EXHIBIT 4.1 SECURITYHOLDERS AGREEMENT
SECURITYHOLDERS AGREEMENT
This Securityholders Agreement is made as of December 1, 1999, by and among
Xx0.xxx Inc. (the "Company"), a Colorado corporation having its principal
address at 000 Xxxxxxxxx Xxxxxx, 0(xx) Xxxxx, Xxx Xxxx, XX 00000, and those
persons named in Schedule A to this Agreement (collectively, the "Holders").
Certain capitalized terms used in this Agreement without definition shall have
the meanings given them in Section 13.
PREAMBLE
Each of the Holders is (a) the Holder of record of shares of Common Stock,
(b) the Holder of record of one or more Common Stock Warrants or (c) the Holder
of record of shares Series A Preferred.
Prior to the Merger, certain of the Holders held shares of common stock of,
or warrants to acquire shares of common stock of Duck.
Each of the Holders designated as a "Former Duck Holder" on Schedule A (the
"Former Duck Holders") voted in favor of or consented to the Merger.
Pursuant to the Merger Agreement, on June 16, 1999 ACAC merged with and into
Duck and each of the outstanding shares of common stock of Duck was converted
into 0.889334306 shares of the Common Stock.
The Merger Agreement also provided that each Holder of warrants to acquire
shares of Duck's common stock would exchange those warrants for certain Common
Stock Warrants in the ratio provided therein.
Section 2.6 of the Merger Agreement provided that the Company would, on or
prior to the ninetieth day after the closing of the Merger, file a registration
statement with the Commission to register for resale to the public shares of the
Common Stock owned by the Former Duck Holders, shares of Common Stock underlying
the Common Stock Warrants and shares of the Common Stock underlying the
Series A Preferred, as well as shares of the Common Stock underlying options
issued to former holders of options to acquire common stock of Duck, on or prior
to the ninetieth day after the closing of the Merger.
Pursuant to the MetaVisual Registration Rights Agreement, the Company has
granted certain rights to the persons who are parties thereto to register shares
of Common Stock held by them.
Pursuant to the Berlin Registration Rights Agreement, the Company has
granted certain rights to the persons who are parties thereto to register shares
of Common Stock held by them.
NOW, THEREFORE, in consideration of the premises and mutual agreements set
forth herein, the Company and the Holders agree as follows:
1. RESTRICTIONS ON TRANSFERABILITY. During the Term, except as permitted by
Section 3.1 or 3.2, no Holder may Sell any Restricted Securities, whether or not
for value, except in compliance with the terms and conditions of this Agreement,
regardless of whether the intended Sale is permitted pursuant to Rule 144 or is
otherwise exempt from the registration requirements of the Securities Act. At
such time as the Restricted Securities cease to be Restricted Securities under
the terms of this Agreement, the provisions of this Agreement shall no longer
apply to any securities that theretofore were Restricted Securities
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2. RESTRICTIVE LEGEND.
2.1. SHARES OF COMMON STOCK. Each certificate representing Restricted
Securities that are shares of Common Stock shall be stamped or otherwise
imprinted with a legend substantially in the following form (in addition to
any legend required under applicable state securities laws or otherwise):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
(THE "SECURITIES ACT"). THESE SHARES MAY NOT BE SOLD, ASSIGNED,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE SECURITIES ACT.
THE SALE, ASSIGNMENT, TRANSFER, PLEDGE AND OTHER DISPOSITION OF THE
SHARES REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED BY THE
SECURITYHOLDERS AGREEMENT (THE "SECURITYHOLDERS AGREEMENT"), DATED AS OF
DECEMBER 1, 1999, AMONG CERTAIN SECURITYHOLDERS OF THE CORPORATION. A
COPY OF THE SECURITYHOLDERS AGREEMENT IS ON FILE WITH THE CORPORATE
SECRETARY AT THE PRINCIPAL EXECUTIVE OFFICES OF THE CORPORATION. A COPY
THEREOF MAY BE OBTAINED AT NO COST UPON WRITTEN REQUEST THEREFOR MADE BY
THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE CORPORATE SECRETARY AT
THE PRINCIPAL OFFICES OF THE CORPORATION.
