Exhibit 7
COOLSAVINGS, INC.
SHAREHOLDERS' AGREEMENT
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THIS SHAREHOLDERS' AGREEMENT, dated as of the 12th day of November, 2001
(this "Agreement") among the investors listed on Schedule I hereto (the "Series
B Investors"); the individuals whose names and addresses appear from time to
time on Schedule II hereto (the "Management/Founding Investors" and with respect
to Xxxxxx Xxxxxx and his affiliates thereon, "Golden," and with respect to
Xxxxxxx Xxxx and his affiliates thereon, "Moog"); and CoolSavings, Inc., a
Delaware corporation (the "Company"). The Series B Investors and the
Management/Founding Investors are hereinafter collectively referred to as the
"Investors". Capitalized terms not defined when used shall have the respective
meanings given to such terms under Section 7(a) below.
R E C I T A L S
WHEREAS, the Series B Investors and/or their Affiliates have, pursuant to
the terms of a Securities Purchase Agreement, dated July 30, 2001, as amended,
with the Company (the "Purchase Agreement"), agreed to purchase shares of Series
B Convertible Preferred Stock of the Company (the "Series B Preferred Stock"), a
12% Senior Secured Note executed by the Company (as may be amended from time to
time) (the "Senior Secured Note"), and certain warrants (the "Warrants") to
purchase shares of Common Stock (as defined below); and
WHEREAS, the Management/Founding Investors hold Common Stock $0.001 per
share of the Company (the "Common Stock" and, together with the Preferred Stock,
the "Shares"); and
WHEREAS, the Investors and the Company desire to promote their mutual
interests by agreeing to certain matters relating to the operations of the
Company and the disposition of the Shares of Management/Founding Investors.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto hereby agree as follows:
1. LEGENDS ON CERTAIN SHARES.
(a) Legends. The certificates evidencing the Shares held by the
Management/Founding Investors, if certificated, will bear the following legend
reflecting the restrictions on the transfer of such securities contained in this
Agreement:
"The securities evidenced hereby are subject to the terms of that certain
Shareholders' Agreement, dated as of November 12, 2001, by and among the
Company and certain investors identified therein, which includes certain
agreements and restrictions on transfer. A copy of this Agreement has been
filed with the Secretary of the Company and is available upon request."
As promptly as practicable after the date hereof, the Investors shall
deliver all certificates representing any Shares to the Company to enable the
Company to place the foregoing legend on such certificates. The Company may
remove such legend upon request for a Transfer effected pursuant to this
Agreement other than a Transfer to a Permitted Transferee.
(b) Additional Investors. The parties hereto acknowledge that executive
officers of the Company may become shareholders of the Company after the date
hereof. As a condition to the issuance of shares of capital stock of the Company
to them, the Company's compensation committee may require such executive
officers to execute and deliver an agreement containing restrictions
substantially similar to those set forth in Sections 1(a), 3(a) and 3(b) hereof
in favor of the Company. In such event, the Company shall require such
agreements to include terms that entitle the Series B Investors, at their option
and in their discretion, to exercise the same rights as held by the Company in
the event the Company does not exercise such rights.
2. NOTICES AND RIGHTS RE: MEETINGS AND COMMITTEES.
(a) Election of Directors. The Company shall provide the Investors with not
less than thirty (30) days' prior written notice of any intended mailing of a
notice to shareholders for an annual meeting at which directors are to be
elected (excluding elections made at special meetings or by written consent in
which case notice shall be provided as required by the Bylaws). The Company
agrees to nominate and recommend for election to the Reserved Series B Seats or
the seats otherwise required for the Series B Directors only those
representatives designated by the holders of shares of Series B Preferred Stock
(acting by written consent or affirmative vote of the holders of a majority of
the then outstanding shares of Series B Preferred Stock). If the Series B
Investors/the holders of Series B Preferred Stock fail to give notice to the
Company of their nominees for the Series B Directors, the designees then serving
as Series B Directors shall be deemed designated for reelection; provided, such
deemed designation shall not preclude the Series B Investors/the holders of
Series B Preferred Stock from otherwise acting with respect to the designation
and election of Reserved Series B Seats at any time and from time to time as
permitted by the Charter.
(b) Observer Rights. In addition to the foregoing, the holders of shares of
Series B Preferred Stock (acting by written consent or affirmative vote of the
holders of a majority of the then outstanding shares of Series B Preferred
Stock) shall be entitled to have (and the Company shall permit) to at least one
additional person attend meetings of the Board of Directors in an observational
capacity (an "Observer"), and if the holders of the Series B Preferred Stock
choose not to fill any of the Reserved Series B Seats reserved for the Series B
Directors, then the holders of the shares of Series B Preferred Stock (acting by
written consent or affirmative vote of the holders of a majority of the then
outstanding shares of Series B Preferred Stock) shall be entitled to have (and
the Company shall permit) an additional Observer for each unfilled seat. If a
Series B Director is not able to attend a Board of Directors meeting or a
meeting of a committee on which such Directors serve, such Director may
designate any Person to attend in their place as an Observer.
