<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 27, 2000
REGISTRATION NO. 333-32388
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
PRINTCAFE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<S> <C> <C>
DELAWARE 7379 94-1854929
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
FORTY 24TH STREET, 5TH FLOOR
PITTSBURGH, PA 15222
(412) 456-1141
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
WILLIAM L. GUTTMAN
CHIEF EXECUTIVE OFFICER
AND
MARC D. OLIN
PRESIDENT
FORTY 24TH STREET, 5TH FLOOR
PITTSBURGH, PA 15222
(412) 456-1141
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENTS FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
IAIN MICKLE, ESQ. JORGE A. DEL CALVO, ESQ.
LOWELL D. NESS, ESQ. DAVINA K. KAILE, ESQ.
JOHN P. COOK, ESQ. JUSTIN D. HOVEY, ESQ.
DENNIS E. MICHAELS, ESQ. PILLSBURY MADISON & SUTRO LLP
ORRICK, HERRINGTON & SUTCLIFFE LLP 2550 HANOVER STREET
400 CAPITOL MALL, SUITE 3000 PALO ALTO, CA 94304
SACRAMENTO, CA 95814 (650) 233-4500
(916) 447-9200
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
------------------------
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]____________
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]____________
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]____________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TITLE OF EACH CLASS OF PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED AGGREGATE OFFERING PRICE(1) REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Class A common stock, par value $0.0001 per share.... $143,750,000 $37,950
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of computing the amount of the registration
fee pursuant to Rule 457(o) under the Securities Act.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
This Amendment No. 1 to printCafe, Inc.'s Registration Statement on Form
S-1 is being filed solely for the purpose of filing certain exhibits.
<PAGE> 3
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
<C> <S>
1.0 Form of Underwriting Agreement**
3.1 Amended and Restated Certificate of Incorporation of
printCafe, Inc. to be in effect after the closing of the
offering made under this Registration Statement.**
3.2 Amended and Restated Bylaws of printCafe.
4.1 Specimen Stock Certificate.**
5.1 Opinion of Orrick, Herrington & Sutcliffe LLP regarding the
legality of the Class A common stock being registered.**
10.1 Strategic Alliance Agreement, dated January 25, 2000,
between printCafe and Creo Products, Inc.
10.2 Series B Preferred Stock Purchase Agreement, dated February
9, 2000, between printCafe, Inc. and Creo SRL.*
10.3 Form of Indemnification Agreement between printCafe, Inc.
and each of its officers and directors.*
10.4 1999 Amended and Restated Stock Option Plan.**
10.5 2000 Incentive Stock Option Plan.*
10.6 2000 Employee Stock Purchase Plan.
10.7 Second Amended and Restated Investors' Rights Agreement
dated March 8, 2000, among printCafe, Inc. and the investors
listed on the exhibits thereto.
10.8 Series C Preferred Stock Purchase Agreement, dated February
15, 2000, among printCafe, Inc. and the purchasers listed on
Exhibit A thereto.*
10.9 Series D Preferred Stock Purchase Agreement, dated March 8,
2000, among printCafe, Inc. and the purchasers listed on
Exhibit A thereto.
10.10 Agreement in Principal, dated March 6, 2000, between
printCafe, Inc. and Time Warner, Inc.+
10.11 Marketing Alliance Agreement, dated March 6, 2000, between
printCafe, Inc. and Andersen Consulting LLP.
10.12 Stock Purchase Agreement, dated January 13, 2000, between
printCafe, Inc., Programmed Solutions, Inc. and the
shareholders of Programmed Solutions, Inc. listed in Exhibit
A thereto.
10.13 Amendment No. 1 to Amended and Restated Stock Purchase
Agreement, dated February 9, 2000, between printCafe, Inc.,
Programmed Solutions, Inc. and the shareholders of
Programmed Solutions, Inc. listed in Exhibit A thereto.
10.14 Agreement and Plan of Merger, dated February 22, 2000,
between printCafe, Inc., Hagen Systems, Inc. and the
shareholders of Hagen Systems, Inc.*
10.15 $1,989,990 Promissory Note, dated March 10, 2000, payable to
Patricia J. Peterson.*
10.16 $1,989,990 Promissory Note, dated March 10, 2000, payable to
Steven R. Peterson.*
10.17 $3,979,800 Promissory Note, dated March 10, 2000, payable to
Richard T. Hagen.
10.18 Agreement and Plan of Reorganization, dated March 8, 2000,
among printCafe, Inc., AHP Acquisition, Inc., AHP Systems,
Inc. and the sole stockholder of A.H.P. Systems, Inc.*
10.19 Stock Purchase Agreement, dated March 10, 2000, between
printCafe, Inc., Constellation Software Inc., Constellation
Software of New Hampshire, Inc., Logic Associates, Inc. and
certain shareholders of Logic Associates, Inc.
</TABLE>
II-1
<PAGE> 4
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
<C> <S>
10.20 Amended and Restated Employment Agreement dated March 10,
2000, between printCafe, Inc. and William L. Guttman.**
10.21 Stock Purchase Agreement, dated as of November 8, 1999,
between printCafe, Inc. and William L. Guttman.*
10.22 Secured Promissory Note, dated as of November 8, 1999,
between printCafe, Inc., as lender, and William L. Guttman,
as borrower.*
10.23 Amended and Restated Pledge Agreement, dated as of March ,
2000, between printCafe, Inc. and William L. Guttman.**
10.24 Amended and Restated Employment Agreement, dated as of March
10, 2000, between printCafe, Inc. and Marc D. Olin.**
10.25 Stock Purchase Agreement, dated as of November 8, 1999,
between printCafe, Inc. and Marc D. Olin.**
10.26 Secured Promissory Note, dated as of November 8, 1999,
between printCafe, Inc., as lender, and Marc D. Olin, as
borrower.*
10.27 Amended and Restated Pledge Agreement, dated as of March 10,
2000, between printCafe, Inc. and Marc D. Olin.**
10.28 Amended and Restated Employment Agreement, dated as of March
10, 2000, between printCafe, Inc. and Ronald F. Hyland Sr.**
10.29 Stock Purchase Agreement, dated as of November 8, 1999,
between printCafe, Inc. and Ronald F. Hyland Sr.*
10.30 Secured Promissory Note, dated as of November 8, 1999,
between printCafe, Inc., as lender, and Ronald F. Hyland
Sr., as borrower.*
10.31 Amended and Restated Pledge Agreement, dated as of March 10,
2000, between printCafe, Inc. and Ronald F. Hyland Sr.**
10.32 Amended and Restated Employment Agreement, dated as of March
10, 2000, between printCafe, Inc. and Joseph J. Whang.**
10.33 Stock Purchase Agreement, dated as of December 22, 1999,
between printCafe, Inc. and Joseph J. Whang.*
10.34 Secured Promissory Note, dated as of December 22, 1999,
between printCafe, Inc., as lender, and Joseph J. Whang, as
borrower.*
10.35 Amended and Restated Pledge Agreement, dated as of March ,
2000, between printCafe, Inc. and Joseph J. Whang.**
10.36 Employment Agreement, dated March 10, 2000, between
printCafe, Inc. and David Lemaster.**
10.37 License Agreement, effective March 9, 2000, by and between
Henry B. Freedman and printCafe, Inc.+
10.38 Warrant to Purchase Shares of Common Stock, dated March 6,
2000, issued by printCafe, Inc. to Andersen Consulting LLP.+
10.39 Warrant to Purchase Shares of Common Stock, dated March 6,
2000, issued by printCafe, Inc. to Andersen Consulting LLP.+
10.40 Warrant to Purchase Shares of Common Stock, dated March 3,
2000, issued by printCafe, Inc. to Time Warner, Inc.+
10.41 Warrant to Purchase Shares of Common Stock, dated March 3,
2000, issued by printCafe, Inc. to Time Warner, Inc.
10.42 Warrant to Purchase Shares of Common Stock, dated March 9,
2000, issued by printCafe, Inc. to Primedia, Inc.
10.43 Warrant to Purchase Shares of Common Stock, dated March 9,
2000, issued by printCafe, Inc. to G.T.C. Transcontinental,
Ltd.
</TABLE>
II-2
<PAGE> 5
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
<C> <S>
10.44 Warrant to Purchase Shares of Common Stock, dated March 1,
2000, issued by printCafe, Inc. to The Sheridan Group, Inc.
10.45 Warrant to Purchase Shares of Common Stock, dated March 6,
2000, issued by printCafe, Inc. to Orrick, Herrington &
Sutcliffe LLP, Inc.
21.1 List of Subsidiaries.**
23.1 Consent of Ernst & Young LLP.*
23.2 Consent of Arthur Andersen LLP.*
23.3 Consent of PricewaterhouseCoopers LLP.*
23.4 Consent of Dylewsky & Goldberg CPAs, LLC.*
23.5 Consent of Larson, Allen, Weishair & Co., LLP.*
23.6 Consent of Bridgman Valiante & Villard, PC.*
23.7 Consent of Orrick, Herrington, & Sutcliffe LLP (included in
Exhibit 5.1).**
24.1 Power of Attorney.*
27.1 Financial Data Schedule.*
</TABLE>
- -------------------------
* Previously filed.
** To be filed by Amendment.
+ Confidential treatment requested as to certain portions of this Exhibit.
(b) Financial Statement Schedules
All schedules have been omitted because the information required to be set
forth therein is not applicable or is shown in the financial statements or notes
thereto.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes to provide to the underwriters
at the closing specified in the underwriting agreements certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act, and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer, or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
II-3
<PAGE> 6
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Pittsburgh, State of
Pennsylvania on March 23, 2000.
PRINTCAFE, INC.
By: /s/ WILLIAM L. GUTTMAN*
------------------------------------
William L. Guttman
Chief Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ WILLIAM L. GUTTMAN* Chief Executive Officer and March 23, 2000
- --------------------------------------------- Director
William L. Guttman
/s/ MARC D. OLIN* President and Director March 23, 2000
- ---------------------------------------------
Marc D. Olin
/s/ JOSEPH J. WHANG Chief Financial Officer (Principal March 23, 2000
- --------------------------------------------- Financial and Accounting Officer)
Joseph J. Whang
/s/ AMOS MICHELSON* Director March 23, 2000
- ---------------------------------------------
Amos Michelson
/s/ CHARLES J. BILLERBECK* Director March 23, 2000
- ---------------------------------------------
Charles J. Billerbeck
/s/ PETER RUH* Director March 23, 2000
- ---------------------------------------------
Peter Ruh
</TABLE>
*By: /s/ JOSEPH J. WHANG
-------------------------------------------------------------------------------
Joseph J. Whang
Attorney-in-Fact
II-5
<PAGE> 8
EXHIBIT INDEX
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
<C> <S>
1.0 Form of Underwriting Agreement**
3.1 Amended and Restated Certificate of Incorporation of
printCafe, Inc. to be in effect after the closing of the
offering made under this Registration Statement.**
3.2 Amended and Restated Bylaws of printCafe.
4.1 Specimen Stock Certificate.**
5.1 Opinion of Orrick, Herrington & Sutcliffe LLP regarding the
legality of the Class A common stock being registered.**
10.1 Strategic Alliance Agreement, dated January 25, 2000,
between printCafe and Creo Products, Inc.
10.2 Series B Preferred Stock Purchase Agreement, dated February
9, 2000, between printCafe, Inc. and Creo SRL.*
10.3 Form of Indemnification Agreement between printCafe, Inc.
and each of its officers and directors.*
10.4 1999 Amended and Restated Stock Option Plan.**
10.5 2000 Incentive Stock Option Plan.*
10.6 2000 Employee Stock Purchase Plan.
10.7 Second Amended and Restated Investors' Rights Agreement
dated March 8, 2000, among printCafe, Inc. and the investors
listed on the exhibits thereto.
10.8 Series C Preferred Stock Purchase Agreement, dated February
15, 2000, among printCafe, Inc. and the purchasers listed on
Exhibit A thereto.*
10.9 Series D Preferred Stock Purchase Agreement, dated March 8,
2000, among printCafe, Inc. and the purchasers listed on
Exhibit A thereto.
10.10 Agreement in Principal, dated March 6, 2000, between
printCafe, Inc. and Time Warner, Inc.+
10.11 Marketing Alliance Agreement, dated March 6, 2000, between
printCafe, Inc. and Andersen Consulting LLP.
10.12 Stock Purchase Agreement, dated January 13, 2000, between
printCafe, Inc., Programmed Solutions, Inc. and the
shareholders of Programmed Solutions, Inc. listed in Exhibit
A thereto.
10.13 Amendment No. 1 to Amended and Restated Stock Purchase
Agreement, dated February 9, 2000, between printCafe, Inc.,
Programmed Solutions, Inc. and the shareholders of
Programmed Solutions, Inc. listed in Exhibit A thereto.
10.14 Agreement and Plan of Merger, dated February 22, 2000,
between printCafe, Inc., Hagen Systems, Inc. and the
shareholders of Hagen Systems, Inc.*
10.15 $1,989,990 Promissory Note, dated March 10, 2000, payable to
Patricia J. Peterson.*
10.16 $1,989,990 Promissory Note, dated March 10, 2000, payable to
Steven R. Peterson.*
10.17 $3,979,800 Promissory Note, dated March 10, 2000, payable to
Richard T. Hagen.
10.18 Agreement and Plan of Reorganization, dated March 8, 2000,
among printCafe, Inc., AHP Acquisition, Inc., AHP Systems,
Inc. and the sole stockholder of A.H.P. Systems, Inc.*
10.19 Stock Purchase Agreement, dated March 10, 2000, between
printCafe, Inc., Constellation Software Inc., Constellation
Software of New Hampshire, Inc., Logic Associates, Inc. and
certain shareholders of Logic Associates, Inc.
10.20 Amended and Restated Employment Agreement dated March 10,
2000, between printCafe, Inc. and William L. Guttman.**
10.21 Stock Purchase Agreement, dated as of November 8, 1999,
between printCafe, Inc. and William L. Guttman.*
10.22 Secured Promissory Note, dated as of November 8, 1999,
between printCafe, Inc., as lender, and William L. Guttman,
as borrower.*
</TABLE>
<PAGE> 9
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
<C> <S>
10.23 Amended and Restated Pledge Agreement, dated as of March ,
2000, between printCafe, Inc. and William L. Guttman.**
10.24 Amended and Restated Employment Agreement, dated as of March
10, 2000, between printCafe, Inc. and Marc D. Olin.**
10.25 Stock Purchase Agreement, dated as of November 8, 1999,
between printCafe, Inc. and Marc D. Olin.**
10.26 Secured Promissory Note, dated as of November 8, 1999,
between printCafe, Inc., as lender, and Marc D. Olin, as
borrower.*
10.27 Amended and Restated Pledge Agreement, dated as of March 10,
2000, between printCafe, Inc. and Marc D. Olin.**
10.28 Amended and Restated Employment Agreement, dated as of March
10, 2000, between printCafe, Inc. and Ronald F. Hyland Sr.**
10.29 Stock Purchase Agreement, dated as of November 8, 1999,
between printCafe, Inc. and Ronald F. Hyland Sr.*
10.30 Secured Promissory Note, dated as of November 8, 1999,
between printCafe, Inc., as lender, and Ronald F. Hyland
Sr., as borrower.*
10.31 Amended and Restated Pledge Agreement, dated as of March 10,
2000, between printCafe, Inc. and Ronald F. Hyland Sr.**
10.32 Amended and Restated Employment Agreement, dated as of March
10, 2000, between printCafe, Inc. and Joseph J. Whang.**
10.33 Stock Purchase Agreement, dated as of December 22, 1999,
between printCafe, Inc. and Joseph J. Whang.*
10.34 Secured Promissory Note, dated as of December 22, 1999,
between printCafe, Inc., as lender, and Joseph J. Whang, as
borrower.*
10.35 Amended and Restated Pledge Agreement, dated as of March ,
2000, between printCafe, Inc. and Joseph J. Whang.**
10.36 Employment Agreement, dated March 10, 2000, between
printCafe, Inc. and David Lemaster.**
10.37 License Agreement, effective March 9, 2000, by and between
Henry B. Freedman and printCafe, Inc.+
10.38 Warrant to Purchase Shares of Common Stock, dated March 6,
2000, issued by printCafe, Inc. to Andersen Consulting LLP.+
10.39 Warrant to Purchase Shares of Common Stock, dated March 6,
2000, issued by printCafe, Inc. to Andersen Consulting LLP.+
10.40 Warrant to Purchase Shares of Common Stock, dated March 3,
2000, issued by printCafe, Inc. to Time Warner, Inc.+
10.41 Warrant to Purchase Shares of Common Stock, dated March 3,
2000, issued by printCafe, Inc. to Time Warner, Inc.
10.42 Warrant to Purchase Shares of Common Stock, dated March 9,
2000, issued by printCafe, Inc. to Primedia, Inc.
10.43 Warrant to Purchase Shares of Common Stock, dated March 9,
2000, issued by printCafe, Inc. to G.T.C. Transcontinental,
Ltd.
10.44 Warrant to Purchase Shares of Common Stock, dated March 1,
2000, issued by printCafe, Inc. to The Sheridan Group, Inc.
10.45 Warrant to Purchase Shares of Common Stock, dated March 6,
2000, issued by printCafe, Inc. to Orrick, Herrington &
Sutcliffe LLP, Inc.
21.1 List of Subsidiaries.**
23.1 Consent of Ernst & Young LLP.*
23.2 Consent of Arthur Andersen LLP.*
23.3 Consent of PricewaterhouseCoopers LLP.*
</TABLE>
<PAGE> 10
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
<C> <S>
23.4 Consent of Dylewsky & Goldberg CPAs, LLC.*
23.5 Consent of Larson, Allen, Weishair & Co., LLP.*
23.6 Consent of Bridgman Valiante & Villard, PC.*
23.7 Consent of Orrick, Herrington, & Sutcliffe LLP (included in
Exhibit 5.1).**
24.1 Power of Attorney.*
27.1 Financial Data Schedule.*
</TABLE>
- -------------------------
* Previously filed.
** To be filed by Amendment.
+ Confidential treatment requested as to certain portions of this Exhibit.
<PAGE> 1
EXHIBIT 3.2
BYLAWS
OF
PRINTCAFE, INC.
(AS AMENDED AND RESTATED EFFECTIVE MARCH 7, 2000)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I - CORPORATE OFFICES................................................................1
1.1 Registered Office...............................................................1
1.2 Other Offices...................................................................1
ARTICLE II - MEETINGS OF STOCKHOLDERS........................................................1
2.1 Place of Meetings...............................................................1
2.2 Annual Meeting..................................................................1
2.3 Special Meeting.................................................................2
2.4 Notice of Stockholder's Meetings; Affidavit of Notice...........................2
2.5 Advance Notice of Stockholder Nominees and Other Stockholder Proposals..........3
2.6 Quorum..........................................................................4
2.7 Adjourned Meeting; Notice.......................................................4
2.8 Conduct of Business.............................................................4
2.9 Voting..........................................................................4
2.10 Waiver of Notice................................................................5
2.11 Record Date for Stockholder Notice; Voting......................................5
2.12 Proxies.........................................................................5
ARTICLE III - DIRECTORS......................................................................6
3.1 Powers..........................................................................6
3.2 Number of Directors.............................................................6
3.3 Election, Qualification and Term of Office of Directors.........................6
3.4 Resignation and Vacancies.......................................................7
3.5 Place of Meetings; Meetings by Telephone........................................8
3.6 Regular Meetings................................................................8
3.7 Special Meetings; Notice........................................................8
3.8 Quorum..........................................................................8
3.9 Waiver of Notice................................................................9
3.10 Board Action by Written Consent Without a Meeting...............................9
3.11 Fees and Compensation of Directors..............................................9
3.12 Approval of Loans to Officers...................................................9
3.13 Removal of Directors...........................................................10
3.14 Chairman of the Board of Directors.............................................10
ARTICLE IV - COMMITTEES.....................................................................10
4.1 Committees of Directors........................................................10
4.2 Committee Minutes..............................................................11
4.3 Meetings and Action of Committees..............................................11
ARTICLE V - OFFICERS........................................................................11
5.1 Officers.......................................................................11
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
5.2 Appointment of Officers........................................................12
5.3 Subordinate Officers...........................................................12
5.4 Removal and Resignation of Officers............................................12
5.5 Vacancies in Offices...........................................................12
5.6 Chief Executive Officer........................................................12
5.7 President......................................................................12
5.8 Vice Presidents................................................................13
5.9 Secretary......................................................................13
5.10 Chief Financial Officer........................................................13
5.11 Representation of Shares of Other Corporations.................................14
5.12 Authority and Duties of Officers...............................................14
ARTICLE VI - INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES, AND OTHER AGENTS............14
6.1 Indemnification of Directors and Officers......................................14
6.2 Indemnification of Others......................................................14
6.3 Payment of Expenses in Advance.................................................15
6.4 Indemnity Not Exclusive........................................................15
6.5 Insurance......................................................................15
6.6 Conflicts......................................................................16
ARTICLE VII - RECORDS AND REPORTS...........................................................16
7.1 Maintenance and Inspection of Records..........................................16
7.2 Inspection by Directors........................................................16
7.3 Annual Statement to Stockholders...............................................17
ARTICLE VIII - GENERAL MATTERS..............................................................17
8.1 Checks.........................................................................17
8.2 Execution of Corporate Contracts And Instruments...............................17
8.3 Stock Certificates; Partly Paid Shares.........................................17
8.4 Special Designation on Certificates............................................18
8.5 Lost Certificates..............................................................18
8.6 Construction; Definitions......................................................18
8.7 Dividends......................................................................19
8.8 Fiscal Year....................................................................19
8.9 Seal...........................................................................19
8.10 Transfer of Stock..............................................................19
8.11 Stock Transfer Agreements......................................................19
8.12 Registered Stockholders........................................................19
ARTICLE IX..................................................................................20
</TABLE>
ii
<PAGE> 4
AMENDED AND RESTARTED
BYLAWS
OF
PRINTCAFE, INC.
ARTICLE I
CORPORATE OFFICES
1.1 REGISTERED OFFICE.
The address of the Corporation's registered office in the State
of Delaware is 15 East North Street, City of Dover, County of Kent. The name of
its registered agent at such address is Incorporating Services, Ltd.
1.2 OTHER OFFICES.
The Board of Directors may at any time establish other offices
at any place or places where the Corporation is qualified to do business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1 PLACE OF MEETINGS.
Meetings of stockholders shall be held at any place, within or
outside the State of Delaware, designated by the Board of Directors. In the
absence of any such designation, stockholders' meetings shall be held at the
registered office of the Corporation.
2.2 ANNUAL MEETING.
(a) The annual meeting of stockholders shall be held each year
on a date and at a time designated by resolution of the Board of Directors. At
the meeting, directors shall be elected and any other proper business may be
transacted.
(b) Nominations of persons for election to the Board of
Directors of the Corporation and the proposal of business to be transacted by
the stockholders may be made at an annual meeting of stockholders (i) pursuant
to the Corporation's notice with respect to such meeting, (ii) by or at the
direction of the Board of Directors or (iii) by any stockholder of the
Corporation who was a stockholder of record at the time of giving of the notice
provided for in this Section 2.2, who is entitled to vote at the meeting and who
has complied with the notice procedures set forth in this Section 2.2.
<PAGE> 5
(c) For nominations or other business to be properly brought
before an annual meeting by a stockholder pursuant to clause (iii) of paragraph
(b) of this Section 2.2, the stockholder must have given timely notice thereof
in writing to the secretary of the Corporation, as provided in Section 2.5, and
such business must be a proper matter for stockholder action under the General
Corporation Law of Delaware.
(d) Only such business shall be conducted at an annual meeting
of stockholders as shall have been brought before the meeting in accordance with
the procedures set forth in these Bylaws. The chairman of the meeting shall
determine whether a nomination or any business proposed to be transacted by the
stockholders has been properly brought before the meeting and, if any proposed
nomination or business has not been properly brought before the meeting, the
chairman shall declare that such proposed business or nomination shall not be
presented for stockholder action at the meeting.
(e) Nothing in this Section 2.2 shall be deemed to affect any
rights of stockholders to request inclusion of proposals in the Corporation's
proxy statement pursuant to Rule 14a-8 under the Exchange Act.
2.3 SPECIAL MEETING.
(a) A special meeting of the stockholders may be called at any
time by the Board of Directors, the chairman of the board, the chief executive
officer, the president or by one or more stockholders holding shares in the
aggregate entitled to cast not less than 66-2/3% of the votes at that meeting.
(b) Nominations of persons for election to the Board of
Directors may be made at a special meeting of stockholders, if such election is
set forth in the notice of such special meeting. Such nominations may be made
either by or at the direction of the Board of Directors, or by any stockholder
of record entitled to vote at such special meeting, provided the stockholder
follows the notice procedures set forth in Section 2.5.
2.4 NOTICE OF STOCKHOLDER'S MEETINGS; AFFIDAVIT OF NOTICE.
(a) All notices of meetings of stockholders shall be in writing
and shall be sent or otherwise given in accordance with this Section 2.4 of
these Bylaws not less than 10 nor more than 60 days before the date of the
meeting to each stockholder entitled to vote at such meeting (or such longer or
shorter time as is required by Section 2.5 of these Bylaws, if applicable). The
notice shall specify the place, date, and hour of the meeting, and, in the case
of a special meeting, the purpose or purposes for which the meeting is called.
Written notice of any meeting of stockholders, if mailed, is given when
deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the Corporation. An
affidavit of the secretary or an assistant secretary or of the transfer agent of
the Corporation that the notice has been given shall, in the absence of fraud,
be prima facie evidence of the facts stated therein.
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(b) If a special meeting is called by stockholders representing
the percentage of the total votes outstanding designated in Section 2.3(a), the
request shall be in writing, specifying the time of such meeting and the general
nature of the business proposed to be transacted, and shall be delivered
personally, or sent by registered mail or by facsimile transmission to the
chairman of the board, the president, any vice president, or the secretary of
the corporation. No business may be transacted at such special meeting otherwise
than specified in such request. The officer receiving the request shall cause
notice to be promptly given to the stockholders entitled to vote, in accordance
with the provisions of this Section 2.4, that a meeting will be held at the time
requested by the person or persons calling the meeting, not less than 35 nor
more than 60 days after the receipt of the request. If the notice is not given
within 20 days after the receipt of the request, the person or persons
requesting the meeting may give the notice. Nothing contained in this Section
2.4(b) shall be construed as limiting, fixing, or affecting the time when a
meeting of stockholders called by action of the Board of Directors may be held.
2.5 ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND OTHER STOCKHOLDER
PROPOSALS.
Only persons who are nominated in accordance with the procedures
set forth in this Section 2.5 shall be eligible for election as directors.
Nominations of persons for election to the Board of Directors of the Corporation
may be made at a meeting of stockholders by or at the direction of the Board of
Directors or by any stockholder of the Corporation entitled to vote for the
election of directors at the meeting who complies with the notice procedures set
forth in this Section 2.5. Such nominations, other than those made by or at the
direction of the Board of Directors, shall be made pursuant to timely notice in
writing to the secretary of the Corporation. Stockholders may bring other
business before the annual meeting, provided that timely notice is provided to
the secretary of the Corporation in accordance with this section, and provided
further that such business is a proper matter for stockholder action under the
General Corporation Law of Delaware. To be timely, a stockholder's notice shall
be delivered to or mailed and received at the principal executive offices of the
Corporation not less than 90 days nor more than 120 days prior to the
anniversary date of the prior year's meeting; provided, however, that in the
event that (i) the date of the annual meeting is more than 30 days prior to or
more than 60 days after such anniversary date, and (ii) less than 60 days notice
or prior public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be so received not
later than the close of business on the 10th day following the day on which such
notice of the date of the meeting was mailed or such public disclosure was made.
Such stockholder's notice shall set forth (a) as to each person whom the
stockholder proposes to nominate for election or re-election as a directors, (i)
the name, age, business address and residence address of such person, (ii) the
principal occupation or employment of such person, (iii) the class and number of
shares of the Corporation which are beneficially owned by such person and (iv)
any other information relating to such person that is required to be disclosed
in solicitations of proxies for election of directors, or is otherwise required,
in each case pursuant to Regulation 14A under the Securities Exchange Act of
1934 (including, without limitation, such person's written consent to being name
in the proxy statement as a nominee and to serving as a director if elected);
(b) as to any other business that the stockholder proposes to bring before the
meeting, a brief description of such business, the reasons for conducting such
business at the meeting and any material interest in such business of such
stockholder and the beneficial owner,
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if any, on whose behalf the proposal is made; and (c) as to the stockholder
giving the notice and the beneficial owner, if any, on whose behalf the proposal
is made (i) the name and address of the stockholder, as they appear on the
Corporation's books, and of such beneficial owner and (ii) the class and number
of shares of the Corporation which are owned of record by such stockholder and
beneficially by such beneficial owner. At the request of the Board of Directors
any person nominated by the Board of Directors for election as a director shall
furnish to the secretary of the Corporation that information required to be set
forth in a stockholder's notice of nomination which pertains to the nominee. No
person shall be eligible for election as a director of the Corporation unless
nominated in accordance with the procedures set forth in this Section 2.5. The
chairman of the meeting shall, if the facts warrant, determine and declare to
the meeting that a nomination was not made in accordance with the procedures
prescribed by the Bylaws, and if he or she should so determine, he or she shall
so declare to the meeting and the defective nomination shall be disregarded.
2.6 QUORUM.
The holders of a majority of the stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the Certificate of
Incorporation. If, however, such quorum is not present or represented at any
meeting of the stockholders, then either (a) the chairman of the meeting or (b)
the stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum is present or
represented. At such adjourned meeting at which a quorum is present or
represented, any business may be transacted that might have been transacted at
the meeting as originally noticed.
2.7 ADJOURNED MEETING; NOTICE.
When a meeting is adjourned to another time or place, unless
these Bylaws otherwise require, notice need not be given of the adjourned
meeting if the time and place thereof are announced at the meeting at which the
adjournment is taken. At the adjourned meeting the Corporation may transact any
business that might have been transacted at the original meeting. If the
adjournment is for more than 30 days, or if after the adjournment a new record
date is fixed for the adjourned meeting, a notice of the adjourned meeting shall
be given to each stockholder of record entitled to vote at the meeting.
2.8 CONDUCT OF BUSINESS.
The chairman of any meeting of stockholders shall determine the
order of business and the procedure at the meeting, including the manner of
voting and the conduct of business.
2.9 VOTING.
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(a) The stockholders entitled to vote at any meeting of
stockholders shall be determined in accordance with the provisions of Section
2.11 of these Bylaws, subject to the provisions of Sections 217 and 218 of the
General Corporation Law of Delaware (relating to voting rights of fiduciaries,
pledgors and joint owners of stock and to voting trusts and other voting
agreements).
(b) Except as may be otherwise provided in the Certificate of
Incorporation, each stockholder shall be entitled to one vote for each share of
capital stock held by such stockholder.
2.10 WAIVER OF NOTICE.
Whenever notice is required to be given under any provision of
the General Corporation Law of Delaware or of the Certificate of Incorporation
or these Bylaws, a written waiver thereof, signed by the person entitled to
notice, whether before or after the time stated therein, shall be deemed
equivalent to notice. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders need be specified in any written
waiver of notice unless so required by the Certificate of Incorporation or these
Bylaws.
2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING.
In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall not be more than 60 nor less than 10 days before the date of such
meeting, nor more than 60 days prior to any other action. If the Board of
Directors does not so fix a record date:
(a) The record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held.
(b) The record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice of
or to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
2.12 PROXIES.
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Each stockholder entitled to vote at a meeting of stockholders
may authorize another person or persons to act for such stockholder by a written
proxy, signed by the stockholder and filed with the secretary of the
Corporation, but no such proxy shall be voted or acted upon after three years
from its date, unless the proxy provides for a longer period. A proxy shall be
deemed signed if the stockholder's name is placed on the proxy (whether by
manual signature, typewriting, electronic or telegraphic transmission or
otherwise) by the stockholder or the stockholder's attorney-in-fact. The
revocability of a proxy that states on its face that it is irrevocable shall be
governed by the provisions of Section 212(e) of the General Corporation Law of
Delaware.
ARTICLE III
DIRECTORS
3.1 POWERS.
Subject to the provisions of the General Corporation Law of
Delaware and any limitations in the Certificate of Incorporation or these Bylaws
relating to action required to be approved by the stockholders or by the
outstanding shares, the business and affairs of the Corporation shall be managed
and all corporate powers shall be exercised by or under the direction of the
Board of Directors.
3.2 NUMBER OF DIRECTORS.
The number of directors constituting the entire Board of
Directors shall be 7.
Thereafter, this number may be changed by a resolution of the
Board of Directors or of the stockholders, subject to Section 3.4 of these
Bylaws. No reduction of the authorized number of directors shall have the effect
of removing any director before such director's term of office expires.
3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS.
Except as provided in Section 3.4 of these Bylaws, and unless
otherwise provided in the Certificate of Incorporation, directors shall be
elected at each annual meeting of stockholders to hold office until the next
annual meeting. Directors need not be stockholders unless so required by the
Certificate of Incorporation or these Bylaws, wherein other qualifications for
directors may be prescribed. Each director, including a director elected to fill
a vacancy, shall hold office until his or her successor is elected and qualified
or until his or her earlier resignation or removal.
Directors need not be stockholders unless so required by the
Certificate of Incorporation or these Bylaws, wherein other qualifications for
directors may be prescribed.
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Each director, including a director elected to fill a vacancy,
shall hold office until his or her successor is elected and qualified or until
his or her earlier resignation or removal.
Unless otherwise specified in the Certificate of Incorporation,
elections of directors need not be by written ballot.
3.4 RESIGNATION AND VACANCIES.
Any director may resign at any time upon written notice to the
attention of the secretary of the Corporation. When one or more directors so
resigns and the resignation is effective at a future date, a majority of the
directors then in office, including those who have so resigned, shall have power
to fill such vacancy or vacancies, the vote thereon to take effect when such
resignation or resignations shall become effective, and each director so chosen
shall hold office as provided in this section in the filling of other vacancies.
Unless otherwise provided in the Certificate of Incorporation, and subject to
the rights of the holders of any series of Preferred Stock that may then be
outstanding, a vacancy created by the removal of a director by the vote of the
stockholders or by court order may be filled only by the affirmative vote of a
majority of the shares represented and voting at a duly held meeting at which a
quorum is present (which shares voting affirmatively also constitute a majority
of the quorum. Each director so elected shall hold office until the next annual
meeting of the stockholders and until a successor has been elected and
qualified.
Unless otherwise provided in the Certificate of Incorporation or
these Bylaws:
(a) Vacancies and newly created directorships resulting from any
increase in the authorized number of directors elected by all of the
stockholders having the right to vote as a single class may be filled by a
majority of the directors then in office, although less than a quorum, or by a
sole remaining director.
(b) Whenever the holders of any class or classes of stock or
series thereof are entitled to elect one or more directors by the provisions of
the Certificate of Incorporation, vacancies and newly created directorships of
such class or classes or series may be filled by a majority of the directors
elected by such class or classes or series thereof then in office, or by a sole
remaining director so elected.
If at any time, by reason of death or resignation or other
cause, the Corporation should have no directors in office, then any officer or
any stockholder or an executor, administrator, trustee or guardian of a
stockholder, or other fiduciary entrusted with like responsibility for the
person or estate of a stockholder, may call a special meeting of stockholders in
accordance with the provisions of the Certificate of Incorporation or these
Bylaws, or may apply to the Court of Chancery for a decree summarily ordering an
election as provided in Section 211 of the General Corporation Law of Delaware.
If, at the time of filling any vacancy or any newly created
directorship, the directors then in office constitute less than a majority of
the whole Board of Directors (as constituted immediately prior to any such
increase), then the Court of Chancery may, upon
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application of any stockholder or stockholders holding at least 10% of the total
number of the shares at the time outstanding having the right to vote for such
directors, summarily order an election to be held to fill any such vacancies or
newly created directorships, or to replace the directors chosen by the directors
then in office as aforesaid, which election shall be governed by the provisions
of Section 211 of the General Corporation Law of Delaware as far as applicable.
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE.
The Board of Directors of the Corporation may hold meetings,
both regular and special, either within or outside the State of Delaware. Unless
otherwise restricted by the Certificate of Incorporation or these Bylaws,
members of the Board of Directors, or any committee designated by the Board of
Directors, may participate in a meeting of the Board of Directors, or any
committee, by means of conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and such participation in a meeting shall constitute presence in person at the
meeting.
3.6 REGULAR MEETINGS.
Regular meetings of the Board of Directors may be held without
notice at such time and at such place as shall from time to time be determined
by the Board of Directors.
3.7 SPECIAL MEETINGS; NOTICE.
Special meetings of the board of directors for any purpose or
purposes may be called at any time by the chairman of the board, the president,
any vice president, the secretary or any two (2) directors.
Notice of the time and place of special meetings shall be
delivered personally or by telephone to each director or sent by first-class
mail or telegram, charges prepaid, addressed to each director at that director's
address as it is shown on the records of the Corporation. If the notice is
mailed, it shall be deposited in the United States mail at least four (4) days
before the time of the holding of the meeting. If the notice is delivered
personally or by telephone, telecopy, telegram, telex or other similar means of
communication, it shall be delivered at least twenty-four (24) hours before the
time of the holding of the meeting, or on such shorter notice as the person or
persons calling such meeting may deem necessary and appropriate in the
circumstances. Any oral notice given personally or by telephone may be
communicated either to the director or to a person at the office of the director
who the person giving the notice has reason to believe will promptly communicate
it to the director. The notice need not specify the purpose of the place of the
meeting, if the meeting is to be held at the principal executive office of the
Corporation.
3.8 QUORUM.
At all meetings of the Board of Directors, a majority of the
authorized number of directors shall constitute a quorum for the transaction of
business and the act of a majority of the directors present at any meeting at
which there is a quorum shall be the act of the Board of
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Directors, except as may be otherwise specifically provided by statute or by the
Certificate of Incorporation. If a quorum is not present at any meeting of the
Board of Directors, then the directors present thereat may adjourn the meeting
from time to time, without notice other than announcement at the meeting, until
a quorum is present.
A meeting at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors, if any action
taken is approved by at least a majority of the required quorum for that
meeting.
3.9 WAIVER OF NOTICE.
Whenever notice is required to be given under any provision of
the General Corporation Law of Delaware or of the Certificate of Incorporation
or these Bylaws, a written waiver thereof, signed by the person entitled to
notice, whether before or after the time stated therein, shall be deemed
equivalent to notice. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the directors, or members of a committee of
directors, need be specified in any written waiver of notice unless so required
by the Certificate of Incorporation or these Bylaws.
3.10 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING.
Unless otherwise restricted by the Certificate of Incorporation
or these Bylaws, any action required or permitted to be taken at any meeting of
the Board of Directors, or of any committee thereof, may be taken without a
meeting if all members of the Board of Directors or committee, as the case may
be, consent thereto in writing and the writing or writings are filed with the
minutes of proceedings of the Board of Directors or committee. Written consents
representing actions taken by the board or committee may be executed by telex,
telecopy or other facsimile transmission, and such facsimile shall be valid and
binding to the same extent as if it were an original.
3.11 FEES AND COMPENSATION OF DIRECTORS.
Unless otherwise restricted by the Certificate of Incorporation
or these Bylaws, the Board of Directors shall have the authority to fix the
compensation of directors. No such compensation shall preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefor.
3.12 APPROVAL OF LOANS TO OFFICERS.
The Corporation may lend money to, or guarantee any obligation
of, or otherwise assist any officer or other employee of the Corporation or of
its subsidiary, including any officer or employee who is a director of the
Corporation or its subsidiary, whenever, in the judgment of the directors, such
loan, guaranty or assistance may reasonably be expected to benefit the
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Corporation. The loan, guaranty or other assistance may be with or without
interest and may be unsecured, or secured in such manner as the Board of
Directors shall approve, including, without limitation, a pledge of shares of
stock of the Corporation. Nothing in this Section 3.2 contained shall be deemed
to deny, limit or restrict the powers of guaranty or warranty of the Corporation
at common law or under any statute.
3.13 REMOVAL OF DIRECTORS.
Unless otherwise restricted by statute, by the Certificate of
Incorporation or by these Bylaws, any director or the entire Board of Directors
may be removed, with or without cause, by the holders of a majority of the
shares then entitled to vote at an election of directors; provided, however,
that if the stockholders of the Corporation are entitled to cumulative voting,
if less than the entire Board of Directors is to be removed, no director may be
removed without cause if the votes cast against his removal would be sufficient
to elect him if then cumulatively voted at an election of the entire Board of
Directors.
No reduction of the authorized number of directors shall have
the effect of removing any director prior to the expiration of such director's
term of office.
3.14 CHAIRMAN OF THE BOARD OF DIRECTORS.
The Corporation may also have, at the discretion of the Board of
Directors, a Chairman of the Board of Directors who shall not be considered an
officer of the Corporation.
ARTICLE IV
COMMITTEES
4.1 COMMITTEES OF DIRECTORS.
The Board of Directors may, by resolution passed by a majority
of the whole Board of Directors, designate one or more committees, with each
committee to consist of one or more of the directors of the Corporation. The
Board of Directors may designate one or more directors as alternate members of
any committee, who may replace any absent or disqualified member at any meeting
of the committee. In the absence or disqualification of a member of a committee,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not such member or members constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board of Directors or
in the Bylaws of the Corporation, shall have and may exercise all the powers and
authority of the Board of Directors in the management of the business and
affairs of the Corporation, and may authorize the seal of the Corporation to be
affixed to all papers that may require it; but no such committee shall have the
power or authority to (a) amend the Certificate of Incorporation (except that a
committee may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares of stock adopted by the Board of Directors
as provided in Section 151(a) of the General Corporation Law of Delaware, fix
the designations and
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any of the preferences or rights of such shares relating to dividends,
redemption, dissolution, any distribution of assets of the Corporation or the
conversion into, or the exchange of such shares for, shares of any other class
or classes or any other series of the same or any other class or classes of
stock of the Corporation or fix the number of shares of any series of stock or
authorize the increase or decrease of the shares of any series),(b) adopt an
agreement of merger or consolidation under Sections 251 or 252 of the General
Corporation Law of Delaware, (c) recommend to the stockholders the sale, lease
or exchange of all or substantially all of the Corporation's property and
assets, (d) recommend to the stockholders a dissolution of the Corporation or a
revocation of a dissolution, or (e) amend the Bylaws of the Corporation; and,
unless the board resolution establishing the committee, the Bylaws or the
Certificate of Incorporation expressly so provide, no such committee shall have
the power or authority to declare a dividend, to authorize the issuance of
stock, or to adopt a certificate of ownership and merger pursuant to Section 253
of the General Corporation Law of Delaware.
4.2 COMMITTEE MINUTES.
Each committee shall keep regular minutes of its meetings and
report the same to the Board of Directors when required.
4.3 MEETINGS AND ACTION OF COMMITTEES.
Meetings and actions of committees shall be governed by, and
held and taken in accordance with, the provisions of Section 3.5 (place of
meetings and meetings by telephone), Section 3.6 (regular meetings), Section 3.7
(special meetings and notice), Section 3.8 (quorum), Section 3.9 (waiver of
notice), and Section 3.10 (action without a meeting) of these Bylaws, with such
changes in the context of such provisions as are necessary to substitute the
committee and its members for the Board of Directors and its members; provided,
however, that the time of regular meetings of committees may be determined
either by resolution of the Board of Directors or by resolution of the
committee, that special meetings of committees may also be called by resolution
of the Board of Directors and that notice of special meetings of committees
shall also be given to all alternate members, who shall have the right to attend
all meetings of the committee. The Board of Directors may adopt rules for the
government of any committee not inconsistent with the provisions of these
Bylaws.
ARTICLE V
OFFICERS
5.1 OFFICERS.
The officers of the Corporation shall be a chief executive
officer, a president, a secretary, and a chief financial officer. The
Corporation may also have, at the discretion of the Board of Directors, one or
more vice presidents, one or more assistant secretaries, one or more assistant
treasurers, and any such other officers as may be appointed in accordance with
the provisions of Section 5.3 of these Bylaws. Any number of offices may be held
by the same person.
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5.2 APPOINTMENT OF OFFICERS.
The officers of the Corporation, except such officers as may be
appointed in accordance with the provisions of Sections 5.3 or 5.5 of these
Bylaws, shall be appointed by the Board of Directors, subject to the rights, if
any, of an officer under any contract of employment.
5.3 SUBORDINATE OFFICERS.
The Board of Directors may appoint, or empower the chief
executive officer or the president to appoint, such other officers and agents as
the business of the Corporation may require, each of whom shall hold office for
such period, have such authority, and perform such duties as are provided in
these Bylaws or as the Board of Directors may from time to time determine.
5.4 REMOVAL AND RESIGNATION OF OFFICERS.
Subject to the rights, if any, of an officer under any contract
of employment, any officer may be removed, either with or without cause, by an
affirmative vote of the majority of the Board of Directors at any regular or
special meeting of the Board of Directors or, except in the case of an officer
chosen by the Board of Directors, by any officer upon whom such power of removal
may be conferred by the Board of Directors.
Any officer may resign at any time by giving written notice to
the attention of the secretary of the Corporation. Any resignation shall take
effect at the date of the receipt of that notice or at any later time specified
in that notice; and, unless otherwise specified in that notice, the acceptance
of the resignation shall not be necessary to make it effective. Any resignation
is without prejudice to the rights, if any, of the Corporation under any
contract to which the officer is a party.
5.5 VACANCIES IN OFFICES.
Any vacancy occurring in any office of the Corporation shall be
filled by the Board of Directors.
5.6 Chief Executive Officer.
Subject to such supervisory powers, if any, as may be given by
the Board of Directors to the chairman of the board, if any, the chief executive
officer of the Corporation shall, subject to the control of the Board of
Directors, have general supervision, direction, and control of the business and
the officers of the Corporation. He or she shall preside at all meetings of the
stockholders and, in the absence or nonexistence of a chairman of the board, at
all meetings of the Board of Directors and shall have the general powers and
duties of management usually vested in the office of chief executive officer of
a corporation and shall have such other powers and duties as may be prescribed
by the Board of Directors or these Bylaws.
5.7 PRESIDENT.
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Subject to such supervisory powers, if any, as may be given by
the Board of Directors to the chairman of the board (if any) or the chief
executive officer, the president shall have general supervision, direction, and
control of the business and other officers of the Corporation. He or she shall
have the general powers and duties of management usually vested in the office of
president of a corporation and such other powers and duties as may be prescribed
by the Board of Directors or these Bylaws.
5.8 VICE PRESIDENTS.
In the absence or disability of the chief executive officer and
president, the vice presidents, if any, in order of their rank as fixed by the
Board of Directors or, if not ranked, a vice president designated by the Board
of Directors, shall perform all the duties of the president and when so acting
shall have all the powers of, and be subject to all the restrictions upon, the
president. The vice presidents shall have such other powers and perform such
other duties as from time to time may be prescribed for them respectively by the
Board of Directors, these Bylaws, the president or the chairman of the board.
5.9 SECRETARY.
The secretary shall keep or cause to be kept, at the principal
executive office of the Corporation or such other place as the Board of
Directors may direct, a book of minutes of all meetings and actions of
directors, committees of directors, and stockholders. The minutes shall show the
time and place of each meeting, the names of those present at directors'
meetings or committee meetings, the number of shares present or represented at
stockholders' meetings, and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal
executive office of the Corporation or at the office of the Corporation's
transfer agent or registrar, as determined by resolution of the Board Of
Directors, a share register, or a duplicate share register, showing the names of
all stockholders and their addresses, the number and classes of shares held by
each, the number and date of certificates evidencing such shares, and the number
and date of cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all
meetings of the stockholders and of the Board of Directors required to be given
by law or by these Bylaws. He or she shall keep the seal of the Corporation, if
one be adopted, in safe custody and shall have such other powers and perform
such other duties as may be prescribed by the Board of Directors or by these
Bylaws.
5.10 CHIEF FINANCIAL OFFICER.
The chief financial officer shall keep and maintain, or cause to
be kept and maintained, adequate and correct books and records of accounts of
the properties and business transactions of the Corporation, including accounts
of its assets, liabilities, receipts, disbursements, gains, losses, capital
retained earnings, and shares. The books of account shall at all reasonable
times be open to inspection by any director.
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The chief financial officer shall deposit all moneys and other
valuables in the name and to the credit of the Corporation with such
depositories as may be designated by the Board of Directors. He or she shall
disburse the funds of the Corporation as may be ordered by the Board of
Directors, shall render to the president, the chief executive officer, or the
directors, upon request, an account of all his or her transactions as chief
financial officer and of the financial condition of the Corporation, and shall
have other powers and perform such other duties as may be prescribed by the
Board of Directors or the Bylaws.
5.11 REPRESENTATION OF SHARES OF OTHER CORPORATIONS.
The chairman of the board, the chief executive officer, the
president, any vice president, the chief financial officer, the secretary or
assistant secretary of this Corporation, or any other person authorized by the
Board of Directors or the chief executive officer or the president or a vice
president, is authorized to vote, represent, and exercise on behalf of this
Corporation all rights incident to any and all shares of any other corporation
or corporations standing in the name of this Corporation. The authority granted
herein may be exercised either by such person directly or by any other person
authorized to do so by proxy or power of attorney duly executed by the person
having such authority.
5.12 AUTHORITY AND DUTIES OF OFFICERS.
In addition to the foregoing authority and duties, all officers
of the Corporation shall respectively have such authority and perform such
duties in the management of the business of the Corporation as may be designated
from time to time by the Board of Directors or the stockholders.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES,
AND OTHER AGENTS
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Corporation shall, to the maximum extent and in the manner
permitted by the General Corporation Law of Delaware, indemnify each of its
directors and officers against expenses (including attorneys' fees), judgments,
fines, settlements and other amounts actually and reasonably incurred in
connection with any proceeding, arising by reason of the fact that such person
is or was an agent of the Corporation. For purposes of this Section 6.1, a
"director" or "officer" of the Corporation includes any person (a) who is or was
a director or officer of the Corporation, (b) who is or was serving at the
request of the Corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, or (c) who was a director
or officer of a Corporation which was a predecessor corporation of the
Corporation or of another enterprise at the request of such predecessor
corporation.
6.2 INDEMNIFICATION OF OTHERS.
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The Corporation shall have the power, to the maximum extent and
in the manner permitted by the General Corporation Law of Delaware, to indemnify
each of its employees and agents (other than directors and officers) against
expenses (including attorneys' fees), judgments, fines, settlements and other
amounts actually and reasonably incurred in connection with any proceeding,
arising by reason of the fact that such person is or was an agent of the
Corporation. For purposes of this Section 6.2, an "employee" or "agent" of the
Corporation (other than a director or officer) includes any person (a) who is or
was an employee or agent of the Corporation, (b) who is or was serving at the
request of the Corporation as an employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, or (c) who was an
employee or agent of a corporation which was a predecessor corporation of the
Corporation or of another enterprise at the request of such predecessor
corporation.
6.3 PAYMENT OF EXPENSES IN ADVANCE.
Expenses incurred in defending any action or proceeding for
which indemnification is required pursuant to Section 6.1 or for which
indemnification is permitted pursuant to Section 6.2 following authorization
thereof by the Board of Directors shall be paid by the Corporation in advance of
the final disposition of such action or proceeding upon receipt of an
undertaking by or on behalf of the indemnified party to repay such amount if it
shall ultimately be determined that the indemnified party is not entitled to be
indemnified as authorized in this Article VI.
6.4 INDEMNITY NOT EXCLUSIVE.
The indemnification provided by this Article VI shall not be
deemed exclusive of any other rights to which those seeking indemnification may
been titled under any Bylaw, agreement, vote of shareholders or disinterested
directors or otherwise, both as to action in an official capacity and as to
action in another capacity while holding such office, to the extent that such
additional rights to indemnification are authorized in the Certificate of
Incorporation.
6.5 INSURANCE.
The Corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him or
her and incurred by him or her in any such capacity, or arising out of his or
her status as such, whether or not the Corporation would have the power to
indemnify him or her against such liability under the provisions of the General
Corporation Law of Delaware.
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6.6 CONFLICTS.
No indemnification or advance shall be made under this Article
VI, except where such indemnification or advance is mandated by law or the
order, judgment or decree of any court of competent jurisdiction, in any
circumstance where it appears:
(a) That it would be inconsistent with a provision of the
Certificate of Incorporation, these Bylaws, a resolution of the stockholders or
an agreement in effect at the time of the accrual of the alleged cause of the
action asserted in the proceeding in which the expenses were incurred or other
amounts were paid, which prohibits or otherwise limits indemnification; or
(b) That it would be inconsistent with any condition expressly
imposed by a court in approving a settlement.
ARTICLE VII
RECORDS AND REPORTS
7.1 MAINTENANCE AND INSPECTION OF RECORDS.
The Corporation shall, either at its principal executive offices
or at such place or places as designated by the Board of Directors, keep a
record of its stockholders listing their names and addresses and the number and
class of shares held by each stockholder, a copy of these Bylaws as amended to
date, accounting books, and other records.
Any stockholder of record, in person or by attorney or other
agent, shall, upon written demand under oath stating the purpose thereof, have
the right during the usual hours for business to inspect for any proper purpose
the Corporation's stock ledger, a list of its stockholders, and its other books
and records and to make copies or extracts therefrom. A proper purpose shall
mean a purpose reasonably related to such person's interest as a stockholder. In
every instance where an attorney or other agent is the person who seeks the
right to inspection, the demand under oath shall be accompanied by a power of
attorney or such other writing that authorizes the attorney or other agent to so
act on behalf of the stockholder. The demand under oath shall be directed to the
Corporation at its registered office in Delaware or at its principal place of
business.
7.2 INSPECTION BY DIRECTORS.
Any director shall have the right to examine the Corporation's
stockledger, a list of its stockholders, and its other books and records for a
purpose reasonably related to his or her position as a director. The Court of
Chancery is hereby vested with the exclusive jurisdiction to determine whether a
director is entitled to the inspection sought. The Court may summarily order the
Corporation to permit the director to inspect any and all books and records, the
stock ledger, and the stock list and to make copies or extracts therefrom. The
Court may, in its
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discretion, prescribe any limitations or conditions with reference to the
inspection, or award such other and further relief as the Court may deem just
and proper.
7.3 ANNUAL STATEMENT TO STOCKHOLDERS.
The Board of Directors shall present at each annual meeting, and
at any special meeting of the stockholders when called for by vote of the
stockholders, a full and clear statement of the business and condition of the
Corporation.
ARTICLE VIII
GENERAL MATTERS
8.1 CHECKS.
From time to time, the Board of Directors shall determine by
resolution which person or persons may sign or endorse all checks, drafts, other
orders for payment of money, notes or other evidences of indebtedness that are
issued in the name of or payable to the Corporation, and only the persons so
authorized shall sign or endorse those instruments.
8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS.
The Board of Directors, except as otherwise provided in these
Bylaws, may authorize any officer or officers, or agent or agents, to enter into
any contract or execute any instrument in the name of and on behalf of the
Corporation; such authority may be general or confined to specific instances.
Unless so authorized or ratified by the Board of Directors or within the agency
power of an officer, no officer, agent or employee shall have any power or
authority to bind the Corporation by any contract or engagement or to pledge its
credit or to render it liable for any purpose or for any amount.
8.3 STOCK CERTIFICATES; PARTLY PAID SHARES.
The shares of the Corporation shall be represented by
certificates, provided that the Board of Directors of the Corporation may
provide by resolution or resolutions that some or all of any or all classes or
series of its stock shall be uncertificated shares. Any such resolution shall
not apply to shares represented by a certificate until such certificate is
surrendered to the Corporation. Notwithstanding the adoption of such a
resolution by the Board of Directors, every holder of stock represented by
certificates and upon request every holder of uncertificated shares shall be
entitled to have a certificate signed by, or in the name of the Corporation by
the chairman or vice-chairman of the Board of Directors, or the chief executive
officer or the president or vice-president, and by the chief financial officer
or an assistant treasurer, or the secretary or an assistant secretary of the
Corporation representing the number of shares registered in certificate form.
Any or all of the signatures on the certificate may be a facsimile. In case any
officer, transfer agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate has ceased to be such officer, transfer agent
or registrar before such certificate
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is issued, it may be issued by the Corporation with the same effect as if he or
she were such officer, transfer agent or registrar at the date of issue.
The Corporation may issue the whole or any part of its shares as
partly paid and subject to call for the remainder of the consideration to be
paid therefor. Upon the face or back of each stock certificate issued to
represent any such partly paid shares, upon the books and records of the
Corporation in the case of uncertificated partly paid shares, the total amount
of the consideration to be paid therefor and the amount paid thereon shall be
stated. Upon the declaration of any dividend on fully paid shares, the
Corporation shall declare a dividend upon partly paid shares of the same class,
but only upon the basis of the percentage of the consideration actually paid
thereon.
8.4 SPECIAL DESIGNATION ON CERTIFICATES.
If the Corporation is authorized to issue more than one class of
stock or more than one series of any class, then the powers, the designations,
the preferences, and the relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights shall be set forth
in full or summarized on the face or back of the certificate that the
Corporation shall issue to represent such class or series of stock; provided,
however, that, except as otherwise provided in Section 202 of the General
Corporation Law of Delaware, in lieu of the foregoing requirements there may be
set forth on the face or back of the certificate that the Corporation shall
issue to represent such class or series of stock a statement that the
Corporation will furnish without charge to each stockholder who so requests the
powers, the designations, the preferences, and the relative, participating,
optional or other special rights of each class of stock or series thereof and
the qualifications, limitations or restrictions of such preferences and/or
rights.
8.5 LOST CERTIFICATES.
Except as provided in this Section 8.5, no new certificates for
shares shall be issued to replace a previously issued certificate unless the
latter is surrendered to the Corporation and canceled at the same time. The
Corporation may issue a new certificate of stock or uncertificated shares in the
place of any certificate previously issued by it, alleged to have been lost,
stolen or destroyed, and the Corporation may require the owner of the lost,
stolen or destroyed certificate, or the owner's legal representative, to give
the Corporation a bond sufficient to indemnify it against any claim that may be
made against it on account of the alleged loss, theft or destruction of any such
certificate or the issuance of such new certificate or uncertificated shares.
8.6 CONSTRUCTION; DEFINITIONS.
Unless the context requires otherwise, the general provisions,
rules of construction, and definitions in the Delaware General Corporation Law
shall govern the construction of these Bylaws. Without limiting the generality
of this provision, the singular number includes the plural, the plural number
includes the singular, and the term "person" includes both a corporation and a
natural person.
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8.7 DIVIDENDS.
The directors of the Corporation, subject to any restrictions
contained in (a) the General Corporation Law of Delaware or (b) the Certificate
of Incorporation, may declare and pay dividends upon the shares of its capital
stock. Dividends may be paid in cash, in property, or in shares of the
Corporation's capital stock.
The directors of the Corporation may set apart out of any of the
funds of the Corporation available for dividends a reserve or reserves for any
proper purpose and may abolish any such reserve. Such purposes shall include but
not be limited to equalizing dividends, repairing or maintaining any property of
the Corporation, and meeting contingencies.
8.8 FISCAL YEAR.
The fiscal year of the Corporation shall be fixed by resolution
of the Board of Directors and may be changed by the Board of Directors.
8.9 SEAL.
The Corporation may adopt a corporate seal, which may be altered
at pleasure, and may use the same by causing it or a facsimile thereof, to be
impressed or affixed or in any other manner reproduced.
8.10 TRANSFER OF STOCK.
Upon surrender to the Corporation or the transfer agent of the
Corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the Corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate, and record the transaction in its books.
8.11 STOCK TRANSFER AGREEMENTS.
The Corporation shall have power to enter into and perform any
agreement with any number of stockholders of any one or more classes of stock of
the Corporation to restrict the transfer of shares of stock of the Corporation
of any one or more classes owned by such stockholders in any manner not
prohibited by the General Corporation Law of Delaware.
8.12 REGISTERED STOCKHOLDERS.
The Corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends and to vote as such owner, shall be entitled to hold liable for calls
and assessments the person registered on its books as the owner of shares, and
shall not be bound to recognize any equitable or other claim to or interest in
such share or shares on the part of another person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
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ARTICLE IX
AMENDMENTS
The Bylaws of the Corporation may be adopted, amended or repealed by the
stockholders entitled to vote; provided, however, that the Corporation may, in
its Certificate of Incorporation, confer the power to adopt, amend or repeal
Bylaws upon the directors. The fact that such power has been so conferred upon
the directors shall not divest the stockholders of the power, nor limit their
power to adopt, amend or repeal Bylaws.
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CERTIFICATE OF ADOPTION OF
AMENDED AND RESTATED BYLAWS
OF
PRINTCAFE, INC.
The undersigned hereby certifies that the undersigned is the
duly elected, qualified, and acting Secretary of printCafe, Inc. (the
"Corporation"), and that the foregoing Amended and Restated Bylaws, comprising
____ pages, were adopted the Bylaws of the corporation on ________, by the Board
of Directors of the corporation.
Executed this _____ day of _________________, ___.
------------------------------------
Matthew D'Emilio, Secretary
<PAGE> 1
EXHIBIT 10.1
STRATEGIC ALLIANCE AGREEMENT
THIS STRATEGIC ALLIANCE AGREEMENT (this "Agreement") is made as of
January 25, 2000 by and between Creo Products Inc., a federally incorporated
Canadian corporation ("Creo") and Prograph Systems, Inc., a Pennsylvania
corporation to be reincorporated into Delaware and renamed Printcafe.com, Inc.
("Printcafe"), to be effective at the closing of the transactions contemplated
by the parties in connection with the sale of shares of Series B Preferred Stock
of Printcafe to Creo, which is currently being discussed by the parties.
RECITALS
WHEREAS, Creo is a leading developer, manufacturer, distributor and
service organization of hardware and software digital solutions that automate
the prepress phase of commercial printing;
WHEREAS, Printcafe is a leading supplier of end-to-end print-publishing
supply chain management software solutions to publishers and printers worldwide;
WHEREAS, Printcafe has developed a transaction-based Internet solution
for the purposes of entering the emerging business-to-business electronic
commerce marketplace for the commercial printing and related industries;
WHEREAS, Creo and Printcafe consider it to be in their respective best
interests to form a strategic alliance such that Printcafe may benefit from
Creo's products and resources and Creo may benefit by using Printcafe as its
applications services provider and Internet based electronic commerce solution;
WHEREAS, it is the intention of Creo and Printcafe to work together in a
spirit of cooperation and good faith in order to assist each of the parties
hereto to develop a successful and profitable Internet based business in a
competitive market place;
WHEREAS, Creo and Printcafe wish to set forth the terms and conditions
of such a strategic alliance and have entered into this agreement;
AGREEMENT
NOW, THEREFORE, in consideration of the premises set forth above and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto hereby agree as follows:
1. INTELLECTUAL PROPERTY. Creo hereby grants to Printcafe an unlimited,
exclusive, perpetual, royalty-free, worldwide license (including right of
sublicense) to use, reproduce, make, have made, sell, modify and create
derivative works from all of the Intellectual Property with respect to the items
set forth in Schedule "A" of this Agreement (the "Contributed IP"). The
Contributed IP is licensed to Printcafe without warranties, express or implied,
of merchantability or fitness for a particular purpose or otherwise. Creo may,
from time to time, acquire Intellectual Property for the provision of Internet
Services (the "Internet IP"). Creo shall grant a perpetual,
<PAGE> 2
non-exclusive, worldwide license (including right of sublicense) to use the
Internet IP for the provision of Internet Services in the Graphic Arts Industry
to Printcafe, in consideration of which Printcafe shall pay Fair Market Value to
Creo for such Internet IP. Notwithstanding any provision herein to the contrary,
the Contributed IP shall not include any Intellectual Property used in, related
to or connected with CreoNet ("CreoNet" is the technology in Creo's intranet
infrastructure), Prinergy Products, Prinergy Web or Creo's Workflow Products.
Notwithstanding any provision herein to the contrary, Internet IP shall not
include any Intellectual Property used in or substantially similar to Prinergy
Products or Prinergy Web, or Workflow Products. Contributed IP and Internet IP
shall not include any Intellectual Property that is subject to a right or claim
of a third party which existed as of the date hereof. Creo shall undertake such
reasonable steps to further evidence the license of the Contributed IP set forth
herein.
2. CONTENT MANAGEMENT. Printcafe hereby grants Creo a Right of First Refusal as
defined herein to develop all technology and related materials for Printcafe
relating to Content Management. Printcafe shall reimburse Creo for its Fully
Loaded Costs associated with such development, to the extent such fully loaded
costs do not exceed the price offered by a third party for any given technology
or development project. Any such technology or related materials so developed,
other than improvements, modifications and developments to or connected with
Prinergy Products, Prinergy Web or Creo's Workflow Products which shall at all
times remain the property of Creo, shall be jointly owned by Creo and Printcafe.
Creo or Printcafe, as the case may be, shall take such steps as are deemed
necessary or desirable by the other party, acting reasonably, to further
evidence the joint ownership of such technology or related materials.
3. PRINERGY PRODUCTS, PRINERGY WEB AND WORKFLOW SERVICES.
(a) Prinergy Products. Printcafe shall be Creo's exclusive ASP for
Prinergy Products and Creo shall provide Prinergy Products to Printcafe for that
purpose at the Fair Market Value which will include a charge for each customer
Printcafe provides services to, and shall be discounted to account for the
following factors:
(i) Printcafe will provide sales, installation and
support to such customers for Prinergy ASP services;
(ii) Printcafe shall supply hardware necessary for the
Prinergy ASP Services;
(iii) Printcafe may, when technology permits, aggregate
multiple customers onto a single hardware configuration; and
(iv) Printcafe shall be restricted to exclusively
providing Creo Workflow Products, and no other Workflow
Products, as an ASP to its customers.
(b) Prinergy Web. For the purposes of this section, "Creo Prinergy Web"
is defined as Prinergy Web for non-commerce-based transactions which are
primarily intra-company based and "Printcafe Prinergy Web" is defined as
Prinergy Web for commerce based inter-company transactions. Creo shall use
commercially reasonable efforts to ensure that Creo Prinergy Web cannot be used
for inter-company eCommerce based transactions. Printcafe shall be Creo's
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exclusive distributor in North America for Printcafe Prinergy Web. Creo shall
provide Printcafe Prinergy Web to Printcafe and determine end user prices,
features, discount policy, and business models at Creo's sole discretion
pursuant to a distributor agreement that Creo shall provide. Creo and its sales
and service channels shall be the exclusive distributor of Creo Prinergy Web.
Any Creo sales and service channel has the perpetual, irrevocable, world-wide,
non-exclusive right to sell and support Printcafe Prinergy Web. The Printcafe
sales channel management decisions for the Printcafe Prinergy Web product will
be agreed by mutual consent of both parties. Nothwithstanding any provision to
the contrary, Printcafe Prinergy Web and Creo Prinergy Web shall remain Creo
products.
(c) Integration of Workflow Services. Notwithstanding any provision
herein to the contrary, Creo shall be permitted to integrate its Workflow
Products with any eCommerce solution marketed to the Graphic Arts Industry and
Printcafe shall be permitted to integrate its eCommerce services with any
Workflow Products solution marketed to the Graphic Arts Industry provided
however that Creo and Printcafe shall exclusively co-market Creo's Workflow
Products and Prograph's eCommerce Services in combination to the Graphic Arts
Industry.
4. PROVISION OF CREO SERVICES.
(a) Creo shall, from time to time as reasonably requested by Printcafe,
provide sales channel services, product servicing, research and development and
such other services as may be mutually agreed by the parties to Printcafe in
relation to the Printcafe Business (the "Printcafe Services"), including, but
not limited to the use of Creo's sales force to distribute Printcafe Services.
Printcafe shall reimburse Creo for its Fully Loaded Costs associated with the
provision of such services and shall also reimburse Creo for any commissions as
determined by mutual agreement of Printcafe and Creo paid to such sales force to
distribute Printcafe Services within 30 days of the receipt of an invoice from
Creo. Creo shall have the right to set-off any amount owing to it pursuant to
this section against any amounts owing from time to time to Printcafe. Creo
shall assign one of its senior sales persons to assist Printcafe in selling its
services through Creo sales channels.
(b) Creo shall at all times have access to sell, service and support all
Printcafe Internet Services and ASP Services at comparable prices, discounts,
terms, commissioning and all other respects to those provided to any similar
Printcafe distribution mechanism or channel. Creo channel management will be
coordinated jointly by Creo and Printcafe.
5. PROMOTIONAL MATERIALS. Printcafe and, subject to the written consent of
Heidelberg Druckmaschinen AG, Creo shall include references to each other and
each other's products in any Promotional Materials that are specifically
targeted to the Graphic Arts Industry at their respective earliest convenience.
Notwithstanding the forgoing, Creo shall not be required to include references
to Princafe in Creo's eSales or eSupport Promotional Materials. Each party shall
be entitled to review a copy of the proposed use and representation of that
party in any such Promotional Materials and approve the use and representation
of that party therein prior to any distribution of such Promotional Material.
Each party will promptly discontinue any reference to the other or the other's
products in any particular Promotional Materials identified by the other party
if requested to do so in writing by the other party.
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6. NON-COMPETE. From and after the date hereof and unless otherwise provided in
this Agreement Creo shall not, directly or indirectly, compete with the
Printcafe Business solely as it relates to the Graphic Arts Industry and
Printcafe shall not, directly or indirectly, compete with the Creo Business
solely as it relates to the Graphic Arts Industry, and Creo or Printcafe, as the
case may be, shall not invest in, own, manage, operate, finance, control or
participate in the ownership, management, operation or control of, any business
that competes with the Printcafe Business or Creo Business, respectively, solely
as either relates to the Graphic Arts Industry. For greater clarity, this
restrictive covenant shall only apply to the respective business of the parties
hereto, as defined herein, solely in the Graphic Arts Industry. Nonwithstanding
the above restrictive covenant, nothing herein shall prevent:
(a) either party or its subsidiaries and affiliates from owning, in the
aggregate, not more than 10% of the outstanding stock or other equity interests
in any company so long as a substantial portion of that company's business
undertaking is not competitive with the Printcafe Business or Creo Business, as
the case may be, as it relates to the Graphic Arts Industry; or
(b) Creo or its subsidiaries and affiliates from providing eSales and
eSupport with respect to Creo's products and services to Creo's customers or
prospects directly without involving Printcafe.
Without limiting the generality of the foregoing, Printcafe shall have the Right
of First Refusal to offer, without competition from Creo, Internet Services and
ASP Services to the Graphic Arts Industry.
7. SOLICITATION. From and after the date hereof and unless otherwise provided in
this Agreement the parties hereto shall not, directly or indirectly, either for
itself, or any other person or entity, induce or attempt to induce any employee
of the other party to leave the employ of such other party (except pursuant to
advertisements of general public circulation); provided that Creo will consent
to Printcafe presenting an offer for employment to become Vice President, Sales
of Printcafe to a senior sales person of Creo to be determined by mutual
agreement between Creo and Printcafe.
8. CONFIDENTIALITY AGREEMENTS. The parties hereto shall and shall cause any of
their respective employees providing services to or on behalf of the other party
or otherwise having access to the other party's confidential information
hereunder to execute and deliver the other party's standard form of
confidentiality and proprietary information agreement in substantially the form
as may be mutually agreed by the parties.
9. TERMINATION.
(a) Creo may terminate this Agreement at any time by written notice to
Printcafe and this Agreement shall cease to have any force and effect, in the
event of:
(i) the failure of Printcafe to comply with any of the
provisions hereunder upon Printcafe being notified in
writing by Creo of such failure and failing to remedy
such failure within 30 days of receiving such notice;
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(ii) from and after the fifth anniversary of the date that
Creo first ceases to be the beneficial or registered
holder of any shares of Printcafe or the holder or
beneficiary of any security exercisable of convertible
into any shares of Printcafe;
(iii) the bankruptcy or receivership of Printcafe or the
passing of a resolution by Printcafe for its winding up
or dissolution.
(b) Printcafe may terminate this Agreement at any time in the event of:
(i) the failure of Creo to comply with any of the provisions
hereunder upon Creo being notified in writing by
Printcafe of such failure and failing to remedy such
failure within 30 days of receiving such notice;
(ii) the bankruptcy or receivership of Creo or the passing of
a resolution by Creo for its winding up or dissolution.
10. DEFINITIONS. As used in this Agreement, the following terms shall have the
following meanings:
(a) "ASP" means application services provider;
(b) "ASP Services" means the provision of software functionality to the
Graphics Arts Industry supply chain solely through a web browser where the
software and hardware resides at and is managed by the ASP, rather than at the
end customer premises, excluding eSales and eSupport;
(c) "Content Management" includes the validation, manipulation,
assembly, conversion, modification, output and re-purposing of any digital
content without limiting the generality of the forgoing, includes Prinergy
(Connect, Collect, Direct, Convert, conCEPS, Page, Image Database), Prinergy Web
(which interfaces to all Prinergy products), Image Database (Banta media, Unity,
Cumulus) and Centralized file repository (e.g., Punch Web Group, Media Depot,
Cumulus);
(d) "Creo Business" means developer, manufacturer, distributor and
service organization of hardware and software digital solutions that automate
the prepress phase of commercial printing, PCB Manufacturing, Development of PCB
Manufacturing Hardware and Software, Hardware design and Manufacturing, Plate
Media design and manufacturing, Research and development and manufacturing of
Optical equipment, electronics, and precision mechanical devices, Prepress
devices, Prepress software products and support of prepress software products;
(e) "CWR" means a common workflow and common RIP based specifically on
PDF and Adobe Extreme(TM) architecture;
(f) "eCommerce Services" means the provision of electronic services over
the internet for quotation, scheduling and tracking of orders, invoicing,
payment, or fulfillment within the Graphics Arts Industry supply chain but does
not include eSales and eSupport or Creo Workflow Products non-commerce-based
transactions which are primarily intra-company based;
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<PAGE> 6
(g) "eSales" means the set of technologies, solutions and services that
allow Creo to interact electronically with Creo's customers or prospects to
facilitate on-line sales by means of the Internet. Solutions include but are not
limited to: providing prospects with requested information; web-based pricing,
configuration and lead time capabilities; on-line ordering capabilities;
web-based order status, invoice, payment and related capabilities; on-line
service and warranty; and other e-commerce capabilities such as e-mail
notification and address change. A wide range of interactions can be supported
within Creo's eSales solutions including but not limited to: on-line
information; on-line ordering; integrated ordering; site personalization and
voice-enabled and/or agent-assisted commerce;
(h) "eSupport" means the set of technologies, solutions and services
that allow Creo to interact electronically with Creo's customers or prospects to
deliver customer support by means of the Internet. Solutions include but are not
limited to: providing requested information and applications; processing
transactions as part of customer service; resolving customer problems; providing
on-line training; providing professional services to assist customers with
developing their own eSales and eSupport capabilities. A wide range of
interactions can be supported within Creo's eSupport solutions including but not
limited to: on-line access to Creo content; self-service solutions; e-mail
management; and real-time interaction;
(i) "Fair Market Value" means the price at which a product or service is
generally made available and/or purchased or sold by a material number of
parties in the specified market for such products or services, or for products
that are deemed to be comparable in features and performance;
(j) "Fully Loaded Cost" means normal direct labor charges (including
overtime) for actual time devoted to performance of any services requested by
Printcafe, plus an allocation (based on such actual time) of fringe benefit
costs, then multiplying such sum by a factor of 1.2 for overhead or as otherwise
determined by Creo's internal accounting for such allocation, and (ii) actual
out-of-pocket expenses (including, without limitation, materials costs consumed
in providing such services);
(k) "Graphic Arts Industry" means participation in the publishing and
printing business as performed by publishers, printers, graphic arts companies,
print buyers, ad agencies, and paper and ink suppliers to printers;
(l) "Intellectual Property" means inventions, patents, patent
applications, copyrights, copyright registrations, copyright applications, trade
secrets, know-how, confidential information, and all other types of intellectual
property (excluding trademarks and like trade identifiers);
(m) "Internet Services" means services provided by a program whose
interface is over the web which enables interaction between two or more parties
(not involving Creo as one of the parties) through the Printcafe central site or
Printcafe branded sites within the Graphic Arts Industry; but as used in this
Agreement does not include the extension of a product's interface, Creo's
Workflow Products and customer support interface through the Internet, and
eSales and eSupport;
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(n) "Prinergy Products" means products based on the proprietary CWR of
Creo and Heidelberg Druckmaschinen AG;
(o) "Prinergy Web" means the web browser interface for Prinergy Products
and includes functionality for job submission, proofing and approval, and job
status monitoring based on the the proprietary CWR of Creo and Heidelberg
Druckmaschinen AG;
(p) "Printcafe Business" means the provision of end-to-end supply chain
management (i.e. ERP) software, ASP Services, and Internet Services to the
Graphic Arts Industry;
(q) "Promotional Materials" includes all materials used for sales,
marketing and reinforcement of the brand name and logo of products, including
but not limited to advertisements, trade show banners, graphic arts images,
promotional brochures, posters, internet banner ads and product splash screens;
(r) "Right of First Refusal" has the meaning described in Section 11
hereto;
(s) "RIP" (raster image processor) means the software and hardware
components and modules, including the DSI, which accept digital data, converts
the data into raster data, screens the raster data and interfaces that screened
data to an output device;
(t) "Workflow Products" means Content Management or software and / or
hardware capable of receiving information in a digital format, processing this
information or sending the data stream to a RIP; and
(u) "Workflow Services" means services provided using Workflow Products.
11. RIGHT OF FIRST REFUSAL. Where this Agreement refers to a Right of First
Refusal in favour of either party to this Agreement, such Right of First Refusal
shall mean:
(a) that a party shall identify a business need or product concept (the
"Project") that is subject to a Right of First Refusal herein in favour of the
other party in writing to the other party;
(b) both parties shall enter into good faith discussions with respect to
the Project for the purposes of jointly developing a competitive strategy for
producing and implementing the Project; and
(c) the other party shall be entitled to undertake the Project on behalf
of the proposing party provided that the other party undertaking the Project
will not result in a material negative impact on the time to market for the
Project, a material cost of implementation over and above that reasonably
expected for a comparable Project or otherwise result in the Project not being
competitive with comparable products or service offerings available in the
market as determined by the proposing party in good faith acting reasonably.
12. CERTAIN COMMITTEES.
(a) Product Steering Committee. Printcafe shall establish a Product
Steering Committee to implement product functionality, pricing, development
schedules and marketing.
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<PAGE> 8
At least one member of the Product Steering Committee shall be designated by
Creo. The Product Steering Committee shall meet at least as often as monthly.
Printcafe shall use its best efforts to cause the Product Steering Committee to
act on a consensus basis.
(b) Operations Committee. Printcafe shall establish an Operations
Committee to advise the Board and implement the Board's decisions with respect
to strategic direction for Printcafe. At least one member of the Operations
Committee shall be designated by Creo. The Operations Committee shall meet at
least as often as monthly. Printcafe shall use its best efforts to cause the
Operations Committee to act on a consensus basis.
13. MISCELLANEOUS.
(a) Dispute Resolution.
(i) Negotiation. No arbitration or other proceeding with respect
to any claim, dispute or controversy arising out of or in connection with or
relating to this Agreement or the breach or alleged breach thereof shall arise
until the following procedures have been completed. Representatives from each
party will meet within ten (10) business days after receipt of a request from
either party to review in good faith any dispute with respect to the
interpretation of any provision of this Agreement or with respect to the
performance of either party under this Agreement. In the event a disagreement or
dispute under this Agreement is not resolved by the designated representatives
of each party by mutual agreement within five (5) business days after a meeting
to discuss the disagreement, which resolution shall be evidenced by a document
signed by both parties, either party may within five (5) business days
thereafter provide the other written notice specifying the terms of such
disagreement in reasonable detail. Upon receipt of such notice, the chief
executive officer of each party shall meet at a mutually-agreed place and time
(but no later than ten (10) business days after receipt of such notice) for the
purpose of resolving such disagreement. Such officers shall make a good faith
effort to resolve the disagreement or negotiate an acceptable revision of this
Agreement acceptable to both parties, without the necessity of formal procedures
relating thereto. During the course of such discussion, the parties will
reasonably cooperate and provide information that is not confidential to the end
that each party may be fully informed with respect to the issues in dispute. The
institution of arbitration to resolve the disagreement may occur only after the
earlier of the following events: (a) the chief executive officers mutually agree
that resolution of the disagreement through continued negotiation is not likely
to occur, or (b) ten (10) business days after the initial meeting between such
chief executive officers.
(ii) Arbitration. Subject to the provisions of paragraph (i)
above, any dispute or claim arising out of or in connection with this Agreement
will be finally settled by binding arbitration in Seattle in accordance with the
then-current Commercial Arbitration Rules of the American Arbitration
Association by three arbitrators appointed in accordance with said rules. Each
party shall select one such arbitrator, and the two arbitrators so chosen shall
select the third arbitrator. The arbitrators shall apply Delaware law, without
reference to rules of conflicts of law or rules of statutory arbitration, to the
resolution of any dispute. Judgment on the award rendered by the arbitrator may
be entered in any court having jurisdiction thereof. Notwithstanding the
foregoing, the parties may apply to any court of competent jurisdiction for
8
<PAGE> 9
preliminary or interim equitable relief, or to compel arbitration in accordance
with this paragraph, without breach of this arbitration provision.
(b) Independent Contractors. The relationship of the parties is that of
independent contractors, and nothing contained in this Agreement shall be
construed to give either party the power to direct or control the day-to-day
activities of the other party or create or assume any obligation on behalf of
the other party.
(c) Amendments and Waivers. Any term of this Agreement may be amended or
waived only with the written consent of the parties or their respective
successors and assigns. Any amendment or waiver effected in accordance with this
Section shall be binding upon the parties and their respective successors and
assigns.
(d) Assignment; Successors and Assigns. This Agreement shall not be
assigned, by operation of law or otherwise, without the express prior written
consent of the party not seeking such assignment. The terms and conditions of
this Agreement shall inure to the benefit of and be binding upon the respective
successors and permitted assigns of the parties. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
(e) Governing Law; Jurisdiction. This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the parties
hereto shall be governed, construed and interpreted in accordance with the laws
of the State of Delaware, without giving effect to principles of conflicts of
law. Each of the parties to this Agreement consents to the non-exclusive
jurisdiction and venue of the courts of the state and federal courts of the
State of Delaware.
(f) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
(g) Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
(h) Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith, in order to maintain the economic position enjoyed by
each party as close as possible to that under the provision rendered
unenforceable. In the event that the parties cannot reach a mutually agreeable
and enforceable replacement for such provision, then (i) such provision shall be
excluded from this Agreement, (ii) the balance of the Agreement shall be
interpreted as if such provision were so excluded and (iii) the balance of the
Agreement shall be enforceable in accordance with its terms.
(i) Entire Agreement. This Agreement and the documents referred to
herein are the product of both of the parties hereto, and constitute the entire
agreement between such parties pertaining to the subject matter hereof and
thereof, and merge all prior negotiations and drafts of the parties with regard
to the transactions contemplated herein and therein. Any and all other
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<PAGE> 10
written or oral agreements existing between the parties hereto regarding such
transactions are expressly canceled.
(j) Attorney's Fees. If any action at law or in equity (including
arbitration) is necessary to enforce or interpret the terms of this Agreement,
the prevailing party shall be entitled to reasonable attorney's fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled.
(k) Force Majeure. In the event that either party is prevented from
performing or is unable to perform any of its obligations under this Agreement
(other than a payment obligation) due to any Act of God, fire, casualty, flood,
earthquake, war, strike, lockout, epidemic, destruction of production
facilities, riot, insurrection, material or component unavailability or
shortage, or any other cause beyond the reasonable control of the party invoking
this section (a "Force Majeure") and if such party shall have used its best
efforts to mitigate its effects, such party shall give prompt written notice to
the other party, its performance shall be excused, and the time for the
performance shall be extended for the period of delay or inability to perform
due to such occurrences. Notwithstanding the foregoing, if such party is not
able to perform within 180 days after the event giving rise to the excuse of
Force Majeure, the other party may terminate this Agreement.
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<PAGE> 11
IN WITNESS WHEREOF, the parties have caused this Strategic Alliance
Agreement to be executed as of the date first written above by their officers
thereunto duly authorized.
CREO PRODUCTS INC.
By: /s/ Mike Ball
---------------------------------
Name: Mike Ball
Title: V.P. Business Development
PROGRAPH SYSTEMS, INC.
By: /s/ Marc Olin
---------------------------------
Name: Marc Olin
Title: President
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<PAGE> 12
SCHEDULE "A"
Contributed IP
1. theLoupe Requirements Document
2. theLoupe Use Cases
3. Demonstration Software
4. High Level Designs
5. theLoupe Business Plan
6. theLoupe Pricing Models
12
<PAGE> 1
EXHIBIT 10.6
FORM OF
PRINTCAFE, INC.
2000 EMPLOYEE STOCK PURCHASE PLAN
<PAGE> 2
<TABLE>
<S> <C> <C>
Section 1 PURPOSE......................................................................1
Section 2 DEFINITIONS..................................................................1
2.1 "1934 Act"...................................................................1
2.2 "Board"......................................................................1
2.3 "Code".......................................................................1
2.4 "Committee"..................................................................1
2.5 "Common Stock"...............................................................1
2.6 "Company"....................................................................1
2.7 "Compensation"...............................................................1
2.8 "Eligible Employee"..........................................................1
2.9 "Employee"...................................................................2
2.10 "Employer" or "Employers"....................................................2
2.11 "Enrollment Date"............................................................2
2.12 "Grant Date".................................................................2
2.13 "Participant"................................................................2
2.14 "Plan".......................................................................2
2.15 "Purchase Date"..............................................................2
2.16 "Subsidiary".................................................................2
Section 3 SHARES SUBJECT TO THE PLAN...................................................2
3.1 Number Available.............................................................2
3.2 Adjustments..................................................................3
Section 4 ENROLLMENT...................................................................3
4.1 Participation................................................................3
4.2 Payroll Withholding..........................................................3
Section 5 OPTIONS TO PURCHASE COMMON STOCK.............................................3
5.1 Grant of Option..............................................................3
5.2 Duration of Option...........................................................3
5.3 Number of Shares Subject to Option...........................................4
5.4 Other Terms and Conditions...................................................4
Section 6 PURCHASE OF SHARES...........................................................4
6.1 Exercise of Option...........................................................4
6.2 Delivery of Shares...........................................................5
6.3 Exhaustion of Shares.........................................................5
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 7 WITHDRAWAL...................................................................5
7.1 Withdrawal...................................................................5
Section 8 CESSATION OF PARTICIPATION...................................................5
8.1 Termination of Status as Eligible Employee...................................5
Section 9 DESIGNATION OF BENEFICIARY...................................................5
9.1 Designation..................................................................5
9.2 Changes......................................................................5
9.3 Failed Designations..........................................................6
Section 10 ADMINISTRATION...............................................................6
10.1 Plan Administrator...........................................................6
10.2 Actions by Committee.........................................................6
10.3 Powers of Committee..........................................................6
10.4 Decisions of Committee.......................................................7
10.5 Administrative Expenses......................................................7
10.6 Eligibility to Participate...................................................7
10.7 Indemnification..............................................................7
Section 11 AMENDMENT, TERMINATION, AND DURATION.........................................7
11.1 Amendment, Suspension, or Termination........................................7
11.2 Duration of the Plan.........................................................8
Section 12 GENERAL PROVISIONS...........................................................8
12.1 Participation by Subsidiaries................................................8
12.2 Inalienability...............................................................8
12.3 Severability.................................................................8
12.4 Requirements of Law..........................................................8
12.5 Compliance with Rule 16b-3...................................................8
12.6 No Enlargement of Employment Rights..........................................9
12.7 Apportionment of Costs and Duties............................................9
12.8 Construction and Applicable Law..............................................9
12.9 Captions.....................................................................9
EXECUTION .............................................................................9
</TABLE>
2
<PAGE> 4
PRINTCAFE, INC.
2000 EMPLOYEE STOCK PURCHASE PLAN
(AS ADOPTED ON ____________, 2000)
SECTION 1
PURPOSE
printCafe, Inc. hereby establishes the printCafe, Inc. 2000
Employee Stock Purchase Plan, effective as of the first Enrollment Date, in
order to provide eligible employees of the Company and its participating
Subsidiaries with the opportunity to purchase Common Stock through payroll
deductions. The Plan is intended to qualify as an employee stock purchase plan
under Section 423(b) of the Code.
SECTION 2
DEFINITIONS
2.1 "1934 Act" means the Securities Exchange Act of 1934, as
amended. Reference to a specific Section of the 1934 Act or regulation
thereunder shall include such Section or regulation, any valid regulation
promulgated under such Section, and any comparable provision of any future
legislation or regulation amending, supplementing or superseding such Section or
regulation.
2.2 "Board" means the Board of Directors of the Company.
2.3 "Code" means the Internal Revenue Code of 1986, as amended.
Reference to a specific Section of the Code or regulation thereunder shall
include such Section or regulation, any valid regulation promulgated under such
Section, and any comparable provision of any future legislation or regulation
amending, supplementing or superseding such Section or regulation.
2.4 "Committee" shall mean the committee appointed by the Board
to administer the Plan. Any member of the Committee may resign at any time by
notice in writing mailed or delivered to the Secretary of the Company. As of the
effective date of the Plan, the Plan shall be administered by the Compensation
Committee of the Board.
2.5 "Common Stock" means the common stock of the Company.
2.6 "Company" means printCafe, Inc., a Delaware corporation.
2.7 "Compensation" means a Participant's regular wages. The
Committee, in its discretion, may (on a uniform and nondiscriminatory basis)
establish a different definition of Compensation prior to an Enrollment Date for
all options to be granted on such Enrollment Date.