2.2. SHARES OF PREFERRED STOCK. Each certificate representing
Restricted Securities that are shares of Series A Preferred shall be stamped
or otherwise imprinted with a legend substantially in the following form (in
addition to any legend required under applicable state securities laws or
otherwise):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
(THE "SECURITIES ACT"). THESE SHARES MAY NOT BE SOLD, ASSIGNED,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE SECURITIES ACT.
THE SALE, ASSIGNMENT, TRANSFER, PLEDGE AND OTHER DISPOSITION OF THE
SHARES REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED BY THE
SECURITYHOLDERS AGREEMENT (THE "SECURITYHOLDERS AGREEMENT"), DATED AS OF
DECEMBER 1, 1999, AMONG CERTAIN SECURITYHOLDERS OF THE CORPORATION. A
COPY OF THE SECURITYHOLDERS AGREEMENT IS ON FILE WITH THE CORPORATE
SECRETARY AT THE PRINCIPAL EXECUTIVE OFFICES OF THE CORPORATION. A COPY
THEREOF MAY BE OBTAINED AT NO COST UPON WRITTEN REQUEST THEREFOR MADE BY
THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE CORPORATE SECRETARY AT
THE PRINCIPAL OFFICES OF THE CORPORATION.
2.3. STOP TRANSFER INSTRUCTIONS. The Holders consent to the Company's
making a notation on its records and giving instructions to any transfer
agent of the Restricted Securities in order to implement the restrictions on
transfer established in this Agreement.
3. NOTICE AND OTHER REQUIREMENTS OF TRANSFER.
3.1. PERMITTED SALES. During the Term, a Holder may Sell Restricted
Securities:
a. the intended Sale is permitted or required by Section 10;
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b. a registration statement under the Securities Act covering such
proposed sale is effective, and the Holder Sells in accordance with such
registration statement;
c. (i) if the proposed Sale is, for value, including Sales made in a
private offering by both the Company and certain of its stockholders
scheduled to occur in December 1999 and the first quarter of 2000, or is
a Sale to which the provisions of clauses a, b, d, and e of this Section
do not apply, such Holder has notified the Company of the proposed Sale
and has furnished the Company with a detailed statement of the
circumstances surrounding the proposed Sale including the name and
address of the buyer and identifying the Restricted Securities with
respect to which such rights are being assigned, and (ii) the buyer, as a
condition to the effectiveness of such Sale, has executed a counterpart
of this Agreement expressly assuming the obligations of a Holder under
this Agreement; and, if the Company requests, such Holder shall also
furnish the Company with an opinion of counsel, reasonably satisfactory
to the Company, that such Sale does not require registration of such
Securities under the Securities Act;
d. (i) if the proposed Sale is a transfer by gift, or other transfer
by a Holder to a member of the Holder's Immediate Family to which the
provisions of clause e of this Section 3 does not apply, and (ii) the
donee or other transferee, as a condition to the effectiveness of such
Sale, has executed a counterpart of this Agreement expressly assuming the
obligations of a Holder under this Agreement; or
e. (i) if the proposed Sale is a transfer to a spouse or former
spouse pursuant to an agreement of separation or divorce approved by a
court of competent jurisdiction, and (ii) the transferee, as a condition
to the effectiveness of such Sale, has executed a counterpart of this
Agreement expressly assuming the obligations of a Holder under this
Agreement.
f. (i) if the proposed Sale is a transfer to an Affiliate, and
(ii) the Affiliate transferee, as a condition to the effectiveness of
such Sale, has executed a counterpart of this Agreement expressly
assuming the obligations of a Holder under this Agreement.
3.2. SALES UNDER RULE 144. In addition to Section 3.1, during the
period commencing on June 15, 2000 and ending on the last day of the
Term, each Holder may Sell up to an aggregate of 25% (rounded to the
nearest whole share) of the shares of Common Stock that are Restricted
Securities as of the date of this Agreement if and only if such sales are
made in full compliance with Rule 144.
