EXHIBIT 4.3
COMMERX, INC.
INVESTOR RIGHTS AGREEMENT
This Investor Rights Agreement (the "Agreement") is made and entered into
as of November 19, 1999 by and among Commerx, Inc., a Delaware corporation (the
"Company"), and the persons listed on Exhibit A hereto (each individually an
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"Investor" and, collectively, the "Investors").
RECITALS
WHEREAS, the Company desires for the Investors to purchase shares of the
Company's Series B Preferred Stock pursuant to a Series B Preferred Stock
Purchase Agreement of even date herewith (the "Purchase Agreement"); and
WHEREAS, as an inducement for the Investors to enter into the Purchase
Agreement, the Company and the Investors desire to enter into this Agreement.
1. RIGHTS OF INVESTORS.
The Company hereby grants to the Investors the information rights,
registration rights and rights of first offer (collectively the "Investor
Rights") contained herein. The Investors accept the Investor Rights, as
applicable, and agree to be bound by the obligations contained herein. The
Company hereby grants to the Common Stockholders certain registration rights
contained herein.
2. INFORMATION RIGHTS.
2.1 Financial Information. The Company will provide each Investor the
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following reports for so long as the Investor is a holder of a minimum of one
hundred thousand (100,000) shares of Registrable Securities (as adjusted for
combinations, stock dividends, subdivisions or split-ups):
(a) Annual Reports. As soon as practicable after the end of each
fiscal year, and in any event within ninety (90) days thereafter, consolidated
balance sheets of the Company and its subsidiaries, if any, as of the end of
such fiscal year, and consolidated statements of income, stockholders' equity
and cash flows of the Company and its subsidiaries, if any, for such year,
prepared in accordance with generally accepted accounting principles and setting
forth in each case in comparative form the figures for the previous fiscal year,
all in reasonable detail and audited (without qualification as to scope) by
independent auditors of national standing selected by the Company.
(b) Monthly and Quarterly Reports. As soon as practicable after
the end of each month and fiscal quarter, and in any event within thirty (30)
days and forty-five (45) days, respectively, thereafter, a consolidated balance
sheet of the Company and its subsidiaries, if any, as of the end of each such
period, consolidated statements of income, consolidated
statements of changes in financial condition, a consolidated statement of cash
flow of the Company and its subsidiaries and a statement of stockholders' equity
for such period and for the current fiscal year to date, and setting forth in
each case in comparative form the figures for corresponding periods in the
previous fiscal year, and setting forth in comparative form the budgeted
figures, prepared in accordance with generally accepted accounting principles
(other than for accompanying notes), subject to changes resulting from year-end
audit adjustments, all in reasonable detail and signed by the principal
financial or accounting officer of the Company.
(c) Annual Budget. As soon as practicable, but in any event thirty
(30) days prior to the end of each fiscal year, a projected operating budget and
business plan for the next fiscal year, prepared on a monthly basis, including
balance sheets and sources and applications of funds statements for such months
and, as soon as prepared, any other budgets or revised budgets prepared by the
Company.
2.2 Inspection. The Company shall permit each Investor at such
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Investor'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 Investor; provided, however, that the Company shall not be obligated
pursuant to this Section 2.2 to provide access to any information that it
reasonably considers to be a trade secret or similar confidential information.
2.3 Assignment of Rights. The rights granted pursuant to Sections 2.1
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and 2.2 may be assigned or otherwise conveyed by an Investor to (i) a transferor
or assignee who holds, subsequent to such transfer, not less than one hundred
thousand (100,000) shares of Registrable Securities and which agrees in writing
to non-disclosure provisions with respect to the information; or (ii) a
subsidiary, wholly-owned entity, successor entity, parent, member or stockholder
of a Holder. Notwithstanding the foregoing, the rights granted pursuant to
Sections 2.1 and 2.2 may not be assigned or otherwise conveyed to a competitor
of the Company, as reasonably determined by the Board of Directors of the
Company. The Investor shall provide the Company with written notice of any
assignment or conveyance of the rights granted pursuant to Sections 2.1 and 2.2.
2.4 Termination of Certain Rights. The Company's obligations under
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this Section 2 will terminate upon the closing of the Company's initial public
offering of Common Stock pursuant to a registration statement filed with and
declared effective by the Securities and Exchange Commission (the "SEC") under
the Securities Act of 1933, as amended (the "Securities Act") with a sales price
per share of Common Stock (as adjusted for combinations, stock dividends,
subdivisions or split-ups) of at least $18.645 and aggregate gross proceeds to
the Company of at least $15,000,000 (the "Company's Initial Public
Registration").