2.8 "Eligible Employee" means every Employee of an Employer,
except (a) any Employee who immediately after the grant of an option under the
Plan, would own stock and/or hold outstanding options to purchase stock
possessing five percent (5%) or more of the total combined voting power or value
of all classes of stock of the Company or of any Subsidiary
<PAGE> 5
of the Company (including stock attributed to such Employee pursuant to Section
424(d) of the Code), or (b) as provided in the following sentence. The
Committee, in its discretion, from time to time may, prior to an Enrollment Date
for all options to be granted on such Enrollment Date, determine (on a uniform
and nondiscriminatory basis) that an Employee shall not be an Eligible Employee
if he or she: (1) has not completed at least two years of service since his or
her last hire date (or such lesser period of time as may be determined by the
Committee in its discretion), (2) customarily works not more than 20 hours per
week (or such lesser period of time as may be determined by the Committee in its
discretion), (3) customarily works not more than 5 months per calendar year (or
such lesser period of time as may be determined by the Committee in its
discretion), or (4) is an officer or other manager.
2.9 "Employee" means an individual who is a common-law employee
of any Employer, whether such employee is so employed at the time the Plan is
adopted or becomes so employed subsequent to the adoption of the Plan.
2.10 "Employer" or "Employers" means any one or all of the
Company, and those Subsidiaries which, with the consent of the Board, have
adopted the Plan.
2.11 "Enrollment Date" means such dates as may be determined by
the Committee (in its discretion and on a uniform and nondiscriminatory basis)
from time to time.
2.12 "Grant Date" means any date on which a Participant is
granted an option under the Plan.
2.13 "Participant" means an Eligible Employee who (a) has become
a Participant in the Plan pursuant to Section 4.1 and (b) has not ceased to be a
Participant pursuant to Section 8 or Section 9.
2.14 "Plan" means the printCafe, Inc. 2000 Employee Stock
Purchase Plan, as set forth in this instrument and as hereafter amended from
time to time.
2.15 "Purchase Date" means such dates as may be determined by
the Committee (in its discretion and on a uniform and nondiscriminatory basis)
from time to time prior to an Enrollment Date for all options to be granted on
such Enrollment Date.
2.16 "Subsidiary" means any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other than
the last corporation in the unbroken chain then owns stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.
SECTION 3
SHARES SUBJECT TO THE PLAN
3.1 Number Available. A maximum of __________ shares of Common
Stock shall initially be available for issuance pursuant to the Plan. Shares
sold under the Plan may be newly issued shares or treasury shares.
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<PAGE> 6
3.2 Adjustments. In the event of any reorganization,
recapitalization, stock split, reverse stock split, stock dividend, combination
of shares, merger, consolidation, offering of rights or other similar change in
the capital structure of the Company, the Board may make such adjustment, if
any, as it deems appropriate in the number, kind and purchase price of the
shares available for purchase under the Plan and in the maximum number of shares
subject to any option under the Plan.
SECTION 4
ENROLLMENT
4.1 Participation. Each Eligible Employee may elect to become a
Participant by enrolling or re-enrolling in the Plan effective as of any
Enrollment Date. In order to enroll, an Eligible Employee must complete, sign
and submit to the Company an enrollment form in such form, manner and by such
deadline as may be specified by the Committee from time to time (in its
discretion and on a nondiscriminatory basis). Any Participant whose option
expires and who has not withdrawn from the Plan automatically will be
re-enrolled in the Plan on the Enrollment Date immediately following the
Purchase Date on which his or her option expires. Any Participant whose option
has not expired and who has not withdrawn from the Plan automatically will be
deemed to be un-enrolled from the Participant's current option and be enrolled
as of a subsequent Enrollment Date if the price per Share on such subsequent
Enrollment Date is lower than the price per Share on the Enrollment Date
relating to the Participant's current option.
4.2 Payroll Withholding. On his or her enrollment form, each
Participant must elect to make Plan contributions via payroll withholding from
his or her Compensation. Pursuant to such procedures as the Committee may
specify from time to time, a Participant may elect to have withholding equal to
a whole percentage from 1% to 15% (or such lesser percentage that the Committee
may establish from time to time for all options to be granted on any Enrollment
Date). A Participant may elect to increase or decrease his or her rate of
payroll withholding by submitting a new enrollment form in accordance with such
procedures as may be established by the Committee from time to time. A
Participant may stop his or her payroll withholding by submitting a new
enrollment form in accordance with such procedures as may be established by the
Committee from time to time. In order to be effective as of a specific date, an
enrollment form must be received by the Company no later than the deadline
specified by the Committee, in its discretion and on a nondiscriminatory basis,
from time to time. Any Participant who is automatically re-enrolled in the Plan
will be deemed to have elected to continue his or her contributions at the
percentage last elected by the Participant.
SECTION 5
OPTIONS TO PURCHASE COMMON STOCK
5.1 Grant of Option. On each Enrollment Date on which the
Participant enrolls or re-enrolls in the Plan, he or she shall be granted an
option to purchase shares of Common Stock.
5.2 Duration of Option. Each option granted under the Plan shall
expire on the earliest to occur of (a) the completion of the purchase of shares
on the last Purchase Date occurring within 27 months of the Grant Date of such
option, (b) such shorter option period as
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<PAGE> 7
may be established by the Committee from time to time prior to an Enrollment
Date for all options to be granted on such Enrollment Date, or (c) the date on
which the Participant ceases to be such for any reason. Until otherwise
determined by the Committee for all options to be granted on an Enrollment Date,
the period referred to in clause (b) in the preceding sentence shall mean the
period from the applicable Enrollment Date through the last business day prior
to the immediately following Enrollment Date.
5.3 Number of Shares Subject to Option. The number of shares
available for purchase by each Participant under the option will be established
by the Committee from time to time prior to an Enrollment Date for all options
to be granted on such Enrollment Date.
5.4 Other Terms and Conditions. Each option shall be subject to
the following additional terms and conditions:
(a) payment for shares purchased under the option shall be made
only through payroll withholding under Section 4.2;
(b) purchase of shares upon exercise of the option will be
accomplished only in accordance with Section 6.1;
(c) the price per share under the option will be determined as
provided in Section 6.1; and
(d) the option in all respects shall be subject to such other
terms and conditions (applied on a uniform and nondiscriminatory basis),
as the Committee shall determine from time to time in its discretion.
SECTION 6
PURCHASE OF SHARES
6.1 Exercise of Option. Subject to Section 6.2, on each Purchase
Date, the funds then credited to each Participant's account shall be used to
purchase whole shares of Common Stock. Any cash remaining after whole shares of
Common Stock have been purchased shall be carried forward in the Participant's
account for the purchase of shares on the next Purchase Date. The price per
Share of the Shares purchased under any option granted under the Plan shall be
eighty-five percent (85%) of the lower of:
(a) the closing price per Share on the Grant Date for such
option on the NASDAQ National Market System; or
(b) the closing price per Share on the Purchase Date on the
NASDAQ National Market System;
provided, however, that with respect to any Grant Date under the Plan that
coincides with the date of the final prospectus for the initial public offering
of the Common Stock, the price in clause (a) above shall be the price per Share
at which shares of Common Stock are initially offered for sale to the public by
the Company's underwriters in such offering.
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<PAGE> 8
6.2 Delivery of Shares. As directed by the Committee in its sole
discretion, shares purchased on any Purchase Date shall be delivered directly to
the Participant or to a custodian or broker (if any) designated by the Committee
to hold shares for the benefit of the Participants. As determined by the
Committee from time to time, such shares shall be delivered as physical
certificates or by means of a book entry system.
6.3 Exhaustion of Shares. If at any time the shares available
under the Plan are over-enrolled, enrollments shall be reduced proportionately
to eliminate the over-enrollment. Such reduction method shall be "bottom up",
with the result that all option exercises for one share shall be satisfied
first, followed by all exercises for two shares, and so on, until all available
shares have been exhausted. Any funds that, due to over-enrollment, cannot be
applied to the purchase of whole shares shall be refunded to the Participants
(without interest thereon).
SECTION 7
WITHDRAWAL
7.1 Withdrawal. A Participant may withdraw from the Plan by
submitting a completed enrollment form to the Company. A withdrawal will be
effective only if it is received by the Company by the deadline specified by the
Committee (in its discretion and on a uniform and nondiscriminatory basis) from
time to time. When a withdrawal becomes effective, the Participant's payroll
contributions shall cease and all amounts then credited to the Participant's
account shall be distributed to him or her (without interest thereon).
SECTION 8
CESSATION OF PARTICIPATION
8.1 Termination of Status as Eligible Employee. A Participant
shall cease to be a Participant immediately upon the cessation of his or her
status as an Eligible Employee (for example, because of his or her termination
of employment from all Employers for any reason). As soon as practicable after
such cessation, the Participant's payroll contributions shall cease and all
amounts then credited to the Participant's account shall be distributed to him
or her (without interest thereon). If a Participant is on a Company-approved
leave of absence, his or her participation in the Plan shall continue for so
long as he or she remains an Eligible Employee and has not withdrawn from the
Plan pursuant to Section 7.1.
SECTION 9
DESIGNATION OF BENEFICIARY
9.1 Designation. Each Participant may, pursuant to such uniform
and nondiscriminatory procedures as the Committee may specify from time to time,
designate one or more Beneficiaries to receive any amounts credited to the
Participant's account at the time of his or her death. Notwithstanding any
contrary provision of this Section 9, Sections 9.1 and 9.2 shall be operative
only after (and for so long as) the Committee determines (on a uniform and
nondiscriminatory basis) to permit the designation of Beneficiaries.
9.2 Changes. A Participant may designate different Beneficiaries
(or may revoke a prior Beneficiary designation) at any time by delivering a new
designation (or revocation of a prior designation) in like manner. Any
designation or revocation shall be
5
<PAGE> 9
effective only if it is received by the Committee. However, when so received,
the designation or revocation shall be effective as of the date the designation
or revocation is executed (whether or not the Participant still is living), but
without prejudice to the Committee on account of any payment made before the
change is recorded. The last effective designation received by the Committee
shall supersede all prior designations.
9.3 Failed Designations. If a Participant dies without having
effectively designated a Beneficiary, or if no Beneficiary survives the
Participant, the Participant's Account shall be payable to his or her estate.
SECTION 10
ADMINISTRATION
10.1 Plan Administrator. The Plan shall be administered by the
Committee. The Committee shall have the authority to control and manage the
operation and administration of the Plan.
10.2 Actions by Committee. Each decision of a majority of the
members of the Committee then in office shall constitute the final and binding
act of the Committee. The Committee may act with or without a meeting being
called or held and shall keep minutes of all meetings held and a record of all
actions taken by written consent.
10.3 Powers of Committee. The Committee shall have all powers
and discretion necessary or appropriate to supervise the administration of the
Plan and to control its operation in accordance with its terms, including, but
not by way of limitation, the following discretionary powers:
(a) To interpret and determine the meaning and validity of the
provisions of the Plan and the options and to determine any question
arising under, or in connection with, the administration, operation or
validity of the Plan or the options;
(b) To determine any and all considerations affecting the
eligibility of any employee to become a Participant or to remain a
Participant in the Plan;
(c) To cause an account or accounts to be maintained for each
Participant;
(d) To determine the time or times when, and the number of
shares for which, options shall be granted;
(e) To establish and revise an accounting method or formula for
the Plan;
(f) To designate a custodian or broker to receive shares
purchased under the Plan and to determine the manner and form in which
shares are to be delivered to the designated custodian or broker;
(g) To determine the status and rights of Participants and their
Beneficiaries or estates;
6
<PAGE> 10
(h) To employ such brokers, counsel, agents and advisers, and to
obtain such broker, legal, clerical and other services, as it may deem
necessary or appropriate in carrying out the provisions of the Plan;
(i) To establish, from time to time, rules for the performance
of its powers and duties and for the administration of the Plan;
(j) To adopt such procedures and subplans as are necessary or
appropriate to permit participation in the Plan by employees who are
foreign nationals or employed outside of the United States;
(k) To delegate to any one or more of its members or to any
other person, severally or jointly, the authority to perform for and on
behalf of the Committee one or more of the functions of the Committee
under the Plan.
10.4 Decisions of Committee. All actions, interpretations, and
decisions of the Committee shall be conclusive and binding on all persons, and
shall be given the maximum possible deference allowed by law.
10.5 Administrative Expenses. All expenses incurred in the
administration of the Plan by the Committee, or otherwise, including legal fees
and expenses, shall be paid and borne by the Employers, except any stamp duties
or transfer taxes applicable to the purchase of shares may be charged to the
account of each Participant. Any brokerage fees for the purchase of shares by a
Participant shall be paid by the Company, but fees and taxes (including
brokerage fees) for the transfer, sale or resale of shares by a Participant, or
the issuance of physical share certificates, shall be borne solely by the
Participant.
10.6 Eligibility to Participate. No member of the Committee who
is also an employee of an Employer shall be excluded from participating in the
Plan if otherwise eligible, but he or she shall not be entitled, as a member of
the Committee, to act or pass upon any matters pertaining specifically to his or
her own account under the Plan.
10.7 Indemnification. Each of the Employers shall, and hereby
does, indemnify and hold harmless the members of the Committee and the Board,
from and against any and all losses, claims, damages or liabilities (including
attorneys' fees and amounts paid, with the approval of the Board, in settlement
of any claim) arising out of or resulting from the implementation of a duty, act
or decision with respect to the Plan, so long as such duty, act or decision does
not involve gross negligence or willful misconduct on the part of any such
individual.
SECTION 11
AMENDMENT, TERMINATION, AND DURATION
11.1 Amendment, Suspension, or Termination. The Board, in its
sole discretion, may amend or terminate the Plan, or any part thereof, at any
time and for any reason. If the Plan is terminated, the Board, in its
discretion, may elect to terminate all outstanding options either immediately or
upon completion of the purchase of shares on the next Purchase Date, or may
elect to permit options to expire in accordance with their terms (and
participation to
7
<PAGE> 11
continue through such expiration dates). If the options are terminated prior to
expiration, all amounts then credited to Participants' accounts which have not
been used to purchase shares shall be returned to the Participants (without
interest thereon) as soon as administratively practicable.
11.2 Duration of the Plan. The Plan shall commence on the date
specified herein, and subject to Section 11.1 (regarding the Board's right to
amend or terminate the Plan), shall terminate on the date ten (10) years from
such date.
SECTION 12
GENERAL PROVISIONS
12.1 Participation by Subsidiaries. One or more Subsidiaries of
the Company may become participating Employers by adopting the Plan and
obtaining approval for such adoption from the Board. By adopting the Plan, a
Subsidiary shall be deemed to agree to all of its terms, including (but not
limited to) the provisions granting exclusive authority (a) to the Board to
amend the Plan, and (b) to the Committee to administer and interpret the Plan.
An Employer may terminate its participation in the Plan at any time. The
liabilities incurred under the Plan to the Participants employed by each
Employer shall be solely the liabilities of that Employer, and no other Employer
shall be liable for benefits accrued by a Participant during any period when he
or she was not employed by such Employer.
12.2 Inalienability. In no event may either a Participant, a
former Participant or his or her Beneficiary, spouse or estate sell, transfer,
anticipate, assign, hypothecate, or otherwise dispose of any right or interest
under the Plan; and such rights and interests shall not at any time be subject
to the claims of creditors nor be liable to attachment, execution or other legal
process. Accordingly, for example, a Participant's interest in the Plan is not
transferable pursuant to a domestic relations order.
12.3 Severability. In the event any provision of the Plan shall
be held illegal or invalid for any reason, the illegality or invalidity shall
not affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.
12.4 Requirements of Law. The granting of options and the
issuance of shares shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or securities
exchanges as the Committee may determine are necessary or appropriate.
12.5 Compliance with Rule 16b-3. Any transactions under this
Plan with respect to officers (as defined in Rule 16a-1 promulgated under the
1934 Act) are intended to comply with all applicable conditions of Rule 16b-3.
To the extent any provision of the Plan or action by the Committee fails to so
comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Committee. Notwithstanding any contrary provision of the
Plan, if the Committee specifically determines that compliance with Rule 16b-3
no longer is required, all references in the Plan to Rule 16b-3 shall be null
and void.
8
<PAGE> 12
12.6 No Enlargement of Employment Rights. Neither the
establishment or maintenance of the Plan, the granting of options, the purchase
of shares, nor any action of any Employer or the Committee, shall be held or
construed to confer upon any individual any right to be continued as an employee
of the Employer nor, upon dismissal, any right or interest in any specific
assets of the Employers other than as provided in the Plan. Each Employer
expressly reserves the right to discharge any employee at any time, with or
without cause.
12.7 Apportionment of Costs and Duties. All acts required of the
Employers under the Plan may be performed by the Company for itself and its
Subsidiaries, and the costs of the Plan may be equitably apportioned by the
Committee among the Company and the other Employers. Whenever an Employer is
permitted or required under the terms of the Plan to do or perform any act,
matter or thing, it shall be done and performed by any officer or employee of
the Employers who is thereunto duly authorized by the Employers.
12.8 Construction and Applicable Law. The Plan is intended to
qualify as an "employee stock purchase plan" within the meaning of Section
423(b) of the Code. Any provision of the Plan which is inconsistent with Section
423(b) of the Code shall, without further act or amendment by the Company or the
Committee, be reformed to comply with the requirements of Section 423(b). The
provisions of the Plan shall be construed, administered and enforced in
accordance with such Section and with the laws of the State of Delaware
(excluding Delaware's conflict of laws provisions).
12.9 Captions. The captions contained in and the table of
contents prefixed to the Plan are inserted only as a matter of convenience, and
in no way define, limit, enlarge or describe the scope or intent of the Plan nor
in any way shall affect the construction of any provision of the Plan.
EXECUTION
IN WITNESS WHEREOF, printCafe, Inc., by its duly authorized
officer, has executed this Plan on the date indicated below.
PRINTCAFE, INC.
Dated: , 2000 By:
--------------- ---------------------------------
Title:
9
<PAGE> 1
EXHIBIT 10.7
PRINTCAFE, INC.
SECOND AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
MARCH 8, 2000
<PAGE> 2
<TABLE>
<S> <C>
1. Registration Rights.................................................................. 2
1.1 Definitions................................................................... 2
1.2 Requested Registration........................................................ 3
1.3 Company Registration.......................................................... 4
1.4 Form S-3 Registration......................................................... 4
1.5 Obligations of the Company.................................................... 5
1.6 Furnish Information........................................................... 7
1.7 Expenses of Registration...................................................... 8
1.8 Underwriting Requirements..................................................... 8
1.9 Delay of Registration......................................................... 9
1.10 Indemnification............................................................... 9
1.11 Reports Under Securities Exchange Act of 1934................................. 11
1.12 Assignment of Registration Rights............................................. 11
1.13 Market-Standoff Agreement..................................................... 12
1.14 Termination of Registration Rights............................................ 12
1.15 Investor Acts................................................................. 13
2. Covenants of the Company............................................................. 13
2.1 Canadian Securities Filings................................................... 13
2.2 Delivery of Financial Statements.............................................. 13
2.3 Inspection.................................................................... 14
2.4 Termination of Covenants...................................................... 14
2.5 Limitations on Subsequent Registration Rights................................. 14
3. Miscellaneous........................................................................ 15
3.1 Successors and Assigns........................................................ 15
3.2 Amendments and Waivers........................................................ 15
3.3 Notices....................................................................... 15
3.4 Severability.................................................................. 15
3.5 Governing Law................................................................. 15
3.6 Counterparts.................................................................. 15
3.7 Titles and Subtitles.......................................................... 15
3.8 Aggregation of Stock.......................................................... 16
3.9 Confidentiality............................................................... 16
3.10 Expenses...................................................................... 16
3.11 Stock Splits.................................................................. 16
3.12 Future Changes in Registration Requirements................................... 16
3.13 Entire Agreement.............................................................. 16
3.14 Further Assurances............................................................ 16
3.15 Injunctive Relief............................................................. 16
</TABLE>
<PAGE> 3
PRINTCAFE, INC.
SECOND AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
This Second Amended and Restated Investors' Rights Agreement (this
"Agreement") is made as of March 8, 2000 by and among printCafe, Inc., a
Delaware corporation (the "Company"), Creo SRL, a Barbados restricted liability
society ("Creo"), the Series C and C-1 Preferred Stock investors listed on
Exhibit B hereto (each, a "Series C Investor" and, collectively, the "Series C
Investors"), the Series D Preferred Stock investors listed on Exhibit C hereto
(each, a "Series D Investor" and, collectively, the "Series D Investors") and
the common stock investors listed on Exhibit D hereto (the "Common Stock
Investors").
RECITALS
WHEREAS, the Company, Creo and the Series C Investors have previously
entered into that certain First Amended and Restated Investors' Rights Agreement
dated as of February 15, 2000 (the "Prior Rights Agreement"), pursuant to which
the Company granted Creo and the Series C Investors certain rights.
WHEREAS, the Company and the Series D Investors have entered into a
Series D Preferred Stock Purchase Agreement of even date herewith (the "Series D
Preferred Stock Purchase Agreement"), pursuant to which the Company desires to
sell to the Series D Investors, and the Series D Investors desire to purchase
from the Company, shares of the Company's Series D Preferred Stock and Series
D-1 Preferred Stock (collectively, the "Series D and D-1 Preferred Stock").
WHEREAS, the Company and the Common Stock Investors have entered into a
Common Stock Purchase Agreement of even date herewith (the "Common Stock
Purchase Agreement" and, together with the Series D Preferred Stock Purchase
Agreement, the "Purchase Agreements"), pursuant to which the Company desires to
sell to the Common Stock Investors, and the Common Stock Investors desire to
purchase from the Company, 225,916 shares of the Company's Class A Common Stock
and 1,132,502 shares of the Company's Class C Common Stock (collectively, the
"Common Stock Investors' Shares").
WHEREAS, a condition to the Series D Investors' and the Common Stock
Investors' obligations under the applicable Purchase Agreement is that the
Company, Creo, the Series C Investors, the Series D Investors and the Common
Stock Investors enter into this Agreement in order to provide the Holders with
(i) certain rights to register Registrable Securities (as defined in Section 1
below) under the Securities Act of 1933, as amended (the "Securities Act"), and
(ii) certain rights to receive or inspect information pertaining to the Company.
WHEREAS, the Company, Creo and the Series C Investors each desire to
amend and restate the Prior Rights Agreement to add the Series D Investors and
the Common Stock Investors as parties to this Agreement and make certain other
changes.
<PAGE> 4
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions hereinafter set forth, the parties hereto hereby agree as follows:
A. AMENDMENTS OF PRIOR RIGHTS AGREEMENT; WAIVER OF RIGHT OF FIRST OFFER.
Effective and contingent upon execution of this Agreement by the Company, Creo
and the holders of all of the outstanding shares of the Company's Series C
Preferred Stock and Series C-1 Preferred Stock and upon the simultaneous
closings of the transactions contemplated by the Purchase Agreements, the Prior
Rights Agreement is hereby amended and restated in its entirety to read as set
forth in this Agreement, and the Company and the Holders hereby agree to be
bound by the provisions hereof as the sole agreement of the Company and the
Holders with respect to registration rights of the Registrable Securities and
certain other rights, as set forth herein. Creo and the Series C Investors
hereby waive the Right of First Offer, including the notice requirements, set
forth in the Company's Certificate of Incorporation with respect to the issuance
of (a) the Series D and D-1 Preferred Stock to the Series D Investors, and (b)
the Common Stock Investors' Shares to the Common Stock Investors.
1. REGISTRATION RIGHTS. The Company and the Holders covenant and agree
as follows:
1.1 DEFINITIONS. For purposes of this Section 1:
(a) "Excluded Registration" means any registration (i) on Form
S-4 or Form S-8 promulgated under the Securities Act or any successor forms
thereto, (ii) in connection with an exchange offer or offering solely to the
Company's stockholders, (iii) on Form S-1 or Form S-3 or any successor forms
thereto solely in connection with mergers or acquisitions conducted or
contemplated by the Company or (iv) the Qualified IPO;
(b) "Form S-3" means such form under the Securities Act as in
effect on the date hereof or any successor form under the Securities Act that
permits significant incorporation by reference of the Company's subsequent
public filings under the Securities Exchange Act of 1934, as amended (the
"Exchange Act");
(c) "Holder" means any person owning or having the right to
acquire Registrable Securities or any assignee thereof in accordance with
Section 1.12 of this Agreement;
(d) "Preferred Stock" means, collectively, the Company's
Series B Preferred Stock, Series C Preferred Stock, Series C-1 Preferred Stock
and Series D and D-1 Preferred Stock issued or issuable to the Holders.
(e) "Qualified IPO" means a firm commitment underwritten
public offering by the Company of shares of its Common Stock pursuant to a
registration statement under the Securities Act, the public offering price of
which is not less than $11.60 per share (appropriately adjusted for any stock
split, dividend, combination or other recapitalization after the date of this
Agreement) and which results in aggregate gross cash proceeds to the Company of
at least $30,000,000 (before underwriting discounts and commissions).
2
<PAGE> 5
(f) "Register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act, and the declaration or
ordering of effectiveness of such registration statement or document;
(g) "Registrable Securities" means (i) the shares of Common
Stock issued or issuable upon conversion of the Preferred Stock, (ii) the Common
Stock Investors' Shares, and (iii) any other shares of Common Stock of the
Company issued as (or issuable upon the conversion or exercise of any warrant,
right or other security which is issued as) a dividend, stock split,
recapitalization or other similar event or distribution with respect to, or in
exchange for or in replacement of, the shares listed in clauses (i) or (ii)
above; provided, however, that the foregoing definition shall exclude in all
cases any Registrable Securities sold by a person in a transaction in which its
rights under this Agreement are not assigned. Notwithstanding the foregoing,
Common Stock or other securities shall only be treated as Registrable Securities
if and so long as they have not been (A) sold to or through a broker or dealer
or underwriter in a public distribution or a public securities transaction
(including, without limitation, pursuant to Rule 144 under the Securities Act),
or (B) sold in a transaction exempt from the registration and prospectus
delivery requirements of the Securities Act under Section 4(1) thereof so that
all transfer restrictions and restrictive legends with respect thereto, if any,
are removed upon the consummation of such sale;
(h) "Registrable Securities then outstanding" shall be
determined by the number of shares of Common Stock outstanding which are, and
the number of shares of Common Stock issuable pursuant to then exercisable or
convertible securities which are, Registrable Securities;
(i) "SEC" means the Securities and Exchange Commission.
1.2 REQUESTED REGISTRATION. If the Company shall receive a written
request from the Holders of a majority of the Series B Preferred Stock then
outstanding or a majority of the Series C Preferred Stock and Series C-1
Preferred Stock then outstanding that the Company file a registration statement
under the Securities Act covering the registration of at least twenty-five
percent (25%) of the Registrable Securities then outstanding held by the holders
of such series of Preferred Stock, then the Company shall promptly, and in no
event more than ten (10) days following receipt of such request, give written
notice of such request to all other Holders and shall, subject to the provisions
of Section 1.8, use its best efforts to effect as soon as practicable, and in
any event within sixty (60) days of the receipt of such request, the
registration under the Securities Act of all Registrable Securities which the
Holders request to be registered within fifteen (15) days of the mailing of such
notice by the Company in accordance with Section 3.3. Notwithstanding the
foregoing, the Company shall not be obligated to effect a registration statement
under this Section 1.2:
(a) prior to the date that is six months after the Company's
Qualified IPO;
(b) after the Company has effected two registration statements
pursuant to this Section 1.2 and such registration statements have been declared
or ordered
3
<PAGE> 6
effective and have remained effective until the earlier of (A) 120 days after
the date of effectiveness, and (B) the date all Registrable Securities
registered thereunder have been sold; provided, however, that if the Company has
withdrawn or abandoned such registration due to the fraud, material misstatement
or omission of a material fact of a Holder participating in such registration,
such withdrawn or abandoned registration shall count as one of the two
registration statements the Company is obligated to effect under this Section
1.2;
(c) if the Registrable Securities requested by all Holders to
be registered pursuant to such request have an anticipated aggregate offering
price to the public of less than $5,000,000;
(d) if the Company shall furnish to the Holders a certificate
signed by the Chief Executive Officer or President of the Company stating that,
in the good faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its stockholders for such registration
statement to be effected at such time, in which event the Company shall have the
right to defer the filing of such registration statement for a period of not
more than 90 days after receipt of the request of the Holder or Holders under
this Section 1.2, provided, however, that the Company shall not exercise such
right more than once in any six (6) month period;
(e) during the period starting sixty (60) days prior to the
Company's good faith estimate of the date of filing of, and ending on a date one
hundred eighty (180) days after the effective date of the first Qualifying IPO
or ninety (90) days after any other registration subject to Section 1.3 hereof,
provided, however, that the Company is actively employing in good faith all
reasonable efforts to cause such registration statement to become effective; or
(f) if the Holders participating in such registration
statement propose to dispose of Registrable Securities that may be registered on
Form S-3 pursuant to a request made pursuant to Section 1.4 below,
1.3 COMPANY REGISTRATION. If (but without any obligation to do so)
the Company proposes to register (including for this purpose a registration
effected by the Company for stockholders other than the Holders) any of its
securities under the Securities Act in connection with the public offering of
such securities other than in connection with an Excluded Registration, the
Company shall, at such time, promptly give each Holder written notice of such
registration. Upon the written request of each Holder given within fifteen (15)
days after mailing of such notice by the Company in accordance with Section 3.3,
the Company shall, subject to the provisions of Section 1.8, use its best
efforts to register under the Securities Act all of the Registrable Securities
that each such Holder has requested to be registered by including such
Registrable Securities in the Company registration statement filed pursuant to
this Section 1.3. The Company shall have the right to terminate or withdraw any
registration initiated by it under this Section 1.3 prior to the effectiveness
of such registration, whether or not any Holder has elected to include
Registrable Securities in such registration. The expenses of such withdrawn
registration shall be borne by the Company in accordance with Section 1.7.
1.4 FORM S-3 REGISTRATION. If the Company shall receive from any
Holder or Holders of not less than ten percent (10%) of the Registrable
Securities then outstanding a
4
<PAGE> 7
written request or requests that the Company effect a registration on Form S-3
or its successor form and any related qualification or compliance with respect
to all or a part of the Registrable Securities owned by such Holder or Holders
(a "Form S-3 Registration"), the Company will:
(a) promptly, and in no event more than five (5) business days
following receipt of such request, give written notice of the proposed
registration, and any related qualification or compliance, to all other Holders;
and
(b) as soon as practicable, use its best efforts to effect
such registration and all such qualifications and compliances as may be so
requested and as would permit or facilitate the sale and distribution of all or
such portion of such Holder's or Holders' Registrable Securities as are
specified in such request, together with all or such portion of the Registrable
Securities of any other Holder or Holders joining in such request as are
specified in a written request given within ten (10) days after receipt of such
written notice from the Company; provided, however, that the Company shall not
be obligated to effect any such registration, qualification or compliance
pursuant to this Section 1.4: (i) if Form S-3 is not available for such offering
by the Holders; (ii) if the Holders, together with the holders of any other
securities of the Company entitled to inclusion in such registration, propose to
sell Registrable Securities and such other securities (if any) at an aggregate
price to the public (net of any underwriters' discounts or commissions) of less
than $1,000,000; (iii) if the Company shall furnish to the Holders a certificate
signed by the Chief Executive Officer or President of the Company stating that,
in the good faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its stockholders for such Form S-3
Registration to be effected at such time, in which event the Company shall have
the right to defer the filing of such Form S-3 Registration for a period of not
more than 90 days after receipt of the request of the Holder or Holders under
this Section 1.4, provided, however, that the Company shall not exercise such
right more than once in any six (6) month period; (iv) if the Company has,
within the twelve (12) month period preceding the date of such request, already
effected two Form S-3 Registrations for the Holders pursuant to this Section 1.4
and such Form S-3 Registrations have been declared or ordered effective and have
remained effective until the earlier of (A) 120 days after the date of
effectiveness, and (B) the date all Registrable Securities registered thereunder
have been sold; provided, however, that if the Company has withdrawn or
abandoned such Form S-3 Registration due to the fraud, material misstatement or
omission of a material fact of a Holder participating in such Form S-3
Registration, such withdrawn or abandoned registration shall count as one of the
two Form S-3 Registrations the Company is obligated to effect under this Section
1.4 in any 12 month period; or (v) in any particular jurisdiction in which the
Company would be required to qualify to do business or to execute a general
consent to service of process in effecting such registration, qualification or
compliance.
(c) Subject to the foregoing, the Company shall file a
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders.
1.5 OBLIGATIONS OF THE COMPANY. Whenever required under this
Section 1 to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:
5
<PAGE> 8
(a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder, keep
such registration statement effective for up to one hundred twenty (120) days.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement for up to one hundred twenty
(120) days.
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request (and in such quantities as they reasonably request) in order
to facilitate the disposition of Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders; provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering
(including one effected pursuant to Section 1.2 or 1.3), enter into and perform
its obligations under an underwriting agreement, in usual and customary form,
with the managing underwriter or underwriters of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by
such registration statement (i) when such registration statement, or any
post-effective amendment thereto, shall have become effective, (ii) of the
receipt of any comments from the SEC, (iii) of the issuance by the SEC or any
other federal or state governmental authority of any stop order suspending the
effectiveness of such registration statement of the initiation of proceedings
for that purpose, and (iv) at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing, such obligation to continue for one hundred twenty (120) days.
(g) Cause all such Registrable Securities registered pursuant
hereto to be listed on each securities exchange or automated quotation system on
which similar securities issued by the Company are then listed or quoted.
6
<PAGE> 9
(h) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereunder and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration.
(i) Use its best efforts to furnish, at the request of any
Holder requesting registration of Registrable Securities pursuant to this
Section 1, on the date that such Registrable Securities are delivered to the
underwriters for sale in connection with a registration pursuant to this Section
1, if such securities are being sold through underwriters or, if such securities
are not being sold through underwriters, on the date that the registration
statement with respect to such securities becomes effective, (i) an opinion,
dated such date, of the counsel representing the Company for the purposes of
such registration, in form and substance as is customarily given to underwriters
in an underwritten public offering, addressed to the underwriters, if any, and
to the Holders requesting registration of Registrable Securities and (ii) a
letter, dated such date, from the independent certified public accountants of
the Company, in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities.
1.6 FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 1 with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be required to effect the registration of such Holder's Registrable
Securities. The Company shall have no obligation with respect to any
registration requested pursuant to Section 1.2 or Section 1.4 of this Agreement
if, as a result of the application of the preceding sentence, the number of
shares or the anticipated aggregate offering price of the Registrable Securities
to be included in the registration does not equal or exceed the number of shares
or the anticipated aggregate offering price required to originally trigger the
Company's obligation to initiate such registration as specified in Section 1.2
or Section 1.4, whichever is applicable.
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1.7 EXPENSES OF REGISTRATION. All expenses other than underwriting
discounts and commissions incurred in connection with registrations, filings or
qualifications of Registrable Securities pursuant to this Section 1 for each
Holder, including, without limitation, all registration, filing, and
qualification fees, printers' and accounting fees, fees and disbursements of
counsel for the Company and the reasonable fees and disbursements of one counsel
for the selling Holder or Holders selected by them with the approval of the
Company, which approval shall not be unreasonably withheld, shall be borne by
the Company. The Company shall pay all expenses in connection with any
registration initiated pursuant to Section 1 which is withdrawn, delayed or
abandoned at the request of the Company or the Holders participating in such
registration, except if such withdrawal, delay or abandonment is caused by the
fraud, material misstatement or omission of a material fact by a Holder
participating in such registration, in which case, the Holder whose fraud,
material misstatement or omission of a material fact caused the withdrawal,
delay or abandonment of such registration statement shall pay all of the
foregoing expenses related to such registration statement.
1.8 UNDERWRITING REQUIREMENTS. If the registration of which the
Company gives notice under Section 1.3 is for a registered public offering
involving an underwriting, then the Company shall so advise the Holders as part
of the written notice given pursuant to Section 1.3. In such event, the Company
shall not be required under Section 1.3 to include any of the Holders'
securities in such underwriting unless they accept the terms of the underwriting
as agreed upon between the Company and the underwriters selected by it (or by
other persons entitled to select the underwriters), and then only in such
quantity as the underwriters determine in their sole discretion will not
jeopardize the success of the offering by the Company. If the total amount of
securities, including Registrable Securities, requested by stockholders to be
included in such offering exceeds the amount of securities sold other than by
the Company that the underwriters determine in their sole discretion is
compatible with the success of the offering, then the Company shall be required
to include in the offering only that number of such securities, including
Registrable Securities, which the underwriters determine in their sole
discretion will not jeopardize the success of the offering (the securities so
included to be allocated, first, to the Company, second, pro rata among the
Holders requesting inclusion in such registration and, if the Holders were able
to sell all Registrable Securities that they desired to sell, third, pro rata
among the remaining selling stockholders according to the total amount of
securities entitled to be included therein owned by each selling stockholder or
in such other proportions as shall mutually be agreed to by such selling
stockholders). No such reduction shall reduce the amount of securities of the
selling Holders included in such registration below twenty percent (20%) of the
total amount of securities included in such registration, unless such offering
is the Company's Qualified IPO, in which event all of the Registrable Securities
of the Holders may be excluded in accordance with the preceding sentence. To
facilitate the allocation of shares in accordance with the above provisions, the
Company may round the number of shares allocated to any Holder or holder to the
nearest 100 shares. If the Holder or holder disapproves of the terms of any such
underwritten offering, such person may elect to withdraw therefrom by written
notice to the Company and the underwriters. Any securities excluded or withdrawn
from such underwritten offering shall be excluded and withdrawn from such
registration and, in the case of withdrawn shares, shall not be transferred in a
public distribution prior to 180 days after the effective date of the
registration statement relating thereto, or such shorter period of time as the
underwriters may require. For purposes of the preceding parenthetical concerning
apportionment, for any selling stockholder which is a holder of Registrable
Securities and which is a partnership
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or corporation, the partners, retired partners and stockholders of such holder,
or the estates and family members of any such partners and retired partners and
any trusts for the benefit of any of the foregoing persons shall be deemed to be
a single "selling stockholder," and any pro-rata reduction with respect to such
"selling stockholder" shall be based upon the aggregate amount of shares
carrying registration rights owned by all entities and individuals included in
such "selling stockholder," as defined in this sentence.
1.9 DELAY OF REGISTRATION. No Holder shall have any right to obtain
or seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 1.
1.10 INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under this Section 1:
(a) The Company will indemnify and hold harmless each Holder,
any underwriter (as defined in the Securities Act) for such Holder, each of its
officers, directors, partners and members, and each person, if any, who controls
such Holder or underwriter within the meaning of the Securities Act or the
Exchange Act against any losses, claims, damages, or liabilities (joint or
several) to which they may become subject under the Securities Act, the Exchange
Act or other federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon any
of the following statements, omissions or violations (collectively a
"Violation"): (i) any untrue statement or alleged untrue statement of a material
fact contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading, or (iii) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act, any state securities law or any
rule or regulation promulgated under the Securities Act, the Exchange Act or any
state securities law; and the Company will pay to each such Holder, underwriter
or controlling person, as incurred, any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this subsection 1.10(a) shall not apply to amounts paid
in settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable to any Holder,
underwriter or controlling person for any such loss, claim, damage, liability,
or action to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by any such Holder,
underwriter or controlling person.
(b) Each selling Holder will, if Registrable Securities held
by such Holder are included in the registration which is the subject of any
losses, claims, damages or liabilities arising out of or relating to a
Violation, indemnify and hold harmless the Company, each of its directors, each
of its officers who has signed the registration statement, each person, if any,
who controls the Company within the meaning of the Securities Act, any
underwriter, any other Holder selling securities in such registration statement
and any controlling person of any such underwriter or other Holder, against any
losses, claims, damages, or liabilities (joint or
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several) to which any of the foregoing persons may become subject, under the
Securities Act, the Exchange Act or other federal or state law, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereto) arise
out of or are based upon such Violation, 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 by such Holder expressly for use in connection
with such registration; and each such Holder will pay, as incurred, any legal or
other expenses reasonably incurred by any person indemnified pursuant to this
subsection 1.10(b), in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this subsection 1.10(b) shall not apply to amounts paid
in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld; provided, further, that in no event shall any
indemnity under this subsection 1.10(b) exceed the net proceeds from the
offering received by such Holder, except in the case of willful fraud by such
Holder.
(c) Promptly after receipt by an indemnified party under this
Section 1.10 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.10, 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 the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the reasonable fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if materially prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 1.10, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 1.10.
(d) If the indemnification provided for in this Section 1.10
is held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage or expense referred to
herein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage, or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations; provided, however, that in no event shall any contribution by a
Holder under this Subsection 1.10(d) exceed the net proceeds from the offering
received by such Holder, except in the case of willful fraud by such Holder. The
relative fault of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to
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information supplied by the indemnifying party or by the indemnified party and
the parties' relative intent, knowledge, access to information, and opportunity
to correct or prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
(f) The obligations of the Company and the Holders under this
Section 1.10 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1, and otherwise.
1.11 REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a view to
making available to the Holders the benefits of Rule 144 promulgated under the
Securities Act and any other rule or regulation of the SEC that may at any time
permit a Holder to sell securities of the Company to the public without
registration, the Company agrees to:
(a) make and keep public information available, as those terms
are understood and defined in SEC Rule 144, at all times after the effective
date of the first registration statement filed by the Company for the offering
of its securities;
(b) take such action, including the voluntary registration of
its Common Stock under Section 12 of the Exchange Act, as is necessary to enable
the Holders to utilize Form S-3 and any similar or successor forms for the sale
of their Registrable Securities;
(c) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
(d) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144 (at
any time after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Securities Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements), or that it qualifies as a registrant whose securities may be
resold pursuant to Form S-3 (at any time after it so qualifies), (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 in availing any Holder of any rule or regulation of the
SEC which permits the selling of any such securities without registration or
pursuant to such form.
1.12 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the
Company to register Registrable Securities pursuant to this Section 1 may be
assigned (but only with all related obligations) by a Holder to an affiliate or
partner of such Holder or a transferee or assignee of at least 100,000 of such
Holder's Registrable Securities (or all of such Holder's Registrable Securities
if such Holder holds less than 100,000 Registrable Securities); provided,
however, the Company is, within a reasonable time after such transfer, furnished
with written notice of the name and address of such affiliate, partner,
transferee or assignee and the securities with respect to which such
registration rights are being assigned; and provided, further, that such
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assignment shall be effective only if immediately following such transfer the
further disposition of such securities by the affiliate, partner, transferee or
assignee is restricted under the Securities Act. For the purposes of determining
the number of shares of Registrable Securities held by a transferee or assignee,
the holdings of transferees and assignees of a partnership who are partners or
retired partners of such partnership (including spouses and ancestors, lineal
descendants and siblings of such partners or spouses who acquire Registrable
Securities by gift, will or intestate succession) shall be aggregated together
and with the partnership; provided, however, that all assignees and transferees
who would not qualify individually for assignment of registration rights shall
have a single attorney-in-fact for the purpose of exercising any rights,
receiving notices or taking any action under Section 1.
1.13 MARKET-STANDOFF AGREEMENT.
(a) MARKET-STANDOFF PERIOD; AGREEMENT. In connection with a
Qualified IPO and upon request of the Company or the underwriters managing such
offering of the Company's securities (the "Managing Underwriters"), each Holder
agrees not to sell, make any short sale of, loan, grant any option for the
purchase of, or otherwise dispose of any securities of the Company (other than
those included in the registration) without the prior written consent of the
Company or the Managing Underwriters, as the case may be, for such period of
time (not to exceed 180 days) from the effective date of such registration as
may be requested by the Company or the Managing Underwriters and to execute an
agreement reflecting the foregoing as may be requested by the Managing
Underwriters at the time of the Company's Qualified IPO initial public offering.
In addition, the Holder agrees to be bound by similar restrictions, and to sign
a similar agreement, in connection with no more than one additional registration
statement filed within twelve months after the closing date of the initial
public offering; provided, however, that the duration of the market-standoff
period with respect to such additional registration shall not exceed 90 days
from the effective date of such additional registration statement.
(b) LIMITATIONS. The obligations described in Section 1.13(a)
shall apply only if all executive officers, directors and five percent (5%)
stockholders of the Company enter into similar agreements.
(c) STOP-TRANSFER INSTRUCTIONS. In order to enforce the
foregoing covenants, the Company may impose stop-transfer instructions with
respect to the securities of each Holder (and the securities of every other
person subject to the restrictions in Section 1.13(a)).
(d) TRANSFEREES BOUND. Each Holder agrees that it will not
transfer Registrable Securities of the Company unless each transferee agrees in
writing to be bound by all of the provisions of this Section 1.13.
1.14 TERMINATION OF REGISTRATION RIGHTS. No Holder shall be
entitled to exercise any right provided for in this Section 1 if Rule 144 or
another similar exemption under the Securities Act is available for the sale of
all of such Holder's shares during a three (3) month period without registration
and without compliance with the manner of sale restrictions of Rule 144(f).
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1.15 INVESTOR ACTS. Whenever under this Section 1 the Holders are
registering Registrable Securities pursuant to any registration statement, the
Holder agrees to (i) timely provide to the Company, at its request, such
information and materials as it may reasonably request in order to effect the
registration of such Registrable Securities and (ii) convert all shares of
Preferred Stock, Class B Common Stock and Class C Common Stock included in any
registration statement to shares of Common Stock, such conversion to be
effective at the closing of such offering pursuant to such registration
statement.
2. COVENANTS OF THE COMPANY.
2.1 CANADIAN SECURITIES FILINGS. Whenever required under Section
1.2 or Section 1.3 to effect the registration of any Registrable Securities or
otherwise whenever the Company undertakes any public offering of its securities,
the Company shall, as soon as reasonably practicable after the filing of any
registration statement, prepare and file in British Columbia, Canada a
preliminary and final prospectus in accordance with the Securities Act (British
Columbia), as amended, to do all things reasonably necessary or desirable as and
when required by law to obtain a receipt therefor from the British Columbia
Securities Commission in order to obtain reporting issuer status in British
Columbia.
2.2 DELIVERY OF FINANCIAL STATEMENTS. The Company shall deliver to
each Holder of at least 100,000 shares of Registrable Securities (other than a
Holder reasonably deemed by the Company to be a competitor of the Company, which
for this purpose shall not include any of the initial Holders who are
signatories to this Agreement or affiliates of such initial Holders):
(a) as soon as practicable, but in any event within ninety
(90) days after the end of each fiscal year of the Company, an income statement
for such fiscal year, a balance sheet of the Company and statement of
stockholder's equity as of the end of such year, and a statement of cash flows
for such year, such year-end financial reports to be in reasonable detail,
prepared in accordance with generally accepted accounting principles ("GAAP"),
and audited and certified by an independent public accounting firm of nationally
recognized standing selected by the Company;
(b) as soon as practicable, but in any event within thirty
(30) days after the end of each of the first three (3) quarters of each fiscal
year of the Company, an unaudited profit or loss statement, a statement of cash
flows for such fiscal quarter and an unaudited balance sheet as of the end of
such fiscal quarter;
(c) as soon as practicable, but in any event thirty (30) days
prior to the end of each fiscal year, a budget and business plan for the next
fiscal year, prepared on a monthly basis, and, as soon as prepared, any other
budgets or revised budgets prepared by the Company as well as financial and
operating statements compared to such budget; and
(d) with respect to the financial statements called for in
subsections (b) and (c) of this Section 2.2, an instrument executed by the Chief
Financial Officer or President of the Company and certifying that such
financials were prepared in accordance with GAAP consistently applied with prior
practice for earlier periods (with the exception of footnotes that
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may be required by GAAP) and fairly present the financial condition of the
Company and its results of operation for the period specified, subject to
year-end audit adjustment, provided that the foregoing shall not restrict the
right of the Company to change its accounting principles consistent with GAAP,
if the Board of Directors determines that it is in the best interest of the
Company to do so and such change is approved in writing by the Company's
independent public accountants.
2.3 INSPECTION. The Company shall permit each Holder of at least
100,000 shares of Registrable Securities (except for a Holder reasonably deemed
by the Company to be a competitor of the Company, which for this purpose shall
not include any of the initial Holders who are signatories to this Agreement or
affiliates of such initial Holders), at such Holder's expense, to visit and
inspect the Company's properties, to examine its books of account and records
and to discuss the Company's affairs, finances and accounts with its officers,
all at such reasonable times as may be requested by the Holder; provided,
however, that any Holder or employee, agent or representative of such Holder, as
the case may be, agrees to hold all information confidential on the terms set
forth in Section 3.9 hereof; provided, further, that the Company shall not be
obligated pursuant to this Section 2.3 to provide access to (a) any information
which it reasonably considers to be a trade secret or similar confidential
information, or (b) any information which it deems in good faith would adversely
affect the attorney-client privilege.
2.4 TERMINATION OF COVENANTS.
(a) The covenants set forth in Sections 2.2 and Section 2.3
shall terminate as to each Holder and be of no further force or effect
immediately prior to the consummation of a Qualified IPO.
(b) The covenants set forth in Sections 2.2 and 2.3 shall
terminate as to each Holder and be of no further force or effect when the
Company first becomes subject to the periodic reporting requirements of Sections
13 or 15(d) of the Exchange Act, if this occurs earlier than the events
described in Section 2.4(a) above.
2.5 LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and after
the date of this Agreement, the Company shall not, without the prior written
consent of (a) holders of at least a majority of the then outstanding shares of
Series B Preferred Stock, (b) holders of at least a majority of the then
outstanding shares of Series C Preferred Stock and Series C-1 Preferred Stock,
voting together as a single class, and (c) holders of at least a majority of the
then outstanding shares of Series D Preferred Stock, enter into any agreement
with any holder or prospective holder of any securities of the Company that
would allow such holder or prospective holder (a) to include such securities in
any registration filed under this Agreement, unless under the terms of such
agreement, such holder or prospective holder may include such securities in any
such registration only to the extent that the inclusion of his securities will
not reduce the amount of Registrable Securities of the Holders which is included
or would materially affect the marketability of the offering as determined by
the managing underwriter or (b) to have registration rights superior to or
otherwise more favorable than, or which limit in any material respect, the
registration rights of the Holders set forth in this Agreement.
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3. MISCELLANEOUS.
3.1 SUCCESSORS AND ASSIGNS. Except as otherwise provided in this
Agreement, the terms and conditions of this Agreement shall inure to the benefit
of and be binding upon the respective permitted successors and assigns of the
parties (including permitted transferees of any of the Holders). Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
3.2 AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended or waived only with the written consent of (a) the Company, (b) the
holders of a majority of the then outstanding shares of Series B Preferred
Stock, (c) the holders of a majority of the then outstanding shares of Series C
Preferred Stock and Series C-1 Preferred Stock, voting together as a single
class, and (d) the holders of a majority of the then outstanding shares of
Series D Preferred Stock. Any amendment or waiver effected in accordance with
this Section 3.2 shall be binding upon each party to the Agreement, whether or
not such party has signed such amendment or waiver, each future holder of all
such Registrable Securities, and the Company.
3.3 NOTICES. Unless otherwise provided, any notice required or
permitted by this Agreement shall be in writing and shall be deemed sufficient
upon delivery, when delivered personally or by overnight courier or sent by
telegram or fax, or five (5) days after being deposited in the U.S. mail, as
certified or registered mail, with postage prepaid, and addressed to the party
to be notified at such party's address or fax number as set forth on the
signature page hereto with respect to notices to the Company or the exhibits
hereto with respect to notices to the Holders or, in each case, as subsequently
modified by written notice.
3.4 SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith. In the event that the parties cannot reach a
mutually agreeable and enforceable replacement for such provision, then (a) such
provision shall be excluded from this Agreement, (b) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (c) the
balance of the Agreement shall be enforceable in accordance with its terms.
3.5 GOVERNING LAW. This Agreement and all acts and transactions
pursuant hereto shall be governed, construed and interpreted in accordance with
the laws of the State of Delaware, without giving effect to principles of
conflicts of laws.
3.6 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
3.7 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
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3.8 AGGREGATION OF STOCK. All shares of Registrable Securities held
or acquired by affiliated entities or persons shall be aggregated together for
the purpose of determining the availability of any rights under this Agreement.
3.9 CONFIDENTIALITY. Each Holder agrees that it will keep
confidential and will not disclose or divulge any confidential, proprietary,
secret or non-public information which such Holder may obtain from the Company
pursuant to financial statements, reports and other materials submitted by the
Company to such Holder pursuant to this Agreement, or pursuant to visitation or
inspection rights granted hereunder, unless such information is known, or until
such information becomes known, to the public; provided, however, that an Holder
may disclose such information (i) on a confidential basis to its attorneys,
accountants, consultants and other professionals to the extent necessary to
obtain their services in connection with its investment in the Company, (ii) to
any prospective purchaser of any Registrable Securities from such Holder as long
as such prospective purchaser agrees in writing to be bound by the provisions of
this Section 3.9, (iii) on a confidential basis to any affiliate or partner of
such Holder or (iv) as required by applicable law.
3.10 EXPENSES. If any action at law or in equity is necessary to
enforce the terms of this Agreement, the prevailing party shall be entitled to
reasonable attorneys' fees, costs and necessary disbursements in addition to any
other relief to which such party may be entitled.
3.11 STOCK SPLITS. All references to numbers of shares in this
Agreement shall be appropriately adjusted to reflect any stock divided, split,
combination or other recapitalization of shares by the Company occurring after
the date of this Agreement.
3.12 FUTURE CHANGES IN REGISTRATION REQUIREMENTS. In the event the
registration requirements under the Securities Act are eliminated to accommodate
a "company registration" or similar approach, this Agreement shall be deemed to
be amended to the extent necessary to reflect such changes and the intent of the
parties hereto with respect to the benefits and obligations of the parties, and
in such connection, the Company shall use reasonable efforts to provide the
Holders, pursuant to Section 1.3, of Registrable Securities equivalent benefits
to those provided under this Agreement.
3.13 ENTIRE AGREEMENT. This Agreement and the other Transaction
Documents (as defined in the Purchase Agreement) constitute the entire agreement
between the Company and the Investors relative to the subject matter hereof and
thereof. Any previous agreement or negotiations between the Company and the
Investors concerning the subject matter hereof is superseded by this Agreement
and the Transaction Documents except for any agreements relating to
confidentiality.
3.14 FURTHER ASSURANCES. Each party hereto agrees to execute and
deliver all such further instruments and documents and take all such other
actions as another party may reasonably request in order to carry out the intent
and purposes of this Agreement.
3.15 INJUNCTIVE RELIEF. Each of the parties hereto hereby
acknowledges that in the event of a breach by any of them of any material
provision of this Agreement, the aggrieved party may be without an adequate
remedy at law. Each of the parties therefore agrees that, except
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as otherwise provided in Section 1.9, in the event of a breach of any material
provision of this Agreement the aggrieved party may elect to institute and
prosecute proceedings in any court of competent jurisdiction to enforce specific
performance or to enjoin continuing breach of such provision, as well as to
obtain damages for breach of this Agreement. By seeking or obtaining such
relief, the aggrieved party will not he precluded from seeking or obtaining any
other relief to which it may be entitled.
[Signature Pages Follow]
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The parties have executed this Second Amended and Restated Investors'
Rights Agreement as of the date first above written.
COMPANY:
PRINTCAFE, INC.
By:
------------------------------------
Name:
Title:
Address: 40 24th Street, 5th Floor
Pittsburgh, PA 15222
Attn: President
Fax: (412) 456-1151
[SIGNATURE PAGE TO INVESTORS' RIGHTS AGREEMENT]
<PAGE> 21
CREO SRL
By:
------------------------------------
Christopher Towner, President
---------------------------------------
Towner International Services SRL,
Secretary, by its authorized signatory
[SIGNATURE PAGE TO INVESTORS' RIGHTS AGREEMENT]
<PAGE> 22
SERIES C INVESTORS:
MELLON VENTURES II, L.P.
By its general partner
MVMA II L.P.
By its general partner MVMA
Inc.
By:
------------------------------------
Ryan Busch, Senior Associate
KEY PRINCIPAL PARTNERS LLC
By:
------------------------------------
John Sinnenberg, President
BANCBOSTON CAPITAL INC.
By:
------------------------------------
Jason Hurd, Vice President
ORRICK, HERRINGTON & SUTCLIFFE LLP
By:
------------------------------------
Name:
Title:
MENLO VENTURES VII, L.P.
By: MV MANAGEMENT VII, L.L.C.,
its General Partner
By:
------------------------------------
Its Managing Member
[SIGNATURE PAGE TO INVESTORS' RIGHTS AGREEMENT]
<PAGE> 23
MENLO ENTREPRENEURS FUND VII, L.P.
By: MV MANAGEMENT VII, L.L.C.,
its General Partner
By:
------------------------------------
Its Managing Member
OLYMPIC VENTURE PARTNERS III, L.P.
By: OVMC III, L.P.,
its General Partner
By:
------------------------------------
Name:
Title:
OVP III ENTREPRENEURS FUND
By OVMC III, L.P.,
its General Partner
By:
------------------------------------
Name:
Title:
---------------------------------------
Iain Mickle
---------------------------------------
Gary Herrmann
[SIGNATURE PAGE TO INVESTORS' RIGHTS AGREEMENT]
<PAGE> 24
SERIES D INVESTORS:
MELLON VENTURES II, L.P.
By its general partner
MVMA II L.P.
By its general partner MVMA
Inc.
By:
------------------------------------
Ryan Busch, Senior Associate
[SIGNATURE PAGE TO INVESTORS' RIGHTS AGREEMENT]
<PAGE> 25
COMMON STOCK INVESTORS:
------------------------------------
Name:
Title:
CREO SRL
By:
------------------------------------
Christopher Towner, President
---------------------------------------
Towner International Services SRL,
Secretary, by its authorized signatory
[SIGNATURE PAGE TO INVESTORS' RIGHTS AGREEMENT]
<PAGE> 26
EXHIBIT A
SERIES B INVESTOR
NAME/ADDRESS/FAX NO. NO. OF SHARES OF SERIES B PREFERRED STOCK
Creo SRL
2nd Street 31,186,312
Barbados
A-1
<PAGE> 27
EXHIBIT B
SERIES C INVESTORS
<TABLE>
<CAPTION>
NO. OF SHARES
NO. OF SHARES OF SERIES C OF SERIES C-1
NAME/ADDRESS/FAX NO. PREFERRED STOCK PREFERRED STOCK
-------------------- --------------- ---------------
<S> <C> <C>
BancBoston Capital Inc.
Attn: Jason H. Hurd 172,413
175 Federal Street, 10th Floor
Boston, MA 02110
Fax: (617) 434-1153
Gary Herrmann
c/o Orrick, Herrington & Sutcliffe LLP 862
Old Federal Reserve Bank Building
400 Sansome Street
San Francisco, CA 94111-3143
Fax: (415) 773-5759
Key Principal Partners LLC
Attn: Bill Blake 344,827
127 Public Square, 2nd Floor
Cleveland, OH 44114
Fax: (216) 689-4121
Mellon Ventures II, L.P.
c/o Mellon Ventures, Inc. 1,143,103 150,000
Attn: Ryan Busch
One Mellon Center, Suite 5300
Pittsburgh, PA 15258-0001
Fax: (412) 236-3593
Menlo Ventures VII, L.P.
Attn: Doug Carlisle 55,776
3000 Sand Hill Road M
Building 4 Suite 100
Menlo Park, CA 94026
Fax: (650) 854-8540
Menlo Entrepreneurs Fund VII, L.P.
Attn: Doug Carlisle 2,474
3000 Sand Hill Road M
Building 4 Suite 100
Menlo Park, CA 94026
Fax: (650) 854-8540
</TABLE>
B-1
<PAGE> 28
<TABLE>
<CAPTION>
NO. OF SHARES
NO. OF SHARES OF SERIES C OF SERIES C-1
NAME/ADDRESS/FAX NO. PREFERRED STOCK PREFERRED STOCK
-------------------- --------------- ---------------
<S> <C> <C>
Iain Mickle
c/o Orrick, Herrington & Sutcliffe LLP 862
400 Capitol Mall, Suite 3000
Sacramento, CA 95814
Fax: (916) 329-4900
Olympic Venture Partners III, L.P.
Attn: George Clute 30,338
2420 Carillon Point
Kirkland, WA 98033
Fax: (425) 889-0153
OVP III Entrepreneurs Fund
Attn: George Clute 1,427
2420 Carillon Point
Kirkland, WA 98033
Fax: (425) 889-0153
Orrick, Herrington & Sutcliffe LLP
Old Federal Reserve Bank Building 13,000
400 Sansome Street
San Francisco, CA 94111-3143
Fax: (415) 773-5759
TOTAL 1,765,082 150,000
</TABLE>
B-2
<PAGE> 29
EXHIBIT C
SERIES D INVESTORS
<TABLE>
<CAPTION>
NO. OF SHARES
NO. OF SHARES OF SERIES D OF SERIES D-1
NAME/ADDRESS/FAX NO. PREFERRED STOCK PREFERRED STOCK
-------------------- --------------- ---------------
<S> <C> <C>
Mellon Ventures II, L.P. 58,125 225,000
c/o Mellon Ventures, Inc.
Attn: Ryan Busch
One Mellon Center, Suite 5300
Pittsburgh, PA 15258-0001
Fax: (412) 236-3593
</TABLE>
C-1
<PAGE> 30
EXHIBIT D
COMMON STOCK INVESTORS
<TABLE>
<CAPTION>
NO. OF SHARES NO. OF SHARES
NAME/ADDRESS/TAX NO. OF CLASS A COMMON STOCK OF CLASS C COMMON STOCK
-------------------- ----------------------- -----------------------
<S> <C> <C>
Efi Gildor 101,925
163 John Street
Greenwich, CT 06831
Nicholas C. Rigopulos 8,493
41 Commonwealth Avenue, #4
Boston, MA 02116
Iphigonia M. Rigopulos 2,831
47 Woodbury Road
Watertown, CT 06795
Creo SRL 1,132,502
2nd Street
Barbados
Kevin Cook 566
Eric Satz 566
Eric Woodward 2,831
Michael Ogborne 2,831
Greg Ager 1,132
Randhir Sethi 2,831
Brad Gevurtz 3,963
Ken Hirsch 5,662
Jeff Fehn 1,698
Charles Clarke 8,493
Charlie Grisi 28,312
Laurel Advisors 22,650
Rob McCreary 5,662
Doug Holmes 11,325
Bob Shepherd 5,662
JD Sullivan 5,622
Mark Schafir 2,831
</TABLE>
<PAGE> 1
EXHIBIT 10.9
PRINTCAFE, INC.
SERIES D AND D-1 PREFERRED STOCK PURCHASE AGREEMENT
MARCH 8, 2000
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Purchase and Sale of Preferred Stock................................................. 1
1.1 Sale and Issuance of Series D Preferred Stock................................. 1
1.2 Closing; Delivery............................................................. 1
2. Representations and Warranties of the Company........................................ 1
2.1 Organization, Good Standing and Qualification................................. 2
2.2 Capitalization................................................................ 2
2.3 Rights of Registration and Voting Rights...................................... 3
2.4 Subsidiaries; Joint Ventures.................................................. 3
2.5 Authorization................................................................. 4
2.6 Valid Issuance of Securities.................................................. 4
2.7 Governmental Consents......................................................... 4
2.8 Litigation.................................................................... 5
2.9 Intellectual Property......................................................... 5
2.10 Confidential Information and Invention Assignment Agreements.................. 5
2.11 Compliance with Other Instruments............................................. 6
2.12 Agreements; Action............................................................ 6
2.13 No Conflict of Interest....................................................... 7
2.14 Title to Property and Assets.................................................. 7
2.15 Financial Statements.......................................................... 7
2.16 Changes....................................................................... 8
2.17 Distributions................................................................. 9
2.18 Tax Returns and Payments...................................................... 9
2.19 Insurance..................................................................... 9
2.20 Employee Benefit Plans........................................................ 9
2.21 Labor Agreements and Actions.................................................. 9
2.22 Compliance with Environmental Requirements.................................... 10
2.23 Permits....................................................................... 10
2.24 Private Offering.............................................................. 10
2.25 Brokers and Finders........................................................... 10
2.26 Certificate of Incorporation.................................................. 11
2.27 Bylaws........................................................................ 11
2.28 Disclosure.................................................................... 11
2.29 Compliance with Other Laws.................................................... 11
2.30 Year 2000 Compliance.......................................................... 11
3. Interpretation....................................................................... 11
4. Representations and Warranties of the Purchasers..................................... 12
4.1 Authorization................................................................. 12
</TABLE>
2
<PAGE> 3
<TABLE>
<S> <C>
4.2 Purchase Entirely for Own Account............................................. 12
4.3 Disclosure of Information..................................................... 12
4.4 Restricted Securities......................................................... 12
4.5 No Public Market.............................................................. 13
4.6 Legends....................................................................... 13
4.7 Accredited Investor........................................................... 13
4.8 Foreign Investors............................................................. 13
5. Covenants of the Company............................................................. 14
5.1 Compliance.................................................................... 14
5.2 Performance................................................................... 14
5.3 Books and Records............................................................. 14
5.4 Renewals and Good Standing.................................................... 14
5.5 Principle Business............................................................ 14
5.6 Proprietary Information and Assignment Agreement.............................. 14
5.7 Stock Options................................................................. 14
5.8 Securities Filings............................................................ 15
5.9 Investment of Funds........................................................... 15
5.10 Directors' and Officers' Insurance............................................ 15
5.11 Survival of Company's Covenants............................................... 15
6. Conditions of the Purchasers' Obligations at the Closing............................. 15
6.1 Representations and Warranties................................................ 15
6.2 Performance................................................................... 15
6.3 Compliance Certificate........................................................ 15
6.4 Qualifications................................................................ 15
6.5 Written Consents.............................................................. 15
6.6 Stock Certificates............................................................ 16
6.7 Restated Certificate.......................................................... 16
6.8 Restated Investors' Rights Agreement.......................................... 16
6.9 Restated Co-Sale Agreement.................................................... 16
6.10 Restated Voting Agreement..................................................... 16
6.11 Confidential Information and Invention Assignment Agreement................... 16
6.12 No Material Adverse Change.................................................... 16
6.13 Company Legal Opinions........................................................ 17
6.14 No Litigation................................................................. 17
6.15 Proceedings and Documents..................................................... 17
6.16 Closing of Common Stock Financing............................................. 17
6.17 Closing Documents............................................................. 17
6.18 General....................................................................... 18
7. Conditions of the Company's Obligations at the Closing............................... 18
7.1 Representations and Warranties................................................ 18
</TABLE>
3
<PAGE> 4
<TABLE>
<S> <C>
7.2 Performance................................................................... 18
7.3 Qualifications................................................................ 18
8. Miscellaneous........................................................................ 18
8.1 Survival of Warranties........................................................ 18
8.2 Entire Agreement.............................................................. 18
8.3 Transfer; Successors and Assigns.............................................. 18
8.4 Governing Law................................................................. 19
8.5 Counterparts.................................................................. 19
8.6 Titles and Subtitles.......................................................... 19
8.7 Notices....................................................................... 19
8.8 Finder's Fee.................................................................. 19
8.9 Attorney's Fees............................................................... 19
8.10 Amendments and Waivers of Agreement........................................... 19
8.11 Severability.................................................................. 20
8.12 Delays or Omissions........................................................... 20
8.13 Confidentiality............................................................... 20
8.14 Exculpation Among Purchasers.................................................. 20
8.15 Indemnification............................................................... 21
8.16 Press Release................................................................. 21
8.17 Use of Proceeds............................................................... 21
</TABLE>
4
<PAGE> 5
PRINTCAFE, INC.
SERIES D AND D-1 PREFERRED STOCK PURCHASE AGREEMENT
This Series D and D1 Preferred Stock Purchase Agreement (this
"Agreement") is made as of March 8, 2000 by and among printCafe, Inc., a
Delaware corporation (the "Company"), and the investors listed on Exhibit A
attached hereto (each a "Purchaser" and together the "Purchasers").
In consideration of the mutual promises, covenants and conditions
hereinafter set forth, the parties hereto hereby agree as follows:
1. PURCHASE AND SALE OF PREFERRED STOCK.
1.1 SALE AND ISSUANCE OF SERIES D PREFERRED STOCK.
(a) The Company shall adopt and file with the Secretary of
State of the State of Delaware on or before the Closing (as defined in Section
1.2(a) below) the Fourth Amended and Restated Certificate of Incorporation in
the form attached hereto as Exhibit B (the "Restated Certificate").
(b) Subject to the terms and conditions of this Agreement,
each Purchaser agrees to purchase at the Closing, and the Company agrees to sell
and issue to each Purchaser at the Closing, that number of shares of the
Company's Series D Preferred Stock and/or Series D-1 Preferred Stock, $0.0001
par value per share, set forth opposite each such Purchaser's name on Exhibit A
attached hereto at a purchase price of $8.83 per share. The shares of Series D
Preferred Stock and Series D-1 Preferred Stock issued to the Purchasers pursuant
to this Agreement shall be hereinafter referred to as the "Stock."
1.2 CLOSING; DELIVERY.
(a) The purchase and sale of the Stock shall take place at the
executive offices of the Company, at 10:00 a.m., on March 9, 2000, or at such
other time and place as the Company and the Purchasers mutually agree upon,
orally or in writing (which time and place are designated as the "Closing").
(b) At the Closing, the Company shall deliver to each
Purchaser a certificate representing the Stock being purchased by such Purchaser
against payment of the purchase price therefor by check payable to the Company
or by wire transfer to the Company's bank account.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to each Purchaser that (acknowledging that each
Purchaser is relying on the representations and warranties set forth in this
Section 2 in connection with the purchase of the Stock by such Purchaser),
except as set forth on the Schedule of Exceptions attached hereto as Exhibit C:
5
<PAGE> 6
2.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
carry on its business. The Company is duly qualified as a foreign corporation or
is otherwise duly qualified to transact business and is in good standing in each
jurisdiction in which the failure so to qualify would, either individually or in
the aggregate, have a material adverse effect on its business or properties.
2.2 CAPITALIZATION. Immediately prior to the Closing, the
authorized capital of the Company shall consist of:
(a) 46,940,082 shares of Preferred Stock, of which (i)
2,500,000 shares have been designated Series A Preferred Stock, 2,455,798 of
which will be issued and outstanding immediately prior to the Closing, (ii)
10,250,000 shares have been designated Series A-1 Preferred Stock, 9,534,148 of
which will be issued and outstanding immediately prior to the Closing, (iii)
31,250,000 have been designated Series B Preferred Stock, 31,186,312 of which
will be issued and outstanding immediately prior to the Closing, (iv) 2,015,082
have been designated Series C Preferred Stock, 1,765,082 of which will be issued
and outstanding immediately prior to the Closing, (v) 150,000 have been
designated Series C-1 Preferred Stock, all of which will be issued and
outstanding immediately prior to the Closing, (vi) 325,000 shares of Series D
Preferred Stock, none of which will be issued and outstanding immediately prior
to the Closing, and (vii) 550,000 shares of Series D-1 Preferred Stock, none of
which will be issued and outstanding immediately prior to the Closing. The
rights, privileges and preferences of the Preferred Stock are as stated in the
Restated Certificate. All of the outstanding shares of Preferred Stock have been
duly authorized, fully paid and nonassessable and issued in compliance with all
applicable federal and state securities laws.
(b) 150,000,000 shares of Common Stock, of which (i)
118,750,000 have been designated Class A Common Stock, 5,886,656 of which are
issued and outstanding immediately prior to the Closing, (ii) 31,250,000 have
been designated Class B Common Stock, none of which are issued and outstanding
immediately prior to the Closing and (iii) 1,150,000 have been designated Class
C Common Stock, none of which will be issued and outstanding prior to the
Closing. All of the outstanding shares of Common Stock have been duly
authorized, fully paid and are nonassessable and issued in compliance with all
applicable federal and state securities laws. Simultaneous with the Closing, the
Company will issue 225,916 shares of its Class A Common Stock and 1,132,502
shares of its Class C Common Stock pursuant to the Common Stock Purchase
Agreement (as defined in Section 6.16).
(c) The Company has reserved 382,215 shares of Class A Common
Stock and 516,976 shares of Series A-1 Preferred Stock (collectively, "Option
Stock") for issuance to officers, directors, employees and consultants of the
Company pursuant to its 1999 Revised Stock Plan duly adopted by the Board of
Directors and approved by the Company's stockholders (the "1999 Revised Stock
Plan"), and the Company has reserved 10,000,000 shares of Common Stock for
issuance to officers, directors, employees and consultants of the Company
6
<PAGE> 7
pursuant to its 2000 Incentive Stock Plan duly adopted by the Board of Directors
and approved by the Company's stockholders (the "2000 Incentive Stock Plan" and,
together with the 1999 Revised Stock Plan, the "Stock Plans"). Of such reserved
shares of Option Stock under the 1999 Revised Stock Plan, no shares have been
issued pursuant to restricted stock purchase agreements, options to purchase
382,215 shares of Common Stock and 516,976 shares of Series A-1 Preferred Stock
have been granted and are currently outstanding, and no shares of Common Stock
remain available for issuance to officers, directors, employees and consultants
pursuant to the 1999 Revised Stock Plan. Of such reserved shares of Common Stock
under the 2000 Incentive Stock Plan, no shares have been issued pursuant to
restricted stock purchase agreements, options to purchase 1,096,169 shares of
Common Stock have been granted and are currently outstanding, and 8,903,831
shares of Common Stock remain available for issuance to officers, directors,
employees and consultants pursuant to the 2000 Incentive Stock Plan.
(d) Except for outstanding options issued pursuant to the
Stock Plans and the warrants listed in Section 2.2 of the Schedule of
Exceptions, there are no outstanding options, warrants, rights (including
conversion or preemptive rights and rights of first refusal or similar rights)
or agreements, orally or in writing, for the purchase or acquisition from the
Company of any shares of its capital stock.
(e) The issuance of Series B Preferred Stock to Creo SRL
pursuant to that certain Series B Preferred Stock Purchase Agreement dated
February 15, 2000 did not constitute a dilutive issuance with respect to the
Company's Series A and A-1 Preferred Stock under or pursuant to the terms of
Article VI(B)(4) of the Company's Certificate of Incorporation as then in
effect. As of the date hereof, Creo SRL has not exercised the Series B Preferred
Stock Voting Conversion Right (as defined in the Restated Certificate).
2.3 RIGHTS OF REGISTRATION AND VOTING RIGHTS. Except as
contemplated in the Second Amended and Restated Investors' Rights Agreement, in
the form attached hereto as Exhibit D (the "Restated Investors' Rights
Agreement"), the Company has not granted or agreed to grant any registration
rights, including piggyback registration rights, to any person or entity. To the
Company's knowledge, except as contemplated in the Second Amended and Restated
Voting Agreement, in the form attached hereto as Exhibit E (the "Restated Voting
Agreement"), no stockholder of the Company has entered into any agreements with
respect to the voting of capital stock of the Company. Except as contemplated by
the Restated Certificate, the Restated Voting Agreement and the Second Amended
and Restated Right of First Refusal and Co-Sale Agreement, in the form attached
hereto as Exhibit F (the "Restated Co-Sale Agreement"), there are no
stockholders agreements, pledge agreements, buy-sell arrangements, rights of
first refusal or proxies related to any securities of the Company to which the
Company is subject or a party or to which, to the Company's knowledge, any
stockholder, officer, director or affiliate of the Company is a party or
subject.
2.4 SUBSIDIARIES; JOINT VENTURES. The Company does not currently
own or control, directly or indirectly, any interest in any other corporation,
association, or other business entity other than the subsidiaries set forth on
Schedule 2.4 of the Schedule of Exceptions (the
7
<PAGE> 8
"Subsidiaries"). The Company is not a participant in any joint venture,
partnership or similar arrangement.
2.5 AUTHORIZATION. All corporate action on the part of the Company,
its officers, directors and stockholders necessary for the authorization,
execution and delivery of this Agreement, the Restated Investors' Rights
Agreement, the Restated Voting Agreement and the Restated Co-Sale Agreement
(collectively, the "Transaction Documents"), the performance of all obligations
of the Company hereunder and thereunder and the authorization, issuance and
delivery of the Stock and the Common Stock issuable upon conversion of the Stock
(together, the "Securities") has been taken or will be taken prior to the
Closing, and the Transaction Documents, when executed and delivered by the
Company, shall constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with their respective terms,
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance, and other laws of general application
affecting enforcement of creditors' rights generally, as limited by laws
relating to the availability of specific performance, injunctive relief, or
other equitable remedies, or (ii) to the extent the indemnification provisions
contained in the Restated Investors' Rights Agreement may be limited by
applicable federal or state securities laws. All corporate action on the part of
the Company and its predecessors, officers, directors, stockholders and
subsidiaries necessary for the authorization, execution and/or delivery, as
applicable, for all past corporate actions was obtained.
2.6 VALID ISSUANCE OF SECURITIES. The Stock that is being issued to
the Purchasers hereunder, when issued, sold and delivered in accordance with the
terms hereof for the consideration expressed herein, will be duly and validly
issued, fully paid and nonassessable and free and clear of all preemptive
rights, rights of first refusal, liens, charges, restrictions, claims and any
other encumbrances imposed by or through the Company other than restrictions on
transfer under this Agreement, the Restated Investors' Rights Agreement, the
Restated Co-Sale Agreement and applicable state and federal securities laws of
the United States. Based in part upon the representations of the Purchasers in
this Agreement and subject to the provisions of Section 2.7 below, the Stock
will be issued in compliance with all applicable federal and state securities
laws. The Common Stock issuable upon conversion of the Stock has been duly and
validly reserved for issuance and, upon issuance in accordance with the terms of
the Restated Certificate, shall be duly and validly issued, fully paid and
nonassessable and free and clear of all preemptive rights, rights of first
refusal, liens, charges, restrictions, claims and any other encumbrances imposed
by or through the Company other than restrictions on transfer under this
Agreement, the Restated Investors' Rights Agreement, the Restated Co-Sale
Agreement and applicable federal and state securities laws and will be issued in
compliance with all applicable federal and state securities laws of the United
States and, where applicable, provincial securities laws of Canada.
2.7 GOVERNMENTAL CONSENTS. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority of the United
States is required in connection with the consummation of
8
<PAGE> 9
the transactions contemplated by this Agreement, except for filings pursuant to
applicable state securities laws and Regulation D of the Securities Act of 1933,
as amended (the "Securities Act"). Based in part on the representations of the
Purchasers set forth in Section 4 hereof, the offer, sale and issuance of the
Stock, in accordance with the terms hereof for the consideration expressed
herein, are exempt from the registration requirements of Section 5 of the
Securities Act and from the qualification requirements of applicable state
securities laws.
2.8 LITIGATION. There is no action, suit, proceeding or
investigation pending or, to the Company's knowledge, currently threatened
against the Company or any of the Subsidiaries, or any basis therefor known to
the Company, that questions the validity of the Transaction Documents or the
right of the Company to enter into them, or to consummate the transactions
contemplated hereby or thereby, or that might result, either individually or in
the aggregate, in any material adverse change in the financial condition,
assets, liabilities, operations or financial performance of the Company,
financially or otherwise, or any change in the current equity ownership of the
Company. Neither the Company nor any of the Subsidiaries is a party or subject
to the provisions of any order, writ, injunction, judgment or decree of any
court or government agency or instrumentality. There is no action, suit,
proceeding or investigation by the Company or any of the Subsidiaries currently
pending or which the Company or any of the Subsidiaries intends to initiate. The
foregoing includes, without limitation, actions pending or threatened (or any
basis therefor known to the Company) involving the prior employment of any of
the Company's employees, their use in connection with the Company's business of
any information or technologies allegedly proprietary to any of their former
employers, or their obligations under any agreements with prior employers.
2.9 INTELLECTUAL PROPERTY. To the Company's knowledge, (i) the
Company owns or possesses sufficient legal rights to all patents, trademarks,
service marks, tradenames, copyrights, trade secrets, licenses, information and
proprietary rights and processes (collectively, "Intellectual Property Rights")
necessary for its business without any conflict with, or infringement of, the
rights of others; and (ii) no third party is infringing or violating any of the
Company's Intellectual Property Rights. The Company has not received any written
communications alleging that the Company has violated or, by conducting its
business, would violate any of the Intellectual Property Rights of any other
person or entity. There are no outstanding options, licenses or agreements of
any kind related to the foregoing, nor is the Company bound by, or a party to,
any options, licenses or agreements of any kind with respect to Intellectual
Property of any other forms.
2.10 CONFIDENTIAL INFORMATION AND INVENTION ASSIGNMENT AGREEMENTS.
Each director, officer, independent contractor, consultant and employee of the
Company (collectively, "Service Providers") have entered into an agreement with
the Company regarding confidentiality, non-solicitation of employees and
customers and assignment of all Intellectual Property Rights, technical
information and other information developed and/or worked on by such Service
Provider while employed or engaged with the Company (each, a "Confidentiality
and Invention Assignment Agreement"). To the Company's knowledge, (i) no past or
present Service Provider is in violation of any term of any Confidentiality and
Invention Assignment
9
<PAGE> 10
Agreement between the Company and such Service Provider; and (ii) it is not nor
will it be necessary to use any inventions of any of its Service Providers (or
persons it currently intends to hire) made prior to their employment or
engagement by the Company. Each Service Provider hired or engaged by the Company
after the date hereof shall, prior to their employment or engagement with the
Company, enter into a Confidentiality and Invention Assignment Agreement with
the Company.
2.11 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in
violation in any material respect or default of any provisions of its Restated
Certificate or Bylaws or of any provision, instrument, agreement, commitment,
arrangement, license, judgment, order, writ, decree or contract to which it is a
party or by which it is bound or, to its knowledge, of any provision of federal
or state statute, rule or regulation applicable to the Company, which violation
or default is reasonably likely to result in a material adverse effect on the
financial condition, assets, liabilities, operations or financial performance of
the Company. No event has occurred which with the passage of time or the giving
of notice, or both, would constitute a material breach of or default under any
of the foregoing, which material violation or breach or default is reasonably
likely to result in a material adverse effect on the financial condition,
assets, liabilities, operations or financial performance of the Company. The
execution, delivery and performance of the Transaction Documents and the
consummation of the transactions contemplated thereby will not result in any
such violation or breach or be in conflict with or constitute, with or without
the passage of time and giving of notice, either a default under any such
provision, agreement, commitment, arrangement, license, instrument, judgment,
order, writ, decree or contract or an event which results in the creation of any
lien, charge or encumbrance upon any assets of the Company. Neither the
execution or delivery of this Agreement, nor the carrying on of the Company's
business by the employees of the Company, nor the conduct of the Company's
business as proposed, will, to the Company's knowledge, conflict in any material
respect with or result in a material breach of the terms, conditions, or
provisions of, or constitute a default under, any contract, covenant or
instrument under which any of the Company's employees is now obligated.
2.12 AGREEMENTS; ACTION.
(a) There are no agreements, understandings or proposed
transactions between the Company and any of its officers, directors, affiliates
or any affiliate thereof.
(b) Except as explicitly contemplated by the Transaction
Documents, there are no agreements, understandings, instruments, contracts or
proposed transactions to which the Company or any of the Subsidiaries is a party
or by which it is bound that involve (i) obligations (contingent or otherwise)
of, or payments to, the Company or any of the Subsidiaries in excess of $50,000,
(ii) the license of any patent, copyright, trade secret or other proprietary
right to or from the Company or any of the Subsidiaries, or (iii) the grant of
rights to manufacture, produce, assemble, license, market, or sell its products
to any other person or affect the Company's exclusive right to develop,
manufacture, assemble, distribute, market or sell its products.
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(c) Neither the Company nor any of the Subsidiaries has (i)
declared or paid any dividends, or authorized or made any distribution upon or
with respect to any class or series of its capital stock, (ii) incurred any
indebtedness for money borrowed or incurred any other liabilities individually
in excess of $50,000 or in excess of $100,000 in the aggregate, (iii) made any
loans or advances to any person, other than ordinary advances to the Company's
employees for business expenses, or (iv) sold, exchanged or otherwise disposed
of any of its assets or rights, other than the sale of its inventory in the
ordinary course of business.
(d) Except as disclosed in Section 2.12 of the Schedule of
Exceptions or as set out in the Transaction Documents, the Company has not
entered into any binding letters of intent with any corporation, partnership,
association, other business entity or any individual regarding (i) the
consolidation or merger of the Company with or into any such corporation or
other business entity, (ii) the sale, conveyance or disposition of all or
substantially all of the assets of the Company or a transaction or series of
transactions in which more than 50% of the voting power of the company is
disposed of, or (iii) any other form of acquisition, liquidation, dissolution or
winding-up of the Company.
2.13 NO CONFLICT OF INTEREST. The Company is not indebted, directly
or indirectly, to any of its officers or directors, in any amount whatsoever,
other than in connection with expenses or advances of expenses incurred in the
ordinary course of business or relocation expenses of employees. To the
Company's knowledge, none of the Company's officers or directors are, directly
or indirectly, indebted to the Company (other than in connection with purchases
of the Company's stock) or have any direct or indirect ownership interest in any
firm or corporation with which the Company is affiliated or with which the
Company has a business relationship, or any firm or corporation which competes
with the Company (other than ownership of stock in, but not exceeding two
percent (2%) of the outstanding capital stock of, any publicly traded company
that competes with the Company). To the Company's knowledge, none of the
Company's officers or directors are, directly or indirectly, interested in any
material contract with the Company. The Company is not a guarantor of any
indebtedness of any other person, firm or corporation.
2.14 TITLE TO PROPERTY AND ASSETS. The Company has good and valid
title to all of its properties and assets, both real and personal, and has good
title to all its leasehold interests, in each case free and clear of all
mortgages, liens, pledges, loans, security interests, conditional sales
agreements, encumbrances or charges, except for Permitted Liens (as defined
below). The Company owns or leases all properties and assets reasonably
necessary to the operation of its business as now conducted. With respect to the
property and assets it leases, the Company is in compliance with such leases
and, to the Company's knowledge, holds a valid leasehold interest free of any
liens, claims or encumbrances, except for Permitted Liens. For purposes of this
Agreement, "Permitted Liens" shall mean any (a) mechanics', carriers', workers'
and other similar liens arising in the ordinary course of business which are not
delinquent and which in the aggregate are not material in amount, and do not
interfere with the present use of the assets of the Company to which they apply;
(b) liens for current taxes and assessments not yet due and payable; (c) liens
and encumbrances that have arisen in the ordinary course of business
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and that do not (in any case or in the aggregate) materially detract from the
value of the assets subject thereto or materially impair the operations of the
Company; and (d) with respect to any asset of the Company which consists of a
leasehold or other possessory interest in real property, all encumbrances,
covenants, imperfections in title, easements, restrictions and other title
matters (whether or not the same are recorded) not known to the Company to which
the underlying fee estate in such real property is subject which were not
created by or incurred by the Company.
2.15 FINANCIAL STATEMENTS. Attached hereto as Exhibit G are the
unaudited balance sheet of the Company as of December 31, 1999, together with an
unaudited statement of income and expenses and statement of cash flows for the
fiscal year ended December 31, 1999 (collectively, the "Financial Statements").
The Financial Statements are complete in all material respects and in accordance
with the books and records of the Company and fairly present the financial
condition and operating results of the Company as of the dates, and for the
periods, indicated therein, subject to the lack of footnote disclosures and
normal year-end audit adjustments. Except as set forth in the Financial
Statements, the Company has no material liabilities, contingent or otherwise,
other than (i) liabilities incurred in the ordinary course of business
subsequent to December 31, 1999, (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 the Financial
Statements, and (iii) performance obligations of the Company under the
Transaction Documents.
2.16 CHANGES. Since December 31, 1999 there has not been:
(a) any change in the assets, liabilities, financial condition
or operating results of the Company from that reflected in the Financial
Statements, except changes in the ordinary course of business that have not
been, in the aggregate, materially adverse;
(b) any damage, destruction, loss or other occurrence or
development materially and adversely affecting the business, properties or
financial condition of the Company;
(c) any waiver or compromise by the Company of a valuable
right or any material debt owed to it;
(d) any satisfaction or discharge of any lien, claim, or
encumbrance or payment of any obligation by the Company, except in the ordinary
course of business and that is not material to the assets, business, properties
or financial condition or operating results of the Company;
(e) any material change or amendment to a material contract or
agreement by which the Company or any of its assets or properties is bound or
subject;
(f) any material change or amendment in any compensation
arrangement or agreement with any employee, officer, director or stockholder;
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(g) any sale, assignment or transfer of any patents,
trademarks, copyrights, trade secrets or other intangible assets;
(h) any resignation or termination of employment of any
officer or key employee of the Company; and the Company, is not aware of any
impending resignation or termination of employment of any such officer or key
employee;
(i) any mortgage, pledge, transfer of a security interest in,
or lien, created by the Company, with respect to any of its material properties
or assets, except for Permitted Liens;
(j) any loans or guarantees made by the Company to or for the
benefit of its employees, officers or directors, or any members of their
immediate families, other than travel advances and other advances made in the
ordinary course of its business;
(k) any declaration, setting aside or payment or other
distribution in respect to any of the Company's capital stock, or any direct or
indirect redemption, purchase, or other acquisition of any of such stock by the
Company;
(l) to the Company's knowledge, any other event or condition
of any character that might materially and adversely affect the business,
properties or financial condition of the Company; or
(m) any arrangement or commitment by the Company to do any of
the things described in this Section 2.16.
2.17 DISTRIBUTIONS. There has been no declaration or payment by the
Company of any dividend, nor any distribution by the Company of any assets of
any kind, to any of its stockholders.
