1
EXHIBIT 10.3
BITSTREAM INC
AGREEMENT AND PLAN OF RECAPITALIZATION
TABLE OF CONTENTS
Section Description Page
- ------- ----------- ----
RECITALS 1
SECTION 1 COVENANTS BY STOCKHOLDERS 4
1.1. Waiver of Redemption. 4
1.2. Liquidation. 4
1.3. Cancellation and Restatement of Shareholder Agreements. 4
1.4. Confidential Information. 4
1.5. Certain Provisions Regarding Transfers by Regulated Shareholder. 5
SECTION 2 PLAN OF REORGANIZATION OF THE COMPANY 6
2.1. Charter Amendment. 6
2.2. Recapitalization Date. 7
2.3. Stock Certificates. 7
2.4. Conversion of Old Stock into New Stock. 7
2.5. Conversion Chart. 8
2.6. Exchange of Stock Certificates. 8
2.7. Automatic Effect. 9
2.8. No Fractional Shares. 9
2.9. Warrants and Options. 9
2.10. New Option Shares. 9
2.11. Tax Treatment. 9
SECTION 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY 10
3.1. Organization and Standing. 10
3.2. Corporate Action. 10
3.3. Governmental Approvals. 10
3.4. Restrictions Upon Transfer of Capital Stock. 10
3.5. Financial Information. 10
3.6. Deferral of Repurchase (re the "Regulated Shareholders"). 11
3.7. Repurchase of Certain Shares Held by Regulated Shareholder. 12
SECTION 4 COVENANTS OF THE COMPANY 13
4.1. Quarterly Financial Statements. 13
4.2. Maintenance of Records, Inspection. 13
4.3. Board of Directors' Meetings 13
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Bitstream Inc. Effective Date: October 28, 1994
Section Description Page
- ------- ----------- ----
4.4. Adjustment of Thresholds. 13
4.5. Assignment of Rights to Information. 13
4.6. Termination of Covenants. 14
SECTION 5 RIGHT OF CO-SALE 14
5.1. Agreement to Sell. 14
5.1.1. Notice. 14
5.1.2. Terms of Co-Sale Right. 14
5.1.3. Response by Co-Sale Shareholders. 14
5.1.4. Transfers for Other than Value. 14
5.2. Exceptions. 15
SECTION 6 PREEMPTIVE RIGHTS 15
6.1. Preemptive Rights. 15
6.2. Exceptions. 16
6.3. Issuances to Regulated Shareholders. 17
SECTION 7 REGISTRATION 17
7.1. Piggyback Registration. 17
7.1.1. Inclusion in Registration. 17
7.2. Required Registration. 18
7.3. Registration on Form S-3. 18
7.4. Effectiveness. 18
7.5. Indemnification. 18
7.6. Exchange Act. 20
7.7. Damages. 21
7.8. Further Obligations of the Company. 21
7.9. Expenses. 22
SECTION 8 DEFINITIONS 22
8.1. "Affiliate" 22
8.2. "Person" 22
8.3. "Regulated Shareholder" 22
SECTION 9 MISCELLANEOUS 23
9.1. Survival. 23
9.2. No Waiver 23
9.3. Amendments, Waivers, and Consents. 23
9.4. Notices. 23
9.5. Costs, Expenses and Taxes. 23
9.6. Brokers, etc. 23
9.7. Binding Effect 24
9.8. Governing Law. 24
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Exhibit 10.3
BITSTREAM INC.
AGREEMENT AND PLAN OF RECAPITALIZATION
This is an agreement and plan of recapitalization with an effective
date of October 28, 1994 by and among Bitstream Inc., a Massachusetts
corporation first organized on December 7, 1981, and having its principal place
of business at 215 First Street, Cambridge, Mass. 02142 (the "Company") and the
undersigned holders of its Classes H & I Series of Preferred Stock (the "H & I
Stockholders"), its Classes F & G Series of Preferred Stock (the "F & G
Stockholders").
RECITALS
A. The total number of shares of all classes of stock as of
the Effective Date that the Company has authority to issue consists of
37,079,820 shares (all having a $.01 per share value), as follows:
Common:
Class A 24,000,000
Class B 2,000,000
Class C (Nonvoting) 2,094,446
Preferred:
Class A 1,000,000
Class B 2,000,000
Class C 688,952
Class D 154,332
Class E (Nonvoting) 361,984
Class F 2,800,000
Class G (Nonvoting) 880,116
Class H 1,000,000
Class I 100,000
----------
Total 37,079,830
B. The stockholders of the Company and the outstanding shares
owned by them are as listed on Schedule B hereto (said shares sometimes
referred to hereinafter as "Old Stock");
C. On April 29, 1993, in connection with the Series H &I
Offering referred to below, the Series F and G investors received an
amendment of their investment agreement to double their number of share
and warrant units that they had received initially in their November
1992 offering;
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Agreement and Plan of Recapitalization Page 2
Bitstream Inc. Effective Date: October 28, 1994
D. The Company in the H and I offering, in order to raise
additional capital on an emergency basis, amended its Articles of
Organization to grant both the Series F and G and the new Series H and
I investors a liquidation preference that held priority over all common
stock and all prior preferred stock, and more than 2/3 of each class of
stock outstanding approved both amendments;
E. Pursuant to the Series F through I liquidation preferences,
in the event of a triggering event under Section 3. of Article 4 of the
amended Articles, the Series F through I stockholders would be paid
their full liquidation preferences prior to any payments to the junior,
Class A through E preferred stockholders in the amounts of $1.00 per
share for the Series F and G and $3.00 per share for the Series H and
I;
F. The April 29, 1993 stock purchase agreement gave the new,
Series H Preferred Stockholders the ability to require the Company to
redeem their 685,690 shares for $3.00 each as of October 31, 1994,
representing a total potential payment of $2,057,070, and the Series I
Preferred Stockholders the ability to require a redemption payment of
$300,000 as of October 31, 1998;
G. The Company recently conducted extensive, but ultimately
unsuccessful efforts to find a buyer for its operations, and currently
has a negligible to negative book value and the Directors therefore
anticipate that the Company will be incapable of paying the H
stockholders any material amount of their redemption, and have informed
the H stockholders of that fact;
H. The H Stockholders hold the right to take over the board of
Directors of the Company, and to take any other actions necessary to
enable them to enforce the redemption, and they acquired and are
holding the proxies from more than 2/3 of each class of stock
outstanding to enable the Chairman of the Board or the President to
vote the shares at the direction of 51% or more of the number of shares
of the Company's Class H Preferred Stock voting in any matter that the
holders of Class H Preferred Stock are entitled to vote (including,
without limitation, any vote of holders of the capital stock of the
Company upon a merger or sale of the Company or of all or substantially
all of the Company's assets and business or an amendment of the
Company's Amended Articles of Organization) (copy of proxy attached as
Exhibit H);
I. The H Stockholders have informed the Company that, unless
they and the Company can agree to an alternative to the redemption, the
H Stockholders will proceed to take all such actions as are necessary
and allowable under the terms of their redemption agreement and proxy;
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Agreement and Plan of Recapitalization Page 3
Bitstream Inc. Effective Date: October 28, 1994
J. Despite showing an operating profit over the last three
quarters as a result of the drastic restructuring of its operations,
the Company will continue to need all of its available cash on hand (an
amount that in any event will equal substantially less than $2,057,070
