EXHIBIT 99.4
INVESTOR RIGHTS AGREEMENT
BY AND AMONG
ASPEN TECHNOLOGY, INC.
AND
THE STOCKHOLDERS NAMED HEREIN
DATED , 2003
TABLE OF CONTENTS
TABLE OF CONTENTS........................................................................i
INVESTOR RIGHTS AGREEMENT................................................................1
BACKGROUND...............................................................................1
AGREEMENT................................................................................1
1. DEFINITIONS...........................................................................1
2. REGISTRATION RIGHTS...................................................................6
2.1. DEMAND REGISTRATIONS............................................................6
2.2. INCIDENTAL REGISTRATIONS........................................................8
2.3. DIVIDEND REGISTRATION...........................................................9
2.4. SHELF REGISTRATION..............................................................9
2.5. REGISTRATION PROCEDURES.........................................................9
2.6. ALLOCATION OF EXPENSES.........................................................13
2.7. INDEMNIFICATION AND CONTRIBUTION...............................................13
2.8. OTHER MATTERS WITH RESPECT TO UNDERWRITTEN OFFERINGS...........................16
2.9. INFORMATION BY HOLDER..........................................................16
2.10. "LOCK-UP" AGREEMENT; CONFIDENTIALITY OF NOTICES................................16
2.11. TERMINATION....................................................................16
3. PREEMPTIVE RIGHTS....................................................................16
3.1. RIGHTS OF INVESTORS............................................................17
3.2. EXCLUDED TRANSACTIONS..........................................................18
3.3. TERMINATION....................................................................19
4. COVENANTS OF THE COMPANY.............................................................19
4.1. INFORMATION REQUIREMENTS.......................................................19
4.2. BOARD OF DIRECTORS.............................................................19
4.3. REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934..................................20
4.4. REGISTRATION RIGHTS............................................................20
4.5. AVAILABLE COPY.................................................................21
4.6. TERMINATION....................................................................21
5. TRANSFER RESTRICTIONS................................................................21
5.1. PROHIBITION....................................................................21
5.2. RESTRICTIONS...................................................................21
5.3. LEGENDS........................................................................22
5.4. ACKNOWLEDGEMENT................................................................23
6. STANDSTILL AGREEMENTS................................................................23
6.1. RESTRICTIONS...................................................................23
6.2. CERTAIN PERMITTED TRANSACTIONS AND COMMUNICATIONS..............................25
6.3. TERMINATION....................................................................25
7. TRADING LIMITATIONS..................................................................25
7.1. RESTRICTIONS...................................................................25
7.2. TERMINATION....................................................................26
8. CONFIDENTIALITY......................................................................26
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8.1. RESTRICTIONS...................................................................26
8.2. TERMINATION....................................................................26
9. ELECTION OF SERIES D-1 DIRECTORS.....................................................26
9.1. INITIAL SERIES D-1 DIRECTORS...................................................26
9.2. DESIGNATION OF SERIES D-1 DIRECTORS............................................27
9.3. COVENANT REGARDING COMMON DIRECTORS............................................26
9.4. TERMINATION....................................................................27
10. NONPUBLIC INFORMATION..........................................................27
11. GENERAL........................................................................27
11.1. OWNERSHIP CALCULATIONS.........................................................27
11.2. NOTICES........................................................................28
11.3. AMENDMENTS AND WAIVERS.........................................................28
11.4. GOVERNING LAW; VENUE; WAIVER OF JURY TRIAL.....................................29
11.5. COUNTERPARTS; FACSIMILE SIGNATURES.............................................29
11.6. ENTIRE AGREEMENT...............................................................29
11.7. INTERPRETATION AND RULES OF CONSTRUCTION.......................................29
11.8. SEVERABILITY...................................................................29
11.9. SPECIFIC PERFORMANCE...........................................................29
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INVESTOR RIGHTS AGREEMENT
THIS AGREEMENT dated as of , 2003 is entered into by and among Aspen
Technology, Inc., a
Delaware corporation (the "Company"), and the entities
listed on the signature pages hereto (the "Investors").
BACKGROUND
A. The Company and certain of the Investors have entered into a
Securities Purchase Agreement dated as of June 1, 2003, pursuant to which
such Investors are acquiring shares of Series D Convertible Preferred Stock
of the Company contemporaneously with the execution and delivery of this
Agreement.
B. Under Sections 7.01(m) and 7.02(i) of such Purchase Agreement,
the delivery of this Agreement is a condition to certain Investors'
acquisition, and the Company's sale, of such shares of Series D Convertible
Preferred Stock.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, the parties hereto agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms shall
have the indicated meanings:
"ACCREDITED INVESTOR" means each Investor that is an "accredited
investor" within the meaning of Rule 501(a) under the Securities Act.
"ADVENT" means Advent International Corporation, a
Delaware
corporation.
"ADVERSE DISCLOSURE" means public disclosure of material non-public
information, which disclosure in the good faith judgment of the Board of
Directors of the Company (after consultation with external legal counsel)
(i) would be required to be made in any Registration Statement so that such
Registration Statement would not be materially misleading, (ii) would not
be required to be made at such time but for the filing, effectiveness or
continued use of such Registration Statement, and (iii) would be materially
detrimental to the Company's ability to effect a material proposed merger,
acquisition or sale.
"AFFILIATE" of a Person shall mean any Person which, directly or
indirectly, controls, is controlled by, or is under common control with
such Person. The term "control" (including, with correlative meaning, the
terms "controlled by" and "under common control with"), as used with
respect to any Person, shall mean the possession, directly or indirectly,
of the power to elect a majority of the board of directors (or other
governing body) or to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting
securities, by contract or otherwise and, in any event and without limiting
the generality of the foregoing, any Person owning more than 10% of the
voting securities of another Person shall be deemed to control that Person.
With respect to each of the initial Series D-1 Investors, the term
"Affiliate" shall also include (i) any entity in which such Series D-1
Investor (or one of its Affiliates) is a general partner or member, (ii)
each investor in such Series D-1 Investor, but only in connection with the
liquidation, winding up or dissolution of the Series D-1 Investor, and only
to the extent of such investor's pro rata share in the Series D-1 Investor
and (iii) any investment fund managed by Advent.
"BENEFICIALLY OWN" has the meaning set forth in Rule 13d-3 under the
Exchange Act, and
"BENEFICIAL OWNERSHIP" shall have a correlative meaning.
"COMMISSION" means the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act or the
Exchange Act.
"COMMON STOCK" means the common stock, par value $.10 per share, of
the Company, or any common stock or other securities issued in respect of
such Common Stock, or into which such Common Stock is converted, due to
stock splits, stock dividends or other distributions, merger,
consolidation, reclassifications, recapitalizations or otherwise.
"COMPANY" has the meaning ascribed to it in the introductory
paragraph hereto.
"COMPANY OFFER" means a written notice of any proposed issuance,
sale or exchange of Company-Offered Securities containing the information
specified in Section 3.1(a).
"COMPANY-OFFER ACCEPTANCE" means a written notice from an Investor
to the Company containing the information specified in Section 3.1(b).
"COMPANY-OFFER AVAILABLE UNSUBSCRIBED AMOUNT" means the difference
between the total of all of the Company-Offer Basic Amounts available for
purchase by Accredited Investors pursuant to Section 3.1 and the
Company-Offer Basic Amounts subscribed for pursuant to Section 3.1.
"COMPANY-OFFER BASIC AMOUNT" means, with respect to an Accredited
Investor, its pro rata portion of the Company-Offered Securities determined
by multiplying the number of Company-Offered Securities by a fraction, the
numerator of which is the aggregate number of shares of Common Stock then
held by such Accredited Investor (giving effect to the conversion into
Common Stock of all shares of convertible preferred stock and exercise of
all warrants (assuming cashless exercise) then held by such Accredited
Investor) and the denominator of which is the total number of shares of
Common Stock then outstanding (giving effect to (i) the conversion into
Common Stock of all outstanding shares of convertible preferred stock, (ii)
the exercise of all outstanding options to purchase shares of Common Stock
issued under employee stock plans of the Company, and (iii) the shares
issuable pursuant to the cashless exercise of warrants to the extent
included in the numerator, in the case of (i) and (ii), which have been
approved by a majority of the Independent Directors and that are then
convertible or exercisable at an exercise price less than the then-current
market price of the Common Stock).
"COMPANY-OFFER REFUSED SECURITIES" means those Company-Offered
Securities as to which a Company-Offer Acceptance has not been given by
Accredited Investors pursuant to Section 3.1.
"COMPANY-OFFER UNSUBSCRIBED AMOUNT" means, with respect to an
Accredited Investor, any additional portion of the Company-Offered
Securities attributable to the Company-Offer Basic Amounts of other
Accredited Investors as such Accredited Investor indicates it will purchase
or acquire should the other Accredited Investors subscribe for less than
their Company-Offer Basic Amounts.
"COMPANY-OFFERED SECURITIES" means (a) any shares of Common Stock,
(b) any other equity securities of the Company, including shares of
preferred stock, (c) any option, warrant or other right to subscribe for,
purchase or otherwise acquire any equity securities of the Company, or (d)
any debt securities convertible into capital stock of the Company.
"COMPANY SALE" means:
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(a) a merger, consolidation, recapitalization, reorganization or
other transaction in which (i) the Company is a constituent
party, or (ii) a Subsidiary is a constituent party and the
Company issues shares of its capital stock pursuant to such
merger or consolidation, recapitalization, reorganization or
other transaction except any such merger or consolidation
involving the Company or a Subsidiary in which the holders of
capital stock of the Company immediately prior to such merger
or consolidation continue to hold immediately following such
merger or consolidation more than 50% by voting power of the
capital stock of or ownership interest in (a) the surviving
or resulting entity or (b) if the surviving or resulting
entity is a wholly owned subsidiary of another entity
immediately following such merger or consolidation, the
parent entity of such surviving or resulting entity; or
(b) the sale, in a single transaction or series of related
transactions, (i) by the Company of all or substantially all
the assets of the Company (except where such sale is to a
wholly owned subsidiary of the Company) or (ii) by the
stockholders of the Company of more than 50% by voting power
of the then-outstanding capital stock of the Company.
"COMPETITOR" shall mean (a) any Person (i) that itself or together
with its Affiliates, derives any portion of its business revenues from
developing, maintaining, supporting, marketing, licensing, selling,
implementing, training or providing other services related to software
products or services used in the process industries, including without
limitation, the oil and gas, refining, petrochemical, chemical or
pharmaceutical businesses and (ii) to which the Company is then selling or
providing, or has previously sold or provided at any time within the past
two (2) years, any of the products or services described in the preceding
clause (i), and (b) with respect to Series D-1 Investors, any
institutional investor that owns 10% or more of the publicly traded stock
of a Person described in clause (a) above or 30% or more of the privately
owned equity interests of a Person described in clause (a) above.
"CONFIDENTIAL INFORMATION" means any information that is labeled as
confidential, proprietary or secret that an Investor obtains from the
Company pursuant to financial statements, reports and other materials
provided by the Company to such Investor pursuant to this Agreement.
"CONVERTIBLE DEBENTURES" means the Company's 5 1/4% Convertible
Subordinated Debentures due June 15, 2005.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and any successor thereto, and the rules and regulations
promulgated thereunder or in connection therewith, all as the same shall be
in effect from time to time.
"INDEMNIFIED PERSON" means a Person entitled to indemnification
pursuant to Section 2.6.
"INDEMNIFYING PERSON" means a Person obligated to provide
indemnification pursuant to Section 2.6.
"INDEPENDENT DIRECTOR" means, as of a given time, a director of the
Company who is eligible to serve on the Audit Committee of the Board of
Directors of the Company under the then-applicable rules of the Securities
and Exchange Commission and the Nasdaq National Market (or such other
exchange, market or trading or quotation facility on which the Common Stock
is then listed).
"INVESTOR" means each Person listed on the signature pages hereto
and each other Person to which Shares are Transferred pursuant to Section
5.2(c) or (d), PROVIDED that such Person delivers in accordance with such
Section a written instrument agreeing to be bound by the terms of this
Agreement.
