INVESTORS' RIGHTS AGREEMENT
This Investors' Rights Agreement is made as of the _day of March, 2000 by
and between XxxXxxxxxx.xxx, Inc., a Delaware corporation (the "Company"),
Xxxxxxx X. Xxxxxx, Xxxxxxxxx Xxxxxxxx, Xxx Xxxxx (collectively, the "Founders")
and the investors listed on Schedule A attached hereto (each an "Investor," and
collectively, the "Investors").
WHEREAS, the Company and the Investors are parties to the Series A
Preferred Stock Purchase Agreement of even date herewith (the "Series A
Agreement");
WHEREAS, in order to induce the Series A Investors to invest funds in the
Company pursuant to the Series A Agreement, the Investors and the Founders and
the Company hereby agree that this Agreement shall govern the rights of the
Investors to cause the Company to register shares of Common Stock issuable to
the Investors and certain other matters as set forth herein;
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto further agree as
follows:
1. Registration Rights. The Company covenants and agrees as follows:
1.1 Definitions. For purposes of this Section 1:
(a) The term " Act" means the Securities Act of 1933, as amended.
(b) The term "Form S-3" means such form under the Act as in effect on
the date hereof or any registration form under the Act subsequently adopted by
the SEC which permits inclusion or incorporation of substantial information by
reference to other documents filed by the Company with the SEC.
(c) The term "Holder" means any person owning or having the right to
acquire Registrable Securities or any assignee thereof in accordance with
Subsection 1.11 hereof.
(d) The term "1934 Act" shall mean the Securities Exchange Act of 1934,
as amended.
(e) The term "register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Act, and the declaration or ordering of
effectiveness of such registration statement or document.
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(f) The term "Registrable Securities" means: (i) the Common Stock issuable
or issued upon conversion of the Series A Preferred Stock and (ii) the Common
Stock held by the Founders, and any Common Stock issued as (or issuable upon the
conversion or exercise of any warrant, right or other security which is issued
as) a dividend or other distribution with respect to, or in exchange for or in
replacement of such shares, excluding in all cases, however, any Registrable
Securities sold by a person in a transaction in which his rights under this
Section 1 are not assigned.
(g) The number of shares of "Registrable Securities then outstanding" shall
be determined by the number of shares of Common Stock then outstanding, and the
number of shares of Common Stock issuable pursuant to then exercisable or
convertible securities which are Registrable Securities.
(h) The term "SEC" means the Securities and Exchange Commission.
1.2 Piggyback Registration. If (but without any obligation to do so) the
Company proposes to register (including for this purpose a registration effected
by the Company for stockholders other than the Holders but not including any
registration of its securities in connection with mergers, acquisitions,
exchange offers, dividend reinvestment plans, retirement plans or stock option
or other employee benefit plans) any of its stock or other securities under the
Act in connection with the public offering; of such securities solely for cash
(other than a registration relating solely to the sale of securities to
participants in a Company stock option plan, a registration of the initial
public offering of the Common Stock of the Company ("IPO"), a registration on
any form which does not include substantially the same information as would be
required to be included in a registration statement covering the sale of the
Registrable Securities or a registration in which the only Common Stock being
registered is Common Stock issuable upon conversion of debt securities which are
also being registered), the Company shall, at such time, promptly give each
Holder written notice of such registration. Upon the written request of each
Holder given within twenty (20) days after mailing of such notice by the Company
in accordance with Subsection 2.5, the Company shall, subject to the provisions
of Subsection 1.6, cause to be registered under the Act all of the Registrable
Securities that each such Holder has requested to be registered.
1.3 Investors' Demand Registration.
(a) At any time after the Company has successfully completed an IPO, the
Holders of at least 33,333 Series A Preferred Stock (the "Requisite Shares")
shall have the right to make up to three separate requests (except with respect
to registrations pursuant to Form S-3, if available, as to which the Holders may
make unlimited registration requests so long as such registrations include the
offering to the public of securities with an aggregate value of no less than
$500,000) that the Company effect the registration under the Securities Act of
all or a portion of the Registrable Securities owned by such Holders, each such
request to specify the intended method or methods of
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disposition thereof (which, following the exercise of at least one demand
hereunder, may include disposition in a Rule 415 Offering), provided that the
Company shall not be required to effect more than one registration pursuant to
this Subsection 1.3 in any 12- month period (or, as to S-3 registrations, more
than two in any 12-month period). A request made by Holders of Requisite Shares
shall not be counted for purposes of the request limitations set forth above if
(a) such Holders determine in their good faith judgment to withdraw the proposed
registration of any Registrable Securities requested to be registration pursuant
to this Subsection 1.3 due to marketing or regulatory reasons and such Holders
have elected to bear all the expenses of such withdrawn registration, (b) the
registration statement relating to any such request is not declared effective
within 90 days of the date such registration statement is first filed with the
SEC, (c) within 180 days after the registration relating to any such request has
become effective, such registration is interfered with by any stop order,
injunction or other order or requirement of the Commission or other governmental
agency or court for any reason and the Company fails to have such stop order,
injunction or other order or requirement removed, withdrawn or resolved to such
Holders' reasonable satisfaction within 30 days, (d) more than 50% of the
Registrable Securities requested by all Holders participating in such
registration to be included in the registration are not so included pursuant to
Subsection 1.3(d) hereof; or (e) the conditions to closing specified in the
underwriting agreement or purchase agreement entered into in connection with
the registration relating to any such request are not satisfied (other than as a
result of a default or breach thereunder by all Holders participating in such
registration). Upon any such request, the Company will promptly, but in any
event within 15 days, give written notice of such request to all Holders and
thereupon the Company will, subject to such Subsection 1.3(d), use its best
efforts to effect the prompt registration under the Securities Act of:
(i) the Registrable Securities which the Company has been so requested to
register by such Holders, and
(ii) all other Registrable Securities which the Company has been requested
to register by the Holders thereof by written request given to the Company by
such Holders within 20 days after the giving of such written notice by the
Company to such Holders,
all to the extent required to permit the disposition of the Registrable
Securities so to be registered in accordance with the intended method or methods
of disposition of each seller of such Registrable Securities.
