each Warrant and to the Exercise Price pursuant to Section 7,
the holder of each Warrant on or prior to the Expiration Date shall have the
right to purchase from the Company (and the Company shall be obligated to issue
and sell to such holder of a Warrant) at the Exercise Price one fully paid
Warrant Share which is non-assessable. The Warrants represented hereby are
being issued to CMU in connection with a License Agreement dated as of March
21, 1997 (the "License") between CMU, as licensor, and the Company, as
licensee. For purposes of exercise, the Warrants shall be divided into 25,000
Class A Warrants and 25,000 Class B Warrants. Each class will become
exercisable in five equal annual installments of 5,000 Warrant Shares,
commencing on the first anniversary of the License, provided that the exercise
of the Class B Warrants shall also be conditioned upon issuance of the "Patent"
referred to in the License. If the Patent is not issued by the first
anniversary of the License, then (i) the first installment of Class B Warrants
will become exercisable upon issuance of the Patent and remaining installments
shall then become exercisable on the succeeeding anniversaries of the License,
and (ii) such first installment shall be in amount equal to the number of
Warrants which would otherwise have become exercisable by such issuance date if
the Patent had been issued by the first anniversary of the License.
(c) MANNER OF EXERCISE. Upon surrender of this Warrant
Certificate, with the Form of Election to Purchase attached hereto duly filled
in and signed, to the Company at its office at 2100 Reston Parkway, Suite 430,
Reston, Virginia 22091, Attention: Chief Financial Officer, or at such other
address as the Company may specify in writing to the then registered holder of
the Warrants, and upon payment of the Exercise Price multiplied by the number
of Warrant Shares then issuable upon exercise of the Warrants being exercised
in lawful money of the United States of America, all as specified by the holder
of this Warrant Certificate in the Form of Election to Purchase, the Company
shall promptly issue and cause to be delivered to or upon the written order of
the registered holder of such Warrants, and in such name or names as such
registered holder may designate, a certificate for the Warrant Shares issued
upon such exercise of such Warrants. Any person so designated to be named
therein shall be deemed to have become holder of record of such Warrant Shares
as of the Date of Exercise of such Warrants.
The "Date of Exercise" of any Warrant means the date on which
the Company shall have received (i) this Warrant Certificate, with the Form of
Election to Purchase attached hereto appropriately filled in and duly signed,
and (ii) payment of the Exercise Price for such Warrant.
(d) PARTIAL EXERCISE. The Warrants evidenced by this Warrant
Certificate shall be exercisable, either as an entirety or, from time to time,
for part only of the number of Warrants evidenced by this Warrant Certificate.
If less than all of the Warrants evidenced by this Warrant Certificate are
exercised at any time, the Company shall issue, at its expense, a new Warrant
Certificate,
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<PAGE> 3
in substantially the form of this Warrant Certificate, for the remaining number
of Warrants evidenced by this Warrant Certificate.
SECTION 4. PAYMENT OF TAXES. The Company will pay all taxes
attributable to the issuance of the Warrants and the Warrant Shares; provided,
however, that the Company shall not be required to pay any tax in respect of
the transfer of Warrants, or the issuance or delivery of certificates for
Warrant Shares or other securities in respect of the Warrant Shares upon the
exercise of Warrants, to a person or entity other than a then existing
registered holder of Warrants or an Affiliate of such registered holder. An
"Affiliate" of any person or entity means any other person or entity directly
or indirectly controlling, controlled by or under direct or indirect common
control with such person or entity.
SECTION 5. MUTILATED OR MISSING WARRANT CERTIFICATE. If this
Warrant Certificate shall be mutilated, lost, stolen or destroyed, upon request
by the registered holder of the Warrants the Company will issue, in exchange
for and upon cancellation of the mutilated Warrant Certificate, or in
substitution for the lost, stolen or destroyed Warrant Certificate, a new
Warrant Certificate, in substantially the form of this Warrant Certificate, of
like tenor and representing the equivalent number of Warrants, but, in the case
of loss, theft or destruction, only upon receipt of evidence satisfactory to
the Company of such loss, theft or destruction of this Warrant Certificate and,
if requested by the Company, indemnity also satisfactory to it.
SECTION 6. RESERVATION, LISTING AND ISSUANCE OF WARRANT
SHARES.
(a) GENERAL. The Company will at all times have authorized,
and reserve and keep available, free from preemptive rights, for the purpose of
enabling it to satisfy any obligation to issue Warrant Shares upon the exercise
of the Warrants, the number of shares of Warrant Shares deliverable upon
exercise of the Warrants. The Company will, at its expense, use its best
efforts to cause such shares to be listed (subject to issuance or notice of
issuance of Warrant Shares) on all stock exchanges on which the Common Stock is
listed not later than the first anniversary of the License.
(b) ADJUSTMENT OF EXERCISE PRICE BELOW PAR VALUE. Before
taking any action which could cause an adjustment pursuant to Section 7
reducing the Exercise Price below the then par value (if any) of the Warrant
Shares, the Company will take any corporate action which may be necessary in
order that the Company may validly and legally issue at the Exercise Price as
so adjusted Warrant Shares that are fully paid and non-assessable.
(c) STATUS OF WARRANT SHARES. The Company covenants that all
Warrant Shares will, upon issuance in accordance with the terms of this Warrant
Certificate, be (i) duly authorized, fully paid and non-assessable, and (ii)
free from all taxes with respect to the issuance thereof and from all liens,
charges and security interests created by the Company.
SECTION 7. ADJUSTMENTS OF PRICE AND NUMBER OF WARRANT SHARES.
(a) GENERAL. The Exercise Price of each Warrant shall be
subject to adjustment from time to time as hereinafter provided. Upon each
adjustment of such Exercise Price pursuant to this Section the holder of such
Warrant shall thereafter prior to the Expiration Date thereof be entitled to
purchase, at the Exercise Price resulting from such adjustment, the number of
Warrant Shares obtained
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<PAGE> 4
by multiplying the Exercise Price in effect immediately prior to such
adjustment by the number of Warrant Shares issuable upon exercise of such
Warrant immediately prior to such adjustment and dividing the product thereof
by the Exercise Price resulting from such adjustment.
(b) ADJUSTMENT FOR CERTAIN SPECIAL DIVIDENDS. In case the
Company shall declare a dividend upon the Common Stock payable otherwise than
out of earnings or earned surplus, determined in accordance with generally
accepted accounting principles, and otherwise than in Common Stock or any stock
or securities convertible or exchangeable for Common Stock, the Exercise Price
in effect immediately prior to the declaration of such dividend shall be
reduced by an amount equal, in the case of a dividend in cash, to the amount
per share of the Common Stock so declared as payable otherwise than out of
earnings or earned surplus or, in the case of any other dividend, to the fair
value per share of the Common Stock of the property so declared as payable
otherwise than out of earnings or earned surplus, as determined, reasonably and
in good faith, by the board of directors of the Company. For the purposes of
the foregoing a dividend other than in cash shall be considered payable out of
earnings or earned surplus (other than revaluation or paid-in-surplus) only to
the extent that such earnings or earned surplus are charged an amount equal to
the fair value of such dividend as determined, reasonably and in good faith, by
the board of directors of the Company. Such reductions shall take effect as of
the date on which a record is taken for the purpose of such dividend, or, if a
record is not taken, the date as of which the holders of Common Stock of record
entitled to such dividend are determined.
(c) SUBDIVISION OR COMBINATION OF STOCK. In case the Company
shall at any time subdivide the outstanding shares of Common Stock into a
greater number of shares, the Exercise Price in effect immediately prior to
such subdivision shall be proportionately reduced, and conversely, in case the
outstanding shares of Common Stock shall be combined into a smaller number of
shares, the Exercise Price in effect immediately prior to such combination
shall be proportionately increased.
(d) ADJUSTMENTS FOR CONSOLIDATION, MERGER, SALE OF ASSETS,
REORGANIZATION, ETC. In case the Company (i) consolidates with or merges into
any other corporation and is not the continuing or surviving corporation of
such consolidation or merger, or (ii) permits any other corporation to
consolidate with or merge into the Company and the Company is the continuing or
surviving corporation but, in connection with such consolidation or merger, the
Common Stock is changed into or exchanged for stock or other securities of any
other corporation or cash or any other assets, or (iii) transfers all or
substantially all of its properties and assets to any other corporation, or
(iv) effects a capital reorganization or reclassification of the capital stock
of the Company in such a way that holders of Common Stock shall be entitled to
receive stock, securities, cash or assets with respect to or in exchange for
Common Stock, then, and in each such case, proper provision shall be made so
that, upon the basis and upon the terms and in the manner provided in this
subsection (f), the holder of this Warrant Certificate, upon the exercise of
each Warrant at any time after the consummation of such consolidation, merger,
transfer, reorganization or reclassification, shall be entitled to receive (at
the aggregate Exercise Price in effect for all shares of Common Stock issuable
upon such exercise immediately prior to such consummation as adjusted to the
time of such transaction), in lieu of shares of Common Stock issuable upon such
exercise prior to such consummation, the stock and other securities, cash and
assets to which such holder would have been entitled upon such consummation if
such holder had so exercised such Warrant immediately prior thereto (subject to
adjustments subsequent to such corporate action as nearly equivalent as
possible to the adjustments provided for in this Section 7).