as of October 31, 1994) for the foreseeable future to continue to pay
off its creditors, fund its ongoing operations, and fund a modest
expansion to support its TrueDoc(TM) initiative;
K. Despite the Company's inability to pay a material portion
of the redemption amount, the H Stockholders have informed the Company
that they recognize that it is not in their or the Company's best
interests vigorously to pursue its collection, and have decided instead
to waive their redemption rights provided that the Company effects a
recapitalization that reflects their current liquidation preferences by
increasing their stock ownership in the recapitalized company, and also
reserves a certain amount of stock for the issuance upon exercise of
options and warrants to be granted as incentive compensation to
employees and outside service providers;
L. The I Stockholder also is willing to waive its future
redemption right subject to the recapitalization;
M. By the same token, the F, G, H & I Stockholders are willing
to deem any and all of their liquidation preferences satisfied that
might be triggered by the recapitalization;
N. Despite the failure of efforts to sell the Company and its
negligible book value, the stockholders and directors have agreed to
establish a value for the Company of approximately $5 million;
O. The Board of Directors believes that would assist the
Company in obtaining future debt and equity financing to simplify its
capital structure and reduce its existing eleven classes of stock down
to a minimum that is acceptable to its shareholders (including G
Preferred stockholder J.P. Morgan Capital Corporation which may own no
more than 5% of the voting stock of a corporation due to United States
banking laws);
P. Upon the completion of the proposed plan of
recapitalization, the undersigned F, G, H & I Stockholders will
represent the holders of a majority of the shares of New Stock
outstanding; and
Q. In the unanimous opinion of the Board of Directors, the
proposed plan of recapitalization will strengthen the equity
capitalization of the Company, and inure to the advantage and welfare
of the Company and its stockholders.
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Agreement and Plan of Recapitalization Page 4
Bitstream Inc. Effective Date: October 28, 1994
NOW THEREFORE, in consideration of the premises and the mutual
undertakings of the parties hereinafter set forth, the Company hereby adopts and
the H & I Stockholders and the F & G Stockholders hereby agree to the following
plan of recapitalization, and accept the rights conferred herein on behalf of
all of the stockholders of the Company:
SECTION 1
COVENANTS BY STOCKHOLDERS
1.1. Waiver of Redemption. Subject to the following sentence, the
undersigned H & I Stockholders, constituting the holders of more than 51% of the
outstanding H & I Stock, hereby waive any right of redemption that they may have
or had under the unamended Articles of Organization, subject to final approval
of this plan and the filing and effectiveness of the Amended Articles of
Organization referred to in the following Section 2. If the stockholders do not
approve this plan and agreement as of the Recapitalization Date, the H
Stockholders accordingly reserve the right to call for the redemption of their
shares on the Recapitalization Date and, upon the failure of the Company to
redeem, to exercise the proxies they now hold for the purpose of voting the
approval of this plan and agreement by the stockholders of the Company.
1.2. Liquidation. The undersigned F, G, H & I Stockholders hereby
covenant and agree that any and all rights that they may have or had under
Section 4.b.3. of the unamended Articles of Organization upon the effectiveness
of this plan and agreement to receive payment of any liquidation preference are
hereby deemed to be fully satisfied, subject to the full and final approval of
this Plan and Agreement of Recapitalization, and the filing and effectiveness of
the newly Amended Articles of Organization referred to in the following Section
2.
1.3. Cancellation and Restatement of Shareholder Agreements. As of the
Effective Date, the Company and the F, G, H & I Stockholders hereby waive and
cancel all rights held by the Company and said stockholders under any and all
outstanding prior stockholder agreements in return for the stockholder rights
stated herein and in the Amended Articles of Organization subject to completion
of the recapitalization provided for herein by the Recapitalization Date.
1.4. Confidential Information. The stockholders understand that certain
information that such stockholders will receive from the Company may constitute
confidential information of the Company (the "Confidential Information"). The
stockholders shall not disclose any such information identified to them in
writing as Confidential information except to those employees or independent
contractors of the stockholders who participate directly in the supervision and
review of the stockholders' investment in the Company or as required by law. The
stockholders shall take all reasonable steps necessary to protect the
Confidential Information, including, without
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Bitstream Inc. Effective Date: October 28, 1994
limitation, such steps as are equivalent to those used by the stockholders with
regard to their own Confidential Information.
1.5. Certain Provisions Regarding Transfers by Regulated Shareholder.
The undersigned Regulated Shareholder agrees and covenants as follows:
1.5.1. No shareholder that is a Regulated Shareholder (as
defined in Definitions section) may sell, assign, pledge, encumber or
otherwise transfer any shares of Class B Common or Class B Preferred
New Stock, or warrants for the purchase of the same (collectively, the
"Class B Shares"),except
(i) to the Company;
(ii) to other shareholders of the Company pursuant to
any contractual right of first offer existing in favor of
shareholders at the time of such transfer,
(iii) to an Affiliate of such Regulated Shareholder,
(iv) in connection with any merger, consolidation or
reorganization of the Company or sale of more than 50% of the
outstanding Common Stock of the Company (collectively, a
"reorganization"),
(v) in a registered public offering or a sale
pursuant to Rule 144 under the Securities Act (or any
successor rule or regulation),
(vi) in a private sale (otherwise than to the
Company, another shareholder as set forth in exception (ii)
above, an Affiliate or in a reorganization or public offering
or sale), provided that the Regulated Shareholder (A) shall
have first offered to the Company the right to purchase all of
such Class B Shares pursuant to a written offer that shall
have been open to acceptance for a period of at least ten
days, for cash at a price that did not exceed the price
obtained in the private sale, and (B) shall not knowingly sell
or otherwise transfer to any single person or group of persons
acting in concert a number of shares of Class B Shares that,
if converted into Class A Common Stock would represent more
than 2 percent of the shares of Class A Common Stock then
outstanding; or
(vii) upon the advice of counsel to such Regulated
Shareholder that such sale or other transfer is permitted
under the laws and regulations applicable to such Regulated
Shareholder.