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"OTHER REGISTRATION RIGHTS" means written agreements entered into
after the date hereof under which the Company agrees to include securities
of the Company (other than Registrable Shares) in a Registration Statement,
PROVIDED that "Other Registration Rights" shall not include any such
agreement to the extent it relates solely to securities of the Company
issued in connection with the acquisition by the Company or any Subsidiary
of all or a majority of the equity or assets of any entity or line of
business.
"OTHER REGISTRATION RIGHTS HOLDERS" means holders of securities
subject to Other Registration Rights.
"PERSON" means an individual or a corporation, partnership, limited
liability company, association, trust, or any other entity or organization,
including a government or political subdivision or an agency or
instrumentality thereof.
"PROSPECTUS" means the prospectus included in any Registration
Statement, as amended or supplemented by an amendment or prospectus
supplement, including post-effective amendments, and all material
incorporated by reference or deemed to be incorporated by reference in such
Prospectus.
"PURCHASE AGREEMENT" means the Securities Purchase Agreement dated
as of June 1, 2003 by and among the Company and the Investors.
"REGISTRABLE SHARES" means, collectively, Series D-1 Registrable
Shares and Series D-2 Registrable Shares.
"REGISTRATION EXPENSES" means all expenses incurred by the Company
in complying with the provisions of Section 2, including all registration
and filing fees, exchange listing fees, printing expenses, fees and
expenses of counsel for the Company and the fees and expenses of
Registration Selling Investor Counsel, state Blue Sky fees and expenses,
and the expense of any special audits incident to or required by any such
registration, but excluding underwriting discounts, selling commissions and
the fees and expenses of Registration Selling Investors' own counsel (other
than Registration Selling Investor Counsel).
"REGISTRATION INITIATING INVESTORS" means the Series D-1 Investors
initiating a request for registration pursuant to Section 2.1(a).
"REGISTRATION SELLING INVESTOR" means any Investor owning
Registrable Shares included in a Registration Statement.
"REGISTRATION SELLING INVESTOR COUNSEL" means (a) if Advent or one
of its Affiliates is participating as a Registration Selling Investor with
respect to a registration, counsel selected by Advent to represent all
Registration Selling Investors with respect to such registration, or (b) if
Advent or one of its Affiliates is not participating as a Registration
Selling Investor with respect to a registration, counsel selected by the
holders of a majority of the Registrable Shares to be included in such
registration to represent all Registration Selling Investors with respect
to such registration.
"REGISTRATION STATEMENT" means a registration statement filed by the
Company with the Commission for a public offering and sale of securities of
the Company, other than (a) a registration statement on Form S-4 or Form
S-8, or their successors, or any other form for a similar limited purpose,
or (b) any registration statement covering only securities proposed to be
issued in exchange for securities or assets of another corporation.
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"REMAINING INVESTOR-OFFERED SHARES" has the meaning ascribed to it
in Section 4.2(b).
"RULE 144" means Rule 144 promulgated under the Securities Act, and
any successor rule or regulation thereto, and in the case of any referenced
section of such rule, any successor section thereto, collectively and as
from time to time amended and in effect.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and
any successor thereto, and the rules and regulations promulgated thereunder
or in connection therewith, all as the same shall be in effect from time to
time.
"SERIES D CERTIFICATE" means the Certificate of Designations of
Series D-1 Convertible Preferred Stock and Series D-2 Convertible Preferred
Stock forming a part of the Certificate of Incorporation of the Company.
"SERIES D-1 DIRECTORS" means the members of the Board of Directors
of the Company elected by the holders of shares of Series D-1 Stock
pursuant to the Series D Certificate.
"SERIES D-1 INVESTORS" means those Investors to the extent they hold
Series D-1 Registrable Shares, which initially shall consist of the
entities identified on the signature pages hereto as Series D-1 Investors.
"SERIES D-1 REGISTRABLE SHARES" means (a) the shares of Common Stock
issued or issuable upon conversion of the Series D-1 Stock, (b) any other
shares of Common Stock, and any shares of Common Stock issued or issuable
upon the conversion or exercise of any other securities, acquired by the
Series D-1 Investors pursuant to Section 3, (c) the shares of Common Stock
issued or issuable upon the exercise of Series D-1 Warrants, and (d) any
other shares of Common Stock issued in respect of such shares; PROVIDED,
HOWEVER, that shares of Common Stock that are Series D-1 Registrable Shares
shall cease to be Series D-1 Registrable Shares upon any sale pursuant to a
Registration Statement or Rule 144 or at such time at which such Series D-1
Registrable Shares may be sold pursuant to paragraph (k) of Rule 144.
"SERIES D-1 STOCK" means the Series D-1 Convertible Preferred Stock
of the Company issued pursuant to the Purchase Agreement.
"SERIES D-1 WARRANTS" means the warrants being issued on the date
hereof to Series D-1 Investors pursuant to the Purchase Agreement.
"SERIES D-2 INVESTORS" means those Investors to the extent they hold
Series D-2 Registrable Shares, which initially shall consist of the
entities identified on the signature pages hereto as Series D-2 Investors.
"SERIES D-2 REGISTRABLE SHARES" means (a) the shares of Common Stock
issued or issuable upon conversion of the Series D-2 Stock, (b) any other
shares of Common Stock, and any shares of Common Stock issued or issuable
upon the conversion or exercise of any other securities, acquired by the
Series D-2 Investors pursuant to Section 3, (c) the shares of Common Stock
issued or issuable upon the exercise of the Series D-2 Warrants, and (d)
any other shares of Common Stock issued in respect of such shares;
PROVIDED, HOWEVER, that shares of Common Stock that are Series D-2
Registrable Shares shall cease to be Series D-2 Registrable Shares upon any
sale pursuant to a Registration Statement or Rule 144 or at such time as
when such Series D-2 Registrable Shares may be sold pursuant to paragraph
(k) of Rule 144.
"SERIES D-2 SECURITIES" means the Series D-2 Stock and the shares of
Common Stock issuable
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upon conversion thereof or as payment of dividends thereon.
"SERIES D-2 STOCK" means the Series D-2 Convertible Preferred Stock
of the Company issued pursuant to the Series D Certificate.
"SERIES D-2 WARRANTS" means the warrants being issued on the date
hereof to Series D-2 Investors pursuant to the Purchase Agreement and the
warrants issued to the Series D-2 Investors pursuant to the Repurchase and
Exchange Agreement, dated as of June 1, 2003, by and among the Company and
the Series D-2 Investors.
"SHARES" means, collectively, shares of Series D-1 Stock and Series
D-2 Stock held by the Investors.
"SHELF REGISTRATION STATEMENT" means a Registration Statement filed
by the Company with the Commission pursuant to Section 2.4 covering the
resale of all Series D-2 Registrable Shares for an offering to be made on a
continuous basis pursuant to Rule 415 promulgated under the Securities Act.
"SUBSIDIARY" means any corporation or other entity of which the
capital stock or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other Persons performing
similar functions is at the time directly or indirectly owned by the
Company.
"TRADING DAY" means (a) any day on which the Common Stock is listed
or quoted and traded on the Nasdaq National Market, the New York Stock
Exchange, the American Stock Exchange or the Nasdaq SmallCap Market or (b)
if the Common Stock is not traded on any such market, then a day on which
trading occurs on the New York Stock Exchange (or any successor thereto).
"TRANSFER" means, as the context requires, (a) any sale, transfer,
distribution or other disposition, whether voluntarily or by operation of
law, or (b) the act of effecting such a sale, transfer, distribution or
other disposition.
2. REGISTRATION RIGHTS
2.1. DEMAND REGISTRATIONS
(a) One or more Series D-1 Investors may, at any time,
request, in writing, that the Company file a Registration Statement
to effect the registration of an offering of Series D-1 Registrable
Shares owned by such Series D-1 Investor(s) and having an aggregate
value of at least $10,000,000, based on the last reported sale price
of the Common Stock on the trading day immediately preceding the
date of such request. If the Company files a Registration Statement
on Form S-3 (or any successor form) pursuant to this Section 2.1(a),
the Company shall set forth therein any information that may be
required in a registration that is filed on Form S-1 and that the
underwriter lead managing the offering requests be expressly
included in the Registration Statement.
(b) Upon receipt of any request for registration pursuant
to this Section 2, the Company shall promptly (but in any event
within five days) give written notice of such proposed registration
to all other Series D-1 Investors. Such other Series D-1 Investors
shall have the right, by giving written notice to the Company within
20 days after the Company provides its notice, to elect to have
included in such registration such of their Series D-1 Registrable
Shares as such Series D-1 Investors may request in such notice of
election, subject in the case of an
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underwritten offering to the terms of Section 2.1(c). Thereupon, the
Company shall, as expeditiously as possible, use all commercially
reasonable efforts to effect the registration on an appropriate
registration form of all Series D-1 Registrable Shares that the
Company has been requested to so register.
(c) If the Registration Initiating Investors intend to
distribute the Series D-1 Registrable Shares 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 2.1(a)
and the Company shall include such information in its written notice
referred to in Section 2.1(b). In such event, (i) the right of any
other Series D-1 Investor to include its Series D-1 Registrable
Shares in such registration pursuant to Section 2.1(a) shall be
conditioned upon such other Series D-1 Investor's participation in
such underwriting on the terms set forth herein, and (ii) all Series
D-1 Investors including Series D-1 Registrable Shares in such
registration shall enter into an underwriting agreement upon
customary terms with the underwriter or underwriters managing the
offering; PROVIDED that such underwriting agreement shall not
provide for indemnification or contribution obligations on the part
of the Series D-1 Investors materially greater than the obligations
of the Series D-1 Investors pursuant to Section 2.7. The Company
shall have the right to select the managing underwriter(s) for any
underwritten offering requested pursuant to Section 2.1(a), which
selection must be made out of a pool of three underwriting firms
chosen by the Company and the Registration Initiating Investors,
each of which firms shall have a national reputation and experience
with software companies. If any Series D-1 Investor that has
requested inclusion of its Series D-1 Registrable Shares in such
registration as provided above disapproves of the terms of the
underwriting, such Person may elect, by written notice to the
Company, to withdraw its Series D-1 Registrable Shares from such
Registration Statement and underwriting. If the lead managing
underwriter advises the Company in writing that marketing factors
require a limitation on the number of shares to be underwritten, the
number of Series D-1 Registrable Shares to be included in the
Registration Statement and underwriting shall be allocated among all
Series D-1 Investors requesting registration in proportion, as
nearly as practicable, to the respective number of Series D-1
Registrable Shares each Series D-1 Investor has requested be
included in such registration.
(d) The Company shall not be required to effect more than
a total of four registrations requested pursuant to Section 2.1(a).
The Series D-1 Investors shall not deliver a notice pursuant to
Section 2.1(a) requesting registration of any underwritten offering
until at least 18 months after the closing of any prior underwritten
offering registered pursuant to a request under Section 2.1(a). For
purposes of this Section 2.1(d), a Registration Statement shall not
be counted until such time as such Registration Statement has been
declared effective by the Commission. If the Registration Initiating
Investors withdraw their request for such registration, it shall not
count as a Registration Statement if the Registration Initiating
Investors pay the Registration Expenses therefor pursuant to Section
2.6. Notwithstanding the foregoing, any request withdrawn by the
Registration Initiating Investors as a result of information
concerning the business or financial condition of the Company, where
such information is made known to the Series D-1 Investors after the
date on which such registration was requested, shall not count as a
Registration Statement.
(e) If at the time of any request to register Series D-1
Registrable Shares by Registration Initiating Investors pursuant to
this Section 2.1, the Company is engaged or has plans to engage in a
registered public offering or is engaged in a material proposed
acquisition, disposition, financing, reorganization,
recapitalization or similar transaction that, in the good faith
determination of the Company's Board of Directors, would be
adversely affected by the requested registration, then the Company
may at its option direct that such request be delayed
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for a period not in excess of 30 days from the date of such request,
such right to delay a request to be exercised by the Company not
more than once in any 12-month period.