(b) Notwithstanding the foregoing, but subject to the rights of Holders of
Registrable Securities under Subsection 1.2 hereof, if the Company shall at any
time furnish to each seller of Registrable Securities a certificate signed by
the President of the Company stating that the Company has pending or in process
a material transaction (including a financing transaction), or that as the
result of the unavailability for a reason beyond the Company's control of its
financial statements or the filing of such registration statement would, in the
good faith judgment of the Board, be significantly disadvantageous to the
Company, the Company may defer the filing of a registration
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statement to be filed pursuant to this Subsection 1.3 for up to 90 days (but
the Company shall use its best efforts to complete the transaction and file the
registration statement as soon as possible) provided that the Company shall not
be permitted to defer the filing of registration statements pursuant to this
clause (b ) more than once in any 180 day period.
(c) The Company will pay registration expenses in connection with any
registration requested under this Subsection 1.3 as described in Section 1.6
herein; provided that each seller of Registrable Securities shall pay all
registration Expenses to the extent required to be paid by such seller under
applicable law.
(d) If a registration pursuant to this Subsection 1.3 involves an
underwritten offering, and the managing underwriter (or, in the case of an
offering which is not underwritten, a nationally recognized investment banking
firm) shall advise the Company in writing (with a copy to each Person requesting
registration of Registrable Securities) that, in its opinion, the number of
securities requested and otherwise proposed to be included in such registration
exceeds the number which can be sold in such offering without materially and
adversely affecting the offering price, the Company will include in such
registration to the extent of the number which the Company is so advised can be
sold in such offering without such material adverse effect, first, the
Registrable Securities of the Investors, on a pro rata basis (based on the
number of shares of Registrable Securities owned by such Person), second, the
securities, if any, being sold by the Company and third, the securities, if any,
being sold by any other stockholders of the Company on a pro rata basis (based
on the number of shares of registrable securities owned by such other
stockholders).
(e) Subject to the provisions of Section 1.3(b) herein, after receipt of
notice of a requested registration pursuant to this Subsection 1.3, the Company
shall not initiate, without the consent of the requesting Investor(s), a
registration of any of its securities for its own account until 90 days after
such requested registration has been effected or such requested registration has
been terminated.
1.4 Obligations of the Company. Whenever required under this Section 1 to
effect the registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective, and, upon the request of the Holders
of a majority of the Registrable Securities registered thereunder, keep such
registration statement effective for a period of ninety (90) days or until the
distribution contemplated in the registration Statement has been completed;
provided, however, that (i) such ninety (90) day period shall be extended for a
period of time equal to the period the Holder refrains from selling any
securities included in such registration at the request of an underwriter of
Common Stock (or other securities) of the Company; and (ii) in the case of any
registration of Registrable Securities on Form S-3 which are intended to be
offered on a continuous or delayed basis,
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such ninety (90) day period shall be extended, if necessary, to keep the
registration statement effective until all such Registrable Securities are sold,
provided that Rule 415, or any successor rule under the Act, permits an offering
on a continuous or delayed basis, and provided further that applicable rules
under the Act governing the obligation to file a post-effective amendment
permit, in lieu of filing a post-effective amendment which (I) includes any
prospectus required by Section 10(a)(3) of the Act or (II) reflects facts or
events representing a material or fundamental change in the information set
forth in the registration statement, the incorporation by reference of
information required to be included in (I) and (II) above to be contained in
periodic reports filed pursuant to Section 13 or 15( d) of the 1934 Act in the
registration statement.
(b ) Prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Act, and such other documents as they may reasonably request in order to
facilitate the disposition of Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the securities covered by
such registration statement under such other securities or Blue Sky laws of such
jurisdictions as shall be reasonably requested by the Holders; provided that the
Company shall not be required in connection therewith or as a condition thereto
to qualify to do business or to file a general consent to service of process in
any such states or jurisdictions, unless the Company is already subject to
service in such jurisdiction and except as may be required by the Act.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Each Holder participating
in such underwriting also shall enter into and perform its obligations under
such an agreement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing.
(g) Cause all such Registrable Securities registered pursuant hereunder to
be listed on each securities exchange on which similar securities issued by the
Company are then listed.