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<PAGE> 5
(e) NOTICE OF ADJUSTMENT. Upon any adjustment of any
Exercise Price, then and in each such case the Company shall promptly deliver a
notice to the registered holder of the Warrants, which notice shall state the
Exercise Price resulting from such adjustment and the increase or decrease, if
any, in the number of shares purchasable at such price upon the exercise of
each Warrant, setting forth in reasonable detail the method of calculation and
the facts upon which such calculation is based.
(f) OTHER NOTICES. In case at any time:
(A) the Company shall declare any cash dividend on its Common
Stock;
(B) the Company shall pay any dividend payable in stock upon
its Common Stock or make any distribution (other than regular cash
dividends) to the holders of its Common Stock;
(C) the Company shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any
class or other rights;
(D) the Company shall authorize the distribution to all
holders of its Common Stock of evidences of its indebtedness or assets
(other than cash dividends or cash distributions payable out of
earnings or earned surplus or dividends payable in Common Stock);
(E) there shall be any capital reorganization, or
reclassification of the capital stock of the Company, or consolidation
or merger of the Company with another corporation (other than a
subsidiary of the Company in which the Company is the surviving or
continuing corporation and no change occurs in the Company's Common
Stock), or sale of all or substantially all of its assets to, another
corporation;
(F) there shall be a voluntary or involuntary dissolution,
liquidation, bankruptcy, assignment for the benefit of creditors, or
winding up of the Company; or
(G) the Company proposes to take any other action or an event
occurs which would require an adjustment of the Exercise Price
pursuant to subsection (i) of this Section 7;
then, in any one or more of said cases, the Company shall give written notice,
addressed to the holder of this Warrant Certificate at the address of such
holder as shown on the books of the Company, of (1) the date on which the books
of the Company shall close or a record shall be taken for such dividend,
distribution or subscription rights, or (2) the date (or, if not then known, a
reasonable approximation thereof by the Company) on which such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation,
bankruptcy, assignment for the benefit of creditors, winding up or other
action, as the case may be, shall take place. Such notice shall also specify
(or, if not then known, reasonably approximate) the date as of which the
holders of Common Stock of record shall participate in such dividend,
distribution or subscription rights, or shall be entitled to exchange their
Common Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation, bankruptcy, assignment for the benefit of creditors, winding up,
or other action, as the case may be. Such written notice shall be given at
least twenty days prior to the action in question and not less than twenty days
prior to the record date or the date on which the Company's transfer books are
closed in respect thereto.
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<PAGE> 6
(g) CERTAIN EVENTS. If any event occurs as to which the
other provisions of this Section 7 are not strictly applicable but the lack of
any adjustment would not fairly protect the purchase rights of the holder of
this Warrant Certificate in accordance with the basic intent and principles of
such provisions, or if strictly applicable would not fairly protect the
purchase rights of the holder of this Warrant Certificate in accordance with
the basic intent and principles of such provisions, then at the request of the
holder the Company shall appoint a firm of independent certified public
accountants of recognized national standing reasonably satisfactory to the
holder, which shall give their opinion upon the adjustment, if any, on a basis
consistent with the basic intent and principles established in the other
provisions of this Section 7, necessary to preserve, without dilution, the
exercise rights of the registered holder of this Warrant Certificate. Upon
receipt of such opinion, the Company shall forthwith make the adjustments
described therein.
SECTION 8. NO STOCK RIGHTS. No holder of this Warrant
Certificate, as such, shall be entitled to vote or be deemed the holder of
Common Stock or any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained herein be
construed to confer upon the holder of this Warrant Certificate, as such, the
rights of a stockholder of the Company or the right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or give or withhold consent to any corporate action or to receive notice of
meetings or other actions affecting stockholders (except as provided herein),
or to receive dividends or subscription rights or otherwise, until the Date of
Exercise of Warrants shall have occurred.
SECTION 9. FRACTIONAL WARRANTS AND FRACTIONAL WARRANT SHARES.
(a) FRACTIONAL WARRANTS. The Company shall not be required
to issue fractions of Warrants or to distribute any Warrant Certificate which
evidences fractional Warrants, nor shall the Company be required to make any
cash adjustment in respect of a fractional interest in a Warrant, but any
person or entity entitled to a fractional interest in a Warrant may elect,
during such period of time (not less than 20 or more than 90 days from the date
such person or entity first becomes entitled to such fractional interest in a
Warrant) as the Company shall determine, to purchase the additional fractional
interest required to make up a full Warrant or to sell the fractional interest
to which such person or entity is entitled. Such election shall be made on a
form to be provided for such purpose by the Company. If such election is not
made in the time prescribed by the Company, the fractional interest to which
such person or entity is entitled shall be sold to a third party or retained as
a treasury share. Upon any sale the Company shall promptly deliver to the
holder of such fractional interest the proportional amount of the proceeds of
such sale attributable to such holder's fractional interest. Such purchase or
sale shall be effected in the manner set forth in subsection (c) of this
Section 9 by the Company, acting as agent for the person or entity entitled to
such fractional interest. For purposes of subsection (c) of this Section 9, the
purchase or sale price of a fractional interest of a Warrant shall be the
purchase or sale price for the Common Stock that would, except for the
provisions of this Section, be issuable upon the exercise of such fractional
interest.
(b) FRACTIONAL WARRANT SHARES. The Company shall not be
required to issue fractions of Warrant Shares upon exercise of the Warrants or
to distribute certificates which evidence fractional Warrant Shares, nor shall
the Company be required to make any cash adjustment in respect of a fractional
interest in a Warrant Share, but any person or entity entitled to a fraction of
a Warrant Share upon exercise of any Warrant may elect, during such period of
time (not less than 20 or more than 90 days from the date such person or entity
first becomes entitled to such fractional interest in a Warrant
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<PAGE> 7
Share) as the Company shall determine, to purchase the additional fractional
interest required to make up a full Warrant Share or to sell the fractional
interest to which such person or entity is entitled. Such election shall be
made on a form to be provided for such purpose by the Company. If such election
is not made within the time prescribed by the Company, the fractional interest
to which such person or entity is entitled will be sold to a third party or
retained as a treasury share. Upon any sale the Company shall promptly deliver
to the holder of such fractional interest the proportional amount of the
proceeds of such sale attributable to such holder's fractional interest. Such
purchase or sale shall be effected in the manner set forth in subsection (c) of
this Section 9 by the Company, acting as agent for the person or entity
entitled to such fractional interest.
(c) CERTAIN PROCEDURES APPLICABLE TO PURCHASE AND SALE OF
FRACTIONAL INTERESTS. The Company shall bill each person or entity entitled to
a fractional interest in Warrants or Warrant Shares for the cost of any
additional fractional interest purchased by the Company as agent for such
person or entity or shall remit to such person or entity the proceeds of the
sale of any fractional interest sold by it as such agent. In the case of a
purchase, the Company may sell the Warrant or Warrant Share to which such
person or entity is entitled if payment is not received by the Company within
30 days after the mailing of such bill and, after deducting the amount of such
bill and other appropriate charges, shall remit the balance, if any, to such
person or entity. Fractional interests shall be non-transferable except by or
to the Company acting as herein authorized. The Company may purchase or sell a
fractional interest for an amount equal to the current value of such fractional
interest computed on the basis of the Market Price on the Date of Exercise of
the related Warrant. Purchases and sales of fractional interests by the Company
may, in its sole discretion, be set off one against the other on the basis of
the Market Price on the date of setoff.
SECTION 10. REGISTRATION OF WARRANTS AND WARRANT SHARES.
(a) NO REGISTRATION UNDER SECURITIES ACT. Neither the
Warrants nor the Warrant Shares have been registered under the Securities Act
of 1933, as amended (such Act, or any similar Federal statute then in effect,
being the "Act").