2.18 TAX RETURNS AND PAYMENTS. The Company has filed all tax
returns and reports as required by applicable law and such tax returns and
reports are true and correct in all material respects. The Company has paid all
taxes, fees, assessments and other governmental charges upon the Company, or
upon any of its properties, income, or franchises, shown in such returns and on
assessments received by the Company to be due as of the date hereof and no such
taxes or assessments are being contested.
2.19 INSURANCE. The Company has in full force and effect fire and
casualty insurance policies, with extended coverage, sufficient in amount
(subject to reasonable deductibles) to allow it to replace any of its properties
that might be damaged or destroyed, and the Company has such other insurance
policies and coverages as are customary in the Company's industry.
2.20 EMPLOYEE BENEFIT PLANS. Section 2.20 of the Schedule of
Exceptions sets forth all currently effective employment contracts, deferred
compensation arrangements, bonus
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plans, incentive plans, profit sharing plans, retirement agreements or other
employee compensation agreements. The Company does not have any Employee Benefit
Plan as defined in the Employee Retirement Income Security Act of 1974, as
amended.
2.21 LABOR AGREEMENTS AND ACTIONS. The Company is not bound by or
subject to (and none of its assets or properties is bound by or subject to) any
written or oral, express or implied, contract, commitment or arrangement with
any labor union, and no labor union has requested or, to the knowledge of the
Company, has sought to represent any of the employees, representatives or agents
of the Company. There is no strike or other labor dispute involving the Company
pending, or to the knowledge of the Company threatened, which could have a
material adverse effect on the financial condition, assets, liabilities,
operations or financial performance of the Company, nor is the Company aware of
any labor organization activity involving its employees. The employment of each
officer and employee of the Company is terminable at the will of the Company.
The services of each consultant and independent contractor is terminable by the
Company upon not more than thirty (30) days prior written notice. To its
knowledge, the Company has complied in all material respects with all applicable
state and federal equal employment opportunity laws and with other laws related
to employment.
2.22 COMPLIANCE WITH ENVIRONMENTAL REQUIREMENTS. To the Company's
knowledge, it has obtained all material permits, licenses and other
authorizations required under federal, state and local laws relating to
pollution or protection of the environment. The Company has not violated any
applicable Environmental Law, the violation of which is reasonably likely to
result in a material adverse change in the financial condition, assets,
liabilities, operations or financial performance of the Company. To the
knowledge of the Company, there are no present requirements of any applicable
Environmental Law which is due to be imposed upon it which will materially
increase its cost of complying with the Environmental Laws. All past on-site
generation, treatment, storage and disposal of Waste, including Hazardous Waste,
by the Company and, to its knowledge, by its predecessors have been done in
compliance with the currently applicable Environmental Laws, and all past
off-site treatment, storage and disposal of Waste, including Hazardous Waste,
generated by the Company and, to its knowledge, by its predecessors have been
done in compliance with the currently applicable Environmental Laws. As used in
this Agreement, the terms (i) "Environmental Laws" include, but are not limited
to, any federal, state, local or foreign law, statute, charter or ordinance, and
any rule, regulation, binding interpretation, binding policy, permit, order,
court order or consent decree issued pursuant to any of the foregoing, which
pertains to, governs or otherwise regulates any of the following activities,
including, without limitation, (a) the emission, discharge, release or spilling
of any substance into the air, surface water, groundwater, soil or substrata;
(b) the manufacturing, processing, sale, generation, treatment, storage,
disposal labeling or other management of any Waste, Hazardous Substance or
Hazardous Waste, and (ii) "Waste," "Hazardous Substance," and "Hazardous Waste"
include any substance defined as such by any applicable Environmental Law.
2.23 PERMITS. The Company and each of the Subsidiaries has all
franchises, permits, licenses and any similar authority necessary for the
conduct of its business, the lack of
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which could materially and adversely affect the business, properties or
financial condition of the Company and, to its knowledge, it can obtain, without
undue burden or expense, any similar authority for the conduct of its business
as planned to be conducted. The Company is not in default in any material
respect under any of such franchises, permits, licenses or other similar
authority.
2.24 PRIVATE OFFERING. Neither the Company nor anyone acting on its
behalf has offered any of the Stock or similar securities for issuance or sale
to, or solicited any offer to acquire any of the same from, anyone so as to make
the issuance and sale of the Stock subject to registration requirements of
Section 5 of the Securities Act.
2.25 BROKERS AND FINDERS. The Company has not retained any
investment banker, broker, finder or any other third party in connection with
the transactions contemplated by this Agreement.
2.26 CERTIFICATE OF INCORPORATION. At the time of Closing, the
Company's certificate of incorporation on file with the Secretary of the State
of Delaware shall be in the form of the Restated Certificate, and no action
shall have been taken to amend or modify such Restated Certificate.
2.27 BYLAWS. The Bylaws of the Company are in the form attached
hereto as Exhibit H and no action has been taken to amend or modify such Bylaws.
2.28 DISCLOSURE. The Company has provided the Purchasers with all
the information that the Purchasers have requested in writing for deciding
whether to acquire the Stock. This Agreement, including all representations
herein by the Company, and any exhibits hereto or any certificate furnished or
to be furnished to Purchasers at the Closing, taken together, do not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements contained herein or therein not misleading in
light of the circumstances under which they were made.
2.29 COMPLIANCE WITH OTHER LAWS. The Company has complied in all
material respects with all laws, statutes, rules, regulations and orders of,
and, to its knowledge, has secured all necessary permits and authorizations and
licenses issued by, federal, state, local and foreign agencies and authorities,
applicable to its business, properties and operations.
2.30 YEAR 2000 COMPLIANCE. To the Company's knowledge, each item of
software and hardware that has been developed by the Company is Year 2000
Compliant (as defined below). For purposes of this Section 2.30, an item of
software or hardware shall be deemed to be "Year 2000 Compliant" only if
operating on a stand-alone basis without reference to dates supplied by third
party software or hardware: (i) the functions, calculations, and other computing
processes of such item of software or hardware (collectively, "Processes")
perform without interruption related to the processing of date data representing
calendar dates before, on or after January 1, 2000; (ii) such item of software
or hardware accepts, calculates, compares,
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sorts, extracts, sequences and otherwise processes date inputs and date values,
and returns and displays date values, without interruption related to the
processing of date data representing calendar dates before, on or after January
1, 2000; (iii) such item of software or hardware stores and displays date
information without interruption related to the processing of date data
representing calendar dates before, on or after January 1, 2000; and (iv) such
item of software or hardware determines leap years without interruption related
to the processing of date data representing calendar dates before, on or after
January 1, 2000, unless, in each case, such interruption related to the
processing of date data representing calendar dates before, on or after January
1, 2000 is caused by external sources, such as in third party operating systems,
data, or other applications not supplied by the Company, or with respect to
incorrect or two-digit date information provided by the user, third party
operating systems or from any other external product, source or interface.
3. INTERPRETATION.
(a) For the purposes of the representations and warranties
contained in Section 2, whenever "to the Company's knowledge" or "to its
knowledge" is used, it means to the knowledge of the officers and directors of
the Company after making such diligent inquiry as may be reasonable under the
circumstances.
(b) For the purposes of the representations and warranties
contained in Section 2, all references to the "Company" shall be deemed to
include Programmed Solutions, Inc. and the Subsidiaries.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each Purchaser
hereby represents and warrants to the Company that:
4.1 AUTHORIZATION. Such Purchaser has full power and authority to
enter into the Transaction Documents. The Transaction Documents, when executed
and delivered by the Purchaser, will constitute valid and legally binding
obligations of the Purchaser, enforceable in accordance with their respective
terms, except (a) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, and any other laws of general
application affecting enforcement of creditors' rights generally, and as limited
by laws relating to the availability of a specific performance, injunctive
relief, or other equitable remedies, or (b) to the extent the indemnification
provisions contained in the Restated Investors' Rights Agreement may be limited
by applicable federal or state securities laws.
4.2 PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made with
the Purchaser in reliance upon the Purchaser's representations to the Company,
which by the Purchaser's execution of this Agreement, the Purchaser hereby
confirms, that the Securities to be acquired by the Purchaser will be acquired
for investment for the Purchaser's own account, not as a nominee or agent, and
not with a view to the resale or distribution of any part thereof in violation
of the Securities Act, and that the Purchaser has no present intention of
selling, granting any participation in, or otherwise distributing the same in
violation of the Securities Act. By
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executing this Agreement, the Purchaser further represents that the Purchaser
does not presently have any contract, undertaking, agreement or arrangement with
any person to sell, transfer or grant participations to such person or to any
third person, with respect to any of the Securities. The Purchaser has not been
formed for the specific purpose of acquiring the Securities.
4.3 DISCLOSURE OF INFORMATION. The Purchaser has had an opportunity
to discuss the Company's business, management, financial affairs and the terms
and conditions of the offering of the Stock with the Company's management and
has had an opportunity to review the Company's facilities. The Purchaser
understands that such discussions, as well as any other written information
delivered by the Company to the Purchaser, were intended to describe the aspects
of the Company's business which it believes to be material.
4.4 RESTRICTED SECURITIES. The Purchaser understands that the
Securities have not been, and will not be, registered under the Securities Act,
by reason of a specific exemption from the registration provisions of the
Securities Act which depends upon, among other things, the bona fide nature of
the investment intent and the accuracy of the Purchaser's representations as
expressed herein. The Purchaser understands that the Securities are "restricted
securities" under applicable U.S. federal and state securities laws and that,
pursuant to these laws, the Purchaser must hold the Securities indefinitely
unless they are registered with the Securities and Exchange Commission and
qualified by state authorities, or an exemption from such registration and
qualification requirements is available. The Purchaser acknowledges that the
Company has no obligation to register or qualify the Securities for resale
except as set forth in the Restated Investors' Rights Agreement. The Purchaser
further acknowledges that if an exemption from registration or qualification is
available, it may be conditioned on various requirements, including, but not
limited to, the time and manner of sale, the holding period for the Securities,
and on requirements relating to the Company which are outside of the Purchaser's
control, and which the Company is under no obligation and may not be able to
satisfy except as specifically provided in the Restated Investors' Rights
Agreement.
4.5 NO PUBLIC MARKET. The Purchaser understands that no public
market now exists for any of the securities issued by the Company, and that the
Company has made no assurances that a public market will ever exist for the
Securities.
4.6 LEGENDS. The Purchaser understands that the Securities, and any
securities issued in respect of or exchange for the Securities, may bear one or
all of the following legends:
(a) "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A
FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
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UNDER THE SECURITIES ACT OF 1933."
(b) Any legend set forth in the other Transaction Documents.
(c) Any legend required by the Blue Sky laws of any state to
the extent such laws are applicable to the shares represented by the certificate
so legended.
4.7 ACCREDITED INVESTOR. The Purchaser is an accredited investor as
defined in Rule 501(a) of Regulation D promulgated under the Securities Act.
4.8 FOREIGN INVESTORS. If the Purchaser is not a United States
person (as defined by Section 7701(a)(30) of the Internal Revenue Code of 1986,
as amended), such Purchaser hereby represents that it has satisfied itself as to
the full observance of the laws of its jurisdiction in connection with any
invitation to subscribe for the Securities or any use of this Agreement,
including (i) the legal requirements within its jurisdiction for the purchase of
the Securities, (ii) any foreign exchange restrictions applicable to such
purchase, (iii) any governmental or other consents that may need to be obtained,
and (iv) the income tax and other tax consequences, if any, that may be relevant
to the purchase, holding, redemption, sale, or transfer of the Securities. Such
Purchaser's subscription and payment for and continued beneficial ownership of
the Securities, will not violate any applicable securities or other laws of the
Purchaser's jurisdiction.
5. COVENANTS OF THE COMPANY. The Company covenants and agrees with each
Purchaser that:
5.1 COMPLIANCE. The Company shall comply with all laws, rules,
regulations and orders, the non-compliance with which could materially and
adversely affect the financial condition, assets, liabilities, operations or
financial performance of the Company or its obligations under this Agreement or
any other agreement with each Purchaser.
5.2 PERFORMANCE. The Company shall diligently observe and perform
or cause to be observed all covenants to be observed or performed under the
Transaction Documents and under any other agreement between the Company and each
Purchaser.
5.3 BOOKS AND RECORDS. The Company shall maintain complete and
accurate records and books of account in which entries shall be made in
accordance with generally accepted accounting principles consistently applied,
reflecting all transactions of the Company and its subsidiaries, if any.
5.4 RENEWALS AND GOOD STANDING. The Company shall (a) do all things
necessary to obtain, promptly renew and maintain in good standing from time to
time, all approvals, leases, licenses, permits and consents as are required to
own, develop and operate the business, assets or operations of the Company and
undertaking, except where the failure to obtain, renew or maintain in good
standing such approvals, leases, licenses, permits and consents is not
reasonably likely to result in a material adverse change in the Company's
financial
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condition, assets, liabilities, operations or financial performance and (b)
perform its obligations under this Agreement and all other agreements between
the Company and each Purchaser.
5.5 PRINCIPLE BUSINESS. Prior to the initial public offering of the
Company's Common Stock, the Company shall not change its principal business or
engage in any other business from that which it is engaged on the date of this
Agreement without the written consent of at least two-thirds of the holders of
shares of Stock converted or convertible into Common Stock.
5.6 PROPRIETARY INFORMATION AND ASSIGNMENT AGREEMENT. The Company
shall require all future officers, directors and employees of the Company and
each subsidiary of the Company to execute and deliver a proprietary information
and assignment agreement and shall require all future consultants and
independent contractors to the Company to execute and deliver a consulting
agreement which provides substantially similar protection from misappropriation
to the intellectual property of the Company.
5.7 STOCK OPTIONS. All stock options granted by the Company shall
have a term of ten (10) years and shall be exercisable, over time, based upon
continued employment over a vesting period to be determined by the Company's
Board of Directors. The per share exercise price of all options granted by the
Company will be no less than the fair market value on the date of grant as
determined by the Board of Directors in good faith. Unless otherwise
specifically approved by the Board of Directors, options granted by the Company
will not accelerate upon a change of control of the Company or any subsidiary of
the Company.
5.8 SECURITIES FILINGS. Within the prescribed time after the
Closing, the Company shall file all documents and take all proceedings required
to be taken by it to permit the Stock to be distributed to each Purchaser in
compliance with applicable federal and state securities laws and the applicable
securities legislation in Canada.
5.9 INVESTMENT OF FUNDS. The Company shall not make any investments
in any securities, other than high grade commercial paper or other form of
comparable security.
5.10 DIRECTORS' AND OFFICERS' INSURANCE. Within 45 days after the
Closing, the Company agrees to have in place Directors' and Officers' insurance,
from a reputable organization, of such type and amount as a comparable company
in its industry.
5.11 SURVIVAL OF COMPANY'S COVENANTS. The covenants of the Company
set forth in this Section 5 will survive the completion of the transactions
contemplated by this Agreement and will continue in full force and effect for
the benefit of each Purchaser until the earlier to occur of (a) five (5) years
from the Closing, or (b) the consummation of a firm commitment underwritten
public offering by the Company of shares of its Common Stock pursuant to a
registration statement under the Securities Act, the public offering price of
which is not less than $11.60 per share (appropriately adjusted for any stock
split, dividend, combination or other recapitalization) and which results in
aggregate gross cash proceeds to the Company of
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at least $30,000,000 (before underwriting discounts and commissions).
6. CONDITIONS OF THE PURCHASERS' OBLIGATIONS AT THE CLOSING. The
obligations of each Purchaser to the Company under this Agreement are subject to
the fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived:
6.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in Section 2 shall be true and correct in
all material respects on and as of the Closing with the same effect as though
such representations and warranties had been made on and as of the date of the
Closing.
6.2 PERFORMANCE. The Company shall have performed and complied in
all material respects with all covenants, agreements, obligations and conditions
contained in this Agreement that are required to be performed or complied with
by it on or before the Closing.
6.3 COMPLIANCE CERTIFICATE. The President or CEO of the Company
shall deliver to the Purchasers at the Closing a certificate certifying that the
conditions specified in Sections 6.1 and 6.2 have been fulfilled.
6.4 QUALIFICATIONS. All authorizations, approvals or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required to be obtained prior to the Closing in connection
with the lawful issuance and sale of the Stock pursuant to this Agreement shall
be obtained and effective as of the Closing.
6.5 WRITTEN CONSENTS. The Company shall have obtained and delivered
to the Purchasers any and all written waivers, permits, consents and approvals
required to be obtained prior to the Closing in connection with the consummation
of the transactions contemplated by the Transaction Documents in a form and
content reasonably acceptable to the Purchasers.
6.6 STOCK CERTIFICATES. The Company shall have delivered to the
Purchasers facsimile copies of executed stock certificates in form and content
acceptable to the Purchasers ("Stock Certificates") and sufficient to transfer
to and vest in each Purchaser good and valid title to the purchased Stock free
of any lien created by or through the Company. Within one (1) business day after
the Closing, the Company shall deliver the original stock certificates to the
Purchasers.
6.7 RESTATED CERTIFICATE. The Company shall have filed the Restated
Certificate with the Secretary of State of the State of Delaware on or prior to
the Closing, which shall continue to be in full force and effect as of the
Closing.
6.8 RESTATED INVESTORS' RIGHTS AGREEMENT. The Company, each
Purchaser, Creo SRL and the holders of a majority of the outstanding shares of
the Company's Series C Preferred Stock shall have executed and delivered the
Restated Investors' Rights Agreement in substantially the form attached as
Exhibit D.
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6.9 RESTATED CO-SALE AGREEMENT. The Company, each Purchaser, the
holders of a majority of the outstanding Founders Shares (as defined in the
Restated Co-Sale Agreement), Creo SRL and the holders of a majority of the
Company's Series C and C-1 Preferred Stock shall have executed and delivered the
Restated Co-Sale Agreement in substantially the form attached as Exhibit F.
6.10 RESTATED VOTING AGREEMENT. The Company, each Purchaser, the
holders of a majority of the outstanding Founders Shares (as defined in the
Restated Voting Agreement), Creo SRL and the holders of a majority of the
Company's Series C and C-1 Preferred Stock shall have executed and delivered the
Restated Voting Agreement in substantially the form attached as Exhibit E.
6.11 CONFIDENTIAL INFORMATION AND INVENTION ASSIGNMENT AGREEMENT.
The Company and each of its Service Providers (other than as set forth on
Section 2.10 of the Schedule of Exceptions) shall have entered into a
Confidential Information and Invention Assignment Agreement, in substantially
the form provided to the Purchasers.
6.12 NO MATERIAL ADVERSE CHANGE. Except as set forth on the
Schedule of Exceptions, there shall have been no material adverse change in the
Company's financial condition, assets, liabilities, operations or financial
performance since December 31, 1999 (it being understood that none of the
following shall be deemed, in and of itself, to constitute a material adverse
change in the financial condition, assets, liabilities, operations or financial
performance of the Company since December 31, 1999: (a) a change that results
from conditions generally affecting the U.S. economy or the world economy, (b) a
change that results from conditions generally affecting the Company's industry,
(c) a change that results from the announcement or pendency of the transactions
contemplated hereby and (d) a change that results from the taking of any action
required by this Agreement).
6.13 COMPANY LEGAL OPINIONS. Orrick, Herrington & Sutcliffe LLP,
special counsel for the Company, shall have delivered a legal opinion to the
Purchasers in the form attached hereto as Exhibit I, and Mathew D'Emilio,
counsel for the Company, shall have delivered a legal opinion to the Purchasers
in the form attached hereto as Exhibit J.
6.14 NO LITIGATION. There shall be no action, suit or proceeding or
investigation instituted or threatened to set aside the transactions provided
for herein or to enjoin or prevent the consummation of the transactions
contemplated hereby.
6.15 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings
in connection with the transactions contemplated hereby and all documents and
instruments incident to such transactions shall be in form and substance
satisfactory to each Purchaser and its counsel and each Purchaser shall have
received all such counterpart originals or certified or other copies of such
documents as it may reasonably request.
6.16 CLOSING OF COMMON STOCK FINANCING. The transactions
contemplated by
21
<PAGE> 22
that certain Common Stock Purchase Agreement, dated as of the date hereof, among
the Company, Creo SRL and the other investors listed on Exhibit A thereto (the
"Common Stock Purchase Agreement"), shall close simultaneous with the
transactions contemplated hereby.
6.17 CLOSING DOCUMENTS. The Company shall have delivered the
following documents to each of the Purchasers:
(a) copies certified by the Secretary of the Company of the
resolutions duly adopted by the Company's board of directors authorizing and
approving: (i) the execution, delivery and performance of the Transaction
Documents and each of the other agreements contemplated hereby, (ii) the
Restated Certificate and the filing of the Restated Certificate with the
Secretary of the State of Delaware, (iii) the reservation for issuance upon
conversion of the Series D Preferred Stock of an aggregate number of shares of
Common Stock equal to the total number of shares initially issuable upon
conversion, (iv) the issuance and sale of the Series D Preferred Stock, and (v)
the consummation of all other transactions contemplated by the Transaction
Documents;
(b) copies certified by the Secretary of the Company of the
resolutions of the Company's stockholders authorizing and approving the Restated
Certificate and the filing of the Restated Certificate with the Delaware
Secretary of the State;
(c) copies certified by the Secretary of the Company of the
Restated Certificate (as filed with the Delaware Secretary of the State) and the
Company's Bylaws, each as in effect at the Closing;
(d) a good standing certificate with respect to the Company
from the Delaware Secretary of State; and
(e) such other documents relating to the transactions
contemplated by this Agreement as the Purchasers or their counsel may reasonably
request.
6.18 GENERAL.
(a) Each Purchasers' obligations under Section 1 shall be
contingent upon the performance by each other Purchaser of its obligations under
Section 1.
(b) In any event the Purchasers may in their sole discretion
waive any conditions to the Closing and close. No such waiver shall be effective
unless it shall be in writing and signed by each Purchaser.
7. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT THE CLOSING. The
obligations of the Company to each Purchaser under this Agreement are subject to
the fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived:
7.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of
22
<PAGE> 23
each Purchaser contained in Section 4 shall be true and correct in all material
respects on and as of the Closing with the same effect as though such
representations and warranties had been made on and as of the Closing.
7.2 PERFORMANCE. All covenants, agreements and conditions contained
in this Agreement to be performed by the Purchasers on or prior to the Closing
shall have been performed or complied with in all material respects.
7.3 QUALIFICATIONS. All authorizations, approvals or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Stock pursuant to this Agreement shall be obtained and effective as of the
Closing.
8. MISCELLANEOUS.
8.1 SURVIVAL OF WARRANTIES. Unless otherwise set forth in this
Agreement, the warranties and representations of the Company contained in
Section 2 hereof shall survive the execution and delivery of this Agreement and
the Closing for a period of two (2) years following the Closing.
8.2 ENTIRE AGREEMENT. This Agreement and the other Transaction
Documents constitute the entire agreement between the Company and the Purchasers
relative to the subject matter hereof and thereof. Any previous agreement or
negotiations between the Company and the Purchasers concerning the subject
matter hereof is superseded by this Agreement and the Transaction Documents
except for any agreements relating to confidentiality.
8.3 TRANSFER; SUCCESSORS AND ASSIGNS. The terms and conditions of
this Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
8.4 GOVERNING LAW. This Agreement and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
Delaware, without giving effect to principles of conflicts of law.
8.5 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
8.6 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
23
<PAGE> 24
8.7 NOTICES. Any notice required or permitted by this Agreement
shall be in writing and shall be deemed sufficient upon delivery, when delivered
personally or by overnight courier or sent by telegram or fax, or five (5) days
after being deposited in the U.S. mail, as certified or registered mail, with
postage prepaid, addressed to the party to be notified at such party's address
as set forth on the signature page or Exhibit A hereto, or as subsequently
modified by written notice, and if to the Company, with a copy (not constituting
notice) to Orrick, Herrington & Sutcliffe LLP, 400 Capitol Mall, Suite 3000,
Sacramento, California 95814, Attention: Iain Mickle.
8.8 FINDER'S FEE. Each party represents that it neither is nor will
be obligated for any finder's fee or commission in connection with this
transaction except as set forth on the Schedule of Exceptions. Each Purchaser
agrees to indemnify and to hold harmless the Company from any liability for any
commission or compensation in the nature of a finder's fee (and the costs and
expenses of defending against such liability or asserted liability) for which
such Purchaser or any of its officers, employees, or representatives is
responsible. The Company agrees to indemnify and hold harmless each Purchaser
from any liability for any commission or compensation in the nature of a
finder's fee (and the costs and expenses of defending against such liability or
asserted liability) for which the Company or any of its officers, employees or
representatives is responsible.
8.9 ATTORNEY'S FEES. If any action at law or in equity (including
arbitration) is necessary to enforce or interpret the terms of any of the
Transaction Documents, the prevailing party shall be entitled to reasonable
attorney's fees, costs and necessary disbursements in addition to any other
relief to which such party may be entitled.
8.10 AMENDMENTS AND WAIVERS OF AGREEMENT. Any term of this
Agreement may be amended or waived only with the written consent of the Company
and at least a majority of the holders of shares of Stock converted or
convertible into the Common Stock. Any amendment or waiver effected in
accordance with this Section 8.10 shall be binding upon the Purchasers and each
transferee of the Stock (or the Common Stock issuable upon conversion thereof),
each future holder of all such securities, and the Company.
8.11 SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith. In the event that the parties cannot reach a
mutually agreeable and enforceable replacement for such provision, then (a) such
provision shall be excluded from this Agreement, (b) the balance of this
Agreement shall be interpreted as if such provision were so excluded and (c) the
balance of this Agreement shall be enforceable in accordance with its terms.
8.12 DELAYS OR OMISSIONS. No delay or omission to exercise any
right, power or remedy accruing to any party under this Agreement, upon any
breach or default of any other party under this Agreement, shall impair any such
right, power or remedy of such non-breaching or non-defaulting party nor shall
it be construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall
24
<PAGE> 25
any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any party of any
breach or default under this Agreement, or any waiver on the part of any party
of any provisions or conditions of this Agreement, must be in writing and signed
by the party charged with such waiver and such waiver shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to any party, shall be cumulative
and not alternative.
8.13 CONFIDENTIALITY. Each party hereto agrees that, except with
the prior written permission of the other party, it shall at all times keep
confidential and not divulge, furnish or make accessible to anyone any
confidential information, knowledge or data concerning or relating to the
business or financial affairs of the other parties to which such party has been
or shall become privy by reason of this Agreement, discussions or negotiations
relating to this Agreement, the performance of its obligations hereunder or the
ownership of Stock purchased hereunder; provided, however, that the receiving
party may disclose such information (i) on a confidential basis to its
attorneys, accountants, consultants and other professionals to the extent
necessary to obtain their services in connection with its investment in the
Company, (ii) to any prospective purchaser of Stock from the such receiving
party as long as such prospective purchaser agrees in writing to be bound by the
provisions of this Section 8.13, (iii) on a confidential basis to any affiliate
or partner of such receiving party and (iv) as required by judicial decree or
applicable law. The provisions of this Section 8.13 shall be in addition to, and
not in substitution for, the provisions of any separate nondisclosure agreement
executed by the parties hereto with respect to the transactions contemplated
hereby.
8.14 EXCULPATION AMONG PURCHASERS. Each Purchaser acknowledges that
it is not relying upon any person, firm or corporation, other than the Company
and its officers and directors, in making its investment or decision to invest
in the Company. Each Purchaser agrees that no Purchaser nor the respective
controlling persons, officers, directors, partners, agents, or employees of any
Purchaser shall be liable to any other Purchaser for any action heretofore or
hereafter taken or omitted to be taken by any of them in connection with the
purchase of the Securities.
8.15 INDEMNIFICATION. The Company shall defend, indemnify and hold
the Purchasers harmless from and against any and all claims, liabilities,
damages, losses and expenses, including reasonable attorney's fees and expenses
and costs of suit, arising out of any breach of the representations and
warranties, and out of any and all breaches of covenants, warranties,
stipulations, agreements and certifications made by or on behalf of the Company,
in the Transaction Documents or in any document delivered hereunder or
thereunder.
8.16 PRESS RELEASE. Upon the consummation of the transactions
contemplated hereby, the Company may issue a press release identifying Mellon
Ventures, II, L.P. ("Mellon") and/or Hewlett-Packard as a Purchaser, subject to
the prior approval by Mellon and/or Hewlett-Packard, as applicable, of such
press release, which approval will not be unreasonably withheld.
25
<PAGE> 26
8.17 USE OF PROCEEDS. The proceeds the Company shall receive upon
the consummation of the transactions contemplated hereby shall be solely used
for product development, working capital and other general corporate purposes
and not for investment purposes other than high grade commercial paper or other
instruments.
[Signature Pages Follow]
26
<PAGE> 27
The parties have executed this Series D Preferred Stock Purchase
Agreement as of the date first written above.
COMPANY:
PRINTCAFE, INC.
By:
Name:
Title:
Address: 40 24th Street, 5th Floor
Pittsburgh, PA 15222
Attn: President
Fax: (412) 456-1151
[SIGNATURE PAGE TO THE PURCHASE AGREEMENT]
27
<PAGE> 28
PURCHASERS:
MELLON VENTURES II, L.P.
By its general partner
MVMA II L.P.
By its general partner
MVMA Inc.
By:
Ryan Busch, Senior Associate
[SIGNATURE PAGE TO THE PURCHASE AGREEMENT]
28
<PAGE> 29
EXHIBITS
<TABLE>
<CAPTION>
<S> <C>
Exhibit A - Schedule of Purchasers
Exhibit B - Form of Amended and Restated Certificate of Incorporation
Exhibit C - Schedule of Exceptions to Representations and Warranties
Exhibit D - Form of Restated Investors' Rights Agreement
Exhibit E - Restated Voting Agreement
Exhibit F - Form of Restated Co-Sale Agreement
Exhibit G - Financial Statements
Exhibit H - Form of Bylaws
Exhibit I - Form of Opinion of Orrick, Herrington & Sutcliffe LLP
Exhibit J - Form of Opinion of Mathew D'Emilio
</TABLE>
<PAGE> 30
EXHIBIT A
SCHEDULE OF PURCHASERS
<TABLE>
<CAPTION>
NO. OF SHARES OF NO. OF SHARES OF SERIES
NAME/ADDRESS/FAX NO. SERIES D PREFERRED STOCK D-1 PREFERRED STOCK
-------------------- ------------------------ -------------------
<S> <C> <C>
Mellon Ventures II, L.P. 58,125 225,000
c/o Mellon Ventures, Inc.
Attn: Ryan Busch
One Mellon Center, Suite 5300
Pittsburgh, PA 15258-0001
Fax: (412) 236-3593
</TABLE>
A-30
<PAGE> 31
EXHIBIT B
FORM OF AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
B-31
<PAGE> 32
EXHIBIT C
SCHEDULE OF EXCEPTIONS TO
REPRESENTATIONS AND WARRANTIES
C-32
<PAGE> 33
EXHIBIT D
FORM OF RESTATED INVESTORS' RIGHTS AGREEMENT
D-33
<PAGE> 34
EXHIBIT E
FORM OF RESTATED VOTING AGREEMENT
E-34
<PAGE> 35
EXHIBIT F
FORM OF RIGHT OF FIRST REFUSAL
AND RESTATED CO-SALE AGREEMENT
F-35
<PAGE> 36
EXHIBIT G
FINANCIAL STATEMENTS
G-36
<PAGE> 37
EXHIBIT H
FORM OF BYLAWS
H-37
<PAGE> 38
EXHIBIT I
FORM OF OPINION OF ORRICK, HERRINGTON & SUTCLIFFE LLP
I-38
<PAGE> 39
EXHIBIT J
FORM OF OPINION OF MATHEW D'EMILIO
J-39
<PAGE> 1
EXHIBIT 10.10
TIME WARNER, INC.
75 ROCKEFELLER PLAZA
New York, NY 10019
March 3, 2000
printCafe Systems, Inc.
40 Twenty Fourth Street
Fifth Floor
Pittsburgh, PA 15222
Attn: Mark Olin, President
Re: Agreement in Principle
Dear Mr. Olin:
This letter outlines the agreement in principle between Time Warner
Inc., a Delaware corporation ("Publisher"), and printCafe Systems, Inc., a
Delaware corporation ("printCafe"), for the establishment of a co-branded web
site hosted through printCafe's web site "printCafe.com" (the "Site") through
which Publisher may purchase print services over the Internet.
1. Preferred Procurement Provider Status. Publisher shall make printCafe
its preferred internal print procurement provider and shall not publicly
disclose or acknowledge the use or existence of any other print procurement
system for a nine month period from the execution of a definitive Co-Branded
Site Agreement (the "Definitive Agreement"). For purposes of clarification, (a)
Publisher shall not be obligated to use printCafe to procure its printing
services and shall not be prevented from using a third party business to
business Internet provider for its print procurement services so long as such
relationship is not publicly disclosed or acknowledged, (b) a public disclosure
or public announcement shall mean the issuance of a press release or other
similar general release but shall not mean a disclosure made in conversation or
a written communication with a third party (other than a news reporter) and (c)
Publisher may procure its printing services other than through the Internet.
2. Warrants. The parties acknowledge that the parent company of
printCafe (printCafe, Inc. ("Parent")) has, in consideration for Publisher
signing the letter of intent dated February 3, 2000, agreed to issue to
Publisher, as of the date hereof, a warrant to purchase 100,000 shares of common
stock of Parent at a price of $5.80 per share pursuant to a warrant agreement
dated the date hereof. In consideration for entering into this letter agreement,
printCafe shall cause Parent to issue an additional warrant to purchase 900,000
shares of common stock of parent at a price of $5.80 per share pursuant to the
Warranty Agreement attached hereto as Exhibit A (the "Additional Warrant"). The
parties agree that Publisher shall forfeit its right to the Additional Warrant
(and the Warrant Agreement shall be deemed null and
<PAGE> 2
printCafe Systems, Inc.
March 3, 2000
Page 2
void) if the parties do not enter into the Definitive Agreement or this letter
of understanding is terminated by printCafe pursuant to Section 10.
3. Services. Upon execution of the Definitive Agreement, printCafe shall
(i) construct a discreet area hosted at the Site which bear Publisher's
trademarks to be supplied by Publisher (the "Publisher Marks") and which may be
used by Publisher to list orders for its printing jobs or requests for
quotations for printing jobs (the "Co-Branded Site") in accordance with site
specifications to be provided by Publisher (the "Site Specifications"); (ii)
host and maintain the Co-Branded Site; (iii) identify the technical and
functional specifications for and assist in the creation of interfaces to be
used in integrating the Co-Branded Site with Publisher's internal print
procurement software applications which shall be described in the Site
Specifications (the "Interfaces"); and (iv) provide other services as may be
mutually agreed upon between the parties and set forth in the Definitive
Agreement (collectively, the "Services"). The Co-Branded Site shall be fully
operational no later than seventy-five (75) days following the delivery of the
Site Specifications by Publisher. printCafe shall, in connection with the
Co-Branded Site, provide Publisher with a fully staffed customer service call
center from 7:00 a.m. to 10:00 p.m. EST, Monday through Friday, and
7-day/24-hour pager response at all other times in order to resolve customer
questions and problems relating to the Co-Branded Site.
4. Fees. In connection with the development of the Co-Branded Site,
printCafe shall provide up to [*] programming hours (the "Free Hours") at no
cost to Publisher in connection with its provision of the Services. Publisher
shall pay printCafe, on a monthly basis, fees equal to $[*] per hour for
programming hours in excess of the Free Hours, plus reasonable travel and living
expenses which have been approved in advance in writing by Publisher. printCafe
does not currently anticipate significantly exceeding the [*] programming hours
in connection with its provision of the Services and printCafe shall advise
Publisher in writing on a monthly basis of the usage of programming hours during
the prior month. Except for the foregoing, there shall be no other charges by
printCafe to Publisher.
5. Use of Publisher Trademarks and Icons. (a) printCafe shall display
the Publisher Marks and a graphical image file and/or trademark ("Publisher's
Icon") on the Co-Branded Site following the written approval of same by
Publisher. In addition, printCafe shall provide links from the Co-Branded Site
to sites designated by Publisher and to no other sites.
(b) printCafe shall not use any Publisher Mark, Publisher's Icon
(or any component of either) on any business sign, business cards, stationery or
forms, or as part of the name of printCafe's business or any division thereof,
or on any advertising or promotional materials without the prior written consent
of Publisher. In addition, printCafe shall not make any announcements or
statements to the public concerning the relationship between printCafe and
Publisher or the transactions described herein without the prior written consent
of Publisher, which consent shall not be unreasonably withheld. Publisher hereby
consents to an appropriate reference to Publisher, the Definitive Agreement when
executed and this letter of understanding
- ------------------
* Material has been omitted pursuant to a request for confidential treatment.
2
<PAGE> 3
printCafe Systems, Inc.
March 3, 2000
Page 3
in printCafe's publicly filed registration statements for securities, subject to
the review and approval by Publisher of such references to Publisher in such
registration statements.
6. Confidentiality. All information that either party acquires from the
other with respect to, or in connection with, the discussions and projects
envisioned hereunder shall be deemed confidential and proprietary information of
the disclosing party which shall be disclosed on a `need to know" basis only,
provided that such information shall not be deemed confidential if such
information (i) was generally available to or known by the public at the time it
was disclosed; (ii) becomes generally available to or known by the public other
than as a result of a disclosure by the receiving party, (iii) becomes available
to the receiving party on a nonconfidential basis from a source other than the
disclosing party (provided that such source is not known by the receiving party
to be prohibited from disclosing such information), (iv) is or was developed by
the receiving party independently of any disclosure by the disclosing party to
the receiving party, or (v) was in the possession of or known by the receiving
party prior to disclosure thereof by the disclosing party.
7. License by printCafe. printCafe shall license (i) to Publisher and
its affiliates a royalty-free, non-exclusive license to use the Co-Branded Site
to procure printing and other related services during the term of the Definitive
Agreement, (ii) to Publisher and its applicable affiliates a royalty-free,
non-exclusive license to use internally and modify the Interfaces (and to
compile any such modified versions thereof) during the term of the Definitive
Agreement and (iii) to Publisher a royalty-free, non-exclusive license to, in
connection with the processing of print orders through the Co-Branded Site, use
certain printCafe software and distribute the printCafe software to its
employees and the employees of its affiliates accessing the Co-Branded Site
during the term of the Definitive Agreement.
8. License by Publisher. Publisher shall grant to printCafe a
non-exclusive, non-transferable license necessary for printCafe to use the
Publisher Marks, Publisher's Icon and Publisher's internal print procurement
software application to perform the Services in accordance with the terms of the
Definitive Agreement. Ownership of all derivative works of the print procurement
software application and of any other of Publisher's programs, tools,
applications or interfaces, in each case developed by or for Publisher (other
than by printCafe) in connection with the provision of the Services or the
transactions contemplated hereby, shall vest in Publisher.
9. Definitive Agreement. Upon execution of this agreement in principle,
the parties shall prepare the Definitive Agreement and any ancillary agreements
which the parties may agree are desirable, which will contain representations,
warranties, indemnities, and other provisions normal and customary in a
transaction of this kind.
10. Non-binding; Termination. This letter is intended as an agreement in
principle summarizing and evidencing Publisher's and printCafe's discussions to
the date hereof. This letter is not intended to be a legally binding agreement
nor does it constitute a legally binding agreement to enter into an agreement,
provided, however, that the provisions set forth in Sections
3
<PAGE> 4
printCafe Systems, Inc.
March 3, 2000
Page 3
2, 5(b), 6, 10, 11 and 12 hereof shall be binding upon the parties hereto. This
letter may be terminated by printCafe in its sole discretion in the event that
Publisher enters into negotiations or an agreement with a competitor of
printCafe for the provision of print procurement services prior to the execution
of the Definitive Agreement.
11. Governing Law. This letter of intent shall be governed by and
construed in accordance with the internal laws of the State of New York, without
giving effect to the conflicts of laws principles thereof.
12. Counterparts. This letter of intent may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which when
taken together, shall constitute one and the same instrument.
13. Please indicate your agreement and acceptance of the terms and
conditions of this letter by executing and returning it to Mr. Guy Gleysteen at
1271 Avenue of the Americas, 38th Floor, New York, New York, 10020, whereupon
this letter shall constitute an agreement in principle between the parties in
accordance with the terms and provisions set forth above. If a fully executed
letter is not returned by 5:00 p.m. by March 6, 2000, its terms shall become
null and void.
Very truly yours,
TIME WARNER, INC.
By:___________________________
Name: Thomas W. McEnerney
Title: Vice President
AGREED TO AND ACCEPTED:
PRINTCAFE SYSTEMS, INC.
By:________________________
4
<PAGE> 1
EXHIBIT 10.11
MARKETING ALLIANCE AGREEMENT
This MARKETING ALLIANCE AGREEMENT ("Agreement") is entered into this 7th day of
March, 2000 ("Effective Date") by and between printCafe Systems, Inc., a
corporation organized under the laws of Delaware, with its principal office at
Forty 24th Street, Pittsburgh, PA 15222 (hereinafter referred to as
"printCafe"), and Andersen Consulting LLP, an Illinois general partnership
registered as a limited liability partnership, with offices at 33 W. Monroe,
Chicago, IL 60603 (hereinafter referred to as "Andersen Consulting"), for the
benefit of any entities that are a part of the Andersen Consulting business unit
of the Andersen Worldwide organization, as hereinafter more fully described.
WHEREAS, Andersen Consulting is a business integration services provider with an
objective of being a leader in the global services market for dynamic commerce
solutions;
WHEREAS, printCafe has developed and end-to-end electronic solution capable of
integrating and automating all stages of the printing process, including design
and specification, procurement, manufacturing, distribution and supply chain
management;
WHEREAS, Andersen Consulting desires to obtain certain rights, on a worldwide
basis, to market such software and promote such eCommerce product offerings as
provided herein; and,
WHEREAS, printCafe desires to grant certain rights to Andersen Consulting to
cooperatively market such software and product offerings and team together in
offering strategic sourcing capabilities initially for the print category and
for additional custom configurable products as mutually agreed upon.
NOW THEREFORE, in consideration of the promises and covenants contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties do mutually agree as follows:
SECTION 1 - DEFINITIONS
The following defined terms used in this Agreement shall have the meanings
specified in this Section 1.
1.1 The rights and benefits of "Andersen Consulting" in this Agreement shall
extend to Andersen Consulting LLP, Proquire and all affiliated entities
of Andersen Consulting located in various countries throughout the world
including each
<PAGE> 2
national practice entity within the Andersen Consulting business unit.
Any such affiliated entity will have the ability to be bound by and
receive the benefits under the terms of this Agreement by executing an
acknowledgment confirming such affiliated entity's acceptance of the
terms of this Agreement.
1.2 "Client" means any Sales Prospect or other third party that has licensed
the Software from printCafe and otherwise contractually agreed to a
subscription of printCafe's Product Offering, and who has contracted
with Andersen Consulting for Services.
1.3 "Documentation" means all functional documentation, user and software
operating materials, descriptions, related training materials,
specifications, instructions and explanatory materials regarding and
related to the Software and printCafe's Product Offering.
1.4 "Proquire" means Proquire LLC, an Andersen Consulting affiliate.
1.5 "Product Offering" means printCafe's eCommerce/eCommunity offering which
enables strategic sourcing through private and public procurement
networks, combined with a process driven strategic sourcing approach and
supply chain integration and collaboration.
1.6 "Sales Prospects" means either party's opportunistic targets and clients
in the printing/publishing industry, or other industry as mutually
agreed upon.
1.7 "Services" means Andersen Consulting's provision to a Client of all
Software and Product Offering integration services, consultation and
coaching, business process management services, change management
services, and strategic services, including but not limited to,
eCommerce systems design and implementation of workforce development
solutions (including Software) and interfaces to printCafe's technology,
modifications to the Client's current business, systems and processes,
identification of operational strategies, implementation and conversion
assistance, organization design and conversion training and other
business changes required to take advantage of printCafe's Software and
Product Offering. Services shall include Andersen Consulting's
development of enhancements, modifications, and or derivatives of the
Software, if any, for a Client. Services may also include training,
systems management and outsourcing.
1.8 "Software" means the object code, modules, programs, configuration
files, reference data files, help files, spreadsheet used to maintain
reference data, supporting design, API information and Documentation,
including all future versions, enhancements, modifications and/or
derivatives and related Documentation made by or on behalf of printCafe
(including without limitation any such enhancements, modifications
and/or derivatives made by Andersen Consulting pursuant to a separate
agreement with printCafe), associated with all versions of printCafe's
internet services. The Software includes any computer object code,
modules, programs, data files, or Documentation that is proprietary
2
<PAGE> 3
to or licensed by another third party, and that is embedded into or that
is inseparable from the Software. This Agreement does not provide for
Andersen Consulting's development for printCafe of any enhancements,
modifications and/or derivatives of printCafe's internet software, and
the Software shall not include any such enhancements, modifications
and/or derivatives prepared by Andersen Consulting for a Client. Any
such enhancements or modifications shall be contracted for and governed
by a separate agreement negotiated in good faith by the parties.
SECTION 2 - MARKETING INTENT & STRATEGY; GRANT OF LICENSE
2.1 The marketing alliance provided for in this Agreement provides printCafe
and Andersen Consulting with an opportunity to jointly provide services
and products to corporations with large expenditures on print or to
printers joining the printCafe procurement networks which would create
new direct and indirect sources of revenue for both parties. Andersen
Consulting's objective with respect to the marketing alliance is to (i)
further support Andersen Consulting's goal of being a strategic part of
the printing/publishing industry, and (ii) obtain exposure to mutually
agreed upon printCafe clients and (iii) be the premier provider of
strategic sourcing services and a pre-eminent participant in the
eCommerce marketplace. printCafe's objective with respect to the
marketing alliance is to (i) further develop and leverage its Software
and Product Offering to become an industry leader for the printing and
publishing industries, (ii) obtain exposure to mutually agreed upon
Andersen Consulting clients, (iii) obtain leverage in the
printing/publishing market as a result of its association with Andersen
Consulting, and (iv) obtain access to experienced consulting
professionals in the delivery of printCafe Software and related Product
Offering.
2.2 The parties agree that the marketing alliance provided for in this
Agreement is intended to initially support buyers of commercial
printing. As the marketing alliance relationship progresses, both
parties will consider expanding the scope of the commodities sourced
through printCafe beyond print and target other markets to support both
organization's objectives. Additional markets shall be as mutually
agreed upon and confirmed in writing.
2.3 To support the marketing alliance provided for herein, Andersen
Consulting agrees to contribute the following: - Internal promotion and
marketing of printCafe and the Software to selected Andersen Consulting
client teams.
- Assignment of business development and marketing resources from
existing client account and portfolio teams.
- Provide an alliance management point of contact for day-to-day
relationship matters and issue escalation and resolution.
- Participate in mutually agreed to marketing and business
development activities with printCafe.
- Use the Software and Product Offerings internally to introduce
printCafe within Andersen Consulting.
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2.4 To support the marketing alliance provided for herein, printCafe agrees
to contribute the following:
- Assume a lead role in developing and implementing marketing
campaigns for the Software and Product Offering.
- Assign a business development and marketing resource to assist in
promoting the alliance.
- Provide an alliance management point of contact for day-to-day
relationship matters and issue escalation and resolution.
- Update Andersen Consulting with respect to new Software and Product
Offerings.
- Access to technical support and training resources and/or courses
during the term of this Agreement.
2.5 Subject to the terms and conditions of this Agreement, printCafe hereby
grants to Andersen Consulting a worldwide, non-exclusive,
non-transferable, paid-up license to market, promote, use, install,
copy, reproduce, and display the Software and Product Offering, during
the term of this Agreement for the following limited purposes: (i)
marketing, promoting and demonstrating the Software and Product Offering
in exhibits, in all present and future Andersen Consulting facilities,
and to potential Sales Prospects; (ii) developing and demonstrating
implementation methodology and application programs utilizing the
Software and Product Offering; and (iii) training Andersen Consulting
personnel; provided that in all events any such use and installation
shall be limited to printCafe's ERP systems installed or used at
Andersen Consulting and not by Clients and provided, further, that it
shall not include the installation of printCafe's web site or related
Software. Subject to the terms and conditions of this Agreement,
printCafe hereby further grants to Andersen Consulting a limited right
to use, under the terms of the license in the preceding sentence, the
company name and trademarks, including logo, of printCafe and any name
used by printCafe to describe the Software and Product Offering, solely
in Andersen Consulting's marketing and promotion activities, with prior
written consent from printCafe. Subject to the terms and conditions of
this Agreement, Andersen Consulting hereby grants to printCafe a limited
right to use the Andersen Consulting company name and trademarks,
including logo, of Andersen Consulting to describe the Services, solely
in printCafe's marketing and promotion activities, with prior written
consent from Andersen Consulting. Notwithstanding anything to the
contrary in this Agreement, Andersen Consulting shall not, for itself,
any affiliate of Andersen Consulting or any third party: sell, license,
sublicense, modify, assign, or transfer the Software, Product Offering
or the license granted by this Section 2.5; decompile, disassemble, or
reverse engineer the Software or any component thereof; or remove from
the Software or Product Offering any language or designation indicating
the confidential nature thereof or the proprietary rights of printCafe
or its suppliers in such items. Andersen Consulting acknowledges that
the Software and Product Offering constitute proprietary information and
trade secrets which are the sole and exclusive property of printCafe or
its licensors and that the Software and Product Offering are protected
by U.S. copyright, trade secret and similar laws and certain
international treaty provisions. This Agreement does not
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transfer or convey to Andersen Consulting any rights in the Software and
Product Offering except for the limited license set forth herein. In the
event that Andersen Consulting uses the license granted by this Section
2.5 outside the United States, Andersen Consulting shall be responsible
for complying with all applicable United States export rules and
regulations and all destination country import laws.
2.6 printCafe acknowledges and agrees that the Software and Product Offering
may be marketed by Andersen Consulting subject to the terms and
conditions of this Agreement as a stand alone product or as part of a
larger, bundled offering which includes other software, products, and/or
Services, subject to printCafe's written approval in the event that such
bundled offering includes a direct competitor of printCafe. Andersen
Consulting shall not misrepresent or mischaracterize the Software or
Product Offering.
2.7 printCafe will be responsible for offering the Product Offering and, if
applicable, licensing the Software to a Sales Prospect, and printCafe
shall be solely responsible for (i) all terms and conditions contained
in such license and/or other subscription based agreement, and (ii) all
packaging, delivery, warranty and on-going Software and Product Offering
support and application maintenance.
2.8 During the term of this Agreement, printCafe shall make available to
Andersen Consulting, at no charge, (i) copies of the Software object
code, available documentation and all necessary executable application
program interface ("API") modules, API information and related technical
information and support sufficient for Andersen Consulting's use for the
purposes set forth in this Agreement, and (ii) updates to all such
materials, including updates to printCafe's Product Offering, as they
are made or become available to printCafe. Andersen Consulting may make
a reasonable number of copies of the Software as necessary for backup
(provided Andersen Consulting reproduces on such copy all proprietary
notices of printCafe or its suppliers), delivery to Andersen Consulting
facilities, and archival purposes. Andersen Consulting shall have the
right to inform its Sales Prospects of its relationship with printCafe
as the preferred integrator of the Software and Product Offering as set
forth in this Agreement.
2.9 printCafe will be solely responsible for obtaining any and all rights
necessary to allow Andersen Consulting to market, in accordance with
this Agreement, any third party components contained in the Software
and/or Product Offering, including responsibility for any administrative
or financial arrangements in relation to such third party components.
2.10 Neither party shall be required to make payments of any kind to each
other under this Agreement.
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SECTION 3 - MARKETING AND SERVICES ARRANGEMENTS
3.1 As soon as practicable following the execution of this Agreement,
Andersen Consulting's and printCafe's designated alliance liaison will
meet, jointly develop, and mutually approve a joint marketing plan to
guide the parties' marketing activities during the term of this
Agreement. The goal of the joint marketing plan is to create a mutual
understanding of opportunities which are of priority interest and to
assist each party in focusing their marketing efforts to support the
achievement of the objectives set forth in Section 2. The joint
marketing plan will be periodically updated on a quarterly basis per the
mutual consent of the parties' liaisons as appropriate. Additionally,
each party's liaison will be responsible for (i) the exchange of
information on Sales Prospect leads with the other party, including the
creation and updating of a monthly sales pipeline report, (ii) the
selection of Sales Prospect leads with the other party, and (iii) report
the efforts/results of the alliance activities provided for herein to
their respective management. When the liaisons agree to jointly pursue a
lead, each party will appoint a project manager who will be responsible
for applicable marketing and job-related activity. Additionally, each
party will provide reasonable marketing support to the other that may
include the development and preparation of marketing materials and
strategies, customer presentations, bids and proposals, possible
incentive arrangements to award printCafe sales teams for promoting
Andersen Consulting's Services, all of which shall have been mutually
agreed upon in accordance with the joint marketing plan.
3.2 Andersen Consulting and printCafe agree that the marketing alliance
provided for in this Agreement is not exclusive. However, printCafe
grants Andersen Consulting recommended status with respect to the
Services offered to Sales Prospects. Under such recommended status,
printCafe shall designate Andersen Consulting as printCafe's
"recommended Services provider" to such Sales Prospects during the term
of this Agreement. Andersen Consulting shall also have the worldwide
right to market itself as printCafe's recommended Services provider
during the term of this Agreement.
3.3 printCafe shall have the worldwide right to inform its Sales Prospects
of its relationship with Andersen Consulting as a recommended solution
provider for electronic print procurement solutions during the term of
this Agreement.
3.4 When learning of a Sales Prospect as provided for in this Agreement, a
party ("Identifying Party") will contact the liaison of the other party
("Referred Party") to determine if the Referred Party has an interest in
the opportunity. The Referred Party will independently review each new
Sales Prospect opportunity and decide if it wants to pursue the
opportunity.
Should the Referred Party have an interest in the Sales Prospect
opportunity, the parties will then discuss how best to pursue the
opportunity. On a case-by-case basis and in accordance with Section 4,
the parties will determine how they will respond to a Sales Prospect
opportunity. The parties may decide the opportunity should be pursued:
i) by only one of the parties; ii) in a joint
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manner; or iii) with the non-leading party providing only an agreed set
of support services.
If, for whatever reason, one party does not wish to pursue a Sales
Prospect opportunity that falls within the scope of the marketing
alliance provided for in this Agreement, the other party may pursue the
opportunity independent of the declining party or team with a third
party.
Should a Sales Prospect refuse to work with either Andersen Consulting
or printCafe, the other party may pursue the opportunity on its own or
in conjunction with a third party. However, in such situations, the
party pursuing the opportunity cannot disclose the non-pursuing party's
intellectual property provided for herein in its proposal or in the
actual execution of any engagement without the express written consent
of the non-pursuing party.
3.5 Each of the parties shall have primary responsibility for marketing the
joint alliance to its own Sales Prospects, and each party agrees that it
will put forth a reasonable effort to market the other party's Software
or Services, as the case may be, through its normal marketing and
distribution channels. Andersen Consulting shall have initial
responsibility for introducing the Software and printCafe's product
offering to selected Andersen Consulting clients in order to gauge
market reaction. Andersen Consulting shall convey applicable market
reaction to printCafe's liaison. Based upon the interest expressed by
Andersen Consulting's clients, and if in accordance with Andersen
Consulting's overall strategy for such client, Andersen Consulting will
introduce interested clients to printCafe's sales representatives. In
order for printCafe to promote the services as provided for in this
Agreement, Andersen Consulting shall supply printCafe with marketing
documentation in electronic and paper format that can be used by
printCafe without limitation on disclosure. printCafe agrees not to
modify, alter, amend, or misrepresent such Andersen Consulting
materials. Additionally, Andersen Consulting agrees to (i) appoint a
business development director to create internal Andersen Consulting
awareness of printCafe's Software and Product Offering capabilities,
(ii) market the Software and printCafe's Product Offering to those
partners aligned with Andersen Consulting's Media and Entertainment
operating unit, as well as other selected industry groups and lines of
businesses within Andersen Consulting, and (iii) put forth a reasonable
effort to market the Software through Andersen Consulting's normal
marketing and distribution channels. However, Andersen Consulting will
have no obligation to establish or maintain a formal sales organization
or marketing program related to this Agreement.
3.6 Any Andersen Consulting internal or external marketing may require
printCafe participation and support which printCafe shall supply in its
reasonable discretion. In order for Andersen to promote the Software as
provided for in this Agreement printCafe shall supply Andersen
Consulting with marketing documentation in electronic and paper format
that can be used by Andersen Consulting without limitation on
disclosure. Andersen Consulting agrees not to
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modify, alter, amend, or misrepresent such printCafe materials.
printCafe may require a Client or Sales Prospect to enter into a
nondisclosure agreement with printCafe to protect its confidential
information after a sales opportunity is qualified and reaches a
detailed discussion stage. printCafe shall control the release of its
confidential information to prospective Clients and or Sales Prospects
and will be responsible for putting in place such nondisclosure
agreements with prospective Clients or Sales Prospects.
3.7 Nothing in this Agreement shall be deemed a commitment or obligation on
Andersen Consulting to effect any level of Software licenses or amount
of revenue in relation to any internal or external marketing activities
supplied by Andersen Consulting with respect to the Software or
printCafe's product offerings. Likewise, printCafe has no obligation or
commitment to effect any level of revenue for Andersen Consulting's
Services.
3.8 Except as otherwise set forth in this Agreement, neither party shall use
any of the other party's marks or company names in advertising or other
promotional material or activity (including Internet web sites) without
first obtaining the owner's prior express written permission, which
shall not be unreasonably withheld or delayed. Any press release related
to this Agreement must be approved in writing by both Andersen
Consulting's Managing Partner - Marketing Communications and by
printCafe in advance.
3.9 Neither party shall have the right to make commitments of any kind for
or on behalf of the other party without first obtaining the other
party's prior written consent. Such commitments may include, but are not
limited to, recommendations for specific Andersen Consulting or
printCafe resources.
3.10 Unless otherwise explicitly agreed upon in writing, each party will be
responsible for its own costs associated with the activities performed
under this Agreement, including but not limited to, work performed and
costs incurred in connection with any proposals, or other marketing
preparation in connection with a Sales Prospect opportunity.
Andersen Consulting will retain 100% of fees related to Services
provided by Andersen Consulting to third parties. These Services will be
provided through separate written agreements. printCafe will retain 100%
of the Software license fees, Product Offering subscriptions, activation
charges, annual subscriptions, maintenance fees, set up and training
fees pursuant to its licenses with Sales Prospects.
3.11 Andersen Consulting will not be restricted from recommending and
marketing services or products which may be competitive with the
Software or Product Offering if Andersen Consulting determines that such
services or products will better meet the needs of an entity.
3.12 Andersen Consulting and printCafe shall each be solely responsible for
its respective products and services and any claims from Sales Prospects
or Clients
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with respect to such products or services. Andersen Consulting and
printCafe shall each not be responsible for the performance of the other
party's products or services or any warranty claims relating to the
other party's products or services.
3.13 During the term of this Agreement, printCafe will provide, at no charge
to Andersen Consulting, free training to a reasonable number of Andersen
Consulting personnel for the purpose of becoming knowledgeable in the
features, capabilities and technical architecture of printCafe's
Software and Product Offering.
3.14 The provisions of this Agreement do not constitute an exclusive
endorsement of the other party's products or services.
SECTION 4 - APPROACH WITH RESPECT TO A SALES PROSPECT
4.1 In the event that Andersen Consulting and printCafe elect to move
forward and pursue a Sales Prospect opportunity, the parties may agree
to jointly proceed in one of two ways:
(i) Jointly propose according to a teaming or prime/sub relationship;
or
(ii) Jointly propose as two concurrent but separate contractors.
4.2 The parties will jointly determine the appropriate marketing approach on
a case-by-case basis based upon joint discussion and input from the
Sales Prospect. In most cases, the initial position will be for Andersen
Consulting to be the lead party with respect to the Services.
4.3 The lead party will manage and coordinate the Sales Prospect
relationship and communication. The lead party will typically be the
primary communication channel with the Sales prospect and Sales Prospect
stakeholders. The non-leading party will channel all communication with
the Sales Prospect through the leading party.
4.4 If a particular opportunity requires a prime/sub relationship, the lead
party will be the prime contractor and the non-leading party will
subcontract its products/services to the lead party under financial
terms to be specified on an engagement by engagement basis. The parties
will enter into an engagement-specific teaming agreement that will
address the following issues:
- responsibilities of the prime contractor;
- responsibilities of the sub-contractor;
- each party will determine the pricing of its products/services;
- each party will be solely responsible for staffing of the
project/engagement and the performance of its obligations;
- prime contractor will be responsible for sign-off on the
sub-contractor's performance of its obligations, including
products/services delivered;
- billing, collection, flow of invoices/payments from/to
subcontractor, and currency issues;
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- each party will bear its own costs related to the products/services
it delivers;
- termination of the engagement-specific teaming agreement.
4.5 Andersen Consulting and printCafe will develop a separate subcontract or
teaming agreement for all subcontracted work based on terms and
conditions as are mutually satisfactory to the parties.
4.6 If Andersen Consulting and printCafe agree to jointly deliver services
as two independent contractors, the parties will coordinate the
following matters prior to entering into separate arrangements directly
with the Sales Prospect:
- allocation of services to be provided by each of the parties
consistent with the core competencies of Andersen Consulting and
printCafe;
- coordination of deliverables;
- as separate/independent contractors each party will determine the
pricing of its services/products and will be solely responsible for
staffing of the project/engagement and the performance of its
obligations;
- Andersen Consulting and printCafe will each determine the use of
its own third party vendors and bear the full costs of using them.
SECTION 5 - CONFIDENTIALITY
5.1 During the course of this Agreement, Andersen and printCafe may be given
access to information that (i) relates to the other's past, present, and
future research, development, business activities, products, services,
and technical knowledge, and (ii) has been identified as confidential
("Confidential Information"). The parties agree that any Software
provided by printCafe shall be deemed printCafe's Confidential
Information. In connection therewith, the following shall apply:
5.1.1 The Confidential Information of the other party may be used by the
recipient only in connection with the performance of its
obligations under this Agreement;
5.1.2 Each party agrees to protect the confidentiality of the
Confidential Information of the other in the same manner that it
protects the confidentiality of its own proprietary and
confidential information of like kind.
5.1.3 The Confidential Information may not be copied or reproduced
without the discloser's prior written consent.
5.2 All Confidential Information made available hereunder, including copies
thereof, shall be returned or destroyed upon the first to occur of (a)
termination of this Agreement or (b) written request by the discloser.
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5.3 Nothing in this Agreement shall prohibit or limit either party's use of
information (including, but not limited to, ideas, concepts, know-how,
techniques, and methodologies) (i) previously known to it without
obligation of confidence, (ii) independently developed by it, (iii)
acquired by it from a third party which is not, to its knowledge, under
an obligation of confidence with respect to such information, or (iv)
which is or becomes publicly available through no breach of this
Agreement.
5.4 In the event either party receives a subpoena or other validly issued
administrative or judicial process requesting Confidential Information
of the other party, it shall provide prompt notice to the other of such
receipt. The party receiving the subpoena shall thereafter be entitled
to comply with such subpoena or other process to that extent.
5.5 In the event a party receives Requests for Proposals ("RFPs") or other
information from a Sales Prospects and such information is disclosed to
the other party to this Agreement, then such RFPs and information will
be considered Confidential Information. The parties agree not to
disclose such RFPs and information to anyone other than their employees
who have a need to know such information for the purposes of this
Agreement without the prior written permission of the disclosing party.
5.6 Except as necessary to fulfill its obligations in relation to the
activities contemplated by this Agreement or as required to be disclosed
by applicable law or government regulation, both parties agree to keep
the terms of this Agreement confidential and except as provided
otherwise in the Agreement, may not use the other party's name without
prior written approval.
SECTION 6 - WARRANTIES TO SALES PROSPECTS
6.1 Andersen Consulting shall not warrant the performance of the Software or
other printCafe product offering, but shall extend to each Sales
Prospect the warranties and indemnification for its Services that
Andersen Consulting generally extends to purchasers of the same or
similar Services. printCafe shall extend to each Sales Prospect the
warranties and indemnification for its Software and Product Offering
that it generally extends to its customers and licensees of the
applicable Software or Product Offering. Additionally, printCafe
retains, and shall be fully responsible for, all obligations,
indemnities, and liabilities associated with ownership and licensing of
the Software and subscription arrangement for the Product Offering.
Andersen Consulting retains, and shall be fully responsible for, all
obligations, indemnities, and liabilities associated with the Services.
6.2 As between the parties, Andersen Consulting shall remain solely
responsible to Sales Prospects for the performance its Services. As
between the parties, printCafe shall remain solely responsible to Sales
Prospects for the performance of and good working order of its Software
and Product Offering.
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SECTION 7 - OWNERSHIP & PROPRIETARY RIGHTS
7.1 Each party will retain ownership of any assets or materials they bring
to this Agreement, such as software, designs, methodology, knowledge
capital, and etc. Unless otherwise agreed to, the parties will each
directly license their own materials to the Sales Prospect.
7.2 During joint marketing and/or the Sales Prospect engagement process,
certain items, including, but not limited to, high level Software
interface designs, customized eCommerce templates, presentations,
customized Product Offering documentation, marketing collateral,
workplans and training materials may be developed (collectively,
"Materials"). Materials shall not include any items or deliverables
developed for or licensed to a party by the other under a separate
contractual arrangement. As between the parties, the ownership and
intellectual property rights to the Materials will fall into the
following three categories:
(a) PRINTCAFE DEVELOPED AND OWNED: printCafe shall own all
proprietary rights in all Materials, including modules and
templates, developed solely by printCafe. If such Materials
contain Confidential Information of Andersen Consulting, the
applicable portions of such Materials will be designated as
such and will be distributed subject to the terms of a
proprietary information agreement.
(b) ANDERSEN CONSULTING DEVELOPED AND OWNED: Andersen
Consulting shall own all proprietary rights in any Materials,
including modules and templates, developed solely by Andersen
Consulting. If such Materials contain Confidential Information
of printCafe, the applicable portions of such Materials will
be designated as such and will be distributed subject to the
terms of a proprietary information agreement.
(c) JOINTLY DEVELOPED: The parties' rights in jointly
developed Materials shall be as provided in specific written
"Joint Development Agreements."
7.3 Trademarks and/or servicemarks will remain the sole property of the
original owner. Except as otherwise set forth in this Agreement, each
party agrees that it will not use the trademarks of the other without
prior written approval.
7.4 Andersen Consulting shall be free to use its general knowledge, skills
and experience, and any ideas, concepts, know-how, and techniques within
the scope of its consulting practice that are used or developed in the
course of sharing information with printCafe, subject to the
nondisclosure and confidentiality obligations agreed to between the
parties.
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7.5 The parties will cooperate with each other and execute such other
documents as may be appropriate to achieve the objectives of this
Section 7. Notwithstanding the above provisions of this Section 7
regarding ownership, each party shall have a license to use Materials
owned by the other party (as provided for in this Section) as necessary
to fulfill the purposes of this Agreement.
SECTION 8 - REPRESENTATIONS
8.1 Andersen Consulting warrants and represents that it has the right to
grant to printCafe the rights purported to be granted by or pursuant to
this Agreement, and has all other rights necessary for the performance
of its obligations under this Agreement, without violating any rights of
any other party. printCafe warrants and represents that it has the right
to grant to Andersen the rights purported to be granted by or pursuant
to this Agreement, and has all other rights necessary for the
performance of its obligations under this Agreement, without violating
any rights of any other party.
8.2 printCafe warrants and represents that except as previously disclosed to
Andersen Consulting, there are no material claims against the Software
and Product Offering (including the Documentation), trade secrets,
copyrights or trademarks related thereto and no demand of any person or
entity pertaining to it, and no material proceedings have been
instituted or are pending or, to the knowledge of printCafe, threatened
that challenge the rights of printCafe in respect thereof. Except as
previously disclosed to Andersen Consulting, printCafe has not been
charged or threatened with infringement or violation of any intellectual
property right of any person or entity and, to the knowledge of
printCafe, is not infringing any intellectual property rights through
any license or use of any Software or Product Offering. There are no
product liability claims pending or, to the knowledge of printCafe,
threatened that are based on any alleged problem or defect in any of the
Software or Product Offering (including the Documentation), trade
secrets, copyrights or trademarks related thereto, or any alleged
misrepresentation or failure to meet any claim or promise made in any
sales literature or otherwise by printCafe to any person, or on any
implied covenant or legal requirement relating to any of the Software.
printCafe will use its reasonable efforts to notify Andersen Consulting
of its knowledge of any future material claims against the Software and
Product Offering, trade secrets, copyrights or trademarks; any future
material charges of infringement or violation of any intellectual
property right; or any future material Software liability claims made or
threatened.
SECTION 9 - INDEMNIFICATION
9.1 Each party shall indemnify, defend and hold harmless the other, its
employees, principals, partners, shareholders, directors, officers,
other holders of an ownership interest, representatives and agents, from
and against any third party claims, demands, loss, damage or expense
relating to bodily injury or death of
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any person or damage to real and/or tangible personal property directly
caused by the negligence or willful misconduct of the indemnifying
party, its personnel or agents in connection with the performance of the
services, product offerings or the provision of the printCafe Products
hereunder.
9.2 Upon notice by one party (the "Indemnified Party") in writing of a third
party claim against the Indemnified Party that any of the printCafe
Products or other service or product offerings infringe any valid U.S.
patent in existence as of the date of this Agreement, a copyright, a
trade secret, or other intellectual property right of any third party,
the party who has provided the service, product or any of the printCafe
Products ("Indemnifying Party") will defend such claim at its expense
and will pay any costs or damages (including counsel fees and court
costs) that may be finally awarded against the Indemnified Party. The
Indemnifying Party will not indemnify the Indemnified Party, however, to
the extent that the claim of infringement is caused by: (1) the
Indemnified Party's misuse or modification of the service, product or
any of the printCafe Products; (2) the Indemnified Party's use of the
service, product or any of the printCafe Products in combination with
any product or information not owned or developed by the Indemnifying
Party; (3) the combination, operation or use of the services, products
or any of the printCafe Products with other products not furnished by
the Indemnifying Party, where services, products or any of the printCafe
Products otherwise would not itself be infringing; or (4) use by the
Indemnified Party of other than a current unaltered version or release
of services, products or any of the printCafe Products, provided that
such version or release had been available to the Indemnified Party on
commercially reasonable terms.
SECTION 10 - LIMITATION OF LIABILITY
10.1 In no event shall either party be liable to the other for any indirect,
special, incidental, consequential, exemplary or punitive loss, damages
or expenses (including lost profits or savings).
10.2 Any action by either party must be brought within two (2) years after
the cause of action arose.
SECTION 11 - TERM AND TERMINATION
11.1 This Agreement shall remain in effect for an initial period of two (2)
years from the Effective Date, and shall automatically renew for
consecutive one (1) year periods thereafter unless terminated by a party
as provided for herein.
11.2 Either party shall have the right to terminate this Agreement:
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- In the event the other party defaults in the performance of any
material obligation hereunder and such default is not cured by the
breaching party to the non-defaulting party's reasonable
satisfaction within thirty (30) days of receiving written notice of
the breach;
- For any reason after the eighteen months following the Effective
Date of this Agreement with a ninety (90) day prior written notice;
or
- In the event of the liquidation, insolvency or bankruptcy of the
other party;
- If there is a change of a majority controlling interest or majority
ownership of the other party with the exception of Creo SRL gaining
majority controlling interest and majority ownership of printCafe.
11.3 Andersen Consulting shall have the right to immediately terminate this
Agreement by providing written notice to printCafe in the event (i) all
or a majority and controlling portion of the ownership rights in the
Software and/or Product Offering are transferred or assigned by
printCafe to a non-affiliated third party, or (ii) printCafe transfers
or assigns a material right or obligation under this Agreement.
printCafe shall have the right to immediately terminate this Agreement
by providing written notice to Andersen Consulting in the event Andersen
Consulting transfers or assigns a material right or obligation under
this Agreement.
11.4 Upon termination or expiration of this Agreement, each party shall
immediately:
11.4.1 Cease holding itself out, in any manner, as affiliated with the
other party, except as may be provided in any surviving separate
agreement;
11.4.2 Discontinue any and all use of trade names and/or trademarks as
provided for under this Agreement, except as necessary for either
party to fulfill its obligations to a Sales Prospect; and
11.4.3 Return to the other party or destroy the other party's
Confidential Information in its possession unless this Agreement
provides otherwise.
11.5 Termination of this Agreement (i) shall not release either party from
obligations to license the Software and/or Product Offering made prior
to the receipt of any notice of termination, and (ii) shall not affect
existing licenses or subscriptions arrangements for the Software and
Product Offering. Notwithstanding the provisions of this Section 11,
each party may continue to exercise the rights and licenses granted
hereunder to the extent necessary to allow such party to fulfill its
obligations under agreements with Clients or included in any proposal to
a Sales Prospect that was outstanding at the time of termination.
Andersen Consulting specifically shall retain the right to use the
Software and/or Product Offering for as long as necessary to meet any
obligations or Services that Andersen Consulting has undertaken.
Andersen Consulting specifically shall retain the limited right to use
the Software and/or Product Offering for as long as necessary to
complete any marketing plans with Sales Prospects which commenced prior
to the termination of this Agreement.
15
<PAGE> 16
11.6 Termination of this Agreement shall not affect any other agreement
separately entered into by Andersen Consulting and printCafe.
11.7 In the event of a breach of this Agreement, the breaching party shall
provide reasonable assistance to the non-breaching party in fulfilling
the non-breaching party's obligations.
SECTION 12 - MISCELLANEOUS
12.1 Following execution of this Agreement, Andersen Consulting and printCafe
agree to establish a steering committee comprised of mutually agreed
upon executive level representatives from both organizations to oversee
and provide guidance on relationship matters as set forth in this
Agreement. In the event of a dispute, the parties agree that in the
event of any dispute or alleged breach under this Agreement, they will
work together in good faith first, to resolve the matter internally by
escalating it first to the steering committee, next to other higher
levels of management, and then, if necessary, to use a mutually agreed
alternative dispute resolution technique prior to resorting to
litigation.
12.2 Neither party may assign any of its rights or obligations under this
Agreement without the prior written consent of the other, provided,
however, that Andersen Consulting may cause this Agreement, in part or
whole, to be performed by any affiliate of Andersen Consulting in
various countries around the world and may assign its rights and
obligations hereunder to such an affiliate.
12.3 Neither party shall be liable for any delays or failures in performance
due to circumstances beyond its reasonable control, including failures
of computers, computer-related equipment, hardware or software.
12.4 If any provision of this Agreement is found to be prohibited by or
invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of the
Agreement.
12.5 Sections 1, 5, 6, 7, 8, 9, 10, 11 and 12 extend beyond the expiration or
termination of this Agreement and shall survive and remain in effect
beyond any expiration or termination. The license rights granted to
Andersen Consulting in Section 2 shall be immediately revoked upon any
termination of this Agreement, except as expressly set forth in Section
11.5.
12.6 This Agreement is governed by and shall be construed in accordance with
the laws of Illinois.
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<PAGE> 17
12.7 This Agreement may be executed in one or more counterparts, each of
which shall be considered an original counterpart, and shall become a
binding agreement when each party shall have executed one counterpart.
12.8 Captions appearing in this Agreement are for convenience only and shall
not be deemed to explain, limit or amplify the provisions hereof.
12.9 Any formal notice or other significant communication given pursuant to
this Agreement shall be in writing and shall be deemed to have been
received either when delivered personally to the party for whom
intended, or five (5) days following the deposit of the same into the
United States mail (certified mail, return receipt requested, or first
class postage prepaid), addressed to such party at the address set forth
below:
For printCafe:
printCafe Services, Inc.
40 Twenty Fourth Street
Pittsburgh, PA 15222
Attn: Marc Olin
For Andersen Consulting:
Attn: Michael Morison
33 W. Monroe
Chicago, IL 60603
Either party may designate a different address by notice to the other
given in accordance herewith.
12.10 Nothing contained in this Agreement shall be deemed or construed as
creating a joint venture or partnership between printCafe and Andersen
Consulting. Except as specifically set forth herein, neither party shall
have the power to control the activities and operations of, or
contractually bind or commit, the other party, and their status with
respect to one another is that of independent contractors.
12.11 During the term of this Agreement and for one (1) year after its
expiration or termination, neither party shall knowingly solicit for
employment any person employed by the other who was directly involved in
the activities provided for in this Agreement. In addition, neither
party shall procure any third party to solicit the other's employees.
The foregoing shall not prohibit the hiring of personnel of the other
who respond to general recruiting efforts not targeting the other party,
or the hiring of the other party's personnel who make unsolicited
inquiries about employment.
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<PAGE> 18
12.12 This Agreement contains the entire understanding of the parties with
regard to the subject matter contained herein. printCafe and Andersen
Consulting may, by mutual agreement in writing, amend, modify and
supplement this Agreement. The failure of any party hereto to enforce at
any time any provision of this Agreement shall not be construed to be a
waiver of such provision, nor in any way to affect the validity of this
Agreement or any part hereof or the right of such party thereafter to
enforce each and every such provision. No waiver of any breach of this
Agreement shall be held to constitute a waiver of any other or
subsequent breach.
18
<PAGE> 19
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.
PRINTCAFE SYSTEMS, INC. ANDERSEN CONSULTING LLP
By:_____________________________ By:________________________________
Name:___________________________ Name: Michael M. Morison
Title:__________________________ Title: Partner
Date: _________________________ Date:______________________________
19
<PAGE> 1
EXHIBIT 10.12
- --------------------------------------------------------------------------------
STOCK PURCHASE AGREEMENT
Dated as of January 13, 2000
Between
PROGRAPH SYSTEMS, INC.,
and
THE SHAREHOLDERS OF PROGRAMMED SOLUTIONS, INC.
- --------------------------------------------------------------------------------
<PAGE> 2
<TABLE>
<CAPTION>
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<S> <C>
BACKGROUND ......................................................................... 1
Article I SALE AND PURCHASE OF COMMON STOCK........................................ 1
1.1 Sale and Purchase........................................................... 1
1.2 Closing..................................................................... 1
1.3 The Purchase Price.......................................................... 1
1.4 Announcement Payment........................................................ 1
1.5 Further Cooperation......................................................... 2
Article II REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS....................... 2
2.1 Corporate Status; Outstanding Stock......................................... 2
2.2 Due Authorization and Validity of Agreement................................. 3
2.3 Officers, Directors, Bank Accounts, etc..................................... 3
2.4 Subsidiaries and Joint Ventures............................................. 3
2.5 Financial Statements........................................................ 3
2.6 Real Estate................................................................. 3
2.7 Personal Property........................................................... 3
2.8 Accounts Receivable......................................................... 4
2.9 Insurance................................................................... 4
2.10 Liabilities................................................................. 4
2.11 Contracts, Leases, Agreements and Other Commitments......................... 4
2.12 Labor, Employment Contracts and Employee Benefit Plans...................... 5
2.13 Litigation.................................................................. 7
2.14 Conflicting Interests....................................................... 8
2.15 Compliance with Law and Regulations......................................... 8
2.16 Agreement Not in Breach of Other Instruments Affecting PSI;
Governmental Consent........................................................ 8
2.17 Tax Matters................................................................. 9
2.18 Actions Since Balance Sheet Date............................................ 10
2.19 Maintenance of Financial Position........................................... 10
2.20 No Material Adverse Change.................................................. 11
2.21 Statements and Other Documents Not Misleading............................... 11
2.22 Year 2000 Warranty.......................................................... 11
</TABLE>
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<TABLE>
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<S> <C>
Article III REPRESENTATIONS AND WARRANTIES OF PROGRAPH............................... 12
3.1 Corporate Status and Authority; Outstanding Stock........................... 12
3.2 Status of Prograph Stock.................................................... 12
3.3 Agreement Not in Breach of Other Instruments Affecting Prograph............. 12
Article IV OTHER AGREEMENTS......................................................... 12
4.1 Continuation and Survival of Representations and Warranties................. 12
4.2 Due Diligence............................................................... 13
4.3 Prograph's Inspection Rights................................................ 13
4.4 Conduct of the Business of PSI Pending Closing.............................. 13
4.5 Post Signing Actions........................................................ 15
Article V CONDITIONS TO CLOSING.................................................... 15
5.1 Conditions Precedent to Prograph's Obligation to Close...................... 15
5.2 Conditions Precedent to the Shareholders' Obligation to Close............... 16
5.3 Closing Deliveries.......................................................... 17
Article VI INDEMNIFICATION.......................................................... 18
6.1 Indemnification by Shareholders............................................. 18
6.2 Prograph Holdback........................................................... 18
6.3 Escrow Arrangements......................................................... 18
6.4 Securityholder Agent of the Shareholders; Power of Attorney................. 21
6.5 Third-Party Claims.......................................................... 21
Article VII SECURITIES LAW COMPLIANCE................................................ 22
7.1 Knowledge Respecting Prograph............................................... 22
7.2 Status of Shares to be Issued............................................... 22
7.3 Prograph Acquisition of the Stock........................................... 23
Article VIII MISCELLANEOUS............................................................ 23
8.1 Further Assurances.......................................................... 23
8.2 Termination................................................................. 24
8.3 Expenses.................................................................... 24
8.4 Indulgences, Waivers, Etc................................................... 24
8.5 Section 338(h)(10) Election................................................. 24
8.6 Controlling Law............................................................. 25
8.7 Notices..................................................................... 25
</TABLE>
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<TABLE>
<CAPTION>
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<S> <C>
8.8 Exhibits and Schedules...................................................... 26
8.9 Binding Nature of Agreement; No Assignment.................................. 26
8.10 No Third-Party Beneficiaries................................................ 27
8.11 Provisions Separable........................................................ 27
8.12 Entire Agreement............................................................ 27
8.13 Amendments and Modifications................................................ 27
8.14 Section Headings and Recitals............................................... 27
8.15 Gender, Etc................................................................. 27
8.16 Waiver of Jury Trial........................................................ 27
8.17 Jurisdiction; Service of Process............................................ 28
8.18 Further Assurances.......................................................... 28
8.19 Survival of Agreements, Representations, Etc................................ 28
8.20 Confidentiality; Publicity.................................................. 28
</TABLE>
-III-
<PAGE> 5
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, made as of the 13th day of January, 2000,
by and between Prograph Systems, Inc., a Pennsylvania corporation ("Prograph"),
and the shareholders of Programmed Solutions, Inc, a Connecticut corporation
("PSI") set forth on Exhibit A hereto (each, a "Shareholder," and collectively,
the "Shareholders");
BACKGROUND
The Shareholders own all of the issued and outstanding capital stock
(the "Stock") of PSI, which is engaged in the business of designing, producing,
distributing and servicing production and systems management software and
related products for the commercial printing industry (the "Business");
The Shareholders desire to sell to Prograph, and Prograph desires to
purchase from the Shareholders all of the Stock.
NOW, THEREFORE, in consideration of the promises and of the mutual
covenants hereinafter set forth, the parties hereto, intending to be legally
bound, hereby agree as follows:
Article I
SALE AND PURCHASE OF COMMON STOCK
1.1 Sale and Purchase. Subject to the terms and conditions herein set
forth, the Shareholders shall sell, assign and transfer to Prograph and Prograph
shall purchase from the Shareholders 1,000 shares of Common Stock of PSI,
constituting all of the issued and outstanding capital stock of PSI.
1.2 Closing. Subject to the terms and conditions herein set forth, the
closing of the transactions contemplated hereby (the "Closing") shall take place
as soon as practicable after the satisfaction or waiver of each of the
conditions set forth in Article V hereof or at such other time as the parties
hereto agree (the "Closing Date"). The Closing shall take place at Pittsburgh,
Pennsylvania at the offices of Prograph, or at such other location as the
parties hereto agree.
1.3 The Purchase Price. The Aggregate Cash Consideration plus the
Aggregate Prograph shares shall comprise the Aggregate Purchase Price. The Per
Share Purchase Price shall be equal to the quotient of the Aggregate Purchase
Price divided by the total number of shares of Common Stock of PSI outstanding
at the Closing. For purposes of this Agreement, "Aggregate Cash Consideration"
equals $15,000,000.00. "Aggregate Prograph Shares" means 1,697,793 shares of
Prograph Common Stock. Exhibit A hereto sets forth the number of shares of PSI
Common Stock held by each Shareholder and the amount of the Aggregate Cash
Consideration and the number of shares of the Aggregate Prograph Shares to be
issued at the Closing to each Shareholder.
1.4 Announcement Payment. (a) In the event that Prograph wishes to make
a public announcement disclosing the transaction contemplated hereby prior to
the Closing, Prograph shall pay to the Securityholder Agent (as defined below)
for the benefit of the Shareholders, the amount of $1,000,000 in cash.
<PAGE> 6
1.5 Further Cooperation. From time to time after the Closing, the
Shareholders at Prograph's request and without further consideration, agree to
take or cause to be taken such further or other action as may reasonably be
necessary or appropriate in order to effectuate the transactions contemplated by
this Agreement.
Article II
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
As material inducement to Prograph to enter into this Agreement and to
consummate the transactions contemplated hereby, the Shareholders hereby make
the following representations and warranties to Prograph. Where any documents
are described as having been delivered by PSI to Prograph, such documents have
been identified by signatures of, or inclusion on a Disclosure Schedule mutually
agreed to by, representatives of both parties. Information that must be
described in more than one Schedule shall not be deemed disclosed in a
particular Schedule unless it is disclosed in such Schedule, either expressly or
by a specific incorporation by reference to the relevant portion of another
Schedule. Disclosure of information in a Schedule shall not be deemed to
establish that such disclosure is required -- e.g., that an item is material, if
disclosed in a Schedule that calls for material items.
For the purpose of this Article II only, "knowledge" with respect to PSI
means information that has come to the attention of an officer of PSI and
information that would with reasonable diligence in the ordinary course of the
performance of his or her normal duties come to the attention of an officer of
PSI responsible for verifying the accuracy thereof for purposes of this
Agreement.
2.1 Corporate Status; Outstanding Stock. PSI is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Connecticut, has the power and authority to own its properties and to carry on
its business as it is now being conducted, and is duly qualified to do business
as a foreign corporation in the jurisdictions specified in Schedule 2.1, which
constitutes all the jurisdictions in which such qualification is required in
which PSI conducts any business. PSI has an authorized capital consisting of
2000 shares of Common Stock, no par value per share. PSI has shares outstanding
and owned by the Shareholders as set forth on Exhibit A, all of which
outstanding shares are validly issued, fully paid and non-assessable. There are
no shares of PSI's capital stock held in its treasury. There are no options,
warrants, rights, shareholder agreements or other instruments or agreements
outstanding giving any person the right to acquire any shares of capital stock
of PSI, nor are there any commitments to issue or execute any such options,
warrants, rights, shareholder agreements, or other instruments or agreements,
other than those in Schedule 2.1. There are no outstanding stock appreciation
rights or similar rights measured with respect to any of PSI's or any
Subsidiary's capital stock, nor are there any instruments or agreements giving
anyone the right to acquire any such rights, except those listed in Schedule
2.1. The minute books and stock records of PSI are complete and accurate and all
signatures included therein are the genuine signatures of the persons indicated
as signing. True, correct and complete copies of PSI's minute books and stock
records, including PSI's Certificate of Incorporation and By-Laws and all
amendments to both, have been delivered to Prograph. PSI is not in default under
or in violation of any provision of its Certificate of Incorporation or its
By-Laws.
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2.2 Due Authorization and Validity of Agreement. This Agreement has been
duly executed and delivered by each Shareholder and constitutes the valid and
binding obligation of the Shareholders enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency, moratorium
and other similar laws affecting creditors' rights generally and by general
principles of equity, whether considered in a proceeding at law or in equity.
2.3 Officers, Directors, Bank Accounts, etc. Schedule 2.3 discloses all
directors and officers of PSI, all bank accounts and safe deposit boxes of PSI
and all persons authorized to sign checks drawn on such accounts and to have
access to such safe deposit boxes.
2.4 Subsidiaries and Joint Ventures. There is no corporation or other
entity in which PSI owns, directly or indirectly, a controlling interest or a
majority of the outstanding shares or other equity interest issued by such
corporation or entity, nor does PSI own any other capital stock, security,
partnership interest or other interest of any kind, either direct or indirect,
in any corporation, partnership, joint venture, association or other entity.
2.5 Financial Statements. The audited balance sheets of PSI as at
December 31, 1997 and December 31, 1998, and the related audited statements of
income and retained earnings and cash flows for the fiscal years then ended, as
well as the unaudited balance sheet as at November 30, 1999 (the "Most Recent
Balance Sheet"), and all related schedules and notes to the foregoing, copies of
all of which constitute Schedule 2.5, were prepared in accordance with generally
accepted accounting principles and practices consistently applied throughout the
periods reported upon and with past periods (except that the unaudited financial
statements do not include footnotes and are subject to normal year-end
adjustments), and fairly present the financial position of PSI as at the dates
of such balance sheets, and the results of the operations and cash flows of PSI
for the periods ended on such dates. The financial statements for the fiscal
year ended on December 31, 1998 were audited by Dylewsky & Goldberg CPAs, LLC,
certified public accountants whose reports are included with such financial
statements.
2.6 Real Estate. PSI has no right, title or interest in, or any
obligation or duty relating to, any real estate or real property, except for its
interest as a tenant, lessee, subtenant or sublessee under the leases disclosed
on Schedule 2.6 (the "Leases").
