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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
January 6, 1999
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Date of Report (Date of earliest event reported)
CyberCash, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 0-27470 54-725021
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File No.) Identification No.)
2100 Reston Parkway, Reston, Virginia 20191
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
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(703) 620-4200
Not applicable
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
On January 6, 1999, CyberCash, Inc. (the "Company") issued 609,756
Units, each consisting of (i) one share of the Company's common stock
(collectively, the "Common Shares") and (ii) a warrant to purchase 0.75 shares
of the Company's common stock (collectively, the "Warrants"), for an aggregate
purchase price of $10 million in cash. The Units were issued to two
institutional investors in a private offering pursuant to Regulation D of the
Securities Act of 1933, as amended.
The per Unit purchase price is $16.40, which is equal to 105% of the
closing bid price of the Company's common stock on January 5, 1999, the last
trading day immediately preceding the private offering. The Company has agreed
to register under the Securities Act of 1933, as amended (the "Securities
Act"), the resale of the Common Shares as well as the common stock issuable
upon exercise of the Warrants (collectively, the "Warrant Shares").
The Warrants will expire on January 6, 2004. The exercise price for
each Warrant is initially set at $20.00. The exercise price may be reset on
January 6, 2000, January 6, 2001 and January 6, 2002, if the average closing bid
price of the Company's common stock over the 10 trading days preceding these
respective dates is less than $20.00. In any of these circumstances, the
exercise price would be reset to equal the average closing bid price of the
Company's common stock over the 10 trading days preceding the applicable reset
date. Beginning January 6, 2002, the exercise price also could be reduced if
the Company issues securities below the market price of the Company's common
stock. If an adjustment of the exercise price occurs, the number of Warrant
Shares would proportionately increase.
Under the Warrants, a holder can elect to pay the exercise price in
immediately available funds, through the cancellation of a portion of the
Warrants or through the delivery of shares of common stock. If the holder elects
to pay the exercise price through the delivery of common stock, the common stock
will be valued at $16.40.
Each investor has the option of selling the Common Shares back to the
Company if a repurchase event occurs. Those events include the Company not
issuing shares upon a holder's exercise of the Warrants, if any of the Common
Shares or Warrant Shares are not registered under the Securities Act within
prescribed time periods, if the Company becomes insolvent, or if the Company
loses the listing of its common stock on a national stock exchange or Nasdaq.
Under any of these circumstances, and generally only if holders of at least 50%
of the then outstanding Common Shares so elect, the investors would have the
right to sell the Common Shares back to the Company at (i) 120% of the price
the investor paid for the shares in this private offering or (ii) the highest
trading price between the date of the event and a specified date thereafter.
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Another repurchase event may arise if the Company consummates a sale,
merger, consolidation or other business combination transaction in which the
Company is not the surviving entity. Under this circumstance, if holders of at
least 50% of the then outstanding Common Shares so elect, the investors would
have the right to sell the Common Shares back to the Company at 120% of the
price the investors paid for the shares in this private offering, but would not
have the option of a potentially higher price based upon a higher trading price
following that repurchase event. In addition, if an investor exercises its right
of repurchase because of a business combination transaction, any Warrants then
held by the investor also would be canceled.
In addition, the Company is committed to sell, and the investors are
committed to purchase, an additional 304,878 Units for an additional $5 million
in cash after a registration statement covering the resale of the Common Shares
and Warrant Shares is declared effective by the U.S. Securities and Exchange
Commission.
The Company's press release announcing the sale of the Units as well as a
Securities Purchase Agreement, a Registration Rights Agreement and the form of
Warrant are filed as exhibits to this Current Report on Form 8-K. This summary
description of the transaction is qualified in its entirety by reference to the
documents filed as exhibits hereto.
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Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
4.1 Securities Purchase Agreement dated as of January 6, 1999 among
the Company, RGC International Investors, LDC and Halifax Fund, L.P.
4.2 Registration Rights Agreement dated as of January 6, 1999 among
the Company, RGC International Investors, LDC and Halifax Fund, L.P.
4.3 Form of Warrant dated as of January 6, 1999.
99.1 Press Release dated January 7, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned thereunto duly authorized.
CyberCash, Inc.
Date: January 11, 1999 By: /s/ James J. Condon
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James J. Condon
Chief Operating Officer and
Chief Financial Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
4.1 Securities Purchase Agreement dated as of January 6, 1999 among
the Company, RGC International Investors, LDC and Halifax
Fund, L.P.
4.2 Registration Rights Agreement dated as of January 6, 1999
among the Company, RGC International Investors, LDC and
Halifax Fund, L.P.
4.3 Form of Warrant dated as of January 6, 1999.
99.1 Press Release dated January 7, 1999.
</TABLE>
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EXHIBIT 4.1
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "AGREEMENT"), dated as of January 6,
1999, by and among CyberCash, Inc., a Delaware corporation, with headquarters
located at 2100 Reston Parkway, 3rd Floor, Reston, Virginia 20191 ("COMPANY"),
and each of the purchasers set forth on the signature pages hereto (the
"BUYERS").
WHEREAS:
a. The Company and the Buyers are executing and delivering
this Agreement in reliance upon the exemption from securities registration
afforded by Rule 506 under Regulation D ("REGULATION D") as promulgated by the
United States Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "1933 ACT");
b. The Company has authorized the issuance to the Buyers of
914,634 units (the "UNITS"), each Unit consisting of (i) one share of the
Company's common stock, par value $.001 per share (the "COMMON STOCK"), and (ii)
one detachable warrant in the form attached hereto as EXHIBIT "A" (each a
"WARRANT" and, collectively, the "WARRANTS") to purchase .75 shares of Common
Stock (subject to adjustment as provided in the Warrants), for a per Unit
purchase price of $16.40. The shares of Common Stock which are included in the
Units, together with any shares of Common Stock issued in replacement thereof or
as a dividend thereon or otherwise with respect thereto are hereinafter referred
to as the "COMMON SHARES." The shares of Common Stock issuable upon exercise of
or otherwise pursuant to the Warrants are hereinafter collectively referred to
as the "WARRANT SHARES." The Common Shares, the Warrants and the Warrant shares
are sometimes hereinafter collectively referred to as the "SECURITIES."
c. The Buyers desire to purchase and the Company desires to
issue and sell, upon the terms and conditions set forth in this Agreement, an
aggregate of 914,634 Units for an aggregate purchase price of Fifteen Million
Dollars ($15,000,000).
d. Each Buyer wishes to purchase, upon the terms and
conditions stated in this Agreement, the number of Units as is set forth
immediately below its name on the signature pages hereto; and
e. Contemporaneous with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement, in the form attached hereto as EXHIBIT "B" (the "REGISTRATION RIGHTS
AGREEMENT"), pursuant to which the Company has agreed to provide certain
registration rights under the 1933 Act and the rules and regulations promulgated
thereunder, and applicable state securities laws.
NOW, THEREFORE, the Company and each of the Buyers severally (and not
jointly) hereby agree as follows:
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a. PURCHASE AND SALE OF UNITS.
(a) PURCHASE OF UNITS. The Company shall issue and sell to
each Buyer and each Buyer severally agrees to purchase from the Company such
number of Units as is set forth immediately below such Buyer's name on the
signature pages hereto. The issuance, sale and purchase of the Units shall take
place at two (2) closings, the first of which is hereinafter referred to as the
"FIRST CLOSING" and the second of which is hereinafter referred to as the
"SECOND CLOSING". The aggregate number of Units to be issued at the First
Closing is 609,756 for an aggregate purchase price of Ten Million Dollars
($10,000,000) and the aggregate number of Units to be issued at the Second
Closing is 304,878 for an aggregate purchase price of Five Million Dollars
($5,000,000).
(b) FORM OF PAYMENT. On each Closing Date (as defined below),
(i) each Buyer shall pay the purchase price for the Units to be issued and sold
to it at the applicable Closing (as defined below) (the "PURCHASE PRICE") by
wire transfer of immediately available funds to the Company, in accordance with
the Company's written wiring instructions, against delivery of duly executed
certificates and Warrants representing such number of Units which such Buyer is
purchasing and (ii) the Company shall deliver such certificates and Warrants
representing such Units duly executed on behalf of the Company, to such Buyer,
against delivery of such Purchase Price.
(c) CLOSING DATE. Subject to the satisfaction (or waiver) of
the conditions thereto set forth in Section 7 and Section 8 below, the date and
time of the issuance and sale of the Units pursuant to this Agreement (the
"CLOSING DATE") shall be (i) in the case of the First Closing, 12:00 noon
Eastern Standard Time on January 6, 1999 and (ii) in the case of the Second
Closing, as soon as practicable (but no less than two (2) business days)
following the satisfaction (or waiver) of the conditions to such closing set
forth in Section 8(b) below, or such other mutually agreed upon time. Each
Closing shall occur on the applicable Closing Date at the offices of Hogan &
Hartson, L.L.P., or at such other location as may be agreed to by the parties.
b. BUYERS' REPRESENTATIONS AND WARRANTIES. Each Buyer severally (and
not jointly) represents and warrants to the Company solely as to such Buyer
that:
(a) INVESTMENT PURPOSE. The Buyer is purchasing the Securities
for its own account and not with a present view towards the public sale or
distribution thereof. Pursuant to Section 2(a) of the Registration Rights
Agreement, the Company has agreed to file a Registration Statement (as defined
in the Registration Rights Agreement) for the resale of the Common Shares and
the Warrant Shares, and further acknowledges that the Buyer may sell the Common
Shares and the Warrant Shares in accordance therewith.
(b) ACCREDITED INVESTOR STATUS. The Buyer is an "accredited
investor" as that term is defined in Rule 501(a) of Regulation D (an "ACCREDITED
INVESTOR").
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(c) RELIANCE ON EXEMPTIONS. The Buyer understands that the
Securities are being offered and sold to it in reliance upon specific exemptions
from the registration requirements of United States federal and state securities
laws and that the Company is relying upon the truth and accuracy of, and the
Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of the Buyer
to acquire the Securities.
(d) INFORMATION. The Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Securities
which have been requested by the Buyer or its advisors. The Buyer and its
advisors, if any, have been afforded the opportunity to ask questions of the
Company. Neither such inquiries nor any other due diligence investigation
conducted by Buyer or any of its advisors or representatives shall modify, amend
or affect Buyer's right to rely on the Company's representations and warranties
contained in Section 3 below. The Buyer understands that its investment in the
Securities involves a significant degree of risk and that the market price of
the Common Stock has been volatile and that no representation is being made as
to the future value of the Common Stock. The Buyer has the knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of an investment in the Securities and has the ability to bear
the economic risks of an investment in the Securities.
(e) GOVERNMENTAL REVIEW. The Buyer understands that no United
States federal or state agency or any other government or governmental agency
has passed upon or made any recommendation or endorsement of the Securities.
(f) TRANSFER OR RESALE. The Buyer understands that (i) except
as provided in the Registration Rights Agreement, the sale or re-sale of the
Securities has not been and is not being registered under the 1933 Act or any
applicable state securities laws, and the Securities may not be transferred
unless (a) subsequently included in an effective registration statement under
the 1933 Act, (b) the Buyer shall have delivered to the Company an opinion of
counsel (which opinion shall be reasonably acceptable to the Company) to the
effect that the Securities to be sold or transferred may be sold or transferred
pursuant to an exemption from such registration, (c) the Securities are sold or
transferred to an "affiliate" (as defined in Rule 144 promulgated under the 1933
Act (or a successor rule) ("RULE 144")) of the Buyer who agrees to sell or
otherwise transfer the Securities only in accordance with this Section 2(f) and
who is an Accredited Investor or (d) the Securities are sold pursuant to Rule
144; (ii) any sale of such Securities made in reliance on Rule 144 may be made
only in accordance with the terms of said Rule and further, if said Rule is not
applicable, any re-sale of such Securities under circumstances in which the
seller (or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the 1933 Act) may require compliance
with some other exemption under the 1933 Act or the rules and regulations of the
SEC thereunder; and (iii) neither the Company nor any other person is under any
obligation to register such Securities under the 1933 Act or any state
securities laws or to comply with the terms and conditions of any
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exemption thereunder (in each case, other than pursuant to the Registration
Rights Agreement). Notwithstanding the foregoing or anything else contained
herein to the contrary, the Securities may be pledged as collateral in
connection with a bona fide margin account or other lending arrangement in the
ordinary course of the Buyer's business provided that such Buyer concludes that
such pledge is exempt from the registration requirements under the 1933 Act.
(g) LEGENDS. The Buyer understands that the Warrants and,
until such time as the Common Shares and Warrant Shares have been registered
under the 1933 Act as contemplated by the Registration Rights Agreement or
otherwise may be sold pursuant to Rule 144 without any restriction as to the
number of securities as of a particular date that can then be immediately sold,
the Common Shares and Warrant Shares, may bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of the certificates for such Securities):
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended. The
securities may not be sold, transferred or assigned in the absence
of an effective registration statement for the securities under said
Act, or an opinion of counsel, in form, substance and scope
reasonably acceptable to the Company, that registration is not
required under said Act or unless sold pursuant to Rule 144 under
said Act."
The legend set forth above shall be removed and the Company shall
issue a certificate without such legend to the holder of any Security upon which
it is stamped, if, unless otherwise required by applicable state securities
laws, (a) such Security is registered for sale under an effective registration
statement filed under the 1933 Act or otherwise may be sold pursuant to Rule 144
without any restriction as to the number of securities as of a particular date
that can then be immediately sold, or (b) such holder provides the Company with
an opinion of counsel, in form, substance and scope reasonably acceptable to the
Company, to the effect that a public sale or transfer of such Security may be
made without registration under the 1933 Act and such Security is sold or
transferred or (c) such holder provides the Company with reasonable assurances
that such Security may be sold pursuant to Rule 144 under the 1933 Act and that
such sale has been effected in accordance with the provisions of such Rule. The
Buyer agrees to sell all Securities, including those represented by a
certificate(s) from which the legend has been removed, in compliance with
applicable prospectus delivery requirements, if any.
(h) AUTHORIZATION; ENFORCEMENT. This Agreement and the
Registration Rights Agreement have been duly and validly authorized. This
Agreement has been duly executed and delivered on behalf of the Buyer, and this
Agreement constitutes, and upon execution and delivery by the Buyer of the
Registration Rights Agreement, such agreement will constitute, valid and binding
agreements of the Buyer enforceable in accordance with their terms.
(i) RESIDENCY. The Buyer is a resident of the jurisdiction set
forth immediately below such Buyer's name on the signature pages hereto.
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(j) NO GENERAL SOLICITATION. The Buyer has not been
offered the Securities by any form of general solicitation or general
advertising.
(k) NASDAQ RULE 4460(i). The Buyer acknowledges that the
Company will be unable to issue Common Stock in excess of 19.99% of the
Company's currently outstanding Common Stock upon issuance of the Common Shares
pursuant to the terms hereof or upon exercise of the Warrants, in the absence
of: (i) the approval of the issuance of the Common Shares and Warrant Shares by
the Company's stockholders; (ii) a waiver by The Nasdaq Stock Market of the
provisions of Nasdaq Marketplace Rule 4460(i) ("Rule 4460(i)"); or (iii) the
provisions of Rule 4460(i) no longer being applicable to the Company, including
where the Common Stock of the Company is no longer listed on the Nasdaq Stock
Market or other securities exchange or quotation system which requires
stockholder approval for issuances similar to those required by Rule 4460(i).
c. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each Buyer that:
(a) ORGANIZATION AND QUALIFICATION. The Company and each of
its Subsidiaries (as defined below), if any, is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is incorporated, with full power and authority (corporate and other) to
own, lease, use and operate its properties and to carry on its business as and
where now owned, leased, used, operated and conducted. SCHEDULE 3(a) sets forth
a list of all of the Subsidiaries of the Company and the jurisdiction in which
each is incorporated. The Company and each of its Subsidiaries is duly qualified
as a foreign corporation to do business and is in good standing in every
jurisdiction in which its ownership or use of property or the nature of the
business conducted by it makes such qualification necessary except where the
failure to be so qualified or in good standing would not have a Material Adverse
Effect. "MATERIAL ADVERSE EFFECT" means any material adverse effect on (i) the
Securities, (ii) the business, operations, assets, financial condition or
prospects of the Company and its Subsidiaries, if any, taken as a whole, or
(iii) on the transactions contemplated hereby or by the agreements or
instruments to be entered into in connection herewith. "SUBSIDIARIES" means any
corporation or other organization, whether incorporated or unincorporated, in
which the Company owns, directly or indirectly, any equity or other ownership
interest and in which such ownership interest entitles the Company to elect a
majority of the Board of Directors or similar governing body.
(b) AUTHORIZATION; ENFORCEMENT. (i) The Company has all
requisite corporate power and authority to enter into and perform this
Agreement, the Registration Rights Agreement and the Warrants and to consummate
the transactions contemplated hereby and thereby and to issue the Securities, in
accordance with the terms hereof and thereof, (ii) the execution and delivery of
this Agreement, the Registration Rights Agreement and the Warrants by the
Company and the consummation by it of the transactions contemplated hereby and
thereby (including without limitation, the issuance of the Common Shares and the
Warrants and the issuance and reservation for issuance of the Warrant Shares
issuable upon exercise thereof)
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have been duly authorized by the Company's Board of Directors and no further
consent or authorization of the Company, its Board of Directors, or its
stockholders is required (except as contemplated hereby), (iii) this Agreement
has been duly executed and delivered by the Company, and (iv) this Agreement
constitutes, and upon execution and delivery by the Company of the Registration
Rights Agreement and the Warrants, each of such agreements and instruments will
constitute, a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms.
(c) CAPITALIZATION. As of the date hereof, the authorized
capital stock of the Company consists of (i) 40,000,000 shares of Common Stock
of which 19,126,603 shares are issued and outstanding, 3,793,686 shares are
reserved for issuance pursuant to the Company's stock option plans, 708,400
shares are reserved for issuance pursuant to securities (other than the
Warrants) exercisable for, or convertible into or exchangeable for shares of
Common Stock and 1,371,952 (2x currently required) shares are reserved for
issuance upon exercise of the Warrants (subject to adjustment pursuant to the
Company's covenant set forth in Section 4(h) below); and (ii) 5,000,000 shares
of preferred stock, none of which is issued or outstanding and of which 300,000
are designated as Series E Junior Participating Preferred Stock, none of which
is issued or outstanding. All of such outstanding shares of capital stock are,
or upon issuance will be, duly authorized, validly issued, fully paid and
nonassessable. No shares of capital stock of the Company are subject to
preemptive rights or any other similar rights of the stockholders of the Company
or any liens or encumbrances imposed through the actions or failure to act of
the Company. Except as disclosed in SCHEDULE 3(c), as of the effective date of
this Agreement, (i) there are no outstanding options, warrants, scrip, rights to
subscribe for, puts, calls, rights of first refusal, agreements, understandings,
claims or other commitments or rights of any character whatsoever relating to,
or securities or rights convertible into or exchangeable for any shares of
capital stock of the Company or any of its Subsidiaries, or arrangements by
which the Company or any of its Subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its Subsidiaries,
(ii) there are no agreements or arrangements under which the Company or any of
its Subsidiaries is obligated to register the sale of any of its or their
securities under the 1933 Act (except the Registration Rights Agreement) and
(iii) there are no anti-dilution or price adjustment provisions contained in any
security issued by the Company (or in any agreement providing rights to security
holders) that will be triggered by the issuance of the Common Shares, the
Warrants, or the Warrant Shares. The Company has furnished to the Buyer true and
correct copies of the Company's Certificate of Incorporation as in effect on the
date hereof ("CERTIFICATE OF INCORPORATION"), the Company's By-laws, as in
effect on the date hereof (the "BY-LAWS"), and the terms of all securities
convertible into or exercisable for Common Stock of the Company and the material
rights of the holders thereof in respect thereto.