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Bitstream Inc. Effective Date: October 28, 1994
1.5.2. Anything in this Agreement to the contrary
notwithstanding, in the event that it becomes unlawful for any
Regulated Shareholder to continue to hold some or all of the
New Stock or warrants held by it (or shares issued on
conversion of either of them) ("Shares"), or restrictions are
imposed on any such holder by any statute, regulation or
interpretation or decision of any governmental authority
which, in the reasonable judgment of such holder, make it
unduly burdensome to continue to hold such Shares, such holder
may sell or otherwise dispose of its Shares, and the Company
shall assist such Regulated Shareholder in disposing of its
Shares in a prompt and orderly manner, and, at the request of
such holder, shall provide (and authorize such Regulated
Shareholder to provide) financial and other information
concerning the Company to any prospective purchaser of the
Shares, provided, however, that any such prospective purchaser
shall enter into an agreement in writing with the Company to
keep such information confidential. Such Regulated Shareholder
shall reimburse the Company for all reasonable expenses
incurred by the Company in connection with the Company's
assistance of such holder hereunder.
SECTION 2
PLAN OF REORGANIZATION OF THE COMPANY
The following actions shall occur upon the final approval of this Plan of
Recapitalization:
2.1. Charter Amendment. The Amended Articles of Organization of the
Company, a copy of which is annexed hereto as Exhibit 2.1, shall be filed with
the Secretary of State of the Commonwealth of Massachusetts no later than
November 21, 1994. The said Articles shall, as of the Recapitalization Date,
revise the number of classes of common stock as follows:
2.1.1. Reduce the three common classes "A" through "C" to two
new classes "A" and "B" (referred to hereinafter as the "Common Stock"
or "Common New Stock"),
2.1.2. Reduce the current nine classes of preferred stock ("A"
through "I") to two (classes "A" and "B") (referred to hereinafter as
the "Preferred Stock" or "Preferred New Stock").
2.1.3. Each new class shall have $.01 per value and such
preferences, voting powers, qualifications, special or relative rights
or privileges as are set forth in Section 4 of the said Amended
Articles ("New Stock").
2.1.4. Class B New Stock shall be nonvoting (for the purposes
of the current Regulated Shareholder, and will be convertible subject
to
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Agreement and Plan of Recapitalization Page 7
Bitstream Inc. Effective Date: October 28, 1994
certain conditions, but are intended to be identical to Class
A Common and Class A Preferred, respectively in every other
material respect.
2.2. Recapitalization Date. The Recapitalization Date shall be
November 21, 1994. All the transactions described in this Section 2
shall be deemed to have been completed and effective as of the
Recapitalization Date.
2.3. Stock Certificates. Certificates representing the New
Stock issued hereunder shall bear legends substantially as follows:
- For both Common & Preferred New Stock:
"The shares evidenced by this certificate
(a) have not been registered under the
Securities Act of 1933, as amended (the
"Act"), and such shares cannot be sold,
transferred or hypothecated unless and until
a registration statement under the Act goes
into effect as to such transfer or the
Corporation has received an opinion of
counsel acceptable in form and substance to
the Corporation that such registration is
not required in order for such transfer to
comply with the Act,
(b) are subject to restrictions on transfer
contained in the Amended Articles of
Organization filed with the Secretary of
State of the Commonwealth (Rights of First
Purchase),"
(c) represent one of several classes of stock of
the Corporation. The full text of the
designations, preferences, powers, and
special and relative rights of the shares of
each such class and series of stock, as set
forth in the Amended Articles of
Organization, will be furnished to the
holder of this certificate upon written
request to the Corporation and without
charge
- and for Preferred New Stock only:
"(c) are subject to restrictions on transfer
contained in The Plan and Agreement of
Reorganization dated October 26, 1994,
Section 5 (Rights of Co-Sale)."
2.4. Conversion of Old Stock into New Stock. On the
Recapitalization Date, all of the outstanding shares of the
Corporation's capital stock shall be converted automatically as
follows:
- Shares of Classes A & B Common Old Stock and A, B, C,
& D Preferred Old Stock shall become shares of a
single Class A Common Stock
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Agreement and Plan of Recapitalization Page 8
Bitstream Inc. Effective Date: October 28, 1994
- Shares of Class C Common Old Stock and Class E
Preferred shall become shares of a single class of
Class B Common New Stock (nonvoting);
- Preferred Classes F, H & I of Old Stock shall become
shares of a single class of Class A Convertible
Preferred New Stock; and
- Preferred Class G of Old Stock shall become shares of
a single class of Class B Convertible Preferred New
Stock (nonvoting).
2.5. Conversion Table. The actual conversion shall occur according to
the following chart with respect to all shares of stock outstanding:
Shares of Shares of
Class of Old Stock Class of New Stock Subtotals of Split
Old Stock Outstanding New Stock Outstanding New Stock Ratio (%)
- --------- ----------- --------- ----------- ------------ ---------
New Common:
To Board of
Directors: 'A' Common 180,000 N/A
A Common 1,842,700 'A' Common 122,846 6.66667
B Common 0 'A' Common 0 N/A
A Preferred 955,180 'A' Common 63,678 6.66667
B Preferred 0 'A' Common 0 6.66667
C Preferred 688,952 'A' Common 45,930 Tot. A Common 6.66667
D Preferred 154,321 'A' Common 10,288 422,742 6.66667
--------- ---------
C Common* 332,461 'B' Common* 22,164 Tot. B Common 6.66667
E Preferred* 361,983 'B' Common* 24,132 46,296 6.66667
--------- ---------
New Preferred:
F Preferred 1,831,800 'A' Preferred 1,831,800 100.00000
H Preferred 685,690 'A' Preferred 2,057,070 Tot. A Preferred 300.00000
I Preferred 100,000 'A' Preferred 300,000 4188,870 300.00000
--------- ---------
G Preferred* 586,744 'B' Preferred* 586,744 B Pref'd: 586,744 100.00000
--------- --------- ---------
Totals: 7,539,831 5,244,652 5,244,652
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2.6. Exchange of Stock Certificates. Promptly after the
Recapitalization Date, each stockholder shall surrender to the Company
certificates representing all of its or his shares of Old Stock in exchange by
for the issuance the Company of the shares listed above as New Stock.
2.7. Automatic Effect. In the case of any Old Stock for which the
Company does not receive and exchange the certificate, the existing certificate
for such Old Stock nonetheless shall be deemed automatically to represent
converted shares of the New Stock equal to the integer obtained by
- -------------------
*Nonvoting stock
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Agreement and Plan of Recapitalization Page 9
Bitstream Inc. Effective Date: October 28, 1994
multiplying the applicable Split Ratio times the number of shares of Old Stock
held as of the Recapitalization Date of this Plan. Attached as Schedule 2.7 is a
listing of the resulting holdings of New Stock of each shareholder after the
Recapitalization Date.