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3. RESTRICTIONS ON CERTAIN TRANSFERS AND OTHER COVENANTS.
(a) Resale of Securities. No Management/Founding Investor shall Transfer
any Shares other than in accordance with the provisions of this Section 3. Any
Transfer or purported Transfer made in violation of this Section 3 shall be null
and void and of no effect.
(b) Rights of First Refusal - Share Transfers.
(i) Limitations on Transfer. No Management/Founding Investor shall Transfer
any of the Shares owned by him unless the Management/Founding Investor desiring
to make the Transfer (hereinafter referred to as the "Transferor") shall have
first made the offers to sell to the Series B Investors as contemplated by this
Section 3(b), and such offers shall not have been accepted in accordance with
the terms of this Section 3(b).
(ii) Offer by Transferor. The Transferor shall provide the Series B
Investors with a copy of a bona fide offer received by the Transferor from a
third party together with (A) a written offer from the Transferor to sell to the
Series B Investors all of the shares then proposed to be transferred by the
Transferor (the "Subject Shares") to the third party, (B) a statement of
intention by the Transferor to Transfer the Subject Shares to the third party,
(C) the name and address of the third party, (D) the number of Subject Shares
involved in the proposed Transfer, and (E) the terms of such Transfer; provided,
however, if the Subject Shares are to be sold through a broker in the open
market, the Transferor may, in lieu of identifying a specific third party and
price, identify the broker and covenant that the Subject Shares shall be sold
through a "limit order" at a specified minimum price ("Minimum Price") that
shall not continue for more than sixty (60) days (the Subject Shares to be sold
through the limit order with respect to Moog only, shall not exceed in number
more than 20% of the average daily volume of the Company's shares traded during
the immediately preceding thirty days). In no event will a Transferor be
entitled to pursue a limit order transaction more than six (6) times in any
twelve-month period.
(iii) Acceptance of Offer.
(A) Within fifteen (15) business days (four (4) business days in the
case of a limit order transaction) after the receipt of the offer described
in Section 3(b)(ii), the Series B Investors may, at their option, elect to
purchase all of the Subject Shares (or any part if a limit order
transaction is proposed). The Series B Investors shall give notice of their
intention to exercise, or that they do not intend to exercise their option
hereunder, to the Transferor within such 15-day (or 4-day) period. The
Series B Investors shall purchase all (or any part, as applicable) of the
Subject Shares as they shall agree upon among themselves.
(B) The notice required to be given by the purchasing party (the
"Purchaser") shall specify a date for the closing of the purchase which
shall not be more than thirty (30) days after the date of the giving of
such notice.
(iv) Purchase Price. The purchase price per share for the Subject Shares
shall be the price per share offered to be paid by the prospective transferee
described in
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the offer (or the Minimum Price, as applicable), which price shall be paid in
cash or, if so provided in the offer of the prospective transferee, cash plus
deferred payments of cash in the same proportions, and with the same terms of
deferred payment as therein set forth.
(v) Consideration Other Than Cash. If the offer of Subject Shares under
this Section 3(b) is for consideration other than cash or cash plus deferred
payments of cash, the Purchaser shall pay the cash equivalent of such other
consideration. If the Transferor and the Purchaser cannot agree on the amount of
such cash equivalent within ten (10) days after the beginning of the 15-day (or
4-day) period under Section 3(b)(iii)(A), any of such parties may, by three (3)
days' written notice to the other, initiate appraisal proceedings under Section
3(b)(vi) for determination of the cash equivalent. The Purchaser may give
written notice to the Transferor revoking an election to purchase the Subject
Shares within five (5) days after determination of the appraised value, if it
chooses not to purchase the Subject Shares.