4. PIGGYBACK REGISTRATION.
4.1. NOTICE TO HOLDERS REQUIRED. If at any time during the Term the
Company shall determine to register any shares of Common Stock for its own
account or the account of any of the Holders, other than (a) a transaction
relating solely to the sale of convertible debt instruments, (b) a
registration on Form S-4 or S-8 or another form not available for
registering the Restricted Securities for sale to the public or (c) any
registration comprised in whole or in substantial part of shares underlying
stock options granted by the Company or its predecessor, the Company will
give to the Holders notice as soon as practicable prior to filing the
registration statement and include in such registration all the Restricted
Securities specified in one or more written requests which have been made
within 15 days after receipt of such written notice from the Company by any
of the Holders, except as set forth in Section 4.2.
4.2. REGISTERED PUBLIC OFFERING INVOLVING AN UNDERWRITING. If the
registration is for a registered public offering involving an underwritten
offering, the Company shall so advise each Holder as a part of the written
notice given pursuant to Section 4.1. In such event, the right of each
Holder to registration pursuant to this Section shall be conditioned upon
such Holder's participation in such underwriting and the inclusion of such
Holder's Restricted Securities in the underwriting to the extent provided
herein. If any Holder proposes to distribute his securities through such
underwriting, such
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Holder shall (together with the Company and the other Holders distributing
their securities through such underwriting) enter into an underwriting
agreement in customary form with the underwriter or underwriters selected
for such underwriting by the Company. Notwithstanding any other provision of
this Section 4, if the managing underwriter determines that marketing
factors require a limitation of the number of shares to be underwritten, the
managing underwriter may limit the number of Restricted Securities to be
included in the underwriting or may limit the number of Restricted
Securities to be included in such registration. The Company shall so advise
each of the Holders, and the number of shares of Restricted Securities and
other securities that may be included in the registration and underwriting
shall be allocated among such Holder and other holders of Common Stock that
hold rights granted by the Company to cause shares of Common Stock held by
them to be included in such registration or underwriting, in proportion, as
nearly as practicable, to the respective amounts of Restricted Securities
held by each Holder and each other such holder that are requested to be
included in the registration or underwriting. To facilitate the allocation
of shares in accordance with the above provisions, the Company or the
underwriter may round the number of shares allocated to any Holders to the
nearest one hundred shares. If any of the Holders disapproves of the terms
of any such underwriting, he may elect to withdraw therefrom by written
notice to the Company. Any Restricted Securities excluded or withdrawn from
such underwriting shall be withdrawn from such registration.
4.3. OTHER REGISTRATION RIGHTS. Each of the Holders acknowledges and
agrees that (a) pursuant to the Berlin Registration Rights Agreement and the
MetaVisual Registration Rights Agreement, certain holders of Common Stock
are entitled to participate on a pro rata basis in registration of Common
Stock that may occur pursuant to Section 4.1 and (b) the Company may from
time to time grant comparable registration rights to other persons in order
to facilitate business transactions which the Company determines to be in
its best interest.
4.4. LOCKUP AGREEMENTS. In consideration for the Company's performance
of its obligations under this Agreement, if any Restricted Securities of
such Holder are included in a registration under Section 4.2, each Holder
will at the request of the Company or the underwriters managing any
underwritten offering of the Company's securities, agree not to sell any
Restricted Securities (other than those included in the registration)
without the prior written consent of the Company or such underwriters, as
the case may be, for such period of time as the underwriters may specify.
5. NONPUBLIC INFORMATION. Notwithstanding any other provision of this
Agreement, the Company's obligation to file a registration statement under
Section 4.1, or to cause such registration statement to become and remain
effective, shall be suspended for a period not to exceed 90 days (and for
periods not exceeding, in the aggregate, 180 days in any 12-month period) if
there exists at the time material non-public information relating to the Company
which, in the reasonable opinion of the Company, should not be disclosed.