2.7 Personal Property.
(a) PSI has good, valid and marketable title to all of the personal
property, tangible and intangible (including, but not limited to Intellectual
Property, as defined below), disclosed on Schedule 2.7, all of which is owned by
it, free and clear of all liens, mortgages, pledges, security interests,
restrictions, prior assignments, encumbrances and claims of every kind, other
than as disclosed on Schedule 2.7. All equipment, furniture and fixtures, and
other tangible personal property used by PSI in its business is in good
operating condition and repair and does not require any repairs other than
normal routine maintenance to maintain such property in good operating condition
and repair. As used herein, "Intellectual Property" shall include trademarks,
trade names, logos, service marks, copyrights, patents, pending patent
applications, shoprights, know-how, trade secrets, computer programs and
computer software and the like and other items commonly known as intellectual
property.
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<PAGE> 8
(b) PSI is the sole and exclusive owner of the Intellectual
Property disclosed on Schedule 2.7 and possesses all Intellectual Property
rights and licenses required for the conduct of the Business other than
Intellectual Property for which it holds a current license. The Intellectual
Property owned by PSI is listed on Schedule 2.7 and is the only Intellectual
Property that is used by PSI in the operation of its business. Except as
disclosed on Schedule 2.7 no claim has been asserted against PSI involving any
conflict or claim of conflict of its Intellectual Property with the Intellectual
Property of others, and to the knowledge of PSI and the Shareholders there is no
basis for any such claim or conflict.
2.8 Accounts Receivable. Except as set forth on Schedule 2.8, each of
the accounts receivable of PSI reflected on the Most Recent Balance Sheet
represents a valid claim in the full amount thereof against the debtor charged
therewith on the books of PSI and was acquired in the ordinary course of PSI's
business, and no such account receivable arose from any transaction with the
United States or any department or agency thereof. To PSI's and the
Shareholders' knowledge, no account debtor has any valid set-off, deduction or
defense with respect thereto and no account debtor has asserted any such
set-off, deduction or defense.
2.9 Insurance. PSI maintains insurance policies bearing the numbers, for
the terms, with the companies, in the amounts, having the named insureds,
providing the general coverage, and with the premiums disclosed on Schedule 2.9.
All of such policies are in full force and effect; PSI is not in default of any
provision thereof and all premiums due (without regard to any grace period) with
respect to such policies have been paid. PSI has not been refused any insurance
for which it has applied and has not received notice from any issuer of any
policy issued to it of the insurer's intention to cancel or refusal to renew any
such policy issued by such insurer. The Shareholders believe that such policies
are substantially similar to those carried by corporations of established
reputations engaged in the same or similar business as is PSI as regards the
hazards insured against and the amounts of coverage. PSI and the Shareholders
believe that the amount of such insurance is adequate. True, correct and
complete copies of all such policies have been delivered to Prograph.
2.10 Liabilities. On the date of the Most Recent Balance Sheet, PSI had,
and as of the date hereof, PSI has, no liabilities, whether related to tax or
non-tax matters, known or unknown, due or not yet due, liquidated or
unliquidated, fixed, contingent, or otherwise, including penalty, acceleration
or forfeiture clauses in any contract, except (a) as and to the extent disclosed
in the Most Recent Balance Sheet or in Schedule 2.10, (b) to the extent not
required by generally accepted accounting principles to be set forth on a
balance sheet, or (c) as incurred since the date of the Most Recent Balance
Sheet (the "Balance Sheet Date") in the ordinary course of business.
2.11 Contracts, Leases, Agreements and Other Commitments.
(a) PSI is not a party to or bound by any written, oral or implied
contract, agreement, lease, power of attorney, guaranty, surety arrangement or
other commitment, including but not limited to any contract or agreement for the
purchase or sale of merchandise or for the rendition of services, except for the
following (which are hereinafter collectively called the "PSI Agreements") (and
for the purpose of this Subsection, PSI shall be considered "bound" by any
lease, mortgage or other encumbrance which is binding on any of its Real
Properties even though it is not personally binding upon PSI):
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<PAGE> 9
(i) Leases described on Schedule 2.6;
(ii) agreements involving a maximum possible liability or
obligation per agreement on the part of PSI of less than $5,000 each and less
than $20,000 in the aggregate;
(iii) customer license agreements in the standard forms
delivered to Prograph, any exceptions to which are set forth on Schedule
2.11(a)(iii);
(iv) employment-related agreements disclosed on Schedule 2.12;
and
(v) agreements listed on Schedule 2.11(a)(v).
(b) True, correct and complete copies of all of the PSI Agreements
(including all amendments thereto) have been delivered to or otherwise made
available to Prograph. PSI's customer agreements cover at least 750 distinct
sites.
(c) All of the PSI Agreements are in full force and effect and are
valid, binding and enforceable against the respective parties thereto in
accordance with their respective terms. Except as disclosed on Schedule 2.11,
PSI and all other parties to all of the PSI Agreements have performed all
obligations required to be performed to date under the PSI Agreements and
neither PSI nor any such other party is in default or in arrears under the terms
thereof, and (to the Shareholders' knowledge with respect to defaults of other
parties thereto) no condition exists or event has occurred which, with the
giving of notice or lapse of time or both, would constitute a default
thereunder. Except as explicitly set forth in Schedule 2.11(c), the execution
and delivery of this Agreement, the consummation of the transactions provided
for herein and the fulfillment of the terms hereof by PSI do not and will not,
with or without the giving of notice, the lapse of time, or both, result in the
breach of any of the terms and provisions of, or constitute a default under, or
conflict with, or cause any acceleration of, any obligation of PSI under, any
PSI Agreement. None of the terms or provisions of any PSI Agreement materially
adversely affects, or with the passage of time may materially adversely affect,
the business, prospects, conditions, affairs or operations of PSI or any of its
properties or assets. Except as set forth in Schedule 2.18(g), PSI is not aware
of any intention by any party to terminate or amend any PSI Agreement or, if PSI
intends to request a renewal, of any intention to refuse to renew the same upon
expiration of its term.
(d) Schedule 2.11 discloses (i) all outstanding written and oral
proposals, bids, offers or guaranties made by PSI which, if accepted, would or
could impose any debts, obligations or liabilities upon PSI, and (ii) unexpired
warranties relating to PSI's products or services, detailing the products or
services covered by each warranty, other than those contained in the standard
form customer license agreements of PSI.
2.12 Labor, Employment Contracts and Employee Benefit Plans. Except as
disclosed on Schedule 2.12:
(a) PSI is not a party to any written or oral employment
agreement, consulting agreement, personal service agreement or agreement with
any independent contractor, and there are no actual or threatened controversies
related to or arising out of any such existing or alleged agreements. PSI is not
a party to any pending or threatened labor dispute. PSI has performed all
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<PAGE> 10
obligations, given all notices and obtained all consents necessary under such
agreements to consummate this Agreement.
(b) PSI is not a party to any collective bargaining agreement. With
respect to employees of PSI none of the following events or circumstances exists
and none is threatened: a controversy, a claim of illegal or improper conduct or
activities, an unresolved grievance or charge of unfair labor practice, an
arbitration proceeding or a union organizing effort. PSI has not received notice
of any claim that it has not complied with any applicable law or regulation
relating to the employment of labor, including any provisions thereof relating
to wages, hours, collective bargaining, the payment of social security and
similar taxes, retirement plans, health and welfare plans, equal employment
opportunity, employment discrimination and employment safety, or that the PSI is
liable for any arrears of wages or any taxes or penalties or interest for
failure to comply with any of the foregoing. PSI has not been the subject of any
organizational efforts by any labor organizing, strike, work stoppage, "sickout"
or picketing by any group of persons (whether or not employees).
(c) PSI has complied with the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), and all other laws relating to the employment
of labor or provision of employee benefits, including any provisions thereof
relating to wages, hours, benefits, pensions, safety, discrimination, the filing
of all reports and forms required to be filed with state or federal agencies,
collective bargaining, recognition and dealing with labor organizations, and the
payment of social security and unemployment compensation taxes, the withholding
of income tax, and the payment and withholding of similar taxes. PSI is not
liable for any arrearages of wages, taxes, benefit payments or contributions, or
penalties or interest for failure to comply with any of the foregoing.
(d) There is no employee benefit plan that PSI maintains or to
which it contributes, except as disclosed in Schedule 2.12. Each employee
benefit plan disclosed in Schedule 2.12, and each related trust, insurance
contract or fund, complies in form and in operation with the applicable
requirements of ERISA, the Internal Revenue Code of 1986, as amended (the
"Code"), and other applicable laws. PSI has never maintained, sponsored or
contributed to an employee pension plan that is or was subject to Title IV of
ERISA.
(e) Except as explicitly set forth on Schedule 2.12(g), all reports
and descriptions (including Form 5500 Annual Reports, Summary Annual Reports,
PBGC-1s, and Summary Plan Descriptions) required of PSI with respect to each
employee benefit plan disclosed in Schedule 2.12, have been timely filed or
distributed in compliance with the requirements of applicable law. The
requirements of Part 6 of Subtitle B of Title I of ERISA and of Section 4980B of
the Code have been met with respect to each such employee benefit plan which is
an employee benefit plan described in Section 3(l) of ERISA.
(f) All contributions (including all employer contributions and
employee salary reduction contributions) which may be required to be made in
accordance with the employee benefit plans and, when applicable, Section 302 of
ERISA or Section 412 of the Code have been or will be timely paid to each
employee benefit plan disclosed in Schedule 2.12, for all periods ending on or
before the Closing; contributions which are not yet due have been paid to each
such employee benefit plan or accrued in accordance with the past custom and
practice of PSI. All
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premiums or other payments for all periods ending on or before the date hereof
have been paid with respect to each such employee benefit plan that is described
in Section 3(l) of ERISA.
(g) Each employee benefit plan disclosed in Schedule 2.12, that is
intended to meet the requirements of a "qualified plan" under Section 401(a) of
the Code satisfies the requirements of Section 401(a) of the Code and has
received, within the last two years, a favorable determination letter from the
Internal Revenue Service.
(h) There have been no prohibited transactions (as defined in ERISA
Section 406 and Section 4975 of the Code) with respect to any employee benefit
plan. No fiduciary (as defined in ERISA) has any liability for breach of
fiduciary duty or any other failure to act or comply in connection with the
administration or investment of the assets of any employee benefit plan. No
action, suit, proceeding, hearing or investigation with respect to the
administration or the investment of the assets of any employee benefit plan
(other than routine claims for benefits) is pending or, to the knowledge of PSI
threatened. To the knowledge of PSI, there is no basis for any such action,
suit, proceeding, hearing or investigation.
(i) PSI does not maintain, has never maintained, and does not
contribute to, has never contributed to, and never has been required to
contribute to any employee benefit plan providing medical, health, or life
insurance or other welfare-type benefits for current or future retired or
terminated employees, their spouses, or their dependents (other than in
accordance with Section 4980B of the Code). No person who is not a current or
former employee (or a beneficiary thereof) of PSI participates or is entitled to
any benefits under any plan disclosed on Schedule 2.12.
(j) Subject to the limitations set forth in Section 6.2, the
Shareholders agree, jointly and severally, to indemnify and hold Prograph and
its Affiliates harmless from any loss, expense, liability, claim or obligation
(including attorneys' fees), which relates to periods ending on or prior to the
Closing, and which in any way arises as a result of, under or with respect to:
(a) the employee benefits and employee benefit plans (as the term is defined in
Section 3(3) of ERISA) which have been or are maintained, sponsored or
contributed to by PSI, (b) post-employment benefits, including but not limited
to retiree medical, retiree life and retiree accidental death and disability
benefits for current and former employees of PSI and (c) the requirement to
provide any employee of PSI who is terminated on or prior to the Closing with
continuation coverage under the requirements of Section 4980B of the Code
(Prograph acknowledging, however, that pursuant to law PSI may have an
obligation to provide, at the employees' expense, continuation health insurance
coverage to such employees who were covered by health insurance provided by PSI
prior to the Closing). The term "Affiliate" as used in this Agreement shall have
the meaning given to such term under the Securities Exchange Act of 1934, as
amended.
2.13 Litigation. Except as disclosed on Schedule 2.13, PSI is not a
party to or threatened with any suit, action, arbitration, or administrative or
other proceeding, either at law or in equity, or governmental investigation, by
or before any court, governmental department, commission, board, agency or
instrumentality, domestic or foreign; to the best of PSI's and the Shareholders'
knowledge, there is no basis for any suit, action, arbitration, or
administrative or other proceeding against PSI which could is likely to,
individually or in the aggregate, have a
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material adverse effect on the business, assets, condition (financial or
otherwise), operations or prospects of PSI; there is no judgment, decree, award
or order outstanding against PSI; and PSI is not contemplating the institution
by it of any suit, action, arbitration or administrative or other proceeding.
2.14 Conflicting Interests. Except as disclosed on Schedule 2.14, no
director, officer or employee of PSI and no Shareholder or any ancestor,
sibling, descendant or spouse of any such persons, or any trust, partnership or
Affiliate of any of the foregoing (a) has any pecuniary interest in any supplier
or customer of PSI or in any other business enterprise with which PSI conducts
business or with which PSI is in competition; (b) is indebted to PSI for money
borrowed; (c) is a party to any transaction or agreement with PSI (apart from
such person's status as an employee or stockholder as such); or (d) has any
business or other interest in conflict with the interests of PSI.
2.15 Compliance with Law and Regulations. Except as shown on Schedule
2.15, PSI is in compliance and has at all times during the past five (5) years
complied in all material respects with all requirements of law, federal, state
and local, and all requirements of all governmental bodies or agencies having
jurisdiction over it, the conduct of its business, the use of its properties and
assets, and all premises occupied by it. Without limiting the foregoing, PSI has
obtained and now holds all licenses, permits, certificates and authorizations
needed or required for the current conduct of its business and the use of its
properties and the premises occupied by it, the failure of which to obtain or
hold would not have a material adverse effect on PSI's assets or business. PSI
has properly filed all material reports and other documents required to be filed
with any federal, state, local and foreign government or subdivision or agency
thereof. PSI has not received any notice, not heretofore complied with, from any
federal, state or local authority or any insurance or inspection body that any
of its properties, facilities, equipment, or business procedures or practices
fails to comply with any applicable law, ordinance, regulation, building or
zoning law, or requirement of any public authority or body. All licenses,
permits, orders and approvals issued by any governmental body or agency
currently in effect and pertaining to the property, assets or business of PSI
are disclosed on Schedule 2.15. To the knowledge of PSI and the Shareholders,
there are no regulations or legislation pending before any federal, state, local
or foreign government agency, administrative body or legislature which, if
adopted, would have a material adverse effect on PSI's business.
2.16 Agreement Not in Breach of Other Instruments Affecting PSI;
Governmental Consent. Except as disclosed on Schedule 2.16, the execution and
delivery of this Agreement, the consummation of the transactions provided for
herein, and the fulfillment of the terms hereof: (a) will not, with or without
the giving of notice, the lapse of time, or both, result in the imposition of
any lien, security interest or encumbrance on any asset of PSI or in the breach
of any of the terms and provisions of, or result in a termination, impairment or
modification of or constitute a default under, or conflict with, or cause any
acceleration of any obligation of PSI under, or permit any other party to modify
or terminate, any agreement, indenture or other instrument by which PSI is
bound, PSI's Certificate of Incorporation or Bylaws, any judgment, decree,
order, or award of any court, governmental body, or arbitrator, or any
applicable law, rule or regulation, (b) do not require the consent of any
governmental authority or other person, and (c) will not result in any
limitation or restriction of any right of PSI.
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2.17 Tax Matters.
(a) "Taxes" shall mean any tax (whether income, excise, customs,
sales or use, value added, ad valorem, real or personal property, license,
transfer, employment, social security or any other kind of tax or payment in
lieu of tax no matter how denominated), or any assessment, levy, impost,
withholding, or other governmental charge in the nature of a tax, and shall
include all additions to tax, interest, penalties and fines with respect
thereto; and "Returns" shall mean all reports, estimates, information statements
and returns of any nature, including amended versions of any of the foregoing,
relating to or required to be filed in connection with any Taxes pursuant to the
statutes or regulations of any federal, state, local or foreign government
taxing authority.
(b) PSI has filed all Returns that are required to be filed by it.
All such Returns are true, correct and complete in all material respects as of
their respective filing dates. All Taxes for which PSI is liable and that are
due (including, without limitation, Taxes shown to be due on all filed Returns)
have been paid, and all Taxes that are required to be withheld or collected by
PSI have been duly withheld and collected and, to the extent required, have been
paid to or accrued on the Most Recent Balance Sheet for the benefit of the
appropriate governmental authority or properly deposited as required by
applicable law, rule or regulation.
(c) No taxing authority has asserted or, to the knowledge of PSI or
any Shareholder, threatened to assert any adjustment, deficiency or assessment
for any Taxes against PSI; to the knowledge of PSI and each Shareholder, no
basis exists for any such adjustment, deficiency or assessment; and to the
knowledge of PSI and each Shareholder, there is no audit or investigation
pending or, to the knowledge of PSI and each Shareholder, threatened by any
taxing authority with respect to any liability for Taxes of PSI.
(d) Except as disclosed on Schedule 2.17, PSI has no taxable income
or gain that may be reportable for a period ending after the Closing, but which
is attributable to a transaction occurring, or a change in accounting method
made for a period ending, at or prior to the Closing, which may result in
deferred reporting of income or gain from such transaction or from such change
in accounting method.
(e) There are no currently outstanding requests made by PSI for tax
rulings, determinations or information that could affect the Taxes of PSI.
(f) Schedule 2.17, discloses all Returns filed with respect to PSI
for taxable periods ending on or after December 31, 1998, and all Returns (if
not for taxable periods) filed since December 31, 1998. PSI has delivered to
Prograph complete and accurate copies of all such Returns.
(g) PSI has not been obligated to deduct and withhold Taxes under
Section 1441 or 1442 of the Code.
(h) No consent under Section 341(f) of the Code has been filed with
respect to PSI.
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(i) PSI is not a party to any agreement or arrangement that would
result in the payment of any "excess parachute payment" within the meaning of
Section 280G of the Code.
(j) PSI has not been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
(k) PSI has made a valid election under the Code to be treated as
an S corporation effective for all taxable years of PSI since December 1987, and
PSI's status as an S corporation for federal income tax purposes has not been
terminated for any reason and has remained valid during the period since such
date to and including the Closing Date..
2.18 Actions Since Balance Sheet Date. Except as disclosed on Schedule
2.18, since the Balance Sheet Date to the date hereof, PSI:
(a) has not taken any action outside of the ordinary and usual
course of business;
(b) has not borrowed any money or become contingently liable for
any obligation or liability of others;
(c) has paid all of its debts and obligations as they became due;
(d) has not incurred any debt, liability or obligation of any
nature to any party, outside the ordinary and usual course of business
consistent with past practice;
(e) has not knowingly waived any right of material value;
(f) has used its best efforts to preserve its business organization
intact, to keep available the services of its employees, and to preserve its
relationships with its customers, suppliers and others with whom it deals;
(g) has not lost the services of any employee and has not sustained
a termination of its relationship with any customer, supplier or other person
with whom it deals, and no such termination is anticipated; and
(h) has not purchased or redeemed any shares of capital stock of
PSI, or transferred, distributed or paid, directly or indirectly, any money or
other property or assets to any stockholder or to any other person, other than
payment of liabilities shown on the Most Recent Balance Sheet on or after the
scheduled maturity or due date thereof, payment of compensation for services
actually rendered at rates not in excess of the rates prevailing on the Balance
Sheet Date, payments due under PSI Agreements, and payments in the ordinary
course of business for goods and services in arm's length transactions.
2.19 Maintenance of Financial Position. Except as set forth on Schedule
2.19, of the date hereof, (a) the excess of current assets over current
liabilities of PSI, as such current assets and current liabilities are shown on
the Most Recent Balance Sheet, is at least equal to the amount thereof shown on
the Most Recent Balance Sheet; (b) the book value of the fixed assets of PSI is
at least equal to the book value thereof shown on the Most Recent Balance Sheet
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(except for depreciation accrued, in accordance with generally accepted
accounting principles applied in a manner consistent with past periods, by
reason of the passage of time); and (c) the tangible net worth (being the excess
of all assets after taking depreciation into account, other than goodwill and
other intangible assets, over all liabilities) of PSI is at least equal to the
amount thereof shown on the Most Recent Balance Sheet.
2.20 No Material Adverse Change. Since the Balance Sheet Date to the
date hereof, there has not been, and there is not threatened, any material
adverse change in the financial condition, business, prospects or affairs of PSI
or any material physical damage or loss to any of PSI's properties or assets or
to the premises occupied by PSI (whether or not such damage or loss is covered
by insurance).
2.21 Statements and Other Documents Not Misleading. Neither this
Agreement, including all Schedules, nor the Closing documents furnished by PSI
or the Shareholders to Prograph in connection with the transactions contemplated
hereby contains or will contain any untrue statement of any material fact or
omits or will omit to state any material fact necessary to be stated in order to
make any statement contained therein not misleading. There is no fact known to
PSI or to any Shareholder which materially adversely affects PSI's business,
prospects, financial condition or affairs or any of its properties or assets
which has not been set forth in this Agreement, including the Schedules
furnished by PSI on or prior to the date hereof in connection with the
transactions contemplated hereby.
2.22 Year 2000 Warranty. Except as set forth on Schedule 2.22, PSI's
software, the technology used in PSI's business and all updates thereto are
designed to correctly handle the change of the century, including the year 2000
and beyond as well as the leap year and the absence of leap year, and will
operate accurately before, during and after the year 2000 with respect to
date/time related operations. Without limiting the foregoing, PSI's software
will operate and correctly process data such that (a) calculations using dates
are executed utilizing a four digit year, (b) the software functionality,
including, but not limited to, entry, inquiry, maintenance, update and display
(whether on-line, batch or otherwise) shall support four digit year processing
(it being understood that certain date fields in certain PSI software products
display two-digit years only, but are nevertheless Y2K compliant), (c) reports
and interfaces with other PSI software shall support four digit year processing
and shall otherwise meet the requirements of this subsection, (d) use of the
correct system date shall occur without human intervention, (e) processing with
a four digit year shall occur without human intervention, (f) all leap years
shall be calculated correctly, and (g) correct results shall be produced in
forward and backward date calculations spanning century boundaries, including
the conversion of previous years currently stored as two digits.
For purposes hereof, "Software" means the intangible languages,
programs, operating systems, compilers and assemblers that cause a computer to
perform in an expected manner, including the media on which such information is
stored.
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Article III
REPRESENTATIONS AND WARRANTIES OF PROGRAPH
As material inducement to the Shareholders to enter into this Agreement
and to consummate the transactions contemplated hereby, Prograph makes the
following representations and warranties to the Shareholders:
3.1 Corporate Status and Authority; Outstanding Stock. Prograph is a
corporation duly organized, validly existing and in good standing under the laws
of the Commonwealth of Pennsylvania and has the corporate power to enter into
and consummate the transactions contemplated by this Agreement. The authorized
capital stock of Prograph is as set forth on Schedule 3.1, and consists of
16,971,000 shares on a fully diluted basis. Prograph has, and will continue to
have at all times until Closing hereunder, a sufficient number of authorized but
unissued shares of Common Stock to be able to issue all of the shares of
Prograph Stock which are to be issued hereunder. The execution, delivery and
performance of this Agreement by Prograph have been duly authorized by all
necessary corporate action on the part of Prograph, and this Agreement has been
duly executed and delivered by and constitutes the valid and binding obligation
of Prograph, enforceable against it in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, moratorium and other
similar laws affecting creditors' rights generally and by general principles of
equity, whether considered in a proceeding at law or in equity.
3.2 Status of Prograph Stock. The shares of Prograph Stock, when issued
pursuant to the terms of this Agreement, will be duly authorized, validly issued
and outstanding, fully paid and non-assessable.
3.3 Agreement Not in Breach of Other Instruments Affecting Prograph.
Except as set forth in Schedule 3.3, the execution and delivery of this
Agreement the consummation of the transactions provided for herein by Prograph
do not and will not, with or without the giving of notice, the lapse of time or
both, result in the breach of any of the terms and provisions of, or constitute
a default under, or conflict with or cause any acceleration of any obligation of
Prograph under, or require any consent under, any agreement, indenture or other
instrument by which Prograph is bound, Prograph's Articles of Incorporation or
Bylaws, any judgment, decree, order or award of any court, governmental body or
arbitrator, or any applicable law, rule or regulation.
3.4 Statements and Other Documents Not Misleading. Neither this
Agreement, including all Schedules, nor the Closing documents furnished by
Prograph to the PSI Shareholders in connection with the transactions
contemplated hereby, nor Prograph's Confidential Offering Memorandum, dated
December 1999 (as supplemented from time to time) (as so supplemented, the
"Prograph Memorandum"), contains or will contain any untrue statement of any
material fact or omits or will omit to state any material fact necessary to be
stated in order to make any statement contained therein not misleading. There is
no fact known to Prograph which materially adversely affects Prograph's
business, prospects, financial condition or affairs or any of its properties or
assets which has not been set forth in the Prograph Memorandum or this
Agreement, including the Schedules furnished by Prograph on or prior to the date
hereof in connection with the transactions contemplated hereby.
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Article IV
OTHER AGREEMENTS
4.1 Continuation and Survival of Representations and Warranties. All
representations and warranties, including information disclosed in Schedules,
made in this Agreement shall continue to be true and correct at and as of the
Closing Date and at all times between the signing of this Agreement and the
Closing Date, as if made at each of such times; provided, however, that at
Closing the Shareholders may deliver to Prograph modifications of the Schedules
to reflect changes thereto arising in the ordinary course of its Business since
the date hereof, provided further that none of such changes, either individually
or in the aggregate, is materially adverse to the Business or financial
condition of PSI. If any party hereto shall learn of a representation or
warranty being or becoming untrue at or prior to Closing, such party shall
promptly give notice thereof to all of the other parties hereto. All
representations and warranties contained herein shall survive the consummation
of the transactions provided for in this Agreement for a period of one year from
the Closing and shall provide the basis for the remedies set forth herein or
otherwise available to the non-breaching party. Each covenant contained herein
shall survive the Closing until fulfilled or expressly waived. Each
representation and warranty contained herein is independent of all other
representations and warranties contained herein (whether or not covering an
identical or a related subject matter) and must be independently and separately
complied with and satisfied. No representation or warranty contained herein
shall be deemed to have been waived, affected or impaired by any investigation
made by or knowledge of any party to this Agreement.
4.2 Due Diligence. The parties agree to use reasonable commercial
efforts to: (a) provide reasonably requested due diligence materials to the
other party as promptly as practicable after receipt of the other party's
request, and (b) complete their due diligence review of the other party no later
than January 21, 2000, subject to timely provision of requested due diligence
material by the other party.
4.3 Prograph's Inspection Rights. PSI shall give to Prograph and its
designated employees or representatives full access to all of the properties and
assets of PSI, to PSI's stock books, and to all of PSI's documents, books and
records relating to its current and past operations and Business. PSI shall
permit such employees and representatives to make copies of PSI's written
materials and to interview and question PSI's employees upon reasonable notice,
during regular business hours and without unnecessary disruption of PSI's
operations. Prograph will not reveal any confidential data and/or information
supplied by PSI except to its management, counsel, accountants, insurance
representatives, investment bankers and like agents, for purposes relating to
the evaluation and consummation of the transactions contemplated by this
Agreement, and in the event the transactions contemplated by this Agreement are
not consummated, such data and information will not be used by Prograph and will
be returned to PSI.. The Shareholders acknowledge receipt of the executed term
sheets for the financings by (i) certain current Prograph shareholders and (ii)
by Creo. The Shareholders shall have the right to make such inquiry of Prograph
concerning its business, capital structure and financing initiatives as shall be
necessary or appropriate for them to evaluate their prospective investment in
Prograph.
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4.4 Conduct of the Business of PSI Pending Closing. Between the date
hereof and the Closing hereunder, PSI shall:
(a) not take or suffer or permit any action which would render
untrue any of the representations or warranties of PSI herein contained, and not
omit to take any action, the omission of which would render untrue any such
representation or warranty;
(b) conduct its Business in a good and diligent manner in the
ordinary and usual course;
(c) not enter into any contract, agreement, commitment or
arrangement with any party, other than contracts for the sale of merchandise or
services and contracts for the purchase of materials, services and supplies in
the ordinary and usual course of its Business, and not amend, modify or
terminate any PSI Agreement without the prior written consent of Prograph;
(d) use its best efforts to preserve its Business organization
intact, to keep available the services of its employees, and to preserve its
relationships with customers, suppliers and others with whom it deals;
(e) not reveal, orally or in writing, to any party, other than
Prograph and Prograph's authorized agents, any of the procedures and practices
followed by it in the conduct of its Business or any technology used in the
processing, evaluation or manufacture of any of its products or rendering its
services;
(f) maintain in full force and effect all of the insurance policies
listed on Schedule 4.4(f) and make no change in any insurance coverage without
the prior written consent of Prograph;
(g) keep the premises occupied by it and all of its equipment and
other tangible personal property in good order and repair and perform all
necessary repairs and maintenance;
(h) continue to maintain all of its usual Business books and
records in accordance with its past practices;
(i) not amend its Certificate of Incorporation or Bylaws;
(j) not declare or make any dividend or other payment on or with
respect to its capital stock, redeem or otherwise acquire any shares of its
capital stock or issue any capital stock or any option, warrant or right
relating thereto;
(k) not waive any right or cancel any claim;
(l) not increase the compensation or rate of compensation payable
to any of its employees;
(m) maintain its corporate existence and not merge or consolidate
with any other entity;
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(n) comply with all provisions of any PSI Agreement applicable to
it and all applicable laws, rules and regulations;
(o) not make any capital expenditure outside of the ordinary course
of business; and
(p) use its best efforts to obtain any necessary third party
consents and take other actions in order to consummate the transactions
contemplated by this Agreement.
4.5 Post Signing Actions. Both parties hereto shall take all reasonable
steps to deliver any of the Exhibits or Schedules or ancillary agreements called
for herein after the date hereof as promptly as possible prior to the Closing.
Article V
CONDITIONS TO CLOSING
5.1 Conditions Precedent to Prograph's Obligation to Close. The
following shall be conditions precedent to the obligation of Prograph to close
hereunder, any of which may be waived in whole or in part by Prograph:
(a) Each of the representations and warranties of the Shareholders
contained in this Agreement are now and, except as to those expressly limited to
the date hereof or some other specific date, and except for those covered by
Section 5.1(c) below, at all times after the date of this Agreement to and
including the time of Closing shall be, true and correct in all material
respects.
(b) Each of the agreements, covenants and undertakings of the
Shareholders contained in this Agreement, except for those calling for
performance after Closing, will have been fully performed and complied with in
all material respects at or before Closing.
(c) No litigation, governmental actions or other proceeding
involving or potentially involving a liability, obligation or loss on the part
of PSI of $20,000 or more, in the aggregate, or which by reason of the nature of
the relief sought might have a material adverse effect on PSI's Business or
financial condition, shall be threatened or commenced against PSI with respect
to any matter; no litigation, governmental action or other proceeding shall be
threatened or commenced against PSI or any Shareholder with respect to the
consummation of the transactions provided for herein.
(d) All indebtedness owing to PSI by any director, officer,
employee or Shareholder of PSI will be paid in full at or prior to Closing,
except for the debt described on Schedule 5.1(d).
(e) All actions, proceedings, instruments and documents required to
enable PSI and the Shareholders to perform this Agreement or matters incident
thereto (other than matters for which Prograph is responsible under the terms of
this Agreement), and all other legal matters not relating to a default by
Prograph of its obligations hereunder, shall have been duly taken, satisfied,
executed or delivered, as the case may be, to the reasonable satisfaction of
Prograph.
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(f) All documents required to be delivered by the Shareholders at
or prior to Closing shall have been delivered or shall be tendered at the time
and place of Closing.
(g) Each of the Shareholders listed on Schedule 5.1(g) shall have
executed and delivered at the Closing Employment Agreements with Prograph in the
form of Exhibit B hereto.
(h) The Stockholder Agreement dated as of January 4, 1999, among
PSI and the Shareholders shall have been terminated with no further force or
effect.
(i) PSI and the Shareholders shall have tendered the Closing
deliverables specified in Section 5.3(a) below.
(j) Tibbetts & Keating and/or David E. Martin, Esq., counsel to the
Shareholders, shall have delivered an opinion or opinions to Prograph relating
to such matters as Prograph and its counsel shall reasonably request.
5.2 Conditions Precedent to the Shareholders' Obligation to Close. The
following shall be conditions precedent to the obligation of the Shareholders'
to close hereunder, any of which may be waived in whole or in part by the
Shareholders:
(a) Each of the representations and warranties of Prograph
contained in this Agreement are now and, except as to those expressly limited to
the date hereof or some other specific date at all times after the date of this
Agreement to and including the time of Closing shall be, true and correct in all
material respects.
(b) Each of the agreements, covenants and undertakings of Prograph
contained in this Agreement, except for those calling for performance after
Closing, will have been fully performed and complied with in all material
respects at or before Closing.
(c) No litigation, governmental actions or other proceeding
involving or potentially involving a liability, obligation or loss on the part
of Prograph of $20,000 or more, in the aggregate, or which by reason of the
nature of the relief sought might have a material adverse effect on Prograph's
Business or financial condition, shall be threatened or commenced against
Prograph with respect to any matter; no litigation, governmental action or other
proceeding shall be threatened or commenced against Prograph or any of its
shareholders with respect to the consummation of the transactions provided for
herein.
(d) Prograph shall have executed and delivered at the Closing
Employment Agreements with each of the Shareholders set forth on Schedule 5.1(g)
in the form of Exhibit B hereto.
(e) The financing contemplated by the Prograph Memorandum shall
have been consummated on terms substantially as beneficial to Prograph and the
Shareholders as the terms set forth in the term sheet delivered to the
Shareholders prior to the date hereof.
(f) Matthew D'Emilio, Esq., counsel to Prograph, shall have
delivered an opinion or opinions to the Shareholders relating to such matters as
the Shareholders and their counsel shall reasonably request.
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(g) Prograph shall have tendered the Closing deliverables specified
in Section 5.3(b) below.
5.3 Closing Deliveries.
(a) Deliveries by the Shareholders at Closing. At Closing, the
Shareholders will deliver or cause to be delivered to Prograph the following:
(i) certificates of the President of PSI, dated as of the
Closing Date, confirming (1) the truth and correctness of all of the
representations and warranties of PSI contained in Article II herein as of the
Closing Date and as of all times between the date hereof and the Closing Date,
and (2) that all agreements and covenants of PSI specified herein have been
complied with, and (3) that no Shareholder has exercised or taken any action
with a view to exercising any rights of rescission under the Pennsylvania
Securities Act of 1972, as amended, with respect to the transactions
contemplated hereby;
(ii) the signed resignations of all directors and all officers
of PSI dated and effective as of the Closing Date;
(iii) the stock books and records, corporate minute books
(containing the originals of all minutes and resolutions ever adopted or
consented to or agreed to by the shareholders, directors or any committee of
directors of PSI) and the corporate seal of PSI;
(iv) a "good standing" certificate for PSI for each
jurisdiction PSI is registered to do business in and a certified copy of the
Certificate of Incorporation and all amendments thereto issued by the Department
of State of Connecticut and dated as of a date within fifteen (15) days prior to
the Closing Date;
(v) a Certification by each Shareholder pursuant to the
Foreign Investment Real Property Tax Act, in the form attached hereto as Exhibit
D;
(vi) certificates representing all of the Stock, together with
duly endorsed in blank stock powers;
(vii) consents executed by all necessary parties whose consent
to the transactions contemplated hereby is required under the terms of the PSI
Agreements, or PSI's licensees or rights. Such consents are described on
Schedule 5.3(a)(vii) hereto; and
(viii) the Employment Agreements, duly executed by the
Shareholders who are party thereto.
(b) Deliveries by Prograph at Closing. At the Closing, Prograph
will deliver or cause to be delivered to the Shareholders the following:
(i) wire transfers or bank checks in amounts equal to the
respective cash portions of the Purchase Price payable to each Shareholder;
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(ii) certificates for the Aggregate Prograph Shares which
shall be validly issued, fully paid and non-assessable Prograph Stock registered
in the names of the Shareholders in accordance with their respective interests
as set forth on Exhibit A;
(iii) the Certificate of the President of Prograph, dated the
Closing Date, confirming the truth and correctness of all of the representations
and warranties of Prograph contained herein as of the Closing Date and as of all
times between the date hereof and the Closing Date;
(iv) the Certificate of the Secretary or an Assistant
Secretary of Prograph, dated the Closing Date, that the necessary corporate
action by the Board of Directors of Prograph has been taken to authorize the
consummation by Prograph of the transactions provided for herein; and
(v) the Employment Agreements, duly executed by Prograph.
Article VI
INDEMNIFICATION
6.1 Indemnification by Shareholders. Subject to Section 6.2 below, from
and after the Closing Date, the Shareholders shall indemnify and hold harmless
PSI, Prograph and any of their affiliates, and their respective officers,
directors, shareholders, representatives and agents (a "Prograph Indemnified
Party") against, and reimburse such Prograph Indemnified Party for, any
liability, damage, loss, obligation, demand, judgment, fine, penalty, cost or
expense, including reasonable attorneys' fees and expenses, and the costs of
investigation incurred in defending against or settling such liability, damage,
loss, cost or expense or claim therefor and any amounts paid in settlement
thereof (collectively "Damages") imposed on or reasonably incurred by such
Prograph Indemnified Part as a result of any breach of any representation,
warranty or covenant, on the part of the Shareholders set forth in Article II of
this Agreement; provided, however, that no Shareholder shall be required to make
any indemnification payments until and unless the amount of cumulative Damages
incurred by Prograph Indemnified Parties exceeds $50,000.
6.2 Prograph Holdback. As the sole and exclusive remedy for satisfying
Shareholders' indemnification obligations set forth in this Agreement, Prograph
shall be entitled to hold back from the Closing proceeds $1,000,000 of the
Aggregate Cash Consideration and 10% of the Aggregate Prograph Shares (the
"Escrowed Proceeds"), to be held in escrow for a period of one year following
the Closing Date (the "Expiration Date"). Solely for purposes of this Section
6.2, the parties agree that each share of Prograph Common Stock shall be deemed
to be worth the then current fair market value per share at any time that such
shares are required to be valued for purposes of satisfying indemnity
obligations. On the first anniversary of the Closing Date, if no Damages shall
have been incurred during such one-year period, Prograph shall immediately turn
over to each of the Shareholders the portion of the Escrowed Proceeds allocable
to them.
6.3 Escrow Arrangements. (a) Escrow Fund. At the Closing, the
Shareholders will be deemed to have received and deposited with the Escrow Agent
(as defined below) the Escrowed Proceeds without any act of any Shareholder. As
soon as practicable after the Closing, the
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Escrow Proceeds, will be deposited with an institution acceptable to Prograph
and the Securityholder Agent, such deposit to constitute an escrow fund (the
"Escrow Fund") to be governed by the terms set forth herein and at the
Shareholders' and Prograph's cost and expense. The Escrow Fund shall be
available to compensate Prograph for any Damages. Prograph and the Shareholders
acknowledge that such Damages, if any, would relate to unresolved contingencies
existing at the Closing, which if resolved at the Closing would have led to a
reduction in the Purchase Price.
(b) Escrow Period; Distribution upon Termination of Escrow Periods.
Subject to the following requirements, the Escrow Fund shall be in existence
immediately following the Closing and shall terminate at 5:00 p.m., Pennsylvania
time, on the Expiration Date (the "Escrow Period"); provided that the Escrow
Period shall not terminate with respect to such amount, that together with the
aggregate amount remaining in the Escrow Fund is necessary in the reasonable
judgment of Prograph, subject to the objection of the Securityholder Agent and
the subsequent arbitration of the matter in the manner provided in Section
6.3(f) hereof, to satisfy any unsatisfied claims concerning facts and
circumstances existing prior to the termination of such Escrow Period. As soon
as all such claims have been resolved, the Escrow Agent shall deliver to the
Shareholders the remaining portion of the Escrow Fund not required to satisfy
such claims. Deliveries of Escrowed Proceeds to the Shareholders pursuant to
this Section 6.3(b) shall be made in proportion to their respective original
contributions to the Escrow Fund
(c) Voting Rights, Investment of the Escrow Fund. Each Shareholder
shall have voting rights with respect to the shares of Prograph Common Stock
contributed to the Escrow Fund by such Shareholder. The Escrow Agent shall
invest the cash portion of the Escrow Fund and interest thereon in U.S.
Government obligations or obligations of commercial banks having at least $10
billion in assets with a maturity of one year or less but in no event extending
beyond the Expiration Date.
(d) Claims Upon Escrow Fund.
(i) Upon receipt by the Escrow Agent wit a copy to the
Shareholder Agent at any time on or before the last day of the Escrow Period of
a certificate signed by any officer of Prograph (an "Officer's Certificate"):
(a) stating that Prograph has paid or properly accrued or reasonably anticipates
that it will have to pay or accrue Damages, and (b) specifying in reasonable
detail the individual items of Damages included in the amount so stated, the
date each such item was paid or properly accrued, or the basis for such
anticipated liability, and the nature of the misrepresentation, breach of
warranty or covenant to which such item is related, the Escrow Agent shall,
subject to the provisions of Section 6.3(e) hereof, transfer out of the Escrow
Fund to Prograph, as promptly as practicable, Escrowed Proceeds held in the
Escrow Fund in an amount equal to such Damages.
(ii) For the purposes of determining the number of shares of
Prograph Common Stock to be transferred to Prograph out of the Escrow Fund
pursuant to Section 6.3(d)(i) hereof, the shares of Parent Common Stock shall be
valued at the then current fair market value.
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(e) Objections to Claims. For a period of thirty (30) days after
delivery of an Officers Certificate to the Shareholder Agent, the Escrow Agent
shall make no transfers of any Escrowed Proceeds pursuant to Section 6.3(d)
hereof unless Escrow Agent shall have received written authorization from the
Shareholder Agent to make such delivery. After the expiration of such thirty
(30)-day period, Escrow Agent shall transfer Escrowed Proceeds from the Escrow
Fund in accordance with Section 6.3(d) hereof, provided that no such payment or
delivery may be made if the Securityholder Agent shall object in a written
statement to the claim made in the Officer's Certificate, and such statement
shall have been delivered to the Escrow Agent with a copy to Prograph prior to
the expiration of such thirty (30)-day period.
(f) Resolution of Conflicts; Arbitration.
(i) In case the Securityholder Agent shall so object in
writing to any claim or claims made in any Officer's Certificate, the
Securityholder Agent and Prograph shall attempt in good faith to agree upon the
rights of the respective parties with respect to each of such claims. If the
Securityholder Agent and Prograph should so agree, a memorandum setting forth
such agreement shall be prepared and signed by both parties and The Escrow Agent
shall be entitled to rely on any such memorandum and distribute Escrowed
Proceeds from the Escrow Fund in accordance with the terms thereof.
(ii) If no such agreement can be reached after good faith
negotiation, either Prograph or the Securityholder Agent may demand arbitration
of the matter unless the amount of the damage or loss is at issue in pending
litigation with a third party, in which event arbitration shall not be commenced
until such amount is ascertained or both parties agree to arbitration; and in
either such event the matter shall be settled by arbitration conducted by three
arbitrators. Prograph and the Securityholder Agent shall each select one
arbitrator, and the two arbitrators so selected shall select a third arbitrator.
The arbitrators shall set a limited time period and establish procedures
designed to reduce the cost and time for discovery while allowing the parties an
opportunity, adequate in the sole judgment of the arbitrators, to discover
relevant information from the opposing parties about the subject matter of the
dispute. The arbitrators shall rule upon motions to compel or limit discovery
and shall have the authority to impose sanctions, including attorneys' fees and
costs, to the extent as a court of competent law or equity, should the
arbitrators determine that discovery was sought without substantial
justification or that discovery was refused or objected to without substantial
justification. The decision of a majority of the three arbitrators as to the
validity and amount of any claim in such Officer's Certificate shall be binding
and conclusive upon the parties to this Agreement, and notwithstanding anything
in Section 6.3(e) hereof, The Escrow Agent shall be entitled to act in
accordance with such decision and make or withhold payments out of the Escrow
Fund in accordance therewith. Such decision shall be written and shall be
supported by written findings of fact and conclusions which shall set forth the
award, judgment, decree or order awarded by the arbitrators.
(iii) Judgment upon any award rendered by the arbitrators may
be entered in any court having jurisdiction. Any such arbitration shall be held
in Allegheny County, Pennsylvania under the rules then in effect of the American
Arbitration Association.
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6.4 Securityholder Agent of the Shareholders; Power of Attorney.
(a) Jonathan Taffler shall be appointed as agent and
attorney-in-fact (the "Securityholder Agent") for each Shareholder for and on
behalf of the Shareholders, to give and receive notices and communications, to
authorize delivery to Prograph of Escrowed Proceeds in satisfaction of claims by
Prograph, to object to such deliveries, to agree to, negotiate, enter into
settlements and compromises of, and demand arbitration and comply with orders of
courts and awards of arbitrators with respect to such claims, and to take all
actions necessary or appropriate in the judgment of Securityholder Agent for the
accomplishment of the foregoing. Such agency may be changed by the Shareholders
from time to time upon prior written notice to Prograph; provided that the
Securityholder Agent may not be removed unless holders of two-thirds of the
Shareholders' interest of the Escrow Fund agree to such removal and to the
identity of the substituted agent. Any vacancy in the position of Securityholder
Agent may be filled by approval of the holders of a majority in interest of the
Escrow Fund. No bond shall be required of the Securityholder Agent, and the
Securityholder Agent shall not receive compensation for his or her services.
Notices or communications to or from the Securityholder Agent shall constitute
notice to or from each of the Shareholders.
(b) Neither the Securityholder Agent nor the Escrow Agent shall be
liable for any act done or omitted hereunder in such capacity while acting in
good faith and in the exercise of reasonable judgment. The Shareholders on whose
behalf the Escrowed Proceeds were contributed to the Escrow Fund shall severally
indemnify the Securityholder Agent and hold the Securityholder Agent harmless,
and each Shareholder and Prograph shall severally indemnify the Escrow Agent and
hold it harmless, against any loss, liability or expense incurred without
negligence or bad faith on the part of the Securityholder Agent and arising out
of or in connection with the acceptance or administration of the Securityholder
Agent's duties hereunder, including the reasonable fees and expenses of any
legal counsel retained by the Securityholder Agent.
(c) Actions of the Securityholder Agent. A decision, act, consent
or instruction of the Securityholder Agent shall constitute a decision of all
the Shareholders for whom a portion of the Escrowed Proceeds otherwise issuable
to them are deposited in the Escrow Fund and shall be final, binding and
conclusive upon each of such Shareholder, and the Escrow Agent and Prograph may
rely upon any such decision, act, consent or instruction of the Securityholder
Agent as being the decision, act, consent or instruction of each every such
Shareholder. Prograph and the Escrow Agent are hereby relieved from any
liability to any person for any acts done by them in accordance with such
decision, act, consent or instruction of the Securityholder Agent.
6.5 Third-Party Claims. In the event Prograph becomes aware of a
third-party claim which Prograph believes may result in a demand against the
Escrow Fund, Prograph shall notify the Securityholder Agent, with a copy to the
Escrow Agent, of such claim, and the Securityholder Agent, as representative for
the Shareholders, shall be entitled, at their expense, to participate in any
defense of such claim. Prograph shall have the right in its sole discretion to
settle any such claim; provided, however, that except with the consent of the
Securityholder Agent, no settlement of any such claim with third-party claimants
shall alone be determinative of the amount of any claim against the Escrow Fund.
In the event that the Securityholder Agent has consented to any such settlement,
the Securityholder Agent shall have no power or authority to
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object under any provision of this Article VI to the amount of any claim by
Prograph against the Escrow Fund with respect to such settlement.
Article VII
SECURITIES LAW COMPLIANCE
7.1 Knowledge Respecting Prograph. By their approval of this Agreement,
each Shareholder represents and acknowledges that (i) such Shareholder is a
sophisticated investor with knowledge and experience in business and financial
matters, knows, or has had the opportunity to acquire, all information
concerning the business, affairs, financial condition and prospects of Prograph
which such Shareholder deems relevant to make a fully informed decision
regarding the consummation of the transactions contemplated hereby and is able
to bear the economic risk and lack of liquidity inherent in holding the Prograph
Stock. Without limiting the foregoing, each Shareholder understands and
acknowledges that neither Prograph nor anyone acting on its behalf has made any
representations or warranties other than those contained herein respecting
Prograph or the future conduct of Prograph's business or of PSI's business, and
no Shareholder has relied upon any representations or warranties other than
those contained herein in the belief that they were made on behalf of Prograph.
7.2 Status of Shares to be Issued. By their approval of this Agreement,
each Shareholder agrees, acknowledges and confirms that he has been advised and
understands as follows:
(a) Shareholder is acquiring the shares of Prograph Stock to be
issued to him for his own account and without a view to any distribution or
resale thereof, other than a distribution or resale which, in the opinion of
counsel for such Shareholder (which opinion shall be satisfactory in form and
substance to Prograph), may be made without violating the registration
provisions of the Securities Act of 1933, as amended (the "1933 Act") or any
applicable blue sky laws. Shareholder acknowledges that the shares of Prograph
Stock are "restricted securities" within the meaning of Rule 144 under the 1933
Act and have not been registered under the 1933 Act or any state securities laws
and thereafter must be held indefinitely unless they are subsequently registered
under the 1933 Act and any other state acts where registration may be required
before sale or an exemption from such registration is available. Prograph is
under no obligation to register the shares of Prograph Stock under the 1933 Act
or any state securities law or to take any action which would make available an
exemption from such registration.
(b) There shall be endorsed on the certificates evidencing the
shares of Prograph Stock delivered at Closing a legend substantially similar to
the following:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"1933 ACT") OR THE SECURITIES LAWS OF ANY OTHER JURISDICTION AND
ARE "RESTRICTED SECURITIES" AS DEFINED BY RULE 144 UNDER THE 1933
ACT. THE SHARES MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR
DISTRIBUTED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
REGISTERING THE SHARES UNDER THE
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1933 ACT AND THE SECURITIES LAWS OF ANY STATE REQUIRING SUCH
REGISTRATION, OR IN LIEU THEREOF, AN OPINION OF COUNSEL, WHICH
OPINION IS SATISFACTORY TO THE ISSUER OF THE SHARES, TO THE
EFFECT THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACTS. WITHOUT
LIMITING THE FOREGOING, THE SHARES MAY NOT BE SOLD WITHIN TWELVE
MONTHS AFTER THE DATE OF THIS CERTIFICATE WITHOUT AN OPINION OF
COUNSEL, WHICH OPINION IS SATISFACTORY TO THE ISSUER, THAT SUCH
SALE DOES NOT VIOLATE THE PENNSYLVANIA SECURITIES ACT OF 1972 OR
THE RULES AND REGULATIONS THEREUNDER."
(c) Except under certain limited circumstances, the above
restrictions on the transfer of the shares of Prograph Stock will also apply to
any and all shares of capital stock or other securities issued or otherwise
acquired with respect to such shares, including, without limitation, shares and
securities issued or acquired as a result of any stock dividend, stock split or
exchange or any distribution of shares or securities pursuant to any corporate
reorganization, reclassification or similar event.
(d) Prograph and its transfer agent may refuse to effect a transfer
of any of the shares of Prograph Stock by the Shareholders or any of their
successors, personal representatives or assigns otherwise than as contemplated
hereby.
7.3 Prograph Acquisition of the Stock. Prograph represents and warrants
that it is acquiring the Stock for its own account and without a view to any
distribution or resale thereof in violation of the registration provisions of
the 1933 Act, or any applicable blue sky laws. Prograph acknowledges that the
shares of Stock are "restricted securities" within the meaning of Rule 144 under
the 1933 Act and have not been registered under the 1933 Act or any state
securities laws and thereafter must be held indefinitely unless they are
subsequently registered under the 1933 Act and any other state acts where
registration may be required before sale or an exemption from such registration
is available.
Article VIII
MISCELLANEOUS
8.1 Further Assurances. The parties agree to execute and deliver all
such other instruments and take all such other action as any party may
reasonably request from time to time, before or after Closing and without
payment of further consideration, in order to effectuate the transactions
provided for herein. The parties shall cooperate fully with each other and with
their respective counsel and accountants in connection with any steps required
to be taken as part of their respective obligations under this Agreement,
including, without limitation, the preparation of financial statements and tax
returns.
8.2 Termination.
(a) This Agreement may be terminated at any time prior to the
Closing Date:
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(i) by the written agreement of Prograph and the Shareholders;
(ii) by Prograph by written notice to the Securityholder Agent
if any of the conditions set forth in Section 5.1 shall not have been, or if it
becomes apparent that any of such conditions will not be, fulfilled by 5:00 p.m.
EST on January 31, 2000, unless such failure shall be due to the failure of
Prograph to perform or comply with any of the covenants, agreements, or
conditions hereof to be performed or complied with by it prior to the Closing;
or
(iii) by the Shareholders by written notice from the
Securityholder Agent to Prograph if any of the conditions set forth in Section
5.2 shall not have been, or if it becomes apparent that any of such conditions
will not be, fulfilled by 5:00 p.m. EST on January 31, 2000, unless such failure
shall be due to the failure of PSI or the Shareholders to perform or comply with
any of the covenants, agreements or conditions to be performed or complied with
by them prior to the Closing.
(b) In the event of the termination of this Agreement pursuant to
this Section, this Agreement shall become void, without any liability to any
party in respect hereof or of the transactions contemplated hereby on the part
of any party hereto, or any of its directors, officers, employees, agents,
consultants, representatives, advisers, stockholders or Affiliates, except for
any liability resulting from such party's breach of this Agreement.
8.3 Expenses. Each party will pay its own legal fees and expenses
incurred in connection with the Proposed Transactions.
8.4 Indulgences, Waivers, Etc. Neither the failure nor any delay on the
part of either party to exercise any right, remedy, power or privilege under
this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege preclude any other or
further exercise of the same or of any other right, remedy, power or privilege,
nor shall any waiver of any right, remedy, power or privilege with respect to
any occurrence be construed as a waiver of such right, remedy, power or
privilege with respect to any other occurrence.
8.5 Section 338(h)(10) Election; Subchapter S Tax Liability.
(a) PSI and each of the Shareholders will, at the request of Prograph,
join in making an election under Section 338(h)(10) of the Code. Each of the
Shareholders will include any income, gain, loss, deduction, or other tax item
resulting from such Section 338(h)(10) election on their Returns to the extent
permitted by applicable law. If Prograph makes such election, Prograph shall
complete the Form 8023, and shall allocate the purchase price in accordance with
the allocation principles set forth on Exhibit 8.5. Each Shareholder shall sign
the completed Form 8023 and such other Tax forms as are necessary to effectuate
the Section 338(h)(10) Election.
(b) Each Shareholder shall cause his accountants to provide to Prograph
a computation showing in reasonable detail the amount (the "Incremental Tax
Liability") by which his aggregate federal and state tax liability (other than
any taxes attributable to "built-in gains" under Section 1374 of the Code or
comparable provisions of state laws), taking into account the Section 338(h)(10)
Election, shown on his federal and state income tax Returns (his "Actual Tax
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<PAGE> 29
Liability") exceeds the aggregate amount of such tax liability to which he would
have been subject had such election not been made (his "Base Liability"). Each
Shareholder and Prograph will use their best efforts to agree as to the amount
of the Shareholder's Incremental Tax Liability. If agreement cannot be reached
within 15 days after such computation is provided to Prograph, the determination
of Incremental Tax Liability will be referred to an accounting firm acceptable
to the Shareholder and Prograph, each of which shall provide such firm with a
schedule showing in reasonable detail its determination of the amount of
Incremental Tax Liability. The determination of such accounting firm shall be
final and conclusive on both parties. The party whose determination of
Incremental Tax Liability provided to the accounting firm differs from the value
determined by such firm by the larger amount shall bear the expenses of the
determination by the accounting firm. Prograph shall pay to the Shareholder the
amount of Incremental Tax Liability as determined pursuant to this Section
8.5(b) within 15 days after the amount of Incremental Tax Liability is
determined.
(c) In the event of any reduction or increase in a Shareholder's
Incremental Tax Liability as a result of audit, the Shareholder shall cause his
accountants to provide a revised computation of his Incremental Tax Liability to
Prograph, based on the adjusted income tax Returns. Procedures similar to those
in Section 8.5(b) shall apply to determine the revised amount of Incremental Tax
Liability. Within 15 days after the revised Incremental Tax Liability is
determined, Prograph shall pay the Shareholder or the Shareholder shall pay to
Prograph the difference between the Incremental Tax Liability as previously
computed and the revised Incremental Tax Liability. In the event of an audit,
Prograph shall be entitled to participate therein, and each Shareholder shall
not agree to any consensual resolution thereof which results in an increase in
the aggregate Incremental Tax Liability without Prograph's prior written
consent.
(d) Each Shareholder shall cause his accountants to provide to Prograph
a computation showing in reasonable detail the amount (the "Incremental 1999
Subchapter S Tax Liability") by which his aggregate 1999 federal and state tax
liability attributable to him as a result of his ownership of PSI stock, shown
on his federal and state income tax Returns (his "1999 Subchapter S Tax
Liability") exceeds or is less than his ratable portion of $450,000 (the
"Assumed Aggregate 1999 Subchapter S Tax Liability"). Shareholder and Prograph
will use their best efforts to agree as to the amount of the Shareholder's 1999
Subchapter S Tax Liability. If agreement cannot be reached within 15 days after
such computation is provided to Prograph, the determination of 1999 Subchapter S
Tax Liability will be referred to an accounting firm acceptable to the
Shareholder and Prograph, each of which shall provide such firm with a schedule
showing in reasonable detail its determination of the amount of 1999 Subchapter
S Tax Liability. The determination of such accounting firm shall be final and
conclusive on both parties. The party whose determination of 1999 Subchapter S
Tax Liability provided to the accounting firm differs from the value determined
by such firm by the larger amount shall bear the expenses of the determination
by the accounting firm. In the event the Shareholder's Incremental 1999
Subchapter S Tax Liability is negative, the Shareholder shall pay to Prograph
the amount of his Incremental 1999 Subchapter S Tax Liability as determined
pursuant to this Section 8.5(d) within 15 days after the amount of Incremental
1999 Subchapter S Tax Liability is determined. In the event the Shareholder's
Incremental 1999 Subchapter S Tax Liability is positive, Prograph shall pay to
the Shareholder the amount of his Incremental 1999 Subchapter S
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Tax Liability as determined pursuant to this Section 8.5(d) within 15 days after
the amount of Incremental 1999 Subchapter S Tax Liability is determined.
(e) In the event of any reduction or increase in a Shareholder's
Incremental 1999 Subchapter S Tax Liability as a result of audit, the
Shareholder shall cause his accountants to provide a revised computation of his
Incremental 1999 Subchapter S Tax Liability to Prograph, based on the adjusted
income tax Returns. Procedures similar to those in Section 8.5(d) shall apply to
determine the revised amount of Incremental 1999 Subchapter S Tax Liability.
Within 15 days after the revised Incremental 1999 Subchapter S Tax Liability is
determined, Prograph shall pay the Shareholder or the Shareholder shall pay to
Prograph the difference between the Incremental 1999 Subchapter S Tax Liability
as previously computed and the revised Incremental 1999 Subchapter S Tax
Liability. In the event of an audit, Prograph shall be entitled to participate
therein, and each Shareholder shall not agree to any consensual resolution
thereof which results in a decrease in the aggregate Incremental 1999 Subchapter
S Tax Liability without Prograph's prior written consent.
8.6 Controlling Law. This Agreement and all questions relating to its
validity, interpretation, performance, remediation and enforcement (including,
without limitation, provisions concerning limitations of actions) shall be
governed by and construed in accordance with the domestic laws of the
Commonwealth of Pennsylvania, notwithstanding any choice-of-laws doctrines of
such jurisdiction or any other jurisdiction which ordinarily would cause the
substantive law of another jurisdiction to apply, without the aid of any canon,
custom or rule of law requiring construction against the draftsman.
8.7 Notices. All notices, requests, demands and other communications
required or permitted under this Agreement shall be in writing and shall be
deemed to have been duly given, made and received only when delivered
(personally, by courier service such as Federal Express, or by other messenger)
or when deposited in the United States mails, registered or certified mail,
postage prepaid, return receipt requested, addressed as set forth below:
(a) If to Prograph:
Marc Olin
c/o Prograph Systems, Inc.
40 24th Street, 5th Floor
Pittsburgh, PA 15222
with copy to:
Matthew D'Emilio
c/o Prograph Systems, Inc.
40 24th Street, 5th Floor
Pittsburgh, PA 15222
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<PAGE> 31
(b) If to the Securityholder Agent:
------------------------------
c/o Programmed Solutions, Inc.
40 Richards Avenue
Norwalk, Connecticut 06854
With copy to:
David E. Martin, Esq.
100 Park Avenue, 22nd Floor
New York, New York 10017
and
Mary Pierson Keating, Esq.
Tibbetts & Keating
43 Corbin Drive
Darien, Connecticut 06820
Any party may alter the address to which communications or copies are to
be sent by giving notice of such change of address to the other parties in
conformity with the provisions of this Section for the giving of notice.
8.8 Exhibits and Schedules. All Exhibits and Schedules attached hereto
are hereby incorporated by reference into, and made a part of, this Agreement.
8.9 Binding Nature of Agreement; No Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, personal representatives, successors and assigns, except that no party
may assign or transfer its rights or delegate its obligations under or interest
in this Agreement, by operation of law or otherwise, without the prior written
consent of the other parties hereto.
8.10 No Third-Party Beneficiaries. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and their
respective successors and assigns, and it is not the intention of the parties to
confer third-party beneficiary rights upon any other person.
8.11 Provisions Separable. The provisions of this Agreement are
independent of and separable from each other, and no provision shall be affected
or rendered invalid or unenforceable by virtue of the fact that any other
provision may be invalid or unenforceable in whole or in part for any reason.
Any term or provision of this Agreement that is invalid or unenforceable in any
situation in any jurisdiction shall not affect the validity or enforceability of
the remaining terms and provisions hereof or the validity or enforceability of
the offending term or provision in any other situation or in any other
jurisdiction. If the final judgment of a court of competent jurisdiction
declares that any term or provision hereof is invalid or unenforceable, the
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<PAGE> 1
EXHIBIT 10.13
EXECUTION COPY
AMENDMENT NO. 1 TO STOCK PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 TO STOCK PURCHASE AGREEMENT, (this
"Amendment") made as of the 9th day of February, 2000, by and among printCafe,
Inc. ("Buyer"), a Delaware corporation and the successor by merger to Prograph
Systems, Inc., a Pennsylvania corporation ("Prograph"), and the shareholders of
Programmed Solutions, Inc, a Connecticut corporation ("PSI") set forth on the
signature page hereof (each, a "Shareholder," and collectively, the
"Shareholders") amends the Stock Purchase Agreement among Prograph and the
Shareholders dated as of January 13, 2000 (the "January 13th Agreement").
BACKGROUND
The Shareholders own all of the issued and outstanding capital
stock (the "Stock") of PSI, which is engaged in the business of designing,
producing, distributing and servicing production and systems management software
and related products for the commercial printing industry.
The Shareholders entered into a stock purchase agreement with
Prograph as of January 13, 2000.
Subsequent to January 13, 2000, Prograph merged with and into
Buyer to "reincorporate" in Delaware as "printCafe, Inc.", and Buyer paid a
deposit of $500,000 of the Aggregate Cash Consideration (as defined in the
January 13th Agreement) to the Shareholders.
The Shareholders and Buyer wish to amend certain provisions of
the January 13th Agreement.
NOW, THEREFORE, in consideration of the promises and of the mutual
covenants hereinafter set forth, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. Section 1.3 of the January 13th Agreement is hereby amended in its entirety
as follows:
1.3 The Purchase Price. The Aggregate Cash Consideration plus the
Aggregate Buyer Shares shall comprise the Aggregate Purchase Price. The
Per Share Purchase Price shall be equal to the quotient of the Aggregate
Purchase Price divided by the total number of shares of Common Stock of
PSI outstanding at the Closing. For purposes of this Agreement,
"Aggregate Cash Consideration" equals $15,000,000.00, and "Aggregate
Buyer Shares" means 1,724,138 shares of Buyer Common Stock. At the
Closing, Buyer shall pay to the Shareholders interest on $14,500,000 at
a rate of 8.5% per annum from and including February 1, 2000 to the
Closing Date. Exhibit A hereto sets forth the number of shares of PSI
Common Stock held by each Shareholder and the amount of the Aggregate
Cash Consideration and the number of shares of the Aggregate Buyer
Shares to be issued at the Closing to each Shareholder.
2. The parties hereto acknowledge and agree that no payment is due pursuant to
Section 1.4 of the January 13th Agreement.
<PAGE> 2
3. Section 5.2(e) of the January 13th Agreement is hereby amended in its
entirety as follows:
(e) The proposed financing of Buyer by Creo Products Inc., or an
affiliate thereof, shall occur simultaneously with the Closing on
substantially the terms previously disclosed to the Shareholders.
4. Section 5.3(a)(i) of the January 13th Agreement is hereby amended in its
entirety as follows:
(i) certificates of the Securityholder Agent, dated as of the
Closing Date, confirming (1) the truth and correctness of all of the
representations and warranties of the Shareholders contained in Article
II herein as of the Closing Date and as of all times between the date
hereof and the Closing Date, and (2) that all agreements and covenants
of the Shareholders specified herein have been complied with, and (3)
that no Shareholder has exercised or taken any action with a view to
exercising any rights of rescission under the Pennsylvania Securities
Act of 1972, as amended, with respect to the transactions contemplated
hereby;
5. Section 5.3(b)(i) of the January 13th Agreement is hereby amended in its
entirety as follows:
(i) a wire transfer to the trust account of Tibbetts & Keating on behalf
of the Shareholders in the amount of $13,500,000 plus the interest specified in
Section 1.3.
6. Section 6.1 of the January 13th Agreement is hereby amended in its entirety
as follows:
6.1 Indemnification by Shareholders and Buyer.
(a) Subject to Section 6.2(a) below, from and after the Closing
Date, the Shareholders shall indemnify and hold harmless PSI, Buyer and
any of their affiliates, and their respective officers, directors,
shareholders, representatives and agents (a "Buyer Indemnified Party")
against, and reimburse such Buyer Indemnified Party for, any liability,
damage, loss, obligation, demand, judgment, fine, penalty, cost or
expense, including reasonable attorneys' fees and expenses, and the
costs of investigation incurred in defending against or settling such
liability, damage, loss, cost or expense or claim therefor and any
amounts paid in settlement thereof (collectively "Damages") imposed on
or reasonably incurred by such Buyer Indemnified Party as a result of
any breach of any representation, warranty or covenant, on the part of
the Shareholders set forth in Article II of this Agreement; provided,
however, that no Shareholder shall be required to make any
indemnification payments until and unless the amount of cumulative
Damages incurred by Buyer Indemnified Parties exceeds $50,000.
(b) Subject to Section 6.2(b) below, from and after the Closing
Date, Buyer shall indemnify and hold harmless the Shareholders and any
of their affiliates, and their respective, representatives and agents (a
"Shareholder Indemnified Party") against, and reimburse such Shareholder
Indemnified Party for, any Damages imposed on or reasonably incurred by
such Shareholder Indemnified Party as a result of any breach of
2
<PAGE> 3
any representation, warranty or covenant, on the part of Buyer set forth
in Article III of this Agreement; provided, however, that Buyer shall
not be required to make any indemnification payments until and unless
the amount of cumulative Damages incurred by Shareholder Indemnified
Parties exceeds $50,000.
7. Section 6.2 of the January 13th Agreement is hereby amended in its entirety
as follows:
6.2 Buyer Holdback; Limitations.
(a) As the sole and exclusive remedy for satisfying Shareholders'
indemnification obligations set forth in this Agreement, Buyer shall be
entitled to hold back from the Closing proceeds $1,000,000 of the
Aggregate Cash Consideration and 10% of the Aggregate Buyer Shares (the
"Escrowed Proceeds"), to be held in escrow for a period of one year
following the Closing Date (the "Expiration Date"). On the first
anniversary of the Closing Date, if no Damages shall have been incurred
during such one-year period, Buyer shall immediately turn over to each
of the Shareholders the portion of the Escrowed Proceeds allocable to
them.
(b) For a one year period following the Closing Date, Buyer shall
be required to provide up to $1,000,000 and 172,414 shares of Buyer's
Common Stock as the sole and exclusive remedy for satisfying Buyer's
indemnification obligations set forth in this Agreement.
(c) Solely for purposes of this Section 6.2, the parties agree
that each share of Buyer Common Stock shall be deemed to be worth the
then current fair market value per share at any time that such shares
are required to be valued for purposes of satisfying indemnity
obligations.
8. Section 6.5 of the January 13th Agreement is hereby amended in its entirety
as follows:
6.5 Third-Party Claims. In the event an indemnified party becomes
aware of a third-party claim which such party believes may result in a
demand for indemnification hereunder, such party shall notify the
Securityholder Agent, with a copy to the Escrow Agent, or Buyer, as the
case may be, of such claim, and the indemnifying party (the
Securityholder Agent, as representative for the Shareholders, or the
Buyer, as the case may be), shall be entitled, at their expense, to
participate in any defense of such claim. The indemnified party shall
have the right in its sole discretion to settle any such claim;
provided, however, that except with the consent of the indemnifying
party, no settlement of any such claim with third-party claimants shall
alone be determinative of the amount of any claim for indemnification.
In the event that the indemnifying party has consented to any such
settlement, such party shall have no power or authority to object under
any provision of this Article VI to the amount of any claim by the
indemnified party with respect to such settlement.
9. Section 7.2(b) of the January 13th Agreement is hereby amended in its
entirety as follows:
3
<PAGE> 4
(b) There shall be endorsed on the certificates evidencing the
shares of Buyer Stock delivered at Closing a legend substantially
similar to the following:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"1933 ACT") OR THE SECURITIES LAWS OF ANY OTHER JURISDICTION AND
ARE "RESTRICTED SECURITIES" AS DEFINED BY RULE 144 UNDER THE 1933
ACT. THE SHARES MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR
DISTRIBUTED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
REGISTERING THE SHARES UNDER THE 1933 ACT AND THE SECURITIES LAWS
OF ANY STATE REQUIRING SUCH REGISTRATION, OR IN LIEU THEREOF, AN
OPINION OF COUNSEL, WHICH OPINION IS SATISFACTORY TO THE ISSUER
OF THE SHARES, TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACTS."
10. Section 8 .2(a)(ii) and (iii) of the January 13th Agreement are hereby
amended in their entirety as follows:
(ii) by Buyer by written notice to the Securityholder Agent if
any of the conditions set forth in Section 5.1 shall not have been, or
if it becomes apparent that any of such conditions will not be,
fulfilled by 5:00 p.m. EST on February 8, 2000, unless such failure
shall be due to the failure of Buyer to perform or comply with any of
the covenants, agreements, or conditions hereof to be performed or
complied with by it prior to the Closing; or
(iii) by the Shareholders by written notice from the
Securityholder Agent to Buyer if any of the conditions set forth in
Section 5.2 shall not have been, or if it becomes apparent that any of
such conditions will not be, fulfilled by 5:00 p.m. EST on February 8,
2000, unless such failure shall be due to the failure of PSI or the
Shareholders to perform or comply with any of the covenants, agreements
or conditions to be performed or complied with by them prior to the
Closing.
11. Section 8.7 of the January 13th Agreement is hereby amended in its entirety
as follows:
8.7 Notices. All notices, requests, demands and other
communications required or permitted under this Agreement shall be in
writing and shall be deemed to have been duly given, made and received
only when delivered (personally, by courier service such as Federal
Express, or by other messenger) or when deposited in the United States
mails, registered or certified mail, postage prepaid, return receipt
requested, addressed as set forth below:
4
<PAGE> 5
(a) If to Buyer:
Marc Olin
c/o printCafe, Inc.
40 24th Street, 5th Floor
Pittsburgh, PA 15222
with copy to:
Matthew D'Emilio
c/o printCafe, Inc.
40 24th Street, 5th Floor
Pittsburgh, PA 15222
1.1.1 If to the Securityholder Agent:
Jonathan Taffler
c/o Programmed Solutions, Inc.
40 Richards Avenue
Norwalk, Connecticut 06854
With copy to:
David E. Martin, Esq.
100 Park Avenue, 22nd Floor
New York, New York 10017
and
Mary Pierson Keating, Esq.
Tibbetts & Keating
43 Corbin Drive
Darien, Connecticut 06820
Any party may alter the address to which communications or
copies are to be sent by giving notice of such change of address to the
other parties in conformity with the provisions of this Section for the
giving of notice.
12. The January 13th Agreement, as amended hereby, remains in full force and
effect.
-Signature Page Follows-
5
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment as of the date first above written.
"BUYER"
printCafe, Inc.
By:
------------------------------------------
Marc Olin, President
"SHAREHOLDERS"
- ---------------------------------------------
Jonathan Taffler
- ---------------------------------------------
Bennett M. Sheppard
- ---------------------------------------------
Douglas Belkofer
- ---------------------------------------------
Steven D. Lala
- ---------------------------------------------
Dennis Stroud
6
<PAGE> 7
Agreed, with respect to Section 6.3,
"ESCROW AGENT"
Chicago Title Insurance Company
BY:
-------------------------------------------
NAME:
TITLE:
7
<PAGE> 1
EXHIBIT 10.17
THE SECURITIES REPRESENTED BY THIS NOTE HAVE BEEN ACQUIRED FOR INVESTMENT AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THESE
SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID
ACT OR LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
PRINTCAFE, INC.
SUBORDINATED NON-NEGOTIABLE PROMISSORY NOTE
$3,979,800 March 10, 2000
PRINTCAFE, INC., a Delaware corporation (the "Company"), for value
received, hereby promises to pay RICHARD T. HAGEN (the "Holder"), or permitted
registered assigns, the principal sum equal to THREE MILLION NINE HUNDRED
SEVENTY-NINE THOUSAND EIGHT HUNDRED DOLLARS ($3,979,800). This Note is issued
pursuant to the Agreement and Plan of Merger dated as of February 22, 2000 (the
"Merger Agreement"), among the Company, Hagen Systems, Inc., a Minnesota
corporation ("Hagen"), the stockholders of Hagen, including the Holder, and
printCafe Systems, Inc., a Delaware corporation wholly-owned by the Company, and
is subject to the provisions thereof. Terms used but not defined herein shall
have the meanings set forth in the Merger Agreement.
THIS NOTE SHALL NOT BE NEGOTIABLE, ASSIGNABLE OR OTHERWISE TRANSFERABLE
WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT OF THE COMPANY.
1. PRINCIPAL AND INTEREST. This Note shall be payable in three equal
successive instalments on the first, second and third (3rd) anniversaries of the
date hereof upon delivery of a notice (the "Payment Notice") from the Holder to
the Company specifying the time, place and manner of payment. The unpaid
principal amount of this Note shall bear interest at a rate of interest for each
quarterly period commencing on the date hereof equal to the lower of (i) the
Prime Rate, as published in the Wall Street Journal on the first business day of
such quarter or (ii) 9.0% per annum. Interest shall be payable quarterly in
arrears on the same day in each successive February, May, August, and November
as the date hereof (except that if any such date is not a business day, such
payment shall be made on the next succeeding business day), with a final payment
on the final maturity date.
2. SECURITY. Payment and performance of this Note is not secured.
3. PREPAYMENT. The Company may prepay, in whole or in part, the outstanding
amount of this Note at any time or from time to time without penalty or premium.
<PAGE> 2
4. MANDATORY PREPAYMENT. Simultaneously with the consummation of a firmly
underwritten initial public offering registered pursuant to the Securities Act
of 1933, as amended (the "Securities Act"), of shares of common stock of the
Company, the Company shall prepay such portion of the principal of this Note as
is necessary to reduce the remaining principal hereof to 50% of the original
face amount hereof, which prepayment shall be applied to reduce equally each of
the remaining scheduled repayments of principal hereunder. In addition,
simultaneously with the consummation of a subsequent firmly underwritten public
offering by the Company of shares of its common stock pursuant to a registration
statement under the Securities Act which results in aggregate gross cash
proceeds to the Company of at least $125 million, the Company shall prepay in
full the remaining principal outstanding under this Note. Each prepayment shall
be made together with interest accrued on the principal so prepaid.
5. RESTRICTIONS ON TRANSFER.
(a) THIS NOTE SHALL NOT BE NEGOTIABLE, ASSIGNABLE OR OTHERWISE
TRANSFERABLE WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT OF THE COMPANY.
(b) The Company shall keep at its principal executive office a register
(herein sometimes referred to as the "Note Register"), in which, subject to such
reasonable regulations as it may prescribe, but at its expense (other than
transfer taxes, if any), the Company shall provide for the registration and
transfer of this Note.
(c) Subject to Section 5(a) hereof, whenever this Note shall be
surrendered at the principal executive office of the Company for transfer,
accompanied by (i) a written instrument of transfer in form reasonably
satisfactory to the Company duly executed by the holder or his attorney duly
authorized in writing, (ii) the written opinion, addressed to the Company, of
counsel for the holder of this Note, stating that in the opinion of such counsel
(which opinion and counsel shall be reasonably satisfactory to the Company),
such proposed transfer does not involve any transaction requiring registration
or qualification of such shares under the Securities Act or the securities blue
sky laws of any relevant state of the United States and (iii) a writing duly
executed by the transferee acknowledging that this Note is issued pursuant to
the Merger Agreement and is subject to the provisions thereof and agreeing to be
bound by the terms hereof and thereof, including, without limitation, the
provisions of this Section 5 and Section 8 hereof, the Company shall execute and
deliver in exchange therefor a new Note or Notes, as may be requested by such
holder, in the same aggregate unpaid amount and payable on the same date as the
Note or Notes so surrendered; each such new Note shall be dated as of the date
to which payments have been made on the Note or Notes so surrendered and shall
be in such amount and registered in such name or names as such holder may
designate in writing.
(d) Upon receipt by the Company of evidence reasonably satisfactory to
it of the loss, theft, destruction or mutilation of this Note and of indemnity
reasonably satisfactory to it, and upon reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
this Note (in case of mutilation), the Company will make and deliver in lieu of
this Note a new Note of like tenor and unpaid amount and dated as of the date
hereof.
2
<PAGE> 3
6. EVENTS AND REMEDIES OF DEFAULT
The occurrence of any of the following shall constitute an "Event of
Default":
(a) if the Company shall fail to pay any amount owing under this Note
when due, and such failure continues for five business days after written notice
to the Company of such default;
(b) if the Company is adjudicated insolvent or bankrupt; or
(c) if the Company admits in writing its inability to pay its debts; or
(d) if the Company shall come under the authority of a custodian,
receiver or trustee for it or for substantially all of its property; or
(e) if the Company makes an assignment for the benefit of creditors, or
suffers proceedings under any law related to bankruptcy, insolvency, liquidation
or the reorganization, readjustment or the release of debtors to be instituted
against it and if contested by it not dismissed or stayed within ninety (90)
days; or
(f) if proceedings under any law related to bankruptcy, insolvency,
liquidation or the reorganization, readjustment or the release of debtors are
instituted or commenced by the Company; or
(g) if any order for relief is entered relating to any of the forgoing
proceedings under subsections (a) through (f); or
(h) the Company shall have dissolved or any proceedings shall have
commenced, or any formal action shall have been taken, with a view to the
dissolution of the Company; or
Upon the occurrence and continuance of an Event of Default, the holder of this
Note shall have the option to (i) demand by written notice full and immediate
payment of the then outstanding balance of this Note and (ii) to protect and
enforce its rights or remedies as may then be available.
7. SUBORDINATION.
(a) General. The Company, for itself, its successors and assigns,
covenants and agrees, and the Holder by its acceptance hereof covenants and
agrees, that this Note shall be subordinated to the extent set forth in this
Section to the prior payment in full of all Senior Debt (as defined below) as
follows:
(i) In the event of an Event of Default specified in Sections
7(b), (e) or (f) hereof, the Holder shall not be entitled to receive any
payment on account of principal of or interest on this Note unless and
until the Senior Debt shall have been paid in full. To that end, the
holders of Senior Debt shall be entitled to receive for application in
payment thereof any payment or distribution of any kind or character,
whether in cash, property or securities, which may be payable or
deliverable in any such proceedings in respect of this Note.
3
<PAGE> 4
(ii) If any Senior Debt or this Note is declared due and payable
prior to its stated maturity by reason of an Event of Default specified
in Sections 7(a), (c), (d) or (g) hereof or like provisions in
instruments evidencing the Senior Debt, then all of the Senior Debt
shall first be paid in full, before any payment on account of principal
of or interest on this Note may be made.
(iii) If the Company fails to pay any principal of or interest
(or premium, if any) on any Senior Debt when due, under circumstances
when the provisions of clauses (i) and (ii) hereof shall not be
applicable, then all principal of and interest (or premium, if any) on
such Senior Debt then due and payable shall first be paid in full,
before any payment on account of principal of or interest on this Note
may be made.
(iv) The provisions of clauses (i) through (iii) shall not
prohibit the Company from issuing to the Holder securities of the
Company which are subordinate and junior in right of payment to all
Senior Debt then outstanding, on the same terms as set forth in this
Section 8, in exchange for and in satisfaction of the indebtedness
represented by this Note.
(b) "Senior Debt" means all amounts (including any interest accruing
thereon) owed under the following, whether now outstanding or hereafter
incurred, created or assumed:
(i) indebtedness pursuant to the Term Loan Agreement, dated July,
6, 1999, between the Company and National City Bank secured by a general
security interest in all assets, except intellectual property, of the
Company, in the amount of $900,000.;
(ii) all indebtedness under securities issued pursuant to a
public offering registered under the Securities Act;
(iii) any line or lines of credit or other indebtedness for
borrowed money incurred by the Company on or after the date hereof (A)
for working capital purposes and/or (B) for refinancing, refunding or
replacement of Senior Debt and/or (C) extended by one or more banks; and
(iv) all guaranties by the Company of the principal of and
interest and premium (if any) on any indebtedness of any subsidiary or
affiliate of the Company which constitutes "Senior Debt" pursuant to
clauses (i) through (iii) hereof, which is guaranteed by the Company.
(c) Further Assurances. The Holder hereby agrees to execute and deliver
all documents, and take all actions necessary or desirable, as reasonably
requested by the Company to affect the provisions of the this Section 8,
including, without, executing and delivering intercreditor or other agreements
among or between the Holder and any holder of Senior Debt of the Company or its
subsidiaries or affiliates.
4
<PAGE> 5
8. GENERAL.
(a) Successors and Assigns. This Note and the obligations and
rights of the Company hereunder, shall be binding upon and inure to the
benefit of the Company, the Holder, and their respective successors and
assigns.
(b) Changes. Changes in or additions to this Note may be made or
compliance with any term, covenant, agreement, condition or provision
set forth herein may be omitted or waived (either generally or in a
particular instance and either retroactively or prospectively) upon
written consent of the Company and the Holder.
(c) Notices. All notices, request, consents and demands shall be
made in writing and shall be mailed postage prepaid, or delivered by
hand, to the Company or the holder hereof at their respective addresses
set forth below or to such other address as may be furnished in writing
to the other party hereto:
If to the Holder:
Richart T. Hagen
c/o Gray, Plant, Mooty, Mooty & Bennett, P.A.
3400 City Center,
33 South Sixth Street,
Minneapolis, MN 55402
Attention: Jeffrey Anderson, Esq.
Facsimile No.: (612) 333-0066
Telephone No.: (612) 343-3958
with a copy to:
Gray, Plant, Mooty, Mooty & Bennett, P.A.
3400 City Center,
33 South Sixth Street,
Minneapolis, MN 55402
Attention: Jeffrey Anderson
Facsimile No.: (612) 333-0066
Telephone No.: (612) 343-3958
If to the Company:
printCafe, Inc.
Forty 24th Street, 5th Floor
Pittsburgh, PA 15222
Attention: President
Facsimile No.: (412) 456-1151
Telephone No.: (412) 456-1141
5
<PAGE> 6
with a copy to:
Orrick, Herrington & Sutcliffe LLP
666 Fifth Avenue
New York, NY 10103
Attention: Daniel A. Mathews, Esq.
Facsimile No.: (212) 506-5151
Telephone No.: (212) 506-5050.
(d) Severability. If any term or provision of this Note shall be
held invalid, illegal or unenforceable, the validity of all other terms
and provisions hereof shall in no way be affected thereby.
(e) Saturdays, Sundays, Holidays. If any date that may at any
time be specified in this Note as a date for the making of any payment
under this Note shall fall on Saturday, Sunday or on a day which in
Pittsburgh, Pennsylvania, shall be a legal holiday, then the date for
the making of that payment shall be the next subsequent say which is not
a Saturday, Sunday, or legal holiday.
(f) Governing Law. This Note shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the
laws of the State of New York, without regard to choice of law
principles.
[Remainder of this page intentionally left blank]
6
<PAGE> 7
IN WITNESS WHEREOF, this Note has been executed and delivered on the
date first above written by the duly authorized representative of the Company.
PRINTCAFE, INC.
By: _____________________________________
Name:
Title:
ACKNOWLEDGED, ACCEPTED
AND AGREED THIS ___ DAY
OF MARCH, 2000
HOLDER:
RICHARD T. HAGEN
______________________________
<PAGE> 1
EXHIBIT 10.19
STOCK PURCHASE AGREEMENT
by and among
PRINTCAFE, INC.
CONSTELLATION SOFTWARE INC.
CONSTELLATION SOFTWARE OF NEW HAMPSHIRE, INC.
LOGIC ASSOCIATES, INC.
and
CERTAIN STOCKHOLDERS
OF LOGIC ASSOCIATES, INC.