(vi) Appraisal Procedure. If any party shall initiate an appraisal
procedure to determine the amount of the cash equivalent of any consideration
for Subject Shares under Section 3(b)(v), then the Transferor, on the one hand,
and the Purchaser, on the other hand, shall each promptly appoint as an
appraiser an individual who shall be a member of a nationally-recognized
investment banking firm. Each appraiser shall, within thirty (30) days of
appointment, separately investigate the value of the consideration for the
Subject Shares as of the proposed transfer date and shall submit a notice of an
appraisal of that value to each party. Each appraiser shall be instructed to
determine such value without regard to income tax consequences to the Transferor
as a result of receiving cash rather than other consideration. If the appraised
values of such consideration (the "Earlier Appraisals") vary by less than ten
percent (10%), the average of the two appraisals on a per share basis shall be
controlling as the amount of the cash equivalent. If the appraised values vary
by more than ten percent (10%), the appraisers, within ten (10) days of the
submission of the last appraisal, shall appoint a third appraiser who shall be
member of a nationally recognized investment banking firm. The third appraiser
shall, within thirty (30) days of his appointment, appraise the value of the
consideration for the Subject Shares (without regard to the income tax
consequences to the Transferor as a result of receiving cash rather than other
consideration) as of the proposed transfer date and submit notice of his
appraisal to each party. The value determined by the third appraiser shall be
controlling as the amount of the cash equivalent unless the value is greater
than the two Earlier Appraisals, in which case the higher of the two Earlier
Appraisals will control, and unless that value is lower than the two Earlier
Appraisals, in which case the lower of the two Earlier Appraisals will control.
If any party fails to appoint an appraiser or if one of the two initial
appraisers fails after appointment to submit his appraisal within the required
period, the appraisal submitted by the remaining appraiser shall be controlling.
The Transferor and the Purchaser shall each bear the cost of its respective
appointed appraiser. The cost of the third appraisal shall be shared one-half by
the Transferor and one-half by the Purchaser.
(vii) Closing of Purchase. The closing of the purchase shall take place at
the office of the Company or such other location as shall be mutually agreeable
and the purchase price, to the extent comprised of cash, shall be paid at the
closing, and cash equivalents and documents evidencing any deferred payments of
cash permitted pursuant to Section 3(b)(iv) above shall be delivered at the
closing. At the closing, the Transferor shall deliver to the
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Purchaser the certificates evidencing the Subject Shares to be conveyed, duly
endorsed and in negotiable form with all the requisite documentary stamps
affixed thereto.
(viii) Release from Restriction; Termination of Rights. If the offer to
sell is not accepted by the Series B Investors within the applicable time
provided for acceptance, the Transferor may make a bona fide Transfer to the
prospective transferee named (or pursuant to the qualifying limit order
described) in the statement attached to the offer in accordance with the agreed
upon terms of such Transfer and the Transferee shall acquire the Subject Shares
free and clear of the terms of this Agreement, provided, that such Transfer
shall be made only in strict accordance with the terms therein stated. If the
Transferor shall fail to make such Transfer within sixty (60) days following the
expiration of the time hereinabove provided for the election by the Series B
Investors or, in the event the Purchaser revokes an election to purchase the
Subject Shares pursuant to Section 3(b)(v), within sixty (60) days of the date
of such notice of revocation, such Shares shall again become subject to all the
restrictions of this Section 3.
(ix) Limitations. The provisions of this Section 3 shall not apply to (i)
sales by Tag-Along Investors (as defined below) pursuant to Section 3(c) hereof,
(ii) Transfers to Permitted Transferees or to the Company, (iii) Transfers by
Moog made subsequent to thirty (30) days after his employment with the Company
has been terminated by the Company without cause or upon his death or permanent
disability (where applicable as defined in Moog's employment agreement) (iv)
Transfers by Golden's estate or personal representative after his death or (v)
Transfers by any Management/Founding Investor which, when aggregated with all
other Transfers by such Management/Founding Investor, result in the Transfer of
less than the greater of (A) five percent (5%) of the Shares owned by the
Management/Founding Investor as of the date hereof and (B) fifty thousand
(50,000) of the Shares owned by the Management/Founding Investor.
(x) Assignment. The rights granted to the Series B Investors under this
Section 3(b) may be freely assigned or otherwise transferred severally by the
Series B Investors to any Affiliate or to any non-Affiliate, provided such
non-Affiliate acquires at least twenty percent (20%) of the shares of Series B
Preferred Stock originally owned by the original holder of the Series B
Preferred Stock.