(d) ISSUANCE OF SHARES. The Common Shares are duly authorized
and, upon issuance in accordance with the terms of this Agreement, will be
validly issued, fully paid and non-assessable, and free from all taxes, liens
and charges with respect to the issue thereof and shall not be subject to
preemptive rights or other similar rights of stockholders of the Company. The
Warrant Shares are duly authorized and reserved for issuance, and, upon and
exercise of the Warrants in accordance with the terms thereof, will be validly
issued, fully paid
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and non-assessable, and free from all taxes, liens, claims and encumbrances and
will not be subject to preemptive rights or other similar rights of stockholders
of the Company.
(e) ACKNOWLEDGMENT OF DILUTION. The Company understands and
acknowledges the potentially dilutive effect to the Common Stock upon the
issuance of the Warrant Shares upon exercise of the Warrants. The Company
further acknowledges that its obligation to issue Warrant Shares upon exercise
of the Warrants in accordance with this Agreement and the Warrants is absolute
and unconditional regardless of the dilutive effect that such issuance may have
on the ownership interests of other stockholders of the Company.
(f) [INTENTIONALLY OMITTED]
(g) NO CONFLICTS. The execution, delivery and performance of
this Agreement, the Registration Rights Agreement and the Warrants by the
Company and the consummation by the Company of the transactions contemplated
hereby and thereby (including, without limitation, the issuance and reservation
for issuance of the Common Shares and Warrant Shares) will not (i) conflict with
or result in a violation of any provision of the Certificate of Incorporation or
By-laws or (ii) violate or conflict with, or result in a breach of any provision
of, or constitute a default (or an event which with notice or lapse of time or
both could become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company or any of its Subsidiaries is a party, or (iii)
result in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations and regulations)
applicable to the Company or any of its Subsidiaries or by which any property or
asset of the Company or any of its Subsidiaries is bound or affected (except for
such conflicts, defaults, terminations, amendments, accelerations, cancellations
and violations as would not, individually or in the aggregate, have a Material
Adverse Effect). Neither the Company nor any of its Subsidiaries is in violation
of its Certificate of Incorporation, By-laws or other organizational documents
and neither the Company nor any of its Subsidiaries is in default (and no event
has occurred which with notice or lapse of time or both could put the Company or
any of its Subsidiaries in default) under, and neither the Company nor any of
its Subsidiaries has taken any action or failed to take any action that would
give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of its Subsidiaries is a party or by which any property or assets of the
Company or any of its Subsidiaries is bound or affected, except for possible
defaults as would not, individually or in the aggregate, have a Material Adverse
Effect. The businesses of the Company and its Subsidiaries, if any, are not
being conducted, and shall not be conducted so long as a Buyer owns any of the
Securities, in violation of any law, ordinance or regulation of any governmental
entity. Except as specifically contemplated by this Agreement and as required
under the 1933 Act and any applicable state securities laws and the rules and
regulations of the Nasdaq National Market ("NASDAQ"), the Company is not
required to obtain any consent, authorization or order of, or make any filing or
registration with, any court, governmental agency, regulatory agency or self
regulatory organization in order for it to execute, deliver or perform any of
its obligations under this Agreement, the Registration Rights Agreement or the
Warrants in accordance with the terms
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hereof or thereof. Except as disclosed in SCHEDULE 3(g), all consents,
authorizations, orders, filings and registrations which the Company is required
to obtain pursuant to the preceding sentence have been obtained or effected on
or prior to the date hereof. The Company is not in violation of the listing
requirements of Nasdaq and does not reasonably anticipate that the Common Stock
will be delisted by Nasdaq in the foreseeable future. The Company is unaware of
any facts or circumstances which might reasonably be expected to give rise to
any of the foregoing.
(h) SEC DOCUMENTS; FINANCIAL STATEMENTS. Since December 31,
1995, the Company has timely filed all reports, schedules, forms, statements and
other documents required to be filed by it with the SEC pursuant to the
reporting requirements of the Exchange Act of 1934, as amended (the "1934 ACT")
(all of the foregoing filed prior to the date hereof and all exhibits included
therein and financial statements and schedules thereto and documents (other than
exhibits) incorporated by reference therein, being hereinafter referred to
herein as the "SEC DOCUMENTS"). The Company has delivered to each Buyer true and
complete copies of the SEC Documents, except for such exhibits and incorporated
documents. As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the 1934 Act and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed with the SEC,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. As of their respective dates, the financial statements of the
Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have been
prepared in accordance with United States generally accepted accounting
principles, consistently applied, during the periods involved (except (i) as may
be otherwise indicated in such financial statements or the notes thereto, or
(ii) in the case of unaudited interim statements, to the extent they may not
include footnotes or may be condensed or summary statements) and fairly present
in all material respects the consolidated financial position of the Company and
its consolidated Subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended (subject,
in the case of unaudited statements, to normal year-end audit adjustments).
Except as set forth in the financial statements of the Company included in the
SEC Documents, the Company has no liabilities, contingent or otherwise, other
than (i) liabilities incurred in the ordinary course of business subsequent to
December 31, 1997 and (ii) obligations under contracts and commitments incurred
in the ordinary course of business and not required under generally accepted
accounting principles to be reflected in such financial statements, which,
individually or in the aggregate, are not material to the financial condition or
operating results of the Company.
(i) ABSENCE OF CERTAIN CHANGES. Except for losses incurred in
the ordinary course of business that have been publicly disclosed prior to the
date hereof or as set forth on SCHEDULE 3(i) hereof, since December 31, 1997,
there has been no material adverse change and no material adverse development in
the assets, liabilities, business, properties, operations, financial condition,
results of operations or prospects of the Company or any of its
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Subsidiaries. For purposes of this Section 3(i), the terms "material adverse
change" and "material adverse development" shall exclude continuing losses that
are consistent with the Company's historical losses.
(j) ABSENCE OF LITIGATION. There is no action, suit, claim,
proceeding, inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending or, to the
knowledge of the Company or any of its Subsidiaries, threatened against or
affecting the Company or any of its Subsidiaries that could have a Material
Adverse Effect. SCHEDULE 3(j) contains a complete list and summary description
of any pending or threatened proceeding against the Company or any of its
Subsidiaries, without regard to whether it would have a Material Adverse Effect.
(k) PATENTS, COPYRIGHTS, ETC. The Company and each of its
Subsidiaries owns or possesses the requisite licenses or rights to use all
patents, patent rights, inventions, know-how, trade secrets, trademarks, service
marks, service names, trade names and copyrights ("INTELLECTUAL PROPERTY")
necessary to enable it to conduct its business as now operated (and, except as
set forth in SCHEDULE 3(k) hereof, to the best of the Company's knowledge, as
presently contemplated to be operated in the future); there is no claim or
action by any person pertaining to, or proceeding pending, or to the Company's
knowledge threatened, which challenges the right of the Company or of a
Subsidiary with respect to any Intellectual Property necessary to enable it to
conduct its business as now operated (and, except as set forth in SCHEDULE 3(k)
hereof, to the best of the Company's knowledge, as presently contemplated to be
operated in the future); to the best of the Company's knowledge, the Company's
or its Subsidiaries' current and intended products, services and processes do
not infringe on any Intellectual Property or other rights held by any person;
and the Company is unaware of any facts or circumstances which might give rise
to any of the foregoing. The Company and each of its Subsidiaries have taken
reasonable security measures to protect the secrecy, confidentiality and value
of their Intellectual Property.
(l) NO MATERIALLY ADVERSE CONTRACTS, ETC. Neither the Company
nor any of its Subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation which in the
judgment of the Company's officers has or is expected in the future to have a
Material Adverse Effect. Neither the Company nor any of its Subsidiaries is a
party to any contract or agreement which in the judgment of the Company's
officers has or is expected to have a Material Adverse Effect.
(m) TAX STATUS. Except as set forth on SCHEDULE 3(m), the
Company and each of its Subsidiaries has made or filed all federal and state
income and all other tax returns, reports and declarations required by any
jurisdiction to which it is subject (unless and only to the extent that the
Company and each of its Subsidiaries has set aside on its books provisions
reasonably adequate for the payment of all unpaid and unreported taxes) and has
paid all taxes and other governmental assessments and charges that are material
in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and has set aside on
its books provisions reasonably adequate for the payment of all
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taxes for periods subsequent to the periods to which such returns, reports or
declarations apply. There are no unpaid taxes in any material amount claimed to
be due by the taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim. The Company has not executed a
waiver with respect to the statute of limitations relating to the assessment or
collection of any foreign, federal, state or local tax. Except as set forth on
SCHEDULE 3(m), none of the Company's tax returns is presently being audited by
any taxing authority.
(n) CERTAIN TRANSACTIONS. Except as set forth on SCHEDULE 3(n)
and except for arm's length transactions pursuant to which the Company or any of
its Subsidiaries makes payments in the ordinary course of business upon terms no
less favorable than the Company or any of its Subsidiaries could obtain from
third parties and other than the grant of stock options disclosed on SCHEDULE
3(c), none of the officers, directors, or employees of the Company is presently
a party to any transaction with the Company or any of its Subsidiaries (other
than for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any corporation, partnership, trust or other entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner.
(o) DISCLOSURE. All information relating to or concerning the
Company or any of its Subsidiaries set forth in this Agreement and provided to
the Buyers pursuant to Section 2(d) hereof and otherwise in connection with the
transactions contemplated hereby is, taken as a whole, true and correct in all
material respects and the Company has not omitted to state any material fact
necessary in order to make the statements made herein or therein, in light of
the circumstances under which they were made, not misleading. Except for the
transactions contemplated hereby, no event or circumstance has occurred or
exists with respect to the Company or any of its Subsidiaries or its or their
business, properties, prospects, operations or financial conditions, which,
under applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly announced or
disclosed (assuming for this purpose that the Company's reports filed under the
1934 Act are being incorporated into an effective registration statement filed
by the Company under the 1933 Act).
(p) ACKNOWLEDGMENT REGARDING BUYERS' PURCHASE OF SECURITIES.
The Company acknowledges and agrees that the Buyers are acting solely in the
capacity of arm's length purchasers with respect to this Agreement and the
transactions contemplated hereby. The Company further acknowledges that no Buyer
is acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement and the transactions contemplated
hereby and any statement made by any Buyer or any of their respective
representatives or agents in connection with this Agreement and the transactions
contemplated hereby is not advice or a recommendation and is merely incidental
to the Buyers' purchase of the Securities. The Company further represents to
each Buyer that the Company's decision to enter
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into this Agreement has been based solely on the independent evaluation of the
Company and its representatives.
(q) NO INTEGRATED OFFERING. Neither the Company, nor any of
its affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited any offers to
buy any security under circumstances that would require registration under the
1933 Act of the issuance of the Securities to the Buyers. The issuance of the
Securities to the Buyers will not be integrated with any other issuance of the
Company's securities (past, current or future) which requires stockholder
approval under the rules of the Nasdaq Stock Market.
(r) NO BROKERS. The Company has taken no action which would
give rise to any claim by any person for brokerage commissions, finder's fees or
similar payments relating to this Agreement or the transactions contemplated
hereby.
(s) PERMITS; COMPLIANCE. The Company and each of its
Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exemptions, consents, certificates,
approvals and orders necessary to own, lease and operate its properties and to
carry on its business as it is now being conducted (collectively, the "COMPANY
PERMITS"), and there is no action pending or, to the knowledge of the Company,
threatened regarding suspension or cancellation of any of the Company Permits.
Neither the Company nor any of its Subsidiaries is in conflict with, or in
default or violation of, any of the Company Permits or any law or regulation,
except for any such conflicts, defaults or violations which, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect. During the period commencing on December 31, 1996 and ending on the date
hereof, neither the Company nor any of its Subsidiaries has received any
notification with respect to possible conflicts, defaults or violations of
applicable laws, except for notices relating to possible conflicts, defaults or
violations, which conflicts, defaults or violations would not have a Material
Adverse Effect.
(t) ENVIRONMENTAL MATTERS.
(i) Except as set forth in SCHEDULE 3(t), there
are, to the Company's knowledge, with respect to the Company or any of its
Subsidiaries or any predecessor of the Company, no past or present violations of
Environmental Laws (as defined below), releases of any material into the
environment, actions, activities, circumstances, conditions, events, incidents,
or contractual obligations which may give rise to any common law environmental
liability or any liability under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 or similar federal, state, local or
foreign laws and neither the Company nor any of its Subsidiaries has received
any notice with respect to any of the foregoing, nor is any action pending or,
to the Company's knowledge, threatened in connection with any of the foregoing.
The term "ENVIRONMENTAL LAWS" means all federal, state, local or foreign laws
relating to pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water, groundwater, land
surface or
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subsurface strata), including, without limitation, laws relating to emissions,
discharges, releases or threatened releases of chemicals, pollutants
contaminants, or toxic or hazardous substances or wastes (collectively,
"HAZARDOUS MATERIALS") into the environment, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials, as well as all authorizations,
codes, decrees, demands or demand letters, injunctions, judgments, licenses,
notices or notice letters, orders, permits, plans or regulations issued,
entered, promulgated or approved thereunder.
(ii) Other than those that are or were stored, used
or disposed of in compliance with applicable law, no Hazardous Materials are
contained on or about any real property currently owned, leased or used by the
Company or any of its Subsidiaries, and no Hazardous Materials were released on
or about any real property previously owned, leased or used by the Company or
any of its Subsidiaries during the period the property was owned, leased or used
by the Company or any of its Subsidiaries, except in the normal course of the
Company's or any of its Subsidiaries' business.
(iii) Except as set forth in SCHEDULE 3(t), there are
no underground storage tanks on or under any real property owned, leased or used
by the Company or any of its Subsidiaries that are not in compliance with
applicable law.
(u) TITLE TO PROPERTY. The Company and its Subsidiaries own no
real property and have good and marketable title to all personal property owned
by them which is material to the business of the Company and its Subsidiaries,
in each case free and clear of all liens, encumbrances and defects except such
as are described in SCHEDULE 3(u) or such as would not have a Material Adverse
Effect. Any real property and facilities held under lease by the Company and its
Subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as would not have a Material Adverse Effect.
(v) INSURANCE. The Company and each of its Subsidiaries are
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as management of the Company believes to be
prudent and customary in the businesses in which the Company and its
Subsidiaries are engaged. Neither the Company nor any such Subsidiary has any
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not have a Material Adverse Effect.
(w) INTERNAL ACCOUNTING CONTROLS. The Company and each of its
Subsidiaries maintain a system of internal accounting controls sufficient, in
the judgment of the Company's board of directors, to provide reasonable
assurance that (i) transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management's general or
specific authorization and (iv) the recorded
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accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(x) FOREIGN CORRUPT PRACTICES. Neither the Company, nor any of
its Subsidiaries, nor any director, officer, agent, employee or other person
acting on behalf of the Company or any Subsidiary has, in the course of his
actions for, or on behalf of, the Company, used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses relating
to political activity; made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds;
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977; or made any bribe, rebate, payoff, influence payment,
kickback or other unlawful payment to any foreign or domestic government
official or employee.
(y) SOLVENCY. The Company (both before and after giving effect
to the transactions contemplated by this Agreement) is solvent (i.e., its assets
have a fair market value in excess of the amount required to pay its probable
liabilities on its existing debts as they become absolute and matured) and
currently the Company has no information that would lead it to reasonably
conclude that the Company would not have the ability to, nor does it intend to
take any action that would impair its ability to, pay its debts from time to
time incurred in connection therewith as such debts mature. The Company did not
receive a qualified opinion from its auditors with respect to its most recent
fiscal year end and does not anticipate or know of any basis upon which its
auditors might issue a qualified opinion in respect of its current fiscal year.
4. COVENANTS.
(a) BEST EFFORTS. The parties shall use their best efforts to
satisfy timely each of the conditions described in Section 7 and 8 of this
Agreement.
(b) FORM D; BLUE SKY LAWS. The Company agrees to file a Form D
with respect to the Securities as required under Regulation D and to provide a
copy thereof to each Buyer promptly after such filing. The Company shall, on or
before the Closing Date with respect to the First Closing, take such action as
the Company shall reasonably determine is necessary to qualify the Securities
for sale to the Buyers at the applicable closing pursuant to this Agreement
under applicable securities or "blue sky" laws of the states of the United
States (or to obtain an exemption from such qualification), and shall provide
evidence of any such action so taken to each Buyer on or prior to the Closing
Date.
(c) REPORTING STATUS; ELIGIBILITY TO USE FORM S-3. The
Company's Common Stock is registered under Section 12(g) of the 1934 Act. So
long as any Buyer beneficially owns any of the Securities, the Company shall
timely file all reports required to be filed with the SEC pursuant to the 1934
Act, and the Company shall not terminate its status as an issuer required to
file reports under the 1934 Act even if the 1934 Act or the rules and
regulations thereunder would permit such termination. The Company currently
meets, and will take all
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necessary action to continue to meet, the "registrant eligibility" requirements
set forth in the general instructions to Form S-3.
(d) USE OF PROCEEDS. The Company shall use the proceeds from
the sale of the Common Shares and the Warrants for working capital and to fund
acquisitions and strategic investments. Pending such uses, the Company will
invest the proceeds in short-term and investment-grade securities.
(e) ADDITIONAL EQUITY CAPITAL. Subject to the exceptions
described below, the Company will not, without the prior written consent of Rose
Glen Capital Management, L.P., negotiate or contract with any party to obtain
additional equity financing (including debt financing with an equity component)
that involves (A) the issuance of Common Stock (whether upon conversion or
exercise of a security convertible into or exercisable for Common Stock) at a
discount to the market price of the Common Stock on the date of issuance thereof
or, in the case of a security convertible into or exercisable for Common Stock,
the date of issuance of such convertible security (taking into account the value
of any warrants or options to acquire Common Stock issued in connection
therewith) or (B) the issuance of convertible securities that are convertible
into an indeterminate number of shares of Common Stock during the period (the
"LOCK-UP PERIOD") beginning on the Closing Date with respect to the First
Closing and ending one hundred eighty (180) days from the date the Registration
Statement (as defined in the Registration Rights Agreement) is declared
effective (plus any days in which sales cannot be made thereunder) (the
limitations referred to in this sentence are collectively referred to as the
"CAPITAL RAISING LIMITATIONS"). The Capital Raising Limitations shall not apply
to any transaction involving (i) issuances of securities in a firm commitment
underwritten public offering (excluding a continuous offering pursuant to Rule
415 under the 1933 Act) or (ii) issuances of securities as consideration for a
merger, consolidation or purchase of assets, or in connection with any strategic
partnership or joint venture (the primary purpose of which is not to raise
equity capital), or in connection with the disposition or acquisition of a
business, product or license by the Company. The Capital Raising Limitations
also shall not apply to the issuance of securities upon exercise or conversion
of the Company's options, warrants or other convertible securities outstanding
as of the date hereof or to the grant of additional options or warrants, or the
issuance of additional securities, under any Company stock option or restricted
stock plan approved by the stockholders of the Company.