3. REGISTRATION RIGHTS.
3.1 Definitions.
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(a) Exchange Act. The term "Exchange Act" means the Securities
Exchange Act of 1934, as amended.
(b) Form S-3. The term "Form S-3" means such form under the
Securities Act as is in effect on the date hereof or any successor registration
form under the Securities Act subsequently adopted by the SEC which permits
inclusion or incorporation of substantial information by reference to other
documents filed by the Company with the SEC.
(c) Holder. For purposes of this Section 3, the term "Holder"
means any person owning of record Registrable Securities that have not been sold
to the public or pursuant to Rule 144 promulgated under the Securities Act or
any assignee of record of such Registrable Securities to whom rights under this
Section 3 have been duly assigned in accordance with this Agreement.
(d) Initiating Holder. The term "Initiating Holder" shall mean
any Holder or Holders who in the aggregate are Holders of not less than 66-2/3%
of the then outstanding Registrable Securities which have not been sold to the
public.
(e) Preferred Stock. The term "Preferred Stock" shall mean the
Series B Preferred Stock of the Company.
(f) Registrable Securities. The term "Registrable Securities"
means: (1) all shares of Common Stock issued or issuable pursuant to the
conversion of Series B Preferred Stock and any shares of the Common Stock of the
Company or other securities issued in connection with any stock split, stock
dividend, recapitalization or similar event relating to the foregoing; excluding
in all cases, however, any Registrable Securities sold by a person in a
transaction in which rights under this Section 3 are not assigned in accordance
with this Agreement or any Registrable Securities sold to the public or sold
pursuant to Rule 144 promulgated under the Securities Act.
(g) Registration. The terms "register," "registered," and
"registration" refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act, and the
declaration or ordering of effectiveness of such registration statement.
(h) Registration Expenses. "Registration Expenses" shall mean all
expenses incurred by the Company in complying with Sections 3.2, 3.3 and 3.5
hereof, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel and accountants for the
Company, fees and expenses of one counsel for all the Holders, blue sky fees and
expenses and the expense of any special audits incident to or required by any
such registration (but excluding the compensation of regular employees of the
Company, which shall be paid in any event by the Company).
(i) SEC. The term "SEC" or "Commission" means the U.S. Securities
and Exchange Commission.
(j) Selling Expenses. "Selling Expenses" shall mean all
underwriting discounts and selling commissions applicable to the sale of
Registrable Securities.
3.2. Requested Registration.
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(a) Request for Registration by Initiating Holders. If the
Company shall receive from an Initiating Holder, at any time, a written request
that the Company effect any registration with respect to all or a part of the
Registrable Securities, the Company will:
(i) promptly give written notice of the proposed
registration, qualification or compliance to all other Holders of Registrable
Securities; and
(ii) as soon as practicable, use its best efforts to effect
such registration (including, without limitation, the execution of an
undertaking to file post-effective amendments, appropriate qualification under
applicable blue sky or other state securities laws and appropriate compliance
with applicable regulations issued under the Securities Act) as may be so
requested and as would permit or facilitate the sale and distribution of all or
such portion of such Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any Holder or
Holders joining in such request as are specified in a written request received
by the Company within 15 days after written notice from the Company is given
under Section 3.2(a)(i) above; provided, however, that the Company shall not be
obligated to effect, or take any action to effect, any such registration
pursuant to this Section 3.2(a):
(A) In any particular Jurisdiction in which the Company
would be required to execute a general consent to service of process in
effecting such registration, qualification or compliance, unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act or applicable rules or regulations thereunder;
(B) After the Company has effected two (2) such
registrations pursuant to Section 3.2 and such registrations have been declared
or ordered effective and the sales of such Registrable Securities shall have
closed; or
(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 $12,500,000; or
(D) Prior to January 1, 2002.
The registration statement filed pursuant to the request of the Initiating
Holders may, subject to the provisions of Section 3.2(b) below, include other
securities of the Company which are held by officers or directors of the
Company, or which are held by persons who, by virtue of agreements with the
Company, are entitled to include their securities in any such registration, but
the Company and such other holders shall have no absolute right to include any
of its securities in any such registration.