MARCH 10, 2000
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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SECTION 1. SALE AND PURCHASE OF SHARES.............................................. 2
1.1 Sale and Purchase of Shares................................................. 2
1.2 Payment of Purchase Price................................................... 3
1.3 Closing..................................................................... 3
1.4 Deliveries at Closing....................................................... 3
SECTION 2. REPRESENTATIONS AND WARRANTIES OF CSI AND CSINH.......................... 4
2.1 Organization; Subsidiaries.................................................. 5
2.2 Articles of Incorporation and Bylaws........................................ 5
2.3 Capital Structure........................................................... 5
2.4 Authority................................................................... 5
2.5 No Conflicts; Required Filings and Consents................................. 6
2.6 Financial Statements........................................................ 6
2.7 Absence of Undisclosed Liabilities.......................................... 6
2.8 Absence of Certain Changes.................................................. 7
2.9 Litigation.................................................................. 7
2.10 Permits; the Company Products; Regulation................................... 7
2.11 Property.................................................................... 8
2.12 Taxes....................................................................... 8
2.13 Employee Matters............................................................ 10
2.14 Interested Party Transactions............................................... 10
2.15 Compliance With Laws........................................................ 10
2.16 Minute Books................................................................ 10
2.17 Brokers' and Finders' Fees.................................................. 10
2.18 Third Party Consents........................................................ 10
2.19 Control of CSI; Size of CSI................................................. 11
2.20 Representations Complete.................................................... 11
SECTION 3. REPRESENTATIONS AND WARRANTIES OF CSINH, COMPANY AND STOCKHOLDERS........ 11
3.1 Organization; Subsidiaries.................................................. 11
3.2 Articles of Incorporation and Bylaws........................................ 12
3.3 Capital Structure........................................................... 12
3.4 Authority................................................................... 13
3.5 No Conflicts; Required Filings and Consents................................. 13
3.6 Financial Statements........................................................ 13
3.7 Absence of Undisclosed Liabilities.......................................... 14
3.8 Absence of Certain Changes.................................................. 14
3.9 Litigation.................................................................. 16
3.10 Restrictions on Business Activities......................................... 16
3.11 Permits; the Company Products; Regulation................................... 16
3.12 Title to Property........................................................... 17
3.13 Intellectual Property....................................................... 18
3.14 Environmental Matters....................................................... 20
</TABLE>
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TABLE OF CONTENTS
(continued)
<TABLE>
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3.15 Taxes....................................................................... 21
3.16 Employee Benefit Plans...................................................... 23
3.17 Certain Agreements Affected by the Sale..................................... 25
3.18 Employee Matters............................................................ 25
3.19 Material Contracts.......................................................... 25
3.20 Interested Party Transactions............................................... 27
3.21 Insurance................................................................... 27
3.22 Compliance With Laws........................................................ 27
3.23 Minute Books................................................................ 28
3.24 Brokers' and Finders' Fees.................................................. 28
3.25 Accounts Receivable......................................................... 28
3.26 Customers and Suppliers..................................................... 28
3.27 Third Party Consents........................................................ 29
3.28 No Commitments Regarding Future Products.................................... 29
3.29 Termination of Shareholders Agreement....................................... 29
3.30 Representations Complete.................................................... 29
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR........................... 29
4.1 Organization, Standing and Power............................................ 30
4.2 Capital Structure........................................................... 30
4.3 Authority................................................................... 31
4.4 No Conflict; Required Filings and Consents.................................. 31
4.5 Financial Statements........................................................ 31
4.6 Absence of Undisclosed Liabilities.......................................... 32
4.7 Absence of Certain Changes.................................................. 32
4.8 Insurance................................................................... 32
4.9 Litigation.................................................................. 32
4.10 Governmental Authorization.................................................. 33
4.11 Compliance With Laws........................................................ 33
4.12 Minute Books................................................................ 33
4.13 Broker's and Finders' Fees.................................................. 33
4.14 Securities Laws............................................................. 33
4.15 Representations Complete.................................................... 33
SECTION 5. CONDUCT PRIOR TO THE CLOSING DATE........................................ 33
5.1 Conduct of Business......................................................... 33
5.2 Conduct of Business of Company.............................................. 34
5.3 Conduct of Business of CSINH................................................ 36
5.4 Conduct of Business of Acquiror and its Subsidiaries........................ 37
5.5 No Solicitation............................................................. 37
SECTION 6. ADDITIONAL AGREEMENTS.................................................... 37
6.1 Best Efforts and Further Assurances......................................... 37
6.2 Consents; Cooperation....................................................... 38
6.3 Access to Information....................................................... 38
</TABLE>
-ii-
<PAGE> 4
TABLE OF CONTENTS
(continued)
<TABLE>
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<S> <C> <C>
6.4 Confidentiality............................................................. 39
6.5 Public Disclosure........................................................... 39
6.6 FIRPTA...................................................................... 39
6.7 Blue Sky Laws............................................................... 40
6.8 Securities Holder's Representation Agreements............................... 40
6.9 Additional Stockholders..................................................... 40
6.10 Termination of 401(k) Plan.................................................. 40
SECTION 7. CONDITIONS TO CLOSING.................................................... 40
7.1 Conditions to Obligations of Each Party to Closing.......................... 40
7.2 Additional Conditions to Obligations of CSI, CSINH Company and
Stockholders................................................................ 41
7.3 Additional Conditions to the Obligations of the Acquiror.................... 42
SECTION 8. TERMINATION, AMENDMENT AND WAIVER........................................ 44
8.1 Termination................................................................. 44
8.2 Effect of Termination....................................................... 45
8.3 Expenses.................................................................... 45
8.4 Amendment................................................................... 45
8.5 Extension; Waiver........................................................... 45
SECTION 9. ESCROW AND INDEMNIFICATION............................................... 45
9.1 Survival of Representations and Warranties.................................. 45
9.2 Escrow Fund................................................................. 46
9.3 Indemnification by CSI, CSINH, Company and Stockholders..................... 46
9.4 Damages Threshold........................................................... 47
9.5 Escrow Period............................................................... 47
9.6 Distributions; Voting....................................................... 48
9.7 Arbitration................................................................. 48
SECTION 10. GENERAL PROVISIONS....................................................... 49
10.1 Notices..................................................................... 49
10.2 Interpretation.............................................................. 50
10.3 Counterparts................................................................ 50
10.4 Entire Agreement; Nonassignability; Parties in Interest..................... 50
10.5 Severability................................................................ 50
10.6 Remedies Cumulative......................................................... 51
10.7 Governing Law............................................................... 51
10.8 Rules of Construction....................................................... 51
10.9 Amendments and Waivers...................................................... 51
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<CAPTION>
EXHIBITS
- --------
<S> <C>
Exhibit A - Stockholders of the Company
Exhibit B-1 - Note A
Exhibit B-2 - Note B
Exhibit C-1 - The Amended and Restated Right of First Refusal and Co-Sale Agreement
Exhibit C-2 - Amended and Restated Voting Agreement
Exhibit D - The Stockholder's Representation Agreement
Exhibit E - [Intentionally Omitted]
Exhibit F - Non-Competition Agreement
Exhibit G - Security Arrangements
Exhibit H - Amendment to Stock Purchase Agreement
</TABLE>
<TABLE>
<CAPTION>
SCHEDULES
- ---------
<S> <C>
Schedule 1 - CSI, CSINH, Company and Stockholders Disclosure Schedule
Schedule 2 - Acquiror Disclosure Schedule
</TABLE>
<PAGE> 6
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of March 10, 2000, by and among printCafe, Inc., a Delaware corporation
(the "Acquiror"), Constellation Software Inc., an Ontario corporation ("CSI"),
Constellation Software of New Hampshire, Inc., a New Hampshire corporation
("CSINH"), Logic Associates, Inc., a New Hampshire corporation (the "Company"),
Nicholas Orem, Warren Loomis and John Woodward-Poor (each a "Founder" and
collectively the "Founders"), and certain other stockholders of the Company
listed on Exhibit A attached hereto (each, together with any other stockholders
added as parties hereto in accordance with Section 6.9, an "Other Stockholder"
and collectively the "Other Stockholders"). The Founders and the Other
Stockholders are hereinafter sometimes collectively referred to as the
"Stockholders."
RECITALS
A. CSI is the record holder of all the issued and outstanding shares of
common stock, without par value, of CSINH (the "CSINH Common Stock"). CSINH is
the record holder of 77.50% of the issued and outstanding shares of common stock
without par value, of the Company (the "Company Common Stock"). The Founders are
collectively the record holders of 13.71% of the Company Common Stock (the
"Founders Shares") and the Other Stockholders are collectively the record
holders of up to 8.79% of the Company Common Stock (the "Other Shares").
B. CSI desires to sell to the Acquiror and the Acquiror desires to buy
from CSI all of the shares of CSINH Common Stock owned by CSI (the "CSINH
Shares"). The Founders desire to sell to the Acquiror and the Acquiror desires
to buy from the Founders all of the Founders Shares and each Other Stockholder
desires to sell to the Acquiror and the Acquiror desires to buy from each such
Other Stockholder that number of the Other Shares set forth opposite each such
Other Stockholder's name on Exhibit A.
AGREEMENT
In consideration of the premises and the mutual representations,
warranties and covenants set forth below, and for other good and valuable
consideration the receipt and sufficiency of which is hereby acknowledged, the
parties hereto hereby agree as follows:
SECTION 1. SALE AND PURCHASE OF SHARES
1.1 SALE AND PURCHASE OF SHARES. At the closing of the transactions
contemplated by this Agreement (the "Closing") the following shall take place:
(a) CSI shall sell to the Acquiror and the Acquiror shall buy from
CSI the CSINH Shares in consideration of the two subordinated promissory notes,
one in the principal amount of Twenty-two Million dollars ($22,000,000) and one
in the principal amount of Twenty-one Million Two Hundred Thousand dollars
($21,200,000), substantially in the form of the notes attached hereto as Exhibit
B1 ("Note A") and Exhibit B2 ("Note B" and together with Note A, the "Note
Consideration"). The Notes will be secured by the security arrangements set out
in Exhibit G.
<PAGE> 7
(b) The Founders shall sell to the Acquiror and the Acquiror shall
buy from the Founders, the Founders Shares in consideration of 652,727 shares of
the common stock, $0.0001 par value, of the Acquiror (the "Acquiror Common
Stock") (the "Share Consideration") less that percentage of the Share
Consideration to be deposited in the Escrow Fund pursuant to Section 9. In
connection with the receipt of the Share Consideration, the Founders shall
become a party to the Amended and Restated Right of First Refusal and Co-Sale
Agreement and the Amended and Restated Voting Agreement, the forms of which are
attached hereto as Exhibit C1 and Exhibit C2 (collectively, the "Stockholder
Agreements").
(c) Each Other Stockholder shall sell to the Acquiror and the
Acquiror shall buy from such Other Stockholders that number of the Other Shares
set forth opposite each such Other Stockholder's name on Exhibit A in
consideration of subordinated promissory notes substantially similar to Note A
and Note B in the principal amounts set forth opposite each such other
stockholder's name on Exhibit A (collectively, the "Other Note Consideration")
less that percentage of the Other Note Consideration to be deposited in the
Escrow Fund pursuant to Section 9.
1.2 PAYMENT OF PURCHASE PRICE. At the Closing, Acquiror shall deliver to
CSI, the Founders and the Other Stockholders, respectively, the Note
Consideration, the Share Consideration and the Other Note Consideration, which
amounts are hereinafter sometimes collectively referred to as the "Purchase
Price," less, in the case of the Share Consideration and the Other Note
Consideration, that percentage thereof to be deposited into the Escrow Fund.
1.3 CLOSING. The Closing shall take place 15 days after the date hereof
or as soon as practicable thereafter after the satisfaction or waiver of each of
the conditions set forth in Section 7 below, or at such other time as the
parties agree (the "Closing Date"). The Closing shall take place at the offices
of Orrick, Herrington & Sutcliffe LLP, 666 Fifth Avenue, New York, New York, or
at such other location as the parties agree.
1.4 DELIVERIES AT CLOSING.
(a) At the Closing, CSI shall deliver to the Acquiror:
(i) stock certificates evidencing all the CSINH Shares, each
in form suitable for transfer, endorsed in blank or with executed blank stock
transfer powers, along with stock book, stock transfer ledger and minute book of
CSINH;
(ii) resignation of the directors and officers of CSINH
requested by the Acquiror;
(iii) receipt for the Note Consideration; and
(iv) each of the certificates and documents contemplated by
Section 7.3 below.
(b) At the Closing, the Founders and the Other Stockholders shall
deliver to the Acquiror:
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<PAGE> 8
(i) stock certificates evidencing all the Founder Shares and
all the Other Shares being sold to the Acquiror hereunder, each in form suitable
for transfer, endorsed in blank or with executed blank stock transfer powers;
(ii) receipts for the Share Consideration and Other Note
Consideration; and
(iii) each of the certificates and documents contemplated by
Section 7.3 below.
(c) At the Closing, the Acquiror shall deliver to:
(i) CSI, the Note Consideration;
(ii) the Founders, the Share Consideration less that
percentage of the Share Consideration to be deposited into the Escrow Fund;
(iii) the Other Stockholder, the Other Notes less that
percentage of the Other Note Consideration to be deposited into the Escrow Fund;
and
(iv) CSI, the Founders and Other Stockholders, as the case may
be, each of the certificates and documents contemplated by Section 7.2 below.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF CSI AND CSINH
In this Agreement, any reference to a "Material Adverse Effect" with
respect to any entity or group of entities means any event, change or effect
that, when taken individually or together with all other adverse changes and
effects, is or is reasonably likely to be materially adverse to the condition
(financial or otherwise), properties, assets, liabilities, business, operations,
results of operations or prospects of such entity and its subsidiaries, taken as
a whole, or to prevent or materially delay consummation of the of the
transactions anticipated by this Agreement or otherwise to prevent such entity
and its subsidiaries from performing their obligations under this Agreement.
In this Agreement, any reference to "knowledge" means, (i) in the case
of CSI and CSINH, facts or information known to Mark Leonard or any executive
officer or director of CSI or CSINH, (ii) in the case of the Company, facts or
information known to Nicholas Orem, Warren Loomis and John Woodward-Poor after
due and diligent inquiry of other executive officers of the Company, (iii) in
the case of each Stockholder, facts or information known to such Stockholder,
and (iv) in the case of the Acquiror, facts or information known to any
corporate officer or director of the Acquiror.
Except as disclosed in a document dated as of the date of this Agreement
and delivered to the Acquiror prior to the execution and delivery of this
Agreement and referring to the representations and warranties in this Section 2
(the "Disclosure Schedule"), CSI and CSINH represent and warrant to the Acquiror
as follows:
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<PAGE> 9
2.1 ORGANIZATION; SUBSIDIARIES. Each of CSI and CSINH is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation. Other than owning the Company Common Stock, CSINH
does not own, lease or operate any properties or carry on any business. Other
than the Company, CSINH does not own, have any investment in, or control,
directly or indirectly, any subsidiaries, associations or other business
entities. CSINH is not a participant in any joint venture or partnership.
2.2 ARTICLES OF INCORPORATION AND BYLAWS. Each of CSI and CSINH have
delivered to the Acquiror a true and correct copy of its Articles of
Incorporation and Bylaws or other charter documents ("Charter Documents"), each
as amended to date. Neither CSI nor CSINH is in violation of any of the
provisions of its Charter Documents.
2.3 CAPITAL STRUCTURE. The authorized capital stock of CSINH consists of
100,000 shares of common stock, without par value per share, of which $3,083.75
is issued and outstanding. There are no other outstanding shares of capital
stock or voting securities and no outstanding commitments to issue any shares of
capital stock or voting securities after the date hereof or any other rights or
securities granted or issued to any person to cause CSINH to issue, sell, redeem
or repurchase any shares of capital stock of CSINH. There does not exist nor is
there outstanding any right, option, warrant, convertible obligation or other
security or agreement entered into or granted by any stockholder of CSINH with
respect to any shares of capital stock of CSINH. All outstanding shares of CSINH
Common Stock are duly authorized, validly issued, fully paid and non-assessable
and are free of any liens or encumbrances or claims of any kind, and are not
subject to preemptive rights or rights of first refusal created by statute, the
Charter Documents of CSINH or any agreement to which CSINH or any stockholder of
CSINH is a party or by which it is bound. CSI is the lawful record and
beneficial owner of all issued and outstanding shares of CSINH Common Stock,
free and clear of all liens, encumbrances or claims of any kind. There does not
exist nor is there outstanding any right, option, warrant, convertible
obligation or other security or agreement entered into or grant by any CSINH
stockholder with respect to any shares of capital stock of CSINH. Except for the
rights created pursuant to this Agreement, there are no options, warrants,
calls, rights, commitments, agreements or arrangements of any character to which
CSINH is a party or by which CSINH is bound relating to the issued or unissued
capital stock of CSINH or obligating CSINH to issue, deliver, sell, repurchase
or redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any
shares of capital stock of CSINH or obligating CSINH to grant, extend,
accelerate the vesting of, change the price of, or otherwise amend or enter into
any such option, warrant, call, right, commitment or agreement. There are no
contracts, commitments or agreements relating to voting, purchase or sale of any
shares of CSINH capital stock between or among CSINH and the stockholder of
CSINH or to which CSINH or such stockholder is a party or by which it is bound.
2.4 AUTHORITY. Each of CSI and CSINH has all requisite corporate power
and authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of each of CSI and CSINH. This
Agreement has been duly executed and delivered by each of CSI and CSINH and,
assuming due authorization, execution and delivery by the Acquiror, constitutes
the valid and binding obligation of each of CSI and CSINH enforceable against it
in accordance
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<PAGE> 10
with its terms, subject to applicable bankruptcy, insolvency, moratorium or
other similar laws relating to creditors' rights and general principles of
equitable remedies.
2.5 NO CONFLICTS; REQUIRED FILINGS AND CONSENTS.
(a) Except as set forth in Section 2.5(a) of the Disclosure
Schedule, the execution and delivery of this Agreement by each of CSI and CSINH
does not, and the consummation of the transactions contemplated hereby will not,
conflict with, or result in any violation of, or default under (with or without
notice or lapse of time, or both), or give rise to a right of termination,
cancellation or acceleration of any obligation or loss of any benefit under (i)
any provision of CSI's or CSINH's Charter Documents, (ii) any mortgage,
indenture, lease, contract or other agreement or instrument, permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to CSINH or any of its properties or assets, or (iii) any
material mortgage, indenture, lease, contract or other agreement or instrument,
permit, concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to CSI or any of its properties or
assets.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality ("Governmental
Entity") is required by or with respect to CSI or CSINH in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for (i) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"); (ii) the
Securities Act of 1933, as amended (the "Securities Act"), applicable state
securities laws and the securities laws of any foreign country; (iii) such
filings as may be required under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended ("HSR"); and (iv) such other consents, authorizations,
filings, approvals and registrations applicable to CSI and not CSINH which, if
not obtained or made, would not have a Material Adverse Effect on CSINH and
would not prevent, or materially alter or delay the consummation of any of the
transactions contemplated by this Agreement.
2.6 FINANCIAL STATEMENTS. Section 2.6 of the Disclosure Schedule
includes a true, correct and complete copy of the audited, consolidated
financial statements of CSI for each of the fiscal years ended December 31, 1997
and December 31, 1998, the unaudited, consolidated financial statements of CSI
for the fiscal year ended December 31, 1999 and the audited financial statements
of CSINH for the fiscal period ended December 31, 1999 (collectively, the "CSI
Financial Statements"). The CSI Financial Statements have been prepared in
accordance with Canadian generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods indicated and with each
other. The CSI Financial Statements accurately set out and describe the
financial condition and operating results of CSI and CSINH as of the dates, and
for the periods, indicated therein, subject to normal year-end audit
adjustments.
2.7 ABSENCE OF UNDISCLOSED LIABILITIES. CSINH does not have obligations
or liabilities of any nature (matured or unmatured, fixed or contingent) other
than (i) those set forth in CSINH's balance sheet for the fiscal period ended
December 31, 1999 (the "CSINH Balance Sheet"), which liabilities consist solely
of indebtedness incurred to finance equity investments in the Company, which
indebtedness has been converted into equity prior to the date of this
6
<PAGE> 11
Agreement, and (ii) those incurred in connection with the execution of this
Agreement. CSI does not have obligations or liabilities of any nature (matured
or unmatured, fixed or contingent) other than (i) those set forth in the CSI's
balance sheet for the period ended December 31, 1999 (the "CSI Balance Sheet"),
(ii) those incurred in the ordinary course of business and not required to be
set forth in the CSI Balance Sheet under GAAP, (iii) those incurred in the
ordinary course of business since the date of the CSI Balance Sheet and
consistent with past practice, and (iv) those incurred in connection with the
execution of this Agreement.
2.8 ABSENCE OF CERTAIN CHANGES. Since the date of the CSINH Balance
Sheet (the "CSINH Balance Sheet Date") there has not been, occurred or arisen,
except for equity investments in the Company and the issuance of stock and
incurrence of debt in connection therewith, any:
(a) transaction by CSINH;
(b) amendments or changes to CSINH's Charter Documents;
(c) capital expenditure or commitment by CSINH;
(d) declaration, setting aside, or payment of a dividend or other
distribution in respect to the capital stock of CSINH, or any direct or indirect
redemption, purchase or other acquisition by CSINH of any of its capital stock;
or
(e) agreement by CSINH or any officer, director or agent of CSINH
to do any of the things described in the preceding clauses (a) through (d)
(other than negotiations with the Acquiror and its representatives regarding the
transactions contemplated by this Agreement).
Since the date of the CSI Balance Sheet (the "CSI Balance Sheet Date")
there has not been, occurred or arisen any event or condition of any character
that has or could reasonably be expected to have a Material Adverse Effect on
CSI.
2.9 LITIGATION. There is no private or governmental action, suit,
proceeding, claim, arbitration or investigation pending before any agency, court
or tribunal, foreign or domestic or threatened against CSINH or any of its
officers or directors (in their capacities as such). There is no judgment,
decree or order against CSINH or any of CSINH's directors or officers (in their
capacities as such).
2.10 PERMITS; THE COMPANY PRODUCTS; REGULATION. CSINH is in possession
of all franchises, grants, authorizations, licenses, permits, easements,
variances, exceptions, consents, certificates, approvals and orders necessary
for CSINH to carry on its business as it is now being conducted (the
"Authorizations") and no suspension or cancellation of any Authorization is
pending or threatened. CSINH is not in conflict with, or in default or violation
of, (i) any laws applicable to CSINH or by which any property or asset of CSINH
is bound or affected, (ii) any Authorization, or (iii) any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which CSINH is a party or by which CSINH or any
property or asset of CSINH is bound or affected.
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<PAGE> 12
2.11 PROPERTY. Other than the Company Shares, CSINH does not, at the
date hereof, own, license or otherwise possess, nor has it ever owned, licensed
or otherwise possessed, any interest or right in any property, tangible or
intangible, including patents, patent rights, trademarks, trademark rights,
trade names, trade name rights, service marks, copyrights, and any applications
for any of the foregoing, maskworks, net lists, schematics, industrial models,
inventions, technology, know-how, trade secrets, inventory, ideas, algorithms,
processes, computer software programs or applications (in both source code and
object code form), and tangible or intangible proprietary information or
material
2.12 TAXES.
(a) For purposes of this Agreement, the following definitions shall
apply:
(i) The term "Taxes" shall mean all taxes, however
denominated, including any interest, penalties or other additions to tax that
may become payable in respect thereof, (A) imposed by any federal, territorial,
state, local or foreign government or any agency or political subdivision of any
such government, which taxes shall include, without limiting the generality of
the foregoing, all income or profits taxes (including but not limited to,
federal, state and foreign income taxes), payroll and employee withholding
taxes, unemployment insurance contributions, social security taxes, sales and
use taxes, ad valorem taxes, excise taxes, franchise taxes, gross receipts
taxes, withholding taxes, business license taxes, occupation taxes, real and
personal property taxes, stamp taxes, environmental taxes, transfer taxes,
workers' compensation, Pension Benefit Guaranty Corporation premiums and other
governmental charges, and other obligations of the same or of a similar nature
to any of the foregoing, which are required to be paid, withheld or collected,
(B) any liability for the payment of amounts referred to in (A) as a result of
being a member of any affiliated, consolidated, combined or unitary group, or
(C) any liability for amounts referred to in (A) or (B) as a result of any
obligations to indemnify another person.
(ii) The term "Returns" shall mean all reports, estimates,
declarations of estimated tax, information statements and returns required to be
filed in connection with any Taxes, including information returns with respect
to backup withholding and other payments to third parties.
(b) All Returns required to be filed by or on behalf of CSINH have
been duly filed on a timely basis, and each such Return is true, complete and
correct in all material respects. All Taxes shown to be payable on such Returns
or on subsequent assessments with respect thereto, and all payments of estimated
Taxes required to be made by or on behalf of CSINH under Section 6655 of the
Code or comparable provisions of state, local or foreign law, have been paid in
full on a timely basis, and no other material Taxes are payable by CSINH with
respect to items or periods covered by such Returns (whether or not shown on or
reportable on such Returns). CSINH has withheld and paid over all Taxes required
to have been withheld and paid over, and complied with all information reporting
and backup withholding in connection with amounts paid or owing to any employee,
creditor, independent contractor, or other third party. There are no liens on
any of the assets of CSINH with respect to Taxes, other than liens for Taxes not
yet due and payable or for Taxes that CSINH is contesting in good faith through
appropriate proceedings. CSINH is not and has not been at any time a member of
an affiliated
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group of corporations filing consolidated, combined or unitary income or
franchise tax returns for a period for which the statute of limitations for any
Tax potentially applicable as a result of such membership has not expired.
(c) The amount of CSINH's liabilities for unpaid Taxes for all periods
through the date of the CSINH Financial Statements do not, in the aggregate,
materially exceed the amount of the current liability accruals for Taxes
reflected on the CSINH Financial Statements, and the CSINH Financial Statements
properly accrue in accordance with GAAP all liabilities for Taxes of CSINH
payable after the date of the CSINH Financial Statements attributable to
transactions and events occurring prior to such date. No liability for Taxes of
CSINH has been incurred (or prior to Closing will be incurred) since such date
other than in the ordinary course of business.
(d) The Acquiror has been furnished by CSINH true and complete copies of
(i) relevant portions of income tax audit reports, statements of deficiencies,
closing or other agreements received by or on behalf of CSINH relating to Taxes,
and (ii) all federal, state and foreign income or franchise tax Returns for or
including CSINH for all periods since CSINH's inception.
(e) No audit of the Returns of or including CSINH by a government or
taxing authority is in process, threatened or, to CSI or CSINH's knowledge,
pending (either in writing or orally, formally or informally). No deficiencies
exist or have been asserted (either in writing or orally, formally or
informally) and not resolved or are expected to be asserted with respect to
Taxes of CSINH, and CSINH has not received notice (either in writing or orally,
formally or informally) nor does it expect to receive notice that it has not
filed a Return or paid Taxes required to be filed or paid. CSINH is not a party
to any action or proceeding for assessment or collection of Taxes, nor has such
event been asserted or threatened (either in writing or orally, formally or
informally) against CSINH, or any of its assets. No waiver or extension of any
statute of limitations is in effect with respect to Taxes or Returns of CSINH.
CSINH has disclosed on its federal and state income and franchise tax returns
all positions taken therein that could give rise to a substantial understatement
penalty within the meaning of Code Section 6662 or comparable provisions of
applicable state tax laws.
(f) CSINH is not (nor has it ever been) a party to any tax sharing
agreement. Since January 1, 1998, CSINH has not been a distributing corporation
or a controlled corporation in a transaction described in Section 355(a) of the
Code.
(g) CSINH is not, nor has it been, a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code. CSINH is
not a "consenting corporation" under Section 341(f) of the Code. CSINH has not
entered into any compensatory agreements with respect to the performance of
services which payment thereunder would result in a nondeductible expense to
CSINH pursuant to Section 280G of the Code or an excise tax to the recipient of
such payment pursuant to Section 4999 of the Code. CSINH has not agreed to, nor
is it required to make, other than by reason of the transactions anticipated by
this Agreement, any adjustment under Code Section 481(a) by reason of, a change
in accounting method, and CSINH will not otherwise have any income reportable
for a period ending after the Closing Date
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attributable to a transaction or other event (e.g., an installment sale)
occurring prior to the Closing Date with respect to which CSINH received the
economic benefit prior to the Closing Date. CSINH is not, nor has it been, a
"reporting corporation" subject to the information reporting and record
maintenance requirements of Section 6038A and the regulations thereunder.
(h) The Acquiror has been furnished accurate and complete
information in writing regarding CSINH's acquisition of the Company Common Stock
owned by CSINH sufficient to determine the tax basis and holding period for such
shares.
(i) Acquiror has been furnished accurate and complete information
regarding CSINH's net operating losses for federal and each state tax purposes
other than losses incurred in connection with the transactions contemplated by
this Agreement. CSINH has no net operating losses and credit carryovers or other
tax attributes currently subject to limitation under Sections 382, 383, or 384
of the Code, not taking into account any such limitation resulting from the
transactions contemplated by this Agreement.
2.13 EMPLOYEE MATTERS. At the date hereof, CSINH does not have, nor has
it ever had, any employees and it does not participate in or sponsor, nor has it
ever participated in or sponsored, any employee benefit plans (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")).
2.14 INTERESTED PARTY TRANSACTIONS. Neither CSI nor CSINH is indebted to
any director, officer, employee or agent of either CSI or CSINH (except for
amounts due as normal salaries and bonuses and in reimbursement of ordinary
expenses), and no such person is indebted to CSINH.
2.15 COMPLIANCE WITH LAWS. CSINH has complied with, is not in violation
of, and has not received any notices of any violation with respect to, any
federal, state, local or foreign statute, law or regulation with respect to the
conduct of its business, or the ownership or operation of its business.
2.16 MINUTE BOOKS. The minute books of CSINH have been made available to
the Acquiror and contain a summary of all meetings of directors and stockholders
or actions by written consent since the time of incorporation of CSINH through
the date of this Agreement, and reflect all transactions referred to in such
minutes accurately in all material respects.
2.17 BROKERS' AND FINDERS' FEES. Neither CSI nor CSINH has incurred, nor
will it incur, directly or indirectly, any liability for brokerage or finders'
fees or agents' commissions or investment bankers' fees or any similar charges
in connection with this Agreement or any transaction contemplated hereby.
2.18 THIRD PARTY CONSENTS. Except as specified in Section 2.5(b), no
consent or approval is needed by CSI or CSINH from any third party in order to
consummate any of the transactions contemplated hereby.
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2.19 CONTROL OF CSI; SIZE OF CSI.
(a) No person (including all parent corporations, subsidiaries and
divisions and all related corporations under common control with any of the
foregoing) has beneficial ownership, whether direct or indirect, through
fiduciaries, agents, controlled entities or other means, of 50% or more of the
voting securities of CSI. Pursuant to a shareholders agreement among the
shareholders of CSI, the shareholders have agreed to vote for the election of
the eight members of the board of directors of CSI as follows: the Ontario
Municipal Employee Retirement System ("OMERS") has the contractual power to
designate three of the directors, Toronto Dominion Bank ("TD") has the
contractual power to designate two of the directors, the Chief Executive Officer
of CSI is to be a member of the Board, and OMERS and TD, acting jointly, have
the contractual power to designate two Independent persons (defined as person
who are not affiliated directly or indirectly, with CSI, OMERS or TD). OMERS
does not have the contractual power to designate the Chief Executive Officer of
CSI.
(b) The annual consolidated net sales of CSI, both domestic and
foreign, for the fiscal year ended December 31, 1999, as stated in the
unaudited, consolidated financial statements of CSI for the year ended December
31, 1999, were less than $100 million. The total consolidated assets of CSI,
both domestic and foreign, as stated on its balance sheet as of December 31,
1999, were less than $100 million. The income statement of CSI for the year
ended December 31, 1999 and the balance sheet of CSI as at such date are the
most recent regularly prepared financial statements of CSI.
2.20 REPRESENTATIONS COMPLETE. None of the representations or warranties
made by CSI or CSINH herein or in any Schedule hereto, including the Disclosure
Schedule, or certificate furnished by CSI or CSINH pursuant to this Agreement,
when all such documents are read together in their entirety, contains or will
contain at the Closing Date any untrue statement of a material fact, or omits or
will omit at the Closing Date to state any material fact necessary in order to
make the statements contained herein or therein, in the light of the
circumstances under which made, not misleading.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF CSINH, COMPANY AND STOCKHOLDERS.
Except as disclosed in the Disclosure Schedules and referring to the
representations and warranties in this Section 3, CSINH and the Company jointly
and severally, and the Stockholders severally, represent and warrant to the
Acquiror as follows:
3.1 ORGANIZATION; SUBSIDIARIES. Each of the Company and each Subsidiary
(as hereinafter defined) is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation. Each of
the Company and each Subsidiary has the requisite corporate power and authority
and all necessary government approvals to own, lease and operate its properties
and to carry on its business as now being conducted and as proposed to be
conducted, except where the failure to have such power, authority and
governmental approvals would not, individually or in the aggregate, have a
Material Adverse Effect on the Company or such Subsidiary. Each of the Company
and each Subsidiary is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its business
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makes such qualification or licensing necessary, except for such failures to be
so qualified or licensed and in good standing that would not, individually or in
the aggregate, have a Material Adverse Effect on the Company or such Subsidiary.
Section 3.1 of the Disclosure Schedule sets forth each jurisdiction where each
of the Company and each Subsidiary is qualified to do business. Except as set
forth in Section 3.1 of the Disclosure Schedule, the Company does not have any
investment in, or control, directly or indirectly, any subsidiaries,
associations or other business entities ( each, a "Subsidiary" or
"Subsidiaries"). Each Subsidiary is wholly-owned by the Company. The entire
capital stock of each Subsidiary is owned by the Company, free and clear of all
liens, encumbrances or claims of any kind None of the Subsidiaries has any
Subsidiaries. Neither the Company nor any Subsidiary is a participant in any
joint venture or partnership.
3.2 ARTICLES OF INCORPORATION AND BYLAWS. The Company has delivered to
the Acquiror a true and correct copy of the Charter Documents of the Company and
each Subsidiary, each as amended to date. Neither the Company nor any Subsidiary
is in violation of any of the provisions of its Charter Documents.
3.3 CAPITAL STRUCTURE. The authorized capital stock of the Company
consists of 2,000,000 shares, consisting of 1,000,000 shares of common stock,
with no par value per share, of which 12,932.124 shares are issued and
outstanding, and 1,000,000 shares of preferred stock, none of which is issued or
outstanding. The Company has issued options to purchase 231.907 shares of common
stock of the Company. There are no other outstanding shares of capital stock or
voting securities and no outstanding commitments to issue any shares of capital
stock or voting securities after the date hereof or any other rights or
securities granted or issued to any person to cause the Company to issue, sell,
redeem or repurchase any shares of capital stock of the Company. All outstanding
shares of the Company Common Stock are duly authorized, validly issued, fully
paid and non-assessable and are free of any liens or encumbrances or claims of
any kind, and are not subject to preemptive rights or rights of first refusal
created by statute, the Charter Documents of the Company or any agreement to
which the Company or any stockholder of the Company is a party or by which it is
bound. CSINH and the Stockholders are the lawful record and beneficial owners of
that number of issued and outstanding shares of the Company Common Stock set
forth on Exhibit A, free and clear of all liens, encumbrances or claims of any
kind. Except as disclosed in this Section 3.3, there does not exist nor is there
outstanding any right, option, warrant, convertible obligation or other security
or agreement entered into or granted by the Company with respect to any shares
of capital stock of the Company. Except (i) for the rights created pursuant to
this Agreement (ii) as set forth in this Section 3.3 or (iii) set forth in
Section 3.3 of the Disclosure Schedule, there are no options, warrants, calls,
rights, commitments, agreements or arrangements of any character to which the
Company is a party or by which the Company is bound relating to the issued or
unissued capital stock of the Company or obligating the Company to issue,
deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold,
repurchased or redeemed, any shares of capital stock of the Company or
obligating the Company to grant, extend, accelerate the vesting of, change the
price of, or otherwise amend or enter into any such option, warrant, call,
right, commitment or agreement. There are no contracts, commitments or
agreements relating to voting, purchase or sale of any shares of the Company
capital stock (i) between or among the Company and any of the stockholders of
the Company or (ii) between or among any of the stockholders of the Company.
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3.4 AUTHORITY.
(a) The Company has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company. This Agreement has been duly
executed and delivered by the Company and assuming due authorization, execution
and delivery by the Acquiror, constitutes the valid and binding obligation of
the Company enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights and general principles of equitable remedies.
(b) Each Stockholder has the requisite capacity to enter into this
Agreement and to consummate the transaction contemplated hereby. This Agreement
has been duly executed and delivered by each Stockholder and constitutes a valid
and binding obligation enforceable against him or her in accordance with its
terms, subject to applicable bankruptcy, insolvency, moratorium or other similar
laws relating to creditors' rights and general principles of equitable remedies.
3.5 NO CONFLICTS; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by the Company,
the Founders and the Other Stockholders does not, and the consummation of the
transactions contemplated hereby will not, conflict with, or result in any
violation of, or default under (with or without notice or lapse of time, or
both), or give rise to a right of termination, cancellation or acceleration of
any obligation or loss of any benefit under (i) any provision of the Charter
Documents of the Company or (ii) any material mortgage, indenture, lease,
contract or other agreement or instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Company or any Subsidiary or any of its properties or assets.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with any Governmental Entity is required by
or with respect to the Company in connection with the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby,
except for (i) such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under the Exchange Act, (ii) the
Securities Act, applicable state securities laws and the securities laws of any
foreign country; (iii) such filings as may be required under the HSR; and (iv)
such other consents, authorizations, filings, approvals and registrations which,
if not obtained or made, would not have a Material Adverse Effect on the Company
and would not prevent, or materially alter or delay any of the transactions
contemplated by this Agreement.
3.6 FINANCIAL STATEMENTS. Section 3.6 of the Disclosure Schedule
includes a true, correct and complete copy of the audited, consolidated
financial statements for each of the fiscal years ended December 31, 1998 and
1999 for the Company and each Subsidiary (collectively, the "Company Financial
Statements"). The Company Financial Statements have been prepared in accordance
with GAAP applied on a consistent basis throughout the periods indicated and
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with each other. The Company Financial Statements accurately set out and
describe the financial condition and operating results the Company as of the
dates, and for the periods, indicated therein, subject to normal year-end audit
adjustments. The Company maintains and will continue to maintain a system of
accounting administered in accordance with GAAP.
3.7 ABSENCE OF UNDISCLOSED LIABILITIES. Neither the Company nor any
Subsidiary has any obligations or liabilities of any nature (matured or
unmatured, fixed or contingent) other than (i) those set forth or adequately
provided for in the Balance Sheet for the period ended December 31, 1999 (the
"Company Balance Sheet"), (ii) those incurred in the ordinary course of business
and not required to be set forth in the Company Balance Sheet under GAAP, (iii)
those incurred in the ordinary course of business since the date of the Company
Balance Sheet and consistent with past practice, and (iv) those incurred in
connection with the execution of this Agreement.
3.8 ABSENCE OF CERTAIN CHANGES. Except as set forth in Section 3.8 of
the Disclosure Schedule, since date of the Company Balance Sheet (the "Company
Balance Sheet Date") there has not been, occurred or arisen any:
(a) transaction by the Company or any Subsidiary except in the
ordinary course of business in a manner consistent with past practices;
(b) amendments or changes to the Company's or any Subsidiary's
Charter Documents;
(c) capital expenditure or commitment by the Company or any
Subsidiary, in any individual amount exceeding $5,000, or in the aggregate,
exceeding $20,000;
(d) destruction of, damage to, or loss of any assets (including,
without limitation, intangible assets), business or customer of the Company or
any Subsidiary (whether or not covered by insurance) that has resulted in, or
might reasonably be expected to result in, a Material Adverse Effect to the
Company or such Subsidiary;
(e) strike, lockout or slowdown or, to the Company's knowledge, any
threat thereof, or claim of wrongful discharge or other unlawful labor practice
or action affecting the Company or any Subsidiary;
(f) change in accounting methods or practices (including any change
in depreciation or amortization policies or rates, any change in policies in
making or reversing accruals, or any change in capitalization of software
development costs) by the Company or any Subsidiary;
(g) revaluation by the Company or any Subsidiary of any of its
assets;
(h) declaration, setting aside, or payment of a dividend or other
distribution in respect to the capital stock of the Company, or any direct or
indirect redemption, purchase or other acquisition by the Company of any of its
capital stock;
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(i) increase in the salary or other compensation payable or to
become payable by the Company or any Subsidiary to any officers, directors,
employees or advisors of the Company or any Subsidiary, except in the ordinary
course of business consistent with past practice, or the declaration, payment,
or commitment or obligation of any kind for the payment by the Company or any
Subsidiary of a bonus or other additional salary or compensation to any such
person except as otherwise contemplated by this Agreement, the establishment of
any bonus, insurance, deferred compensation, pension, retirement, profit
sharing, stock option (including without limitation, the granting of stock
options, stock appreciation rights, performance awards), stock purchase or other
employee benefit plan;
(j) sale, lease, license of other disposition of any of the assets
or properties of the Company or any Subsidiary, except in the ordinary course of
business and not in excess of $20,000 in the aggregate;
(k) termination or material amendment of any Material Contract (as
hereafter defined) to which the Company or any Subsidiary is a party or by which
it is bound;
(l) loan by the Company or any Subsidiary to any person or entity,
or guaranty by the Company or any Subsidiary of any loan;
(m) waiver or release of any right or claim of the Company or any
Subsidiary, including any write-off or other compromise of any account
receivable of the Company or any Subsidiary, in excess of $20,000 in the
aggregate;
(n) the commencement or notice or, to the Company's knowledge,
threat of commencement of any lawsuit or proceeding against or, to the Company's
knowledge, investigation of the Company or any Subsidiary or its affairs;
(o) to the Company's knowledge, any notice of any claim of
ownership by a third party of the Intellectual Property (as hereinafter defined)
or of infringement by the Company or any Subsidiary of any third party's
Intellectual Property rights;
(p) issuance or sale by the Company or any Subsidiary of any of its
shares of capital stock, or securities exchangeable, convertible or exercisable
therefor, or of any other of its securities;
(q) change in pricing or royalties set or charged by the Company or
any Subsidiary to its customers or licensees or in pricing or royalties set or
charged by persons who have licensed the Intellectual Property to the Company or
such Subsidiary;
(r) event or condition of any character that has or could
reasonably be expected to have a Material Adverse Effect on the Company or any
Subsidiary; or
(s) agreement by the Company or any Subsidiary or any director,
officer or employee of the Company or any Subsidiary to do any of the things
described in the preceding clauses (a) through (r) (other than negotiations with
the Acquiror and its representatives regarding the transactions contemplated by
this Agreement).
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3.9 LITIGATION. There is no private or governmental action, suit,
proceeding, claim or arbitration pending before any agency, court or tribunal,
foreign or domestic, or, to the knowledge of the Company, threatened against the
Company or any Subsidiary or any of its properties or any of its officers or
directors (in their capacities as such) that, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect on the Company.
There is no judgment, decree or order against the Company or, to the knowledge
of the Company, any of the Company's or any Subsidiary's directors or officers
(in their capacities as such), that could prevent, enjoin, or materially alter
or delay any of the transactions contemplated by this Agreement, or that could
reasonably be expected to have a Material Adverse Effect on the Company. All
litigation to which the Company or any Subsidiary is a party (or, to the
knowledge of the Company, threatened to become a party) is disclosed in the
Disclosure Schedule.
3.10 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no agreement,
judgment, injunction, order or decree binding upon the Company or any Subsidiary
which has or could reasonably be expected to have the effect of prohibiting or
materially impairing any current or future business practice of the Company or
any Subsidiary, any acquisition of property by the Company or any Subsidiary or
the overall conduct of business by the Company or any Subsidiary as currently
conducted or as proposed to be conducted by the Company. Neither the Company nor
any Subsidiary has entered into any agreement under which the Company or any
Subsidiary is restricted from selling, licensing or otherwise distributing any
of its products to any class of customers, in any geographic area, during any
period of time or in any segment of the market.
3.11 PERMITS; THE COMPANY PRODUCTS; REGULATION.
(a) Each of the Company and each Subsidiary is in possession of all
franchises, grants, authorizations, licenses, permits, easements, variances,
exceptions, consents, certificates, approvals and orders necessary for each of
the Company and such Subsidiary to own, lease and operate its properties or to
carry on its business as it is now being conducted (the "Authorizations") and no
suspension or cancellation of any Authorization is pending or, to the knowledge
of the Company, threatened, except where the failure to have, or the suspension
or cancellation of, any Authorization would not have a Material Adverse Effect
on the Company. Neither the Company nor any Subsidiary is in conflict with, or
in default or violation of, (i) any laws applicable to the Company or such
Subsidiary or by which any property or asset of the Company or such Subsidiary
is bound or affected, (ii) any Authorization, or (iii) any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or such Subsidiary is a party or
by which the Company or any property or asset of the Company or such Subsidiary
is bound or affected, except for any such conflict, default or violation that
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company.
(b) Except as would not have a Material Adverse Effect on the
Company, there have been no written notices, citations or decisions by any
governmental or regulatory body that any product produced, manufactured,
marketed or distributed at any time by the Company or any Subsidiary (the
"Products") is defective or fails to meet any applicable standards promulgated
by any such governmental or regulatory body. To the knowledge of the
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Company, each of the Company and each Subsidiary has complied in all material
respects with the laws, regulations, policies, procedures and specifications
with respect to the design, manufacture, labeling, testing and inspection of the
Products. Except as disclosed in Section 3.11(b) of the Disclosure Schedule,
there have been no recalls, field notifications or seizures ordered or, to the
Company's knowledge, threatened by any such governmental or regulatory body with
respect to any of the Products.
(c) Except as set forth in Section 3.11(c) of the Disclosure
Schedule, each of the Company and each Subsidiary has obtained, in all countries
where the Company and such Subsidiary is marketing or has marketed its Products,
all applicable licenses, registrations, approvals, clearances and authorizations
required by local, state or federal agencies in such countries regulating the
safety, effectiveness and market clearance of the Products currently or
previously marketed by the Company or such Subsidiary in such countries, except
for any such failures as would not, individually or in the aggregate, have a
Material Adverse Effect on the Company. The Company has identified and made
available for examination by the Acquiror all information relating to regulation
of the Products, including licenses, registrations, approvals and permits. The
Company has identified in writing to the Acquiror all international locations
where regulatory information and documents are kept.
3.12 TITLE TO PROPERTY.
(a) The Company (or a Subsidiary) has good and marketable title to
all of its properties, interests in properties and assets, real and personal,
reflected in the Company Balance Sheet or acquired after the Company Balance
Sheet Date (except properties, interests in properties and assets sold or
otherwise disposed of since the Company Balance Sheet Date in the ordinary
course of business), or with respect to leased properties and assets, valid
leasehold interests in, free and clear of all mortgages, liens, pledges, charges
or encumbrances of any kind or character, except (i) the lien of current taxes
not yet due and payable, (ii) such imperfections of title, liens and easements
as do not and will not materially detract from or interfere with the use of the
properties subject thereto or affected thereby, or otherwise materially impair
business operations involving such properties, and (iii) liens securing debt
which is reflected on the Company Balance Sheet. The plants, property and
equipment of the Company and each Subsidiary that are used in the operations of
its businesses are in good operating condition and repair. All properties used
in the operations of the Company or any Subsidiary are reflected in the Company
Balance Sheet to the extent GAAP require the same to be reflected. Section
3.12(a) of the Disclosure Schedule sets forth a true, correct and complete list
of all real property owned or leased by the Company or any Subsidiary, the name
of the lessor, the date of the lease and each amendment thereto and the
aggregate annual rental and other fees payable under such lease. Such leases are
in good standing, are valid and effective in accordance with their respective
terms, and there is not under any such leases any existing default or event of
default (or event which with notice or lapse of time, or both, would constitute
a default).
(b) Section 3.12(b) of the Disclosure Schedule also sets forth a
true, correct and complete list of all equipment having a value in excess of
$1,000 owned or leased the Company or any Subsidiary, and such equipment is,
taken as a whole, in conjunction with the equipment having a value of less than
$1,000, (i) adequate for the conduct of the Company's and
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such Subsidiary's business, consistent with its past practice, and (ii) in good
operating condition (except for ordinary wear and tear).
3.13 INTELLECTUAL PROPERTY.
(a) Each of the Company and each Subsidiary owns, or has licensed
or otherwise possess legally enforceable rights to use all patents, patent
rights, trademarks, trademark rights, trade names, trade name rights, service
marks, copyrights, and any applications for any of the foregoing, maskworks, net
lists, schematics, industrial models, inventions, technology, know-how, trade
secrets, inventory, ideas, algorithms, processes, computer software programs or
applications (in both source code and object code form), and tangible or
intangible proprietary information or material ("Intellectual Property") that
are used or proposed to be used in the business of the Company or any Subsidiary
as currently conducted by the Company or such Subsidiary.
(b) Section 3.13 of the Disclosure Schedule lists (i) all patents
and patent applications and all registered and unregistered trademarks, trade
names and service marks, registered and unregistered copyrights, and maskworks
registered by the Company or any Subsidiary, included in the Intellectual
Property, including the jurisdictions in which each such Intellectual Property
right has been issued or registered or in which any application for such
issuance and registration has been filed, (ii) all licenses, sublicenses and
other agreements as to which the Company is a party and pursuant to which any
person is authorized to use any Intellectual Property except for licenses to
customers granted in the ordinary course of business, and (iii) all material
licenses, sublicenses and other agreements as to which the Company or any
Subsidiary is a party and pursuant to which any person is authorized the use any
third party patents, trademarks or copyrights, including software ("Third Party
Intellectual Property Rights") which are incorporated in, are, or form a part of
any product that is material to its business, excluding Third Party Intellectual
Property Rights for word processing software or similar software validly
obtained and licensed by the Company. Neither the Company nor any Subsidiary is
in violation of any license, sublicense or agreement described in Section 3.13
of the Disclosure Schedule. The execution and delivery of this Agreement by the
Company and the consummation of the transactions contemplated hereby, will
neither cause the Company or any Subsidiary to be in violation or default under
any such license, sublicense or agreement, nor entitle any other party to any
such license, sublicense or agreement to terminate or modify such license,
sublicense or agreement. Except as set forth in Section 3.13 of the Disclosure
Schedule, the Company (or a Subsidiary) is the sole and exclusive owner or
licensee of, with all right, title and interest in and to (free and clear of any
liens), the Intellectual Property, and has sole and exclusive rights (and is not
contractually obligated to pay any compensation to any third party in respect
thereof) to the use thereof or the material covered thereby in connection with
the services or products in respect of which the Intellectual Property is being
used.
(c) There is no material unauthorized use, disclosure, infringement
or misappropriation of any Intellectual Property rights of the Company or any
Subsidiary, any trade secret material to the Company or any Subsidiary or any
Intellectual Property right of any third party to the extent licensed by or
through the Company or any Subsidiary, by any third party, including any
employee of the Company or any Subsidiary. Neither the Company nor any
Subsidiary has entered into any agreement to indemnify any other person against
any charge of
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infringement of any Intellectual Property, other than indemnification provisions
contained in purchase orders arising in the ordinary course of business.
(d) Neither the Company nor any Subsidiary is nor will be as a
result of the execution and delivery of this Agreement or the performance of the
Company's obligations under this Agreement, in breach of any license, sublicense
or other agreement relating to the Intellectual Property or Third Party
Intellectual Property Rights, the breach of which would have a Material Adverse
Effect on the Company.
(e) All patents, registered trademarks, service marks and
copyrights held by the Company and each Subsidiary are valid and existing and,
to the knowledge of the Company, there is no assertion or claim (or basis
therefor) challenging the validity of any Intellectual Property of the Company
or any Subsidiary. Neither the Company nor any Subsidiary has been sued in any
suit, action or proceeding which involves a claim of infringement of any
patents, trademarks, service marks, copyrights or violation of any trade secret
or other proprietary right of any third party. Neither the conduct of the
business of the Company or any Subsidiary as currently conducted nor the
manufacture, sale, licensing or use of any of the products of the Company or any
Subsidiary as now manufactured, sold or licensed or used, nor the use in any way
of the Intellectual Property in the manufacture, use, sale or licensing by the
Company or any Subsidiary of any products currently proposed, infringes on or
will infringe or conflict with, in any way, any license, trademark, trademark
right, trade name, trade name right, patent, patent right, industrial model,
invention, service mark or copyright of any third party that, individually or in
the aggregate, is reasonably likely to have a Material Adverse Effect on the
Company. All registered trademarks, service marks and copyrights held by the
Company or any Subsidiary are valid and existing. To the Company's knowledge, no
third party is challenging the ownership by the Company, or the validity or
effectiveness of, any of the Intellectual Property. The Company has not brought
any action, suit or proceeding for infringement of Intellectual Property or
breach of any license or agreement involving Intellectual Property against any
third party. There are no pending, or to the knowledge of the Company,
threatened interference, re-examinations, oppositions or nullities involving any
patents, patent rights or applications therefor of the Company except such as
may have been commenced by the Company. There is no breach or violation of or,
to the knowledge of the Company, threatened or actual loss of rights under any
license agreement to which the Company is a party.
(f) Each of the Company and each Subsidiary has secured valid
written assignments from all consultants and employees who contributed to the
creation or development of Intellectual Property of the rights to such
contributions that the Company (or a Subsidiary) does not already own by
operation of law.
(g) Each of the Company and each Subsidiary has a policy requiring
each employee, consultant and independent contractor to execute proprietary
information and confidentiality agreements substantially in the Company's or
such Subsidiary's standard forms and all current and former employees,
consultant and independent contractors of the Company and such Subsidiary have
executed such an agreement. All use, disclosure or appropriation of the
Intellectual Property owned by the Company or any Subsidiary and not otherwise
protected by patents, patent applications or copyright ("Confidential
Information") has been pursuant to the terms of a written agreement between the
Company or a Subsidiary and a third party. All
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use, disclosure or appropriation by the Company or any Subsidiary of
Confidential Information not owned by the Company or a Subsidiary has been
pursuant to the terms of a written agreement between the Company or such
Subsidiary and the owner of such Confidential Information, or is otherwise
lawful.
3.14 ENVIRONMENTAL MATTERS.
(a) The following terms shall be defined as follows:
(i) "Environmental and Safety Laws" shall mean any federal,
state or local laws, ordinances, codes, regulations, rules, policies and orders,
as currently in effect, that are intended to assure the protection of the
environment, or that classify, regulate, call for the remediation of air, water
or groundwater with respect to, or that require reporting with respect to,
Hazardous Materials; which regulate the manufacture, handling, transport,
treatment, storage or disposal of Hazardous Materials, or which are intended to
assure the good health of employees or other persons, including the public.
(ii) "Hazardous Materials" shall mean any toxic or hazardous
substance, material or waste or any pollutant or contaminant, or infectious or
radioactive substance or material, including without limitation, those
substances, materials and wastes defined in or regulated under any Environmental
and Safety Laws; petroleum and petroleum products including crude oil and any
fractions thereof; natural gas and any mixtures thereof; radon and asbestos.
(iii) "Property" shall mean all real property leased or owned
by the Company either currently or in the two-year period prior to the Closing.
(iv) "Facilities" shall mean all buildings and improvements on
the Property of the Company.
(b) Except as would not have a Material Adverse Effect on the
Company or its Subsidiaries considered as a whole: (i) no asbestos is contained
in or has been used at or released from the Facilities in violation of
Environmental and Safety Laws; (ii) the Company has not received notice (verbal
or written) of any noncompliance of the Facilities or of its past or present
operations with Environmental and Safety Laws; (iii) no notices, administrative
actions or suits are pending or, to the knowledge of the Company, CSINH and the
Founders, threatened against the Company, CSINH or the Founders relating to
Hazardous Materials or a violation of any Environmental and Safety Laws; (iv)
the Company has not received notice that it is a potentially responsible party
under the federal Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), or any state analog statute, arising out of events
occurring prior to the Closing Date; (v) to the knowledge of the Company, CSINH
and the Founders, there has not been in the past, and there is not now, any
contamination, disposal, spilling, dumping, incineration, discharge, storage, or
treatment of Hazardous Materials on, under or migrating from the Facilities or
Property (including without limitation, soils and surface and ground waters);
(vi) except in material compliance with Environmental and Safety Laws, there are
not now any underground tanks at, on or under the Property including without
limitation, treatment or storage tanks, sumps, or oil wells; (vii) to the
knowledge of the
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Company, CSINH and the Founders, there are no polychlorinated biphenyls ("PCBs")
deposited, stored, disposed of or located on the Property or Facilities or any
equipment on the Property containing PCBs at levels in excess of 50 parts per
million; (viii) to the knowledge of the Company, CSINH and the Founders, there
is no formaldehyde on the Property or in the Facilities, nor any insulating
material containing urea formaldehyde in the Facilities; (ix) the Facilities and
the Company's activities therein, within applicable statutes of limitation, have
complied in all material respects with all Environmental and Safety Laws; (x)
the Company and each Subsidiary has all the permits and licenses required under
Environmental and Safety Laws to operate its business as currently conducted and
the Company is in compliance in all material respects with the terms and
conditions of those permits; and (xi) neither the Company nor any Subsidiary has
not received notice that it is liable for any off-site contamination involving
Hazardous Materials.
3.15 TAXES.
(a) All Returns required to be filed by or on behalf of the Company
and each Subsidiary have been duly filed on a timely basis, except where the
failure to timely file such Return will not have a Material Adverse Effect on
the Company, and each such Return is true, complete and correct in all material
respects. All Taxes shown to be payable on such Returns or on subsequent
assessments with respect thereto, and all payments of estimated Taxes required
to be made by or on behalf of the Company under Section 6655 of the Code or
comparable provisions of state, local or foreign law, have been paid in full on
a timely basis, and no other material Taxes are payable by the Company with
respect to items or periods covered by such Returns (whether or not shown on or
reportable on such Returns). Each of the Company and each Subsidiary has
withheld and paid over all Taxes required to have been withheld and paid over,
and complied with all information reporting and backup withholding in connection
with amounts paid or owing to any employee, creditor, independent contractor, or
other third party. There are no liens on any of the assets of the Company or any
Subsidiary with respect to Taxes, other than liens for Taxes not yet due and
payable or for Taxes that the Company is contesting in good faith through
appropriate proceedings. The Company is not and has not been at any time a
member of an affiliated group of corporations filing consolidated, combined or
unitary income or franchise tax returns for a period for which the statute of
limitations for any Tax potentially applicable as a result of such membership
has not expired.
(b) The amount of the Company's liabilities for unpaid Taxes
(including Subsidiaries) for all periods through the date of the Company
Financial Statements do not, in the aggregate, materially exceed the amount of
the current liability accruals for Taxes reflected on the Company Financial
Statements, and the Company Financial Statements properly accrue in accordance
with GAAP all liabilities for Taxes of the Company or any Subsidiary payable
after the date of the Company Financial Statements attributable to transactions
and events occurring prior to such date. No liability for Taxes of the Company
or any Subsidiary has been incurred (or prior to Closing will be incurred) since
such date other than in the ordinary course of business.
(c) The Acquiror has been furnished by the Company true and
complete copies of (i) relevant portions of income tax audit reports, statements
of deficiencies, closing or other agreements received by or on behalf of the
Company and each Subsidiary relating to
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Taxes, and (ii) all federal, state and foreign income or franchise tax Returns
for or including the Company or any Subsidiary for all periods since the
inception of the Company.
(d) Except as set forth in Section 3.15 of the Disclosure Schedule,
no audit of the Returns of or including the Company or any Subsidiary by a
government or taxing authority is in process, threatened or, to the Company's
knowledge, pending (either in writing or orally, formally or informally). No
deficiencies exist or have been asserted (either in writing or orally, formally
or informally) and not resolved or are expected to be asserted with respect to
Taxes of the Company or any Subsidiary, and neither the Company nor any
Subsidiary has received notice (either in writing or orally, formally or
informally) nor does it expect to receive notice that it has not filed a Return
or paid Taxes required to be filed or paid. Neither the Company nor any
Subsidiary is a party to any action or proceeding for assessment or collection
of Taxes, nor has such event been asserted or threatened (either in writing or
orally, formally or informally) against the Company or any Subsidiary or any of
their respective assets. No waiver or extension of any statute of limitations is
in effect with respect to Taxes or Returns of the Company or any Subsidiary. The
Company has disclosed on their federal and state income and franchise tax
returns all positions taken therein that could give rise to a substantial
understatement penalty within the meaning of Code Section 6662 or comparable
provisions of applicable state tax laws.
(e) The Company is not (nor has it ever been) a party to any tax
sharing agreement. Since January 1, 1998, the Company has never been a
distributing corporation or a controlled corporation in a transaction described
in Section 355(a) of the Code.
(f) The Company is not, nor has it been, a United States real
property holding corporation within the meaning of Section 897(c)(2) of the Code
during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
The Company is not a "consenting corporation" under Section 341(f) of the Code.
The Company has not entered into any compensatory agreements with respect to the
performance of services which payment thereunder would result in a nondeductible
expense to the Company pursuant to Section 280G of the Code or an excise tax to
the recipient of such payment pursuant to Section 4999 of the Code. The Company
has agreed to, nor is it required to make, other than by reason of the
transactions contemplated hereunder, any adjustment under Code Section 481(a) by
reason of, a change in accounting method, and the Company will not otherwise
have any income reportable for a period ending after the Closing Date
attributable to a transaction or other event (e.g., an installment sale)
occurring prior to the Closing Date with respect to which the Company received
the economic benefit prior to the Closing Date. The Company is not, nor has it
been, a "reporting corporation" subject to the information reporting and record
maintenance requirements of Section 6038A and the regulations thereunder.
(g) The Disclosure Schedule contains accurate and complete
information regarding the Company's net operating losses for federal and each
state tax purposes. The Company will not have net operating losses and credit
carryovers or other tax attributes currently subject to limitation under
Sections 382, 383, or 384 of the Code, not taking into account any such
limitation resulting from the transactions contemplated hereunder.
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3.16 EMPLOYEE BENEFIT PLANS.
(a) Schedule 3.16 lists, with respect to the Company and any trade
or business (whether or not incorporated) which is treated as a single employer
with CSINH (an "ERISA Affiliate") within the meaning of Section 414(b), (c), (m)
or (o) of the Code, (i) all employee benefit plans (as defined in Section 3(3)
of ERISA), (ii) each loan to a non-officer employee, loans to officers and
directors and any stock option, stock purchase, phantom stock, stock
appreciation right, supplemental retirement, severance, sabbatical, medical,
dental, vision care, disability, employee relocation, cafeteria benefit (Code
Section 125) or dependent care (Code Section 129), life insurance or accident
insurance plans, programs or arrangements, (iii) all contracts and agreements
relating to employment and all severance agreements, with any of the directors,
officers or employees of the Company (other than, in each case, any such
contract or agreement that is terminable by the Company at will or without
penalty or other adverse consequence), (iv) all bonus, pension, profit sharing,
savings, deferred compensation or incentive plans, programs or arrangements, (v)
other fringe or employee benefit plans, programs or arrangements that apply to
senior management of the Company and that do not generally apply to all
employees, and (vi) any current or former employment or executive compensation
or severance agreements, written or otherwise, as to which unsatisfied
obligations of the Company remain for the benefit of, or relating to, any
present or former employee, consultant or director of the Company (together, the
"Employee Plans").
(b) The Company has furnished to the Acquiror a copy of each of the
Employee Plans and related plan documents (including trust documents, insurance
policies or contracts, employee booklets, summary plan descriptions and other
authorizing documents, and, to the extent still in its possession, any material
employee communications relating thereto) and has, with respect to each Employee
Plan which is subject to ERISA reporting requirements, provided copies of the
Form 5500 reports filed for the last three plan years. Any Employee Plan
intended to be qualified under Section 401(a) of the Code has either obtained
from the Internal Revenue Service a favorable determination letter as to its
qualified status under the Code, including all amendments to the Code effected
by the Tax Reform Act of 1986 and subsequent legislation, or has applied to the
Internal Revenue Service for such a determination letter prior to the expiration
of the requisite period under applicable Treasury Regulations or Internal
Revenue Service pronouncements in which to apply for such determination letter
and to make any amendments necessary to obtain a favorable determination with
the exception of any amendments required by such subsequent legislation for
which the period during which a determination letter may be requested from the
Internal Revenue Service has not yet expired under such applicable Treasury
regulation or Internal Revenue Service pronouncements. The Company has also
furnished the Acquiror with the most recent Internal Revenue Service
determination letter issued with respect to each such Employee Plan, and nothing
has occurred since the issuance of each such letter which could reasonably be
expected to cause the loss of the tax-qualified status of any Employee Plan
subject to Code Section 401(a). This Section 3.16(b) is limited by the
disclosure set forth in Section 3.16(b) of the Disclosure Schedule.
(c) Except as set forth in Section 3.16(c) of the Disclosure
Schedule, (i) none of the Employee Plans promises or provides retiree medical or
other retiree welfare or life insurance benefits to any person; (ii) there has
been no "prohibited transaction," as such term is defined in Section 406 of
ERISA and Section 4975 of the Code, with respect to any Employee
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Plan, which could reasonably be expected to have, in the aggregate, a Material
Adverse Effect; (iii) each Employee Plan has been administered in accordance
with its terms and in compliance with the requirements prescribed by any and all
statutes, rules and regulations (including ERISA and the Code), except as would
not have, in the aggregate, a Material Adverse Effect, and the Company has
performed all obligations required to be performed by them under, are not in any
material respect in default under or violation of, and have no knowledge of any
material default or violation by any other party to, any of the Employee Plans;
(iv) neither the Company nor any ERISA Affiliate is subject to any liability or
penalty under Sections 4976 through 4980 of the Code or Title I of ERISA with
respect to any of the Employee Plans; (v) all material contributions required to
be made by the Company or ERISA Affiliate to any Employee Plan have been made on
or before their due dates and a reasonable amount has been accrued for
contributions to each Employee Plan for the current plan years; (vi) with
respect to each Employee Plan, no "reportable event" within the meaning of
Section 4043 of ERISA (excluding any such event for which the thirty day notice
requirement has been waived under the regulations to Section 4043 of ERISA) nor
any event described in Section 4062, 4063 or 4041 or ERISA has occurred; (vii)
no Employee Plan is covered by, and neither the Company nor any ERISA Affiliate
has incurred or expects to incur any direct or indirect liability under, arising
out of or by operation of Title IV of ERISA in connection with the termination
of, or an employee's withdrawal from, any Employee Plan or other retirement plan
or arrangement, and no fact or event exists that could give rise to any such
liability, or under Section 412 of the Code; (viii) the Company has not incurred
any liability under, and have complied in all respects with, the Worker
Adjustment Retraining Notification Act, (the "WARN Act")and no fact or event
exists that could give rise to liability under such act; and (ix) no
compensation paid or payable to any employee of the Company has been, or will
be, non-deductible by reason of application of Section 162(m) of the Code. With
respect to each Employee Plan subject to ERISA as either an employee pension
plan within the meaning of Section 3(2) of ERISA or an employee welfare benefit
plan within the meaning of Section 3(1) of ERISA, the Company has prepared in
good faith and timely filed all requisite governmental reports (which were true
and correct as of the date filed to the best of the Company's knowledge) and has
properly and timely filed and distributed or posted all notices and reports to
employees required to be filed, distributed or posted with respect to each such
Employee Plan, except to the extent that the failure to comply would not, in the
aggregate, have a Material Adverse Effect. No suit, administrative proceeding,
action or other litigation has been brought, or to the best knowledge of the
Company is threatened, against or with respect to any such Employee Plan,
including any audit or inquiry by the IRS or United States Department of Labor.
Neither the Company or any ERISA Affiliate is a party to, or has made any
contribution to or otherwise incurred any obligation under, any "multiemployer
plan" as defined in Section 3(37) of ERISA.
(d) With respect to each Employee Plan, the Company has complied
with (i) the applicable health care continuation and notice provisions of the
Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") and the
proposed regulations thereunder and (ii) the applicable requirements of the
Family Leave Act of 1993 and the regulations thereunder, except to the extent
that such failure to comply would not, in the aggregate, have a Material Adverse
Effect.
(e) The consummation of the transactions contemplated by this
Agreement will not (i) entitle any current or former employee or other service
provider of the Company or
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any ERISA Affiliate to severance benefits or any other payment (including,
without limitation, unemployment compensation, golden parachute or bonus),
except as expressly provided in this Agreement, or (ii) accelerate the time of
payment or vesting of any such benefits, or increase the amount of compensation
due any such employee or service provider.
(f) There has been no amendment to, written interpretation or
announcement (whether or not written) by the Company or any ERISA Affiliate
relating to, or change in participation or coverage under, any Employee Plan
which would materially increase the expense of maintaining such Plan above the
level of expense incurred with respect to that Plan for the most recent fiscal
year included in the Company's financial statements.
3.17 CERTAIN AGREEMENTS AFFECTED BY THE SALE. Neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (i) result in any payment (including, without limitation, severance,
unemployment compensation, golden parachute, bonus or otherwise) becoming due to
any director or employee of the Company, (ii) materially increase any benefits
otherwise payable by the Company, or (iii) result in the acceleration of the
time of payment or vesting of any such benefits.
3.18 EMPLOYEE MATTERS. The Company and each Subsidiary is in compliance
in all material respects with all currently applicable federal, state, local and
foreign laws and regulations respecting employment, discrimination in
employment, terms and conditions of employment, wages, hours and occupational
safety and health and employment practices, and is not engaged in any unfair
labor practice. There are no pending claims against the Company or any
Subsidiary under any workers compensation plan or policy or for long term
disability. There are no controversies pending or, to the knowledge the Company,
threatened, between the Company or any Subsidiary and any of its respective
employees, which controversies have or could reasonably be expected to have a
Material Adverse Effect on the Company. Neither the Company nor any Subsidiary
is a party to any collective bargaining agreement or other labor unions contract
nor does the Company know of any activities or proceedings of any labor union or
other group to organize any such employees.
3.19 MATERIAL CONTRACTS.
(a) Subsections (i) through (ix) of Section 3.19(a) of the
Disclosure Schedule contain a list of the following contracts and agreements to
which the Company or any Subsidiary is a party or by which it is bound
(collectively, the "Material Contracts").
(i) each contract (other than routine purchase orders and
pricing quotes in the ordinary course of business covering a period of less than
1 year) for the purchase of inventory, spare parts, other materials or personal
property with any supplier or for the furnishing of services to the Company or
such Subsidiary under the terms of which the Company or such Subsidiary: (A)
paid or otherwise gave consideration of more than $100,000 in the aggregate
during the calendar year ended December 31, 1999, (B) is required by its terms
to pay or pursuant to which the Company or such Subsidiary presently anticipates
that it will pay more than $100,000 in the aggregate during the calendar year
ended December 31, 2000, (C) is required by its terms to pay or pursuant to
which the Company or such Subsidiary presently anticipates that it will pay more
than $100,000 in the aggregate over the remaining term of such
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contract, or (D) cannot be cancelled by the Company or such Subsidiary without
penalty or further payment of less than $100,000;
(ii) each customer contract and agreement (other than routine
purchase orders, pricing quotes with open acceptance and other tender bids, in
each case, entered into in the ordinary course of business and covering a period
of less than one year) to which the Company or such Subsidiary is a party which
(A) involved consideration of more than $100,000 in the aggregate during the
calendar year ended December 31, 1999, (B) is required by its terms to pay or
pursuant to which the Company or such Subsidiary presently anticipates that it
will pay more than $100,000 in the aggregate during the calendar year ended
December 31, 2000, (C) is required by its terms to pay or pursuant to which the
Company or such Subsidiary presently anticipates that it will pay more than
$100,000 in the aggregate over the remaining term of the contract, or (D) cannot
be cancelled by the Company or such Subsidiary without penalty or further
payment of less than $100,000;
(iii) (A) all distributor, manufacturer's representative,
broker, franchise, agency and dealer contracts and agreements to which the
Company or such Subsidiary is a party (specifying on a matrix, in the case of
distributor agreements, the name of the distributor, product, territory,
termination date and exclusivity provisions) and (B) all sales promotion, market
research, marketing and advertising contracts and agreements to which the
Company or such Subsidiary is a party which: (1) involved consideration of more
than $100,000 in the aggregate during the calendar year ended December 31, 1999,
(2) are required by its terms to pay or pursuant to which the Company or such
Subsidiary presently anticipates that it will pay more than $100,000 in the
aggregate during the calendar year ended December 31, 2000, or (3) are required
by its terms to pay or pursuant to which the Company or such Subsidiary
presently anticipates that it will pay or pursuant to which the Company or such
Subsidiary presently anticipates that it will pay more than $100,000 in the
aggregate over the remaining term of the contract;
(iv) all management contracts with independent contractors or
consultants (or similar arrangements) to which the Company or such Subsidiary is
a party and which (A) involved consideration or more than $50,000 in the
aggregate during the calendar year ended December 31, 1999, (B) are likely to
involve consideration of more than $50,000 in the aggregate during the calendar
year ended December 31, 2000, or (C) are required by its terms to pay or
pursuant to which the Company or such Subsidiary presently anticipates that it
will pay or pursuant to which the Company or such Subsidiary presently
anticipates that it will pay more than $50,000 in the aggregate over the
remaining term of the contract;
(v) all contracts and agreements (excluding routine checking
account overdraft agreements involving petty cash amounts) under which the
Company or such Subsidiary has created, incurred, assumed or guaranteed (or may
create, incur, assume or guarantee) indebtedness in excess of $25,000 or under
which the Company or such Subsidiary has imposed (or may impose) a security
interest or lien on any of their respective assets, whether tangible or
intangible, to secure indebtedness in excess of $25,000;
(vi) all contracts and agreements that limit the ability of
the Company or such Subsidiary or, after the Closing Date, the Acquiror or any
of its affiliates, to compete in
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any line of business or with any person or in any geographic area or during any
period of time, or to solicit any customer or client;
(vii) all contracts and agreements between or among the
Company or such Subsidiary, on the one hand, and any affiliate of the Company or
such Subsidiary, on the other hand;
(viii) all contracts and agreements to which the Company or
such Subsidiary is a party under which it has agreed to supply products to a
customer at specified prices, whether directly or through a specific
distributor, manufacturer's representative or dealer; and
(ix) all other contracts or agreements (A) which are material
to the Company or such Subsidiary or the conduct of their respective businesses,
(B) the absence of which would have a Material Adverse Effect on the Company, or
(C) which are believed by the Company to be of unique value even though not
material to the business of the Company.
(b) Except as would not, individually or in the aggregate, have a
Material Adverse Effect on the Company, each Company license, each Material
Contract and each other material contract or agreement of the Company or such
Subsidiary which would not have been required to be disclosed in Section 3.19(a)
of the Disclosure Schedule is a legal, valid and binding agreement, and none of
the Company licenses or Material Contracts is in default by its terms or has
been cancelled by the other party and the Company or such Subsidiary is not in
receipt of any claim of default under any such agreement; and the Company does
not anticipate any termination or change to, or receipt of a proposal with
respect to, any such agreement as a result of the transactions to be consummated
hereunder or otherwise. The Company has furnished the Acquiror with true and
complete copies of all such agreements together with all amendments, waivers or
other changes thereto.
3.20 INTERESTED PARTY TRANSACTIONS. Except as disclosed in the Financial
Statements, neither the Company nor any Subsidiary is indebted to any director,
officer, employee or agent of the Company or such Subsidiary (except for amounts
due as normal salaries and bonuses and in reimbursement of ordinary expenses),
and no such person is indebted to the Company or such Subsidiary.
3.21 INSURANCE. Section 3.21 of the Disclosure Schedule lists the
policies of insurance and bonds carried by the Company and its Subsidiaries.
There is no material claim pending under any of such policies or bonds as to
which coverage has been questioned, denied or disputed by the underwriters of
such policies or bonds. All premiums due and payable under all such policies and
bonds have been paid and the Company or a Subsidiary is otherwise in compliance
with the terms of such policies and bonds. The Company has no knowledge of any
threatened termination of, or material premium increase with respect to, any of
such policies.
3.22 COMPLIANCE WITH LAWS. The Company and each Subsidiary has complied
with and has not received any notices of violation with respect to, any federal,
state, local or foreign statute, law or regulation with respect to the conduct
of its business, or the ownership or operation of its business, except for such
violations or failures to comply as could not reasonably
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be expected to have a Material Adverse Effect on the Company or its Subsidiaries
considered as a whole.
3.23 MINUTE BOOKS. The minute books of the Company and each Subsidiary
have been made available to the Acquiror and contain a summary of all meetings
of directors and stockholders or actions by written consent since the time of
incorporation of the Company and each Subsidiary through the date of this
Agreement, and reflect all transactions referred to in such minutes accurately
in all material respects.
3.24 BROKERS' AND FINDERS' FEES. The Company has not incurred, nor will
it incur, directly or indirectly, any liability for brokerage or finders' fees
or agents' commissions or investment bankers' fees or any similar charges in
connection with this Agreement or any transaction contemplated hereby.
3.25 ACCOUNTS RECEIVABLE.
(a) The Company has made available to the Acquiror a list of all
accounts receivable of the Company and each Subsidiary reflected on the Company
Financial Statements ("Accounts Receivable") along with a range of days elapsed
since invoice.
(b) All Accounts Receivable arose in the ordinary course of
business and are carried at values determined in accordance with GAAP
consistently applied. Except as disclosed in the Company Financial Statements,
no person has any lien on any of such Accounts Receivable and no request or
agreement for deduction or discount has been made with respect to any of such
Accounts Receivable.
(c) All of the inventories of the Company and each Subsidiary
reflected in the Company Financial Statements and the Company's books and
records on the date hereof were purchased, acquired or produced in the ordinary
and regular course of business and in a manner consistent with the Company's
regular inventory practices and are set forth on the Company's books and records
in accordance with the practices and principles of the Company consistent with
the method of treating said items in prior periods. None of the inventory of the
Company or any Subsidiary reflected on the Company Financial Statements or on
the Company's books and records as of the date hereof (in either case net of the
reserve therefor) is obsolete, defective or in excess of the needs of the
business of the Company reasonably anticipated for the normal operation of the
business consistent with past practices and outstanding customer contracts. The
presentation of inventory on the Company Financial Statements conforms to GAAP
and such inventory is stated at the lower of cost or net realizable value.
3.26 CUSTOMERS AND SUPPLIERS. As of the date hereof, no customer which
individually accounted for more than 5% of the Company's gross revenues during
the 12-month period preceding the date hereof, and no supplier of the Company,
has cancelled or otherwise terminated, or made any written threat to the Company
to cancel or otherwise terminate its relationship with the Company, or has at
any time on or after the Company Balance Sheet Date decreased materially its
services or supplies to the Company in the case of any such supplier, or its
usage of the services or products of the Company in the case of such customer,
and to the Company's knowledge, no such supplier or customer intends to cancel
or otherwise terminate its
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relationship with the Company or to decrease materially its services or supplies
to the Company or its usage of the services or products of the Company, as the
case may be. From and after the date hereof, no customer which individually
accounted for more than 5% of the Company's gross revenues during the 12 month
period preceding the Closing Date, has cancelled or otherwise terminated, or
made any written threat to the Company to cancel or otherwise terminate, for any
reason, including without limitation the consummation of the transactions
contemplated hereby, its relationship with the Company, and to the Company's
knowledge, no such customer intends to cancel or otherwise terminate its
relationship with the Company or to decrease materially its usage of the
services or products of the Company. The Company has not knowingly breached, so
as to provide a benefit to the Company that was not intended by the parties, any
agreement with, or engaged in any fraudulent conduct with respect to, any
customer or supplier of the Company.
3.27 THIRD PARTY CONSENTS. Except as set forth in Section 3.27 of the
Disclosure Schedule or specified in Section 2.5(b), no consent or approval is
needed from any third party in order to effect the consummation of the
transactions contemplated hereby.
3.28 NO COMMITMENTS REGARDING FUTURE PRODUCTS. Neither the Company nor
any Subsidiary has made any sales to customers that are contingent upon
providing future enhancements of existing products, to add features not
presently available on existing products or to otherwise enhance the performance
of its existing products (other than beta or similar arrangements pursuant to
which the Company's or such Subsidiary's customers from time to time test or
evaluate products). The products the Company or any Subsidiary has delivered to
customers substantially comply with published specifications for such products
and neither the Company nor any Subsidiary has received material complaints from
customers about its products that remain unresolved.
3.29 TERMINATION OF SHAREHOLDERS AGREEMENT. Immediately prior to the
execution and delivery of this Agreement, the Shareholders Agreement dated as of
October 1, 1999 among the Company and the shareholders of the Company was
terminated by written agreement of shareholders of the Company holding in excess
of 95% of the Company Common Stock (including for purposes hereof shares
entitled to be purchased by optionholders).
3.30 REPRESENTATIONS COMPLETE. None of the representations or warranties
made by CSINH, the Company or the Stockholders herein or in any Schedule hereto,
including the Disclosure Schedule, or certificate furnished by CSINH, the
Company or the Stockholders pursuant to this Agreement, when all such documents
are read together in their entirety, contains or will contain at the Closing any
untrue statement of a material fact, or omits or will omit at the Closing to
state any material fact necessary in order to make the statements contained
herein or therein, in the light of the circumstances under which made, not
misleading.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR.
Except as disclosed in a document dated as of the date of this Agreement
and delivered collectively to CSI, CSINH, the Company and the Stockholders prior
to the execution and delivery of this Agreement and referring to the
representations and warranties in this
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Section 4 (the "Acquiror Disclosure Schedule"), the Acquiror hereby represents
and warrants to CSI, CSINH, Company and the Stockholders as follows:
4.1 ORGANIZATION, STANDING AND POWER. The Acquiror is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation. The Acquiror has the corporate power to own its
properties and to carry on its business as now being conducted and as proposed
to be conducted and is duly qualified to do business and is in good standing in
each jurisdiction in which the failure to be so qualified and in good standing
would have a Material Adverse Effect on the Acquiror. The Acquiror has delivered
a true and correct copy of its Charter Documents, each as amended to date, to
CSI, CSINH and the Stockholders. The Acquiror is not in violation of any
material provisions of Charter Documents.
4.2 CAPITAL STRUCTURE. The authorized capital stock of Acquiror consists
of (i) 150,000,000 shares of Common Stock, $0.0001 par value, of which (A)
118,750,000 have been designated Class A Common Stock, 10,818,819 shares of
which were issued and outstanding as of the close of business on the date of
this Agreement (the "Capitalization Date"), (B) 31,250,000 have been designated
Class B Common Stock, none of which were issued and outstanding as of the close
of business on the Capitalization Date, and (C) 1,150,000 have been designated
Class C Common Stock, 1,132,502 of which were issued and outstanding as of the
close of business on the Capitalization Date, and (ii) 46,940,082 shares of
Preferred Stock, $0.0001 par value, of which (A) 2,500,000 shares have been
designated Series A Preferred Stock, 2,455,798 of which were issued and
outstanding as of the close of business on the Capitalization Date, (B)
10,250,000 shares have been designated Series A-1 Preferred Stock, 9,534,148 of
which were issued and outstanding as of the close of business on the
Capitalization Date, (C) 31,250,000 have been designated Series B Preferred
Stock, 31,186,312 of which were issued and outstanding as of the close of
business on the Capitalization Date, (D) 2,015,082 have been designated Series C
Preferred Stock, 1,765,082 of which were issued and outstanding as of the close
of business on the Capitalization Date, (E) 150,000 have been designated Series
C-1 Preferred Stock, all of which were issued and outstanding as of the close of
business on the Capitalization Date, (F) 550,000 have been designated Series D
Preferred Stock, 58,125 of which were issued and outstanding as of the close of
business on the Capitalization Date and (G) 225,000 have been designated Series
D-1 Preferred Stock, 225,000 of which were issued and outstanding as of close of
business on the Capitalization Date. As of the close of business on the
Capitalization Date, the Acquiror has reserved 382,215 shares of Class A Common
Stock and 516,976 shares of Series A-1 Preferred Stock (collectively, "Option
Stock") for issuance to officers, directors, employees and consultants of the
Acquiror pursuant to its 1999 Revised Stock Plan duly adopted by the Board of
Directors and approved by the Acquiror's stockholders (the "1999 Revised Stock
Plan"), and the Acquiror has reserved 10,000,000 shares of Common Stock for
issuance to officers, directors, employees and consultants of the Acquiror
pursuant to its 2000 Incentive Stock Plan duly adopted by the Board of Directors
and approved by the Acquiror's stockholders (the "2000 Incentive Stock Plan"
and, together with the 1999 Revised Stock Plan, the "Stock Plans"). Of such
reserved shares of Option Stock under the 1999 Revised Stock Plan, no shares
have been issued pursuant to restricted stock purchase agreements, options to
purchase 382,215 shares of Class A Common Stock and 516,976 shares of Series A-1
Preferred Stock have been granted and are currently outstanding, and no shares
of Class A Common Stock remain available for issuance to officers, directors,
employees and consultants
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pursuant to the 1999 Revised Stock Plan. Of such reserved shares of Class A
Common Stock under the 2000 Incentive Stock Plan, no shares have been issued
pursuant to restricted stock purchase agreements, options to purchase 1,096,169
shares of Class A Common Stock have been granted and are currently outstanding,
and 8,903,831 shares of Class A Common Stock remain available for issuance to
officers, directors, employees and consultants pursuant to the 2000 Incentive
Stock Plan. The Company has issued warrants to purchase an aggregate of
2,516,421 shares of Class A Common Stock as of the close of business on the
Capitalization Date. Other than as contemplated under this Agreement or as set
forth in the Acquiror Disclosure Schedule, there are no other options, warrants,
calls, rights, commitments or agreements of any character to which Acquiror is a
party or by which either of them is bound obligating Acquiror to issue, deliver,
sell, repurchase or redeem, or cause to be issued, delivered, sold, repurchased
or redeemed, any shares of the capital stock of Acquiror or obligating Acquiror
to grant, extend or enter into any such option, warrant, call, right, commitment
or agreement. The shares of Acquiror Common Stock to be issued pursuant to this
Agreement will be duly authorized, validly issued, fully paid, and
non-assessable.
4.3 AUTHORITY. The Acquiror has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Acquiror. This Agreement
has been duly executed and delivered by the Acquiror and constitutes the valid
and binding obligations of the Acquiror, subject to applicable bankruptcy,
insolvency, moratorium or other similar laws relating to creditors' rights and
general principles of equitable remedies.
4.4 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by the Acquiror
does not, and the consummation of the transactions contemplated hereby will not,
conflict with, or result in any violation of, or default under (with or without
notice or lapse of time, or both), or give rise to a right of termination,
cancellation or acceleration of any obligation or loss of a benefit under (i)
any provision of the Charter Documents of the Acquiror, as amended, or (ii) any
material mortgage, indenture, lease, contract or other agreement or instrument,
permit, concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Acquiror or its properties or
assets.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity, is required
by or with respect to the Acquiror in connection with the execution and delivery
of this Agreement by the Acquiror or the consummation by the Acquiror of the
transactions contemplated hereby, except for (i) any filings as may be required
under applicable state securities laws and the securities laws of any foreign
country and (ii) such other consents, authorizations, filings, approvals and
registrations which, if not obtained or made, would not have a Material Adverse
Effect on the Acquiror and would not prevent, materially alter or delay any the
transactions contemplated by this Agreement.
4.5 FINANCIAL STATEMENTS. Section 4.5 of the Disclosure Schedule
includes a true, correct and complete copy of the Acquiror's audited financial
statements for the fiscal years ended December 31, 1998 and 1999, (collectively,
the "Acquiror Financial Statements"). The
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Acquiror Financial Statements have been prepared in accordance with GAAP applied
on a consistent basis throughout the periods indicated and with each other. The
Acquiror Financial Statements accurately set out and describe the financial
condition and operating results of the Acquiror as of the dates, and for the
periods, indicated therein, subject to normal year-end audit adjustments.
4.6 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in Section
4.7 of the Disclosure Schedule, the Acquiror has no material obligations or
liabilities of any nature (matured or unmatured, fixed or contingent) other than
(i) those set forth or adequately provided for in the Balance Sheet for the
period ended December 31, 1999 (the "Acquiror Balance Sheet"), (ii) those
incurred in the ordinary course of business and not required to be set forth in
the Acquiror Balance Sheet under GAAP, (iii) those incurred in the ordinary
course of business since the Acquiror Balance Sheet Date and consistent with
past practice, and (iv) those incurred in connection with the execution of this
Agreement.
4.7 ABSENCE OF CERTAIN CHANGES. Except as set forth in Section 4.7 of
the Disclosure Schedule, since the date of the Acquiror Balance Sheet (the
"Acquiror Balance Sheet Date"), the Acquiror has conducted its business in the
ordinary course in a manner consistent with past practice and there has not
occurred: (i) any change, event or condition (whether or not covered by
insurance) that has resulted in, or might reasonably be expected to result in, a
Material Adverse Effect to the Acquiror; (ii) any declaration, setting aside, or
payment of a dividend or other distribution with respect to the shares of the
Acquiror, or any direct or indirect redemption, purchase or other acquisition by
the Acquiror of any of its shares of capital stock; (iii) any material amendment
or change to the Acquiror's Charter Documents; or (iv) any negotiation or
agreement by the Acquiror to do any of the things described in the preceding
clauses (i) through (iii) (other than negotiations with the other parties hereto
and their representatives regarding the transactions contemplated by this
Agreement).
4.8 INSURANCE. Section 4.8 of the Disclosure Schedule lists the policies
of insurance and bonds carried by the Acquiror. There is no material claim
pending under any of such policies or bonds as to which coverage has been
questioned, denied or disputed by the underwriters of such policies or bonds.
All premiums due and payable under all such policies and bonds have been paid
and the Acquiror is otherwise in compliance with the terms of such policies and
bonds. The Acquiror has no knowledge of any threatened termination of, or
material premium increase with respect to, any of such policies.
4.9 LITIGATION. Except as set forth in Section 4.9 of the Disclosure
Schedule, there is no private or governmental action, suit, proceeding, claim,
arbitration or investigation pending before any agency, court or tribunal,
foreign or domestic, or, to the knowledge of the Acquiror, threatened against
the Acquiror or any of its respective properties or any of their respective
officers or directors (in their capacities as such) that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect on the
Acquiror. There is no judgment, decree or order against the Acquiror or, to the
knowledge of the Acquiror, any of its directors or officers (in their capacities
as such) that could prevent, enjoin, or materially alter or delay any of the
transactions contemplated by this Agreement, or that could reasonably be
expected to have a Material Adverse Effect on the Acquiror.
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4.10 GOVERNMENTAL AUTHORIZATION. Except as set forth in Section 4.10 of
the Disclosure Schedule, the Acquiror has obtained each federal, state, county,
local or foreign governmental consent, license, permit, grant, or other
authorization of a Governmental Entity that is required for the operation of the
Acquiror's business (the "Acquiror Authorizations"), and all of such the
Acquiror Authorizations are in full force and effect, except where the failure
to obtain or have any of such the Acquiror Authorizations could not reasonably
be expected to have a Material Adverse Effect on the Acquiror.
4.11 COMPLIANCE WITH LAWS. The Acquiror has complied with, are not in
violation of, and have not received any notices of violation with respect to,
any federal, state, local or foreign statute, law or regulation with respect to
the conduct of its business, or the ownership or operation of its business,
except for such violations or failures to comply as could not reasonably be
expected to have a Material Adverse Effect on the Acquiror.
4.12 MINUTE BOOKS. The minute books of the Acquiror have been made
available to the CSI and the Stockholders and contain a complete summary of all
meetings of directors and stockholders or actions by written consent since the
time of incorporation of the Acquiror through the date of this Agreement, and
reflect all transactions referred to in such minutes accurately in all material
respects.
4.13 BROKER'S AND FINDERS' FEES. The Acquiror has not incurred, nor will
it incur, directly or indirectly, any liability for brokerage or finders' fees
or agents' commissions or investment bankers' fees or any similar charges in
connection with this Agreement or any transaction contemplated hereby.
4.14 SECURITIES LAWS. Subject in part to the representations and
warranties of the other parties hereto, all outstanding shares of capital stock
of the Acquiror were issued, and the shares of the Acquiror Common Stock to be
issued pursuant to this Agreement will be issued, in compliance with all
applicable federal and state securities laws.
4.15 REPRESENTATIONS COMPLETE. None of the representations or warranties
made by the Acquiror herein or in any Schedule hereto, or certificate furnished
by the Acquiror pursuant to this Agreement, when all such documents are read
together in their entirety, contains or will contain at the Closing any untrue
statement of a material fact, or omits or will omit at the Closing to state any
material fact necessary in order to make the statements contained herein or
therein, in the light of the circumstances under which made, not misleading.
SECTION 5. CONDUCT PRIOR TO THE CLOSING DATE.