(c) Tag-Along Rights. In the event the Series B Investors do not exercise
their rights of first refusal as to all of the Subject Shares pursuant to
Section 3(b) hereto and any Management/Founding Investor intends to consummate
the Transfer of any of its Shares (other than Transfers to any Permitted
Transferee or to the Company), such Management/Founding Investor (the "Selling
Investor") shall notify the Series B Investors (the "Tag-Along Investors") and
the Company in writing, of such proposed Transfer and its terms and conditions
in the notice specified in Section 3(b) above. Each Tag-Along Investor that so
notifies the Selling Investor (pursuant to the same terms and conditions
regarding notice set forth in Section 3(b) above) shall have the right to sell,
at the same price and on the same terms and conditions as the Selling Investor,
an amount of Shares equal to the Shares the third party actually proposes to
purchase multiplied by a fraction, the numerator of which shall be the number of
Shares owned by such Tag-Along Investor on the date of notice and the
denominator of which shall be the aggregate number of Shares owned by the
Selling Investor and each Tag-Along Investor exercising its rights under this
Section 3(c) on the date of notice; provided, however, that if any Tag-Along
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Investor has, on the date of notice, the ability to immediately liquidate
pursuant to Rule 144 of the Securities Act of 1933, as amended, at a price above
the then applicable Conversion Price, a number of Shares equal to the number of
Shares such Tag-Along Investor would otherwise be entitled to sell pursuant to
the rights granted under this Section 3(c), then such Tag-Along Investor shall
not be entitled to the benefit of this Section 3(c). The rights granted to the
Series B Investors under this Section 3(c) may be freely assigned or otherwise
transferred severally by the Series B Investors to any Person acquiring at least
twenty percent (20%) of the shares of Series B Preferred Stock originally owned
by the original holder of the Series B Preferred Stock.
(d) Right of First Offer - Equity or Debt Financings.
(i) If at any time after the date hereof, the Company proposes to issue any
Debt or Equity other than (i) the issuance of the Series B Preferred Stock to
the Series B Investors, the Series C Preferred Stock, the Warrants, or any
shares issuable as a result of the conversion or exercise of such securities, or
Debt or Equity issued pro rata to all of the Series B Investors, (ii) pursuant
to the acquisition of another person by the Company, whether by purchase of
stock, merger, consolidation, purchase of all or substantially all of the assets
of such person or otherwise, or (iii) pursuant to an employee stock option plan,
stock bonus plan, stock purchase plan or other management equity program
approved by the Company's Board of Directors including the affirmative vote of
at least one Series B Director (collectively, "Exempt Issuances"), the Company
shall:
(A) give written notice setting forth in reasonable detail (1) the
designation and all of the terms and provisions of the securities (whether
Debt or Equity) proposed to be issued (the "Proposed Securities"),
including, where applicable, the voting powers, preferences and relative
participating, optional or other special rights, and the qualification,
limitations or restrictions thereof and interest rate and maturity; (2) the
price and other terms of the proposed sale of such securities; (3) the
amount of such securities proposed to be issued; and (4) such other
information as the Investors may reasonably request in order to evaluate
the proposed issuance; and
(B) offer to issue to the Series B Investors the Proposed Securities.
(ii) The Series B Investors must exercise their purchase rights hereunder
within fifteen (15) business days after receipt of such notice from the Company.
The Series B Investors shall purchase the Proposed Securities as they shall
agree among themselves.
(iii) If the Series B Investors shall not have elected to exercise their
purchase rights hereunder prior to the expiration of the offering period
described above, the Company will be free to sell the Proposed Securities during
the ninety (90) days following such expiration on terms and conditions no more
favorable to the purchasers thereof than those offered to the Series B
Investors. Any Proposed Securities offered or sold by the Company after such
90-day period must be reoffered to the Series B Investors pursuant to this
Section 3(d).
(iv) The election by the Series B Investors not to exercise their right of
first refusal under this Section 3(d) in any one instance shall not affect their
right (other than in
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respect of a reduction in their percentage holdings) as to any subsequent
proposed issuance. Any sale of such Debt or Equity by the Company without first
giving the Series B Investors the rights described in this Section 3(d) shall be
void and of no force and effect.
(v) The rights granted to the Series B Investors under this Section 3(d)
may be freely assigned or otherwise transferred severally by the Series B
Investors to any Affiliate or to any non-Affiliate, provided such non-Affiliate
acquires at least twenty percent (20%) of the shares of Series B Preferred Stock
originally owned by the original holder of the Series B Preferred Stock.
(e) Subscription Right.
(i) Notwithstanding the foregoing, if the Company issues such Proposed
Securities pursuant to Section 3(d) in a transaction other than an Exempt
Issuance after the Series B Investors have failed to exercise their purchase
rights under such section, the Company shall nonetheless:
(A) offer to sell to each such Series B Investor, on the same terms
and subject to the same conditions as the sale of the Proposed Securities
to non-Series B Investors, a portion of the Proposed Securities equal to a
percentage determined by dividing (x) the number of shares of Common Stock
owned by such Series B Investor (calculated on an as-converted and
as-exercised basis), by (y) the total number of shares of Common Stock then
outstanding (calculated on an as-converted and as-exercised basis).