(b) Underwriting; Request by Initiating Holders. If the
Initiating Holders intend to distribute the Registrable Securities covered by
their request by means of an underwriting, they shall so advise the Company as a
part of their request made pursuant to Section 3.2(a) and the Company shall
include such information in the written notice referred to
in Section 3.2(a). In such event, the right of any Holder to include such
Holder's Registrable Securities in such registration shall be conditioned upon
such Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting (unless otherwise mutually
agreed by a majority in interest of the Initiating Holders and such Holder) to
the extent provided herein. All Holders proposing to distribute their securities
through such underwriting shall (together with the Company as provided in
Section 3.6(e)) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by a majority in
interest of the Initiating Holders and reasonably acceptable to the Company.
Notwithstanding any other provision of Section 3.2, if the underwriter advises
the Company and the Initiating Holders in writing that marketing factors require
a limitation of the number of shares to be underwritten, then the Company shall
so advise all Holders of Registrable Securities which would otherwise be
underwritten pursuant hereto, and the number of shares of Registrable Securities
that may be included in the underwriting shall be allocated among all Holders
thereof, including the Initiating Holders, in such proportion (as nearly as
practicable) among the Holders pro rata based on the amount of Registrable
Securities owned by each Holder.
(c) Notwithstanding the foregoing, if the Company shall furnish to
the Holders requesting the filing of a registration statement pursuant to
Section 3.2(a), a certificate signed by the President or Chief Executive Officer
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 filed and it is therefore
essential to defer the filing of such registration statement, then the Company
shall have the right to defer such filing for a period of not more than 180 days
after receipt of the request of the Initiating Holders; provided, however, that
the Company may not utilize this right more than once in any twelve (12)-month
period.
3.3 Piggyback Registrations.
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(a) Notice. The Company shall notify all Holders of Registrable
Securities in writing at least 30 days prior to filing any registration
statement under the Securities Act for purposes of effecting a public offering
of securities of the Company (including, but not limited to, registration
statements relating to secondary offerings of securities of the Company, but
excluding any registration statement relating to any employee benefit plan or a
corporate reorganization) and will afford each such Holder an opportunity to
include in such registration statement all or any part of the Registrable
Securities then held by such Holder. Each Holder desiring to include in any such
registration statement all or any part of the Registrable Securities held by
such Holder shall, within 15 days after receipt of the above-described notice
from the Company, so notify the Company in writing, and in such notice shall
inform the Company of the number of Registrable Securities such Holder wishes to
include in such registration statement. If a Holder decides not to include all
of its Registrable Securities in any registration statement thereafter filed by
the Company, such Holder shall nevertheless continue to have the right to
include any Registrable Securities in any subsequent registration statement or
registration statements as may be filed by the Company with respect to offerings
of its securities, all upon the terms and conditions set forth herein.
(b) Underwriting. If a registration statement under which the Company
gives notice under Section 3.3 is for an underwritten offering, then the Company
shall so advise the Holders of Registrable Securities. In such event, the right
of any such Holder's Registrable Securities to be included in a registration
pursuant to this Section 3.3 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their Registrable Securities through such
underwriting shall enter into an underwriting agreement in customary form with
the managing underwriter or underwriter(s) selected for such underwriting.
Notwithstanding any other provision of this Agreement, if the managing
underwriter(s) determine(s) in good faith that marketing factors require a
limitation of the number of shares to be underwritten then the managing
underwriter(s) may exclude shares (including Registrable Securities) from the
registration and the underwriting, and the number of shares that may be included
in the registration and the underwriting shall be allocated, first, to the
Company, second, to each of the Holders of Registrable Securities requesting
inclusion of their Registrable Securities in such registration statement, to be
allocated among all Holders thereof pro rata based on the amount of Registrable
Securities of the Company owned by each Holder and third, to each of the other
holders of the Company's securities, other than the Holders requesting inclusion
of their Registrable Securities in such registration statement, to be allocated
among such other holders thereof pro rata based on the number of shares owned by
each such other holder; provided, however, that the right of the underwriters to
exclude shares (including Registrable Securities) from the registration and
underwriting as described above shall be restricted so that the number of
Registrable Securities included in any such registration is not reduced below
twenty-five percent (25%) of the shares included in the registration, except for
a registration relating to the Company's Initial Public Registration from which
all Registrable Securities may be excluded. Any Registrable Securities excluded
or withdrawn from such underwriting shall be excluded and withdrawn from the
registration. For any Holder which is a partnership 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 "Holder,"
and any pro rata reduction with respect to such "Holder" shall be based upon the
aggregate amount of shares carrying registration rights owned by all entities
and individuals included in such "Holder," as defined in this sentence.