2.8. No Fractional Shares. Where the application of the Split Ratio to
the Old Stock results in a fractional (decimal) number, the holder shall receive
a cash payment equal to fractional number minus its integer.
2.9. Warrants and Options. All outstanding warrants and options for Old
Stock shall, as of the Recapitalization Date, become exercisable automatically
for New Stock of the appropriate class in the Split Ratio stated above. The
Company will issue new warrants and options at the appropriate ratio to any
holder who turn its or his old ones.
2.10. New Option Shares. In order to provide further incentives to
retain and motivate key employees and service providers, and to implement the
equivalent of its management incentive plan of March 1994, which contemplated
substantial payments by the Company to key employees in the event that the
Company were to be sold or merged for proceeds in excess of $3 million, the
Company shall reserve an additional 2,750,000 shares of Common New Stock for
issuance under an Incentive Stock Option Plan both to the participants in the
said incentive plan and to additional key employees on an as needed basis, and
under warrants for issuance to key outside service providers (consultants,
directors, etc.) whose continued efforts and loyalty are deemed vital to the
continued turnaround and resumed success of the Company (the "New Option
Shares").
2.11. Tax Treatment. This Agreement and Plan of Recapitalization is
intended to take effect as a plan of reorganization within the meaning of
Section 368(a)(1)(E) of the Internal Revenue Code of 1986, as amended.
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Bitstream Inc. Effective Date: October 28, 1994
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants as follows:
3.1. Organization and Standing of the Company. The Company is a duly
organized and validly existing corporation in good standing under the laws of
the Commonwealth of Massachusetts and has all requisite and corporate power and
authority to own and operate its property and to carry on its business as now
conducted and as now proposed to be conducted. The Company is duly licensed or
qualified to do business in each jurisdiction where the ownership or leasing of
property or the nature of the activities conducted by it makes such
qualification necessary.
3.2. Corporate Action. The Company holds all necessary corporate power
and has taken all corporate action required to make all the provisions of this
Agreement and any other agreement and instrument executed in connection herewith
the valid and enforceable obligations they purport to be. Sufficient shares of
authorized but unissued Common Stock and Preferred Stock of the Company have
been reserved by appropriate corporate action in connection with the issuance of
the shares of Preferred Stock hereunder. Upon issuance, the shares of Preferred
Stock to be issued hereunder, and the shares of Common Stock issuable upon the
conversion of such Preferred Stock will not fall subject to preemptive or other
preferential rights or similar statutory or contractual rights, either arising
pursuant to any agreement or instrument to which the Company is a party or which
are otherwise binding upon the Company.
3.3. Governmental Approvals. No authorization, consent, approval,
license, filing or registration with any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, is or
will be necessary for or in connection with the execution or delivery by the
Company of this Agreement or the issuance by the Company of the Preferred Stock
to be issued hereunder other than the filing of the Amended Articles of
Organization.
3.4. Restrictions on Transfer of Capital Stock. There are no general
restrictions on the transfer of shares of the Common or Preferred Stock of the
Company, other than those (a) imposed on the stockholders pursuant to the
provisions of Sections 7.1 & 7.2 hereof, (b) that may be set forth on the stock
certificates in accordance with Section 2.3 hereof, or (c) are imposed by
relevant domestic and foreign securities laws.
3.5. Financial Information. Copies of the financial statements of the
Company have previously been provided to all holders of stock of the Company for
the twelve-month period ended September 30, 1993 and for the eleven-month period
ended August, 1994. An additional, unaudited financial
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Agreement and Plan of Recapitalization Page 11
Bitstream Inc. Effective Date: October 28, 1994
statement for the month of September, 1994 is also provided herewith (copies
will be attached to the final, executed version of this Agreement as Exhibit
3.5).
3.5.1. Audited Statements. The financial statements for the
twelve-month period ended September 30, 1993 present fairly the
financial position of the Company as at the dates thereof and its
results of operations for the periods covered thereby and have been
prepared in accordance with generally accepted accounting principles
applied on a consistent basis. The Company bears no liability,
contingent or otherwise, not disclosed in the aforesaid audited
financial statements or in the notes thereto that could, together with
all such other liabilities, materially affect the financial condition
of the Company, nor does the Company have any reasonable grounds to
know of any such liability.
3.5.2. Recent, Unaudited Statements. The financial statements
attached for the twelve-month period ended September, 1994 are
estimated, have not been audited, and are subject to year-end
adjustments that may include normal recurring items and certain
anticipated, one-time restructuring charges. The Fiscal Year 1995
Budget that is also attached is merely a projection, and no assurance
can be given that it will correspond to actual Fiscal Year 1995 events.
3.5.3. Financial Changes. Since the date of said financial
statements, (a) there has been no material adverse change in the
business, assets or condition, financial or otherwise, operations or
prospects of the Company; and (b) to the best of the Company's
knowledge, neither the business, condition, operations, or prospects of
the Company nor any of its properties or assets has been materially
adversely affected as the result of any legislative or regulatory
change, any revocation or change in any franchise, license or right to
do business, or any other event or occurrence, whether or not insured
against.
3.6. Deferral of Repurchase (re the "Regulated Shareholders"). The
Company shall not directly or indirectly convert, redeem, purchase or otherwise
acquire any shares of any class of Common Stock or Preferred Stock of the
Company unless the Company gives prior written notice (the "Company Notice") of
such action to each Regulated Shareholder (as defined at Section 8). The Company
will defer making any such conversion, redemption, purchase or other acquisition
for a period of 10 business days after the giving of such notice in order to
allow each Regulated Shareholder to determine whether it wishes to convert or
take any other action with respect to the stock of the Company that it owns or
controls. The Company Notice shall be deemed given when received by each
Regulated Shareholder and may, if the Company so elects, be sent to such
Regulated Shareholder by telefax. The Company Notice shall contain a statement
as to (i) the total number of shares of each class of Common Stock and or
Preferred Stock of the Company to be converted, redeemed, purchase d or
otherwise acquired and (ii) the total number of
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Bitstream Inc. Effective Date: October 28, 1994
shares of each class of Common Stock and or Preferred Stock of the Company that
will be outstanding immediately following such conversion, redemption, purchase,
or other acquisition.