(f) EXPENSES. The Company shall reimburse Rose Glen Capital
Management, L.P. ("ROSE GLEN") for all expenses incurred by it in connection
with the negotiation, preparation, execution, delivery and performance of this
Agreement and the other agreements to be executed in connection herewith,
including, without limitation, attorneys' and consultants' fees and expenses.
The Company's obligation to reimburse Rose Glen's expenses under this Section
4(f) shall be limited to Thirty Thousand Dollars ($30,000), of which Ten
Thousand Dollars ($10,000) was advanced previously.
(g) FINANCIAL INFORMATION. The Company agrees to send the
following reports to each Buyer until such Buyer transfers, assigns, or sells
all of the Securities:
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(i) within ten (10) days after the filing with the SEC, a copy of its Annual
Report on Form 10-K, its Quarterly Reports on Form 10-Q and any Current Reports
on Form 8-K; (ii) within one (1) day after release, copies of all press releases
issued by the Company or any of its Subsidiaries; and (iii) contemporaneously
with the making available or giving to the stockholders of the Company, copies
of any notices or other information the Company makes available or gives to such
stockholders.
(h) RESERVATION OF SHARES. The Company shall at all times have
authorized, and reserved for the purpose of issuance, a sufficient number of
shares of Common Stock to provide for the full exercise of the outstanding
Warrants and issuance of the Warrant Shares in connection therewith (based on
the Exercise Price of the Warrants in effect from time to time). The Company
shall not reduce the number of shares of Common Stock reserved for issuance upon
exercise of the Warrants without the consent of each Buyer. The Company shall
use its best efforts at all times to maintain the number of shares of Common
Stock so reserved for issuance at no less than two (2) times the number that is
then actually issuable upon full exercise of the Warrants (based on the Exercise
Price of the Warrants in effect from time to time). If at any time the number of
shares of Common Stock authorized and reserved for issuance is below the number
of Warrant Shares issued and issuable upon exercise of the Warrants (based on
the Exercise Price of the Warrants then in effect), the Company will promptly
take all corporate action necessary to authorize and reserve a sufficient number
of shares, including, without limitation, calling a special meeting of
stockholders to authorize additional shares to meet the Company's obligations
under this Section 4(h), in the case of an insufficient number of authorized
shares, and using its best efforts to obtain shareholder approval of an increase
in such authorized number of shares.
(i) LISTING. The Company shall use its best efforts to
promptly secure the listing of the Common Shares and the Warrant Shares upon
each national securities exchange or automated quotation system, if any, upon
which shares of Common Stock are then listed (subject to official notice of
issuance) and, so long as any Buyer owns any of the Securities, shall maintain,
so long as any other shares of Common Stock shall be so listed, such listing of
all Common Shares and Warrant Shares from time to time issuable upon exercise of
the Warrants. The Company will obtain and, so long as any Buyer owns any of the
Securities, maintain the listing and trading of its Common Stock on Nasdaq,
Nasdaq SmallCap, the New York Stock Exchange ("NYSE"), or the American Stock
Exchange ("AMEX") and will comply in all respects with the Company's reporting,
filing and other obligations under the bylaws or rules of the National
Association of Securities Dealers ("NASD") and such exchanges, as applicable.
The Company shall promptly provide to each Buyer copies of any notices it
receives from Nasdaq and any other exchanges or quotation systems on which the
Common Stock is then listed regarding the continued eligibility of the Common
Stock for listing on such exchanges and quotation systems.
(j) CORPORATE EXISTENCE. So long as a Buyer beneficially owns
any Common Shares or Warrants, the Company shall maintain its corporate
existence and shall not sell all or substantially all of the Company's assets,
except in the event of a merger or
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consolidation or sale of all or substantially all of the Company's assets, where
the surviving or successor entity in such transaction (i) assumes the Company's
obligations hereunder and under the agreements and instruments entered into in
connection herewith and (ii) is a publicly traded corporation whose Common Stock
is listed for trading on Nasdaq, Nasdaq SmallCap, NYSE or AMEX.
(k) NO INTEGRATION. The Company shall not make any offers or
sales of any security (other than the Securities) under circumstances that would
require registration of the Securities being offered or sold hereunder under the
1933 Act or cause the offering of Securities to be integrated with any other
offering of securities by the Company for the purpose of any stockholder
approval provision applicable to the Company or its securities.
5. OTHER AGREEMENTS. The Company and the Buyer hereby agree as
follows:
(a) REPURCHASE EVENTS. If any of the following events (each, a
"REPURCHASE EVENT") shall occur during the period in which any Buyer (or any
permitted assignee of any such Buyer's rights hereunder) beneficially owns any
Common Shares:
(i) The Company (A) fails to issue Warrant Shares
to the holders of Warrants upon exercise thereof in accordance with the terms of
the Warrants (for a period of at least sixty (60) days if such failure is solely
as a result of the circumstances governed by Section 3(b) of the Warrants and
the Company is using its best efforts to authorize a sufficient number of shares
of Common Stock as soon as practicable), (B) fails to transfer or to cause its
transfer agent to transfer (electronically or in certificated form) any
certificate for Warrant Shares issued to the holders of Warrants upon exercise
thereof as and when required by this Agreement, the Warrants and the
Registration Rights Agreement, (C) fails to remove any restrictive legend (or to
withdraw any stop transfer instructions in respect thereof) on any certificate
or any Common Shares or Warrant Shares issued to the holders as and when
required by this Agreement, the Warrants or the Registration Rights Agreement or
(D) fails to fulfill its obligations pursuant to Sections 4(c), 4(e), 4(h),
4(i), 4(j) or 6 of this Agreement (or makes any announcement, statement or
threat that it does not intend to honor the obligations described in this
paragraph) and any such failure shall continue uncured (or any announcement,
statement or threat not to honor its obligations shall not be rescinded in
writing) for ten (10) days after the Company shall have been notified thereof in
writing by any holder of Securities;
(ii) The Company fails to obtain effectiveness with
the SEC prior to June 30, 1999 (or, in the event (A) the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1998 is reviewed by the SEC
or (B) following the filing of the Form 10-K, the Company is informed by the SEC
that the Registration Statement (as defined in the Registration Rights
Agreement) will be reviewed by the SEC, August 31, 1999) of the Registration
Statement (as defined in the Registration Rights Agreement) required to be filed
pursuant to Section 2(a) of the Registration Rights Agreement, or fails to
obtain the effectiveness of any additional Registration Statement required
pursuant to Section 3(b) of the Registration
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Rights Agreement within one hundred twenty (120) days after the date the Company
reasonably first determined (or reasonably should have determined) the need
therefor, or any such Registration Statement, after its initial effectiveness,
lapses in effect or sales of all of the Registrable Securities (as defined in
the Registration Rights Agreement) otherwise cannot be made thereunder (whether
by reason of the Company's failure to amend or supplement the prospectus
included therein in accordance with the Registration Rights Agreement, the
Company's failure to file and obtain effectiveness with the SEC of an additional
Registration Statement required pursuant to Section 3(b) of the Registration
Rights Agreement or otherwise) for more than thirty (30) consecutive days or
more than sixty (60) days in any twelve (12) month period after such
Registration Statement becomes effective;
(iii) The Company or any Subsidiary shall make an
assignment for the benefit of creditors, or apply for or consent to the
appointment of a receiver or trustee for it or for all or substantially all of
its property or business; or such a receiver or trustee shall otherwise be
appointed;
(iv) Bankruptcy, insolvency, reorganization or
liquidation proceedings or other proceedings for relief under any bankruptcy law
or any law for the relief of debtors shall be instituted by or against the
Company or any Subsidiary;
(v) The Company shall fail to maintain the listing
of the Common Stock on Nasdaq, the Nasdaq SmallCap, the NYSE or the AMEX; or
(vi) The Company shall consummate a sale, conveyance
or disposition of all or substantially all of its assets, or a transaction or
series of related transactions in which more than 50% of the voting power of the
Company is disposed of, or the consolidation, merger or other business
combination of the Company with or into any other person or persons when the
Company is not the survivor;
then, upon the occurrence and during the continuation of any Repurchase Event
specified in subparagraphs (i), (ii), (v) or (vi), at the option of the holders
of at least 50% of the then outstanding Common Shares by written notice (the
"REPURCHASE NOTICE") to the Company of such Repurchase Event (which Repurchase
Notice must be delivered within ten (10) business days after the occurrence of
the Repurchase Event in the case of a Repurchase Event specified in subparagraph
(vi)), or upon the occurrence of any Repurchase Event specified in subparagraphs
(iii) or (iv), the Company shall purchase each holder's outstanding Common
Shares for an amount equal to the greater of (1) 120% of the product of (x) the
number of outstanding Common Shares then held by such holder, multiplied by (y)
$16.40 (subject to adjustment for stock splits, stock dividends and similar
transactions) and (2) the "parity value" of the Common Shares to be repurchased,
where parity value means the product of (a) the number of Common Shares to be
repurchased multiplied by (b) the highest Closing Price (as defined below) for
the Common Stock during the period beginning on the date of first occurrence of
the Repurchase Event and ending one day prior to date of payment (the
"REPURCHASE DATE") of the Repurchase Amount (the greater of such amounts being
referred to as the "REPURCHASE AMOUNT"); provided,
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however, that the Repurchase Amount to be paid in the event of a Repurchase
Event specified in subparagraph (vi) shall be limited to clause (1) of this
sentence and, provided further, that in the case of a Repurchase Event specified
in clause (A) of subparagraph (i), the Repurchase Notice shall be given at the
option of the holders of at least 50% of the then outstanding Warrants and the
Company's repurchase obligation shall only be with respect to the Common Shares
held by such holders of Warrants. The Repurchase Amount shall be payable by the
Company within five (5) business days after (x) receipt by the Company of the
Repurchase Notice in the event of the occurrence of a Repurchase Event specified
in subparagraphs (i), (ii), (v) or (vi), or (y) the occurrence of a Repurchase
Event specified in subparagraphs (iii) or (iv). "CLOSING PRICE," as of any date,
means the last sale price of the Common Stock on Nasdaq as reported by Bloomberg
Financial Markets or an equivalent reliable reporting service mutually
acceptable to and hereafter designated by the holders of a majority in interest
of the Common Shares and the Company ("BLOOMBERG") or, if Nasdaq is not the
principal trading market for such security, the last sale price of such security
on the principal securities exchange or trading market where such security is
listed or traded as reported by Bloomberg, or if the foregoing do not apply, the
last sale price of such security in the over-the-counter market on the
electronic bulletin board for such security as reported by Bloomberg, or, if no
last sale price of such security is available in the over-the-counter market on
the electronic bulletin board for such security or in any of the foregoing
manners, the average of the bid prices of any market makers for such security
that are listed in the "pink sheets" by the National Quotation Bureau, Inc. If
the Closing Price cannot be calculated for such security on such date in the
manner provided above, the Closing Price shall be the fair market value as
mutually determined by the Company and the holders of a majority in interest of
the outstanding Common Shares. If the Company fails to pay the Repurchase Amount
within five (5) business days of the date that such amount is due and payable,
then (assuming there are sufficient authorized shares) in addition to all other
available remedies, each holder of Common Shares shall have the right at any
time, so long as the Repurchase Event continues, to require the Company, upon
written notice, to immediately issue, in lieu of paying the Repurchase Amount,
such number of additional shares of Common Stock of the Company (valued at the
Closing Price then in effect) necessary to increase the value of the Common
Shares held by such holder (which Common Shares for purposes of this Section
5(a) shall be valued at the Closing Price) to an amount equal to the Repurchase
Amount. The occurrence of a Repurchase Event shall in no way effect any
outstanding Warrants, which Warrants shall remain outstanding and exercisable in
accordance with their terms; provided, however, that following the occurrence of
a Repurchase Event specified in subparagraph (vi) above, any Warrants held by
any holder of Common Shares whose Common Shares are repurchased pursuant to the
provisions of this Section 5(a) shall be immediately canceled upon the receipt
by such holder of the Repurchase Amount.
(b) TRADING MARKET REPURCHASE. If the Warrants (or portion
thereof) cease to be exercisable by any holder as a result of the limitations
described in Section 3(f) of the Warrants (a "TRADING MARKET REPURCHASE EVENT"),
and the Company has not prior to, or within forty-five (45) days of, the date
that such Trading Market Repurchase Event arises, (i) obtained the Stockholder
Approval (as defined in the Warrants) or (ii) eliminated any prohibitions under
applicable law or the rules or regulations of any stock exchange, interdealer
-18-
<PAGE> 19
quotation system or other self-regulatory organization with jurisdiction over
the Company or any of its securities on the Company's ability to issue shares of
Common Stock in excess of the Maximum Share Amount (as defined in the Warrants),
then the Company shall be obligated to repurchase immediately all of the Common
Shares then outstanding in accordance with this Section 5(b). An irrevocable
repurchase notice (the "TRADING MARKET REPURCHASE NOTICE") shall be delivered
promptly to the holders of Warrants at their registered address appearing on the
records of the Company and shall state (i) that the Maximum Share Amount (as
defined in the Warrants) has been issued upon exercise of the Warrants, (ii)
that the Company is obligated to repurchase all of the Common Shares then
outstanding and (iii) the Repurchase Date, which shall be a date within five (5)
business days of the earlier of (a) the date of the Trading Market Repurchase
Notice or (b) the date on which the holders of the Warrants notify the Company
of the occurrence of a Trading Market Repurchase Event. On the Repurchase Date,
the Company shall make payment in cash of the Repurchase Amount (as defined in
Section 5(a) above) with respect to all of the Common Shares then outstanding.
In the event of a Trading Market Repurchase Event, all outstanding Warrants
shall be immediately canceled upon payment of the Repurchase Amount.
6. TRANSFER AGENT INSTRUCTIONS. The Company shall issue
irrevocable instructions to its transfer agent to issue certificates,
registered in the name of each Buyer or its nominee, for the Common Shares and
Warrant Shares in such amounts as specified from time to time by each Buyer to
the Company (the "IRREVOCABLE TRANSFER AGENT INSTRUCTIONS"). Prior to
registration of the Common Shares and Warrant Shares under the 1933 Act or the
date on which the Common Shares and Warrant Shares, as applicable, may be sold
pursuant to Rule 144 without any restriction as to the number of securities as
of a particular date that can then be immediately sold, all such certificates
shall bear the restrictive legend specified in Section 2(g) of this Agreement.
The Company warrants that no instruction other than the Irrevocable Transfer
Agent Instructions referred to in this Section 6, and stop transfer
instructions to give effect to Section 2(f) hereof (in the case of the Common
Shares and Warrant Shares, prior to effectiveness of the registration statement
relating to the Common Shares and Warrant Shares under the 1933 Act or the date
on which the Common Shares and Warrant Shares, as applicable, may be sold
pursuant to Rule 144 without any restriction as to the number of securities as
of a particular date that can then be immediately sold), will be given by the
Company to its transfer agent and that the Securities shall otherwise be freely
transferable on the books and records of the Company as and to the extent
provided in this Agreement and the Registration Rights Agreement. Nothing in
this Section 6 shall affect in any way the Buyer's obligations and agreement
set forth in Section 2(g) hereof to comply with all applicable prospectus
delivery requirements, if any, upon resale of the Securities. If a Buyer
provides the Company with (i) an opinion of counsel, in form, substance and
scope reasonably satisfactory to the Company, that registration of the resale
by such Buyer of any of the Securities is not required under the 1933 Act or
(ii) the Buyer provides reasonable assurances that the Securities can be sold
pursuant to Rule 144, the Company shall permit the transfer, and, in the case
of the Common Shares and Warrant Shares, promptly instruct its transfer agent
to issue one or more certificates, free from any restrictive legend, in such
name and in such denominations as specified by such Buyer.
-19-
<PAGE> 20
7. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL. The
obligation of the Company hereunder to issue and sell the Units to a Buyer at
each of the First Closing and the Second Closing, as applicable, is subject to
the satisfaction, at or before the Closing Date in respect of each Closing, of
each of the following conditions thereto, provided that these conditions are
for the Company's sole benefit and may be waived by the Company at any time in
its sole discretion:
(a) With respect to the First Closing and the Second
Closing:
(i) The applicable Buyer shall have executed this
Agreement and the Registration Rights Agreement, and delivered the same to the
Company.
(ii) The applicable Buyer shall have delivered the
Purchase Price for the Units which it is purchasing in accordance with Section
1(b) above.
(iii) The representations and warranties of the
applicable Buyer shall be true and correct in all material respects as of the
date when made and as of the applicable Closing Date as though made at that time
(except for representations and warranties that speak as of a specific date),
and the applicable Buyer shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the applicable Buyer at
or prior to such Closing Date.
(iv) No litigation, statute, rule, regulation,
executive order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by or in any court or governmental authority of
competent jurisdiction or any self-regulatory organization having authority over
the matters contemplated hereby which prohibits the consummation of any of the
transactions contemplated by this Agreement.
8. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE. The
obligation of each Buyer hereunder to purchase the Units at each of the First
Closing and the Second Closing, as applicable, is subject to the satisfaction,
at or before the Closing Date in respect of such Closing, of each of the
following conditions, provided that these conditions are for such Buyer's sole
benefit and may be waived by such Buyer at any time in its sole discretion:
(a) With respect to the First Closing and the Second
Closing:
(i) The Company shall have executed this Agreement
and the Registration Rights Agreement, and delivered the same to the Buyer.
(ii) The Company shall have delivered to such Buyer
duly executed certificates (in such denominations as the Buyer shall request)
representing the Common Shares and duly executed Warrants in accordance with
Section 1(b) above.
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<PAGE> 21
(iii) The Irrevocable Transfer Agent
Instructions, in form and substance satisfactory to a majority-in-interest of
the Buyers, shall have been delivered to and acknowledged in writing by the
Company's Transfer Agent.
(iv) The representations and warranties of the
Company shall be true and correct in all material respects as of the date when
made and as of the applicable Closing Date as though made at such time (except
for representations and warranties that speak as of a specific date) and the
Company shall have performed, satisfied and complied in all material respects
with the covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Company at or prior to such Closing
Date. The Buyer shall have received a certificate or certificates, executed by
the chief executive officer of the Company, dated as of the applicable Closing
Date, to the foregoing effect and as to such other matters as may be reasonably
requested by such Buyer including, but not limited to certificates with respect
to the Company's Certificate of Incorporation, By-laws and Board of Directors'
resolutions relating to the transactions contemplated hereby.