6. EXPENSES OF REGISTRATION. The Company will bear all reasonable expenses
incurred in connection with registrations pursuant to Section 4, including
without limitation all registration, filing and qualification fees, printing
expenses, fees and disbursements of counsel for the Company and independent
accountants for the Company and expenses of any special audits of the Company's
financial statements incidental to or required by such registration, fees of the
National Association of Securities Dealers, Inc., transfer taxes, fees of
transfer agents and registrars' fees, but the Company will not pay underwriters'
fees, discounts or commissions relating to the Restricted Securities or any fees
or expenses of legal counsel for any or all of the Holders.
7. REGISTRATION PROCEDURES. In the case of each registration effected by
the Company pursuant to this Agreement, the Company will keep the Holders
participating therein advised in writing as to the initiation of each
registration and as to the completion thereof.
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8. INDEMNIFICATION.
8.1. INDEMNITY BY THE COMPANY. If the Company registers any Restricted
Securities under the Securities Act pursuant to Section 4, the Company will
indemnify and hold harmless the Holders of such Restricted Securities
thereunder, each underwriter of such Restricted Securities thereunder and
each other person, if any, who controls any Holder or underwriter within the
meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which such Holders, underwriter or
controlling persons may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement under which such Restricted Securities were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereof, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, or any violation by the Company of
any rule or regulation promulgated under the Securities Act or any state
securities law applicable to the Company and relating to action or inaction
required of the Company in connection with any such registration, and will
reimburse the Holders, each of their respective officers, directors and
partners, and each person controlling any of the Holders, each such
underwriter and each person who controls any such underwriter, for any
reasonable legal and any other expenses incurred in connection with
investigating, defending or settling any such claim, loss, damage, liability
or action, provided that the Company will not be liable in any such case to
any Holder to the extent that any such claim, loss, damage or liability
arises out of or is based on any untrue statement or omission based upon
written information furnished to the Company or to an underwriter by an
instrument duly executed by such Holder specifically for use therein.
8.2. INDEMNITY BY THE HOLDERS. Each Holder will, if Restricted
Securities held by or issuable to such Holder are included in the securities
as to which such registration is being effected, severally and not jointly,
indemnify and hold harmless the Company, each of its directors, each officer
who signs the registration statement, each underwriter, if any, of the
Company's securities covered by such a registration statement, each person
who controls the Company and each underwriter within the meaning of the
Securities Act, against all claims, losses, expenses, damages and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained
in any such registration statement, prospectus, offering circular or other
document, or any omission (or alleged omission) to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse the Company, such directors,
officers, partners, persons or underwriters for any reasonable legal or any
other expenses incurred by them in connection with investigating, defending
or settling any such claim, loss, damage, liability or action, in each case
to the extent, but only to the extent, that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by such Holder specifically for use
therein; provided, that the total amount for which any Holder, its officers,
directors and partners, and any person controlling such Holders, shall be
liable under this Section 8.2 shall not in any event exceed the proceeds
(net of underwriting discounts and commissions) received by such Holder from
the sale of Restricted Securities sold by such Holder in such registration.
8.3. NOTICE BY THE INDEMNIFIED PARTY. Each party entitled to
indemnification under this Section 8 (the "Indemnified Party") shall give
notice to the party required to provide indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has actual knowledge of any
claims as to which indemnity may be sought, and shall permit the
Indemnifying Party to assume the defense of any such claim or any litigation
resulting therefrom, provided that counsel for the Indemnifying Party, who
shall conduct the defense of such claim or litigation, shall be approved by
the Indemnified Party
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(whose approval shall not be unreasonably withheld), and the Indemnified
Party may participate in such defense at such party's expense, and provided
further that the failure of any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its obligations
hereunder, unless such failure resulted in actual detriment to the
Indemnifying Party. No Indemnifying Party, in the defense of any such claim
or litigation, shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in
respect of such claim or litigation.