The holder of this Warrant Certificate, by acceptance hereof,
represents that it is acquiring the Warrants to be issued to it for its own
account and not with a view to the distribution thereof, and agrees not to
sell, transfer, pledge or hypothecate any Warrants or any Warrant Shares unless
a registration statement is effective for such Warrants or Warrant Shares under
the Act or in the opinion of such holder's counsel (a copy of which opinion
shall be delivered to the Company) such transaction is exempt from the
registration requirements of the Act.
The Company will use its best efforts to comply with the
reporting requirements of Section 13 and 15(d) of the Securities Exchange Act
of 1934 (whether or not is shall be required to do so pursuant to such
Sections) and will use its best efforts to comply with all other public
information reporting requirements of the Securities and Exchange Commission
(such Commission or any successor to any or all of its functions being the
"Commission") (including, without limitation, Rule 144 promulgated by the
Commission under the Act) from time to time in effect and relating to the
availability of an exemption from the Act for sale of restricted securities.
The Company also will cooperate with the holder of this Warrant Certificate and
with each holder of any Warrant Shares in supplying such information as may be
necessary for any such holder to complete and file any information reporting
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<PAGE> 8
forms presently or hereafter required by the Commission as a condition to the
availability of an exemption from the Act for the sale of restricted
securities.
(b) "PIGGYBACK" REGISTRATION. Whenever the Company proposes
to file under the Act a registration statement relating to any of its Common
Stock (other than a registration statement required to be filed in respect of
employee benefit plans of the Company on Form S-8 or any similar form from time
to time in effect or pursuant to subsection (c) of this Section), the Company
shall at least fifteen days prior to such filing give effective written notice
of such proposed filing to the registered holder of each Warrant or Warrant
Share. Upon receipt by the Company not more than fifteen days after such
effective notice of a written request or written requests from one or more of
such holders for registration of Warrant Shares, the Company shall include in
such offering the Warrant Shares as to which such holder or holders request
such inclusion, on terms and conditions comparable to those of the securities
offered on behalf of the Company.
(c) DEMAND REGISTRATION. Whenever one or more registered
holders of Warrants or Warrant Shares shall make a written request to the
Company to register under the Act Warrant Shares either issuable upon exercise
of such Warrants or held by such holder or holders and the aggregate number of
Warrant Shares so requested to be registered represents, as of the date of such
request, at least 51% of the total of the Warrant Shares issuable upon exercise
of outstanding Warrants and Warrant Shares issued and outstanding, the Company
within five days after such request is effective shall promptly give written
notice of such request to all registered holders of outstanding Warrants or
Warrant Shares other than the holder or holders making such request, such
notice stating the estimated approximate date of filing such registration
statement, and shall thereupon promptly use its best efforts to register the
Warrant Shares of or pertaining to the holder or holders making such request
and each other holder of Warrants or Warrant Shares from whom written request
for registration is effective or received on or before the later to occur of
(A) the twentieth day after the effective date of such notice by the Company or
(B) the thirtieth day prior to the estimated date of filing specified in such
notice; provided, that the Company shall not be required to effect more than
two registration statements pursuant to subsections (b) and (c) of this Section
10.
(d) OTHER PROVISIONS RELATING TO REGISTRATION RIGHTS. In
connection with any registration pursuant to this Section:
(i) COOPERATION WITH UNDERWRITERS. Upon the request of the
registered holder of any Warrant or Warrant Shares participating in
such registration, the Company will cooperate with any underwriters
for such holder, including, without limitation, providing such
information, certificates, comfort letters of accountants and opinions
of counsel as may be reasonably requested by such underwriters.
(ii) DURATION OF EFFECTIVENESS OF THE REGISTRATION STATEMENT.
The Company shall not be required to maintain the effectiveness of any
registration statement under subsection (b) or (c) of this Section for
a period in excess of six months or, in the case of any registration
statement under subsection (b) or (c) of this Section filed on a Form
S-3 Registration Statement under the Act, for a period in excess of
twelve months, or in the case of an underwritten offering, such longer
period as may be required by the Act to enable the underwriters to
complete such offering.
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<PAGE> 9
(iii) CERTAIN DOCUMENTS TO BE PROVIDED BY THE COMPANY. The
Company will furnish to each holder of Warrants or Warrant Shares (A)
at least seven days prior to the filing thereof with the Commission, a
copy of the registration statement in the form in which the Company
proposes to file the same with the Commission and, not later than the
effective date thereof, a copy of any and all amendments to such
registration statement, (B) within five days of the filing thereof
with the Commission, a copy of any and all post-effective amendments
to such registration statement, and (C) at the request of any such
holder and, in the case of a registration pursuant to subsection (c)
of this Section, the Warrantholders' Managers (as defined below), a
reasonable number of copies of a preliminary prospectus and a final
prospectus (each of which shall, as of their respective dates, comply
with Section 10 of the Act and shall not, as of such dates, include an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make statements therein
not misleading) covering the offering and sale by such holders of the
Warrant Shares to be covered thereby as aforesaid.
(iv) STOP ORDER. The Company will advise each of such
holders of the entry of any stop order suspending the effectiveness of
such registration statement or of the initiation of any proceeding for
that purpose, and, if such stop order should be entered, use its best
efforts promptly to cause such stop order to be lifted or removed.
(v) REQUIRED AMENDMENTS AND SUPPLEMENTS TO THE REGISTRATION
STATEMENT. For such period of time (not exceeding the maximum period
of time for which the Company is required to maintain the
effectiveness of such registration statement) as any of such holders
may be required by law to deliver a prospectus in connection with a
sale of any Warrant Shares pursuant to such registration statement, if
any event shall occur as a result of which it is necessary to amend or
supplement the prospectus forming a part of such registration
statement in order to correct an untrue statement of a material fact,
or an omission to state a material fact necessary to make statements
therein, in the light of the circumstances existing when such
prospectus is delivered to a purchaser, not misleading or if it is
necessary to amend or supplement such prospectus to comply with any
law, the Company will forthwith prepare and furnish to each of such
holders and, in the case of a registration pursuant to subsection (c)
of this Section, the Warrantholders' Managers, a reasonable number of
amended or supplemented prospectuses so that statements in the
prospectuses as so amended or supplemented will not, in the light of
the circumstances then existing, be misleading, or so that such
prospectuses will comply with law.
(vi) UNDERWRITING AGREEMENT. At any time prior to the filing
of a registration statement pursuant to subsection (c) of this
Section, the holders of Warrants or Warrant Shares making or joining
in a request for such registration may select an investment banker or
bankers (collectively, the "Warrantholders' Managers") which shall be
satisfactory to the Company, and the offering pursuant to such
registration statement shall be made through the Warrantholders'
Managers. The Company shall enter into an underwriting agreement in
customary form with the Warrantholders' Managers and will indemnify
the Warrantholders' Managers, their officers and directors, and each
person, if any, who controls the Warrantholders' Managers within the
meaning of the Act to the same extent as hereinafter provided with
respect to the holders of Warrant Shares requesting such registration.
(vii) BLUE SKY COMPLIANCE. The Company will use its best
efforts to qualify, file or register the Warrant Shares being
registered under the securities laws of such states of the United
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<PAGE> 10
States of America as may be reasonably designated by the holders of
Warrants or Warrant Shares or by the Warrantholders' Managers and to
obtain the consent, authorization or approval of any governmental
agency (other than any such consent, authorization or approval
required under any statute or regulation applicable to any such
holders and not applicable to investors generally) required in
connection with the issuance of the Warrant Shares being registered or
in order that such holders may publicly sell the Warrant Shares
covered by such registration statement.
(viii) EXPENSES. All fees, disbursements and expenses
incurred by the Company in connection with the registration pursuant
to subsection (b) or (c) of this Section, and all reasonable fees and
disbursements of one counsel for the holders of Warrants or Warrant
Shares, shall be borne by the Company, including, without limitation,
all registration and filing fees, all costs of preparation and
printing (in such quantities as the holders of Warrants or Warrant
Shares, or the Warrantholders' Managers, may reasonably request) of
any registration statement and related prospectus and any amendments
or supplements thereto, all fees and disbursements of counsel for the
Company, the expenses of complying with applicable securities or blue
sky laws, and all costs in connection with the preparation and
delivery of such legal opinions, auditors' comfort letters or other
closing documents as the holders of Warrants or Warrant Shares, or as
the Warrantholders' Managers, shall reasonably request. All
underwriting commissions and expenses of the Warrantholders' Managers
shall be allocated among the holders of Warrants or Warrant Shares pro
rata according to the number of Warrant Shares being registered by
each such holder or in such other manner as such holders may agree.