2.2. INCIDENTAL REGISTRATIONS
(a) Whenever the Company proposes to file a Registration
Statement covering shares of Common Stock (other than a Registration
Statement filed (i) pursuant to Section 2.1, 2.3 or 2.4, (ii) in
accordance with the requirements of a written agreement entered into
prior to the date hereof, (iii) with respect to shares issued by the
Company in connection with an acquisition by the Company or any
Subsidiary of all or a majority of the equity or assets of any
entity, or (iv) with respect to a so-called "private investment,
public equity" (a/k/a "PIPE") offering of Company-Offered Securities
to which the provisions of Section 3.1 apply, except in any such
case to the extent expressly permitted therein) at any time and from
time to time, it will, prior to such filing, give written notice to
all Series D-1 Investors of its intention to do so; PROVIDED that no
such notice need be given if no Series D-1 Registrable Shares are to
be included therein as a result of a written notice from the
managing underwriter pursuant to Section 2.2(b). Upon the written
request of a Series D-1 Investor or Series D-1 Investors given
within 10 days after the Company provides such notice (which request
shall state the intended method of disposition of such Series D-1
Registrable Shares), the Company shall use all commercially
reasonable efforts to cause all Series D-1 Registrable Shares that
the Company has been requested by such Series D-1 Investor or Series
D-1 Investors to register to be registered under the Securities Act
to the extent necessary to permit their sale or other disposition in
accordance with the intended methods of distribution specified in
the request of such Series D-1 Investor or Series D-1 Investors;
PROVIDED that the Company shall have the right to postpone or
withdraw any registration effected pursuant to this Section 2.2
without obligation upon 10 days' advance written notice to the
Series D-1 Investors. Upon receipt of such notice, the Series D-1
Investors may elect to exercise their right to demand a registration
in accordance with Section 2.1.
(b) If the registration for which the Company gives notice
pursuant to Section 2.2(a) is a registered public offering involving
an underwriting, the Company shall so advise the Series D-1
Investors as a part of the written notice given pursuant to Section
2.2(a). In such event, (i) the right of any Series D-1 Investor to
include its Series D-1 Registrable Shares in such registration
pursuant to this Section 2.2 shall be conditioned upon such Series
D-1 Investor's participation in such underwriting on the terms set
forth herein and (ii) all Series D-1 Investors including Series D-1
Registrable Shares in such registration shall enter into an
underwriting agreement upon customary terms with the underwriter or
underwriters selected for the underwriting by the Company. If any
Series D-1 Investor who has requested inclusion of its Series D-1
Registrable Shares in such registration as provided above
disapproves of the terms of the underwriting, such Person may elect,
by written notice to the Company, to withdraw its shares from such
Registration Statement and underwriting. If the managing underwriter
advises the Company in writing that marketing factors require a
limitation on the number of shares to be underwritten, the shares
held by holders other than the Series D-1 Investors and Other
Registration Rights Holders shall be excluded from such Registration
Statement and underwriting to the extent deemed advisable by the
managing underwriter, and if a further reduction of the number of
shares is required, the number of shares that may be included in
such Registration Statement and underwriting shall be allocated
among all Series D-1 Investors and Other Registration Rights Holders
requesting registration in proportion, as nearly as practicable, to
the respective number of shares of Common Stock (on an as converted
basis) held by them on the date the Company gives the notice
specified in Section 2.2(a). If any Series D-1 Investor or Other
Registration Rights Holder would thus be entitled to include more
8
shares than such holder has requested to be registered, the excess
shall be allocated among other requesting Series D-1 Investors and
Other Registration Rights Holders pro rata in the manner described
in the preceding sentence.
2.3. DIVIDEND REGISTRATION. For so long as it is required by the
terms of the Series D Certificate, shares of Common Stock issued in payment
of dividends on the Shares shall be, at the time such shares are issued,
registered for resale for an offering to be made on a continuous basis
pursuant to Rule 415 of the Securities Act. Whenever the Company proposes
to file a Registration Statement covering shares of Common Stock to be
issued in payment of dividends on Shares, it will, prior to such filing,
give written notice to all Investors of its intention to do so. Upon
issuance, such shares shall constitute Registrable Shares in accordance
with the definition thereof in Section 1. The Company shall cause all such
Registrable Shares to be registered under the Securities Act to permit
their sale or other disposition by any methods of distribution reasonably
requested by the Investors, other than by means of an underwriting.
2.4. SHELF REGISTRATION. The Company shall prepare and file with
the Commission a Shelf Registration Statement as promptly as practicable
after the date hereof and shall take such steps as are necessary to enable
the Shelf Registration to be declared effective by the Commission as
promptly as practicable after the date hereof (and in any event by no later
than 90 days after the date of this Agreement or, if the Shelf Registration
Statement (including any of the documents incorporated by reference
therein) is the subject of a complete or partial review by the Commission,
in any event by no later than 120 days after the date of this Agreement).
The Shelf Registration Statement shall be on Form S-3 (except if the
Company is not then eligible to register for resale the Series D-2
Registrable Shares on Form S-3, in which case such Shelf Registration
Statement shall be on such other form as the Company is eligible to use)
and shall contain the "Plan of Distribution" attached hereto as ANNEX A.
The Company shall notify each Series D-2 Investor in writing promptly (in
any event within one Trading Day) after receiving notification from the
Commission that the Shelf Registration Statement has been declared
effective.
2.5. REGISTRATION PROCEDURES
(a) If and whenever the Company is required by the
provisions of this Agreement to use all commercially reasonable
efforts to effect the registration of any Registrable Shares under
the Securities Act, the Company shall:
(i) prepare and file with the Commission a
Registration Statement with respect to such
Registrable Shares (which, in the case of the
Series D-2 Registrable Shares, shall be the
Shelf Registration Statement) and use all
commercially reasonable efforts to cause that
Registration Statement to become effective as
soon as possible;
(ii) not less than three Trading Days prior to the
filing of a Registration Statement or any
related Prospectus or any amendment or
supplement thereto (including any document that
would be incorporated or deemed to be
incorporated therein by reference), the Company
shall (i) furnish to the each Registration
Selling Investor and its counsel copies of all
such documents proposed to be filed, which
documents (other than those incorporated or
deemed to be incorporated by reference) will be
subject to the review of such Registrable
Selling Investor and its counsel, and (ii)
cause its officers and directors, counsel and
independent certified public accountants to
respond to such inquiries as shall be
necessary, in the reasonable opinion of
respective counsel, to conduct a reasonable
investigation within the meaning of the
Securities Act;
9
and the Company shall not file any Registration
Statement or any such Prospectus or any
amendments or supplements thereto to which the
Registrable Selling Investors holding a
majority of the Registrable Securities to be
registered thereunder and their counsel shall
reasonably object, PROVIDED that such objection
is communicated to the Company within three
Trading Days of receipt of such documents;
(iii) as expeditiously as possible prepare and file
with the Commission any amendments and
supplements to the Registration Statement and
the prospectus included in the Registration
Statement as may be necessary to comply with
the provisions of the Securities Act (including
the anti-fraud provisions thereof) and use all
commercially reasonable efforts to keep the
Registration Statement continuously effective:
(A) in the case of a shelf registration of
an offering of Series D-1 Registrable
Shares on a continuous basis under Rule
415 under the Securities Act for 180
days from the effective date or such
lesser period until all such Registrable
Shares are sold,
(B) in the case of a Registration Statement
filed pursuant to Section 2.3 with
respect to shares of Common Stock paid
as dividends on the Shares, for (1) 45
days from the date such dividends were
issued, if such dividends represent no
more than one year's accumulated
dividends on the Shares, (2) 90 days
from the date such dividends were
issued, if such dividends represent more
than one year's accumulated dividends on
the Shares or (3) such lesser period
until all such shares of Common Stock
are sold,
(C) in the case of the Shelf Registration
Statement filed pursuant to Section 2.4,
until the earliest of (1) the second
anniversary of the date hereof, (2) the
date on which all of the Series D-2
Registrable Shares covered by the Shelf
Registration Statement have been sold,
and (3) the date on which all of such
Series D-2 Registrable Shares may be
sold pursuant to paragraph (k) of Rule
144 (assuming utilization of any
cashless exercise feature of any
securities), as determined by the
Company after consultation with legal
counsel; PROVIDED that if the Company
ceases to keep the Registration
Statement effective by reason of Section
2.5(a)(iii)(C)(3), the Company must
certify to the Series D-2 Investors that
the Series D-2 Registrable Shares may be
sold pursuant to paragraph (k) of Rule
144 (assuming utilization of any
cashless exercise feature of any
securities), and
(D) in the case of all other registrations,
for (1) 45 days from the effective date
or such greater period, up to 120 days,
as an underwriter may require, or (2)
such lesser period until all such
Registrable Shares are sold;
PROVIDED that the number of days specified in
the foregoing clauses (A), (B) and (D) shall
not include any day on which a Registration
Selling Investor is restricted from offering or
selling Registrable Shares pursuant to Section
2.5(b) or 2.5(c) below.
(iv) in all cases respond as promptly as reasonably
possible to any comments
10
received from the Commission with respect to
any Registration Statement or any amendment
thereto and as promptly as reasonably possible
provide to the counsel for the Registration
Selling Investors true and complete copies of
all correspondence from and to the Commission
relating to the applicable Registration
Statement;
(v) as expeditiously as possible furnish to each
Registration Selling Investor and its counsel,
without charge, at least one conformed copy of
the applicable Registration Statement and each
amendment thereto, including financial
statements and schedules, all documents
incorporated or deemed to be incorporated
therein by reference, and all exhibits to the
extent requested by such Person (including
those previously furnished or incorporated by
reference) promptly after the filing of such
documents with the Commission;
(vi) as expeditiously as possible furnish to each
Registration Selling Investor (with a copy to
counsel to such Registration Selling Investors)
such reasonable numbers of copies of the
Prospectus, including any preliminary
Prospectus, in conformity with the requirements
of the Securities Act, and such other documents
as such Registration Selling Investor may
reasonably request in order to facilitate the
public sale or other disposition of the
Registrable Shares owned by such Registration
Selling Investor; and the Company hereby
consents to the use of any such Prospectus and
each amendment or supplement thereto by each
Registration Selling Investor in connection
with the offering and sale of the Registrable
Securities covered by such Prospectus and any
amendment or supplement thereto;
(vii) use all commercially reasonable efforts to
avoid the issuance of or, if issued, obtain the
withdrawal of (x) any order suspending the
effectiveness of any Registration Statement or
(y) any suspension of the qualification (or
exemption from qualification) of any of the
Registrable Securities for sale in any
jurisdiction as soon as reasonably practicable;
(viii) as expeditiously as possible (and in the case
of the Shelf Registration Statement, prior to
the public offering of Registrable Securities
pursuant thereto) use all commercially
reasonable efforts to register or qualify the
Registrable Shares covered by the Registration
Statement under the securities or Blue Sky laws
of such states as the Registration Selling
Investors shall reasonably request, and do any
and all other acts and things that may be
necessary or desirable to enable the
Registration Selling Investors to consummate
the public sale or other disposition in such
states of the Registrable Shares owned by the
Registration Selling Investors; PROVIDED,
HOWEVER, that the Company shall not be required
in connection with this paragraph (viii) to
qualify as a foreign corporation or execute a
general consent to service of process in any
jurisdiction;
(ix) as expeditiously as possible, cause all such
Registrable Shares to be listed on each
securities exchange or automated quotation
system on which similar securities issued by
the Company are then listed;
(x) promptly provide a transfer agent and registrar
for all such Registrable Shares not later than
the effective date of such registration
statement;
11
(xi) cooperate with the Registration Selling
Investors to facilitate the timely preparation
and delivery of certificates representing
Registrable Securities to be delivered to a
transferee pursuant to an effective
Registration Statement, which certificates
shall be free, to the extent permitted
hereunder, of all restrictive legends, and to
enable such Registrable Securities to be in
such denominations and registered in such names
as any such Registration Selling Investors may
request;
(xii) promptly make available for inspection by the
Registration Selling Investors, any managing
underwriter participating in any disposition
pursuant to such Registration Statement, and
any attorney or accountant or other agent
retained by any such underwriter or selected by
the Registration Selling Investors, all
financial and other records, pertinent
corporate documents and properties of the
Company and cause the Company's officers,
directors, employees and independent
accountants to supply all information
reasonably requested by any such seller,
underwriter, attorney, accountant or agent in
connection with such Registration Statement;
provided that the Company will not make
available to any Series D-2 Investor material
nonpublic information;
(xiii) in connection with an underwritten disposition
of Registrable Shares, provide such reasonable
assistance in the marketing of the Registrable
Shares as is customary of issuers in primary
underwritten public offerings (including
participation by its senior management in "road
shows");
(xiv) as expeditiously as possible, notify each
Registration Selling Investor, promptly after
it shall receive notice thereof, of the time
when such Registration Statement has become
effective or a supplement to any Prospectus
forming a part of such Registration Statement
has been filed; and
(xv) as expeditiously as possible following the
effectiveness of such Registration Statement,
notify each seller of such Registrable Shares
of any request by the Commission for the
amending or supplementing of such Registration
Statement or Prospectus.