8.4. UNDERWRITING AGREEMENT. Notwithstanding the foregoing, to the
extent that the provisions on indemnification contained in the underwriting
agreements entered into among the selling Holders, the Company and the
underwriters in connection with the underwritten public offering are in
conflict with the foregoing provisions, the provisions in the underwriting
agreement shall be controlling as to the Restricted Securities included in
the public offering; provided, that if, as a results of this Section 8.4,
the Holders, and any persons controlling such Holders is held liable for an
amount which exceeds the aggregate proceeds received by such Holders from
the sale of Restricted Securities included in a registration, as provided in
Section 8.2, pursuant to such underwriting agreement (the "Excess
Liability"), the Company shall reimburse any such Holders for such Excess
Liability.
8.5. CONTRIBUTION. If the indemnification provided for in this Section
is held by a court of competent jurisdiction to be unavailable to an
Indemnified Party with respect to any loss, liability, claim, damage or
expense referred to therein, then the Indemnifying Party, in lieu of
indemnifying such Indemnified Party thereunder, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such loss,
liability, claim, damage or expense in such proportion as is appropriate to
reflect the relative fault of the Indemnifying Party on the one hand and of
the Indemnified Party on the other hand in connection with the statements or
omissions which resulted in such loss, liability, claim, damage or expense
as well as any other relevant equitable considerations. The relevant fault
of the Indemnifying Party and the Indemnified Party shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact
relates to information supplied by the Indemnifying Party or by the
Indemnified Party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. Notwithstanding the foregoing, the amount that any Holder shall be
obligated to contribute pursuant to this Section 8.5 shall be limited to an
amount equal to the proceeds to such Holder of the Restricted Securities
sold pursuant to the registration statement which gives rise to such
obligation to contribute (less the aggregate amount of any damages which
such Holder has otherwise been required to pay in respect of such loss,
claim, damage, liability or action or any substantially similar loss, claim,
damage, liability or action arising from the sale of such Restricted
Securities).
8.6. SURVIVAL OF INDEMNITY. The indemnification provided by this
Section shall be a continuing right to indemnification and shall survive the
registration and sale of any securities by any person entitled to
indemnification hereunder and the Term.
9. HOLDER'S COOPERATION.
9.1. INFORMATION REGARDING HOLDERS. Each of the Holders shall promptly
furnish to the Company such information regarding such Holder and the
distribution proposed by such Holder as the Company may request in writing
and as shall be required in connection with any registration referred to
herein.
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9.2. OBLIGATIONS OF THE HOLDERS. Each of the Holders holding shares
included in the registration will not (until further notice by the Company)
effect sales thereof (or deliver a prospectus to any purchaser) after receipt of
telegraphic or written notice from the Company to suspend sales to permit the
Company to correct or update a registration statement or prospectus. At the end
of the period during which the Company is obligated to keep any registration
statement filed under Section 4 current and effective as required by applicable
law, the Holders holding shares of Restricted Securities included in the
registration shall discontinue sales of shares pursuant to such registration
statement upon receipt of notice from the Company of its intention to remove
from registration the shares of Restricted Securities covered by such
registration statement that remain unsold, and each of the Holders shall notify
the Company of the number of such shares registered that remain unsold
immediately upon receipt of such notice from the Company.
10. SALES OF PROPORTIONATE PERCENTAGES OF SHARES.
10.1. TAG ALONG RIGHTS.
a. If during the Term any Holder or Holders of more than 33 1/3% of the
Common Stock proposes to Sell (as such term is defined in Section 10.3) in a
single transaction or a series of related transactions an aggregate number
of shares of Stock which represents more than 33 1/3% of the issued and
outstanding shares of Stock (other than to any Affiliates of such Holders),
such Holders (the "Selling Holders") shall comply with the provisions set
forth in Sections 10.1a through 10.1e. For all purposes of this Section,
Warrantholders and Series A Stockholders shall be deemed to hold the shares
of the Common Stock underlying their Common Stock Warrants and Series A
Preferred, as applicable.