3.4 Expenses of Registration. All Registration Expenses incurred in
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connection with two demand registrations (pursuant to Section 3.2), all
piggyback registrations (pursuant to Section 3.3) and one S-3 registration per
year (pursuant to Section 3.5) shall be borne by the Company, and all Selling
Expenses shall be borne by the Holders of the securities so registered pro rata
on the basis of the number of their shares so registered.
3.5 Form S-3 Registration. In case the Company shall receive from Holders
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of 25% or more of the outstanding Registrable Securities a written request or
requests that the Company effect a registration on Form S-3 and any related
qualification or compliance with respect to all or a part of the Registrable
Securities owned by such Holders, provided the number of shares requested to be
sold would have an aggregate price to the public of at least $2,000,000, then
the Company will:
(a) Notice. Promptly give written notice of the proposed registration
and the Holder's request therefor, and any related qualification or compliance,
to all other Holders of Registrable Securities; and
(b) Registration. 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 the Holder's Registrable Securities as are specified in such
request together with all or such portion of the Registrable Securities of any
Holder or Holders joining in such request as are specified in a written request
received by the Company within 15 days after written notice from the Company is
given under Section 3.5(a) above; provided, however, that the Company shall not
be obligated to effect any such registration, qualification or compliance
pursuant to this Section 3.5:
(i) if Form S-3 is not available for such offering by the
Holders;
(ii) if the Company shall furnish to the Holders a certificate
signed by the President or Chief Executive Officer 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 the Form S-3 registration statement for an
aggregate of not more than one hundred eighty (180) days after receipt of the
request of the Holders; provided, however, that the Company may not utilize this
right more than once in any twelve (12)-month period;
(iii) 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; or
(iv) if the Company has filed a registration statement on Form
S-3 relating to Registrable Securities within the twelve (12) months preceding
the request of the Holders.
Subject to the foregoing, the Company shall use its best efforts to file a
Form S-3 registration statement covering the Registrable Securities and other
securities so requested to be registered pursuant to this Section 3.5 as soon as
practicable after receipt of the request the Holders for such registration.
3.6 Obligations of the Company. Whenever required to effect the
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registration of any Registrable Securities under this Agreement, the Company
shall, as expeditiously as reasonably possible:
(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 keep such registration statement
effective until the distribution is completed, but not more than 180 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.
(c) Furnish to the Holders such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and all amendments and supplements thereto, and such other
documents as they may reasonably request in order to facilitate the disposition
of the Registrable Securities owned by them that are included in such
registration.
(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, enter into and
perform its obligations under an underwriting agreement in usual and customary
form, with the managing underwriter(s) 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 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 and, following such notification, promptly deliver to each Holder
copies of all amendments or supplements referred to in paragraphs (b) and (c) of
this Section 3.6.
(g) Furnish, at the request of any Holder registering Registrable
Securities, on the date that such Registrable Securities are delivered to the
underwriters for sale, if such securities are being sold through underwriters,
(i) an opinion, dated as of 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 if there are no underwriters, to the Holders
requesting registration of Registrable Securities and (ii) a "comfort" letter
dated as of 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 and
reasonably satisfactory to a majority in interest of the Holders requesting
registration, addressed to the underwriters.
3.7 Furnish Information. It shall be a condition precedent to the
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obligations of the Company to take any action pursuant to Sections 3.2, 3.3 or
3.5 that the selling Holders shall furnish to the Company such information
regarding themselves, the Registrable Securities held by them, and the intended
method of disposition of such securities as shall be required to timely effect
the registration of Registrable Securities.
3.8 Delay of Registration. No Holder shall have any right to obtain or
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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 3.
3.9 Indemnification. In the event any Registrable Securities are included
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in a registration statement under Sections 3.2, 3.3 or 3.5:
(a) By the Company. To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, the partners, members, officers and
directors of each Holder, any underwriter (as defined in the Securities Act) for
such Holder 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 or incorporated by reference 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 federal or state securities law or any
rule or regulation promulgated under the Securities Act, the Exchange Act or any
federal or state securities law in connection with the offering covered by such
registration statement;
and the Company will reimburse each such Holder, partner, member, officer
or director, underwriter or controlling person for any legal or other expenses
reasonably incurred by them, as incurred, in connection with investigating or
defending any such loss, claim, damage, liability or action; provided however,
that the indemnity agreement contained in this subsection 3.9(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 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 a Violation which occurs in
reliance upon and in conformity with written information furnished in writing
and expressly stated for use in connection with such registration by such
Holder, partner, member, officer, director, underwriter or controlling person of
such Holder.