(ii) Each such Series B Investor must exercise its purchase rights under
this Section 3(e) within five (5) business days after receipt of such notice
from the Company of such subscription right. If all of the Proposed Securities
offered to such Series B Investors are not fully subscribed by such Series B
Investors, the remaining (unsubscribed) Proposed Securities will be reoffered to
the Series B Investors purchasing their full allotment upon the terms set forth
in this Section 3(e), until all such Proposed Securities are fully subscribed
for or until all such Series B Investors have subscribed for all such Proposed
Securities which they desire to purchase, except that such Series B Investors
must exercise their purchase rights within five days after receipt of all such
reoffers. To the extent that the Company offers two or more securities in units,
Series B Investors must purchase such units as a whole and will not be given the
opportunity to purchase only one of the securities making up such unit.
(iii) Upon the expiration of the offering periods described above, the
Company will be free to sell such Proposed Securities that the Series B
Investors have not elected to purchase during the ninety (90) days following
such expiration on terms and conditions no more favorable to the purchasers
thereof than those offered to such holders. Any Proposed Securities offered or
sold by the Company after such 90-day period must be reoffered to the Investors
pursuant to this Section 3(e)
(iv) The election by a Series B Investor not to exercise its subscription
rights under this Section 3(e) in any one instance shall not affect its right
(other than in respect of a reduction in its percentage holdings) as to any
subsequent proposed issuance. Any sale of such
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securities by the Company without first giving the Series B Investors the rights
described in this Section 3(e) shall be void and of no force and effect.
(v) The rights granted to the Series B Investors under this Section 3(e)
may be freely assigned or otherwise transferred severally by the Series B
Investors to any Affiliate or to any non-Affiliate, provided such non-Affiliate
acquires at least twenty percent (20%) of the shares of Series B Preferred Stock
originally owned by the original holder of the Series B Preferred Stock.
(f) The terms of this Section 3 shall terminate and be of no further force
and effect as of the date the Series B Investors and their Affiliates own (on an
as-converted and as-exercised basis) less than fifteen percent (15%) of the
Common Stock.
4. TERMINATION.
(a) The Agreement shall terminate on the earlier of (1) the date which the
Series B Investors and the Management/Founding Investors owning a majority of
the shares of Common Stock (excluding outstanding options) owned by the
Management/Founding Investors shall have agreed in writing to terminate this
Agreement or (2) ten (10) years from the date hereof.
5. BLOCKING RIGHTS.
(a) In addition to any other rights provided by law, the Company shall not,
and shall not permit any subsidiary (a "Subsidiary") to, without first obtaining
the affirmative vote or written consent of the Series B Investors that own a
majority of the outstanding shares of Series B Preferred Stock:
(i) amend the Company's articles of incorporation or bylaws in any manner.
(ii) merge, consolidate, or otherwise combine the Company with or into any
other entity, or effect any sale, lease, license, assignment (for the benefit of
creditors or otherwise), transfer or other conveyance or disposition of any
material portion of the assets of the Company or any of its Subsidiaries, or any
consolidation, merger or share exchange involving the Company or any Subsidiary
or any reclassification or other change of any stock, or any recapitalization,
or any dissolution, liquidation or winding up of the Company;
(iii) acquire, by purchase, exchange, merger, consolidation or other
business combination, lease, assignment, or other transfer or conveyance, or
series of transfers or conveyances, of, all or substantially all of the
properties or assets of any other corporation, entity or business (as determined
in accordance with Rule 11-01(d) of Regulation S-X promulgated by the Securities
and Exchange Commission), or enter into a joint venture or partnership with any
other entity, in each case involving the payment of consideration or
contribution by the Company or any Subsidiary in an aggregate amount or value in
excess of $1,000,000;
(iv) purchase, redeem or otherwise acquire for value (or pay into or set
aside as a sinking fund for such purpose) any of the capital stock of the
Company; provided, that
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this provision shall not apply to the repurchase of shares of capital stock from
directors, officers, employees or consultants or of advisers to the Company or
any Subsidiary pursuant to agreements under which the Company has the option to
repurchase such shares upon the occurrence of certain events, including the
termination of employment by or service to the Company or any Subsidiary;
(v) permit any Subsidiary to issue or sell, or obligate itself to issue or
sell, except to the Company or a wholly owned Subsidiary, any stock of such
Subsidiary, if after giving effect to such issuance or sale, the Company or a
wholly owned Subsidiary would own less than eighty percent (80%) of the
outstanding stock of such Subsidiary on a fully diluted basis;
(vi) authorize, issue or obligate itself to issue any stock or similar
security, including, without limitation, securities containing equity features
and securities containing profit participation features, or any security
convertible or exchangeable, with or without consideration, into or for any
stock or similar security, or any security carrying any warrant or right to
subscribe for or purchase any stock or similar security, or any such warrant or
right (an "Equity Security") except in exchange for (a) cash (if otherwise
permitted), (b) shares issuable upon exercise or conversion of the Series B