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(h) When appropriate, provide a transfer agent and registrar for all
Registrable Securities registered pursuant hereunder and a CUSIP number for all
such Registrable Securities, in each case not later than the effective date of
such registration.
(i) Furnish, at the request of any Holder requesting registration of
Registrable Securities pursuant to this Section 1, on the date that such
Registrable Securities are delivered to the underwriters for sale in connection
with a registration pursuant to this Section 1, if such securities are being
sold through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (i) an opinion, dated such date, of counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities and (ii) a letter dated such date, from
the independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities.
1.5 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 1 with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be required to effect the registration of such Holder's Registrable
Securities. .
1.6 Expenses of Company Registration. The Company shall bear and pay all
out-of-pocket expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to this Section I for each Holder (which right may be assigned as
provided in Subsection 1.11 ), including (without limitation) all registration,
filing, and qualification fees, printers and accounting fees relating or
apportionable thereto and the reasonable fees and disbursements of one counsel
for the selling Holders selected by them, but excluding underwriting discounts
and commissions and transfer taxes relating to Registrable Securities.
1. 7 Underwriting Requirements. In connection with any offering under
Subsection 1.2 involving an underwriting of shares of the Company's capital
stock, the Company shall not be required to include any of the Holders'
securities in such underwriting unless they accept the terms of the underwriting
as agreed upon between the Company and the underwriters selected by it, and then
only in such quantity as the underwriters determine in their sole discretion
will not jeopardize the success of the offering by the Company. If the total
amount of securities, including Registrable Securities, requested by Holders to
be included in such offering exceeds the amount of securities sold other than by
the Company that the underwriters determine in their sole
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discretion is compatible with the success of the offering, then the Company
shall be required to include in the offering only that number of such
securities, including Registrable Securities, which the underwriters determine
in their sole discretion will not jeopardize the success of the offering (the
securities so included to be apportioned pro rata among the Holders and any
other selling stockholders according to the total amount of securities entitled
to be included therein owned by each selling stockholder or in such other
proportions as shall mutually be agreed to by the selling stockholders). For
purposes of the preceding parenthetical concerning apportionment, for any
selling stockholder which is a holder of Registrable Securities and which is a
partnership or corporation, the partners, retired partners and stockholders of
such holder, or the estates and family members of any such partners and retired
partners and any trusts for the benefit of any of the foregoing persons shall be
deemed to be a single "selling stockholder," and any pro-rata reduction with
respect to such "selling stockholder" shall be based upon the aggregate amount
of shares carrying registration rights owned by all entities and individuals
included in such "selling stockholder," as defined in this sentence.
1.8 Delay of Registration. No Holder shall have any right to obtain or seek
an injunction restraining or otherwise delaying any such registration as the
result of any controversy that might arise with respect to the interpretation or
implementation of this Section 1.
1.9 Indemnification. In the event any Registrable Securities are included
in a registration statement under this Section 1:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder, any underwriter (as defined in the Act) for such
Holder and each person, if any, who controls such Holder or underwriter within
the meaning of the Act or the 1934 Act, against any losses, claims, damages, or
liabilities joint or several to which they may become subject under the Act, or
the 1934 Act or other federal or state law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or are
based upon any of the following statements, omissions or violations
(collectively a "Violation"): (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Act, the 1934 Act, any state securities law or
any rule or regulation promulgated under the Act, the 1934 Act or any state
securities law; and the Company will pay to each such Holder, underwriter or
controlling person, any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this Subsection 1.9(a) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability, or action if such settlement is effected
without the consent of the Company (which consent shall not be unreasonably
withheld), nor shall the Company be liable in any such case for any such
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loss, claim, damage, liability, or action to the extent that it arises out of or
is based upon a Violation which occurs in reliance upon and in conformity with
written information furnished expressly for use in connection with such
registration by any such Holder, underwriter or controlling person.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Act, any underwriter, any other
Holder selling securities in such registration statement and any controlling
person of any such underwriter or other Holder, against any losses, claims,
damages, or liabilities (joint or several) to which any of the foregoing persons
may become subject, under the Act, the 1934 Act or other federal or state law,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished by such Holder expressly for
use in connection with such registration; and each such Holder will pay, as
incurred, any legal or other expenses reasonably incurred by any person intended
to be indemnified pursuant to this Subsection 1.9(b), in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this Subsection
1.9(b) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of the Holder, which consent shall not be unreasonably withheld; provided, that,
in no event shall any indemnity under this Subsection 1.9(b) exceed the gross
proceeds from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this Subsection
1.9 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Subsection 1.9, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not, except to the extent of any actual prejudice caused thereby,
relieve such indemnifying party of any liability to the indemnified party under
this Subsection 1.9.
(d) If the indemnification provided for in this Subsection 1.9 is held by
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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
hereunder, 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 benefits (which shall be
deemed to be in the same proportions as the proceeds of the offering received by
each party, after deducting all expenses incurred) and fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection
with the statements or omissions that resulted in such loss, liability, claim,
damage, or expense as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the untrue or allege
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.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
(f) The obligations of the Company and Holders under this
Subsection 1.9 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section I, and otherwise.