(v) No litigation, statute, rule, regulation,
executive order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by or in any court or governmental authority of
competent jurisdiction or any self-regulatory organization having authority over
the matters contemplated hereby which prohibits the consummation of any of the
transactions contemplated by this Agreement.
(vi) The Common Shares and the Warrant Shares, as
permitted by Nasdaq, shall have been authorized for quotation on Nasdaq and
trading in the Common Stock on Nasdaq shall not have been suspended by the SEC
or Nasdaq.
(vii) The Buyer shall have received an opinion of the
Company's counsel, dated as of the applicable Closing Date, in form, scope and
substance reasonably satisfactory to the Buyer and in substantially the same
form as EXHIBIT "C" attached hereto.
(b) With respect to the Second Closing:
(i) The registration statement(s) filed by the
Company pursuant to Section 2(a) of the Registration Rights Agreement covering
the resale of the Registrable Securities (as defined in the Registration Rights
Agreement) issued or issuable at the First Closing and the Second Closing shall
have been declared effective by the SEC and no stop order shall have been issued
in respect thereof.
(ii) No Repurchase Event shall have occurred and be
continuing.
9. STANDSTILL AGREEMENT. Except as otherwise expressly
contemplated by this Agreement, the Warrants or the Registration Rights
Agreement, or the terms of any other security or instrument issued by the
Company to any Buyer, or as may be
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<PAGE> 22
otherwise necessary to enforce any such Buyer's rights or remedies under this
Agreement, the Warrants or the Registration Rights Agreement, or any other
security or instrument issued by the Company to any Buyer, each Buyer agrees
that, for a period beginning on the date hereof and ending twelve (12) months
following the date on which it no longer owns any Securities, it will not,
directly or indirectly (unless in any such cases specifically invited in writing
to do so by the Board of Directors of the Company), do any of the following:
(a) except as acquired pursuant to or otherwise contemplated
by this Agreement and the Warrants or as a result of any stock split, stock
dividend or similar recapitalization by the Company, acquire, offer to acquire,
or agree to acquire by purchase or otherwise, individually or by joining a
partnership, limited partnership, syndicate or other "group" (as such term is
used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT")) (any such act, to "acquire"), any securities of the Company
entitled to vote, or securities convertible into or exercisable or exchangeable
for such securities (collectively, "VOTING SECURITIES") if, after such
acquisition, the Buyer would beneficially own 10% or more of the total combined
voting power of the Company's Voting Securities then outstanding;
(b) form, join, participate in or encourage the formation
of a partnership, limited partnership, syndicate or other group for the
purpose of acquiring, holding or disposing of Voting Securities;
(c) make, or in any way participate in, directly or
indirectly, any "solicitation" of "proxies" (as such terms are defined or used
in Regulation 14A under the Exchange Act) or become a "participant" in any
"election contest" (as such terms are defined or used in Rule 14a-11 under the
Exchange Act) with respect to the Company, or initiate, propose or otherwise
solicit stockholders of the Company for the approval of one or more stockholder
proposals with respect to the Company or induce or attempt to induce any other
person to initiate any stockholder proposal;
(d) deposit any Voting Securities into a voting trust or
subject them to any voting agreement or other agreement or arrangement with
respect to the voting of such Voting Securities;
(e) otherwise act, directly or indirectly, alone or in
concert with others, to seek to control the management, Board of Directors,
policies or affairs of the Company, or solicit, propose, seek to effect or
negotiate with any other person with respect to any form of business
combination transaction with the Company or any affiliate thereof, or any
restructuring, recapitalization or similar transaction with respect to the
Company or any affiliate thereof, or announce or disclose an intent, purpose,
plan or proposal with respect to the Company or any voting securities
inconsistent with the provisions of this Agreement, including an intent,
purpose, plan or proposal that is conditioned on or would require the Company
to waive the benefit of or amend any provision of this Agreement, or assist,
participate in, facilitate or encourage or solicit any effort or attempt by any
person to do or seek to do any of the foregoing;
-22-
<PAGE> 23
(f) encourage or render advice to or make any recommendation
or proposal to any person, or directly or indirectly participate, aid and abet
or otherwise induce any person to engage in any of the actions prohibited by
this Section 9 or to engage in any actions inconsistent with such prohibitions;
and
(g) take any actions which would require that a filing be
made under the Hart-Scott-Rodino Anti-trust Improvements Act of 1976 without
providing the Company with fifteen (15) days advance notice.
10. GOVERNING LAW; MISCELLANEOUS.
(a) GOVERNING LAW. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Delaware without regard
to the principles of conflict of laws. The parties hereto hereby submit to the
exclusive jurisdiction of the United States Federal Courts located in Delaware
with respect to any dispute arising under this Agreement, the agreements entered
into in connection herewith or the transactions contemplated hereby or thereby.
(b) COUNTERPARTS; SIGNATURES BY FACSIMILE. This Agreement
may be executed in one or more counterparts, all of which shall be considered
one and the same agreement and shall become effective when counterparts have
been signed by each party and delivered to the other party. This Agreement, once
executed by a party, may be delivered to the other party hereto by facsimile
transmission of a copy of this Agreement bearing the signature of the party so
delivering this Agreement.
(c) HEADINGS. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
(d) SEVERABILITY. If any provision of this Agreement shall
be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or enforceability of this Agreement
in any other jurisdiction.
(e) ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the
instruments referenced herein contain the entire understanding of the parties
with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor the Buyer
makes any representation, warranty, covenant or undertaking with respect to such
matters. No provision of this Agreement may be waived or amended other than by
an instrument in writing signed by the party to be charged with enforcement.
(f) NOTICES. Any notices required or permitted to be given
under the terms of this Agreement shall be sent by certified or registered mail
(return receipt requested) or delivered personally or by courier (including a
recognized overnight delivery service) or by facsimile and shall be effective
five days after being placed in the mail, if mailed by regular
-23-
<PAGE> 24
United States mail, or upon receipt, if delivered personally or by courier
(including a recognized overnight delivery service) or by facsimile, in each
case addressed to a party. The addresses for such communications shall be:
If to the Company:
CyberCash, Inc.
2100 Reston Parkway
3rd Floor
Reston, Virginia 20191
Attention: Chief Financial Officer
Facsimile: (703) 264-5928
With copy to:
Hogan & Hartson, L.L.P.
111 South Calvert Street
Suite 1600
Baltimore, Maryland 21202
Attention: Michael J. Silver, Esq.
Facsimile: (410) 539-6981
If to a Buyer: To the address set forth immediately below such Buyer's
name on the signature pages hereto.
Each party shall provide notice to the other party of any change in
address.
(g) SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties and their successors and assigns.
Neither the Company nor any Buyer shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other (which
consent, in the case of the Company, shall not be unreasonably withheld).
Notwithstanding the foregoing, subject to Section 2(f), any Buyer may assign its
rights hereunder to (i) any of its "affiliates," as that term is defined under
the 1934 Act or (ii) any person that purchases at least 25% of the Common Shares
originally purchased by such Buyer in a private transaction, without the consent
of the Company; provided, however, that the rights set forth in Section 4(e) may
not be assigned.
(h) THIRD PARTY BENEFICIARIES. This Agreement is intended
for the benefit of the parties hereto and their respective permitted successors
and assigns, and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.
(i) SURVIVAL. The representations and warranties of the
Company and the agreements and covenants set forth in Sections 3, 4, 5, 6 and 9
shall survive the closing hereunder notwithstanding any due diligence
investigation conducted by or on behalf of the
-24-
<PAGE> 25
Buyers. The Company agrees to indemnify and hold harmless each of the Buyers and
all their officers, directors, employees and agents for loss or damage arising
as a result of or related to any breach or alleged breach by the Company of any
of its representations, warranties and covenants set forth in Sections 3 and 4
hereof or any of its covenants and obligations under this Agreement or the
Registration Rights Agreement, including advancement of expenses as they are
incurred.
(j) PUBLICITY. The Company and each of the Buyers shall have
the right to review a reasonable period of time before issuance of any press
releases, SEC, Nasdaq or NASD filings, or any other public statements with
respect to the transactions contemplated hereby; provided, however, that the
Company shall be entitled, without the prior approval of each of the Buyers, to
make any press release or SEC, Nasdaq or NASD filings with respect to such
transactions as is required by applicable law and regulations (although each of
the Buyers shall be consulted by the Company in connection with any such press
release prior to its release and shall be provided with a copy thereof and be
given an opportunity to comment thereon).
(k) FURTHER ASSURANCES. Each party shall do and perform, or
cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
(l) NO STRICT CONSTRUCTION. The language used in this
Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against
any party.
(m) REMEDIES. The Company acknowledges that a breach by it
of its obligations hereunder will cause irreparable harm to the Buyers, by
vitiating the intent and purpose of the transactions contemplated hereby.
Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations under this Agreement will be inadequate and agrees, in the event of
a breach or threatened breach by the Company of the provisions hereunder, that
the Buyers shall be entitled, in addition to all other available remedies at law
or in equity, to an injunction or injunctions restraining, preventing or curing
any breach of the provisions of this Agreement and to enforce specifically the
terms and provisions hereof, without the necessity of showing economic loss and
without any bond or other security being required.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 26
IN WITNESS WHEREOF, the undersigned Buyers and the Company have
caused this Agreement to be duly executed as of the date first above written.
CYBERCASH, INC.
By: /s/ James J. Condon
-----------------------------------
James J. Condon
Chief Financial Officer
RGC INTERNATIONAL INVESTORS, LDC
By: Rose Glen Capital Management, L.P., Investment Manager
By: RGC General Partner Corp., as General Partner
By: /s/ Wayne D. Block
-----------------------------------
Wayne D. Bloch
Managing Director
RESIDENCE: Cayman Islands
ADDRESS:
c/o Rose Glen Capital Management, L.P.
3 Bala Plaza East, Suite 200
251 St. Asaphs Road
Bala Cynwyd, PA 19004
Facsimile: (610) 617-0570
Telephone: (610) 617-5900
AGGREGATE SUBSCRIPTION AMOUNT:
<TABLE>
<CAPTION>
First Closing
-------------
<S> <C>
Number of Units: 406,707
Number of Common Shares: 406,707
Number of Warrants: 305,030
Aggregate Purchase Price: $ 6,670,000
Second Closing
--------------
Number of Units: 203,049
Number of Common Shares: 203,049
Number of Warrants: 152,287
Aggregate Purchase Price: $ 3,330,000
</TABLE>
<PAGE> 27
HALIFAX FUND, L.P.
By: The Palladin Group L.P., as attorney-in-fact
By: Palladin Capital Management LLC,
its general partner
By: /s/ Jeffrey Devers
-----------------------------------
Jeffrey Devers
President
RESIDENCE: Cayman Islands
ADDRESS:
c/o The Palladin Group L.P.
40 West 57th Street
New York, NY 10019
Facsimile: (212) 698-0563
Telephone: (212) 698-0540
AGGREGATE SUBSCRIPTION AMOUNT:
<TABLE>
<CAPTION>
First Closing:
- -------------
<S> <C>
Number of Units: 203,049
Number of Common Shares: 203,049
Number of Warrants: 152,287
Aggregate Purchase Price: $ 3,330,000
Second Closing
--------------
Number of Units: 101,829
Number of Common Shares: 101,829
Number of Warrants: 76,372
Aggregate Purchase Price: $ 1,670,000
</TABLE>
<PAGE> 1
EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of January 6,
1999, by and among CyberCash, Inc. a Delaware corporation, with its headquarters
located at 2100 Reston Parkway, 3rd Floor, Reston, Virginia 20191 (the
"COMPANY"), and each of the undersigned (together with their respective
affiliates and any assignee or transferee of all of their respective rights
hereunder, the "INITIAL INVESTORS").
WHEREAS:
A In connection with the Securities Purchase Agreement by and among
the parties hereto of even date herewith (the "SECURITIES PURCHASE Agreement"),
the Company has agreed, upon the terms and subject to the conditions contained
therein, to issue and sell to the Initial Investors 914,634 units of the Company
("UNITS"), each Unit consisting of (i) one share of the Company's common stock,
par value $.001 per share ("COMMON STOCK"); and (ii) one warrant to acquire .75
shares of Common Stock at an exercise price of $20.00 per share, subject to
reset and adjustment as provided therein (collectively, the "WARRANTS"), upon
the terms and conditions and subject to the limitations and conditions set forth
in such Warrants; and
B. To induce the Initial Investors to execute and deliver the
Securities Purchase Agreement, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended, and the rules
and regulations thereunder, or any similar successor statute (collectively, the
"1933 ACT"), and applicable state securities laws;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and each of the
Initial Investors hereby agree as follows:
1. DEFINITIONS.
a. As used in this Agreement, the following terms shall have the
following meanings:
(i) "INVESTORS" means the Initial Investors and any
transferee or assignee who agrees to become bound by the provisions of this
Agreement in accordance with Section 9 hereof.
(ii) "REGISTER," "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the 1933 Act and pursuant to Rule 415 under the
1933 Act or any successor rule providing for offering securities on a continuous
basis ("RULE 415"), and the declaration or ordering of effectiveness of such
Registration Statement by the United States Securities and Exchange Commission
(the "SEC").
<PAGE> 2
(iii) "REGISTRABLE SECURITIES" means the Common Shares issued
and/or issuable pursuant to the Securities Purchase Agreement, the Warrant
Shares issued or issuable upon exercise of the Warrants issued and/or issuable
pursuant to the Securities Purchase Agreement, and any shares of capital stock
issued or issuable as a dividend on or in exchange for or otherwise with respect
to any of the foregoing (including, without limitation, any shares of Common
Stock issued or issuable pursuant to Section 2(c) hereof).
(iv) "REGISTRATION STATEMENT" means a registration statement
of the Company under the 1933 Act.
b. Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the Securities Purchase
Agreement.
2. REGISTRATION.
a. MANDATORY REGISTRATION. The Company shall prepare, and, on or
prior to the date which is thirty (30) days after the date of the First Closing
under the Securities Purchase Agreement (the "CLOSING DATE"), file with the SEC
a Registration Statement on Form S-3 (or, if Form S-3 is not then available, on
such form of Registration Statement as is then available to effect a
registration of the Registrable Securities, subject to the consent of the
Initial Investors, which consent will not be unreasonably withheld) and pursuant
to Rule 415 covering the resale from time to time by the holders thereof of the
Registrable Securities, which Registration Statement, to the extent allowable
under the 1933 Act and the rules and regulations promulgated thereunder
(including Rule 416), shall state that such Registration Statement also covers
such indeterminate number of additional shares of Common Stock as may become
issuable upon exercise of the Warrants (i) to prevent dilution resulting from
stock splits, stock dividends or similar transactions or (ii) by reason of
changes in the exercise price of the Warrants in accordance with the terms
thereof. The number of shares of Common Stock initially included in such
Registration Statement shall be no less than the sum of (i) the number of Common
Shares issued and/or issuable pursuant to the Securities Purchase Agreement and
(ii) two (2) times the number of Warrant Shares that are issuable upon exercise
of the Warrants issued and/or issuable pursuant to the Securities Purchase
Agreement, without regard to any limitation on the Investor's ability to
exercise the Warrants. The Company acknowledges that the number of Warrant
Shares initially included in the Registration Statement represents a good faith
estimate of the maximum number of shares issuable upon exercise of the Warrants.
b. PAYMENTS BY THE COMPANY. The Company shall use its best
efforts to obtain effectiveness of the Registration Statement as soon as
practicable. If (i) the Registration Statement covering the Registrable
Securities required to be filed by the Company pursuant to Section 2(a) hereof
is not declared effective by the SEC within one hundred twenty (120) days (or,
in the event (A) the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998 (the "FORM 10-K") is reviewed by the SEC or (B)
following the filing of the Form 10-K, the Company is informed by the SEC that
the Registration Statement filed pursuant to Section 2(a) above will be
reviewed by the SEC, one hundred eighty (180) days) after the Closing Date, or
(ii)
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<PAGE> 3
after the Registration Statement has been declared effective by the SEC, sales
of all of the Registrable Securities cannot be made pursuant to the Registration
Statement, or (iii) the Common Stock is not listed or included for quotation on
the Nasdaq National Market ("NASDAQ"), the Nasdaq SmallCap Market ("NASDAQ
SMALLCAP"), the New York Stock Exchange (the "NYSE") or the American Stock
Exchange (the "AMEX") after being so listed or included for quotation, then the
Company will make payments to the Investors in such amounts and at such times as
shall be determined pursuant to this Section 2(b) as partial relief for the
damages to the Investors by reason of any such delay in or reduction of their
ability to sell the Registrable Securities (which remedy shall not be exclusive
of any other remedies available at law or in equity). The Company shall pay to
each holder of the Registrable Securities an amount equal to the aggregate
purchase price paid by such Investor pursuant to the Securities Purchase
Agreement for the Common Shares held by such Investor at the time of an event
specified in clauses (i), (ii) or (iii) above ("AGGREGATE PURCHASE PRICE")
multiplied by the Applicable Percentage (as defined below) times the sum of: (i)
the number of months (prorated for partial months) after the end of such 120-day
or 180-day period, as the case may be, and prior to the date the Registration
Statement is declared effective by the SEC, provided, however, that there shall
be excluded from such period any delays which are solely attributable to changes
required by the Investors in the Registration Statement with respect to
information relating to the Investors, including, without limitation, changes to
the plan of distribution, or to the failure of the Investors to conduct their
review of the Registration Statement pursuant to Section 3(h) below in a
reasonably prompt manner; (ii) the number of months (prorated for partial
months) that sales of all of the Registrable Securities cannot be made pursuant
to the Registration Statement after the Registration Statement has been declared
effective (including, without limitation, when sales cannot be made by reason of
the Company's failure to properly supplement or amend the prospectus included
therein in accordance with the terms of this Agreement, but excluding any days
during an Allowed Delay (as defined in Section 3(e)); and (iii) the number of
months (prorated for partial months) that the Common Stock is not listed or
included for quotation on the Nasdaq, Nasdaq SmallCap, NYSE or AMEX or that
trading thereon is halted after the Registration Statement has been declared
effective. The term "APPLICABLE PERCENTAGE" means one hundredth (.01). (For
example, if the Registration Statement becomes effective one (1) month after the
end of such 120-day or 180-day period, as the case may be, the Company would pay
$10,000 for each $1,000,000 of Aggregate Purchase Price. If thereafter, sales
could not be made pursuant to the Registration Statement for an additional
period of one (1) month, the Company would pay an additional $10,000 for each
$1,000,000 of Aggregate Share Price.) Such amounts shall be paid in cash or, at
each Investor's option, in shares of Common Stock valued at the closing bid
price of such shares on the trading day immediately preceding the date of
payment (which shares of Common Stock shall be Registrable Securities). If the
Investor desires to receive the amounts due hereunder in shares of Common Stock,
it shall so notify the Company in writing within two (2) business days of the
date on which such amounts are first payable in cash. Payments of cash pursuant
hereto shall be made within five (5) days after the end of each period that
gives rise to such obligation, provided that, if any such period extends for
more than thirty (30) days, interim payments shall be made for each such thirty
(30) day period.