(ix) INDEMNITY. The Company will indemnify and hold harmless
each holder of Warrants or Warrant Shares and any underwriter (as
defined in the Act) for such holder and each person or entity, if any,
who controls such holder or underwriter within the meaning of the Act,
against any losses, claims, damages, liabilities, costs or expenses,
joint or several, or actions in respect thereof to which such holder
or underwriter or controlling person or entity may become subject
under the Act, or otherwise, insofar as such losses, claims, damages,
liabilities, costs, expenses or actions in respect thereof arise out
of, or are based upon, or are related to, any untrue statement or
alleged untrue statement of any material fact contained in any
registration statement under which Warrant Shares of or pertaining to
such holder were registered under the Act, any preliminary prospectus,
amended preliminary prospectus, or final prospectus contained therein,
or any amendment or supplement thereto, or arise out of, or are based
upon, or are related to, the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and will reimburse such
holder or underwriter or controlling person or entity for any legal or
other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or
action; provided that to the extent that any such loss, claim, damage
or liability arises out of, or is based upon, an untrue statement or
alleged untrue statement or omission or alleged omission made in said
registration statement, said preliminary prospectus, said amended
preliminary prospectus or said final prospectus or any said amendment
or supplement in reliance upon, and in conformity with, written
information furnished to the Company in an instrument duly executed by
such holder or by any underwriter for such holder specifically for use
in the preparation thereof, the Company will not be so liable to such
holder or underwriter.
SECTION 11. NOTICES. All notices, requests, demands and
other communications relating to this Warrant Certificate shall he in writing,
including by telex, telegram or cable, addressed, if to the
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<PAGE> 11
registered owner hereof, to it at the address furnished by the registered owner
to the Company, and if to the Company, to it at 2100 Reston Parkway, Suite 430,
Reston, VA 22091, Attention: Chief Financial Officer, or to such other address
as any party shall notify the other party in writing, and shall be effective,
in the case of written notice by mail, three days after placement into the
mails (first class, postage prepaid), and in the case of notice by telex,
telegram or cable, on the same day as sent.
SECTION 12. BINDING EFFECT. This Warrant Certificate shall
be binding upon and inure to the sole and exclusive benefit of the Company, its
successors and assigns, and the registered holder or holders from time to time
of the Warrants and the Warrant Shares. Without limiting the generality of the
foregoing, such registered holder or holders from time to time shall be
entitled to the rights and benefits of Section 7 and Section 10.
SECTION 13. SURVIVAL OF RIGHTS AND DUTIES. This Warrant
Certificate shall terminate and be of no further force and effect on the
earlier of 5:00 P.M., Pittsburgh time, on the Expiration Date or the date on
which all of the Warrants have been exercised, except that the provisions of
Sections 4, 6(c), and 10 shall continue in full force and effect after such
termination date.
SECTION 14. GOVERNING LAW. This Warrant Certificate shall be
construed in accordance with and governed by the laws of the State of Delaware.
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be executed under its corporate seal by its officer(s) thereunto
duly authorized as of the date hereof.
CYBERCASH, INC.
[CORPORATE SEAL] By: /s/ Bruce G. Wilson
-----------------------------
Name: Bruce G. Wilson
Title: Executive Vice President
ATTEST:
/s/ Russell B. Stevenson, Jr.
--------------------------------
Secretary
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<PAGE> 12
FORM OF ELECTION TO PURCHASE
(To Be Executed by the Holder if the Holder Desires to Exercise Warrants
Evidenced by the Foregoing Warrant Certificate)
To CyberCash, Inc.:
The undersigned hereby irrevocably elects to exercise
____________ Warrants evidenced by the foregoing Warrant Certificate for, and
to purchase thereunder, _____________ full shares of Common Stock issuable upon
exercise of said Warrants and delivery of $_______ in cash, as provided for in
the foregoing Warrant Certificate) and any applicable taxes payable by the
undersigned pursuant to such Warrant Certificate.
The undersigned requests that certificates for such shares be
issued in the name of
PLEASE INSERT SOCIAL SECURITY OR TAX
IDENTIFICATION NUMBER:
----------------------------------------
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
If said number of warrants shall not be all the Warrants
evidenced by the foregoing Warrant Certificate, the undersigned requests that a
new Warrant Certificate evidencing the Warrants not so exercised be issued in
the name of and delivered to
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dated: __________, 19__ Name of
Holder (Print):
-------------------------
(By:)
-----------------------------------
(Title:)
<PAGE> 13
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, _________________________________________
________ hereby sells, assigns and transfers to each assignee set forth below
all of the rights of the undersigned in and to the number of Warrants (as
defined in and evidenced by the foregoing Warrant Certificate) set opposite the
name of such assignee below and in and to the foregoing Warrant Certificate
with respect to said Warrants and the shares of Common Stock issuable upon
exercise of said warrants:
NAME OF ASSIGNEE ADDRESS NUMBER OF WARRANTS
If the total of said Warrants shall not be all the Warrants
evidenced by the foregoing Warrant Certificate, the undersigned requests that a
new Warrant Certificate evidencing the Warrants not so assigned be issued in
the name of and delivered to the undersigned.
Name of
Holder (Print):
-------------------------
Dated: __________, 19__ (By:)
-----------------------------------
(Title:)
<PAGE> 1
EXHIBIT 10.5
JOINT VENTURE AGREEMENT
This Joint Venture Agreement ("JV AGREEMENT") is made and entered into
as of May 13, 1997 by and between CyberCash, Inc., a corporation organized
under the laws of Delaware; CyberCash Japan C.V., a partnership organized under
the laws of the Netherlands which is an indirect subsidiary of CyberCash
(collectively, "CYBERCASH"); and SoftBank Corporation, a corporation organized
under the laws of Japan ("SOFTBANK").
In consideration of the mutual promises set forth herein, CyberCash
and SoftBank hereby agree as follows:
WHEREAS, CyberCash currently operates in the United States a suite of payment
services for enabling payments on the Internet the, including a Secure Credit
Card Service, the CyberCoin(TM) Service, and the PayNow(TM) Service, and
intends to introduce additional payment services in the future (in the
aggregate, the "CYBERCASH SERVICES"); and
WHEREAS, CyberCash wishes to offer the CyberCash Services in Japan, and wishes
to cooperate with SoftBank in doing so; and
WHEREAS, CyberCash and SoftBank wish to form a joint venture relationship as
equal partners for operating and marketing the CyberCash Services in Japan; and
WHEREAS, CyberCash wishes to develop for the joint venture a version of its
software for the Japanese market and convey that software to the joint venture;
and
WHEREAS, SoftBank wishes to invest in the joint venture a substantial portion
of the funds necessary to finance the customization of the CyberCash Technology
and to provide working capital for the joint venture;
NOW THEREFORE, CyberCash and SoftBank agree as follows:
1. FORMATION AND CAPITALIZATION OF THE JOINT VENTURE.
1.01 GENERAL. CyberCash has organized, and is the sole shareholder of
a Japanese corporation, "CyberCash Kabushiki Kaisha" (known in English, as
"CyberCash KK", and referred to in this Agreement as "CCKK"). The Articles of
Incorporation of CCKK are attached hereto as Exhibit A. The principal office of
CCKK shall be located in Tokyo, Japan.
1.02 PURPOSES OF CCKK. The purposes of CCKK shall be (i) to assist in
the preparation of specifications for CyberCash's technology localized for the
Japanese market (the "LOCAL SOFTWARE"), (ii) to finance the development of the
Local Software, (iii) to provide the CyberCash Services in Japan, (iv) to
market the CyberCash Services in the Japanese market, and (v) to engage in
other business activities consistent with this JV Agreement as the Board of
Directors shall determine.
1.03 TERM. The joint venture will have an initial term of five years.
<PAGE> 2
1.04 CAPITAL STOCK. The authorized capital stock of CCKK initially
shall be 800 shares of Common Stock (the "COMMON STOCK"). The company shall
also be authorized to issue Convertible Preferred Stock not to exceed 1,000
shares (the "PREFERRED STOCK"). The Preferred Stock shall not have any dividend
preference, but it shall have a liquidation preference giving its holders
priority over the Common Stock in the event of liquidation.
1.05 INITIAL CAPITALIZATION. CyberCash is currently the sole
shareholder of CCKK, having purchased 200 shares of Common Stock for the sum of
10,000,000 Yen.
1.06 INVESTMENT BY SOFTBANK. Within 10 business days of the execution
of this Agreement, SoftBank shall purchase 80 shares of Preferred Stock at a
purchase price of 2,500,000 Yen per share. (The time of such purchase shall be
referred to herein as the "CLOSING.")