Preferred Stock, the Series C Preferred Stock or the warrants to purchase common
stock issued to Landmark Communications, Inc. or certain of its affiliates or
transferees (collectively, "Landmark") (the "Warrants") in connection with the
Company's issuance and sale of a Senior Secured Note to Landmark in the
aggregate principal amount of $5,000,000 dated July 30, 2001 (as may be amended,
the "Senior Secured Note"), or (c) shares of Common Stock or options to purchase
Common Stock pursuant to an option or incentive plan approved by the Board of
Directors, provided such approval included the affirmative vote of one of the
Series B Directors (an "Approved Plan") provided the aggregate number of
options, warrants or any other type of rights or equity securities issued and
outstanding under any such Approved Plan shall not exceed 7,953,954 plus up to
1,800,000 options issued in connection with the cancellation of options issued
under the Company's 1997 Stock Option Plan and reissuance under an Approved Plan
as contemplated by the Purchase Agreement;
(vii) authorize or issue, or obligate itself to issue (a) any shares of
Series B Preferred Stock or capital stock exchangeable or convertible into
Series B Preferred Stock to any person other than to a Series B Investor or (b)
Equity Securities ranking senior to or on a parity with the Series B Preferred
Stock as to dividend or redemption rights, liquidation preferences, conversion
rights, voting rights or otherwise, or reclassify any Equity Security such that
it ranks senior to or on a parity with the Series B Preferred Stock as to
dividend or redemption rights, liquidation preferences, conversion rights,
voting rights or otherwise;
(viii) increase or decrease (other than by the redemption or conversion of
the Series B Preferred Stock as provided herein) the total number of authorized
shares of Series A Preferred Stock, Series B Preferred Stock or Series C
Preferred Stock or issue any additional shares of any such series of Preferred
Stock or declare or pay any dividends or declare or make any other distribution,
direct or indirect (other than a dividend payable solely in shares of Common
Stock or paid in kind on the Series B Preferred Stock) on account of any Equity
Security or set apart any sum for any such purpose;
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(ix) adopt any stock option, stock purchase or similar incentive plan or
arrangement other than an Approved Plan, amend any Approved Plan or amend any
stock option, restricted stock award, stock purchase right or other incentive
award or grant issued or granted pursuant to an Approved Plan;
(x) enter into or permit any Subsidiary to enter into any agreement,
indenture or other instrument which contains any provisions restricting the
Company's obligation to make prepayments or payments in kind under or
redemptions of the Senior Secured Note or pay dividends, make payments in kind
or effect redemptions of the Series B Preferred Stock;
(xi) enter into any transaction with an officer, director, employee or
holder of more than five percent (5%) of the Company's capital stock (other than
with the holders of the Series B Preferred Stock or Landmark or its affiliates)
or any affiliate thereof other than in the ordinary course of business;
(xii) enter into any agreement which restricts the Company from engaging in
any business practice without the approval of the majority of the Board of
Directors, including the affirmative vote of the Series B Directors;
(xiii) create any Subsidiary;
(xiv) amend, alter or rescind any term of the Forbearance Agreement between
the Company and American National Bank dated as of June 15, 2001, as amended
July 27, 2001, or the Forbearance Agreement between the Company and Midwest
Guaranty Bank dated as of July 27, 2001;
(xv) create, incur or become or remain liable with respect to any
indebtedness in an aggregate amount in excess of $500,000, or make (or permit
any Subsidiary to make) any loan or advance to, or own any stock or other
securities of, any corporation, partnership, or other entity other than a
Subsidiary which is at least eighty percent (80%) owned by the Company;
(xvi) make any loan or advance to any person, including, without
limitation, any employee or director of the Company or any Subsidiary, except
travel advances and similar expenditures in the ordinary course of business or
under the terms of an Approved Plan, or guarantee directly or indirectly any
indebtedness, except for trade accounts of any Subsidiary arising in the
ordinary course of business;
(xvii) amend, modify or waive compliance with the terms of any employment
agreements with employees of the Company, including without limitation any
non-competition, non-solicitation or non-disclosure clauses contained therein or
elsewhere;
(xviii) hire, terminate or replace the Chief Executive Officer, the
President/Chief Operating Officer, Chief Financial Officer, Chief Technology
Officer, or Executive Vice President--Business Development;
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(xix) enter into any material agreements, joint venture agreements, license
agreements revenue sharing agreements, or other arrangements which allocate
revenues to a third party or obligate the Company to pay any kind of fees which,
individually, would exceed $250,000 per year, or $750,000 over the term of such
arrangement, or which when combined with all similar arrangements would involve
fees in excess of $2,000,000; or
(xx) enter into any material agreements, joint venture agreements, license
agreements revenue sharing agreements, alliances or other arrangements which
allocate revenues to a third party or obligate the Company to perform any
services which on an arms length basis calculated at fair market value,
individually would exceed $250,000 per year, or $750,000 over the term of such
arrangement, or which when combined with all similar arrangements would involve
in kind services on an arms length basis calculated at fair market value in
excess of $2,000,000.