(b) By Selling Holders. To the extent permitted by law, each selling
Holder will, if Registrable Securities held by such Holder are included in the
securities as to which such registration is being effected, 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, any underwriter (as defined in the
Securities Act) and any other Holder selling securities under such registration
statement or any of
such other Holder's partners, members, directors or officers or any person who
controls such underwriter or other Holder within the meaning of the Securities
Act or the Exchange Act, against any losses, claims, damages or liabilities
(joint or several) to which the Company or any such director, officer,
controlling person, underwriter or other such Holder, member, partner or
director, officer or controlling person of such underwriter or other Holder 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 any 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 by an
instrument duly executed by such Holder and stated to be specifically for use in
such registration; and each such Holder will reimburse any legal or other
expenses reasonably incurred by the Company or any such director, officer,
controlling person, underwriter or other Holder, partner, member, officer,
director or controlling person of such other Holder or underwriter in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the indemnity agreement contained in this
subsection 3.9(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; and
provided further, that the total amounts payable in indemnity by a Holder under
this Section 3.9(b) in respect of any Violation shall not exceed the net
proceeds received by such Holder in the registered offering out of which such
Violation arises.
(c) Notice. Promptly after receipt by an indemnified party under
Section 3.9 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 Section 3.9, 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 shall
have the right to retain its own counsel, with the 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 conflict of 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 Section 3.9, 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 Section 3.9.
(d) Survival. The obligations of the Company and Holders under
Section 3.9 shall survive the completion of any offering of Registrable
Securities in a registration statement, and otherwise.
3.10 "Market Stand-Off" Agreement. Each Holder hereby agrees that it
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shall not, to the extent requested by the Company or an underwriter of
securities of the Company, sell or otherwise transfer or dispose of any
Registrable Securities or other shares of stock of the Company then owned by
such Holder (other than to donees, members or partners of the Holder
who agree to be similarly bound) for up to 180 days following the date of the
final prospectus in connection with the registration statement of the Company
filed under the Securities Act; provided, however, that such agreement shall be
applicable only to the first such registration statement of the Company that
covers securities to be sold on its behalf to the public in an underwritten
offering but not to Registrable Securities sold pursuant to such registration
statement or any shares purchased by the Holder in the underwritten offering or
on the open market following the effective date of the offering, and provided,
further, that each officer and director of the Company also agrees to such
restrictions.
The provisions of this Section 3.10 shall be binding upon any transferee or
assignee of any Registrable Securities, whether or not such persons are entitled
to registration rights pursuant to Section 3.13.
3.11 Rule 144 Reporting. With a view to making available the benefits of
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certain rules and regulations of the Commission which may at any time permit the
sale of the Registrable Securities to the public without registration, after
such time as a public market exists for the Common Stock of the Company, the
Company agrees to:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times after
the effective date of the first registration under the Securities Act filed by
the Company for an offering of its securities to the general public;
(b) Use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act (at any time after it has become subject to
such reporting requirements); and
(c) So long as a Holder owns any Registrable Securities, to furnish
to the Holder forthwith upon request a written statement by the Company as to
its compliance with the reporting requirements of Rule 144 (at any time after 90
days after the effective date of the first registration statement filed by the
Company for an offering of its securities to the general public), and of the
Securities Act and the Exchange Act (at any time after it has become subject to
the reporting requirements of the Exchange Act), a copy of the most recent
annual or quarterly report of the Company, and such other reports and documents
of the Company as a Holder may reasonably request in availing itself of any rule
or regulation of the Commission allowing a Holder to sell any such securities
without registration (at any time after the Company has become subject to the
reporting requirements of the Exchange Act).
3.12 Limitations on Subsequent Registration Rights. From and after the
---------------------------------------------
date of this Agreement, the Company shall not, without the prior written consent
of the Holders of at least 50% of the Registrable Securities, 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 Section 3 hereof, 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 the Registrable Securities of the
Holders which is included, or (b) to make a demand registration to the Company.
3.13 Assignment of Registration Rights. The rights of a Holder under this
---------------------------------
Section 3 may be assigned by any Holder in connection with any transfer or
assignment by a Holder of Registrable Securities provided that: (i) such
transfer may otherwise be effected in accordance with applicable securities
laws, (ii) such transfer is effected in compliance with the restrictions on
transfer contained in the Agreement and in any other agreement between the
Company and the Holder, (iii) such assignee or transferee either holds
subsequent to such transfer not less than fifty thousand (50,000) shares of
Registrable Securities or is a subsidiary, wholly-owned entity, successor
entity, parent, member or stockholder of a Holder, and (iv) such other party
agrees in writing with the Company to be bound by all of the provisions of this
Section 3.