1.07 ADDITIONAL INVESTMENT BY SOFTBANK AFFILIATE. Not later than June
30, 1997, SoftBank shall purchase, or shall cause one of its affiliates to
purchase an additional 120 shares of Preferred Stock at a purchase price of
2,500,000 Yen per share.
1.08 RESERVED SHARES. With the consent of CyberCash and SoftBank, CCKK
may reserve 20 shares of Common Stock for issuance to CCKK's employees and
consultants pursuant to stock options or other forms of employee benefit plans
as determined by the Board of Directors.
1.09 ADDITIONAL CAPITAL. With the consent of CyberCash and SoftBank,
CCKK may issue additional shares of capital stock in connection with capital
contributions made after the Closing subject to applicable law and due approval
by the Board of Directors. The Articles of Incorporation shall not provide any
stockholder with preemptive rights. The parties acknowledge that they
contemplate selling stock or warrants to Japanese banks as an incentive to the
banks to make use of the services of CCKK. It is not, however, the intention of
the parties to engage in additional financing during the six months after the
Closing that would reduce CyberCash's position to less than 45% of the
outstanding equity capital.
1.10 RESTRICTIONS ON TRANSFER. Neither CyberCash nor SoftBank shall
voluntarily transfer, sell, assign, pledge, hypothecate, give or otherwise
dispose of all or any portion of its Common Stock or any warrants to purchase
Common Stock without the prior written approval of the other party, except in
connection with a termination of the joint venture pursuant to Section 9
hereof. In implementation of the preceding sentence, each certificate
evidencing shares of Common Stock or warrants will bear a restrictive legend.
Any attempted transfer in violation of this Section 1.10 shall be void and
shall not be reflected on CCKK's stock records. This restriction on transfer
shall cease upon the completion of an initial public offering of CCKK's Common
Stock.
1.11 DEADLOCK. Should the Board of Directors be deadlocked and unable
to reach a decision with respect to any major issue for a period of two
consecutive regular meetings, then either CyberCash or SoftBank (the
"DISSENTING PARTY") may offer to sell its shares in CCKK to the other (the
"NON-DISSENTING PARTY") at a price, and on terms and conditions, specified in
writing (the "OFFER"). If the Non-Dissenting Party does not accept the Offer in
writing within 30 days of receiving it, the Dissenting Party shall have an
option to purchase the Non-Dissenting Party's shares in CCKK at the same price,
and on the same terms and conditions as set forth in the Offer. If the
Dissenting Party does not exercise that option within 30 days, it may sell its
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<PAGE> 3
shares to a third party; provided that the sale must be at a price, and on
terms and conditions, no more favorable than those set forth in the Offer.
2. MANAGEMENT AND OPERATIONS OF THE JOINT VENTURE.
2.01 GENERAL. The powers, responsibilities and procedures of the
stockholders, the Board of Directors and the officers shall be as specified in
this Agreement and in the Articles of Incorporation and Bylaws of CCKK. Written
agendas of the subjects or topics to be covered at CCKK stockholder and Board
of Directors meetings shall be distributed to the participants in advance of
such meetings; written descriptions of such meetings or topics to be covered
shall be distributed at such meetings and be the basis of any discussion.
2.02 STOCKHOLDER MATTERS. Annual and special meetings of the
stockholders shall be conducted as provided in the Articles of Incorporation
and the Bylaws.
2.03 BOARD OF DIRECTORS.
(a) CCKK will be managed by a Board of Directors. Initially,
the Board will consist of three members, two of whom will be elected
by CyberCash and one by SoftBank. Upon the closing of the additional
investment by SoftBank or its affiliate contemplated by Section 1.07,
there shall be a fourth director, who shall be designated by SoftBank.
The parties agree so to vote their shares as to effectuate the
foregoing provisions. The powers and duties, indemnification and other
terms and conditions of such directors shall be as defined and set
forth in the Bylaws of CCKK.
(b) Subject to Section 2.03(c), unless otherwise required by
law, decisions of the Board of Directors shall require the affirmative
vote or consent of a majority of the total number of directors.
(c) Any of the following actions by the Board of Directors
shall require the affirmative vote of at least 75% of the directors:
(i) The adoption of, or any material change in, the
business plan and the operating plan for CCKK;
(ii) The approval of the annual budget for CCKK;
(iii) The sale of any equity security other than pursuant
to an employee benefit plan;
(iv) The borrowing during any six-month period in excess
of 50,000,000 Yen.
(v) a merger or combination transaction involving CCKK;
(vi) the appointment or dismissal of the chief executive
officer and the chief operating officer of CCKK;
(vii) a sale of all or substantially all of CCKK's
assets; and
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<PAGE> 4
(viii)any purchase of securities having a value of more
than 10,000 Yen (other than the purchase of
money-market instruments for the purpose of cash
management).
2.04 ADVISORY COUNCIL.
(a) Within one year after the Closing, CyberCash and SoftBank
shall mutually agree on the appointment of an Advisory Council
consisting of two or three senior executives from the financial
institutions taking part in the business of CCKK or investing in CCKK,
and/or senior and respected governmental officials, either currently
active or retired.
(b) The management and directors of CCKK shall consult the
Advisory Council for advice on matters of policy and strategy and
shall seek the assistance of the Advisory Council with respect to
making contacts and forming relationships with persons and financial
institutions and other companies who may be helpful to CCKK.
(c) In the event that the Board of Directors of CCKK is
deadlocked with respect to any major decision, the Board of Directors
shall seek the advice of the Advisory Council, which, in addition to
providing advice and guidance on the issue in question, may act as
mediator to assist the Board of Directors to reach a decision and to
avoid future deadlocks.
2.05 OPERATING MANAGEMENT. The Board of Directors may appoint
officers to manage CCKK.
2.06 ACCOUNTING. CCKK will retain a firm of independent certified
public accountants, at CCKK's expense, to audit its financial statements
annually.
3. DEVELOPMENT OF LOCALIZED SOFTWARE.
3.01 SOFTWARE DEVELOPMENT AGREEMENT. Prior to Closing CyberCash and
CCKK shall enter into a Software Development Agreement pursuant to which
CyberCash shall agree to do the customization and localization work necessary
to adapt the CyberCash Technology to the Japanese Market pursuant to
specifications developed as provided below and to convey the software so
developed to CCKK (the "SDA"). This work shall include modification of the
CyberCash Gateway Software, the CyberCash Wallet Software, and the CyberCash
Merchant Software in their current form for use in Japan. (The software so
modified is referred to herein as the "LOCAL SOFTWARE.") The SDA shall provide
that CCKK shall agree to pay CyberCash its fully-burdened cost plus $100,000
(not to exceed US $1,100,000) of performing the development work. CCKK shall
make an initial payment of US $600,000. CyberCash shall furnish CCKK with
monthly statements setting forth the progress of the work and the cost of the
time and materials incurred. After the sum of the statements exceeds US
$600,000, CCKK shall pay the outstanding balance within 15 days of
presentation.
3.02 PROJECT PLAN. The parties to this JV Agreement shall
cooperate in the preparation not later than July 15, 1997 of a Project Plan for
the joint venture. The Project Plan shall provide for a schedule for the
development of the Local Software, a plan for an experimental operation, in
which Japanese banks will be invited to participate, and a plan for the
commencement of full commercial operations. Both CyberCash and SoftBank must
approve the commencement of full commercial operations. The Project Plan shall
include the following: (i) a
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<PAGE> 5
development plan for software specifications, (ii) a training schedule, (iii) an
assurance testing plan, (iv) a business plan for the joint venture (including a
marketing plan), (v) an implementation plan for both the pilot phase and the
full implementation of each service and (vi) a fee payment schedule.
3.03 SALE OF BUSINESS. CyberCash shall not transfer all or
substantially all of its assets or business to any third party unless and until
the third party has executed a written agreement pursuant to which the third
party is bound by all of the terms and conditions of this Agreement.
4. LICENSE OF MARKS.
4.01 LICENSE OF MARKS. CyberCash will grant, at no cost to CCKK a
license to use in Japan the CyberCash name and all trademarks and service marks
of CyberCash associated with the CyberCash Services.
4.02 ACCESS TO THE CYBERCASH GATEWAY SYSTEM. CCKK will have access to
any other Gateways that CyberCash currently, or in the future, operates or
licenses as part of its global Internet payments system for the purpose of
processing transactions involving a transaction party outside of Japan or
involving currencies other than the Yen, subject to the terms and conditions
that CyberCash establishes for connections to other Gateways, including
compliance with its global system operating rules and connectivity standards
and the payment of standard transaction processing fees.