1.10 Reports Under Securities Exchange Act of 1934. With a view to making
available to the Holders the benefits of Rule 144 promulgated under the Act and
any other rule or regulation of the SEC that may at any time permit a Holder to
sell securities of the Company to the public without registration or pursuant to
a registration on Form S-3, the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times after ninety (90) days
after the effective date of the first registration statement filed by the
Company for the offering of its securities to the general public;
(b) take such action, including the voluntary registration of its
Common Stock under Section 12 of the 1934 Act, as is necessary to enable the
Holders to utilize Form S-3 for the sale of their Registrable Securities, such
action to be taken as soon as practicable after the end of the fiscal year in
which the first registration statement filed by the Company for the offering of
its securities to the general public is declared effective;
(c) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act; and
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(d) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144 (at
any time after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Act and the 1934 Act (at any
time after it has become subject to such reporting requirements), or that it
qualifies as a registrant whose securities may be resold pursuant to Form S-3
(at any time after it so qualifies), (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC which permits the
selling of any such securities without registration or pursuant to such form.
1.11 Assignment of Registration Rights. The rights to cause the Company to
register Registrable Securities pursuant to this Section I shall be deemed to
have been assigned to, and shall inure to the benefit of, any transferee of
Registrable Securities pursuant to a transfer of such securities permitted under
the Stockholders' agreement dated as of the date hereof by and among certain
parties to this Agreement.
1.12 Market Stand-Off Agreement. Each Investor hereby agrees that, during
the period of duration specified by the Company and an underwriter of common
stock or other securities of the Company, following the effective date of a
registration statement of the Company filed under the Act, it shall not, to the
extent requested by the Company and such underwriter, directly or indirectly
sell, offer to sell, contract to sell (including, without limitation, any short
sale), grant any option to purchase or otherwise transfer or dispose of (other
than to donees who agree to be similarly bound) any securities of the Company
held by it at any time during such period except common stock included in such
registration; provided, however, that:
(a) all officers and directors of the Company and all other persons
with registration rights (whether or not pursuant to this Agreement) enter into
similar agreements; and
(b) such market stand-off time period shall not exceed one hundred
eighty (180) days.
In order to enforce the foregoing covenant, the Company may impose stop-transfer
instructions with respect to the Registrable Securities of the Investor (and the
shares or securities of every other person subject to the foregoing restriction)
until the end of such period.
Notwithstanding the foregoing, the obligations described in this Subsection 1.12
shall not apply to a registration relating solely to employee benefit plans on
Form S-8 or similar forms which may be promulgated in the future, or a
registration relating solely to an SEC Rule 145 transaction on Form S-4 or
similar forms which may be promulgated in the future.
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1.13. Termination of Registration Rights. No Holder shall be entitled to
exercise any right provided for in this Section 1 after the first to occur of
(a) the fourth anniversary of the consummation of the Company's IPO or (b) the
point in time at which all shares of Registrable Securities held or entitled to
be held upon conversion by such Holder may immediately be sold under Rule 144
during any ninety (90)-day period.
1.14 Prior Rights. No other Stockholder of the Company shall be granted
demand or piggyback registration rights superior to those of the Holders without
the prior written consent of the Holders of at least 70% of the Registrable
Securities.
2. Miscellaneous.
2.1 Successors and Assigns. Except as otherwise provided herein, the terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the respective successors and assigns of the parties (including transferees
of any shares of Registrable Securities). Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabi1ities under or by reason of this Agreement, except as expressly provided
in this Agreement.
2.2 Governing Law. This Agreement shall be governed by and construed under
the laws of the State of New York.
2.3 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
2.4 Titles and Subtitles. The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in construing or
inteI1Jreting this Agreement.
2.5 Notices. All notices and other communications provided for hereunder
shall, unless otherwise stated herein, be in writing (including by telex or
facsimile transmission) and mailed or sent or delivered at the
addresses specified below. All such notices and communications shall be given by
hand, telex or facsimile transmission; provided that, in the event that telex
and facsimile transmission facsimiles are not operational, such notices and
communications may be given by mail, but the sender shall use reasonable efforts
to continue facsimile transmission facilities shall become operational. All such
notices and communications shall be effective when delivered by hand, or, in the
case of mail, upon the earlier of receipt and continuation by telex or facsimile
transmission as provided below, or, in the case of facsimile transmission, when
sent as addressed as set forth herein and continuation of delivery is received,
or, in the case of telex, when the telex is sent and the appropriate answer back
is received. The
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address for each of the Investors is as set forth on the signature blocks below.
The address for the Company is as follows.
Sky Xxxxxxx.xxx, Inc.
000 Xxxxxxx Xxxxxx 000x Xxxxx
Xxx Xxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
with copies to:
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Copies of all notices to Baring shall be delivered to:
Xxxxxxxxxx Helpern Syracuse & Hirschtritt LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxx Xxxxxxxxxx,o Esq.
2.6 Expenses. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled to
reasonable attorneys' fees, costs and necessary disbursements in addition to any
other relief to which such party may be entitled.