3.7. Repurchase of Certain Shares Held by Regulated Shareholder. In the
event that the Company proposes a redemption, purchase or other acquisition
("Share Purchase"): (i) any shares of any class of Common Stock of the Company
or (ii) any shares of any class of Preferred Stock of the Company where as a
result of such Share Purchase of Preferred Stock any Regulated Shareholder is
required to convert any shares of Preferred Stock of the Company or warrants for
such shares then held by such Regulated Shareholder into shares of Common Stock
in order to remain in compliance with any law, rule, regulation, interpretation
or other requirement of any Person at the time applicable to such Regulated
Shareholder; and as a result of any such Share Purchase, the number of
outstanding shares of Common Stock of the Company held by any Regulated
Shareholder plus the number of such shares issuable upon exercise of outstanding
warrants therefor held by such Regulated Shareholder, together with those held
by its Affiliates would constitute more than 24.9% of the total number of shares
of Common Stock then outstanding (the "Maximum Permitted Percentage") (any such
Share Purchase shall hereinafter be referred to as a "24.9% Transaction"), such
Regulated Shareholder shall have the right to require the Company to purchase
such number of shares (or any portion thereof) of Common Stock held by such
holder as would be necessary to maintain such holder's aggregate holdings at the
Maximum Permitted Percentage following the execution of such 24.9% Transaction
(the "Excess Shares"). The purchase price per share for the Excess Shares shall
be equal to (i) $.60 in the case of Common Stock and (ii) $1.00 in the case of
Preferred Stock (both as adjusted accordingly for any stock splits up or splits
down, stock dividends or other recapitalizations of the company occurring after
the Recapitalization Date). The sale of any Excess Shares elected to be sold
shall occur prior to or concurrent with the proposed 24.9% Transaction and shall
be made upon surrender by such Regulated Shareholder of the certificates
evidencing such Excess Shares (accompanied by appropriate stock transfer powers)
against full payment by the Company payable to the order of such Regulated
Shareholder or, at the request of any such holder, by wire transfer of
immediately available funds to a bank designated by such holder.
///////////
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Agreement and Plan of Recapitalization Page 13
Bitstream Inc. Effective Date: October 28, 1994
SECTION 4
COVENANTS OF THE COMPANY
(Applicable to Stated Share Thresholds)
4.1. Quarterly Financial Statements. The Company will furnish or cause
to be furnished as soon as available, copies of any quarterly financial
statements prepared by the Company for internal purposes to holders of greater
than 5,000 shares of the New Stock of the Company.
4.2. Maintenance of Records, Inspection. The Company will keep complete
records and books of account in accordance with generally accepted accounting
principles applied on a consistent basis, and permit representatives of each
holder of greater than 500,000 shares of the Preferred New Stock to examine and
make copies of its records and books of account.
4.3. Board of Directors' Meetings; Discussion of Financial Affairs of
Company with Officers. Each holder of greater than 500,000 shares of the
Preferred New Stock shall be entitled to receive notice of and to attend
meetings of the Board of Directors of the Company and to discuss the financial
affairs of the Company with the Company's officers, and to receive all material
information distributed to members of the Board of Directors when distributed to
such members; provided, that any information disclosed or furnished to such
shareholder (or its or his nominee) which shall have been indicated or
designated as being "Confidential" shall be maintained as confidential and shall
not be disclosed by any shareholder (or its or his nominee) to any other person
except the employees and consultants of such Investor on a need-to-know basis
consistent with the purposes of this Agreement.
4.4. Adjustment of Thresholds. The share thresholds stated herein shall
be adjusted accordingly for any stock splits up or splits down, stock dividends
or other recapitalizations of the company occurring after the Recapitalization
Date.
4.5. Assignment of Rights to Information. The rights granted pursuant
to Sections 4.1 - 4.3. may be assigned or otherwise conveyed by a holder of New
Stock or by any subsequent purchaser or by any subsequent assignee or transferee
of any such rights in connection with a transfer of any of the New Stock;
provided, however, that such assignee or transferee (i) is not itself, does not
control and is not controlled by, directly or indirectly, any competitor or the
Company, (ii) shall agree to be bound by the provisions of Section 1.4 of this
Agreement, and (iii) is subject to the same share ownership limits as provided
in this Section 4 (as adjusted per Section 4.4). The Purchaser or any subsequent
assigned or transferee of such rights shall notify the Company in writing of any
such transfer,
4.6. Termination of Covenants. The covenants in this Section 4 shall
terminate and cease to have any further force and effect upon the date when a
16
Agreement and Plan of Recapitalization Page 14
Bitstream Inc. Effective Date: October 28, 1994
registration statement on Form S-1 filed by the Company under the 1933
Securities Act in connection with the first underwritten public offering of its
securities becomes effective, provided that at such time the Company falls
subject to the reporting requirements under the 1934 Securities Exchange Act, as
amended.
SECTION 5
RIGHT OF CO-SALE
(Applicable to holders of Preferred Shares)
5.1. Except as provided at Section 5.2 hereto, each holder of shares of
the Preferred New Stock (referred to within this Section as the "Co-Sale
Shareholders") hereby agrees to the following right of co-sale with respect to
any sale or agreement to sell, for value, any shares of Preferred Stock owned by
any holder of shares of the Preferred New Stock (or its or his respective
donees, transferrees, or assignees per Section 5.5 below) (referred to within
this Section as the "Selling Shareholder"):
5.1.1. Notice Required. No Selling Shareholder shall complete
a sale of its or his shares covered by this Section without first
giving written notice in reasonable detail to each other Co-Sale
Shareholder at least 30 days prior to such sale or agreement to sell.
The Selling Shareholder shall follow up the initial notice with
additional 30-day notices in the event of any material changes of the
terms of the offering in price or nature of the securities offered.
5.1.2. Terms of Co-Sale Right. The Selling Shareholder must
afford to each other Co-Sale Shareholder the opportunity to sell in
such offering, on the same terms and price per share at which the
Selling Shareholder intends to sell its or his shares, the number of
shares of Preferred Stock held by such Co-Sale Shareholder that
represents the same proportion of such Co-Sale shareholder's holdings
of Preferred Stock as the number of shares of Preferred Stock to be
sold by the Selling Shareholder bears to the total number of shares of
Preferred Stock then held by the Selling Shareholder.
5.1.3. Response by Co-Sale Shareholders. Each Co-Sale
Shareholder shall have twenty days following receipt of the initial
notice or any subsequent follow up notice from a Selling Shareholder to
respond with a request to participate in the offering on the terms
stated in the notice.
5.1.4. Transfers for Other than Value. Each Co-Sale
Shareholder agrees that it or he will not transfer for other than
value, by gift, assignment or otherwise unless the transferee agrees in
writing with each Co-Sale Shareholder to follow the provisions of this
Section 5.