b. Prior to effecting any Sale limited by Section 10.1a, the Selling
Holders shall notify the Company of the proposed sale pursuant to this
Section (which notice shall set forth the terms and conditions of such
proposed Sale in reasonable detail), and offer each other Holder (the "Other
Holders") by such notice the right to participate in the Sale on the terms
set out in the notice. The Company shall promptly send copies of the notice
to each of the Other Holders. Each Other Holder may elect to participate in
the contemplated Sale by notifying the Company within ten business days
after receipt of the Company's notice to them, specifying the number of
shares of the Common Stock that such Other Holder elects to Sell, which Sale
shall be on the same terms and conditions (including purchase price)
available to the Selling Holders. Each Other Holder may elect to Sell in the
contemplated transaction up to a number of shares of the Common Stock equal
to the product obtained by multiplying the number of shares of the Common
Stock which the Other Holder owns by a fraction, the numerator of which
shall be the number of shares of the Common Stock that the Selling Holders
propose to Sell, and the denominator of which shall be the aggregate number
of shares of the Common Stock that are held by Selling Holders. If the Other
Holders and Selling Holders (singularly, a "Selling Party", and,
collectively, the "Selling Parties") determine to sell in the aggregate more
than the total number of shares of the Common Stock than the Selling
Holders' buyer or buyers wish to purchase, then each Selling Party shall be
entitled to sell to the buyer or buyers that number of shares of the Common
Stock to be so purchased by the buyer or buyers from the Selling Parties
multiplied by a fraction, the numerator of which is the number of shares of
the Common Stock such Selling Party elects to Sell and the denominator of
which is the aggregate number of shares of the Common Stock which all Other
Holders have determined to Sell.
c. Each Other Holder electing to do so shall participate in a Sale to
the Selling Holders' buyer or buyers pursuant to this Section. All shares of
the Common Stock proposed to be sold by each of the Other Holders shall be
sold free and clear of all liens, claims and encumbrances of any kind.
d. The exercise or nonexercise of the rights of the Other Holders under
this Section shall not adversely affect any right of any Other Holder to
participate in subsequent Sales by the Selling Holders that satisfy the
conditions specified in this Section.
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e. Any sale or transfer made pursuant to this Section shall be
consummated within 90 days of the expiration of the Selling Holders' sale
notice.
10.2. BRING ALONG RIGHTS.
a. If during the Term Selling Holders shall intend to Sell or exchange
in a business combination or otherwise, in a single transaction or in a
series of related transactions, all the Common Stock owned by them in a bona
fide arm's length transaction with a third party that desires to purchase
not less than 80% of the Common Stock, such Selling Holders shall have the
right to require that (X) the Holders other than the Selling Holders (the
"Noninitiating Holders") Sell the same proportion of their shares of the
Common Stock held as of the date of this Agreement in the same transaction
at the same price and on the same terms and conditions applicable to the
Selling Holders and (Y) if stockholder approval of the transaction is
required, that each Noninitiating Holder shall vote his shares in favor
thereof.
b. Each Noninitiating Holder shall participate in a Sale to the Selling
Holders' buyer or buyers pursuant to this Section 10.2. All the Common Stock
proposed to be sold by each Noninitiating Holder shall be sold free and
clear of all liens, claims and encumbrances of any kind.
10.3. DEFINITION OF SELL/SALE. For all purposes of Section 10, a "Sale"
shall include a merger, consolidation or similar combination, exchange, sale of
assets followed by a liquidation, or any disposition for cash, marketable
securities, or debt obligations, or a combination thereof; provided, that a
"Sale" shall not include a public offering of shares to be registered under the
Securities Act.
11. RELEASE OF THE COMPANY, ITS DIRECTORS AND OFFICERS. Each Holder hereby
releases and discharges the Company, its directors and officers from any and all
claims, demands, damages, debts, liabilities, accounts, obligations, costs,
expenses, actions and causes of action of every kind and nature whatsoever,
whether now known or unknown, suspected or unsuspected, xxxxxx or inchoate,
whether arising before or after the date of this Agreement (a) arising under the
Merger Agreement and relating to any registration, sale or other transfer of
shares of capital stock or other securities of the Company or Duck or (b) in any
other way relating to any registration, sale or other transfer of shares of
capital stock or other securities of the Company or Duck, except in either case
for those obligations of the Company which are expressly set forth above in this
Agreement.