5.1 CONDUCT OF BUSINESS. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Closing Date, each of CSINH, the Company and the Acquiror agrees (except
to the extent expressly contemplated by this Agreement or as consented to in
writing by the other), to carry on its business in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted, to pay
debts and Taxes when due subject, in the case of Taxes of CSINH or the Company,
to the Acquiror's consent to the filing of material Tax Returns if applicable,
to pay or perform other obligations when due, and to use all reasonable efforts
consistent with past practice and policies
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to preserve intact its present business organization, keep available the
services of its present officers and key employees and preserve its
relationships with customers, suppliers, distributors, licensors, licensees, and
others having business dealings with it, to the end that its goodwill and
ongoing businesses shall be unimpaired at the Closing. Each such party hereto
agrees to promptly notify the other parties hereto of any event or occurrence
not in the ordinary course of its business, and of any event which could have a
Material Adverse Effect. Without limiting the foregoing, except as expressly
contemplated by this Agreement, CSI, CSINH, the Company and the Stockholders
shall not do, cause or permit any of the following with respect to each of CSINH
and the Company, without the prior written consent of the Acquiror:
(a) CHARTER DOCUMENTS. Cause or permit any amendments to its
Charter Documents;
(b) DIVIDENDS; CHANGES IN CAPITAL STOCK. Declare or pay any
dividends on or make any other distributions (whether in cash, stock or
property) in respect of any of its capital stock, or split, combine or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock, or repurchase or otherwise acquire, directly or indirectly, any
shares of its capital stock except from former employees, directors and
consultants in accordance with agreements providing for the repurchase of shares
in connection with any termination of service to it or its Subsidiaries;
(c) STOCK OPTIONS, ETC. Accelerate, amend or change the period of
exercisability or vesting of any options or authorize cash payments in exchange
for any options; or
(d) OTHER. Take, or agree in writing or otherwise to take, any of
the actions described in Sections 5.1(a) through (c) above, or any action which
would make any of its representations or warranties contained in this Agreement
untrue or incorrect or prevent it from performing or cause it not to perform its
covenants hereunder.
5.2 CONDUCT OF BUSINESS OF COMPANY. During the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement or the Closing Date, except as expressly contemplated by this
Agreement, CSI, CSINH, the Company and the Stockholders shall not do, cause or
permit any of the following, or allow, cause or permit CSINH or the Company to
do, cause or permit any of the following, without the prior written consent of
the Acquiror:
(a) MATERIAL CONTRACTS. Enter into any Material Contract or
commitment, or violate, amend or otherwise modify or waive any of the terms of
any of the Material Contracts, other than in the ordinary course of business
consistent with past practice;
(b) ISSUANCE OF SECURITIES. Issue, deliver or sell or authorize or
propose the issuance, delivery or sale of, or purchase or propose the purchase
of, any shares of the Company's capital stock or securities convertible into, or
subscriptions, rights, warrants or options to acquire, or other agreements or
commitments of any character obligating it to issue any such shares or other
convertible securities;
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(c) INTELLECTUAL PROPERTY. Transfer to any person or entity any
rights to the Intellectual Property;
(d) EXCLUSIVE RIGHTS. Enter into or amend any agreements pursuant
to which any other party is granted exclusive marketing or other exclusive
rights of any type or scope with respect to any of the Company's products or
technology;
(e) DISPOSITIONS. Sell, lease, license or otherwise dispose of or
encumber any properties or assets of the Company, except in the ordinary course
of business consistent with past practice;
(f) INDEBTEDNESS. Incur any indebtedness for borrowed money or
guarantee any such indebtedness or issue or sell any debt securities or
guarantee any debt securities of others;
(g) LEASES. Enter into any operating lease;
(h) PAYMENT OF OBLIGATIONS. Pay, discharge or satisfy in an amount
in excess of $10,000 in any one case or $25,000 in the aggregate, any claim,
liability or obligation (absolute, accrued, asserted or unasserted, contingent
or otherwise) arising other than in the ordinary course of business, other than
the payment, discharge or satisfaction of liabilities reflected or reserved
against in the Company Financial Statements;
(i) CAPITAL EXPENDITURES. Make any capital expenditures, capital
additions or capital improvements except in the ordinary course of business and
consistent with past practice;
(j) INSURANCE. Materially reduce the amount of any material
insurance coverage provided by existing insurance policies;
(k) TERMINATION OR WAIVER. Terminate or waive any right and
heretofore have been disclosed to the Acquiror, other than in the ordinary
course of business;
(l) EMPLOYEE BENEFIT PLANS; NEW HIRES; PAY INCREASES. Adopt or
amend any employee benefit or stock purchase or option plan, or hire any new
director level or officer level employee, pay any special bonus or special
remuneration to any employee or director, or increase the salaries or wage rates
of any employees;
(m) SEVERANCE ARRANGEMENT. Grant any severance or termination pay
(i) to any director or officer of the Company or (ii) to any employee of the
Company except payments made pursuant to standard written agreements outstanding
on the date of this Agreement and which heretofore have been disclosed to the
Acquiror;
(n) LAWSUITS. Commence any lawsuit other than (i) for the routine
collection of bills, (ii) in such cases where it in good faith determines that
failure to commence suit would result in the material impairment of any aspect
of business of the Company, provided that it consults with the Acquiror prior to
the filing of such a suit, or (iii) for a breach of this Agreement;
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(o) ACQUISITIONS. Acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial portion of the assets of, or
by any other manner, any business or any corporation, partnership, association
or other business organization or division thereof, or otherwise acquire or
agree to acquire any assets which are material, individually or in the
aggregate, to the business of the Company;
(p) TAXES. Other than in the ordinary course of business, make or
change any election in respect of Taxes, adopt or change any accounting method
in respect of Taxes, file any Tax Return or any amendment to a material Tax
Return, enter into any closing agreement, settle any claim or assessment in
respect of Taxes, or consent to any extension or waiver of the limitation period
applicable to any claim or assessment in respect of Taxes;
(q) NOTICES. The Company shall give all notices and other
information required to be given to the employees of the Company, any collective
bargaining unit representing any group of employees of the Company, and any
applicable government authority under the National Labor Relations Act, the
Internal Revenue Code, COBRA, and other applicable law in connection with the
transactions provided for in this Agreement;
(r) REVALUATION. Revalue any of its assets, including without
limitation writing down the value of inventory or writing off notes or accounts
receivable other than in the ordinary course of business; or
(s) OTHER. Take or agree in writing or otherwise to take, any of
the actions described in Sections 5.2(a) through (r) above, or any action which
would make any of its representations or warranties contained in this Agreement
untrue or incorrect or prevent it from performing or cause it not to perform its
covenants hereunder.
5.3 CONDUCT OF BUSINESS OF CSINH. During the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement or the Closing Date, except as expressly contemplated by this
Agreement, CSI and CSINH shall not do, cause or permit any of the following, or
allow, cause or permit CSINH to do, cause or permit any of the following,
without the prior written consent of the Acquiror:
(a) CONTRACTS; ACTIVITIES. Enter into any contract or commitment,
incur any obligation or liability, or engage in any business activity other than
the ownership of common stock of the Company;
(b) ISSUANCE OF SECURITIES. Issue, deliver or sell or authorize or
propose the issuance, delivery or sale of, or purchase or propose the purchase
of, any shares of CSINH's capital stock or securities convertible into, or
subscriptions, rights, warrants or options to acquire, or other agreements or
commitments of any character obligating it to issue any such shares or other
convertible securities, except capital stock issued as a result of the
conversion of CSINH's existing debt into equity;
(c) DISPOSITIONS. Sell or otherwise dispose of or encumber the
securities of the Company held by CSINH;
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(d) TAXES. Other than in the ordinary course of business, make or
change any election in respect of Taxes, adopt or change any accounting method
in respect of Taxes, file any Tax Return or any amendment to a material Tax
Return, enter into any closing agreement, settle any claim or assessment in
respect of Taxes, or consent to any extension or waiver of the limitation period
applicable to any claim or assessment in respect of Taxes;
(e) OTHER. Take or agree in writing or otherwise to take, any of
the actions described in Sections 5.3(a) through (d) above, or any action which
would make any of its representations or warranties contained in this Agreement
untrue or incorrect or prevent it from performing or cause it not to perform its
covenants hereunder.
5.4 CONDUCT OF BUSINESS OF ACQUIROR AND ITS SUBSIDIARIES. During the
period from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Closing Date, except as expressly
contemplated by this Agreement, the Acquiror (which term for the purposes of
this Section 5.4 means the Acquiror and its subsidiaries) shall not do, cause or
permit any of the following, or allow, cause or permit the Acquiror to do, cause
or permit any of the following, without the prior written consent of CSI and the
Stockholders:
(a) INTELLECTUAL PROPERTY. Transfer to any person or entity any
rights to the Intellectual Property except for a transfer to a wholly-owned
subsidiary of Acquiror; or
(b) OTHER. Take or agree in writing or otherwise to take, any of
the actions described in Section 5.2(a) above, or any action which would make
any of its representations or warranties contained in this Agreement untrue or
incorrect or prevent it from performing or cause it not to perform its covenants
hereunder.
5.5 NO SOLICITATION. None of CSI, CSINH, the Company, the Stockholders
or the officers, directors, employees or other agents of CSINH or the Company
will, directly or indirectly, (i) take any action to solicit, initiate,
encourage or approve any Takeover Proposal (as defined below) or (ii) engage in
negotiations with, or disclose any nonpublic information relating to CSINH or
the Company, or afford access to the properties, books or records of CSINH or
the Company to any person that has advised CSINH or the Company that it may be
considering making, or that has made, a Takeover Proposal. For purposes of this
Agreement, "Takeover Proposal" means any offer or proposal for, or any
indication of interest in, a merger or other business combination involving
CSINH or the Company or the acquisition of any significant equity interest in,
or a significant portion of the assets of, CSINH or the Company, other than the
transactions contemplated by this Agreement.
SECTION 6. ADDITIONAL AGREEMENTS.
6.1 BEST EFFORTS AND FURTHER ASSURANCES. Each of the parties to this
Agreement shall use its best efforts to effectuate the transactions contemplated
hereby and to fulfill and cause to be fulfilled the conditions to closing under
this Agreement. Each party hereto, at the reasonable request of another party
hereto, shall execute and deliver such other instruments and do and perform such
other acts and things as may be necessary or desirable for effecting completely
the consummation of this Agreement and the transactions contemplated hereby.
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6.2 CONSENTS; COOPERATION.
(a) Each party hereto shall use its reasonable best efforts to
promptly (i) obtain from any Governmental Entity any consents, licenses,
permits, waivers, approvals, authorizations or orders required to be obtained or
made in connection with the authorization, execution and delivery of this
Agreement and the consummation of the transactions contemplated hereunder and
(ii) make all necessary filings, and thereafter make any other required
submissions, with respect to this Agreement required under the Securities Act
and the Exchange Act and any other applicable federal, state or foreign
securities laws.
(b) From the date of this Agreement until the earlier of the
Closing Date or the termination of this Agreement, each party shall promptly
notify the other party in writing of any pending or, to the knowledge of such
party, threatened action, proceeding or investigation by any Governmental Entity
or any other person (i) challenging or seeking material damages in connection
with this Agreement or the transactions contemplated hereunder or (ii) seeking
to restrain or prohibit the consummation of the transactions contemplated
hereunder or otherwise limit the right of the Acquiror or its subsidiaries to
own or operate all or any portion of the businesses or assets of CSINH or the
Company.
(c) Each party hereto shall give or cause to be given any required
notices to third parties, and use its reasonable best efforts to obtain all
consents, waivers and approvals from third parties (i) necessary, proper or
advisable to consummate the transactions contemplated hereunder, (ii) disclosed
or required to be disclosed in the Disclosure Schedule or the Acquiror
Disclosure Schedule, or (iii) required to prevent a Material Adverse Effect on
CSINH, the Company or the Acquiror from occurring prior or after the Closing
Date. In the event that the Acquiror, the Company or CSINH shall fail to obtain
any third party consent, waiver or approval described in this Section 6.2(c), it
shall use its reasonable best efforts, and shall take any such actions
reasonably requested by the other party, to minimize any adverse effect upon the
Acquiror, the Company, CSINH or any of their respective subsidiaries and their
respective businesses resulting (or which could reasonably be expected to result
after the Closing Date) from the failure to obtain such consent, waiver or
approval.
(d) Each party hereto, and will take or cause to be taken, all
reasonable actions necessary to comply promptly with all legal requirements
which may be imposed on them with respect to the consummation of the
transactions contemplated by this Agreement and will promptly cooperate with and
furnish information to any party hereto necessary in connection with any such
requirements imposed upon such other party in connection with the consummation
of the transactions contemplated by this Agreement and will take all reasonable
actions necessary to obtain (and will cooperate with the other parties hereto in
obtaining) any consent, approval, order or authorization of, or any
registration, declaration or filing with, any Governmental Entity or other
person, required to be obtained or made in connection with the taking of any
action contemplated by this Agreement.
6.3 ACCESS TO INFORMATION.
(a) CSINH and the Company shall afford the Acquiror and its
accountants, counsel and other representatives reasonable access during normal
business hours during the
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period prior to the Closing Date to (i) all of CSINH's and the Company's
properties, books, contracts, commitments and records, and (ii) all other
information concerning the business, properties and personnel of CSINH or the
Company as the Acquiror may reasonably request. Each of CSINH and the Company
agrees to provide to the Acquiror and its accountants, counsel and other
representatives copies of internal financial statements promptly upon request.
The Acquiror shall afford each of CSI, the Founders, CSINH and the Company and
its accountants, counsel and other representatives reasonable access during
normal business hours during the period prior to the Closing Date to (i) all of
the Acquiror's and its subsidiaries' properties, books, contracts, commitments
and records, and (ii) all other information concerning the business, properties
and personnel of the Acquiror and its subsidiaries as CSI, the Founders, CSINH
or the Company may reasonably request. The Acquiror agrees to provide to each of
CSI, the Founders, CSINH and the Company and its accountants, counsel and other
representatives copies of internal financial statements promptly upon request.
(b) Subject to compliance with applicable law, from the date hereof
until the Closing Date, the Acquiror, CSINH and the Company shall confer on a
regular and frequent basis with one or more representatives of the other party
to report operational matters of materiality and the general status of ongoing
operations.
(c) No information or knowledge obtained in any investigation
pursuant to this Section 6.3 shall affect or be deemed to modify any
representation or warranty contained herein or the conditions to the obligations
of the parties to consummate the transactions contemplated hereunder.
6.4 CONFIDENTIALITY. Any information concerning any party hereto
disclosed to any other party hereto or any party's affiliates or representatives
in connection with this Agreement or the transactions contemplated hereby, which
has not been publicly disclosed shall be kept strictly confidential by such
party, its affiliates and/or representatives. Each party hereto shall keep, and
shall cause its affiliates and/or representatives to keep, such confidential
information in strict confidence.
6.5 PUBLIC DISCLOSURE. Unless otherwise permitted by this Agreement, the
Acquiror, on one hand and, CSI, CSINH and the Company, on the other hand, shall
consult with each other before issuing any press release or otherwise making any
public statement or making any other public (or non-confidential) disclosure
(whether or not in response to an inquiry) regarding the terms of this Agreement
and the transactions contemplated hereby, and neither shall issue any such press
release or make any such statement or disclosure without the prior approval of
the other (which approval shall not be unreasonably withheld), except as may be
required by law.
6.6 FIRPTA. Each of CSINH and the Company shall, prior to the Closing
Date, provide the Acquiror with a properly executed Foreign Investment in Real
Property Tax Act of 1980 ("FIRPTA") Notification Letter, which shall state that
neither the shares of capital stock of CSINH nor the shares of capital stock of
the Company constitute "United States real property interests" under Section
897(c) of the Code, for purposes of satisfying the Acquiror's obligations under
Treasury Regulation Section 1.1445-2(c)(3). In addition, simultaneously with
delivery of such Notification Letter, each of CSINH and the Company shall have
provided to the Acquiror, as agent for each of CSINH and the Company, a form of
notice to the Internal Revenue Service
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in accordance with the requirements of Treasury Regulation Section 1.897-2(h)(2)
along with written authorization for the Acquiror to deliver such notice form to
the Internal Revenue Service on behalf of CSINH and the Company upon the
Closing. Collectively, documents to be delivered to the Acquiror pursuant to
this Section 6.6 are hereinafter sometimes referred to as the "FIRPTA
Documents."
6.7 BLUE SKY LAWS. The Acquiror shall take such steps as may be
necessary to comply with the securities and blue sky laws of all jurisdictions
within the United States which are applicable to the issuance of the Acquiror
Common Stock in connection with this Agreement. CSI shall take such steps as may
be necessary to comply with the securities laws of all jurisdictions within
Canada which are applicable to the sale of the Company Common Stock in
connection with this Agreement. Each party hereto shall use its, his or her best
efforts to assist the Acquiror and CSI as may be necessary to comply with the
securities and blue sky laws of all jurisdictions which are applicable in
connection with the issuance of the Acquiror Common Stock and the sale of
Company Common Stock in connection with this Agreement.
6.8 SECURITIES HOLDER'S REPRESENTATION AGREEMENTS. Each Stockholder will
execute and deliver to the Acquiror a Securities Holder's Representation
Agreement substantially in the form attached hereto as Exhibit D (the
"Securities Holder's Representation Agreement").
6.9 ADDITIONAL STOCKHOLDERS. Promptly after the execution and delivery
of this Agreement, the Acquiror shall offer to purchase, in compliance with
applicable securities laws, all of the shares of Company Common Stock held of
record by the shareholders of the Company (including for purposes hereof the
holders of options to acquire shares of Company Common Stock) who are not
parties to this Agreement as of the date hereof for the same purchase price per
share, in subordinated promissory notes substantially similar to Note A and Note
B, at which Other Stockholders parties hereto as of the date hereof have agreed
to sell their shares of Company Common Stock, such purchase price being, for
each share of Company Common Stock, a promissory note substantially similar to
Note A in the principal amount of $2,156.4137 and a promissory note
substantially similar to Note B in the principal amount of $2,077.9987, after
taking into account such modifications as may be necessary or desirable in
Acquiror's discretion in order to comply with applicable securities laws. This
Agreement may be amended from time to time prior to Closing to add other
shareholders as Other Shareholders hereunder by the execution and delivery of an
amendment in the form of Exhibit H hereto. Notwithstanding Section 10.9, any
such amendment shall require only the signatures of the Acquiror and the
shareholders party thereto.
6.10 TERMINATION OF 401(k) PLAN. The Company agrees to terminate its
401(k) plan immediately prior to Closing, unless Acquiror, in its sole and
absolute discretion, agrees to sponsor and maintain such plan by providing the
Company with notice of such election prior to the Closing.
SECTION 7. CONDITIONS TO CLOSING.
7.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO CLOSING. The respective
obligations of each party to this Agreement to consummate the transactions
contemplated hereby shall be
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subject to the satisfaction on or prior to the Closing Date of each of the
following conditions, any of which may be waived, in writing, by agreement of
all the parties hereto:
(a) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal or regulatory restraint or
prohibition preventing the consummation of the transactions contemplated hereby,
nor shall any proceeding brought by an administrative agency or commission or
other governmental authority or instrumentality, domestic or foreign, seeking
any of the foregoing be pending; nor shall there be any action taken, or any
statute, rule, regulation or order enacted, entered, enforced or deemed
applicable which makes the consummation of the transaction contemplated hereby
illegal. In the event an injunction or other order shall have been issued, each
party agrees to use its reasonable diligent efforts to have such injunction or
other order lifted.
(b) GOVERNMENTAL APPROVAL. The parties hereto shall have timely
obtained from each Governmental Entity all approvals, waivers and consents, if
any, necessary for consummation of the several transactions contemplated hereby,
including, without limitation, such approvals, waivers and consents as may be
required under the Securities Act and under any state securities laws.
7.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF CSI, CSINH COMPANY AND
STOCKHOLDERS. The obligations of CSI, CSINH the Company and the Stockholders to
consummate and effect this Agreement and the transactions contemplated hereby
shall be subject to the satisfaction at or prior to the Closing Date of each of
the following conditions, any of which may be waived, in writing, by each party:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. (i) Each of the
representations and warranties of the Acquiror in this Agreement that is
expressly qualified by a reference to materiality shall be true in all respects
as so qualified, and each of the representations and warranties of the Acquiror
in this Agreement that is not so qualified shall be true and correct in all
material respects, on and as of the Closing Date as though such representation
or warranty had been made on and as of such time (except that those
representations and warranties which address matters only as of a particular
date shall remain true and correct as of such date), and (ii) the Acquiror shall
have performed and complied in all material respects with all covenants,
obligations and conditions of this Agreement required to be performed and
complied with by them as of the Closing Date.
(b) CERTIFICATES OF THE ACQUIROR.
(i) COMPLIANCE CERTIFICATE OF THE ACQUIROR. CSI, CSINH, the
Company and the Stockholders shall have been collectively provided with a
certificate executed on behalf of the Acquiror by its President or its Chief
Financial Officer to the effect that, as of the Closing Date, each of the
conditions set forth in Sections 7.1(a) has been satisfied with respect to the
Acquiror.
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(ii) CERTIFICATE OF SECRETARY OF THE ACQUIROR. CSI, CSINH, the
Company and the Stockholders shall have been collectively provided with a
certificate executed by the Secretary or Assistant Secretary of the Acquiror
certifying:
A. resolutions duly adopted by the Board of Directors of
the Acquiror authorizing the execution of this Agreement and the execution,
performance and delivery of all agreements, documents and transactions
contemplated hereby;
B. its Charter Documents, as in effect immediately prior
to the Closing Date, including all amendments thereto; and
C. the incumbency of the officers of the Acquiror
executing this Agreement and all agreements and documents contemplated hereby.
(c) LEGAL OPINION. CSI, CSINH, the Company and the Stockholders
shall have received a legal opinion from the Acquiror's legal counsel in form
and substance reasonably satisfactory to CSI, CSINH, the Company and the
Stockholders.
(d) NO MATERIAL ADVERSE CHANGES. There shall not have occurred any
material adverse change in the condition (financial or otherwise), properties,
assets (including intangible assets), liabilities, business, operations, results
of operations or prospects of the Acquiror and its subsidiaries, taken as a
whole.
(e) GOOD STANDING. CSI, CSINH, the Company and the Stockholders
shall have collectively received a certificate or certificates of the Secretary
of State of the State of Delaware and any applicable franchise tax authority of
such state, certifying as of a date no more than 5 business days prior to the
Closing Date that each of the Acquiror has filed all required reports, paid all
required fees and taxes and is, as of such date, in good standing and authorized
to transact business as a domestic corporation.
(f) SECURITY AGREEMENTS. CSI and the Stockholders shall have
received the duly authorized and executed security agreements in support of the
Notes contemplated in Exhibit B.
7.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF THE ACQUIROR. The
obligations of the Acquiror to consummate and effect this Agreement and the
transactions contemplated hereby shall be subject to the satisfaction at or
prior to the Closing Date of each of the following conditions, any of which may
be waived, in writing, by the Acquiror:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. (i) Each of the
representations and warranties of each of CSI, CSINH, the Company and the
Stockholders in this Agreement that is expressly qualified by a reference to
materiality shall be true in all respects as so qualified, and each of the
representations and warranties of CSI, CSINH, the Company and the Stockholders
in this Agreement that is not so qualified shall be true and correct in all
material respects, on and as of the Closing Date as though such representation
or warranty had been made on and as of such time (except that those
representations and warranties which address matters only as of a particular
date shall remain true and correct as of such date), and (ii) each of CSI,
CSINH, the Company and the Stockholders shall have performed and complied in all
material
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respects with all covenants, obligations and conditions of this Agreement
required to be performed and complied with by it, him or her as of the Closing
Date.
(b) NO MATERIAL ADVERSE CHANGES. There shall not have occurred any
material adverse change in the condition (financial or otherwise), properties,
assets (including intangible assets), liabilities, business, operations, results
of operations or prospects of CSINH or the Company.
(c) CERTIFICATES OF CSI, CSINH, COMPANY AND STOCKHOLDERS
(i) COMPLIANCE CERTIFICATE. The Acquiror shall have been
provided with a certificate from each of CSI, CSINH and the Company, executed by
its President or its Chief Financial Officer and a certificate executed by each
Stockholder, each to the effect that, as of the Closing Date, each of the
conditions set forth in Section 7.3(a) and (b) above has been satisfied.
(ii) CERTIFICATE OF SECRETARY OF CSI, CSINH AND THE COMPANY.
The Acquiror shall have been provided with a certificate from each of CSI, CSINH
and the Company, executed by its Secretary certifying:
A. resolutions duly adopted by its Board of Directors and
stockholders authorizing the execution of this Agreement and the execution,
performance and delivery of all agreements, documents and transactions
contemplated hereby;
B. its Charter Documents, as in effect immediately prior
to the Closing Date, including all amendments thereto; and
C. the incumbency of the officers executing this
Agreement and all agreements and documents contemplated hereby.
(d) THIRD PARTY CONSENTS. The Acquiror shall have been furnished
with evidence satisfactory to it that CSI, CSINH or the Company, as the case may
be, has obtained those consents, waivers, approvals or authorizations of those
Governmental Entities and third parties whose consent or approval are required
in connection with the transactions contemplated by this Agreement.
(e) LEGAL OPINION. The Acquiror shall have received a legal opinion
from each of CSI's, CSINH's, the Company's and the Stockholders' legal counsel,
each in form and substance reasonably satisfactory to the Acquiror.
(f) FIRPTA CERTIFICATE. Each of CSINH and the Company shall, prior
to the Closing Date, provide the Acquiror with properly executed FIRPTA
Documents.
(g) STOCKHOLDER'S REPRESENTATION AGREEMENTS. The Acquiror shall
have received from the each Stockholder, duly executed and delivered the
Stockholder's Representation Agreements.
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(h) NON-COMPETITION AGREEMENTS. Each of the Founders shall have
executed a Non-Competition Agreement substantially in the form attached hereto
as Exhibit F.
(i) GOOD STANDING. The Acquiror shall have received a certificate
or certificates of the Secretary of State of the State of incorporation or other
authorized official in the jurisdiction of incorporation of each of CSI, CSINH
and the Company and any applicable franchise tax authority of such state,
certifying as of a date no more than 5 business days prior to the Closing Date
that each of CSINH and the Company has filed all required reports, paid all
required fees and taxes and is, as of such date, in good standing and authorized
to transact business as a domestic corporation.
(j) STOCK CERTIFICATES. Each of CSI, CSINH and the Stockholders
shall deliver to the Acquiror for cancellation the stock certificates, in form
suitable for transfer, evidencing all the CSINH Shares, the Founders Shares and
the Other Shares, as the case may be, each endorsed in blank or with an executed
blank stock transfer power attached thereto.
(k) SUBSIDIARY CHARTER DOCUMENTS AND CERTIFICATES. The Company
shall have delivered to the Acquirer, Charter Documents, as in effect
immediately prior to the Closing Date, including all amendments thereto for each
of the Company's Subsidiaries and certificates of the Secretary of State of
incorporation or other authorized official in the jurisdiction of incorporation
certifying as of a date no more than 5 business days prior to the Closing Date,
that each of the Company's Subsidiaries has filed all required reports, paid all
required fees and taxes and is, as of such date, in good standing and authorized
to transact business in such jurisdiction.
SECTION 8. TERMINATION, AMENDMENT AND WAIVER.
8.1 TERMINATION. At any time prior to the Closing Date, this Agreement
may be terminated:
(a) by mutual consent of the parties hereto;
(b) by either the Acquiror, on the one hand or CSI, CSINH, the
Company and the Stockholders, on the other hand, if, without fault of the
terminating party;
(i) the Closing Date shall not have occurred on or before
April 10, 2000 (or such later date as may be agreed upon in writing by the
parties); or
(ii) there shall be any applicable federal, provincial or
state law that makes consummation of the transaction contemplated hereunder
illegal or otherwise prohibited or if any court of competent jurisdiction or
Governmental Entity shall have issued an order, decree, ruling or taken any
other action restraining, enjoining or otherwise prohibiting the consummation of
the transactions hereunder and such order, decree, ruling or other action shall
have become final and nonappealable.
(c) by the Acquiror, if any of CSI, CSINH, the Company or the
Stockholders shall materially breach any of its or their representations,
warranties or obligations hereunder, provided that the Acquiror is not in
material breach of any of its representations, warranties or obligations
hereunder;
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(d) by CSI, CSINH, the Company and the Stockholders, if the
Acquiror shall materially breach any of its representations, warranties or
obligations, provided that none of CSI, CSINH, the Company or the Stockholders
is in material breach of any of its representations, warranties or obligations
hereunder.
8.2 EFFECT OF TERMINATION. In the event of termination of this Agreement
as provided in Section 8.1, this Agreement shall forthwith become void and there
shall be no liability or obligation on the part of any party hereto or their
respective officers, directors, stockholders or affiliates, except to the extent
that such termination results from the breach by a party hereto of any of its
representations, warranties or covenants set forth in this Agreement; provided
that, the provisions of Section 6.4 (Confidentiality), Section 8.3 (Expenses)
and this Section 8.2 shall remain in full force and effect and survive any
termination of this Agreement.
8.3 EXPENSES. Whether or not the transactions contemplated hereunder are
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated including, without limitation, filing fees and
the fees and expenses of advisors, accountants, legal counsel and financial
printers, shall be paid by the party having incurred such cost and expense.
8.4 AMENDMENT. The parties hereto may cause this Agreement to be amended
at any time by execution of an instrument in writing signed on behalf of each of
the parties.
8.5 EXTENSION; WAIVER. At any time prior to the Closing Date any party
may, to the extent legally allowed, (i) extend the time for the performance of
any of the obligations or other acts of the other parties, (ii) waive any
inaccuracies in the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto, and (iii) waive compliance
with any of the agreements or conditions for the benefit of such party contained
herein. Any agreement on the part of a party to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf of
such party.
SECTION 9. ESCROW AND INDEMNIFICATION.
9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All covenants to be
performed prior to the Closing Date, and all representations and warranties in
this Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Closing Date and continue until the twelve (12) month anniversary
thereof (the "Escrow Termination Date"), except for the representations and
warranties contained in Section 2 as to CSINH and Sections 3.3, 3.4, 3.13, 3.14,
3.15 and 3.16 hereof, each of which shall survive the Closing Date until the
earlier of December 31, 2006 and the expiration of the applicable statue of
limitations (the "Special Indemnity Termination Date"); provided that if any
claims for indemnification have been asserted with respect to any such
representations and warranties prior the expiration date for such
representations and warranties specified in this Section 9.1, the
representations and warranties on which any such claims are based shall continue
in effect until final resolution of any claims; provided further, that Fraud
Claims (as defined below) shall survive in accordance with the applicable
statute of limitations related to such representations and warranties or such
Fraud Claims. All covenants to be performed after the Effective Time shall
continue indefinitely. "Fraud Claim" shall mean any claim, demand, suit or cause
of action otherwise available to the
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Indemnified Persons based upon an allegation or allegations that the CSI, CSINH,
the Company and/or and Stockholder had an intent to defraud or made a willful or
intentional misrepresentation or willful omission of a material fact in
connection with this Agreement, including the Exhibits and Schedules attached
hereto, or any of the agreements referred to herein.
9.2 ESCROW FUND. At the Closing Date, ten percent (10%) of the Share
Consideration and ten percent (10%) of the Other Note Consideration shall, be
registered in the name of, and be deposited with an escrow agent mutually agreed
by the Acquiror and the Founders (the "Escrow Agent"), such deposit to
constitute the escrow fund (the "Escrow Fund"), to be governed by the terms set
forth in an escrow agreement mutually agreeable to the Acquiror and the Founders
upon terms and conditions consistent with the terms and conditions contained in
this Agreement. In the event that any Damages (as defined below) arise, the
Escrow Fund shall be available to compensate the Indemnified Persons (defined
below) pursuant to the indemnification obligations of the Founders pursuant to
Section 9.4. The costs of the Escrow Agent shall be shared equally by the
Acquiror and the Founders.
9.3 INDEMNIFICATION BY CSI, CSINH, COMPANY AND STOCKHOLDERS.
(a) INDEMNIFIED DAMAGES. Subject to the limitations set forth in
this Section 9, from and after the Closing Date, CSI and the Stockholders shall
severally protect, defend, indemnify and hold harmless the Acquiror and its
respective affiliates (including CSINH and the Company if the transactions
contemplated hereby are consummated), officers, directors, employees,
representatives and agents (the Acquiror and each of the foregoing persons or
entities is hereinafter referred to individually as an "Indemnified Person" and
collectively as "Indemnified Persons") from and against any and all losses,
costs, damages, liabilities, fees (including without limitation attorneys' fees)
and expenses (collectively, the "Damages"), that any of the Indemnified Persons
incurs by reason of or in connection with any claim, demand, action or cause of
action alleging misrepresentation, breach of, or default in connection with, any
of the representations, warranties, covenants or agreements of CSI, CSINH, the
Company or the Stockholders contained in this Agreement. For the purposes of
this Agreement, to the extent that the Acquiror suffers any Damages from a
breach of any of the representations and warranties with respect to the Company,
the amount of Damages shall be equal to the Acquiror's ownership percentage of
the Company as of the Closing.
(b) LIMITATIONS. Except as otherwise provided herein, (i) only CSI
shall be liable for Damages resulting from any misrepresentation of any of the
representations or warranties made in Section 2, (ii) CSI and each Stockholder,
in proportion to the Company Common Stock sold by each, shall be liable for
Damages resulting from any misrepresentation of any of the representations or
warranties made by the Company and (iii) CSI and each Stockholder shall be fully
liable for Damages resulting from any misrepresentation of any of the
representations or warranties made by such party with respect to the Company
Common Stock sold by such party. The maximum liability for any breach of a
representation, warranty or covenant of CSI, CSINH, the Company or the
Stockholders contained in this Agreement, including all Exhibits and Schedules
attached hereto, is limited (1) in the case of CSI, to the Note Consideration
(or, if the claim for Damages is less than the Purchase Price, its proportional
share of such liability where its proportional share is calculated as the Note
Consideration divided by the Purchase Price), (2) in the case of the Founders,
to the Share Consideration (or, if the claim
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for Damages is less than the Purchase Price, its proportional share of such
liability where its proportional share is calculated as the Share Consideration
divided by the Purchase Price), and (3) in the case of the Other Stockholders,
to that portion of the Other Note Consideration deposited into the Escrow Fund
which amount in the Escrow Fund shall be the exclusive contractual remedy of the
Acquiror against the Other Stockholders for any Damages; provided, however, that
nothing herein shall limit the liability: (i) of any Stockholder in connection
with any breach by such stockholder of its Securities Holder Representation
Agreement, (ii) CSI in connection with any breach of any of the representations
or warranties contained in Section 2 as to CSINH, (iii) of any party in
connection with any breach of any of the representations and warranties
contained in Section 3.3 or 3.4, and (iv) of any party in connection with a
Fraud Claim; and provided further, however, that the indemnities shall not apply
until the aggregate of all claims for Damages exceeds $250,000 (except that the
foregoing monetary limitation of this proviso shall not apply to Damages
attributable to breaches of representations or warranties contained in Section 2
as to CSINH or contained Section 3.3 or 3.4 as to any party). Subject to
compliance with applicable securities laws, any of the Founders may, at his
option, satisfy any Damages for which he is liable by payment of Acquiror
Company Stock, valued at the greater of (i) the price per share at which such
stock was issued pursuant hereto and (ii) if such stock is then publicly-traded,
the fair market value thereof, calculated by the average of the bid price and
ask price as of the business day immediately preceding the date such payment is
to be made. Notwithstanding the foregoing, in no event shall the Founders be
permitted or required to satisfy any Damages by delivering shares of Acquiror
Common Stock in excess of the number of shares received by the Founders pursuant
to this Agreement.
9.4 DAMAGES THRESHOLD. Notwithstanding the foregoing, the Acquiror may
not receive any amount from the Escrow Fund unless and until a certificate
signed by an officer of the Acquiror (an "Officer's Certificate") identifying
Damages has been delivered to the Escrow Agent and such amount is determined
pursuant to this Section 9 to be payable, in which case the Acquiror shall
receive a proportional amount of the escrowed notes and shares from the Escrow
Fund equal in value to the full amount of such Damages without deduction. In
determining the amount of any Damages attributable to a breach, any materiality
standard contained in any representation, warranty or covenant of CSI, CSINH,
the Company, the Stockholders or the Acquiror shall be disregarded.
9.5 ESCROW PERIOD. Subject to the following requirements, the Escrow
Fund shall remain in existence until the Escrow Termination Date (the "Escrow
Period"). Upon the expiration of the Escrow Period, the Escrow Fund shall
terminate; provided, however, that the amount of escrowed shares, notes and cash
in the Escrow Fund, which, in the reasonable judgment of the Acquiror, are
necessary to satisfy any unsatisfied claims specified in any Officer's
Certificate delivered to the Escrow Agent prior to the expiration of such Escrow
Period with respect to facts and circumstances existing on or prior to the
Escrow Termination Date shall remain in the Escrow Fund (and the Escrow Fund
shall remain in existence) until such claims have been resolved. As soon as all
such claims have been resolved, the Escrow Agent shall deliver to CSI, the
Founders and the Stockholder Representative, as the case may be, the balance of
the escrowed Share Consideration, Other Note Consideration and other property
remaining in the Escrow Fund and not required to satisfy such claims.
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9.6 DISTRIBUTIONS; VOTING.
(a) Any shares of Acquiror Common Stock or other equity securities
issued or distributed by Acquiror (including shares issued upon a stock split)
("New Shares") in respect of the shares of the Acquiror's Common Stock initially
deposited into the Escrow Fund (the "Escrow Shares") that have not been released
from the Escrow Fund shall be added to the Escrow Fund and become a part
thereof. When and if cash dividends on Escrow Shares in the Escrow Fund shall be
declared and paid, they shall be retained in escrow pending final distribution
of the Escrow Fund and will not be immediately distributed to the beneficial
owners of the Escrow Shares. Such dividends will become part of the Escrow Fund
and will be available to satisfy Damages. The beneficial owners of the Escrow
Shares shall pay any taxes on such dividends.)
(b) Each holder of Acquiror Common Stock shall have voting rights
with respect to that number of Escrow Shares contributed to the Escrow Fund on
behalf of such stockholder (and on any voting securities added to the Escrow
Fund in respect of such Escrow Shares) so long as such Escrow Shares or other
voting securities are held in the Escrow Fund. As the record holder of such
shares, the Escrow Agent shall vote such shares in accordance with the
instructions of the stockholders having the beneficial interest therein and
shall promptly deliver copies of all proxy solicitation materials to such
stockholders. The Acquiror shall show the Acquiror Common Stock contributed to
the Escrow Fund as issued and outstanding on its balance sheet.
9.7 ARBITRATION. Any controversy or claim arising out of or relating to
Damages shall be settled by arbitration in accordance with commercial rules of
the American Arbitration Association ("AAA"). Arbitration proceedings shall be
held in New York, New York. Arbitrations shall be conducted by three arbitrators
(the "Arbitrators") consisting of three independent and impartial arbitrators
appointed by the AAA from a list of arbitrators maintained in the office of the
AAA in New York, New York. No Arbitrator shall be a person who ever has been an
affiliate of or attorney for any party or for any of their respective
affiliates. Any provisional remedy that would be available to a court of law
shall be available from the Arbitrators to the parties pending arbitration. Any
party may, without inconsistency with the Agreement, apply to any court of
proper jurisdiction and seek injunctive relief until the arbitration award is
rendered or the controversy is otherwise resolved. The Arbitrator?s award shall
be made in writing. The Arbitrators shall not modify or amend any of the terms
and conditions contained in this Agreement. The award of the majority of the
arbitrators shall be binding and final and not subject to appeal and may be
entered as a judgment in any court of competent jurisdiction. The parties hereby
irrevocably consent and submit to the jurisdiction of the State of New York for
all purposes relative to any arbitration and to any subsequent entry of judgment
on any award rendered pursuant thereto. Each party hereby waives the benefit of
any applicable law which would permit it to appeal the decision of the
Arbitrator to any court or other authority. All fees and expenses of the
arbitration proceedings shall be borne equally among the parties to the
arbitrations. However, each party shall bear the expense of its own counsel,
experts, witnesses, and preparation and presentation of proofs.
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SECTION 10. GENERAL PROVISIONS.
10.1 NOTICES. Any notice required or permitted by this Agreement shall
be in writing and shall be deemed sufficient upon receipt, when delivered
personally or by courier, overnight delivery service or confirmed facsimile, or
48 hours after being deposited in the regular mail as certified or registered
mail (airmail if sent internationally) with postage prepaid, if such notice is
addressed to the party to be notified at such party's address or facsimile
number as set forth below, or as subsequently modified by written notice.
(a) if to the Acquiror, to:
printCafe, Inc.
Forty 24th Street, 5th Floor
Pittsburgh, PA 15222
Attention: President
Facsimile No.: (412) 456-1151
Telephone No.: (412) 456-1141
with a copy to:
Orrick, Herrington & Sutcliffe LLP
1020 Marsh Road
Menlo Park, CA 94061
Attention: Lowell D. Ness
Facsimile No.: (650) 614-7401
Telephone No.: (650) 614-7400
(b) if to CSI, CSINH, or the Company to:
Constellation Software Inc.
1002-181 University Avenue
Toronto, Onterio M5H 3M7
Attention: Mark Leonard
Facsimile No.: (416) 861-0866
Telephone No.: (416) 861-2275
with a copy to:
McCarthy Tetrault
Suite 4700
Toronto Dominion Bank Tower
Toronto, Ontario
Attention: George Takach
Facsimile No.: (416) 868-0673
Telephone No.: (416) 601-7662
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(c) if to if to the Founders to:
Logic Associates, Inc.
221 Christian Street
White River Junction, Vermont 05001
Attention: Nicholas Orem
Facsimile No.: (802) 295-5512
Telephone No.: (802) 295-5661
(d) if to the Other Stockholders:
at their respective addresses as set forth on the
signature pages.
10.2 INTERPRETATION. When a reference is made in this Agreement to
Exhibits or Schedules, such reference shall be to an Exhibit or Schedule to this
Agreement unless otherwise indicated. The words "include," "includes" and
"including" when used herein shall be deemed in each case to be followed by the
words "without limitation." The phrase "made available" in this Agreement shall
mean that the information referred to has been made available if requested by
the party to whom such information is to be made available. The phrases "the
date of this Agreement," "the date hereof," and terms of similar import, unless
the context otherwise requires, shall be deemed to refer to the date first set
forth above. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
10.3 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
10.4 ENTIRE AGREEMENT; NONASSIGNABILITY; PARTIES IN INTEREST. This
Agreement and the documents and instruments and other agreements specifically
referred to herein or delivered pursuant hereto, including the Exhibits, the
Schedules, including the Disclosure Schedule and the Acquiror Disclosure
Schedule (a) constitute the entire agreement among the parties with respect to
the subject matter hereof and supersede all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof, except for the Confidentiality Agreement, which shall continue in full
force and effect, and shall survive any termination of this Agreement or the
Closing, in accordance with its terms; (b) are not intended to confer upon any
other person any rights or remedies hereunder; and (c) shall not be assigned by
operation of law or otherwise except as otherwise specifically provided.
10.5 SEVERABILITY. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith, in order to maintain the economic position enjoyed by
each party as close as possible to that under the provision rendered
unenforceable. In the event that the parties cannot reach a mutually agreeable
and enforceable replacement for such provision, then (i) such provision shall be
excluded from this Agreement, (ii) the balance of the Agreement shall be
interpreted as if such provision were so excluded and (iii) the balance of the
Agreement shall be enforceable in accordance with its terms.
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<PAGE> 55
10.6 REMEDIES CUMULATIVE. Except as otherwise provided herein, any and
all remedies herein expressly conferred upon a party will be deemed cumulative
with and not exclusive of any other remedy conferred hereby, or by law or equity
upon such party, and the exercise by a party of any one remedy will not preclude
the exercise of any other remedy.
10.7 GOVERNING LAW. This Agreement and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
New York, without giving effect to principles of conflicts of law.
10.8 RULES OF CONSTRUCTION. The parties hereto agree that they have been
represented by counsel during the negotiation, preparation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
10.9 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended
or waived only with the written consent of the parties or their respective
successors and assigns. Any amendment or waiver effected in accordance with this
Section 10.9 shall be binding upon the parties and their respective successors
and assigns.
[Signature Page Follows]
51
<PAGE> 56
The parties hereto have executed this Stock Purchase Agreement as of the
date first written above.
PRINTCAFE, INC.
By:
------------------------------------
Name:
----------------------------------
(Print)
--------------------------------
Title:
---------------------------------
Address:
-------------------------------
CONSTELLATION SOFTWARE INC.
By:
------------------------------------
Name:
----------------------------------
(Print)
--------------------------------
Title:
---------------------------------
Address:
-------------------------------
CONSTELLATION SOFTWARE OF NEW HAMPSHIRE, INC.
By:
------------------------------------
Name:
----------------------------------
(Print)
--------------------------------
Title:
---------------------------------
Address:
-------------------------------
LOGIC ASSOCIATES, INC.
By:
------------------------------------
Name:
----------------------------------
(Print)
--------------------------------
Title:
---------------------------------
Address:
-------------------------------
---------------------------------------
Nicholas Orem
Address:
-------------------------------
<PAGE> 57
---------------------------------------
Warren Loomis
Address:
-------------------------------
---------------------------------------
John Woodward-Poor
Address:
-------------------------------
OTHER STOCK HOLDERS
[signature page for each attached on following pages]
<PAGE> 58
The parties hereto have executed this Stock Purchase Agreement as of the date
first written above.
---------------------------------------
[Security Holder]
Address:
-------------------------------
<PAGE> 59
SCHEDULE 1
CSI, CSINH, COMPANY AND STOCKHOLDERS
DISCLOSURE SCHEDULE
<PAGE> 60
SCHEDULE 2
ACQUIROR DISCLOSURE SCHEDULE
<PAGE> 1
EXHIBIT 10.37
LICENSE AGREEMENT
This Agreement effective the 9th day of March 2000 is by and between
Henry B. Freedman, an individual having an address of Box 2413, Springfield,
Virginia 22152 (hereinafter "Licensor"); and printCafe, Inc., a Delaware
corporation, having a place of business at 40 24th Street, 5th Floor,
Pittsburgh, Pennsylvania 15222 (hereinafter "Licensee") (collectively, the
"Parties").
Recitals
WHEREAS, Licensor is the owner of the Licensed Patent; and
WHEREAS, Licensee is desirous of acquiring from Licensor a non-exclusive
license under the Licensed Patent; and
NOW, THEREFORE, for and in consideration of the foregoing premises and
of the mutual covenants set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Parties, intending to be legally bound, covenant and agree as follows:
Definition
As used herein the term "Licensed Patent" shall mean U.S. Patent No.
4,839,829 entitled Automated Printing Control System (hereinafter "the `829
Patent") and all divisionals, continuations, continuations-in-part, reissues,
reexaminations, and/or extensions thereof, including all foreign counterparts of
the foregoing, and all other patents and/or patent applications that have been
or shall be filed and/or issued in the United States and all foreign countries
on any of the improvements included in the `829 Patent.
Article I - Grant of License
A. Licensor hereby grants to Licensee under the terms and conditions
hereinafter stated (i) a non-exclusive right and license to make, advertise,
have made, use and import into the United States systems (which may include
hardware, software and/or combinations of hardware and software) embodying the
claimed invention of the Licensed Patent (hereinafter "Systems") for its own
use; and (ii) a non-exclusive right and license to allow others ("End-Users") to
make use of and/or to otherwise access (but
<PAGE> 2
not to copy, download, disseminate or otherwise obtain or appropriate) such
Systems through Licensee's Internet Web Site ("Web Site Use rights"). As used
herein, the term Web Site shall mean a computer-based resource, including the
hardware and/or software thereof, which can be reached by other computers or
network-capable appliances over one or more computer networks using a Uniform
Resource Locator (URL) and a Web Browser or similar application, or by other
such means. It is expressly understood and agreed between Licensor and Licensee
that (i) Licensee may deploy Systems [*] that may be physically separate from
Licensee's address noted above, (ii) Licensor reserves the exclusive right to
grant further licenses to other users of Systems of the Licensed Patent, and
(iii) third parties acquire no license or other rights to make or sell Systems
under this Agreement.
B. Licensee shall not have the right to grant any sub-license or other
rights to third parties, other than the Web Site Use rights specified above,
under the rights granted to it by this Agreement.
C. Licensor hereby releases, acquits and forever discharges Licensee;
its subsidiaries and affiliated companies; its successors in interest; its sales
representatives, distributors and customers including End-Users (collectively
referred to as "the Released Entities"); and each of the Released Entities'
respective owners, agents, representatives, attorneys, employees, officers,
directors, and stockholders from and against any and all claims, demands, causes
of action or liabilities of any kind, character or nature whatsoever, for past
and/or present infringements of the Licensed Patent arising out of the offering
for sale, making, having made, using, selling or importing of Systems. The
purpose and intent of this release is to ensure that Licensee, its various
representatives, distributors and customers are immune from suit for any past
and/or present infringement, including any claims of direct infringement,
contributory infringement and/or inducement of infringement by others, of the
License Patent arising out of the offering for sale, making, having made, using,
selling or importing of Systems and/or parts thereof.
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* Material has been omitted pursuant to a request for confidential treatment.
2
<PAGE> 3
Article II - Compensation
A. As consideration for the license granted herein and during the Term
of this Agreement, Licensee agrees to pay Licensor [*] (the "License Fee") to be
paid as follows:
1. [*] within ten (10) days after the effective date of this
Agreement;
2. [*] by January 2, 2001; and
3. [*] by January 2, 2002.
B. The payments of the Licensee Fee shall be made even in the event that
there is a finding by a court of competent jurisdiction, that one or more claims
of the Licensed Patent is/are invalid, and such a finding shall not terminate,
or give rise to any rights by Licensee to terminate, this Agreement. Licensee
agrees that it will not challenge the validity or enforceability of the `829
Patent.
Article III - Other Licensees
A. From the effective date of this Agreement until the expiration of the
`829 Patent, Licensor agrees that it will not, except upon consent of the
Licensee in writing, license the Licensed Patent to other e-commerce printing
entities [*] on more favorable terms than those agreed to between the parties
concerning the Licensed Patent. [*].
Article IV - Warranties and Obligations
A. Licensor warrants that, at the time of the execution of this
Agreement, it has the legal right and power to grant to Licensee the rights
granted under this Agreement.
B. Licensor warrants that it has not granted any rights or made any
commitments relative to the granting of any rights, which are inconsistent with
the rights granted to Licensee under this Agreement.
C. Licensor makes no other representations or warranties, express or
implied, and does not assume any liability with respect to infringement of
patents or other rights of third parties due to Licensee's operation under the
license granted herein.
D. Licensor shall have no obligation to enforce the Licensed Patent
against any third party or to defend any action or suit which challenges the
validity of the
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* Material has been omitted pursuant to a request for confidential treatment.
3
<PAGE> 4
Licensed Patent. Licensee shall have no right to enforce the Licensed Patent
against any third party.
E. The Parties agree to take reasonable steps to ensure the
confidentiality of the terms of this Agreement and, accordingly, any release of
information relating to this Agreement must be reviewed and approved in advance
by each of the Parties, except that copies of this Agreement may be made
available to government agencies in compliance with regulations thereof
requiring the disclosure of material agreements. Neither party shall be liable
for disclosure of the terms of this Agreement if made in response to a valid
order of a court or authorized agency of government; provided that ten (10)
days' notice first be given to the other part so a protective order, if
appropriate, may be sought by such party. Furthermore, either party may
disclose, in confidence, the terms of this Agreement to its financial
consultants, tax planners and/or advisors, attorneys, underwriters, and/or third
parties under an obligation to the disclosing party to preserve the secrecy of
the disclosing party's confidential information, without the consent of the
other party. Anything to the contrary notwithstanding, Licensor may disclose the
terms of this Agreement under suitable confidentiality terms in connection with
further licensing of the Licensed Patent.
F. The Parties shall cooperate in reasonable efforts to publicize the
'829 Patent through the joint dissemination of a press release in a form
substantially similar to that attached hereto within sixty (60) days of the
Effective Date. Nothing herein shall preclude further announcements by the
Parties.
4
<PAGE> 5
Article V - Marking
Licensee shall mark and prominently display the legend "U.S. Patent
4,839,829" on all literature, users manuals and documentation produced that
promotes the system under the Licensed Patent and on all web sites that promote
or feature the system of the License Patent. Furthermore, Licensee must
prominently list the Licensed Patent as licensed from Henry B. Freedman and must
prominently list the web site and telephone number of Henry B. Freedman as the
owner of the Licensed Patent on Licensee's Internet web site.
Article VI - Term and Termination
A. Unless sooner terminated as provided below, this Agreement shall
remain in effect until the expiration of the last to expire of the Licensed
Patent (the Term).
B. If Licensee, at any time, defaults in any payments due hereunder or
breaches any material term of this Agreement, Licensor shall have the right to
give notice of such default or breach to Licensee, in writing, and, if the
default is not cured within thirty (30) days after receipt of the notice,
Licensor, at its option, may immediately terminate this Agreement and license
granted herein by giving written notice of termination to Licensee.
Article VII - Administration
A. This Agreement shall be binding upon and shall inure to the benefit
of and be enforceable by Licensor and its successors in interest and assigns.
This Agreement and the rights granted hereunder are personal to Licensee and
Licensee may not sell, pledge, assign or transfer this Agreement and the rights
granted hereunder nor delegate any duties or obligations hereunder, without the
written consent of the Licensor, except that a change of ownership or control of
Licensee (whether by merger, operation of law, a sale of all or substantially
all of the assets of Licensee or otherwise) shall not be deemed an impermissible
assignment of this Agreement. Licensee agrees to promptly notify Licensor of any
change of ownership or control of Licensee. For purposes of this Article VII, a
change in ownership or control with respect to Licensee means a transaction
resulting in (i) the sale, disposition or other transfer of greater than fifty
percent (50%) of the outstanding voting securities of Licensee by the current
stockholders of Licensee
5
<PAGE> 6
other than by way of merger, acquisition or operation of law; (ii) a sale of all
or substantially all of the assets of Licensee; or (iii) the acquisition of the
beneficial ownership (as determined with reference to Rule 13d-3 of the General
Rules and Regulations of the Securities Exchange Act of 1934, as amended, in
effect on the date of this Agreement) of greater than fifty percent (50%) of the
outstanding voting securities of Licensee.
B. This Agreement shall be construed, interpreted and applied in
accordance with the law of Virginia, without regard to that State's body of law
regarding conflicts of law.
C. The Parties agree that if in the event any either party shall need to
pursue its rights under this Agreement and license in a court of competent
jurisdiction, the court shall award to the prevailing party its cost involved in
pursuing the dispute, including attorneys' fees, and such award shall be paid by
the other party.
D. In the event that any provision of this Agreement is determined by a
court of competent jurisdiction to be unenforceable or invalid, the Parties
hereto agree that such provision found to be unenforceable or invalid shall be
enforced to the full extent permitted and, in any event, all other provisions of
this Agreement shall remain valid and enforceable as if the unenforceable or
invalid portion had never been made a part hereof. Furthermore, no damages for
any act of infringement of the Licensed Patent by Licensee or any of the
Released Entities shall accrue from the Effective Date.
E. All notices required to be provided for by the terms of this
Agreement shall be given in writing and shall be deemed to have been duly given
if addressed and sent by registered or certified mail, return receipt requested,
with the postage prepaid, or by overnight courier services to the address of
such party as set forth above or to such other address as either party may, by
written notice, appoint for that purpose with a copy to counsel for each party.
Counsel are as follows:
Licensor:
Ronald L. Panitch, Esquire
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
One Commerce Square
2005 Market Street, 22nd Floor
Philadelphia, PA 19103
Telephone (215) 965-1300
6
<PAGE> 7
Licensee:
F. With respect to the subject matter of this Agreement, the foregoing
constitutes the entire and only understanding between the Parties, and this
Agreement supersedes any prior or collateral agreements or understandings
between the Parties with respect to the subject matter thereof. No terms,
conditions or statements purporting to modify, vary or waive the terms of this
Agreement shall be effective unless made in writing and signed by the Parties
hereto. This Agreement is the product of an arms-length negotiation between the
Parties, with each of the Parties being represented by legal counsel of their
choice. Nothing in this Agreement and the negotiations leading to its
consummation shall be construed as offering any tax-related advice to either of
the Parties by the other party.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement
to be executed by its authorized representatives.
Henry B. Freedman
Date:____________________ ____________________________________
printCafe, Inc.
Date:____________________ BY:_________________________________
NAME:_______________________________
TITLE:______________________________
7
<PAGE> 8
[*]
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* Material has been omitted pursuant to a request for confidential treatment.
8
<PAGE> 1
EXHIBIT 10.38
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS. THESE
SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT
BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR AN EXEMPTION THEREFROM. THE ISSUER
OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS
IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
printCafe, Inc.
WARRANT TO PURCHASE SHARES
OF COMMON STOCK
THIS WARRANT CERTIFIES THAT, for good and valuable consideration,
Andersen Consulting LLP (the "HOLDER"), is entitled to purchase, subject to the
terms of this Warrant, up to 521,739 paid and nonassessable shares of Common
Stock (as adjusted pursuant to Article 4 hereof, the "SHARES") of printCafe,
Inc., a Delaware corporation (the "COMPANY"), at the price of FIVE DOLLARS AND
EIGHTY CENTS ($5.80) per Share (such price and such other price as shall result
from time to time from the adjustments specified in Article 4 hereof, the
"WARRANT PRICE"), subject to the provisions and upon the terms and conditions
set forth in this Warrant. As used herein, (a) the term "COMMON STOCK" shall
mean the Company's common stock, par value $.0001 per share, and any capital
stock into or for which such Common Stock may hereafter be converted or
exchanged, and (b) the term "DATE OF GRANT" shall mean the Date of Grant listed
on the signature page hereof.
ARTICLE 1. TERM. The purchase right represented by this Warrant is exercisable,
in whole or in part, at any time and from time to time from the Date of Grant
through 5:00 p.m. New York City local time on the date which is the earlier of
(i) four years after the Date of Grant, (ii) three (3) years after the closing
of a firmly underwritten initial public offering (the "IPO") of the Common Stock
effected pursuant to a registration statement (or its successor) filed under the
Securities Act of 1933, as amended (the "ACT"), (iii) the closing date of a
merger or consolidation of the Company with or into any other entity, including
a reverse triangular merger involving the Company (other than a merger or
consolidation in which the holders of the voting power of the Company
immediately prior to such consolidation or merger hold a majority of the
surviving or resulting entity immediately following such consolidation or
merger), or (iv) the closing date of the sale, lease, exchange, conveyance or
other disposition of all or substantially all of the assets of the Company.
<PAGE> 2
ARTICLE 2. EXERCISE.
2.1 Subject to Article 1 hereof, this Warrant be exercisable as follows:
(i) [1] Shares shall be exercisable immediately upon the Date of Grant, and (ii)
[*] shall vest on a quarterly basis for a [*] period beginning on the date which
the Company installs an internet based print procurement system (the "Web Site")
for Holder, with the amount vesting each quarter equal to [*] multiplied by a
fraction, the numerator of which is the amount of printing Holder purchases for
its internal need through the Web Site during such [*] and the denominator of
which is [*]; provided, however, that in no event shall Holder vest in Warrants
to purchase greater than [*] Shares pursuant to this subsection 2.1(ii).
2.2 Method of Exercise; Payment. Subject to Article 1 hereof and the
vesting schedule set forth in Section 2.1, the purchase right represented by
this Warrant may be exercised by the Holder, in whole or in part and from time
to time, at the election of the Holder, by (a) the surrender of this Warrant
(with the notice of exercise substantially in the form attached hereto as
EXHIBIT A duly completed and executed) at the principal office of the Company
and by the payment to the Company, by certified check or by wire transfer to an
account or accounts designated by the Company of an amount equal to the then
applicable Warrant Price multiplied by the number of Shares then being
purchased, or (b) exercise of the Conversion Right provided for in Article 3
hereof.
2.3 Delivery of Certificate and New Warrant. The person or persons in
whose name(s) any certificate(s) representing Shares shall be issuable upon
exercise of this Warrant shall be deemed to have become the holder(s) of record
of, and shall be treated for all purposes as the record holder(s) of, the Shares
represented thereby (and such Shares shall be deemed to have been issued)
immediately prior to the close of business on the date or dates upon which this
Warrant is exercised. In the event of any exercise of the rights represented by
this Warrant, the Company shall deliver to the Holder as soon as practicable and
in any event within thirty (30) days after such exercise (a) a certificate of
the Company executed by a duly authorized officer of the Company to the effect
that the representations and warranties set forth in Section 5.1 hereof are true
and correct as of the date thereof (a "COMPLIANCE CERTIFICATE"), (b)
certificates for the Shares so purchased and (c) unless this Warrant has been
fully exercised or expired, a new Warrant representing the portion of the
Shares, if any, with respect to which this Warrant shall not then have been
exercised.
2.4 Stock Fully Paid; Reservation of Shares. All Shares that may be
issued upon the exercise of this Warrant will, upon issuance pursuant to the
terms and conditions herein, be fully paid and nonassessable, and free from all
taxes, liens and charges (except for taxes, liens and charges applicable to the
Holder) with respect to the issue thereof. During the period within which the
rights represented by this Warrant may be exercised, the Company will at all
times have authorized, and reserved for the purpose of the issue upon exercise
of the purchase rights evidenced by this Warrant, a sufficient number of shares
of Common Stock to provide for the exercise of the rights represented by this
Warrant.
2.5 Replacement of Warrants. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of loss, theft
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* Material has been omitted pursuant to a request for confidential treatment.
2
<PAGE> 3
or destruction, on delivery of an indemnity agreement reasonably satisfactory in
form and amount to the Company, and, in the case of mutilation, on surrender and
cancellation of this Warrant, the Company at its expense shall execute and
deliver, in lieu of this Warrant, a new warrant of like tenor.
2.6 No Assignment. The Holder of this Warrant shall not be entitled,
without obtaining the prior written consent of the Company, to assign, by
operation of law or otherwise, its interest in this Warrant in whole or in part
to any person or persons.
2.7 Other Agreements. Except in connection with Holder's contingent
exercise of its Conversion Right (as defined in Section 3.1) in connection with
the closing of the IPO as more fully described in Article 3, Holder hereby
acknowledges and agrees that, in the event that Holder exercises this Warrant
prior to the closing of the IPO, Holder will execute and become a party to that
certain Right of First Refusal and Co-Sale Agreement substantially in the form
attached hereto as Exhibit B hereto and that certain Voting Agreement
substantially in the form attached hereto as Exhibit C hereto, as such
agreements shall be amended to the date of exercise by Holder, with respect to
the Shares received by Holder in connection with such exercise of this Warrant.
ARTICLE 3. CONVERSION RIGHT.
3.1 Conversion Right. In addition to and without limiting the rights of
the Holder under the terms of this Warrant, the Holder shall have the right to
convert this Warrant or any portion thereof which is fully vested at such time
(the "CONVERSION RIGHT") into shares of Common Stock at any time or from time to
time during the term of this Warrant. Upon exercise of the Conversion Right with
respect to a particular number of Shares (the "CONVERTED WARRANT SHARES"), the
Company shall deliver to the Holder (without payment by the Holder of any
exercise price or any cash or other consideration) that number of shares of
fully paid and nonassessable Common Stock determined by dividing (a) the
aggregate Fair Market Value (as determined pursuant to Section 3.3) of the
Converted Warrant Shares on the Conversion Date (as defined in Section 3.2
below) minus the aggregate Warrant Price of such Converted Warrant Shares by (b)
the Fair Market Value of one share of Common Stock.
3.2 Method of Exercise. In the event that the Holder elects to exercise
the Conversion Right, the Holder shall surrender this Warrant at the principal
office of the Company together with a written statement specifying that the
Holder thereby intends to exercise the Conversion Right and indicating the
number of Shares which are being surrendered (referred to in Section 3.1 hereof
as the Converted Warrant Shares) in exercise of the Conversion Right. Such
conversion shall be effective upon receipt by the Company of this Warrant
together with the aforesaid written statement or on such later date as is
specified therein (the "CONVERSION DATE") and, at the election of the Holder,
may be made contingent upon the closing of the IPO. Certificates for the Shares
issuable upon exercise of the Conversion Right, a Compliance Certificate and, if
applicable, a new warrant evidencing the balance of the Shares remaining subject
to this Warrant, shall be issued as of the Conversion Date and shall be
delivered to the Holder within thirty (30) days following the Conversion Date.
3
<PAGE> 4
3.3 Determination of Fair Market Value. For purposes of this Article 3,
"FAIR MARKET VALUE" of a share of Common Stock as of a particular date (the
"DETERMINATION DATE") shall mean:
(a) If the Conversion Right is exercised in connection with and
contingent upon the IPO, then the initial "Price to Public" specified in the
final prospectus with respect to such offering.
(b) If the Conversion Right is not exercised in connection with
the IPO, then as follows:
(i) If traded on a securities exchange, the Fair Market
Value of the Common Stock shall be deemed to be the average of the closing
prices of the Common Stock on such exchange over the 30-day period ending five
(5) business days prior to the Determination Date;
(ii) If traded over-the-counter, the Fair Market Value of
the Common Stock shall be deemed to be the average of the closing bid prices of
the Common Stock over the 30-day period ending five (5) business days prior to
the Determination Date; or
(iii) If there is no public market for the Common Stock,
then Fair Market Value shall be determined in good faith by the Board of
Directors of the Company.
3.4 Fractional Shares. No fractional Shares shall be issuable upon
exercise of this Warrant pursuant to Section 2.1 or exercise of the Conversion
Right pursuant to this Article 3, but in lieu of such fractional shares the
Company shall make a cash payment therefor based on the Fair Market Value of the
Shares on the date of exercise or conversion as determined pursuant to Section
3.3.
ARTICLE 4. ADJUSTMENTS TO THE SHARES.
4.1 Stock Dividends. If the Company declares or pays a dividend on the
Common Stock payable in share of Common Stock (except any distribution
specifically provided for in Sections 4.2 or 4.3), then upon exercise of this
Warrant, for each Share acquired, the Holder shall receive, without cost to the
Holder, the total number and kind of securities to which the Holder would have
been entitled had the Holder owned the Shares of record as of the date the
dividend or subdivision occurred.
4.2 Reclassification, Exchange, Substitution or Merger. In case of any
reclassification, exchange or change of securities of the class issuable upon
exercise of this Warrant (other than a change in par value, or from par value to
no par value, or from no par value to par value, or as a result of a subdivision
or combination), the Company shall duly execute and deliver to the Holder a new
warrant (in form and substance satisfactory reasonably acceptable to the Holder)
providing that the Holder shall have the right to exercise such new Warrant and
upon such exercise to receive, in lieu of each share of Common Stock theretofore
issuable upon exercise of this Warrant, the kind and amount of shares of stock,
other securities, money and property receivable upon such reclassification or
change by a holder of one share Common Stock. Such new warrant shall provide for
adjustments which shall be as nearly equivalent as
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<PAGE> 5
may be practicable to the adjustments provided for in this Article 4. The
provisions of this Section 4.2 shall similarly apply to successive
reclassifications or changes.
4.3 Adjustments for Subdivisions or Combinations. If the Company at any
time while this Warrant remains outstanding and unexpired shall subdivide or
combine its Common Stock, the Exercise Price and the number of Shares issuable
upon exercise hereof shall be proportionately adjusted.
4.4 Minimum Adjustment. No adjustment in the Exercise Price pursuant to
this Article 4 shall be required unless the adjustment would require an increase
or decrease of at least $.05 in such Exercise Price; provided, however, that any
adjustments which by reason of this Section 4.4 are not required to be made,
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Article 4 shall be to the nearest cent or the
nearest Share, as the case may be.
4.5 Certificate as to Adjustments. Upon each adjustment of the Warrant
Price and the number of Shares acquirable hereunder, the Company, at its
expense, shall promptly compute such adjustment and furnish the Holder with a
certificate of its Chief Financial Officer setting forth such adjustment and the
facts upon which such adjustment is based. The Company shall, upon written
request, furnish the Holder a certificate setting forth the Warrant Price in
effect on the date thereof and the number of Shares acquirable hereunder on such
date and the series of adjustments leading to such Warrant Price and share
number.
ARTICLE 5. REPRESENTATIONS AND COVENANTS OF THE COMPANY.
5.1 Representations and Warranties. The Company hereby represents and
warrants to the Holder that:
(a) This Warrant has been duly authorized and executed by the
Company and is a valid and binding obligation of the Company enforceable in
accordance with its terms, subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors and the rules of law or
principles at equity governing specific performance, injunctive relief and other
equitable remedies;
(b) The Shares have been duly authorized and reserved for
issuance by the Company and, when issued in accordance with the terms hereof,
will be validly issued, fully paid and non-assessable;
(c) The rights, preferences, privileges and restrictions granted
to or imposed upon the Shares and the holders thereof are as set forth in the
Company's Certificate of Incorporation, as amended to the Date of the Grant;
(d) The execution and delivery of this Warrant is not, and the
issuance of the Shares upon exercise of this Warrant in accordance with the
terms hereof will not be, inconsistent with the Company's Certificate of
Incorporation or bylaws and do not and will not conflict with or contravene any
provision of, or constitute a default under, any material
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indenture, mortgage, contract or other instrument of which the Company is a
party or by which it is bound; and
(e) There are no actions, suits, investigations or proceedings
pending or, to the knowledge of the Company, threatened against the Company in
any court or before any governmental commission, board or authority which, if
adversely determined, will have a material adverse effect on the ability of the
Company to issue the Shares upon exercise of this Warrant.
5.2 Notice of Certain Events. If the Company proposes at any time to (a)
declare any dividend or distribution upon the Common Stock, whether in cash,
property, stock, or other securities and whether or not a regular cash dividend;
(b) offer for subscription pro rata to the holders of any class or series of its
stock any additional shares of stock of any class or series or other rights; or
(c) effect any reclassification or recapitalization of the Common Stock, then,
in connection with each such event, the Company shall give the Holder (1) prompt
prior written notice of the date on which a record will be taken for such
dividend, distribution, or subscription rights or for determining rights to
vote, if any, in respect of the matters referred to in (c) above; and (2) in the
case of the matters referred to in (c) above, prompt prior written notice of the
date when the same will take place.
5.3 Mergers. The Company shall provide the Holder with at least ten (10)
business days' notice of the terms and conditions of any of the following
potential transactions: (i) the sale, lease, exchange, conveyance or other
disposition of all or substantially all of the Company's property or business,
or (ii) its merger into or consolidation with any other corporation (other than
a wholly-owned subsidiary of the Company), or any transaction (including a
merger or other reorganization) or series of related transactions, in which a
majority of the voting power of the Company is disposed of.
5.4 Rights as Stockholders; Information. The Holder, as such, shall not
be entitled to vote or receive dividends or be deemed the holder of Common Stock
or any other securities of the Company which may at any time be issuable on the
exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the Holder, as such, any of the rights of a stockholder
of the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise until this
Warrant shall have been exercised and the Shares purchasable upon the exercise
hereof shall have become deliverable, as provided herein. Notwithstanding the
foregoing, the Company will transmit to the Holder such information, documents
and reports as are generally distributed to the holders of any class or series
of the securities of the Company concurrently with the distribution thereof to
the stockholders.
ARTICLE 6. SECURITIES LAW COMPLIANCE.
6.1 Compliance with the Act. This Warrant may not be sold, assigned,
pledged, hypothecated, encumbered or in any other manner transferred or disposed
of, in whole or in part. The Shares, nor any interest in them, may not be sold,
assigned, hypothecated, encumbered or in any other manner transferred or
disposed of, in whole or in part, except in compliance with the Act and state
securities laws and the terms and conditions hereof. Upon exercise of this
Warrant,
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unless the Shares being acquired are registered under the Act and any applicable
state securities laws or an exemption from such registration is available, the
Holder shall confirm in writing that the Shares so purchased are being acquired
for investment and not with a view toward distribution or resale in violation of
the Act and shall confirm such other matters related thereto as may be
reasonably requested by the Company. This Warrant and all Shares issued upon
exercise of this Warrant (unless at the time of acquisition they are registered
under the Act and any applicable state securities laws) shall be stamped or
imprinted with a legend in substantially the following form:
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
SECURITIES LAWS. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES
LAWS, PURSUANT TO REGISTRATION OR AN EXEMPTION THEREFROM. THE
ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN
FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT
ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND
ANY APPLICABLE STATE SECURITIES LAWS."
Any certificate for Shares issued at any time in exchange or substitution for
any certificate for any Shares bearing such legend (except a new certificate for
any Shares issued after the acquisition of such Shares pursuant to a
registration statement which has been declared effective under the Act) shall
also bear such legend unless, in the opinion of counsel for the Company, the
Shares represented thereby are no longer subject to the restrictions set forth
herein. The provisions of this Article 6 shall be binding upon all subsequent
Holders of certificates for Shares bearing the above legend and all subsequent
Holders of this Warrant, if any.
6.2 Investment Representations. In addition, in connection with the
issuance of this Warrant, the Holder specifically represents to the Company by
acceptance of this Warrant as follows:
(a) The Holder is aware of the Company's business affairs and
financial condition and has acquired information about the Company sufficient to
reach an informed and knowledgeable decision to acquire this Warrant. The Holder
is acquiring this Warrant for its own account for investment purposes only and
not with a view to, or for the resale in connection with, any "distribution"
thereof in violation of the Act. The Holder is an "accredited investor" as
defined in Rule 501 promulgated under the Act.
(b) The Holder understands that this Warrant has not been
registered under the Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of the Holder's
investment intent as expressed herein.
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(c) The Holder further understands that this Warrant must be held
indefinitely unless subsequently registered under the Act and qualified under
any applicable state securities laws or unless exemptions from registration and
qualification are otherwise available. The Holder understands that the Company
is under no obligation to register and qualify this Warrant or the Shares
underlying the Warrant.
(d) The Holder is aware of the provisions of Rule 144 promulgated
under the Act, which, in substance, permit limited public resale of "restricted
securities" acquired, directly or indirectly, from the issuer thereof (or from
an affiliate of the issuer), in a nonpublic offering subject to the satisfaction
of certain conditions, if applicable, including, without limitation, the
availability of certain public information about the Company, the resale
occurring not less than one year after the party has purchased and paid for the
securities to be sold, the sale being made through a broker in an unsolicited
"broker transaction" or in transactions directly with a market maker and the
amount of securities being sold during any three (3) month period not exceeding
certain specified limitations.
(e) The Holder further understands that at the time it wishes to
sell this Warrant or the Shares there may be no public market upon which to make
such a sale and that, even if such public market then exists, the Company may
not be satisfying the current public information requirements under Rule 144
promulgated under the Act and that, in such event, the Holder may be precluded
from selling this Warrant under Rule 144 even if the one year minimum holding
period has been satisfied.
(f) The Holder further understands that in the event that all the
requirements of Rule 144 are not met, registration under the Act, compliance
with Regulation A or some other registration exemption will be required; and
that, notwithstanding the fact that Rule 144 under the Act is not exclusive, the
staff of the Securities and Exchange Commission (the "COMMISSION") has expressed
its opinion that persons proposing to sell private placement securities other
than in a registered offering or pursuant to Rule 144 will have a substantial
burden of proof in establishing that an exemption from registration is available
for such offers or sales, and that such persons and their respective brokers who
participate in such transactions do so at their own risk.
6.3 Disposition of Warrant or the Shares. With respect to any offer,
sale or other disposition of this Warrant or any Shares acquired pursuant to the
exercise of this Warrant prior to registration of this Warrant or such Shares,
the Holder agrees to give written notice to the Company prior thereto,
describing briefly the manner thereof, together with a written opinion of the
Holder's counsel, or, if reasonably requested by the Company, other evidence to
the effect that such offer, sale or other disposition may be effected without
registration or qualification (under the Act as then in effect or any federal or
state securities law then in effect) of this Warrant or such Shares and
indicating whether or not under the Act certificates for this Warrant or such
Shares to be sold or otherwise disposed of require any restrictive legend as to
applicable restrictions on transferability in order to ensure compliance with
such law. If a determination has been made pursuant to this Section 6.3 that the
opinion of counsel for the Holder or other evidence is not reasonably
satisfactory to the Company, the Company shall so notify the Holder promptly
with details thereof after such determination has been made. Notwithstanding the
foregoing, this Warrant or the Shares may be offered, sold or otherwise disposed
of if (a) the
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<PAGE> 9
Company shall have been furnished with a letter from the Commission, in response
to a written request in form and substance acceptable to counsel for the Company
setting forth all of the facts and circumstances surrounding the contemplated
transfer, stating that the Commission will take no action with regard to the
contemplated transfer; or (b) the Shares are transferred pursuant to a
registration statement which has been filed with the Commission and has become
effective. The Company may issue stop transfer instructions to its transfer
agent to enforce the foregoing restrictions. Notwithstanding the foregoing, no
such opinion of counsel shall be required in instances of transfers of the
Shares or the Warrant to any affiliate (as such term is defined by Rule 405
under the Act) of Holder, provided the Company is notified of such transfer and
so long as such transfer complies with all applicable laws, rules and
regulations.
6.4 Termination of Restrictions and Removal of Legend. Except for the
restriction set forth in Section 2.6, the restrictions on transfer imposed by
this Article 6 shall cease and terminate as to the Shares when (i) such
securities shall have been effectively registered under the Act and sold by the
Holder in accordance with such registration, (ii) an acceptable opinion or other
evidence as described in Section 6.3 or a "no action" letter described in
Section 6.3 states that future transfers of such securities by the transferor or
the contemplated transferee would be exempt from registration under the Act, or
(iii) such securities may be sold under and in accordance with Rule 144(k)
promulgated by the Commission under the Act. When the restrictions on transfer
contained in this Article 6 have terminated as provided above, the Holder or the
transferee of the Holder shall be entitled to receive promptly from the Company,
without expense to it, and upon surrender of existing certificates, new
certificates not bearing the legend set forth in Section 6.1 hereof.
ARTICLE 7. MISCELLANEOUS.
7.1 Liquidated Damages. Holder acknowledges and agrees that the Company
is issuing certain of the Warrants to Holder in connection with Holder selecting
the Company as internal print procurement provider for its North America
operations and, in connection therewith, Holder agrees to not publicly disclose
the internal use of any other print procurement system (other than Ariba or
Fatbrain) for a period of 18 months after the installation of the Web Site.
Notwithstanding anything to the contrary set forth in this Warrant, in the event
that Holder makes such a public disclosure during such 18 month period, Holder
agrees that any Warrants not yet exercised will become null and void on the date
of such public disclosure, Holder shall forfeit any shares of Common Stock it
holds which were obtained through exercise of the Warrant and, to the extent
Holder has exercised the Warrant and sold the underlying shares of Common Stock,
Holder agrees that it will pay to the Company as liquidated damages any profits
recognized by Holder in connection with such transactions.
7.2 No Impairment. The Company shall not by amendment of its Certificate
of Incorporation avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed under this Warrant by the Company.
7.3 Agreement for Lock-up. The Holder, by acceptance hereof, agrees that
such Holder will not, without the prior written consent of the lead underwriter
in connection with the IPO, directly or indirectly offer to sell, contract to
sell (including, without limitation, any short
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sale), pledge, grant any option for the sale of, acquire any option to dispose
of, or otherwise dispose of any Shares or securities into which such Share are
converted for a period of 180 days following the closing of the IPO.
7.4 Notices. All notices and other communications from the Company to
the Holder, or vice versa, shall be deemed delivered and effective when given
personally or mailed by first-class registered or certified mail, postage
prepaid, at such address as may have been furnished by the Company or the
Holder, as the case may be, in writing by the Company or the Holder from time to
time.
7.5 No Inconsistent Agreements. The Company has not previously entered
into, and will not on or after the date of this Warrant enter into, any
agreement with respect to its securities which is inconsistent with the terms of
this Warrant, including any agreement which impairs or limits the rights granted
to the Holder in this Warrant, or which otherwise conflicts with the provisions
hereof or would preclude the Company from discharging its obligations hereunder.
7.6 Modification and Waiver. This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge
or termination is sought.
7.7 Attorneys' Fees. In the event of any dispute between the parties
concerning the terms and provisions of this Warrant, the party prevailing in
such dispute shall be entitled to collect from the other party all costs
incurred in such dispute, including reasonable attorneys' fees.
7.8 Descriptive Headings. The descriptive headings of the several
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant. The language in this Warrant shall be
construed as to its fair meaning without regard to which party drafted this
Warrant.
7.9 Survival of Representations, Warranties and Agreements. All
representations and warranties of the Company and the Holder contained herein
shall survive the Date of Grant, the exercise or conversion of this Warrant (or
any part hereof) or the termination or expiration of rights hereunder. All
agreements of the Company and the Holder contained herein shall survive
indefinitely until, by their respective terms, they are no longer operative.
7.10 Remedies. In case any one or more of the covenants and agreements
contained in this Warrant shall have been breached, the Holder (in the case of a
breach by the Company), or the Company (in the case of a breach by a Holder),
may proceed to protect and enforce its rights either by suit in equity and/or by
action at law, including, but not limited to, an action for damages as a result
of any such breach and/or an action for specific performance of any such
covenant or agreement contained in this Warrant.
7.11 Severability. The invalidity or unenforceability of any provision
of this Warrant in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction, or affect any other
provision of this Warrant, which shall remain in full force and effect.
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7.12 Entire Agreement. This Warrant constitutes the entire agreement
between the parties pertaining to the subject matter contained in it and
supersedes all prior and contemporaneous agreements, representations, and
undertakings of the parties, whether oral or written, with respect to such
subject matter.
7.13 Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to its
principles regarding conflicts of law.
[SIGNATURE PAGE FOLLOWS]
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Date of Grant: March ___, 2000
PRINTCAFE, INC.
By: __________________________________
Name:
Title:
REVIEWED, ACKNOWLEDGED AND AGREED TO THIS ___ DAY OF MARCH, 2000
ANDERSEN CONSULTING LLP
By: _______________________________
Name:
Title:
<PAGE> 13
EXHIBIT A
NOTICE OF EXERCISE
To: printCafe, Inc. (the "Company")
1. The undersigned hereby:
[ ] elects to purchase __________ shares of Common Stock of
the Company pursuant to the terms of the attached Warrant,
and tenders herewith payment of the purchase price of such
shares in full, or
[ ] elects to exercise its Conversion Right pursuant to
Article 3 of the attached Warrant with respect to
__________ shares of Common Stock.
2. Please issue a certificate or certificates representing said shares
in the name of the undersigned or in such other name or names as are specified
below:
________________________________
(Name)
________________________________
________________________________
________________________________
(Address)
3. The undersigned represents that the aforesaid shares are being
acquired for the account of the undersigned for investment and not with a view
to, or for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such shares,
all except as in compliance with applicable securities laws.
_______________________________________
(Signature)
Date:
<PAGE> 14
EXHIBIT A-1
NOTICE OF EXERCISE
To: printCafe, Inc., (the "Company")
1. Contingent upon and effective immediately prior to the closing (the
"Closing") of the Company's public offering contemplated by the Registration
Statement on Form S , filed , 20 , the undersigned hereby:
[ ] elects to purchase ____________ shares of Common Stock of
the Company (or such lesser number of shares as may be
sold on behalf of the undersigned at the Closing) pursuant
to the terms of the attached Warrant, or
[ ] elects to exercise its Conversion Right pursuant to
Article 3 of the attached Warrant with respect
____________ shares of Common Stock.
2. Please deliver to the custodian for the selling stockholders a stock
certificate representing such __________ shares.
3. The undersigned has instructed the custodian for the selling
stockholders to deliver to the Company $________ or, if less, the net proceeds
due the undersigned from the sale of shares in the aforesaid public offering. If
such net proceeds are less than the purchase price for such shares, the
undersigned agrees to deliver the difference to the Company prior to the
Closing.
_______________________________________
(Signature)
Date:
<PAGE> 1
EXHIBIT 10.39
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS. THESE
SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT
BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR AN EXEMPTION THEREFROM. THE ISSUER
OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS
IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
printCafe, Inc.
WARRANT TO PURCHASE SHARES
OF COMMON STOCK
THIS WARRANT CERTIFIES THAT, for good and valuable consideration,
Andersen Consulting LLP (the "HOLDER"), is entitled to purchase, subject to the
terms of this Warrant, up to [1] paid and nonassessable shares of Common Stock
(as adjusted pursuant to Article 4 hereof, the "SHARES") of printCafe, Inc., a
Delaware corporation (the "COMPANY"), at the price of EIGHT DOLLARS AND
EIGHTY-NINE CENTS ($8.89) per Share (such price and such other price as shall
result from time to time from the adjustments specified in Article 4 hereof, the
"WARRANT PRICE"), subject to the provisions and upon the terms and conditions
set forth in this Warrant. As used herein, (a) the term "COMMON STOCK" shall
mean the Company's class A common stock, par value $.0001 per share, and any
capital stock into or for which such Common Stock may hereafter be converted or
exchanged, and (b) the term "DATE OF GRANT" shall mean the Date of Grant listed
on the signature page hereof.
ARTICLE 1. TERM. The purchase right represented by this Warrant is exercisable,
in whole or in part, at any time and from time to time from the Date of Grant
through 5:00 p.m. New York City local time on the date which is the earlier of
(i) four years after the Date of Grant, (ii) three (3) years after the closing
of a firmly underwritten initial public offering (the "IPO") of the Common Stock
effected pursuant to a registration statement (or its successor) filed under the
Securities Act of 1933, as amended (the "ACT"), (iii) the closing date of a
merger or consolidation of the Company with or into any other entity, including
a reverse triangular merger involving the Company (other than a merger or
consolidation in which the holders of the voting power of the Company
immediately prior to such consolidation or merger hold a majority of the
surviving or resulting entity immediately following such consolidation or
merger), or (iv) the closing date of the sale, lease, exchange, conveyance or
other disposition of all or substantially all of the assets of the Company.
ARTICLE 2. EXERCISE.
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* Material has been omitted pursuant to a request for confidential treatment.
<PAGE> 2
2.1 Vesting of Warrants. Subject to Article 1 hereof, this Warrant shall
vest and become exercisable pursuant to the following schedule:
(a)[2] will vest and become exercisable during the [*] after
Holder creates an Internet based web site (the "Andersen Procurement Vehicle")
which includes a print procurement link using the Company's technology, on [*]
basis pursuant to the following formula: [*] multiplied by a fraction, the
numerator which is the amount of graphic art orders processed by third parties
using the Company's co-branded site on the Andersen Procurement Vehicle during
an applicable [*] and the denominator of which is $[*], provided that in no
event shall Holder vest in greater than [*] warrants pursuant to this Section
2.1(b); and
(b)[*] will vest and become exercisable during the eighteen
months after Holder creates the Andersen Procurement Vehicle which includes a
procurement link using the Company's technology, on a [*] basis pursuant to the
following formula: [*] multiplied by a fraction, the numerator of which is the
amount of non-graphic art order processed procurement processed by third parties
using the Company's co-branded site on the Andersen Procurement Vehicle and the
denominator of which is $[*], provided that in no event shall Holder vest in
greater than [*] warrants pursuant to this Section 2.1(c).
2.2 Method of Exercise; Payment. Subject to Article 1 hereof and the
vesting schedule set forth in Section 2.1, the purchase right represented by
this Warrant may be exercised by the Holder, in whole or in part and from time
to time, at the election of the Holder, by (a) the surrender of this Warrant
(with the notice of exercise substantially in the form attached hereto as
EXHIBIT A duly completed and executed) at the principal office of the Company
and by the payment to the Company, by certified check or by wire transfer to an
account or accounts designated by the Company of an amount equal to the then
applicable Warrant Price multiplied by the number of Shares then being
purchased, or (b) exercise of the Conversion Right provided for in Article 3
hereof.
2.3 Delivery of Certificate and New Warrant. The person or persons in
whose name(s) any certificate(s) representing Shares shall be issuable upon
exercise of this Warrant shall be deemed to have become the holder(s) of record
of, and shall be treated for all purposes as the record holder(s) of, the Shares
represented thereby (and such Shares shall be deemed to have been issued)
immediately prior to the close of business on the date or dates upon which this
Warrant is exercised. In the event of any exercise of the rights represented by
this Warrant, the Company shall deliver to the Holder as soon as practicable and
in any event within thirty (30) days after such exercise (a) a certificate of
the Company executed by a duly authorized officer of the Company to the effect
that the representations and warranties set forth in Section 5.1 hereof are true
and correct as of the date thereof (a "COMPLIANCE CERTIFICATE"), (b)
certificates for the Shares so purchased and (c) unless this Warrant has been
fully exercised or expired, a new Warrant representing the portion of the
Shares, if any, with respect to which this Warrant shall not then have been
exercised.
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* Material has been omitted pursuant to a request for confidential treatment.
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<PAGE> 3
2.4 Stock Fully Paid; Reservation of Shares. All Shares that may be
issued upon the exercise of this Warrant will, upon issuance pursuant to the
terms and conditions herein, be fully paid and nonassessable, and free from all
taxes, liens and charges (except for taxes, liens and charges applicable to the
Holder) with respect to the issue thereof. During the period within which the
rights represented by this Warrant may be exercised, the Company will at all
times have authorized, and reserved for the purpose of the issue upon exercise
of the purchase rights evidenced by this Warrant, a sufficient number of shares
of Common Stock to provide for the exercise of the rights represented by this
Warrant.
2.5 Replacement of Warrants. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of loss, theft or destruction, on delivery of an
indemnity agreement reasonably satisfactory in form and amount to the Company,
and, in the case of mutilation, on surrender and cancellation of this Warrant,
the Company at its expense shall execute and deliver, in lieu of this Warrant, a
new warrant of like tenor.
2.6 No Assignment. The Holder of this Warrant shall not be entitled,
without obtaining the prior written consent of the Company, to assign, by
operation of law or otherwise, its interest in this Warrant in whole or in part
to any person or persons.