3.14 Termination of Registration Rights. The registration rights granted
----------------------------------
pursuant to Section 3 will terminate as to any Holder upon the later to occur of
(a) such time as the Company and the Holder are satisfied that Rule 144(k) is
available for the resale by the then-current Holder of the Common Stock
underlying all of the Preferred Stock, (b) the three-year anniversary following
the effective date of the Company's Initial Public Registration or (c) such time
as a Holder has less than one percent shares of the outstanding Common Stock of
the Company (assuming conversion of all Preferred Stock into Common Stock) and
can sell all of its remaining Registrable Securities under Rule 144 during any
three (3)-month period.
4. RIGHT OF FIRST OFFER TO SUBSCRIBE TO NEW ISSUANCES.
4.1 General. The Company hereby grants to each Investor the right of
-------
first offer to purchase such Investor's pro rata share ("Pro Rata Share") of New
Securities (as defined in Section 4.2(a)) that the Company may, from time to
time, propose to sell and issue. Such Investor's Pro Rata Share, for purposes
of this right of first offer, is the ratio that the number of shares of Common
Stock (assuming conversion of all Preferred Stock and securities convertible
into Common Stock but not including options or warrants to acquire Common Stock)
held by such Investor bears to the total number of shares of Common Stock
outstanding immediately prior to the time of issuance of such New Securities
(assuming conversion into Common Stock of all outstanding Preferred Stock and
any other securities convertible into Common Stock but not including options or
warrants to acquire Common Stock). This right of first offer shall be subject
to the following provisions:
4.2 Certain Definitions. For the purposes of Section 4:
-------------------
(a) "New Securities" shall mean any Common Stock or any Preferred
Stock of the Company, whether or not now authorized, and any rights, options, or
warrants to purchase said Common Stock or Preferred Stock, and securities of any
type whatsoever that are, or may become, convertible into or exchangeable for
Common Stock or Preferred Stock; provided, however, that "New Securities" does
not include (i) securities issuable upon conversion of or with respect to the
Series B Preferred Stock or the Series A Preferred Stock or upon conversion of
or with respect to any other Preferred Stock subsequently issued; (ii)
securities offered to the public pursuant to a registration statement filed
under the Securities Act; (iii) securities issued pursuant to the acquisition of
another unaffiliated corporation by the Company by merger, purchase of
substantially all of the assets, or other reorganization whereby the Company
owns not less than 50% of the voting power of the surviving corporation; (iv)
shares of the Company's Common Stock (or related options or warrants) issued to
employees, officers, directors, consultants, or other persons performing
services for the Company (including, but not by way of limitation, distributors
and sales representatives) pursuant to any stock offering, plan, or arrangement
approved by a majority of the non-employee members of the Board of Directors of
the Company; (v) securities issued pursuant to or in connection with any
corporate partnership, joint venture, licensing or distribution arrangement with
a non-affiliate or in connection with an unaffiliated equipment lease financing
or bank or similar institutional credit financing which the Company may enter;
or (vi) shares of the Company's Common Stock or Preferred Stock issued in
connection with any stock split, stock dividend, recapitalization by the Company
or other antidilution events set forth in Section 5 of the Company's Amended and
Restated Certificate of Incorporation.
4.3 Mechanics of Right.
------------------
(a) Notices, Pro Rata Rights. In the event that the Company
proposes to issue New Securities, it shall give each such Investor written
notice (the "First Notice") of its intention, describing the type of New
Securities, the price, and the general terms upon which the Company proposes to
issue the same. Within 20 days after receipt of the First Notice, the Investor
shall give the Company written notice (the "Investor Notice") of its intention
to purchase or obtain, at the price and on the terms specified in the Notice, a
number of shares equal to or less than its Pro Rata Share of the New Securities.