12. EFFECTIVENESS OF THIS AGREEMENT. This Agreement shall become effective
when executed by Holders owning at least 66 2/3% of the Restricted Securities.
13. DEFINITIONS. As used in this Agreement, the following terms shall have
the following meanings:
a. "ACAC" means Applied Capital Acquisition Corp., a Delaware
corporation.
b. "Affiliate" has the meaning given it in Rule 405 under the
Securities Act.
c. "Berlin Registration Rights Agreement" means the Registration
Rights Agreement, dated November 11, 1999, between the Company and the
persons named therein.
d. "Commission" shall mean the U. S. Securities and Exchange
Commission, or any other federal agency at the time administering the
Securities Act.
e. "Common Stock" shall mean shares of the Company's Common Stock,
no par value.
f. "Common Stock Warrants" mean warrants to purchase shares of the
Common Stock.
g. "Duck" means The Duck Corporation, a Delaware corporation and a
wholly-owned subsidiary of the Company.
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h. "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar United States statute and the rules and
regulations thereunder, all as the same shall be in effect at the time.
i. "Holders" shall mean the persons named in Schedule I to this
Agreement and any other person who holds Restricted Securities and who
has assumed the obligations of this Agreement pursuant to clauses c, d,
and e of Section 3.
j. "Immediate Family" means the spouse, parent, child or grandchild
or a Holder of a trust exclusively for the exclusive benefit of spouse,
children or grandchildren of such Holder.
k. "Merger" means the merger transaction contemplated by the
Agreement and Plan of Merger (the "Merger Agreement"), dated as of
June 9, 1999, by and among the Company, Applied Capital Acquisition Corp.
("ACAC") and Duck.
l. "Merger Agreement" means the Agreement and Plan of Merger, dated
as of June 9, 1999, by and among the Company, ACAC and Duck.
m. "MetaVisual Registration Rights Agreement" means the Registration
Rights Agreement, dated September 27, 1999, between the Company and the
persons named therein.
n. "Register," "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of
the effectiveness of such registration statement, and compliance with
applicable state securities laws of such states in which any of the
Holders notifies the Company of his intention to offer Registrable
Securities.
o. "Restricted Securities" shall mean the (i) the shares of the
Common Stock held by the Holders, (ii) the shares of Common Stock
issuable to the Warrantholders upon the exercise of the Warrants held by
them and (iii) the shares of Common Stock issuable to the Holders of the
Series A Preferred upon conversion of the Series A Preferred, in each
case only to the extent the same have not been sold to the public. As to
any particular Restricted Securities, such securities shall cease to be
Restricted Securities when a registration statement with respect to the
sale of such securities shall have become effective under the Securities
Act and such securities shall have been disposed of under such
registration statement; in no event however shall the fact that such
securities shall have become eligible for resale pursuant to Rule 144
terminate such securities as Restricted Securities under this Agreement
(except to the extent set forth in Section 3.2), it the being intent of
the parties to this Agreement that the restrictions imposed by Section 1
of this Agreement will continue to apply to such securities until such
restrictions terminate by operation of the express provisions of this
Agreement and not otherwise. As to any particular Restricted Securities,
such securities shall cease to be Restricted Securities when (i) such
securities shall have been otherwise transferred or disposed of, and
(x) new certificates therefor not bearing a legend restricting further
transfer shall have been delivered by the Company, and (y) subsequent
transfer or disposition of them shall not require their registration or
qualification under the Securities Act or any similar state law then in
force or compliance with Rule 144, or (ii) such securities shall have
ceased to be outstanding.
p. "Rule 144" shall mean Rule 144 under the Securities Act or any
successor or similar rule as may be enacted by the Commission from time
to time.
q. "Sale" means any sale, transfer, assignment, pledge or other
disposition; "Sell" means to sell, transfer, assign or otherwise dispose
of; provided that for all purposes of Section 10 "Sale" and "Sell" shall
have the particular meanings given them in Section 10.3.
r. "Rule 145" shall mean Rule 145 under the Securities Act or any
successor or similar rule as may be enacted by the Commission from time
to time.