2. 7 Amendments and Waivers. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof. Any term of this Agreement may be amended and the observance
of any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of the Company and the holders of a majority of the Registrable
Securities then outstanding. Any amendment or waiver effected in accordance with
this paragraph shall be binding upon each holder of any Registrable Securities
then outstanding, each future holder of all such Registrable Securities, and the
Company.
2.8 Severability. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, such provision shall be excluded from
this
12
Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
2.9 Aggregation of Stock. All shares of Registrable Securities held or
acquired by affiliated entitled or persons shall be aggregated together for the
purpose of determining the availability of any rights under this Agreement.
[Remainder of Page Intentionally Left Blank]
13
IN WITNESS WHEREOF t the parties have executed this Agreement as of the
date first above written
SKY XXXXXXX.XXX. INC.
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------
Its:
Address:
------------------------------
------------------------------
INVESTORS:
BARING LATIN AMERICA PRIVATE EQUITY
FUND. L.P.
By: Baring Latin America Partners. LLC,
its General Partner
By: /s/ Xxxxx X. Xxxxxxx
------------------------------
Xxxxx X. Xxxxxxx, Managing Member
Address: 000 Xxxx Xxxxxx
Xxx Xxxx. Xxx Xxxx 00000
Barlng Asia Private Equity Investment XIX Limit
By: /s/ Xxxxxx Xxxxxx
------------------------------
Xxxxxx Xxxxxx, Director
Address: X.X. Xxx 000
1315 Victoria Road
St. Xxxxx Port
Guemsey Channel Islands
GYI 32D, United .Kingdom
Name:
---------------------------------
Address:
---------------------------------
---------------------------------
---------------------------------
14
/s/ Xxxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Address: c/o XxxXxxxxxx.xxx, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
/s/ Xxxxxxxxx Xxxxxxxx Jr.
---------------------------------
Name: Xxxxxxxxx Xxxxxxxx Jr.
Address: c/o XxxXxxxxxx.xxx, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax:(000) 000-0000
/s/ Xxx Xxxxx
---------------------------------
Name: Xxx Xxxxx
Address: c/o XxxXxxxxxx.xxx, Inc.
000 Xxxxxxx Xxxxxx
XxxXxxx ,XX 00000
Fax: (000) 000-0000
Exhibit 2.9 Proprietary Information and Inventions Agreement
30
February , 2000
--
XxxXxxxxxx.xxx. Inc.
000 Xxxxxxx Xxx., 00xx xxxxx
Xxx Xxxx, XX 00000
This letter is executed in connection with a contemplated business relationship
{the "Business Relationship") between me and XxxXxxxxxx.xxx, Inc. (the
"Company") concerning and the disclosure by the Company to me of
certain Confidential Information {as defined below).
I hereby represent to the Company that I am not prohibited or restricted from
entering into the Business Relationship and being a consultant/contractor to the
Company by any prior or exist1ng agreement or arrangement with a third party, or
any judgment or decree arising therefrom.
As consideration for the Company disclosing to me the Confidential Information
and negotiating the Business Relationship, I hereby agree as follows:
1. I shall not, at any time as of the date hereof and prior to during and
after the termination of the Business Relationship and whether or not the
Business Relationship shall materialize, reproduce or use for my own
purposes or disclose to any other person, directly or indirectly, for any
reason or purpose other than in furtherance of the Company's business and
for the purposes such Confidential Information was disclosed to me, any
Confidential Information, or any portion thereof, without the Company's
express prior written consent. For the purposes of this letter,
"Confidential information" shall mean all information that is confidential
and proprietary to the Company, whether in written form or otherwise,
including, among other things, the Intellectual Property: information
relating to the Company's business policies, methods and practices;
information concerning the Company's development. ownership and use of
computer programs; the names of, and terms of dealing with, past, present
and prospective customers or vendors; financial information, budgets,
projections, product plans and pricing; sales records, forms. and call
records; information contained in the Company's database; information
regarding the Company's marketing, promotional and sales programs:
information relating to the Company's other business strategies and
techniques: personnel information, including organizational structure,
salary and qualifications of employees; information regarding proposed
products or other business plans; and any and all other data and
information that the Company treats as or otherwise considers confidential
or proprietary.
2. At any time as of the date hereof and prior to, during and after the
termination of the Business Relationship and whether or not the Business
Relationship shall materialize, I will not remove from the Company's
premises any documents, records, files. notebooks. reports, video or audio
recordings. computer printouts, programs or software, price lists.
microfilm, drawings, customer lists. or other such documents containing
Confidential Information. including copies thereof, whether prepared by me
or by others. except as my duty shall require, and in such cases. will
promptly return such items to the Company. I shall promptly return to the
Company all such items. including summaries or copies, then in my
possession, at any time upon the Company's request and in any event
immediately upon termination of my employment with the Company.