In addition, the Investor Notice shall state whether an Investor wishes to
purchase more than its Pro Rata Share of the New Securities. The Company shall
promptly give written notice to each Investor that purchases its Pro Rata Share
of the New Securities (a "Fully-Exercising Investor") of the amount of New
Securities, if any, that other Investors do not elect to purchase in response to
the First Notice (the "Second Notice"). Each Fully-Exercising Investor shall
notify the Company within 15 days of receipt of the Second Notice if it would
like to purchase any of the unsubscribed shares and indicate the maximum number
of unsubscribed shares it would like to purchase. The Company shall inform the
Fully-Exercising Investors of the total number of unsubscribed shares available
and provide the Fully-Exercising Investors with an allocation of the
unsubscribed shares based on the number of shares of Common Stock (assuming
conversion of all Preferred Stock into Common Stock) held by each Fully-
Exercising Investor.
(b) Company Right. To the extent that Investors fail to exercise
in full the right of first offer as provided in Section 4.3(a) hereof, the
Company shall have 90 days thereafter to sell (or enter into an agreement
pursuant to which the sale of New Securities covered thereby shall be closed, if
at all, within said 90-day period) the New Securities respecting which the
Investors' rights were not exercised, at a price and upon general terms no more
favorable to the purchasers thereof than specified in the Company's notice. In
the event the Company has not sold the New Securities within said 90-day period
(or sold and issued New Securities in accordance with the foregoing within 90
days from the date of said agreement), the Company shall not thereafter issue or
sell any New Securities, without first offering such securities to the Investors
in the manner provided above.
(c) No Impairment. An Investor's failure to exercise this right of
first offer on any issuance of New Securities shall not adversely affect the
Investor's right of first offer to purchase subsequent issuances of New
Securities.
4.4 Termination. The rights of first offer under this Section 4 shall
-----------
not apply to and shall terminate upon the closing of the Company's Initial
Public Registration.
4.5 Assignment. The right of first offer granted under this Section 4
----------
is nonassignable except to another entity under common control with an Investor
or a successor to an Investor.
5. LEGENDS.
Each Investor understands that the share certificates evidencing any
Registrable Securities shall be endorsed with the following legends (in addition
to any legends required under applicable state securities laws):
(a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THEY 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 AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED."
(b) "THE SALE, TRANSFER OR ASSIGNMENT OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF AN AGREEMENT BETWEEN
THE COMPANY AND THE REGISTERED HOLDER OR HIS PREDECESSOR IN INTEREST. COPIES OF
SUCH AGREEMENT MAY BE OBTAINED BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD
OF THIS CERTIFICATE TO THE SECRETARY OF THE COMPANY."
(c) Any legend required to be place thereon by any other
applicable state securities laws.
6. MISCELLANEOUS.
-------------
6.1 Successors and Assigns. Except as otherwise expressly provided
----------------------
herein, the terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the respective successors and permitted transferees and
permitted assigns of the parties.
6.2 Governing Law. This Agreement shall be governed in all respects by
-------------
the laws of the State of Delaware as applied to contracts made and to be
performed entirely within that state between residents of that state.
6.3 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one instrument.
6.4 Titles and Subtitles. The titles of the paragraphs and
--------------------
subparagraphs of this Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement.
6.5 Stock Splits, etc. All share numbers used in this Agreement are
-----------------
subject to adjustment in the case of any stock split, reverse stock split,
combination or similar events.
6.6 Notices. Any notice required or permitted to be given to a party
-------
pursuant to the provisions of this Agreement will be in writing and will be
effective and or (i) the date of delivery by facsimile, or (ii) the business day
after deposit with a nationally-recognized courier or overnight service,
including Express Mail, for United States deliveries or (iii) five (5) business
days after deposit in the United States mail by registered or certified mail for
United States deliveries. All notices not delivered personally or by facsimile
will be sent with postage and other charges prepaid and properly addressed to
the party to be notified at the address set forth below such party's signature
on this Agreement or at such other address as such party may designate by ten
(10) days advance written notice to the other parties hereto. All notices for
delivery outside the United States will be sent by facsimile, or by nationally
recognized courier or overnight service. Any notice given hereunder to more
than one person will be deemed to have been given, for purposes of counting time
periods hereunder, on the date given to the last party required to be given such
notice. Notices to the Company will be marked to the attention of the Chief
Financial Officer.
6.7 Attorneys' Fees. If any action at law or in equity is necessary to
---------------
enforce or interpret 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.
6.8 Amendments and Waivers. Any term of this Agreement may be amended
----------------------
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of the party against whom enforcement of such amendment
or waiver is sought; provided, however that with respect to any Investor, the
consent of the holders of more than 50% of the Registrable Securities shall be
sufficient to bind any and all Investors; and provided, further, that where the
amendment or waiver affects a right or creates an obligation that is specific to
a party named herein (whether an individual, trust, partnership or corporation),
the amendment or waiver of such right or creation of such obligation shall
require the consent of such party.