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Agreement and Plan of Recapitalization Page 15
Bitstream Inc. Effective Date: October 28, 1994
5.2. Exceptions to Co-Sale Rights. Notwithstanding anything to the
contrary provided herein, the co-sale rights granted pursuant to this Section 5
shall not apply to:
5.2.1. Sales or agreements to sell less than 100,000 shares of
Preferred Stock during any twelve-month period,
5.2.2. Transfers to the Selling Shareholder's family members
for estate planning purposes, or
5.2.3. Sales or agreements to sell to the Company, or
5.2.4. Sales or agreements to sell to an Affiliate.
SECTION 6
PREEMPTIVE RIGHTS
(Applicable to "Accredited Investors")
6.1. Preemptive Rights. Except as provided in Section 6.2 herein, the
Company grants this right to each shareholder that qualifies as an Accredited
Investor as defined for the purpose of private placements pursuant to Regulation
D (Rules 501 through 506 of the Securities and Exchange Commission), or any
successor provision (an "Accredited Investor") the right to purchase or
otherwise acquire a portion of new securities that the Company may from time to
time propose to issue and sell. These preemptive rights apply to any new
securities that the Company issues after the date hereof up to a limit, with
respect to each Accredited Investor, equal to the percentage of the offering
that such investor's shares bears to the total number of outstanding shares. For
purposes of this Section 6, the term "Newly Issued Securities" shall mean any
capital stock of the Company whether now authorized or not, and any rights,
options or warrants to purchase capital stock and securities convertible into
capital stock other than those excepted by Section 6.2.
6.1.1. Notice. The Company shall give each Accredited Investor
written notice between thirty (30) and ninety (90) days prior to the
proposed date of issuance as stated therein. The Notice shall describe
the type and price of Newly Issued Securities to be issued, and the
general terms upon which the Company proposes to effect their issuance.
The Company shall follow up the initial notice with additional 30-day
notices of any material changes of the terms of the offering in price
or nature of the securities offered.
6.1.2. Accredited Investor Response Required. Each Accredited
Investor must supply the Company with a written response no later than
twenty (20) days after the written notice stating the maximum number of
Newly Issued Securities the Accredited Investor agrees to purchase.
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Agreement and Plan of Recapitalization Page 16
Bitstream Inc. Effective Date: October 28, 1994
6.1.3. All Shares Subscribed For. If all of the Newly Issued
Securities are subscribed for pursuant to this provision, then the
Company shall sell the Newly Issued Securities to the Accredited
Investors on the date of issuance as stated in the Notice. If the
number of Newly Issued Securities subscribed for shall exceed the
number offered, the shares to be sold shall be allocated among the
accepting Accredited Investors, insofar as reasonably practicable, in
relation to their then holdings of the Company.
6.1.4. Unsubscribed Shares. If less than all of the shares or
other securities of the Newly Issued Securities are subscribed for,
then the Company may sell all of the shares or other securities of the
Newly Issued Securities to any person, corporation or entity upon the
same price, terms and conditions as set forth in the Notice for a
period of ninety (90) days following the sale dated as set forth in the
Notice.
6.1.5. Loans from Shareholders. The Company and the Accredited
Investors acknowledge that certain of the Accredited Investors have
loaned money to the Company (either directly or by deferring receipt of
compensation income), and that one or more of them may loan money to
the Company in the future. The Company and the Accredited Investors
agree that in the event that any Accredited Investor elects to purchase
any portion of the Newly Issued Securities, he may pay for all or part
of the purchase by canceling all or a part of the debt owed to him or
the Company, even though such debt at the time is not yet due and
payable. The Company agrees that it will accept such cancellation of
debt in lieu of cash.
6.2. Exceptions to Preemptive Rights. Notwithstanding anything to the
contrary provided herein, the preemptive rights granted pursuant to this Section
6 shall not apply to the:
6.2.1. issuance of any securities upon conversion of any class
of convertible Preferred Stock of the Company or any class of Common
Stock into any other securities issued by the Company, or upon the
exercise of any outstanding warrants or options
6.2.2. issuance of any options or warrants for the New Option
Shares (per Section 2.10), or shares pursuant to the same.
6.2.3. sale of securities in a public offering, or
6.2.4. issuance of securities pursuant to any stock dividend
or other pro rata distribution to shareholders declared by the Board of
Directors of the Company.
6.3. Issuances to Regulated Shareholders. At the option of any
Regulated Shareholder, the right to purchase granted hereby may be exercisable
for shares of, or rights or options to purchase shares of or shares
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Agreement and Plan of Recapitalization Page 17
Bitstream Inc. Effective Date: October 28, 1994
convertible into or exchangeable for shares of Common Stock or Preferred Stock
of the same class then held by such holder or equivalent non-voting securities.
If the right to purchase granted hereby is exercised for such shares, etc., and
if, because of such exercise, the Company is required to issue a new class or
new classes of non-voting securities, the said Regulated Shareholder shall bear
all fees, costs and expenses of each issuance of a new class or new classes of
non-voting securities, up to a maximum aggregate amount of $5,000.
SECTION 7
REGISTRATION
(Applicable to All New Stock)
7.1. Piggyback Registration. Notice by Company. If at any time or times
after the Recapitalization Date the Company shall determine to register shares
of its Common Stock under the Securities Act (other than (a) the registration of
an offer and sale of securities to employees of or other persons providing
services to the Company pursuant to an employee or similar benefit plan,
registered on Form S-8 or comparable form; or (b) relating to a merger,
acquisition or other transaction of the type described in Securities Act Rule
145 or comparable rule, registered on Form S-14, Form S-15 or similar form), the
Company shall send prompt written notice of such determination to each Person
who is a stockholder or holding an option or warrant issued pursuant to the
reservation of the New Option Shares ("Investor").
7.1.1. Inclusion in Registration. If within 20 days after
receipt of such notice such Investor shall so request in writing, the
Company shall use its best efforts to include in such registration
statement all or any part of such holder's New Stock or such stock as
may be issued or issuable upon conversion thereof or upon exercise of
an option or warrant issued pursuant to the reservation of the New
Option Shares (the "Registrable Shares") as such holder requests to be
registered; provided, however:
7.1.1.1. First Offering. In the case of the first
such registration of Common Stock by the Company, the Company
shall not be required to register any Registrable Shares which
the principal underwriter of a firm commitment underwritten
offering shall reasonably and in good faith refuse in writing
to include in such offering; and provided, further, that in
the event of such refusal by such principal underwriter, then
the Company will ensure that each holder of Registrable Shares
may participate proportionately with all other holder of
Registrable Shares to be included in such offering.
7.1.1.2. Secondary Offering. If the registration is
exclusively of a secondary offering, each holder of
Registrable Shares shall bear its proportionate share of the
expenses of the registration and offering, except expenses
which the Company
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Agreement and Plan of Recapitalization Page 18
Bitstream Inc. Effective Date: October 28, 1994
would have incurred whether or not registration was attempted,
including without limitation the expense of preparing normal
audited or unaudited financial statements or summaries consistent
with this Agreement or applicable reports to the Securities and
Exchange Commission.