3. In the event that during or as a result of the Business Relationship I
shall develop, discover or otherwise acquire any rights to any Intellectual
Property) (as defined below), to sell, transfer, and assign to the Company
any and all of my present and future right, title, and interest in and to
any and all Intellectual Property, whether developed prior to. during or
subsequent to the termination of the Business Relationship, during working
hours or otherwise, which (i) relates to the business, operations or
affairs of the Company: or (ii) is based upon or developed with any
materials or facilities or information belonging to the Company, and that
any such Intellectual Property shall be the sole and exclusive property of
the Company. I further agree that any and all such Intellectual Property
eligible under copyright laws is or shall be "work made for hire." I will
promptly disclose to the Company any such Intellectual Property that I may
develop or discover in the future and, at the request of and without charge
to the Company, I will do all things deemed by the Company to be necessary
to perfect title to such Intellectual Property in the Company and to assist
it in obtaining for the Company such patents, copyrights or other
protection as may be provided under law and desired by the Company,
including but not limited to executing and signing any and all relevant
applications, assignments, or other instruments. For the purposes of this
letter the term "Intellectual Property" shall mean any and all patents or
patentable materials, copyrights or copyrightable materials, trade-
secrets, trade marks, trade dress, trade styles, know how, innovations,
creations, designs, business plans, inventions, ideas, disclosures,
improvements, source and object code, documentation, specifications and any
derivative works based thereon, In each case, whether or not registered
and whether or not registerable.
I recognize that any Intellectual Property described in the preceding
paragraph that is developed or discovered by me within six months of the
termination of the Business Relationship is likely to have been developed
or discovered in the course of the Business Relationship, Accordingly, I
agree that any and all such Intellectual Property shall be presumed to have
been developed or discovered In the course of the Business Relationship
with the Company unless and until I establish the contrary by clear and
convincing evidence.
Very truly yours,
---------------------------
Exhibit 2.14 Financial Statements
31
XXXXXXXXXX.XXX, INC. PAGE: 1
TRIAL BALANCE AS OF FEB 24, 2000 20:33:52
COMPANY CODE: 4 FOR PERIOD 01/01/99 TO 12/31/99
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1100100 - CASH - SKY ACCT -STERLING -93333.58 BEG: 0.00
END: -93333.58
--------------------------------------------------------------------------------
1100308 - CASH - PAYROLL A/C - SKYAUC 315.02 BEG: 0.00
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--------------------------------------------------------------------------------
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END: 300.00
--------------------------------------------------------------------------------
1100618 - CASH - CHASE - VISTA - SKY 1405251.87 BEG: 0.00
END: 1405251.87
--------------------------------------------------------------------------------
1100908 - TRANSFER ACCOUNT - SKY 0.00 BEG: 0.00
END: 0.00
--------------------------------------------------------------------------------
0000000 - ACCOUNTS RECEIVABLE: SKY 29932.15 BEG: 0.00
END: 29932.15
--------------------------------------------------------------------------------
1102708 - DEPOSITS RECEIVABLE: SKY 13834.29 BEG: 0.00
END: 13834.29
--------------------------------------------------------------------------------
1102718 - LAND ON HAND - RCI REGULAR 133838.00 BEG: 0.00
END: 133838.00
--------------------------------------------------------------------------------
1102728 - LAND ON HAND - RCI LUXURY 100000.00 BEG: 0.00
END: 100000.00
--------------------------------------------------------------------------------
1103008 - BAD DEBT: SKY 0.00 BEG: 0.00
END: 0.00
--------------------------------------------------------------------------------
1104008 - COMMISSIONS RECIEVABLE: SKY 0.00 BEG: 0.00
END: 0.00
--------------------------------------------------------------------------------
0000000 - ACCOUNTS RECIEVABLE: SKYAUC 9274.31 BEG: 0.00
END: 9274.31
--------------------------------------------------------------------------------
1106008 - LOANS AND EXCHANGES: SKY 1901.68 BEG: 0.00
END: 1901.68
--------------------------------------------------------------------------------
11075081 - PREPAID TICKETS: SKY-JAN 0.00 BEG: 0.00
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--------------------------------------------------------------------------------
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--------------------------------------------------------------------------------
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--------------------------------------------------------------------------------
11075084 - PREPAID TICKETS: SKY-APR 0.00 BEG: 0.00
END: 0.00
XXXXXXXXXX.XXX, INC. PAGE: 2
TRIAL BALANCE AS OF FEB 24, 2000 20:34:44
COMPANY CODE: 4 FOR PERIOD 01/01/99 TO 12/31/99
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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--------------------------------------------------------------------------------
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--------------------------------------------------------------------------------
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--------------------------------------------------------------------------------
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--------------------------------------------------------------------------------
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--------------------------------------------------------------------------------
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--------------------------------------------------------------------------------
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--------------------------------------------------------------------------------
1107508C - PREPAID TICKETS: SKY-DEC 0.00 BEG: 0.00
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--------------------------------------------------------------------------------
1107508F - PREPAID TICKETS: SKY-FUT -61642.84 BEG: 0.00
END: -61642.84
--------------------------------------------------------------------------------