(b) At any time when a Prospectus is required to be
delivered under the Securities Act, the Company shall promptly
notify each Registration Selling Investor and its counsel of any of
the following events: (i) the Commission notifies the Company
whether there will be a "review" of the Registration Statement; (ii)
the Commission comments in writing on the Registration Statement (in
which case the Company shall deliver to each Registration Selling
Investor a copy of such comments and of all written responses
thereto); (iii) the Registration Statement or any post-effective
amendment is declared effective; (iv) the Commission or any other
Federal or state governmental authority requests any amendment or
supplement to the Registration Statement or Prospectus or requests
additional information related thereto; (v) the Commission issues
any stop order suspending the effectiveness of the Registration
Statement or initiates any Suit (as defined in the Purchase
Agreement) for that purpose; (vi) the Company receives notice of any
suspension of the qualification or exemption from qualification of
the Registrable Securities for sale in any jurisdiction, or the
initiation or threat of any Suit for such purpose; or (vii) the
financial statements included in the Registration Statement become
ineligible for inclusion therein or any statement made in the
Registration Statement or Prospectus or any document incorporated or
deemed to be incorporated therein by reference is untrue in any
material respect or any revision to the Registration Statement,
Prospectus or
12
other document is required so that it will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading. If requested, the Registration Selling Investors
shall immediately cease making offers of Registrable Shares pursuant
to the Registration Statement until its receipt of the copies of the
supplemented or amended Prospectus. Following receipt of the revised
Prospectuses, the Registration Selling Investors shall be free to
resume making offers of the Registrable Shares.
(c) In the event that it is advisable to suspend use of a
Prospectus included in a Registration Statement because continued
use would require Adverse Disclosure, the Company shall notify all
Registration Selling Investors to such effect, and, upon receipt of
such notice, each such Registration Selling Investor shall
immediately discontinue any sales of Registrable Shares pursuant to
such Registration Statement until such Registration Selling Investor
has received copies of a supplemented or amended Prospectus or until
such Registration Selling Investor is advised in writing by the
Company that the then current Prospectus may be used and has
received copies of any additional or supplemental filings that are
incorporated or deemed incorporated by reference in such Prospectus.
Notwithstanding anything to the contrary herein, the Company shall
not exercise its rights under this Section 2.5(c) to suspend sales
of Registrable Shares for a period in excess of 30 consecutive days
or a total of 60 days in any 365-day period, PROVIDED that the
Company may suspend such sales for a period of up to 90 consecutive
days (and a total of 90 days in a 365-day period) if the reason for
the continued suspension beyond 30 days relates solely to the
preparation of financial statements required to be filed in
accordance with Item 7 of Form 8-K under the Exchange Act (in which
event the Company shall use all commercially reasonable efforts to
cause such financial statements to be prepared as promptly as
reasonably practicable in the circumstances), and such suspension
period shall automatically terminate two Trading Days after the
filing of such financial statements. In no event shall the Company's
right under this Section 2.5(c) be exercised to suspend sales of
Registrable Shares beyond the period during which sales of
Registrable Shares would require Adverse Disclosure. After the end
of any suspension period under this Section 2.5, the Company shall
use all commercially reasonable efforts (including filing any
required supplemental prospectus) to restore, as promptly as
reasonably possible, the effectiveness of the Registration Statement
and the ability of the Registration Selling Investors to publicly
resell their Registrable Securities pursuant to such effective
Registration Statement.
2.6. ALLOCATION OF EXPENSES. The Company will pay all Registration
Expenses for all registrations under this Agreement; PROVIDED, HOWEVER,
that: (a) if a registration under Section 2.1 is withdrawn at the request
of the Registration Initiating Investors (other than as a result of
information concerning the business or financial condition of the Company
that is made known to the Registration Selling Investors after the date on
which such registration was requested), the Registration Selling Investors
may pay the Registration Expenses of such registration pro rata in
accordance with the number of their Series D-1 Registrable Shares included
in such registration in order that, in accordance with Section 2.1(d), such
registration shall not be counted as a registration requested under Section
2.1; and (b) the Company shall not be obligated to pay fees and expenses of
Registration Selling Investors Counsel to the extent those fees and
expenses exceed $50,000 with respect to a registration for an underwritten
offering or $20,000 with respect to a registration for any other offering.
2.7. INDEMNIFICATION AND CONTRIBUTION
(a) In the event of any registration of any of the
Registrable Shares under the Securities Act pursuant to this
Agreement, the Company shall indemnify and hold harmless each
13
Registration Selling Investor and each underwriter of such
Registrable Shares, their respective partners, members, agents,
directors, officers, fiduciaries, investment advisors, brokers
(including brokers who offer and sell Registrable Securities as
principal as a result of a pledge or any failure to perform under a
margin call of Common Stock) and employees of each of them, and each
other Person, if any, who controls such Registration Selling
Investor or underwriter within the meaning of the Securities Act or
the Exchange Act and the officers, directors, partners, members,
agents and employees of each such controlling Person (each such
Person an "Investor Indemnified Person"), to the fullest extent
permitted by applicable law, from and against any and all losses,
claims, damages, liabilities, settlement costs and expenses, as
incurred, joint or several, that arise out of, relate to or are
based upon (i) any untrue statement or alleged untrue statement of
any material fact contained in any Registration Statement under
which such Registrable Shares were registered under the Securities
Act, any preliminary prospectus or final prospectus contained in the
Registration Statement or any amendment or supplement to such
Registration Statement or Prospectus, (ii) the omission or alleged
omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or (iii)
any violation or alleged violation by the Company of the Securities
Act, the Exchange Act, any state securities law or any rule or
regulation promulgated under the Securities Act, the Exchange Act or
any state securities law in connection with the Registration
Statement or the offering contemplated thereby; and the Company will
reimburse such Investor Indemnified Person for any legal or any
other expenses reasonably incurred by such Investor Indemnified
Person in connection with investigating or defending any such loss,
claim, damage, liability or action; PROVIDED, HOWEVER, that the
Company will not be liable to any Investor Indemnified Person, in
any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any untrue statement or
omission made in such Registration Statement, preliminary prospectus
or prospectus, or any such amendment or supplement, in reliance upon
and in conformity with information furnished to the Company, in
writing, by such Person specifically for use in the preparation
thereof.
(b) In the event of any registration of any of the
Registrable Shares under the Securities Act pursuant to this
Agreement, each Registration Selling Investor, severally and not
jointly, will indemnify and hold harmless the Company, each of its
directors and officers and each underwriter (if any) and each
Person, if any, who controls the Company or any such underwriter
within the meaning of the Securities Act or the Exchange Act,
against any and all losses, claims, damages, liabilities, settlement
costs and expenses arising solely out of (i) any untrue statement or
alleged untrue statement of a material fact contained in any
Registration Statement under which such Registrable Shares were
registered under the Securities Act, any preliminary prospectus or
final prospectus contained in the Registration Statement, or any
amendment or supplement to the Registration Statement or Prospectus,
or (ii) any omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, if and to the extent (and only to the
extent) that the statement or omission was made in reliance upon and
in conformity with information relating to such Registration Selling
Investor furnished in writing to the Company by such Registration
Selling Investor specifically for use in connection with the
preparation of such Registration Statement, prospectus, amendment or
supplement; PROVIDED, HOWEVER, that the obligations of a
Registration Selling Investor hereunder shall be limited to an
amount equal to the net proceeds to such Registration Selling
Investor of Registrable Shares sold in connection with such
registration.
(c) Each Indemnified Person shall give notice to the
Indemnifying Person promptly after such Indemnified Person has
actual knowledge of any claim as to which indemnity may
14
be sought, and shall permit the Indemnifying Person to assume the
defense of any such claim or any litigation resulting therefrom;
PROVIDED, that counsel for the Indemnifying Person, who shall
conduct the defense of such claim or litigation, shall be approved
by the Indemnified Person (whose approval shall not be unreasonably
withheld, conditioned or delayed); and, PROVIDED, FURTHER, that the
failure of any Indemnified Person to give notice as provided herein
shall not relieve the Indemnifying Person of its obligations under
this Section 2.7 except to the extent that the Indemnifying Person
is actually prejudiced by such failure. The Indemnified Person may
participate in such defense at such party's expense; PROVIDED,
HOWEVER, that the Indemnifying Person shall pay such expense if the
Indemnified Person reasonably concludes that representation of such
Indemnified Person by the counsel retained by the Indemnifying
Person would be inappropriate due to actual or potential differing
interests between the Indemnified Person and any other party
represented by such counsel in such proceeding; PROVIDED further
that in no event shall the Indemnifying Person be required to pay
the expenses of more than one law firm per jurisdiction as counsel
for the Indemnified Person. The Indemnifying Person also shall be
responsible for the expenses of such defense if the Indemnifying
Person does not elect to assume such defense. No Indemnifying
Person, in the defense of any such claim or litigation shall, except
with the consent of each Indemnified Person, consent to entry of any
judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Person of a release from all liability in
respect of such claim or litigation, and no Indemnified Person shall
consent to entry of any judgment or settle such claim or litigation
without the prior written consent of the Indemnifying Person, which
consent shall not be unreasonably withheld, conditioned or delayed.
(d) In order to provide for just and equitable
contribution in circumstances in which the indemnification provided
for in this Section 2.7 is due in accordance with its terms but for
any reason is held to be unavailable to an Indemnified Person in
respect to any losses, claims, damages and liabilities referred to
herein, then the Indemnifying Person shall, in lieu of indemnifying
such Indemnified Person, contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages
or liabilities to which such party may be subject in such proportion
as is appropriate to reflect the relative fault of the Company on
the one hand and the Registration Selling Investors on the other in
connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities. The relative fault of the
Company and the Registration Selling Investors shall be determined
by reference to, among other things, whether the untrue or alleged
untrue statement of material fact related to information supplied by
the Company or the Registration Selling Investors and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the
Registration Selling Investors agree that it would not be just and
equitable if contribution pursuant to this Section 2.7(d) were
determined by pro rata allocation or by any other method of
allocation that does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of
this Section 2.7(d), in no case shall any one Registration Selling
Investor be liable or responsible for any amount in excess of the
net proceeds received by such Registration Selling Investor from the
offering of Registrable Shares; PROVIDED, HOWEVER, that no Person
guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation. Any party entitled to contribution will, promptly
after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under this
Section 2.7(d), notify such party or parties from whom contribution
may be sought, but the omission so to notify such party or parties
from whom contribution may be sought shall not relieve such party
from
15
any other obligation it or they may have thereunder or otherwise
under this Section 2.7(d). No party shall be liable for contribution
with respect to any action, suit, proceeding or claim settled
without its prior written consent, which consent shall not be
unreasonably withheld, conditioned or delayed.
(e) The indemnity and contribution agreements contained in
this Section are in addition to any other liability that any
Indemnifying Person may have to any Indemnified Person.