4.03 ALL NECESSARY RIGHTS. CyberCash represents that (i) it has and
will have during the term hereof all necessary rights to grant CCKK the license
to use CyberCash's service marks and trademarks as provided in this Section 4,
and (ii) there are no outstanding claims or pending lawsuits on the date of
this Agreement in connection with any aspect of these service marks and
trademarks.
5. UPGRADES AND MAINTENANCE.
5.01 SCOPE OF MAINTENANCE. Pursuant to the SDA, CyberCash shall
provide maintenance releases, remote support and software defect corrections
for the Local Software. CyberCash shall also provide CCKK with all upgrades to
the Local Software. CyberCash shall not be required to provide maintenance and
support of releases of Local Software that are more than one release prior to
the current release.
5.02 FEES AND EXPENSES. CCKK shall reimburse CyberCash for the fully
burdened costs it incurs in performing maintenance of the Local Software, and
in providing customized versions of maintenance and upgrade releases; provided
that such costs shall be limited to the incremental costs incurred by CyberCash
for work particular to CCKK and will not include costs incurred with respect to
general maintenance and upgrades of its software and technology. CCKK shall
also pay any travel expenses of CyberCash personnel reasonably necessary to
perform maintenance and upgrade work or installation under this Section 5.
5.03 SET COMPLIANCE. The Local Software shall be compliant with the
latest version of the SET Protocol available. As soon as possible after SET
Protocol version 1.0 is available, necessary revision shall be made to the
Local Software so that it is made compliant therewith.
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<PAGE> 6
6. TRAINING OF EMPLOYEES.
CyberCash shall provide initial training for personnel employed by
CCKK in the operation and maintenance of the Local Gateways on the training
schedule established in the Project Plan. The training shall be provided at
CyberCash's facilities and shall be available to personnel possessing minimum
qualifications specified by CyberCash. CCKK shall pay the travel and living
expenses of the trainees, and CyberCash shall be responsible for the remaining
costs of training.
7. CONFIDENTIALITY.
7.01 CONFIDENTIAL INFORMATION. The parties acknowledge that they,
their subsidiaries and affiliated companies are the owners of valuable trade
secrets and other confidential information and that they license Confidential
Information from others.
7.02 NON-DISCLOSURE. All Confidential Information disclosed by one
party to the other party in connection with the joint venture shall remain the
property of and be deemed proprietary to the disclosing party. The receiving
party agrees to receive Confidential Information in strict confidence, to hold
Confidential Information in trust for the disclosing party and to use
Confidential Information solely and exclusively in accordance with the terms of
this JV Agreement in order to carry out the purposes set forth in Section 1.02
hereof. Notwithstanding the preceding, no party to this JV Agreement shall be
liable for disclosure or use of Confidential Information if the Confidential
Information was properly in the public domain at the time it was disclosed or
is publicly released in response to a subpoena, court order or other legal
process under circumstances in which a protective order or confidentiality
agreement has been requested but rejected by the appropriate judicial or other
lawful authority.
7.03 INJUNCTIVE RELIEF. The parties hereto acknowledge that their
remedies under this JV Agreement or otherwise available at law in the event of
a disclosure of any Confidential Information or any default or threatened
default by either party in the performance of its obligations under this
Section 7 will be inadequate and agree that the terms of this Section 7 shall
be enforceable by a decree for the specific performance thereof by the
defaulting party, or by an injunction against any violation of its terms, or
otherwise. The parties hereto further acknowledge and agree that the covenants
contained herein are necessary for the protection of legitimate business
interests of both parties, their subsidiaries and/or affiliated companies and
are reasonable in scope and content.
8. CLOSING. Subject to the satisfaction of the conditions specified in
this Section 8 and on the terms set forth herein, the Closing shall take place
within 10 days after the execution of the Agreement at a place and time to be
determined by the parties.
9. TERMINATION.
9.01 TERMINATION. This JV Agreement may be terminated only as
follows:
(a) By written agreement of the parties hereto at any time;
(b) Automatically after five years as provided in Section 1.03
hereof, unless the parties hereto agree to extend the term of the
Agreement;
(c) Upon the expiration of the term of CCKK and its liquidation and
termination.
6
<PAGE> 7
9.02 EFFECT OF TERMINATION. In the event that this JV Agreement is
terminated pursuant to Section 9.01, this Agreement shall terminate without any
liability or further obligation of any party to another, except for any breach
of this JV Agreement prior to termination. Sections 4.03, 7 and 10 shall
survive any expiration or termination of this Agreement.
10. DISPUTE RESOLUTION.
Disputes arising under this JV Agreement shall be resolved by
arbitration in Tokyo pursuant to the rules of the Japan Commercial Arbitration
Association or such other arbitral body as the parties shall select by mutual
agreement. This JV Agreement shall be interpreted in accordance with the laws
of Japan, without regard to its rules governing choice of law.
11. MISCELLANEOUS PROVISIONS.
11.01 NOTICES. All notices, consents, requests and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when (a) delivered by hand, (b) sent by telecopier (with receipt
confirmed), provided that a copy is sent in the manner provided in clause (c),
or (c) when received by the addressee, if sent by DHL, Federal Express,
Airborne Express or other generally recognized international express delivery
service (receipt requested), in each case to the appropriate addresses and
telecopier numbers set forth below (or to such other addresses and telecopier
numbers as a party may designate as to itself by notice to the other parties):
(a) If to SoftBank:
SoftBank Corp.
3-42-3 Nihonbashi-Hamacho
Chuo-ku
Tokyo 103 Japan
Telecopier No.: 81-3-5641-3402
Attention: Yoshitaka Kitao, Executive Vice President
(b) If to CyberCash:
2100 Reston Parkway, Suite 430
Reston, Virginia 20191
Telecopier No.: (703) 264-5928
Attention: Bruce Wilson
with a copy to the General Counsel
11.02 HEADINGS. The headings in this JV Agreement are for
convenience of reference only and shall not be given any effect in the
interpretation of the JV Agreement.
11.03 COUNTERPARTS. This JV Agreement may be executed in two or more
counterparts, each of which shall be considered an original, but all of which
together shall constitute the same instrument.
11.04 ASSIGNMENT. All of the terms and provisions of this JV
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the parties hereto and their
7
<PAGE> 8
respective successors and permitted assigns. This JV Agreement shall not be
assignable or transferable by either party hereto without the prior written
consent of the other party hereto.
11.05 ENTIRE AGREEMENT; AMENDMENT. This JV Agreement with the annexed
Exhibits and Schedules sets forth the entire understanding between the parties
relating to the subject matter contained herein and merges all prior
discussions between them. No amendment to this JV Agreement shall be effective
unless it is in writing and executed by the parties hereto.
11.06 SEVERABILITY. Any term or provision of this JV Agreement which
is invalid or unenforceable will be ineffective to the extent of such
invalidity or unenforceability without rendering invalid or unenforceable the
remaining rights of the person intended to be benefited by such provision or
any other provisions of this JV Agreement.
11.07. NO WAIVER. The failure of a party to insist upon strict
adherence to any term of this JV Agreement on any occasion shall not be
considered a waiver or deprive that party of the right thereafter to insist
upon strict adherence to that term or any other term of this JV Agreement. Any
waiver must be in writing.
11.08. INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and
Schedules attached hereto are incorporated in this JV Agreement and shall be
deemed a part hereof as if set forth herein in full. References herein to "this
JV Agreement" and the words "herein," "hereof" and words of similar import
refer to this JV Agreement (including its Exhibits and Schedules) as an
entirety. In the event of any conflict between the provisions of this JV
Agreement and any such Exhibit or Schedule, the provisions of this JV Agreement
shall control.
8
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have caused this JV Agreement
to be duly executed, as of the date first above written.
CYBERCASH, INC.
By: /s/ Bruce G. Wilson
------------------------------
Name: Bruce G. Wilson
Title: Executive Vice President
CYBERCASH JAPAN C.V.
By: CyberCash International C.V.
By: Reston Parkway II, Inc.
By: /s/ Bruce G. Wilson
------------------------------
Name: Bruce G. Wilson
Title: President and Chief
Executive Officer
SoftBank Corp.
By: /s/ Yoshitaka Kitao
------------------------------
Name: Yoshitaka Kitao
Title: Executive Vice President
9
<PAGE> 1
EXHIBIT 10.6
SOFTWARE DEVELOPMENT AGREEMENT
This Agreement is made and entered into as of May 13, 1997 by and between
CyberCash, Inc., a corporation organized under the laws of Delaware
("CyberCash"); and CyberCash K.K., a corporation organized under the laws of
Japan ("CCKK").
In consideration of the mutual promises set forth herein, CyberCash and CCKK
hereby agree as follows:
1. DEFINITIONS.
a. In addition to the capitalized terms defined elsewhere in this
Agreement, the following capitalized terms shall have the following
meanings when used in this Agreement.
b. "Completion" has the meaning set forth in Section 4.a.
c. "Gateway Software" means the Gateway software developed and
operated by CyberCash for processing credit, coin, and check
transactions in the United States.
d. "Original Software" means the Gateway Software, Wallet Software,
and Merchant Software, currently being used in the operation of the
CyberCash services in the United States.
e. "Local Gateway" means the Gateway Software, in object code form, as
adapted and customized by CyberCash for CCKK hereunder, to handle
transactions denominated in Yen with financial institutions located
in Japan.
f. "Local Software" means the Local Gateway Software, the Local Wallet
Software, and the Local Merchant Software, in object code form.
g. "Merchant Software" means the client software used by merchants in
the operation of the CyberCash services in the United States.
h. "Project Plan" has the meaning set forth in Section 4.a hereof.
i. "Wallet Software" means the client software used by consumers in
the operation of the CyberCash services in the United States.
2. PURPOSE OF AGREEMENT.
The purposes of this Agreement shall be to enable CCKK to: (i) prepare
specifications for the Local Software localized for the Japanese
market; (ii) finance the development of the Local Software; (iii)
operate the Local Software and distribute the software necessary for
processing in the Japanese market credit transactions, CyberCoin
transactions, and electronic check transactions denominated in Yen
involving Japanese financial institutions; and (iv) engage in other
business activities in connection with the foregoing.
3. DEVELOPMENT OF LOCAL SOFTWARE.
a. Subject to the terms and conditions hereof, CyberCash shall develop
for CCKK: (i) the Local Software developed for use in Japan; and
(ii) upgrades of the Local Software.
<PAGE> 2
CyberCash shall also provide CCKK with maintenance and support
service for the use of the Local Software and its upgrades.
b. Subject to the terms and conditions hereof, CCKK shall pay to
CyberCash:
(i) CyberCash's fully burdened costs for the performance of the
development work specified in Section 4, plus $100,000, but
not to exceed a total of US$1,100,000; and
(ii) CyberCash's fully-burdened costs (including out-of-pocket
expenses) for the incremental development work necessary to
adapt any upgrades or modifications to its Original Software
and to install such upgrades or modifications in Japan;
(iii) After CCKK has completed an initial public offering, a fair
share of CyberCash's development costs for modifying and
upgrading its technology.
c. With respect to the sum specified in paragraph 3b(i) CCKK shall
make an initial payment of US$600,000. CyberCash shall furnish CCKK
with monthly statements setting forth the progress of the work and
the cost of the time and materials incurred. After the sum of the
statements exceeds US$600,000, CCKK shall pay the outstanding
balance within 15 days of presentation.
4. SPECIFICATION OF LOCAL SOFTWARE.
a. The parties hereto shall cooperate in the preparation of a project
plan, to be completed not later than July 15, 1997, for the
development and completion of the Local Software (the "Project
Plan"). The Project Plan shall, provide for a schedule for the
development of the Local Software. The parties hereto agree to use
their best efforts to carry out all necessary activities required
to meet the objectives of the Project Plan.
b. CyberCash will use its best efforts to develop by July 15, 1997,
proposed specifications for the Local Software. The parties shall
make their best efforts to reach a prompt agreement on final
specifications within 30 days of the date the specifications are
first proposed. The Local Software shall be compliant with the
latest version of the SET Protocol available.
c. If CCKK requests modifications to the Local Software that are not
contemplated in the specifications, CyberCash shall use reasonable
efforts to accommodate such request.
d. CyberCash shall use its best efforts to complete installation and
acceptance testing of the Local Software pursuant to the Project
Plan; however, CyberCash shall have no obligation to commence
development work on the Local Software until the specifications are
finalized.
5. OWNERSHIP OF LOCAL SOFTWARE.
Upon completion of the Local Software, all rights in and to the Local
Software shall vest in CCKK, and CCKK shall have the exclusive right
to (i) operate the Local Software for processing transactions in Japan
involving Japanese financial institutions and merchants and (ii) keep
and maintain a back-up copy of the object code of the Local Software.
After the Completion, CyberCash shall have the rights to copy,
distribute, sub-license and modify the Local Software,
2
<PAGE> 3
but only to the extent necessary for the performance of its
obligations hereunder. Except as expressly provided herein, CyberCash
shall not assert or claim any intellectual property rights or moral
rights in or to any part of the Local Software. This agreement conveys
to CCKK no rights to the Original Software or any modifications or
derivative works thereof other than the Local Software.
6. USE OF LOCAL SOFTWARE.
a. CyberCash shall make its reasonably best efforts to obtain any
licenses or permits necessary to enable CCKK to use the Local
Software, including (i) the acquisition on behalf of CCKK of
sublicenses of any software constituting a part of either of the
Local Software, without any cost to CCKK and (ii) the compliance
with any process to be taken under the applicable regulations in
the United States. If CyberCash is unable to obtain a license or
permit necessary for CCKK to use the Local Software without
additional cost, CCKK shall be responsible for paying any such
cost. A list of the third party licenses necessary to the Local
Software is attached as Exhibit A.
b. CyberCash shall grant CCKK a license to use in Japan the CyberCash
name and all trademarks and service marks of CyberCash associated
with the Local Software, free of charge. CCKK will agree to comply
with reasonable rules established by CyberCash regarding the use of
CyberCash's trademarks and service marks.
c. CyberCash shall authorize CCKK to access any other Gateways that
CyberCash currently, or in the future, operates or licenses as part
of its global Internet payments system for the purpose of
processing transactions involving a party outside of Japan or
involving currencies other than yen, subject to the terms and
conditions that CyberCash reasonably establishes for connections to
other Gateways, including compliance with its global system
operating rules and connectivity standards and the payment of
standard transaction processing fees.
7. UPGRADES
a. On and after the Completion, CyberCash shall continue to develop,
on behalf of CCKK, upgrades to the Local Software, which
functionally correspond to those made to the Original Software or
which CCKK from time to time reasonably determines necessary to its
use of the Local Software in the Japanese market. CCKK shall
provide and maintain adequate hardware and other resources for
software upgrades and testing. Upon completion of each upgrade to
the Local Software, such completed upgrade shall be considered to
be a part of the Local Software as defined in Section 1.f hereof.
b. As soon as possible after SET Protocol version 1.0 is available,
necessary revision shall be made to the Local Software so that it
is made compliant therewith.
c. CCKK shall pay CyberCash its fully-burdened incremental costs of
developing such upgrades as provided in paragraph 3b(ii), above in
accordance with the agreement of the parties.
3
<PAGE> 4
8. MAINTENANCE
a. On and after the Completion, CyberCash shall provide CCKK with
services of maintenance releases, remote support and software
defect corrections for the Local Software (the "Maintenance and
Support Services"). CyberCash shall retain the right, in assigning
a software correction, to a release and the priority of a reported
software defect. Upon completion of each maintenance release or
software defect correction for the Local Software, such completed
maintenance release or software defect correction shall be
considered to be a part of the Local Software as defined in Section
1.f hereof.
b. CCKK shall reimburse CyberCash for its fully-burdened costs of
providing Maintenance and Support Services (which shall not exceed
US$250,000 per year) in accordance with the agreement of the
parties.
c. CyberCash shall provide Maintenance and Support Services to CCKK in
accordance with the terms of a Support Services and Maintenance
Agreement to be executed by CyberCash and CCKK before the
Completion, which shall be based on the principles set out in 8.a
and 8.b above.
9. TRAINING OF EMPLOYEES.
CyberCash shall provide initial training for personnel employed by
CCKK in the operation and maintenance of the Local Software in
accordance with the training schedule established in the Project Plan.
The training shall be provided at CyberCash's facilities and shall be
available to personnel possessing minimum qualifications specified by
CyberCash. CCKK shall pay the travel and living expenses of the
trainees, and CyberCash shall be responsible for the remaining costs
of training.