2.7 Other Agreements. Except in connection with Holder's contingent
exercise of its Conversion Right (as defined in Section 3.1) in connection with
the closing of the IPO as more fully described in Article 3, Holder hereby
acknowledges and agrees that, in the event that Holder exercises this Warrant
prior to the closing of the IPO, Holder will execute and become a party to that
certain Right of First Refusal and Co-Sale Agreement substantially in the form
attached hereto as Exhibit B hereto and that certain Voting Agreement
substantially in the form attached hereto as Exhibit C hereto, as such
agreements shall be amended to the date of exercise by Holder, with respect to
the Shares received by Holder in connection with such exercise of this Warrant.
ARTICLE 3. CONVERSION RIGHT.
3.1 Conversion Right. In addition to and without limiting the rights of
the Holder under the terms of this Warrant, the Holder shall have the right to
convert this Warrant or any portion thereof which is fully vested at such time
(the "CONVERSION RIGHT") into shares of Common Stock at any time or from time to
time during the term of this Warrant. Upon exercise of the Conversion Right with
respect to a particular number of Shares (the "CONVERTED WARRANT SHARES"), the
Company shall deliver to the Holder (without payment by the Holder of any
exercise price or any cash or other consideration) that number of shares of
fully paid and nonassessable Common Stock determined by dividing (a) the
aggregate Fair Market Value (as determined pursuant to Section 3.3) of the
Converted Warrant Shares on the Conversion Date (as defined in Section 3.2
below) minus the aggregate Warrant Price of such Converted Warrant Shares by (b)
the Fair Market Value of one share of Common Stock.
3.2 Method of Exercise. In the event that the Holder elects to exercise
the Conversion Right, the Holder shall surrender this Warrant at the principal
office of the Company together with a written statement specifying that the
Holder thereby intends to exercise the Conversion Right and
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<PAGE> 4
indicating the number of Shares which are being surrendered (referred to in
Section 3.1 hereof as the Converted Warrant Shares) in exercise of the
Conversion Right. Such conversion shall be effective upon receipt by the Company
of this Warrant together with the aforesaid written statement or on such later
date as is specified therein (the "CONVERSION DATE") and, at the election of the
Holder, may be made contingent upon the closing of the IPO. Certificates for the
Shares issuable upon exercise of the Conversion Right, a Compliance Certificate
and, if applicable, a new warrant evidencing the balance of the Shares remaining
subject to this Warrant, shall be issued as of the Conversion Date and shall be
delivered to the Holder within thirty (30) days following the Conversion Date.
3.3 Determination of Fair Market Value. For purposes of this Article 3,
"FAIR MARKET VALUE" of a share of Common Stock as of a particular date (the
"DETERMINATION DATE") shall mean:
(a) If the Conversion Right is exercised in connection with and
contingent upon the IPO, then the initial "Price to Public" specified in the
final prospectus with respect to such offering.
(b) If the Conversion Right is not exercised in connection with
the IPO, then as follows:
(i) If traded on a securities exchange, the Fair Market
Value of the Common Stock shall be deemed to be the average of the closing
prices of the Common Stock on such exchange over the 30-day period ending five
(5) business days prior to the Determination Date;
(ii) If traded over-the-counter, the Fair Market Value of
the Common Stock shall be deemed to be the average of the closing bid prices of
the Common Stock over the 30-day period ending five (5) business days prior to
the Determination Date; or
(iii) If there is no public market for the Common Stock,
then Fair Market Value shall be determined in good faith by the Board of
Directors of the Company.
3.4 Fractional Shares. No fractional Shares shall be issuable upon
exercise of this Warrant pursuant to Section 2.1 or exercise of the Conversion
Right pursuant to this Article 3, but in lieu of such fractional shares the
Company shall make a cash payment therefor based on the Fair Market Value of the
Shares on the date of exercise or conversion as determined pursuant to Section
3.3.
ARTICLE 4. ADJUSTMENTS TO THE SHARES.
4.1 Stock Dividends. If the Company declares or pays a dividend on the
Common Stock payable in share of Common Stock (except any distribution
specifically provided for in Sections 4.2 or 4.3), then upon exercise of this
Warrant, for each Share acquired, the Holder shall receive, without cost to the
Holder, the total number and kind of securities to which the Holder would have
been entitled had the Holder owned the Shares of record as of the date the
dividend or subdivision occurred.
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<PAGE> 5
4.2 Reclassification, Exchange, Substitution or Merger. In case of any
reclassification, exchange or change of securities of the class issuable upon
exercise of this Warrant (other than a change in par value, or from par value to
no par value, or from no par value to par value, or as a result of a subdivision
or combination), the Company shall duly execute and deliver to the Holder a new
warrant (in form and substance satisfactory reasonably acceptable to the Holder)
providing that the Holder shall have the right to exercise such new Warrant and
upon such exercise to receive, in lieu of each share of Common Stock theretofore
issuable upon exercise of this Warrant, the kind and amount of shares of stock,
other securities, money and property receivable upon such reclassification or
change by a holder of one share Common Stock. Such new warrant shall provide for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article 4. The provisions of this Section 4.2
shall similarly apply to successive reclassifications or changes.
4.3 Adjustments for Subdivisions or Combinations. If the Company at any
time while this Warrant remains outstanding and unexpired shall subdivide or
combine its Common Stock, the Exercise Price and the number of Shares issuable
upon exercise hereof shall be proportionately adjusted.
4.4 Minimum Adjustment. No adjustment in the Exercise Price pursuant to
this Article 4 shall be required unless the adjustment would require an increase
or decrease of at least $.05 in such Exercise Price; provided, however, that any
adjustments which by reason of this Section 4.4 are not required to be made,
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Article 4 shall be to the nearest cent or the
nearest Share, as the case may be.
4.5 Certificate as to Adjustments. Upon each adjustment of the Warrant
Price and the number of Shares acquirable hereunder, the Company, at its
expense, shall promptly compute such adjustment and furnish the Holder with a
certificate of its Chief Financial Officer setting forth such adjustment and the
facts upon which such adjustment is based. The Company shall, upon written
request, furnish the Holder a certificate setting forth the Warrant Price in
effect on the date thereof and the number of Shares acquirable hereunder on such
date and the series of adjustments leading to such Warrant Price and share
number.
ARTICLE 5. REPRESENTATIONS AND COVENANTS OF THE COMPANY.
5.1 Representations and Warranties. The Company hereby represents and
warrants to the Holder that:
(a) This Warrant has been duly authorized and executed by the
Company and is a valid and binding obligation of the Company enforceable in
accordance with its terms, subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors and the rules of law or
principles at equity governing specific performance, injunctive relief and other
equitable remedies;
(b) The Shares have been duly authorized and reserved for
issuance by the Company and, when issued in accordance with the terms hereof,
will be validly issued, fully paid and non-assessable;
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<PAGE> 6
(c) The rights, preferences, privileges and restrictions granted
to or imposed upon the Shares and the holders thereof are as set forth in the
Company's Certificate of Incorporation, as amended to the Date of the Grant;
(d) The execution and delivery of this Warrant is not, and the
issuance of the Shares upon exercise of this Warrant in accordance with the
terms hereof will not be, inconsistent with the Company's Certificate of
Incorporation or bylaws and do not and will not conflict with or contravene any
provision of, or constitute a default under, any material indenture, mortgage,
contract or other instrument of which the Company is a party or by which it is
bound; and
(e) There are no actions, suits, investigations or proceedings
pending or, to the knowledge of the Company, threatened against the Company in
any court or before any governmental commission, board or authority which, if
adversely determined, will have a material adverse effect on the ability of the
Company to issue the Shares upon exercise of this Warrant.
5.2 Notice of Certain Events. If the Company proposes at any time to (a)
declare any dividend or distribution upon the Common Stock, whether in cash,
property, stock, or other securities and whether or not a regular cash dividend;
(b) offer for subscription pro rata to the holders of any class or series of its
stock any additional shares of stock of any class or series or other rights; or
(c) effect any reclassification or recapitalization of the Common Stock, then,
in connection with each such event, the Company shall give the Holder (1) prompt
prior written notice of the date on which a record will be taken for such
dividend, distribution, or subscription rights or for determining rights to
vote, if any, in respect of the matters referred to in (c) above; and (2) in the
case of the matters referred to in (c) above, prompt prior written notice of the
date when the same will take place.
5.3 Mergers. The Company shall provide the Holder with at least ten (10)
business days' notice of the terms and conditions of any of the following
potential transactions: (i) the sale, lease, exchange, conveyance or other
disposition of all or substantially all of the Company's property or business,
or (ii) its merger into or consolidation with any other corporation (other than
a wholly-owned subsidiary of the Company), or any transaction (including a
merger or other reorganization) or series of related transactions, in which a
majority of the voting power of the Company is disposed of.
5.4 Rights as Stockholders; Information. The Holder, as such, shall not
be entitled to vote or receive dividends or be deemed the holder of Common Stock
or any other securities of the Company which may at any time be issuable on the
exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the Holder, as such, any of the rights of a stockholder
of the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise until this
Warrant shall have been exercised and the Shares purchasable upon the exercise
hereof shall have become deliverable, as provided herein. Notwithstanding the
foregoing, the Company will transmit to the Holder such information, documents
and reports as are generally distributed to the holders of any class or series
of the securities of the Company concurrently with the distribution thereof to
the stockholders.
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<PAGE> 7
ARTICLE 6. SECURITIES LAW COMPLIANCE.
6.1 Compliance with the Act. This Warrant may not be sold, assigned,
pledged, hypothecated, encumbered or in any other manner transferred or disposed
of, in whole or in part. The Shares, nor any interest in them, may not be sold,
assigned, hypothecated, encumbered or in any other manner transferred or
disposed of, in whole or in part, except in compliance with the Act and state
securities laws and the terms and conditions hereof. Upon exercise of this
Warrant, unless the Shares being acquired are registered under the Act and any
applicable state securities laws or an exemption from such registration is
available, the Holder shall confirm in writing that the Shares so purchased are
being acquired for investment and not with a view toward distribution or resale
in violation of the Act and shall confirm such other matters related thereto as
may be reasonably requested by the Company. This Warrant and all Shares issued
upon exercise of this Warrant (unless at the time of acquisition they are
registered under the Act and any applicable state securities laws) shall be
stamped or imprinted with a legend in substantially the following form:
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
SECURITIES LAWS. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES
LAWS, PURSUANT TO REGISTRATION OR AN EXEMPTION THEREFROM. THE
ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN
FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT
ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND
ANY APPLICABLE STATE SECURITIES LAWS."
Any certificate for Shares issued at any time in exchange or substitution for
any certificate for any Shares bearing such legend (except a new certificate for
any Shares issued after the acquisition of such Shares pursuant to a
registration statement which has been declared effective under the Act) shall
also bear such legend unless, in the opinion of counsel for the Company, the
Shares represented thereby are no longer subject to the restrictions set forth
herein. The provisions of this Article 6 shall be binding upon all subsequent
Holders of certificates for Shares bearing the above legend and all subsequent
Holders of this Warrant, if any.
6.2 Investment Representations. In addition, in connection with the
issuance of this Warrant, the Holder specifically represents to the Company by
acceptance of this Warrant as follows:
(a) The Holder is aware of the Company's business affairs and
financial condition and has acquired information about the Company sufficient to
reach an informed and knowledgeable decision to acquire this Warrant. The Holder
is acquiring this Warrant for its
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<PAGE> 8
own account for investment purposes only and not with a view to, or for the
resale in connection with, any "distribution" thereof in violation of the Act.
The Holder is an "accredited investor" as defined in Rule 501 promulgated under
the Act.
(b) The Holder understands that this Warrant has not been
registered under the Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of the Holder's
investment intent as expressed herein.
(c) The Holder further understands that this Warrant must be held
indefinitely unless subsequently registered under the Act and qualified under
any applicable state securities laws or unless exemptions from registration and
qualification are otherwise available. The Holder understands that the Company
is under no obligation to register and qualify this Warrant or the Shares
underlying the Warrant.
(d) The Holder is aware of the provisions of Rule 144 promulgated
under the Act, which, in substance, permit limited public resale of "restricted
securities" acquired, directly or indirectly, from the issuer thereof (or from
an affiliate of the issuer), in a nonpublic offering subject to the satisfaction
of certain conditions, if applicable, including, without limitation, the
availability of certain public information about the Company, the resale
occurring not less than one year after the party has purchased and paid for the
securities to be sold, the sale being made through a broker in an unsolicited
"broker transaction" or in transactions directly with a market maker and the
amount of securities being sold during any three (3) month period not exceeding
certain specified limitations.
(e) The Holder further understands that at the time it wishes to
sell this Warrant or the Shares there may be no public market upon which to make
such a sale and that, even if such public market then exists, the Company may
not be satisfying the current public information requirements under Rule 144
promulgated under the Act and that, in such event, the Holder may be precluded
from selling this Warrant under Rule 144 even if the one year minimum holding
period has been satisfied.
(f) The Holder further understands that in the event that all the
requirements of Rule 144 are not met, registration under the Act, compliance
with Regulation A or some other registration exemption will be required; and
that, notwithstanding the fact that Rule 144 under the Act is not exclusive, the
staff of the Securities and Exchange Commission (the "COMMISSION") has expressed
its opinion that persons proposing to sell private placement securities other
than in a registered offering or pursuant to Rule 144 will have a substantial
burden of proof in establishing that an exemption from registration is available
for such offers or sales, and that such persons and their respective brokers who
participate in such transactions do so at their own risk.
6.3 Disposition of Warrant or the Shares. With respect to any offer,
sale or other disposition of this Warrant or any Shares acquired pursuant to the
exercise of this Warrant prior to registration of this Warrant or such Shares,
the Holder agrees to give written notice to the Company prior thereto,
describing briefly the manner thereof, together with a written opinion of the
Holder's counsel, or, if reasonably requested by the Company, other evidence to
the effect that such offer, sale or other disposition may be effected without
registration or qualification (under the Act as then in effect or any federal or
state securities law then in effect) of this
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<PAGE> 9
Warrant or such Shares and indicating whether or not under the Act certificates
for this Warrant or such Shares to be sold or otherwise disposed of require any
restrictive legend as to applicable restrictions on transferability in order to
ensure compliance with such law. If a determination has been made pursuant to
this Section 6.3 that the opinion of counsel for the Holder or other evidence is
not reasonably satisfactory to the Company, the Company shall so notify the
Holder promptly with details thereof after such determination has been made.
Notwithstanding the foregoing, this Warrant or the Shares may be offered, sold
or otherwise disposed of if (a) the Company shall have been furnished with a
letter from the Commission, in response to a written request in form and
substance acceptable to counsel for the Company setting forth all of the facts
and circumstances surrounding the contemplated transfer, stating that the
Commission will take no action with regard to the contemplated transfer; or (b)
the Shares are transferred pursuant to a registration statement which has been
filed with the Commission and has become effective. The Company may issue stop
transfer instructions to its transfer agent to enforce the foregoing
restrictions. Notwithstanding the foregoing, no such opinion of counsel shall be
required in instances of transfers of the Shares or the Warrant to any affiliate
(as such term is defined by Rule 405 under the Act) of Holder, provided the
Company is notified of such transfer and so long as such transfer complies with
all applicable laws, rules and regulations.
6.4 Termination of Restrictions and Removal of Legend. Except for the
restriction set forth in Section 2.6, the restrictions on transfer imposed by
this Article 6 shall cease and terminate as to the Shares when (i) such
securities shall have been effectively registered under the Act and sold by the
Holder in accordance with such registration, (ii) an acceptable opinion or other
evidence as described in Section 6.3 or a "no action" letter described in
Section 6.3 states that future transfers of such securities by the transferor or
the contemplated transferee would be exempt from registration under the Act, or
(iii) such securities may be sold under and in accordance with Rule 144(k)
promulgated by the Commission under the Act. When the restrictions on transfer
contained in this Article 6 have terminated as provided above, the Holder or the
transferee of the Holder shall be entitled to receive promptly from the Company,
without expense to it, and upon surrender of existing certificates, new
certificates not bearing the legend set forth in Section 6.1 hereof.
ARTICLE 7. MISCELLANEOUS.
7.1 No Impairment. The Company shall not by amendment of its Certificate
of Incorporation avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed under this Warrant by the Company.
7.2 Agreement for Lock-up. The Holder, by acceptance hereof, agrees that
such Holder will not, without the prior written consent of the lead underwriter
in connection with the IPO, directly or indirectly offer to sell, contract to
sell (including, without limitation, any short sale), pledge, grant any option
for the sale of, acquire any option to dispose of, or otherwise dispose of any
Shares or securities into which such Share are converted for a period of 180
days following the closing of the IPO.
7.3 Notices. All notices and other communications from the Company to
the Holder, or vice versa, shall be deemed delivered and effective when given
personally or mailed by first-
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class registered or certified mail, postage prepaid, at such address as may have
been furnished by the Company or the Holder, as the case may be, in writing by
the Company or the Holder from time to time.
7.4 No Inconsistent Agreements. The Company has not previously entered
into, and will not on or after the date of this Warrant enter into, any
agreement with respect to its securities which is inconsistent with the terms of
this Warrant, including any agreement which impairs or limits the rights granted
to the Holder in this Warrant, or which otherwise conflicts with the provisions
hereof or would preclude the Company from discharging its obligations hereunder.
7.5 Modification and Waiver. This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge
or termination is sought.
7.6 Attorneys' Fees. In the event of any dispute between the parties
concerning the terms and provisions of this Warrant, the party prevailing in
such dispute shall be entitled to collect from the other party all costs
incurred in such dispute, including reasonable attorneys' fees.
7.7 Descriptive Headings. The descriptive headings of the several
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant. The language in this Warrant shall be
construed as to its fair meaning without regard to which party drafted this
Warrant.
7.8 Survival of Representations, Warranties and Agreements. All
representations and warranties of the Company and the Holder contained herein
shall survive the Date of Grant, the exercise or conversion of this Warrant (or
any part hereof) or the termination or expiration of rights hereunder. All
agreements of the Company and the Holder contained herein shall survive
indefinitely until, by their respective terms, they are no longer operative.
7.9 Remedies. In case any one or more of the covenants and agreements
contained in this Warrant shall have been breached, the Holder (in the case of a
breach by the Company), or the Company (in the case of a breach by a Holder),
may proceed to protect and enforce its rights either by suit in equity and/or by
action at law, including, but not limited to, an action for damages as a result
of any such breach and/or an action for specific performance of any such
covenant or agreement contained in this Warrant.
7.10 Severability. The invalidity or unenforceability of any provision
of this Warrant in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction, or affect any other
provision of this Warrant, which shall remain in full force and effect.
7.11 Entire Agreement. This Warrant constitutes the entire agreement
between the parties pertaining to the subject matter contained in it and
supersedes all prior and contemporaneous agreements, representations, and
undertakings of the parties, whether oral or written, with respect to such
subject matter.
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7.12 Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to its
principles regarding conflicts of law.
[SIGNATURE PAGE FOLLOWS]
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Date of Grant: March ___, 2000
PRINTCAFE, INC.
By: ___________________________________
Name:
Title:
REVIEWED, ACKNOWLEDGED AND AGREED TO THIS ___ DAY OF MARCH, 2000
ANDERSEN CONSULTING LLP
By: ____________________________
Name:
Title:
<PAGE> 13
EXHIBIT A
NOTICE OF EXERCISE
To: printCafe, Inc. (the "Company")
1. The undersigned hereby:
[ ] elects to purchase __________ shares of Common Stock of
the Company pursuant to the terms of the attached Warrant,
and tenders herewith payment of the purchase price of such
shares in full, or
[ ] elects to exercise its Conversion Right pursuant to
Article 3 of the attached Warrant with respect to
__________ shares of Common Stock.
2. Please issue a certificate or certificates representing said shares
in the name of the undersigned or in such other name or names as are specified
below:
________________________________
(Name)
________________________________
________________________________
________________________________
(Address)
3. The undersigned represents that the aforesaid shares are being
acquired for the account of the undersigned for investment and not with a view
to, or for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such shares,
all except as in compliance with applicable securities laws.
_______________________________________
(Signature)
Date:
<PAGE> 14
EXHIBIT A-1
NOTICE OF EXERCISE
To: printCafe, Inc., (the "Company")
1. Contingent upon and effective immediately prior to the closing (the
"Closing") of the Company's public offering contemplated by the Registration
Statement on Form S , filed , 20 , the undersigned hereby:
[ ] elects to purchase ____________ shares of Common Stock of
the Company (or such lesser number of shares as may be
sold on behalf of the undersigned at the Closing) pursuant
to the terms of the attached Warrant, or
[ ] elects to exercise its Conversion Right pursuant to
Article 3 of the attached Warrant with respect
____________ shares of Common Stock.
2. Please deliver to the custodian for the selling stockholders a stock
certificate representing such _____________ shares.
3. The undersigned has instructed the custodian for the selling
stockholders to deliver to the Company $________ or, if less, the net proceeds
due the undersigned from the sale of shares in the aforesaid public offering. If
such net proceeds are less than the purchase price for such shares, the
undersigned agrees to deliver the difference to the Company prior to the
Closing.
_______________________________________
(Signature)
Date:
<PAGE> 1
EXHIBIT 10.40
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS. THESE
SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT
BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR AN EXEMPTION THEREFROM. THE ISSUER
OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS
IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
printCafe, Inc.
WARRANT TO PURCHASE SHARES
OF COMMON STOCK
THIS WARRANT CERTIFIES THAT, for good and valuable consideration, Time
Warner Inc. (the "HOLDER"), is entitled to purchase, subject to the terms of
this Warrant, 900,000 paid and nonassessable shares of Common Stock (as adjusted
pursuant to Article 4 hereof, the "SHARES") of printCafe, Inc., a Delaware
corporation (the "COMPANY"), at the price of FIVE DOLLARS AND EIGHTY CENTS
($5.80) per Share (such price and such other price as shall result from time to
time from the adjustments specified in Article 4 hereof, the "WARRANT Price"),
subject to the provisions and upon the terms and conditions set forth in this
Warrant. As used herein, (a) the term "COMMON STOCK" shall mean the Company's
common stock, par value $.0001 per share, and any capital stock into or for
which such Common Stock may hereafter be converted or exchanged, and (b) the
term "DATE OF GRANT" shall mean the Date of Grant listed on the signature page
hereof.
ARTICLE 1. TERM. The purchase right represented by this Warrant is exercisable,
in whole or in part, at any time and from time to time from the Date of Grant
through 5:00 p.m. New York City local time on the date which is the earlier of
(i) four years after the Date of Grant, and (ii) three (3) years after the
closing of a firmly underwritten initial public offering (the "IPO") of the
Common Stock effected pursuant to a registration statement (or its successor)
filed under the Securities Act of 1933, as amended (the "ACT").
ARTICLE 2. EXERCISE.
2.1 Exercise of Warrant. Subject to Article 1 hereof, this Warrant shall
vest and become exercisable pursuant to the following schedule:
(a) From and after the date which is the [1] anniversary of the
date which the Company installs (the "Installation Date") a print procurement
web site for Holder branded in Holder's name (the "Holder Site"), an amount of
Warrants equal to the product of [*] multiplied
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* Material has been omitted pursuant to a request for confidential treatment.
<PAGE> 2
by a fraction, the numerator of which is the amount of printing which Holder
actually purchased through the Holder Site during each of the most recent three
months ending prior to the [2] anniversary of the Installation Date and the
denominator of which is the total amount of printing which Holder actually
purchased during such period through the Holder Site and all other sources,
shall vest and become exercisable. By way of example, if during the [*] ending
immediately prior to the [*] anniversary of the Installation Date, Holder
purchased $100 million of printing through the Holder Site and $175 million in
total, the amount of Warrants which would vest and become exercisable would be
[*] Warrants:
[*] X $100,000,000 = [*]
-----------------------------
$175,000,000
; and
(b) From and after the date which is the [*] anniversary of the
Installation Date, an amount of additional Warrants equal to the product of
900,000 less the amount of Warrants vested pursuant to Section 2.1(a) above,
with the difference between such amounts multiplied by fraction, the numerator
of which is the amount of printing which Holder actually purchased through the
Holder Site during each of the most recent three months ending prior to the [*]
anniversary of the Installation Date and the denominator of which is the total
amount of printing which Holder actually purchased during such period through
the Holder Site and all other sources, shall vest and become exercisable. By way
of example, if during the [*] ending immediately prior to the [*] anniversary of
the Installation Date, Holder purchased $175 million of printing through the
Holder Site and $200 million in total, the amount of Warrants which would vest
and become exercisable would be [*] Warrants:
(900,000) - ([*]) X $175,000,000 = [*]
--------------------------
$200,000,000
The parties acknowledge and agree that when calculating the total amount of
printing purchased by Holder during such measurement periods, the following
printing sources shall be excluded from such calculation: (i) printing procured
through [*] and its affiliates, (ii) printing procured through [*] and its
affiliates, and (iii) printing procured on behalf of America Online, Inc.
("AOL") or any company which (x) prior to AOL's proposed merger with Holder (the
"Merger") is an affiliate of AOL or (y) after the Merger, based on the lines of
businesses of the two companies prior to the Merger, would most likely have been
an affiliate of AOL rather than Holder if the Merger had not occurred.
Notwithstanding the foregoing, regardless of the aggregate amount of printing
which Holder actually purchased through the Holder Site during the measurement
periods set forth in Section 2.1(a) and Section 2.1(b), Holder shall not be
entitled to more than an aggregate number of 900,000 Warrants.
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* Material has been omitted pursuant to a request for confidential treatment.
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<PAGE> 3
(c) In the event that on the eighteen month anniversary of the
Installation Date the amount of Warrants which become exercisable pursuant to
Sections 2.1(a) and (b) is less than 900,000, Holder shall, on the date which is
the eighteen month anniversary of the Installation Date, vest in that number of
Warrants, to the extent it is greater than the amount of Warrants Holder
otherwise vested in pursuant to Sections 2.1(a) and (b), determined based on
multiplying [3] by the number of printers on Holder's preferred printer list
(the "Preferred List") which, prior to the [*] anniversary of the Installation
Date, execute an agreement with the Company or one of its subsidiaries pursuant
to which such printer agrees to pay a subscription fee to the Company or one of
its subsidiaries in connection with the Company providing internet based print
processing services to such printer; provided, however, that Holder shall not be
given credit for the purposes of such computation for any printer which executes
such an agreement with the Company or one of its subsidiaries prior to Holder
placing it on the Preferred List (such printer, a "Non-Preferred Printer"); and,
provided, further, that if Holder or its affiliates represents eighty-five
percent (85%) or more of such Non-Preferred Printer's annual sales revenue,
Holder shall be given credit for such Non-Preferred Printer for purposes of the
computation set forth in this subsection (c). The parties acknowledge that
Holder is currently undergoing a request for information ("RFI") process to
determine which printers will be placed on the Preferred List and that Holder
shall use the Company to collect the responses to the RFI process and shall
provide the Company with a copy of the final Preferred List after it is
prepared. For purposes of this Section 2.1(c), a "printer" shall mean each
different facility which an entity uses to print documents (i.e. one entity may
have numerous different locations which sign up for the Company's services and
agree to pay a service fee in connection therewith).
2.2 Method of Exercise; Payment. Subject to Article 1 hereof and the
provisions of Section 2.1, the purchase right represented by this Warrant may be
exercised by the Holder, in whole or in part and from time to time, at the
election of the Holder, by (a) the surrender of this Warrant (with the notice of
exercise substantially in the form attached hereto as EXHIBIT A duly completed
and executed) at the principal office of the Company and by the payment to the
Company, by certified check or by wire transfer to an account or accounts
designated by the Company of an amount equal to the then applicable Warrant
Price multiplied by the number of Shares then being purchased, or (b) exercise
of the Conversion Right provided for in Article 3 hereof.
2.3 Delivery of Certificate and New Warrant. The person or persons in
whose name(s) any certificate(s) representing Shares shall be issuable upon
exercise of this Warrant shall be deemed to have become the holder(s) of record
of, and shall be treated for all purposes as the record holder(s) of, the Shares
represented thereby (and such Shares shall be deemed to have been issued)
immediately prior to the close of business on the date or dates upon which this
Warrant is exercised. In the event of any exercise of the rights represented by
this Warrant, the Company shall deliver to the Holder as soon as practicable and
in any event within five (5) days after such exercise (a) a certificate of the
Company executed by a duly authorized officer of the Company to the effect that
the representations and warranties set forth in Section 5.1 hereof are true and
correct as of the date thereof (a "COMPLIANCE CERTIFICATE"), (b) certificates
for the Shares so purchased
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* Material has been omitted pursuant to a request for confidential treatment.
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<PAGE> 4
and (c) unless this Warrant has been fully exercised or expired, a new Warrant
representing the portion of the Shares, if any, with respect to which this
Warrant shall not then have been exercised.
2.4 Stock Fully Paid; Reservation of Shares. All Shares that may be
issued upon the exercise of this Warrant will, upon issuance pursuant to the
terms and conditions herein, be fully paid and nonassessable, and free from all
taxes, liens and charges (except for taxes, liens and charges applicable to the
Holder) with respect to the issue thereof. During the period within which the
rights represented by this Warrant may be exercised, the Company will at all
times have authorized, and reserved for the purpose of the issue upon exercise
of the purchase rights evidenced by this Warrant, a sufficient number of shares
of Common Stock to provide for the exercise of the rights represented by this
Warrant.
2.5 Replacement of Warrants. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of loss, theft or destruction, on delivery of an
indemnity agreement reasonably satisfactory in form and amount to the Company,
and, in the case of mutilation, on surrender and cancellation of this Warrant,
the Company at its expense shall execute and deliver, in lieu of this Warrant, a
new Warrant of like tenor.
2.6 No Assignment. The Holder of this Warrant shall not be entitled,
without obtaining the prior written consent of the Company, to assign, by
operation of law or otherwise, its interest in this Warrant in whole or in part
to any person or persons; provided, however, that the Holder shall be permitted
to assign this Warrant to its affiliates or subsidiaries without the Company's
prior written consent. Notwithstanding the foregoing, the Company acknowledges
that Holder may merge into AOL (either directly or through affiliates of the two
companies) and the transfer of this Warrant by operation of law in connection
with such merger shall not require the consent of the Company.
2.7 Other Agreements. Except in connection with Holder's contingent
exercise of its Conversion Right (as defined in Section 3.1) in connection with
the closing of the IPO as more fully described in Article 3, Holder hereby
acknowledges and agrees that, in the event that Holder exercises this Warrant
prior to the closing of the IPO, Holder will execute and become a party to that
certain Right of First Refusal and Co-Sale Agreement substantially in the form
attached hereto as Exhibit B hereto and that certain Voting Agreement
substantially in the form attached hereto as Exhibit C hereto, as such
agreements shall be amended to the date of exercise by Holder, with respect to
the Shares received by Holder in connection with such exercise of this Warrant.
ARTICLE 3. CONVERSION RIGHT.
3.1 Conversion Right. In addition to and without limiting the rights of
the Holder under the terms of this Warrant, the Holder shall have the right to
convert this Warrant or any portion thereof (the "CONVERSION RIGHT") into shares
of Common Stock as provided in this Article 3 pursuant to the vesting schedule
set forth in Section 2.1. Upon exercise of the Conversion Right with respect to
a particular number of Shares (the "CONVERTED WARRANT SHARES"), the Company
shall deliver to the Holder (without payment by the Holder of any exercise price
or any cash or other consideration) that number of shares of fully paid and
nonassessable Common Stock
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<PAGE> 5
determined by dividing (a) the aggregate Fair Market Value (as determined
pursuant to Section 3.3) of the Converted Warrant Shares on the Conversion Date
(as defined in Section 3.2 below) minus the aggregate Warrant Price of such
Converted Warrant Shares by (b) the Fair Market Value of one share of Common
Stock.
3.2 Method of Exercise. In the event that the Holder elects to exercise
the Conversion Right, the Holder shall surrender this Warrant at the principal
office of the Company together with a written statement specifying that the
Holder thereby intends to exercise the Conversion Right and indicating the
number of Shares which are being surrendered (referred to in Section 3.1 hereof
as the Converted Warrant Shares) in exercise of the Conversion Right. Such
conversion shall be effective upon receipt by the Company of this Warrant
together with the aforesaid written statement or on such later date as is
specified therein (the "CONVERSION DATE") and, at the election of the Holder,
may be made contingent upon the closing of the IPO. Certificates for the Shares
issuable upon exercise of the Conversion Right, a Compliance Certificate and, if
applicable, a new warrant evidencing the balance of the Shares remaining subject
to this Warrant, shall be issued as of the Conversion Date and shall be
delivered to the Holder within five (5) days following the Conversion Date.
3.3 Determination of Fair Market Value. For purposes of this Article 3,
"FAIR MARKET VALUE" of a share of Common Stock as of a particular date (the
"DETERMINATION DATE") shall mean:
(a) If the Conversion Right is exercised in connection with and
contingent upon the IPO, then the initial "Price to Public" specified in the
final prospectus with respect to such offering.
(b) If the Conversion Right is not exercised in connection with
the IPO, then as follows:
(i) If traded on a securities exchange, the Fair Market
Value of the Common Stock shall be deemed to be the average of the closing
prices of the Common Stock on such exchange over the 30-day period ending five
(5) business days prior to the Determination Date;
(ii) If traded over-the-counter, the Fair Market Value of
the Common Stock shall be deemed to be the average of the closing bid prices of
the Common Stock over the 30-day period ending five (5) business days prior to
the Determination Date; or
(iii) If there is no public market for the Common Stock,
then Fair Market Value shall be determined in good faith by the Board of
Directors of the Company.
3.4 Fractional Shares. No fractional Shares shall be issuable upon
exercise of this Warrant pursuant to Section 2.1 or exercise of the Conversion
Right pursuant to this Article 3, but in lieu of such fractional shares the
Company shall make a cash payment therefor based on the Fair Market Value of the
Shares on the date of exercise or conversion as determined pursuant to Section
3.3.
ARTICLE 4. ADJUSTMENTS TO THE SHARES.
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<PAGE> 6
4.1 Stock Dividends. If the Company declares or pays a dividend on the
Common Stock payable in share of Common Stock (except any distribution
specifically provided for in Sections 4.2 or 4.3), then upon exercise of this
Warrant, for each Share acquired, the Holder shall receive, without cost to the
Holder, the total number and kind of securities to which the Holder would have
been entitled had the Holder owned the Shares of record as of the date the
dividend or subdivision occurred.
4.2 Reclassification, Exchange, Substitution or Merger. In case of any
reclassification, exchange, merger or change of securities of the class issuable
upon exercise of this Warrant (other than a change in par value, or from par
value to no par value, or from no par value to par value, or as a result of a
subdivision or combination), the Company shall duly execute and deliver to the
Holder a new Warrant (in form and substance satisfactory reasonably acceptable
to the Holder) providing that the Holder shall have the right to exercise such
new Warrant and upon such exercise to receive, in lieu of each share of Common
Stock theretofore issuable upon exercise of this Warrant, the kind and amount of
shares of stock, other securities, money and property receivable upon such
reclassification, merger or change by a holder of one share Common Stock. Such
new warrant shall provide for adjustments which shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Article 4. The
provisions of this Section 4.2 shall similarly apply to successive
reclassifications, mergers or changes.
4.3 Adjustments for Subdivisions or Combinations. If the Company at any
time while this Warrant remains outstanding and unexpired shall subdivide or
combine its Common Stock, the Exercise Price and the number of Shares issuable
upon exercise hereof shall be proportionately adjusted.
4.4 Minimum Adjustment. No adjustment in the Exercise Price pursuant to
this Article 4 shall be required unless the adjustment would require an increase
or decrease of at least $.05 in such Exercise Price; provided, however, that any
adjustments which by reason of this Section 4.4 are not required to be made,
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Article 4 shall be to the nearest cent or the
nearest Share, as the case may be.
4.5 Certificate as to Adjustments. Upon each adjustment of the Warrant
Price and the number of Shares acquirable hereunder, the Company, at its
expense, shall promptly compute such adjustment and furnish the Holder with a
certificate of its Chief Financial Officer setting forth such adjustment and the
facts upon which such adjustment is based. The Company shall, upon written
request, furnish the Holder a certificate setting forth the Warrant Price in
effect on the date thereof and the number of Shares acquirable hereunder on such
date and the series of adjustments leading to such Warrant Price and share
number.
ARTICLE 5. REPRESENTATIONS AND COVENANTS OF THE COMPANY.
5.1 Representations and Warranties. The Company hereby represents and
warrants to the Holder that:
(a) This Warrant has been duly authorized and executed by the
Company and is a valid and binding obligation of the Company enforceable in
accordance with its terms,
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<PAGE> 7
subject to laws of general application relating to bankruptcy, insolvency and
the relief of debtors and the rules of law or principles at equity governing
specific performance, injunctive relief and other equitable remedies;
(b) The Shares have been duly authorized and reserved for
issuance by the Company and, when issued in accordance with the terms hereof,
will be validly issued, fully paid and non-assessable;
(c) The rights, preferences, privileges and restrictions granted
to or imposed upon the Shares and the holders thereof are as set forth in the
Company's Certificate of Incorporation, as amended to the Date of the Grant;
(d) The execution and delivery of this Warrant is not, and the
issuance of the Shares upon exercise of this Warrant in accordance with the
terms hereof will not be, inconsistent with the Company's Certificate of
Incorporation or bylaws and do not and will not conflict with or contravene any
provision of, or constitute a default under, any material indenture, mortgage,
contract or other instrument of which the Company is a party or by which it is
bound; and
(e) There are no actions, suits, investigations or proceedings
pending or, to the knowledge of the Company, threatened against the Company in
any court or before any governmental commission, board or authority which, if
adversely determined, will have a material adverse effect on the ability of the
Company to issue the Shares upon exercise of this Warrant.
5.2 Notice of Certain Events. If the Company proposes at any time to (a)
declare any dividend or distribution upon the Common Stock, whether in cash,
property, stock, or other securities and whether or not a regular cash dividend;
(b) offer for subscription pro rata to the holders of any class or series of its
stock any additional shares of stock of any class or series or other rights; or
(c) effect any reclassification or recapitalization of the Common Stock, then,
in connection with each such event, the Company shall give the Holder (1) prompt
prior written notice of the date on which a record will be taken for such
dividend, distribution, or subscription rights or for determining rights to
vote, if any, in respect of the matters referred to in (c) above; and (2) in the
case of the matters referred to in (c) above, prompt prior written notice of the
date when the same will take place.
5.3 Mergers. The Company shall provide the Holder with at least ten (10)
business days' notice of the terms and conditions of any of the following
potential transactions: (i) the sale, lease, exchange, conveyance or other
disposition of all or substantially all of the Company's property or business,
or (ii) its merger into or consolidation with any other corporation (other than
a wholly-owned subsidiary of the Company), or any transaction (including a
merger or other reorganization) or series of related transactions, in which a
majority of the voting power of the Company is disposed of.
5.4 Rights as Stockholders; Information. The Holder, as such, shall not
be entitled to vote or receive dividends or be deemed the holder of Common Stock
or any other securities of the Company which may at any time be issuable on the
exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the Holder, as such, any of the rights of a
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<PAGE> 8
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to receive
notice of meetings, or to receive dividends or subscription rights or otherwise
until this Warrant shall have been exercised and the Shares purchasable upon the
exercise hereof shall have become deliverable, as provided herein.
Notwithstanding the foregoing, the Company will transmit to the Holder such
information, documents and reports as are generally distributed to the holders
of any class or series of the securities of the Company concurrently with the
distribution thereof to the stockholders.
ARTICLE 6. SECURITIES LAW COMPLIANCE.
6.1 Compliance with the Act. This Warrant may not be sold, assigned,
pledged, hypothecated, encumbered or in any other manner transferred or disposed
of, in whole or in part. The Shares, nor any interest in them, may not be sold,
assigned, hypothecated, encumbered or in any other manner transferred or
disposed of, in whole or in part, except in compliance with the Act and state
securities laws and the terms and conditions hereof. Upon exercise of this
Warrant, unless the Shares being acquired are registered under the Act and any
applicable state securities laws or an exemption from such registration is
available, the Holder shall confirm in writing that the Shares so purchased
are being acquired for investment and not with a view toward distribution or
resale in violation of the Act and shall confirm such other matters related
thereto as may be reasonably requested by the Company. This Warrant and all
Shares issued upon exercise of this Warrant (unless at the time of acquisition
they are registered under the Act and any applicable state securities laws)
shall be stamped or imprinted with a legend in substantially the following form:
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
SECURITIES LAWS. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES
LAWS, PURSUANT TO REGISTRATION OR AN EXEMPTION THEREFROM. THE
ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN
FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT
ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND
ANY APPLICABLE STATE SECURITIES LAWS."
Any certificate for Shares issued at any time in exchange or substitution for
any certificate for any Shares bearing such legend (except a new certificate for
any Shares issued after the acquisition of such Shares pursuant to a
registration statement which has been declared effective under the Act) shall
also bear such legend unless, in the opinion of counsel for the Company, the
Shares represented thereby are no longer subject to the restrictions set forth
herein. The provisions of this Article 6 shall be binding upon all subsequent
Holders of certificates for Shares bearing the above legend and all subsequent
Holders of this Warrant, if any.
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<PAGE> 9
6.2 Investment Representations. In addition, in connection with the
issuance of this Warrant, the Holder specifically represents to the Company by
acceptance of this Warrant as follows:
(a) The Holder is aware of the Company's business affairs and
financial condition and has acquired information about the Company sufficient to
reach an informed and knowledgeable decision to acquire this Warrant. The Holder
is acquiring this Warrant for its own account for investment purposes only and
not with a view to, or for the resale in connection with, any "distribution"
thereof in violation of the Act. The Holder is an "accredited investor" as
defined in Rule 501 promulgated under the Act.
(b) The Holder understands that this Warrant has not been
registered under the Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of the Holder's
investment intent as expressed herein.
(c) The Holder further understands that this Warrant must be held
indefinitely unless subsequently registered under the Act and qualified under
any applicable state securities laws or unless exemptions from registration and
qualification are otherwise available. The Holder understands that the Company
is under no obligation to register and qualify this Warrant or the Shares
underlying the Warrant.
(d) The Holder is aware of the provisions of Rule 144 promulgated
under the Act, which, in substance, permit limited public resale of "restricted
securities" acquired, directly or indirectly, from the issuer thereof (or from
an affiliate of the issuer), in a nonpublic offering subject to the satisfaction
of certain conditions, if applicable, including, without limitation, the
availability of certain public information about the Company, the resale
occurring not less than one year after the party has purchased and paid for the
securities to be sold, the sale being made through a broker in an unsolicited
"broker transaction" or in transactions directly with a market maker and the
amount of securities being sold during any three (3) month period not exceeding
certain specified limitations.
(e) The Holder further understands that at the time it wishes to
sell this Warrant or the Shares there may be no public market upon which to make
such a sale and that, even if such public market then exists, the Company may
not be satisfying the current public information requirements under Rule 144
promulgated under the Act and that, in such event, the Holder may be precluded
from selling this Warrant under Rule 144 even if the one year minimum holding
period has been satisfied.
(f) The Holder further understands that in the event that all the
requirements of Rule 144 are not met, registration under the Act, compliance
with Regulation A or some other registration exemption will be required; and
that, notwithstanding the fact that Rule 144 under the Act is not exclusive, the
staff of the Securities and Exchange Commission (the "COMMISSION") has expressed
its opinion that persons proposing to sell private placement securities other
than in a registered offering or pursuant to Rule 144 will have a substantial
burden of proof in establishing that an exemption from registration is available
for such offers or sales, and that such persons and their respective brokers who
participate in such transactions do so at their own risk.
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<PAGE> 10
6.3 Disposition of Warrant or the Shares. With respect to any offer,
sale or other disposition of this Warrant or any Shares acquired pursuant to the
exercise of this Warrant prior to registration of this Warrant or such Shares,
the Holder agrees to give written notice to the Company prior thereto,
describing briefly the manner thereof, together with a written opinion of the
Holder's counsel, or, if reasonably requested by the Company, other evidence to
the effect that such offer, sale or other disposition may be effected without
registration or qualification (under the Act as then in effect or any federal or
state securities law then in effect) of this Warrant or such Shares and
indicating whether or not under the Act certificates for this Warrant or such
Shares to be sold or otherwise disposed of require any restrictive legend as to
applicable restrictions on transferability in order to ensure compliance with
such law. If a determination has been made pursuant to this Section 6.3 that the
opinion of counsel for the Holder or other evidence is not reasonably
satisfactory to the Company, the Company shall so notify the Holder promptly
with details thereof after such determination has been made. Notwithstanding the
foregoing, this Warrant or the Shares may be offered, sold or otherwise disposed
of if (a) the Company shall have been furnished with a letter from the
Commission, in response to a written request in form and substance acceptable to
counsel for the Company setting forth all of the facts and circumstances
surrounding the contemplated transfer, stating that the Commission will take no
action with regard to the contemplated transfer; or (b) the Shares are
transferred pursuant to a registration statement which has been filed with the
Commission and has become effective. The Company may issue stop transfer
instructions to its transfer agent to enforce the foregoing restrictions.
6.4 Termination of Restrictions and Removal of Legend. Except for the
restriction set forth in Section 2.6, the restrictions on transfer imposed by
this Article 6 shall cease and terminate as to the Shares when (i) such
securities shall have been effectively registered under the Act and sold by the
Holder in accordance with such registration, (ii) an acceptable opinion or other
evidence as described in Section 6.3 or a "no action" letter described in
Section 6.3 states that future transfers of such securities by the transferor or
the contemplated transferee would be exempt from registration under the Act, or
(iii) such securities may be sold under and in accordance with Rule 144(k)
promulgated by the Commission under the Act. When the restrictions on transfer
contained in this Article 6 have terminated as provided above, the Holder or the
transferee of the Holder shall be entitled to receive promptly from the Company,
without expense to it, and upon surrender of existing certificates, new
certificates not bearing the legend set forth in Section 6.1 hereof.
ARTICLE 7. MISCELLANEOUS.
7.1 No Impairment. The Company shall not by amendment of its Certificate
of Incorporation avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed under this Warrant by the Company.
7.2 Agreement for Lock-up. The Holder, by acceptance hereof, agrees that
such Holder will not, without the prior written consent of the lead underwriter
in connection with the IPO, directly or indirectly offer to sell, contract to
sell (including, without limitation, any short sale), pledge, grant any option
for the sale of, acquire any option to dispose of, or otherwise dispose of any
Shares or securities into which such Share are converted for a period of 180
days
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following the closing of the IPO provided that, prior to the effectiveness of
the IPO, the Company's officers and directors (in each case who own shares of
the Company's capital stock) and stockholders of the Company representing an
amount in excess of ten percent (10%) of the issued and outstanding shares of
the Company's capital stock enter into similar agreements with the same lock-up
period
7.3 Notices. All notices and other communications from the Company to
the Holder, or vice versa, shall be deemed delivered and effective when given
personally or mailed by first-class registered or certified mail, postage
prepaid, at such address as may have been furnished by the Company or the
Holder, as the case may be, in writing by the Company or the Holder from time to
time.
7.4 No Inconsistent Agreements. The Company has not previously entered
into, and will not on or after the date of this Warrant enter into, any
agreement with respect to its securities which is inconsistent with the terms of
this Warrant, including any agreement which impairs or limits the rights granted
to the Holder in this Warrant, or which otherwise conflicts with the provisions
hereof or would preclude the Company from discharging its obligations hereunder.
7.5 Modification and Waiver. This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge
or termination is sought.
7.6 Attorneys' Fees. In the event of any dispute between the parties
concerning the terms and provisions of this Warrant, the party prevailing in
such dispute shall be entitled to collect from the other party all costs
incurred in such dispute, including reasonable attorneys' fees.
7.7 Descriptive Headings. The descriptive headings of the several
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant. The language in this Warrant shall be
construed as to its fair meaning without regard to which party drafted this
Warrant.
7.8 Survival of Representations, Warranties and Agreements. All
representations and warranties of the Company and the Holder contained herein
shall survive the Date of Grant, the exercise or conversion of this Warrant (or
any part hereof) or the termination or expiration of rights hereunder. All
agreements of the Company and the Holder contained herein shall survive
indefinitely until, by their respective terms, they are no longer operative.
7.9 Remedies. In case any one or more of the covenants and agreements
contained in this Warrant shall have been breached, the Holder (in the case of a
breach by the Company), or the Company (in the case of a breach by a Holder),
may proceed to protect and enforce its rights either by suit in equity and/or by
action at law, including, but not limited to, an action for damages as a result
of any such breach and/or an action for specific performance of any such
covenant or agreement contained in this Warrant.
7.10 Severability. The invalidity or unenforceability of any provision
of this Warrant in any jurisdiction shall not affect the validity or
enforceability of such provision in any other
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jurisdiction, or affect any other provision of this Warrant, which shall remain
in full force and effect.
7.11 Entire Agreement. This Warrant constitutes the entire agreement
between the parties pertaining to the subject matter contained in it and
supersedes all prior and contemporaneous agreements, representations, and
undertakings of the parties, whether oral or written, with respect to such
subject matter.
7.12 Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to its
principles regarding conflicts of law.
[SIGNATURE PAGE FOLLOWS]
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Date of Grant: March ___, 2000
PRINTCAFE, INC.
By: ___________________________________
Name:
Title:
REVIEWED, ACKNOWLEDGED AND AGREED TO THIS ___ DAY OF MARCH, 2000
TIME WARNER INC.
By: ____________________________
Name:
Title:
<PAGE> 14
EXHIBIT A
NOTICE OF EXERCISE
To: printCafe, Inc. (the "Company")
1. The undersigned hereby:
[ ] elects to purchase __________ shares of Common Stock of
the Company pursuant to the terms of the attached Warrant,
and tenders herewith payment of the purchase price of such
shares in full, or
[ ] elects to exercise its Conversion Right pursuant to
Article 3 of the attached Warrant with respect to
__________ shares of Common Stock.
2. Please issue a certificate or certificates representing said shares
in the name of the undersigned or in such other name or names as are specified
below:
________________________________
(Name)
________________________________
________________________________
________________________________
(Address)
3. The undersigned represents that the aforesaid shares are being
acquired for the account of the undersigned for investment and not with a view
to, or for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such shares,
all except as in compliance with applicable securities laws.
_______________________________________
(Signature)
Date:
<PAGE> 15
EXHIBIT A-1
NOTICE OF EXERCISE
To: printCafe, Inc., (the "Company")
1. Contingent upon and effective immediately prior to the closing (the
"Closing") of the Company's public offering contemplated by the Registration
Statement on Form S____, filed ________________________, 20___, the undersigned
hereby:
[ ] elects to purchase ____________ shares of Common Stock of
the Company (or such lesser number of shares as may be
sold on behalf of the undersigned at the Closing) pursuant
to the terms of the attached Warrant, or
[ ] elects to exercise its Conversion Right pursuant to
Article 3 of the attached Warrant with respect
____________ shares of Common Stock.
2. Please deliver to the custodian for the selling stockholders a stock
certificate representing such _____________ shares.
3. The undersigned has instructed the custodian for the selling
stockholders to deliver to the Company $________ or, if less, the net proceeds
due the undersigned from the sale of shares in the aforesaid public offering. If
such net proceeds are less than the purchase price for such shares, the
undersigned agrees to deliver the difference to the Company prior to the
Closing.
_______________________________________
(Signature)
Date:
<PAGE> 1
EXHIBIT 10.41
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS. THESE
SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT
BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR AN EXEMPTION THEREFROM. THE ISSUER
OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS
IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
printCafe, Inc.
WARRANT TO PURCHASE SHARES
OF COMMON STOCK
THIS WARRANT CERTIFIES THAT, for good and valuable consideration, Time
Warner Inc. (the "HOLDER"), is entitled to purchase, subject to the terms of
this Warrant, 100,000 paid and nonassessable shares of Common Stock (as adjusted
pursuant to Article 4 hereof, the "SHARES") of printCafe, Inc., a Delaware
corporation (the "COMPANY"), at the price of FIVE DOLLARS AND EIGHTY CENTS
($5.80) per Share (such price and such other price as shall result from time to
time from the adjustments specified in Article 4 hereof, the "WARRANT PRICE"),
subject to the provisions and upon the terms and conditions set forth in this
Warrant. As used herein, (a) the term "COMMON STOCK" shall mean the Company's
common stock, par value $.0001 per share, and any capital stock into or for
which such Common Stock may hereafter be converted or exchanged, and (b) the
term "DATE OF GRANT" shall mean the Date of Grant listed on the signature page
hereof.
ARTICLE 1. TERM. The purchase right represented by this Warrant is exercisable,
in whole or in part, at any time and from time to time from the Date of Grant
through 5:00 p.m. New York City local time on the date which is the earlier of
(i) four years after the Date of Grant, and (ii) three (3) years after the
closing of a firmly underwritten initial public offering (the "IPO") of the
Common Stock effected pursuant to a registration statement (or its successor)
filed under the Securities Act of 1933, as amended (the "ACT").
ARTICLE 2. EXERCISE.
2.1 Method of Exercise; Payment. Subject to Article 1 hereof, the
purchase right represented by this Warrant shall be exercisable by the Holder,
in whole or in part and from time to time, at the election of the Holder, by (a)
the surrender of this Warrant (with the notice of exercise substantially in the
form attached hereto as EXHIBIT A duly completed and executed) at the principal
office of the Company and by the payment to the Company, by certified check or
by wire transfer to an account or accounts designated by the Company of an
amount equal to the then applicable Warrant Price multiplied by the number of
Shares then being purchased, or (b) exercise of the Conversion Right provided
for in Article 3 hereof.
<PAGE> 2
2.2 Delivery of Certificate and New Warrant. The person or persons in
whose name(s) any certificate(s) representing Shares shall be issuable upon
exercise of this Warrant shall be deemed to have become the holder(s) of record
of, and shall be treated for all purposes as the record holder(s) of, the Shares
represented thereby (and such Shares shall be deemed to have been issued)
immediately prior to the close of business on the date or dates upon which this
Warrant is exercised. In the event of any exercise of the rights represented by
this Warrant, the Company shall deliver to the Holder as soon as practicable and
in any event within five (5) days after such exercise (a) a certificate of the
Company executed by a duly authorized officer of the Company to the effect that
the representations and warranties set forth in Section 5.1 hereof are true and
correct as of the date thereof (a "COMPLIANCE CERTIFICATE"), (b) certificates
for the Shares so purchased and (c) unless this Warrant has been fully exercised
or expired, a new Warrant representing the portion of the Shares, if any, with
respect to which this Warrant shall not then have been exercised.
2.3 Stock Fully Paid; Reservation of Shares. All Shares that may be
issued upon the exercise of this Warrant will, upon issuance pursuant to the
terms and conditions herein, be fully paid and nonassessable, and free from all
taxes, liens and charges (except for taxes, liens and charges applicable to the
Holder) with respect to the issue thereof. During the period within which the
rights represented by this Warrant may be exercised, the Company will at all
times have authorized, and reserved for the purpose of the issue upon exercise
of the purchase rights evidenced by this Warrant, a sufficient number of shares
of Common Stock to provide for the exercise of the rights represented by this
Warrant.
2.4 Replacement of Warrants. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of loss, theft or destruction, on delivery of an
indemnity agreement reasonably satisfactory in form and amount to the Company,
and, in the case of mutilation, on surrender and cancellation of this Warrant,
the Company at its expense shall execute and deliver, in lieu of this Warrant, a
new Warrant of like tenor.
No Assignment. The Holder of this Warrant shall not be entitled, without
obtaining the prior written consent of the Company, to assign, by operation of
law or otherwise, its interest in this Warrant in whole or in part to any person
or persons; provided, however, that the Holder shall be permitted to assign this
Warrant to its affiliates or subsidiaries without the Company's prior written
consent. Notwithstanding the foregoing, the Company acknowledges that Holder may
merge into America Online, Inc. ("AOL") (either directly or through affiliates
of the two companies) and the transfer of this Warrant by operation of law in
connection with such merger shall not require the consent of the Company.
2.6 Other Agreements. Except in connection with Holder's contingent
exercise of its Conversion Right (as defined in Section 3.1) in connection with
the closing of the IPO as more fully described in Article 3, Holder hereby
acknowledges and agrees that, in the event that Holder exercises this Warrant
prior to the closing of the IPO, Holder will execute and become a party to that
certain Right of First Refusal and Co-Sale Agreement substantially in the form
attached hereto as Exhibit B hereto and that certain Voting Agreement
substantially in the form attached hereto as Exhibit C hereto, as such
agreements shall be amended to the date of exercise
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<PAGE> 3
by Holder, with respect to the Shares received by Holder in connection with such
exercise of this Warrant.
ARTICLE 3. CONVERSION RIGHT.
3.1 Conversion Right. In addition to and without limiting the rights of
the Holder under the terms of this Warrant, the Holder shall have the right to
convert this Warrant or any portion thereof (the "CONVERSION RIGHT") into shares
of Common Stock at any time or from time to time during the term of this
Warrant. Upon exercise of the Conversion Right with respect to a particular
number of Shares (the "CONVERTED WARRANT SHARES"), the Company shall deliver to
the Holder (without payment by the Holder of any exercise price or any cash or
other consideration) that number of shares of fully paid and nonassessable
Common Stock determined by dividing (a) the aggregate Fair Market Value (as
determined pursuant to Section 3.3) of the Converted Warrant Shares on the
Conversion Date (as defined in Section 3.2 below) minus the aggregate Warrant
Price of such Converted Warrant Shares by (b) the Fair Market Value of one share
of Common Stock.
3.2 Method of Exercise. In the event that the Holder elects to exercise
the Conversion Right, the Holder shall surrender this Warrant at the principal
office of the Company together with a written statement specifying that the
Holder thereby intends to exercise the Conversion Right and indicating the
number of Shares which are being surrendered (referred to in Section 3.1 hereof
as the Converted Warrant Shares) in exercise of the Conversion Right. Such
conversion shall be effective upon receipt by the Company of this Warrant
together with the aforesaid written statement or on such later date as is
specified therein (the "CONVERSION DATE") and, at the election of the Holder,
may be made contingent upon the closing of the IPO. Certificates for the Shares
issuable upon exercise of the Conversion Right, a Compliance Certificate and, if
applicable, a new warrant evidencing the balance of the Shares remaining subject
to this Warrant, shall be issued as of the Conversion Date and shall be
delivered to the Holder within five (5) days following the Conversion Date.
3.3 Determination of Fair Market Value. For purposes of this Article 3,
"FAIR MARKET VALUE" of a share of Common Stock as of a particular date (the
"DETERMINATION DATE") shall mean:
(a) If the Conversion Right is exercised in connection with and
contingent upon the IPO, then the initial "Price to Public" specified in the
final prospectus with respect to such offering.
(b) If the Conversion Right is not exercised in connection with
the IPO, then as follows:
(i) If traded on a securities exchange, the Fair Market
Value of the Common Stock shall be deemed to be the average of the closing
prices of the Common Stock on such exchange over the 30-day period ending five
(5) business days prior to the Determination Date;
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<PAGE> 4
(ii) If traded over-the-counter, the Fair Market Value of
the Common Stock shall be deemed to be the average of the closing bid prices of
the Common Stock over the 30-day period ending five (5) business days prior to
the Determination Date; or
(iii) If there is no public market for the Common Stock,
then Fair Market Value shall be determined in good faith by the Board of
Directors of the Company.
3.4 Fractional Shares. No fractional Shares shall be issuable upon
exercise of this Warrant pursuant to Section 2.1 or exercise of the Conversion
Right pursuant to this Article 3, but in lieu of such fractional shares the
Company shall make a cash payment therefor based on the Fair Market Value of the
Shares on the date of exercise or conversion as determined pursuant to Section
3.3.
ARTICLE 4. ADJUSTMENTS TO THE SHARES.
4.1 Stock Dividends. If the Company declares or pays a dividend on the
Common Stock payable in share of Common Stock (except any distribution
specifically provided for in Sections 4.2 or 4.3), then upon exercise of this
Warrant, for each Share acquired, the Holder shall receive, without cost to the
Holder, the total number and kind of securities to which the Holder would have
been entitled had the Holder owned the Shares of record as of the date the
dividend or subdivision occurred.
4.2 Reclassification, Exchange, Substitution or Merger. In case of any
reclassification, merger, exchange or change of securities of the class issuable
upon exercise of this Warrant (other than a change in par value, or from par
value to no par value, or from no par value to par value, or as a result of a
subdivision or combination), the Company shall duly execute and deliver to the
Holder a new Warrant (in form and substance satisfactory reasonably acceptable
to the Holder) providing that the Holder shall have the right to exercise such
new Warrant and upon such exercise to receive, in lieu of each share of Common
Stock theretofore issuable upon exercise of this Warrant, the kind and amount of
shares of stock, other securities, money and property receivable upon such
reclassification, change or merger by a holder of one share Common Stock. Such
new warrant shall provide for adjustments which shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Article 4. The
provisions of this Section 4.2 shall similarly apply to successive
reclassifications, changes or mergers.
4.3 Adjustments for Subdivisions or Combinations. If the Company at any
time while this Warrant remains outstanding and unexpired shall subdivide or
combine its Common Stock, the Exercise Price and the number of Shares issuable
upon exercise hereof shall be proportionately adjusted.
4.4 Minimum Adjustment. No adjustment in the Exercise Price pursuant to
this Article 4 shall be required unless the adjustment would require an increase
or decrease of at least $.05 in such Exercise Price; provided, however, that any
adjustments which by reason of this Section 4.4 are not required to be made,
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Article 4 shall be to the nearest cent or the
nearest Share, as the case may be.
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<PAGE> 5
4.5 Certificate as to Adjustments. Upon each adjustment of the Warrant
Price and the number of Shares acquirable hereunder, the Company, at its
expense, shall promptly compute such adjustment and furnish the Holder with a
certificate of its Chief Financial Officer setting forth such adjustment and the
facts upon which such adjustment is based. The Company shall, upon written
request, furnish the Holder a certificate setting forth the Warrant Price in
effect on the date thereof and the number of Shares acquirable hereunder on such
date and the series of adjustments leading to such Warrant Price and share
number.
ARTICLE 5. REPRESENTATIONS AND COVENANTS OF THE COMPANY.
5.1 Representations and Warranties. The Company hereby represents and
warrants to the Holder that:
(a) This Warrant has been duly authorized and executed by the
Company and is a valid and binding obligation of the Company enforceable in
accordance with its terms, subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors and the rules of law or
principles at equity governing specific performance, injunctive relief and other
equitable remedies;
(b) The Shares have been duly authorized and reserved for
issuance by the Company and, when issued in accordance with the terms hereof,
will be validly issued, fully paid and non-assessable;
(c) The rights, preferences, privileges and restrictions granted
to or imposed upon the Shares and the holders thereof are as set forth in the
Company's Certificate of Incorporation, as amended to the Date of the Grant;
(d) The execution and delivery of this Warrant is not, and the
issuance of the Shares upon exercise of this Warrant in accordance with the
terms hereof will not be, inconsistent with the Company's Certificate of
Incorporation or bylaws and do not and will not conflict with or contravene any
provision of, or constitute a default under, any material indenture, mortgage,
contract or other instrument of which the Company is a party or by which it is
bound; and
(e) There are no actions, suits, investigations or proceedings
pending or, to the knowledge of the Company, threatened against the Company in
any court or before any governmental commission, board or authority which, if
adversely determined, will have a material adverse effect on the ability of the
Company to issue the Shares upon exercise of this Warrant.
5.2 Notice of Certain Events. If the Company proposes at any time to (a)
declare any dividend or distribution upon the Common Stock, whether in cash,
property, stock, or other securities and whether or not a regular cash dividend;
(b) offer for subscription pro rata to the holders of any class or series of its
stock any additional shares of stock of any class or series or other rights; or
(c) effect any reclassification or recapitalization of the Common Stock, then,
in connection with each such event, the Company shall give the Holder (1) prompt
prior written notice of the date on which a record will be taken for such
dividend, distribution, or subscription rights or for determining rights to
vote, if any, in respect of the matters referred to in (c) above;
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<PAGE> 6
and (2) in the case of the matters referred to in (c) above, prompt prior
written notice of the date when the same will take place.
5.3 Mergers. The Company shall provide the Holder with at least ten (10)
business days' notice of the terms and conditions of any of the following
potential transactions: (i) the sale, lease, exchange, conveyance or other
disposition of all or substantially all of the Company's property or business,
or (ii) its merger into or consolidation with any other corporation (other than
a wholly-owned subsidiary of the Company), or any transaction (including a
merger or other reorganization) or series of related transactions, in which a
majority of the voting power of the Company is disposed of.
5.4 Rights as Stockholders; Information. The Holder, as such, shall not
be entitled to vote or receive dividends or be deemed the holder of Common Stock
or any other securities of the Company which may at any time be issuable on the
exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the Holder, as such, any of the rights of a stockholder
of the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise until this
Warrant shall have been exercised and the Shares purchasable upon the exercise
hereof shall have become deliverable, as provided herein. Notwithstanding the
foregoing, the Company will transmit to the Holder such information, documents
and reports as are generally distributed to the holders of any class or series
of the securities of the Company concurrently with the distribution thereof to
the stockholders.
ARTICLE 6. SECURITIES LAW COMPLIANCE.
6.1 Compliance with the Act. This Warrant may not be sold, assigned,
pledged, hypothecated, encumbered or in any other manner transferred or disposed
of, in whole or in part. The Shares, nor any interest in them, may not be sold,
assigned, hypothecated, encumbered or in any other manner transferred or
disposed of, in whole or in part, except in compliance with the Act and state
securities laws and the terms and conditions hereof. Upon exercise of this
Warrant, unless the Shares being acquired are registered under the Act and any
applicable state securities laws or an exemption from such registration is
available, the Holder shall confirm in writing that the Shares so purchased are
being acquired for investment and not with a view toward distribution or resale
in violation of the Act and shall confirm such other matters related thereto as
may be reasonably requested by the Company. This Warrant and all Shares issued
upon exercise of this Warrant (unless at the time of acquisition they are
registered under the Act and any applicable state securities laws) shall be
stamped or imprinted with a legend in substantially the following form:
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
SECURITIES LAWS. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES
LAWS, PURSUANT TO
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REGISTRATION OR AN EXEMPTION THEREFROM. THE ISSUER OF THESE
SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY
PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND
ANY APPLICABLE STATE SECURITIES LAWS."
Any certificate for Shares issued at any time in exchange or substitution for
any certificate for any Shares bearing such legend (except a new certificate for
any Shares issued after the acquisition of such Shares pursuant to a
registration statement which has been declared effective under the Act) shall
also bear such legend unless, in the opinion of counsel for the Company, the
Shares represented thereby are no longer subject to the restrictions set forth
herein. The provisions of this Article 6 shall be binding upon all subsequent
Holders of certificates for Shares bearing the above legend and all subsequent
Holders of this Warrant, if any.
6.2 Investment Representations. In addition, in connection with the
issuance of this Warrant, the Holder specifically represents to the Company by
acceptance of this Warrant as follows:
(a) The Holder is aware of the Company's business affairs and
financial condition and has acquired information about the Company sufficient to
reach an informed and knowledgeable decision to acquire this Warrant. The Holder
is acquiring this Warrant for its own account for investment purposes only and
not with a view to, or for the resale in connection with, any "distribution"
thereof in violation of the Act. The Holder is an "accredited investor" as
defined in Rule 501 promulgated under the Act.
(b) The Holder understands that this Warrant has not been
registered under the Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of the Holder's
investment intent as expressed herein.
(c) The Holder further understands that this Warrant must be held
indefinitely unless subsequently registered under the Act and qualified under
any applicable state securities laws or unless exemptions from registration and
qualification are otherwise available. The Holder understands that the Company
is under no obligation to register and qualify this Warrant or the Shares
underlying the Warrant.
(d) The Holder is aware of the provisions of Rule 144 promulgated
under the Act, which, in substance, permit limited public resale of "restricted
securities" acquired, directly or indirectly, from the issuer thereof (or from
an affiliate of the issuer), in a nonpublic offering subject to the satisfaction
of certain conditions, if applicable, including, without limitation, the
availability of certain public information about the Company, the resale
occurring not less than one year after the party has purchased and paid for the
securities to be sold, the sale being made through a broker in an unsolicited
"broker transaction" or in transactions directly with a market maker and the
amount of securities being sold during any three (3) month period not exceeding
certain specified limitations.
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(e) The Holder further understands that at the time it wishes to
sell this Warrant or the Shares there may be no public market upon which to make
such a sale and that, even if such public market then exists, the Company may
not be satisfying the current public information requirements under Rule 144
promulgated under the Act and that, in such event, the Holder may be precluded
from selling this Warrant under Rule 144 even if the one year minimum holding
period has been satisfied.
(f) The Holder further understands that in the event that all the
requirements of Rule 144 are not met, registration under the Act, compliance
with Regulation A or some other registration exemption will be required; and
that, notwithstanding the fact that Rule 144 under the Act is not exclusive, the
staff of the Securities and Exchange Commission (the "COMMISSION") has expressed
its opinion that persons proposing to sell private placement securities other
than in a registered offering or pursuant to Rule 144 will have a substantial
burden of proof in establishing that an exemption from registration is available
for such offers or sales, and that such persons and their respective brokers who
participate in such transactions do so at their own risk.
6.3 Disposition of Warrant or the Shares. With respect to any offer,
sale or other disposition of this Warrant or any Shares acquired pursuant to the
exercise of this Warrant prior to registration of this Warrant or such Shares,
the Holder agrees to give written notice to the Company prior thereto,
describing briefly the manner thereof, together with a written opinion of the
Holder's counsel, or, if reasonably requested by the Company, other evidence to
the effect that such offer, sale or other disposition may be effected without
registration or qualification (under the Act as then in effect or any federal or
state securities law then in effect) of this Warrant or such Shares and
indicating whether or not under the Act certificates for this Warrant or such
Shares to be sold or otherwise disposed of require any restrictive legend as to
applicable restrictions on transferability in order to ensure compliance with
such law. If a determination has been made pursuant to this Section 6.3 that the
opinion of counsel for the Holder or other evidence is not reasonably
satisfactory to the Company, the Company shall so notify the Holder promptly
with details thereof after such determination has been made. Notwithstanding the
foregoing, this Warrant or the Shares may be offered, sold or otherwise disposed
of if (a) the Company shall have been furnished with a letter from the
Commission, in response to a written request in form and substance acceptable to
counsel for the Company setting forth all of the facts and circumstances
surrounding the contemplated transfer, stating that the Commission will take no
action with regard to the contemplated transfer; or (b) the Shares are
transferred pursuant to a registration statement which has been filed with the
Commission and has become effective. The Company may issue stop transfer
instructions to its transfer agent to enforce the foregoing restrictions.
6.4 Termination of Restrictions and Removal of Legend. Except for the
restriction set forth in Section 2.5, the restrictions on transfer imposed by
this Article 6 shall cease and terminate as to the Shares when (i) such
securities shall have been effectively registered under the Act and sold by the
Holder in accordance with such registration, (ii) an acceptable opinion or other
evidence as described in Section 6.3 or a "no action" letter described in
Section 6.3 states that future transfers of such securities by the transferor or
the contemplated transferee would be exempt from registration under the Act, or
(iii) such securities may be sold under and in accordance with Rule 144(k)
promulgated by the Commission under the Act. When the
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<PAGE> 9
restrictions on transfer contained in this Article 6 have terminated as provided
above, the Holder or the transferee of the Holder shall be entitled to receive
promptly from the Company, without expense to it, and upon surrender of existing
certificates, new certificates not bearing the legend set forth in Section 6.1
hereof.
ARTICLE 7. MISCELLANEOUS.
7.1 No Impairment. The Company shall not by amendment of its Certificate
of Incorporation avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed under this Warrant by the Company.
7.2 Agreement for Lock-up. The Holder, by acceptance hereof, agrees that
such Holder will not, without the prior written consent of the lead underwriter
in connection with the IPO, directly or indirectly offer to sell, contract to
sell (including, without limitation, any short sale), pledge, grant any option
for the sale of, acquire any option to dispose of, or otherwise dispose of any
Shares or securities into which such Share are converted for a period of 180
days following the closing of the IPO provided that, prior to the effectiveness
of the IPO, the Company's officers and directors (in each case who own shares of
the Company's capital stock) and stockholders of the Company representing an
amount in excess of ten percent (10%) of the issued and outstanding shares of
the Company's capital stock enter into similar agreements with the same lock-up
period.
7.3 Notices. All notices and other communications from the Company to
the Holder, or vice versa, shall be deemed delivered and effective when given
personally or mailed by first-class registered or certified mail, postage
prepaid, at such address as may have been furnished by the Company or the
Holder, as the case may be, in writing by the Company or the Holder from time to
time.
7.4 No Inconsistent Agreements. The Company has not previously entered
into, and will not on or after the date of this Warrant enter into, any
agreement with respect to its securities which is inconsistent with the terms of
this Warrant, including any agreement which impairs or limits the rights granted
to the Holder in this Warrant, or which otherwise conflicts with the provisions
hereof or would preclude the Company from discharging its obligations hereunder.
7.5 Modification and Waiver. This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge
or termination is sought.
7.6 Attorneys' Fees. In the event of any dispute between the parties
concerning the terms and provisions of this Warrant, the party prevailing in
such dispute shall be entitled to collect from the other party all costs
incurred in such dispute, including reasonable attorneys' fees.
7.7 Descriptive Headings. The descriptive headings of the several
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant. The language in this Warrant shall be
construed as to its fair meaning without regard to which party drafted this
Warrant.
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7.8 Survival of Representations, Warranties and Agreements. All
representations and warranties of the Company and the Holder contained herein
shall survive the Date of Grant, the exercise or conversion of this Warrant (or
any part hereof) or the termination or expiration of rights hereunder. All
agreements of the Company and the Holder contained herein shall survive
indefinitely until, by their respective terms, they are no longer operative.
7.9 Remedies. In case any one or more of the covenants and agreements
contained in this Warrant shall have been breached, the Holder (in the case of a
breach by the Company), or the Company (in the case of a breach by a Holder),
may proceed to protect and enforce its rights either by suit in equity and/or by
action at law, including, but not limited to, an action for damages as a result
of any such breach and/or an action for specific performance of any such
covenant or agreement contained in this Warrant.
7.10 Severability. The invalidity or unenforceability of any provision
of this Warrant in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction, or affect any other
provision of this Warrant, which shall remain in full force and effect.
7.11 Entire Agreement. This Warrant constitutes the entire agreement
between the parties pertaining to the subject matter contained in it and
supersedes all prior and contemporaneous agreements, representations, and
undertakings of the parties, whether oral or written, with respect to such
subject matter.
7.12 Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to its
principles regarding conflicts of law.
[SIGNATURE PAGE FOLLOWS]
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Date of Grant: March ___, 2000
PRINTCAFE, INC..
By: ___________________________________
Name:
Title:
REVIEWED, ACKNOWLEDGED AND AGREED TO THIS ___ DAY OF MARCH, 2000
TIME WARNER INC.
By: ____________________________
Name:
Title:
<PAGE> 12
EXHIBIT A
NOTICE OF EXERCISE
To: printCafe, Inc. (the "Company")
1. The undersigned hereby:
[ ] elects to purchase __________ shares of Common Stock of
the Company pursuant to the terms of the attached Warrant,
and tenders herewith payment of the purchase price of such
shares in full, or
[ ] elects to exercise its Conversion Right pursuant to
Article 3 of the attached Warrant with respect to
__________ shares of Common Stock.
2. Please issue a certificate or certificates representing said shares
in the name of the undersigned or in such other name or names as are specified
below:
________________________________
(Name)
________________________________
________________________________
________________________________
(Address)
3. The undersigned represents that the aforesaid shares are being
acquired for the account of the undersigned for investment and not with a view
to, or for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such shares,
all except as in compliance with applicable securities laws.
_______________________________________
(Signature)
Date:
<PAGE> 13
EXHIBIT A-1
NOTICE OF EXERCISE
To: printCafe, Inc., (the "Company")
1. Contingent upon and effective immediately prior to the closing (the
"Closing") of the Company's public offering contemplated by the Registration
Statement on Form S_____, filed ______________, 20___, the undersigned hereby:
[ ] elects to purchase ____________ shares of Common Stock of
the Company (or such lesser number of shares as may be
sold on behalf of the undersigned at the Closing) pursuant
to the terms of the attached Warrant, or
[ ] elects to exercise its Conversion Right pursuant to
Article 3 of the attached Warrant with respect
____________ shares of Common Stock.
2. Please deliver to the custodian for the selling stockholders a stock
certificate representing such _____________ shares.
3. The undersigned has instructed the custodian for the selling
stockholders to deliver to the Company $_________ or, if less, the net proceeds
due the undersigned from the sale of shares in the aforesaid public offering. If
such net proceeds are less than the purchase price for such shares, the
undersigned agrees to deliver the difference to the Company prior to the
Closing.
_______________________________________
(Signature)
Date:
<PAGE> 1
EXHIBIT 10.42
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS. THESE
SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT
BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR AN EXEMPTION THEREFROM. THE ISSUER
OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS
IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
printCafe, Inc.
WARRANT TO PURCHASE SHARES
OF COMMON STOCK
THIS WARRANT CERTIFIES THAT, for good and valuable consideration,
PRIMEDIA Inc., a Delaware corporation (the "HOLDER"), is entitled to purchase,
subject to the terms of this Warrant, 83,333 paid and nonassessable shares of
Common Stock (as adjusted pursuant to Article 4 hereof, the "SHARES") of
printCafe, Inc., a Delaware corporation (the "COMPANY"), at the price Fifteen
Dollars (15.00) per Share (such price and such other price as shall result from
time to time from the adjustments specified in Article 4 hereof, the "WARRANT
PRICE"), subject to the provisions and upon the terms and conditions set forth
in this Warrant. As used herein, (a) the term "COMMON STOCK" shall mean the
Company's class A common stock, par value $.0001 per share, and any capital
stock into or for which such Common Stock may hereafter be converted or
exchanged, and (b) the term "DATE OF GRANT" shall mean the Date of Grant listed
on the signature page hereof.
ARTICLE 1. TERM. The purchase right represented by this Warrant is exercisable,
in whole or in part, at any time and from time to time from the Date of Grant
through 5:00 p.m. New York City local time on the date which is the earlier of
(i) four years after the Date of Grant, (ii) three (3) years after the closing
of a firmly underwritten initial public offering (the "IPO") of the Common Stock
effected pursuant to a registration statement (or its successor) filed under the
Securities Act of 1933, as amended (the "ACT"), (iii) the closing date of a
merger or consolidation of the Company with or into any other entity, including
a reverse triangular merger involving the Company (other than a merger or
consolidation in which the holders of the voting power of the Company
immediately prior to such consolidation or merger hold a majority of the
surviving or resulting entity immediately following such consolidation or
merger), or (iv) the closing date of the sale, lease, exchange, conveyance or
other disposition of all or substantially all of the assets of the Company;
provided, however, that notice pursuant to Section 5.3 hereof shall have been
properly given with respect to clauses (iii) and (iv).
<PAGE> 2
ARTICLE 2. EXERCISE.
2.1 Method of Exercise; Payment. Subject to Article 1 hereof, the
purchase right represented by this Warrant may be exercised by the Holder, in
whole or in part and from time to time after the Date of Grant, at the election
of the Holder, by (a) the surrender of this Warrant (with the notice of exercise
substantially in the form attached hereto as EXHIBIT A duly completed and
executed) at the principal office of the Company and by the payment to the
Company, by certified check or by wire transfer to an account or accounts
designated by the Company of an amount equal to the then applicable Warrant
Price multiplied by the number of Shares then being purchased, or (b) exercise
of the Conversion Right provided for in Article 3 hereof.
2.2 Delivery of Certificate and New Warrant. The person or persons in
whose name(s) any certificate(s) representing Shares shall be issuable upon
exercise of this Warrant shall be deemed to have become the holder(s) of record
of, and shall be treated for all purposes as the record holder(s) of, the Shares
represented thereby (and such Shares shall be deemed to have been issued)
immediately prior to the close of business on the date or dates upon which this
Warrant is exercised. In the event of any exercise of the rights represented by
this Warrant, the Company shall deliver to the Holder as soon as practicable and
in any event within thirty (30) days after such exercise (a) a certificate of
the Company executed by a duly authorized officer of the Company to the effect
that the representations and warranties set forth in Section 5.1 hereof are true
and correct as of the date thereof (a "COMPLIANCE CERTIFICATE"), (b)
certificates for the Shares so purchased and (c) unless this Warrant has been
fully exercised or expired, a new Warrant of like tenor representing the portion
of the Shares, if any, with respect to which this Warrant shall not then have
been exercised.
2.3 Stock Fully Paid; Reservation of Shares. All Shares that may be
issued upon the exercise of this Warrant will, upon issuance pursuant to the
terms and conditions herein, be fully paid and nonassessable, and free from all
taxes, liens and charges (except for taxes, liens and charges applicable to the
Holder) with respect to the issue thereof. During the period within which the
rights represented by this Warrant may be exercised, the Company will at all
times have authorized, and reserved for the purpose of the issue upon exercise
of the purchase rights evidenced by this Warrant, a sufficient number of shares
of Common Stock to provide for the exercise of the rights represented by this
Warrant.
2.4 Replacement of Warrants. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of loss, theft or destruction, on delivery of an
indemnity agreement reasonably satisfactory in form and amount to the Company,
and, in the case of mutilation, on surrender and cancellation of this Warrant,
the Company at its expense shall execute and deliver, in lieu of this Warrant, a
new warrant of like tenor.
2.5 No Assignment. The Holder of this Warrant shall not be entitled,
without obtaining the prior written consent of the Company, to assign, by
operation of law or otherwise, its interest in this Warrant in whole or in part
to any person or persons.
2.6 Other Agreements. Except in connection with Holder's contingent
exercise of its Conversion Right (as defined in Section 3.1) in connection with
the closing of the IPO as more fully described in Article 3, Holder hereby
acknowledges and agrees that, in the event that
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<PAGE> 3
Holder exercises this Warrant prior to the closing of the IPO, Holder will
execute and become a party to that certain Right of First Refusal and Co-Sale
Agreement substantially in the form attached hereto as Exhibit B hereto and that
certain Voting Agreement substantially in the form attached hereto as Exhibit C
hereto, as such agreements shall be amended to the date of exercise by Holder,
with respect to the Shares received by Holder in connection with such exercise
of this Warrant.
ARTICLE 3. CONVERSION RIGHT.
3.1 Conversion Right. In addition to and without limiting the rights of
the Holder under the terms of this Warrant, the Holder shall have the right to
convert this Warrant or any portion thereof (the "CONVERSION RIGHT") into shares
of Common Stock at any time or from time to time during the term of this
Warrant. Upon exercise of the Conversion Right with respect to a particular
number of Shares (the "CONVERTED WARRANT SHARES"), the Company shall deliver to
the Holder (without payment by the Holder of any exercise price or any cash or
other consideration) that number of shares of fully paid and nonassessable
Common Stock determined by dividing (a) the aggregate Fair Market Value (as
determined pursuant to Section 3.3) of the Converted Warrant Shares on the
Conversion Date (as defined in Section 3.2 below) minus the aggregate Warrant
Price of such Converted Warrant Shares by (b) the Fair Market Value of one share
of Common Stock.
3.2 Method of Exercise. In the event that the Holder elects to exercise
the Conversion Right, the Holder shall surrender this Warrant at the principal
office of the Company together with a written statement specifying that the
Holder thereby intends to exercise the Conversion Right and indicating the
number of Shares which are being surrendered (referred to in Section 3.1 hereof
as the Converted Warrant Shares) in exercise of the Conversion Right. Such
conversion shall be effective upon receipt by the Company of this Warrant
together with the aforesaid written statement or on such later date as is
specified therein (the "CONVERSION DATE") and, at the election of the Holder,
may be made contingent upon the closing of the IPO. Certificates for the Shares
issuable upon exercise of the Conversion Right, a Compliance Certificate and, if
applicable, a new warrant evidencing the balance of the Shares remaining subject
to this Warrant, shall be issued as of the Conversion Date and shall be
delivered to the Holder within thirty (30) days following the Conversion Date.
3.3 Determination of Fair Market Value. For purposes of this Article 3,
"FAIR MARKET VALUE" of a share of Common Stock as of a particular date (the
"DETERMINATION DATE") shall mean:
(a) If the Conversion Right is exercised in connection with and
contingent upon the IPO, then the initial "Price to Public" specified in the
final prospectus with respect to such offering.
(b) If the Conversion Right is not exercised in connection with
the IPO, then as follows:
(i) If traded on a securities exchange, the Fair Market
Value of the Common Stock shall be deemed to be the average of the closing
prices of the Common Stock on
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<PAGE> 4
such exchange over the 30-day period ending five (5) business days prior to the
Determination Date;
(ii) If traded over-the-counter, the Fair Market Value of
the Common Stock shall be deemed to be the average of the closing bid prices of
the Common Stock over the 30-day period ending five (5) business days prior to
the Determination Date; or
(iii) If there is no public market for the Common Stock,
then Fair Market Value shall be determined in good faith by the Board of
Directors of the Company.
3.4 Fractional Shares. No fractional Shares shall be issuable upon
exercise of this Warrant pursuant to Section 2.1 or exercise of the Conversion
Right pursuant to this Article 3, but in lieu of such fractional shares the
Company shall make a cash payment therefor based on the Fair Market Value of the
Shares on the date of exercise or conversion as determined pursuant to Section
3.3.
ARTICLE 4. ADJUSTMENTS TO THE SHARES AND EXERCISE PRICE.
4.1 Adjustment to the Exercise Price. In the event that the Company
completes an IPO within twelve months after the Date of Grant at a public
offering price of less than $15.00 per share, the Exercise Price shall be
adjusted downward to equal the price at which shares of Common Stock were sold
to the public in connection with such IPO.
4.2 Stock Dividends. If the Company declares or pays a dividend on the
Common Stock payable in shares of Common Stock (except any distribution
specifically provided for in Sections 4.2 or 4.3), then upon exercise of this
Warrant, for each Share acquired, the Holder shall receive, without cost to the
Holder, the total number and kind of securities to which the Holder would have
been entitled had the Holder owned the Shares of record as of the date the
dividend or subdivision occurred.
4.3 Reclassification, Exchange, Substitution or Merger. In case of any
reclassification, exchange or change of securities of the class issuable upon
exercise of this Warrant (other than a change in par value, or from par value to
no par value, or from no par value to par value, or as a result of a subdivision
or combination), the Company shall duly execute and deliver to the Holder a new
warrant (in form and substance satisfactory reasonably acceptable to the Holder)
providing that the Holder shall have the right to exercise such new Warrant and
upon such exercise to receive, in lieu of each share of Common Stock theretofore
issuable upon exercise of this Warrant, the kind and amount of shares of stock,
other securities, money and property receivable upon such reclassification or
change by a holder of one share Common Stock. Such new warrant shall provide for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article 4. The provisions of this Section 4.2
shall similarly apply to successive reclassifications or changes.
4.4 Adjustments for Subdivisions or Combinations. If the Company at any
time while this Warrant remains outstanding and unexpired shall subdivide or
combine its Common Stock, the Exercise Price and the number of Shares issuable
upon exercise hereof shall be proportionately adjusted.
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<PAGE> 5
4.5 Minimum Adjustment. No adjustment in the Exercise Price pursuant to
this Article 4 shall be required unless the adjustment would require an increase
or decrease of at least $.05 in such Exercise Price; provided, however, that any
adjustments which by reason of this Section 4.4 are not required to be made,
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Article 4 shall be to the nearest cent or the
nearest Share, as the case may be.
4.6 Certificate as to Adjustments. Upon each adjustment of the Warrant
Price and the number of Shares acquirable hereunder, the Company, at its
expense, shall promptly compute such adjustment and furnish the Holder with a
certificate of its Chief Financial Officer setting forth such adjustment and the
facts upon which such adjustment is based. The Company shall, upon written
request, furnish the Holder a certificate setting forth the Warrant Price in
effect on the date thereof and the number of Shares acquirable hereunder on such
date and the series of adjustments leading to such Warrant Price and share
number.
ARTICLE 5. REPRESENTATIONS AND COVENANTS OF THE COMPANY.
5.1 Representations and Warranties. The Company hereby represents and
warrants to the Holder that:
(a) This Warrant and the issuance of the shares of Common Stock
upon exercise of the Warrant have been duly authorized and executed by the
Company and is a valid and binding obligation of the Company enforceable in
accordance with its terms, subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors and the rules of law or
principles at equity governing specific performance, injunctive relief and other
equitable remedies;
(b) The Shares have been duly authorized and reserved for
issuance by the Company and, when issued in accordance with the terms hereof,
will be validly issued, fully paid and non-assessable;
(c) The rights, preferences, privileges and restrictions granted
to or imposed upon the Shares and the holders thereof are as set forth in the
Company's Certificate of Incorporation, as amended to the Date of the Grant;
(d) The execution and delivery of this Warrant is not, and the
issuance of the Shares upon exercise of this Warrant in accordance with the
terms hereof will not be, inconsistent with the Company's Certificate of
Incorporation or bylaws and do not and will not conflict with or contravene any
provision of, or constitute a default under, any material indenture, mortgage,
contract or other instrument of which the Company is a party or by which it is
bound; and
(e) There are no actions, suits, investigations or proceedings
pending or, to the knowledge of the Company, threatened against the Company in
any court or before any governmental commission, board or authority which, if
adversely determined, will have a material adverse effect on the ability of the
Company to issue the Shares upon exercise of this Warrant.
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<PAGE> 6
5.2 Notice of Certain Events. If the Company proposes at any time to (a)
declare any dividend or distribution upon the Common Stock, whether in cash,
property, stock, or other securities and whether or not a regular cash dividend;
(b) offer for subscription pro rata to the holders of any class or series of its
stock any additional shares of stock of any class or series or other rights; or
(c) effect any reclassification or recapitalization of the Common Stock, then,
in connection with each such event, the Company shall give the Holder (1) prompt
prior written notice of the date on which a record will be taken for such
dividend, distribution, or subscription rights or for determining rights to
vote, if any, in respect of the matters referred to in (c) above; and (2) in the
case of the matters referred to in (c) above, prompt prior written notice of the
date when the same will take place.