C. PIGGY-BACK REGISTRATIONS. Subject to the last sentence of this
Section 2(c), if at any time prior to the expiration of the Registration Period
(as hereinafter defined) the Company
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shall determine to file with the SEC a Registration Statement relating to an
offering for its own account or the account of others under the 1933 Act of any
of its equity securities (other than on Form S-4 or Form S-8 or their then
equivalents relating to equity securities to be issued solely in connection with
any acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans), the Company shall
send to each Investor who is entitled to registration rights under this Section
2(c) written notice of such determination and, if within ten (10) days after the
effective date of such notice, such Investor shall so request in writing, the
Company shall, subject to the rights of existing securityholders, include in
such Registration Statement all or any part of the Registrable Securities such
Investor requests to be registered, except that if, in connection with any
underwritten public offering for the account of the Company the managing
underwriter(s) thereof shall impose a limitation on the number of shares of
Common Stock which may be included in the Registration Statement because, in
such underwriter(s)' judgment, marketing or other factors dictate such
limitation is necessary to facilitate public distribution, then the Company
shall be obligated to include in such Registration Statement only such limited
portion of the Registrable Securities with respect to which such Investor has
requested inclusion hereunder as the underwriter shall permit. Any exclusion of
Registrable Securities shall be made pro rata among the Investors seeking to
include Registrable Securities in proportion to the number of Registrable
Securities sought to be included by such Investors; provided, however, that the
Company shall not exclude any Registrable Securities unless the Company has
first excluded all outstanding securities, the holders of which are not entitled
to inclusion of such securities in such Registration Statement or are not
entitled to pro rata inclusion with the Registrable Securities; and provided,
further, however, that, after giving effect to the immediately preceding
proviso, any exclusion of Registrable Securities shall be made pro rata with
holders of other securities having the right to include such securities in the
Registration Statement other than holders of securities entitled to inclusion of
their securities in such Registration Statement by reason of demand registration
rights. No right to registration of Registrable Securities under this Section
2(c) shall be construed to limit any registration required under Section 2(a)
hereof. If an offering in connection with which an Investor is entitled to
registration under this Section 2(c) is an underwritten offering, then each
Investor whose Registrable Securities are included in such Registration
Statement shall, unless otherwise agreed by the Company, offer and sell such
Registrable Securities in an underwritten offering using the same underwriter or
underwriters and, subject to the provisions of this Agreement, on the same terms
and conditions as other shares of Common Stock included in such underwritten
offering. Notwithstanding anything to the contrary set forth herein, the
registration rights of the Investors pursuant to this Section 2(c) shall only be
available in the event the Company fails to timely file, obtain effectiveness or
maintain effectiveness of any Registration Statement to be filed pursuant to
Section 2(a) in accordance with the terms of this Agreement.
D. ELIGIBILITY FOR FORM S-3. The Company represents and warrants
that it meets the registrant eligibility and transaction requirements for the
use of Form S-3 for registration of a primary issuance of Common Stock by the
Company and for registration of the sale by the Initial Investors and any other
Investors of the Registrable Securities and the Company shall file all reports
required to be filed by the Company with the SEC in a timely manner so as to
maintain such eligibility for the use of Form S-3.
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<PAGE> 5
3. OBLIGATIONS OF THE COMPANY.
In connection with the registration of the Registrable Securities, the
Company shall have the following obligations:
a. The Company shall prepare promptly, and file with the SEC not
later than the date which is thirty (30) days after the Closing Date, a
Registration Statement with respect to the number of Registrable Securities
provided in Section 2(a), and thereafter use its best efforts to cause such
Registration Statement relating to Registrable Securities to become effective as
soon as possible after such filing, (but in no event later than one hundred
twenty (120) days (or, in the event that the Form 10-K is reviewed by the SEC
or, following the filing of the Form 10-K, the Company is informed by the SEC
that the Registration Statement filed pursuant to Section 2(a) above will be
reviewed by the SEC, one hundred eighty (180) days) after the Closing Date), and
keep the Registration Statement effective pursuant to Rule 415 at all times
until such date as is the earlier of (i) the date on which all of the
Registrable Securities have been sold and (ii) the date on which the Registrable
Securities (in the opinion of counsel to the Initial Investors) may be
immediately sold without restriction (including without limitation as to volume
by each holder thereof) and without registration under the 1933 Act (including
under Rule 144(k)) (the "REGISTRATION PERIOD"), which Registration Statement
(including any amendments or supplements thereto and prospectuses contained
therein) shall not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein, or necessary to make the
statements therein not misleading.
b. The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to the Registration
Statements and the prospectus used in connection with the Registration
Statements as may be necessary to keep the Registration Statement effective at
all times during the Registration Period, and, during such period, comply with
the provisions of the 1933 Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration Statements
until such time as all of such Registrable Securities have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof as set forth in the Registration Statements. In the event the number of
shares available under a Registration Statement filed pursuant to this Agreement
is insufficient to cover all of the Registrable Securities issued or issuable
upon exercise of the Warrants, the Company shall, if permitted, amend the
Registration Statement, or file a new Registration Statement (on the short form
available therefore, if applicable), so as to cover all of the Registrable
Securities, in each case, as soon as practicable, but in any event within twenty
(20) business days after the necessity therefor arises (based on the market
price of the Common Stock and other relevant factors on which the Company
reasonably elects to rely). The Company shall use its best efforts to cause such
amendment and/or new Registration Statement to become effective as soon as
practicable following the filing thereof, but in no event later than ninety (90)
days after the day after the date on which the Company reasonably first
determines (or reasonably should have determined) the need therefor. The
provisions of Section 2(b) shall be applicable with respect to such obligation.
c. The Company shall furnish to each Investor whose Registrable
Securities are included in a Registration Statement and its legal counsel (i)
promptly after the same is prepared and
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<PAGE> 6
publicly distributed, filed with the SEC, or received by the Company, one copy
of each Registration Statement and any amendment thereto, each preliminary
prospectus and prospectus and each amendment or supplement thereto, and, in the
case of the Registration Statement referred to in Section 2(a), each letter
written by or on behalf of the Company to the SEC or the staff of the SEC, and
each item of correspondence from the SEC or the staff of the SEC, in each case
relating to such Registration Statement (other than any portion of any thereof
which contains information for which the Company has sought confidential
treatment), and (ii) such number of copies of a prospectus, including a
preliminary prospectus, and all amendments and supplements thereto and such
other documents as such Investor may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by such Investor. The
Company will immediately notify each Investor of the effectiveness of each
Registration Statement or any post-effective amendment.
d. The Company shall use reasonable efforts to (i) register and
qualify the Registrable Securities covered by the Registration Statements under
such other securities or "blue sky" laws of such jurisdictions in the United
States as the Investors who hold a majority in interest of the Registrable
Securities being offered reasonably request, (ii) prepare and file in those
jurisdictions such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the Registration Period, (iii) take
such other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and (iv)
take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided, however, that
the Company shall not be required in connection therewith or as a condition
thereto to (a) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(d), (b) subject itself
to general taxation in any such jurisdiction, (c) file a general consent to
service of process in any such jurisdiction, (d) provide any undertakings that
cause the Company undue expense or burden, or (e) make any change in its charter
or bylaws, which in each case the Board of Directors of the Company determines
to be contrary to the best interests of the Company and its stockholders.
e. As promptly as practicable after becoming aware of such event,
the Company shall notify each Investor of the happening of any event, of which
the Company has knowledge, as a result of which the prospectus included in any
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omission to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, and use its best
efforts promptly to prepare and file with the SEC a supplement or amendment to,
or document incorporated by reference in, the Registration Statement to correct
such untrue statement or omission, and deliver such number of copies of such
supplement or amendment to each Investor as such Investor may reasonably
request; provided that, for not more than thirty (30) consecutive days (or not
more than seventy-five (75) consecutive days, provided that the event giving
rise thereto is an acquisition required to be reported in a Current Report on
Form 8-K pursuant to Item 2 thereof, and further provided that the Company shall
use its best efforts to minimize the duration of such time period in the manner
described below as soon as possible following the occurrence of such event) or
for a total of not more than ninety (90) days during any one year period, the
Company may delay the filing of such supplement, amendment or other document or
other public disclosure of the material non-public
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<PAGE> 7
information concerning the Company, the disclosure of which at the time is not,
in the good faith opinion of the Board of Directors of the Company, in the best
interests of the Company and, in the opinion of counsel to the Company,
otherwise required (an "ALLOWED DELAY"); provided, further, that the Company
shall promptly (i) notify the Investors in writing of the existence of (but in
no event, without the prior written consent of an Investor, shall the Company
disclose to such Investor any of the facts or circumstances regarding) material
non-public information giving rise to an Allowed Delay and (ii) advise the
Investors in writing to cease all sales under such Registration Statement until
the end of the Allowed Delay. Upon expiration of the Allowed Delay, the Company
shall again be bound by the first sentence of this Section 3(e) with respect to
the information giving rise thereto.
f. The Company shall use its best efforts to prevent the
issuance of any stop order or other suspension of effectiveness of any
Registration Statement, and, if such an order is issued, to obtain the
withdrawal of such order at the earliest possible moment and to notify each
Investor who holds Registrable Securities being sold (or, in the event of an
underwritten offering, the managing underwriters) of the issuance of such order
and the resolution thereof.
g. The Company shall permit a single firm of counsel designated
by the Initial Investors to review such Registration Statement and all
amendments and supplements thereto (as well as all requests for acceleration or
effectiveness thereof) a reasonable period of time prior to their filing with
the SEC, and not file any document in a form to which such counsel reasonably
objects and will not request acceleration of such Registration Statement without
prior notice to such counsel, provided that, in the event of the objection by
such counsel, the Company's obligations to make payments under Section 2(b)
hereof shall be suspended until such objections are withdrawn. The sections of
such Registration Statement covering information with respect to the Investors,
the Investor's beneficial ownership of securities of the Company or the
Investors intended method of disposition of Registrable Securities shall conform
to the information provided to the Company by each of the Investors.
h. The Company shall make generally available to its security
holders as soon as practicable, but not later than ninety (90) days after the
close of the period covered thereby, an earnings statement (in form complying
with the provisions of Rule 158 under the 1933 Act) covering a twelve-month
period beginning not later than the first day of the Company's fiscal quarter
next following the effective date of the Registration Statement.
i. In an underwritten offering contemplated by Section 2(c)
hereof, at the request of any Investor, the Company shall furnish, on the date
of effectiveness of any Registration Statement (i) an opinion, dated as of such
date, from counsel representing the Company for purposes of such Registration
Statement, in form, scope and substance as is customarily given in an
underwritten public offering, addressed to the Investors and (ii) a letter,
dated such date, from the Company's independent certified public accountants in
form and substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering, addressed to the
Investors.
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<PAGE> 8
j. The Company shall make available for inspection by (i) any
Investor, (ii) one firm of attorneys and one firm of accountants or other agents
retained by the Initial Investors, and (iii) one firm of attorneys and one firm
of accountants or other agents retained by all other Investors (collectively,
the "INSPECTORS") all pertinent financial and other records, and pertinent
corporate documents and properties of the Company (collectively, the "RECORDS"),
as shall be reasonably deemed necessary by each Inspector to enable each
Inspector to exercise its due diligence responsibility, and cause the Company's
officers, directors and employees to supply all information which any Inspector
may reasonably request for purposes of such due diligence; provided, however,
that each Inspector shall hold in confidence and shall not make any disclosure
(except to an Investor) of any Record or other information which the Company
determines in good faith to be confidential, and of which determination the
Inspectors are so notified, unless (a) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in any Registration
Statement, (b) the release of such Records is ordered pursuant to a subpoena or
other order from a court or government body of competent jurisdiction, or (c)
the information in such Records has been made generally available to the public
other than by disclosure in violation of this or any other agreement. The
Company shall not be required to disclose any confidential information in such
Records to any Inspector until and unless such Inspector shall have entered into
confidentiality agreements (in form and substance satisfactory to the Company)
with the Company with respect thereto, substantially in the form of this Section
3(j). Each Investor agrees that it shall, upon learning that disclosure of such
Records is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to the Company and allow
the Company, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, the Records deemed
confidential. Nothing herein (or in any other confidentiality agreement between
the Company and any Investor) shall be deemed to limit the Investor's ability to
sell Registrable Securities in a manner which is otherwise consistent with
applicable laws and regulations.
k. The Company shall hold in confidence and not make any
disclosure of information concerning an Investor provided to the Company unless
(i) disclosure of such information is necessary to comply with federal or state
securities laws, (ii) the disclosure of such information is necessary to avoid
or correct a material misstatement or material omission in any Registration
Statement, (iii) the release of such information is ordered pursuant to a
subpoena or other order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to the
public other than by disclosure in violation of this or any other agreement. The
Company agrees that it shall, upon learning that disclosure of such information
concerning an Investor is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt notice to such
Investor prior to making such disclosure, and allow the Investor, at its
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, such information.
l. The Company shall (i) cause all the Registrable Securities
covered by the Registration Statement to be listed on each national securities
exchange on which securities of the same class or series issued by the Company
are then listed, if any, if the listing of such Registrable Securities is then
permitted under the rules of such exchange, or (ii) to the extent the securities
of the same class or series are not then listed on a national securities
exchange, secure the designation
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<PAGE> 9
and quotation of all the Registrable Securities covered by the Registration
Statement on Nasdaq or, if not eligible for Nasdaq on the Nasdaq SmallCap and,
without limiting the generality of the foregoing, to arrange for at least two
market makers to register with the National Association of Securities Dealers,
Inc. ("NASD") as such with respect to such Registrable Securities.
m. The Company shall provide a transfer agent and registrar,
which may be a single entity, for the Registrable Securities not later than the
effective date of the Registration Statement.
n. The Company shall cooperate with the Investors who hold
Registrable Securities being offered and the managing underwriter or
underwriters, if any, to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends) representing Registrable
Securities to be offered pursuant to a Registration Statement and enable such
certificates to be in such denominations or amounts, as the case may be, as the
managing underwriter or underwriters, if any, or the Investors may reasonably
request and registered in such names as the managing underwriter or
underwriters, if any, or the Investors may request, and, within three (3)
business days after a Registration Statement which includes Registrable
Securities is ordered effective by the SEC, the Company shall deliver, and shall
cause legal counsel selected by the Company to deliver, to the transfer agent
for the Registrable Securities (with copies to the Investors whose Registrable
Securities are included in such Registration Statement) an instruction in the
form attached hereto as EXHIBIT 1 and an opinion of such counsel in the form
attached hereto as EXHIBIT 2.
o. At the request of the holders of a majority-in-interest of the
Registrable Securities, the Company shall prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to a
Registration Statement and any prospectus used in connection with the
Registration Statement as may be necessary in order to change the plan of
distribution set forth in such Registration Statement.
p. From and after the date of this Agreement, the Company shall
not, and shall not agree to, allow the holders of any securities of the Company
(other than those existing security holders identified on Schedule 1 hereto who
have registration rights on the date of this Agreement) to include any of their
securities in any Registration Statement under Section 2(a) hereof or any
amendment or supplement thereto under Section 3(b) hereof without the consent of
the holders of a majority-in-interest of the Registrable Securities.
q. The Company shall take all other reasonable actions necessary
to expedite and facilitate disposition by the Investors of Registrable
Securities pursuant to a Registration Statement.
4. OBLIGATIONS OF THE INVESTORS.
In connection with the registration of the Registrable Securities, the
Investors shall have the following obligations:
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a. It shall be a condition precedent to the obligations of the
Company to complete the registration pursuant to this Agreement with respect to
the Registrable Securities of a particular Investor that such Investor shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the registration
of such Registrable Securities and shall execute such documents in connection
with such registration as the Company may reasonably request. At least three (3)
business days prior to the first anticipated filing date of the Registration
Statement, the Company shall notify each Investor of the information the Company
requires from each such Investor.
b. Each Investor, by such Investor's acceptance of the
Registrable Securities, agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of the
Registration Statements hereunder, unless such Investor has notified the
Company in writing of such Investor's election to exclude all of such
Investor's Registrable Securities from the Registration Statements.
c. In the event Investors holding a majority-in-interest of the
Registrable Securities being registered (with the approval of the Initial
Investors) determine to engage the services of an underwriter, each Investor
agrees to enter into and perform such Investor's obligations under an
underwriting agreement, in usual and customary form, including, without
limitation, customary indemnification and contribution obligations, with the
managing underwriter of such offering and take such other actions as are
reasonably required in order to expedite or facilitate the disposition of the
Registrable Securities, unless such Investor has notified the Company in writing
of such Investor's election to exclude all of such Investor's Registrable
Securities from such Registration Statement.
d. Each Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(e) or
3(f), such Investor will immediately discontinue disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until such Investor's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3(e) or 3(f) and, if so directed by
the Company, such Investor shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of destruction)
all copies in such Investor's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice.
e. No Investor may participate in any underwritten registration
hereunder unless such Investor (i) agrees to sell such Investor's Registrable
Securities on the basis provided in any underwriting arrangements in usual and
customary form entered into by the Company, (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements, and (iii) agrees to pay its pro rata share of all underwriting
discounts and commissions and any expenses in excess of those payable by the
Company pursuant to Section 5 below.
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<PAGE> 11
f. Each Investor, if so requested by the managing underwriter in
connection with a firm underwritten public offering of Common Stock managed by
an underwriter set forth on Schedule 2 hereto pursuant to an effective
registration statement, shall not sell any Registrable Securities pursuant to a
Registration Statement hereunder for ninety (90) days commencing upon the date
specified by the Company (the "Stand-Off Period"), but in no event sooner than
ten (10) trading days after such holder's receipt of the Company's request;
provided, however, that:
(i) the Company may only request, and the holders of Registrable
Securities shall only be subject to, two (2) Stand-Off Periods
during the twenty-four (24) month period immediately following the
Closing Date and one (1) Stand-Off Period thereafter (provided that,
if the Stand-Off Period terminates pursuant to clause (ii) below on
any one occasion with respect to the twenty-four (24) month period
referred to above or on any separate occasion with respect to the
remaining period thereafter, the Company may request and the holders
will be subject to a Stand-Off Period on one additional occasion
during such period);
(ii) the Market Stand-Off shall immediately terminate if the
registration statement for the underwritten public offering is not
declared effective on or before the thirtieth (30) trading day after
the Company's requested commencement date of the Stand-Off Period;
and
(iii) the expiration date of the Warrants shall be automatically
extended by the aggregate number of days for which the restrictions
imposed by the Stand-Off Period shall be effective.
5. EXPENSES OF REGISTRATION.
All reasonable expenses, other than underwriting discounts and
commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing and qualification fees, printers and accounting fees, the
fees and disbursements of counsel for the Company, and the reasonable fees and
disbursements of one counsel (not to exceed, together with the other Investors'
expenses associated with the transactions contemplated hereby, $30,000) selected
by the Initial Investors pursuant to Sections 2(b) and 3(h) hereof shall be
borne by the Company.