6.9 Severability. If any provision of this Agreement is held to be
------------
unenforceable under applicable law, then such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision was so excluded and shall be enforceable in accordance with its terms.
6.10 Entire Agreement. This Agreement, together with all Exhibits
----------------
hereto, constitute the full and entire understanding and agreement between the
parties with respect to the subject matter hereof and supersedes all prior
negotiations, correspondence, agreements, understandings, duties or obligations
among the parties with respect to the subject matter hereof
6.11 Further Assurances. From and after the date of this Agreement,
------------------
upon the request of a party, the other parties shall execute and deliver such
instruments, documents or other writings as may be reasonably necessary or
desirable to confirm and carry out and to effectuate fully the intent and
purposes of this Agreement.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties hereto have executed this Investor Rights
Agreement as of the date first above written.
COMMERX, INC.
/s/ Xxx Xxxxxx
-------------------------------------------------
Xxx Xxxxxx, President
/s/ Nick Stojks
-------------------------------------------------
Xxxx Xxxxxx, Secretary
INVESTORS
CAPITAL RESEARCH AND MANAGEMENT COMPANY
on behalf of SMALLCAP World Fund, Inc.
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------------------
Title: Xxxxxxx X. Xxxxxx, Secretary
Address: 000 Xxxxx Xxxx Xx., Xx., 55
Xxx Xxxxxxx, XX 00000
INTERNET CAPITAL GROUP, INC.
By: /s/ Xxx Xxx
-------------------------------------------
Title: Xxx Xxx, Managing Director
Address: 800 The Safeguard Building
000 Xxxxx Xxxx Xxxxx
Xxxxx, Xxxxxxxxxxxx 00000
PIVOTAL PARTNERS, L.P.
By: /s/ Xxxxxxxxxxx Xxxx
------------------------------------
Title: Xxxxxxxxxxx Xxxx, Manager
Address: Xxx Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000-0000
XXXXXXXXXXX XXXX
/s/ /s/ Xxxxxxxxxxx Xxxx
-----------------------------------
Address: Xxx Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000-0000
CALIFORNIA BANK & TRUST
AGENT FOR XXXXX XXXXXXXXXX XXX#1
By: /s/ illegible
------------------------------------
Title: Trust Officer
Address: 000 Xxxxxxxx Xx. 0/xx/ Xxxxx
Xxxxxxx, XX 00000
PALANTIR INVESTMENTS LDC
By: /s/ Xxxxx Xxxxxx
-----------------------------------
Title: Xxxxx Xxxxxx, Manager
Address: 0000 Xxx Xxxxx Xxxxx
Xxxxxx Xxxxx Xx, XX 00000
PALANTIR PARTNERS LP
By: /s/ Xxxxx Xxxxxx
------------------------------------
Title: Xxxxx Xxxxxx, General Partner
Address: 0000 Xxx Xxxxx Xxxxx
Xxxxxx Xxxxx Xx, XX 00000
DIVINE INTERVENTURES, INC.
By: /s/ illegible
--------------------------------------------
Title: EVP and General Counsel
Address: 0000 Xxxxxxxxxx Xxxx
Xxxxx, XX 00000
B2B INVESTORS LLC
By: /s/ Xxx Xxxxxx
--------------------------------------------
Title: Xxx Xxxxxx, Manager
Address: Corporation Trust Center
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx
XXXXX XXXX
/s/ Xxxxx Xxxx
--------------------------------------------------
Address: 000 X. XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
XXX XXXXXXX
/s/ Xxx Xxxxxxx
--------------------------------------------------
Address: 000 X. XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
XXXX XXXXXXX
/s/ Xxxx Xxxxxxx
-------------------------------------------------
Address: 000 X. XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
XXXX XXXXXX
/s/ Xxxx Xxxxxx
-------------------------------------------------
Address: 000 X. XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
EXHIBIT A
---------
INVESTORS
Capital Research And Management Company
on behalf of SMALLCAP World Fund, Inc.
Internet Capital Group, Inc.
Pivotal Partners, L.P.
Xxxxxxxxxxx Xxxx
California Bank & Trust
Agent for Xxxxx Xxxxxxxxxx
XXX#1
Palantir Investments LDC
Palantir Partners LP
Divine Interventures, Inc.
B2B Investment, LLC
Xxxxx Xxxx
Xxx Xxxxxxx
Xxxx Xxxxxxx
Xxxx Xxxxxx