7.2. Required Registration. The holders of not less than 50% of the
Registrable Shares then held by the stockholders shall have the right,
exercisable on any two occasions after the closing of a Public Offering, to
require the Company to use its best efforts to cause not less than 30% of the
Registrable Shares then held by the stockholders to be registered under the
Securities Act as expeditiously as possible. Such right shall be exercised by a
written notice from such holders to the Company which designates the number of
Registrable Shares then held by such holders as to which such registration is
sought .
7.3. Registration on Form S-3. In addition to the rights provided the
holders of Registrable Shares in Sections 7.1 & 7.2 above, if the registration
of Registrable Shares under the Securities Act can be effected on Form S-3 (or
any similar form promulgated by the SEC), the Company will promptly so notify
each holder of the Registrable Shares, including each holder who has a right to
acquire Registrable Shares, and then will at any time, and from time to time
thereafter, as expeditiously as possible, use its best efforts to effect
qualification and registration under the Securities Act on said Form S-3 of all
or such portion of the Registrable Shares as the holder or holders shall
specify.
7.4. Effectiveness. The Company will use its best efforts to maintain
for up to nine months the effectiveness of any registration statement pursuant
to which any of the Registrable Shares are being offered, and from time to time
will amend or supplement such registration statement and the prospectus
contained therein as and to the extent necessary to comply with the Securities
Act and any applicable state securities statute or regulation.
7.5. Indemnification. In the event any Registrable Shares are included
in a registration statement under this Agreement:
7.5.1. Of Holder. To the extent permitted by law, the Company
will indemnify and hold harmless each holder requesting or joining in a
registration, any underwriter (as defined in the Securities Act of
1933) for it, and each Person, if any, who controls such holder or
underwriter within the meaning of the Securities Act of 1933 ("Holder
Indemnitee"), against any losses, claims, damages, or liabilities,
joint and several, to which they may become subject under the
Securities Act of 1933 or otherwise, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or
are based on any untrue or alleged untrue statement of any material
fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, or arise out of or are based upon
the omission or alleged
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Agreement and Plan of Recapitalization Page 19
Bitstream Inc. Effective Date: October 28, 1994
omission to state therein a material fact required to be stated
therein, or necessary to make the statements therein not misleading or
arise out of any violations by the Company of any rule or regulation
promulgated under the Securities Act of 1933 applicable to the Company
and relating to action or inaction required of the Company in
connection with any such registration; and will reimburse each such
Holder Indemnitee for any legal or other expenses reasonably incurred
by them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this subsection 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 shall not be unreasonably withheld)
nor shall the Company be liable in any such case for any such loss,
claim, damage, liability or action to the extent that it arises out of
or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in connection with such registration
statement, preliminary prospectus, final prospectus, or amendments or
supplements thereto, in reliance upon and in conformity with written
information furnished expressly for use in connection with registration
by any such Holder Indemnitee.
7.5.2. Of Company. To the extent permitted by law, each holder
of Registrable Shares requesting or joining in a registration will
indemnify and hold harmless the Company, each of its directors, each of
its officers who have signed the registration statement, each person,
if any, who controls the Company within the meaning of the Securities
Act of 1933, and each agent and any underwriter for the Company (a
"Company Indemnitee") (within the meaning of the Securities Act of
1933) against any losses, claims, damages, or liabilities to which the
Company Indemnitee may become subject, under the Securities Act of 1933
or otherwise, insofar as such losses, claims, damages, or liabilities
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in such registration
statement, including any preliminary or final prospectus contained
therein or any amendments of supplements thereto, arise out of or are
based upon 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, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in such registration statement,
preliminary or final prospectus, or amendments or supplements thereto,
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 reimburse any legal or other expenses
reasonably incurred by the Company or any such Company Indemnitee in
connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the
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Agreement and Plan of Recapitalization Page 20
Bitstream Inc. Effective Date: October 28, 1994
indemnity agreement contained in this subsection 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 such
holder (which consent shall not be unreasonably withheld), and further
provided that such holder's obligations hereunder shall be limited to
an amount equal to the net proceeds realized by such holder of
Registrable Shares pursuant to the sale of such Registrable Shares in
such registration.
7.5.3. Method of Indemnification. Promptly after receipt by an
indemnitee under this section of notice of the commencement of any
action, such indemnitee will, if a claim in respect thereof is to be
made against any indemnifying party under this subsection, notify the
Indemnifying Party in writing 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 notified, to assume the defense thereof
with counsel mutually satisfactory to the parties. The failure to
notify an indemnifying party promptly of the commencement of any
action, if and only if prejudicial to his ability to defend such
action, shall relieve such Indemnifying Party of any liability to the
Indemnified Party under this subsection, but the omission so to notify
the Indemnifying Party will not relieve him of any liability that he
may have to any Indemnified Party otherwise than under this subsection.
7.6. Exchange Act. If the Company falls subject to the reporting
requirements of either Section 13 or Section 15(d) of the Exchange Act, the
Company will use its best efforts to timely file with the SEC such information
as the SEC may require under either of said Sections; and in such event, the
Company shall use its best efforts to take all action as may be required as a
condition to the availability of Rule 144 under the Securities Act (or any
successor exemptive rule hereinafter in effect) with respect to its Common
Stock. The Company shall furnish to any holder of Registrable Shares forthwith
upon request (a) a written statement by the Company as to its compliance with
the reporting requirements of Rule 144, (b) a copy of the most recent annual or
quarterly report of the Company as filed with the SEC, and (c) such other
reports and documents as such holder may reasonably request in availing itself
of any rule or regulation of the SEC allowing a holder to sell any such
Registrable Shares without registration.
7.7. Damages. The Company recognizes and agrees that holders of the
Registrable Shares will not have an adequate remedy at law if the Company fails
to comply with the provisions of this Section 7 and that damages will not be
readily ascertainable. The Company therefore expressly agrees that, in the event
of such failure, it shall not oppose an application by the holders of
Registrable Shares or any other person entitled to the benefits of this Section
7 requiring specific performance of any and all provisions of this Section 7
enjoining the Company from continuing to commit any such breach of this Section
7.