6. CONVERSION COVENANT.
The Series B Investors hereby agree not to request the conversion of their
shares of Series B Preferred Stock until the earliest of (i) the first
anniversary of the date hereof, (ii) a Change of Control (as defined under the
Charter), and (iii) any breach under the Purchase Agreement or any default under
the Senior Secured Note or that certain Amended and Restated Loan and Security
Agreement between the Company and Landmark Communications, Inc. dated as of July
30, 2001.
7. INTERPRETATION OF THIS AGREEMENT.
(a) Terms Defined. As used in this Agreement, the following terms have the
respective meaning set forth below:
Affiliate: shall mean any Person or entity, directly or indirectly
controlling, controlled by or under common control with such Person or entity.
Charter: shall mean the Company's certificate of incorporation, as amended
from time to time.
Debt: shall mean any indenture, mortgage, deed of trust, credit agreement,
loan, note or any other evidence of indebtedness.
Equity: shall mean a grant by the Company at any time and in any manner of
Common Stock or any rights to subscribe for or to purchase, or any options for
the purchase of, Common Stock or any stock or other securities convertible into
or exchangeable for Common Stock (whether directly or by assumption in a merger
or otherwise).
Exchange Act: shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
Permitted Transferee: shall mean members of a Management/Founding
Investor's family, heirs, executors or legal representatives trusts or any other
person formed or used for the benefit of such Management/Founding Investor's
family for purposes of estate
11
planning; provided, in each instance, that such transferee agrees to be bound by
the provisions of this Agreement as if such transferee were an original
signatory hereto.
Person: shall mean an individual, partnership, joint-stock company,
corporation, limited liability company, trust or unincorporated organization,
and a government or agency or political subdivision thereof.
Reserved Series B Seats: shall have the meaning given such term under the
Charter.
Securities: shall have the meaning set forth in Section 2(1) of the
Securities Act.
Securities Act: shall mean the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
Series B Directors: shall have the meaning given such term under the
Charter.
Transfer: shall mean any sale, assignment, pledge, hypothecation, or other
disposition or encumbrance.
(b) Accounting Principles. Where the character or amount of any asset or
amount of any asset or liability or item of income or expense is required to be
determined or any consolidation or other accounting computation is required to
be made for the purposes of this Agreement, this shall be done in accordance
with U.S. generally accepted accounting principles at the time in effect, to the
extent applicable, except where such principles are inconsistent with the
requirements of this Agreement.
(c) Directly or Indirectly. Where any provision in this Agreement refers to
action to be taken by any Person, or which such Person is prohibited from
taking, such provision shall be applicable whether such action is taken directly
or indirectly by such Person.
(d) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed entirely within such State.
(e) Section Headings. The headings of the sections and subsections of this
Agreement are inserted for convenience only and shall not be deemed to
constitute a part thereof.
8. MISCELLANEOUS.
(a) Notices.
(i) All communications under this Agreement shall be in writing and shall
be delivered by hand or facsimile or mailed by overnight courier or by
registered or certified mail, postage prepaid:
(A) if to any of the Investors, at the address or facsimile number of
such Investor shown on Schedule I or Schedule II, as applicable, or at such
other
12
address as the Investor may have furnished the Company and the other
Investors in writing, with a copy to Xxxxxxx Xxxx & Xxxxxxxxx, 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, XX 00000 (facsimile: (000) 000-0000), Attention: Xxxxxxx
X. Xxxxx, Xx., and a copy to Xxxxxxx & Xxxxxx, P.C., 0000 Xxxx xx Xxxxxxx
Xxxxxx, Xxxxxxx, XX 00000 (facsimile: (000) 000-0000), Attention: Xxxxxx X.