2.8. OTHER MATTERS WITH RESPECT TO UNDERWRITTEN OFFERINGS. In the
event that Series D-1 Registrable Shares are sold pursuant to a
Registration Statement in an underwritten offering pursuant to Section 2.1,
the Company agrees to (a) enter into an underwriting agreement containing
customary representations and warranties with respect to the business and
operations of the Company and customary covenants and agreements to be
performed by the Company, including customary provisions with respect to
indemnification by the Company of the underwriters of such offering; (b)
use all commercially reasonable efforts to cause its legal counsel to
render customary opinions to the underwriters with respect to the
Registration Statement; and (c) use all commercially reasonable efforts to
cause its independent public accounting firm to issue customary "cold
comfort letters" to the underwriters with respect to the Registration
Statement.
2.9. INFORMATION BY HOLDER. Each holder of Registrable Shares
included in any registration shall furnish to the Company such customary
information regarding such holder and the distribution proposed by such
holder as the Company may reasonably request in writing and that is
required under applicable laws, rules and regulations.
2.10. "LOCK-UP" AGREEMENT; CONFIDENTIALITY OF NOTICES
(a) Each Series D-2 Investor that Beneficially Owns 5.0%
or more of the outstanding Common Stock on the date of the filing of
an initial registration statement for an underwritten offering (a
"5% Series D-2 Investor") and each Series D-1 Investor, in each case
if requested by the Company and the managing underwriter of such
underwritten offering, shall not Transfer any Registrable Shares or
other securities of the Company held by such Series D-1 Investor or
5% Series D-2 Investor for a period of 90 days following the
effective date of the Registration Statement for such underwritten
offering and shall enter into customary separate agreements to such
effect as reasonably requested by the Company and such managing
underwriter; PROVIDED that substantially all executive officers and
directors (other than Series D-1 Directors) of the Company enter
into similar agreements as required by the underwriter. The Company
may impose stop-transfer instructions with respect to the
Registrable Shares or other securities owned by any such Series D-1
Investor or 5% Series D-2 Investor subject to the foregoing
restriction until the end of such 90-day period.
(b) Any Investor receiving any written notice from the
Company regarding the Company's plans to file a Registration
Statement shall treat such notice confidentially and shall not
disclose such information to any Person other than as necessary to
exercise its rights under this Agreement.
2.11. TERMINATION. The rights and obligations of an Investor under
this Section 2 shall terminate on the first date on which such Investor no
longer holds any Registrable Shares, except that the rights and obligations
of the Company and the Registration Selling Investors under Section 2.7
shall survive the termination of any and all other provisions of this
Agreement.
3. PREEMPTIVE RIGHTS
16
3.1. RIGHTS OF INVESTORS
(a) The Company shall not issue, sell or exchange, agree
to issue, sell or exchange, or reserve or set aside for issuance,
sale or exchange, any Company-Offered Securities, unless in each
such case the Company shall have first complied with this Section
3.1. The Company shall deliver to each Investor a Company Offer,
which shall (i) identify and describe the Company-Offered
Securities, (ii) describe the price (expressed in either a fixed
dollar amount or a definitive formula pursuant to which the only
variable is the market price of the Common Stock at or near the time
of the proposed issuance, sale or exchange) and other terms upon
which they are to be issued, sold or exchanged, and the number or
amount of the Company-Offered Securities to be issued, sold or
exchanged, (iii) identify the Persons (if known) to which or with
which the Company-Offered Securities are to be offered, issued, sold
or exchanged, and (iv) offer to issue and sell to or exchange with
such Investor that is an Accredited Investor (a) such Accredited
Investor's Company-Offer Basic Amount and (b) such Accredited
Investor's Company-Offer Unsubscribed Amount. Notwithstanding the
other provisions of this Section 3.1, after delivery of the Company
Offer, the Company may issue, sell or exchange, agree to issue, sell
or exchange, or reserve or set aside for issuance, sale or exchange,
Company-Offered Securities to the offerees or purchasers described
in the Company Offer and upon the terms and conditions (including
unit prices and interest rates) that are not more favorable, in the
aggregate, to the acquiring Person or Persons than those set forth
in the Company Offer without complying with the terms of this
Section 3.1, PROVIDED that the Company permits each Accredited
Investor to purchase the number of Company-Offered Securities that
such Accredited Investor is entitled to purchase pursuant to this
Section 3.1 on substantially the same terms as the Company sold the
Company-Offered Securities in the initial transaction, within 20
days after the Company receives a Company-Offer Acceptance from such
Accredited Investor.
(b) To accept a Company Offer, in whole or in part, an
Accredited Investor must deliver to the Company, on or prior to the
date 15 days after the date of delivery of the Company Offer, a
Company-Offer Acceptance providing a representation letter
certifying that such Accredited Investor is an accredited investor
within the meaning of Rule 501 under the Act and indicating the
portion of the Accredited Investor's Company-Offer Basic Amount that
such Accredited Investor elects to purchase and, if such Accredited
Investor shall elect to purchase all of its Company-Offer Basic
Amount, the Company-Offer Unsubscribed Amount (if any) that such
Accredited Investor elects to purchase. If the Company-Offer Basic
Amounts subscribed for by all Accredited Investors are less than the
total of all of the Company-Offer Basic Amounts available for
purchase, then each Accredited Investor who has set forth a
Company-Offer Unsubscribed Amount in its Company-Offer Acceptance
shall be entitled to purchase, in addition to the Company-Offer
Basic Amounts subscribed for, the Company-Offer Unsubscribed Amount
it has subscribed for; PROVIDED, HOWEVER, that if the Company-Offer
Unsubscribed Amounts subscribed for exceed the Company-Offer
Available Unsubscribed Amount, each Accredited Investor who has
subscribed for any Company-Offer Unsubscribed Amount shall be
entitled to purchase only that portion of the Company-Offer
Available Unsubscribed Amount as the Company-Offer Unsubscribed
Amount subscribed for by such Accredited Investor bears to the total
Company-Offer Unsubscribed Amounts subscribed for by all Investors,
subject to rounding by the Board of Directors to the extent it deems
reasonably necessary.
(c) The Company shall have 90 days from the expiration of
the period set forth in Section 3.1(b) to issue, sell or exchange
all or any part of the Company-Offer Refused Securities, but only to
the offerees or purchasers described in the Company Offer (if so
17
described therein) and only upon terms and conditions (including
unit prices and interest rates) that are not more favorable, in the
aggregate, to the acquiring Person or Persons than those set forth
in the Company Offer.
(d) In the event the Company shall propose to sell less
than all the Company-Offer Refused Securities, then each Accredited
Investor may, at its sole option and in its sole discretion, reduce
the number or amount of the Company-Offered Securities specified in
its Company-Offer Acceptance to an amount that shall be not less
than the number or amount of the Company-Offered Securities that the
Accredited Investor elected to purchase pursuant to Section 3.1(b)
multiplied by a fraction, (i) the numerator of which shall be the
number or amount of Company-Offered Securities the Company actually
proposes to issue, sell or exchange (including Company-Offered
Securities to be issued or sold to Accredited Investors pursuant to
Section 3.1(b) prior to such reduction) and (ii) the denominator of
which shall be the original amount of the Company-Offered
Securities. In the event that any Accredited Investor so elects to
reduce the number or amount of Company-Offered Securities specified
in its Company-Offer Acceptance, the Company may not issue, sell or
exchange more than the reduced number or amount of the
Company-Offered Securities unless and until such securities have
again been offered to the Accredited Investors in accordance with
Section 3.1(a).
(e) Upon (i) the closing of the issuance, sale or exchange
of all or less than all of the Company-Offer Refused Securities or
(ii) such other date agreed to by the Company and Accredited
Investors who have subscribed for a majority of the Company-Offered
Securities subscribed for by the Accredited Investors, such
Accredited Investor or Investors shall acquire from the Company and
the Company shall issue to such Accredited Investor or Investors,
the number or amount of Company-Offered Securities specified in the
Investor Offers of Acceptance, as reduced pursuant to Section 3.1(d)
if any of the Accredited Investors has so elected, upon the terms
and conditions specified in the Company Offer.
(f) The purchase by the Accredited Investors of any
Company-Offered Securities is subject in all cases to the
preparation, execution and delivery by the Company and the
Accredited Investors of a purchase agreement relating to such
Company-Offered Securities reasonably satisfactory in form and
substance to the Accredited Investors and their respective counsel.
(g) Company-Offered Securities not acquired by the
Accredited Investors or other Persons in accordance with Section
3.1(c) may not be issued, sold or exchanged until they are again
offered to the Accredited Investors under the procedures specified
in this Agreement.
3.2. EXCLUDED TRANSACTIONS. The rights of the Accredited Investors
under Section 3.1 shall not apply to:
(a) the issuance of securities of the Company for
consideration other than cash, including the issuance
of shares (i) as a stock dividend to holders of Common
Stock, Shares or any other Company securities, or upon
any subdivision or combination of shares of Common
Stock, Shares or any other Company securities, and
(ii) upon exercise or conversion of preferred stock,
options, warrants or debt securities exercisable or
convertible for Common Stock pursuant to their terms;
(b) the issuance of Common Stock or options to purchase
Common Stock to employees, directors or consultants of
the Company or any Subsidiary pursuant to a stock
option plan, employee stock purchase plan or other
equity incentive plan or arrangement approved by the
Board of Directors of the Company and by a majority
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of the Independent Directors;
(c) the issuance of securities solely in consideration for
the acquisition (whether by merger or otherwise) by
the Company or any of its subsidiaries of all or
substantially all of the stock or assets of such
entity;
(d) the issuance of securities of the Company in a
firm-commitment underwritten public offering pursuant
to an effective Registration Statement;
(e) the issuance of securities of the Company, or the
grant of options or warrants therefor, in connection
with any present or future borrowing, line of credit,
leasing or similar financing arrangement approved by
the Board of Directors of the Company and by a
majority of the Independent Directors; or
(f) the issuance of securities in connection with any
transaction with a strategic investor, vendor, lessor,
customer, supplier, marketing partner, developer or
integrator or any similar arrangement, in each case
the primary purpose of which is not to raise equity
capital, approved by the Board of Directors of the
Company and by a majority of the Independent
Directors.
In addition, the rights under Section 3.1 of Accredited Investors that are
(i) Series D-1 Investors shall not apply to an issuance of securities as to
which Series D-1 Investors holding not less than a majority of the Series
D-1 Stock have delivered to the Company a written notice to the effect that
Series D-1 Investors have waived their right to participate in the
contemplated offering under Section 3.1, or (ii) Series D-2 Investors shall
not apply to an issuance of securities as to which Series D-2 Investors
holding not less than a majority of the Series D-2 Stock have delivered to
the Company a written notice to the effect that Series D-2 Investors have
waived their right to participate in the contemplated offering under
Section 3.1.
3.3. TERMINATION. The rights of an Investor under this Section 3
shall terminate upon the earlier of (a) the first date on which the
Investors, in the aggregate, hold less than 10% of the Shares originally
issued on the date hereof and (b) the closing of a Company Sale.
4. COVENANTS OF THE COMPANY
4.1. INFORMATION REQUIREMENTS. The Company shall furnish to each
Investor:
(a) promptly after filing, a copy of each report or other
document (including any schedules or exhibits thereto)
that is filed by the Company with the Commission under
the Securities Act or the Exchange Act and that is
available to the general public; PROVIDED that no such
copy shall be required if such report was filed using
the Electronic Data Gathering, Analysis, and Retrieval
system of the Commission; and
(b) contemporaneously with delivery to holders of Common
Stock, a copy of each report or other document (other
than any document filed with the Commission under the
Securities Act or the Exchange Act) delivered to
holders of Common Stock.
4.2. BOARD OF DIRECTORS. For so long as any director is serving at
the election of the holders of Series D-1 Stock pursuant to the Series D
Certificate:
19
(a) The Company shall reimburse the Series D-1 Directors
for their reasonable out-of-pocket expenses incurred in attending
meetings of the Board of Directors of the Company or any committee
thereof, to the extent provided in, and in accordance with, the
Company's reimbursement policy in effect from time to time with
respect to other directors who are not employees of the Company or a
Subsidiary. The Series D-1 Directors shall be entitled to receive
such fees or other compensation as may be paid by the Company from
time to time to directors who are not employees of the Company or a
Subsidiary.