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Agreement and Plan of Recapitalization Page 21
Bitstream Inc. Effective Date: October 28, 1994
7.8. Further Obligations of the Company. Whenever, under the preceding
provisions of this Section 7, the Company is required hereunder to register
Registrable Shares, it agrees that it shall also do the following:
7.8.1. Furnish to each selling holder of Registrable Shares
such copies of each preliminary and final prospectus and such other
documents as such holder may reasonably request to facilitate the
public offering of its Registrable Shares;
7.8.2. Use its best efforts to register or qualify the
Registrable Shares covered by said registration statement under the
applicable securities or "blue sky" laws of such jurisdictions as any
selling holder may reasonably request; provided, however, that the
Company shall not be obligated to qualify to do business in any
jurisdiction where it is not then so qualified or to take any action
which would subject it to the service of process in suits other than
those arising out of the offer or sale of the securities covered by the
registration statement in any jurisdiction where it is not then so
subject;
7.8.3. Furnish to each selling holder a signed counterpart of
(i) an opinion of counsel for the Company, dated the
effective date of the registration statement, and
(ii) "comfort" letters signed by the Company's
independent public accountants who have examined and reported
on the Company's financial statements included in the
registration statement, to the extent permitted by the
standards of the American Institute of Certified Public
Accountants,
covering substantially the same matters with respect to the
registration statement (and the prospectus included therein) and (in
the case of the accountants "comfort" letters) with respect to events
subsequent to the date of the financial statements, as are customarily
covered in opinions of issuer's counsel and in accountants' "comfort"
letters delivered to the underwriters in underwritten public offerings
of securities, to the extent that the Company is required to deliver or
cause the delivery of such opinion or "comfort" letters to the
underwriters in an underwritten public offering of securities;
7.8.4. Permit each selling holder or his counsel or other
representative to inspect and copy such corporate documents and records
as may reasonably be requested by them;
7.8.5. Furnish to each selling holder a copy of all documents
filed and all correspondence from or to the SEC in connection with any
such offering; and
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Agreement and Plan of Recapitalization Page 22
Bitstream Inc. Effective Date: October 28, 1994
7.8.6. Use its best efforts to insure the obtaining of all
necessary approvals from the National Association of Securities
Dealers, Inc.
7.9. Expenses. In the case of a registration under Section 7.1 (except
as otherwise provided in the case of registration which is exclusively of a
secondary offering) or Section 7.2, the Company shall bear all costs and
expenses of each such registration, including, but not limited to, printing,
legal and accounting expenses, SEC filing fees and "blue sky" fees and expenses;
provided, however, that the Company shall have no obligation to pay or otherwise
bear (a) any portion of the fees or disbursements of more than one counsel for
the selling holders of Registrable Shares in connection with the registration of
their Registrable Shares in connection with the registration of their
Registrable Shares, or (b) any portion of the underwriters' commissions or fees
attributable to the registration of Registrable Shares.
SECTION 8
DEFINITIONS
8.1. Affiliate. shall mean with respect to any Person, any other
person, directly or indirectly controlling, controlled by or under common
control with such Person. For the purpose of the above definition, the term
"control" (including with correlative meaning, "controlling," "controlled by,"
"under common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or by contract or otherwise.
8.2. "Person" shall mean an individual, a partnership, corporation,
trust, joint venture, an unincorporated association, or a government or any
department or agency thereof.
8.3. "Regulated Shareholder" shall mean (i) any stockholder that is
subject to the provisions of Regulation Y of the Board of Governors of the
Federal Reserve System (12 C.F.R. Part 225) or any successor to such
25
Agreement and Plan of Recapitalization Page 23
Bitstream Inc. Effective Date: October 28, 1994
regulation ("Regulation Y") and to which shares of Class B Common Stock and
Class B Preferred Stock of the Corporation are issued pursuant to the
recapitalization effected with these Articles, so long as such stockholder shall
hold such shares of Common Stock or Preferred Stock or shares issued upon
conversion of such shares, or warrants to purchase any shares of those classes,
(ii) any Affiliate of any such Regulated Shareholder that is a transferee of any
shares of Common Stock or Preferred Stock of the Corporation or warrants for the
same, so long as such Affiliate shall hold, and only with respect to, such
shares of Common Stock or Preferred Stock or shares issued upon conversion of
such shares and (iii) any Person to which such Regulated Shareholder or any of
its Affiliates has transferred such shares or warrants, so long as such
transferree shall hold, and only with respect to, any shares or warrants
transferred by such stockholder or Affiliates or any shares issued upon
conversion of such shares or exercise of such warrants but only if such Person
(or any Affiliate of such Person) falls subject to the provisions of Regulation
Y.
SECTION 9
MISCELLANEOUS
9.1. Survival. The agreements and covenants contained in Sections 1, 4,
5, 6, 7 & 8 shall survive the Effective Date
9.2. No Waiver; Cumulative Remedies. No failure or delay on the part of
a party or stockholder in exercising any right, power or remedy hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise there or the
exercise of any other right, power or remedy hereunder.
9.3. Amendments, Waivers, and Consents. Notwithstanding any provision
in this Agreement to the contrary, changes in or additions to this Agreement may
be made, and compliance with any covenant or provision herein set forth may be
omitted or waived with respect to the party affected thereby by a writing signed
by that party.
9.4. Notices. All notices, hereunder shall be in writing to the Company
at its headquarters address (cc: Legal Department) and to the shareholders at
their addresses as stated in the stockholder records of the Company, or at such
other address as any party hereto may designate in writing.
9.5. Costs, Expenses and Taxes. Each party to this Agreement shall bear
his or its own legal or other related expenses in connection with the
preparation and/or negotiation of this Agreement.
9.6. Brokers, etc. There is no broker, finder, etc. with any right to
any commission in connection with this Agreement.
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Agreement and Plan of Recapitalization Page 24
Bitstream Inc. Effective Date: October 28, 1994
9.7. Binding Effect; Assignment. This Agreement shall be binding upon
and inure to the benefit of the Company, each of the stockholders, and their
respective successors and assigns.
9.8. Governing Law. The laws of the Commonwealth of Massachusetts shall
govern this Agreement.
In Witness Whereof, the parties hereto have executed this Agreement, as
of the Effective Date.
JHI DEVELOPMENT CAPITAL LIMITED PRIVEST I N.V.
By: /s/ Robert A. Christensen By: /s/
------------------------------- -------------------------------
Robert A. Christensen, Director
BANCBOSTON VENTURES, INC. J.P. MORGAN CAPITAL CORP.
By: /s/ Peter Roberts By: /s/ Mark Hulak
------------------------------- -------------------------------
Peter Roberts Mark Hulak
PRIVEST II N.V.
/s/ James W. Sole By: /s/
- ----------------------------------- -------------------------------
James W. Sole
/s/ Amos Kaminski /s/ Morton E. Goulder
- ----------------------------------- -----------------------------------
Amos Kaminski Morton E. Goulder
/s/ Susan D. Johnson /s/ David G. Lubrano
- ----------------------------------- -----------------------------------
Susan D. Johnson (nee' Gosselin) David G. Lubrano
INTERFID LTD.
By: /s/ /s/ George B. Beitzel
------------------------------- -----------------------------------
George B. Beitzel
GEORGE BEITZEL TRUST
By: /s/ George B. Beitzel /s/ John Collins
------------------------------- -----------------------------------
George B. Beitzel, Trustee John Collins
BITSTREAM INC.
By: /s/ C. Ray Boelig
-------------------------------
C. Ray Boelig, President