6. INDEMNIFICATION.
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
a. To the extent permitted by law, the Company will indemnify,
hold harmless and defend (i) each Investor who holds such Registrable
Securities, (ii) the directors, officers, partners, employees, agents and each
person who controls any Investor within the meaning of the 1933 Act or the
Securities Exchange Act of 1934, as amended (the "1934 ACT"), if any, (iii) any
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<PAGE> 12
underwriter (as defined in the 1933 Act) for the Investors, and (iv) the
directors, officers, partners, employees and each person who controls any such
underwriter within the meaning of the 1933 Act or the 1934 Act, if any (each, an
"INDEMNIFIED PERSON"), against any joint or several losses, claims, damages,
liabilities or expenses (collectively, together with actions, proceedings or
inquiries by any regulatory or self-regulatory organization, whether commenced
or threatened, in respect thereof, "CLAIMS") to which any of them may become
subject insofar as such Claims arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of a material fact in a Registration
Statement or the omission or alleged omission to state therein a material fact
required to be stated or necessary to make the statements therein not
misleading; (ii) any untrue statement or alleged untrue statement of a material
fact contained in the prospectus (as amended or supplemented, if the Company
files any amendment thereof or supplement thereto with the SEC) or the omission
or alleged omission to state therein any material fact necessary to make the
statements made therein, in light of the circumstances under which the
statements therein were made, not misleading; or (iii) any violation or alleged
violation by the Company of the 1933 Act, the 1934 Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities (the matters in the foregoing clauses (i) through (iii) being,
collectively, "VIOLATIONS"). Subject to the restrictions set forth in Section
6(c) with respect to the number of legal counsel, the Company shall reimburse
the Indemnified Person, promptly as such expenses are incurred and are due and
payable, for any reasonable legal fees or other reasonable expenses incurred by
them in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(a): (i) shall not apply to a Claim arising
out of or based upon a Violation which occurs in reliance upon and in conformity
with information furnished in writing to the Company by any Indemnified Person
or underwriter for such Indemnified Person expressly for use in connection with
the preparation of such Registration Statement or any such amendment thereof or
supplement thereto; (ii) shall not apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written consent of the
Company, which consent shall not be unreasonably withheld; and (iii) with
respect to any preliminary prospectus, shall not inure to the benefit of any
Indemnified Person if the untrue statement or omission of material fact
contained in the preliminary prospectus, if any, was corrected on a timely basis
in the prospectus, as then amended or supplemented, such corrected prospectus
was timely made available by the Company pursuant to Section 3(c) hereof, and
the Indemnified Person was promptly advised in writing not to use the incorrect
prospectus prior to the use giving rise to a Violation and such Indemnified
Person, notwithstanding such advice, used it. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
the Indemnified Person and shall survive the transfer of the Registrable
Securities by the Investors pursuant to Section 9.
b. In connection with any Registration Statement in which an
Investor is participating, each such Investor agrees severally and not jointly
to indemnify, hold harmless and defend, to the same extent and in the same
manner set forth in Section 6(a), the Company, each of its directors, each of
its officers who signs the Registration Statement, each person, if any, who
controls the Company within the meaning of the 1933 Act or the 1934 Act, any
underwriter and any other stockholder selling securities pursuant to the
Registration Statement or any of its directors or officers or any person who
controls such stockholder or underwriter within the meaning of the 1933
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<PAGE> 13
Act or the 1934 Act (collectively and together with an Indemnified Person, an
"INDEMNIFIED PARTY"), against any Claim to which any of them may become subject,
under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim arises out
of or is based upon any Violation by such Investor, in each case to the extent
(and only to the extent) that such Violation occurs in reliance upon and in
conformity with written information furnished to the Company by such Investor
expressly for use in connection with such Registration Statement; and subject to
Section 6(c) such Investor will reimburse any legal or other expenses (promptly
as such expenses are incurred and are due and payable) reasonably incurred by
them in connection with investigating or defending any such Claim; provided,
however, that the indemnity agreement contained in this Section 6(b) shall not
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of such Investor, which consent shall not be
unreasonably withheld; provided, further, however, that the Investor shall be
liable under this Agreement (including this Section 6(b) and Section 7) for only
that amount as does not exceed the gross proceeds to such Investor as a result
of the sale of Registrable Securities pursuant to such Registration Statement.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such Indemnified Party and shall survive
the transfer of the Registrable Securities by the Investors pursuant to Section
9. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(b) with respect to any
preliminary prospectus shall not inure to the benefit of any Indemnified Party
if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected on a timely basis in the prospectus, as
then amended or supplemented.
c. Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action
(including any governmental action), such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the indemnifying party a
written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as the
case may be; provided, however, that an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel with the fees and expenses to be
paid by the indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such counsel of the
Indemnified Person or Indemnified Party and the indemnifying party would be
inappropriate due to actual or potential differing interests between such
Indemnified Person or Indemnified Party and any other party represented by such
counsel in such proceeding. The indemnifying party shall pay for only one
separate legal counsel for the Indemnified Persons or the Indemnified Parties,
as applicable, and such legal counsel shall be selected by Investors holding a
majority-in-interest of the Registrable Securities included in the Registration
Statement to which the Claim relates (with the approval of a
majority-in-interest of the Initial Investors), if the Investors are entitled to
indemnification hereunder, or the Company, if the Company is entitled to
indemnification hereunder, as applicable. The failure to deliver written notice
to the indemnifying party within a reasonable time of the commencement of any
such action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to the
extent
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<PAGE> 14
that the indemnifying party is actually prejudiced in its ability to defend such
action. The indemnification required by this Section 6 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as such expense, loss, damage or liability is incurred and is due and
payable.
7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is prohibited
or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided, however, that
(i) no contribution shall be made under circumstances where the maker would not
have been liable for indemnification under the fault standards set forth in
Section 6, (ii) no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any seller of Registrable Securities who was not
guilty of such fraudulent misrepresentation, and (iii) contribution (together
with any indemnification or other obligations under this Agreement) by any
seller of Registrable Securities shall be limited in amount to the net amount of
proceeds received by such seller from the sale of such Registrable Securities.
8. REPORTS UNDER THE 1934 ACT.
With a view to making available to the Investors the benefits of Rule 144
promulgated under the 1933 Act or any other similar rule or regulation of the
SEC that may at any time permit the investors to sell securities of the Company
to the public without registration ("RULE 144"), the Company agrees to:
a. make and keep public information available, as those terms
are understood and defined in Rule 144;
b. file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act so long as
the Company remains subject to such requirements (it being understood that
nothing herein shall limit the Company's obligations under Section 4(c) of the
Securities Purchase Agreement) and the filing of such reports and other
documents is required for the applicable provisions of Rule 144; and
c. furnish to each Investor so long as such Investor owns
Registrable Securities, promptly upon request, (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144, the
1933 Act and the 1934 Act, (ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents so filed by the
Company, and (iii) such other information as may be reasonably requested to
permit the Investors to sell such securities pursuant to Rule 144 without
registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
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<PAGE> 15
The rights under this Agreement shall be automatically assignable by the
Investors to any transferee of at least 25% of the Registrable Securities then
held by such Investor if: (i) the Investor agrees in writing with the transferee
or assignee to assign such rights, and a copy of such agreement is furnished to
the Company within a reasonable time after such assignment, (ii) the Company is,
within a reasonable time after such transfer or assignment, furnished with
written notice of (a) the name and address of such transferee or assignee, and
(b) the securities with respect to which such registration rights are being
transferred or assigned, (iii) following such transfer or assignment, the
further disposition of such securities by the transferee or assignee is
restricted under the 1933 Act and applicable state securities laws, (iv) at or
before the time the Company receives the written notice contemplated by clause
(ii) of this sentence, the transferee or assignee agrees in writing with the
Company to be bound by all of the provisions contained herein, (v) such transfer
shall have been made in accordance with the applicable requirements of the
Securities Purchase Agreement, and (vi) such transferee shall be an "ACCREDITED
INVESTOR" as that term defined in Rule 501 of Regulation D promulgated under the
1933 Act.
10 AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance thereof may
be waived (either generally or in a particular instance and either retroactively
or prospectively), only with written consent of the Company, each of the Initial
Investors (to the extent such Initial Investor still owns at least 25% of the
Registrable Securities originally purchased by it) and Investors who hold a
majority in interest of the remaining Registrable Securities. Any amendment or
waiver effected in accordance with this Section 10 shall be binding upon each
Investor and the Company.
11 MISCELLANEOUS.
a A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.
b Any notices required or permitted to be given under the terms
hereof shall be sent by certified or registered mail (return receipt requested)
or delivered personally or by courier (including a recognized overnight delivery
service) or by facsimile and shall be effective five days after being placed in
the mail, if mailed by regular United States mail, or upon receipt, if delivered
personally or by courier (including a recognized overnight delivery service) or
by facsimile, in each case addressed to a party. The addresses for such
communications shall be:
If to the Company:
CyberCash, Inc.
2100 Reston Parkway, 3rd Floor
Reston, Virginia 20191
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<PAGE> 16
Attention: Chief Financial Officer
Facsimile: (703) 264-5928
With copy to:
Hogan & Hartson, L.L.P.
111 South Calvert Street
Suite 1600
Baltimore, Maryland 21202
Attention: Michael J. Silver, Esq.
Facsimile: (410) 539-6981
If to an Investor: to the address set forth immediately below such Investor's
name on the signature pages to the Securities Purchase Agreement.
c Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.
d This Agreement shall be enforced, governed by and construed in
accordance with the laws of the State of Delaware applicable to agreements made
and to be performed entirely within such State. In the event that any provision
of this Agreement is invalid or unenforceable under any applicable statute or
rule of law, then such provision shall be deemed inoperative to the extent that
it may conflict therewith and shall be deemed modified to conform with such
statute or rule of law. Any provision hereof which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability of
any other provision hereof. The parties hereto hereby submit to the exclusive
jurisdiction of the United States Federal Courts located in Delaware with
respect to any dispute arising under this Agreement or the transactions
contemplated hereby.
e This Agreement and the Securities Purchase Agreement
(including all schedules and exhibits thereto) constitute the entire agreement
among the parties hereto with respect to the subject matter hereof and thereof.
There are no restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein and therein. This Agreement and the
Securities Purchase Agreement supersede all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof and thereof.
f Subject to the requirements of Section 9 hereof, this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties hereto.
g The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
h This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same agreement. This
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<PAGE> 17
Agreement, once executed by a party, may be delivered to the other party hereto
by facsimile transmission of a copy of this Agreement bearing the signature of
the party so delivering this Agreement.
i Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.
j Except as otherwise provided herein, all consents and other
determinations to be made by the Investors pursuant to this Agreement shall be
made by Investors holding a majority in interest of the Registrable Securities,
determined as if the all of the Warrants then outstanding have been exercised
for Registrable Securities.
k The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the Investors, by
vitiating the intent and purpose of the transactions contemplated hereby.
Accordingly, the Company acknowledges that the remedy at law for a breach of
its obligations under this Agreement will be inadequate and agrees, in the
event of a breach or threatened breach by the Company of the provisions
hereunder, that the Investors shall be entitled, in addition to all other
available remedies at law or in equity, to an injunction or injunctions
restraining, preventing or curing any breach of the provisions of this
Agreement and to enforce specifically the terms and provisions hereof, without
the necessity of showing economic loss and without any bond or other security
being required.
l The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and no rules of
strict construction will be applied against any party.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 18
IN WITNESS WHEREOF, the Company and the undersigned Initial
Investors have caused this Agreement to be duly executed as of the date first
above written.
CYBERCASH, INC.
By: /s/ JAMES J. CONDON
--------------------------------
James J. Condon
Chief Financial Officer
RGC INTERNATIONAL INVESTORS, LDC
By: Rose Glen Capital Management, L.P., Investment Manager
By: RGC General Partner Corp., as General Partner
By: /s/ WAYNE D. BLOCH
--------------------------------
Wayne D. Bloch
Managing Director
HALIFAX FUND, L.P.
By: The Palladin Group L.P., as attorney-in-fact
By: Palladin Capital Management LLC, its general partner
By: /s/ JEFFREY DEVERS
--------------------------------
Jeffrey Devers
President
<PAGE> 19
SCHEDULE 1
EXISTING REGISTRATION RIGHTS
First USA Bank has certain registration rights with respect to 2,200,000 shares
of Common Stock issuable pursuant to warrants.
<PAGE> 1
EXHIBIT 4.3
THIS WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF
THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED. EXCEPT AS OTHERWISE SET FORTH
HEREIN OR IN A SECURITIES PURCHASE AGREEMENT DATED AS OF
JANUARY 6, 1999, NEITHER THIS WARRANT NOR ANY OF SUCH SHARES
MAY BE SOLD, TRANSFERRED OR ASSIGNED OR OTHERWISE DISPOSED
OF IN THE ABSENCE OF REGISTRATION UNDER SUCH ACT OR, AN
OPINION OF COUNSEL THAT REGISTRATION IS NOT REQUIRED UNDER
SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.
ANY SUCH SALE, ASSIGNMENT OR TRANSFER MUST ALSO COMPLY WITH
APPLICABLE STATE SECURITIES LAWS.
Right to
Purchase
----------
Shares of
Common Stock, par
value $.001
per share
STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, ______________________ or its
registered assigns, is entitled to purchase from CyberCash, Inc., a Delaware
corporation (the "Company"), at any time or from time to time during the period
specified in Paragraph 2 hereof, _____________________________ (_______) fully
paid and nonassessable shares of the Company's Common Stock, par value $.001 per
share (the "Common Stock"), at an exercise price of $20.00 per share, subject to
reset and adjustment as provided herein (the "EXERCISE PRICE"). The term
"Warrant Shares," as used herein, refers to the shares of Common Stock
purchasable hereunder. The Warrant Shares and the Exercise Price are subject to
reset and adjustment as provided in Paragraphs 4 and 5 hereof. The term
"WARRANTS" means this Warrant and the other warrants issued and/or issuable
pursuant to that certain Securities Purchase Agreement, dated January 6, 1999,
by and among the Company and the Buyers listed on the execution page thereof
(the "SECURITIES PURCHASE AGREEMENT").
This Warrant is subject to the following terms, provisions, and
conditions:
<PAGE> 2
1. MANNER OF EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR Shares.
Subject to the provisions hereof, this Warrant may be exercised by the holder
hereof, in whole or in part, by the surrender of this Warrant, together with a
completed exercise agreement in the form attached hereto (the "EXERCISE
AGREEMENT"), to the Company during normal business hours on any business day at
the Company's principal executive offices (or such other office or agency of the
Company as it may designate by notice to the holder hereof), and upon (i)
payment to the Company in cash, by certified or official bank check or by wire
transfer for the account of the Company of the Exercise Price for the Warrant
Shares specified in the Exercise Agreement, (ii) if the resale of the Warrant
Shares by the holder is not then registered pursuant to an effective
registration statement under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), delivery to the Company of a written notice of an election to
effect a "CASHLESS EXERCISE" (as defined in Section 12(c) below) for the Warrant
Shares specified in the Exercise Agreement, or (iii) surrender to the Company of
shares of Common Stock having an Aggregate Exchange Value (as defined below)
equal to the aggregate Exercise Price for the Warrant Shares specified in the
Exercise Agreement. For purposes hereof, the "AGGREGATE EXCHANGE VALUE" of any
shares of Common Stock delivered in payment of the Exercise Price pursuant to
clause (iii) of the preceding sentence shall equal the product of (x) $16.40 per
share (subject to adjustment for stock splits, stock dividends and similar
transactions), multiplied by (y) the number of shares of Common Stock delivered
pursuant hereto. The Warrant Shares so purchased shall be deemed to be issued to
the holder hereof or such holder's designee, as the record owner of such shares,
as of the close of business on the date on which this Warrant shall have been
surrendered, the completed Exercise Agreement shall have been delivered, and
payment shall have been made for such shares as set forth above. Certificates
for the Warrant Shares so purchased, representing the aggregate number of shares
specified in the Exercise Agreement, shall be delivered to the holder hereof
within a reasonable time, not exceeding three (3) business days, after this
Warrant shall have been so exercised. The certificates so delivered shall be in
such denominations as may be requested by the holder hereof and shall be
registered in the name of such holder or such other name as shall be designated
by such holder. If this Warrant shall have been exercised only in part, then,
unless this Warrant has expired, the Company shall, at its expense, at the time
of delivery of such certificates, deliver to the holder a new Warrant
representing the number of shares with respect to which this Warrant shall not
then have been exercised.
Notwithstanding anything in this Warrant to the contrary, in no
event shall the Holder of this Warrant be entitled to exercise a number of
Warrants (or portions thereof) in excess of the number of Warrants (or portions
thereof) upon exercise of which the sum of (i) the number of shares of Common
Stock beneficially owned by the Holder and its affiliates (other than shares of
Common Stock which may be deemed beneficially owned through the ownership of the
unexercised Warrants and the unexercised or unconverted portion of any other
securities of the Company (including shares of preferred stock of the Company)
subject to a limitation on conversion or exercise analogous to the limitation
contained herein) and (ii) the number of shares of Common Stock issuable upon
exercise of the Warrants (or portions thereof) with respect to which the
determination described herein is being made, would result in beneficial
ownership by the Holder and its affiliates of more than 9.9% of the outstanding
shares of Common Stock. For purposes of the immediately preceding sentence,
beneficial ownership shall be determined in accordance with
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<PAGE> 3
Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulation
13D-G thereunder, except as otherwise provided in clause (i) hereof.
2. PERIOD OF EXERCISE. This Warrant is exercisable at any time or from
time to time on or after the date on which this Warrant is issued and delivered
pursuant to the terms of the Securities Purchase Agreement (the "ISSUE DATE")
and before 5:00 p.m., New York City time on the fifth (5th) anniversary of the
Issue Date (the "EXERCISE PERIOD"); provided, however, that this Warrant is
subject to cancellation as provided in Sections 5(a) and 5(b) of the Securities
Purchase Agreement.
3. CERTAIN AGREEMENTS OF THE COMPANY. The Company hereby covenants and
agrees as follows:
(a) SHARES TO BE FULLY PAID. All Warrant Shares will, upon
issuance in accordance with the terms of this Warrant, be validly issued, fully
paid, and nonassessable and free from all taxes, liens, and charges with
respect to the issue thereof.
(b) RESERVATION OF SHARES. During the Exercise Period, the Company
shall at all times have authorized and reserved for the purpose of issuance upon
exercise of this Warrant, free from preemptive rights, a sufficient number of
shares of Common Stock to provide for the exercise in full of this Warrant at
the then current Exercise Price. As of the date of issuance of the Warrants,
1,371,952 authorized and unissued shares of Common Stock have been duly reserved
for issuance upon exercise of the Warrants (the "RESERVED AMOUNT"). The Reserved
Amount shall be increased from time to time in accordance with the Company's
obligations pursuant to Section 4(h) of the Securities Purchase Agreement. In
addition, if the Company shall issue any securities or make any change in its
capital structure which would change the number of shares of Common Stock into
which the Warrants shall be exercisable at the then current Exercise Price, the
Company shall at the same time also make proper provision so that thereafter
there shall be a sufficient number of shares of Common Stock authorized and
reserved, free from preemptive rights, for exercise of the outstanding Warrants.