9
s. "Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar United States statute and the rules and
regulations thereunder, all as the same shall be in effect at the time.
t. "Series A Preferred" shall mean shares of the Company's Series A
Preferred Stock, no par value.
u. "Series A Stockholder" mean a holder of Series A Preferred.
v. "Stockholder" means a holder of record of shares of the Common
Stock.
w. "Term" means the period beginning on the date on which this
Agreement has become effective pursuant to Section 12 and ending on
December 20, 2000.
x. "Warrantholder" means a holder of record of Common Stock
Warrants.
14. MISCELLANEOUS.
14.1. AMENDMENTS. This Agreement may be amended only by a written
instrument executed by (a) the Holders of 75% of the Restricted Securities
which are parties to this Agreement and (b) the Company. Any such amendments
shall be binding upon all Holders who have executed or assumed this
Agreement.
14.2. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which shall constitute a single instrument.
14.3. NOTICES, ETC. All notices, requests, demands and other
communications required or permitted to be given hereunder shall be in
writing and shall be given personally, sent by facsimile transmission or
sent by prepaid air courier or certified or express mail, postage prepaid.
Any such notice shall be deemed to have been given (a) when received, if
delivered in person, sent by facsimile transmission and confirmed in writing
within three business days thereafter or sent by prepaid air courier or
(b) three business days following the mailing thereof, if mailed by
certified first class mail, postage prepaid, in the case of the Company to
its address set forth in the initial paragraph of this Agreement or, in the
case of the Holders, to their addresses as set forth in the Company's
Stockholder list (or to such other address or addresses as a party may have
advised the other in the manner provided in this Section 14.3).
14.4. SEVERABILITY. If any provision of this Agreement shall be held to
be illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any
manner affect or render illegal, invalid or unenforceable any other
provision of this Agreement, and this Agreement shall be carried out as if
any such illegal, invalid or unenforceable provision were not contained
herein.
14.5. GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of New York without regard to principles of
conflict of law.
14.6. JURISDICTION. Each of the Holders and the Company hereby
irrevocably and unconditionally consents and submits to the exclusive
jurisdiction of any state or federal court located within the County of New
York, State of New York, in connection with any, actions, suits or
proceedings arising out of or relating to this Agreement or any of the
agreements delivered in connection herewith or the transactions contemplated
hereby or thereby. Each of the Company and Holders hereby waives any
objection to venue in such jurisdiction, and agrees that service of any
summons, complaint, notice or other process relating to such proceeding may
be effected as provided by Section 14.3.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written above.
THE COMPANY:
XX0.XXX INC.
By:
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President and Chief Executive
Officer
THE HOLDERS:
/s/ XXXX XXXXXX
---------------------------------------------
Xxxx Xxxxxx
/s/ XXXX XXXXXXX
---------------------------------------------
Xxxx Xxxxxxx
/s/ XXXXXX X. XXXXXX
---------------------------------------------
Xxxxxx X. Xxxxxx
/s/ XXXXX XXXXXX
---------------------------------------------
Xxxxx Xxxxxx
/s/ XXX XXXXXX
---------------------------------------------
Xxx Xxxxxx
/s/ XXXXX XXXXXX
---------------------------------------------
Xxxxx Xxxxxx
/s/ XXXXX XXXX
---------------------------------------------
Xxxxx Xxxx
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/s/ XXXXX XXXXXX / XXXX XXXXXX
---------------------------------------------
Xxxxx Xxxxxx / Xxxx Xxxxxx
/s/ XXXXXX XXXXXX
---------------------------------------------
Xxxxxx Xxxxxx
/s/ XXXXXX XXXXXXX
---------------------------------------------
Xxxxxx Xxxxxxx
XXXXXXX TECHNOLOGY PARTNERS III, L.P.
By: /s/ XXXXX XXXXXXX
-----------------------------------------
Name: Xxxxx Xxxxxxx
Title: General Partner
THE TRAVELERS INSURANCE COMPANY
By: /s/ JORDAN X. XXXXXXX
-----------------------------------------
Name: Jordan X. Xxxxxxx
Title: Vice President
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