10. REPRESENTATIONS AND WARRANTIES BY CYBERCASH.
a. CyberCash hereby represents and warrants as follows:
i) CyberCash is a corporate entity duly organized and existing in
good standing under the laws of the State of Delaware, and has
the full and complete corporate power and authority to execute
and deliver, and perform its obligations under, this Agreement;
ii) the execution and delivery by CyberCash of, and the performance
by CyberCash of its obligations under, this Agreement have been
duly authorized by all necessary corporate action;
iii) the execution and delivery by CyberCash of, and the
performance by CyberCash of its obligations under, this
Agreement (i) do not require any approval of its shareholders
or the approval or consent of any holder of any indebtedness
or obligations of CyberCash; (ii) except for any necessary
export or import licenses, do not require any consent,
approval, order or authorization of, or registration with, or
the giving of prior notice to, any governmental authority with
respect to the execution and delivery of this Agreement or the
validity and enforceability thereof or the satisfaction of all
obligations hereunder; (iv) do not contravene any applicable
law or violate the articles of incorporation or by-laws
4
<PAGE> 5
of CyberCash; and (v) do not result in any breach of, or
constitute a default under, any agreement to which CyberCash
is a party or by which it may be bound or affected;
iv) this Agreement shall constitute the legal, valid and binding
obligations of CyberCash, enforceable against it in accordance
with its terms.
v) no part of the Local Software, the Original Software, or
CyberCash's service marks and trademarks now infringe or,
during the term of this Agreement, shall infringe on any
intellectual rights of a third party;
vi) there are no outstanding claims or pending lawsuits on the
date of this Agreement in connection with any aspect of the
Original Software or CyberCash's service marks and trademarks.
b. CyberCash shall indemnify and hold CCKK harmless from and against
any damages, liabilities, costs and expenses incurred by CCKK in
connection with CyberCash's breach of the representations provided
in this Section 10.
11. CONFIDENTIALITY.
a. Confidential Information. The parties acknowledge that they, their
subsidiaries and affiliated companies are the owners of valuable
trade secrets and other confidential information and that they
license Confidential Information (as defined below) from others.
b. Non-Disclosure. All confidential information disclosed by one party
to the other party in connection with this Agreement (the
"Confidential Information") shall remain the property of and be
deemed proprietary to the disclosing party. The receiving party
agrees to receive Confidential Information in strict confidence, to
hold Confidential Information in trust for the disclosing party and
to use Confidential Information solely and exclusively in
accordance with the terms of this Agreement in order to carry out
the purposes. Notwithstanding the preceding no party to this
Agreement shall be liable for disclosure or use of Confidential
Information if the Confidential Information was properly in the
public domain at the time it was disclosed or is publicly released
in response to a subpoena, court order or other legal process under
circumstances in which a protective order or confidentiality
agreement has been requested by rejected by the appropriate
judicial or other lawful authority.
c. Injunctive Relief. The parties hereto acknowledge that their
remedies under this Agreement or otherwise available at law in the
event of a disclosure of any Confidential Information or any
default or threatened default by either party in the performance of
its obligations under this Section 11 will be inadequate and agree
that the terms of this Section 11 shall be enforceable by a decree
for the specific performance thereof by the defaulting party, or by
an injunction against any violation of its terms, or otherwise. The
parties hereto further acknowledge and agree that the covenants
contained herein are necessary for the protection of legitimate
business interests of both parties, their subsidiaries and/or
affiliated companies and are reasonable in scope and content.
5
<PAGE> 6
12. NON-COMPETITION
The parties hereto acknowledge and recognize the highly competitive
nature of the business of CCKK and accordingly, to the extent
permitted under any applicable law, agree that neither party hereof
shall, directly or indirectly, from the date hereof until one (1) year
after termination hereof, (i) induce employees of the other party to
terminate their employment or to engage in any business directly
competing with the other party, or (ii) induce any customer of the
other party to terminate its relationship with the other party. or
(iii) engage in the business of providing Internet payment services in
Japan in competition with CCKK.
13. TERM/TERMINATION.
a. This Agreement shall become effective as of the date first above
written and shall continue in full force and effect for an
indefinite term thereafter, unless this Agreement is sooner
terminated pursuant to this Section 13.
b. Either party hereto may terminate this Agreement by giving written
notice to the other party, upon the occurrence of any of the
following events:
(i) If any note or check issued by the other party is dishonored;
(ii) If the other party receives a petition for attachment,
provisional attachment, provisional disposition or other
execution or is subject to any disposition for failure to pay
taxes
(iii) If a petition for bankruptcy, composition, company
reorganization, company liquidation, or special liquidation
is filed in respect to either party:
(iv) If either party causes damage to the other party due to a
willful act or gross negligence in connection with the
performance of its obligations under this Agreement;
provided, however, that in such event only the damaged party
may terminate this Agreement; and
(v) If the other party's actions or inactions materially breach
this Agreement.
Notwithstanding the foregoing, this Agreement may be terminated by
written agreement of the parties hereto at any time.
c. In the event that this Agreement is terminated pursuant to this
Section 13, this Agreement shall terminate without any liability or
further obligation of any party to another, except for any breach
of this Agreement prior to termination.
d. Sections 5, 10 and 11 shall survive any expiration or termination
of this Agreement.
14. FURTHER ACTS
The parties hereto shall take whatever actions or steps are necessary
to carry out and cause the performance of the various terms of this
Agreement.
6
<PAGE> 7
15. DISPUTE RESOLUTION.
Disputes arising under this Agreement shall be resolved by arbitration
pursuant to the rules of the American Arbitration Association or such
other arbitral body as the parties shall select by mutual agreement.
This Agreement shall be interpreted in accordance with the laws of the
Commonwealth of Virginia, without regard to its rules governing choice
of law.
16. MISCELLANEOUS PROVISIONS.
a. Notices. All notices, consents, requests and other communications
hereunder shall be in writing and shall be deemed to have been duly
given when (a) delivered by hand, (b) sent by telecopier (with
receipt confirmed), provided that a copy is sent in the manner
provided in clause (c), or (c) when received by the addressee, if
sent by DHL, Federal Express, Airborne Express or other generally
recognized international express delivery service (receipt
requested), in each case to the appropriate addresses and
telecopier numbers set forth below (or to such other addresses and
telecopier numbers as a party may designate as to itself by notice
to the other parties):
(i) If to CCKK:
SoftBank Corp.
3-42-3 Nihonbashi-Hamacho
Chuo-ku
Tokyo 103 Japan
Telecopier No.: 81-3-5641-3402
Attention: Yoshitaka Kitao, Executive Vice President
(ii) If to CyberCash:
Reston Parkway, Suite 430
Reston, Virginia 22091
Telecopier No.: (703)264-5928
Attention: Bruce Wilson
with a copy to the General Counsel
b. Headings. The headings in this Agreement are for convenience of
reference only and shall not be given any effect in the
interpretation of the Agreement.
c. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be considered an original, but
all of which together shall constitute the same instrument.
d. Assignment. All of the terms and provisions of this Agreement shall
be binding upon and inure to the benefit of and be enforceable by
the parties hereto and their respective successors and permitted
assigns. This Agreement shall not be assignable or transferable by
either party hereto without prior written consent of the other
party hereto.
e. Entire Agreement; Amendment. This Agreement sets forth the entire
understanding between the parties relating to the subject matter
contained herein and merges all prior
7
<PAGE> 8
agreements and understandings between them. No amendment to this
Agreement shall be effective unless it is in writing and executed
by the parties hereto.
f. Severability. Any term or provision of this Agreement which is
invalid or unenforceable will be ineffective to the extent of such
invalidity or unenforceability without rendering invalid or
unenforceable the remaining rights of the person intended to be
benefited by such provision or any other provisions of this
Agreement.
g. No Waiver. The failure of a party to insist upon strict adherence
to any term of this Agreement on any occasion shall not be
considered a waiver or deprive that party of the right thereafter
to insist upon strict adherence to that term or any other term of
this Agreement. Any waiver must be in writing.
h. Incorporation. References herein to "this Agreement" and the words
"herein," "hereof" and words of similar import refer to this
Agreement, and Appendix 1 hereto, as an entirety.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed, as of the date first above written.
CYBERCASH, INC.
By: /s/ Bruce G. Wilson
-----------------------
Name: Bruce G. Wilson
Title: Executive Vice President
CYBERCASH K.K.
By: /s/ Yoshitaka Kitao
-----------------------
Name: Yoshitaka Kitao
Title: Director
8
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<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 19,592,353
<SECURITIES> 0
<RECEIVABLES> 1,314,362
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<CURRENT-ASSETS> 21,786,081
<PP&E> 7,759,715
<DEPRECIATION> 2,525,743
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<CURRENT-LIABILITIES> 2,314,373
<BONDS> 0
0
0
<COMMON> 10,919
<OTHER-SE> 25,400,733
<TOTAL-LIABILITY-AND-EQUITY> 27,726,025
<SALES> 0
<TOTAL-REVENUES> 812,361
<CGS> 0
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<INCOME-PRETAX> (6,323,548)
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