If at any time a holder of this Warrant submits an Exercise Agreement, and the
Company does not have sufficient authorized but unissued shares of Common Stock
available to effect such exercise in accordance with the provisions of this
Warrant (an "EXERCISE DEFAULT"), the Company shall issue to the holder all of
the shares of Common Stock which are available to effect such exercise. The
portion of this Warrant included in the Exercise Agreement which exceeds the
amount which is then exercisable into available shares of Common Stock (the
"EXCESS AMOUNT") shall, notwithstanding anything to the contrary contained
herein, not be exercisable into Common Stock in accordance with the terms hereof
until (and at the holder's option at any time after) the date additional shares
of Common Stock are authorized by the Company to permit such exercise, at which
time the Exercise Price in respect thereof shall be the lesser of (i) the
Exercise Price on the Exercise Default Date (as defined below) and (ii) the
Exercise Price on the exercise date elected by the holder in respect thereof.
The Company shall use its best efforts to effect an increase in the authorized
number of shares of Common Stock as soon as possible following the earlier of
(i) such time that a holder of Warrants notifies the Company or that the Company
otherwise becomes aware that there are or likely will be insufficient authorized
and unissued shares to allow full exercise thereof and (ii) an Exercise Default.
In addition, the Company shall pay to the holder payments
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<PAGE> 4
("EXERCISE DEFAULT PAYMENTS") for an Exercise Default in the amount of (a) .24,
multiplied by (b) the Market Value (as defined in Section 5 hereof) on the date
of the Exercise Default of the Warrant Shares which would have been issuable
upon exercise of the Excess Amount, multiplied by (c) (N/365), where N = the
number of days from the day the holder submits an Exercise Agreement giving rise
to an Exercise Default (the "EXERCISE DEFAULT DATE") to the date (the
"AUTHORIZATION DATE") that the Company authorizes a sufficient number of shares
of Common Stock to effect the exercise in full of the Warrants. The Company
shall send notice to the holder of the authorization of additional shares of
Common Stock, the Authorization Date and the amount of the holder's accrued
Exercise Default Payments. The accrued Exercise Default Payment for each
calendar month shall be paid in cash or shall be convertible into Common Stock
at the applicable Market Price, at the holder's option, as follows:
(i) In the event the holder elects to take such payment in
cash, cash payment shall be made to holder by the fifth (5th) day of the month
following the month in which it has accrued; and
(ii) In the event the holder elects to take such payment in
Common Stock, the holder may convert such payment amount into Common Stock at
the Market Price (as in effect at the time of exercise) at any time after the
fifth (5th) day of the month following the month in which it has accrued in
accordance with the terms hereof (so long as there is then a sufficient number
of authorized shares of Common Stock).
The holder's election shall be made in writing to the Company at any
time prior to 9:00 p.m, New York City time, on the third (3rd) day of the month
following the month in which Exercise Default Payments have accrued. If no
election is made, the holder shall be deemed to have elected to receive cash.
Nothing herein shall limit the holder's right to pursue actual damages (to the
extent in excess of the Exercise Default Payments) for the Company's failure to
maintain a sufficient number of authorized shares of Common Stock, and each
holder shall have the right to pursue all remedies available at law or in equity
(including a decree of specific performance and/or injunctive relief).
(c) LISTING. The Company shall, to the extent permitted by Nasdaq,
promptly secure the listing of the shares of Common Stock issuable upon exercise
of the Warrant upon each national securities exchange or automated quotation
system, if any, upon which shares of Common Stock are then listed (subject to
official notice of issuance upon exercise of this Warrant) and shall maintain,
so long as any other shares of Common Stock shall be so listed, such listing of
all shares of Common Stock from time to time issuable upon the exercise of this
Warrant; and the Company shall so list on each national securities exchange or
automated quotation system, as the case may be, and shall maintain such listing
of, any other shares of capital stock of the Company issuable upon the exercise
of this Warrant if and so long as any shares of the same class shall be listed
on such national securities exchange or automated quotation system.
(d) CERTAIN ACTIONS PROHIBITED. The Company will not, by amendment
of its charter or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or
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<PAGE> 5
sale of securities, or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed by it
hereunder, but will at all times in good faith assist in the carrying out of all
the provisions of this Warrant and in the taking of all such action as may
reasonably be requested by the holder of this Warrant in order to protect the
exercise privilege of the holder of this Warrant against dilution or other
impairment, consistent with the tenor and purpose of this Warrant. Without
limiting the generality of the foregoing, the Company (i) will not increase the
par value of any shares of Common Stock receivable upon the exercise of this
Warrant above the Exercise Price then in effect, and (ii) will take all such
actions as may be necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable shares of Common Stock upon the
exercise of this Warrant.
(e) SUCCESSORS AND ASSIGNS. This Warrant will be binding upon any
entity succeeding to the Company by merger, consolidation, or acquisition of all
or substantially all the Company's assets.
(f) TRADING MARKET LIMITATION. Unless (i) permitted by the
applicable rules and regulations of the principal securities market on which the
Common Stock is listed or traded or (ii) the Company has obtained approval of
the issuance of the Common Stock upon exercise of the Warrants in accordance
with applicable law and the rules and regulations of any stock exchange,
interdealer quotation system or other self-regulatory organization with
jurisdiction over the Company or any of its securities (the "STOCKHOLDER
APPROVAL"), in no event shall the total number of shares of Common Stock issued
upon exercise of the Warrants (including any shares of capital stock or rights
to acquire shares of capital stock issued by the Company which are aggregated or
integrated with the Common Stock issued or issuable upon exercise of the
Warrants for purposes of any such rule or regulation) exceed the maximum number
of shares of Common Stock that the Company can so issue pursuant to any rule of
the principal United States securities market on which the Common Stock trades
(including Rule 4460(i) of the Nasdaq Stock Market or any successor rule) (the
"MAXIMUM SHARE AMOUNT") which, as of the Issue Date, shall be 3,823,408 (19.99%
of the total shares of Common Stock outstanding on the Issue Date), subject to
equitable adjustments from time to time for stock splits, stock dividends,
combinations, capital reorganizations and similar events relating to the Common
Stock occurring after the Issue Date. With respect to each holder of a Warrant,
the Maximum Share Amount shall refer to such holder's pro rata share thereof. In
the event that (a) the aggregate number of shares of Common Stock actually
issued upon exercise of the Warrants represents at least twenty percent (20%) of
the Maximum Share Amount and (b) the sum of (x) the aggregate number of shares
of Common Stock actually issued upon exercise of the Warrants plus (y) the
aggregate number of shares of Common Stock that remain issuable upon exercise of
the Warrants at the Exercise Price then in effect, represents at least one
hundred percent (100%) of the Maximum Share Amount (the "TRIGGERING EVENT"), the
Company will use its best efforts to seek and obtain Stockholder Approval (or
obtain such other relief as will allow exercises of the Warrants in excess of
the Maximum Share Amount) as soon as practicable following the Triggering Event.
4. RESET OF EXERCISE PRICE. In the event that the average of the
closing bid prices of the Common Stock for the ten (10) consecutive trading
days ending on the trading day immediately
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<PAGE> 6
preceding January 6, 2000 (the "FIRST RESET PRICE") is less than the Exercise
Price then in effect, the Exercise Price shall, beginning on January 6, 2000,
equal the First Reset Price. In the event that the average of the closing bid
prices of the Common Stock for the ten (10) consecutive trading days ending on
the trading day immediately preceding January 6, 2001 (the "SECOND RESET PRICE")
is less than the Exercise Price then in effect, the Exercise Price shall,
beginning on January 6, 2001, equal the Second Reset Price. In the event that
the average of the closing bid prices of the Common Stock for the ten (10)
consecutive trading days ending on the trading day immediately preceding January
6, 2002 (the "THIRD RESET PRICE") is less than the Exercise Price then in
effect, the Exercise Price shall, beginning on January 6, 2002, equal the Third
Reset Price. Each of the ten (10) consecutive trading day periods immediately
preceding January 6, 2000, January 6, 2001 and January 6, 2002 is hereinafter
referred to as a "PRICING PERIOD" and each of January 6, 2000, January 6, 2001
and January 6, 2002 is hereinafter referred to as a "RESET DATE". In the event
that, during any Pricing Period, the Registration Statement (as defined in the
Registration Rights Agreement referred to in Section 8(a) hereof) has not been
declared effective by the SEC or such Registration Statement, after having been
declared effective, lapses in effect or sales of all of the Registrable
Securities (as defined in the Registration Rights Agreement) otherwise cannot be
made thereunder, whether by reason of the Company's failure or inability to
amend or supplement the prospectus included therein or otherwise (including
during an Allowed Delay (as defined in the Registration Rights Agreement)), then
the applicable Pricing Period shall begin on the tenth (10th) trading day
preceding January 6, 2000, January 6, 2001 or January 6, 2002, as the case may
be, and end on the third (3rd) trading day after the date the Registration
Statement is declared effective, such effectiveness resumes or sales of all of
the Registrable Securities (as defined in the Registration Rights Agreement) may
resume being made thereunder, with the applicable Reset Price being the lowest
average closing bid price for any ten (10) consecutive trading days during the
applicable Pricing Period (as extended pursuant hereto) and with the applicable
Reset Date being the trading day next following the end of the applicable
Pricing Period. In the event of any reset of the Exercise Price pursuant to this
Section 4, the number of Warrant Shares shall be proportionately increased
concurrent with any such reset.
5. ANTIDILUTION PROVISIONS. During the Exercise Period, the Exercise
Price and the number of Warrant Shares shall be subject to adjustment from time
to time as provided in this Paragraph 5.
In the event that any adjustment of the Exercise Price as required herein
results in a fraction of a cent, such Exercise Price shall be rounded up to the
nearest cent.
(a) ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES UPON
ISSUANCE OF COMMON STOCK. Except as otherwise provided in Paragraphs 5(c) and
5(e) hereof, if and whenever on or after January 6, 2002, the Company issues or
sells, or in accordance with Paragraph 5(b) hereof is deemed to have issued or
sold, any shares of Common Stock for no consideration or for a consideration per
share (before deduction of reasonable expenses or commissions or underwriting
discounts or allowances in connection therewith) less than the Market Price (as
hereinafter defined) on the date of issuance (a "DILUTIVE ISSUANCE"), then
immediately upon the Dilutive Issuance, the Exercise Price will be reduced to a
price determined by multiplying the Exercise Price in effect immediately prior
to the Dilutive Issuance by a fraction, (i) the numerator of which is an amount
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<PAGE> 7
equal to the sum of (x) the number of shares of Common Stock actually
outstanding immediately prior to the Dilutive Issuance, plus (y) the quotient of
the aggregate consideration, calculated as set forth in Paragraph 5(b) hereof,
received by the Company upon such Dilutive Issuance divided by the Market Price
in effect immediately prior to the Dilutive Issuance, and (ii) the denominator
of which is the total number of shares of Common Stock Deemed Outstanding (as
defined below) immediately after the Dilutive Issuance.
(b) EFFECT ON EXERCISE PRICE OF CERTAIN EVENTS. For purposes of
determining the adjusted Exercise Price under Paragraph 5(a) hereof, the
following will be applicable:
(i) ISSUANCE OF RIGHTS OR OPTIONS. If the Company in any
manner issues or grants any warrants, rights or options, whether or not
immediately exercisable, to subscribe for or to purchase Common Stock or other
securities convertible into or exchangeable for Common Stock ("CONVERTIBLE
SECURITIES") (such warrants, rights and options to purchase Common Stock or
Convertible Securities are hereinafter referred to as "OPTIONS") and the price
per share for which Common Stock is issuable upon the exercise of such Options
is less than the Market Price on the date of issuance or grant of such Options,
then the maximum total number of shares of Common Stock issuable upon the
exercise of all such Options will, as of the date of the issuance or grant of
such Options, be deemed to be outstanding and to have been issued and sold by
the Company for such price per share. For purposes of the preceding sentence,
the "price per share for which Common Stock is issuable upon the exercise of
such Options" is determined by dividing (i) the total amount, if any, received
or receivable by the Company as consideration for the issuance or granting of
all such Options, plus the minimum aggregate amount of additional consideration,
if any, payable to the Company upon the exercise of all such Options, plus, in
the case of Convertible Securities issuable upon the exercise of such Options,
the minimum aggregate amount of additional consideration payable upon the
conversion or exchange thereof at the time such Convertible Securities first
become convertible or exchangeable, by (ii) the maximum total number of shares
of Common Stock issuable upon the exercise of all such Options (assuming full
conversion of Convertible Securities, if applicable). No further adjustment to
the Exercise Price will be made upon the actual issuance of such Common Stock
upon the exercise of such Options or upon the conversion or exchange of
Convertible Securities issuable upon exercise of such Options.
(ii) ISSUANCE OF CONVERTIBLE SECURITIES. If the Company in
any manner issues or sells any Convertible Securities, whether or not
immediately convertible (other than where the same are issuable upon the
exercise of Options), and the price per share for which Common Stock is
issuable upon such conversion or exchange is less than the Market Price on the
date of issuance, then the maximum total number of shares of Common Stock
issuable upon the conversion or exchange of all such Convertible Securities
will, as of the date of the issuance of such Convertible Securities, be deemed
to be outstanding and to have been issued and sold by the Company for such
price per share. For the purposes of the preceding sentence, the "price per
share for which Common Stock is issuable upon such conversion or exchange" is
determined by dividing (i) the total amount, if any, received or receivable by
the Company as consideration for the issuance or sale of all such Convertible
Securities, plus the minimum aggregate amount of additional consideration, if
any, payable to the Company upon the conversion or exchange thereof at the
time such Convertible
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<PAGE> 8
Securities first become convertible or exchangeable, by (ii) the maximum total
number of shares of Common Stock issuable upon the conversion or exchange of
all such Convertible Securities. No further adjustment to the Exercise Price
will be made upon the actual issuance of such Common Stock upon conversion or
exchange of such Convertible Securities.
(iii) CHANGE IN OPTION PRICE OR CONVERSION RATE. If there is a
change at any time in (i) the amount of additional consideration payable to the
Company upon the exercise of any Options; (ii) the amount of additional
consideration, if any, payable to the Company upon the conversion or exchange of
any Convertible Securities; or (iii) the rate at which any Convertible
Securities are convertible into or exchangeable for Common Stock (other than
under or by reason of provisions designed to protect against dilution), the
Exercise Price in effect at the time of such change will be readjusted to the
Exercise Price which would have been in effect at such time had such Options or
Convertible Securities still outstanding provided for such changed additional
consideration or changed conversion rate, as the case may be, at the time
initially granted, issued or sold.
(iv) TREATMENT OF EXPIRED OPTIONS AND UNEXERCISED CONVERTIBLE
SECURITIES. If, in any case, the total number of shares of Common Stock issuable
upon exercise of any Option or upon conversion or exchange of any Convertible
Securities is not, in fact, issued and the rights to exercise such Option or to
convert or exchange such Convertible Securities shall have expired or
terminated, the Exercise Price then in effect will be readjusted to the Exercise
Price which would have been in effect at the time of such expiration or
termination had such Option or Convertible Securities, to the extent outstanding
immediately prior to such expiration or termination (other than in respect of
the actual number of shares of Common Stock issued upon exercise or conversion
thereof), never been issued.
(v) CALCULATION OF CONSIDERATION RECEIVED. If any Common
Stock, Options or Convertible Securities are issued, granted or sold for cash,
the consideration received therefor for purposes of this Warrant will be the
amount received by the Company therefor, before deduction of reasonable
commissions, underwriting discounts or allowances or other reasonable expenses
paid or incurred by the Company in connection with such issuance, grant or sale.
In case any Common Stock, Options or Convertible Securities are issued or sold
for a consideration part or all of which shall be other than cash, the amount of
the consideration other than cash received by the Company will be the fair value
of such consideration, except where such consideration consists of securities,
in which case the amount of consideration received by the Company will be the
Market Price thereof as of the date of receipt. In case any Common Stock,
Options or Convertible Securities are issued in connection with any acquisition,
merger or consolidation in which the Company is the surviving corporation, the
amount of consideration therefor will be deemed to be the fair value of such
portion of the net assets and business of the non-surviving corporation as is
attributable to such Common Stock, Options or Convertible Securities, as the
case may be. The fair value of any consideration other than cash or securities
will be determined in good faith by the Board of Directors of the Company.
-8-
<PAGE> 9
(vi) EXCEPTIONS TO ADJUSTMENT OF EXERCISE PRICE. No
adjustment to the Exercise Price will be made (i) upon the exercise of any
warrants, options or convertible securities granted, issued and outstanding on
the date of issuance of this Warrant; (ii) upon the grant or exercise of any
stock or options which may hereafter be granted or exercised under any employee
benefit plan of the Company now existing or to be implemented in the future, so
long as the issuance of such stock or options is approved by a majority of the
independent members of the Board of Directors of the Company or a majority of
the members of a committee of independent directors established for such
purpose; or (iii) upon the exercise of the Warrants.
(c) SUBDIVISION OR COMBINATION OF COMMON STOCK. If the Company at
any time after the Issue Date subdivides (by any stock split, stock dividend,
recapitalization, reorganization, reclassification or otherwise) the shares of
Common Stock acquirable hereunder into a greater number of shares, then, after
the date of record for effecting such subdivision, the Exercise Price in effect
immediately prior to such subdivision will be proportionately reduced. If the
Company at any time after the Issue Date combines (by reverse stock split,
recapitalization, reorganization, reclassification or otherwise) the shares of
Common Stock acquirable hereunder into a smaller number of shares, then, after
the date of record for effecting such combination, the Exercise Price in effect
immediately prior to such combination will be proportionately increased.
(d) ADJUSTMENT IN NUMBER OF SHARES. Upon each adjustment of the
Exercise Price pursuant to the provisions of this Paragraph 5, the number of
shares of Common Stock issuable upon exercise of this Warrant shall be adjusted
by multiplying a number equal to the Exercise Price in effect immediately prior
to such adjustment by the number of shares of Common Stock issuable upon
exercise of this Warrant immediately prior to such adjustment and dividing the
product so obtained by the adjusted Exercise Price.
(e) CONSOLIDATION, MERGER OR SALE. In case, at any time after the
Issue Date, of any consolidation of the Company with, or merger of the Company
into any other corporation, or in case of any sale or conveyance of all or
substantially all of the assets of the Company other than in connection with a
plan of complete liquidation of the Company, then as a condition of such
consolidation, merger or sale or conveyance, adequate provision will be made
whereby the holder of this Warrant will have the right to acquire and receive
upon exercise of this Warrant in lieu of the shares of Common Stock immediately
theretofore acquirable upon the exercise of this Warrant, such shares of stock,
securities or assets as may be issued or payable with respect to or in exchange
for the number of shares of Common Stock immediately theretofore acquirable and
receivable upon exercise of this Warrant had such consolidation, merger or sale
or conveyance not taken place. In any such case, the Company will make
appropriate provision to insure that the provisions of this Paragraph 5 hereof
will thereafter be applicable as nearly as may be in relation to any shares of
stock or securities thereafter deliverable upon the exercise of this Warrant.