5.3 Mergers. The Company shall provide the Holder with at least ten (10)
business days' notice of the terms and conditions of any of the following
potential transactions: (i) the sale, lease, exchange, conveyance or other
disposition of all or substantially all of the Company's property or business,
or (ii) its merger into or consolidation with any other corporation (other than
a wholly-owned subsidiary of the Company), or any transaction (including a
merger, reverse triangular merger or other reorganization) or series of related
transactions, in which a majority of the voting power of the Company is disposed
of.
5.4 Rights as Stockholders; Information. The Holder, as such, shall not
be entitled to vote or receive dividends or be deemed the holder of Common Stock
or any other securities of the Company which may at any time be issuable on the
exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the Holder, as such, any of the rights of a stockholder
of the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise until this
Warrant shall have been exercised and the Shares purchasable upon the exercise
hereof shall have become deliverable, as provided herein. Notwithstanding the
foregoing, the Company will transmit to the Holder such information, documents
and reports as are generally distributed to the holders of any class or series
of the securities of the Company concurrently with the distribution thereof to
the stockholders.
ARTICLE 6. SECURITIES LAW COMPLIANCE.
6.1 Compliance with the Act. This Warrant may not be sold, assigned,
pledged, hypothecated, encumbered or in any other manner transferred or disposed
of, in whole or in part. The Shares, nor any interest in them, may not be sold,
assigned, hypothecated, encumbered or in any other manner transferred or
disposed of, in whole or in part, except in compliance with the Act and state
securities laws and the terms and conditions hereof. Upon exercise of this
Warrant, unless the Shares being acquired are registered under the Act and any
applicable state securities laws or an exemption from such registration is
available, the Holder shall confirm in writing that the Shares so purchased are
being acquired for investment and not with a view toward distribution or resale
in violation of the Act and shall confirm such other matters related thereto as
may be reasonably requested by the Company. This Warrant and all Shares issued
upon exercise of this Warrant (unless at the time of acquisition they are
registered under the Act and any applicable state securities laws) shall be
stamped or imprinted with a legend in substantially the following form:
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<PAGE> 7
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
SECURITIES LAWS. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES
LAWS, PURSUANT TO REGISTRATION OR AN EXEMPTION THEREFROM. THE
ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN
FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT
ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND
ANY APPLICABLE STATE SECURITIES LAWS."
Any certificate for Shares issued at any time in exchange or substitution for
any certificate for any Shares bearing such legend (except a new certificate for
any Shares issued after the acquisition of such Shares pursuant to a
registration statement which has been declared effective under the Act) shall
also bear such legend unless, in the opinion of counsel for the Company, the
Shares represented thereby are no longer subject to the restrictions set forth
herein. The provisions of this Article 6 shall be binding upon all subsequent
Holders of certificates for Shares bearing the above legend and all subsequent
Holders of this Warrant, if any.
6.2 Investment Representations. In addition, in connection with the
issuance of this Warrant, the Holder specifically represents to the Company by
acceptance of this Warrant as follows:
(a) The Holder has such knowledge and experience in financial and
business matters that it is capable of evaluating the risks related to the
purchase of this Warrant and the Shares underlying the Warrant and of protecting
its interests in connection therewith. The Holder is acquiring this Warrant for
its own account for investment purposes only and not with a view to, or for the
resale in connection with, any "distribution" thereof in violation of the Act.
The Holder is an "accredited investor" as defined in Rule 501 promulgated under
the Act.
(b) The Holder understands that this Warrant has not been
registered under the Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of the Holder's
investment intent as expressed herein.
(c) The Holder further understands that this Warrant must be held
indefinitely unless subsequently registered under the Act and qualified under
any applicable state securities laws or unless exemptions from registration and
qualification are otherwise available. The Holder understands that the Company
is under no obligation to register and qualify this Warrant or the Shares
underlying the Warrant.
(d) The Holder is aware of the provisions of Rule 144 promulgated
under the Act, which, in substance, permit limited public resale of "restricted
securities" acquired, directly
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<PAGE> 8
or indirectly, from the issuer thereof (or from an affiliate of the issuer), in
a nonpublic offering subject to the satisfaction of certain conditions, if
applicable, including, without limitation, the availability of certain public
information about the Company, the resale occurring not less than one year after
the party has purchased and paid for the securities to be sold, the sale being
made through a broker in an unsolicited "broker transaction" or in transactions
directly with a market maker and the amount of securities being sold during any
three (3) month period not exceeding certain specified limitations.
(e) The Holder further understands that at the time it wishes to
sell this Warrant or the Shares there may be no public market upon which to make
such a sale and that, even if such public market then exists, the Company may
not be satisfying the current public information requirements under Rule 144
promulgated under the Act and that, in such event, the Holder may be precluded
from selling this Warrant under Rule 144 even if the one year minimum holding
period has been satisfied.
(f) The Holder further understands that in the event that all the
requirements of Rule 144 are not met, registration under the Act, compliance
with Regulation A or some other registration exemption will be required; and
that, notwithstanding the fact that Rule 144 under the Act is not exclusive, the
staff of the Securities and Exchange Commission (the "COMMISSION") has expressed
its opinion that persons proposing to sell private placement securities other
than in a registered offering or pursuant to Rule 144 will have a substantial
burden of proof in establishing that an exemption from registration is available
for such offers or sales, and that such persons and their respective brokers who
participate in such transactions do so at their own risk.
6.3 Disposition of Warrant or the Shares. With respect to any offer,
sale or other disposition of this Warrant or any Shares acquired pursuant to the
exercise of this Warrant prior to registration of this Warrant or such Shares,
the Holder agrees to give written notice to the Company prior thereto,
describing briefly the manner thereof, together with a written opinion of the
Holder's counsel, such counsel to be satisfactory to the Company, that such
offer, sale or other disposition may be effected without registration or
qualification (under the Act as then in effect or any federal or state
securities law then in effect) of this Warrant or such Shares and indicating
whether or not under the Act certificates for this Warrant or such Shares to be
sold or otherwise disposed of require any restrictive legend as to applicable
restrictions on transferability in order to ensure compliance with such law.
Notwithstanding the foregoing, this Warrant or the Shares may be offered, sold
or otherwise disposed of if (a) the Company shall have been furnished with a
letter from the Commission, in response to a written request in form and
substance acceptable to counsel for the Company setting forth all of the facts
and circumstances surrounding the contemplated transfer, stating that the
Commission will take no action with regard to the contemplated transfer; or (b)
the Shares are transferred pursuant to a registration statement which has been
filed with the Commission and has become effective. The Company may issue stop
transfer instructions to its transfer agent to enforce the foregoing
restrictions.
6.4 Termination of Restrictions and Removal of Legend. Except for the
restriction set forth in Section 2.5, the restrictions on transfer imposed by
this Article 6 shall cease and terminate as to the Shares when (i) such
securities shall have been effectively registered under the Act and sold by the
Holder in accordance with such registration, (ii) an acceptable opinion or
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<PAGE> 9
other evidence as described in Section 6.3 or a "no action" letter described in
Section 6.3 states that future transfers of such securities by the transferor or
the contemplated transferee would be exempt from registration under the Act, or
(iii) such securities may be sold under and in accordance with Rule 144(k)
promulgated by the Commission under the Act. When the restrictions on transfer
contained in this Article 6 have terminated as provided above, the Holder or the
transferee of the Holder shall be entitled to receive promptly from the Company,
without expense to it, and upon surrender of existing certificates, new
certificates not bearing the legend set forth in Section 6.1 hereof.
ARTICLE 7. MISCELLANEOUS.
7.1 No Impairment. The Company shall not by amendment of its Certificate
of Incorporation avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed under this Warrant by the Company.
7.2 Agreement for Lock-up. The Holder, by acceptance hereof, agrees that
such Holder will not, without the prior written consent of the lead underwriter
in connection with the IPO, directly or indirectly offer to sell, contract to
sell (including, without limitation, any short sale), pledge, grant any option
for the sale of, acquire any option to dispose of, or otherwise dispose of any
Shares or securities into which such Share are converted for a period of 180
days following the closing of the IPO.
7.3 Notices. All notices and other communications from the Company to
the Holder, or vice versa, shall be deemed delivered and effective when given
personally or mailed by first-class registered or certified mail, postage
prepaid, at such address as may have been furnished by the Company or the
Holder, as the case may be, in writing by the Company or the Holder from time to
time.
7.4 No Inconsistent Agreements. The Company has not previously entered
into, and will not on or after the date of this Warrant enter into, any
agreement with respect to its securities which is inconsistent with the terms of
this Warrant, including any agreement which impairs or limits the rights granted
to the Holder in this Warrant, or which otherwise conflicts with the provisions
hereof or would preclude the Company from discharging its obligations hereunder.
7.5 Modification and Waiver. This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge
or termination is sought.
7.6 Descriptive Headings. The descriptive headings of the several
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant. The language in this Warrant shall be
construed as to its fair meaning without regard to which party drafted this
Warrant.
7.7 Survival of Representations, Warranties and Agreements. All
representations and warranties of the Company and the Holder contained herein
shall survive the Date of Grant, the exercise or conversion of this Warrant (or
any part hereof) or the termination or expiration of rights
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<PAGE> 10
hereunder. All agreements of the Company and the Holder contained herein shall
survive indefinitely until, by their respective terms, they are no longer
operative.
7.8 Remedies. In case any one or more of the covenants and agreements
contained in this Warrant shall have been breached, the Holder (in the case of a
breach by the Company), or the Company (in the case of a breach by a Holder),
may proceed to protect and enforce its rights either by suit in equity and/or by
action at law, including, but not limited to, an action for damages as a result
of any such breach and/or an action for specific performance of any such
covenant or agreement contained in this Warrant.
7.9 Severability. The invalidity or unenforceability of any provision of
this Warrant in any jurisdiction shall not affect the validity or enforceability
of such provision in any other jurisdiction, or affect any other provision of
this Warrant, which shall remain in full force and effect.
7.10 Entire Agreement. This Warrant constitutes the entire agreement
between the parties pertaining to the subject matter contained in it and
supersedes all prior and contemporaneous agreements, representations, and
undertakings of the parties, whether oral or written, with respect to such
subject matter.
7.11 Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to its
principles regarding conflicts of law.
7.12 Successors and Assigns. Except as otherwise provided herein, this
Agreement and the rights and obligations of the parties hereunder shall inure to
the benefit of, and be binding upon, the parties' respective successors, assigns
and legal representatives.
[SIGNATURE PAGE FOLLOWS]
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<PAGE> 11
Date of Grant: March 9, 2000
PRINTCAFE, INC.
By: ___________________________________
Name:
Title:
REVIEWED, ACKNOWLEDGED AND AGREED TO THIS ___ DAY OF MARCH, 2000
PRIMEDIA INC.
By: ____________________________
Name:
Title:
<PAGE> 12
EXHIBIT A
NOTICE OF EXERCISE
To: printCafe, Inc. (the "Company")
1. The undersigned hereby:
[ ] elects to purchase __________ shares of Common Stock of
the Company pursuant to the terms of the attached Warrant,
and tenders herewith payment of the purchase price of such
shares in full, or
[ ] elects to exercise its Conversion Right pursuant to
Article 3 of the attached Warrant with respect to
__________ shares of Common Stock.
2. Please issue a certificate or certificates representing said shares
in the name of the undersigned or in such other name or names as are specified
below:
________________________________
(Name)
________________________________
________________________________
________________________________
(Address)
3. The undersigned represents that the aforesaid shares are being
acquired for the account of the undersigned for investment and not with a view
to, or for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such shares,
all except as in compliance with applicable securities laws.
_______________________________________
(Signature)
Date:
<PAGE> 13
EXHIBIT A-1
NOTICE OF EXERCISE
To: printCafe, Inc., (the "Company")
1. Contingent upon and effective immediately prior to the closing (the
"Closing") of the Company's public offering contemplated by the Registration
Statement on Form S____, filed _______________, 20___, the undersigned hereby:
[ ] elects to purchase ____________ shares of Common Stock of
the Company (or such lesser number of shares as may be
sold on behalf of the undersigned at the Closing) pursuant
to the terms of the attached Warrant, or
[ ] elects to exercise its Conversion Right pursuant to
Article 3 of the attached Warrant with respect
____________ shares of Common Stock.
2. Please deliver to the custodian for the selling stockholders a stock
certificate representing such _____________ shares.
3. The undersigned has instructed the custodian for the selling
stockholders to deliver to the Company $_________ or, if less, the net proceeds
due the undersigned from the sale of shares in the aforesaid public offering. If
such net proceeds are less than the purchase price for such shares, the
undersigned agrees to deliver the difference to the Company prior to the
Closing.
_______________________________________
(Signature)
Date:
<PAGE> 1
EXHIBIT 10.43
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS. THESE
SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT
BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR AN EXEMPTION THEREFROM. THE ISSUER
OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS
IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
printCafe, Inc.
WARRANT TO PURCHASE SHARES
OF COMMON STOCK
THIS WARRANT CERTIFIES THAT, for good and valuable consideration, G.T.C.
Transcontinental Group Ltd, a Canadian corporation (the "HOLDER"), is entitled
to purchase, subject to the terms of this Warrant, 250,000 paid and
nonassessable shares of Common Stock (as adjusted pursuant to Article 4 hereof,
the "SHARES") of printCafe, Inc., a Delaware corporation (the "COMPANY"), at the
price Fifteen Dollars (15.00) per Share (such price and such other price as
shall result from time to time from the adjustments specified in Article 4
hereof, the "WARRANT PRICE"), subject to the provisions and upon the terms and
conditions set forth in this Warrant. As used herein, (a) the term "COMMON
STOCK" shall mean the Company's class A common stock, par value $.0001 per
share, and any capital stock into or for which such Common Stock may hereafter
be converted or exchanged, and (b) the term "DATE OF GRANT" shall mean the Date
of Grant listed on the signature page hereof.
TERM. The purchase right represented by this Warrant is exercisable, in whole or
in part, at any time and from time to time from the Date of Grant through 5:00
p.m. New York City local time on the date which is the earlier of (i) four years
after the Date of Grant, (ii) three (3) years after the closing of a firmly
underwritten initial public offering (the "IPO") of the Common Stock effected
pursuant to a registration statement (or its successor) filed under the
Securities Act of 1933, as amended (the "ACT"), (iii) the closing date of a
merger or consolidation of the Company with or into any other entity, including
a reverse triangular merger involving the Company (other than a merger or
consolidation in which the holders of the voting power of the Company
immediately prior to such consolidation or merger hold a majority of the
surviving or resulting entity immediately following such consolidation or
merger), or (iv) the closing date of the sale, lease, exchange, conveyance or
other disposition of all or substantially all of the assets of the Company.
EXERCISE.
Method of Exercise; Payment. This Warrant shall become exercisable upon
and after the effectiveness (the "Effective Date") of that certain Private Label
Site Agreement entered into between Holder and printCafe Services, Inc., a
Delaware corporation and wholly-owned subsidiary
<PAGE> 2
of the Company, in an amount equal to 6,944.44 per month commencing at the end
of the month during which the Effective Date occurs, and continuing at the end
of each of the next thirty-five months. Subject to Article 1 hereof, the
purchase right represented by this Warrant may be exercised by the Holder, in
whole or in part and from time to time after it becomes vested pursuant to the
preceding sentence, at the election of the Holder, by (a) the surrender of this
Warrant (with the notice of exercise substantially in the form attached hereto
as EXHIBIT A duly completed and executed) at the principal office of the Company
and by the payment to the Company, by certified check or by wire transfer to an
account or accounts designated by the Company of an amount equal to the then
applicable Warrant Price multiplied by the number of Shares then being
purchased, or (b) exercise of the Conversion Right provided for in Article 3
hereof.
Delivery of Certificate and New Warrant. The person or persons in whose
name(s) any certificate(s) representing Shares shall be issuable upon exercise
of this Warrant shall be deemed to have become the holder(s) of record of, and
shall be treated for all purposes as the record holder(s) of, the Shares
represented thereby (and such Shares shall be deemed to have been issued)
immediately prior to the close of business on the date or dates upon which this
Warrant is exercised. In the event of any exercise of the rights represented by
this Warrant, the Company shall deliver to the Holder as soon as practicable and
in any event within thirty (30) days after such exercise (a) a certificate of
the Company executed by a duly authorized officer of the Company to the effect
that the representations and warranties set forth in Section 5.1 hereof are true
and correct as of the date thereof (a "COMPLIANCE CERTIFICATE"), (b)
certificates for the Shares so purchased and (c) unless this Warrant has been
fully exercised or expired, a new Warrant representing the portion of the
Shares, if any, with respect to which this Warrant shall not then have been
exercised.
Stock Fully Paid; Reservation of Shares. All Shares that may be issued
upon the exercise of this Warrant will, upon issuance pursuant to the terms and
conditions herein, be fully paid and nonassessable, and free from all taxes,
liens and charges (except for taxes, liens and charges applicable to the Holder)
with respect to the issue thereof. During the period within which the rights
represented by this Warrant may be exercised, the Company will at all times have
authorized, and reserved for the purpose of the issue upon exercise of the
purchase rights evidenced by this Warrant, a sufficient number of shares of
Common Stock to provide for the exercise of the rights represented by this
Warrant.
Replacement of Warrants. On receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of this Warrant
and, in the case of loss, theft or destruction, on delivery of an indemnity
agreement reasonably satisfactory in form and amount to the Company, and, in the
case of mutilation, on surrender and cancellation of this Warrant, the Company
at its expense shall execute and deliver, in lieu of this Warrant, a new warrant
of like tenor.
No Assignment. The Holder of this Warrant shall not be entitled, without
obtaining the prior written consent of the Company, to assign, by operation of
law or otherwise, its interest in this Warrant in whole or in part to any person
or persons.
2
<PAGE> 3
Other Agreements. Except in connection with Holder's contingent exercise
of its Conversion Right (as defined in Section 3.1) in connection with the
closing of the IPO as more fully described in Article 3, Holder hereby
acknowledges and agrees that, in the event that Holder exercises this Warrant
prior to the closing of the IPO, Holder will execute and become a party to that
certain Right of First Refusal and Co-Sale Agreement substantially in the form
attached hereto as Exhibit B hereto and that certain Voting Agreement
substantially in the form attached hereto as Exhibit C hereto, as such
agreements shall be amended to the date of exercise by Holder, with respect to
the Shares received by Holder in connection with such exercise of this Warrant.
CONVERSION RIGHT.
Conversion Right. In addition to and without limiting the rights of the
Holder under the terms of this Warrant, the Holder shall have the right to
convert this Warrant or any portion thereof (the "CONVERSION RIGHT") into shares
of Common Stock at any time or from time to time during the term of this
Warrant. Upon exercise of the Conversion Right with respect to a particular
number of Shares (the "CONVERTED WARRANT SHARES"), the Company shall deliver to
the Holder (without payment by the Holder of any exercise price or any cash or
other consideration) that number of shares of fully paid and nonassessable
Common Stock determined by dividing (a) the aggregate Fair Market Value (as
determined pursuant to Section 3.3) of the Converted Warrant Shares on the
Conversion Date (as defined in Section 3.2 below) minus the aggregate Warrant
Price of such Converted Warrant Shares by (b) the Fair Market Value of one share
of Common Stock.
Method of Exercise. In the event that the Holder elects to exercise the
Conversion Right, the Holder shall surrender this Warrant at the principal
office of the Company together with a written statement specifying that the
Holder thereby intends to exercise the Conversion Right and indicating the
number of Shares which are being surrendered (referred to in Section 3.1 hereof
as the Converted Warrant Shares) in exercise of the Conversion Right. Such
conversion shall be effective upon receipt by the Company of this Warrant
together with the aforesaid written statement or on such later date as is
specified therein (the "CONVERSION DATE") and, at the election of the Holder,
may be made contingent upon the closing of the IPO. Certificates for the Shares
issuable upon exercise of the Conversion Right, a Compliance Certificate and, if
applicable, a new warrant evidencing the balance of the Shares remaining subject
to this Warrant, shall be issued as of the Conversion Date and shall be
delivered to the Holder within thirty (30) days following the Conversion Date.
Determination of Fair Market Value. For purposes of this Article 3,
"FAIR MARKET VALUE" of a share of Common Stock as of a particular date (the
"DETERMINATION DATE") shall mean:
If the Conversion Right is exercised in connection with and
contingent upon the IPO, then the initial "Price to Public" specified in the
final prospectus with respect to such offering.
If the Conversion Right is not exercised in connection with the
IPO, then as follows:
3
<PAGE> 4
If traded on a securities exchange, the Fair Market Value of the
Common Stock shall be deemed to be the average of the closing prices of the
Common Stock on such exchange over the 30-day period ending five (5) business
days prior to the Determination Date;
If traded over-the-counter, the Fair Market Value of the Common
Stock shall be deemed to be the average of the closing bid prices of the Common
Stock over the 30-day period ending five (5) business days prior to the
Determination Date; or
If there is no public market for the Common Stock, then Fair
Market Value shall be determined in good faith by the Board of Directors of the
Company.
1.1 Fractional Shares. No fractional Shares shall be issuable upon
exercise of this Warrant pursuant to Section 2.1 or exercise of the Conversion
Right pursuant to this Article 3, but in lieu of such fractional shares the
Company shall make a cash payment therefor based on the Fair Market Value of the
Shares on the date of exercise or conversion as determined pursuant to Section
3.3.
ADJUSTMENTS TO THE SHARES.
1.2 Stock Dividends. If the Company declares or pays a dividend on the
Common Stock payable in share of Common Stock (except any distribution
specifically provided for in Sections 4.2 or 4.3), then upon exercise of this
Warrant, for each Share acquired, the Holder shall receive, without cost to the
Holder, the total number and kind of securities to which the Holder would have
been entitled had the Holder owned the Shares of record as of the date the
dividend or subdivision occurred.
1.3 Reclassification, Exchange, Substitution or Merger. In case of any
reclassification, exchange or change of securities of the class issuable upon
exercise of this Warrant (other than a change in par value, or from par value to
no par value, or from no par value to par value, or as a result of a subdivision
or combination), the Company shall duly execute and deliver to the Holder a new
warrant (in form and substance satisfactory reasonably acceptable to the Holder)
providing that the Holder shall have the right to exercise such new Warrant and
upon such exercise to receive, in lieu of each share of Common Stock theretofore
issuable upon exercise of this Warrant, the kind and amount of shares of stock,
other securities, money and property receivable upon such reclassification or
change by a holder of one share Common Stock. Such new warrant shall provide for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article 4. The provisions of this Section 4.2
shall similarly apply to successive reclassifications or changes.
1.4 Adjustments for Subdivisions or Combinations. If the Company at any
time while this Warrant remains outstanding and unexpired shall subdivide or
combine its Common Stock, the Exercise Price and the number of Shares issuable
upon exercise hereof shall be proportionately adjusted.
1.5 Minimum Adjustment. No adjustment in the Exercise Price pursuant to
this Article 4 shall be required unless the adjustment would require an increase
or decrease of at least $.05 in such Exercise Price; provided, however, that any
adjustments which by reason of this Section 4.4
4
<PAGE> 5
are not required to be made, shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Article 4 shall be to the
nearest cent or the nearest Share, as the case may be.
1.6 Certificate as to Adjustments. Upon each adjustment of the Warrant
Price and the number of Shares acquirable hereunder, the Company, at its
expense, shall promptly compute such adjustment and furnish the Holder with a
certificate of its Chief Financial Officer setting forth such adjustment and the
facts upon which such adjustment is based. The Company shall, upon written
request, furnish the Holder a certificate setting forth the Warrant Price in
effect on the date thereof and the number of Shares acquirable hereunder on such
date and the series of adjustments leading to such Warrant Price and share
number.
ARTICLE 2. REPRESENTATIONS AND COVENANTS OF THE COMPANY.
2.1 Representations and Warranties. The Company hereby represents and
warrants to the Holder that:
(a) This Warrant has been duly authorized and executed by the
Company and is a valid and binding obligation of the Company enforceable in
accordance with its terms, subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors and the rules of law or
principles at equity governing specific performance, injunctive relief and other
equitable remedies;
(b) The Shares have been duly authorized and reserved for
issuance by the Company and, when issued in accordance with the terms hereof,
will be validly issued, fully paid and non-assessable;
(c) The rights, preferences, privileges and restrictions granted
to or imposed upon the Shares and the holders thereof are as set forth in the
Company's Certificate of Incorporation, as amended to the Date of the Grant;
(d) The execution and delivery of this Warrant is not, and the
issuance of the Shares upon exercise of this Warrant in accordance with the
terms hereof will not be, inconsistent with the Company's Certificate of
Incorporation or bylaws and do not and will not conflict with or contravene any
provision of, or constitute a default under, any material indenture, mortgage,
contract or other instrument of which the Company is a party or by which it is
bound; and
(e) There are no actions, suits, investigations or proceedings
pending or, to the knowledge of the Company, threatened against the Company in
any court or before any governmental commission, board or authority which, if
adversely determined, will have a material adverse effect on the ability of the
Company to issue the Shares upon exercise of this Warrant.
2.2 Notice of Certain Events. If the Company proposes at any time to (a)
declare any dividend or distribution upon the Common Stock, whether in cash,
property, stock, or other securities and whether or not a regular cash dividend;
(b) offer for subscription pro rata to the holders of any class or series of its
stock any additional shares of stock of any class or series or
5
<PAGE> 6
other rights; or (c) effect any reclassification or recapitalization of the
Common Stock, then, in connection with each such event, the Company shall give
the Holder (1) prompt prior written notice of the date on which a record will be
taken for such dividend, distribution, or subscription rights or for determining
rights to vote, if any, in respect of the matters referred to in (c) above; and
(2) in the case of the matters referred to in (c) above, prompt prior written
notice of the date when the same will take place.
2.3 Mergers. The Company shall provide the Holder with at least ten (10)
business days' notice of the terms and conditions of any of the following
potential transactions: (i) the sale, lease, exchange, conveyance or other
disposition of all or substantially all of the Company's property or business,
or (ii) its merger into or consolidation with any other corporation (other than
a wholly-owned subsidiary of the Company), or any transaction (including a
merger or other reorganization) or series of related transactions, in which a
majority of the voting power of the Company is disposed of.
2.4 Rights as Stockholders; Information. The Holder, as such, shall not
be entitled to vote or receive dividends or be deemed the holder of Common Stock
or any other securities of the Company which may at any time be issuable on the
exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the Holder, as such, any of the rights of a stockholder
of the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise until this
Warrant shall have been exercised and the Shares purchasable upon the exercise
hereof shall have become deliverable, as provided herein. Notwithstanding the
foregoing, the Company will transmit to the Holder such information, documents
and reports as are generally distributed to the holders of any class or series
of the securities of the Company concurrently with the distribution thereof to
the stockholders.
ARTICLE 3. SECURITIES LAW COMPLIANCE.
3.1 Compliance with the Act. This Warrant may not be sold, assigned,
pledged, hypothecated, encumbered or in any other manner transferred or disposed
of, in whole or in part. The Shares, nor any interest in them, may not be sold,
assigned, hypothecated, encumbered or in any other manner transferred or
disposed of, in whole or in part, except in compliance with the Act and state
securities laws and the terms and conditions hereof. Upon exercise of this
Warrant, unless the Shares being acquired are registered under the Act and any
applicable state securities laws or an exemption from such registration is
available, the Holder shall confirm in writing that the Shares so purchased are
being acquired for investment and not with a view toward distribution or resale
in violation of the Act and shall confirm such other matters related thereto as
may be reasonably requested by the Company. This Warrant and all Shares issued
upon exercise of this Warrant (unless at the time of acquisition they are
registered under the Act and any applicable state securities laws) shall be
stamped or imprinted with a legend in substantially the following form:
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
SECURITIES LAWS.
6
<PAGE> 7
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY
AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR AN EXEMPTION THEREFROM. THE ISSUER OF
THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY
PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY
APPLICABLE STATE SECURITIES LAWS."
Any certificate for Shares issued at any time in exchange or substitution for
any certificate for any Shares bearing such legend (except a new certificate for
any Shares issued after the acquisition of such Shares pursuant to a
registration statement which has been declared effective under the Act) shall
also bear such legend unless, in the opinion of counsel for the Company, the
Shares represented thereby are no longer subject to the restrictions set forth
herein. The provisions of this Article 6 shall be binding upon all subsequent
Holders of certificates for Shares bearing the above legend and all subsequent
Holders of this Warrant, if any.
3.2 Investment Representations. In addition, in connection with the
issuance of this Warrant, the Holder specifically represents to the Company by
acceptance of this Warrant as follows:
(a) The Holder is aware of the Company's business affairs and
financial condition and has acquired information about the Company sufficient to
reach an informed and knowledgeable decision to acquire this Warrant. The Holder
is acquiring this Warrant for its own account for investment purposes only and
not with a view to, or for the resale in connection with, any "distribution"
thereof in violation of the Act. The Holder is an "accredited investor" as
defined in Rule 501 promulgated under the Act.
(b) The Holder understands that this Warrant has not been
registered under the Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of the Holder's
investment intent as expressed herein.
(c) The Holder further understands that this Warrant must be held
indefinitely unless subsequently registered under the Act and qualified under
any applicable state securities laws or unless exemptions from registration and
qualification are otherwise available. The Holder understands that the Company
is under no obligation to register and qualify this Warrant or the Shares
underlying the Warrant.
(d) The Holder is aware of the provisions of Rule 144 promulgated
under the Act, which, in substance, permit limited public resale of "restricted
securities" acquired, directly or indirectly, from the issuer thereof (or from
an affiliate of the issuer), in a nonpublic offering subject to the satisfaction
of certain conditions, if applicable, including, without limitation, the
availability of certain public information about the Company, the resale
occurring not less than
7
<PAGE> 8
one year after the party has purchased and paid for the securities to be sold,
the sale being made through a broker in an unsolicited "broker transaction" or
in transactions directly with a market maker and the amount of securities being
sold during any three (3) month period not exceeding certain specified
limitations.
(e) The Holder further understands that at the time it wishes to
sell this Warrant or the Shares there may be no public market upon which to make
such a sale and that, even if such public market then exists, the Company may
not be satisfying the current public information requirements under Rule 144
promulgated under the Act and that, in such event, the Holder may be precluded
from selling this Warrant under Rule 144 even if the one year minimum holding
period has been satisfied.
(f) The Holder further understands that in the event that all the
requirements of Rule 144 are not met, registration under the Act, compliance
with Regulation A or some other registration exemption will be required; and
that, notwithstanding the fact that Rule 144 under the Act is not exclusive, the
staff of the Securities and Exchange Commission (the "COMMISSION") has expressed
its opinion that persons proposing to sell private placement securities other
than in a registered offering or pursuant to Rule 144 will have a substantial
burden of proof in establishing that an exemption from registration is available
for such offers or sales, and that such persons and their respective brokers who
participate in such transactions do so at their own risk.
3.3 Disposition of Warrant or the Shares. With respect to any offer,
sale or other disposition of this Warrant or any Shares acquired pursuant to the
exercise of this Warrant prior to registration of this Warrant or such Shares,
the Holder agrees to give written notice to the Company prior thereto,
describing briefly the manner thereof, together with a written opinion of the
Holder's counsel, or, if reasonably requested by the Company, other evidence to
the effect that such offer, sale or other disposition may be effected without
registration or qualification (under the Act as then in effect or any federal or
state securities law then in effect) of this Warrant or such Shares and
indicating whether or not under the Act certificates for this Warrant or such
Shares to be sold or otherwise disposed of require any restrictive legend as to
applicable restrictions on transferability in order to ensure compliance with
such law. If a determination has been made pursuant to this Section 6.3 that the
opinion of counsel for the Holder or other evidence is not reasonably
satisfactory to the Company, the Company shall so notify the Holder promptly
with details thereof after such determination has been made. Notwithstanding the
foregoing, this Warrant or the Shares may be offered, sold or otherwise disposed
of if (a) the Company shall have been furnished with a letter from the
Commission, in response to a written request in form and substance acceptable to
counsel for the Company setting forth all of the facts and circumstances
surrounding the contemplated transfer, stating that the Commission will take no
action with regard to the contemplated transfer; or (b) the Shares are
transferred pursuant to a registration statement which has been filed with the
Commission and has become effective. The Company may issue stop transfer
instructions to its transfer agent to enforce the foregoing restrictions.
3.4 Termination of Restrictions and Removal of Legend. Except for the
restriction set forth in Section 2.5, the restrictions on transfer imposed by
this Article 6 shall cease and terminate as to the Shares when (i) such
securities shall have been effectively registered under
8
<PAGE> 9
the Act and sold by the Holder in accordance with such registration, (ii) an
acceptable opinion or other evidence as described in Section 6.3 or a "no
action" letter described in Section 6.3 states that future transfers of such
securities by the transferor or the contemplated transferee would be exempt from
registration under the Act, or (iii) such securities may be sold under and in
accordance with Rule 144(k) promulgated by the Commission under the Act. When
the restrictions on transfer contained in this Article 6 have terminated as
provided above, the Holder or the transferee of the Holder shall be entitled to
receive promptly from the Company, without expense to it, and upon surrender of
existing certificates, new certificates not bearing the legend set forth in
Section 6.1 hereof.
ARTICLE 4. MISCELLANEOUS.
4.1 No Impairment. The Company shall not by amendment of its Certificate
of Incorporation avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed under this Warrant by the Company.
4.2 Agreement for Lock-up. The Holder, by acceptance hereof, agrees that
such Holder will not, without the prior written consent of the lead underwriter
in connection with the IPO, directly or indirectly offer to sell, contract to
sell (including, without limitation, any short sale), pledge, grant any option
for the sale of, acquire any option to dispose of, or otherwise dispose of any
Shares or securities into which such Share are converted for a period of 180
days following the closing of the IPO.
4.3 Notices. All notices and other communications from the Company to
the Holder, or vice versa, shall be deemed delivered and effective when given
personally or mailed by first-class registered or certified mail, postage
prepaid, at such address as may have been furnished by the Company or the
Holder, as the case may be, in writing by the Company or the Holder from time to
time.
4.4 No Inconsistent Agreements. The Company has not previously entered
into, and will not on or after the date of this Warrant enter into, any
agreement with respect to its securities which is inconsistent with the terms of
this Warrant, including any agreement which impairs or limits the rights granted
to the Holder in this Warrant, or which otherwise conflicts with the provisions
hereof or would preclude the Company from discharging its obligations hereunder.
4.5 Modification and Waiver. This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge
or termination is sought.
4.6 Attorneys' Fees. In the event of any dispute between the parties
concerning the terms and provisions of this Warrant, the party prevailing in
such dispute shall be entitled to collect from the other party all costs
incurred in such dispute, including reasonable attorneys' fees.
4.7 Descriptive Headings. The descriptive headings of the several
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant. The language in this Warrant shall be
construed as to its fair meaning without regard to which party drafted this
Warrant.
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<PAGE> 10
4.8 Survival of Representations, Warranties and Agreements. All
representations and warranties of the Company and the Holder contained herein
shall survive the Date of Grant, the exercise or conversion of this Warrant (or
any part hereof) or the termination or expiration of rights hereunder. All
agreements of the Company and the Holder contained herein shall survive
indefinitely until, by their respective terms, they are no longer operative.
4.9 Remedies. In case any one or more of the covenants and agreements
contained in this Warrant shall have been breached, the Holder (in the case of a
breach by the Company), or the Company (in the case of a breach by a Holder),
may proceed to protect and enforce its rights either by suit in equity and/or by
action at law, including, but not limited to, an action for damages as a result
of any such breach and/or an action for specific performance of any such
covenant or agreement contained in this Warrant.
4.10 Severability. The invalidity or unenforceability of any provision
of this Warrant in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction, or affect any other
provision of this Warrant, which shall remain in full force and effect.
4.11 Entire Agreement. This Warrant constitutes the entire agreement
between the parties pertaining to the subject matter contained in it and
supersedes all prior and contemporaneous agreements, representations, and
undertakings of the parties, whether oral or written, with respect to such
subject matter.
4.12 Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to its
principles regarding conflicts of law.
4.13 Successors and Assigns. Except as otherwise provided herein, this
Agreement and the rights and obligations of the parties hereunder shall inure to
the benefit of, and be binding upon, the parties' respective successors, assigns
and legal representatives.
[SIGNATURE PAGE FOLLOWS]
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<PAGE> 11
Date of Grant: March 9, 2000
PRINTCAFE, INC.
By: ___________________________________
Name:
Title:
REVIEWED, ACKNOWLEDGED AND AGREED TO THIS ___ DAY OF MARCH, 2000
G.T.C. TRANSCONTINENTAL GROUP LTD
By: ____________________________
Name:
Title:
<PAGE> 12
EXHIBIT A
NOTICE OF EXERCISE
To: printCafe, Inc. (the "Company")
1. The undersigned hereby:
[ ] elects to purchase __________ shares of Common Stock of
the Company pursuant to the terms of the attached Warrant,
and tenders herewith payment of the purchase price of such
shares in full, or
[ ] elects to exercise its Conversion Right pursuant to
Article 3 of the attached Warrant with respect to
__________ shares of Common Stock.
2. Please issue a certificate or certificates representing said shares
in the name of the undersigned or in such other name or names as are specified
below:
________________________________
(Name)
________________________________
________________________________
________________________________
(Address)
3. The undersigned represents that the aforesaid shares are being
acquired for the account of the undersigned for investment and not with a view
to, or for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such shares,
all except as in compliance with applicable securities laws.
_______________________________________
(Signature)
Date:
<PAGE> 13
EXHIBIT A-1
NOTICE OF EXERCISE
To: printCafe, Inc., (the "Company")
1. Contingent upon and effective immediately prior to the closing (the
"Closing") of the Company's public offering contemplated by the Registration
Statement on Form S______, filed ______________, 20___, the undersigned hereby:
[ ] elects to purchase ____________ shares of Common Stock of
the Company (or such lesser number of shares as may be
sold on behalf of the undersigned at the Closing) pursuant
to the terms of the attached Warrant, or
[ ] elects to exercise its Conversion Right pursuant to
Article 3 of the attached Warrant with respect
____________ shares of Common Stock.
2. Please deliver to the custodian for the selling stockholders a stock
certificate representing such ____________ shares.
3. The undersigned has instructed the custodian for the selling
stockholders to deliver to the Company $________ or, if less, the net proceeds
due the undersigned from the sale of shares in the aforesaid public offering. If
such net proceeds are less than the purchase price for such shares, the
undersigned agrees to deliver the difference to the Company prior to the
Closing.
_______________________________________
(Signature)
Date:
<PAGE> 1
EXHIBIT 10.44
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS. THESE
SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT
BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR AN EXEMPTION THEREFROM. THE ISSUER
OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS
IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
printCafe, Inc.
WARRANT TO PURCHASE SHARES
OF COMMON STOCK
THIS WARRANT CERTIFIES THAT, for good and valuable consideration, The
Sheridan Group, Inc., a Maryland corporation (the "HOLDER"), is entitled to
purchase, subject to the terms of this Warrant, 100,000 paid and nonassessable
shares of Common Stock (as adjusted pursuant to Article 4 hereof, the "SHARES")
of printCafe, Inc., a Delaware corporation (the "COMPANY"), at the price of FIVE
DOLLARS AND EIGHTY CENTS ($5.80) per Share (such price and such other price as
shall result from time to time from the adjustments specified in Article 4
hereof, the "WARRANT PRICE"), subject to the provisions and upon the terms and
conditions set forth in this Warrant. As used herein, (a) the term "COMMON
STOCK" shall mean the Company's class A common stock, par value $.0001 per
share, and any capital stock into or for which such Common Stock may hereafter
be converted or exchanged, and (b) the term "DATE OF GRANT" shall mean the Date
of Grant listed on the signature page hereof.
ARTICLE 1. TERM. The purchase right represented by this Warrant is exercisable,
in whole or in part, at any time and from time to time from the Date of Grant
through 5:00 p.m. New York City local time on the date which is the earlier of
(i) four years after the Date of Grant, (ii) three (3) years after the closing
of a firmly underwritten initial public offering (the "IPO") of the Common Stock
effected pursuant to a registration statement (or its successor) filed under the
Securities Act of 1933, as amended (the "ACT"), (iii) the closing date of a
merger or consolidation of the Company with or into any other entity, including
a reverse triangular merger involving the Company (other than a merger or
consolidation in which the holders of the voting power of the Company
immediately prior to such consolidation or merger hold a majority of the
surviving or resulting entity immediately following such consolidation or
merger), or (iv) the closing date of the sale, lease, exchange, conveyance or
other disposition of all or substantially all of the assets of the Company
ARTICLE 2. EXERCISE.
2.1 Method of Exercise; Payment. Subject to Article 1 hereof, the
purchase right represented by this Warrant may be exercised by the Holder, in
whole or in part and from time to time, at the election of the Holder, by (a)
the surrender of this Warrant (with the notice of exercise
<PAGE> 2
substantially in the form attached hereto as EXHIBIT A duly completed and
executed) at the principal office of the Company and by the payment to the
Company, by certified check or by wire transfer to an account or accounts
designated by the Company of an amount equal to the then applicable Warrant
Price multiplied by the number of Shares then being purchased, or (b) exercise
of the Conversion Right provided for in Article 3 hereof.
2.2 Delivery of Certificate and New Warrant. The person or persons in
whose name(s) any certificate(s) representing Shares shall be issuable upon
exercise of this Warrant shall be deemed to have become the holder(s) of record
of, and shall be treated for all purposes as the record holder(s) of, the Shares
represented thereby (and such Shares shall be deemed to have been issued)
immediately prior to the close of business on the date or dates upon which this
Warrant is exercised. In the event of any exercise of the rights represented by
this Warrant, the Company shall deliver to the Holder as soon as practicable and
in any event within thirty (30) days after such exercise (a) a certificate of
the Company executed by a duly authorized officer of the Company to the effect
that the representations and warranties set forth in Section 5.1 hereof are true
and correct as of the date thereof (a "COMPLIANCE CERTIFICATE"), (b)
certificates for the Shares so purchased and (c) unless this Warrant has been
fully exercised or expired, a new Warrant representing the portion of the
Shares, if any, with respect to which this Warrant shall not then have been
exercised.
2.3 Stock Fully Paid; Reservation of Shares. All Shares that may be
issued upon the exercise of this Warrant will, upon issuance pursuant to the
terms and conditions herein, be fully paid and nonassessable, and free from all
taxes, liens and charges (except for taxes, liens and charges applicable to the
Holder) with respect to the issue thereof. During the period within which the
rights represented by this Warrant may be exercised, the Company will at all
times have authorized, and reserved for the purpose of the issue upon exercise
of the purchase rights evidenced by this Warrant, a sufficient number of shares
of Common Stock to provide for the exercise of the rights represented by this
Warrant.
2.4 Replacement of Warrants. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of loss, theft or destruction, on delivery of an
indemnity agreement reasonably satisfactory in form and amount to the Company,
and, in the case of mutilation, on surrender and cancellation of this Warrant,
the Company at its expense shall execute and deliver, in lieu of this Warrant, a
new Warrant of like tenor.
No Assignment. The Holder of this Warrant shall not be entitled, without
obtaining the prior written consent of the Company, to assign, by operation of
law or otherwise, its interest in this Warrant in whole or in part to any person
or persons.
2.6 Other Agreements. Except in connection with Holder's contingent
exercise of its Conversion Right (as defined in Section 3.1) in connection with
the closing of the IPO as more fully described in Article 3, Holder hereby
acknowledges and agrees that, in the event that Holder exercises this Warrant
prior to the closing of the IPO, Holder will execute and become a party to that
certain Right of First Refusal and Co-Sale Agreement substantially in the form
attached hereto as Exhibit B hereto and that certain Voting Agreement
substantially in the form attached hereto as Exhibit C hereto, as such
agreements shall be amended to the date of exercise
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<PAGE> 3
by Holder, with respect to the Shares received by Holder in connection with such
exercise of this Warrant.
ARTICLE 3. CONVERSION RIGHT.
3.1 Conversion Right. In addition to and without limiting the rights of
the Holder under the terms of this Warrant, the Holder shall have the right to
convert this Warrant or any portion thereof (the "CONVERSION RIGHT") into shares
of Common Stock at any time or from time to time during the term of this
Warrant. Upon exercise of the Conversion Right with respect to a particular
number of Shares (the "CONVERTED WARRANT SHARES"), the Company shall deliver to
the Holder (without payment by the Holder of any exercise price or any cash or
other consideration) that number of shares of fully paid and nonassessable
Common Stock determined by dividing (a) the aggregate Fair Market Value (as
determined pursuant to Section 3.3) of the Converted Warrant Shares on the
Conversion Date (as defined in Section 3.2 below) minus the aggregate Warrant
Price of such Converted Warrant Shares by (b) the Fair Market Value of one share
of Common Stock.
3.2 Method of Exercise. In the event that the Holder elects to exercise
the Conversion Right, the Holder shall surrender this Warrant at the principal
office of the Company together with a written statement specifying that the
Holder thereby intends to exercise the Conversion Right and indicating the
number of Shares which are being surrendered (referred to in Section 3.1 hereof
as the Converted Warrant Shares) in exercise of the Conversion Right. Such
conversion shall be effective upon receipt by the Company of this Warrant
together with the aforesaid written statement or on such later date as is
specified therein (the "CONVERSION DATE") and, at the election of the Holder,
may be made contingent upon the closing of the IPO. Certificates for the Shares
issuable upon exercise of the Conversion Right, a Compliance Certificate and, if
applicable, a new warrant evidencing the balance of the Shares remaining subject
to this Warrant, shall be issued as of the Conversion Date and shall be
delivered to the Holder within five (5) days following the Conversion Date.
3.3 Determination of Fair Market Value. For purposes of this Article 3,
"FAIR MARKET VALUE" of a share of Common Stock as of a particular date (the
"DETERMINATION DATE") shall mean:
(a) If the Conversion Right is exercised in connection with and
contingent upon the IPO, then the initial "Price to Public" specified in the
final prospectus with respect to such offering.
(b) If the Conversion Right is not exercised in connection with
the IPO, then as follows:
(i) If traded on a securities exchange, the Fair Market
Value of the Common Stock shall be deemed to be the average of the closing
prices of the Common Stock on such exchange over the 30-day period ending five
(5) business days prior to the Determination Date;
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<PAGE> 4
(ii) If traded over-the-counter, the Fair Market Value of
the Common Stock shall be deemed to be the average of the closing bid prices of
the Common Stock over the 30-day period ending five (5) business days prior to
the Determination Date; or
(iii) If there is no public market for the Common Stock,
then Fair Market Value shall be determined in good faith by the Board of
Directors of the Company.
3.4 Fractional Shares. No fractional Shares shall be issuable upon
exercise of this Warrant pursuant to Section 2.1 or exercise of the Conversion
Right pursuant to this Article 3, but in lieu of such fractional shares the
Company shall make a cash payment therefor based on the Fair Market Value of the
Shares on the date of exercise or conversion as determined pursuant to Section
3.3.
ARTICLE 4. ADJUSTMENTS TO THE SHARES.
4.1 Stock Dividends. If the Company declares or pays a dividend on the
Common Stock payable in share of Common Stock (except any distribution
specifically provided for in Sections 4.2 or 4.3), then upon exercise of this
Warrant, for each Share acquired, the Holder shall receive, without cost to the
Holder, the total number and kind of securities to which the Holder would have
been entitled had the Holder owned the Shares of record as of the date the
dividend or subdivision occurred.
4.2 Reclassification, Exchange, Substitution or Merger. In case of any
reclassification, exchange or change of securities of the class issuable upon
exercise of this Warrant (other than a change in par value, or from par value to
no par value, or from no par value to par value, or as a result of a subdivision
or combination), the Company shall duly execute and deliver to the Holder a new
Warrant (in form and substance satisfactory reasonably acceptable to the Holder)
providing that the Holder shall have the right to exercise such new Warrant and
upon such exercise to receive, in lieu of each share of Common Stock theretofore
issuable upon exercise of this Warrant, the kind and amount of shares of stock,
other securities, money and property receivable upon such reclassification, or
change by a holder of one share Common Stock. Such new warrant shall provide for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article 4. The provisions of this Section 4.2
shall similarly apply to successive reclassifications or changes.
4.3 Adjustments for Subdivisions or Combinations. If the Company at any
time while this Warrant remains outstanding and unexpired shall subdivide or
combine its Common Stock, the Exercise Price and the number of Shares issuable
upon exercise hereof shall be proportionately adjusted.
4.4 Minimum Adjustment. No adjustment in the Exercise Price pursuant to
this Article 4 shall be required unless the adjustment would require an increase
or decrease of at least $.05 in such Exercise Price; provided, however, that any
adjustments which by reason of this Section 4.4 are not required to be made,
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Article 4 shall be to the nearest cent or the
nearest Share, as the case may be.
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<PAGE> 5
4.5 Certificate as to Adjustments. Upon each adjustment of the Warrant
Price and the number of Shares acquirable hereunder, the Company, at its
expense, shall promptly compute such adjustment and furnish the Holder with a
certificate of its Chief Financial Officer setting forth such adjustment and the
facts upon which such adjustment is based. The Company shall, upon written
request, furnish the Holder a certificate setting forth the Warrant Price in
effect on the date thereof and the number of Shares acquirable hereunder on such
date and the series of adjustments leading to such Warrant Price and share
number.
ARTICLE 5. REPRESENTATIONS AND COVENANTS OF THE COMPANY.
5.1 Representations and Warranties. The Company hereby represents and
warrants to the Holder that:
(a) This Warrant has been duly authorized and executed by the
Company and is a valid and binding obligation of the Company enforceable in
accordance with its terms, subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors and the rules of law or
principles at equity governing specific performance, injunctive relief and other
equitable remedies;
(b) The Shares have been duly authorized and reserved for
issuance by the Company and, when issued in accordance with the terms hereof,
will be validly issued, fully paid and non-assessable;
(c) The rights, preferences, privileges and restrictions granted
to or imposed upon the Shares and the holders thereof are as set forth in the
Company's Certificate of Incorporation, as amended to the Date of the Grant;
(d) The execution and delivery of this Warrant is not, and the
issuance of the Shares upon exercise of this Warrant in accordance with the
terms hereof will not be, inconsistent with the Company's Certificate of
Incorporation or bylaws and do not and will not conflict with or contravene any
provision of, or constitute a default under, any material indenture, mortgage,
contract or other instrument of which the Company is a party or by which it is
bound; and
(e) There are no actions, suits, investigations or proceedings
pending or, to the knowledge of the Company, threatened against the Company in
any court or before any governmental commission, board or authority which, if
adversely determined, will have a material adverse effect on the ability of the
Company to issue the Shares upon exercise of this Warrant.
5.2 Notice of Certain Events. If the Company proposes at any time to (a)
declare any dividend or distribution upon the Common Stock, whether in cash,
property, stock, or other securities and whether or not a regular cash dividend;
(b) offer for subscription pro rata to the holders of any class or series of its
stock any additional shares of stock of any class or series or other rights; or
(c) effect any reclassification or recapitalization of the Common Stock, then,
in connection with each such event, the Company shall give the Holder (1) prompt
prior written notice of the date on which a record will be taken for such
dividend, distribution, or subscription rights or for determining rights to
vote, if any, in respect of the matters referred to in (c) above;
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<PAGE> 6
and (2) in the case of the matters referred to in (c) above, prompt prior
written notice of the date when the same will take place.
5.3 Mergers. The Company shall provide the Holder with at least ten (10)
business days' notice of the terms and conditions of any of the following
potential transactions: (i) the sale, lease, exchange, conveyance or other
disposition of all or substantially all of the Company's property or business,
or (ii) its merger into or consolidation with any other corporation (other than
a wholly-owned subsidiary of the Company), or any transaction (including a
merger or other reorganization) or series of related transactions, in which a
majority of the voting power of the Company is disposed of.
5.4 Rights as Stockholders; Information. The Holder, as such, shall not
be entitled to vote or receive dividends or be deemed the holder of Common Stock
or any other securities of the Company which may at any time be issuable on the
exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the Holder, as such, any of the rights of a stockholder
of the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise until this
Warrant shall have been exercised and the Shares purchasable upon the exercise
hereof shall have become deliverable, as provided herein. Notwithstanding the
foregoing, the Company will transmit to the Holder such information, documents
and reports as are generally distributed to the holders of any class or series
of the securities of the Company concurrently with the distribution thereof to
the stockholders.
ARTICLE 6. SECURITIES LAW COMPLIANCE.
6.1 Compliance with the Act. This Warrant may not be sold, assigned,
pledged, hypothecated, encumbered or in any other manner transferred or disposed
of, in whole or in part. The Shares, nor any interest in them, may not be sold,
assigned, hypothecated, encumbered or in any other manner transferred or
disposed of, in whole or in part, except in compliance with the Act and state
securities laws and the terms and conditions hereof. Upon exercise of this
Warrant, unless the Shares being acquired are registered under the Act and any
applicable state securities laws or an exemption from such registration is
available, the Holder shall confirm in writing that the Shares so purchased are
being acquired for investment and not with a view toward distribution or resale
in violation of the Act and shall confirm such other matters related thereto as
may be reasonably requested by the Company. This Warrant and all Shares issued
upon exercise of this Warrant (unless at the time of acquisition they are
registered under the Act and any applicable state securities laws) shall be
stamped or imprinted with a legend in substantially the following form:
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
SECURITIES LAWS. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES
LAWS, PURSUANT TO
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<PAGE> 7
REGISTRATION OR AN EXEMPTION THEREFROM. THE ISSUER OF THESE
SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY
PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY
APPLICABLE STATE SECURITIES LAWS."
Any certificate for Shares issued at any time in exchange or substitution for
any certificate for any Shares bearing such legend (except a new certificate for
any Shares issued after the acquisition of such Shares pursuant to a
registration statement which has been declared effective under the Act) shall
also bear such legend unless, in the opinion of counsel for the Company, the
Shares represented thereby are no longer subject to the restrictions set forth
herein. The provisions of this Article 6 shall be binding upon all subsequent
Holders of certificates for Shares bearing the above legend and all subsequent
Holders of this Warrant, if any.
6.2 Investment Representations. In addition, in connection with the
issuance of this Warrant, the Holder specifically represents to the Company by
acceptance of this Warrant as follows:
(a) The Holder is aware of the Company's business affairs and
financial condition and has acquired information about the Company sufficient to
reach an informed and knowledgeable decision to acquire this Warrant. The Holder
is acquiring this Warrant for its own account for investment purposes only and
not with a view to, or for the resale in connection with, any "distribution"
thereof in violation of the Act. The Holder is an "accredited investor" as
defined in Rule 501 promulgated under the Act.
(b) The Holder understands that this Warrant has not been
registered under the Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of the Holder's
investment intent as expressed herein.
(c) The Holder further understands that this Warrant must be held
indefinitely unless subsequently registered under the Act and qualified under
any applicable state securities laws or unless exemptions from registration and
qualification are otherwise available. The Holder understands that the Company
is under no obligation to register and qualify this Warrant or the Shares
underlying the Warrant.
(d) The Holder is aware of the provisions of Rule 144 promulgated
under the Act, which, in substance, permit limited public resale of "restricted
securities" acquired, directly or indirectly, from the issuer thereof (or from
an affiliate of the issuer), in a nonpublic offering subject to the satisfaction
of certain conditions, if applicable, including, without limitation, the
availability of certain public information about the Company, the resale
occurring not less than one year after the party has purchased and paid for the
securities to be sold, the sale being made through a broker in an unsolicited
"broker transaction" or in transactions directly with a market maker and the
amount of securities being sold during any three (3) month period not exceeding
certain specified limitations.
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<PAGE> 8
(e) The Holder further understands that at the time it wishes to
sell this Warrant or the Shares there may be no public market upon which to make
such a sale and that, even if such public market then exists, the Company may
not be satisfying the current public information requirements under Rule 144
promulgated under the Act and that, in such event, the Holder may be precluded
from selling this Warrant under Rule 144 even if the one year minimum holding
period has been satisfied.
(f) The Holder further understands that in the event that all the
requirements of Rule 144 are not met, registration under the Act, compliance
with Regulation A or some other registration exemption will be required; and
that, notwithstanding the fact that Rule 144 under the Act is not exclusive, the
staff of the Securities and Exchange Commission (the "COMMISSION") has expressed
its opinion that persons proposing to sell private placement securities other
than in a registered offering or pursuant to Rule 144 will have a substantial
burden of proof in establishing that an exemption from registration is available
for such offers or sales, and that such persons and their respective brokers who
participate in such transactions do so at their own risk.
6.3 Disposition of Warrant or the Shares. With respect to any offer,
sale or other disposition of this Warrant or any Shares acquired pursuant to the
exercise of this Warrant prior to registration of this Warrant or such Shares,
the Holder agrees to give written notice to the Company prior thereto,
describing briefly the manner thereof, together with a written opinion of the
Holder's counsel, or, if reasonably requested by the Company, other evidence to
the effect that such offer, sale or other disposition may be effected without
registration or qualification (under the Act as then in effect or any federal or
state securities law then in effect) of this Warrant or such Shares and
indicating whether or not under the Act certificates for this Warrant or such
Shares to be sold or otherwise disposed of require any restrictive legend as to
applicable restrictions on transferability in order to ensure compliance with
such law. If a determination has been made pursuant to this Section 6.3 that the
opinion of counsel for the Holder or other evidence is not reasonably
satisfactory to the Company, the Company shall so notify the Holder promptly
with details thereof after such determination has been made. Notwithstanding the
foregoing, this Warrant or the Shares may be offered, sold or otherwise disposed
of if (a) the Company shall have been furnished with a letter from the
Commission, in response to a written request in form and substance acceptable to
counsel for the Company setting forth all of the facts and circumstances
surrounding the contemplated transfer, stating that the Commission will take no
action with regard to the contemplated transfer; or (b) the Shares are
transferred pursuant to a registration statement which has been filed with the
Commission and has become effective. The Company may issue stop transfer
instructions to its transfer agent to enforce the foregoing restrictions.
6.4 Termination of Restrictions and Removal of Legend. Except for the
restriction set forth in Section 2.5, the restrictions on transfer imposed by
this Article 6 shall cease and terminate as to the Shares when (i) such
securities shall have been effectively registered under the Act and sold by the
Holder in accordance with such registration, (ii) an acceptable opinion or other
evidence as described in Section 6.3 or a "no action" letter described in
Section 6.3 states that future transfers of such securities by the transferor or
the contemplated transferee would be exempt from registration under the Act, or
(iii) such securities may be sold under and in accordance with Rule 144(k)
promulgated by the Commission under the Act. When the
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<PAGE> 9
restrictions on transfer contained in this Article 6 have terminated as provided
above, the Holder or the transferee of the Holder shall be entitled to receive
promptly from the Company, without expense to it, and upon surrender of existing
certificates, new certificates not bearing the legend set forth in Section 6.1
hereof.
ARTICLE 7. MISCELLANEOUS.
7.1 No Impairment. The Company shall not by amendment of its Certificate
of Incorporation avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed under this Warrant by the Company.
7.2 Agreement for Lock-up. The Holder, by acceptance hereof, agrees that
such Holder will not, without the prior written consent of the lead underwriter
in connection with the IPO, directly or indirectly offer to sell, contract to
sell (including, without limitation, any short sale), pledge, grant any option
for the sale of, acquire any option to dispose of, or otherwise dispose of any
Shares or securities into which such Share are converted for a period of 180
days following the closing of the IPO.
7.3 Notices. All notices and other communications from the Company to
the Holder, or vice versa, shall be deemed delivered and effective when given
personally or mailed by first-class registered or certified mail, postage
prepaid, at such address as may have been furnished by the Company or the
Holder, as the case may be, in writing by the Company or the Holder from time to
time.
7.4 No Inconsistent Agreements. The Company has not previously entered
into, and will not on or after the date of this Warrant enter into, any
agreement with respect to its securities which is inconsistent with the terms of
this Warrant, including any agreement which impairs or limits the rights granted
to the Holder in this Warrant, or which otherwise conflicts with the provisions
hereof or would preclude the Company from discharging its obligations hereunder.
7.5 Modification and Waiver. This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge
or termination is sought.
7.6 Attorneys' Fees. In the event of any dispute between the parties
concerning the terms and provisions of this Warrant, the party prevailing in
such dispute shall be entitled to collect from the other party all costs
incurred in such dispute, including reasonable attorneys' fees.
7.7 Descriptive Headings. The descriptive headings of the several
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant. The language in this Warrant shall be
construed as to its fair meaning without regard to which party drafted this
Warrant.
7.8 Survival of Representations, Warranties and Agreements. All
representations and warranties of the Company and the Holder contained herein
shall survive the Date of Grant, the exercise or conversion of this Warrant (or
any part hereof) or the termination or expiration of rights
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<PAGE> 10
hereunder. All agreements of the Company and the Holder contained herein shall
survive indefinitely until, by their respective terms, they are no longer
operative.
7.9 Remedies. In case any one or more of the covenants and agreements
contained in this Warrant shall have been breached, the Holder (in the case of a
breach by the Company), or the Company (in the case of a breach by a Holder),
may proceed to protect and enforce its rights either by suit in equity and/or by
action at law, including, but not limited to, an action for damages as a result
of any such breach and/or an action for specific performance of any such
covenant or agreement contained in this Warrant.
7.10 Severability. The invalidity or unenforceability of any provision
of this Warrant in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction, or affect any other
provision of this Warrant, which shall remain in full force and effect.
7.11 Entire Agreement. This Warrant constitutes the entire agreement
between the parties pertaining to the subject matter contained in it and
supersedes all prior and contemporaneous agreements, representations, and
undertakings of the parties, whether oral or written, with respect to such
subject matter.
7.12 Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to its
principles regarding conflicts of law.
7.13 Successors and Assigns. Except as otherwise provided herein, this
Agreement and the rights and obligitions of the parties here under shall inure
to the benefit of, and be binding upon, the parties' respective successors,
assigns and legal representatives.
[SIGNATURE PAGE FOLLOWS]
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Date of Grant: March 1, 2000
printCafe, Inc..
By: ___________________________________
Name:
Title:
REVIEWED, ACKNOWLEDGED AND AGREED TO THIS 1st DAY OF MARCH, 2000
THE SHERIDAN GROUP, INC.
By: ____________________________
Name: John A. Saxon
Title: President and Chief Executive Officer
<PAGE> 12
EXHIBIT A
NOTICE OF EXERCISE
To: printCafe, Inc. (the "Company")
1. The undersigned hereby:
[ ] elects to purchase __________ shares of Common Stock of
the Company pursuant to the terms of the attached Warrant,
and tenders herewith payment of the purchase price of such
shares in full, or
[ ] elects to exercise its Conversion Right pursuant to
Article 3 of the attached Warrant with respect to
__________ shares of Common Stock.
2. Please issue a certificate or certificates representing said shares
in the name of the undersigned or in such other name or names as are specified
below:
________________________________
(Name)
________________________________
________________________________
________________________________
(Address)
3. The undersigned represents that the aforesaid shares are being
acquired for the account of the undersigned for investment and not with a view
to, or for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such shares,
all except as in compliance with applicable securities laws.
_______________________________________
(Signature)
Date:
<PAGE> 13
EXHIBIT A-1
NOTICE OF EXERCISE
To: printCafe, Inc., (the "Company")
1. Contingent upon and effective immediately prior to the closing (the
"Closing") of the Company's public offering contemplated by the Registration
Statement on Form S___, filed ________________, 20___, the undersigned hereby:
[ ] elects to purchase ____________ shares of Common Stock of
the Company (or such lesser number of shares as may be
sold on behalf of the undersigned at the Closing) pursuant
to the terms of the attached Warrant, or
[ ] elects to exercise its Conversion Right pursuant to
Article 3 of the attached Warrant with respect
____________ shares of Common Stock.
2. Please deliver to the custodian for the selling stockholders a stock
certificate representing such _____________ shares.
3. The undersigned has instructed the custodian for the selling
stockholders to deliver to the Company $_________ or, if less, the net proceeds
due the undersigned from the sale of shares in the aforesaid public offering. If
such net proceeds are less than the purchase price for such shares, the
undersigned agrees to deliver the difference to the Company prior to the
Closing.
_______________________________________
(Signature)
Date:
<PAGE> 1
EXHIBIT 10.45
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS. THESE
SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT
BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR AN EXEMPTION THEREFROM. THE ISSUER
OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS
IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
printCafe, Inc.
WARRANT TO PURCHASE SHARES
OF COMMON STOCK
THIS WARRANT CERTIFIES THAT, for good and valuable consideration,
Orrick, Herrington & Sutcliffe LLP (the "HOLDER"), is entitled to purchase,
subject to the terms of this Warrant, 100,000 fully paid and nonassessable
shares of Common Stock (as adjusted pursuant to Article 4 hereof, the "SHARES")
of printCafe, Inc., a Delaware corporation (the "Company"), at the price of FIVE
DOLLARS AND EIGHTY CENTS ($5.80) per Share (such price and such other price as
shall result from time to time from the adjustments specified in Article 4
hereof, the "WARRANT PRICE"), subject to the provisions and upon the terms and
conditions set forth in this Warrant. As used herein, (a) the term "COMMON
STOCK" shall mean the Company's class A common stock, par value $.0001 per
share, and any capital stock into or for which such Common Stock may hereafter
be converted or exchanged, and (b) the term "DATE OF GRANT" shall mean the Date
of Grant listed on the signature page hereof.
ARTICLE 1. TERM. The purchase right represented by this Warrant is exercisable,
in whole or in part, at any time and from time to time from the Date of Grant
through 5:00 p.m. New York City local time on the date which is the earlier of
(i) four years after the Date of Grant, (ii) three (3) years after the closing
of a firmly underwritten initial public offering (the "IPO") of the Common Stock
effected pursuant to a registration statement (or its successor) filed under the
Securities Act of 1933, as amended (the "ACT"), (iii) the closing date of a
merger or consolidation of the Company with or into any other entity, including
a reverse triangular merger involving the Company (other than a merger or
consolidation in which the holders of the voting power of the Company
immediately prior to such consolidation or merger hold a majority of the
surviving or resulting entity immediately following such consolidation or
merger), or (iv) the closing date of the sale, lease, exchange, conveyance or
other disposition of all or substantially all of the assets of the Company.
ARTICLE 2. EXERCISE.
2.1 Method of Exercise; Payment. Subject to Article 1 hereof, the
purchase right represented by this Warrant may be exercised by the Holder, in
whole or in part and from time to time, at the election of the Holder, by (a)
the surrender of this Warrant (with the notice of exercise
<PAGE> 2
substantially in the form attached hereto as EXHIBIT A duly completed and
executed) at the principal office of the Company and by the payment to the
Company, by certified check or by wire transfer to an account or accounts
designated by the Company of an amount equal to the then applicable Warrant
Price multiplied by the number of Shares then being purchased, or (b) exercise
of the Conversion Right provided for in Article 3 hereof.
2.2 Delivery of Certificate and New Warrant. The person or persons in
whose name(s) any certificate(s) representing Shares shall be issuable upon
exercise of this Warrant shall be deemed to have become the holder(s) of record
of, and shall be treated for all purposes as the record holder(s) of, the Shares
represented thereby (and such Shares shall be deemed to have been issued)
immediately prior to the close of business on the date or dates upon which this
Warrant is exercised. In the event of any exercise of the rights represented by
this Warrant, the Company shall deliver to the Holder as soon as practicable and
in any event within thirty (30) days after such exercise (a) a certificate of
the Company executed by a duly authorized officer of the Company to the effect
that the representations and warranties set forth in Section 5.1 hereof are true
and correct as of the date thereof (a "COMPLIANCE CERTIFICATE"), (b)
certificates for the Shares so purchased and (c) unless this Warrant has been
fully exercised or expired, a new Warrant representing the portion of the
Shares, if any, with respect to which this Warrant shall not then have been
exercised.
2.3 Stock Fully Paid; Reservation of Shares. All Shares that may be
issued upon the exercise of this Warrant will, upon issuance pursuant to the
terms and conditions herein, be fully paid and nonassessable, and free from all
taxes, liens and charges (except for taxes, liens and charges applicable to the
Holder) with respect to the issue thereof. During the period within which the
rights represented by this Warrant may be exercised, the Company will at all
times have authorized, and reserved for the purpose of the issue upon exercise
of the purchase rights evidenced by this Warrant, a sufficient number of shares
of Common Stock to provide for the exercise of the rights represented by this
Warrant.
2.4 Replacement of Warrants. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of loss, theft or destruction, on delivery of an
indemnity agreement reasonably satisfactory in form and amount to the Company,
and, in the case of mutilation, on surrender and cancellation of this Warrant,
the Company at its expense shall execute and deliver, in lieu of this Warrant, a
new warrant of like tenor.
2.5 No Assignment. The Holder of this Warrant shall not be entitled,
without obtaining the prior written consent of the Company, to assign, by
operation of law or otherwise, its interest in this Warrant in whole or in part
to any person or persons.
2.6 Other Agreements. Except in connection with Holder's contingent
exercise of its Conversion Right (as defined in Section 3.1) in connection with
the closing of the IPO as more fully described in Article 3, Holder hereby
acknowledges and agrees that, in the event that Holder exercises this Warrant
prior to the closing of the IPO, Holder will execute and become a party to that
certain Right of First Refusal and Co-Sale Agreement substantially in the form
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<PAGE> 3
attached hereto as Exhibit B hereto and that certain Voting Agreement
substantially in the form attached hereto as Exhibit C hereto, as such
agreements shall be amended to the date of exercise by Holder, with respect to
the Shares received by Holder in connection with such exercise of this Warrant.
ARTICLE 3. CONVERSION RIGHT.
3.1 Conversion Right. In addition to and without limiting the rights of
the Holder under the terms of this Warrant, the Holder shall have the right to
convert this Warrant or any portion thereof (the "CONVERSION RIGHT") into shares
of Common Stock at any time or from time to time during the term of this
Warrant. Upon exercise of the Conversion Right with respect to a particular
number of Shares (the "CONVERTED WARRANT SHARES"), the Company shall deliver to
the Holder (without payment by the Holder of any exercise price or any cash or
other consideration) that number of shares of fully paid and nonassessable
Common Stock determined by dividing (a) the aggregate Fair Market Value (as
determined pursuant to Section 3.3) of the Converted Warrant Shares on the
Conversion Date (as defined in Section 3.2 below) minus the aggregate Warrant
Price of such Converted Warrant Shares by (b) the Fair Market Value of one share
of Common Stock.
3.2 Method of Exercise. In the event that the Holder elects to exercise
the Conversion Right, the Holder shall surrender this Warrant at the principal
office of the Company together with a written statement specifying that the
Holder thereby intends to exercise the Conversion Right and indicating the
number of Shares which are being surrendered (referred to in Section 3.1 hereof
as the Converted Warrant Shares) in exercise of the Conversion Right. Such
conversion shall be effective upon receipt by the Company of this Warrant
together with the aforesaid written statement or on such later date as is
specified therein (the "CONVERSION DATE") and, at the election of the Holder,
may be made contingent upon the closing of the IPO. Certificates for the Shares
issuable upon exercise of the Conversion Right, a Compliance Certificate and, if
applicable, a new warrant evidencing the balance of the Shares remaining subject
to this Warrant, shall be issued as of the Conversion Date and shall be
delivered to the Holder within thirty (30) days following the Conversion Date.
3.3 Determination of Fair Market Value. For purposes of this Article 3,
"FAIR MARKET VALUE" of a share of Common Stock as of a particular date (the
"DETERMINATION DATE") shall mean:
(a) If the Conversion Right is exercised in connection with and
contingent upon the IPO, then the initial "Price to Public" specified in the
final prospectus with respect to such offering.
(b) If the Conversion Right is not exercised in connection with
the IPO, then as follows:
(i) If traded on a securities exchange, the Fair Market
Value of the Common Stock shall be deemed to be the average of the closing
prices of the Common Stock on such exchange over the 30-day period ending five
(5) business days prior to the Determination Date;
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<PAGE> 4
(ii) If traded over-the-counter, the Fair Market Value of
the Common Stock shall be deemed to be the average of the closing bid prices of
the Common Stock over the 30-day period ending five (5) business days prior to
the Determination Date; or
(iii) If there is no public market for the Common Stock,
then Fair Market Value shall be determined in good faith by the Board of
Directors of the Company.
3.4 Fractional Shares. No fractional Shares shall be issuable upon
exercise of this Warrant pursuant to Section 2.1 or exercise of the Conversion
Right pursuant to this Article 3, but in lieu of such fractional shares the
Company shall make a cash payment therefor based on the Fair Market Value of the
Shares on the date of exercise or conversion as determined pursuant to Section
3.3.
ARTICLE 4. ADJUSTMENTS TO THE SHARES.
4.1 Stock Dividends. If the Company declares or pays a dividend on the
Common Stock payable in share of Common Stock (except any distribution
specifically provided for in Sections 4.2 or 4.3), then upon exercise of this
Warrant, for each Share acquired, the Holder shall receive, without cost to the
Holder, the total number and kind of securities to which the Holder would have
been entitled had the Holder owned the Shares of record as of the date the
dividend or subdivision occurred.
4.2 Reclassification, Exchange, Substitution or Merger. In case of any
reclassification, exchange or change of securities of the class issuable upon
exercise of this Warrant (other than a change in par value, or from par value to
no par value, or from no par value to par value, or as a result of a subdivision
or combination), the Company shall duly execute and deliver to the Holder a new
warrant (in form and substance satisfactory reasonably acceptable to the Holder)
providing that the Holder shall have the right to exercise such new Warrant and
upon such exercise to receive, in lieu of each share of Common Stock theretofore
issuable upon exercise of this Warrant, the kind and amount of shares of stock,
other securities, money and property receivable upon such reclassification or
change by a holder of one share Common Stock. Such new warrant shall provide for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article 4. The provisions of this Section 4.2
shall similarly apply to successive reclassifications or changes.
4.3 Adjustments for Subdivisions or Combinations. If the Company at any
time while this Warrant remains outstanding and unexpired shall subdivide or
combine its Common Stock, the Exercise Price and the number of Shares issuable
upon exercise hereof shall be proportionately adjusted.
4.4 Minimum Adjustment. No adjustment in the Exercise Price pursuant to
this Article 4 shall be required unless the adjustment would require an increase
or decrease of at least $.05 in such Exercise Price; provided, however, that any
adjustments which by reason of this Section 4.4 are not required to be made,
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Article 4 shall be to the nearest cent or the
nearest Share, as the case may be.
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<PAGE> 5
4.5 Certificate as to Adjustments. Upon each adjustment of the Warrant
Price and the number of Shares acquirable hereunder, the Company, at its
expense, shall promptly compute such adjustment and furnish the Holder with a
certificate of its Chief Financial Officer setting forth such adjustment and the
facts upon which such adjustment is based. The Company shall, upon written
request, furnish the Holder a certificate setting forth the Warrant Price in
effect on the date thereof and the number of Shares acquirable hereunder on such
date and the series of adjustments leading to such Warrant Price and share
number. ARTICLE 5. REPRESENTATIONS AND COVENANTS OF THE COMPANY.
5.1 Representations and Warranties. The Company hereby represents and
warrants to the Holder that:
(a) This Warrant has been duly authorized and executed by the
Company and is a valid and binding obligation of the Company enforceable in
accordance with its terms, subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors and the rules of law or
principles at equity governing specific performance, injunctive relief and other
equitable remedies;
(b) The Shares have been duly authorized and reserved for
issuance by the Company and, when issued in accordance with the terms hereof,
will be validly issued, fully paid and non-assessable;
(c) The rights, preferences, privileges and restrictions granted
to or imposed upon the Shares and the holders thereof are as set forth in the
Company's Certificate of Incorporation, as amended to the Date of the Grant;
(d) The execution and delivery of this Warrant is not, and the
issuance of the Shares upon exercise of this Warrant in accordance with the
terms hereof will not be, inconsistent with the Company's Certificate of
Incorporation or bylaws and do not and will not conflict with or contravene any
provision of, or constitute a default under, any material indenture, mortgage,
contract or other instrument of which the Company is a party or by which it is
bound; and
(e) There are no actions, suits, investigations or proceedings
pending or, to the knowledge of the Company, threatened against the Company in
any court or before any governmental commission, board or authority which, if
adversely determined, will have a material adverse effect on the ability of the
Company to issue the Shares upon exercise of this Warrant.
5.2 Notice of Certain Events. If the Company proposes at any time to (a)
declare any dividend or distribution upon the Common Stock, whether in cash,
property, stock, or other securities and whether or not a regular cash dividend;
(b) offer for subscription pro rata to the holders of any class or series of its
stock any additional shares of stock of any class or series or other rights; or
(c) effect any reclassification or recapitalization of the Common Stock, then,
in connection with each such event, the Company shall give the Holder (1) prompt
prior written notice of the date on which a record will be taken for such
dividend, distribution, or subscription rights or for determining rights to
vote, if any, in respect of the matters referred to in (c) above;
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<PAGE> 6
and (2) in the case of the matters referred to in (c) above, prompt prior
written notice of the date when the same will take place.
5.3 Mergers. The Company shall provide the Holder with at least ten (10)
business days' notice of the terms and conditions of any of the following
potential transactions: (i) the sale, lease, exchange, conveyance or other
disposition of all or substantially all of the Company's property or business,
or (ii) its merger into or consolidation with any other corporation (other than
a wholly-owned subsidiary of the Company), or any transaction (including a
merger or other reorganization) or series of related transactions, in which a
majority of the voting power of the Company is disposed of.
5.4 Rights as Stockholders; Information. The Holder, as such, shall not
be entitled to vote or receive dividends or be deemed the holder of Common Stock
or any other securities of the Company which may at any time be issuable on the
exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the Holder, as such, any of the rights of a stockholder
of the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise until this
Warrant shall have been exercised and the Shares purchasable upon the exercise
hereof shall have become deliverable, as provided herein. Notwithstanding the
foregoing, the Company will transmit to the Holder such information, documents
and reports as are generally distributed to the holders of any class or series
of the securities of the Company concurrently with the distribution thereof to
the stockholders.
ARTICLE 6. SECURITIES LAW COMPLIANCE.
6.1 Compliance with the Act. This Warrant may not be sold, assigned,
pledged, hypothecated, encumbered or in any other manner transferred or disposed
of, in whole or in part. The Shares, nor any interest in them, may not be sold,
assigned, hypothecated, encumbered or in any other manner transferred or
disposed of, in whole or in part, except in compliance with the Act and state
securities laws and the terms and conditions hereof. Upon exercise of this
Warrant, unless the Shares being acquired are registered under the Act and any
applicable state securities laws or an exemption from such registration is
available, the Holder shall confirm in writing that the Shares so purchased are
being acquired for investment and not with a view toward distribution or resale
in violation of the Act and shall confirm such other matters related thereto as
may be reasonably requested by the Company. This Warrant and all Shares issued
upon exercise of this Warrant (unless at the time of acquisition they are
registered under the Act and any applicable state securities laws) shall be
stamped or imprinted with a legend in substantially the following form:
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
SECURITIES LAWS. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES
LAWS, PURSUANT TO
6
<PAGE> 7
REGISTRATION OR AN EXEMPTION THEREFROM. THE ISSUER OF THESE
SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY
PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY
APPLICABLE STATE SECURITIES LAWS."
Any certificate for Shares issued at any time in exchange or substitution for
any certificate for any Shares bearing such legend (except a new certificate for
any Shares issued after the acquisition of such Shares pursuant to a
registration statement which has been declared effective under the Act) shall
also bear such legend unless, in the opinion of counsel for the Company, the
Shares represented thereby are no longer subject to the restrictions set forth
herein. The provisions of this Article 6 shall be binding upon all subsequent
Holders of certificates for Shares bearing the above legend and all subsequent
Holders of this Warrant, if any.
6.2 Investment Representations. In addition, in connection with the
issuance of this Warrant, the Holder specifically represents to the Company by
acceptance of this Warrant as follows:
(a) The Holder is aware of the Company's business affairs and
financial condition and has acquired information about the Company sufficient to
reach an informed and knowledgeable decision to acquire this Warrant. The Holder
is acquiring this Warrant for its own account for investment purposes only and
not with a view to, or for the resale in connection with, any "distribution"
thereof in violation of the Act. The Holder is an "accredited investor" as
defined in Rule 501 promulgated under the Act.
(b) The Holder understands that this Warrant has not been
registered under the Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of the Holder's
investment intent as expressed herein.
(c) The Holder further understands that this Warrant must be held
indefinitely unless subsequently registered under the Act and qualified under
any applicable state securities laws or unless exemptions from registration and
qualification are otherwise available. The Holder understands that the Company
is under no obligation to register and qualify this Warrant or the Shares
underlying the Warrant.
(d) The Holder is aware of the provisions of Rule 144 promulgated
under the Act, which, in substance, permit limited public resale of "restricted
securities" acquired, directly or indirectly, from the issuer thereof (or from
an affiliate of the issuer), in a nonpublic offering subject to the satisfaction
of certain conditions, if applicable, including, without limitation, the
availability of certain public information about the Company, the resale
occurring not less than one year after the party has purchased and paid for the
securities to be sold, the sale being made through a broker in an unsolicited
"broker transaction" or in transactions directly with a market maker and the
amount of securities being sold during any three (3) month period not exceeding
certain specified limitations.
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<PAGE> 8
(e) The Holder further understands that at the time it wishes to
sell this Warrant or the Shares there may be no public market upon which to make
such a sale and that, even if such public market then exists, the Company may
not be satisfying the current public information requirements under Rule 144
promulgated under the Act and that, in such event, the Holder may be precluded
from selling this Warrant under Rule 144 even if the one year minimum holding
period has been satisfied.
(f) The Holder further understands that in the event that all the
requirements of Rule 144 are not met, registration under the Act, compliance
with Regulation A or some other registration exemption will be required; and
that, notwithstanding the fact that Rule 144 under the Act is not exclusive, the
staff of the Securities and Exchange Commission (the "COMMISSION") has expressed
its opinion that persons proposing to sell private placement securities other
than in a registered offering or pursuant to Rule 144 will have a substantial
burden of proof in establishing that an exemption from registration is available
for such offers or sales, and that such persons and their respective brokers who
participate in such transactions do so at their own risk.
6.3 Disposition of Warrant or the Shares. With respect to any offer,
sale or other disposition of this Warrant or any Shares acquired pursuant to the
exercise of this Warrant prior to registration of this Warrant or such Shares,
the Holder agrees to give written notice to the Company prior thereto,
describing briefly the manner thereof, together with a written opinion of the
Holder's counsel, or, if reasonably requested by the Company, other evidence to
the effect that such offer, sale or other disposition may be effected without
registration or qualification (under the Act as then in effect or any federal or
state securities law then in effect) of this Warrant or such Shares and
indicating whether or not under the Act certificates for this Warrant or such
Shares to be sold or otherwise disposed of require any restrictive legend as to
applicable restrictions on transferability in order to ensure compliance with
such law. If a determination has been made pursuant to this Section 6.3 that the
opinion of counsel for the Holder or other evidence is not reasonably
satisfactory to the Company, the Company shall so notify the Holder promptly
with details thereof after such determination has been made. Notwithstanding the
foregoing, this Warrant or the Shares may be offered, sold or otherwise disposed
of if (a) the Company shall have been furnished with a letter from the
Commission, in response to a written request in form and substance acceptable to
counsel for the Company setting forth all of the facts and circumstances
surrounding the contemplated transfer, stating that the Commission will take no
action with regard to the contemplated transfer; or (b) the Shares are
transferred pursuant to a registration statement which has been filed with the
Commission and has become effective. The Company may issue stop transfer
instructions to its transfer agent to enforce the foregoing restrictions.
6.4 Termination of Restrictions and Removal of Legend. Except for the
restriction set forth in Section 2.5, the restrictions on transfer imposed by
this Article 6 shall cease and terminate as to the Shares when (i) such
securities shall have been effectively registered under the Act and sold by the
Holder in accordance with such registration, (ii) an acceptable opinion or other
evidence as described in Section 6.3 or a "no action" letter described in
Section 6.3 states that future transfers of such securities by the transferor or
the contemplated transferee would be exempt from registration under the Act, or
(iii) such securities may be sold under and in accordance with Rule 144(k)
promulgated by the Commission under the Act. When the
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<PAGE> 9
restrictions on transfer contained in this Article 6 have terminated as provided
above, the Holder or the transferee of the Holder shall be entitled to receive
promptly from the Company, without expense to it, and upon surrender of existing
certificates, new certificates not bearing the legend set forth in Section 6.1
hereof.
ARTICLE 7. MISCELLANEOUS.
7.1 No Impairment. The Company shall not by amendment of its Certificate
of Incorporation avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed under this Warrant by the Company.
7.2 Agreement for Lock-up. The Holder, by acceptance hereof, agrees that
such Holder will not, without the prior written consent of the lead underwriter
in connection with the IPO, directly or indirectly offer to sell, contract to
sell (including, without limitation, any short sale), pledge, grant any option
for the sale of, acquire any option to dispose of, or otherwise dispose of any
Shares or securities into which such Share are converted for a period of 180
days following the closing of the IPO.
7.3 Notices. All notices and other communications from the Company to
the Holder, or vice versa, shall be deemed delivered and effective when given
personally or mailed by first-class registered or certified mail, postage
prepaid, at such address as may have been furnished by the Company or the
Holder, as the case may be, in writing by the Company or the Holder from time to
time.
7.4 No Inconsistent Agreements. The Company has not previously entered
into, and will not on or after the date of this Warrant enter into, any
agreement with respect to its securities which is inconsistent with the terms of
this Warrant, including any agreement which impairs or limits the rights granted
to the Holder in this Warrant, or which otherwise conflicts with the provisions
hereof or would preclude the Company from discharging its obligations hereunder.
7.5 Modification and Waiver. This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge
or termination is sought.
7.6 Attorneys' Fees. In the event of any dispute between the parties
concerning the terms and provisions of this Warrant, the party prevailing in
such dispute shall be entitled to collect from the other party all costs
incurred in such dispute, including reasonable attorneys' fees.
7.7 Descriptive Headings. The descriptive headings of the several
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant. The language in this Warrant shall be
construed as to its fair meaning without regard to which party drafted this
Warrant.
7.8 Survival of Representations, Warranties and Agreements. All
representations and warranties of the Company and the Holder contained herein
shall survive the Date of Grant, the exercise or conversion of this Warrant (or
any part hereof) or the termination or expiration of rights
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<PAGE> 10
hereunder. All agreements of the Company and the Holder contained herein shall
survive indefinitely until, by their respective terms, they are no longer
operative.
7.9 Remedies. In case any one or more of the covenants and agreements
contained in this Warrant shall have been breached, the Holder (in the case of a
breach by the Company), or the Company (in the case of a breach by a Holder),
may proceed to protect and enforce its rights either by suit in equity and/or by
action at law, including, but not limited to, an action for damages as a result
of any such breach and/or an action for specific performance of any such
covenant or agreement contained in this Warrant.
7.10 Severability. The invalidity or unenforceability of any provision
of this Warrant in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction, or affect any other
provision of this Warrant, which shall remain in full force and effect.
7.11 Entire Agreement. This Warrant constitutes the entire agreement
between the parties pertaining to the subject matter contained in it and
supersedes all prior and contemporaneous agreements, representations, and
undertakings of the parties, whether oral or written, with respect to such
subject matter.
7.12 Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to its
principles regarding conflicts of law.
[SIGNATURE PAGE FOLLOWS]
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Date of Grant: March 6, 2000
printCafe, Inc.
By: ___________________________________
Name:
Title:
REVIEWED, ACKNOWLEDGED AND AGREED TO THIS ___ DAY OF MARCH, 2000
Orrick, Herrington & Sutcliffe LLP
By: ____________________________
Name:
Title:
<PAGE> 12
EXHIBIT A
NOTICE OF EXERCISE
To: printCafe, Inc. (the "Company")
1. The undersigned hereby:
[ ] elects to purchase __________ shares of Common Stock of
the Company pursuant to the terms of the attached Warrant,
and tenders herewith payment of the purchase price of such
shares in full, or
[ ] elects to exercise its Conversion Right pursuant to
Article 3 of the attached Warrant with respect to
__________ shares of Common Stock.
2. Please issue a certificate or certificates representing said shares
in the name of the undersigned or in such other name or names as are specified
below:
________________________________
(Name)
________________________________
________________________________
________________________________
(Address)
3. The undersigned represents that the aforesaid shares are being
acquired for the account of the undersigned for investment and not with a view
to, or for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such shares,
all except as in compliance with applicable securities laws.
_______________________________________
(Signature)
Date:
<PAGE> 13
EXHIBIT A-1
NOTICE OF EXERCISE
To: printCafe, Inc., (the "Company")
1. Contingent upon and effective immediately prior to the closing (the
"Closing") of the Company's public offering contemplated by the Registration
Statement on Form S______, filed ______________, 20___, the undersigned hereby:
[ ] elects to purchase ____________ shares of Common Stock of
the Company (or such lesser number of shares as may be
sold on behalf of the undersigned at the Closing) pursuant
to the terms of the attached Warrant, or
|[ ] elects to exercise its Conversion Right pursuant to
Article 3 of the attached Warrant with respect
____________ shares of Common Stock.
2. Please deliver to the custodian for the selling stockholders a stock
certificate representing such _____________ shares.
3. The undersigned has instructed the custodian for the selling
stockholders to deliver to the Company $_________ or, if less, the net proceeds
due the undersigned from the sale of shares in the aforesaid public offering. If
such net proceeds are less than the purchase price for such shares, the
undersigned agrees to deliver the difference to the Company prior to the
Closing.
_______________________________________
(Signature)
Date:
