EXHIBIT 4.7
OPEN PORT TECHNOLOGY, INC.
SECOND AMENDED AND RESTATED
VOTING AND CO-SALE AGREEMENT
January 27, 2000
SECOND AMENDED AND RESTATED
VOTING AND CO-SALE AGREEMENT
This Second Amended and Restated Voting and Co-Sale Agreement (this
"Agreement") is made and entered into as of the 27th day of January, 2000, by
and among Open Port Technology, Inc., an Illinois corporation (the "Company");
the persons and entities identified on Schedule 1 hereto which includes the
original preferred shareholders party to the First Amended and Restated Voting
and Co-Sale Agreement defined below (the "Original Preferred Shareholders") and
certain new preferred shareholders (the "New Preferred Shareholders," and
collectively with the Original Preferred Shareholders, the "Preferred
Shareholders") and certain persons identified on Schedule 2 hereto and who have
executed this Agreement (the persons identified on Schedule 2 and any other
person who hereafter becomes a holder of shares of Common Stock (as defined
below) and becomes a party to this Agreement are hereinafter referred to
individually as a "Shareholder" and collectively as the "Shareholders"). For
purposes of this Agreement, the "Preferred Shareholders" are not "Shareholders"
and shall not be deemed to be "Shareholders" solely by reason of the conversion
of their Preferred Stock into Common Stock.
RECITALS
A. The authorized capital stock of the Company consists of 71,000,000
shares of common stock, par value $.001 per share (the "Common Stock"),
1,228,917 shares of Series A Convertible Participating Preferred Stock, par
value $.001 per share (the "Series A Preferred Stock"), 13,526,786 shares of
Series B Convertible Participating Preferred Stock, par value $.001 per share
(the "Series B Preferred Stock"), 3,934,199 shares of Series C Convertible
Participating Preferred Stock, par value $.001 per share (the "Series C
Preferred Stock"), 935,454 shares of Series D Convertible Preferred Stock, par
value $.001 per share (the "Series D Preferred Stock") and 17,662,889 shares of
Series E Convertible Participating Preferred Stock, par value $.001 per share
(the "Series E Preferred Stock" and collectively with the Series A Preferred
Stock, the Series B Preferred Stock, the Series C Preferred Stock and the Series
D Preferred Stock, the "Preferred Stock").
B. The beneficial and record owners of the issued and outstanding Common
Stock of the Company are as listed on Schedule 2. The Preferred Shareholders and
those persons listed on Schedule 2 are the holders of all the issued and
outstanding shares of capital stock of the Company indicated on those schedules.
C. The Company and the Original Preferred Shareholders are parties to that
certain Amended and Restated Voting and Co-Sale Agreement, dated as of June 15,
1998 (the "Existing Amended and Restated Voting and Co-Sale Agreement"), entered
into in connection with that certain Investment Agreement by and between the
Company and the Preferred Shareholders party thereto dated as of June 15, 1998
as amended (the "Series C Investment Agreement").
2
D. Pursuant to the terms of an investment agreement (the "Series D
Investment Agreement"), dated as of April 29, 1999, among the Company, the
holders of the Series D Stock, the Series C Stock, the Series B Stock, and the
Series A Stock, the Company sold shares of Series D Preferred Stock.
E. The New Preferred Shareholders have agreed to purchase shares of Series
E Preferred Stock pursuant to that certain Investment Agreement dated as of even
date herewith (the "Series E Investment Agreement") provided that the Company,
the Preferred Shareholders and the Shareholders enter into this Agreement.
F. The Company, the Preferred Shareholders, and the Shareholders deem it
desirable to (i) enter into this Agreement in order to induce the New Preferred
Shareholders to purchase shares of Series E Preferred Stock pursuant to the
Series E Investment Agreement and (ii) to amend and restate (and supersede and
replace) the Amended and Restated Voting and Co-Sale Agreement.
G. The Company, in connection with certain financing arrangements has
issued warrants to acquire shares of Series C Preferred Stock to Third Coast
Venture Lease Partners I, L.P. ("Third Coast"), CID Mezzanine Capital, L.P.
("CIDMC") and Silicon Valley Bank (such warrants being collectively referred to
as the "Existing Warrants") and the Company may in the future enter into
additional financing arrangements pursuant to which the Company will issue
"Additional Warrants" (as that term is defined in Section 3.4 of the Series E
Investment Agreement); upon exercise of such Existing Warrants or such
Additional Warrants by the holder or holders thereof, such holder or holders
shall be deemed a "New Preferred Shareholder" for all purposes hereof and
Schedule 1 shall be amended to include such holder or holders designated as such
without any action of the Company or the other Preferred Shareholders.