The Company will not effect any consolidation, merger or sale or conveyance
unless prior to the consummation thereof, the successor corporation (if other
than the Company) assumes by written instrument the obligations under this
Paragraph 5 and the obligations to deliver to the holder of this Warrant such
shares of stock, securities or assets as, in accordance with the foregoing
provisions, the holder may be entitled to acquire.
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<PAGE> 10
(f) DISTRIBUTION OF ASSETS. In case, at any time after the Issue
Date, the Company shall declare or make any distribution of its assets
(including cash) to holders of Common Stock as a partial liquidating dividend,
by way of return of capital or otherwise, then, after the date of record for
determining stockholders entitled to such distribution, but prior to the date of
distribution, the holder of this Warrant shall be entitled upon exercise of this
Warrant for the purchase of any or all of the shares of Common Stock subject
hereto, to receive the amount of such assets which would have been payable to
the holder had such holder been the holder of such shares of Common Stock on the
record date for the determination of stockholders entitled to such distribution.
(g) NOTICE OF ADJUSTMENT. Upon the occurrence of any event which
requires any adjustment of the Exercise Price, then, and in each such case, the
Company shall give notice thereof to the holder of this Warrant, which notice
shall state the Exercise Price resulting from such adjustment and the increase
or decrease in the number of Warrant Shares purchasable at such price upon
exercise, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based. Such calculation shall be certified
by the chief financial officer of the Company.
(h) MINIMUM ADJUSTMENT OF EXERCISE PRICE. No adjustment of the
Exercise Price shall be made in an amount of less than 1% of the Exercise Price
in effect at the time such adjustment is otherwise required to be made, but any
such lesser adjustment shall be carried forward and shall be made at the time
and together with the next subsequent adjustment which, together with any
adjustments so carried forward, shall amount to not less than 1% of such
Exercise Price.
(i) NO FRACTIONAL SHARES. No fractional shares of Common Stock are
to be issued upon the exercise of this Warrant, but the Company shall pay a cash
adjustment in respect of any fractional share which would otherwise be issuable
in an amount equal to the same fraction of the Market Price of a share of Common
Stock on the date of such exercise.
(j) OTHER NOTICES. In case at any time after the Issue Date:
(i) the Company shall declare any dividend upon the Common
Stock payable in shares of stock of any class or make any other distribution
(including dividends or distributions payable in cash out of retained earnings)
to the holders of the Common Stock;
(ii) the Company shall offer for subscription pro rata to the
holders of the Common Stock any additional shares of stock of any class or other
rights;
(iii) there shall be any capital reorganization of the
Company, or reclassification of the Common Stock, or consolidation or merger of
the Company with or into, or sale of all or substantially all its assets to,
another corporation or entity; or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company;
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<PAGE> 11
then, in each such case, the Company shall give to the holder of this Warrant
(a) notice of the date on which the books of the Company shall close or a record
shall be taken for determining the holders of Common Stock entitled to receive
any such dividend, distribution, or subscription rights or for determining the
holders of Common Stock entitled to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up and (b) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up, notice of
the date (or, if not then known, a reasonable approximation thereof by the
Company) when the same shall take place. Such notice shall also specify the date
on which the holders of Common Stock shall be entitled to receive such dividend,
distribution, or subscription rights or to exchange their Common Stock for stock
or other securities or property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation, or
winding-up, as the case may be. Such notice shall be given at least 30 days
prior to the record date or the date on which the Company's books are closed in
respect thereto. Failure to give any such notice or any defect therein shall not
affect the validity of the proceedings referred to in clauses (i), (ii), (iii)
and (iv) above.
(k) CERTAIN EVENTS. If any event occurs of the type contemplated
by the adjustment provisions of this Paragraph 5 but not expressly provided for
by such provisions, the Company will give notice of such event as provided in
Paragraph 5(g) hereof, and the Company's Board of Directors will make an
appropriate adjustment in the Exercise Price and the number of shares of Common
Stock acquirable upon exercise of this Warrant so that the rights of the Holder
shall be neither enhanced nor diminished by such event.
(l) CERTAIN DEFINITIONS.
(i) "COMMON STOCK DEEMED OUTSTANDING" shall mean the number
of shares of Common Stock actually outstanding (not including shares of Common
Stock held in the treasury of the Company), plus (x) pursuant to Paragraph
5(b)(i) hereof, the maximum total number of shares of Common Stock issuable upon
the exercise of Options, as of the date of such issuance or grant of such
Options, if any, and (y) pursuant to Paragraph 5(b)(ii) hereof, the maximum
total number of shares of Common Stock issuable upon conversion or exchange of
Convertible Securities, as of the date of issuance of such Convertible
Securities, if any.
(ii) "MARKET PRICE," as of any date, (i) means the average of
the last reported sale prices for the shares of Common Stock on the Nasdaq
National Market ("NASDAQ") for the five (5) trading days immediately preceding
such date as reported by Bloomberg, L.P. ("Bloomberg"), or (ii) if Nasdaq is not
the principal trading market for the shares of Common Stock, the average of the
last reported sale prices on the principal trading market for the Common Stock
during the same period as reported by Bloomberg, or (iii) if market value cannot
be calculated as of such date on any of the foregoing bases, the Market Price
shall be the fair market value as reasonably determined in good faith by (a) the
Board of Directors of the Corporation or, at the option of a
majority-in-interest of the holders of the outstanding Warrants by (b) an
independent investment bank of nationally recognized standing in the valuation
of businesses similar to the business of the corporation. The manner of
determining the Market Price of the Common Stock set forth in the
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<PAGE> 12
foregoing definition shall apply with respect to any other security in respect
of which a determination as to market value must be made hereunder.
(iii) "COMMON STOCK," for purposes of this Paragraph 4,
includes the Common Stock, par value $.001 per share, and any additional class
of stock of the Company having no preference as to dividends or distributions on
liquidation, provided that the shares purchasable pursuant to this Warrant shall
include only shares of Common Stock, par value $.001 per share, in respect of
which this Warrant is exercisable, or shares resulting from any subdivision or
combination of such Common Stock, or in the case of any reorganization,
reclassification, consolidation, merger, or sale of the character referred to in
Paragraph 5(e) hereof, the stock or other securities or property provided for in
such Paragraph.
6. ISSUE TAX. The issuance of certificates for Warrant Shares upon the
exercise of this Warrant shall be made without charge to the holder of this
Warrant or such shares for any issuance tax or other costs in respect thereof,
provided that the Company shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than the holder of this Warrant.
7. NO RIGHTS OR LIABILITIES AS A SHAREHOLDER. This Warrant shall not
entitle the holder hereof to any voting rights or other rights as a shareholder
of the Company. No provision of this Warrant, in the absence of affirmative
action by the holder hereof to purchase Warrant Shares, and no mere enumeration
herein of the rights or privileges of the holder hereof, shall give rise to any
liability of such holder for the Exercise Price or as a shareholder of the
Company, whether such liability is asserted by the Company or by creditors of
the Company.
8. TRANSFER, EXCHANGE, AND REPLACEMENT OF WARRANT.
(a) RESTRICTION ON TRANSFER. This Warrant and the rights granted
to the holder hereof are transferable, in whole or in part, upon surrender of
this Warrant, together with a properly executed assignment in the form attached
hereto, at the office or agency of the Company referred to in Paragraph 8(e)
below, provided, however, that any transfer or assignment shall be subject to
the conditions set forth in Paragraph 8(f) hereof and to the applicable
provisions of the Securities Purchase Agreement. Until due presentment for
registration of transfer on the books of the Company, the Company may treat the
registered holder hereof as the owner and holder hereof for all purposes, and
the Company shall not be affected by any notice to the contrary. Notwithstanding
anything to the contrary contained herein, the registration rights described in
Paragraph 9 are assignable only in accordance with the provisions of that
certain Registration Rights Agreement, dated as of January 6, 1999, by and among
the Company and the other signatories thereto (the "REGISTRATION RIGHTS
AGREEMENT").
(b) WARRANT EXCHANGEABLE FOR DIFFERENT DENOMINATIONS. This Warrant
is exchangeable, upon the surrender hereof by the holder hereof at the office or
agency of the Company referred to in Paragraph 8(e) below, for new Warrants of
like tenor representing in the aggregate the right to purchase the number of
shares of Common Stock which may be purchased hereunder, each
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<PAGE> 13
of such new Warrants to represent the right to purchase such number of shares as
shall be designated by the holder hereof at the time of such surrender.
(c) REPLACEMENT OF WARRANT. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction, or mutilation of
this Warrant and, in the case of any such loss, theft, or destruction, upon
delivery of an indemnity agreement reasonably satisfactory in form and amount to
the Company, or, in the case of any such mutilation, upon surrender and
cancellation of this Warrant, the Company, at its expense, will execute and
deliver, in lieu thereof, a new Warrant of like tenor.
(d) CANCELLATION; PAYMENT OF EXPENSES. Upon the surrender of this
Warrant in connection with any transfer, exchange, or replacement as provided in
this Paragraph 8, this Warrant shall be promptly canceled by the Company. The
Company shall pay all taxes (other than securities transfer taxes) and all other
expenses (other than legal expenses, if any, incurred by the Holder or
transferees) and charges payable in connection with the preparation, execution,
and delivery of Warrants pursuant to this Paragraph 8.
(e) REGISTER. The Company shall maintain, at its principal
executive offices (or such other office or agency of the Company as it may
designate by notice to the holder hereof), a register for this Warrant, in
which the Company shall record the name and address of the person in whose
name this Warrant has been issued, as well as the name and address of each
transferee and each prior owner of this Warrant.
(f) EXERCISE OR TRANSFER WITHOUT REGISTRATION. If, at the time of
the surrender of this Warrant in connection with any exercise, transfer, or
exchange of this Warrant, this Warrant (or, in the case of any exercise, the
Warrant Shares issuable hereunder), shall not be registered under the Securities
Act of 1933, as amended (the "SECURITIES ACT") and under applicable state
securities or blue sky laws, the Company may require, as a condition of allowing
such exercise, transfer, or exchange, (i) that the holder or transferee of this
Warrant, as the case may be, furnish to the Company a written opinion of
counsel, which opinion and counsel are acceptable to the Company, to the effect
that such exercise, transfer, or exchange may be made without registration under
said Act and under applicable state securities or blue sky laws, (ii) that the
holder or transferee execute and deliver to the Company an investment letter in
form and substance acceptable to the Company and (iii) that the transferee be an
"accredited investor" as defined in Rule 501(a) promulgated under the Securities
Act; provided that no such opinion, letter or status as an "accredited investor"
shall be required in connection with a transfer pursuant to Rule 144 under the
Securities Act. The first holder of this Warrant, by taking and holding the
same, represents to the Company that such holder is acquiring this Warrant for
investment and not with a view to the distribution thereof.
9. REGISTRATION RIGHTS. The initial holder of this Warrant (and certain
assignees thereof) is entitled to the benefit of such registration rights in
respect of the Warrant Shares as are set forth in Section 2 of the Registration
Rights Agreement.
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<PAGE> 14
10. NOTICES. All notices, requests, and other communications required or
permitted to be given or delivered hereunder to the holder of this Warrant shall
be in writing, and shall be personally delivered, or shall be sent by certified
or registered mail or by recognized overnight mail courier, postage prepaid and
addressed, to such holder at the address shown for such holder on the books of
the Company, or at such other address as shall have been furnished to the
Company by notice from such holder. All notices, requests, and other
communications required or permitted to be given or delivered hereunder to the
Company shall be in writing, and shall be personally delivered, or shall be sent
by certified or registered mail or by recognized overnight mail courier, postage
prepaid and addressed, to the office of the Company at 2100 Reston Parkway, 3rd
Floor, Reston, Virginia 20191, Attention: Chief Financial Officer, or at such
other address as shall have been furnished to the holder of this Warrant by
notice from the Company. Any such notice, request, or other communication may be
sent by facsimile, but shall in such case be subsequently confirmed by a writing
personally delivered or sent by certified or registered mail or by recognized
overnight mail courier as provided above. All notices, requests, and other
communications shall be deemed to have been given either at the time of the
receipt thereof by the person entitled to receive such notice at the address of
such person for purposes of this Paragraph 10, or, if mailed by registered or
certified mail or with a recognized overnight mail courier upon deposit with the
United States Post Office or such overnight mail courier, if postage is prepaid
and the mailing is properly addressed, as the case may be.
11. GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE WITHOUT
REGARD TO THE BODY OF LAW CONTROLLING CONFLICTS OF LAW.
12. MISCELLANEOUS.
(a) AMENDMENTS. This Warrant and any provision hereof may only be
amended by an instrument in writing signed by the Company and the holder hereof.
(b) DESCRIPTIVE HEADINGS. The descriptive headings of the several
paragraphs of this Warrant are inserted for purposes of reference only, and
shall not affect the meaning or construction of any of the provisions hereof.
(c) CASHLESS EXERCISE. Notwithstanding anything to the contrary
contained in this Warrant, if the resale of the Warrant Shares by the holder is
not then registered pursuant to an effective registration statement under the
Securities Act, this Warrant may be exercised by presentation and surrender of
this Warrant to the Company at its principal executive offices with a written
notice of the holder's intention to effect a cashless exercise, including a
calculation of the number of shares of Common Stock to be issued upon such
exercise in accordance with the terms hereof (a "CASHLESS EXERCISE"). In the
event of a Cashless Exercise, in lieu of paying the Exercise Price in cash, the
holder shall surrender this Warrant for that number of shares of Common Stock
determined by multiplying the number of Warrant Shares to which it would
otherwise be entitled by a fraction, the numerator of which shall be the
difference between the then current Market Price
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<PAGE> 15
per share of the Common Stock and the Exercise Price, and the denominator of
which shall be the then current Market Price per share of Common Stock.
(d) REMEDIES. The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the holder hereof, by
vitiating the intent and purpose of the transactions contemplated hereby.
Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations under this Warrant will be inadequate and agrees, in the event of a
breach or threatened breach by the Company of the provisions hereunder, that the
holder shall be entitled, in addition to all other available remedies at law or
in equity, to an injunction or injunctions restraining, preventing or curing any
breach of this Warrant and to enforce specifically the terms and provisions
hereof, without the necessity of showing economic loss and without any bond or
other security being required.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 16
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
CYBERCASH, INC.
By: /s/ James J.Condon
------------------------------
James J. Condon
Chief Financial Officer
Dated as of January 6, 1999
<PAGE> 17
FORM OF EXERCISE AGREEMENT
Dated: ________ __, 199_
To: CyberCash, Inc.
The undersigned, pursuant to the provisions set forth in the within
Warrant, hereby agrees to purchase ________ shares of Common Stock covered by
such Warrant, and makes payment herewith in full therefor at the price per share
provided by such Warrant either (i) in cash or by certified or official bank
check in the amount of, (ii) if the resale of such Common Stock by the
undersigned is not currently registered pursuant to an effective registration
statement under the Securities Act of 1933, as amended, by surrender of
securities issued by the Company (including a portion of the Warrant) having a
market value (in the case of a portion of this Warrant, determined in accordance
with Section 12(c) of the Warrant) equal to, or (iii) by surrender of shares of
Common Stock (valued at $16.40 per share (subject to adjustment for stock
splits, stock dividends and similar transactions)) having an aggregate value of,
$_________. Please issue a certificate or certificates for such shares of Common
Stock in the name of and pay any cash for any fractional share to:
Name:
--------------------------------------
Signature:
---------------------------------
Address:
---------------------------------
---------------------------------
Note: The above signature should
correspond exactly with the name on
the face of the within Warrant.
and, if said number of shares of Common Stock shall not be all the shares
purchasable under the within Warrant, a new Warrant is to be issued in the name
of said undersigned covering the balance of the shares purchasable thereunder
less any fraction of a share paid in cash.
<PAGE> 18
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers
all the rights of the undersigned under the within Warrant, with respect to the
number of shares of Common Stock covered thereby set forth hereinbelow, to:
Name of Assignee Address No of Shares
, and hereby irrevocably constitutes and appoints ________________________
as agent and attorney-in-fact to transfer said Warrant on the books of the
within-named corporation, with full power of substitution in the premises.
Dated: ________ __, 199_
In the presence of:
- -------------------------
Name:
--------------------------------------
Signature:
---------------------------------
Title of Signing Officer or Agent (if any):
-----------------------------------
Address:
-----------------------------------
-----------------------------------
Note: The above signature should
correspond exactly with the name on
the face of the within Warrant.
<PAGE> 1
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
January 7, 1999
CYBERCASH RAISES $10 MILLION IN EQUITY
THROUGH PRIVATE PLACEMENT
Additional Funding to Support Marketing & Sales of Innovative New InstaBuy(sm)
Service
RESTON, VA., January 7, 1999 -- CyberCash, Inc. (Nasdaq:CYCH), the world leader
in e-commerce payment technologies and services, announced today that it has
raised $10 million in equity capital through a private placement of common stock
and warrants. CyberCash says it plans to use this equity to support the roll out
of its new InstaBuy(sm) one-click shopping service. Funds managed by Rose Glen
Capital Management, L.P. and The Palladin Group, L.P., respectively, provided
the financing.
"The additional funds will help to support marketing, sales and customer support
efforts behind CyberCash's InstaBuy Service unveiled in August of 1998," Condon
said. "It will assist us in telling the story about the safety and convenience
of our universal, interoperable one-click Internet shopping capability. The
InstaBuy Service meets the needs of merchants who want to convert a higher
percentage of web visitors to buyers, addresses the desires of consumers who
want the convenience of one-click shopping and solves a problem for banks that
want to strengthen their relationships with customers online."
The private placement involves the issuance of Units, each consisting of one
share of the company's common stock and a warrant to purchase 0.75 shares of the
company's common stock. The purchase price is $16.40 per Unit, which is 105% of
the closing bid price of the company's common stock on January 5, 1999. The
exercise price of each warrant is $20, subject to reset under certain
circumstances beginning one year after the date of issuance. The company has
agreed to register under the Securities Act of 1933 the resale of the common
stock issued in the offering as well as the common stock issuable when the
warrants are exercised.
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CyberCash Press Release
Page Two
In addition, the company is committed to sell, and the investors have agreed to
purchase, additional Units for an additional $5 million in cash after the the
registration statement covering this private placement is declared effective by
the SEC.
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<PAGE> 2
CyberCash is the world's leading provider of secure electronic commerce
payment technologies and services spanning the retail point of sale
through the Internet, CyberCash, the CyberCash logo and InstaBuy are
trademarks or service marks of CyberCash, Inc.
This press release contains statements that are forward looking, including
statements about the Company's future profitability and stock price. They are
based on the Company's current expectations, and are subject to a number of
uncertainties and risks, and actual results may differ materially. The
uncertainties and risk include the need for additional capital, the pace of
growth of Internet commerce, the 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,
general economic conditions, and stock market developments affecting technology
companies. Further information about these and other relevant risks and
uncertainties may be found in the Company's report on Form 10-K, and its other
filings with the Securities and Exchange Commission, all of which are available
from the Commission and from the Company's worldwide web site
http://www.cybercash.com as well as other sources.