(b) The Company's Certificate of Incorporation shall at
all times provide for the indemnification of the members of the
Board of Directors to the fullest extent provided by the
Delaware
General Corporation Law. In the event that the Company or any of its
successors or assigns (i) consolidates with or mergers into any
other entity and shall not be the continuing or surviving
corporation in such consolidation or merger or (ii) Transfers all or
substantially all of its properties and assets to any entity, then,
and in each such case, to the extent necessary, proper provision
shall be made so that the successors and assigns of the Company
assume the obligations of the Company with respect to
indemnification of members of the Board of Directors as contained in
the Company's Certificate of Incorporation.
(c) The Company shall use all commercially reasonable
efforts to carry and maintain any insurance against directors' and
officers' liability to cover such directors to the same extent as
directors elected by the holders of Common Stock; PROVIDED, HOWEVER,
that if the aggregate annual premiums for such insurance exceed 200%
of the per annum rate of premium currently paid by the Company on
the date of this Agreement for such insurance, then the Company
shall provide, at a minimum, the maximum coverage that shall then be
available at an annual premium equal to 200% of such rate; PROVIDED,
HOWEVER, that in no event should the coverage afforded the Series
D-1 Directors be less favorable in any respect than the coverage
afforded directors elected by the holders of Common Stock.
4.3. REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a view to
making available to the Investors the benefits of Rule 144 and any other
rule or regulation of the Commission that may at any time permit a Holder
to sell securities of the Company to the public without registration, and
with a view to making it possible for Investors to have the Registrable
Shares registered for resale pursuant to a registration on Form S-3 (or any
successor form), the Company shall:
(a) use all commercially reasonable efforts to make and
keep current public information about the Company
available, as those terms are understood and defined
in Rule 144, at all times;
(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; and
(c) furnish to any Investor upon request (i) a written
statement by the Company as to its compliance with the
reporting requirements of Rule 144 and (ii) such other
reports and documents of the Company as such Investor
may reasonably request to avail itself of any similar
rule or regulation of the Commission allowing it to
sell any Registrable Shares without registration.
4.4. REGISTRATION RIGHTS. The Company shall not enter into any
Other Registration Rights with any Other Registration Rights Holder unless
such Other Registration Rights do not conflict with the provisions of this
Agreement. Such Other Registration Rights shall not be deemed to conflict
with this Agreement solely as a result of a grant of incidental
registration rights to the Other
20
Registration Rights Holders with respect to a Registration Statement filed
pursuant to Section 2.1, PROVIDED that:
(a) Investors are granted the right to exercise incidental
registration rights with respect to any registration
required by such Other Registration Rights Holders to
be made by the Company;
(b) if a managing underwriter advises the Company that
marketing factors require a limitation on the number
of shares to be underwritten in an offering made at
the request of the Other Registration Rights Holders,
the shares held by the Investors shall be excluded
first, before any shares of such Other Registration
Rights Holders are excluded; and
(c) if a managing underwriter advises the Company that
marketing factors require a limitation on the number
of shares to be underwritten in an offering requested
under Section 2.1, the shares held by such Other
Registration Rights Holders shall be excluded first,
before any shares of the Investors are excluded.
4.5. AVAILABLE COPY. The Secretary of the Company shall maintain
an original copy of this Agreement, duly executed by each of the parties
hereto, at the principal executive office of the Company and shall make
such copy available for inspection by any Person requesting it.
4.6. TERMINATION. The rights of an Investor under this Section 4
shall terminate upon the first date on which such Investor no longer holds
any Shares, PROVIDED that Section 4.4 shall terminate upon the earlier of
(A) the first date on which such Investor no longer holds any Shares, and
(B) the closing of a Company Sale.
5. TRANSFER RESTRICTIONS
5.1. PROHIBITION. Any Transfer, whether direct or indirect, of any
of the Shares or Registrable Shares by an Investor, other than according to
the terms of this Agreement, shall be void and convey no right, title, or
interest in or to any of such Shares or Registrable Shares to the purported
transferee.
5.2. RESTRICTIONS. No Investor shall Transfer any Shares or
Registrable Shares or any legal or beneficial interest therein except for:
(a) Transfers of Registrable Shares pursuant to a bona
fide public offering under a Registration Statement
filed with the Commission under the Securities Act,
including pursuant to the exercise of rights granted
in Section 2;
(b) Transfers of Registrable Shares pursuant to Rule 144;
(c) Transfers of Shares to any non-Affiliate (other than a
Competitor), PROVIDED that (i) immediately after
giving effect to such Transfer, the Investor
reasonably believes the transferee Beneficially Owns
less than 10% of the outstanding Common Stock, and
(ii) such transferee delivers to the Company and the
Investors a written instrument, in form and substance
reasonably acceptable to the Company, agreeing to be
bound by the terms of this Agreement as if such
transferee were an Investor;
(d) Transfers of Shares or Registrable Shares to an
Affiliate of such Investor (or to any investor in such
Affiliate of such Investor pursuant to a pro rata
liquidation or
21
distribution), PROVIDED that such transferee delivers
to the Company and the Investors a written instrument,
in form and substance reasonably acceptable to the
Company, agreeing to be bound by the terms of this
Agreement as if such transferee were an Investor;
(e) Transfers of Shares or Registrable Shares pursuant to
a bona fide public offer that is subject to the
provisions of Regulation 14D or Rule 13e-3 under the
Exchange Act (or any successor regulation, rule or
statute) by a Person to purchase or exchange for cash
or other consideration any shares of Common Stock and
that consists of an offer to acquire more than 25% of
the then-outstanding Common Stock, PROVIDED that such
offer is not made by and does not include (i) the
Company, an Investor, or an Affiliate of the Company
or any Investor or (ii) any group (within the meaning
of Section 13(d) of the Exchange Act) formed for the
purpose of acquiring, holding, voting or disposing of
Common Stock that includes the Company, an Investor,
or an Affiliate of the Company or any Investor; or
(f) Transfers of Shares or Registrable Shares pursuant to
a merger, consolidation or reorganization to which the
Company is a party.
5.3. LEGENDS.
(a) Each Series D-1 Investor agrees to the imprinting on
certificates representing such Investor's Shares or Registrable
Shares of a legend substantially to the following effect:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
MAY NOT BE SOLD, TRANSFERRED, DISTRIBUTED OR OTHERWISE DISPOSED
OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION TO THE EFFECT THAT SUCH REGISTRATION IS NOT
REQUIRED. THE SALE OR OTHER DISPOSITION OF ANY OF THE SHARES
REPRESENTED BY THIS CERTIFICATE IS RESTRICTED BY AN
INVESTOR
RIGHTS AGREEMENT DATED AS OF __________, 2003 BY AND AMONG THIS
CORPORATION AND CERTAIN OF THE STOCKHOLDERS OF THIS
CORPORATION. A COPY OF SUCH AGREEMENT IS AVAILABLE FOR
INSPECTION DURING NORMAL BUSINESS HOURS AT THE PRINCIPAL
EXECUTIVE OFFICE OF THIS CORPORATION."
The legend set forth above shall be removed if and when (a) the
securities represented by such certificate are disposed of pursuant
to an effective Registration Statement or (b) the Series D-1
Investor delivers to the Company an opinion of counsel reasonably
acceptable to the Company to the effect that such legend may be
removed.
(b) Each Series D-2 Investor agrees to the imprinting, so
long as is required by this Section 5.3(b), of the following legend
on any certificate evidencing Series D-2 Securities:
"THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY
STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH
APPLICABLE STATE SECURITIES OR BLUE SKY LAWS. THESE SECURITIES
AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES
MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
22
ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES."
Certificates evidencing Series D-2 Securities shall not be required
to contain such legend or any other legend (i) pursuant to or
following any sale of such Series D-2 Securities pursuant to an
effective Registration Statement covering the resale of such Series
D-2 Securities under the Securities Act, (ii) following any sale of
such Series D-2 Securities pursuant to Rule 144, (iii) if such
Series D-2 Securities are eligible for sale under Rule 144(k), or
(iv) if such legend is not, in the reasonable opinion of the Company
counsel, required under the circumstances under applicable
requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the Staff of the
Commission). Following the effectiveness of the Shelf Registration
Statement or at such earlier time as a legend is no longer required
for certain Series D-2 Securities, the Company will, no later than
three Trading Days following the delivery by a Series D-2 Investor
to the Company or the Company's transfer agent of a legended
certificate representing such Series D-2 Securities, deliver or
cause to be delivered to such Series D-2 Investor a certificate
representing such Series D-2 Securities that is free from all
restrictive and other legends. The Company may not make any notation
on its records or give instructions to any transfer agent of the
Company that enlarge the restrictions on transfer set forth in this
Section, except as may be required by applicable law.
5.4. ACKNOWLEDGEMENT. The Company acknowledges and agrees that a
Series D-2 Investor may from time to time pledge pursuant to a bona fide
margin agreement or grant a security interest in some or all of the Series
D-2 Securities and, if required under the terms of such arrangement, such
Series D-2 Purchaser may transfer pledged or secured Series D-2 Securities
to the pledgees or secured parties. Such a pledge or transfer would not be
subject to approval of the Company and no legal opinion of the pledgee,
secured party or pledgor shall be required in connection therewith except
as required by applicable law. Further, no notice shall be required of such
pledge. At the appropriate Series D-2 Investor's expense, the Company will
execute and deliver such reasonable documentation as a pledgee or secured
party of Series D-2 Securities may reasonably request in connection with a
pledge or transfer of the Series D-2 Securities, including the preparation
and filing of any required prospectus supplement under Rule 424(b)(3) of
the Securities Act or other applicable provision of the Securities Act to
appropriately amend the list of Selling Stockholders thereunder.
6. STANDSTILL AGREEMENTS
6.1. RESTRICTIONS
(a) No Series D-1 Investor shall, directly or indirectly,
unless specifically permitted by this Agreement or authorized or
consented to do so in writing in advance by the Company:
(i) except for shares or securities acquired as a
dividend or distribution on the Shares, acquire
or agree, offer, seek or propose to acquire, or
cause to be acquired, Beneficial Ownership of
any shares of Common Stock, or any options,
warrants or other rights (including any
convertible or exchangeable securities) to
acquire any shares of Common Stock, to the
extent that such acquisition would result in an
increase in such Investor's (or Affiliate's, as
the case may be) percentage Beneficial
Ownership of Common Stock above the percentage
Beneficial Ownership of Common Stock as of the
date of this Agreement;
(ii) make, or in any way participate in, any
"solicitation" of "proxies" (as such terms are
defined in Rule 14a-1 under the Exchange Act)
with respect to the
23
voting of any securities of the Company;
(iii) deposit any securities of the Company in a
voting trust or subject any such securities to
any arrangement or agreement with any Person
(other than one or more Investors or
Affiliates);
(iv) form, join, or in any way become a member of
any group within the meaning of Section 13(d)
of the Exchange Act (other than a "group"
consisting solely of Investors and Affiliates
that together Beneficially Own less than a
majority of the Company's outstanding voting
securities);
(v) arrange any financing for, or provide any
financing commitment specifically for, the
purchase by such Investor of any voting
securities or securities convertible or
exchangeable into or exercisable for any voting
securities or assets of the Company, except for
such assets as are then being offered for sale
by the Company; PROVIDED, HOWEVER, that this
clause (v) shall not apply to any such
financing arrangements or commitments to the
extent involving a Transfer of Common Stock
Beneficially Owned by an Investor to any Person
that is not an Investor;
(vi) seek to propose or propose, whether alone or in
concert with other Investors, any tender offer,
exchange offer, merger, business combination,
restructuring, liquidation, recapitalization or
similar transaction involving the Company or
any of the Subsidiaries;
(vii) for so long as holders of Series D-1 Stock are
entitled to elect Series D-1 Directors pursuant
to the Series D Certificate, nominate any
Person for election by the holders of Common
Stock as a director of the Company who is not
nominated by the then-incumbent directors, or
propose any matter to be voted upon by the
stockholders of the Company (other than for an
Affiliate of such Investor acting in his or her
capacity as a director of the Company);
(viii) authorize or direct any of its directors,
officers, employees, agents or other
representatives acting in any such capacities
to take any action described in clauses (i)
through (vii) above;
(ix) solicit, initiate, or knowingly or
intentionally facilitate the taking of any
action by an Affiliate of such Series D-1
Investor (that is not itself an Investor) that
would be prohibited by this Section 6.1 if such
Affiliate were an Investor; or
(x) publicly announce or disclose any intention,
plan or arrangement inconsistent with the
foregoing.