Xxxxxxx; and
(B) if to the Company, at 000 X. Xxxxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxx,
XX 00000 (facsimile: (000) 000-0000), Attention: Xxxxxx Xxxxxx, or at such
other address as it may have furnished in writing to each of the Investors,
with a copy to Jaffe, Raitt, Heuer & Xxxxx, P.C., Xxx Xxxxxxxx Xxxxxx,
Xxxxx 0000, Xxxxxxx, XX 00000 (facsimile: (000) 000-0000), Attention: Xxxxx
Sugar.
(ii) Any notice so addressed shall be deemed to be given: if delivered by
hand or facsimile, on the date of such delivery; if mailed by courier, on the
first business day following the date of such mailing; and if mailed by
registered or certified mail, on the third business day after the date of such
mailing.
(b) Reproduction of Documents. This Agreement and all documents relating
thereto, including, without limitation, (i) consents, waivers and modifications
which may hereafter be executed, (ii) documents received by a party pursuant
hereto, and (iii) financial statements, certificates and other information
previously or hereafter furnished to a party, may be reproduced by such party by
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and such party may destroy any original document so reproduced.
All parties hereto agree and stipulate that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made by each Investor in the regular course of business) and
that any enlargement, facsimile or further reproduction of such reproduction
shall likewise be admissible in evidence.
(c) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties.
(d) Entire Agreement; Amendment and Waiver. This Agreement and the Purchase
Agreement constitute the entire understanding of the parties hereto relating to
the subject matter hereof and supersede all prior understandings among such
parties. This Agreement may be amended, and the observance of any term of this
Agreement may be waived, with (and only with) the written consent of each Series
B Investor, the Management/Founding Investors owning a majority of the shares of
Common Stock (excluding outstanding options) owned by the Management/Founding
Investors and the Company. This Agreement shall not become effective and the
terms and provisions herein shall be of no force and effect unless and until all
parties hereto have executed and delivered the Agreement.
(e) Severability. In the event that any part or parts of this Agreement
shall be held illegal or unenforceable by any court or administrative body of
competent jurisdiction, such determination shall not affect the remaining
provisions of this Agreement which shall remain in full force and effect.
13
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
(g) Injunctive Relief. The Company and the Investors hereby declare that it
is impossible to measure in money the damages which will accrue to the parties
hereto by reason of the failure of any Investor or the Company to perform any of
its obligations set forth in this Agreement. Therefore, in addition to and not
in limitation of any other rights and remedies, the Company and each of the
Investors shall have the right to specific performance of such obligations
(without the showing of special, imminent or irreparable damages and without any
obligation to post bond or other security or surety), and if any party hereto
shall institute any action or proceeding to enforce the provisions hereof, each
of the Company and the Investors hereby waives the claim or defense that the
party instituting such action or proceeding has an adequate remedy at law.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK -
SIGNATURE PAGES FOLLOW]
14
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
COOLSAVINGS, INC.
By: /s/ Xxxxxxx Xxxx
------------------------------
Name: Xxxxxxx Xxxx
Title: Chief Executive Officer
LANDMARK VENTURES VII, LLC
By: /s/ Xxxxxxx X. Xxxxx
------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President, Secretary and
Treasurer
XXXXXX X. XXXXXX
/s/ Xxxxxx X. Xxxxxx
------------------------------
XXXXXX X. XXXXXX REVOCABLE LIVING
TRUST DATED 3/3/98
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Trustee
XXXXXX X. XXXXXX L.L.C.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Member
XXXXXXX XXXX
/s/ Xxxxxxx Xxxx
------------------------------
MOOG INVESTMENT PARTNERS LP
By: /s/ Xxxxxxx Xxxx
------------------------------
Name: Xxxxxxx Xxxx
Title: General Partner
[SHAREHOLDERS AGREEMENT]
SCHEDULE I
Series B Investors
------------------
Name Address
---- -------
Landmark Ventures VII, LLC 000 X. Xxxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxx X. Xxxxxxxx, III
Executive Vice President and
General Counsel
--------------------------------------------------------------------------------
SCHEDULE II
Management/Founding Investors
-----------------------------
Name Address
---- -------
Xxxxxx X. Xxxxxx 000 X. Xxxxxxxx Xxx., 00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Xxxxxx X. Xxxxxx Revocable Living Trust 000 X. Xxxxxxxx Xxx., 00xx Xxxxx
dated 3/3/98; Xxxxxx X. Xxxxxx as Xxxxxxx, Xxxxxxxx 00000
Trustee
Xxxxxx X. Xxxxxx L.L.C. 000 X. Xxxxxxxx Xxx., 00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Xxxxxxx Xxxx 000 X. Xxxxxxxx Xxx., 00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Moog Investment Partners LP 000 X. Xxxxxxxx Xxx., 00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
--------------------------------------------------------------------------------