TERMS AND CONDITIONS
In consideration of the mutual covenants, agreements, representations and
warranties contained in this Agreement and intending to be legally bound, the
parties agree to amend and restate (and supersede and replace) the Amended and
Restated Voting and Co-Sale Agreement as follows:
Section 1. Voting of Shares. CID shall nominate a director of the Company
to be elected by the holders of the Series A Preferred Stock pursuant to the
Company's Articles of Incorporation as amended and restated on or about the date
hereof (the "Restated Articles"), voting separately as a series (the "Series A
Director"), and, if the Series A Director ceases to serve as a director of the
Company for any reason, CID shall nominate a successor to such Series A Director
to be elected by the holders of the Series A Preferred Stock, voting separately
as a series. Each of Frontenac VI Limited Partnership ("Frontenac VI") and New
Enterprise Associates VII, Limited Partnership ("NEA VII") shall nominate one of
the two directors of the Company to be elected by the holders of the Series B
Preferred Stock pursuant to the Restated Articles, voting separately as a series
(each a "Series B Director"), and if a Series B Director
3
ceases to serve as a director of the Company for any reason, the entity that
nominated such Series B Director shall nominate a successor to such Series B
Director to be elected by the holders of the Series B Preferred Stock, voting
separately as a series. The holders of Series E Preferred Stock shall nominate a
director of the Company to be elected by the holders of the Series E Preferred
Stock pursuant to the Restated Articles, voting separately as a series, provided
that such director is reasonably approved by a majority of the directors elected
pursuant to subsections 1(f), 1(g) and 1(i) below and is not affiliated with any
Series E Investor (the "Series E Director"), and, if the Series E Director
ceases to serve as a director of the Company for any reason, the holders of
Series E Preferred Stock shall nominate a successor to such Series E Director to
be elected by the holders of the Series E Preferred Stock, voting separately as
a series, provided that such director is reasonably approved by a majority of
the directors elected pursuant to subsections 1(f), 1(g) and 1(i) below and is
not affiliated with any Series E Investor. The holders of the Common Stock shall
designate by vote of a majority of the shares of Common Stock, voting separately
as a class, one nominee for director of the Company to be elected by the holders
of the Preferred Stock and Common Stock voting together as a single class, and
if such nominee ceases to serve as a director of the Company for any reason, the
holders of the Common Stock shall designate by vote of a majority of the shares
of Common Stock, voting separately as a class, a successor to such nominee to be
elected by the holders of the Preferred Stock and Common Stock voting together
as a single class. The Series A Director, the Series B Directors, the Series E
Director and the members of the Board of Directors designated pursuant to
subsections (f), (g) and (h) below shall designate by majority vote additional
nominees for directors of the Company to be elected by the holders of the
Preferred Stock and Common Stock voting together as a single class, and if any
such nominee ceases to serve as a director of the Company for any reason, such
directors shall designate by majority vote a successor to such nominee to be
elected by the holders of the Preferred Stock and Common Stock voting together
as a single class. Each of the Preferred Shareholders and the Shareholders
agrees that he, she or it shall vote any shares of Common Stock, Preferred Stock
and any other voting security he, she or it may now own or hereafter acquire
that may be entitled to vote on each of the following matters at any regular,
special, or adjourned meeting of shareholders of the Company at which the
matters specified herein shall be presented to the holders of Common Stock
and/or other voting securities, for a vote, as follows:
(a) in favor of the election of the Series A Director, or, if CID's
nominee is unable or unwilling to serve in that capacity, any other person
that CID designates, as permitted by ARTICLE FOURTH of the Restated
Articles;
(b) in favor of the election of the Series B Directors, or if either
or both of Frontenac VI's and NEA VII's nominees is unable or unwilling to
serve in that capacity, any other person that Frontenac VI or NEA VII, as
the case may be, designates, as permitted by ARTICLE FOURTH of the Restated
Articles;
(c) in favor of the election of the Series E Director, or, if such
nominee is unable or unwilling to serve in that capacity, any other person
that the holders of the Series E Preferred Stock designate, as permitted by
this Section 1;
4
(d) in favor of all actions required by the Series E Investment
Agreement, unless the holders of Preferred Stock representing at least that
number of the shares of Common Stock into which all outstanding shares of
Preferred Stock are then convertible required to give consent in accordance
with the provisions of the Series E Investment Agreement;
(e) against all actions that would constitute a violation or breach of
the Series E Investment Agreement, unless the holders of Preferred Stock
representing at least that number of the shares of Common Stock into which
all outstanding shares of Preferred Stock are then convertible required to
give consent in the Series E Investment Agreement, consent to the action in
accordance with the provisions of the Series E Investment Agreement;
(f) in favor of the election of Xxxxx X. Xxxxxx ("Xxxxxx") as a
director of the Company or, if he is unable or unwilling to serve in that
capacity or ceases to be an employee of the Company, such other person that
is designated by Xxxxxx (as long as he remains a Shareholder) or, in the
event that Xxxxxx is unable or unwilling to act in that regard or ceases to
be a Shareholder, by Xxxxxxxx Xxxxxxx ("Nandyal") or, in the event that
Nandyal is unable or unwilling to act in that regard or ceases to be a
Shareholder, by a majority of the shares of Common Stock (excluding the
Preferred Stock, except to the extent converted);
(g) in favor of the election of Nandyal as a director of the Company
or, if he is unable or unwilling to serve in that capacity or ceases to be
an employee of the Company, such other person that is designated by Xxxxxx
(as long as he remains a Shareholder) or, in the event that Xxxxxx is
unable or unwilling to act in that regard, by Nandyal or, in the event that
Nandyal is unable or unwilling to act in that regard or ceases to be a
Shareholder, by a majority of the shares of Common Stock (excluding the
Preferred Stock, except to the extent converted);
(h) in favor of the election of Xxx Xxxxxx ("Xxxxxx") as a director of
the Company or, if he is unable or unwilling to serve in that capacity,
such other person that is designated pursuant to subsection (j) below
(excluding any director elected pursuant to this subsection (h));
(i) in favor of the election to the Board of Directors of the nominee
designated by a majority of the shares of Common Stock (excluding the
Preferred Stock, except to the extent converted);
(j) in favor of the election to the Board of Directors of the nominees
of the majority of the Series A Director, the Series B Directors, the
Series E Director, and the members of the Board of Directors of the Company
designated pursuant to subsections (f), (g), (h) and (i) above; and
(k) to fill any vacancy occurring in the Board of Directors of the
Company in such order so as to fill any vacancy designated to be filled by
a person nominated under
5
the immediately preceding subsections (a), (b), (c), (f), (g), (h) and (i),
before filling any other vacancies.
Section 2. Board of Directors.
(a) Until the provisions of Section 2(b) below become effective,
except as provided in the Restated Articles, the Board of Directors shall
consist of not less than seven and not more than ten members.
(b) The Series A Director, one of the Series B Directors, and one of
the directors elected pursuant to either Section 1(i) or Section 1(j) above
shall be appointed to every committee of the Board of Directors, whether
now existing or hereinafter created, except that the composition of the
Compensation Committee and the Audit Committee shall be subject to the
provisions of Section 3.7 and Section 3.8, respectively, of the Series E
Investment Agreement, which provisions shall control in the event of a
conflict with this Section 2. The Company shall indemnify each member of
the Board of Directors to the fullest extent permitted by applicable law.
(c) Immediately prior to the effective date of the first offering of
Common Stock to the public by the Company registered pursuant to the
Securities Act of 1933, as amended, the Preferred Shareholders and the
Shareholders shall take such actions as necessary to reduce the Board of
Directors to seven members. Concurrently with such reduction, such
shareholders or the appropriate shareholders, as the case may be, shall
take such actions as necessary to (i) cause the resignations of the
director nominated by CID Equity Capital III, L.P. and the director
nominated by Frontenac VI Limited Partnership, (ii) cause the resignation
of one of the directors elected pursuant to Section 1(j) of this Agreement,
(iii) amend the Restated Articles as necessary to reflect the revised board
structure described in this subsection, and (iv) amend Section 1 of this
Agreement to provide as is set forth on Exhibit A attached hereto and
delete Section 2(b).
Section 3. Restriction on Transfer. Each of the Shareholders agrees that,
during the term of this Agreement, all of the shares of Common Stock and all
other securities (including warrants, rights, and options) of the Company
convertible into or exchangeable for Common Stock, that they now or hereafter
own or hold (the Common Stock and other securities so owned or held by the
Shareholders are hereinafter collectively referred to as the "Shareholders'
Securities") shall be subject to the terms and conditions of this Agreement. No
sale or transfer (as defined in Section 20 of this Agreement) of any
Shareholders' Securities shall be valid (and the Company shall not take any
action to implement, acknowledge or record any transfer of Shareholders'
Securities) unless the Company and the Shareholder holding the Shareholders'
Securities have complied with the terms and conditions of this Agreement prior
to the sale or transfer. The Company and each of the Shareholders severally
represent and warrant that the total number of shares of Common Stock or other
Shareholders' Securities presently owned or held by the Shareholders is as set
forth on Schedule 2, and each of the Shareholders severally represents and
warrants that he or she holds the equity securities listed on Schedule 2 free
and
6
clear of all liens, encumbrances, equitable rights of third parties, or claims
except as provided in this Agreement, the Series A Investment Agreement, the
Series B Investment Agreement, the Series C Investment Agreement, the Series D
Investment Agreement, the Series E Investment Agreement and the Restated
Articles and that he or she has not transferred, pledged, hypothecated, sold, or
agreed to transfer, pledge, hypothecate, or sell his or her holdings of equity
securities of the Company. Notwithstanding any provisions hereof to the
contrary, no Shareholder shall pledge or hypothecate any Shareholders'
Securities.
Section 4. Legends. All certificates representing the Common Stock,
Preferred Stock and other securities so owned or held by any Preferred
Shareholder (hereinafter referred to as "Preferred Securities") and
Shareholders' Securities now or hereafter owned by the Preferred Shareholders
and the Shareholders shall contain the following conspicuously placed legend (or
a substantially similar legend referring to this Agreement or any prior executed
version), as modified to reflect the security holder and the type of security
issued or held: The [shares] [warrants] [rights] [options] represented by this
[certificate] [instrument] are subject to and may be transferred only in
compliance with a Second Amended and Restated Voting and Co-Sale Agreement,
dated as of [the date of this Agreement] (as the same may be amended from time
to time, the "Agreement"), by and among the holder of this [certificate]
[instrument], the Company, and certain shareholders of the Company. The Company
will mail to the shareholder a copy of the Agreement without charge within five
days after receipt of a written request therefor.
Section 5. Conditions to Transfer by the Shareholders.
(a) Prior to a transfer of Shareholders' Securities by any Shareholder
who holds 2% or more of the Common Stock (assuming exercise or conversion
of all outstanding options, warrants, and convertible securities), the
transferring Shareholder shall first notify (i) the Preferred Shareholders
and (ii) the Founders (as hereinafter defined); provided, however, that if
any such Founder is not employed by the Company on the date of the notice,
such Founder is also not employed by any other entity that competes with
the Company (collectively, the "First Offerees") in writing at least 30
days in advance of the intended transfer. The notice shall contain all of
the terms of the transfer, including, without limitation, the name and
address of the prospective transferee, the purchase price and other terms
and conditions of payment (or the minimum purchase price or basis for
determining the minimum purchase price and minimum acceptable other terms
and conditions), the date on or about which the transfer is to be made, the
number of shares of Common Stock or other securities of the Company to be
transferred, and the percentage of the Shareholder's total holdings of
Shareholders' Securities that those shares or other securities represent
(the "Shareholder's Sales Notice") and a copy of the agreement whereby the
shares are to be transferred.
(b) Within ten business days after receipt of the Shareholder's Sales
Notice, any Preferred Shareholder may notify the Shareholders (the
"Preferred Notice") that such Preferred Shareholder will either (i)
purchase its pro rata share (as provided in subsection (d) below) of the
Shareholders' Securities on the terms and conditions set forth in the
Shareholders' Sales Notice, or (ii) transfer to either the buyer named in
the Shareholder's Sales Notice or to the Shareholder, Preferred Securities
in an amount equal to its pro rata
7
share of the Shareholders' Securities (as provided in subsection (d) below) on
the same terms as set forth in the Shareholder's Sales Notice. The Preferred
Shareholders' right to transfer under subsection (b)(ii) hereof shall only apply
with respect to a transfer by a Shareholder who holds 2% or more of the Common
Stock (assuming exercise or conversion of all outstanding options, warrants, and
convertible securities).
(c) Within ten business days after receipt of the Shareholder's Sales
Notice, any other First Offeree may notify the Shareholders (the "Other First
Offeree Notice") that he, she or it will purchase his, her or its pro rata share
(as provided in subsection (e) below) of the Shareholders' Securities on the
terms and conditions set forth in the Shareholder's Sales Notice.
(d) With respect to any Shareholder's Sales Notice the Preferred
Shareholders receive under this Section 5, the maximum number of shares of
Shareholders' Securities that any Preferred Shareholder shall be entitled to
purchase or the maximum number of Preferred Securities that any Preferred
Shareholder shall be entitled to transfer or sell under subsection (b) shall be
equal to the total number of shares of Shareholders' Securities that the
Shareholder has agreed to sell or transfer, multiplied by the percentage that
such Preferred Shareholder's holdings of Common Stock (assuming conversion at
the then applicable conversion rate or rates of Preferred Stock, other
convertible securities, warrants, rights, or options held by such Preferred
Shareholder) bears to the total number of shares of Common Stock (assuming
conversion at the then applicable conversion rate or rates of Preferred Stock,
other convertible securities, warrants, rights, or options held by all holders
thereof) held by all of the First Offerees other than the transferring
Shareholder; provided, however, that if the other First Offerees do not purchase
the aggregate maximum number of shares purchasable by them under subsection (e)
below, the Preferred Shareholders shall have the right, on a pro rata basis, to
purchase any of the shares not purchased by the other First Offerees on the
terms and conditions set forth in the Shareholder's Sales Notice.
(e) With respect to any Shareholder's Sales Notice the First Offerees
other than the Preferred Shareholders receive under this Section 5, the only
number of shares of Shareholders' Securities that each of the other First
Offerees shall be entitled to purchase, except as otherwise agreed by the other
First Offerees, shall be equal to the total number of shares of Shareholders'
Securities that the Shareholder has agreed to sell or transfer, multiplied by
the percentage that the First Offeree's holdings of Common Stock bears to the
total number of shares of Common Stock (assuming conversion at the then
applicable conversion rate or rates of Preferred Stock, other convertible
securities, warrants, rights or options) then held by all of the First Offerees
other than the transferring Shareholder.
(f) Notwithstanding the foregoing provisions of this Section 5, prior to a
transfer of Shareholders' Securities by Xxxxxxx Xxxxx, Xxxxxx X. Xxxxx, Xxxxxxxx
X. Xxxxxxx, Xxxxx X. Xxxxxx, or Xxxxxx X. Xxxxxx (each a "Founder" and
collectively the "Founders") to anyone other than another Founder, the following
provisions shall apply:
8
(i) The transferring Founder shall provide the notice required by
subsection (a) above, such notice being referred to in this subsection
(f) as the "Founder's Sales Notice;"
(ii) Within ten business days after receipt of the Founder's Sales
Notice, any other Founder (provided, however, that if any such Founder
is not employed by the Company on the date of the notice, such Founder
is also not employed by any other entity that competes with the
Company) may notify the Founders that he will purchase his or her pro
rata share of the Shareholders' Securities on the terms and conditions
set forth in the Founder's Sales Notice. A Founder's "pro rata share"
shall be equal to the total number of shares of Shareholders'
Securities that the Founder has agreed to sell or transfer, multiplied
by the percentage that the Founder's holdings of Common Stock bears to
the total number of shares of Common Stock (assuming conversion at the
then applicable conversion rate or rates of convertible securities,
warrants, rights or options) then held by the Founders other than the
transferring Founder, unless otherwise agreed to by the Founders.
(iii) If the other Founders of the Company do not purchase all of the
securities identified as to be transferred in the Founder's Sales
Notice, then the transferring Founder shall so notify the Preferred
Shareholders, and the Preferred Shareholders shall then have the
rights set forth in subsection (b) of this Section 5.
(g) If a Preferred Shareholder exercises its rights under subsection
(b)(ii) of this Section 5, the Shareholder shall either assign that portion of
his or her interest in the agreement of transfer as such Preferred Shareholder
is then entitled to and requests in the Preferred Notice (the assignment shall
be in form and substance reasonably satisfactory to the Preferred Shareholder),
or, at the Preferred Shareholder's option and demand, the Shareholder shall
acquire, under the same terms and conditions as set forth in the Shareholder's
Sales Notice, all or any part of the Preferred Securities that such Preferred
Shareholder would have been authorized to transfer under the provisions of this
Section 5; provided, however, that the Shareholder shall not be required to
purchase any Preferred Securities from such Preferred Shareholder if the
proposed sale or transfer with the prospective transferee fails to be
consummated.
(h) After compliance with the provisions of this Section 5, the
Shareholder may transfer his or her Shareholders' Securities, but only to the
transferee designated in the Shareholder's Sales Notice, within ninety (90) days
after the expiration of other shareholders' rights to buy, at the price, and on
the same terms and conditions as those contained in the Shareholder's Sales
Notice. The Preferred Notice or the Other First Offeree Notice pursuant to this
Section 5, when taken together with the Shareholder's Sales Notice shall
constitute a legal, valid, binding, and enforceable agreement between the
Shareholder and such First Offeree on the terms and conditions set forth
therein.
(i) The transferring Shareholder shall have the right to withdraw the
Shareholder's Sales Notice or the Founder's Sales Notice, as applicable, at any
time prior
9
to the execution of a definitive agreement for the purchase and sale of the
Shareholder's Securities, and upon such withdrawal the transferring
Shareholder shall have no obligation to transfer the Shareholder's
Securities.
Section 6. Right of First Refusal -- New Securities. Each Preferred
Shareholder shall have the first right to purchase any authorized but unissued
or treasury stock of the Company, notes or other evidences of indebtedness of
the Company (except evidences of indebtedness issued to commercial lenders in
connection with any term loan, revolving loan, line of credit, or letter of
credit), or any other securities of the Company, including but not limited to
options, warrants, or other convertible securities other than the issuance of
options (or stock upon exercise of options) issued to employees of the Company
pursuant to the Stock Option Plan (as defined in the Series E Investment
Agreement) and other than securities of the Company being issued in a registered
primary offering pursuant to the Securities Act of 1933, as amended (the "New
Securities"), at a price and on such other terms and conditions that are no less
favorable to such Preferred Shareholder than those upon which the New Securities
shall be offered, sold, or issued to any other individual, corporation,
partnership, or other entity. Such Preferred Shareholder may exercise this right
of first offer at any time within ten business days after it receives written
notice from the Company of the contemplated offer, sale, or issuance of the New
Securities, and such Preferred Shareholder may exercise this right of first
offer to purchase the number of New Securities equal to the product obtained by
multiplying the total number of New Securities the Company is offering by a
fraction, the numerator of which shall be the number of shares of Common Stock,
on a fully diluted basis, owned by such Preferred Shareholder immediately prior
to the sale of such securities (assuming conversion in full of the Preferred
Stock) and the denominator of which shall be the total number of shares of
Common Stock outstanding immediately prior to the sale of such securities
(assuming conversion in full of the Preferred Stock). Notwithstanding the
foregoing, the rights of each Preferred Shareholder pursuant to this Section 6
shall terminate upon the consummation by the Company of a Qualified Public
Offering (as defined in the Restated Articles).
Section 7. Obligations of the Company. The Company agrees that it shall
not issue or transfer on its records any Common Stock or other securities
convertible into or exchangeable for Common Stock held by any of the
Shareholders to any person, corporation, partnership, or other entity unless the
Company has verified that the transferring Shareholder has complied with his or
her obligations under this Agreement.
Section 8. Restrictions on Transfers to Five Percent Shareholders. The
Company and Shareholders agree that they shall not issue or transfer any Common
Stock or any other securities convertible or exchangeable for Common Stock to
any person who is not a party to this Agreement if as a result of such issuance
or transfer, such person would become (assuming the conversion and exercise of
any securities held by such person that are convertible into or exercisable for
Common Stock) the beneficial owners of 5% or more of the then outstanding Common
Stock, unless such person agrees to be bound by the terms of this Agreement.
Section 9. Term. This Agreement shall commence on the date first written
above and shall terminate on the earlier of (i) the date on which the Preferred
Shareholders together cease to own in the aggregate at least 5% of the issued
and outstanding shares of Common Stock of the
10
Company (assuming conversion at the then applicable conversion rate or rates of
Preferred Stock, other convertible securities, warrants, rights, or options held
by such Preferred Shareholder) on a fully-diluted basis, and (ii) the
consummation by the Company of a Qualified Public Offering (as defined in the
Restated Articles).
Section 10. Restrictions on Public Sale by Shareholders. Each Shareholder
agrees not to make any public sale or distribution of equity securities of the
Company (except as part of the underwritten registration or pursuant to
registration on Form S-8 or any successor form), including a sale pursuant to
Rule 144, during the seven days prior to and the 180 days after the effective
date of a registration statement of the Company filed under the Securities Act
of 1933, as amended, unless the managing underwriters agree otherwise. In order
to enforce this Section 10, the Company may impose stop-transfer instructions
with respect to the securities of each Shareholder until the end of such period.
Section 11. Intentionally Deleted.
---------------------
Section 12. Event of Non-Compliance; Remedies. For the purposes of this
Agreement, "Event of Non-Compliance" means the breach in any material respect of
any term or condition of this Agreement by the Company or any Shareholder;
provided, however, that the failure of the Company to recertificate any
Preferred Securities or Shareholder Securities within 30 days of the date of
this Agreement pursuant to Section 4 hereof shall not constitute an Event of
Non-Compliance. If there is an Event of Non-Compliance under this Agreement, the
Preferred Shareholders shall have and may exercise those remedies available
under applicable laws and as provided in the Restated Articles.
Section 13. Amendment. This Agreement may be amended or modified only by a
written agreement executed by the Company, the Preferred Shareholders and the
holders of at least 70% of the then issued and outstanding Common Stock owned by
the Shareholders.
Section 14. Attorneys' Fees. In any legal action or proceeding brought to
enforce any provision of this Agreement, the prevailing party shall be entitled
to recover all reasonable expenses, charges, court costs, and attorneys' fees in
addition to any other available remedy at law or in equity.
Section 15. Benefit of Parties; Assignability. All of the terms and
provisions of this Agreement shall be binding upon and shall inure to the
benefit of the parties and their respective personal representatives, heirs,
successors and assigns, including without limitation all subsequent holders of
securities who become bound by the terms of this Agreement; provided, however,
that neither the Company nor any Shareholder may delegate its responsibilities
or assign or transfer its rights or obligations under this Agreement without the
prior written consent of each of the Preferred Shareholders.
Section 16. Construction. Any reference to the masculine gender shall be
deemed to include the feminine and neuter genders unless the context otherwise
requires.
11
Section 17. Cooperation. The parties agree that after execution of this
Agreement they will from time to time, upon the request of any other party and
without further consideration, execute, acknowledge, and deliver in proper form
any further instruments and take such other action as any other party may
reasonably require to carry out effectively the intent of this Agreement.
Section 18. Cumulative Remedies and Survival. The rights and remedies
specified in this Agreement shall not be exclusive of any other right or remedy
and shall be cumulative and in addition to every other right or remedy now or
hereafter existing at law or in equity or by statute or otherwise that may be
available to the Preferred Shareholders.
Section 19. Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same agreement.
Section 20. Definitions. Except as set forth in the next sentence, the
terms "sale," "sell," "transfer," and the like shall include any assignment,
transfer, or other disposition, with or without consideration, to any person for
any purpose and shall include but shall not be limited to a private or public
sale, exchanges of securities on account of merger, consolidation,
reorganization, or any other transaction affecting any of the capital stock of
the Company. The terms "sale," "sell," "transfer," and the like shall not
include a transfer of Shareholders' Securities to the Company or to (a) any
other current shareholder, (b) the spouse or any parent, child, grandchild, or
sibling of the transferring Shareholder, or (c) a trust established by the
transferring Shareholder for the benefit of any of the persons specified in
clause (b); provided, however, in the case of clauses (a), (b) and (c) above,
the transfer shall be exempt from the provisions of this Agreement only if all
transferees (and in the case of a minor the person or persons holding the shares
for the benefit of the minor and who can make a binding obligation with respect
to the Shareholders' Securities transferred to the minor) agree in writing prior
to the transfer to be bound by the terms and conditions of this Agreement as
additional Shareholders if required by Section 8 hereof.
Section 21. Entire Agreement. This Agreement, including the Schedules
referred to and incorporated by reference herein that form a part of this
Agreement, the Second Amended and Restated Registration Rights Agreement (as
defined in the Series E Investment Agreement), the Series A Investment
Agreement, the Series B Investment Agreement, the Series C Investment Agreement,
the Series D Investment Agreement and the Series E Investment Agreement contain
the entire understanding of the parties with respect to the subject matter
hereof and thereof. There are no representations, promises, warrants, covenants,
or undertakings with respect to the subject matter of this Agreement other than
those expressly set forth or provided for herein or therein.
Section 22. Governing Law. All questions concerning the relative rights of
the Company and its Shareholders shall be governed by the laws of the State of
Illinois. Illinois law shall govern the interpretation, construction, and
enforcement of this Agreement and all transactions and agreements contemplated
hereby, notwithstanding any state's choice of law rules to the contrary.
12
Section 23. Interpretation. The terms and conditions of this Agreement
represent the results of bargaining and negotiations among the parties, each of
which has been represented by counsel of its own selection, and none of which
has acted under duress or compulsion, whether legal, economic, or otherwise, and
represent the results of a combined draftsmanship effort. Consequently, the
terms and conditions hereof shall be interpreted and construed in accordance
with their usual and customary meanings and the parties hereby expressly waive
and disclaim in connection with the interpretation and construction hereof any
rule of law or procedures requiring otherwise, specifically including but not
limited to any rule of law to the effect that ambiguous or conflicting terms or
conditions contained herein shall be interpreted or construed against the party
whose counsel prepared this Agreement or any earlier draft hereof.
Section 24. Notices. All notices, requests, demands, or other
communications that are required or may be given pursuant to the terms of this
Agreement shall be in writing and delivery shall be deemed sufficient in all
respects and to have been duly given on the date of service if delivered
personally or by facsimile transmission if receipt is confirmed to the party to
whom notice is to be given, or on the third day after mailing if mailed by first
class mail, return receipt requested, postage prepaid, and properly addressed to
the addresses set forth in the Series A Investment Agreement, the Series B
Investment Agreement, the Series C Investment Agreement, the Series D Investment
Agreement or the Series E Investment Agreement, as the case may be, or to such
other addresses as the respective parties hereto designate below and shall from
time to time designate to the others in writing.
Section 25. Specific Performance. Each of the parties agrees that damages
for a breach of or default under this Agreement would be inadequate and that in
addition to all other remedies available at law or in equity the parties and
their successors and assigns shall be entitled to specific performance or
injunctive relief, or both, in the event of a breach or a threatened breach of
this Agreement.
Section 26. Additional New Preferred Shareholder. The Company, in
connection with certain financing arrangements has issued warrants to acquire
shares of Series C Preferred Stock to Third Coast Venture Lease Partners I, L.P.
("Third Coast"), CID Mezzanine Capital, L.P. ("CIDMC") and Silicon Valley Bank
(such warrants being collectively referred to as the "Existing Warrants") and
the Company may in the future enter into additional financing arrangements
pursuant to which the Company will issue "Additional Warrants" (as that term is
defined in Section 3.4 of the Series E Investment Agreement) (the Existing
Warrants and the Additional Warrants being hereafter referred to as the
"Warrants"); upon exercise of such Warrants by the holder or holders thereof,
such holder or holders shall be deemed a "New Preferred Shareholder" for all
purposes hereof and Schedule 1 shall be amended to include such holder or
holders designated as such without any action of the Company or the other
Preferred Shareholders.
Section 27. Table of Contents and Captions. The Table of Contents and
captions of the sections and subsections of this Agreement are solely for
convenient reference and shall not be deemed to affect the meaning or
interpretation of any provision of this Agreement.
13
Section 28. Validity of Provisions. Should any part of this Agreement for
any reason be declared by any court of competent jurisdiction to be invalid,
that decision shall not affect the validity of the remaining portion, which
shall continue in full force and effect as if this Agreement had been executed
with the invalid portion eliminated, it being the intent of the parties that
they would have executed the remaining portion of the Agreement without
including any part or portion that may for any reason be declared invalid.
Section 29. Waiver of Right of First Refusal. Each Original Preferred
Shareholder hereby waives its right of first refusal under Section 6 of the
Existing Amended and Restated Voting and Co-Sale Agreement, with respect to (i)
the Series E Preferred Stock being issued pursuant to the Series E Investment
Agreement, (ii) the Warrants and (iii) the shares of Series C Preferred Stock
and Series E Preferred Stock, as appropriate, issuable upon exercise of the
Warrants and the shares of Common Stock issuable upon conversion of such shares
of Series C Preferred Stock or of Series E Preferred Stock.
Section 30. Waiver of Breach. Neither any waiver of any breach of, nor any
failure to enforce any term or condition of, this Agreement shall operate as a
waiver of any other breach of any term or condition, nor constitute nor be
deemed a waiver or release of any other rights, in law or at equity, or claims
that any party may have against any other party for anything arising out of,
connected with, or based upon this Agreement. No waiver shall be enforceable
against any party hereto unless set forth in a written instrument or agreement
signed by that party. No waiver shall be enforceable against any party hereto
unless set forth in a written instrument or agreement signed by that party. No
waiver shall be deemed to occur as a result of the failure of any party to
enforce any term or condition of this Agreement.
[END OF DOCUMENT]
[REST OF PAGE INTENTIONALLY LEFT BLANK]
14
SCHEDULE 1
Preferred Shareholders
----------------------
NEW PREFERRED SHAREHOLDERS
---------------------------
Xxxxxx Xxxx
Xxxxxxx Investment Management
Essex Investment Management
Kobrick Funds
Crown Advisors
American Fund Advisors
Open Tech LLC
Winfield Capital
United States Development Capital Portfolio Company
DBAB Principals
Battery Venture Partners
Brookside Capital Partners Fund, L.P.
WPG Raytheon Software Fund, L.P.
WPG Software Fund, L.P.
WPG Institutional Software Fund, L.P.
WPG Raytheon Networking Fund, L.P.
WPG Networking Fund, L.P.
WPG Institutional Networking Fund, L.P.
Xxx Xxxxx
EXISTING PREFERRED SHAREHOLDERS
-------------------------------
CID Equity Capital III, L.P.
CID Equity Capital V, L.P.
Frontenac VI Limited Partnership
Battery Ventures III, L.P.
MKW Partners, L.P.
Xxxxxxxx X. Xxxxx
New Enterprise Associates VII, Limited Partnership
NEA Presidents' Fund, L.P.
NEA Ventures 1997, L.P.
15
Xxxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
Xxxxxx Family Limited Partnership
Xxxxxx Family Limited Partnership I
Xxxxxx Xxxx and Xxxxx Xxxx, JTWROS
Xxxx Associates Pension Plan
Xxxxx Xxxxx
Xxxxxxx Xxxxxxxx
Xxxxxx Xxxxxxx
Xxxxx Ramp
Microsoft Corporation
Oak Investment Partners VII, Limited Partnership
Oak VII Affiliates Fund, Limited Partnership
Northwestern University
Xxxxxx Xxxxxx
16
SCHEDULE 2
Founders
Xxxxxxx Xxxxx
Xxxxxx X. Xxxxx
Xxxxxxxx X. Xxxxxxx
Xxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
EXHIBIT A
---------
1. Voting of Shares. Provided that at least 200,000 shares of Series E
Preferred Stock remains outstanding, the holders of Series E Preferred Stock
shall nominate a director of the Company to be elected by a majority of the
holders of the Series E Preferred Stock pursuant to the Restated Articles,
voting separately as a series, provided that such director is reasonably
approved by a majority of the directors elected pursuant to subsections 1(b)
and 1(d) below and is not affiliated with any Series E Investor (the "Series
E Director"), and, if the Series E Director ceases to serve as a director of
the Company for any reason, the holders of Series E Preferred Stock shall
nominate a successor to such Series E Director to be elected by a majority
of the holders of the Series E Preferred Stock, voting separately as a
series, provided that such director is reasonably approved by a majority of
the directors elected pursuant to subsections 1(b) and 1(d) below and is not
affiliated with any Series E Investor. The holders of the Common Stock shall
designate by vote of a majority of the shares of Common Stock (excluding the
Preferred Stock, except to the extent converted), two management nominees
for director of the Company to be elected by the holders of the Common
Stock, and if such nominee ceases to serve as a director of the Company for
any reason, the holders of the Common Stock shall designate by vote of a
majority of the shares of Common Stock (excluding the Preferred Stock,
except to the extent converted), a successor to such nominee to be elected
by the holders of the Common Stock. The holders of the Preferred Stock
(other than the holders of the Series E Preferred Stock) shall designate by
vote of a majority of the shares of Preferred Stock (other than the Series E
Preferred Stock), two nominees for director of the Company to be elected by
the holders of the Preferred Stock (other than the Series E Preferred
Stock), and if any such nominee ceases to serve as a director of the Company
for any reason, the holders of the Preferred Stock (other than the Series E
Preferred Stock) shall designate by vote of a majority of the shares of
Preferred Stock (other than the Series E Preferred Stock), a successor to
such nominee to be elected by the holders of the Preferred Stock. The
directors elected pursuant to subsection 1(b) below shall designate by
majority vote two nominees, who shall not be affiliated with the Company or
with any holder of Preferred Stock or Common Stock, to be elected by a
majority of the holders of the Common Stock, and if any such nominee ceases
to serve as a director of the Company for any reason, such directors shall
designate by majority vote a successor to such nominee to be elected by the
holders of the Common Stock. Each of the Preferred Shareholders and the
Shareholders agrees that he, she or it shall vote any shares of Common
Stock, Preferred Stock and any other voting security he, she or it may now
own or hereafter acquire that may be entitled to vote on each of the
following matters at any regular, special, or adjourned meeting of
shareholders of the Company at which the matters specified herein shall be
presented to the holders of Common Stock and/or other voting securities, for
a vote, as follows:
(a) in favor of the election of the Series E Director, or, if such
nominee is unable or unwilling to serve in that capacity, any other person that
the holders of the Series E Preferred Stock designate, as permitted by this
Section 1;
(b) in favor of the election to the Board of Directors of two
management nominees designated by the holders of a majority of the shares
of Common Stock (excluding the Preferred Stock, except to the extent
converted);
(c) in favor of the election to the Board of Directors of two
nominees designated by the holders of a majority of the shares of Preferred
Stock (other than the holders of the Series E Preferred Stock);
(d) in favor of the election to the Board of Directors of two
nominees designated by the directors elected pursuant to subsection 1(b)
above and reasonably approved by the holders of a majority of the Preferred
Stock, which nominees shall not be affiliated with the Company or any of
the holders of Preferred Stock or Common Stock;
(e) to fill any vacancy occurring in the Board of Directors of the
Company in accordance with (a) through (d) above.