Notwithstanding the foregoing, a Series D-1 Investor shall not be
prohibited from taking any action described in clauses (i) through
(x) to the extent such action is taken in response to, and in
competition with, a similar action that has been undertaken by a
Person who is not an Investor.
(b) No Series D-1 Investor will, nor will it authorize or
permit any of its directors, officers, employees, agents or other
representatives acting in any such capacities to, take any action
that would require the Company to make a public announcement
regarding any of the matters set forth in Section 6.1(a).
24
(c) Anything in this Section 6.1 to the contrary
notwithstanding, this Section 6.1 shall not prohibit or restrict (i)
the voting of securities of the Company held by the Series D-1
Investors or (ii) any disclosure pursuant to Section 13(d) of the
Exchange Act that a Series D-1 Investor reasonably believes, after
consulting with outside counsel, is required in connection with any
action taken by a Series D-1 Investor pursuant to Section 6.1(b).
6.2. CERTAIN PERMITTED TRANSACTIONS AND COMMUNICATIONS. Anything
in Section 6.1 to the contrary notwithstanding, Section 6.1 shall not
prohibit (a) the conversion of Series D-1 Stock, the exercise of the Series
D-1 Warrants, or the consummation by a Series D-1 Investor of any
transaction expressly provided for in this Agreement, PROVIDED that if such
transaction is to be consummated on or before the earliest of (i) June 15,
2005, (ii) the first date on which none of the Convertible Debentures
remains outstanding, and (iii) the first date on which the provision in the
Convertible Debentures requiring redemption upon a Change of Control (as
defined in the indenture governing the Convertible Debentures) is not in
effect, then such Series D-1 Investor (which for this purpose shall include
any syndicate or group that includes such Series D-1 Investor and that
would be deemed to be a person under Section 13(d)(3) of the Exchange Act)
shall not, without the prior written consent of the Company, be entitled to
consummate such transaction to the extent such Series D-1 Investor
(including any such syndicate or group) would thereafter Beneficially Own
more than 49.9% of the then-outstanding voting securities of the Company
(any voting securities of which such Series D-1 Investor is the Beneficial
Owner that are not then outstanding being deemed outstanding for purposes
of calculating such percentage), Common Stock, (b) any action taken by
Series D-1 Investors in connection with the nomination and election of the
Series D-1 Directors or any action taken by the Series D-1 Directors in
such capacities, (c) officers and employees of the Series D-1 Investors
from communicating with officers of the Company or its Affiliates on
matters related to or governed by this Agreement, matters relating to the
Series D-1 Investors investment in the Company, or operational matters, or
(d) the Series D-1 Investors from communicating with the Board of
Directors, the Chairman of the Board of Directors, the Chief Executive
Officer or the Chief Financial Officer of the Company, so long as any such
communication is conveyed in confidence, would not require public
disclosure by the Series D-1 Investors or by the Company, and is not
intended to elicit, and, in the reasonable belief (after consulting with
outside counsel) of the Series D-1 Investor making such communication, does
not require the issuance of, a public response by the Company.
6.3. TERMINATION. The obligations of a Series D-1 Investor under
this Section 6 shall terminate upon the earlier of (a) the first date on
which such Series D-1 Investor and its Affiliates Beneficially Own less
than 5% of the outstanding shares of Common Stock, collectively (on an
as-converted basis), and (b) the closing of a Company Sale.
7. TRADING LIMITATIONS
7.1. RESTRICTIONS. For so long as an Investor or its Affiliates
hold Shares, such Investor shall not sell, contract to sell, grant any
option to purchase, or make any short sale of Common Stock, establish a
"put equivalent position" (as such term is defined in Rule 16a-1(h) under
the Exchange Act) or engage in any transaction the result of which would
involve any of the foregoing, at a time when such Investor has no
equivalent offsetting long position in Common Stock. For purposes of
determining whether an Investor has an equivalent offsetting long position
in the Common Stock, all Common Stock held by such Investor, all shares of
Common Stock issuable upon conversion of all Shares or upon exercise in
full of any warrant for Common Stock then held by such Investor (assuming
that such securities were then fully convertible or exercisable,
notwithstanding any provisions to the contrary, and giving effect to any
conversion or exercise price adjustments scheduled to take effect in the
future), and all shares of Common Stock issuable upon exercise of
25
any call option or "call equivalent position" (as defined in Rule 16a-1(b)
under the Exchange Act) held by such Investor (assuming that such call
position was then fully convertible or exercisable, notwithstanding any
provisions to the contrary, and giving effect to any conversion or exercise
price adjustments scheduled to take effect in the future) shall be deemed
to be held long by such Investor.
7.2. TERMINATION. The obligations of an Investor under this
Section 7 shall terminate upon the earlier of (a) the first date on which
such Investor no longer Beneficially Owns any Shares or Registrable Shares
and (b) the closing of a Company Sale.
8. CONFIDENTIALITY.
8.1. RESTRICTIONS. Each Series D-1 Investor agrees that it will
keep confidential and will not disclose, divulge or use for any purpose,
other than to monitor its investment in the Company, any Confidential
Information, unless such Confidential Information (a) is known or becomes
known to the public in general (other than as a result of a breach of this
Section 8 by such Series D-1 Investor), (b) is or has been independently
developed or conceived by the Series D-1 Investor without use of the
Company's Confidential Information or (c) is or has been made known or
disclosed to the Series D-1 Investor by a third party unless at the time of
the proposed disclosure by the Series D-1 Investor, the Series D-1 Investor
has knowledge that the disclosure was made to the Series D-1 Investor in
breach of an obligation of confidentiality such third party had to the
Company; PROVIDED, HOWEVER, that a Series D-1 Investor may disclose
Confidential Information (i) to its attorneys, accountants, consultants,
and other professionals to the extent necessary to obtain their services in
connection with monitoring its investment in the Company, (ii) to any
prospective purchaser of any Shares from such Series D-1 Investor as long
as such prospective purchaser agrees to be bound by the provisions of this
Section 8 and names the Company as a third party beneficiary of such
agreement, (iii) to any Affiliate, PROVIDED that the Confidential
Information is disclosed on a confidential basis to such party, or (iv) as
may otherwise be required by law, legal process or regulatory requirements,
PROVIDED that the Series D-1 Investor takes reasonable steps to minimize
the extent of any such required disclosure. Notwithstanding the foregoing,
such information shall not be deemed confidential for the purpose of
enforcing this Agreement. The Series D-1 Investor shall be liable for the
disclosure of any Confidential Information by any Person described in the
preceding clauses (i) and (iii).
8.2. TERMINATION. The obligations of a Series D-1 Investor under
this Section 8 shall terminate on the second anniversary of the earlier of
(a) the first date on which such Series D-1 Investor no longer Beneficially
Owns any Shares or Registrable Shares and (b) the closing of a Company
Sale.
9. ELECTION OF SERIES D-1 DIRECTORS
9.1. INITIAL SERIES D-1 DIRECTORS. The Company confirms that its
Board of Directors has elected, effective contemporaneously with the
execution and delivery of this Agreement, Xxxxxxx X. Xxxxxxxx and Xxxxxxx
Xxxx as directors of the Company. The Series D-1 Investors confirm that
such individuals shall constitute two of the initial Series D-1 Directors.
The Company and the Series D-1 Investors agree to take any such further
actions as may be necessary or desirable (i) to effect the appointment of
such additional initial Series D-1 Directors as the Series D-1 Investors
are permitted to designate pursuant to the Series D Certificate and (ii) to
effect the election, from time to time in the future, of individuals as
Series D-1 Directors pursuant to the Series D Certificate, subject to the
provisions of Section 9.2. No individual designated to serve on the Board
of Directors as a Series D-1 Director shall be deemed to be the deputy of
or otherwise required to discharge his or her duties under the direction
of, or with special attention to the interests of, the Series D-1
Investors.
26
9.2. DESIGNATION OF SERIES D-1 DIRECTORS. The Company shall
provide the Series D-1 Investors with 30 days' prior written notice of any
intended mailing of a notice to stockholders for a meeting at which the
term of one or more Series D-1 Directors shall expire. Such notice shall
specify (i) the date of such meeting, (ii) the date on which such mailing
is intended to be made, and (iii) the name or names of the Series D-1
Directors whose terms are to expire at such meeting. A Series D-1 Investor
or Investors holding in the aggregate a majority of the shares of Series
D-1 Stock then outstanding (not including outstanding shares of Common
Stock) may give written notice to the other Series D-1 Investors and the
Company, no later than 15 days after receipt of such notice from the
Company, of the individuals to be designated by the Board as nominees for
election as Series D-1 Directors at such meeting. Only the individuals
designated pursuant to the preceding sentence or otherwise in accordance
with the Series D Certificate shall be nominated and recommended for
election as Series D-1 Directors. If Series D-1 Investors fail to give
notice to the Company as provided above, then the individuals then serving
as Series D-1 Directors shall be deemed to have been designated for
reelection.
9.3. COVENANT REGARDING COMMON DIRECTORS. In the event one or more
directors elected by the holders of the Common Stock (voting as a single
class or with one or more other classes or series of capital stock (the
"Common Directors")) no longer serves as a member of the Board of Directors
due to his or her resignation, removal, incapacity or death (the resulting
vacancy in the Board of Directors being referred to herein as a "Common
Director Vacancy"), for so long as this Section 9 is in effect and the
Series D-1 Investors have the right to elect one or more members of the
Board of Directors pursuant to the terms of the Series D Certificate, the
Series D-1 Investors hereby covenant and agree as follows:
(a) In the event the Board of Directors elects to fill a
Common Director Vacancy by vote of the members of the Board of
Directors then in office, the Series D-1 Investors shall use all
commercially reasonable efforts to cause the Series D-1 Directors to
vote for the nominee approved by a majority of the remaining Common
Directors then in office.
(b) In the event a Common Director Vacancy is filled by a
person who was not approved by a majority of the Common Directors in
office (regardless of whether the Series D-1 Investors used all
commercially reasonable efforts as required by subsection (a)
above), the Series D-1 Investors shall, notwithstanding their rights
contained in the Series D Certificate, use commercially reasonable
efforts to cause a Series D-1 Director to resign and be replaced by
a person approved by a majority of the Common Directors then in
office.
9.4. TERMINATION. The rights of the Series D-1 Investors under
this Section 9 shall terminate as of the date on which holders of shares of
Series D-1 Stock are no longer entitled to elect Series D-1 Directors
pursuant to the Series D Certificate.
10. NONPUBLIC INFORMATION. Notwithstanding any other provision of this
Agreement, neither the Company nor any Person acting on its behalf will provide
any Series D-2 Investor with any material, nonpublic information about the
Company unless such Series D-2 Investor consents to receive such information in
writing in advance even if otherwise required pursuant to the terms of any
Transaction Document (as defined in the Purchase Agreement). The Company
understands and confirms that each of the Series D-2 Investors will rely on the
foregoing covenant in effecting transactions in securities of the Company.
11. GENERAL
11.1. OWNERSHIP CALCULATIONS
27
(a) Except as otherwise expressly provided herein, in
determining the number or percentage of Shares owned by an Investor
for purposes of exercising rights under this Agreement, (i) Shares
owned by an Investor shall be deemed to include Shares that have
been converted into Common Stock so long as such Common Stock is
owned by such Investor and (ii) all Shares held by Affiliates shall
be aggregated together, PROVIDED that no Shares shall be attributed
to more than one Person within any such group of Affiliates.
(b) In determining the number or percentage of Registrable
Shares owned by an Investor for purposes of exercising rights under
this Agreement, the determination shall include shares of Common
Stock issuable upon conversion, exercise or exchange of securities,
including the Shares, even if such conversion, exercise or exchange
has not been effected.