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END: 11496.05
--------------------------------------------------------------------------------
1110008 - CREDIT CARD SALES - ARC: SKY 0.00 BEG: 0.00
END: 0.00
--------------------------------------------------------------------------------
1121008 - DEFERRED BARTER COSTS: SKYAU 12462.43 BEG: 0.00
END: 12462.43
--------------------------------------------------------------------------------
1217208 - FURNISHINGS: SKY 12432.51 BEG: 0.00
END: 12432.51
--------------------------------------------------------------------------------
1217308 - ACCUM DEPRECIATION-FURN: SKY -686.00 BEG: 0.00
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--------------------------------------------------------------------------------
1217408 - COMPUTERS: SKY 28770.64 BEG: 0.00
END: 28770.64
--------------------------------------------------------------------------------
1217508 - ACCUM DEPRECIATION-COMP: SKY -2537.00 BEG: 0.00
END: -2537.00
--------------------------------------------------------------------------------
XXXXXXXXXX.XXX, INC. PAGE: 3
TRIAL BALANCE AS OF FEB 24, 2000 20:35:20
COMPANY CODE: 4 FOR PERIOD 01/01/99 TO 12/31/99
--------------------------------------------------------------------------------
1217608 - SOFTWARE: SKYAUC 202252.50 BEG: 0.00
END: 202252.50
--------------------------------------------------------------------------------
1217708 - ACCUM DEPRECIATION-SOFTWR: S -13677.00 BEG: 0.00
END: -13677.00
--------------------------------------------------------------------------------
1218608 - LEASEHOLD IMPROVEMENTS: SKYA 0.00 BEG: 0.00
END: 0.00
--------------------------------------------------------------------------------
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END: 0.00
--------------------------------------------------------------------------------
1319408 - INVESTMENT: SKY 0.00 BEG: 0.00
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--------------------------------------------------------------------------------
24201081 - DEPOSITS PAYABLE: SKY -JAN 0.00 BEG: 0.00
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--------------------------------------------------------------------------------
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--------------------------------------------------------------------------------
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--------------------------------------------------------------------------------
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--------------------------------------------------------------------------------
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END: 0.00
XXXXXXXXXX.XXX, INC. PAGE: 4
TRIAL BALANCE AS OF FEB 24, 2000 20:35:39
COMPANY CODE: 4 FOR PERIOD 01/01/99 TO 12/31/99
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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--------------------------------------------------------------------------------
2421008 - AIR PAYABLE: SKY 0.00 BEG: 0.00
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--------------------------------------------------------------------------------
0000000 - ACCOUNTS PAYABLE: SKY -1133860.90 BEG: 0.00
END:-1133860.90
--------------------------------------------------------------------------------
2423008 - ACCRUED EXPENSES PAYABLE: SK -333898.00 BEG: 0.00
END: -333898.00
--------------------------------------------------------------------------------
2424008 - FEDERAL WH TAX PAYABLE: SKY 0.00 BEG: 0.00
END: 0.00
--------------------------------------------------------------------------------
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--------------------------------------------------------------------------------
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--------------------------------------------------------------------------------
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--------------------------------------------------------------------------------
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2425008 - STATE CORP TAX PAYABLE: SKY 0.00 BEG: 0.00
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--------------------------------------------------------------------------------
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--------------------------------------------------------------------------------
2431008 - DEFERRED BARTER INCOME: SK 0.00 BEG: 0.00
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--------------------------------------------------------------------------------
3630008 - PAID IN CAPITAL: SKY -1500000.00 BEG: 0.00
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--------------------------------------------------------------------------------
3630108 - CAPITAL STOCK- SKY -300.00 BEG: 0.00
END: -300.00
--------------------------------------------------------------------------------
3732008 - RETAINED EARNINGS - PRIOR: S 0.00 BEG: 0.00
END: 0.00
XXXXXXXXXX.XXX, INC. PAGE: 5
TRIAL BALANCE AS OF FEB 24, 2000 20:36:03
COMPANY CODE: 4 FOR PERIOD 01/01/99 TO 12/31/99
--------------------------------------------------------------------------------
4840108 - SALES: SKY -6813478.64 BEG: 0.00
END: -6813478.58
--------------------------------------------------------------------------------
4842008 - SALES REFUNDS - PRIOR PER: SKY 0.00 BEG: 0.00
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--------------------------------------------------------------------------------
4842508 - SALES REFUNDS: SKY 2870.93 BEG: 0.00
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--------------------------------------------------------------------------------
4846008 - ADVERTISING INCOME: SKYAUC -9274.31 BEG: 0.00
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--------------------------------------------------------------------------------
4895108 - INTEREST INCOME -5251.87 BEG: 0.00
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--------------------------------------------------------------------------------
5845008 - AIR COSTS: SKY 4713462.71 BEG: 0.00
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--------------------------------------------------------------------------------
5864908 - AIR - OTHER: SKY 0.00 BEG: 0.00
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--------------------------------------------------------------------------------
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--------------------------------------------------------------------------------
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--------------------------------------------------------------------------------