11.2. NOTICES. All notices, requests and other communications to
any party hereunder shall be in writing (including facsimile or similar
writing) and shall be given to such party at its address or facsimile
number set forth on the signature page hereof, or such other address or
facsimile number as such party may hereinafter specify for the purpose of
this Section to the party giving such notice. Each such notice, request or
other communication shall be effective (a) if given by facsimile
transmission, when such facsimile is transmitted to the facsimile number
specified on the signature pages of this agreement and the appropriate
confirmation is received or, (b) if given by mail, 72 hours after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or, (c) if given by any other means, when delivered
at the address specified on the signature pages of this Agreement.
11.3. AMENDMENTS AND WAIVERS. This Agreement may be amended or
terminated and the observance of any term of this Agreement may be waived
with respect to all parties to this Agreement (either generally or in a
particular instance and either retroactively or prospectively), with the
written consent of the Company, Investors holding greater than 50% of the
Series D-1 Stock then held by Investors and Investors holding greater than
50% of the Series D-2 Stock then held by Investors; PROVIDED that any
amendment, termination or waiver to:
(a) any provision of this Agreement that affects only the
rights of holders of Series D-1 Stock and has no
adverse effect on the rights of holders of Series D-2
Stock may be amended with the written consent of the
Company and Investors holding greater than 50% of the
Series D-1 Stock then held by Investors; PROVIDED that
after such amendment such provision continues to
affect only the holders of the Series D-1 Stock; and
(b) any provision of this Agreement that affects only the
rights of holders of Series D-2 Stock and has no
adverse effect on the rights of holders of Series D-1
Stock may be amended with the written consent of the
Company and Investors holding greater than 50% of the
Series D-2 Stock then held by Investors; PROVIDED that
after such amendment such provision continues to
affect only the holders of the Series D-2 Stock.
Notwithstanding the foregoing, this Agreement may not be amended or
terminated and the observance of any term hereunder may not be waived with
respect to any Investor without the written consent of such Investor unless
such amendment, termination or waiver applies to all Investors of the same
series of Series D Preferred Stock in the same fashion (it being agreed
that a waiver of the provisions of Section 3 with respect to a particular
transaction shall be deemed to apply to all Accredited Investors in the
same fashion if such waiver does so by its terms, notwithstanding the fact
that certain Accredited Investors may nonetheless, by agreement with the
Company, purchase securities in such transaction). The Company shall give
prompt written notice
28
of any amendment or termination of this Agreement or waiver hereunder to
any party hereto that did not consent in writing to such amendment,
termination or waiver. Any amendment, termination or waiver effected in
accordance with this Section 10.3 shall be binding on all parties hereto,
even if they do not execute such consent. No waivers of or exceptions to
any term, condition or provision of this Agreement, in any one or more
instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such term, condition or provision.
11.4. GOVERNING LAW; VENUE; WAIVER OF JURY TRIAL. All questions
concerning the construction, validity, enforcement and interpretation of
this Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of
Delaware. Each party
hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the State of
Delaware, for the adjudication of
any dispute hereunder or in connection with any transaction contemplated
hereby or discussed herein, and hereby irrevocably waives, and agrees not
to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such suit,
action or proceeding is improper. Each party hereby irrevocably waives
personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such
party at the address in effect for notices to it under this Agreement and
agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to
limit in any way any right to serve process in any manner permitted by law.
Each of the parties hereby waives all rights to a trial by jury.
11.5. COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be
executed in any number of counterparts (including facsimile signature),
each of which shall be an original with the same effect as if the
signatures thereto and hereto were upon the same instrument. No provision
of this Agreement is intended to confer upon any Person other than the
parties hereto any rights or remedies hereunder, except to the extent
expressly provided herein.
11.6. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and understanding among the parties hereto with respect to the
subject matter of this Agreement and supersedes any and all prior
agreements and understandings, written or oral, relating to such subject
matter.
11.7. INTERPRETATION AND RULES OF CONSTRUCTION. Definitions
contained in this Agreement apply to singular as well as the plural forms
of such terms and to the masculine as well as to the feminine and neuter
genders of such terms. Words in the singular shall be held to include the
plural and vice versa, and words of one gender shall be held to include the
other gender as the context requires. The terms "hereof," "herein,"
"hereby" and "herewith" and words of similar import shall, unless otherwise
stated, be construed to refer to this Agreement as a whole and not to any
particular provision of this Agreement. The terms "includes" and the word
"including" and words of similar import shall be deemed to be followed by
the words "without limitation." Section and paragraph references are to the
Sections and paragraphs of this Agreement unless otherwise specified. The
word "or" shall not be exclusive. For purposes of this Agreement, the terms
"Company" and "Subsidiary" shall include any entity which is, in whole or
in part, a predecessor of the Company or any Subsidiary, unless the context
expressly requires otherwise. The headings in this Agreement are included
for convenience only and shall be ignored in the construction or
interpretation hereof.
11.8. SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement.
11.9. SPECIFIC PERFORMANCE. In addition to any and all other
remedies that may be available at law in the event of any breach of this
Agreement, each Investor shall be entitled to specific performance of the
agreements and obligations of the Company hereunder and to such other
29
injunctive or other equitable relief as may be granted by a court of
competent jurisdiction.
30
IN WITNESS WHEREOF, the parties hereto have caused this
Investor Rights
Agreement to be duly executed by their respective authorized signatories as of
the date first written above.
ASPEN TECHNOLOGY, INC.
By:
-----------------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
ADDRESS FOR NOTICES:
Aspen Technology, Inc.
Xxx Xxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Chief Financial Officer and General Counsel
Facsimile: 617.949.1717
WITH A COPY TO:
Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx
Facsimile: 617.526.5000
[INVESTOR SIGNATURE PAGES FOLLOW]
31
SERIES D-1 INVESTORS:
ADVENT ENERGY II LIMITED PARTNERSHIP
ADVENT PGGM GLOBAL LIMITED PARTNERSHIP
DIGITAL MEDIA & COMMUNICATIONS III LIMITED PARTNERSHIP
DIGITAL MEDIA & COMMUNICATIONS III-A LIMITED
PARTNERSHIP
DIGITAL MEDIA & COMMUNICATIONS III-B LIMITED
PARTNERSHIP
DIGITAL MEDIA & COMMUNICATIONS III-C
LIMITED PARTNERSHIP
DIGITAL MEDIA & COMMUNICATIONS III-D C.V.
DIGITAL MEDIA & COMMUNICATIONS III-E C.V.
GLOBAL PRIVATE EQUITY III LIMITED PARTNERSHIP
GLOBAL PRIVATE EQUITY IV LIMITED PARTNERSHIP
GPE IV CPP INVESTMENT BOARD CO-INVESTMENT LIMITED
PARTNERSHIP
By: Advent International Limited Partnership, General
Partner
By: Advent International Corporation, General Partner
By:
-------------------------------------
Senior Vice President
ADDRESS FOR NOTICES:
c/o Advent International Corporation
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Managing Director
Facsimile: 617.951.0568
WITH A COPY TO:
Xxxxxx Xxxxxxxx LLP
3000 Two Xxxxx Square
00xx xxx Xxxx Xxxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Facsimile: 215.981.4750
ADVENT PARTNERS (NA) GPE III LIMITED PARTNERSHIP
ADVENT PARTNERS DMC III LIMITED PARTNERSHIP
ADVENT PARTNERS GPE-III LIMITED PARTNERSHIP
ADVENT PARTNERS GPE-IV LIMITED PARTNERSHIP
ADVENT PARTNERS II LIMITED PARTNERSHIP
By: Advent International Corporation, General Partner
By:
-------------------------------
Senior Vice President
ADDRESS FOR NOTICES:
c/o Advent International Corporation
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Managing Director
Facsimile: 617.951.0568
WITH A COPY TO:
Xxxxxx Xxxxxxxx LLP
3000 Two Xxxxx Square
00xx xxx Xxxx Xxxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Facsimile: 215.981.4750
SERIES D-2 INVESTORS:
PINE RIDGE FINANCIAL INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
ADDRESS FOR NOTICES:
Pine Ridge Financial Inc.
c/x Xxxxxxx Capital Corp.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Avi Vigder
Telephone: 000.000.0000
Facsimile: 212.651.9010
WITH A COPY TO:
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
Facsimile: 212.969.2900
SMITHFIELD FIDUCIARY LLC
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
ADDRESS FOR NOTICES:
Smithfield Fiduciary LLC
c/o Highbridge Capital Management, LLC
0 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxx X. Xxxxxx / Xxxx X. Chill
Facsimile: 212.751.0755
WITH A COPY TO:
Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxxx, Esq.
Facsimile: 212.593.5955
PERSEVERANCE LLC
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
ADDRESS FOR NOTICES:
Perseverance LLC
c/x Xxxxxxx Capital Corp.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Avi Vigder
Facsimile: 212.651.9010
WITH A COPY TO:
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
Facsimile: 212.969.2900
ANNEX A
PLAN OF DISTRIBUTION
The selling stockholders may, from time to time, sell any or all of their
shares of common stock on any stock exchange, market or trading facility on
which the shares are traded or in private transactions. These sales may be at
fixed or negotiated prices. The selling stockholders may use any one or more of
the following methods when selling shares:
- ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
- block trades in which the broker-dealer will attempt to sell the
shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction;
- purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
- an exchange distribution in accordance with the rules of the
applicable exchange;
- privately negotiated transactions;
- short sales;
- broker-dealers may agree with the selling stockholders to sell a
specified number of such shares at a stipulated price per share;
- a combination of any such methods of sale; and
- any other method permitted pursuant to applicable law.
The selling stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.
The selling stockholders may also engage in short sales against the box,
puts and calls and other transactions in our securities or derivatives of our
securities and may sell or deliver shares in connection with these trades.
Broker-dealers engaged by the selling stockholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the selling stockholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The selling stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved. Any
profits on the resale of shares of common stock by a broker-dealer acting as
principal might be deemed to be underwriting discounts or commissions under the
Securities Act. Discounts, concessions, commissions and similar selling
expenses, if any, attributable to the sale of shares will be borne by a selling
stockholder. The selling stockholders may agree to indemnify any agent, dealer
or broker-dealer that participates in transactions involving sales of the shares
if liabilities are imposed on that person under the Securities Act.
The selling stockholders may from time to time pledge or grant a security
interest in some or all of the shares of common stock owned by them and, if they
default in the performance of their secured obligations, the pledgees or secured
parties may offer and sell the shares of common stock from time to time under
this prospectus after we have filed an amendment to this prospectus under Rule
424(b)(3) or other applicable provision of the Securities Act amending the list
of selling stockholders to include the
A-1
pledgee, transferee or other successors in interest as selling stockholders
under this prospectus.
The selling stockholders also may transfer the shares of common stock in
other circumstances, in which case the transferees, pledgees or other successors
in interest will be the selling beneficial owners for purposes of this
prospectus and may sell the shares of common stock from time to time under this
prospectus after we have filed an amendment to this prospectus under Rule
424(b)(3) or other applicable provision of the Securities Act amending the list
of selling stockholders to include the pledgee, transferee or other successors
in interest as selling stockholders under this prospectus.
The selling stockholders and any broker-dealers or agents that are involved
in selling the shares of common stock may be deemed to be "underwriters" within
the meaning of the Securities Act in connection with such sales. In such event,
any commissions received by such broker-dealers or agents and any profit on the
resale of the shares of common stock purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act.
We are required to pay certain fees and expenses incident to the
registration of the shares of common stock, including certain fees and
disbursements of counsel to the selling stockholders. We have agreed to
indemnify the selling stockholders against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act.
The selling stockholders have advised us that they have not entered into
any agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their shares of common stock, nor is there
an underwriter or coordinating broker acting in connection with a proposed sale
of shares of common stock by any selling stockholder. If we are notified by any
selling stockholder that any material arrangement has been entered into with a
broker-dealer for the sale of shares of common stock, if required, we will file
a supplement to this prospectus. If the selling stockholders use this prospectus
for any sale of the shares of common stock, they will be subject to the
prospectus delivery requirements of the Securities Act.
The anti-manipulation rules of Regulation M under the Securities Exchange
Act may apply to sales of our common stock and activities of the selling
stockholders.
A-2