6867508 - LAND: SKY 1070901.20 BEG: 0.00
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--------------------------------------------------------------------------------
6869008 - COMMISSION INCOME: SKY -3858.60 BEG: 0.00
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--------------------------------------------------------------------------------
7860108 - NET PAYROLL: SKYAUCTION 0.00 BEG: 0.00
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--------------------------------------------------------------------------------
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--------------------------------------------------------------------------------
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--------------------------------------------------------------------------------
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--------------------------------------------------------------------------------
7871208 - FULLFILLMENT FEE: SKYAUC 251425.00 BEG: 0.00
END: 251425.00
--------------------------------------------------------------------------------
XXXXXXXXXX.XXX, INC. PAGE: 6
TRIAL BALANCE AS OF FEB 24, 2000 20:36:09
COMPANY CODE: 4 FOR PERIOD 01/01/99 TO 12/31/99
--------------------------------------------------------------------------------
7871308 - MANAGEMENT FEES: SKY 0.00 BEG: 0.00
END: 0.00
--------------------------------------------------------------------------------
7871508 - COMMISSION EXPENSE: SKY 16043.00 BEG: 0.00
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--------------------------------------------------------------------------------
7871608 - CREDIT CARD FEE EXP: SKY 199959.05 BEG: 0.00
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--------------------------------------------------------------------------------
7875008 - RENT & UTIL: SKY 93903.00 BEG: 0.00
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--------------------------------------------------------------------------------
7875208 - RENT - HARDWARE STORAGE: SKY 19570.00 BEG: 0.00
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--------------------------------------------------------------------------------
0000000 - TELEPHONE: SKY 7663.96 BEG: 0.00
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--------------------------------------------------------------------------------
7875608 - COMPUTER CONSULTING & SUPP:S 309636.07 BEG: 0.00
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--------------------------------------------------------------------------------
7876008 - ENTERTAINMENT: SKYAUC 2247.94 BEG: 0.00
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--------------------------------------------------------------------------------
7876308 - FAM TRIPS & TRAVEL: SKY 8212.67 BEG: 0.00
END: 8212.67
--------------------------------------------------------------------------------
7876508 - POSTAGE & SHIPPING SKY 63729.79 BEG: 0.00
END: 63729.79
--------------------------------------------------------------------------------
7877008 - OFFICE SUPPLIES & EXP: SKY 18205.85 BEG: 0.00
END: 18205.85
--------------------------------------------------------------------------------
7877508 - PRINTING & STATIONERY: SKY 2443.69 BEG: 0.00
END: 2443.69
--------------------------------------------------------------------------------
7878008 - ADVERTISING - GENERAL: SKY 452680.64 BEG: 0.00
END: 452680.64
--------------------------------------------------------------------------------
7878508 - ADVERTISING - BROCHURE: SKY 0.00 BEG: 0.00
END: 0.00
--------------------------------------------------------------------------------
7878808 - PUBLIC RELATIONS: SKY 68269.47 BEG: 0.00
END: 68269.47
--------------------------------------------------------------------------------
7879008 - PROFESSIONAL FEES: SKY 246035.44 BEG: 0.00
END: 246035.44
--------------------------------------------------------------------------------
8880008 - WORKMENS COMP: SKYAUC 3795.00 BEG: 0.00
END: 3795.00
--------------------------------------------------------------------------------
XXXXXXXXXX.XXX, INC. PAGE: 7
TRIAL BALANCE AS OF FEB 24, 2000 20:36:25
COMPANY CODE: 4 FOR PERIOD 01/01/99 TO 12/31/99
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
8881008 - EMPLOYEE WELFARE: SKYAUC 38209.20 BEG: 0.00
END: 38209.20
--------------------------------------------------------------------------------
8882208 - FICA EXPENSE: SKY 23499.46 BEG: 0.00
END: 23499.46
--------------------------------------------------------------------------------
8882708 - UNEMPLOYMENT EXPENSE: SKY 8486.04 BEG: 0.00
END: 8486.04
--------------------------------------------------------------------------------
8882908 - PAYROLL RELATED COSTS: SKYAU 26097.00 BEG: 0.00
END: 26097.00
--------------------------------------------------------------------------------
8883708 - DISABILITY EXPENSE: SKY -45.76 BEG: 0.00
END: -45.76
--------------------------------------------------------------------------------
0000000 - BANK CHARGES: SKY 1259.91 BEG: 0.00
END: 1259.91
--------------------------------------------------------------------------------
9890508 - AUTO EXPENSE: SKYAUC 8792.36 BEG: 0.00
END: 8792.36
--------------------------------------------------------------------------------
9891008 - GENERAL INSURANCE: SKYAUC 347.68 BEG: 0.00
END: 347.68
--------------------------------------------------------------------------------
9891508 - DUES & SUBSCRIPTIONS: SKY 0.00 BEG: 0.00
END: 0.00
--------------------------------------------------------------------------------
9894108 - DEPRECIATION EXPENSE: SKYAU 16900.00 BEG: 0.00
END: 16900.00
--------------------------------------------------------------------------------
9894908 - MISC. EXPENSE: SKY 238.39 BEG: 0.00
END: 238.39
--------------------------------------------------------------------------------
9895308 - MISC. INTEREST EXPENSE: SKY 0.00 BEG: 0.00
END: 0.00
--------------------------------------------------------------------------------
9895408 - MISC. INCOME: SKY -0.80 BEG: 0.00
END: -0.80
--------------------------------------------------------------------------------
9996108 - STATE CORP. TAX: SKY 0.00 BEG: 0.00
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--------------------------------------------------------------------------------
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--------------------------------------------------------------------------------
9996308 - ANNUAL FEE: SKYAUC 0.00 BEG: 0.00
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9999999 - VOIDED CHECKS: SKY 0.00 BEG: 0.00
END: 0.00
--------------------------------------------------------------------------------
